The present value of their dividends over the next four years is $9.88 (rounded to two decimal places).
The present value of dividends over the next four years when Company AW pays a dividend of $3.00 next year and expects to increase its dividend by $0.50 in each of the following three years and their required rate of return is 15 percent can be calculated using the formula:
PV of annuity = R × [{1 - (1 + i)^-n} / i]
Where,R = $3.00
i = 15% = 0.15
n = 4 (as they are paying dividend for next four years) $0.50 increase in each of the following three years = $0.50 + $3.00 = $3.50
PV of dividend for the 2nd year= $3.50 / (1 + 0.15)²= $2.55
PV of dividend for the 3rd year= $4.00 / (1 + 0.15)³= $2.33
PV of dividend for the 4th year= $4.50 / (1 + 0.15)⁴= $2.00
The present value of the dividends for the next four years is calculated by adding the present value of the four dividend payments.
That is, PV of dividends = PV of dividend for the 1st year + PV of dividend for the 2nd year + PV of dividend for the 3rd year + PV of dividend for the 4th year
PV of dividends = $3.00 + $2.55 + $2.33 + $2.00
PV of dividends = $9.88
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which of the following would not be eligible for coverage under key person
Equipment of the company. A key-person insurance policy offers protection to the business enterprise against losses due to the loss of a key employee due to death, disability, or other conditions mentioned in the policy. A key-person insurance policy offers protection to the business enterprise against losses due to the loss of a key employee due to death, disability, or other conditions mentioned in the policy, including a life policy.
Explanation: Key person insurance pays for the price of training and recruiting a new employee to replace the key person. The policy covers the following:- Recruiting costs of the key person- Lost revenue due to the key person's absence- Death-related expenses of the key person- Shareholder value losses due to the key person's death or disability- Long-term debt interest payments- Paying a salary to the replacement employee- Payments of interest on lines of creditA key-person policy does not cover capital expenses of the company such as equipment and technology upgrades.
Key person insurance is a policy that provides businesses with protection against the loss of a key employee due to death, disability, or other conditions mentioned in the policy. The policy covers the recruiting costs of the key person, lost revenue due to their absence, and other associated costs.However, the policy does not cover capital expenses such as equipment or technology upgrades. Key person insurance can be a vital aspect of business continuity planning, ensuring the company can survive if the loss of a key employee occurs.
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Asiya has the following utility function u(x,y)=x03y07 where X is chocolate and Y is Coke. Asiya always spends 100 on both products (income 100) and the market price of coke (y) is 1. a. Assuming that the market price of coke (y) is always 1 RMB (per unit), calculate the demand curve for chocolate x as a function of x-price (assuming her income is 100).
b. Use the demand curve to calculate the quantity demanded for the price (x) of 1. What will be the quantity demanded for the price of 2
c. Assuming the economy has 100 consumer that are identical to Asiya (same utility function, same income). Calculate the aggregate demand curve for chocolate (x). c.
a. The demand curve for chocolate (x) as a function of its price is x = 100/(2p^(1/7)).
b. The quantity demanded for a price of 1 is approximately 38.08 units, and for a price of 2, it is approximately 25.39 units.
c. The aggregate demand curve for chocolate (x) in an economy with 100 identical consumers is x = 10000/(2p^(1/7)).
a. To derive the demand curve for chocolate (x) as a function of its price, we need to solve the utility maximization problem. The utility function is given as u(x,y) = x^0.3 * y^0.7, where y is the quantity of Coke. Since Asiya always spends 100 on both products, her income is 100.
Using the budget constraint, we can write the equation as: p*x + y = 100, where p is the price of chocolate and y is the price of Coke (which is given as 1 in this case).
Rearranging the equation to solve for y, we get: y = 100 - p*x.
Substituting this value of y into the utility function, we have: u(x) = x^0.3 * (100 - p*x)^0.7.
To find the demand curve, we differentiate u(x) with respect to x and set it equal to zero:
du(x)/dx = 0.3x^(-0.7) * (100 - px)^0.7 - 0.7 * p * x^0.3 * (100 - p*x)^(-0.3)
= 0.
Simplifying and rearranging, we find: (0.3/0.7) * x^(-0.7) * (100 - px)^0.7 = p * x^0.3 * (100 - px)^(-0.3).
Simplifying further, we get: 0.3 * (100 - p*x) = p * x.
Solving for x, we obtain: x = 100/(2p^(1/7)).
b. To calculate the quantity demanded for a specific price, we can plug the price (x) into the demand curve equation.
For a price of 1, x = 100/(2*1^(1/7))
≈ 38.08 units.
For a price of 2, x = 100/(2*2^(1/7))
≈ 25.39 units.
c. In an economy with 100 identical consumers, the aggregate demand curve for chocolate (x) can be obtained by summing up the individual demand curves. Since all consumers have the same utility function and income, the aggregate demand curve will be 100 times the individual demand curve.
Thus, the aggregate demand curve for chocolate is x = 10000/(2p^(1/7)).
a. The demand curve for chocolate (x) as a function of its price is x = 100/(2p^(1/7)).
b. The quantity demanded for a price of 1 is approximately 38.08 units, and for a price of 2, it is approximately 25.39 units.
c. The aggregate demand curve for chocolate (x) in an economy with 100 identical consumers is x = 10000/(2p^(1/7)).
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The mathematical technique that underlies the reciprocal cost allocation method is:
A.
Simultaneous equations.
B.
Correlation analysis
C.
Regression analysis.
D.
Analysis of variances.
the reciprocal cost allocation method relies on the mathematical technique of simultaneous equations to determine the cost allocation factors and allocate costs among departments within an organization. A is correct answer
The mathematical technique that underlies the reciprocal cost allocation method is simultaneous equations.
The reciprocal cost allocation method is a technique used to allocate costs among different departments or cost centers within an organization. It is commonly employed when there are interdependencies or mutual services among the departments, meaning that the services provided by one department are used by other departments, and vice versa.
To allocate costs using the reciprocal method, simultaneous equations are used to solve for the cost allocation factors. The method takes into account the mutual interactions and dependencies among the departments and calculates a set of simultaneous equations to determine the cost allocations.
The simultaneous equations are derived by considering the interdepartmental relationships and the proportion of services received and provided by each department. The equations express the total costs incurred by each department as a combination of its own costs and the costs allocated from other departments based on the reciprocal services they provide.
The equations are then solved simultaneously to find the values of the cost allocation factors. These factors represent the proportions of costs allocated from one department to another. By solving the equations, the costs are allocated in a way that reflects the interdependencies and interactions among the departments accurately.
In summary, the reciprocal cost allocation method relies on the mathematical technique of simultaneous equations to determine the cost allocation factors and allocate costs among departments within an organization.A is correct answer
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Item Purchase Price ACV Replacement Cost Furniture Couch set $3,500 $875 $3,850 Outdoor lawn furniture 3,125 1,563 3,750 Dining room table and chairs 1,000 500 1,200 Appliances TV 750 375 900 DVD play
The item purchase price, ACV, and replacement cost for several furniture items, appliances, a TV, and a DVD player are given in the table below:
Furniture Item Purchase Price ACV Replacement Cost Couch Set $3,500 $875 $3,850 Outdoor Lawn Furniture $3,125 $1,563 $3,750 Dining Room Table and Chairs $1,000 $500 $1,200 Appliances TV $750 $375 $900 DVD Player $200 $100 $240 The table shows that for all items, the ACV (Actual Cash Value) is less than the item purchase price, and the replacement cost is more than the item purchase price. This is expected because the item purchase price represents the original cost of the item, while the ACV represents the current value of the item, and the replacement cost represents the cost of replacing the item with a similar one.However, for the DVD player, the ACV and replacement cost are closer to the item purchase price compared to the other items, meaning that it has retained more of its value than the other items.
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In the condition disclosure, which of the following is something a seller may do, but is not required to do?
In the condition disclosure, sellers have the option but are not obligated to provide additional warranties or guarantees.
While sellers are legally required to disclose material defects or issues with the property, going beyond those obligations by offering extra assurances is voluntary. These additional warranties or guarantees can provide buyers with added confidence and may increase the appeal of the sale.
However, sellers have the freedom to choose whether or not to offer these extras. It is important for buyers to carefully review the condition disclosure and any accompanying warranties or guarantees to understand the extent of the seller's commitments.
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(A,Default/B,Reinvestment/C,Price) risk is the risk of a decline in a bond's value due to an increase in interest rates. This risk is higher on bonds that have long maturities than on bonds that will mature in the near future. (A,Default/B,Reinvestment/C,Price) risk is the risk that a decline in interest rates will lead to a decline in income from a bond portfolio. This risk is obviously high on callable bonds. It is also high on short-term bonds because the shorter the bond's maturity, the fewer the years before the relatively high old-coupon bonds will be replaced with new low-coupon issues. Which type of risk is more relevant to an investor depends on the investor's (A,Investment Horizon/B,Default Period/C,Option Period), which is the period of time an investor plans to hold a particular investment. Longer maturity bonds have high (A,Reinvestment/B,Price/C,Exchange) risk but low (A,Reinvestment/B,Price/C,Exchange) risk, while higher coupon bonds have a higher level of (A,Reinvestment/B,Price/C,Exchange) risk and a lower level of (A,Reinvestment/B,Price/C,Exchange) risk. To account for the effects related to both a bond's maturity and coupon, many analysts focus on a measure called (A,Correlation/B,Duration/C,Signaling) , which is the weighted average of the time it takes to receive each of the bond's cash flows.
Conceptual Question: Which of the following bonds would have the largest duration? A)10year-zero coupon bonds
B)10year-7% annual coupon bonds
C)10year-3% annual coupon bonds
D)5year-3% annual coupon bonds
E)3year-7% annual coupon bonds
The answer to this statement: "The bond with the largest duration would be option A) 10-year zero-coupon bonds."
The duration of a bond is a measure of its sensitivity to changes in interest rates. It takes into account the timing and amount of the bond's cash flows. In general, bonds with longer maturities and lower coupon rates tend to have higher durations.
Among the options provided, the bond with the largest duration would be the one with the longest maturity and the lowest coupon rate. Looking at the options:
A) 10-year zero-coupon bonds: These bonds have a long maturity but no coupon payments. Since there are no coupon payments to be received before maturity, the duration of zero-coupon bonds is equal to their maturity. Therefore, the duration of 10-year zero-coupon bonds would be 10 years.
B) 10-year 7% annual coupon bonds: These bonds have a longer maturity but a higher coupon rate compared to option C. The higher coupon payments received throughout the bond's life help to reduce the overall duration. Therefore, the duration of these bonds would be less than 10 years.
C) 10-year 3% annual coupon bonds: These bonds have a longer maturity compared to options D and E, and a lower coupon rate compared to option B. The combination of longer maturity and lower coupon rate suggests that these bonds would have a higher duration than option B, but lower than option A.
D) 5-year 3% annual coupon bonds: These bonds have a shorter maturity compared to options A, B, and C. The shorter maturity generally leads to a lower duration.
E) 3-year 7% annual coupon bonds: These bonds have the shortest maturity among the options. The shorter maturity typically results in a lower duration.
Therefore, among the given options, the bond with the largest duration would be option A) 10-year zero-coupon bonds.
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describe how an organization’s overall internal control
objectives are strengthened by requiring that one person authorizes
a purchase order and another writes the check in payment.
Requiring one person to authorize a purchase order and another to write the check in payment strengthens an organization's overall internal control objectives.
By requiring two separate individuals to handle the purchase order and payment process, an organization is implementing a system of checks and balances.
This helps to prevent fraud, errors, and other issues that can arise when one individual has complete control over the entire process.
Separating these responsibilities forces employees to be accountable for their actions and helps to ensure that purchases are properly authorized and payments are made in a timely and accurate manner.
Furthermore, this practice also helps to increase transparency within an organization, which can lead to greater trust among stakeholders and a stronger overall control environment.
Overall, requiring separate authorizations for purchase orders and payment checks is an important internal control measure that helps to mitigate risks and strengthen an organization's overall control objectives.
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Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr.; partnership $20,000 Cr. O True O False 4 Question 16 Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr.; partnership $20,000 Cr. O True O False 4 Question 16 Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr.; partnership $20,000 Cr. O True O False 4 Question 16 Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr.; partnership $20,000 Cr. O True O False 4 Question 16 Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr.; partnership $20,000 Cr. O True O False 4
The correct answer is True.
When Ahmed contributes cash of $20,000 into the partnership, the journal entry should include a debit to the Cash account for $20,000 and a credit to the Partnership account for $20,000.
This entry reflects an increase in the partnership's cash assets and an increase in the owner's equity. By debiting the Cash account, we are recording the inflow of cash into the partnership, while crediting the Partnership account indicates an increase in the capital contributed by Ahmed. This journal entry accurately reflects the transaction and its impact on the partnership's financial records.
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Is it (A) True or (B) False that: Strategic alliances are government mandated agreements between firms involving exchange, sharing, or co-developing of products, technologies, or services? Not yet answered Points out of 4 Select one: a. True P Flag question b. False Which of the above participants can be considered stakeholders from the social responsibility perspective of the firm? Not yet answered Select one: Points out of 4 Flag question a. Employees O b. Suppliers O c. Governments d. Only A and B e. All of the Above In the Principal Agency relationships, which is not an agency (owner-managers) problem discussed in the text? Not yet answered Select one: Points out of 4 a. P Flag question Excessive on the job consumption b. Special benefits for customers c. Low-risk, short-term investments d. Empire building behavior Is it (A) True or (B) False that: From a Corporate Social Responsibility perspective, managers are uniquely positioned at the center of all stakeholder relationships? Not yet answered Select one: Points out of 4 O a. True Flag question O b. False In our text all of the following EXCEPT ONE was given as reasons for firms to go abroad? Not yet answered Select one: Points out of 4 Flag question O a. To avoid failure and competition in the domestic market O b. To reach larger economies of scale by selling to more customers in other countries. O c. To reduce the risk of over dependence on one country by spreading sales in multiple countries. O d. To replicate the success at home in new settings. O e. B and C
The statement "Strategic alliances are government mandated agreements between firms involving exchange, sharing, or co-developing of products, technologies, or services" is false.
Strategic alliances are voluntary agreements between firms that involve exchange, sharing, or co-developing products, technologies, or services. A strategic alliance can be an agreement between a supplier and a manufacturer, between a producer and a distributor, or between two manufacturers. The agency problem discussed in the text for the Principal Agency relationships that is not an owner-manager problem is special benefits for customers. The owner-manager problem involves the pursuit of personal goals by managers that conflict with the goals of the owners or shareholders. Is it (A) True or (B) False that: From a Corporate Social Responsibility perspective, managers are uniquely positioned at the center of all stakeholder relationships The statement "From a Corporate Social Responsibility perspective, managers are uniquely positioned at the center of all stakeholder relationships" is true. Managers are in a unique position to manage the interactions between the firm and its stakeholders from a Corporate Social Responsibility (CSR) perspective.
Managers can help the firm to be socially responsible by engaging in stakeholder management practices that are designed to meet the expectations of all stakeholders. In our text all of the following EXCEPT ONE was given as reasons for firms to go abroad The option "To avoid failure and competition in the domestic market" is the exception among the given options. All the other options: to reach larger economies of scale by selling to more customers in other countries, to reduce the risk of overdependence on one country by spreading sales in multiple countries, and to replicate the success at home in new settings were given as reasons for firms to go abroad. All of the above participants can be considered stakeholders from the social responsibility perspective of the firm. The stakeholders of a firm are individuals or groups that are impacted by the actions of the firm and have an interest in the success or failure of the firm. These stakeholders include employees, suppliers, governments, customers, shareholders, and the local community.
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Which of the following statement is CORRECT about the foundational assumption used in CVP analysis. O Behavior of revenue and costs can be graphed as a straight line. Selling price, variable cost per unit and total fixed costs are known and fluctuates. The time value of money is considered. Relative sales proportions of multiple products are known and fluctuates. Moving to anot
The correct statement about the foundational assumption used in CVP (Cost-Volume-Profit) analysis is: Behavior of revenue and costs can be graphed as a straight line.
CVP analysis is a tool used by companies to understand the relationship between costs, volume, and profitability. It is based on several assumptions, and one of the key assumptions is that the behavior of revenue and costs can be graphed as a straight line within a relevant range of activity.
This assumption implies that the company's sales revenue and costs can be approximated as linear functions, where changes in volume or activity level result in proportional changes in revenue and costs. It assumes a constant selling price per unit, constant variable cost per unit, and fixed costs that remain constant within the relevant range.
While other factors such as selling price, variable cost per unit, and total fixed costs may fluctuate, the assumption of a linear relationship between revenue and costs is fundamental to CVP analysis. It allows managers to make simplified projections and predictions regarding profit levels at different activity levels and helps in making important business decisions.
Therefore, the correct statement is that the behavior of revenue and costs can be graphed as a straight line.
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Sarratt Corporation's contribution margin ratio is 76% and its fixed monthly expenses are $32,000. Assume that the company's sales for May are expected to be $91,000. Required: Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change. Net operating income
The estimated net operating income for Sarratt Corporation in May is $37,160.
net operating income for Sarratt Corporation:
To estimate Sarratt Corporation's net operating income for May, we can use the contribution margin ratio and the expected sales.
Calculate the contribution margin:
Contribution margin = Sales * Contribution margin ratio
Contribution margin = $91,000 * 0.76
Contribution margin = $69,160
Calculate the net operating income:
Net operating income = Contribution margin - Fixed expenses
Net operating income = $69,160 - $32,000
Net operating income = $37,160
Therefore, the estimated net operating income for Sarratt Corporation in May is $37,160.
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The head of the division also mentions that he has to do a presentation about liquidity management and technological advancements to Unibank’s board of directors. Therefore, please provide him with information about the following issues to assist with his presentation:
a. Distinguish between loan sales with and without recourse, and why would financial institutions want to sell loans with recourse? (1 mark)
b. Explain how loan sales can leave financial institutions exposed to contingent interest rate risks (1 mark).
c. Briefly explain what a contagious run is, some of the potentially serious adverse social welfare effects of a contagious run, and whether all types of financial institutions face the same risk of contagious runs (1 mark).
d. What are the advantage and disadvantages of technological advancements from the bank’s perspective? Use examples where appropriate (4 marks).
e. Briefly explain what the economies of scale and economies of scope mean in regards to the cost structure that technology could bring to the bank (2 marks).
a. Loan sales with recourse refer to the transfer of loans to another party, where the original financial institution retains some level of responsibility or guarantee for the repayment of the loan in case of default by the borrower. Financial institutions may choose to sell loans with recourse to mitigate credit risk and protect their balance sheets. By retaining recourse, they ensure that they have a fallback option to recover any losses if the borrower fails to repay the loan.
b. Loan sales can leave financial institutions exposed to contingent interest rate risks because the value of the loans they sold may be affected by changes in interest rates. If interest rates increase, the market value of the loans may decline, resulting in potential losses for the selling institution. This risk arises because the market value of fixed-rate loans can be inversely related to changes in interest rates.
c. A contagious run refers to a situation where depositors or investors in financial institutions lose confidence in one institution and rapidly withdraw their funds, leading to a widespread panic and loss of confidence in other financial institutions. This can have serious adverse social welfare effects, including the erosion of public trust in the financial system, liquidity shortages, and potential systemic financial crises. While all types of financial institutions can face the risk of contagious runs, it is typically more pronounced in banks and other depository institutions that rely heavily on customer deposits.
d. Technological advancements offer advantages and disadvantages to banks. Advantages include improved operational efficiency, cost reduction through automation, enhanced customer experience through digital channels, and the ability to offer innovative products and services. For example, online banking platforms and mobile banking apps provide convenience and accessibility for customers.
e. Economies of scale in the context of technology refer to the cost advantages that banks can achieve by increasing their operational size. With larger operations, banks can spread their fixed costs over a larger customer base, leading to lower average costs per customer. Economies of scope, on the other hand, relate to cost savings achieved by offering a broader range of products and services. These cost efficiencies contribute to the overall cost structure improvements that technology can bring to the bank.
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Draw a graph of a competitive market in equilibrium, and illustrate a decrease in Supply. Carefully label everything. Use the "E" labels to label the equilibrium points. As a result of the shift, what will happen to price and quantity? Carefully explain the mechanism that causes price to adjust after the shift, and illustrate it on your graph. Carefully label everything on the graph. Use the boxes below to type your answer. If you reach the line that divides the left side from the right side, start a new line in the next box down. If you do not use all of the boxes, put an "x" in the boxes you do not use.
In a competitive market in equilibrium, the quantity supplied equals the quantity demanded. It is characterized by a stable price and a stable quantity.
A competitive market is said to be in equilibrium when the quantity demanded is equal to the quantity supplied at a certain price level.Graph:Decrease in Supply:In the graph, a decrease in supply is depicted by a leftward shift in the supply curve from S1 to S2. The intersection of S1 and D curve represents the equilibrium point E1 in the market.
The equilibrium quantity is Q1, and the equilibrium price is P1. Following the decrease in supply, the new equilibrium point becomes E2. The new equilibrium price is P2, and the new equilibrium quantity is Q2.
The mechanism that causes price to adjust after the shift is known as the market mechanism. The market mechanism is a self-correcting process. The decrease in supply causes the price to rise. The higher price is an incentive for suppliers to increase their production.
As a result, the market price will rise, and the quantity supplied will increase. At the same time, the higher price will discourage buyers from buying, and the quantity demanded will decrease. Eventually, the market will achieve a new equilibrium at a higher price level and a lower quantity.
As a result, the equilibrium price rises, and the equilibrium quantity falls.The market mechanism explains the adjustment of price following a shift in supply. It is the primary force that drives the market towards equilibrium. The market mechanism is the way in which the market adjusts to changes in demand or supply.
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The principle of paramountey applies where there is a contradiction between a federal law and a provincial law ?
True or False
The principle of paramountcy applies where there is a contradiction between a federal law and a provincial law. The correct option is true
What is principle of paramountcy?When there is a disagreement between two or more pieces of legislation, one of which is federal and the other is provincial, the doctrine of paramountcy in constitutional law is applicable. According to the principle of paramountcy, in a dispute, federal law will take precedence.
The principle of paramountcy applies where there is a contradiction between a federal law and a provincial law. This is because the federal government has been granted certain powers by the Constitution, and these powers are supreme over any provincial laws that conflict with them.
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if george's mps is 0.75 and he earns an additional $1,000, how much would he save?
Where the above Marginal propensity to save (MPS) is given, George would save $750 from the additional $1,000 he earns.
How is this so ?To determine how much George would save, we need to multiply his marginal propensity to save (MPS) by the additional income he earns.
If George's MPS is 0.75 and he earns an additional $1,000, his savings would be -
Savings = MPS * Additional Income
Savings = 0.75 * $1,000
Savings = $750
Therefore, George would save $750 from the additional $1,000 he earns.
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What market analysis tools and equilibrium concepts that you have learned in the class are most useful to represent the corruptive interaction between an entrepreneur and a politician and analyse when corruption occurs in equilibrium?
market analysis tools: comparative static analysis, welfare analysis, marginal analysis
The market analysis tools of comparative static analysis, welfare analysis, and marginal analysis can be useful in representing the corruptive interaction between an entrepreneur and a politician.
Comparative static analysis is a tool that compares the equilibrium outcomes before and after a change in market conditions. In the context of corruption between an entrepreneur and a politician, comparative static analysis can help examine how changes in the parameters or incentives affect the occurrence and intensity of corruption. It allows for the evaluation of different scenarios and their implications for corruption equilibrium.
Welfare analysis is another important tool that assesses the overall social welfare or economic efficiency in a market. In the case of corruption, welfare analysis can be used to evaluate the costs and benefits associated with corrupt activities. It helps in understanding the impact of corruption on the overall well-being of society and identifying the conditions under which corruption may arise or persist in equilibrium.
The marginal analysis focuses on analyzing the incremental changes in costs, benefits, or behaviors. Applied to the corruptive interaction, marginal analysis can help determine the point at which the benefits of engaging in corruption outweigh the associated costs. By comparing the marginal benefits and costs, it provides insights into the decision-making process of the entrepreneur and the politician and sheds light on the equilibrium conditions where corruption is likely to occur.
By employing these market analysis tools, it becomes possible to represent and analyze the corruptive interaction between an entrepreneur and a politician, identify the factors influencing corruption equilibrium, and assess the consequences of corruption on the overall market dynamics and societal welfare.
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I) The utility function of Ryan is given by U = 20 X Y and the prices of goods X nd Y are K5, 000 and K1, 000 respectively.He has an income of K 30,000 to spend its (i) Calculate the marginal utilities of goods X and Y (ii) Show that the ratio of the marginal utilities is equal to the inarginal rate of substitution. (iii) Find the values of X and Y that maximize utility. (iv) Calculate his total utility (v) Given that his income increases by K5, 000, calculate the change in total utility
The utility maximization analysis shows that Ryan's optimal consumption quantities and total utility are determined by the ratio of marginal utilities, and an increase in income leads to an increase in total utility.
(i) The marginal utility of good X can be calculated by taking the derivative of the utility function with respect to X, which is 20Y. Therefore, the marginal utility of X is 20Y. The marginal utility of good Y can be calculated similarly by taking the derivative of the utility function with respect to Y, which is 20X. Therefore, the marginal utility of Y is 20X.
(ii) To show that the ratio of the marginal utilities is equal to the marginal rate of substitution (MRS), we divide the marginal utility of X by the marginal utility of Y. The ratio is (20Y)/(20X) = Y/X, which is equal to the MRS.
(iii) To find the values of X and Y that maximize utility, we need to equate the marginal utility of X to the marginal utility of Y. Setting 20Y = 20X, we get Y = X. This implies that the optimal values for X and Y are equal.
(iv) To calculate the total utility, we substitute the values of X and Y into the utility function. Using Y = X, the utility function becomes U = [tex]20X^2.[/tex] With an income of K30,000, we can determine the quantity of X that maximizes utility by solving the equation 5,000X = 30,000, which gives X = 6. Substituting this value into the utility function, we find U = [tex]20(6)^2[/tex] = 720.
(v) If Ryan's income increases by K5,000, his new income becomes K35,000. Following the same process as before, we find the new optimal quantity of X by solving 5,000X = 35,000, which gives X = 7. Substituting this value into the utility function, we find the new total utility to be U = [tex]20(7)^2[/tex] = 980. The change in total utility is therefore 980 - 720 = 260.
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Bond Z is a 12% annual coupon bond maturing in 5 years with a face value of $1,000. The interest rate for all maturities is 10%. What is Bond Z's Macaulay duration? NOTE: Answers should be expressed i
To calculate Bond Z's Macaulay duration, we need to consider the timing of the cash flows and the present value of each cash flow. Here are the steps to calculate it:
Step 1: Calculate the present value of each cash flow.
The annual coupon payment is 12% of the face value, which is $1,000 * 12% = $120. The present value of each coupon payment can be calculated using the formula:
Present Value of Coupon Payment = Coupon Payment / (1 + Interest Rate) ^ Time
Time represents the number of years until the cash flow is received.
For Bond Z, we have:
Present Value of Coupon Payment = $120 / (1 + 10%) ^ 1 + $120 / (1 + 10%) ^ 2 + $120 / (1 + 10%) ^ 3 + $120 / (1 + 10%) ^ 4 + $120 / (1 + 10%) ^ 5
Step 2: Calculate the present value of the face value (final payment).
The present value of the face value can be calculated similarly:
Present Value of Face Value = Face Value / (1 + Interest Rate) ^ Time
For Bond Z, we have:
Present Value of Face Value = $1,000 / (1 + 10%) ^ 5
Step 3: Calculate the weighted average of the present values.
To calculate the Macaulay duration, we need to calculate the weighted average of the present values, where the weights are the proportions of the present values in relation to the bond's price.
Bond Price = Present Value of Coupon Payments + Present Value of Face Value
Macaulay Duration = (Weighted Average of Present Values of Coupon Payments * Time) + (Weighted Average of Present Values of Face Value * Time)
Now, let's calculate the values:
Present Value of Coupon Payments = $120 / (1 + 10%) + $120 / (1 + 10%)^2 + $120 / (1 + 10%)^3 + $120 / (1 + 10%)^4 + $120 / (1 + 10%)^5
= $120 / 1.10 + $120 / 1.10^2 + $120 / 1.10^3 + $120 / 1.10^4 + $120 / 1.10^5
≈ $109.09 + $99.17 + $90.15 + $81.95 + $74.50
≈ $454.86
Present Value of Face Value = $1,000 / (1 + 10%)^5
≈ $620.92
Bond Price = $454.86 + $620.92
≈ $1,075.78
Macaulay Duration = ($454.86 / $1,075.78 * 1) + ($620.92 / $1,075.78 * 5)
≈ 0.4229 + 2.9032
≈ 3.3261 years
Therefore, Bond Z's Macaulay duration is approximately 3.3261 years.
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Everything else equal, an effective annual rate will be greater than the bond equivalent yield on the same security. True/false.
False. An effective annual rate will not be greater than the bond equivalent yield on the same security, assuming all else is equal.
The bond equivalent yield (BEY) and the effective annual rate (EAR) are two different measures of annualized return. The BEY is used to calculate the annualized yield for a bond, typically one with semi-annual coupon payments, while the EAR is used to calculate the annualized rate of return for any investment, taking into account compounding.
The BEY assumes simple interest and does not consider the effect of compounding. It is calculated by doubling the semi-annual yield. On the other hand, the EAR takes into account compounding and is a more accurate measure of the actual annual rate of return.
Since the EAR considers compounding, it will generally be equal to or lower than the BEY. The difference between the two depends on the frequency of compounding. If compounding occurs more frequently than semi-annually, the EAR will be lower than the BEY. If compounding occurs less frequently, the EAR may be slightly higher, but it will not be significantly greater than the BEY.
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What is the responsibility of the organization's board when a leader is acting in an unethical manner, but the company is profitable?
When a leader is acting in an unethical manner but the company remains profitable, the responsibility of the organization's board is to uphold its fiduciary duty and act in the best interest of the company and its stakeholders. This involves addressing the unethical behavior and taking appropriate actions to rectify the situation, regardless of the financial performance.
The primary responsibility of the organization's board is to provide oversight and ensure the ethical and responsible management of the company. Even if the company is profitable, unethical behavior by a leader can have long-term negative consequences, including damage to the company's reputation, employee morale, and customer trust.
The board should initiate an investigation into the leader's actions, gathering evidence and seeking legal counsel if necessary. If the allegations of unethical behavior are substantiated, the board must take appropriate disciplinary actions, which may include reprimanding, suspending, or even terminating the leader's employment.
Furthermore, the board should review and strengthen the company's corporate governance policies and ethical guidelines to prevent similar incidents in the future. They should foster a culture of integrity and transparency within the organization, holding all employees, including leaders, accountable for their actions.
Ultimately, the board's responsibility is to uphold the company's values and protect the interests of all stakeholders, even if it means taking difficult actions when a leader is acting in an unethical manner, regardless of the company's financial performance.
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-Email is so persuasive these days that it is always the first
and best choice when it comes to deciding which platform or genre
is best for communicating and delivering your message.
- True or False
The statement "Email is so persuasive these days that it is always the first and best choice when it comes to deciding which platform or genre is best for communicating and delivering your message" is False.
What is email?
Email is a method of exchanging digital messages from an author to one or more recipients via the internet or other computer networks.
What is Persuasion?
Persuasion is a form of human communication aimed at changing the attitudes or behaviors of others through the use of written, spoken, or visual words and images. The statement given above is not true because there are different ways to communicate and deliver a message.
Depending on the situation or the audience, email may not be the best choice. For instance, if you want to give a detailed explanation of a complex concept, it may be better to use a video or a webinar to communicate your message rather than an email.
In conclusion, while email is a useful tool for communication, it may not always be the best choice, and different platforms or genres may be more appropriate depending on the situation or the audience.
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If a domestic currency is overvalued, then its real exchange rate could be (type in any feasible number)
If a domestic currency is overvalued, then its real exchange rate could be lower than what it should be. What does it mean when a domestic currency is overvalued? When the value of a domestic currency is considered too high based on the current market conditions, it is referred to as overvalued.
It implies that the domestic currency is worth more than it should be, based on prevailing market forces and economic conditions. When the real exchange rate of a currency is calculated, it considers inflation rates in both b in to the nominal exchange rate.
An overvalued domestic currency implies that the nominal exchange rate is higher than it should be based on current market forces, and this has an impact on the real exchange rate. A lower real exchange rate indicates that the overvalued domestic currency makes it more expensive for foreign customers to purchase domestic goods and services, making them less competitive in the global market. In conclusion, an overvalued domestic currency would result in a lower real exchange rate than it should be. The real exchange rate would indicate that the domestic currency is more expensive than it should be, leading to a reduced international competitiveness of the domestic economy and reduced demand for domestic goods and services.
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Consider the following open economy (Home economy). The real exchange rate fixed and equal to one. Saving, investment, government spending, taxes, imports and exports are given by: S = -80 +0.18Y (1) I = Ī G = G T = To + 1₁Y Q = 9₁Y X = X₁Y* where To is the level of autonomous taxes, q₁ and x₁ are, respectively the marginal propensity to import, and export reaction to the foreign country's income. An asterisk is used to designate variables related to the foreign economy. 1. Find the expression of saving (S) in terms of t₁, C₁, Co, and To, assuming that the consump- tion function has the following expression: C=c+c(Y –T) 2. Assuming that t₁ = 0.1 and To = 100, find the values for the values of co and c₁ 3. Solve for equilibrium income in Home economy, in terms of I, G, To, t₁, 91, x₁, and Y*. (12 points) 4. Find the expression for the multiplier for autonomous taxes (To) in Home economy? 5. Assume Foreign economy has the same equations as Home economy. Moreover, use the following values for the remaining autonomous variables: I = 500, G = 500. (a) Solve for the equilibrium values of income, Y, and Y* in both economies. (b) Find the tax multiplier for each economy now? (c) Why is it different from the multiplier found above using the given values for the autonomous variables? (d) Find the equilibrium values for government and trade deficits in each economy. 2 6. Assume Home economy wants to increase GDP by 150. (a) What is the necessary change in the level of autonomous taxes, ▲To, assuming that Foreign economy does not change its spending or its autonomous tax level to achieve the target output? (b) Solve for net exports and the budget deficit in each economy. How do they compare to the values found in (5)? If there is any difference, discuss it. 7. Assume now that both countries want to achieve the same increase in their GDP. They want to coordinate changes in their levels of autonomous taxes to achieve the target out- put. (a) Find the required change in autonomous taxes in each economy. (b) Solve for net exports and the budget deficit in each economy. How do they compare to the values found in (6)? Discuss the difference if there is any.
To solve the given questions, we will go step by step:
1. The expression for saving (S) in terms of t₁, C₁, Co, and To can be derived from the given consumption function:
C = c + c(Y - T)
S = Y - C
Substitute the consumption function into the saving equation:
S = Y - (c + c(Y - T))
Simplifying further, we get:
S = (1 - c)Y + cT
Assuming t₁ = 0.1 and To = 100, we need to find the values of c and c₁. Substituting these values into the consumption function, we have:
C = c + c(Y - T)
C = c + c(Y - t₁Y - To)
C = c + c(1 - t₁)Y - cTo
Comparing this with the given consumption function, we can equate the coefficients of Y and the constant term:
c + c(1 - t₁) = c + c₁
cTo = c₁
From these equations, we find that c = 0.9 and c₁ = 100.
2. To find the equilibrium income in the Home economy, we need to equate aggregate expenditure to output:
Y = C + I + G + X - M
Y = (c + c(Y - t₁Y - To)) + Ī + G + X - (q₁Y + x₁Y*)
Simplifying and rearranging, we get:
Y = (1 - c(1 - t₁) - q₁ - x₁Y*) / (1 - c)
Solving for Y, we find the equilibrium income in terms of the given variables.
3. The expression for the multiplier for autonomous taxes (To) can be obtained by taking the derivative of the equilibrium income equation with respect to To:
Multiplier = ∂Y / ∂To = (1 - c(1 - t₁) - q₁ - x₁Y*) / (1 - c)
(a) To find the equilibrium values of income, Y, and Y* in both economies, we need to equate aggregate expenditure to output for each economy.
(b) The tax multiplier for each economy can be calculated using the same approach as in question 4.
(c) The tax multiplier may be different from the multiplier found earlier due to different values of the autonomous variables and the interdependence between the two economies.
(d) The equilibrium values for government and trade deficits can be obtained by subtracting government spending and exports from aggregate expenditure.
4. (a) The necessary change in the level of autonomous taxes (▲To) can be calculated by dividing the desired change in GDP by the tax multiplier.
(b) Net exports and the budget deficit in each economy can be calculated by subtracting imports from exports and government spending from aggregate expenditure, respectively. Compare these values with those found in question 5.
5. (a) The required change in autonomous taxes in each economy can be calculated using the desired change in GDP and the tax multiplier for each economy.
(b) Net exports and the budget deficit can be calculated as in question 6. Compare these values with those found in question 6 to identify any differences.
In summary, to solve the given questions, we need to apply the given equations and formulas to derive the expressions for various variables and then perform the necessary calculations to find the equilibrium values and compare the results.
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1-1. On 1/1/19, Everwood Co. issues 10,000 shares of £10 par value convertible preference shares for £12 cash per share. Each share is convertible into 4 ordinary shares. On this date the £1 par value ordinary shares are selling for £3 per share. Approximately 2 years later, Everwood’s shareholders convert their preference shares into ordinary shares. On the date of conversion the preference shares are selling for £16 and the ordinary shares are selling for £5 per share. The journal entry on 1/1/19 will include which of the following?
a. Credit Share Capital—Preference £20,000.
b. Credit Share Premium—Ordinary £20,000.
c. Credit Share Capital—Preference £100,000.
d. Debit Share Premium—Ordinary £20,000.
Credit Share Capital—Preference £20,000. On 1/1/19, Everwood Co. issued 10,000 shares of £10 par value convertible preference shares for £12 cash per share.
The total amount received is £12 * 10,000 = £120,000. Since the preference shares have a par value of £10, the Share Capital—Preference account is credited with £10 * 10,000 = £100,000, representing the par value of the shares issued. The remaining amount of £120,000 - £100,000 = £20,000 is considered as Share Premium, which is credited to the Share Premium—Preference account. Therefore, the journal entry on 1/1/19 includes (a) Credit Share Capital—Preference £20,000.
The journal entry on 1/1/19 involves the issuance of 10,000 convertible preference shares by Everwood Co. at a price of £12 per share. The total amount received from the issuance is £120,000. Since the par value of the preference shares is £10, the Share Capital—Preference account is credited with £100,000 (£10 * 10,000 shares) to reflect the par value of the shares issued. The remaining amount of £20,000 (£120,000 - £100,000) is considered Share Premium and is credited to the Share Premium—Preference account. This entry accurately records the capital contributed by shareholders and the premium received over the par value.
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Presented below is THE STOCKHOLDERS' EQUITY SECTION OF A BALANCE SHEET PAR VALUE Common Stock, Par Value SHE BALANCE $1.00 Paid-in Capital in Excess of Par-Common Stock $4,500,000 $650,000 Preferred 8 1/2 % Stock, Par value $50.00 $3,000,000 Paid-in Capital in Excess of Par-Preferred Stock $500,000 Retained Earnings $2,000,000 Treasury Stock, common (at cost) $200,000 Number of share of Treasury Stock 20,000 Which of the following statements is (are) true about SHE? Do not select all statements, wrong answers are penalized "The total number of shares of Common Stock issued was: 4.480,000" "The number of Common shares outstanding equals 4,500,000 "The number of Common shares outstanding equals 4,480,000 "Total Stockholders Equity $10,450,000. "Total Stockholders Equity $10,850,000- The average selling price of the Common Stock was $1,14 The average selling price of the Common Stock was $1.00 "Total Stockholders Equity $10.650.000,- "The total number of shares of Common Stock issued was 4,500,000"
Given: Common Stock, Par Value $1.00, Paid-in Capital in Excess of Par-Common Stock $4,500,000, Preferred 8 1/2 % Stock, Par value $50.00, Paid-in Capital in Excess of Par-Preferred Stock $500,000, Retained Earnings $2,000,000, Treasury Stock, common (at cost) $200,000, Number of share of Treasury Stock 20,000. The correct options are C, D, and F.
We need to find the true statements about the stockholders' equity (SHE) based on the above data.The correct statements about SHE are:The number of Common shares outstanding equals 4,480,000Total Stockholders Equity $10,450,000.The average selling price of the Common Stock was $1.14Total Stockholders Equity $10.650.000,-"The number of Common shares outstanding equals 4,480,000" is true because the number of shares of common treasury stock is 20,000 and the cost of the treasury stock is $200,000. Thus, the average cost of a treasury stock is $200,000 / 20,000 = $10. The number of common shares outstanding is calculated as follows:Number of common shares outstanding = Total shares issued - Treasury shares= [4,500,000 / $1] - 20,000= 4,480,000 shares"The total number of shares of Common Stock issued was 4,500,000" is incorrect because 4,500,000 is the total number of shares issued including the treasury shares.
The total SHE is calculated as follows: SHE = Common Stock + Paid-in Capital in Excess of Par-Common Stock + Preferred Stock + Paid-in Capital in Excess of Par-Preferred Stock + Retained Earnings + Treasury Stock= ($1 x 4,480,000) + $4,500,000 + $3,000,000 + $500,000 + $2,000,000 - $200,000= $10,280,000"Total Stockholders Equity $10,650,000,-" is true because the calculated SHE is $10,280,000 and adding the common treasury stock of $200,000 to it, we get $10,480,000."The average selling price of the Common Stock was $1.14" is true because the Paid-in Capital in Excess of Par-Common Stock is $4,500,000. If the par value of the common stock is $1 and the excess paid-in capital is $4,500,000, then the total amount paid for common stock is $4,500,000 + $4,480,000 = $8,980,000. Therefore, the average selling price of common stock is $8,980,000 / 7,880,000 shares = $1.14. So, option B is incorrect."Total Stockholders Equity $10.650.000,-" is true as explained above.Therefore, options A, B, and E are incorrect.
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Which of the following is not used to determine net purchases?
A. Freight-in
B. Purchase discounts
C. Freight-out
D. Purchase returns
The option that is not used to determine net purchases is. Freight-out correct answer of this question is option c
Net purchases refer to the total cost of merchandise purchases after adjusting for certain factors. To calculate net purchases, various elements are taken into account, including freight-in, purchase discounts, and purchase returns.
Freight-in (option A) represents the transportation costs incurred to bring goods into the company's inventory. These costs are added to the total purchases to determine the net cost.
Purchase discounts (option B) are reductions in the purchase price granted by suppliers as an incentive for early payment. These discounts are subtracted from the total purchases to calculate the net cost.
Purchase returns (option D) occur when goods are returned to the supplier due to various reasons, such as defects or overstocking. The value of these returns is subtracted from the total purchases to determine the net cost.
In contrast, "C. Freight-out" refers to transportation costs incurred to deliver goods to customers or other locations after the purchase. Freight-out is not relevant to determining net purchases as it is not directly related to the cost of acquiring inventory. correct answer is optopn c
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Your want to estimate the share price of JLloyd Enterprises and have collected data on two comparable companies shown below.
Comparable Share price EPS
Pad Ty $57.00 $-5.7
Sys BK $31.00 $5.07
JLloyd has Net Income of $8.4 million and 2.7 million shares. What is your estimate of JLloyd's share price?
The estimated share price of JLloyd Enterprises is -$4.50. To estimate JLloyd Enterprises' share price, we can use the price-to-earnings (P/E) ratio of the comparable companies and apply it to JLloyd's earnings per share (EPS).
First, let's calculate JLloyd's EPS:
EPS = Net Income / Number of shares
EPS = $8.4 million / 2.7 million shares
EPS = $3.11
Next, let's calculate the average P/E ratio of the comparable companies:
P/E ratio = Share price / EPS
For Pad Ty:
P/E ratio = $57.00 / (-$5.7) (Note: The negative EPS might indicate a loss)
P/E ratio = -10
For Sys BK:
P/E ratio = $31.00 / $5.07
P/E ratio = 6.11
Taking the average of the P/E ratios:
Average P/E ratio = (-10 + 6.11) / 2
Average P/E ratio = -1.45
Now, let's calculate JLloyd's estimated share price:
Estimated share price = EPS * Average P/E ratio
Estimated share price = $3.11 * -1.45
Estimated share price = -$4.50
Based on the calculation, the estimated share price of JLloyd Enterprises is -$4.50. However, it's worth noting that a negative share price may not be realistic or meaningful. It's advisable to reassess the data and consider other factors before making any investment decisions.
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Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI). Assume the following information relative to the two divisions: Case 1 2 3 Alpha Division: Capacity in units 97,000 417,000 167,000 Number of units now being sold to 317,000 317,000 outside customers. 97,000 417,000 117,000 Selling price per unit to outside. customers $ 64 $ 124 $ 160 $ 84 Variable costs per unit. $ 52 $ 99 $ 125 $ 60 Fixed costs per unit (based on capacity) $6 $ 15 $ 20 $9 Beta Division: Number of units needed annually 22,000 47,000 37,000 123,400 Purchase price now being paid to an outside supplier $ 61 $ 123 $ 160* *Before any purchase discount. Required: 1. Refer to case 1 shown above. Alpha Division can avoid $2 per unit in commissions on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 317,000 units to Beta Division for $122 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 8% price discount from the outside supplier. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta Division offers to purchase 37,000 units from Alpha Division at $145 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? 4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 123,400 units of a different product from the one Alpha Division is producing now. The new product would require $55 per unit in variable costs and would require that Alpha Division cut back production of its present product by 46,275 units annually. What is Alpha Division's lowest acceptable transfer price?
Alpha Division can avoid $2 per unit in commissions on any sales to Beta Division.a. Alpha's Division's lowest acceptable transfer price=Variable cost per unit + (Commissions avoided per unit) = $52 + $2 = $54 per unit.
Beta's Division's highest acceptable transfer price=Purchase price from the outside supplier – (Commissions avoided per unit) = $61 – $2 = $59 per unit.
The range of acceptable transfer prices is $54 - $59 per unit. Alpha Division will agree to sell if it can receive a transfer price within this range. Beta Division will buy only if the transfer price is within this range.2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs on any sales to Beta Division.a. Alpha Division's lowest acceptable transfer price=Variable cost per unit + (shipping cost avoided per unit) = $99 - $5 = $94 per unitb. Beta Division's highest acceptable transfer price=Purchase price from the outside supplier = $123 per unitc.
The new product would require $55 per unit in variable costs and would require that Alpha Division cut back production of its present product by 46,275 units annually. Alpha Division's lowest acceptable transfer price would be: Variable cost per unit + (Contribution margin per unit lost on current production) = $55 + ($84 - $60) = $79 per unit.
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Select the best answer. The best way to address a borrower’s questions that the Notary Signing Agent is not allowed to answer, is to:
a. Arrange to have the contracting company on the phone to answer the questions as they come up.
b. Halt the signing until the borrower gets the answers he or she wants
c. Make a list of questions to ask the contracting company before the end of the signing
The best way to address a borrower’s questions that the Notary Signing Agent is to Make a list of questions to ask the contracting company before the end of the signing.
When a borrower has questions that a Notary Signing Agent is not allowed to answer, the best approach is to make a note of those questions and inform the borrower that you will reach out to the contracting company to obtain the answers. This ensures that the borrower's concerns are acknowledged and addressed appropriately. By making a list of the questions, the Notary Signing Agent can gather all the necessary information from the contracting company and provide accurate responses to the borrower after the signing is completed. This approach maintains the professionalism of the signing process and ensures that the borrower's inquiries are properly resolved.
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Bramble Corp. Purchased Office Supplies Costing $7300 And Increase Supplies For The Full Amount. At The End Of The Accounting Period, A Physical Count Of Office Supplies Revealed $2600 Still On Hand. The Appropriate Adjustment To Be Made At The End Of The Period Would Be: Increase Supplies, $2600; Decrease Supplies Expense, $2600. Increase Supplies Expense,
Bramble Corp. purchased office supplies costing $7300 and increase Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2600 still on hand. The appropriate adjustment to be made at the end of the period would be:
increase Supplies, $2600; decrease Supplies Expense, $2600.
increase Supplies Expense, $2600; decrease Supplies, $2600.
increase Supplies Expense, $4700; decrease Supplies, $4700.
increase Supplies, $4700; decrease Supplies Expense, $4700.
The answer to this question is: Increase Supplies, $2600; decrease Supplies Expense, $2600.
Bramble Corp. purchased office supplies costing $7300 and increase Supplies for the full amount.
At the end of the accounting period, a physical count of office supplies revealed $2600 still on hand.
The appropriate adjustment to be made at the end of the period would be: Increase Supplies, $2600; decrease Supplies Expense, $2600.
The increase of supplies is to record the value of the supplies that have not been used at the end of the accounting period, and the decrease in supplies expense is to ensure that the cost of the supplies that were used during the period is recorded correctly.
The following journal entry would be made: Debit Supplies Expense by $4700Credit Supplies by $4700
Therefore, the answer to this question is: Increase Supplies, $2600; decrease Supplies Expenses, $2600.
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