1.The total profit will be USD 133,000. 2.If the company does not get the order, there will be no cash inflow. Therefore, the total profit will be zero.3.The total profit will be USD 149,000. 4. There will be no cash inflow. So, the total profit will be zero.
Part 1: To calculate the total profit if the company gets the order and the exchange rate will be USD 1.37 = EUR 1 in one year, we need to consider the cash inflow from the order and the forward contract.
The cash inflow from the order is €100,000. We need to convert this amount to USD using the forward rate of USD 1.33 = EUR 1. So, the cash inflow in USD will be €100,000 * USD 1.33/EUR 1 = USD 133,000.
Therefore, the total profit will be the cash inflow in USD minus the initial cost of the forward contract, which is zero. So, the total profit will be USD 133,000.
Part 2: If the company does not get the order, there will be no cash inflow. Therefore, the total profit will be zero.
Part 3: If the company gets the order and the exchange rate will be USD 1.49 = EUR 1 in one year, we can follow the same calculation as in Part 1. The cash inflow in USD will be €100,000 * USD 1.49/EUR 1 = USD 149,000.
The total profit will be USD 149,000.
Part 4: If the company does not get the order and the exchange rate will be USD 1.49 = EUR 1 in one year, there will be no cash inflow. So, the total profit will be zero.
In summary, the total profit depends on the exchange rate at the end of the year and whether the company gets the order or not. If the order is obtained, the profit will be the cash inflow in USD based on the exchange rate. If the order is not obtained, the profit will be zero as there is no cash inflow.
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How did a cash dividend impact Lowe’s financial position?
On November 2, 2019, Lowe’s Companies, Inc. (NYSE: LOW (Links to an external site.)) paid a cash dividend of $0.35 per share to shareholders of record as of October 19, 2019. The Lowe’s Board of Directors declared this dividend on August 19, 2019.
Assume Lowe’s had 910 million shares of common stock issued and outstanding.
Questions
Name each of the dates related to Lowe’s cash dividend: (a) August 19, 2019; (b) October 19, 2019; and (c) November 2, 2019.
On August 19, 2019, how will Lowe’s assets, liabilities, and stockholders’ equity be impacted by the Board of Directors’ action?
On October 19, 2019, how will Lowe’s assets, liabilities, and stockholders’ equity be impacted by the Board of Directors’ action?
On November 2, 2019, how will Lowe’s assets, liabilities, and stockholders’ equity be impacted by the Board of Directors’ action?
What is the total amount of the cash dividend that Lowe’s will pay related to this announcement?
the declaration of the cash dividend on August 19, 2019, does not immediately impact Lowe's financial position.
(a) August 19, 2019: The date when the Lowe's Board of Directors declared the cash dividend.
(b) October 19, 2019: The date on which shareholders of record were determined for the cash dividend.
(c) November 2, 2019: The date when Lowe's actually paid the cash dividend to its shareholders.
On August 19, 2019, when the Board of Directors declared the cash dividend, there is no immediate impact on Lowe's assets, liabilities, or stockholders' equity. The declaration of the dividend represents a commitment to distribute a portion of the company's earnings to its shareholders in the future. It does not result in any immediate changes to the financial position of the company.
On October 19, 2019, when the shareholders of record were determined, there is still no impact on Lowe's assets, liabilities, or stockholders' equity. This date is relevant for determining which shareholders are entitled to receive the cash dividend, but it does not change the company's financial position.
On November 2, 2019, when Lowe's actually paid the cash dividend, the impact on the company's financial position is as follows:
Assets: The cash balance of Lowe's will decrease by the total amount of the cash dividend paid.
Liabilities: There is no direct impact on liabilities. The payment of a cash dividend does not create or modify the company's obligations to creditors.
Stockholders' Equity: Retained earnings, a component of stockholders' equity, will decrease by the total amount of the cash dividend paid. This reflects the reduction in the company's accumulated profits that are being distributed to shareholders.
The total amount of the cash dividend that Lowe's will pay related to this announcement is calculated by multiplying the cash dividend per share ($0.35) by the number of shares of common stock issued and outstanding (910 million):
Total cash dividend = $0.35 per share * 910 million shares = $318.5 million.
the declaration of the cash dividend on August 19, 2019, does not immediately impact Lowe's financial position. However, when the cash dividend is paid on November 2, 2019, it results in a decrease in cash and retained earnings. This represents a distribution of the company's earnings to its shareholders. The total cash dividend amount related to this announcement is $318.5 million.
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Give examples of 3 government policies or regulations can have a potential impact on this industry (education/community college). Think fiscal and monetary policies, tariffs, standards, etc. Explain how each change in policy may affect the market for your product.
There are several government policies or regulations that can have a potential impact on the education/community college industry. Three of them are given below with an explanation of how each change in policy may affect the market for the product.
Fiscal Policy: Fiscal policy refers to the government's use of taxation and government expenditure to control the economy. The education industry can be affected by fiscal policy in several ways. If the government reduces taxes, it could lead to an increase in disposable income for individuals, and parents may be willing to spend more on education fees for their children.
On the other hand, if taxes are increased, parents may be less willing to spend on education, leading to a decrease in demand for the community college's services. Moreover, if the government increases expenditure in the education sector, it could lead to growth in the industry. For example, if the government provides funds for community colleges, they may be able to offer more courses or reduce fees to attract more students.
Monetary Policy: Monetary policy refers to the government's control over the money supply to stabilize the economy. If the government increases the money supply, it could lead to a decrease in interest rates, making it easier for students to get loans to pay for tuition fees. This, in turn, could increase the demand for the college's services.
Conversely, if the government reduces the money policy, it could lead to an increase in interest rates, making it difficult for students to obtain loans to pay for their tuition fees, and demand for the college's services may decrease.
Tariffs: Tariffs refer to taxes imposed by the government on imported goods. Tariffs can have a direct impact on the education industry because textbooks and educational materials are often imported. If the government imposes high tariffs on imported textbooks, it could increase the cost of producing and delivering courses, leading to an increase in tuition fees for students.
This could lead to a decrease in demand for the community college's services. Conversely, if the government reduces tariffs on imported textbooks, the college may be able to offer courses at a lower fee, leading to an increase in demand for its services.
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Overview
Knowing the expectations involved with maintaining operational sustainability and who is responsible for meeting these expectations is an important part of being an effective practitioner. In this assignment, you will create a guide that can be used throughout this course and in the future to help you better understand the roles, influences, and responsibilities of internal and external stakeholders involved in maintaining ethical business practices related to the triple bottom line (TBL). This assignment will also support you in completing your course project, which is due in Module Seven.
Scenario
You are working on a collaborative project regarding sustainability initiatives. During recent meetings, the group has realized there is a lot of confusion surrounding who is responsible for what regarding regulations, governance, and responsibilities surrounding the new initiatives that are being planned. To help everyone understand the roles and responsibilities of both internal and external stakeholders, you have volunteered to create a brief guide.
Prompt
Use course and external resources to complete the Module Three Assignment Template Word Document, making sure to clearly and concisely identify key stakeholders and their roles, responsibilities, and level of influence in upholding sustainable business operations regarding each aspect of the TBL.
For the purposes of this assignment, you can select one of the following industries to help contextualize your response:
Food service
Office supply
Accounting and finance
Specifically, you must address the following rubric criteria:
Identification: Identify key internal and external stakeholders, groups, and organizations involved in enforcing and maintaining operational sustainability regarding each aspect of the TBL.
Roles: Briefly describe the role of identified internal and external stakeholders, groups, and organizations involved in enforcing and maintaining operational sustainability.
Responsibilities: Briefly describe the responsibilities of identified internal and external stakeholders, groups, and organizations involved in enforcing and maintaining operational sustainability regarding each aspect of the TBL, specifically in regard to their level of responsibility and accountability in the following:
Evaluating or enforcing sustainable operations
Determining which aspects of the TBL framework they support most strongly
Explaining how their responsibilities can help justify prioritizing the TBL
Influence: Briefly describe the level of influence of the identified internal and external stakeholders, groups, and organizations involved in enforcing and maintaining operational sustainability regarding each aspect of the TBL. Make sure to note their ability to make decisions, enforce requirements, and justify prioritizing the TBL for an organization.
Complete this template by replacing the bracketed text with the relevant information. Use the row in italics as an example.
Internal Stakeholders
Internal stakeholders are individuals or groups within an organization who have a direct interest and influence in the operations and decisions related to sustainability.
In the context of the selected industry, which is [food service/office supply/accounting and finance], the key internal stakeholders involved in enforcing and maintaining operational sustainability regarding each aspect of the triple bottom line (TBL) include:
1. Management: Management plays a crucial role in setting the strategic direction and policies related to sustainability. They are responsible for overseeing the implementation of sustainable practices and ensuring compliance with regulations and standards.
Their responsibilities include evaluating and enforcing sustainable operations, determining which aspects of the TBL framework they support most strongly, and justifying the prioritization of the TBL within the organization. Management has a high level of influence and decision-making authority in shaping the organization's sustainability practices.
2. Employees: Employees have a significant impact on operational sustainability. They are responsible for implementing sustainable practices on a day-to-day basis, such as reducing waste, conserving energy, and promoting ethical business practices.
Their responsibilities include actively participating in sustainability initiatives, following established guidelines, and reporting any concerns or suggestions for improvement. While employees may not have the same level of decision-making authority as management, their actions and behaviors can influence the overall success of the organization's sustainability efforts.
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the circular flow model of a mixed economy shows _____
The circular flow model of a mixed economy shows the interdependence and flow of goods, services, and money.
The circular flow model is a simplified representation of the economic transactions that occur in a mixed economy. It illustrates the flow of goods, services, and money between households and firms, highlighting the interdependence and interconnectedness of these entities.
In the circular flow model, households are the primary consumers of goods and services. They supply factors of production, such as labor and capital, to firms in exchange for wages, salaries, and other forms of income. Firms, on the other hand, produce goods and services using the inputs provided by households and sell them to households in exchange for revenue.
The flow of goods and services is accompanied by the flow of money. Households spend their income on goods and services, creating revenue for firms. Firms, in turn, use the revenue to pay for factors of production, such as wages and rent.
The circular flow model also includes the role of the government and the foreign sector. Government intervention through taxation, spending, and regulations affects the flow of money and goods/services. Additionally, the circular flow extends to international trade, where exports and imports play a role in the overall economy.
Overall, the circular flow model provides a visual representation of the interactions and interdependencies among households, firms, government, and the foreign sector in a mixed economy.
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Mister Jones was selling his house. The asking price was $230,000, and Jones decided he would take no less than $196,000. After some negotiation, Mister Smith purchased the house for $215,000. Jones'
The final selling price of Mister Jones' house was $215,000.
During the negotiation process, Mister Jones initially set the asking price for his house at $230,000. However, he had a minimum acceptable price of $196,000 below which he was not willing to sell. After negotiations with Mister Smith, they reached an agreement, and Mister Smith purchased the house for $215,000. This price falls between the asking price and the minimum acceptable price set by Mister Jones. Therefore, the final selling price of the house was $215,000, which both parties agreed upon.
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Explain some of the advantages smaller countries may
have from their participation in international trade
Smaller countries can benefit significantly from their participation in international trade. These advantages include access to larger markets, increased specialization, economies of scale, technology transfer, and diversification of risks.
One key advantage for smaller countries participating in international trade is gaining access to larger markets. By exporting their goods and services to foreign markets, smaller countries can tap into a broader customer base, which can lead to increased sales and revenue. This access to larger markets allows them to expand their production and reach a wider audience.
International trade also enables smaller countries to specialize in the production of goods and services in which they have a comparative advantage. By focusing on producing goods in which they are relatively more efficient, smaller countries can achieve higher levels of productivity and competitiveness. This specialization leads to increased efficiency and can result in lower production costs.
Additionally, participating in international trade allows smaller countries to benefit from economies of scale. When they engage in trade, they can take advantage of producing goods in larger quantities, which often leads to cost savings due to lower per-unit production costs. This can enhance their competitiveness in the global market.
Moreover, international trade facilitates technology transfer for smaller countries. Through trade relationships with technologically advanced nations, smaller countries can acquire new technologies, knowledge, and expertise. This technology transfer can drive innovation, improve productivity, and foster economic growth.
Lastly, international trade helps smaller countries diversify their risks. By expanding their markets beyond domestic boundaries, they become less dependent on a single market or industry. This diversification reduces their vulnerability to economic shocks or disruptions in their domestic market and enhances their resilience to economic fluctuations.
Overall, participation in international trade offers numerous advantages for smaller countries, including access to larger markets, specialization, economies of scale, technology transfer, and risk diversification. These benefits can contribute to their economic growth, development, and overall prosperity.
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Information on Bridgeport Corp., which reports under ASPE, follows: July 1 (a) 3 5 9 Dec. 29 Bridgeport Corp. sold to Ivanhoe Company merchandise having a sales price of $9,200, terms 2/10, n/60. Ignore cost of goods sold entry. Ivanhoe Company returned defective merchandise having a sales price of $600. The merchandise was not saleable and was scrapped. Accounts receivable of $19,800 are factored with Flint Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds and collections are handled by the finance company. Specific accounts receivable of $19,600 (gross) are pledged to Landon Credit Corp. as security for a loan of $ 10,900 at a finance charge of 2% of the loan amount plus 8% interest on the outstanding balance. Bridgeport will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount. Ivanhoe Company notifies Bridgeport that it is bankrupt and will be able to pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. Prepare all necessary journal entries on Bridgeport Corp.'s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)
The journal entries for Bridgeport Corp. based on the given information are as follows:
July 1:
Accounts Receivable (AR) 19,800
Factoring Payable 19,800
To record the factoring of accounts receivable with Flint Corp.
December 29:
Accounts Receivable (AR) 9,200
Sales 9,200
To record the sale of merchandise to Ivanhoe Company.
December 29:
Sales Returns and Allowances 600
AR 600
To record the return of defective merchandise by Ivanhoe Company.
No Entry
There is no entry required for the scrapping of the unsaleable merchandise since it does not involve a financial transaction.
No Entry
There is no entry required for the cash collection of factored accounts receivable since the collections are handled by the finance company.
No Entry
There is no entry required for the pledging of specific accounts receivable as security for the loan from Landon Credit Corp since the collections are still made by Bridgeport Corp.
No Entry
There is no entry required for the bankrupt notification from Ivanhoe Company since it does not involve a financial transaction.
December 29:
Allowance for Doubtful Accounts 920
AR 920
To write off the uncollectible balance of Ivanhoe Company using the allowance method.
Factoring of Accounts Receivable:
Bridgeport Corp. factored the accounts receivable of $19,800 with Flint Corp. This transaction involves the transfer of the accounts receivable to Flint Corp., who will handle the collections and provide financing. The factoring payable account is credited to record the liability created by the factoring arrangement.
Sale of Merchandise:
Bridgeport Corp. made a sale of merchandise to Ivanhoe Company for $9,200. The sales revenue is recorded, and the accounts receivable is debited to reflect the amount owed by Ivanhoe Company.
Return of Defective Merchandise:
Ivanhoe Company returned defective merchandise to Bridgeport Corp. The sales returns and allowances account is credited to reduce the sales revenue, and the accounts receivable is debited to cancel the amount due from Ivanhoe Company.
Scrapping of Unsaleable Merchandise:
The information provided does not mention any financial transaction related to the scrapping of unsaleable merchandise. Therefore, no journal entry is required.
Factored Accounts Receivable Collections:
The information states that cash is received for the proceeds of the factored accounts receivable, and the collections are handled by the finance company. Since the collections are not recorded by Bridgeport Corp., no journal entry is required.
Pledging of Specific Accounts Receivable:
Specific accounts receivable are pledged to Landon Credit Corp. as security for a loan. However, Bridgeport Corp. continues to make the collections. Since the collections are still recorded by Bridgeport Corp., no journal entry is required.
Bankrupt Notification:
Ivanhoe Company notifies Bridgeport Corp. of its bankruptcy and its inability to pay the full amount owed. This notification does not involve a financial transaction and, therefore, no journal entry is required.
Write-off of Uncollectible Balance:
Based on Ivanhoe Company's bankruptcy notification and its ability to pay only 10% of the account, Bridgeport Corp. needs to write off the uncollectible balance. The allowance for doubtful accounts is credited to reduce the accounts receivable balance, and the accounts receivable is debited to remove the uncollectible amount.
The provided information allowed us to determine the necessary journal entries for Bridgeport Corp. based on various transactions, such as factoring of accounts receivable, sale of merchandise, return of defective merchandise, and the write-off of an uncollectible balance using the allowance method. By following the guidelines and considering the specific details of each transaction, the appropriate journal entries were recorded to accurately reflect the financial activities of Bridgeport Corp.
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More info a. Depreciation, $400. b. Prepaid rent expires, $900. c. Interest expense accrued, $800. d. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $13,000. e. Unearned revenue earned, \$1,200. f. Office supplies used, $450. The following data at July 31,2024 , are given for KTR: (Click the icon to view the data.) Read the requirements. Requirement 1. Journalize the adjusting entries needed on July 31, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) a. Depreciation, $400. Requirements 1. Journalize the adjusting entries needed on July 31, 2024. 2. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
The overall understatement of net income as a result of the omission of these adjustments is 1,200 + 450 + 400 + 800 = 2,850.
Requirement 1:
Journalize the adjusting entries needed on July 31, 2024a.
Depreciation, 400
.Account Title/Explanation Debit Credit
Depreciation expense 400
Accumulated depreciation—Furniture and fixtures 400b.
Prepaid rent expires, 900.
Account Title/Explanation Debit
Credit Rent expense 900
Prepaid rent 900c.
Interest expense accrued, 800.
Account Title/Explanation Debit
Credit Interest expense 800
Interest payable 800d.
Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, 13,000.
Account Title/Explanation Debit
Credit Salaries and wages expense 10,400
Salaries and wages payable 10,400(13,000 ÷ 5 days × 4 days)e.
Unearned revenue earned, 1,200.
Account Title/Explanation Debit Credit
Unearned revenue 1,200
Revenue 1,200f.
Office supplies used, 450.
Account Title/Explanation Debit Credit Office supplies expense 450 Office supplies 450 Requirement 2
Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
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Choose the target word that best collocates with each group of words below. implicate levy liberal reside violate 1. liberal : quantity, serving, portion, 2. : a fine, a tariff, a surcharge, a(n) 3. : in a vicinity, in a neighborhood, in a home, at a(n) 4. : in a wrongdoing, in a scandal, in an offense, in a(n) 5. : the law, standards, a promise, a(n)
Answer:
1. liberal: portion
2. levy: a fine
3. reside: in a neighborhood
4. implicate: in a wrongdoing
5. violate: the law
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Explanation:
Oceanic Company has 25,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $20 par common stock. The following amounts were distributed as dividends:
20Y1 $225,000
20Y2 90,000
20Y3 337,500
Determine the dividends per share for preferred and common stock for each year.
Dividends per share for preferred and common stock for each year:
- 20Y1:
- Preferred stock: $9 per share
- Common stock: $0 per share
- 20Y2:
- Preferred stock: $3.6 per share
- Common stock: $0 per share
- 20Y3:
- Preferred stock: $13.5 per share
- Common stock: $6.75 per share
To determine the dividends per share for preferred and common stock, we need to divide the total dividends distributed by the respective number of shares.
- 20Y1: Dividends per share = $225,000 / 25,000 shares = $9 per share
- 20Y2: Dividends per share = $90,000 / 25,000 shares = $3.6 per share
- 20Y3: Dividends per share = $337,500 / 25,000 shares = $13.5 per share
For common stock dividends:
Since the preferred stock is cumulative, it receives dividends before the common stock. If the preferred stock dividends are not fully paid in a particular year, the remaining amount is carried forward to subsequent years. In this case, the preferred stock dividends were fully paid in all years, so there were no dividends available for the common stock.
Therefore, the dividends per share for the common stock are $0 per share for all years.
Oceanic Company paid dividends to its preferred stockholders in each year. The dividends per share for preferred stock were $9 in 20Y1, $3.6 in 20Y2, and $13.5 in 20Y3. However, no dividends were available for the common stockholders in any of the years.
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When a pure pubic good is conaumed a. this exciudes other people from the consumption of the good b. it does not reduce the avzilability of the good to be consumed by others and it does not prevent others from consuming to c. there will be less for others to consume d. the overall supply of the good increases
When a pure public good is consumed it does not reduce the availability of the good to be consumed by others and it does not prevent others from consuming it. A pure public good is characterized by two key characteristics: non-excludability and non-rivalry. The correct option is b.
Pure public goods are non-excludable, meaning that people cannot be stopped from using them. Furthermore, because it is non-rivalrous, one person's use of the good does not affect how much is left for other people to eat. The right response is that using a pure public good does not make it less accessible to others or stop them from using it.
Thus, the ideal selection is option b.
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You pay $500,000 for the rights to run a hotel, agreeing to a 25 year operating contract for which you receive $60,000 each year. If your required return is 6.25%, what is the PI this project?
1.2786
0.2786.
2.0000
0.4982
You pay $500,000 for the rights to run a hotel, agreeing to a 25 year operating contract for which you receive $60,000 each year. If your required return is 6.25%. The project's profitability index (PI) is 1.2786.
The profitability index (PI) is a measure of the profitability of an investment project. It is calculated by dividing the present value of future cash flows by the initial investment.
To calculate the present value of future cash flows, we need to discount the annual cash flow of $60,000 for 25 years using the required return of 6.25%. The formula to calculate PI is:
PI = Present value of future cash flows / Initial investment
Calculating the present value of future cash flows:
PV = $60,000 / (1 + 0.0625)^1 + $60,000 / (1 + 0.0625)^2 + ... + $60,000 / (1 + 0.0625)^25
PV = $1,460,415.68
Calculating the PI:
PI = PV / Initial investment
PI = $1,460,415.68 / $500,000
PI = 1.2786
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The confidence index is based on the difference between the yields on 3 month Treasury bills and the 10 Treasury bond. O True False
True. The given statement "The confidence index is based on the difference between the yields on 3 month Treasury bills and the 10 Treasury bond" is true.
The confidence index is a quantitative measure of consumer confidence in the economy. It is an indicator of the future state of the economy and is based on the difference between the yields on 3-month Treasury bills and the 10-year Treasury bond. A high confidence index indicates that investors are optimistic about the economy's future and are more willing to invest in stocks and other assets.
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Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock A Stock B
Recession 0.18 0.07 ? 0.18
Normal 0.55 0.10 0.11
Boom 0.27 0.15 0.28
Calculate the expected return for the two stocks. (Round your answers to 2 decimal places. (e.g., 32.16))
Expected return
Stock A
%
Stock B
%
Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Standard deviation
Stock A
%
Stock B
%
help and show work if possible
The expected returns for the two stocks are as follows:Expected return of Stock A = 10.55%Expected return of Stock B = 2.07%. The standard deviation for the two stocks are as follows:Standard deviation of Stock A = 0.93%Standard deviation of Stock B = 20.70%
The calculation of the expected return for two stocks and their standard deviation is given below.State of Probability of Stock A Stock BRecession 0.18 0.07 ? 0.18Normal 0.55 0.10 0.11Boom 0.27 0.15 0.28Expected return:The expected return is calculated using the formula below:Expected Return = Sum of (Probability * Rate of return) for all outcomesTherefore,Expected return of Stock A = (0.18 * 0.07) + (0.55 * 0.10) + (0.27 * 0.15)Expected return of Stock A = 0.01 + 0.055 + 0.0405Expected return of Stock A = 0.1055 or 10.55%Expected return of Stock B = (0.18 * x) + (0.55 * 0.11) + (0.27 * 0.28)Expected return of Stock B = 0.18x + 0.0605 + 0.0756Expected return of Stock B = 0.18x + 0.1361To calculate x, use the fact that the sum of probabilities must be equal to 1.0.
Therefore,0.18 + 0.55 + 0.27 = 1.00So, the expected return of Stock B can be calculated as follows:Expected return of Stock B = 0.18x + 0.1361 = 0.1568x = 0.1568 - 0.1361x = 0.0207Expected return of Stock B = 0.0207 or 2.07%Therefore, the expected returns for the two stocks are as follows:Expected return of Stock A = 10.55%Expected return of Stock B = 2.07%.
Standard Deviation:Formula to calculate standard deviation is given as follows:Standard deviation = SQRT[ Σ ( xi - μ )2 / N ]where,μ = Expected returnTo calculate the standard deviation for Stock A, use the formula below:Standard deviation of Stock A = SQRT [ (0.18 * (0.07 - 0.1055)2) + (0.55 * (0.10 - 0.1055)2) + (0.27 * (0.15 - 0.1055)2) ]Standard deviation of Stock A = SQRT [ 0.0000280825 + 0.00000225025 + 0.00005632025 ]Standard deviation of Stock A = SQRT [ 0.000086652 ]Standard deviation of Stock A = 0.00931 or 0.93%To calculate the standard deviation for Stock B, use the formula below:
Standard deviation of Stock B = SQRT [ (0.18 * (0.0207 - 0.0207)2) + (0.55 * (0.11 - 0.0207)2) + (0.27 * (0.28 - 0.0207)2) ]Standard deviation of Stock B = SQRT [ 0.0000072285 + 0.00356720325 + 0.03932040145 ]Standard deviation of Stock B = SQRT [ 0.0428948322 ]Standard deviation of Stock B = 0.2070 or 20.70%Therefore, the standard deviation for the two stocks are as follows:Standard deviation of Stock A = 0.93%Standard deviation of Stock B = 20.70%
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Assume an interest rate of 6 percent. The amount of money you have to deposit today is $ (Round to the nearest cent.)
To calculate the amount of money you need to deposit today, we require additional information such as the desired future value or the time period for which the deposit will be made.
With that information, we can use the present value formula to determine the present value of a future sum of money.The present value formula is given as:Present Value = Future Value / (1 + r)^nWhere:Present Value is the amount of money you need to deposit todayFuture Value is the desired future sum of moneyr is the interest rate (expressed as a decimal)n is the number of periodsPlease provide the desired future value and the time period for which the deposit will be made so that I can assist you in calculating the required deposit accurately.
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Write a paper setting out the difference between silo based risk management and enterprise wide risk management, together with the steps required to move from the former to the latter and the benefits of operating such a system?
Silo-based risk management refers to managing risks within individual departments or divisions of an organization, while enterprise-wide risk management involves a holistic approach to identify and mitigate risks across the entire organization.
To transition from silo-based to enterprise-wide risk management, the following steps can be taken:
1. Establish a risk management framework: Develop a comprehensive framework that outlines the objectives, scope, roles, and responsibilities of risk management within the organization.
2. Identify and assess risks: Conduct a thorough risk assessment to identify and analyze potential risks across different areas of the organization, considering both internal and external factors.
3. Develop risk mitigation strategies: Create strategies to mitigate identified risks, ensuring they align with the organization's overall objectives and risk tolerance.
4. Implement risk management processes: Integrate risk management practices into daily operations, such as regular monitoring, reporting, and reviewing of risks.
5. Foster a risk-aware culture: Promote a culture of risk awareness and encourage employees at all levels to actively participate in risk management activities.
The benefits of operating an enterprise-wide risk management system include improved decision-making, enhanced risk awareness, increased operational efficiency, better resource allocation, and reduced overall organizational risk exposure.
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A firm had the following accounts and financial data for 2005: Sales revenue $3,060 Accounts receivable $500 Interest expense $126 Total operating expenses $600 Accounts payable $240 Cost of goods sold $1,800 Preferred stock dividends $18 Tax rate 40% Number of common shares outstanding 1,000 The firm's earnings per share, rounded to the nearest cent, for 2005 was _____.
a. $0.5335
b. $0.5125
c. $0.3204
d. $0.3024
Rounded to the nearest cent, the firm's earnings per share for 2005 is -$0.71. Therefore, the correct answer is none of the provided options.
To calculate the firm's earnings per share (EPS) for 2005, we need to use the formula:
EPS = (Net Income - Preferred Stock Dividends) / Number of Common Shares Outstanding
Let's calculate the components of the formula:
Net Income = Sales Revenue - Cost of Goods Sold - Total Operating Expenses - Interest Expense - Taxes
Net Income = $3,060 - $1,800 - $600 - $126 - (40% * $3,060)
First, calculate the tax amount:
Tax Amount = 40% * $3,060 = $1,224
Now, calculate the net income:
Net Income = $3,060 - $1,800 - $600 - $126 - $1,224 = $-690
Preferred Stock Dividends = $18
Number of Common Shares Outstanding = 1,000
Now, we can calculate the EPS:
EPS = ($-690 - $18) / 1,000
EPS = -$708 / 1,000
EPS = -$0.708
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Calculate the current price of a $1,000 par value bond that has a coupon rate of 7 percent, pays coupon interest annually, has 12 years remaining to maturity, and has a current yield to maturity (discount rate) of 13 percent. (Round your answer to 2 decimal places and record without dollar sign or commas). Your Answer
The current price of a $1,000 par value bond that has a coupon rate of 7%, pays coupon interest annually, has 12 years remaining to maturity, and has a current yield to maturity (discount rate) of 13% can be calculated as follows:First, determine the annual coupon payment:Annual coupon payment = Coupon rate * Par value= 7% * $1,000= $70.
Next, calculate the present value of the bond by discounting the future cash flows:Present value of bond = PV of annual coupon payments + PV of par value; PV of annual coupon payments = Annual coupon payment / (1 + Discount rate)n, where n is the number of years remaining to maturity; PV of annual coupon payments = $70 / (1 + 0.13)¹²PV of annual coupon payments = $70 / 5.8547 = $11.96
PV of par value = Par value / (1 + Discount rate)n, where n is the number of years remaining to maturityPV of par value = $1,000 / (1 + 0.13)¹² PV of par value = $1,000 / 5.8547 = $170.80. Present value of bond = PV of annual coupon payments + PV of par value. Present value of bond = $11.96 + $170.80 = $182.76. Therefore, the current price of the $1,000 par value bond is $182.76 (rounded to 2 decimal places).
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Which of the following transactions does NOT decrease cash? A)
Stock splits B) Stock retirements C) Cash dividends D) Treasury
stock purchases
Option A). Stock Splits is the transaction that does not decrease cash.
The transaction that does NOT decrease cash is stock splits.A stock split is an increase in a corporation's total number of shares available by dividing each share of the company's stock into two or more pieces. The company's outstanding shares are increased by this split, and the price per share is reduced in proportion to the number of new shares issued for each old share.
The total value of each investor's shares remains the same. Here are the choices:A) Stock splits B) Stock retirements C) Cash dividends D) Treasury stock purchases From the choices given, Stock Splits is the transaction that does not decrease cash.
When a stock split occurs, the company's total number of shares outstanding increases, but the value of each share decreases proportionally, so there is no effect on cash.A corporation's own stock, also known as Treasury stock, is stock that has been bought back by the issuing company and is now being held in its treasury.
Cash dividends are a distribution of a portion of the company's earnings to shareholders, which are made in cash instead of stocks.Stock retirement is a term used to describe a situation in which a company buys back its shares and cancels them, resulting in a reduction in the number of shares outstanding.
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State whether each of the following statements is TRUE or FALSE.
1. In the past few centuries, choices have led to a substantial decline in the standards of living around the globe.
2. Using assumptions to make things simpler and focus attention on what really matters is like using a road map to plan a trip.
3. A key assumption of most economic analysis is that people act rationally, meaning they respond to incentives.
4. The opportunity cost of something is the nominal price paid for the product.
5. Governments sometimes create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price ceiling.
6. If the price of apples increases by 10% and quantity demanded falls by 20%, then the price elasticity of demand for apples is 0.5.
7. By definition, an economy experiences inflation when the aggregate compensation to employees is rising
8. If a 15% increase in income results in a 30% fall in the demand for a good, then other things equal, this good is an inferior good.
9. A market characterised by easy entry and exit, many sellers and differentiated products is perfectly competitive.
10. Real GDP is expressed as a relative value, that is, it has to be expressed as a comparison to the value in another year, called the base year.
1. FALSE - Choices have actually led to an increase in standards of living globally over the past few centuries.
2. TRUE - Using assumptions helps simplify complex situations and focus on what is important, similar to using a road map to plan a trip.
3. TRUE - Most economic analysis assumes that people act rationally and respond to incentives.
4. FALSE - The opportunity cost of something is not the nominal price paid for the product, but rather the value of the next best alternative that is given up.
5. TRUE - When governments set a maximum price below the equilibrium price, it creates an excess demand known as a price ceiling.
6. FALSE - If the price of apples increases by 10% and quantity demanded falls by 20%, then the price elasticity of demand for apples is 2.
7. TRUE - Inflation occurs when the aggregate compensation to employees is rising.
8. TRUE - If a 15% increase in income results in a 30% fall in the demand for a good, then the good is considered an inferior good.
9. TRUE - A market characterized by easy entry and exit, many sellers, and differentiated products is a perfectly competitive market.
10. FALSE - Real GDP is not expressed as a relative value or compared to a base year. It is a measure of economic output adjusted for inflation.
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on Time left 1:17:06 Case 4 Terry is thinking of opening up a food truck that creates unique salads. He can purchase the truck for $280,000 and can sell each salad for $6. He has calculated the average variable cost of creating one dazen salads to be $41.40. What is the average variable cost per perogy? Oa. $41.40 Ob. $.45 Oc. $3.45 Od. $6.00 What are the total fixed costs (TFC)? Oa. $6.00 Ob. $41.40 Oc. $280,000 Od. $300,000 What is the breakeven quantity? Oa. 109,804 Ob. 6,763 Oc. 46,667 Od. 81,159 TO MYNAIT If Terry wants a profit of $45,000, what is the breakeven quantity he must sell? Oa. 54,167 Ob. 17,647 Oc. 127,451 Od. 109,804 At the breakeven quantity without profit, what is the total revenue? Oa. $127,451 Ob. $658,824 Oc. $40,578 Od. $280,000 K Time left 1:16:51
The average variable cost per salad is $3.45. The total fixed costs are $280,000. The breakeven quantity is 46,667 salads.
The average variable cost per salad is calculated by dividing the total variable cost by the number of salads, which is 41.4 / 12 = $3.45. The total fixed costs are the cost of purchasing the food truck, which is $280,000. The breakeven quantity is the number of salads that must be sold in order to cover the total fixed costs, which is calculated by dividing the total fixed costs by the profit margin per salad, which is 280,000 / 6 = 46,667 salads.
**To achieve a profit of $45,000, Terry must sell 127,451 salads.**
The profit margin per salad is calculated by subtracting the average variable cost from the selling price, which is 6 - 3.45 = $2.55. The number of salads that must be sold to achieve a profit of $45,000 is calculated by dividing the desired profit by the profit margin per salad, which is 45,000 / 2.55 = 17,647 salads.
**At the breakeven quantity, the total revenue is $658,824.**
The total revenue at the breakeven quantity is calculated by multiplying the breakeven quantity by the selling price per salad, which is 46,667 * 6 = $280,000 + $279,992 = $658,824.
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Security Standar Deviation Beta
A .3945 0.99
B .3103 1.25
C .1469 1.17
D .2711 1.05
Which security has the most systematic risk?
a. C
b. A
c. B
d. D
The security with the most systematic risk is the one with the highest beta coefficient. In this case, the security with the highest beta coefficient is C.1469 1.17. The correct answer is: a. C
The beta coefficient is a measure of systematic risk, which represents the sensitivity of a security's returns to the overall market movements. A higher beta indicates that the security tends to move more in line with the market, reflecting greater systematic risk.
Looking at the given options, security C has a beta coefficient of 1.17, which is higher than the beta coefficients of the other securities. This means that security C is more responsive to market movements and is likely to experience larger fluctuations in price compared to the others. Therefore, security C has the most systematic risk among the given options.
In comparison, securities A, B, and D have lower beta coefficients, indicating relatively lower systematic risk and potentially less sensitivity to market movements.
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Max created a new app that allows business owners to rent office space by the hour. The app becomes a success as companies like the idea of being able to rent space only when they need it and not having to sign up for a long term lease. Max’s app grows in popularity and success. He incorporated a company, gets 10 directors to sit on the board and makes himself C.E.O. He makes it the company vision to be able to rent office space on every city on the planet by 2025.
Max buys a corporate private jet to allow him to travel to any city at any time. He also buyer 12 luxury homes across the globe that he uses instead of staying in hotels. All the homes cost 46 million dollars. Max also buys a helicopter that he regularly uses for private transportation.
While Max is making these purchases the company profit continue to grow as the company app is becoming used more and more across the globe. An investment bank in China starts discussing the possibility of doing an initial public offering. Max is convinced that his methods are working.
Some analyst in the company start to raise the concern that the company cannot continue to grow at this rate. That eventually things will start to turn downwards and if that happens the company will not be able to meet its current expenses. When the board of directors hear this they start to become concerned.
5 of the board of directors start to try and implement cost cutting measures in the company. Particularly they want to scale back on the expensive lifestyle that Max is living on the company dollar. Arguing that if things do slow down the company will go bankrupt. 5 of the board of directors push back on the cost cutting method stating that any cuts in cost would stifle the brilliant work that Max is doing and will result in the company not functioning the way it would, which has been successful. The 5 directors trying to save money sue the 5 directors that will not cut cost stating that they are breaching their fiduciary duties by believing that business will always be good.
The plaintiffs will represent the 5 cost cutting directors. The defendants will represent the 5 directors against cost cutting measures
The plaintiffs argue that the defendants are breaching their fiduciary duties by refusing to implement cost-cutting measures to prepare for potential downturns in the company's growth.
The plaintiffs, who represent the 5 directors advocating for cost-cutting measures, believe that it is their fiduciary duty to act in the best interests of the company and its shareholders. They argue that by scaling back on Max's expensive lifestyle and reducing unnecessary expenses, the company can build a financial cushion to mitigate potential risks and ensure long-term sustainability.
They assert that failing to do so could lead to bankruptcy if the company's growth slows down or if unforeseen challenges arise. On the other hand, the defendants, representing the 5 directors opposing cost-cutting, contend that Max's extravagant lifestyle and the company's current trajectory have been key factors in its success.
They believe that any cuts in expenses would hinder Max's ability to continue his brilliant work and could compromise the company's unique selling proposition. The defendants argue that their stance aligns with the company's vision and that by maintaining the current approach, the company will continue to thrive.
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Suppose there are two options for dining out in Pleasanton; Gio's Pizza and Taco Jalisco. If you have a dining out budget of $180/month and a dinner at Gio's Pizza costs $15 and $20 at Taco Jalisco, depict your dining budget constraint. a. What is the opportunity cost of Gio's Pizza in terms of Taco Jalisco? b. What is the opportunity cost of Taco Jalisco in terms of Gio's Pizza? c. In your graph, depict a change in the budget constraint that occurs if the cost of Gio's. Pizza increases to $18 per dinner. d. What are the new opportunity costs?
With a $180/month budget, you can have up to 12 dinners at Gio's Pizza ($15/dinner) and 9 dinners at Taco Jalisco ($20/dinner).
To depict the dining budget constraint, we can create a graph with the number of dinners on the x-axis and the amount spent on dining out on the y-axis. With a budget of $180/month, we can divide it equally between Gio's Pizza and Taco Jalisco or allocate it differently depending on the prices.
For Gio's Pizza, each dinner costs $15. So, if we spend the entire budget on Gio's Pizza, we can have $180/$15 = 12 dinners. This gives us the point (12, $180) on the graph.
For Taco Jalisco, each dinner costs $20. So, if we spend the entire budget on Taco Jalisco, we can have $180/$20 = 9 dinners. This gives us the point (9, $180) on the graph.
Connecting these two points, we get the budget constraint line that represents the maximum number of dinners we can have at each restaurant given the budget.
a. The opportunity cost of Gio's Pizza in terms of Taco Jalisco is the number of dinners at Taco Jalisco that we have to give up to have one more dinner at Gio's Pizza. In this case, it is 1 dinner at Taco Jalisco, as the price of Gio's Pizza is $15 and Taco Jalisco is $20.
b. The opportunity cost of Taco Jalisco in terms of Gio's Pizza is the number of dinners at Gio's Pizza that we have to give up to have one more dinner at Taco Jalisco. In this case, it is 1.2 dinners at Gio's Pizza, as the price of Taco Jalisco is $20 and Gio's Pizza is $15.
c. If the cost of Gio's Pizza increases to $18 per dinner, the new budget constraint line will change. Now, with a budget of $180/month, we can have $180/$18 = 10 dinners at Gio's Pizza, which gives us the point (10, $180) on the graph. The point (9, $180) representing Taco Jalisco remains the same.
d. The new opportunity costs are as follows:
The opportunity cost of Gio's Pizza in terms of Taco Jalisco remains 1 dinner at Taco Jalisco.
The opportunity cost of Taco Jalisco in terms of Gio's Pizza remains 1.2 dinners at Gio's Pizza.
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You need to assign 2 engineers
to 2 subsidiary offices located in Vietnam and Italy. Your
engineers are from Mexico and China.
Decide which engineer will be
assigned to which country (office). Discuss
When deciding which engineer to assign to each subsidiary office in Vietnam and Italy, several factors should be considered:
1. Language Skills: Language proficiency is an essential factor when considering international assignments. If one of the engineers has fluency or a good command of the Vietnamese language, it would be beneficial to assign them to the subsidiary office in Vietnam. Similarly, if one of the engineers has proficiency in Italian, they would be a suitable choice for the subsidiary office in Italy.
2. Cultural Understanding: Cultural awareness and understanding are crucial when working in foreign environments. If one of the engineers has previous experience or knowledge of the Vietnamese or Italian culture, they may be better suited for the respective subsidiary office. This can help with effective communication and adaptation to the local work culture.
3. Technical Skills and Expertise: Assess the technical skills and expertise of each engineer and match them with the specific requirements of the subsidiary offices. Consider the projects, tasks, or responsibilities that the engineers will handle in each location and align them with the engineers' strengths and experience. Assign the engineer with the most relevant skills to the office that requires those skills the most.
4. Flexibility and Adaptability: Consider the engineer's adaptability and willingness to work in different cultural and professional environments. Some individuals may be more open-minded and adaptable to new experiences, which can make the transition to a foreign subsidiary office smoother.
5. Personal Preferences and Career Development: Take into account the personal preferences and career aspirations of the engineers. Engage in discussions with them to understand their interests and goals. If one engineer expresses a particular interest in working in a specific country or has career aspirations aligned with a particular market, it may be worth considering those preferences when making the assignment.
It's important to note that these factors are general guidelines, and the final decision should be made based on a comprehensive assessment of the engineers' skills, qualifications, and personal circumstances. Open communication with the engineers and considering their input can also contribute to a more successful and satisfactory assignment.
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If you are to use ‘sound logic and analysis’ in your management career, describe and
summarize four ‘guidelines for evaluating management ideas and knowledge’. Does your
current job allow you to practice these guidelines or experiment with ideas?
However, it is important for management professionals to incorporate these principles into their work to enhance decision-making and drive organizational success.
To use sound logic and analysis in your management career, there are four guidelines for evaluating management ideas and knowledge:
1. Critical Thinking: This involves examining ideas and knowledge objectively, questioning assumptions, and considering multiple perspectives. Analyze the evidence, identify any biases, and evaluate the credibility of the sources. Apply logical reasoning to assess the validity and reliability of management ideas.
2. Research and Data Analysis: Gather relevant data and conduct research to support or refute management ideas. Utilize quantitative and qualitative analysis methods to evaluate the effectiveness and feasibility of these ideas. Use statistical tools and techniques to interpret data and draw conclusions.
3. Peer Review and Collaboration: Seek feedback and input from colleagues, mentors, and experts in the field. Engage in discussions and exchange ideas to refine and validate management concepts. Collaborate on projects and encourage a culture of constructive criticism to improve decision-making.
4. Experimentation and Continuous Improvement: Test management ideas through pilot programs or controlled experiments. Monitor and measure the outcomes, collect feedback, and make necessary adjustments. Embrace a growth mindset and foster a learning environment that encourages innovation and the exploration of new ideas.
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Which of the following is an advantage of a strong culture?
a) It makes merging with another organization simpler.
b) It allows employees to identify themselves with the organization
c) It can be "too much of a good thing" if it creates extreme behaviors.
d) It makes adapting to the environment less difficult.
e) It attracts and retains similar kinds of employees.
Among the options provided, the advantage of a strong culture is that it allows employees to identify themselves with the organization (option b).
The advantage of a strong culture is that it allows employees to identify themselves with the organization, fostering a sense of belonging, commitment, and engagement.
Among the options provided, the advantage of a strong culture is that it allows employees to identify themselves with the organization (option b). A strong culture creates a shared set of values, beliefs, and norms within an organization, which fosters a sense of belonging and identity among employees. This can lead to higher levels of employee engagement, motivation, and commitment.
When employees identify themselves with the organization, they are more likely to align their behaviors and actions with its goals and values. This promotes a cohesive work environment and enhances teamwork and collaboration. Moreover, employees who identify with the organization are more likely to stay with the company for a longer period, reducing turnover rates and associated costs.
While the other options may have their merits, they are not specific advantages of a strong culture. Option a (making merging simpler) and option d (making adapting to the environment less difficult) could be advantages in some cases, but they are not directly related to a strong culture. Option c (extreme behaviors) highlights a potential drawback of a strong culture, and option e (attracting and retaining similar employees) is not an inherent advantage of a strong culture but rather a potential consequence.
In conclusion, the advantage of a strong culture is that it allows employees to identify themselves with the organization, fostering a sense of belonging, commitment, and engagement.
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Suppose the following:
I. Two countries each with demand for homogeneous goods given by P()=40−
II. In country A there is one firm with marginal cost of production of .
III. In country B there is one firm with marginal cost of production of .
IV. Competition in relevant markets is Cournot
a) Find for each country expressions for the equilibrium price and equilibrium quantity and firm profits under the assumption that no occurred between the two countries occurred. b) Now assume a state of free trade occurs between the two countries. Derive expressions for each firm’s quantity supplied and country A’s imports.
c) Assuming that =10 and =8. Which Country stands to benefit by imposing k2 per unit tariff on imports? By how much would total surplus increase? Who gains and who Loses and by how much?
Given the constant elasticity demand function as : P=P ℎ ℎ cy o m
a. Show that Marginal Revenue of this function is proportional to the price (let K=(1)1⁄ ). To simplify the equation.
b. calculate the Marginal Revenue when P==−2 and when b=-10.
c. what does your answer mean in terms of revenue facing the firm?
d. If =− what would this imply for Marginal Revenue and Total Revenue of the firm.
e. Explain how Marginal Revenue and profit maximization would be affected if demand was inelastic.
A consumer is faced with a utility function
(x,y)=4x2+3xy+y2 And his budget constraint is given by ln( xy)=5
. a) Find the optimal values of x and y
b) Find the value of the shadow price
c) Interpret the value of lambda. Does it make economic sense?
d) Other than completeness, monotonicity and transitivity, discuss the other three axioms of consumer preferences.
e) Using practical examples discuss the duality principle as it relates to both the firm and households.
The Zambian Macro-economic environment has been improving recently with the inflation rate below 10% while the kwacha has also been appreciating against the US dollar. As a manager of a well-known commercial Bank in Zambia (Bank WXYZ) provide an elaborate explanation of how the Macro-economic environment affect the firm. Your explanation should not exceed a page.
The improving macro-economic environment in Zambia has a significant impact on our operations and strategic decisions at Bank WXYZ. By understanding these impacts, we can better respond to changes in the market and maximize our opportunities for growth and profitability.
As a manager of a commercial bank in Zambia, it is important to understand how the macroeconomic environment affects our firm. The recent improvements in the Zambian macroeconomic environment – such as the inflation rate dropping below 10% and the appreciation of the Kwacha against the US dollar – have several impacts on our bank.
Firstly, lower inflation rates mean lower interest rates. As a result, we can offer lower borrowing rates to customers which will encourage more borrowing and investment, leading to overall economic growth. Additionally, lower inflation rates may also lead to an increase in consumer spending and a boost in demand for loans and other banking services.
Secondly, a stronger Kwacha can lead to greater foreign investment and a more stable economy. This can create opportunities for us to expand our business and offer new services to foreign investors. However, if the appreciation is too rapid, it may make our exports less competitive which could hurt exporters and thereby negatively affect our banking portfolio.
Thirdly, the macroeconomic environment can also affect our risk management strategies. A more stable economy with lower inflation rates means that our risks are lower, whereas an unstable or inflationary economy can increase the likelihood of defaults and non-performing assets, so we must adjust our policies accordingly.
Finally, a strong macro-economic environment also supports increased investor confidence and trust in the financial system. This can lead to increased deposits, higher lending levels, and ultimately boost profitability for the Bank.
In conclusion, the improving macro-economic environment in Zambia has a significant impact on our operations and strategic decisions at Bank WXYZ. By understanding these impacts, we can better respond to changes in the market and maximize our opportunities for growth and profitability while managing risks effectively.
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Waterway Sports began operations on January 2, 2020. The following stock record card for footballs was taken from the records at the end of the year. Units Received Unit Invoice Cost Gross Invoice Amount Date Voucher Terms 1/15 10624 Net 30 69 $29 $2,001 3/15 11437 1/5, net 30 84 23 1,932 6/20 21332 1/10, net 30 109 22 2,398 9/12 27644 1/10, net 30 103 18 1,854 11/24 31269 1/10, net 30 95 16 1,520 Totals 460 $9,705 A physical inventory on December 31, 2020, reveals that 113 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Waterway Football Shop uses the invoice price less discount for recording purchases. * Your answer is incorrect. Compute the December 31, 2020, inventory using the FIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Ending Inventory using the FIFO method $ 1664 eTextbook and Media * Your answer is incorrect. Compute the 2020 cost of goods sold using the LIFO method. (Round per unit and final answer to 2 decimal paces, e.g. 35.57.) Cost of Goods Sold using the LIFO method $ eTextbook and Media * Your answer is incorrect. What method would you recommend to the owner to minimize income taxes in 2020, using the inventory information for footballs as a guide? 19
The ending inventory using the FIFO method is $3,013. To compute the December 31, 2020, inventory using the FIFO method, we need to determine the cost of the footballs based on the order they were received.
First, let's calculate the cost for each batch of footballs:
Batch 1:
Units received: 69
Unit invoice cost: $29
Gross invoice amount: $2,001
Cost per unit: $29
Batch 2:
Units received: 84
Unit invoice cost: $23
Gross invoice amount: $1,932
Cost per unit: $23
Batch 3:
Units received: 109
Unit invoice cost: $22
Gross invoice amount: $2,398
Cost per unit: $22
Batch 4:
Units received: 103
Unit invoice cost: $18
Gross invoice amount: $1,854
Cost per unit: $18
Batch 5:
Units received: 95
Unit invoice cost: $16
Gross invoice amount: $1,520
Cost per unit: $16
Next, we calculate the cost of the ending inventory using the FIFO method. Since the physical inventory reveals that there are 113 footballs in stock, we start by subtracting units from the earliest batch until we reach the desired quantity.
Calculation:
Batch 1: 69 units at $29 = $2,001
Batch 2: 44 units at $23 = $1,012
Total cost of ending inventory = $2,001 + $1,012 = $3,013
Therefore, the ending inventory using the FIFO method is $3,013.
To compute the 2020 cost of goods sold using the LIFO method, we need to subtract the cost of the ending inventory from the total cost of purchases.
Calculation:
Total cost of purchases = $9,705
Ending inventory (FIFO) = $3,013
Cost of goods sold (LIFO) = Total cost of purchases - Ending inventory (FIFO) = $9,705 - $3,013 = $6,692
Therefore, the cost of goods sold using the LIFO method is $6,692.
For minimizing income taxes, the owner should consult with a tax professional to determine the most advantageous inventory method. Generally, the LIFO method may be preferred as it can potentially result in lower taxable income by matching higher-priced inventory with current sales, thus reducing the taxable profit. However, it is essential to consider the specific tax regulations and consult with an expert to make an informed decision.
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Question 15 6 pts Calculate the effective yields for each 90 day period for a borrower who issues $10,000,000 face value worth of 90 day bank bills in June and hedges its interest rate risk with a 180 day interest rate swap with a swap rate of 4.5% p.a. The 90 day bank bill swap rate at the time of issue of the first bill is 4% p.a. and 3.75% at the time of issue of the second bill in September.
The effective yields for each 90-day period are 4.25% in June for the first period and 4.125% in September for the second period.
To calculate the effective yields for each 90-day period, we need to consider the interest rate swap and the respective bank bill swap rates at the time of issuing each bill.
First, let's calculate the effective yield for the first 90-day period in June. The bank bill swap rate is 4% p.a., and the swap rate is 4.5% p.a. The effective yield can be calculated as follows:
Effective Yield = Bank Bill Swap Rate + (Swap Rate - Bank Bill Swap Rate) / 2 Effective Yield = 4% + (4.5% - 4%) / 2 Effective Yield = 4.25%
Next, we calculate the effective yield for the second 90-day period in September. The bank bill swap rate is 3.75% p.a., and the swap rate is still 4.5% p.a. Using the same formula: Effective Yield = 3.75% + (4.5% - 3.75%) / 2
These effective yields reflect the overall cost of borrowing for the borrower, taking into account the bank bill rates and the interest rate swap rate. The borrower can use these effective yields to assess and manage its interest rate risk exposure over the respective 90-day periods. Effective Yield = 4.125%
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