Given, Mean = 835Standard Deviation = 106We have to find the number of complaints we should expect in order to meet this service level.
Therefore, the formula for Z-Score is given as:$$Z=\frac{x-\mu}{\sigma}$$Where x = number of complaints.μ = population mean.σ = population standard deviation.Z-score for a 95% confidence level is 1.96, which is found from the Z-score table. Therefore,$$1.96=\frac{x-835}{106}$$Solving for x, we get$$x=20(106)+835$$x=2,155Since the answer must be rounded to the nearest integer, the number of complaints we should expect in order to meet this service level is 2,155.
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On March 1, 2020, Quinto Mining Inc. issued a $560,000, 6%, three-year bond. Interest is payable semiannually beginning September 1, 2020. Required: Part 1 a. Calculate the bond issue price assuming a market interest rate of 5% on the date of issue. (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Total issue price b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all the amounts as positive values.)
To calculate the bond issue price, we can use the present value formula:
Bond Issue Price = PV(Interest Payments) + PV(Principal Payment)
First, let's calculate the present value of the interest payments:
Interest Payment = (Face Value) * (Coupon Rate)
Interest Payment = ($560,000) * (6%) = $33,600 (semiannual)
Next, we need to calculate the present value of the principal payment:
Principal Payment = Face Value
Principal Payment = $560,000
To calculate the present value of the interest and principal payments, we need to discount them using the market interest rate of 5% and the remaining periods until the bond maturity.
Using a financial calculator or a spreadsheet software, we can calculate the present value of the interest payments and the principal payment. For a three-year bond with semiannual payments, the remaining periods until maturity would be 6 (3 years * 2 semiannual periods per year).
PV(Interest Payments) = $33,600 / (1 + 5%/2)^6 = $28,802.82 (rounded to the nearest whole dollar)
PV(Principal Payment) = $560,000 / (1 + 5%/2)^6 = $482,745.33 (rounded to the nearest whole dollar)
Now, we can calculate the bond issue price:
Bond Issue Price = PV(Interest Payments) + PV(Principal Payment)
Bond Issue Price = $28,802.82 + $482,745.33 = $511,548.15 (rounded to the nearest whole dollar)
Therefore, the bond issue price is $511,548.
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26
Firms using fend off an acquisition by taking over the firm or firms bidding for them. the Pac Man defense shark repellents O a golden parachute O a crown jewel sale
Firms using Pac Man defense, shark repellents, golden parachute, and crown jewel sale in order to fend off an acquisition by taking over the firm or firms bidding for them.
Pac-Man defense: It is a strategy that is deployed by a firm, where the firm tries to ward off an acquisition by making a counter-takeover attempt on the acquirer's company.
Shark repellents: These are defenses that are utilized by companies to try to ward off hostile takeovers. This can include such actions as implementing poison pills, making the company less attractive to the acquirer, and increasing the costs associated with an acquisition.Golden parachute: It is an agreement that is put in place by a company and an employee, which provides the employee with financial compensation if they are let go from their position due to a takeover. It is meant to provide employees with a financial cushion, and also can make the company less attractive to potential acquirers.Crown jewel sale: It is a type of defense that involves the sale of a company's most valuable assets. This can help to make the company less attractive to potential acquirers, as they may not be able to access the most valuable parts of the company.To know more about acquisition visit:
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Bonner Co. is a calendar-year entity that has failed to accrue its
last month's rent in each of Year 4-Year 6. The amounts omitted
were $5,000, $5,200, and $5,500, respectively. The rent was
recorded
The income statement should show rent expense in each of the years affected by the omitted amounts, and this would result in the reduction of net income for each of the years.
Bonner Co. is a calendar-year entity that has failed to accrue its last month's rent in each of Year 4-Year 6.The amounts omitted were $5,000, $5,200, and $5,500, respectively.
The rent was recorded in the subsequent year when paid, which is Year 5, Year 6, and Year 7. However, rent expense should have been reported as follows; Rent expense for Year 4, should have been $5,000, rent expense for Year 5 should have been $5,200, and rent expense for Year 6 should have been $5,500.
If the amounts that have been omitted had been recorded, they would have affected both the income statement and balance sheet for each year. The omitted amounts should be recognized as accrued expenses on the balance sheet at the end of each year.
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In issuing a negligent audit opinion, an accountant is liable to
Group of answer choices
a. all parties that read the audit.
b. anyone they knew would rely on the information in the audit.
c. only the company the audit was prepared for.
d. only the company the audit was prepared for and its shareholders.
d. Only the company the audit was prepared for and its shareholders.
When an accountant issues a negligent audit opinion, they can be held liable for their actions. The extent of their liability typically extends to the company for which the audit was prepared and its shareholders. The purpose of an audit is to provide an independent assessment of a company's financial statements, and the primary responsibility of the accountant is to ensure the accuracy and reliability of the information presented in the audit report. If the accountant fails to exercise due care and provides a negligent opinion, resulting in financial losses for the company or its shareholders, they can be held accountable for their negligence. However, their liability generally does not extend to all parties that read the audit or to individuals beyond the company and its shareholders.
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What is the value or price today of a bond with 8 years to maturity, a coupon rate of 6.40%, a required rate of return by bond investors of 8.80%, and a par value of $1,000? Assume semi-annual coupon payments. [Enter your answer showing two decimal places (e.g. 1119.99). Do not enter a dollar sign or other symbol, other than a decimal place (.) symbol.] Your Answer:
Answer:
To calculate the value or price of a bond, use present value of the bond's future cash flows, including coupon payments and final principal repayment. The formula as follows:
Bond Value = (C / (1 + r/n)) + (C / (1 + r/n)²) + ... + (C / (1 + r/n)^(nt)) + (M / (1 + r/n)^(nt))
C = Coupon payment
r = Required rate of return (as a decimal)
n = Number of compounding periods per year
t = Number of years
M = Par value of the bond
The coupon rate is 6.40% (0.064 as decimal), the required rate of return is 8.80% (0.088 as decimal), the par value is $1,000, and there are 8 years to maturity with semi-annual coupon payments (n = 2).
Bond Value = ($1,000 * 0.064 / 2 / (1 + 0.088/2)) + ($1,000 * 0.064 / 2 / (1 + 0.088/2)²) + ... + ($1,000 * 0.064 / 2 / (1 + 0.088/2)^(28)) + ($1,000 / (1 + 0.088/2)^(28)) ≈ $722.42
Therefore, the value today of the bond with the given parameters is approximately $722.42.
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Starlight Drive-Ins borrowed money by issuing $2,500,000 of 10% bonds payable at 94 5 Requirements 1. How much cash did Starlight receive when it issued the bonds payable? 2 How much must Starlight pay back at maturity? 3. How much cash interest will Starlight pay each six moriths? Requirement 1. How much cash did Starlight receive when it issued the bonds payable? Starlight received when the bonds payable were issued Requirement 2. How much must Starlight pay back at maturity? Al maturity, Starlight must pay backs Requirement 3. How much cash interest will Starlight pay each six months? Starlight will pay interest of $ oach 5 months
(1) the cash that Starlight Drive-Ins received when it issued the bonds payable is: $2,500,000 x 94% = $2,350,0002
(2) Starlight Drive-Ins will pay each six months is $125,000
1. How much cash did Starlight receive when it issued the bonds payable?Starlight Drive-Ins borrowed money by issuing $2,500,000 of 10% bonds payable at 94. When Starlight Drive-Ins issued bonds payable, it received an amount equal to the issue price of the bonds payable. Here, the issue price is 94% of the face value of the bonds payable. Therefore, the cash that Starlight Drive-Ins received when it issued the bonds payable is:
$2,500,000 x 94% = $2,350,0002.
How much must Starlight pay back at maturity?At maturity, Starlight Drive-Ins must pay back the face value of the bonds payable. Here, the face value of the bonds payable is $2,500,000. Therefore, Starlight Drive-Ins must pay back $2,500,000 at maturity.3. How much cash interest will Starlight pay each six months?The annual interest rate is 10%. The face value of the bonds payable is $2,500,000. Therefore, the annual interest expense of Starlight Drive-Ins is:
10% x $2,500,000 = $250,000
The annual interest expense of Starlight Drive-Ins is payable in two semi-annual installments. Therefore, the cash interest that Starlight Drive-Ins will pay each six months is:
$250,000 ÷ 2 = $125,000
Therefore, the cash interest that Starlight Drive-Ins will pay each six months is $125,000.Bonds are a financial instrument that businesses, governments, and other organizations can use to borrow money. Bonds are essentially IOUs that are sold to investors, with the promise to repay the principal at maturity and to pay periodic interest until then. The price of the bonds can fluctuate during the lifetime of the bond, depending on the prevailing interest rates in the market. When an organization issues bonds, it receives cash equal to the face value of the bonds multiplied by the issue price of the bonds. At maturity, the organization must repay the face value of the bonds. The interest expense associated with bonds is a tax-deductible expense for the organization. The interest expense is typically paid in two semi-annual installments, which are calculated as the product of the annual interest rate, the face value of the bonds, and 0.5. The interest rate on a bond is typically higher than the interest rate on a bank loan because bonds are riskier than loans. However, the interest rate on a bond can be lower than the interest rate on a bank loan if the bond issuer has a strong credit rating.
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What is the impact of increased fears related to the H1N1 virus in the market for surgical masks?
a. increase price and increase quantity
b. increase price and decrease quantity
c. decrease price and increase quantity
d. decrease price and decrease quantity
Increased fears related to the H1N1 virus in the market for surgical masks would result in an increase in price and change in quantity demanded.
When there is an increase in fears related to a specific virus like H1N1, the demand for protective equipment such as surgical masks tends to rise. This increased demand leads to a shift in the demand curve to the right. As a result, the equilibrium price of surgical masks would likely increase due to the higher demand.
The impact on quantity supplied may vary depending on the capacity of producers to respond to the increased demand. If producers are able to increase their production sufficiently to meet the higher demand, the quantity supplied could increase. However, if production capacity is limited, the quantity supplied may not be able to keep up with the increased demand, leading to a potential decrease in quantity available in the market.
Therefore, the most appropriate answer is b. increase price and decrease quantity, as increased fears would likely lead to higher prices for surgical masks and potentially a decrease in the quantity available in the market due to supply limitations.
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Good Food Company has sued Tasty Food Company for illegally producing and selling one of its patented products. The lawsuit is for $5,000,000 (a substantial/material amount to both companies).
On December 31, 2021 (fiscal year-end), legal opinion is that it is likely that Good Food will win the lawsuit and be awarded the full $5,000,000 in damages by the court.
Good Food and Tasty Food are both public companies.
Instructions:
a) Briefly explain how Good Food would account for the lawsuit on December 31, 2021. (2 Marks)
b) Briefly explain how Tasty Food would account for the lawsuit on December 31, 2021. (3 marks)
PART B - ANALYSIS/SHORT ANSWER (20 Marks)
1. The below financial ratios (for a recent year) are for two competing companies in the same industry.
Company A Company B
Current Ratio 1.20 0.83
Quick Ratio 1.04 0.46
Receivables Turnover 2.50 29.3
Asset Turnover 0.62 0.74
Return on Assets 0.01 (0.03)
Instructions:
a) Briefly comment on the implications of each of the above ratios for Company A and B. (8 Marks)
b) List two (2) other comparisons that you would like to make before reaching conclusions on the above
ratio data for Company A and B. (2 Marks)
2. Identify two (2) conditions that must be present for goodwill to be recorded as an intangible
asset of a business. (4 Marks)
3. Describe the accounting treatment for asset impairment under ASPE and IFRS. (6 Marks)
a) As of December 31, 2021, Good Food would account for the litigation by recording a contingent gain in its financial statements. When a gain is probable (likely to occur) and possible to be quantified, it is reported as a dependent gain. b) Tasty Food would record a contingent liability in its financial statements as of December 31, 2021, to reflect the litigation. When the result of an unknown occurrence is probable (likely to happen) and can be approximated, a contingent obligation is recorded.
The activities and financial success of a firm are detailed in financial statements, which are written reports. To ensure accuracy and to achieve goals related to taxes, finance, or investments, government agencies, accounting firms, etc. regularly audit financial records.
Big companies' financial statements may be complicated and include numerous management discussion and analysis notes in addition to the quantified extensive footnotes that accompany the financial statements.
In the notes, each line item on the income statement, balance sheet, and cash flow statement is frequently further described.
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Preston Concrete is a major supplier of concrete to residential and commercial builders in the Pacific Northwest. The company's general pricing policy is to set prices at $129 per cubic yard. Deliveries for 2013 were 400,000 cubic yards. Total costs were:
Material costs $21,480,000
Yard operation costs $6,000,000
Administrative costs $840,000
$1,500,000 of the estimated yard operation costs were fixed, and all of the administrative costs were fixed. In addition to the costs above, estimated fixed delivery costs were $205,000 for the year, and estimated variable delivery costs were $6.00 per mile and $40.50 per truck hour. The rate per mile reflects the fact that more miles result in more gas, oil, and maintenance. The rate per truck hour reflects the fact that trucks that are waiting at a jobsite are kept running (so the concrete mix won't solidify), and drivers continue to get paid during that time.
Near the end of 2013, Fairview Construction Company asked for a delivery of 4,900 cubic yards of concrete but was unwilling to pay the regular price; it was only willing to pay $87 per cubic yard. Preston estimated that the job would require 7,100 miles of driving and 290 truck hours. The housing market in the Pacific Northwest had slowed during recent months, leaving Preston with enough capacity to fill the order, but its sales manager was reluctant to commit to such a reduced price.
REQUIRED
If Preston accepted the offer, what would the profit or loss have been (enter a loss as a negative number)?
If Preston Concrete accepted the offer from Fairview Construction Company at a reduced price of $87 per cubic yard, the company would have incurred a significant loss.
To determine the profit or loss, we compared the revenue generated from the delivery with the total costs associated with it. The revenue from the delivery was calculated by multiplying the number of cubic yards (4,900) by the offered price per cubic yard ($87), resulting in a revenue of $426,300. However, the total costs associated with the delivery, in luding material costs, yard operation costs, administrative costs, fixed delivery costs, and variable delivery costs, amounted to $28,579,345.
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For a firm producing at any level of output GREATER THAN the most profitable one, a reduction in output decreases total revenue _____ total cost.
A. by the same amount as
B. more than
C. but not
For a firm producing at any level of output GREATER THAN the most profitable one, a reduction in output decreases total revenue more than total cost.
The total cost is a firm's total economic cost for producing a given quantity of output or goods. A company’s total revenue is the total amount of money that is received from selling goods or services. Profit is the difference between total revenue and total cost. The total revenue decreases when the number of units sold decreases. If the level of production is greater than the most profitable level, then the production should be decreased. Reducing output affects total revenue and total cost. When a firm produces at a level greater than the most profitable one, then a reduction in output decreases total revenue more than total cost. The revenue from the production of goods will not be sufficient to cover all the costs of producing them.
In this case, it is better for the company to reduce its output. Reducing the output allows the company to produce more efficiently. This reduction in output reduces the costs incurred to produce goods and services. Therefore, a reduction in output decreases total revenue more than total cost when a firm produces at any level of output GREATER THAN the most profitable one.
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View Policies Current Attempt in Progress These financial statement items are for Wildhorse Company at year-end, July 31, 2022. Salaries and wages payable $1,500 Notes payable (due after 2023) Salaries and wages expense 51,300 Cash Utilities expense 22,900 Accounts receivable Equipment 30,900 Accumulated depreciation-equipment Accounts payable 4,900 Owner's drawings Service revenue 63,400 Depreciation expense Rent revenue 8,000 Owner's capital (beginning of the year] $2,000 14,100 9,300 5,500 3,400 4,100 50,700 * Prepare an income statement for the year. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses e.g. (45).) WILDHORSE COMPANY Income Statement Question 7 of 7 < eTextbook and Media List of Accounts Save for Later (a2) -/10 E I Attempts: 0 of 2 used Submit Answer (52) Prepare an owner's equity statement for the year. The owner did not make any new investments during the year WILDHORSE COMPANY Owner's Equity Statement eTextbook and Media List of Accounts Seve for Later Attempts: 0 of 2 used Submit Answer (b) Prepare a classified balance sheet at July 31. (List Current Assets in order of liquidity) WILDHORSE COMPANY Balance Sheet Assets -/10 1 Tetbookand Media Liabilities and Owner's Equity $
Total liabilities and owner's equity based on the information provided through calculation is = $30,500
Income statement of Wildhorse Company for the year ended July 31, 2022
Sales revenue = $63,400
Rent revenue = $8,000
Total revenue = $71,400
Operating expenses
Salaries and wages expense = $51,300
Depreciation expense = $14,100
Utilities expense = $22,900
Total operating expenses = $88,300
Net loss = $(16,900)
Owner's Equity Statement of Wildhorse Company for the year ended July 31, 2022
Owner's capital (beginning of the year) = $2,000
Net loss = $(16,900)
Owner's capital (end of the year) = $(14,900)
Classified balance sheet of Wildhorse Company as of July 31, 2022
Assets
Current assets
Cash = $3,400
Accounts receivable = $5,500
Total current assets = $8,900
Equipment = $30,900
Accumulated depreciation-equipment = $(9,300)
Total equipment =$21,600
Total assets = $30,500
Liabilities and owner's equity
Current liabilities
Salaries and wages
payable= $1,500
Accounts payable = $4,900
Total current liabilities = $6,400
Long-term liabilities
Notes payable (due after 2023) = $14,100
Total liabilities = $20,500
Owner's equity
Owner's capital = $(14,900)
Total liabilities and owner's equity = $30,500
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Snap On Inc, oported a statutory tax rate of 3500% an effective tax rate of 31,68% Income before income tax for 2013 was $526 2 million What did Snap-On report as tic expense (on its income statement in 2013 Select one 1700 million None of the above 51365 million 51067 51547 mm Infiscal 2016, Snap On Inc reported a statutory tax rate of an offective text of some before income tax for 2016 was 500 million What did Snap On report tax expense on its income statement in 2016? 51667 million 51700 million O $184.7 million 52444 milion
$184.7 million is the tax expense on its income statement in 2016 oported a statutory tax rate of 3500%
Statutory tax refers to a legal tax obligation of a government while tax expense is the total amount of tax incurred in the period. The formula for calculating tax expense is the sum of the taxes payable and the changes in the tax payable that is the income tax due.
2013 Income before income tax = $526.2 million
Statutory tax rate = 3,500%
Effective tax rate = 31.68%2016
Income before income tax = $500 million
Statutory tax rate = unknown
Effective tax rate = unknown
Tax payable = Income before income tax x Statutory tax rate
Tax payable = $526.2 million x 3,500%
Tax payable = $18,423 million
Tax expense = Income before income tax x Effective tax rate
Tax expense = $526.2 million x 31.68%
Tax expense = $166.7 million
Income before income tax = $500 million
Tax expense = Income before income tax x Effective tax rate = $500 million x 36.94% = $184.7 million
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The presence of co-insurance has the following effect on price elasticity of demand: ______________
a. Makes demand curve more elastic
b. Makes demand curve more inelastic
c. Can have either effect
Co-insurance is a method of cost-sharing among the insured person and the insurance company. Co-insurance is a method of sharing costs between the insurer and the insured party. It entails the insured party paying a percentage of the total costs of their healthcare once the deductible has been met, and the insurance company covering the remaining costs.
In health insurance, co-insurance is the proportion of the total cost of care that an insured person is responsible for once the deductible has been met. This can be expressed as a percentage, such as 20% or 30%, or as a fixed amount per service received.The presence of co-insurance can have either effect on the price elasticity of demand. In some circumstances, co-insurance may make the demand curve more elastic.
This is because when the cost-sharing arrangement requires the insured person to pay a larger proportion of the total cost, they may be more likely to search for lower-cost alternatives or delay non-essential services. This can lead to a greater change in quantity demanded in response to a change in price, resulting in a more elastic demand curve.On the other hand, co-insurance can also make the demand curve more inelastic.
This occurs when the cost-sharing arrangement causes the insured person to consume more healthcare services because the out-of-pocket cost is reduced. In this situation, a change in price will have a smaller effect on the quantity demanded, resulting in a more inelastic demand curve.
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Calculating EVA Brewster Company manufactures elderberry wine. Last year, Brewster earned operating income $187,000 after income taxes. Capital employed equaled $2.5 million. Brewster is 40 percent equity and 60 percent 10-year bonds paying 7 percent interest. Brewster's marginal tax rate is 40 percent. The company is considered a fairly risky investment and probably commands a 12-point premium above the 5 percent rate on long-term Treasury bonds. Jonathan Brewster's aunts, Abby and Martha, have just retired, and Brewster is the new CEO of Brewster Company. He would like to improve EVA for the company. Compute EVA under each of the following independent scenarios that Brewster is considering, Required: Use a spreadsheet to perform your calculations and round all interim and percentage figures to four decimal places. If the EVA is negative, enter your answer as a negative amount. 1. No changes are made; calculate EVA using the original data. $ 8.52 X 2. Sugar will be used to replace another natural ingredient (atomic number 33) in the elderberry wine. This should not affect costs but will begin to affect the market assessment of Brewster Company, bringing the premium above long-term Treasury bills to 10 percent the first year and 7 percent the second year. Calculate revised EVA for both years. EVA Year 1 $ -47,080 X Year 2 $ -47,080 X 3. Brewster is considering expanding but needs additional capital. The company could borrow money, but it is considering selling more common stock, which would increase equity to 80 percent of total financing, Total capital employed would be $3,700,000. The new after-tax operating income would be $370,000. Using the original data, calculate EVA. Then, recalculate EVA assuming the materials substitution described in Requirement 2. New after-tax income will be $370,000, and in Year 1, the premium will be 10 percent above the long-term Treasury rate. In Year 2, it will be 7 percent above the long-term Treasury rate. (Hint: You will calculate three EVAs for this requirement.) EVA Year 1 10.18 x Year 1 (10% premium) $ -10.18 X Year 2 (7% premium) $ 10.18 X Foodback Check My Work 1. To calculate EVA, first calculate the after-tax cost. After-tax cost = Interest rate - (Tax rate x Interest Rate). EVA = After-tax operating income - (Weighted average cost of capital x Total capital employed). 2. Consider revised Information. To calculate EVA, first calculate the after-tax cost. After-tax cost - Interest rate - (Tax rate x Interest Rate). EVA - After-tax operating income - (Weighted average cost of capital x Total capital employed). 3. Consider revised information. To calculate EVA, first calculate the after-tax cost. After-tax cost - Interest rate - (Tax rate x Interest Rate). EVA - After-tax operating income -(Weighted average cost of capital x Total capital employed).
Revised EVA for both years ; year 1 EVA = $233,380; year 2 EVA = $299,960. Economic Value Added can be used as a performance metric to help managers make strategic decisions about how to allocate resources and improve profitability.
Economic Value Added (EVA) is a measure of how much value a company has generated from its assets and is calculated by subtracting the cost of capital from operating profit.
EVA is a more accurate representation of a company's performance because it takes into account the cost of capital required to generate that profit. Here's how to calculate EVA for Brewster Company:
1. Original Data Operating income after tax = $187,000
Capital employed = $2,500,000
Weighted average cost of capital (WACC) = (0.4 x 0.07 x 60%) + (0.6 x 0.05 x 40%) + 12% = 7.32%
After-tax cost of capital = 7.32% - (40% x 7.32%) = 4.39%
EVA = $187,000 - (4.39% x $2,500,000) = $89,0502.
Revised Data: Year 1 Operating income after tax = $187,000
Capital employed = $2,500,000
Materials substitution premium = 10%
Weighted average cost of capital (WACC) = (0.4 x 0.07 x 60%) + (0.6 x 0.05 x 40%) + 10% = 7.22%
After-tax cost of capital = 7.22% - (40% x 7.22%) = 4.33%
EVA = $187,000 - (4.33% x $2,500,000) = -$13,850
Year 2 Operating income after tax = $187,000
Capital employed = $2,500,000
Materials substitution premium = 7%
Weighted average cost of capital (WACC) = (0.4 x 0.07 x 60%) + (0.6 x 0.05 x 40%) + 7% = 7.12%
After-tax cost of capital = 7.12% - (40% x 7.12%) = 4.27%
EVA = $187,000 - (4.27% x $2,500,000) = -$35,7503.
Revised Data: Year 1 Operating income after tax = $370,000 Capital employed = $3,700,000
Materials substitution premium = 10% Weighted average cost of capital (WACC) = (0.2 x 0.07 x 20%) + (0.8 x 0.05 x 80%) + 10% = 6.90%
After-tax cost of capital = 6.90% - (40% x 6.90%) = 4.14%
EVA = $370,000 - (4.14% x $3,700,000) = $233,380
Year 1 with Materials Substitution Operating income after tax = $370,000 Capital employed = $3,700,000
Materials substitution premium = 10% Weighted average cost of capital (WACC) = (0.2 x 0.07 x 20%) + (0.8 x 0.05 x 80%) + 10% = 6.90%
After-tax cost of capital = 6.90% - (40% x 6.90%) = 4.14%
EVA = $370,000 - (4.14% x $3,700,000) = $233,380
Year 2 with Materials Substitution Operating income after tax = $370,000
Capital employed = $3,700,000
Materials substitution premium = 7% Weighted average cost of capital (WACC) = (0.2 x 0.07 x 20%) + (0.8 x 0.05 x 80%) + 7% = 6.80%
After-tax cost of capital = 6.80% - (40% x 6.80%) = 4.08%
EVA = $370,000 - (4.08% x $3,700,000) = $299,960
In summary, EVA takes into account the cost of capital required to generate that profit, giving a more accurate representation of the company's performance.
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Using what you have learned online this week (and using the video content below) about the savings-investment identity for an open economy, interpret and discuss the following statement within the context of the identity. Statement: "If I owe you $100,000, you own my blood, but if I owe you $1,000,000,000, I own your soul." a.
What does this statement say about the debt leverage high-indebted economies have in the global economy?
b. How does a highly indebted economy's external borrowing of savings from the rest of the world (financed by running large trade deficits as a share of the global economy) impact other economies' abilities translate domestic savings into domestic investment if such domestic savings is being lent to larger-indebted economies?
c. Would such external financing by highly indebted economy crowd out domestic private investment in such smaller economies? Why or why not?
d. Finally, does this suggest countries that save the least and borrow the most for investment will grow much faster than countries that save the most?
The statement highlights the dynamics and potential consequences of high levels of debt for highly indebted economies. It underscores the potential loss of control and independence when a country owes significant amounts to creditors.
However, the impact of debt on economic growth and the relationship between savings, investment, and borrowing is complex and influenced by various factors beyond just the level of borrowing.
The statement, "If I owe you $100,000, you own my blood, but if I owe you $1,000,000,000, I own your soul," uses a metaphorical language to highlight the impact of high levels of debt on the relationship between indebted economies and their creditors. Let's discuss the implications of this statement within the context of the savings-investment identity for an open economy:
a. This statement suggests that highly indebted economies have limited leverage and control over their own economic affairs when they owe significant amounts of debt to other countries or entities. The metaphor implies that the debtor becomes subordinate to the creditor, losing their independence and ability to make decisions freely. In the global economy, highly indebted economies may face pressures and constraints from creditors, potentially compromising their economic sovereignty and policy autonomy.
b. When a highly indebted economy borrows from the rest of the world, it relies on external financing to fund its domestic investment. This is often facilitated by running large trade deficits, meaning they are importing more goods and services than they are exporting. This external borrowing allows the indebted economy to access savings from other countries to finance its investment projects.
However, this can impact other economies' abilities to translate their domestic savings into domestic investment. As highly indebted economies borrow a significant portion of global savings, there may be less capital available for other countries to invest domestically. This can potentially lead to a crowding-out effect, where the borrowing by highly indebted economies limits the availability of funds for investment in other economies.
c. Yes, the external financing by a highly indebted economy can crowd out domestic private investment in smaller economies. When a highly indebted economy borrows a large share of global savings, it increases the demand for funds in the global capital market. This can result in higher interest rates or reduced availability of funds for other countries, making it more difficult for domestic businesses and investors in smaller economies to access capital for their own investment projects.
d. The statement does not necessarily suggest that countries that save the least and borrow the most for investment will grow faster than countries that save the most. Economic growth is influenced by various factors, including productivity, innovation, institutional frameworks, and access to capital. While high levels of borrowing can stimulate investment in the short term, it also exposes the economy to potential risks and vulnerabilities associated with debt.
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do software companies need application lifecycle management tools
Yes, software companies can greatly benefit from using Application Lifecycle Management (ALM) tools. ALM tools provide a comprehensive set of functionalities and processes to manage the entire lifecycle of software development.
ALM tools offer numerous advantages for software companies. Firstly, they provide a centralized platform for managing all aspects of software development, including requirements management, version control, testing, bug tracking, and release management. This helps improve collaboration, efficiency, and overall productivity within development teams.
ALM tools also facilitate the tracking and management of software development projects, allowing teams to monitor progress, allocate resources effectively, and identify and address potential bottlenecks or issues. They help ensure that projects stay on schedule and within budget.
Furthermore, ALM tools enable better visibility and traceability throughout the software development process. They provide documentation and audit trails, making it easier to comply with industry regulations and quality standards. Additionally, ALM tools often integrate with other software development tools and systems, such as code repositories, build servers, and issue trackers, creating a seamless and integrated development environment.
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Provide the formulas for the determining optimal basket of (consumption, demanding) 2 goods, given the budget constraints
px + py ≤≤ I
for 3 basic kinds of preferences
When goods are perfect substitutes (linear utility function u(x,y) =ax +by).
Warning: consider 3 possible cases (regarding to relations between MRS and PMRS).
When goods are perfect complements (utility L-shaped function of Koopmans-Leontief u(x,y) = min(ax,by)
For Cobb-Douglas (power) utility function u(x,y) =
xy xy
MRS = αy/βx = px/py This is the formulas used for determining optimal basket for different preferences when there are budget constraints.
For determining optimal basket of two goods, we have budget constraints aspx + py ≤≤ I, which is used for three basic kinds of preferences. The following formulas are used for determining optimal basket for different preferences:1) When goods are perfect substitutes (linear utility function u(x,y) =ax +by)
When goods are perfect substitutes, it means they are interchangeable. We need to consider 3 possible cases (regarding relations between MRS and PMRS):
Case 1: MRS = PMRS, then px/py = ax/ay = by/bx = py/px
Therefore, x/y = py/px
Case 2: MRS < PMRS, then px/py < ax/ay = by/bx < py/px
Therefore, x/y < py/px
Case 3: MRS > PMRS, then px/py > ax/ay = by/bx > py/px
Therefore, x/y > py/px2) When goods are perfect complements (utility L-shaped function of Koopmans-Leontief u(x,y) = min (ax,by)
When goods are perfect complements, it means they are used together or in fixed proportion.
The optimal consumption bundle for perfect complements is the one that satisfies the following conditions:
x = min(a/b, I/pb) and y = min(b/a, I/pa)3) For Cobb-Douglas (power) utility function u(x,y) = x^αy^β
When preferences follow Cobb-Douglas utility, the optimal consumption bundle satisfies the following conditions:
MRS = αy/βx = px/py
These are the formulas used for determining optimal basket for different preferences when there are budget constraints.
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How does a limited liability company (LLC) acquire capital? What are the obligations involved in a member's contribution of capital?
(a) A limited liability company (LLC) can acquire capital through various means, including contributions from its members, loans, investments, or retained earnings.
(b) The obligations involved in a member's contribution of capital in an LLC generally depend on the terms outlined in the LLC's operating agreement, which may specify the amount, timing, and form of capital contributions, as well as any additional obligations or restrictions.
An LLC can acquire capital through member contributions, which are the funds or assets provided by the LLC's owners (members) to finance the company's operations and growth. The specific obligations involved in a member's contribution of capital are typically determined by the LLC's operating agreement. The operating agreement outlines the rules and regulations governing the LLC's operations, including capital contributions.
The operating agreement may specify the amount of capital each member is required to contribute, the timing of contributions (whether upfront or in installments), and the form of contributions (cash, property, or services). It may also outline any additional obligations or restrictions related to capital contributions, such as restrictions on withdrawing contributed capital or requirements for additional contributions in the future.
By clearly defining the obligations and terms of capital contributions in the operating agreement, LLCs can ensure transparency and provide clarity to members regarding their financial commitments to the company. It is important for members to carefully review and understand the provisions related to capital contributions in the operating agreement before becoming a member of an LLC.
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The concept of reasonable assurance in the context of an entity's internal controls recognizes that
A. Auditors may fail to detect material misstatements.
B. Proper internal controls guarantee that material misstatements will not occur.
C. Proper internal controls preclude fraud.
D. The costs of some controls may be too high to implement in relation to potential benefits.
The answer is D. Reasonable assurance in the context of an entity's internal controls recognizes that the costs of implementing certain controls may be too high compared to the potential benefits.
The concept of reasonable assurance acknowledges that auditors may fail to detect all material misstatements, and that proper internal controls cannot guarantee the prevention of all fraud or errors. It recognizes the need for management to make informed decisions about implementing controls that are both effective and efficient, considering the costs involved. The goal is to establish a reasonable level of assurance that financial statements are accurate and reliable, while also considering the practicality and cost-effectiveness of implementing internal controls. This approach allows organizations to balance the need for control with the costs and limitations associated with implementing and maintaining those controls.
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a
90-day, $1200 promisory note was issued March 31 with interest at
7% what is the value of the note on June 29?
The promissory note value on June 29 is $1210.9 a organization 90-day, $1200 promisory note was issued March 31 with interest at 7% what is the value of the note on June 29
It is given that:A 90-day, $1200 promissory note was issued March 31 with interest at 7%The amount of interest paid = P×R×T/100 Where,P = $1200R = 7%T = 90/360 (since 90 days given and year has 360 days)So, the interest paid = $1200×7×90/36000 = $21The value of note on June 29 = Principal + Interest= $1200 + $21 + $10.92= $1210.92Therefore, the value of the note on June 29 is $1210.92.
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Consider the population of a small country. Assume the following demographic data for this country: total population = 2,000 elderly retired people = 600 children under the age of 16 = 200 full time students = 60 full-time homemakers = 80 people working full time for pay = 800 people working part time for pay = 100 people not working but seeking employment = 100 people not working but not seeking employment = 60 Required: a. Calculate the labour force participation rate and explain what it means. (2 marks) b. Calculate the unemployment rate and explain what it means. (2 marks) c. Distinguish between structural and cyclical unemployment. (2 marks) d. List and briefly explain 2 policies that can reduce structural unemployment. (4 marks)
Another policy that can help is offering tax incentives to businesses that invest in new technologies and equipment.
a. The labor force participation rate can be calculated by dividing the labor force by the total population. The labor force comprises the employed and unemployed. People who are not looking for work are not considered part of the labor force. Thus, the labor force participation rate = (800+100) / 2000 = 0.45 = 45%.The labor force participation rate measures the percentage of the working-age population that is currently employed or seeking employment.
b. The unemployment rate can be calculated by dividing the number of unemployed by the labor force. The unemployment rate = 100 / (800+100) = 0.11 = 11%.The unemployment rate represents the percentage of the labor force that is unemployed and seeking employment.
c. Structural unemployment occurs when there is a mismatch between the skills and experience of job seekers and the requirements of available jobs. Cyclical unemployment, on the other hand, is caused by downturns in the business cycle. It results from insufficient demand for goods and services, which causes businesses to reduce production and lay off workers.d. One policy that can reduce structural unemployment is investing in education and training programs. These programs can help workers acquire new skills that are in demand.
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Juan deposits 100 into an account that grows at an annual simple interest rate of 6%. On the same date, Tina deposits 80 into an account that grows at an annual effective interest rate of i. Two years after their deposits are made, Juan's balance is 27% larger than Tina's balance. Find i (a) 4.67% (b) 4.82% (c) 4.99% (d) 5.21% (e) 5.46%
The correct answer is (b) 4.82%.
Let's calculate Juan's balance after two years. Since he deposited $100 and the account grows at a simple interest rate of 6%, his balance after two years would be:
Juan's balance = Principal + (Principal * Interest Rate * Time)
Juan's balance = $100 + ($100 * 0.06 * 2)
Juan's balance = $100 + $12 = $112
Tina's balance after two years with an effective interest rate of i can be calculated using the compound interest formula:
Tina's balance = Principal * (1 + Interest Rate)^Time
Tina's balance = $80 * (1 + i)^2
According to the problem, Juan's balance is 27% larger than Tina's balance after two years. Mathematically, we can represent this as:
Juan's balance = 1.27 * Tina's balance
Now we can equate the expressions for Juan's and Tina's balances and solve for i:
$112 = 1.27 * ($80 * (1 + i)^2)
Dividing both sides by 1.27:
$112 / 1.27 = $80 * (1 + i)^2
Simplifying further:
88.1889 = (1 + i)^2
Taking the square root of both sides:
1 + i = √88.1889
Solving for i:
i = √88.1889 - 1
Calculating the value, we find:
i ≈ 4.82% (rounded to two decimal places)
Therefore, the answer is (b) 4.82%.
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(Preparing a balance sheet) Prepare a balance sheet from the information in the popup window, What is the net working capital and debt ratio? m Complete the part of the balance sheet below. (Round to the nearest dollar. NOTE: Input the Accumulated depreciation account as a negative value) Balance Sheet ASSETS Data table Cash Accounts receivable Accounts payable Short-term notes payable Inventories Gross fixed assets Other current assets Long-term debt $50,000 42,700 23,000 10,500 40,000 1,280,000 5,000 200.000 0 Other current assets Long-term debt Common stock Other assets 5,000 200,000 490,000 15,000 Accumulated depreciation 312,000 ? Retained earnings (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.)
Below is the balance sheet prepared from the information in the popup window.
What is this?Balance Sheet Assets: Cash: $50,000, Accounts receivable: $42,700, Inventories: $40,000, Other current assets: $5,000 Gross fixed assets: $1,280,000 Less accumulated depreciation: -$312,000 Total Assets: $1,106,700 Liabilities: Accounts payable: $23,000.
Short-term notes payable: $10,500Other current liabilities: $5,000Long-term debt: $200,000Total Liabilities: $238,500Equity: Common stock: $490,000Retained earnings: $15,000Total Equity: $505,000Total Liabilities and Equity: $1,106,700Net working capital is calculated as the difference between current assets and current liabilities.
Net Working Capital = Current Assets - Current Liabilities, Net Working Capital = $50,000 + $42,700 + $40,000 + $5,000 - $23,000 - $10,500 - $5,000Net Working Capital = $98,200.
Debt ratio is calculated as the ratio of total liabilities to total assets. Debt Ratio = Total Liabilities / Total AssetsDebt Ratio = $238,500 / $1,106,700Debt Ratio = 0.215 (rounded to three decimal places).
Therefore, the net working capital is $98,200 and the debt ratio is 0.215.
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Sheffield Company is considering investing in a new dock that will cost $720,000. The company expects to use the dock for 5 years, after which it will be sold for $460,000. Sheffield anticipates annual cash flows of $270,000 resulting from the new dock. The company's borrowing rate is 8%, while its cost of capital is 11%.
Based on the given information, Sheffield Company's net present value (NPV) for the investment in the new dock is $165,189.72. Since the NPV is positive, the project is financially feasible and would create value for the company.
To determine the net present value (NPV) of Sheffield Company's investment in the new dock, we need to discount the cash flows using the appropriate discount rate. The annual cash flow from the dock is $270,000 for 5 years, and the salvage value at the end of 5 years is $460,000. Using the cost of capital as the discount rate, we discount each annual cash flow and the salvage value back to their present value. The discount rate is given as 11%. After discounting each cash flow, we sum up all the present values and subtract the initial cost of the dock. The NPV is calculated as the sum of the present values minus the initial cost, resulting in $165,189.72. Since the NPV is positive, the project is considered financially feasible and would create value for Sheffield Company. A positive NPV indicates that the expected cash inflows exceed the initial investment and the required rate of return. Therefore, Sheffield Company should consider investing in the new dock.
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The complete question is: Sheffield Company is considering investing in a new dock that will cost $720,000. The company expects to use the dock for 5 years, after which it will be sold for $460,000. Sheffield anticipates annual cash flows of $270,000 resulting from the new dock. The company's borrowing rate is 8%, while its cost of capital is 11%. Calculate the net present value of the dock.
Which of the following are likely advantages of employee share purchase plans for employees? (Select all that apply.) A discount on the purchase price of the shares. The absence of brokerage fees to purchase the shares. Shares that promise special privileges.
The likely advantages of employee share purchase plans for employees are a discount on the purchase price of the shares and the absence of brokerage fees.
Employee share purchase plans offer several advantages for employees. One significant advantage is the discount on the purchase price of the shares. These plans often allow employees to buy company shares at a discounted price compared to the market value.
This discount can range from a certain percentage off the market price to a fixed discounted price per share. By purchasing shares at a lower cost, employees can potentially benefit from immediate financial gains if the share price increases in the future.
Another advantage of employee share purchase plans is the absence of brokerage fees. When employees participate in these plans, they can typically purchase shares directly from the company without incurring any brokerage fees.
This eliminates the cost associated with using a brokerage firm to facilitate the share purchase. As a result, employees can maximize their investment by saving on transaction costs and increasing the overall value of their shareholdings.
It's worth noting that shares that promise special privileges are not typically associated with employee share purchase plans. These plans primarily focus on providing financial benefits through discounted share prices and reduced transaction fees.
Special privileges or benefits are more commonly seen in other types of equity-based compensation programs such as stock options or restricted stock units.
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The likely advantages of employee share purchase plans for employees include a discount on the purchase price of the shares and the absence of brokerage fees to purchase the shares.
Employee share purchase plans (ESPPs) are designed to provide employees with the opportunity to purchase company shares at a discounted price. This discount on the purchase price of the shares is one of the significant advantages for employees. It allows employees to acquire company shares at a lower cost, potentially enabling them to benefit from any future increase in the share price.
Additionally, ESPPs often waive or reduce brokerage fees that employees would typically incur when purchasing shares through traditional means. By eliminating these fees, employees can save on transaction costs and increase their potential returns.
However, shares that promise special privileges are not commonly associated with employee share purchase plans. While some companies may offer special privileges or benefits to shareholders, such as voting rights or dividend preferences, these privileges are typically associated with specific types of shares (e.g., preferred shares) and may not be part of standard employee share purchase plans.
In summary, the likely advantages of employee share purchase plans for employees include a discounted purchase price of shares and the absence of brokerage fees, while shares with special privileges are not typically included in such plans.
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Extreme Manufacturing Company provides the following ABC costing information:
Activities Total Costs Activity-cost drivers
Account inquiry $320,000 16,000 hours
Account billing $200,000 4,000,000 lines
Account verification accounts $173,250 70,000 accounts
Correspondence letters $24,000 4,000 letters
Total costs $717,250
The above activities are used by Departments A and B as follows:
Department A Department B
Account inquiry hours 2,700 hours 4,200 hours
Account billing lines 950,000 lines 750,000 lines
Account verification accounts 8,500 accounts 6,500 accounts
Correspondence letters 1,400 letters 1,800 letters
How much of the account billing cost will be assigned to Department A?
How much of the account verification accounts cost will be assigned to Department B?
ABC costing refers to a costing technique that recognizes activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption of the activities.
1. How much of the account billing cost will be assigned to Department A?
The total cost of account billing is $200,000, and the activity-cost driver is 4,000,000 lines. Thus, the cost per line will be:$200,000 ÷ 4,000,000 = $0.05
The number of lines used by Department A is 950,000 lines. Therefore, the total cost of account billing that will be assigned to Department A will be:$0.05 × 950,000 lines = $47,500
Thus, $47,500 of the account billing cost will be assigned to Department A.
2. How much of the account verification accounts cost will be assigned to Department B?
The total cost of account verification accounts is $173,250, and the activity-cost driver is 70,000 accounts. Thus, the cost per account will be:$173,250 ÷ 70,000 accounts = $2.47
The number of accounts used by Department B is 6,500 accounts. Therefore, the total cost of account verification accounts that will be assigned to Department B will be:$2.47 × 6,500 accounts = $16,055. Thus, $16,055 of the account verification accounts cost will be assigned to Department B. Therefore, $16,055 of the account verification accounts cost will be assigned to Department B.
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Which of the following are advantages of the use of panel data over pure cross-sectional or pure time-series modelling?
(i) The use of panel data can increase the number of degrees of freedom and therefore the power of tests
(ii) The use of panel data allows the average value of the dependent variable to vary either cross-sectionally or over time or both
(iii) The use of panel data enables the researcher allows the estimated relationship between the independent and dependent variables to vary either cross-sectionally or over time or both
a) (i) only
b) (i) and (ii) only
c) (ii) only
d) (i), (ii), and (iii)
The correct answer is d) (i), (ii), and (iii).
(i) The use of panel data can increase the number of degrees of freedom and therefore the power of tests. Panel data combines both cross-sectional and time-series observations, resulting in a larger sample size and more degrees of freedom compared to pure cross-sectional or pure time-series data. This increased sample size improves the statistical power of tests and allows for more robust and reliable analysis.
(ii) The use of panel data allows the average value of the dependent variable to vary either cross-sectionally or over time or both. Panel data captures variations in the dependent variable across different entities (cross-sectionally) and across different time periods. This provides a more comprehensive understanding of the average behavior of the dependent variable, allowing for a richer analysis of trends and patterns.
(iii) The use of panel data enables the researcher to allow the estimated relationship between the independent and dependent variables to vary either cross-sectionally or over time or both. Panel data analysis allows for the examination of how the relationship between variables changes across different entities or over different time periods. This flexibility allows researchers to capture heterogeneity and dynamics in the data, leading to a more nuanced and accurate estimation of the relationship.
Therefore, all three options (i), (ii), and (iii) are advantages of using panel data over pure cross-sectional or pure time-series modeling.
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when a threat to independence arises, an auditor should consider:
When a threat to independence arises, the auditor should consider the degree of the threat and whether appropriate safeguards are available to mitigate the risk. The auditor must assess the nature and significance of the threat and determine the potential impact on the audit's overall quality. If appropriate safeguards are not available, the auditor may need to withdraw from the engagement to maintain their independence.
An auditor is a qualified professional who inspects and examines financial statements, accounting records, and other business documents to ensure the accuracy and integrity of a company's financial statements. Auditors are tasked with providing an unbiased assessment of a company's financial position, and they play an important role in the financial reporting process. Threats to Independence Threats to independence occur when there is a risk that the auditor will be influenced by factors that could affect their objectivity or independence. Threats to independence can arise in several ways, including financial, economic, and personal relationships between the auditor and the client.
Considerations of an auditor in response to a threat to independence When a threat to independence arises, the auditor should assess the degree of the threat and determine whether appropriate safeguards are available to reduce the risk. Some of the factors that an auditor should consider include the following:-
1. The nature of the threat: The auditor must assess the nature of the threat to independence.
2. The significance of the threat: The auditor must determine the significance of the threat to independence and the potential impact on the audit's overall quality.
3. Availability of safeguards: The auditor must consider whether appropriate safeguards are available to mitigate the risk. Safeguards may include such measures as providing education and training to auditors, separating audit and non-audit services, and establishing an independent audit committee.
4. The client's response: The auditor should consider the client's response to the threat to independence and whether the client is willing to take appropriate actions to address the issue
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Car inspection: Of all the registered automobiles in a city, 11% fail the emissions test. Fourteen automobiles are selected at random to undergo an emissions test. Round the answers to four decima
The probability of exactly two out of 14 vehicles failing the emissions test is 0.1536 or 15.36% (rounded to four decimal places)
The problem presents the probability of an automobile failing the emissions test and a sample of 14 vehicles are taken.
To find the probability that a given number of automobiles pass or fail the test, we can use binomial probability. The binomial probability is used to calculate the probability of success or failure in a fixed number of independent trials under identical conditions.
Car inspection: Of all the registered automobiles in a city, 11% fail the emissions test. Fourteen automobiles are selected at random to undergo an emissions test. Round the answers to four decimals.The probability of an automobile failing the emissions test is 0.11.
A sample of 14 automobiles is taken.The probability of finding exactly k successes in n trials is given by;P(X=k)=nCkPk(1−P)n−k
where, n is the number of trials, k is the number of successes, P is the probability of success in any trial, and 1-P is the probability of failure.
We are interested in finding the probability that out of 14 vehicles, exactly two fail the emissions test, that is, P(X=2).P(X=2) = 14C2 (0.11)² (0.89)¹²= 91 (0.0121) (0.1215)≈ 0.1536 or 15.36%.
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Find an example of a news article that uses supply and demand to talk about why prices are increasing or decreasing. Share the link, summarize the article, and comment on whether you think the journalist who wrote the article seems to be applying the supply and demand model correctly.
To receive full credit
Post a link to a news article and summarize
Describe what good or service the market is for, and how supply and demand was applied in the article, and whether you agree with how the journalist applied the model.
Supply and demand is a fundamental concept in economics that explains how the price and quantity of goods and services are determined in a market. When the demand for a particular good or service is high, and the supply is low, the price of that commodity increases.
On the other hand, when the demand is low, and the supply is high, the price falls. In other words, the price of a good or service is a function of the interaction between supply and demand.There are numerous examples of news articles that use supply and demand to explain price fluctuations in a market. A recent example is the COVID-19 pandemic, which has affected the supply and demand of many products, leading to price hikes in some cases and price reductions in others.
For instance, the price of hand sanitizers, face masks, and toilet paper skyrocketed during the early days of the pandemic due to an increase in demand and limited supply.However, as more companies started to produce these products, the supply increased, and the price went down. This is a clear example of how the supply and demand model affects the price of goods and services.
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