The sales mix of bikes and carts is 75% and 25% respectively, based on the current units sold. The unit contribution margin for bikes is $200, while for carts it is $150. The break-even point for bikes is 1,000 units, generating $500,000 in sales, while for carts it is 1,333 units, generating $533,333 in sales.
To calculate the sales mix, we divide the units sold for each product by the total units sold. For bikes, the sales mix is 750 units / (750 units + 250 units) = 75%, and for carts, it is 250 units / (750 units + 250 units) = 25%.
The unit contribution margin is calculated by subtracting the variable costs from the selling price. For bikes, it is $500 - $300 = $200, and for carts, it is $400 - $250 = $150.
To calculate the break-even point in units, we divide the total fixed costs by the unit contribution margin. For bikes, it is $200,000 / $200 = 1,000 units, and for carts, it is $200,000 / $150 = 1,333 units.
To calculate the break-even point in sales dollars, we multiply the break-even point in units by the selling price. For bikes, it is 1,000 units * $500 = $500,000, and for carts, it is 1,333 units * $400 = $533,333.
Therefore, to break even, Nord needs to sell 1,000 bikes, generating $500,000 in sales, and 1,333 carts, generating $533,333 in sales.
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Nintendo's Wii is a modern example of O a. Commercially and Technologically Innovation. O b. Continues Innovation. OC. Commercially Discontinues innovation. O d. Technologically Discontinu
Nintendo's Wii is a modern example of Commercially and Technologically Innovation. Nintendo is a company that produces games, applications, and other forms of interactive entertainment. The company is headquartered in Japan. Its most well-known gaming system is the Nintendo Switch.
The Wii: A Commercial and Technological Innovation
The Wii gaming system is an example of both commercial and technological innovation. The Wii console was released by Nintendo in November 2006, and it has become one of the most popular gaming systems of all time.
Commercial Innovation: Nintendo revolutionized the gaming industry with the release of the Wii gaming system. The Wii was marketed towards a broader demographic than traditional gaming systems. Instead of targeting only hardcore gamers, Nintendo aimed the Wii at families, senior citizens, and casual gamers. This broad marketing approach helped Nintendo to sell over 100 million units of the Wii, making it one of the best-selling gaming systems of all time.
Technological Innovation: The Wii was not only a commercial success but also a technological innovation. The Wii was the first gaming system to use motion controls. The Wii Remote controller was a groundbreaking invention that allowed players to control the game with their physical movements. This innovation made the Wii gaming experience more interactive and engaging, making it an instant hit with gamers of all ages and abilities.
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Larkspur Corporation issued 101,000 shares of $20 par value, cumulative, 9% preferred stock on January 1,2021, for $2,510,000. In December 2023, Larkspur declared its first dividend of $740,000.
Prepare Larkspur's journal entry to record the issuance of the preferred stock. (Credit account titles are outomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the occount titles and enter O for the amounts)
The journal entry to record the issuance of the stock by Larkspur Corporation is as Date: January 1, 2021 Preferred Stock 2,020,000 Paid-in Capital in Excess of Par - Preferred Stock 490,000 Cash 2,510,000
In the journal entry, the Preferred Stock account is debited for the par value of the preferred stock issued, which is calculated as follows: Par value per share * Number of shares issued = $20 * 101,000 = $2,020,000.The Paid-in Capital in Excess of Par - Preferred Stock account is debited for the excess amount received over the par value. This is calculated as the total amount received minus the par value of the stock: Total amount received - Par value per share * Number of shares issued = $2,510,000 - ($20 * 101,000) = $490,000. Finally, the Cash account is credited for the total amount received from the issuance of the preferred stock, which is $2,510,000. This journal entry reflects the issuance of the preferred stock by debiting the appropriate accounts (Preferred Stock and Paid-in Capital in Excess of Par - Preferred Stock) and crediting the Cash account. It records the inflow of cash from the investors in exchange for the preferred stock shares issued by Larkspur Corporation.
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Insurance company, IHI, is part of a swap agreement with investment bank Lachlin Bank on a notional principal of $190 million. IHI has agreed to pay Lachlin Bank the six month BBSW rate and receives 11% pa, convertible half-yearly. If the swap has a residual life of 18 months, and the next interest payment is due in six months, calculate the value of the swap for Lachlin, given BBSW rates (compounding continuously) for the corresponding 6, 12 and 18 month maturities are 10.67% pa, 10.82% pa, 11.1% pa and the half year BBSW rate on the next payment is known to be 11.2% pa compounding half-yearly. Give your answer in millions of dollars to 2 decimal places.
To calculate the value of the swap for Lachlin Bank, we need to determine the present value of the cash flows associated with the swap.
First, let's calculate the cash flow from IHI to Lachlin Bank. IHI pays Lachlin Bank the six-month BBSW rate, which is 11.2% per annum compounded semi-annually. The payment is due in six months.
Using the formula for present value of a future cash flow, the cash flow from IHI to Lachlin Bank is:
Cash Flow = (BBSW Rate / 2) * Notional Principal * e^(-r * t)
where:
BBSW Rate = 11.2% per annum compounded semi-annually
Notional Principal = $190 million
r = 10.67% per annum compounded continuously (for a 6-month maturity)
t = 0.5 (since the payment is due in six months)
Cash Flow = (0.112 / 2) * $190 million * e^(-0.1067 * 0.5)
Now, let's calculate the present value of the cash flow using the given BBSW rates for 12 and 18 months maturities:
Present Value = Cash Flow / (1 + r)^t
For a 12-month maturity:
r = 10.82% per annum compounded continuously
t = 1 (since the payment is due in 12 months)
For an 18-month maturity:
r = 11.1% per annum compounded continuously
t = 1.5 (since the payment is due in 18 months)
Finally, the value of the swap for Lachlin Bank is the sum of the present values of the cash flows.
Let's calculate the values:
Cash Flow = (0.112 / 2) * $190 million * e^(-0.1067 * 0.5)
Present Value for 6-month maturity = Cash Flow / (1 + 0.1067)^0.5
Present Value for 12-month maturity = Cash Flow / (1 + 0.1082)^1
Present Value for 18-month maturity = Cash Flow / (1 + 0.111)^1.5
Value of the swap for Lachlin Bank = Present Value for 6-month maturity + Present Value for 12-month maturity + Present Value for 18-month maturity
Calculate the values using the provided formulas and the given BBSW rates, then sum them up to find the value of the swap for Lachlin Bank in millions of dollars to two decimal places.
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WGA Corp. declared a 10% cash dividend on Dec. 1 payable to shareholders on record as of Dec. 31. A shareholders with 100 shares of a 10 par stock who bought another 100 shares on Dec. 15 will receive ___________
To determine the dividend amount that a shareholder with 100 shares of a $10 par stock, who bought another 100 shares on December 15, will receive, we need to consider the record date for the dividend.
In this scenario, WGA Corp. declared a 10% cash dividend on December 1 and set the record date as December 31. This means that shareholders who are recorded as owners of the company's stock on December 31 will be eligible to receive the dividend. Since the shareholder bought an additional 100 shares on December 15, those shares will be included in their holdings as of the record date. Therefore, the shareholder will have a total of 200 shares on record. To calculate the dividend amount, we need to multiply the number of shares on record by the dividend rate. In this case, the dividend rate is 10%.
Dividend Amount = Number of Shares on Record * Dividend Rate
Dividend Amount = 200 shares * 10% = 20 shares
Therefore, the shareholder with 100 shares of a $10 par stock, who bought another 100 shares on December 15, will receive a dividend amount equal to 20 shares.
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A firm's cash flow from operating activities is $32 million, depreciation is $4 million, its investments in fixed capital totals $13 million, its before-tax interest totals $4 million and its investment in working capital totals $4 million. The tax rate is 30%. What is its Free Cash Flow to the Firm?
a.
$23.00 million
b.
$21.80 million
c.
$25.80 million
d.
$17.80 million
The firm's Free Cash Flow to the Firm is $21.80 million.
Free Cash Flow to the Firm (FCFF) is calculated by subtracting the investments in fixed capital and working capital from the cash flow from operating activities, and then adding back the tax shield on interest.
Step 1: Calculate the tax shield on interest.
Tax shield on interest = Before-tax interest * Tax rate
Tax shield on interest = $4 million * 30% = $1.2 million
Step 2: Calculate the Free Cash Flow to the Firm.
FCFF = Cash flow from operating activities - Investments in fixed capital - Investments in working capital + Tax shield on interest
FCFF = $32 million - $13 million - $4 million + $1.2 million
FCFF = $16.2 million
Therefore, the firm's Free Cash Flow to the Firm is $16.2 million.
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Greg Morrison recently graduated from construction engineering school. He is considering opening his own construction business providing module housing. Providing module homes is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served. Assume the annual fixed cost of operations is $800,000. Further assume that the only significant variable cost relates to the module homes, themselves. An average module home costs $12,000. Greg's banker has asked a variety of questions in contemplation of providing a loan for this business:
(a) If the average family is charged $18,000 for installation of a module home, how many families must be served to clear the break-even point?
(b) If the banker believes Greg will only serve 100 families during the first year in business, how much will the business lose during its first year of operation?
(c) If Greg believes his profits will be at least $100,000 during the first year, how much is he anticipating for total revenue?
(d) The banker has suggested that Greg can reduce his fixed costs by $150,000 if he will not buy any vehicles. Greg can instead rent vehicles as needed. The variable cost of renting is $700 per family served. Will this suggestion help Greg reach the break-even point sooner?
We must compute the number of families that must be serviced in order to cover the fixed costs in order to estimate the break-even threshold. Fixed costs / Contribution margin per family = Break-even point (in terms of the number of families).
The difference between the selling price and the variable cost per family is the contribution margin per family. Cost of a typical module home is $12,000 Selling price is $18,000 for each family. Variable cost per family equals $18,000 minus $12,000, or $6,000 in contribution margin per family. Break-even point is equal to 800,000/6,000, or 133.33 families. Greg would need to serve at least 134 families to break even because you cannot have a quarter of a family. If the banker thinks Greg will only serve 100 customers.
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Exercise 7-18 (Algo) Schedule of cash receipts LO P2 Jasper Company has 60% of its sales on credit and 40% for cash. All credit sales are collected in full in the first month following the sale. The company budgets sales of $525,000 for April, $535,000 for May, and $560,000 for June. Total sales for March are $300,100. Prepare a schedule of cash receipts from sales for April, May, and June. Zisk Company purchases direct materials on credit. Budgeted purchases are April, $82,000; May, $112,000; and June, $122,000. Cash payments for purchases are: 70% in the month of purchase and 30% in the first month after purchase. Purchases for March are $72,000. Prepare a schedule of cash payments for direct materials for April, May, and June.
Schedule of Cash Receipts from Sales:
April:
Credit sales: $525,000 x 60% = $315,000
Cash sales: $525,000 x 40% = $210,000
Total cash receipts for April: $315,000 (from March credit sales) + $210,000 (April cash sales) = $525,000
May:
Credit sales: $535,000 x 60% = $321,000
Cash sales: $535,000 x 40% = $214,000
Total cash receipts for May: $321,000 (from April credit sales) + $214,000 (May cash sales) = $535,000
June:
Credit sales: $560,000 x 60% = $336,000
Cash sales: $560,000 x 40% = $224,000
Total cash receipts for June: $336,000 (from May credit sales) + $224,000 (June cash sales) = $560,000
Schedule of Cash Payments for Direct Materials:
April:
Cash payments for April purchases: $82,000 x 70% = $57,400
Cash payments for March purchases: $72,000 x 30% = $21,600
Total cash payments for April: $57,400 + $21,600 = $79,000
May:
Cash payments for May purchases: $112,000 x 70% = $78,400
Cash payments for April purchases: $82,000 x 30% = $24,600
Total cash payments for May: $78,400 + $24,600 = $103,000
June:
Cash payments for June purchases: $122,000 x 70% = $85,400
Cash payments for May purchases: $112,000 x 30% = $33,600
Total cash payments for June: $85,400 + $33,600 = $119,000
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Schedule of Cash Receipts from Sales:
April:
Credit sales: $525,000 x 60% = $315,000
Cash sales: $525,000 x 40% = $210,000
Total cash receipts for April: $315,000 (from March credit sales) + $210,000 (April cash sales) = $525,000
May:
Credit sales: $535,000 x 60% = $321,000
Cash sales: $535,000 x 40% = $214,000
Total cash receipts for May: $321,000 (from April credit sales) + $214,000 (May cash sales) = $535,000
June:
Credit sales: $560,000 x 60% = $336,000
Cash sales: $560,000 x 40% = $224,000
Total cash receipts for June: $336,000 (from May credit sales) + $224,000 (June cash sales) = $560,000
Schedule of Cash Payments for Direct Materials:
April:
Cash payments for April purchases: $82,000 x 70% = $57,400
Cash payments for March purchases: $72,000 x 30% = $21,600
Total cash payments for April: $57,400 + $21,600 = $79,000
May:
Cash payments for May purchases: $112,000 x 70% = $78,400
Cash payments for April purchases: $82,000 x 30% = $24,600
Total cash payments for May: $78,400 + $24,600 = $103,000
June:
Cash payments for June purchases: $122,000 x 70% = $85,400
Cash payments for May purchases: $112,000 x 30% = $33,600
Total cash payments for June: $85,400 + $33,600 = $119,000
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1. You are charged with the valuation of DMH Enterprises given the following information: DMH is expected to pay $1.50 at year-end, and dividend growth is expected to be 20% over the next three years, after which growth will taper to a constant rate of 8%. If DMH's beta is 1.25, the yield on Treasury bonds is 1% and the expected return on the market is 13%, what should be the stock's current price?
The current price of DMH Enterprises' stock should be approximately $22.28, calculated using the dividend discount model and the Capital Asset Pricing Model.
To determine the current price of DMH Enterprises' stock, we can use the dividend discount model (DDM). The DDM values a stock by calculating the present value of its future dividends.
First, let's calculate the dividends over the next three years:
Year 1 dividend: $1.50
Year 2 dividend: $1.50 * (1 + 20%) = $1.80
Year 3 dividend: $1.80 * (1 + 20%) = $2.16
Next, we need to calculate the terminal value of the stock, which represents the present value of all future dividends beyond the third year. We can use the constant growth rate of 8% to calculate this value.
Assuming the risk-free rate is 1% and the market return is 13%, the required rate of return for DMH's stock can be calculated using the Capital Asset Pricing Model (CAPM):
Required rate of return = Risk-free rate + Beta * (Market return - Risk-free rate)
= 1% + 1.25 * (13% - 1%)
= 15.25%
Using the constant growth formula, we can calculate the terminal value:
Terminal value = Year 3 dividend * (1 + Growth rate) / (Required rate of return - Growth rate)
= $2.16 * (1 + 8%) / (15.25% - 8%)
= $29.52
Finally, we can calculate the present value of all the dividends and the terminal value using the required rate of return of 15.25%:
Current price = Present value of dividends + Present value of terminal value
= $1.50 / (1 + 15.25%) + $1.80 / (1 + 15.25%)² + $2.16 / (1 + 15.25%)³ + $29.52 / (1 + 15.25%)³
≈ $1.30 + $1.36 + $1.42 + $18.20
≈ $22.28
Therefore, based on the given information, the current price of DMH Enterprises' stock should be approximately $22.28.
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Explain the importance of human resource plans for strategic success.
Human resource plans are crucial for strategic success as they align an organization's workforce with its strategic objectives, ensuring the right people with the right skills are in place to achieve organizational goals. x
Human resource plans play a vital role in strategic success by ensuring that an organization's workforce is aligned with its overall strategic objectives. These plans involve assessing the current and future workforce needs, identifying skill gaps, and developing strategies to address those gaps. By aligning human resources with strategic goals, organizations can effectively allocate resources and deploy their workforce in a manner that supports the achievement of key objectives.
Additionally, human resource plans help attract, develop, and retain top talent. They outline recruitment strategies to attract individuals with the desired skills and competencies, ensuring a high-quality workforce. These plans also focus on employee development programs, training initiatives, and career progression opportunities, which not only enhance individual skills but also improve overall organizational capabilities. By investing in employee growth and well-being, human resource plans foster a positive work culture and increase employee engagement, leading to higher levels of productivity and motivation.
Furthermore, human resource plans enable effective resource allocation. By forecasting workforce needs, organizations can allocate resources efficiently, avoiding overstaffing or understaffing situations. This ensures optimal utilization of human capital and reduces costs associated with excessive labor or operational inefficiencies. Moreover, these plans facilitate succession planning, identifying potential leaders and key positions that need to be filled in the future. By proactively addressing talent gaps, organizations can ensure continuity and stability in their strategic endeavors. In conclusion, human resource plans are instrumental in achieving strategic success by aligning the workforce with organizational objectives, attracting and retaining top talent, fostering a positive work culture, and enabling effective resource allocation. By strategically managing human capital, organizations can enhance their competitive advantage, adapt to changing market dynamics, and achieve long-term success.
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Carla Vista Company at December 31 has cash $21,200, noncash assets $108.000, liabilities $56,800, and the following capital balances: Floyd $43,600 and DeWitt $28,800. The firm is liquidated, and $115.000 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 60% and 40%, respectively.
Required:
Prepare the entries to record.
Record the distribution of cash to partners: Debit Cash $115,000, Debit Floyd's Capital $69,000, Debit DeWitt's Capital $46,000, Credit Noncash Assets $108,000, Credit Liabilities $56,800.
The entry records the liquidation of Carla Vista Company. Cash of $115,000 is received for the noncash assets, which is debited to Cash. Floyd's capital balance receives 60% of the income ratio ($108,000 x 0.6 = $64,800), and DeWitt's capital balance receives 40% ($108,000 x 0.4 = $43,200). These amounts are debited to their respective capital accounts. Noncash assets are credited to remove them from the books, and liabilities are credited to settle them during liquidation.
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Answer the following questions about derivatives and margin lending:
a) What is the difference between a ‘long’ and a ‘short’ position?
b) Why would an investor consider short selling strategies?
c) Outline, using examples, the difference between a put option and a call option.
d) What benefits for portfolio building and allocation does leverage provide?
e) What does ‘in-the-money’ mean with regards to options?
(Only short responses required)
A 'long' position involves buying an asset, while a 'short' position involves selling an asset the investor doesn't own. Short selling strategies are used to profit from falling asset prices, hedge existing positions, or exploit arbitrage opportunities.
a) A 'long' position refers to buying an asset or security with the expectation that its value will increase, while a 'short' position involves selling an asset or security that the investor does not currently own, with the expectation that its value will decrease.
b) Short selling strategies allow investors to profit from a decline in the price of an asset. Investors may consider short selling to speculate on falling prices, hedge existing positions, or engage in arbitrage opportunities.
c) A put option gives the holder the right, but not the obligation, to sell an underlying asset at a specified price (strike price) within a certain period. A call option, on the other hand, gives the holder the right, but not the obligation, to buy an underlying asset at a specified price (strike price) within a certain period. Put options are commonly used as protection against potential price declines, while call options are often utilized for potential price appreciation or as a means to control an asset without owning it.
d) Leverage, provided through margin lending, can benefit portfolio building and allocation by amplifying potential returns. It allows investors to increase their exposure to an asset or strategy without committing the full capital upfront. By using leverage, investors can potentially enhance their portfolio performance and diversify their investments, although it also comes with increased risk and the potential for larger losses.
e) 'In-the-money' refers to the situation where the price of the underlying asset in an option contract is favorable for the option holder. For a call option, it means the current price of the underlying asset is higher than the strike price. For a put option, it means the current price of the underlying asset is lower than the strike price. In-the-money options typically have intrinsic value and can be exercised profitably if the option holder chooses to do so.
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Martinez Company accumulates the following summary data for the year ending December 31, 2022, for its Water Division, which it operates as a profit center: sales-$1.920,000 budget. $1,996,800 actual; variable costs-$960,000 budget, $1,008,000 actual; and controllable fixed costs-$288,000 budget, $292,800 actual. Prepare a responsibility report for the Water Division for the year ending December 31, 2022.
Water Division Responsibility Report
For the Year Ending December 31, 2022
Sales:
- Budget: $1,920,000
- Actual: $1,996,800
Variable Costs:
- Budget: $960,000
- Actual: $1,008,000
Controllable Fixed Costs:
- Budget: $288,000
- Actual: $292,800
Contribution Margin:
- Actual Sales - Actual Variable Costs
- $1,996,800 - $1,008,000 = $988,800
Controllable Margin:
- Contribution Margin - Actual Controllable Fixed Costs
- $988,800 - $292,800 = $696,000
Explanation:
The Water Division exceeded its sales budget, achieving actual sales of $1,996,800 compared to the budgeted amount of $1,920,000. This indicates a positive performance in generating revenue.
The actual variable costs incurred for the year amounted to $1,008,000, which exceeded the budgeted amount of $960,000. This suggests that the division experienced higher costs in producing and delivering its products.
In terms of controllable fixed costs, the division incurred $292,800, slightly higher than the budgeted amount of $288,000. This indicates a relatively close adherence to the budgeted expenses for controllable fixed costs.
The contribution margin, which represents the amount available to cover fixed costs and contribute to profit, is calculated by subtracting the actual variable costs from the actual sales. In this case, the contribution margin amounts to $988,800.
Finally, the controllable margin, which reflects the amount remaining after covering both variable and controllable fixed costs, is calculated by subtracting the actual controllable fixed costs from the contribution margin. The Water Division achieved a controllable margin of $696,000.
This responsibility report highlights the division's performance in terms of sales, variable costs, controllable fixed costs, contribution margin, and controllable margin for the year ending December 31, 2022.
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Practice with Identifying Assumptions For each of the following research designs, state the identifying assumption and provide one reason for why the assumption might not be valid. a) Regression: To study the effect of school spending on test scores, I run the following regression: where controls for the average family income at school . b) Fixed Effects: To study the effect of years of schooling on wages, I run a regression while adding family fixed effects. That is, I compare future wages between siblings with different levels of educational attainment (this controls for omitted ability bias because siblings are assumed to have similar levels of innate ability on average). c) Differences-in-differences: To study the effect of teacher pay on achievement within a school district, I analyze a group of 20 school districts that increased teacher pay in 2009. I analyze how district performance trended before and after the pay change in 2009, and compare against the trends of school districts that did not increase teacher pay in 2009.
In such a case, the effect of years of schooling on wages would be biased. The identifying assumption of this regression is that there is no omitted variable bias.
a) Regression: To study the effect of school spending on test scores, I run the following regression: Yit = α + βXit + controls for the average family income at school. Identifying assumption: The identifying assumption of this regression is that there is no omitted variable bias. This means that there are no other unobserved factors that affect both school spending and test scores. One reason for why the assumption might not be valid is if there is another variable that affects both school spending and test scores, and which is not included in the regression. In such a case, the effect of school spending on test scores would be overestimated or underestimated.
b) Fixed Effects: To study the effect of years of schooling on wages, I run a regression while adding family fixed effects. That is, I compare future wages between siblings with different levels of educational attainment (this controls for omitted ability bias because siblings are assumed to have similar levels of innate ability on average). Identifying assumption: The identifying assumption of this fixed-effects regression is that there is no time-varying unobserved heterogeneity. That is, the effect of years of schooling on wages is constant across time. One reason for why the assumption might not be valid is if there is a variable that changes over time and affects both years of schooling and wages, and which is not included in the regression. In such a case, the effect of years of schooling on wages would be biased.
c) Differences-in-differences: To study the effect of teacher pay on achievement within a school district, I analyze a group of 20 school districts that increased teacher pay in 2009. I analyze how district performance trended before and after the pay change in 2009, and compare against the trends of school districts that did not increase teacher pay in 2009. Identifying assumption: The identifying assumption of this differences-in-differences design is that there is no unobserved time-varying confounding. That is, the trend of district performance would have been the same in the absence of the teacher pay increase. One reason for why the assumption might not be valid is if there is a factor that affects both district performance and the decision to increase teacher pay, and which changes over time, but is not observed in the data. In such a case, the estimate of the effect of teacher pay on district performance would be biased.
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1. An item costs $ 30 and sells for $ 50. Find the markup and rate of markup based on cost.
8. An item costs $ 80 and has a markup of $ 40. Find the selling price.
3. Find the cost and selling price of a baseball that is marked up $ 20 with a 40 % markup based
on the selling price,
4. Recall the conversion formula from markup rate based on cost to markup rate based on selling
price and use it to find the markup rate based on selling price of a DVD player that is marked
up 50 % based on cast,
5. A bag is priced $ 40 and was reduced $ 20. Find the amount of markdoun.
6, 1 table was bought for 300 and was marked up based 80 % based on the cost, For a promotion,
it was marked down 20 % and then marked doun again 30 %. What was the final reduced
pricel
Markup = Selling Price - Cost Price
Markup = $50 - $30 = $20
Rate of Markup based on Cost = (Markup / Cost Price) * 100
Rate of Markup based on Cost = ($20 / $30) * 100 = 66.67%
Selling Price = Cost Price + Markup
Selling Price = $80 + $40 = $120
Let the selling price of the baseball be SP.
Markup based on Selling Price = 40%
Markup = (Markup rate / 100) * Selling Price
$20 = (40 / 100) * SP
SP = $20 / (40 / 100) = $50
Cost Price = Selling Price - Markup
Cost Price = $50 - $20 = $30
Markup rate based on selling price = (Markup rate based on cost / (100% + Markup rate based on cost)) * 100
Markup rate based on selling price = (50% / (100% + 50%)) * 100
Markup rate based on selling price = (50 / 150) * 100 = 33.33%
Amount of Markdown = Original Price - Reduced Price
Amount of Markdown = $40 - $20 = $20
Initial Marked-up Price = Cost Price + (80% of Cost Price)
Initial Marked-up Price = $300 + (0.8 * $300) = $540
After 20% markdown, Reduced Price = Initial Marked-up Price - (20% of Initial Marked-up Price)
Reduced Price = $540 - (0.2 * $540) = $432
After 30% markdown, Final Reduced Price = Reduced Price - (30% of Reduced Price)
Final Reduced Price = $432 - (0.3 * $432) = $302.40
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The article states that the position of the Business Roundtable, comprised of top CEOs, doesn't, and can't, require how companies do business. Corporate Boards have a legal obligation to protect the interests of Shareholders. That having been said, what are the likely motivations of the leaders of the Business Roundtable & do you believe that addressing the needs of all Stakeholders (including Shareholders) promotes the long-term profitability, viability & sustainability of an organization?
The leaders of the Business Roundtable may have a variety of motivations for endorsing a stakeholder-focused approach to business.
Some may genuinely believe that it is the right thing to do from an ethical or social perspective, while others may be responding to pressure from employees, customers, and other stakeholders who are increasingly demanding that companies take a more holistic view of their impact on society.
At the same time, it is important to recognize that addressing the needs of all stakeholders, including shareholders, can indeed promote the long-term profitability, viability, and sustainability of an organization. This is because a company's success is ultimately dependent on its ability to create value for all of its stakeholders, not just its shareholders.
For example, by investing in employee development and engagement, companies can improve productivity and innovation, leading to higher profits and a stronger competitive position. By reducing their environmental footprint and improving their social impact, companies can enhance their reputation and build stronger relationships with customers and communities, leading to increased loyalty and revenue.
In short, while there may be some tension between the interests of different stakeholders, taking a broader view of business can ultimately benefit everyone involved, including shareholders.
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4. Blue Mamba bed and breakfast uses equity and debt in their capital structure (no preferred). They target \( 32 \% \) as their preferred debt percentage. Their marginal tax rate is \( 25 \% \) and t
Blue Mamba's weighted average cost of capital (WACC) is 8.25%.The cost of debt is the interest rate that Blue Mamba pays on its debt. We are given that the marginal tax rate is 25%,
To calculate WACC, we need to know the cost of debt, the cost of equity, and the percentage of debt in the capital structure.
The cost of debt is the interest rate that Blue Mamba pays on its debt. We are given that the marginal tax rate is 25%, so the after-tax cost of debt is 0.05 * (1 - 0.25) = 0.0375.
The cost of equity is the return that investors expect to receive on their investment in Blue Mamba. We can estimate this using the Capital Asset Pricing Model (CAPM). The CAPM tells us that the cost of equity is equal to the risk-free rate plus a risk premium.
The risk-free rate is the interest rate on a government bond, and the risk premium is a measure of the additional return that investors require for taking on the risk of investing in Blue Mamba.
We are given that the beta of Blue Mamba is 1.25, which means that it is 25% more risky than the market. The market return is 10%, so the risk premium is 10% * 1.25 = 12.5%. The cost of equity is therefore 0.05 + 0.125 = 0.175.
The percentage of debt in the capital structure is 32%.
The WACC is calculated as follows:
WACC = (cost of debt * percentage of debt) + (cost of equity * percentage of equity)
WACC = (0.0375 * 0.32) + (0.175 * 0.68)
WACC = 0.0825
Therefore, Blue Mamba's WACC is 8.25%.
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From January 2005, Australia has adopted the accounting standards issued by the International Accounting Standard Board (IASB). One of the key supporters of this adoption is the Australian Securities Exchange (ASX).
Question:
Why do think that the ASX was keen for Australian companies to adopt the international accounting standards? Provide two justifications to support your answer
The ASX was keen for Australian companies to adopt international accounting standards to promote global comparability and transparency, benefiting investors and stakeholders, and enhance Australia's reputation in the global business community.
The ASX's support for the adoption of international accounting standards by Australian companies can be justified on two grounds. Firstly, international accounting standards promote global comparability and transparency. By aligning with these standards, Australian companies can provide financial statements that are easily comparable to those of international counterparts. This facilitates investment decision-making for domestic and international investors, as they can assess the financial health and performance of Australian companies on a consistent basis. Moreover, global comparability reduces information asymmetry, increases market efficiency, and enhances investor confidence.
Secondly, adopting international accounting standards enhances Australia's reputation in the global business community. By conforming to globally accepted accounting principles, Australian companies demonstrate their commitment to transparency and high-quality financial reporting. This, in turn, attracts foreign investment, as international investors are more likely to trust and engage with companies that adhere to recognized standards. The presence of international investors not only brings capital but also promotes knowledge exchange and innovation, fostering economic growth. Additionally, a positive reputation in the global business community strengthens Australia's position as a desirable destination for trade and business partnerships, creating opportunities for Australian companies to expand their operations internationally.
In conclusion, the ASX's eagerness for Australian companies to adopt international accounting standards is justified by the benefits it brings. These standards promote global comparability and transparency, enabling investors to make informed decisions. Furthermore, adhering to international standards enhances Australia's reputation, attracting foreign investment and fostering economic growth.
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answer please
is the amount required to keep a firm in its current line of production. 2 Points normal profit passive profit supernormal profit abnormal profit sub-normal profit
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The amount required to keep a firm in its current line of production is known as the normal profit. It represents the minimum level of profit necessary for a firm to cover its opportunity cost and remain in business.
Normal profit is an economic concept that refers to the level of profit needed to keep a firm operating in its current line of production. It is often considered as the minimum level of profit necessary for a firm to stay in business in the long run. Normal profit includes the implicit costs of entrepreneurship, such as the opportunity cost of the owner's time and capital invested in the business.
In economic theory, normal profit is different from other types of profit. Passive profit, also known as accounting profit, refers to the actual profit earned by a firm after deducting all explicit costs from its revenue. Supernormal profit, on the other hand, is any profit earned above and beyond the normal profit level. It represents an excess return that goes beyond what is required to keep the firm in its current production line.
Abnormal profit and sub-normal profit are terms that are sometimes used interchangeably with supernormal profit and normal profit, respectively. Abnormal profit refers to profit levels that are higher than the normal profit, while sub-normal profit refers to profit levels that fall below the normal profit.
Overall, the normal profit represents the minimum profit required for a firm to cover all costs and remain viable in its current line of production. It is an important concept in understanding the economic dynamics of businesses and the long-term sustainability of firms.
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Savage Ltd. expects variable manufacturing overhead costs to be $18,100 in the first quarter of 2020 , with $4,400 increments in each of the remaining three quarters. It estimates fixed overhead costs to be $32,600 in each quarter. Prepare the manufacturing overhead budget by quarters for the year.
The manufacturing budget for Savage Ltd. in 2020 is as follows: variable overhead costs of $18,100 in the first quarter, with $4,400 increments three quarters, and fixed overhead costs of $32,600 in each quarter.
To prepare the manufacturing overhead budget for Savage Ltd. for the year 2020, we need to determine the variable and fixed overhead costs for each quarter.
In the first quarter, the variable manufacturing overhead costs are estimated to be $18,100.
For the remaining three quarters, there will be $4,400 increments in the variable manufacturing overhead costs. Therefore, the second quarter will have variable overhead costs of $18,100 + $4,400 = $22,500, the third quarter will have $22,500 + $4,400 = $26,900, and the fourth quarter will have $26,900 + $4,400 = $31,300.
The fixed overhead costs remain constant in each quarter at $32,600.
Therefore, the manufacturing overhead budget for each quarter in 2020 is as follows:
First quarter: Variable overhead costs $18,100, Fixed overhead costs $32,600.
Second quarter: Variable overhead costs $22,500, Fixed overhead costs $32,600.
Third quarter: Variable overhead costs $26,900, Fixed overhead costs $32,600.
Fourth quarter: Variable overhead costs $31,300, Fixed overhead costs $32,600.
By preparing this manufacturing overhead budget, Savage Ltd. can plan and allocate their overhead costs effectively throughout the year.
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calculate the total cost of an item bought at a negotiated price of 17250
The total cost of an item bought at a negotiated price of $17,250 is determined by considering the negotiated price as the final cost of the item. In this scenario, there are no additional costs or discounts involved.
When purchasing an item at a negotiated price, it means that both parties have agreed upon a specific amount to be paid. This negotiated price serves as the final cost without any additional charges. Therefore, in this case, the total cost of the item is equal to the negotiated price of $17,250.
It's important to note that the total cost may vary if there are additional factors involved, such as taxes, shipping fees, or discounts. However, based on the information provided, the negotiated price of $17,250 represents the complete cost of the item.
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Your financial planner at the bank offers you a new investment product that earns interest using the following scheme: - Any amount deposited does not earn interest for the first month it is in the account. - Afterwards, it earns interest at a rate of 0.5% at the end of every odd month (January, March, May, July, September, November), and 1% at the end of every even month (February, April, June, August, October, December). (Note: These rates are not APRs.) You'd like to make three equal deposits of P to the account on October 1, 2022, February 1, 2023, and April 1, 2023. Determine P so that you have exactly $2000 on July 1, 2023 . A Anonymous 41 minutes ago Connect with me at myhomeworkhelp89 on g mail for all your questions. I charge $3 per question and will provide excel sheet with full workings.
To determine the value of P that will result in exactly $2000 on July 1, 2023, we need to calculate the interest earned on each deposit and the total value of the account on the given date.
Let's break down the deposits and interest earned for each month:
October 2022: The deposit does not earn any interest in the first month.
November 2022: The deposit earns interest at a rate of 0.5%.
December 2022: The deposit earns interest at a rate of 1%.
January 2023: The deposit does not earn any interest.
February 2023: The deposit earns interest at a rate of 1%.
March 2023: The deposit earns interest at a rate of 0.5%.
April 2023: The deposit earns interest at a rate of 1%.
Now, let's calculate the value of the account after each deposit:
October 2022: Account value = P
December 2022: Account value = P + (P * 1%)
February 2023: Account value = (P + (P * 1%)) + ((P + (P * 1%)) * 1%)
April 2023: Account value = ((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) + (((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) * 1%)
July 2023: Account value = ((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) + (((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) * 1%)
Given that the account value on July 1, 2023, should be $2000, we can set up the equation:
((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) + (((P + (P * 1%)) + ((P + (P * 1%)) * 1%)) * 1%) = 2000
Solving this equation will give us the value of P that will result in a final account balance of $2000 on July 1, 2023. However, it is important to note that the equation may not have a simple solution and might require numerical methods or approximations to find the exact value of P.
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The CEO of Madge Mansion, Taufik Edrus is interested over Kundang Estate Sdn. Bhd. He found out that Kundang Estate Sdn. Bhd. has a very good business plan and able to grow bigger and worldwide. However, during pandemic covid 19 since December 2019 the value of the company keep on dropping. Taufik Edrus come out with a plan either to merge with the company or acquire the whole business assets. As an advisor to Taufik Edrus, assist him to differentiate between merger and acquisition and describe the advantage and disadvantage of mergers. (b) Jade Hills Corporation currently is looking for a business opportunity which requires an initial outlay of RM100,000. The manager of Jade Hills asks Zaid one of the project managers to find any possible project that Jade Hills able to accomplish. 5/7 After few weeks of searching, Zaid come out with two projects which are located in Puncak Alam and Cyberjaya. The expected cash inflows for Puncak Alam is RM45,000 for 5 years and Cyberjaya is RM62,000 for 3 years. Based on the information given, calculate the following if the required rate of return is 12 percent. i. Payback period. ii. Net present value (NPV). Profitability index. iv. State which location that Jade Hills Corporation should choose. Justify your answer.
A merger is a situation where two companies combine to form a new entity. It involves the mutual agreement and integration of two separate companies to create a single entity with a shared identity and ownership structure.
Cost Savings: Merging can result in economies of scale, leading to cost savings in areas such as production, procurement, marketing, and administration.
Disadvantages of a merger: Acquisition: Acquisition refers to the purchase of one company by another, where the acquiring company gains control over the target company's assets, operations, and management.
Advantages of an acquisition: Cost Savings: Similar to mergers, acquisitions can lead to economies of scale and cost savings in various areas. Disadvantages of an acquisition: Reputational Risks: If an acquisition is perceived negatively by stakeholders.
(b) Calculations for Jade Hills Corporation's project selection:
Project 1: Puncak Alam
Initial Outlay: RM100,000
Expected Cash Inflows: RM45,000 per year (for 5 years)
Project 2: Cyberjaya
Initial Outlay: RM100,000
Expected Cash Inflows: RM62,000 per year (for 3 years)
i. Payback period:
Payback period is the time it takes for the initial investment to be recovered.
Project 1:
Payback period = Initial Outlay / Cash Inflow per year
Payback period = RM100,000 / RM45,000 per year = 2.22 years (rounded to 2 years and 3 months)
Project 2:
Payback period = Initial Outlay / Cash Inflow per year
Payback period = RM100,000 / RM62,000 per year = 1.61 years (rounded to
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Elaborate on the systems theory and highlight why it is suitable in explaining the characteristic of the management environment
Systems theory is suitable for explaining the characteristics of the management environment because it offers a holistic perspective, an interdisciplinary approach, and a focus on feedback, adaptation, and complexity management.
By embracing systems thinking, managers can gain a deeper understanding of the interconnectedness of the organization and its environment, leading to more effective decision-making and improved management practices.
Systems theory is an interdisciplinary approach that examines the interactions and interdependencies between different components of a system. It views organizations as complex systems composed of various elements, such as people, processes, resources, and structures, that work together to achieve specific goals. Systems theory recognizes that these elements are interconnected and that changes in one component can have ripple effects throughout the entire system.
In the context of management, systems theory provides a comprehensive framework for understanding the characteristics of the management environment. Here's why it is suitable:
1. Holistic Perspective: Systems theory emphasizes a holistic perspective, considering the organization as a whole rather than focusing solely on individual parts. It recognizes that the behavior and performance of a system are influenced by the interactions among its components. By understanding the interconnectedness and interdependencies within the management environment, managers can make more informed decisions and develop comprehensive strategies.
2. Interdisciplinary Approach: Systems theory draws from various disciplines, such as biology, physics, engineering, and sociology. This interdisciplinary approach enables managers to analyze and address complex issues from multiple angles, integrating insights from different fields. It encourages managers to consider not only the internal dynamics of the organization but also the external factors and their impact on the system.
3. Feedback and Adaptation: Systems theory highlights the importance of feedback loops and adaptation in managing organizations. It recognizes that organizations exist within larger environments and are subject to external influences and changes. Through feedback mechanisms, managers can monitor the performance of the system, identify deviations, and make necessary adjustments to maintain stability or drive desired changes.
4. Open Systems Perspective: Systems theory views organizations as open systems that interact with their external environment. This perspective acknowledges that organizations are influenced by external factors such as market trends, economic conditions, regulatory frameworks, and social dynamics. By considering the external environment as part of the management system, managers can anticipate and respond to external challenges and opportunities effectively.
5. Complexity Management: As organizations become more complex, systems theory offers tools and concepts to manage this complexity. It provides methods for analyzing system dynamics, identifying bottlenecks, optimizing processes, and understanding emergent properties. By applying systems thinking, managers can navigate the intricacies of the management environment, identify leverage points for improvement, and enhance overall organizational performance.
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Assume that ABC Company uses the earnings approach for revenue recognition. ABC Company sells merchandise on account for $2,400 to XYZ Company. XYZ Company returns $800 (cost $500 ) of merchandise that was damaged, along with a cheque to settle the account. What entry does ABC Company make upon receipt of the cheque? The damaged inventory is sent to recycling. A. Cash. Accounts Receivable. 1,600 B. Cash.. 1,600 Sales Returns and Allowances... 1,568 Accounts Receivable. 832 C. Cash. 1,600 Sales Returns and Allowances.. 800 Accounts Receivable. 2,400 D. Cash. 2,400 Sales Returns and Allowances. 800 Accounts Receivable. 1,600 Choose either A, B, C or D. Input a single alphabet either in lower case or upper case.
The net effect of the transaction on ABC Company's financial statements will be a decrease in sales revenue of $800 and a decrease in cost of goods sold of $500, which results in a decrease in gross profit of $300. The correct answer is option D.
Upon receipt of the cheque, the entry that ABC Company makes is Cash 2,400
Sales Returns and Allowances 800
Accounts Receivable 1,600.
Using the earnings approach for revenue recognition, ABC Company recognizes the revenue upon delivery of goods or services, irrespective of when the payment is made. The transaction between ABC Company and XYZ Company generated a sales revenue of $2,400 ($2,400 sales - $0 returns) for ABC Company.
However, XYZ Company returned $800 of damaged merchandise, which costs $500; hence, ABC Company will have to account for a sales return of $800 and a reduction in cost of goods sold of $500.
The journal entry that ABC Company makes upon receipt of the cheque is:
Cash 2,400
Sales Returns and Allowances 800
Accounts Receivable 1,600
option D is the correct answer.
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Epsilon Remodeling has collected the following data for the next year’s budgeted activity:
Carpenter wages $200,000
Fringe benefits $22,500
Related overhead $17,500
Total estimated construction hours 4,500
Desired Profit margin per hour $22
Supply clerk’s wages & benefits $22,000
Supply Related overhead $20,000
Profit margin on materials 15%
Total estimated material costs $168,000
Based on the above, carpenter hourly charges would be billed at what hourly rate?
The carpenter hourly charges would be billed at approximately $96.27.
To calculate the carpenter hourly rate that would be billed, we need to consider the various costs and profit margins involved. Let's break down the calculation:
Total Labor Costs:
Carpenter wages: $200,000
Fringe benefits: $22,500
Related overhead: $17,500
Total labor costs: $200,000 + $22,500 + $17,500 = $240,000
Total Material Costs:
Total estimated material costs: $168,000
Profit margin on materials: 15%
Profit on materials: 15% of $168,000 = $25,200
Total cost of materials including profit: $168,000 + $25,200 = $193,200
Total Costs:
Total costs: Total labor costs + Total cost of materials including profit
Total costs: $240,000 + $193,200 = $433,200
Desired Profit Margin:
Desired profit margin per hour: $22
Total Estimated Construction Hours: 4,500
Now, we can calculate the hourly rate that would be billed:
Hourly Rate = (Total Costs + Desired Profit) / Total Estimated Construction Hours
Hourly Rate = ($433,200 + $22) / 4,500
Hourly Rate = $433,222 / 4,500
Hourly Rate ≈ $96.27
Therefore, the carpenter hourly charges would be billed at approximately $96.27.
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Calculate the future value of $7,000 in a. 3 years at an interest rate of 7% per year. b. 6 years at an interest rate of 7% per year. c. 3 years at an interest rate of 14% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? a. Calculate the future value of $7,000 in 3 years at an interest rate of 7% per year. The future value of $7,000 in 3 years at an interest rate of 7% per year is $ (Round to the nearest dollar.)
a. To calculate the future value of $7,000 in 3 years at an interest rate of 7% per year, we can use the formula for compound interest:
Future Value = Present Value * (1 + interest rate)^time
Future Value = $7,000 * (1 + 0.07)^3
Future Value = $7,000 * (1.07)^3
Future Value ≈ $7,000 * 1.225043
Future Value ≈ $8,575.30 (rounded to the nearest dollar)
b. To calculate the future value of $7,000 in 6 years at an interest rate of 7% per year, we can use the same formula:
Future Value = Present Value * (1 + interest rate)^time
Future Value = $7,000 * (1 + 0.07)^6
Future Value = $7,000 * (1.07)^6
Future Value ≈ $7,000 * 1.5036301
Future Value ≈ $10,525.41 (rounded to the nearest dollar)
c. To calculate the future value of $7,000 in 3 years at an interest rate of 14% per year, we use the same formula:
Future Value = Present Value * (1 + interest rate)^time
Future Value = $7,000 * (1 + 0.14)^3
Future Value = $7,000 * (1.14)^3
Future Value ≈ $7,000 * 1.488144
Future Value ≈ $10,417.01 (rounded to the nearest dollar)
d. The reason the amount of interest earned in part (a) is less than half the amount of interest earned in part (b) is due to the compounding effect. In part (a), the interest is compounded annually, so the interest earned in each year is added to the initial investment. However, in part (b), the investment is held for a longer period of time, resulting in more compounding periods. The interest is added to the investment not only after 3 years but also for the subsequent years until the end of the 6-year period. This allows for more growth in the investment and, consequently, more interest earned. The longer the investment is held, the more time it has to accumulate interest and benefit from the compounding effect.
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Humongous Bank is the only bank in the economy. The people in this economy have $20 million in money, and they deposit all their money in Humongous Bank.
a. Humongous Bank decides on a policy of holding 100% reserves. Draw a T-account for the bank.
b. Humongous Bank is required to hold 5% of its existing $20 million as reserves, and to loan out the rest. Draw a T-account for the bank after this first round of loans has been made.
c. Assume that Humongous bank is part of a multibank system. How much will money supply increase with that original loan of $19 million?
a. With a policy of holding 100% reserves, Humongous Bank's T-account would show $20 million in reserves and $20 million in deposits.
b. After the first round of loans, the T-account would reflect $1 million in reserves, $19 million in loans, and $20 million in deposits.
c. The original loan of $19 million would increase the money supply by the same amount in a multibank system.
When Humongous Bank holds 100% reserves (a), it means that it keeps all the deposits it receives as reserves. In this case, the bank has $20 million in reserves, which is equal to the total amount of deposits it holds.
In the second scenario (b), the bank is required to hold 5% of its existing $20 million as reserves, which amounts to $1 million. The remaining $19 million can be loaned out to borrowers. Therefore, the bank's reserves decrease to $1 million, while its loans increase to $19 million. The total amount of deposits remains unchanged at $20 million.
In a multibank system (c), when Humongous Bank makes the initial loan of $19 million, it effectively increases the money supply by that amount. This is because the borrowers who receive the loan will have the funds deposited into their accounts, creating new money in the system. Since the initial loan is $19 million, the money supply in the economy would increase by $19 million.
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Which allowable filing status is most advantageous to Samantha? a. Qualifying Widow with Dependent Child b. Single c. Married Filing Separately d. Head of Household
The most beneficial filing status for Samantha is head of household. She is not specified in the question. I assume that she is a single parent who has been living separately from her spouse for more than half of the year in a household with a dependent child.
She may be eligible for head of household status, which is the most beneficial filing status in this scenario.The four filing statuses are as follows: Single: When a person is not married and does not have dependents, he or she files this status. Married Filing Jointly: This is a filing status that can be used when a person is married, files jointly with their spouse, and is required to file a federal tax return.
Married Filing Separately: This filing status is available to married individuals who choose to file separate tax returns instead of jointly. Qualifying Widow or Widower with Dependent Child: A person who is considered a qualifying widow or widower and has a dependent child qualifies for this status. Head of Household: A person who is unmarried, divorced, or separated from their spouse for at least half of the year and has dependents qualifies for this status.
Samantha can benefit from the Head of Household status when she is an unmarried, separated, or divorced single parent with a dependent child living with her for more than half of the year.
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1. A speculator opens a short position in 250 crude oil contracts at a price of 97.15. One month later the speculator closes out the position at a price of 95.42. 3 pts a. What is the speculator's profit/loss? b. What is the return on the speculator's investment? Crude oil futures contracts are 1,000 barrels, are quoted in dollars per barrel, and the initial margin is $9,000 per contract. Soybean futures contracts are 5,000 bushels, are quoted in cents per bushel, and have an initial margin of $4,725. E-mini S&P 500 futures contracts are quoted in S&P 500 index value with a $50 multiplier and have an initial margin of $12,650 per contract. Gold futures contracts are 100 ounces and are quoted in dollars per ounce.
a. To calculate the speculator's profit/loss, we need to determine the difference between the initial position value and the closing position value.
Initial position value = Number of contracts * Contract size * Initial price
Closing position value = Number of contracts * Contract size * Closing price
Profit/Loss = Closing position value - Initial position value
In this case:
Number of contracts = 250
Contract size = 1,000 barrels
Initial price = $97.15
Closing price = $95.42
Initial position value = 250 * 1,000 * $97.15 = $24,287,500
Closing position value = 250 * 1,000 * $95.42 = $23,855,000
Profit/Loss = $23,855,000 - $24,287,500 = -$432,500
Therefore, the speculator's loss is -$432,500.
b. To calculate the return on the speculator's investment, we need to divide the profit/loss by the initial margin and express it as a percentage.
Return on Investment = (Profit/Loss / (Number of contracts * Initial margin)) * 100
In this case:
Number of contracts = 250
Initial margin = $9,000 per contract
Return on Investment = (-$432,500 / (250 * $9,000)) * 100
Return on Investment = -48.06%
Therefore, the speculator's return on investment is -48.06%.
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RWP3-1 (Algo) Great Adventures Continuing Problem [The following information applies to the questions displayed below.] Tony and Suzie graduate from college in May 2024 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes course for outdoor enthusiasts. On July 1, 2024, Tony and Suzie organize their new company as a corporation, Great Adventures Incorporated The articles of incorporation state that the corporation will sell 37,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as co-presidents of the company. The following business activities occur during July for Great Adventures. September 1 To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed for one year, paying $4,560 ( $380 per month) in advance. September 21 Tony and Suzie conduct a rock-climbing clinic. The company receives $15,000 cash. October 17 Tony and suzie conduct an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orient through heavily wooded areas. The company receives $18,900 cash. December 1 Tony and Suzie decide to hold the company's first adventure race on December 15. Four-person teams will race from checkpoint to checkpoint using a combination of mountain biking, kayaki orienteering, trail running, and rock-climbing skills. The first team in each December 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $30 in salary for each team that competes in the race. His salary will be paid after the December 8 The company pays $1,300 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense. December 12 The company purchases racing supplies for $2,800 on account due in 30 days. Supplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and December 15 The company receives $27,600 cash from a total of forty teams, and the race is held. December 16 The company pays victor's salary of $1,200. December 31 The company pays a dividend of $4,100($2,050 to Tony and $2,050 to Suzie). December 31 Using his personal money, Tony purchases a diamond ring for $4,900. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married 1 The following information relates to year-end adjusting entries as of December 31,2024. a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,900. b. Six months' of the one-year insurance policy purchased on July 1 has expired. c. Four months of the one-year rental agreement purchased on September 1 has expired. d. Of the $1,200 of office supplies purchased on July 4,$330 remains. e. Interest expense on the $46,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,800 of racing supplies purchased on December 12,$150 remains. g. Suzie calculates that the company owes $14,900 in income taxes. For the period July 1 to December 31, 2024, prepare an income statement. Complete this question by entering your answers in the tabs below. For the period July 1 to December 31, 2024, prepare a statement of stockholders' equity. All account balances on July 1 were zero. Complete this question by entering your answers in the tabs below.
Income Statement for Great Adventures Incorporated
For the Period July 1 to December 31, 2024
Revenue:
Rock-climbing clinic $15,000
Orienteering clinic 18,900
Adventure race 27,600
Total revenue 61,500
Expenses:
Victor's salary 1,200
State park permit 1,300
Racing supplies 2,650 (2,800 - 150)
Depreciation expense 7,900
Insurance expense 760 (4,560 / 12 x 6 months)
Rent expense 1,520 (4,560 / 12 x 4 months)
Office supplies expense 870 (1,200 - 330)
Interest expense TBD
Income tax expense 14,900
Total expenses 31,100
Net income $30,400
Statement of Stockholders' Equity
For the Period July 1 to December 31, 2024
Common stock:
Shares sold $37,000
Total common stock 37,000
Retained earnings:
Beginning balance -
Net income 30,400
Dividends declared (4,100)
Ending balance 26,300
Total stockholders' equity $63,300
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Income Statement for Great Adventures Incorporated
For the Period July 1 to December 31, 2024
Revenue:
Rock-climbing clinic $15,000
Orienteering clinic 18,900
Adventure race 27,600
Total revenue 61,500
Expenses:
Victor's salary 1,200
State park permit 1,300
Racing supplies 2,650 (2,800 - 150)
Depreciation expense 7,900
Insurance expense 760 (4,560 / 12 x 6 months)
Rent expense 1,520 (4,560 / 12 x 4 months)
Office supplies expense 870 (1,200 - 330)
Interest expense TBD
Income tax expense 14,900
Total expenses 31,100
Net income $30,400
Statement of Stockholders' Equity
For the Period July 1 to December 31, 2024
Common stock:
Shares sold $37,000
Total common stock 37,000
Retained earnings:
Beginning balance -
Net income 30,400
Dividends declared (4,100)
Ending balance 26,300
Total stockholders' equity $63,300
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