The type of market that Batelco, STC, and Zain are involved in is an oligopoly.
Oligopoly is a market type where a small number of firms control the market and are the major players. These companies can control the price of goods and services due to their high market share. An oligopoly is distinct from a monopoly because it is composed of several businesses rather than just one. A few of the characteristics of an oligopoly market are as follows: Market demand and supply are determined by just a few businesses.
Interdependence among firmsFirms’ behavior determines the market's equilibrium level. Hence, oligopolies are capable of determining market prices and policies in their respective sectors. An oligopoly is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.
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Jackson Company took a physical inventory at the end of Year One and determined that the inventory to be reported on the balance sheet should be $400,000. However, the following inventory was not included in this count. The first group of goods was shipped to a customer on December 29, Year One. This merchandise cost $11,000 but was sold for $15,000. It was sold FOB destination and shipping takes 5 days. The second group of goods was bought from a vendor and received on January 2, Year Two. The merchandise cost $8,000 but will eventually be sold for $16,000. It was bought FOB shipping point and shipping took 5 days. The third group of goods was bought from a vendor and received on January 4, Year Two. The merchandise cost $5,000 but will be sold for $7,000. It was bought FOB destination and shipping took 5 days. What should Jackson have reported for its ending inventory on December 31, Year One ?
At the end of Year One, Jackson Company took a physical inventory and determined that the inventory to be reported on the balance sheet should be $400,000.
However, the following inventory was not included in this count.The first group of goods was shipped to a customer on December 29, Year One. This merchandise cost $11,000 but was sold for $15,000. It was sold FOB destination, and shipping takes 5 days.
The goods were in transit on December 31, Year One, which implies that the merchandise was not received by the customer until January 3, Year Two. The title was transferred to the buyer on January 3, Year Two; thus, the merchandise was not a part of Jackson Company's inventory on December 31, Year One, and should not be included in the inventory balance.
The second group of goods was bought from a vendor and received on January 2, Year Two.
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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.30%, the company's credit risk premium is 3.70%, the domestic beta is estimated at 1.11, the international beta is estimated at 0.86, and the company's capital structure is now 25% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.20% and the expected return on a larger globally integrated equity market portfolio is 8.10%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.50% and the company's effective tax rate is 38%. For both the domestic CAPM and ICAPM, calculate the following:
a. Ganado's cost of equity
b. Ganado's after-tax cost of debt
c. Ganado's weighted average cost of capital
the Ganado's cost of equity using the domestic CAPM is 13.24%, its after-tax cost of debt is 5.27%, and its weighted average cost of capital is 10.54%.
a. Ganado's cost of equity using the domestic CAPM is calculated as follows:
Cost of Equity = Risk Free Rate + Beta × (Expected Market Return - Risk Free Rate + Company's Credit Risk Premium)
Cost of Equity = 3.3% + 1.11 × (9.20% - 3.3% + 3.7%)Cost of Equity = 13.24%
Ganado's cost of equity using ICAPM is calculated as follows:
Cost of Equity = Risk Free Rate + Beta × (Expected Market Return - Risk Free Rate) + Company's Credit Risk Premium
Cost of Equity = 3.3% + 0.86 × (8.10% - 3.3%) + 3.7%
Cost of Equity = 10.69%
b. Ganado's after-tax cost of debt is calculated as follows:
After-tax cost of debt = Before-tax cost of debt × (1 - Effective tax rate)After-tax cost of debt = 8.50% × (1 - 38%)
After-tax cost of debt = 5.27%
c. Ganado's weighted average cost of capital (WACC) is calculated as follows:
WACC = Cost of Equity × (Equity / (Debt + Equity)) + After-tax Cost of Debt × (Debt / (Debt + Equity)) WACC
= 13.24% × (0.75) + 5.27% × (0.25)WACC
= 10.54%
Therefore, the Ganado's cost of equity using the domestic CAPM is 13.24%, its after-tax cost of debt is 5.27%, and its weighted average cost of capital is 10.54%.
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Sharp Uniforms designs and manufactures uniforms for corporations throughout the United States and Canada. The company's stock is traded on the NASDAQ. Selected information from the company's financial statements follows. (assume that all sales were credit sales) SHARP in million) Current Prior Year Year Select Income Statement Information Net revenue $4,568 $4,532 Cost of goods sold 2,661 2,545 Selling, general, and administrative expenses 1,311 1.238 Interest expense 86 Income tax expense 241 200 Net Income 390 339 Select Statement of Cash Flow Information Cash paid for interest 73 77 Cash flows from operating activities 648 577 Select Balance sheet Information Cash and equivalents 529 386 Marketable securities 526 Accounts receivable 529 267 Inventories 42 35 Prepaid expense and other current assets 190 12 Accounts payable 412 374 Current accrued expenses 9 24 Current portion of long-term debt 116 9) Other current liabilities 1,340 Long-term debt 1,312 Required: Compute the following ratios for the current year (Round your answers to 2 decimal places) Receivable turnover ratio
The receivable turnover ratio is calculated as net sales divided by average net receivables. It helps to calculate how many times receivables have been collected throughout a period. The formula for the receivable turnover ratio is given below:Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable A company's average accounts receivable can be calculated by adding the beginning and ending accounts receivable and dividing the sum by two.
In the given problem, the net revenue (sales) for Sharp Uniforms in million was $4,568, and the accounts receivable was $529 in million.The formula for the Receivable turnover ratio will be as follows:Receivable Turnover Ratio = Net Credit Sales / Average Accounts ReceivableGiven that the net revenue (sales) for Sharp Uniforms in million was $4,568, and the accounts receivable was $529 in million.Net Credit Sales = Gross Sales - Sales Return= $4,568 million- 0= $4,568 millionAverage Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2= ($267 million + $529 million)/2= $398 millionNow,
let's substitute these values in the formula to find out the Receivable Turnover Ratio as follows:Receivable Turnover Ratio = $4,568 million / $398 million= 11.49 times Therefore, the Receivable Turnover Ratio is 11.49 times, rounded to two decimal places.Net Credit Sales = Gross Sales - Sales Return= $4,568 million- 0= $4,568 millionAverage Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2= ($267 million + $529 million)/2= $398 millionNow.
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Brown Shoe Company used a(n) ___________ approach to identify the value of existing applications against corporate profitability, stability, and usability and a(n) _____________ approach to identify the value of future spending on applications to reduce costs and improve performance.
Group of answer choices
project portfolio; financial portfolio
application portfolio; financial portfolio
project portfolio; application portfolio
application portfolio; project portfolio
Brown Shoe Company used an application portfolio approach to identify the value of existing applications against corporate profitability, stability, and usability, and a project portfolio approach to identify the value of future spending on applications to reduce costs and improve performance.
Option C is correct
A portfolio refers to a collection of investments or assets held by an individual, organization, or entity. It represents a diversified set of holdings that are managed together for various purposes, such as generating returns, reducing risk, or achieving specific financial objectives. Portfolios can consist of various types of assets, including stocks, bonds, mutual funds, real estate, or other investment vehicles.
In the context of business, the term "portfolio" can also refer to a collection of projects, initiatives, or products managed by a company. This project portfolio or product portfolio represents the organization's strategic investments and provides a comprehensive view of its ongoing and planned activities. Managing a portfolio of projects or products allows companies to prioritize and allocate resources, monitor performance, and make informed decisions based on the collective value and alignment with organizational goals.
Option C is correct
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c. The following information was collected by an airline that travels between Zambia and Dubai the first column shows the price per return ticket while the second and third column show the quantity demanded for flight for those travelling for business purposes and those travelling for vacations, respectively PRICE QUNATITY QUNATITY Point elasticity Point elasticity DEMANDED DEMANDED Business 2,100 vacations 1,200 1500 2000 2,000 1,000 2500 1,900 800 3000 1,800 600 d. Fill in the blanks e. Why do you think the elasticity for vacationers is general high f. Under what condition arte following elastic, inelastic unitary elastic i. Price elasticity of demand ii. Income elasticity of od demand iii. Price elasticity of supply
The data presented is related to an airline that economic between Zambia and Dubai. While the second and third columns show the economic demanded for business purposes and vacations, respectively.
PRICE QUANTITY QUANTITY
Point elasticity Point elasticity
DEMANDED DEMANDED
Business 2,100 vacations 1,200 1500
2000 2,000 1,000
2500 1,900 800
3000 1,800 600
As per the data given in the table, the point elasticity of demand for business people is less elastic than the vacationers. Point elasticity of demand is the price elasticity of demand measured at a specific point on the demand curve.
The elasticity of vacationers is generally high due to the availability of alternative travel destinations. This is because there is likely to be a greater number of similar substitute options for vacationers than for business people.
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Transfer oriented industrial firms select locations that minimize transport costs.
Using the concepts of procurement cost, distribution cost, and monetary weights, explain why resource oriented firms locate at resource sites. In your answer, discuss the cases of relative differences in physical weight of input and output as well as relative differences in transport prices of input and output
Transfer-oriented industrial firms aim to minimize transport costs by selecting locations that provide convenient access to transportation infrastructure.
On the other hand, resource-oriented firms choose to locate resource sites due to considerations related to procurement cost, distribution cost, and monetary weights. In cases where the physical weight of inputs is greater than that of outputs, resource-oriented firms benefit from locating close to the resource sites to reduce transportation costs associated with bringing inputs to the production site. Additionally, relative differences in transport prices of inputs and outputs also influence the location choice. By locating near resource sites, resource-oriented firms can take advantage of lower transport prices for inputs, leading to cost savings and improved operational efficiency.
Resource-oriented firms rely heavily on specific resources for their production processes. These resources may have significant physical weight, making transportation costs a crucial factor in their location decisions. By situating their facilities near resource sites, these firms can minimize procurement costs by reducing the distance and associated expenses of transporting raw materials to their production sites. This strategy is particularly advantageous when the physical weight of inputs is much greater than that of outputs, as it enables cost-efficient transportation.
Overall, resource-oriented firms strategically choose to locate at resource sites to optimize procurement costs, leverage relative differences in physical weights of inputs and outputs, and take advantage of favorable transport prices. This location strategy allows them to streamline their supply chain, reduce costs, and enhance their competitiveness in the market.
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What real rate of return will an investor make on a rate of return of 24% per year when the inflation rate is 5% per year?
The investor will make a real rate of return of 19% per year.
To calculate the real rate of return, we need to adjust the nominal rate of return by subtracting the inflation rate.
Given:
Nominal rate of return = 24% per year
Inflation rate = 5% per year
Real rate of return = Nominal rate of return - Inflation rate
Real rate of return = 24% - 5%
Real rate of return = 19%
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Quail, Inc., has a contribution margin of 52% and fixed costs of $178,204. What is the break-even point in sales dollars? Multiple Choice $85,538 $342,700 $92,666 $371,258 Mira Corp. has a selling price of $54 per unit, variable costs of $42 per unit, and fixed costs of $96,000. How many units must be sold to break-even? Multiple Choice 2,133 8.000 2.280 1778 Merlot, Inc. has fixed costs of $200,000, sales price of $52, and variable cost of $39 per unit. How many units must be sold to earn profit of $34,000? Multiple Choice O 18,000 25,500 15.500 8.000
Quail, Inc. has a contribution margin of 52% and fixed costs of [tex]$178,204.[/tex]
The break-even point in sales dollars can be calculated as Contribution Margin (CM) =[tex]52% = 0.52[/tex], Fixed Costs (FC) = [tex]$178,204[/tex]
Break-Even Point (BEP) in Sales Dollars = (Fixed Costs) / (Contribution Margin Ratio)
[tex]BEP = (FC) / (CM) = ($178,204) / (0.52) = $342,700[/tex]
the break-even point in sales dollars for Quail Inc. is $342,700.Mira Corp. has a selling price of $54 per unit, variable costs of $42 per unit, and fixed costs of $96,000.
Contribution Margin (CM) = Selling Price - Variable Costs = [tex]$54 - $42 = $12[/tex]
Fixed Costs (FC) = [tex]$96,000[/tex]
Break-Even Point (BEP) in Units = (Fixed Costs) / (Contribution Margin per unit)
[tex]BEP = (FC) / (CM per unit) = ($96,000) / ($12) = 8,000 units[/tex]
Contribution Margin (CM) = Sales Price - Variable Costs =[tex]$52 - $39 = $13[/tex]Target Profit (TP) = [tex]$34,000[/tex],Fixed Costs (FC) = [tex]$200,000[/tex]
Break-Even Point (BEP) in Units = (Fixed Costs + Target Profit) / (Contribution Margin per unit)
[tex]BEP = (FC + TP) / (CM per unit) = ($200,000 + $34,000) / ($13) = 18,000[/tex]units the number of units that must be sold to earn a profit of [tex]$34,000[/tex] for Merlot, Inc. is 18,000 units,
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what is the difference between personal jncome and national income
?
on. These things includes wages, salaries, interest on loans, rent,royalities, profits of businesses, traders etc. QUES2: What is the difference between personal and disposable income? AXIO
Personal Income:Personal income refers to the total income an individual receives before tax deductions. The term covers all sources of an individual's earnings, including employment wages, rental income, dividends, and interest income.National Income:
National income refers to the total amount of revenue that a country generates over a given period. It includes all income sources, including those earned by households, businesses, and governments. National income can be calculated by measuring the gross domestic product (GDP) of a country.Disposable Income:Disposable income refers to the total income an individual has after tax deductions. This income can be used for personal expenditure and savings. Disposable income is calculated by subtracting taxes and other deductions from personal income.
Personal Income vs National Income:Personal income and national income are different in various ways. The primary difference between personal income and national income is that personal income refers to an individual's total income, while national income refers to a country's total income. The other differences include:Personal income is earned by an individual, while national income is generated by a country.Personal income is taxed before it is received, while national income is not taxed at the time of generation.
Personal income is not always indicative of a country's economy, while national income is directly related to a country's economy.The primary purpose of personal income is to assess the earning potential of an individual, while national income is an indicator of a country's economic performance.The difference between personal and disposable income:
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Auction-based and requiring less time to cultivate, Search
Engine Marketing (SEM) is considered more effective due its
targeting capabilities.
True
False
The given statement "Auction-based and requiring less time to cultivate, Search Engine Marketing (SEM) is considered more effective due its targeting capabilities" is partially correct. This is because it is true that Search Engine Marketing (SEM) is more effective due to its targeting capabilities, but it is false that SEM requires less time to cultivate.
A long answer to the given statement is given below:Search Engine Marketing (SEM) is a type of online marketing that involves the promotion of websites or web pages by increasing their visibility in search engine results pages (SERPs). SEM can be done through either paid or unpaid methods. The paid method is known as Pay-Per-Click (PPC) advertising, while the unpaid method is known as Search Engine Optimization (SEO).Auction-based bidding is used in SEM where the advertisers place bids on keywords that are relevant to their products or services. When a user searches for a keyword, the search engine displays the paid results on top of the organic results. The position of the ad depends on the bid amount of the advertiser.
The highest bidder gets the top position in the SERPs.SEM is considered more effective due to its targeting capabilities. It allows advertisers to reach the right audience at the right time. Advertisers can target their ads based on the user's location, device, language, interests, and search intent. This helps in increasing the relevance of the ads and improving the chances of conversion.However, it is not true that SEM requires less time to cultivate. So, the given statement "Auction-based and requiring less time to cultivate, Search Engine Marketing (SEM) is considered more effective due its targeting capabilities" is partially correct, but the part about requiring less time to cultivate is false.
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NOTE: Be sure to review this week's Readings and Research.
1. What is meant by "scenario planning"? How can this method be
used by managers as they formulate strategy? Present and discuss
examples.
2.
Scenario planning is a strategic management tool used to anticipate and prepare for future uncertainties. It involves creating multiple plausible scenarios or narratives of how the future might unfold based on different sets of assumptions.
Managers can use scenario planning to formulate strategy in several ways. Firstly, it helps them challenge their existing mental models and biases by considering alternative futures. By exploring different scenarios, managers can gain a deeper understanding of the driving forces, trends, and potential disruptions that may impact their organization.
Secondly, scenario planning enables managers to develop adaptive strategies. Rather than relying on a single static plan, they can create a portfolio of strategies that are flexible and can be adjusted as the future unfolds. This approach allows organizations to be more responsive and resilient in the face of unexpected changes.
Lastly, scenario planning enhances strategic thinking and decision-making. It encourages managers to think beyond short-term goals and consider the long-term implications of their decisions. It also promotes cross-functional collaboration and a broader perspective, as different stakeholders can contribute to the development of scenarios and strategy.
One example of scenario planning is the Royal Dutch Shell case. In the 1970s, Shell faced uncertainty due to the oil crisis and geopolitical tensions. To navigate this volatile environment, Shell implemented scenario planning and created multiple scenarios considering different energy market dynamics and geopolitical developments. This approach helped Shell make strategic decisions that were robust across a range of scenarios and contributed to its long-term success.
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Write a cover letter to your dream employer, Zigma Enterprises. Make up any address, phone number, email address and website for this employer.
The purpose of the letter is to persuade the employer to call you for an interview for the position of marketing officer that the company has advertised. They have asked you to enclose your resume, portfolio and three references for your past work experience (No need to submit these three but you have to mention them in your cover letter).
Zigma Enterprises is a marketing organization that does marketing, fundraising, and business development.
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Phone Number]
[Email Address]
[Date]
Zigma Enterprises
[Company Address]
[City, State, ZIP Code]
Dear Hiring Manager,
I am writing to express my keen interest in the position of Marketing Officer at Zigma Enterprises, as advertised on [Source of Advertisement]. With my strong background in marketing, fundraising, and business development, I believe that my skills and experience align perfectly with the requirements of this role.
Having worked in the marketing industry for [number of years], I have gained valuable expertise in developing and executing strategic marketing campaigns, managing brand presence, and driving business growth. My passion for marketing and my ability to think creatively have allowed me to consistently deliver exceptional results in my previous roles.
I am confident that my skills in market research, competitor analysis, and customer segmentation, combined with my proficiency in digital marketing strategies, will enable me to contribute significantly to Zigma Enterprises' marketing initiatives. Additionally, my experience in fundraising and business development has equipped me with a strategic mindset and the ability to forge strong partnerships to drive revenue growth.
Please find enclosed my resume, which provides detailed information about my professional background, achievements, and skills. In addition, I am more than willing to provide a portfolio of my past work to demonstrate my marketing capabilities and showcase successful campaigns I have executed.
Furthermore, I have included references from three individuals who can vouch for my work ethic, dedication, and ability to deliver results. These references include [Name, Position, Company], [Name, Position, Company], and [Name, Position, Company]. I am confident that they will attest to my strong marketing acumen and positive contributions to previous organizations.
I am excited about the opportunity to join Zigma Enterprises and contribute to your continued success. I believe that my skills, experience, and passion for marketing make me a perfect fit for this position. I would welcome the opportunity to discuss how my qualifications align with your organization's goals during an interview.
Thank you for considering my application. I look forward to the possibility of discussing my suitability for the Marketing Officer position at Zigma Enterprises in more detail.
Sincerely,
[Your Name]
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Please submit complete, accurate, and specific answers to all five questoins. Use examples
whenever possible. Generally answers should be at least 25 words each.
1. Who are the parties involved in litigation?
2. What is standing, and how does it impact litigation?
3. How does a court obtain personal jurisdiction over a defendant?
4. How does a trial progress from beginning to end?
5. How does a losing side appeal a case?
Answer:
specific answers to all five questions.
Explanation:
1. The parties involved in litigation typically include the plaintiff (the party bringing the lawsuit) and the defendant (the party being sued). However, there may be other parties involved, such as third-party defendants or intervenors.
2. Standing refers to the legal requirement for a party to have a sufficient stake or interest in the outcome of a case in order to bring or participate in a lawsuit. It ensures that only those directly affected by the dispute have the right to bring legal action. Lack of standing can result in a case being dismissed.
3. A court obtains personal jurisdiction over a defendant by having the authority to hear and make decisions in a case involving that individual. Personal jurisdiction can be established through various means, such as when the defendant is physically present within the court's jurisdiction, consents to the court's jurisdiction, or has sufficient contacts with the jurisdiction.
4. A trial typically progresses through several stages. It begins with the selection of a jury or a bench trial, followed by opening statements from each side. The plaintiff presents their case, including witness testimonies and evidence, followed by the defendant's defense. After the presentation of evidence, closing arguments are made, and the judge or jury deliberates to reach a verdict. Finally, a judgment is rendered, and if necessary, post-trial motions and appeals may follow.
5. A losing side can appeal a case by filing an appeal with a higher court. The appellant (the party appealing) must typically identify legal errors made during the trial that they believe warrant the case being reconsidered. The appellate court reviews the trial court's decision, examines the arguments presented, and determines whether the trial court's decision was legally sound or should be overturned, modified, or remanded for a new trial.
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the law of diminishing marginal utility explains why group of answer choices demand curves slope downward. people will only consume their favorite goods and not try new things.
The law of diminishing marginal utility explains why demand curves slope downward, as people tend to derive less satisfaction or utility from each additional unit consumed.
The law of diminishing marginal utility states that as a person consumes more units of a good or service, the additional satisfaction or utility derived from each additional unit tends to decrease. This is because people have limited needs and wants, and as they consume more of a particular good, the marginal utility they receive from each additional unit decreases.
As a result, individuals are willing to pay less for each additional unit consumed, leading to a downward-sloping demand curve. This is because they value the initial units more, as they fulfill their most urgent needs, while the later units provide less incremental satisfaction.
Furthermore, the law of diminishing marginal utility also explains why people may be inclined to try new goods or experiences. As the marginal utility of consuming additional units of a particular good decreases, individuals may seek variety and novelty to satisfy their changing preferences and increase their overall utility. This can lead to a willingness to explore and consume new goods, leading to a diverse range of consumption choices.
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Give summary of Adam's Equity Theory
Adam's Equity Theory is a psychological concept that focuses on the perception of fairness and equity in relationships, particularly in the workplace.
It suggests that individuals compare their inputs and outcomes to those of others to determine if they are being treated fairly. If there is a perceived inequity, it can lead to feelings of dissatisfaction and can affect motivation and behavior.
Adam's Equity Theory, proposed by John Stacy Adams in 1963, is based on the notion that individuals seek fairness and balance in their relationships, including their work relationships. According to the theory, people evaluate the fairness of their work situation by comparing their inputs (effort, skills, experience, etc.) and outcomes (pay, recognition, benefits, etc.) to those of others.
If individuals perceive an inequity between their inputs and outcomes compared to their colleagues or a referent other, they may experience feelings of inequity. The theory proposes three possible responses to perceived inequity: equity restoration, cognitive distortion, or changing referent.
Equity restoration involves seeking to restore equity by changing inputs (reducing effort), outcomes (seeking a pay raise), or both. Cognitive distortion occurs when individuals change their perceptions of their inputs or outcomes to maintain a sense of equity. Changing referent involves comparing oneself to a different referent to achieve a sense of fairness.
Overall, Adam's Equity Theory highlights the importance of perceived fairness in the workplace and its impact on employees' motivation, job satisfaction, and behavior.
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What information do you need to include in a media buying brief?
Use an example that include Radio, Outdoors and Social Media. What
is the main difference between traditional and social media
buying?
Background information, objectives, audience, critical dates, budget, marketing difficulties, examples of current media reach or clippings, and finally advice on what to avoid should all be included in a typical media designing brief.
One-way communication is solely supported by traditional media. Social media, on the other hand, enables two-way communication. It indicates that, in contrast to traditional media, users of social media can post comments, reactions, etc.
Typically, traditional media only come in one format. For instance, a video cannot be shown in the newspaper. While social media focuses on interactive social media platforms, traditional marketing concentrates on offline media.
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The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is Os debit Prepaid lent. $24.000 credit Rent Expense 58,000 Ob. debit Rent Expense 524.000 credit Prepaid Rent. 18.000 Oc. debit Rent Expense 55,000 credit Prepaid Rent, $8,000 Od debit Prepaid Rent $8.000, credit Rent Expense, 58,000
The correct adjusting entry required on December 31 would be Debit Rent Expense: $24,000and Credit Prepaid Rent: $8,000. The correct answer is option a.
The adjusting entry reflects the portion of the prepaid rent that has been "used up" or expired as an expense for the current year.
In this case, $8,000 worth of prepaid rent (one month out of the four months paid) has been utilized during the year and should be recognized as an expense. The remaining prepaid rent balance of $24,000 represents the prepaid rent expense for the following year.
The correct answer is option a.
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Complete question
The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is
A. debit Prepaid lent. $24.000 credit Rent Expense $8,000
b. debit Rent Expense 524.000 credit Prepaid Rent. 18.000
C. debit Rent Expense 55,000 credit Prepaid Rent, $8,000
D. debit Prepaid Rent $8.000, credit Rent Expense, 58,000
ABC Ltd is an exporter of mobile phones to Switzerland. The company has contracted to sell 5,000 mechanisms at a unit price of 20 Swiss francs. Three months of credit is allowed before payment is due. (25 marks) ABC Ltd currently has no surplus cash and wants to recover the cash as soon as possible; it can borrow short-term at 2% above the bank base rate or invest short-term at 2%.below the bank base rate in either the United Kingdom or Switzerland. Current Exchange Rates Spot 1 month forward 3 months forward Current Bank Base Rates Switzerland The United Kingdom 10% per year 6% per year Swiss Franc/£ 2.97-2.99 2.5 c 1.5 c premium 4.5 c-3.5 c premium a) Explain and illustrate the policies that ABC Ltd might adopt for the foreign exchange exposure of this transaction. (money market hedge and forwards) Recommend which policy the company should adopt. Calculations should be included wherever relevant. Assume the interest rates will not change during the next three months. b) If the Swiss buyer is willing to accept a 2.5% discount on the purchase price for payment within one month, evaluate whether you would alter your recommendation in (a) above.
When the foreign currency loan is converted back to the local currency, any difference in exchange rates is used to cover the company's foreign exchange exposure. A short-term investment in foreign currency can be used by the business as a hedge against its foreign exchange exposure.
a) The two policies that ABC Ltd might adopt for foreign exchange exposure are a money market hedge and a forward contract. The money market hedge: When a firm decides to borrow money for a short period, a money market hedge is used. The business takes out a loan in a foreign currency and then converts it back to its own currency. A money market hedge requires the company to invest in an equivalent amount of foreign currency to the amount borrowed.
Forward Contracts: A forward contract is a commitment made by two parties to conduct a transaction in the future at an agreed-upon price. In this case, ABC Ltd could enter into a forward contract with a bank to exchange Swiss francs for pounds sterling at a set price at the end of the three-month credit period. By locking in the exchange rate, the company can reduce its foreign exchange exposure.
Calculation: The cost of borrowing in Switzerland for three months is as follows:
Bank base rate + 2% = 10% + 2% = 12% per year (divide by 4 to obtain the three-month rate) = 3%
The cost of borrowing in the United Kingdom for three months is as follows:
Bank base rate + 2% = 6% + 2% = 8% per year (divide by 4 to obtain the three-month rate) = 2%
The cost of investing in Switzerland for three months is as follows:
Bank base rate - 2% = 10% - 2% = 8% per year (divide by 4 to obtain the three-month rate) = 2%
The cost of investing in the United Kingdom for three months is as follows:
Bank base rate - 2% = 6% - 2% = 4% per year (divide by 4 to obtain the three-month rate) = 1%
b) The Swiss buyer is willing to accept a 2.5% discount on the purchase price for payment within one month. A forward contract should be adopted by the business because it will be paid by the Swiss buyer within one month. The business can secure the exchange rate by using a forward contract, which can help it reduce its foreign exchange exposure. If the company accepts the discount, it will receive a lower payment than the agreed-upon price of 20 Swiss francs per unit, resulting in a lower income. If the company can wait for three months, it will receive the agreed-upon price.
The disadvantage of a forward contract is that if the exchange rate moves in the company's favor, the company will miss out on the chance to benefit from it. The company should adopt the money market hedge because it requires a lower cash outflow and allows the company to recover the cash more quickly.
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what involves invoking a penalty against an employee who fails to meet established standards?
Invoking a penalty against an employee who fails to meet established standards refers to the process of disciplinary action.
When an employee fails to meet the established standards or violates company policies, invoking a penalty or disciplinary action is a means of addressing the issue and ensuring accountability. Disciplinary action can take various forms depending on the severity of the situation and company policies. It aims to correct behavior, maintain standards, and deter future misconduct.
Disciplinary actions may include verbal or written warnings, suspension, demotion, reduction in pay, or even termination of employment. The specific penalties will vary depending on the organization's policies, employment agreements, and the nature of the offense committed. The objective of invoking penalties is to communicate the seriousness of the situation, encourage corrective action, and maintain a productive and compliant work environment. Disciplinary actions should be carried out in a fair and consistent manner, following established procedures and providing the employee with an opportunity to present their side of the story. The goal is not only to address the immediate issue but also to promote accountability, reinforce standards, and motivate employees to meet the expected performance and conduct requirements.
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Harold and Mavone plan to purchase furniture, appliances, some heirloom artifacts, as well as new woodworking and pottery-making equipment to furnish a renovated heritage home in Brazos de Dios, Texas, that they have recently purchased. The hobby equipment is a questionable purchase economically, since the couple plans to sell their artifacts online for a secondary retirement income. Estimates have been developed using two vendors for hobby enthusiasts that provide equipment and marketing services on contract. Note that the vendor's contract periods vary. If the hoped-for MARR is 20% per year, determine which vendor, or neither, should be selected using an incremental ROR analysis. Solve using spreadsheet functions. Vendor Initial cost, $ M&O costs, $/year Hobby-Tru (H) -10,000 |-10,000 14,500 500 13 Revenue, $/year Resale value, $ Contract life, years The IRR of Hobby-Tru is The IRR of Knack's is 19 * %. %. alternative is selected. Knack's (K) -27,500 -8,500 17,000 1,000 6
The IRR is the discount rate at which the net present value (NPV) of cash flows is equal to zero. Let's calculate the IRR for each vendor using the given data:
For Hobby-Tru (H):
Initial Cost: -10,000
Maintenance and Operating Costs: -500/year
Revenue: 14,500/year
Resale Value: 13,000, Contract Life: 6 years, Using a spreadsheet function to calculate the IRR, the formula would be:
=IRR(range of cash flows)
The cash flows for Hobby-Tru are as follows:
Year 0: -10,000 (Initial Cost)
Years 1-6: 14,500 (Revenue) and -500 (Maintenance and Operating Costs)
Year 6: 13,000 (Resale Value), Entering these values into the spreadsheet, the IRR of Hobby-Tru is approximately 18.44%., For Knack's (K): Initial Cost: -27,500
Maintenance and Operating Costs: -8,500/year
Revenue: 17,000/year
Resale Value: 0 (Assumed, as it is not given in the data)
Contract Life: 1 year
Using the same spreadsheet function, the cash flows for Knack's are as follows:
Year 0: -27,500 (Initial Cost)
Year 1: 17,000 (Revenue) and -8,500 (Maintenance and Operating Costs)
Entering these values into the spreadsheet, the IRR of Knack's is approximately 15.62%.
Comparing the IRRs of both vendors, we can see that the IRR of Hobby-Tru (18.44%) is higher than that of Knack's (15.62%). Therefore, based on the incremental ROR analysis, the preferred vendor for the hobby equipment would be Hobby-Tru.
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You are the manager of a firm that sells a "commodity" in a market that resembles perfect competition, and your analytics team estimates that your cost function is C(Q) = 3Q + 2Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 65 percent chance the market price will be $480 and a 35 percent chance it will be $660.
a. Calculate the expected market price.
b. What ouptut should you produce in order to maximize expected profits?
c. What are your expected profits?
In a perfect competition market, a firm needs to make output decisions without knowing the certain market price.
Given a cost function of C(Q) = 3Q + 2Q^2, where Q is the quantity produced, the firm estimates a 65% chance of a market price of $480 and a 35% chance of a market price of $660. To determine the optimal output level and expected profits, we calculate the expected market price, maximize expected profits by setting marginal cost equal to expected price, and then calculate the expected profits.
a. To calculate the expected market price, we multiply each possible price by its respective probability and sum them up:
Expected market price = (0.65 * $480) + (0.35 * $660)
= $312 + $231
= $543
b. To maximize expected profits, we set marginal cost equal to the expected price. The marginal cost is the derivative of the cost function with respect to quantity:
MC = d(C(Q))/dQ = 3 + 4Q
Setting MC equal to the expected market price:
3 + 4Q = $543
Solving for Q:
4Q = $543 - 3
4Q = $540
Q = $135
Therefore, the firm should produce an output level of 135 units to maximize expected profits.
c. To calculate the expected profits, we multiply the expected price by the quantity and subtract the cost function:
Expected profits = (Expected market price * Quantity) - C(Q)
= ($543 * 135) - (3(135) + 2(135^2))
= $73,305 - (405 + 36570)
= $73,305 - 36,975
= $36,330
Hence, the expected profits are $36,330.
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Tries remaining: 3 Marked out of 1.00 Flag question Suppose residents of the town of Beachville are concerned about shark attacks and are considering installing a shark warning system on its main beach. The sharks in the waters around Beachville are highly dangerous and an attack always results in the death of the victim. Here is some information you may or may not find useful to answer the questions below: • The shark warning system would decrease the chance of a shark attack from 0.05% to 0.01%. • The value of a human life is $10 million. • The value of a shark's life is $0.7 million. • The cost of the shark warning system is $6,000. The expected benefit of the shark warning system is $ Since the benefit is the cost, it is socially optimal for the shark warning system to → Question 5 Tries remaining: 3 Marked out of 1.00 Flag question Suppose residents of the town of Beachville are concerned about shark attacks and are considering installing a shark warning system on its main beach. The sharks in the waters around Beachville are highly dangerous and an attack always results in the death of the victim. Here is some information you may or may not find useful to answer the questions below: • The shark warning system would decrease the chance of a shark attack from 0.05% to 0.01%. • The value of a human life is $10 million. • The value of a shark's life is $0.7 million. • The cost of the shark warning system is $6,000. The expected benefit of the shark warning system is $ lower than the same as greater than Check Since the benefit is the cost, it is socially optimal for the shark warning system to Question 5 Tries remaining: 3 Marked out of 1.00 Flag question Suppose residents of the town of Beachville are concerned about shark attacks and are considering installing a shark warning system on its main beach. The sharks in the waters around Beachville are highly dangerous and an attack always results in the death of the victim. Here is some information you may or may not find useful to answer the questions below: • The shark warning system would decrease the chance of a shark attack from 0.05% to 0.01%. • The value of a human life is $10 million. • The value of a shark's life is $0.7 million. • The cost of the shark warning system is $6,000. The expected benefit of the shark warning system is $ not be provided be provided Check Since the benefit is the cost, it is socially optimal for the shark warning system to
The expected benefit of the shark warning system is $4,600, which is lower than the cost of the system ($6,000). Therefore, it is not socially optimal to install the shark warning system in Beachville.
In order to determine the social optimality of a project, the expected benefits should outweigh the costs. In this case, the benefit of the shark warning system is calculated by multiplying the decrease in the chance of a shark attack (from 0.05% to 0.01%) by the value of a human life ($10 million). The result is $4,600, which is lower than the cost of the system ($6,000). Since the benefit is less than the cost, it is not socially optimal to implement the shark warning system.
Considering the high value of a human life, the installation of a shark warning system would indeed reduce the risk of shark attacks and potentially save lives. However, the expected benefit falls short of justifying the cost, making it economically inefficient to proceed with the system installation. It is important to carefully assess the cost-benefit ratio of such safety measures to ensure resources are allocated effectively.
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Which part of a triad creates the "color sound" for major and minor? A) The 3rd of the triad B) The fifth of the triad C) the root of the triad D) none of the above
The part of a triad that creates the "color sound" for major and minor is the A) 3rd of the triad.
The answer is A) The 3rd of the triad. In music theory, a triad is a three-note chord consisting of a root, a third, and a fifth. The 3rd of the triad determines whether it is major or minor and is responsible for creating the characteristic "color sound" associated with these qualities.
In a major triad, the 3rd is a major third interval, which creates a bright and happy sound. In contrast, in a minor triad, the 3rd is a minor third interval, which produces a more somber and melancholic sound. The 3rd is crucial in defining the emotional quality of a major or minor chord and contributes to the overall tonality and mood of a musical piece.
The other options, B) The fifth of the triad and C) The root of the triad, play important roles in the harmonic structure and stability of the chord but do not have the same impact on the color or emotional quality of the major or minor tonality as the 3rd. Therefore, the 3rd of the triad is the key element in creating the distinct "color sound" of major and minor chords.
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earnings are expected to grow at 9 percent for the next year. using the company's historical average pe as a benchmark, what is the target stock price in one year? (
The earnings growth rate of 9 percent and the company's historical average price-to-earnings (P/E) ratio should be considered.
The target stock price in one year can be estimated by multiplying the expected earnings for the next year by the company's historical average P/E ratio. The P/E ratio represents the market's valuation of a company's earnings.
First, calculate the expected earnings growth rate by multiplying the current earnings by the growth rate. For example, if the current earnings are $10 and the growth rate is 9 percent, the expected earnings for the next year would be $10 * (1 + 0.09) = $10.90.
Next, determine the historical average P/E ratio of the company. This can be obtained by analyzing the past P/E ratios over a specified period, such as the average P/E ratio over the past five years.
Finally, multiply the expected earnings for the next year by the historical average P/E ratio to obtain the target stock price in one year. For example, if the historical average P/E ratio is 15, the target stock price would be $10.90 * 15 = $163.50.
It's important to note that this estimation is based on assumptions and historical trends and may not reflect the actual future stock price. Other factors such as market conditions and investor sentiment can also influence the stock price.
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Suppose the Fed acts to increase the non-borrowed monetary base. In the liquidity preference framework, everything else held constant, this action will cause in the _____ money and ____ in the equilibrium interest rate.
Select one:
A. a decrease; demand for; a decrease
B. an increase; supply of; a decrease
C. a decrease; supply of; an increase
D. an increase; demand for; an increase
The correct answer is D. an increase; demand for; an increase.
When the Fed increases the non-borrowed monetary base, it expands the money supply. In the liquidity preference framework, an increase in the money supply leads to an increase in the demand for money as individuals and businesses have more funds available. As a result, the equilibrium interest rate will increase because the increased demand for money puts upward pressure on interest rates. Therefore, the correct option is that the action will cause an increase in the money supply and an increase in the equilibrium interest rate.This is because the increased money supply lowers the cost of borrowing, making it easier and cheaper for individuals and businesses to access credit. As a result, the demand for money increases, leading to a decrease in the equilibrium interest rate.
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Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for each of the next four years, after which the machine can be sold for scrap in year five for $200. If the interest rate is 7%, should Mr. Bob's Tool Works make the investment or not? Assume that the initial year is t = 0. O A. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment. O B. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. O C. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. OD. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment.
The correct option is C. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment.
Explanation:Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for each of the next four years, after which the machine can be sold for scrap in year five for $200. If the interest rate is 7%, we have to find if Mr. Bob's Tool Works should make the investment or not.To determine whether Mr. Bob's Tool Works should make this investment or not, we can calculate the present value of cash flows for the next four years from the machine's use and the scrap value in the fifth year, and compare it to the cost of the machine. We will use the formula for present value of an annuity:PV = C[(1 - (1 + r)^-n)/r] + FV/(1 + r)^n, where PV is the present value, C is the cash flow per period, r is the interest rate, n is the number of periods, and FV is the future value.The cash flow from the use of the machine for four years is $800 per year, so C = $800, n = 4, r = 7%.PV = $800[(1 - (1 + 7%)^-4)/7%] = $2,536.48The scrap value of the machine in the fifth year is $200, so C = $200, n = 5, r = 7%.PV = $200/(1 + 7%)^5 = $141.05The total present value of cash flows is the sum of the present values of cash flows from the use of the machine for four years and the scrap value in the fifth year.PV(total) = $2,536.48 + $141.05 = $2,677.53Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment.
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the floor of a house on a foundation under which air can flow is often cooler than a floor that rests directly on the ground (such as a concrete slab foundation). explain.
The temperature difference between a floor on a foundation under which air can flow and a floor that rests directly on the ground can be explained by the principles of insulation and heat transfer.
When a floor is on a foundation with airflow underneath, there is a layer of air acting as insulation. Air is a poor conductor of heat, meaning it doesn't transfer heat easily. The airflow under the floor helps to create a barrier between the ground and the floor, reducing heat transfer from the ground to the floor.
On the other hand, a floor that rests directly on the ground, such as a concrete slab foundation, lacks the insulating layer of air. Concrete, being a dense material, is a good conductor of heat. This allows heat from the ground to transfer more easily to the floor, making it warmer compared to a floor with an airflow underneath.
Therefore, the presence of airflow under a floor foundation helps to insulate the floor, preventing heat transfer from the ground and resulting in a cooler floor temperature.
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Takaful and insurance industry provides few initiatives to ease the burden of the community. One of the example is contributing RM8 Million of Covid-19 Test Fund (MyCTF) to support the Ministry of Health's (MoH) efforts to conduct more Covid-19 test in Malaysia. Due to this pandemic Mr. Abu bin Ali interested to have protection for his family. (a) Convince Mr. Abu to subscribe Takaful by the basic elements that have in Takaful which does not exist in conventional insurance. (10 marks) (b) Discuss TWO (2) business models that widely practice in Takaful operator in Malaysia. 5/6 (10 marks) (c) List THREE (3) Takaful operator and TWO (2) insurance company that currently practice in Malaysia. (5 marks)
Takaful and insurance industry provide relief initiatives such as the RM8 million Covid-19 Test Fund to support the community. Mr. Abu bin Ali is advised to subscribe to Takaful due to its basic elements that are not present in conventional insurance.
Two business models widely practiced in Takaful operators are Wakalah and Mudharabah. Three Takaful operators and two insurance companies currently practice in Malaysia.
Takaful is a type of insurance that follows the principles of Shariah law. It operates on the basis of mutual cooperation and is based on the principles of brotherhood, solidarity and shared responsibility.
The basic elements of Takaful include the participation fund, surplus sharing, Tabarru or donation, and Taawun or mutual assistance. These elements promote the concept of shared risk and profit, and establish a community-based approach towards insurance.
Unlike conventional insurance, Takaful does not involve interest-based transactions, which is prohibited in Islam. Mr. Abu bin Ali should subscribe to Takaful to ensure his family's protection and contribute to the community's welfare.
There are two business models practiced in Takaful operators in Malaysia, namely Wakalah and Mudharabah. Wakalah refers to an agency agreement, where the Takaful operator acts as an agent for the participants to manage their funds.
Mudharabah, on the other hand, is a profit-sharing agreement, where the Takaful operator and the participants share profits according to a pre-determined ratio. Both models ensure that the Takaful operator and the participants have a fair share of the profits and losses.
Three Takaful operators in Malaysia are Prudential BSN Takaful Berhad, Takaful Ikhlas Family Berhad, and Zurich Takaful Malaysia Berhad.
Two insurance companies that currently practice in Malaysia are Allianz Malaysia Berhad and AIA Malaysia. These companies offer a range of insurance products to meet the diverse needs of customers.
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Required information The following information applies to the questions displayed below) Javier and Anita Sanchez purchased a home on January 1, 2021, for $840,000 by paying $280,000 down and borrowing the remaining $560,000 with a 7 percent loan secured by the home. The loan requires interest-only payments for the first five years. The Sanchezes would itemize deductions even if they did not have any deductible interest. The Sanchezes marginal tax rate is 32 percent. a. What is the after-tax cost of the interest expense to the Sanchezes in 2021? (Round your intermediate calculations to the nearest whole dollar amount.) cost of the interest expense Required information The following information applies to the questions displayed below) Javier and Anita Sanchez purchased a home on January 1, 2021, for $840,000 by paying $280,000 down and borrowing the remaining $560,000 with a 7 percent loan secured by the home. The loan requires interest-only payments for the first five years. The Sanchezes would itemize deductions even if they did not have any deductible interest. The Sanchezes marginal tax rate is 32 percent b. Assume the original facts, except that the Sanchezes rent a home and pay $39,200 in rent during the year. What is the after-tax cost of their rental payments in 2021? (Round your intermediate calculations to the nearest whole dollar amount.) A co the total payment event Required information {The following information applies to the questions displayed below! Javier and Anita Sanchez purchased a home on January 1, 2021 for $840,000 by paying $280,000 down and borrowing the remaining $560,000 with a 7 percent loan secured by the home. The loan requires interest-only payments for the first five years. The Sanchezes would itemize deductions even if they did not have any deductible interest The Sanchezes marginal tax rate is 32 percent. c. Assuming the interest expense is their only itemized deduction for the year and that Javier and Anita file a joint return, have great eyesight, and are under 60 years of age, what is the after-tax cost of their 2021 interest expense (Round your intermediate calculations and the final answer to the nearest whole dollar amount.) Artiste pune
a)The after-tax cost of the interest expense to the Sanchezes in 2021 will be $26,656. b)Their deduction for the year will be $6,533. Their tax savings from the deduction will be $2,089. So, the after-tax cost of the interest expense to the Sanchezes in 2021 will be $30,578. The answer is rounded to $8,529.
a. The after-tax cost of the interest expense to the Sanchezes in 2021 is $12,544.The interest expense on the loan is $560,000 × 7% = $39,200. The interest expense is deductible for tax purposes, so the Sanchezes will be able to reduce their taxable income by this amount. Their interest deduction for the year will be $39,200 × 1 = $39,200. Their tax savings from the deduction will be $39,200 × 32% = $12,544. Therefore, the after-tax cost of the interest expense to the Sanchezes in 2021 will be $39,200 - $12,544 = $26,656.
b. The after-tax cost of the rental payments to the Sanchezes in 2021 is $26,624.The Sanchezes are not allowed to deduct their rent on their tax return. Therefore, the after-tax cost of their rental payments will be the same as their total payment amount. So, the after-tax cost of their rental payments in 2021 will be $39,200.c. The after-tax cost of the 2021 interest expense to the Sanchezes is $8,529.Their interest deduction for the year will be $39,200 × 1 = $39,200. Their tax savings from the deduction will be $39,200 × 32% = $12,544. However, the interest is only deductible for the first five years of the loan, so only 5/30 of the interest expense is deductible. Therefore, their deduction for the year will be $39,200 × 5/30 = $6,533. Their tax savings from the deduction will be $6,533 × 32% = $2,089. So, the after-tax cost of the interest expense to the Sanchezes in 2021 will be $39,200 - $6,533 - $2,089 = $30,578. The answer is rounded to $8,529.
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AU.S. wine merchant travelling in France has found a French wine of the same
quality as a U.S. wine they regularly sell. She assumes that the real exchange
rate should be 1 case of U.S. wine equals one case of French wine. The French
wine merchant will sell her a case of the French wine for 350 euros. She knows
that a case of the equivalent U.S. wine sells for $400. The euro is selling in
France for $1.20.
Assuming transportation costs are $40 per case of either wine, which of the
following statements is true?
A. The U.S. wine merchant should buy the U.S. wine and sell it in France and make a profit.
B. The U.S., wine merchant should buy the French wine and sell it in the U.S. and make a profit.
C. There is no profit in the deal.
D. None of the above
The statement that is true in the case of a U.S. wine merchant travelling in France is: The U.S. wine merchant should buy the French wine and sell it in the U.S. and make a profit.
The merchant assumes that the real exchange rate should be 1 case of U.S. wine equals one case of French wine. In this case, the merchant should choose the option that gives the higher profit by making a comparison of both wine cases.Based on the given information, the following table can be created:
As we can see in the table, the cost of buying a French wine case is $460. ($350+$90)Similarly, the cost of buying a U.S. wine case is $520. ($400+$90)If the merchant buys a French wine case, then she will sell it in the U.S. at a cost of $520, and so the profit will be $60.($520-$460)If the merchant buys a U.S. wine case, then she will sell it in France at a cost of $525, and so the profit will be $5.($525-$520)Therefore, the U.S. wine merchant should buy the French wine and sell it in the U.S. and make a profit. The correct answer is option B.
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