Peter Limited has spent $3 billion on developing a new single board computer over the past four years. The company now has three mutually exclusive options: 1) The company can manufacture the single board computer itself in which case the plant will cost $5 billion. Additional working capital of $2.1 billion will be required when production commences. The expected sales and selling prices are as follows: The company usually depreciates plant of this type over five years using the straight-line method and assumes no scrap value. Variable costs are expected to be $65 per unit and other fixed cost is 2,000 million per year. Applicable tax rate for the company is 20%. The company will accept the new product if the new product can payback within three years. 2) Sell the know-how to one of its major competitors for a single payment of $3.5 billion. 3) Sell the know-how for a royalty of $10 per unit. For option 1), the company may accept the new product if the new product can payback within 3 years and it can generate sufficient profit to the company. For option 2) and 3), the company will not manufacture the product itself. The information about the company's current capital structure are as follows: i. The common stock is now trading at $15.65. We have used analysts' estimates to determine that the market believes our dividends will grow at 6% per year and the expected dividend next year will be $2. The number of shares outstanding is 200 million. ii. The company's 20-year bonds that pay semi-annual coupon rate of 9% is now selling at $975. The face value of the bond is $1,000 and there are 500,000 bonds outstanding. The price company's 8% preferred share is 93% of its par value ($100). The number of shares outstanding is $10 million. a. Compute the WACC of Peter Limited. b. Calculate the relevant cash flow for option 1,2 and 3 . c. Compute the NPV, payback period and IRR for all 3 options. d. What would your final decision be? Discuss your decision in detail. e. As the cost of debt is apparently lower than other sources of fund, the company's CFO, David, suggests that the company should use debt financing exclusively in funding this new project. Do you agree with his suggestion? Please discuss in detail according to the Modigliani and Miller's theory. f. Jason, the company's finance manager, suggests that the company may consider issuing equity warrant as a new source of fund. Do you agree? Please discuss in detail. g. David believes the company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? Please discuss in detail. h. Angela, the company's accountant, believes that the company should use the extra cash to pay off debt and upgrade and expand its existing manufacturing capability. How would Angela's proposal affect the company? Please discuss in detail. i. Jason is in favor of a share repurchase. He argues that a repurchase will increase the company's P/E ratio. Is his argument correct? How will a share repurchase affect the value of the company? Please discuss in detail. j. Another option discussed by David, Angela and Jason would be to adopt the residual dividend policy. How would you evaluate this proposal? Please discuss in detail.

Based on the case "Robinhood: The Challenges of Keeping Pace with Innovation," the most significant strategic radar screen would be the technological screen.  keeping a close eye on the technological screen would be vital for Robinhood to understand and adapt to the rapidly evolving landscape of financial services.

This is because the case focuses on the challenges faced by Robinhood, a financial services company, in keeping pace with innovation. The technological screen involves monitoring and analyzing technological trends, developments, and advancements that can impact the industry and the organization's ability to stay competitive.

In the case of Robinhood, technological innovation and advancements in financial technology (FinTech) play a crucial role in shaping the company's business model, operations, and ability to meet customer demands. Therefore, keeping a close eye on the technological screen would be vital for Robinhood to understand and adapt to the rapidly evolving landscape of financial services.

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a, The elements of scenario are The $300 Kenji spends to purchase software from PC Pros. and Lucia's labor. The correct answers are a and c. b) The correct answer is False. Gross domestic product (GDP) is a commonly used measure to estimate and represent the total income generated by an economy.

a, In the given scenario, the elements that represent a flow from a household to a firm are Kenji's expenditure of $300 to purchase software from PC Pros and Lucia's labor as a programmer for PC Pros.

The $300 spent by Kenji represents a flow of dollars from the household to the firm, as it is a payment made by Kenji (representing the household) to purchase software from PC Pros (the firm).

Lucia's labor is another flow from the household to the firm, as she provides her skills and services as a programmer, which contributes to the firm's output and revenue generation. Both of these elements involve the transfer of resources or value from the household to the firm.

b, Regarding the statement about GDP, the correct answer is False. GDP is a widely used measure to assess the total income generated by an economy.

It captures the value of all final goods and services produced within a country's borders during a specified period, which includes the income earned by households, businesses, and other entities.

GDP serves as an important indicator to gauge the overall economic activity and income levels of an economy.

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--The given question is incomplete, the complete question is given below " a, Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.

       a The $300 Kenji spends to purchase software from PC Pros

        b The car wash Lucia receives

        c Lucia's labor

b, True or False: Gross domestic product (GDP) cannot be used to measure the economy's income.

True

False"--

The size of each payment from the annuity should be approximately $319.09 (rounded to the nearest cent).

To calculate the size of each payment from the annuity, we can use the present value of an ordinary annuity formula: PV = P * [(1 - (1 + r)^(-n)) / r]

In this case, the present value (PV) is $344,000, the interest rate (r) is 3.25% per year compounded monthly (which means the monthly interest rate is 3.25% / 12), and the total number of periods (n) is 641 years * 12 months per year = 7,692 months.

Plugging in these values into the formula, we can solve for the payment amount (P):

344,000 = P * [(1 - (1 + (0.0325/12))^(-7,692)) / (0.0325/12)]

Now let's calculate it:n r_monthly = 0.0325 / 12, n_months = 7692

P = 344,000 / [(1 - (1 + r_monthly)^(-n_months)) / r_monthly]

After performing the calculations, the size of each payment from the annuity comes out to be $319.09 (rounded to the nearest cent).

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The depreciation for the first year is $58,316.67.

b. The gain on the sale of the equipment is $90,024 - $70,966.64 = $19,057.36.

c. The journal entry to record the sale cannot be determined without the cost of the equipment.

a. The depreciation for the first year can be calculated using the straight-line method. The formula for straight-line depreciation is (Cost - Residual Value) / Useful Life. In this case, the cost is $537,500, the residual value is $41,650, and the useful life is 9 years. Plugging these values into the formula, we get ($537,500 - $41,650) / 9 = $58,316.67. Rounded to the nearest cent, the depreciation for the first year is $58,316.67.

b. To determine the gain or loss on the sale of the equipment, we need to compare the book value to the sale price. The book value is the asset cost minus accumulated depreciation. Since the equipment was sold at the end of year eight, the accumulated depreciation would be the depreciation for the first eight years.

The accumulated depreciation would be 8 x  $58,316.67 = $466,533.36. The book value would be $537,500 - $466,533.36 = $70,966.64. Comparing this to the sale price of $90,024, we can see that the book value is less than the sale price. Therefore, the equipment was sold for a gain.

c. To journalize the entry to record the sale, we would need to know the cost of the equipment. However, this information is not provided in the question. Without the cost of the equipment, we cannot determine the journal entry to record the sale accurately.

In summary, a. The depreciation for the first year is $58,316.67. b. The gain on the sale of the equipment is $90,024 - $70,966.64 = $19,057.36. c. The journal entry to record the sale cannot be determined without the cost of the equipment.

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After 4 years, Hank will have $15,772.73 as his down payment. The, Hank's down payment after 4 years will be $15,772.73 (rounded to the nearest cent).

To calculate the down payment, we can use the future value of an ordinary annuity formula. The monthly deposit of $300 is made for 4 years, which means there will be a total of 48 deposits. The annual percentage rate (APR) is 8.7%, compounded monthly.

Using the formula:

FV = P * [(1 + r)^n - 1] / r

where FV is the future value, P is the monthly deposit, r is the monthly interest rate, and n is the number of periods (deposits).

Plugging in the values, we get:

FV = 300 * [(1 + 0.087/12)^48 - 1] / (0.087/12)

Calculating this expression, we find that the future value is approximately $15,772.73. Therefore, Hank's down payment after 4 years will be $15,772.73 (rounded to the nearest cent).

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The new rental rate of capital is obtained by solving for R in the equation Kd = 0.5Y/MPK where K = 4 and

[tex]L = 0.64.Kd = 0.5Y/MPK[/tex]

1. Demand for labor and capital The formula for the demand for labor is given as; MPL = W/ P (W) where MPL is the marginal product of labor, W is the real wage rate and P (W) is the nominal wage rate expressed in dollars.

Let α = 0.5The production function Y = K0.5L0.5 shows that [tex]MPL=0.5(K0.5)(L-0.5) = 0.5Y/L \\[/tex]

The demand for labor is expressed as d = (1-α) Y/W, substituting MPL, we obtain

The new real wage rate is obtained by solving for W in the equation d = 0.5Y/MPL where L = 0.64.

Ld = 0.5Y/MPL

→ 0.64 = 0.5(8/3)/MPL

→ MPL = 2/3

Therefore, [tex]W = MPL × P (W) = (2/3) × 4 = $2.67[/tex]

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1. Identify a Problem in a Business or Organization you Know Well. Describe the problem and use the tools presented in the 'Framing the Problem' chapter to help you write up the problem recognition. (There are a couple examples at the end of the chapter. Focus on the Problem Recognition and Review of Previous Findings steps.)

The problem that has been identified in a business is the lack of growth. Although the company has been functioning for a few years, there has been no significant development in the business. It has not been able to expand or increase its customers, nor has it been able to compete with other companies in the industry.

It is primarily because the company's product is neither exceptional nor tailored to the customers' demands and choices. Additionally, the company has failed to comprehend the market's needs and consumers' buying habits. Therefore, there is a need to revisit the strategy and business plan to be competitive in the market.

2. Conduct some research to identify some previous findings. Use more than one of the examples suggested. Summarize your review of previous findings.

The previous findings show that the business's product and market strategy are outdated, and the company has been incapable of maintaining itself in the industry. Due to the company's poor customer service, high prices, and low product value, it is losing market share. Additionally, customers have switched to competitors as the company is unable to fulfill their needs and preferences.

The research indicates that the business has a bad reputation in the market, and this has a significant effect on the brand image. There is a need to enhance the product value by incorporating customer feedback and reviews. The market competition is growing rapidly, and the company needs to align itself with market trends and understand consumer behavior to be competitive in the industry. The company must revisit its market and product strategy to cater to the market's demands and stay ahead of the competition.

In problem framing exercise, there are few steps to be followed. These steps include identifying a problem in a business or organization that is known well, conducting some research to identify some previous findings, and reviewing the previous findings. It is also important to frame the problem with the help of the 'Framing the Problem Worksheet' questions on Page 48 of "Keeping Up with the Quants".

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When a company pays its bill from a lawyer for services provided in the prior year on account Liabilities decrease; Equity decreases.

When a company pays its bill from a lawyer for services provided in the prior year on account, it means that the company is settling its outstanding liability to the lawyer. Liabilities represent the company's obligations to pay for goods or services received. By making the payment, the company reduces its liability to the lawyer, resulting in a decrease in liabilities. Equity, on the other hand, represents the residual interest in the assets of the company after deducting liabilities. Paying the lawyer's bill does not directly impact equity unless the payment is made from retained earnings or affects other equity accounts. Therefore, there is no direct impact on equity. In summary, when a company pays its bill to a lawyer for services provided in the prior year on account, liabilities decrease as the company fulfills its obligation to pay, while equity remains unchanged.

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Given information: Milden Company is a merchandiser that plans to sell 37,000 units during the next quarter at a selling price of $61 per unit. The company also gathered the following cost estimates for the next quarter.

Cost Cost of good sold$31 per unit sold Advertising expense$181,000 per quarter Sales commissions6% of sales Shipping expense$63,000 per quarter

Administrative salaries$4.00 per unit sold Insurance expense$91,000 per quarter Depreciation expense$10,100 per quarter Prepare a contribution format income statement for the next quarter.

Milden Company  Contribution Format Income Statement  For the Next Quarter Variable expenses Place in the left Total variable expenses Beginning inventory$0Purchases$0Direct materials$0

Direct labor$0Variable manufacturing overhead$0Shipping expense$4.00 per unit sold Sales commission6% of sales Variable expenses subtotal Contribution margin Fixed expenses Place in the left Total fixed expenses

Administrative salaries$61,000Insurance expense$10,100, Depreciation expense$91,000 ,

Fixed manufacturing overhead$0Utilities$0Other expenses$0 Maintenance$0

Indirect labor$0 Indirect materials$0 Fixed expenses subtotal Net operating income Contribution format income statement for the next quarter is as follows:

Milden Company Contribution Format Income Statement

For the Next Quarter Variable expenses Place in the left Total variable expenses Beginning inventory$0Purchases$0Direct materials$0Direct labor$0Variable manufacturing overhead$0Shipping expense$148,000Sales commission$1,080,000Variable expenses subtotal$1,228,000Contribution margin$2,273,000

Fixed expenses  Place in the left. Total fixed expenses,

Administrative salaries$61,000Insurance expense$10,100Depreciation expense$91,000

Fixed manufacturing overhead$0Utilities$0Other expenses$0Maintenance$0Indirect labor$0Indirect materials$0Fixed expenses subtotal$162,100.

Net operating income$2,110,900Prepare a traditional format income statement for the next quarter.

Milden Company Traditional Format Income Statement. For the Next QuarterSales37,000 × $61$2,257,000Cost of goods sold. Place in the left. Beginning inventory$0Purchases$1,147,000Ending inventory$31 × 37,000(1,147,000)

Cost of goods sold$0Gross profit$2,257,000Operating expenses. Selling expenses Sales commissions$136,020Sales salaries$0

Advertising expense$181,000Shipping expense$63,000Total selling expenses$380,020Administrative expenses. Administrative salaries$61,000Insurance expense$91,000

Depreciation expense$10,100Total administrative expenses$162,100Total operating expenses$542,120Net operating income$1,714,880

The traditional format income statement for the next quarter is as follows:

Milden Company Traditional Format Income Statement For the Next QuarterSales$2,257,000Cost of goods sold Beginning inventory$0Purchases$1,147,000Ending inventory$(1,147,000)Cost of goods sold$0Gross profit$2,257,000

Operating expenses Selling expenses Sales commissions$136,020Sales salaries$0Advertising expense$181,000Shipping expense$63,000Total selling expenses$380,020

Administrative expenses Administrative salaries$61,000Insurance expense$91,000Depreciation expense$10,100

Total administrative expenses$162,100Total operating expenses$542,120Net operating income$1,714,880.

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The Net Present Value (NPV) is a financial metric used to determine the profitability of an investment by calculating the present value of future cash flows. To calculate the NPV, we subtract the initial cost of the investment from the present value of the expected future cash flows.

Given the information provided, the upfront costs to market and develop the software product are $4.99 million. The product is expected to generate profits of $1.18 million per year for ten years. The company will also have to provide product support expected to cost $92,000 per year indefinitely.To calculate the NPV at a discount rate of 6.1%, we need to discount each year's cash flow to its present value and sum them up. Using the formula:

NPV = (Cash Flow / (1 + Discount Rate)^Year) - Initial Cost
Here's how we can calculate it:
Year 1: NPV = ($1.18 million / (1 + 0.061)^1) - $4.99 million

Year 2: NPV = ($1.18 million / (1 + 0.061)^2) - $92,000
Year 10: NPV = ($1.18 million / (1 + 0.061)^10) - $92,000
To find the NPV, we sum up all the present values:

NPV = Year 1 + Year 2 + ... + Year 10
Now, let's calculate the NPV at a discount rate of 6.1%:
Year 1: NPV = ($1.18 million / (1 + 0.061)^1) - $4.99 million
Year 2: NPV = ($1.18 million / (1 + 0.061)^2) - $92,000
Year 10: NPV = ($1.18 million / (1 + 0.061)^10) - $92,000

Add up all the present values:
NPV = Year 1 + Year 2 + ... + Year 10
Repeat the same calculations for discount rates of 1.1% and 17.3% to find the NPV at each rate.
Now, let's answer the questions:
a. The NPV of the investment at a discount rate of 6.1% is the sum of the present values calculated as mentioned above. Should the firm undertake the project?
b. The Internal Rate of Return (IRR) is the discount rate at which the NPV of an investment becomes zero. To calculate the IRR, we set the NPV equation equal to zero and solve for the discount rate.

c. The IRR rule indicates whether an investment should be undertaken or not. If the IRR is greater than the cost of capital, the investment is considered profitable, and the project should be undertaken. If the IRR is less than the cost of capital, the investment is not profitable, and the project should be rejected.

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the meatpacker is the one who sells in this scenario.                                                                              To calculate the market value of Yum! Brands' equity, we multiply the stock price by the number of outstanding shares.

Given that the stock price is $165 and the number of outstanding shares is 332.5 million, we can calculate the market value as follows:
Market value = Stock price x Number of shares
          [tex]= $165 x 332.5 million              = $54,787.5 million[/tex]
Therefore, the market value of Yum! Brands' equity is $54,787.5 billion.
Since the bond rating for Caterpillar Tractor (CAT) has been revised to AA, we can refer to Table 2.2 to determine the approximate interest rate. According to the table, AA-rated bonds have an interest rate of 3.5%. Therefore, the interest rate that Catalytic Concepts would now need to pay on its bonds is approximately 3.5%.
In the commodity market, the farmer agrees to buy live cattle in the future at a fixed price, while the meatpacker agrees to sell.

Therefore, the meatpacker is the one who sells in this scenario.

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One job experience I had in the past was working as a customer service representative at a call center.

1. Three things I liked about the job:

a) Helping customers: I enjoyed the satisfaction of resolving customer issues and providing them with a positive experience. It felt rewarding to assist people and make a difference in their day.

b) Variety of inquiries: Each customer interaction was unique, and I appreciated the opportunity to handle a wide range of inquiries. It kept the job interesting and allowed me to develop problem-solving skills.

c) Team environment: Working in a call center meant being part of a team. I liked collaborating with my colleagues, sharing knowledge, and supporting each other during busy periods.

Three things I didn't like about the job:

a) High-stress levels: Dealing with frustrated customers and working under pressure to meet performance metrics could be stressful at times. It required emotional resilience to handle difficult situations.

b) Repetitive tasks: While the variety of inquiries was a positive aspect, there were also repetitive tasks involved in the job, such as following standardized scripts. It could become monotonous over time.

c) Limited growth opportunities: In some call center environments, career growth prospects may be limited, with few opportunities for advancement or professional development.

2. As a manager/supervisor, here's what can be done to increase the likes and decrease the dislikes:

a) Implement regular training and skill development programs: Providing ongoing training sessions and opportunities for personal growth can help employees develop new skills, handle stress better, and feel more motivated in their roles.

b) Offer job rotation or task variety: By periodically rotating employees across different customer service tasks or offering projects that require problem-solving, managers can provide more variety and reduce the monotony associated with repetitive tasks.

c) Recognize and reward performance: Creating a culture of appreciation and recognition for outstanding customer service can help decrease stress levels and boost employee morale. Recognizing achievements through incentives, bonuses, or employee recognition programs can motivate employees to strive for excellence.

3. Yes, the suggested changes would likely motivate me to work harder. By addressing the dislikes and enhancing the aspects I enjoy about the job, I would feel more valued and fulfilled in my role. Regular training and skill development would provide opportunities for growth, making the job more rewarding.

Job rotation and variety would keep me engaged and interested, reducing the chances of monotony. Lastly, recognition and rewards for performance would create a positive work environment and encourage me to put in extra effort to provide excellent customer service.

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Operating leverage measures fixed costs' impact on profitability, financial leverage assesses the use of debt to magnify earnings, and total leverage combines both to evaluate risk and profitability.

The three types of leverage commonly referred to in financial analysis are operating leverage, financial leverage, and total leverage. Each type of leverage measures a company's ability to use fixed costs or debt to magnify its returns or earnings.

1. Operating Leverage:

Operating leverage measures the extent to which fixed costs are used in a company's operations. It determines the relationship between a company's fixed costs and its sales revenue. A higher degree of operating leverage means a larger proportion of fixed costs relative to variable costs. Operating leverage is calculated using the following formula:

Operating Leverage = Contribution Margin / Operating Income

A higher value of operating leverage indicates that a company has a higher proportion of fixed costs, such as rent, depreciation, and salaries, in its cost structure. This means that a small change in sales can have a significant impact on the company's profitability. Higher operating leverage can enhance profitability potential when sales are increasing, but it also increases the risk of losses if sales decline.

Reference: Brigham, E. F., & Houston, J. F. (2012). Fundamentals of Financial Management. Cengage Learning.

2. Financial Leverage:

Financial leverage measures the use of debt or borrowed funds to finance a company's assets. It evaluates the relationship between a company's earnings before interest and taxes (EBIT) and its earnings per share (EPS). Financial leverage is calculated using the following formula:

Financial Leverage = EBIT / Earnings Per Share (EPS)

A higher value of financial leverage indicates that a company has a higher proportion of debt in its capital structure. This means that a small change in EBIT can lead to a significant change in EPS. Higher financial leverage can amplify profitability potential when a company's earnings are growing, as interest expenses remain fixed. However, it also increases the risk of losses when earnings decline, as interest expenses become a larger burden.

Reference: Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2017). Fundamentals of Corporate Finance. McGraw-Hill Education.

3. Total Leverage:

Total leverage combines both operating leverage and financial leverage to evaluate the overall risk and profitability potential of a company. It measures the relationship between a company's sales revenue and its EPS. Total leverage is calculated using the following formula:

Total Leverage = Operating Leverage × Financial Leverage

A higher value of total leverage indicates that a company has both higher operating leverage and financial leverage. This means that small changes in sales can have a magnified impact on EPS. Higher total leverage can enhance profitability potential when sales are increasing, but it also increases the risk of losses if sales decline.

Reference: Gitman, L. J., & Zutter, C. J. (2015). Principles of Managerial Finance. Pearson Education.

In summary, higher values of each type of leverage indicate a higher potential for profitability when the company is performing well. However, higher leverage also increases the company's exposure to risk, especially in economic downturns or periods of declining sales. It is important for companies to strike a balance between leverage and risk to maintain sustainable financial health.

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The annual growth of real GDP per capita is 2% instead of 1.5%, you would expect the standard of living to double in about 36 years.

:If the annual growth of real GDP per capita is 2% rather than 1.5%, the standard of living will double in about 36 years. The correct option is B.The growth rate of real GDP per capita is the primary determinant of the growth rate of a nation's standard of living. The faster the growth rate of real GDP per capita, the faster the nation's standard of living increases.

:Therefore, if the annual growth of real GDP per capita is 2% instead of 1.5%, you would expect the standard of living to double in about 36 years.

The annual growth of real GDP per capita is 2% instead of 1.5%, you would expect the standard of living to double in about 36 years.

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If you have accumulated $1,985,323 for your retirement and you invest it at a rate of 14.44 percent per year, compounded annually, you can withdraw approximately $95,925.15 each year for the next 22 years.

To calculate the amount of money you can withdraw annually for the next 22 years, we can use the concept of an annuity. An annuity is a series of equal cash flows received or paid at regular intervals. In this case, the cash flows are received at the end of each year.

Using the formula for the future value of an annuity, we can determine the annual cash flow amount. Given the present value of $1,985,323, the interest rate of 14.44 percent, and the number of years as 22, we can calculate the annual cash flow. By substituting these values into the formula, we find that the annual cash flow is approximately $95,925.15.

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The net profit for Rigodon Corporation can be calculated by considering the changes in owner's equity from the beginning of the fiscal year to the end, including the owner's drawings. The net profit for Rigodon Corporation is P109,000.

To calculate the net profit, we need to determine the change in owner's equity. The beginning owner's equity of P185,000 minus the owner's drawing of P100,000 gives us P85,000.

Next, we examine the changes in various balance sheet accounts. The increase in accrued insurance expense (P50,000), unearned rental income (P1,500), and the allowance for bad debts (P2,000) are expenses that reduce the net profit.

On the other hand, the decrease in the accumulated depreciation of office equipment (P8,000) and furniture (P2,000) are gains that increase the net profit.

Considering these adjustments, the net profit can be calculated as follows:

Beginning Owner's Equity (P185,000) - Owner's Drawing (P100,000) + Increase in Accrued Insurance Expense (P50,000) + Increase in Unearned Rental Income (P1,500) - Increase in Allowance for Bad Debts (P2,000) - Decrease in Accumulated Depreciation (P8,000 + P2,000) = P109,000.

Therefore, the net profit for Rigodon Corporation is P109,000.

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The risk-neutral probabilities are 0.5 and 0.375, and the discount factor is 1 for this economy.

To compute the portfolio the investor will select, we need to find the weights of the assets in the portfolio that maximize the investor's expected utility. This can be done using mean-variance optimization or the Sharpe ratio approach.

Given the returns matrix [2 2; 1 3] and equilibrium prices of 1.5 for both assets, let's compute the portfolio weights:

(a) Compute the portfolio weights:

To compute the portfolio weights, we can calculate the mean returns and variance-covariance matrix of the asset returns:

Mean returns:

Asset 1: (2 + 1) / 2 = 1.5

Asset 2: (2 + 3) / 2 = 2.5

Variance-covariance matrix:

Var(Asset 1) = [(2 - 1.5)^2 + (1 - 1.5)^2] / 2 = 0.5

Var(Asset 2) = [(2 - 2.5)^2 + (3 - 2.5)^2] / 2 = 0.5

Cov(Asset 1, Asset 2) = [(2 - 1.5)(2 - 2.5) + (1 - 1.5)(3 - 2.5)] / 2 = 0.25

Using these values, we can calculate the portfolio weights:

w1 = [Var(Asset 2) - Cov(Asset 1, Asset 2)] / [Var(Asset 1) + Var(Asset 2) - 2 * Cov(Asset 1, Asset 2)] = (0.5 - 0.25) / (0.5 + 0.5 - 2 * 0.25) = 0

w2 = 1 - w1 = 1

Therefore, the investor will select a portfolio with 100% invested in Asset 2 and 0% invested in Asset 1.

(b) Calculate the prices at which these assets will trade:

Since the equilibrium prices are given as 1.5 for both assets, there is no need to recalculate the prices. The assets will continue to trade at 1.5.

(c) Compute the risk-neutral probabilities and discount factor:

To compute the risk-neutral probabilities, we can use the formula:

Risk-neutral probability = (1 + r) / (1 + R), where r is the risk-free rate and R is the asset return.

Given that the equilibrium prices are 1.5 for both assets, we can calculate the risk-neutral probabilities as follows:

Asset 1: (1 + r) / (1 + 2) = 1.5 / 3 = 0.5

Asset 2: (1 + r) / (1 + 3) = 1.5 / 4 = 0.375

The risk-neutral probabilities for Asset 1 and Asset 2 are 0.5 and 0.375, respectively.

To compute the discount factor, we can use the formula:

Discount factor = 1 / (1 + r), where r is the risk-free rate.

Assuming a risk-free rate of 0%, the discount factor is:

Discount factor = 1 / (1 + 0) = 1

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By using the formula of the present value of an annuity, the accumulated amount at the end of 20 years, if an investor sets aside $600 at the end of each month and earns an average return of 5.5%, is about $303,391.44.

An annuity is a financial product that pays out a fixed stream of payments to an individual at a set interval.

The annuity is commonly used by investors to provide a steady stream of income over a given time period. There are two types of annuities: ordinary annuity and annuity due.

In this problem, the investment is an ordinary annuity because the payments are made at the end of each month. The formula for the present value of an ordinary annuity is given as:

PV = PMT[tex][(1 - (1 + r/n)^{(-nt)} ) / (r/n)][/tex]

Where

PV = present value

PMT = payment

r = rate of interest

n = number of compounding periods per year

t = total number of payment periods

Using the formula above:

PV = $600 [tex][(1 - (1 + 0.055/12)^{(-12*20)} ) / (0.055/12)][/tex]

PV = $600 [tex][(1 - (1.004583)^{(-240)} ) / (0.004583)][/tex]

PV = $600 [(1 - 0.153906) / 0.004583]

PV = $303,391.44

Therefore, the accumulated amount at the end of 20 years if an investor sets aside $600 at the end of each month and earns an average return of 5.5% is about $303,391.44.

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The number of shares of stock outstanding for Big Guy Subs is approximately 679,919.

To calculate the number of shares outstanding for Big Guy Subs, we can use the formula: Shares Outstanding = Net Income / Earnings per Share

Given:

- Net Income = $155,710

- Price-Earnings Ratio = 11.3

- Earnings per Share = $2.59

First, we need to find the market capitalization using the price-earnings ratio:

Market Capitalization = Price-Earnings Ratio * Net Income

Substituting the values, we have:

Market Capitalization = 11.3 * $155,710 = $1,760,003

Next, we can calculate the number of shares outstanding:

Shares Outstanding = Market Capitalization / Earnings per Share

Substituting the values, we have:

Shares Outstanding = $1,760,003 / $2.59 ≈ 679,919

Rounding to the nearest whole number, the number of shares outstanding for Big Guy Subs is approximately 679,919.

Therefore, there are approximately 679,919 shares of stock outstanding for Big Guy Subs.

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1. Calculation of predetermined overhead rate:Predetermined overhead rate is the rate at which factory overhead is charged to the work-in-process account.

It is usually calculated at the beginning of each period by dividing

the estimated total factory overhead

cost for the period by the estimated total amount of the allocation base,

which is machine hours in this case.

 Formula for Predetermined overhead rate:Predetermined Overhead Rate = Estimated Overhead Costs ÷ Estimated Activity BaseGiven: Estimated overhead

costs = $2,046,000Estimated machine hours = 62,000Predetermined Overhead Rate = $2,046,000 ÷ 62,000 hours= $33 per machine hour2.

Preparation of Journal Entries for the month of April:a.

Purchase of materialsAccounts Debit CreditMaterials Inventory $1,157,400Accounts Payable $1,157,400b.

Issuance of materials to productionAccounts Debit CreditWork in Process $105,420Indirect Materials $129,350Materials Inventory$234,770c.

Recording of Labor CostsAccounts Debit CreditWork in Process $394,000Manufacturing Overhead $59,000Wages Payable $394,000d.

Completion of JobsAccounts Debit CreditFinished Goods Inventory $95,900Work in Process $95,900($9,400+$86,500)h.

Shipment of Job G28 Accounts Debit Credit Accounts Receivable $112,450Sales $86,500Cost of Goods Sold $68,550 Finished

Goods In ventory $68,550i. Allocation of Manufacturing Overhead Accounts Debit Credit Manufacturing

Overhead $379,500 Work in Process $379,500($33 x 11,500 machine hours)3.

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1. Purchase of Debentures: Debit Debentures - N$1,455,882, Debit Brokerage Fees Expense - N$5,800, Credit Cash - N$1,461,682.

2. Accrual of Interest Expense: Debit Interest Expense - N$135,000, Credit Interest Payable - N$135,000.

3. Recognition of Interest Income: Debit Interest Receivable - N$135,000, Credit Interest Income - N$135,000.

4. Revaluation of Debentures at Fair Value: Debit Debentures - N$1,597,500, Credit Gain on Fair Value Change - N$141,618.

5. Realization of Gain on Sale: Debit Cash - N$2,475,000, Credit Debentures - N$2,475,000.

To account for the debentures purchased on 1 January 2020, we need to record the following journal entries:

1. Purchase of Debentures:
  Debit: Debentures (investment) - N$1,455,882
  Debit: Brokerage Fees Expense - N$5,800
  Credit: Cash - N$1,461,682

2. Accrual of Interest Expense:
  Debit: Interest Expense - N$135,000 (450,000 debentures x N$1 x 18%)
  Credit: Interest Payable - N$135,000

3. Recognition of Interest Income:
  Debit: Interest Receivable - N$135,000
  Credit: Interest Income - N$135,000

4. Revaluation of Debentures at Fair Value:
  Debit: Debentures (investment) - N$1,597,500 (450,000 debentures x N$3.55)
  Credit: Gain on Fair Value Change - N$141,618 (N$1,597,500 - N$1,455,882)

5. Realization of Gain on Sale:
  Debit: Cash - N$2,475,000 (450,000 debentures x N$5.50)
  Credit: Debentures (investment) - N$2,475,000

Therefore, in response to the email, the suggested journal entries would involve recording the purchase of debentures, accrual of interest expense, recognition of interest income, revaluation of debentures at fair value, and realization of gain on sale.

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1. Market yourself based on a SWOT analysis by leveraging your strengths, addressing your weaknesses, capitalizing on opportunities, and mitigating threats.

2. Conduct a SWOT analysis to compare two companies from the same industry, evaluating their strengths, weaknesses, opportunities, and threats to gain insights into their competitive positions.

1. Conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) provides valuable insights that can be used to develop an effective marketing strategy. To market yourself using a SWOT analysis, start by identifying your strengths, such as unique skills, expertise, or resources that set you apart from competitors. Highlight these strengths in your marketing materials, emphasizing how they benefit your target audience and meet their needs.

Next, address your weaknesses by acknowledging them upfront and demonstrating how you are actively working to improve or mitigate them. Showing transparency and a commitment to growth can build trust with customers and stakeholders. Identify opportunities in the market that align with your strengths and capabilities. These could be emerging trends, untapped customer segments, or partnerships that can enhance your brand's visibility and reach. Develop targeted marketing campaigns that capitalize on these opportunities to attract new customers and expand your market share.

Lastly, analyze potential threats that could impact your business and develop strategies to mitigate them. This could involve staying ahead of competitive pressures, monitoring industry trends, and being adaptable to changing market conditions. Communicate how you are proactively addressing these threats to assure customers of your long-term stability and reliability. Hence, by leveraging your strengths, addressing weaknesses, capitalizing on opportunities, and mitigating threats identified through a SWOT analysis, you can effectively market yourself and differentiate your brand in the marketplace.

2. When comparing two companies from the same industry using a SWOT analysis, start by assessing their strengths. Look at factors such as market leadership, technological advancements, brand reputation, financial stability, and unique selling propositions. Identify the areas where each company excels and has a competitive advantage. Next, analyze their weaknesses. Evaluate aspects such as operational inefficiencies, limited product offerings, poor customer service, or organizational challenges. Understand the areas where each company lags behind and may face obstacles.

Identify opportunities for each company, such as emerging market trends, changing customer preferences, or untapped market segments. Assess how well-positioned each company is to seize these opportunities and leverage them for growth. Finally, evaluate the threats that each company faces. These could include intense competition, regulatory changes, economic fluctuations, or disruptive technologies. Understand the potential risks and challenges that may affect their market positions.

Hence, by conducting a comprehensive SWOT analysis, comparing the strengths, weaknesses, opportunities, and threats of two companies in the same industry, you can gain valuable insights into their competitive positions, identify areas of differentiation, and make informed decisions about their relative strengths and weaknesses.

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1.1.1. Marginal cost (MC): Marginal cost refers to the additional cost incurred in producing one more unit of a good or service. It is calculated by dividing the change in total cost by the change in quantity produced.

1.1.2. Unitary elastic demand: Unitary elastic demand is a situation where the percentage change in quantity demanded is equal to the percentage change in price. In this case, the price elasticity of demand is exactly equal to 1.

1.1.3. Supply: Supply refers to the quantity of goods or services that producers are willing and able to offer for sale at different price levels. It represents the relationship between price and quantity supplied.

1.1.4. Private good: Private goods are goods that are excludable and rivalrous in consumption. They are owned by individuals or businesses and can be withheld from those who do not pay for them.

1.1.5. Services: Services are intangible economic activities provided by individuals or businesses to satisfy the needs and wants of consumers. Examples include haircuts, legal advice, and transportation.

1.2.1. Complement goods versus substitute goods: Complement goods are products that are used together, where the demand for one good is directly related to the demand for the other. For example, coffee and sugar are complement goods because people often consume them together. Substitute goods, on the other hand, are products that can be used as alternatives to each other. For instance, if the price of coffee rises, some consumers may switch to tea as a substitute.

1.2.2. Want versus demand: Wants refer to the desires or preferences of individuals for certain goods or services. However, demand is the willingness and ability to pay for a specific quantity of a good or service. For example, someone may want a luxury car, but they may not have the financial means to demand it.

1.2.3. Homogeneous goods versus heterogeneous goods: Homogeneous goods are identical products that are not easily distinguishable from each other, such as basic commodities like grains or oil. Heterogeneous goods, on the other hand, are products that have unique characteristics and can vary in quality, design, or features, like smartphones or cars.

1.2.4. Intermediate goods versus final goods: Intermediate goods are used in the production process to make other goods or services. They are not the end product themselves. Final goods, on the other hand, are finished products that are ready for consumption by end-users.

For example, steel used to manufacture a car is an intermediate good, while the car itself is the final good.

1.3. Opportunity cost: Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. It represents the benefits or opportunities that are lost when choosing one option over another. For example, if you have the choice between studying for an exam or going to a party, the opportunity cost of attending the party is the potential higher grade you could have achieved by studying.

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3) you have an inferior good.

4) An increase in the quantity of smartphones demanded.

5) The likely outcome of the simultaneous events in the market for California wine is that the demand for California wine increases and the supply of California wine decreases.

6) The equilibrium price and quantity will be $8 and 50 units.

3) If incomes increase and quantity demanded for a certain good decreases, you have an inferior good.

4) When the average price of smartphones falls, the result is an increase in the quantity of smartphones demanded.

5) Based on demand and supply analysis, the likely outcome of the simultaneous events in the market for California wine is that the demand for California wine increases and the supply of California wine decreases. The impact of these events is to decrease the equilibrium price while the change in equilibrium quantity is indeterminate.

6) Referring to the table, the equilibrium price and quantity will be $8 and 50 units.

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When consumers' incomes increase, they tend to switch to higher-quality or more desirable goods, leading to a decrease in demand for inferior goods. This is because, as the price decreases, smartphone producers are willing to supply more smartphones in the market to capitalize on the demand. The combined effect of these events is an increase in both demand and supply, leading to an increase in the equilibrium price and quantity of California wine.

3) If incomes increase and the quantity demanded for a certain good decreases, the correct answer would be c) inferior good. An inferior good is a type of good for which demand decreases as consumer incomes rise. Typically, inferior goods are considered lower-quality or less desirable alternatives to other goods. When consumers' incomes increase, they tend to switch to higher-quality or more desirable goods, leading to a decrease in demand for inferior goods.

4) When the average price of smartphones falls, the correct answer would be b) an increase in the quantity of smartphones supplied. A decrease in the average price of smartphones would result in a movement along the supply curve, causing an increase in the quantity of smartphones supplied. This is because, as the price decreases, smartphone producers are willing to supply more smartphones in the market to capitalize on the demand.

5) Based on the information provided, the likely outcome for the equilibrium price and quantity of California wine would be a) Demand for California wine increases, and supply of California wine increases, resulting in an increase in the equilibrium price and quantity. Event 1, the fall in the price of glass wine bottles, reduces the production costs for wine, leading to an increase in the supply of California wine.

Event 2, the decrease in the price of cheese (a complement to wine), increases the overall demand for wine as consumers are more likely to purchase wine when cheese is more affordable. The combined effect of these events is an increase in both demand and supply, leading to an increase in the equilibrium price and quantity of California wine.

6) Referring to the table, the equilibrium price and quantity will be d) $9 and 60 units. The equilibrium price is determined at the point where the quantity demanded (Qd) equals the quantity supplied (Qs). From the table, at a price of $9, the quantity demanded is 60 units (column 2), and the quantity supplied is also 60 units (column 5). This price and quantity combination represents the equilibrium point where the market clears, with demand and supply being in balance.

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The couple's first mortgage payment includes $1,066.56 in interest.

Calculate the down payment: The couple pays 20% of the purchase price as a down payment.

Down payment = $333,300.00 x 20% = $66,660.00

Calculate the amount financed: The amount financed is the purchase price minus the down payment.

Amount financed = $333,300.00 - $66,660.00 = $266,640.00

Calculate the monthly interest rate: Divide the annual interest rate by 12 to get the monthly rate.

Monthly interest rate = 4.80% / 12 = 0.40%

Calculate the interest on the first payment: The mortgage has a 30-year term, which is 360 months. The interest on the first payment is calculated using the outstanding balance of $266,640.00.

Interest = $266,640.00 x 0.40% x 1 = $1,066.56

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The interest paid on a margin loan can be calculated using the formula:

Interest = Principal * Rate * Time

In this case, the principal is $32,000 and the rate is given as an effective rate of 7.6 percent. The time period is six months.

To calculate the interest, we can substitute the values into the formula:

Interest = $32,000 * 0.076 * (6/12)

Simplifying the equation, we find:

Interest = $32,000 * 0.038

Therefore, the interest paid on the margin loan would be $1,216.

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a. Based on the provided financial statements and additional information, the forecasted property, plant, and equipment net for the fiscal year ended April 2020 is $10,025 million.

b. However, considering the company's disclosed anticipated CAPEX of $1,575 million, the refined forecasted property, plant, and equipment net is $11,600 million.

a. Using the provided financial statements and additional information, we can forecast the property, plant, and equipment (PPE) net for the fiscal year ended April 2020.

Based on the given data:

- Net sales for April 2019: $32,085 million

- Depreciation expense for April 2019: $895 million

- Property, plant, and equipment, gross for April 2019: $10,920 million

To calculate the forecasted PPE net for April 2020, we can use the formula:

PPE net = PPE gross - Accumulated Depreciation

Accumulated Depreciation = Depreciation expense for April 2019

Using this formula, the forecasted PPE net for April 2020 is:

PPE net = $10,920 million - $895 million

PPE net = $10,025 million

Therefore, the forecasted property, plant, and equipment net for the fiscal year ended April 2020 is $10,025 million.

b. Considering the company's disclosed anticipated CAPEX for the fiscal year ended April 2020 of $1,575 million, we can refine our forecast of the property, plant, and equipment net.

Adjusted PPE net = Forecasted PPE net + Anticipated CAPEX

Using this formula, the refined forecasted property, plant, and equipment net for the fiscal year ended April 2020 is:

Adjusted PPE net = $10,025 million + $1,575 million

Adjusted PPE net = $11,600 million

Therefore, the refined forecasted property, plant, and equipment net for the fiscal year ended April 2020, considering the anticipated CAPEX, is $11,600 million.

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The number of times inventory "turns" in a year is known as inventory turnover. To calculate this, we can use the formula: Inventory turnover = Total Sales / Average Inventory.

In this case, Adventure Inc had total sales of $4,000,000 and an average inventory of $320,000.

Inventory turnover = $4,000,000 / $320,000 = 12.5 times.

The inventory turnover ratio tells us how efficiently a company is managing its inventory. In this case, Adventure Inc's inventory turned 12.5 times during 2023. This means that, on average, Adventure Inc sold and replaced its inventory 12.5 times during the year.

To calculate the approximate days for inventory to "turn", we can use the formula: Days for inventory to turn = 360 days / Inventory turnover.

Days for inventory to turn = 360 days / 12.5 times = 28.8 days.

Rounding to the nearest full day, Adventure Inc's average days for inventory to "turn" during 2023 is approximately 29 days.

In summary, Adventure Inc had an inventory turnover of 12.5 times and an average of approximately 29 days for inventory to "turn" during 2023.

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Before leaving your current employer, you may be called in for an exit interview. An exit interview is conducted to gather feedback from employees who are leaving the company voluntarily. It is usually conducted by HR personnel or a supervisor.

An exit interview is conducted to learn the reasons behind the employee's leave, learn about their time at the organization, and pinpoint areas that need to be improved.  

The information collected during an exit interview can be used to address any issues or concerns raised by the employee and make necessary changes to improve the work environment.

1. Preparation: It is essential to prepare for a job interview by researching the company, understanding the job requirements, and practicing common interview questions. This will help you demonstrate your knowledge and skills effectively.

2. Appearance: Dress professionally and maintain good grooming to make a positive impression on the interviewer. Your appearance should align with the company's culture and expectations.

3. Communication abilities: In a job interview, effective communication is essential. Maintain good eye contact, speak clearly, and pay attention to the interviewer's questions. Use suitable body language and show that you can express your ideas clearly.

4. Knowledge and skills: Showcase your relevant knowledge and skills during the interview. Be prepared to provide examples of your past experiences and achievements that highlight your qualifications for the job.

5. Attitude and enthusiasm: Employers often look for candidates with a positive attitude and enthusiasm for the role. Show your genuine interest in the position and the company, and demonstrate your willingness to learn and contribute.

6. Problem-solving and critical thinking: Employers value candidates who can think critically and solve problems effectively. Be prepared to discuss how you have tackled challenges in the past and how you approach problem-solving.

7. Cultural fit: Companies often assess whether a candidate will fit well within their organizational culture. Research the company's values and work environment, and align your responses during the interview to showcase your compatibility.

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Investment in O'Fallon account balance of Belleville Company in the financial records as of December 31 would be $1,524,400. Explanation:It is given that Belleville Company purchased 52,000 shares of O'Fallon's voting common stock by paying $1,300,000, which represents a 40% investment.

No allocation to goodwill or other specific accounts was made.

Therefore, the cost of investment of Belleville Company is $1,300,000 / 40% = $3,250,000.

O'Fallon declared a $3 per share dividend during the year, so the total dividend paid would be 52,000 shares × $3 per share = $156,000.

Belleville Company will record the dividend income as follows:Equity in earnings of O'Fallon = 40% of $561,000

net income = $224,400

Dividend income = 40% of $156,000 = $62,400

The investment in O'Fallon account balance would be:Beginning balance in Investment in O'Fallon account = $3,250,000

Add: Equity in earnings of O'Fallon = $224,400

Add: Dividend income = $62,400

Balance in Investment in O'Fallon account as of December 31 = $3,537,800

However, this is not the answer to our question since we are not asked for the value of the investment itself. We are asked to determine the Investment in O'Fallon account balance found in Belleville's financial records as of December 31.In order to find that balance, we need to subtract the amortization of any difference between the cost of the investment and the book value of O'Fallon's net assets.The fair value of O'Fallon's net assets is assumed to be equal to its book value since no allocations to goodwill or other specific accounts were made.Belleville Company purchased 52,000 shares of O'Fallon's voting common stock for $1,300,000, which represents a 40% investment. Therefore, O'Fallon's net assets are assumed to be worth:

Book value of O'Fallon's net assets = $1,300,000 / 40% = $3,250,000

Since O'Fallon reported net income of $561,000 during the year, the book value of its net assets would have increased by:

Increase in book value of net assets = $561,000 − $156,000

dividend = $405,000

The amortization of the difference between the cost of the investment and the book value of O'Fallon's net assets is calculated as follows:Difference between the cost of the investment and the book value of O'Fallon's net assets = $3,250,000 cost − $3,250,000 book value = $0

Amortization of difference = $0 ÷ 10 years = $0 per year

Since the amortization is zero, the balance in Investment in O'Fallon account found in Belleville's financial records as of December 31 would be:$3,537,800 − $0 (amortization) = $3,537,800The correct option is B. $1,524,400.

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