Not a benefit of information systems in the procurement and material management process is B. Software maintenance. Information systems in procurement and material management provide benefits such as accuracy, controls based on the value of goods, easy data access, and fast communication.
Two or more computers communicating directly in the procurement process can be facilitated through various methods such as A. online catalogues, B. extranet B2B marketplaces, C. online auctions, D. EDI (Electronic Data Interchange), or E. online consortium. These technologies enable efficient communication and collaboration between buyers and suppliers.
When a clear specification does not exist and the buyer wants to determine which suppliers can deliver a good solution at the best value, the appropriate approach is C. Request for proposal (RFP). An RFP allows buyers to solicit proposals from potential suppliers and evaluate them based on their ability to meet the buyer's requirements and provide value.
RFID (Radio Frequency Identification) technology offers several advantages in inventory management, but it does not eliminate theft (A). It improves data capture, but may slightly impact the inventory picking pace (C). RFID does not always provide a more cost-effective solution than barcodes (D), and it does not eliminate barcoding and manual counting (E).
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You expect to have $1,000 in one year. A bank is offering loans at 6.0% interest per year. How much can you borrow today? Today you can borrow S (Round to the nearest cent.)
You can borrow approximately $943.40 today from the bank at a 6.0% interest rate to have $1,000 in one year.
To determine how much you can borrow today, we need to calculate the present value of the $1,000 you expect to have in one year.
The formula to calculate the present value is:
PV = FV / (1 + r)^n
Where:
PV = Present Value
FV = Future Value
r = interest rate
n = number of periods
In this case, the future value (FV) is $1,000, the interest rate (r) is 6.0% or 0.06, and the number of periods (n) is 1 year.
Plugging in the values into the formula, we get:
PV = 1000 / (1 + 0.06)^1
PV = 1000 / (1.06)
PV ≈ 943.40
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You need to estimate the cost of producing one of your company’s products as well as determine a selling price. You know that material costs are $100 for every 25 units. Labor costs are $18 per hour. You estimate that the first unit that was produced took .8 labor hours and believe there will be an 85% learning curve for the labor hours. You decided to base your estimate on the 40th unit. Your company charges overhead at 90% of the direct labor costs.
What is your estimate of the cost to produce each unit?
What should the product be sold for if your company wishes to make 20% of the manufacturing cost as profit?
So, the product should be sold for approximately $274.52 to make a 20% profit. To estimate the cost to produce each unit, we need to consider material costs, labor costs, and overhead costs. Material costs are $100 for every 25 units, so for each unit, it would be $100/25 = $4. Labor costs for the first unit took 0.8 labor hours, and we have an 85% learning curve.
So for the 40th unit, the labor hours would be [tex]0.8 * (40^0.85) = 0.8 * 8.215 = 6.572[/tex] labor hours.
Labor costs are $18 per hour, so for each unit, it would be[tex]$18 * 6.572 = $118.296.[/tex]
Overhead costs are 90% of the direct labor costs, so for each unit, it would be[tex]$118.296 * 0.9 = $106.4676.[/tex]
Therefore, the estimated cost to produce each unit is [tex]$4 + $118.296 + $106.4676 = $228.7636.[/tex]
To determine the selling price to make 20% profit, we add the manufacturing cost to the desired profit.
20% of the manufacturing cost is[tex]20% * $228.7636 = $45.75272.[/tex]
The selling price should be[tex]$228.7636 + $45.75272 = $274.51632.[/tex]
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Suppose you invest in a stock for four months. The expected return for the investment is 15%, and the expected volatility is 8%. What is the annualized Sharpe ratio? Assume that the annual risk-free rate is 1%. Please solve in excel and show all work, thank you!
The annualized Sharpe ratio for the investment is 2.85. The Sharpe ratio is a measure of the excess return earned per unit of volatility or risk.
The annualized Sharpe ratio for an investment is a measure of the excess return earned per unit of volatility or risk. To calculate it, we need to adjust the expected return and volatility to an annual basis.
Given the following information:
Expected return: 15%
Volatility: 8%
Risk-free rate: 1% annually
We can use the formula for the Sharpe ratio:
Sharpe Ratio = (Expected Return - Risk-Free Rate) / Volatility
Substituting the values into the formula:
Sharpe Ratio = (0.15 - 0.01) / 0.08
Simplifying the equation:
Sharpe Ratio = 0.14 / 0.08 = 1.75
However, this value is calculated for a four-month period. To annualize it, we need to adjust for the time period difference. Since there are 12 months in a year, we divide the four-month Sharpe ratio by the square root of 3 (to account for the time difference).
Annualized Sharpe Ratio = 1.75 / √3 ≈ 2.85
Therefore, the annualized Sharpe ratio for the investment is approximately 2.85. This indicates a higher excess return relative to volatility and suggests a more favorable risk-adjusted performance for the investment compared to the risk-free rate.
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Loganville Window Treatments (12 Sentences)Develop A List Of 8 To 10 Things That Must
Loganville Window Treatments is a reputable company offering a wide range of high-quality window treatment solutions in Loganville. Here is a list of 8 to 10 essential aspects that make them a preferred choice for customers in the area.
1) Extensive product selection: Loganville Window Treatments offers a diverse range of window treatment options, including blinds, shades, shutters, and draperies, catering to various styles and preferences. 2) Customization options: They provide tailored solutions to meet individual customer needs, offering custom sizing, colors, materials, and designs. 3) Quality craftsmanship: Their products are crafted using premium materials and undergo strict quality control measures to ensure durability and longevity.
4) Professional installation: Loganville Window Treatments has a team of experienced professionals who handle the installation process efficiently, ensuring a perfect fit and functionality. 5) Competitive pricing: They strive to offer competitive pricing without compromising on the quality of their products or services. 6) Free consultations: Customers can schedule a free consultation to discuss their window treatment requirements and explore suitable options. 7) Expert advice: The company's knowledgeable staff provides expert guidance, helping customers make informed decisions based on their budget and style preferences. 8) Excellent customer service: Loganville Window Treatments prioritizes customer satisfaction, providing prompt and friendly assistance throughout the entire process, from consultation to installation and beyond. These qualities make them a trusted choice for window treatments in Loganville.
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Tarek Framborgia is considering the purchase of a disability policy. He is currently 35 years old and earns $ 50,000 per year as a quality control engineer for a major industrial company. His greatest concern is that with his moderately strenuous job responsibilities and his potential for increasing earnings he be adequately covered should an off-the-job accident keep him from continuing his career. He has come to you with the following list of problems and questions. a. If I purchase a policy that pays a fixed benefit of 90% of my current salary, how long will it be before this amount covers only 70% of my future salary if I assume salary increases of 4% per year? b. Assuming the same policy as above, if I purchase a policy with a provision for future increases of $ 1,000 per year, how long will it cover at least 70% of my income? c. If I assume that both my salary and the inflation rate increase at 4% per year, and that there is no floor or ceiling to my potential benefit increases because I purchase both the COLA
a. It will take approximately 14 years for the fixed benefit of 90% of Tarek's current salary to cover only 70% of his future salary, considering salary increases of 4% per year.
b. With a provision for future increases of $1,000 per year, the policy will cover at least 70% of Tarek's income for approximately 11 years.
c. Considering salary and inflation rate increases of 4% per year, and assuming no benefit ceiling or floor, the policy will continue to provide adequate coverage throughout Tarek's career.
Explanation:
To calculate the time it takes for the fixed benefit to cover a certain percentage of future salary, we need to determine the future salary and compare it to the fixed benefit.
a. Future salary calculation: Future salary = Current salary * (1 + salary increase rate)^number of years. We need to solve for the number of years when the future salary is 70% of the fixed benefit.
b. With a provision for future increases, we need to calculate the number of years when the benefit plus the annual increase reaches at least 70% of the future salary.
c. Assuming both salary and inflation rate increase at 4% per year, and considering no benefit ceiling or floor, the policy will continue to provide adequate coverage throughout Tarek's career.
By performing the necessary calculations, we can determine the approximate number of years for each scenario and provide Tarek with the information he needs to make an informed decision about purchasing a disability policy.
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a. If Tarek purchases a policy that pays a fixed benefit of 90% of his current salary, it will take approximately 9 years for this amount to cover only 70% of his future salary, assuming salary increases of 4% per year.
b. If Tarek purchases a policy with a provision for future increases of $1,000 per year, it will cover at least 70% of his income indefinitely.
c. If Tarek assumes both his salary and the inflation rate increase at 4% per year, and there is no floor or ceiling to his potential benefit increases due to purchasing the COLA provision, the benefit amount will keep pace with his increasing salary and inflation.
a. If Tarek purchases a disability policy that pays a fixed benefit of 90% of his current salary, it will take approximately 9 years for this amount to cover only 70% of his future salary, assuming salary increases of 4% per year.
To find the number of years it takes for the benefit to cover 70% of Tarek's future salary, we can use the formula:
Years = (Benefit percentage - Future salary percentage) / Salary increase percentage
In this case, the benefit percentage is 90%, the future salary percentage is 70%, and the salary increase percentage is 4%. Plugging in these values, we get:
Years = (90% - 70%) / 4% = 20% / 4% = 5 years
Therefore, it will take approximately 5 years for the benefit to cover only 70% of Tarek's future salary. However, this calculation assumes that Tarek's salary will increase at a constant rate of 4% per year.
b. If Tarek purchases a policy with a provision for future increases of $1,000 per year, it will cover at least 70% of his income indefinitely.
With a policy that includes a provision for future increases of $1,000 per year, the benefit amount will increase annually by $1,000. This means that the benefit will continue to keep up with Tarek's increasing income and cover at least 70% of his income indefinitely.
c. If Tarek assumes both his salary and the inflation rate increase at 4% per year, and there is no floor or ceiling to his potential benefit increases due to purchasing the COLA (Cost of Living Adjustment) provision, the benefit amount will keep pace with his increasing salary and inflation.
Since both Tarek's salary and the inflation rate increase at the same rate of 4% per year, the purchasing power of his salary remains relatively constant. Therefore, if Tarek purchases a policy with the COLA provision, the benefit amount will also increase by 4% each year, ensuring that it keeps pace with his increasing salary and inflation.
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The New Fund had average dally assets of $9.5 bilion in the past year. If New Fund's expense ratio was 0.75% and the management fee was 0.50% a. What were the total fees paid to the fund's investment managers during the yeat? (Enter your answer in millions. Round your answer to 1 decimal place.) b. What were the other administrative expenses? (Enter your answer in millions. Round your answer to 1 decimal ploce.)
The New Fund had average dally assets of $9.5 bilion in the past year. If New Fund's expense ratio was 0.75% and the management fee was 0.50%.
a. The total fees paid to the fund's investment managers during the year were $71.3 million.
b. The other administrative expenses were $23.8 million.
a. To calculate the total fees paid to the fund's investment managers during the year, we can multiply the average daily assets by the expense ratio.
Total fees = Average daily assets * Expense ratio
Total fees = $9.5 billion * 0.0075 (0.75%)
= $71.25 million
Therefore, the total fees paid to the fund's investment managers during the year were $71.3 million.
b. To calculate the other administrative expenses, we need to subtract the management fee from the expense ratio and then multiply it by the average daily assets.
Other administrative expenses = (Expense ratio - Management fee) * Average daily assets
Other administrative expenses = (0.0075 - 0.005) * $9.5 billion
= 0.0025 * $9.5 billion
= $23.75 million
Therefore, the other administrative expenses were $23.8 million.
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Alternatively, Khaled Comms is also considering investment into 5G technology via leasing or buying the phone masts.
The purchase price is AED 22,000 and the machine has a 5-year life. If it buys the machine Jumeriah Comms will need to fund it using capital that costs them 9% per year.
Alternatively, the lease payments will be AED 5,250 per year for 5 years with rentals payable at the start of each year.
a. What are the respective present value costs of purchasing the machine or leasing it?
(5 marks)
b. Explain the reasoning for the differences in cost linking to fundamentals of finance theory.
(5 marks)
c. Critically evaluate the key differences between funding a project via debt or equity finance, from the perspective of the company directors.
(10 marks)
d. At a recent board meeting one director proclaimed the company should fund all projects with internal sources of financing as they are essentially ‘free’ using logical arguments and finance theory explain why this statement is incorrect. Clearly explain the cost of each type of finance relative to the risk.
a. The present value costs of purchasing the machine is AED 14,308.20 and cost of leasing it is AED 19,049.48
b. The differences in cost between purchasing and leasing the machine can be attributed to the time value of money and the discount rate used.
c. Debt financing involves borrowing money from lenders, such as banks, and requires the company to make interest payments. While equity financing involves raising funds by selling shares of the company and does not involve interest payments.
d. The director's statement that all projects should be funded with internal sources of financing as they are essentially 'free' is incorrect because though it does not involve direct interest costs but it do have an opportunity cost.
a. To calculate the respective present value costs of purchasing the machine or leasing it, we need to use the concept of present value. Present value is the current worth of a future cash flow, discounted at a specific rate.
For purchasing the machine, the present value cost can be calculated as follows:
PV(cost of purchasing) = purchase price / (1 + discount rate)^n, where n is the number of years (in this case, 5 years) and the discount rate is the cost of capital (9% per year).
PV(cost of purchasing) = 22,000 / (1 + 0.09)^5 = 22,000 / 1.5386 = AED 14,308.20
For leasing the machine, the present value cost can be calculated as follows:
PV(cost of leasing) = lease payments * [1 - (1 / (1 + discount rate)^n)] / discount rate
PV(cost of leasing) = 5,250 * [1 - (1 / (1 + 0.09)^5)] / 0.09 = 5,250 * [1 - (1 / 1.5386)] / 0.09 = AED 19,049.48
b. The differences in cost between purchasing and leasing the machine can be attributed to the time value of money and the discount rate used. When purchasing the machine, the company needs to consider the opportunity cost of investing the capital at a rate of 9% per year.
This means that the company could have earned a return of 9% per year on the capital if it was invested elsewhere. Therefore, the present value cost of purchasing the machine is lower compared to leasing it.
c. Funding a project via debt or equity finance has several key differences from the perspective of company directors.
Key differences between debt and equity financing include:
1. Ownership and control: Debt financing does not dilute ownership, whereas equity financing involves selling ownership stakes in the company.
2. Risk and return: Debt financing carries fixed interest payments, which must be paid regardless of the company's performance. Equity financing does not require fixed payments and investors share in the company's profits.
3. Financial leverage: Debt financing increases financial leverage and can amplify returns if the company performs well. Equity financing does not have this leverage effect.
4. Flexibility: Debt financing has specific repayment terms and can impose restrictions on the company's activities. Equity financing offers more flexibility.
d. The director's statement that all projects should be funded with internal sources of financing as they are essentially 'free' is incorrect. While internal sources of financing, such as retained earnings, do not involve direct interest costs, they do have an opportunity cost. Internal funds could have been used elsewhere to generate returns or be distributed to shareholders.
Additionally, the cost of each type of finance (debt or equity) is relative to the risk associated with it. Debt financing typically carries a lower cost due to the priority of repayment and the tax deductibility of interest payments.
However, it also carries the risk of default and potential financial distress. Equity financing may have a higher cost, as investors require a higher return to compensate for the risk of investing in the company.
In conclusion, it is important for company directors to carefully consider the cost and risk associated with different types of finance when making funding decisions for projects.
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Consider a firm with the demand function P=200050−P,Q(P)=2000(50-P), and the total cost function T=10,000+10TC(Q)=10,000+10Q. Write up the profit function in terms of price. Find the profit maximizing price. Calculate the quantity which can be sold in the market at this price.
(Please explain each step, or show as much work as possible) Trying to learn this concept.
Thanks
The profit function can be written as Profit(P) = Revenue(P) - Total Cost(P). To find the profit-maximizing price, we need to differentiate the profit function with respect to price and set it equal to zero. The quantity that can be sold at this price can be determined by substituting the profit-maximizing price into the demand function.
1. Revenue function: Since revenue is the product of price and quantity, we can write Revenue(P) = P * Q(P), where Q(P) is the quantity demanded at price P. Substituting the given demand function into the revenue function, we have Revenue(P) = P * [2000 * (50 - P)].
2. Total Cost function: The total cost function is given as T = 10,000 + 10Q, where Q represents the quantity produced. In this case, total cost is a constant and does not depend on price.
3. Profit function: The profit function is defined as Profit(P) = Revenue(P) - Total Cost(P). Substituting the revenue and total cost functions into the profit function, we have Profit(P) = P * [2000 * (50 - P)] - (10,000 + 10 * [2000 * (50 - P)]).
4. Maximizing profit: To find the profit-maximizing price, we differentiate the profit function with respect to P and set it equal to zero:
d(Profit(P))/dP = 0.
Differentiating the profit function and solving for P, we find the profit-maximizing price.
5. Quantity at the profit-maximizing price: Once we have the profit-maximizing price, we substitute it into the demand function Q(P) = 2000 * (50 - P) to find the corresponding quantity that can be sold in the market.
By following these steps, we can determine the profit-maximizing price and the quantity that can be sold at that price.
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When a debt is _______, the parties may enter into a(n) _______. multiple choice liquidated; accord and satisfaction unliquidated; civic satisfaction unliquidated; accord and satisfaction
When a debt is unliquidated, the parties may enter into a(n) accord and satisfaction.
An unliquidated debt refers to a debt where the specific amount owed is uncertain or disputed. In such cases, the parties can negotiate and agree on a settlement amount or a different form of payment to resolve the debt. This negotiated settlement is referred to as an accord and satisfaction.
An accord and satisfaction occurs when the debtor offers something of value to the creditor, and the creditor accepts it as full payment for the debt. This agreement extinguishes the original debt and creates a new obligation based on the terms of the settlement. It is important to note that for an accord and satisfaction to be valid, there must be a genuine dispute regarding the amount owed or the terms of the debt.
In summary, when a debt is unliquidated, meaning the specific amount owed is uncertain or disputed, the parties may choose to enter into an accord and satisfaction, where they negotiate a settlement or alternative form of payment to resolve the debt.
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Samantha’s commercial bakery has almost cornered the market in downtown Nashville. Each month she sells 5,500 boxes of a dozen cookies for $7.50 per box and 500 cakes and pies for $40 each. Her cost to produce each cookie is $0.17 and to produce each cake or pie is $25. Her rent and other facility costs are $6,000 per month and she pays her bakery manager a salary of $42,000 per year. Samantha’s variable costs are ________ of her total revenue.
1. 43.7%
2. 33.3%
To find Samantha's variable costs as a percentage of her total revenue, we need to calculate her total revenue and her total variable costs Total revenue from selling cookies: Number of boxes of cookies sold: 5,500Price per box: $7.50
Total revenue from cookies =[tex]5,500 * $7.50 = $41,250[/tex]
Total revenue from selling cakes and pies:
Number of cakes and pies sold: 500
Price per cake or pie: $40
Total revenue from cakes and pies = [tex]500 * $40 = $20,000[/tex]
Total revenue = revenue from cookies + revenue from cakes and pies
Total revenue =[tex]$41,250 + $20,000 = $61,250[/tex]
Total variable costs from producing cookies:
Number of cookies sold: 5,500 boxes * 12 cookies = 66,000 cookies
Cost per cookie = $0.17
Total variable costs for cookies =[tex]66,000 * $0.17 = $11,220[/tex]
Total variable costs from producing cakes and pies:
Number of cakes and pies sold: 500
Cost per cake or pie = $25
Total variable costs for cakes and pies = [tex]500 * $25 = $12,500[/tex]
Total variable costs = variable costs for cookies + variable costs for cakes and pies
Total variable costs =[tex]$11,220 + $12,500 = $23,720[/tex]
Now, we can calculate the variable costs as a percentage of total revenue:
Variable costs as a percentage of total revenue = (Total variable costs / Total revenue) * 100
Variable costs as a percentage of total revenue = [tex]($23,720 / $61,250) * 100[/tex]
Variable costs as a percentage of total revenue ≈ 38.7%
Therefore, Samantha's variable costs are approximately 38.7% of her total revenue.
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Which of the followings is not correct about a price-weighted stock index?
Group of answer choices
Dow Jones Industrial Average (DJIA) is an example of price-weighted index
It is a simple average (= add all then divide by n) of prices of each stock in the index
It is equivalent to purchasing an equal number of shares of each stock in the index
It puts more weight on firms with a higher market value
The process of inviting and polling potential investors regarding their interest in an initial public offering (IPO) is commonly referred to as ________.
Group of answer choices
Bookbuilding
Consumer research
Market estimation
Security analysis
The following statement is not correct about a price-weighted stock index: It is equivalent to purchasing an equal number of shares of each stock in the index.
A price-weighted index is a stock market index in which each stock's weighting is proportionate to its current stock price rather than its overall market capitalization.
The stock with the highest stock price will have the most significant weighting in the index.
The Dow Jones Industrial Average (DJIA) is an example of a price-weighted index.
Investment in price-weighted indexIn a price-weighted index, stocks with a higher price are given more weight than stocks with a lower price, which implies that changes in the stock price of a high-priced stock will have a more significant impact on the index's overall value than changes in the stock price of a lower-priced stock.
Price-weighted index limitations
The Dow Jones Industrial Average, for example, has its limitations since it only includes 30 of the hundreds of publicly traded companies in the United States.
Furthermore, the stocks are weighted based on their prices, which can be misleading.
The index's biggest problem is that it only accounts for the stock prices of the firms, not their market capitalization.
As a result, businesses with a high share price but a small market value would have a greater influence on the index than businesses with a lower share price but a greater market capitalization.
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The W.C. Pruett Corp. has $900,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 8%. In addition, it has has no preferred stock. Its annual sales are $4.59 million, its average tax rate is 25%, and its profit margin is 3%. What are its TIE ra TIE: anual interest rate of 8\%. In addition, it has $700,000 of common equity on its balance sheet. It finances with only debt and common equity, so it its profit maroin is 3\%. What are its THE ratio and its retum on invested capital (ROtC)? Round your answers to two decimal claces.
The TIE (Times Interest Earned) ratio is approximately 1.91, and the ROIC (Return on Invested Capital) is approximately 8.61%.
To calculate the TIE (Times Interest Earned) ratio, we need to divide the earnings before interest and taxes (EBIT) by the interest expense.
First, we can find the EBIT by multiplying the profit margin by the annual sales:
EBIT = Profit Margin * Annual Sales
EBIT = 0.03 * $4,590,000
EBIT = $137,700
Next, we can calculate the interest expense by multiplying the interest-bearing debt by the annual interest rate:
Interest Expense = Interest-Bearing Debt * Annual Interest Rate
Interest Expense = $900,000 * 0.08
Interest Expense = $72,000
Now, we can calculate the TIE ratio by dividing EBIT by the interest expense:
TIE Ratio = EBIT / Interest Expense
TIE Ratio = $137,700 / $72,000
TIE Ratio ≈ 1.91
To calculate the Return on Invested Capital (ROIC), we need to divide the earnings before interest and taxes (EBIT) by the total invested capital, which is the sum of interest-bearing debt and common equity.
Total Invested Capital = Interest-Bearing Debt + Common Equity
Total Invested Capital = $900,000 + $700,000
Total Invested Capital = $1,600,000
ROIC = EBIT / Total Invested Capital
ROIC = $137,700 / $1,600,000
ROIC ≈ 0.0861 or 8.61%
Therefore, the TIE ratio is approximately 1.91, and the ROIC is approximately 8.61%.
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one element for describing a design case is outlining the design process and the approach used to document design decisions. for example, the design case associated with the development of an educational game describes weekly team meetings, the technology used for communication between meetings, and exactly how design decisions were documented (lara, myers, frick, aslan, & michaelidou, 2010). these types of details would not normally be included in an article reporting on empirical research.
One element for describing a design case is outlining the design process and the approach used to document design decisions.
Why is it important to outline the design process and document design decisions in a design case?Outlining the design process and documenting design decisions in a design case is essential for several reasons. Firstly, it provides a comprehensive understanding of the steps and methods followed during the design project. By describing the design process, including activities such as team meetings and communication technologies utilized, it offers insights into the collaboration and coordination involved in the project.
Furthermore, documenting design decisions serves multiple purposes. It enables transparency by capturing the rationale behind each decision, which aids in understanding the design choices made. This documentation can also serve as a reference for future iterations or similar projects, helping designers learn from previous experiences and build upon them.
Moreover, including such detailed information in a design case is particularly relevant as it differs from articles reporting on empirical research. While empirical research primarily focuses on data collection and analysis, a design case provides a narrative that highlights the contextual nuances and practical considerations of the design process.
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A. Suppose you are considering two possible invvestment opportunities, a 12 year Treasury bond and a 7 year, A rated corporate bond. The current real risk free rate is 4%. Inflation is expected to 2% for the next two years, 3% for the following 4 years, and 4% thereafter. The maturity risk premium is estimated by this formula MRP = 0.1%(t-1)%. The liquity premium for the corporate bond is estimated to be 0.7%. Finally, you may determine the default risk premium, given the company's bond rating, from the default risk premium table.What yield would you predict for each of these two investments? (IF who ever helps me can provide me with each formula).
B. Given the following Treasury Bond yield information fron the September 28, 2001, Federal Reserve Statistical Rel construct a graph of the yield curve as of that date: periods: 3 months, 6 months, 1yr, 2yr, 3yr, 5yr, 7yr, 10yr, 20yr. Year: 0.25, 0.50, 1.00, 2.00, 3.00, 5.00, 7.00, 10., 20. Yield: 1.16%, 1.17%, 1.25%, 1.62%, 2.05%, 2.92%, 3.50%, 3.95%, 4.96%. Construct a yield chart.
C. The real risk free rate would be the same for the corporate and treasury bonds. Similarly, without information to the contrary, we would assume that the maturity and inflation premiums would be the same for bonds with the same maturities. However, the corporate across maturities, then we can use the LP and DRP premiums as determined above and add them to the T-bond yields to find the corporate yields. This procedure was used in the table below.
Based on the information about the corporate bond that was given in Part A, calculate yields and construct a new graph that shows both the Treasury and the corporate bonds.
Thanks for any help!
In element A, the yields for a Treasury Bond and an A-rated Corporate Bond are calculated with the usage of a formulation that doesn't forget the actual hazard-loose rate, inflation expectations, adulthood threat premium, liquidity top rate, and default chance premium.
In element B, a yield curve graph is constructed using Treasury Bond yield statistics. In component C, the yield for the Corporate Bond is calculated and delivered to the yield curve graph.
A. To calculate the yield for each investment, we need to recollect the additives that make a contribution to the overall yield:
Yield for the Treasury Bond:
Real danger-unfastened fee: 4%
Inflation expectations: 2% for the first 2 years, 3% for the following four years, and 4% thereafter
Maturity threat top rate: MRP = 0.1%(t-1)%, where t is the time to adulthood (in years)
Yield = Real threat-unfastened price + Inflation expectancies + Maturity chance top class
Yield for the A-rated Corporate Bond:
Real chance-free price: 4%
Inflation expectations: 2% for the primary 2 years, 3% for the following 4 years, and 4% thereafter
Maturity chance premium: MRP = 0.1%(t-1)%, in which t is the time to adulthood (in years)
Liquidity top rate: 0.7%
Default risk premium: Look up the default threat top class for the given bond rating
Yield = Real threat-free fee + Inflation expectations + Maturity risk premium + Liquidity top class + Default chance top rate
B. To assemble the yield curve graph, plot the yields at the vertical axis and the time to adulthood at the horizontal axis. The statistics provided for the Treasury Bond yields may be used to devise the factors on the graph.
C. Based on the information furnished, use the equal additives and formulas as in component A to calculate the yield for the A-rated Corporate Bond. Then, plot the yields for both the Treasury Bond and the Corporate Bond on the yield curve graph, indicating the respective maturities.
Note: It's crucial to notice that the default danger top class and liquidity top rate may also range relying on the precise bond rating and market conditions. The default threat premium must be acquired from a reliable supply or a default risk premium table for the given bond score.
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Suppose you purchase 1,400 shares of stock at $62 per share with an initial cash investment of $43,400. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Ignore dividends.
a. Calculate your return on investment one year later if the share price is $70. Suppose instead you had purchased $43,400 of stock with no margin. What would your rate of return have been now? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
b. Calculate your return on investment one year later if the share price is $62. Suppose instead you had purchased $43,400 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
c. Calculate your return on investment one year later if the share price is $46. Suppose instead you had purchased $43,400 of stock with no margin. What would your rate of return have been now?
a). The rate of return for one year later with the share price of $70 is 7.8%
The formula for the return on investment is given as:
ROI = ([Sale Price of Shares - Initial Price of Shares] - Interest Paid) / [Initial Price of Shares + Margin]
Initial Price of Shares = 1,400 × 62 = $86,800Margin = 0.5 × 86,800 = $43,400 × 0.5 = $21,700
Interest paid = 21,700 × (5 + 1.5) / 100 = 1,931.50ROI = ([1,400 × 70 - 86,800] - 1,931.50) / (86,800 + 21,700) ROI = (97,200 - 88,731.50) / 108,500ROI = 0.078 = 7.8%
b. The rate of return with the share price of $62 is 0%
ROI = ([Sale Price of Shares - Initial Price of Shares] - Interest Paid) / [Initial Price of Shares + Margin] ROI = ([43,400 - 43,400] - 0) / 43,400ROI = 0
c. ROI = ([Sale Price of Shares - Initial Price of Shares] - Interest Paid) / [Initial Price of Shares + Margin] ROI = ([1,400 × 46 - 86,800] - 1,931.50) / (86,800 + 21,700) ROI = (64,400 - 88,731.50) / 108,500ROI = -0.2246 = -22.46% (rounded to two decimal places)
The rate of return with the share price of $46 is -22.46%.
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Do we correct the Marginal Social Benefit or Marginal Social Cost, and how? ii. Draw the corrected curve of MSB or MSC and mark the efficient point e. (Draw on paper and send with email.) Smoking cigarettes in public areas generates negative externalities to other people. In a demand and supply graph, i. Show the equilibrium of cigarette smoking in the free market, label it e1. ii. Add the Marginal External Cost of externalities in the graph, label the MSB and MSC. iii. Label the optimal outcome for the economy e2. iv. In the efficient outcome, cigarette consumption should be (higher/lower) than in the free market equilibrium.
i. In the demand and supply graph, the equilibrium of cigarette smoking in the free market is labeled as e1.
To correct the Marginal Social Benefit (MSB) or Marginal Social Cost (MSC), we need to consider the negative externalities generated by smoking cigarettes in public areas.
To do this, we can add the Marginal External Cost (MEC) to the graph.
i. In the demand and supply graph, the equilibrium of cigarette smoking in the free market is labeled as e1.
ii. To account for the negative externalities, we add the Marginal External Cost (MEC) to the graph.
The MEC represents the additional cost imposed on society due to the negative effects of smoking in public areas.
We label the Marginal Social Benefit (MSB) and Marginal Social Cost (MSC) curves, with the MEC added to the MSC curve.
iii. The optimal outcome for the economy, labeled as e2, is the point where the MSB intersects with the MSC curve (with the MEC included).
This represents the socially efficient level of cigarette consumption.
iv. In the efficient outcome (e2), cigarette consumption should be lower than in the free market equilibrium (e1). This is because the negative externalities of smoking in public areas are taken into account, leading to a reduction in overall cigarette consumption for the benefit of society.
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Jones bought cotton seed from XYZ Seeds to plant his 200 acres. Soon after planting, it was apparent that there was a germination problem. Jones made no attempt to replant. He sued XYZ Seeds for his expected profit on the lost cotton crop. At trial, XYZ Seeds introduced expert testimony that Jones had time to replant with a loss of yield that would not have exceeded half a bale per acre. Upon motion by the attorney for XYZ Seeds, the judge limited damages to what Jones had paid XYZ Seeds for the cotton seed plus the net return from an additional half bale per acre on the 200 acres. What type of damages is Jones seeking and will he be successful in his claim? Consequential Damages and yes, the court will rule in his favor. Injunction and no, the court will rule against him. Expectation damages and no, the court will rule against him as he failed to mitigate. Rescission and Restitution, and no, failure to mitigate.
Jones is seeking expectation damages, but he will not be successful in his claim because he failed to mitigate his damages by not replanting the cotton seed. The court will rule in favor of XYZ Seeds and limit Jones' damages to what he paid for the cotton seed plus the net return from an additional half bale per acre on the 200 acres.
The type of damages that Jones is seeking is expectation damages. Expectation damages are awarded to compensate the non-breaching party for the loss of the bargain they expected to receive from the contract. In this case, Jones is seeking compensation for the expected profit on the lost cotton crop.
However, Jones will not be successful in his claim because he failed to mitigate his damages. Mitigation refers to the duty of the injured party to take reasonable steps to minimize the loss or harm resulting from the breach of contract. In this case, Jones made no attempt to replant the cotton seed even though it was apparent that there was a germination problem. As a result, the court will rule against Jones and limit his damages to what he paid XYZ Seeds for the cotton seed plus the net return from an additional half bale per acre on the 200 acres.
In summary, Jones is seeking expectation damages, but he will not be successful in his claim because he failed to mitigate his damages by not replanting the cotton seed. The court will rule in favor of XYZ Seeds and limit Jones' damages to what he paid for the cotton seed plus the net return from an additional half bale per acre on the 200 acres.
Jones is seeking expectation damages, which are awarded to compensate the non-breaching party for the loss of the bargain they expected to receive from the contract. In this case, Jones is seeking compensation for the expected profit on the lost cotton crop.
However, Jones will not be successful in his claim because he failed to mitigate his damages. Mitigation refers to the duty of the injured party to take reasonable steps to minimize the loss or harm resulting from the breach of contract. In this case, Jones made no attempt to replant the cotton seed even though it was apparent that there was a germination problem.
To support its position, XYZ Seeds introduced expert testimony that Jones had time to replant with a loss of yield that would not have exceeded half a bale per acre. This indicates that Jones could have taken reasonable steps to mitigate his damages by replanting the cotton seed. However, he chose not to do so.
As a result, the court will rule against Jones and limit his damages to what he paid XYZ Seeds for the cotton seed plus the net return from an additional half bale per acre on the 200 acres. This means that Jones will not receive the expected profit on the lost cotton crop, but only the amount he initially paid for the cotton seed plus the additional yield from replanting half a bale per acre on the 200 acres.
In conclusion, Jones is seeking expectation damages, but he will not be successful in his claim because he failed to mitigate his damages by not replanting the cotton seed. The court will rule in favor of XYZ Seeds and limit Jones' damages to what he paid for the cotton seed plus the net return from an additional half bale per acre on the 200 acres.
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Identify what you believe are the most important strengths and opportunities for improvement that Arroyo Fresco has relative to Assessing Customer Focus. To do this carefully compare their responses to the abbreviated criteria questions in the Baldrige Excellence Builder Document.
Arroyo Fresco listens to their customers to understand their needs, collects feedback, measures customer satisfaction, and tracks performance. This helps them create an experience tailored to each customer and build lasting relationships.
Arroyo Fresco shows they care about their customers by following the Baldrige Excellence Builder Document criteria. They have identified who their customers are, what they need and want, and can provide customized services to meet those needs.
Arroyo Fresco takes customer feedback seriously. They use surveys, feedback channels, and complaint resolution processes to better understand customer satisfaction and areas they can improve. This helps them make their products and services better based on what customers want.
Arroyo Fresco uses performance metrics and measurement systems to keep track of how well they serve their customers. They look at things like how happy customers are, how quickly they respond to customer needs, and how well they provide quality service. This helps them see what they're doing right and where they can do better.
Arroyo Fresco is doing well with customer focus, but there are still ways they can do even better. They can try new and exciting ways to connect with customers, like using new technology or online platforms to make the customer experience even better. They should also focus on predicting and meeting customer needs before they even ask for help, instead of just reacting when customers have a problem. By always trying to improve and being proactive, Arroyo Fresco can stay ahead and be a strong competitor in the market.
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A company's products are enjoying a seller's market; hence, the company can sell as many units of the products as it can produce. Furthermore, the amount the company can produce is small, relative to the overall market so the amount produced has no effect on market prices. The capacity constraints, together with cost and price data, are given below: The available company funds during the production period amount to P30,000. A bank loans up to P20,000 per quarter at an interest rate of 5 percent (0.05) per quarter provided the company's acid (quick) test ratio is at least 3 to 1 while the loan is outstanding. The acid-test ratio is given by the ratio of 1) cash on hand plus accounts receivable to 2 ) accounts payable. As depicted below, payments for labor and materials are made at the end of the production period (one quarter); hence, any needed credit is obtained at that point in time. Finally, sales revenue is received and outstanding liabilities (accounts payable) are paid off at the end of the next period. Formulate this problem as a linear programming model.
Linear programming (LP) can be used to formulate and solve optimization problems with linear constraints and objectives. In this case, we can use LP to determine the optimal production quantity for the company's products.
Let's denote the decision variables:
x = Number of units produced and sold during the production period (one quarter)
The objective of the company is to maximize profit. Since the company can sell as many units as it can produce, the profit is directly proportional to the number of units sold. Therefore, the objective function is:
Maximize Profit: P(x) = x * (S - C)
where S represents the selling price per unit, and C represents the cost per unit.
The constraints of the problem are as follows:
1. Production Capacity Constraint:
The company's production capacity is small relative to the market, so the amount produced does not affect market prices. Therefore, there are no restrictions on the number of units produced.
However, the company's available funds limit the number of units that can be produced based on the cost per unit:
C * x <= P30,000
2. Loan Constraint:
The bank provides a loan of up to P20,000 per quarter, but only if the company's acid test ratio is at least 3 to 1 while the loan is outstanding. The acid test ratio is defined as follows:
Cash on hand + Accounts Receivable
-------------------------------
Accounts Payable
Let's denote:
CH = Cash on hand
AR = Accounts Receivable
AP = Accounts Payable
The loan constraint can be formulated as:
(CH + AR) / AP >= 3
3. Non-Negativity Constraint:
The number of units produced cannot be negative:
x >= 0
Now, we can summarize the linear programming model:
Maximize: P(x) = x * (S - C)
Subject to:
C * x <= P30,000 (Production capacity constraint)
(CH + AR) / AP >= 3 (Loan constraint)
x >= 0 (Non-negativity constraint)
With the given information, you need to specify the values for S (selling price per unit) and C (cost per unit) to complete the formulation.
To complete the formulation, we need to know the selling price per unit (S) and the cost per unit (C).
The problem has been formulated as a linear programming model to maximize the company's profit given production capacity constraints, loan requirements, and available funds.
The formulation allows for the determination of the optimal production quantity (x) to achieve the maximum profit.
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Why does management chooses units of production method of depreciation for their various assets and does this impact the financial performance of business
Management may choose the units of production method of depreciation for their various assets when the asset's useful life is better measured, it produces rather than the passage of time.
This method is particularly useful when an asset's wear and tear or obsolescence is directly related to the level of production or usage.
The units of production method calculates depreciation expense based on the actual output or usage of the asset during a specific period.
The choice of depreciation method can impact the financial performance of a business in a few ways:
Depreciation Expense: The units of production method may result in varying depreciation expenses from one period to another, depending on the level of asset usage or output.
Asset Valuation: The choice of depreciation method affects the carrying value or book value of the assets on the balance sheet.
Tax Implications: The depreciation method chosen can also have tax implications.
Decision Making: The choice of depreciation method can influence investment decisions and capital budgeting.
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Briefly explain why rising inequities in the Australian housing market count as evidence of rising wealth and intergenerational inequality. Do some brief research on how housing inequality is affecting renters and list two or three common problems with rental properties in the private rental market.
The rising inequities in the Australian housing market count as evidence of rising wealth and intergenerational inequality as the high cost of housing disproportionately affects young people and those from lower socioeconomic backgrounds, who may not be able to afford to enter the market or may have to resort to substandard housing. Furthermore, high housing costs and rental prices can cause long-term financial strain and prevent people from saving for retirement, creating an intergenerational wealth gap.
Research shows that housing inequality is affecting renters as well. Below are some common problems with rental properties in the private rental market-
1. Poor maintenance: Many private rental properties are poorly maintained, with landlords failing to address issues such as leaks, pest infestations, or broken appliances. This can lead to health and safety risks for renters.
2. High costs: Rental prices in the private market are often unaffordable, especially for those on low incomes. This can lead to overcrowding or people being forced to live in substandard housing.
3. Lack of security: Many renters in the private market face insecurity, with short-term leases and the risk of eviction. This can lead to instability and difficulty in planning for the future.
Overall, rising housing inequality in Australia is a significant issue that is contributing to wealth and intergenerational inequality, as well as creating problems for renters in the private rental market.
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Jack took a car loan of $40,000 to be repaid in 60 uniform monthly payments starting exactly twelve months after acquiring the loan. The interest rate he is being charged is 1.5% per month. Calculate the required uniform monthly payment.
If possible please don't pull the factors from a table, I am trying to calculate it by hand and can't figure out where I am going wrong. Thanks.
Therefore, the required uniform monthly payment for Jack's car loan is approximately $1,252.62..
To calculate the required uniform monthly payment for Jack's car loan, we can use the formula for the present value of an annuity. The formula is: [tex]PV = P * [(1 - (1 + r)^(-n)) / r] .[/tex]
Where:
PV = present value (loan amount)
P = monthly payment
r = monthly interest rate
n = number of payments .
Now, let's solve for P:
$40,000 = P * [(1 - (1 + 0.015)^(-60)) / 0.015]
First, calculate the value inside the brackets:
[tex]PV = P * [(1 - (1 + r)^(-n)) / r] .[/tex]
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Tom Collins, Inc. has the following capital gains and loss transactions in 2022.
Short-term gain $1,500
Short-term loss ($2,100)
Long-term gain $16,000
Long-term loss ($10,500)
After the netting process, what is the amount and character of the gain or loss?
free answer and explain pls
Vizsla, LLC's shareholders are in the 32% marginal tax bracket. Because of their high tax rate, Vizsla, LLC is trying to decide if it should renew a certificate of deposit ("CD") of $10,000, 6%, which generates taxable income. Vizsla could move the $10,000 to tax-exempt municipal bonds. What is the minimum rate of interest Norma would have to receive to make the tax exempt-bond as profitable of an investment as the CD?
4.08%
6.00%
8.40%
9.00%
explain pls
The minimum rate of interest that Norma would have to receive on the tax-exempt bond to make it as profitable as the CD is 4.08%.
Netting Capital Gains and Losses:To determine the net gain or loss, we need to offset the gains against the losses in the same category (short-term or long-term).
Short-term gain: $1,500
Short-term loss: ($2,100)
Net short-term gain/loss: $1,500 - $2,100 = ($600) (short-term loss)
Long-term gain: $16,000
Long-term loss: ($10,500)
Net long-term gain/loss: $16,000 - $10,500 = $5,500 (long-term gain)
Total net gain/loss: ($600) + $5,500 = $4,900 (net gain)
The amount of the gain is $4,900, and the character of the gain is a net capital gain.
Minimum Rate of Interest for Tax-Exempt Bond:
To compare the profitability of the tax-exempt bond and the CD, we need to calculate the equivalent rate of interest on the tax-exempt bond.
The tax-exempt bond provides income that is not subject to federal income tax, while the CD generates taxable income.
To determine the minimum rate of interest on the tax-exempt bond, we need to find the after-tax return that matches the after-tax return of the CD.
CD interest rate: 6%
Marginal tax bracket: 32%
After-tax return from the CD: 6% * (1 - 0.32) = 4.08%
Therefore, the minimum rate of interest that Norma would have to receive on the tax-exempt bond to make it as profitable as the CD is 4.08%.
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Discuss the similarities between the Shwhart cycle and DMAIC. And what role does risk play in project selection and the DEFINE step of DMAIC?
Shewhart cycle and DMAIC share an iterative approach to continuous improvement, emphasizing risk assessment and project prioritization.
1. The Shewhart cycle and DMAIC (Define, Measure, Analyze, Improve, Control) have several similarities in their approach to continuous improvement. Firstly, both methodologies follow an iterative approach, emphasizing the need for continuous monitoring, analysis, and adjustment of processes to achieve desired outcomes.
2. In the context of project selection and the Define step of DMAIC, risk assessment plays a crucial role. When selecting improvement projects, organizations need to evaluate the potential risks and benefits associated with each project.
In summary, both the Shewhart cycle and DMAIC share similarities in their iterative approach to continuous improvement.
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Question 1 (25 Marks) Broadband adoption has grown exponentially in LAC over the last decade, with fixed broadband subscriptions growing at a compound annual growth rate of 76% between 2000 and 2010. Estimating the price elasticity for broadband demand has been quite important in the growth of that sector in Latin America and the Caribbean (LAC). a) Critically discuss the rationale and the importance of price elasticity as a tool in maximising revenue for the broadband sector in LAC. (15 marks) b) The broadband demand model used in the case study is as follows: Provide in-depth theoretical considerations justifying the inclusion of the above independent variables in explaining broadband penetration (PENETi) in LAC and the Caribbean. (10marks)
The rationale behind estimating price elasticity for broadband demand in LAC is to understand how changes in price affect the quantity demanded of broadband services. Price elasticity measures the responsiveness of demand to changes in price, indicating whether demand is elastic (responsive to price changes) or inelastic (less responsive). This information is crucial for broadband providers in maximizing revenue.
By estimating price elasticity, broadband providers can determine the optimal pricing strategy. If demand is elastic, a decrease in price will lead to a proportionally larger increase in demand, resulting in higher overall revenue. On the other hand, if demand is inelastic, a price increase may lead to a smaller decline in demand, thus increasing revenue.
Understanding price elasticity also helps providers make informed decisions regarding pricing tiers, bundling options, and promotional offers. By analyzing the sensitivity of demand to price changes, providers can identify the price points that maximize revenue and strike a balance between affordability for consumers and profitability for the sector.b) The independent variables included in the broadband demand model for explaining broadband penetration in LAC and the Caribbean should be theoretically justified.
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What is the maximum allowable force in the connection based on the bearing stress in the cable connector?
The maximum allowable force in the connection based on the bearing stress in the cable connector is determined by the design specifications and the material properties involved.
How is the maximum allowable force calculated using bearing stress in the cable connector?The maximum allowable force in the connection can be calculated by considering the bearing stress in the cable connector. Bearing stress is the force applied perpendicular to the area of contact between two components. In this case, it refers to the force exerted by the cable connector against the connecting material.
To calculate the maximum allowable force, the bearing stress limit of the cable connector material must be known. This limit is typically provided by the manufacturer or can be obtained from material engineering references. Once the bearing stress limit is determined, it is multiplied by the effective area of contact between the cable connector and the connecting material.
The effective area of contact can be calculated based on the geometry of the connection and the specific design. This involves considering the shape and dimensions of the cable connector and the surface it is in contact with. By multiplying the bearing stress limit by the effective area of contact, the maximum allowable force in the connection can be obtained.
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Jim Coleman, Jr. was appointed the manager of Maris Properties, a recently formed company that manages residential rental properties. Linda Grider is the accountant. She prepared a chart of accounts based on an analysis of the expenditures of the company. Two of the largest expense categories are Travel and Entertainment. Mr. Coleman believes that it is important to maintain a presence in the social life of the city. In this, he sharply differs from his father, Jim Coleman, Sr. The elder Mr. Coleman has set up Maris Properties in order to test his son's management skills before allowing him to manage the more lucrative commercial property business. Mr. Coleman, Sr. provided the capital for Maris, and maintains close contact with the company. He allowed his son, however, to hire his own employees.
Mr. Coleman has asked Ms. Grider to change the names of the Travel and Entertainment Expense accounts to Property Development. He hopes to deflect his father's attention away from the amount he has spent on travel and entertainment until he has proven that his methods work. When Ms. Grider resisted, he reminded her that he, not his father, hired her. He also reminded her that she had been enthusiastic about his business plans when she was hired.
Required:
Who are the stakeholders in this situation?
Should Ms. Grider agree to the change in the Travel Expense and Entertainment Expense accounts to Property Development? Explain.
The stakeholders in this situation include Jim Coleman Jr., Jim Coleman Sr., Linda and potentially other employees and investors of Maris Properties.
Agree to the change in the Travel Expense and Entertainment Expense accounts to Property Development, it is important to consider the ethical implications. It is ultimately up to her to decide whether she wants to comply with the request or take appropriate action to ensure the integrity of the company's financial records.
Changing the names of the expense accounts to Property Development would misrepresent the true nature of the expenses and potentially deceive stakeholders, such as Jim Coleman Sr. and other investors, who may rely on accurate financial information to make informed decisions.
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equally thely. The market value today of its assets is $258 militon. a. What is the expected retum of WT stock werout leverage? b. Suppose the risk-free interest rate is 5%. If WT borrows $69 milion todoy at this rate and uses the proceeds to pay an immediate cash dividend, what wit be the marhet value of ts ezuly fat affor the dividend is paid, hccordeg to MM? e. What is the expected retum of WT stock after the dividend is paid in part (b)? a. The unlevered eopected return of WT stock is 8. (Round to two decinal places)
Since the market value of equity remains unchanged at $258 million, the expected return will also remain the same. However, without knowing the initial investment, we cannot determine the exact expected return after the dividend is paid. Expected return = (New market value of equity - Initial investment) / Initial investment.
a. The expected return of WT stock without leverage can be calculated using the formula:
Expected return = (Market value of assets - Initial investment) / Initial investment
Given that the market value of assets is $258 million and there is no information about the initial investment, we cannot determine the expected return without leverage.
b. According to the Modigliani-Miller (MM) theory, the market value of a firm is independent of its capital structure. Therefore, the market value of WT's equity after the dividend is paid will remain the same at $258 million.
c. The expected return of WT stock after the dividend is paid can be calculated using the same formula as in part a, but with the new market value of equity after the dividend is paid.
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A beginning inventory of $31,000 and a gross profit rate of 44% on net sales. Estimated cost of merchandise lost The inventory of Coronado Company was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained: Sales Revenue $55,000, Sales Returns and Allowances $1,000, Purchases $33,000, Freight-In $1,500, and Purchase Returns and Allowances $1,700. Determine the merchandise lost by fire, assuming: (a) A beginning inventory of $23,000 and a gross profit rate of 30% on net sales. Estimated cost of merchandise lost
The estimated cost of merchandise lost by fire, assuming a beginning inventory of $23,000 and a gross profit rate of 30% on net sales, is $27,900.
To calculate the estimated cost of merchandise lost by fire, we need to determine the cost of goods sold (COGS) and subtract it from the net sales. The COGS can be calculated using the gross profit rate on net sales.
Net sales can be calculated by subtracting the sales returns and allowances from the sales revenue:
Net sales = Sales revenue - Sales returns and allowances
Net sales = $55,000 - $1,000
Net sales = $54,000
To calculate COGS, we use the gross profit rate on net sales:
Gross profit = Gross profit rate * Net sales
Gross profit = 0.30 * $54,000
Gross profit = $16,200
Now, we can calculate the COGS by subtracting the gross profit from the net sales:
COGS = Net sales - Gross profit
COGS = $54,000 - $16,200
COGS = $37,800
To estimate the cost of merchandise lost by fire, we need to consider the change in inventory. Given a beginning inventory of $23,000, the formula for the ending inventory is:
Ending inventory = Beginning inventory + Purchases + Freight-In - Purchase Returns and Allowances - COGS
Plugging in the given values, we have:
Ending inventory = $23,000 + $33,000 + $1,500 - $1,700 - $37,800
Ending inventory = $18,000
The merchandise lost by fire can be calculated by subtracting the ending inventory from the beginning inventory:
Merchandise lost = Beginning inventory - Ending inventory
Merchandise lost = $23,000 - $18,000
Merchandise lost = $5,000
Therefore, the estimated cost of merchandise lost by fire, assuming a beginning inventory of $23,000 and a gross profit rate of 30% on net sales, is $27,900 ($5,000 / 0.30).
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Oyster Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $214 per board. This includes 35 pounds of direct materials, at the budgeted price of $2 per pound, and 10 hours of direct manufacturing labor, at the budgeted rate of $14.40 per hour. Following are additional data for the month of July: Units completed 5,500 units Direct material purchases 230,000 pounds Cost of direct material purchases $782,000 Actual direct manufacturing labor-hours 48,000 hours Actual direct labor cost $705,600 Direct materials efficiency variance $1,100 F There were no beginning inventories. 1. Compute direct manufacturing labor variances for July.
The direct labor efficiency variance is -691,056 US dollars
To compute the direct manufacturing labor variances for July, we need to calculate the direct labor rate variance and the direct labor efficiency variance.
1. Direct labor rate variance:
Actual direct labor cost - (Actual direct manufacturing labor-hours * Budgeted direct labor rate)
Given:
Actual direct labor cost = $705,600
Actual direct manufacturing labor-hours = 48,000 hours
Budgeted direct labor rate = $14.40 per hour
Direct labor rate variance = $705,600 - (48,000 * $14.40)
2. Direct labor efficiency variance:
(Budgeted direct manufacturing labor-hours - Actual direct manufacturing labor-hours) * Budgeted direct labor rate
Given:
Budgeted direct manufacturing labor-hours = 10 hours per unit (given in the question)
Actual direct manufacturing labor-hours = 48,000 hours
Direct labor efficiency variance = (10 - 48,000) * $14.40
Note: Please calculate the values based on the given data and perform the arithmetic calculations to find the actual values of the direct manufacturing labor variances for July.
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