Problem Set: Module 4 EX.06.01 PR.06.02A.ALGO BE.06.02.ALGO BE.06.03.ALGO Hide or show questions Progress:2/4 items eBook Show Me How Question Content Area Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (98,000,000) Gross profit $92,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 21,800,000 Total expenses (35,800,000) Operating income $56,200,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $9,500,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $ fill in the blank 1 Total fixed costs $ fill in the blank 2 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $ fill in the blank 3 Unit contribution margin $ fill in the blank 4 3. Compute the break-even sales (units) for the current year. fill in the blank 5 units 4. Compute the break-even sales (units) under the proposed program for the following year. fill in the blank 6 units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $56,200,000 of operating income that was earned in the current year. fill in the blank 7 units 6. Determine the maximum operating income possible with the expanded plant. $ fill in the blank 8 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? $ fill in the blank 9 8. Based on the data given, would you recommend accepting the proposal? In favor of the proposal because of the reduction in break-even point. In favor of the proposal because of the possibility of increasing income from operations. In favor of the proposal because of the increase in break-even point. Reject the proposal because if future sales remain at the current level, the income from operations will increase. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer.
Answers
Answer-1: The total variable costs is $90,000,000 and total fixed costs is 438,000 units. The whole table is shown in the attached image.
The calculation of the other parts is also shown in the attached images.
Costs refer to the expenses incurred by a business or organization in the process of producing goods or services. They include all the expenditures involved in running a business, such as raw materials, labor, rent, utilities, marketing expenses, administrative costs, and taxes. Costs can be classified into various categories, such as fixed costs (which remain constant regardless of the level of production) and variable costs (which vary with the level of production).
Learn more about costs here:
https://brainly.com/question/28499890
#SPJ4
Related Questions
Wilfred's expected utility function is pw0.5+ (1 - p)w2.5 9 where p is the probability that his wealth is w₁ and (1 p) is the probability that his wealth is w₂. Wilfred is offered a choice between
Answers
Wilfred's expected utility function is pw0.5+ (1 - p)w2.5: The value of the certainty equivalent (CE) for Wilfred is $2,487.
he certainty equivalent represents the amount of money in a certain outcome that would make an individual indifferent between that certain outcome and a risky outcome.
In this case, Wilfred's utility function is given by pw^0.5 + (1 - p)w^2.5, where p is the probability of wealth w₁ and (1 - p) is the probability of wealth w₂.
To find the certainty equivalent, we need to equate the expected utility of the lottery to the utility of the certain payment.
The expected utility of the lottery is 0.7(2500)^0.5 + 0.3(6400)^0.5.
We set this equal to the utility of the certain payment Z, which is Z^0.5.
Solving the equation, we find Z^0.5 = 0.7(2500)^0.5 + 0.3(6400)^0.5.
Squaring both sides, we get Z = (0.7(2500) + 0.3(6400))^2 = 2487.
To know more about certainty equivalent (CE), refer here:
https://brainly.com/question/32811032#
#SPJ11
Complete question:
Wilfred's expected utility function is pw0.5+ (1 - p)w2.5 9 where p is the probability that his wealth is w₁ and (1 p) is the probability that his wealth is w₂. Wilfred is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2500 with probability p = 0.7 and $6400 with probability 1 - p. Wilfred will choose the sure payment if Z > CE and the lottery if Z < CE, where the value of CE is equal to
ALTVEG Burger & Barbecue Corner
Location: Corner of Robson Street & Denman Street in Vancouver, BC
Company Mission: Provide a healthy, tasty alternative to traditional meat burgers and bbq dishes in a festive and casual atmosphere.
Company Description: ALTVEG Burger & Barbecue Corner wants to change people's perceptions about non-meat based food, such as plant-based meat alternatives, by showing them how good the food really is! They want people to come into their restaurant, and be amazed by the food, and stay for the fun atmosphere. The interior is designed to feel like you're at an outdoor barbecue with your friends. The floor even has artificial turf (fake grass), and diners sit at picnic tables. You can see the chefs preparing your meal on grills that look like barbecues.
The restaurant is currently being built, and the menu is not yet finalized. They will be holding a grand opening event in 9 months from today, and hope to get a lot of attention and reservations for their first day through their online reservation system. The reservation system will open two weeks before the grand opening day, and their goal is to sell out reservations for the first day in order to manage the anticipated crowds.
The owners are chefs and have no experience in marketing or social media, and do not have any social media accounts yet for their business. They have come to you for a strategy, plan and ideas. They are relying on you to make their opening day a success. They have a small budget of $2,000 for social media, and the remainder of their marketing budget will go to another company that specializes in traditional marketing challenges and PR. So your task is to ONLY focus on social media strategy, plan and execution.
Required Sections:
Measurement & Analytics - List your KPI's including timeframes and milestones of when you estimate to achieve them, and what analytics you will be collecting to measure performance on achieving your goals.
please answer only the measurement and analytics not the mission and objectives.
Answers
The measurement and analytics for ALTVEG Burger & Barbecue Corner's social media strategy will focus on key performance indicators (KPIs) such as brand awareness, reservation conversion rate, online buzz and sentiment, engagement rate, and referral traffic and conversion.
The measurement and analytics component of ALTVEG's social media strategy involves tracking specific KPIs to assess the performance and effectiveness of their social media efforts. By monitoring metrics such as the number of followers, reach, engagement, and sentiment analysis, they can gauge the success of their brand awareness campaigns and customer perception. Additionally, tracking the reservation conversion rate will help evaluate the effectiveness of the online reservation system in driving bookings. By analyzing engagement rates, click-through rates, referral traffic, and conversion rates, ALTVEG can determine the impact of social media on website traffic and customer conversions. These insights will guide the optimization of their social media presence and contribute to a successful grand opening.
To learn more about analytics, Click here: brainly.com/question/30101345?
#SPJ11
Which of the following can be used to manage a multinational corporation’s political risk exposure?
A) Keep 100% ownership in home country
B) Try to influence the political climate in your favor by supporting certain leaders
C) Deemphasize the host country, emphasize the home country
D) Employ large numbers of people from the host country
Answers
All option are best in this given situation. To manage a multinational corporation's political risk exposure, several strategies can be implemented.
Firstly, option A, keeping 100% ownership in the home country, can be effective. By maintaining control over operations in the home country, the company can minimize its exposure to potential political risks in other countries.
Option B, attempting to influence the political climate in the company's favor by supporting certain leaders, can also be a strategy. This can involve engaging in lobbying efforts, forming alliances with influential political figures, or supporting political campaigns that align with the company's interests.
Deemphasizing the host country (option C) and emphasizing the home country can also help manage political risk exposure. By diversifying operations across multiple countries and reducing reliance on a single host country, the company can minimize the impact of political instability in any one location.
Lastly, employing large numbers of people from the host country (option D) can also help manage political risk. By creating local jobs, the company can foster goodwill and support from the host country's government and community, potentially reducing the likelihood of political risk events.
In summary, managing a multinational corporation's political risk exposure can involve strategies such as keeping ownership in the home country, influencing the political climate, diversifying operations, and employing local staff.
to know about political risk visit:
https://brainly.com/question/30692302
#SPJ11
In a detailed paragraphs explain how has Nike brand mad the world a better place?
Answers
Nike, as a global brand, has made a positive impact on the world in several ways. Firstly, through its commitment to sustainability and environmental responsibility, Nike has taken significant steps to reduce its carbon footprint and promote eco-friendly practices.
The company has implemented initiatives like the Nike Grind program, which recycles and repurposes materials to reduce waste. Additionally, Nike has made efforts to eliminate hazardous chemicals from its supply chain, promoting safer working conditions and reducing environmental harm.
Secondly, Nike has actively supported social causes and advocated for positive change. The brand has taken a stand on issues such as racial inequality and social justice, supporting campaigns like "Equality" and "Just Do It." Nike's partnerships with organizations like Girls on the Run and Made to Play have also focused on empowering youth and promoting inclusivity in sports. Through these initiatives, Nike has worked towards creating a more equitable and inclusive society.
Furthermore, Nike has championed innovation and technology to enhance athletic performance and accessibility. The company's dedication to developing cutting-edge products and technologies has revolutionized the sporting industry, making sports more accessible and enjoyable for athletes of all levels. Nike's commitment to innovation extends beyond products to digital platforms and experiences, enabling individuals to connect, train, and engage with sports on a global scale.
In summary, Nike has made the world a better place by prioritizing sustainability, supporting social causes, and driving innovation. Through these efforts, the brand has contributed to environmental conservation, social progress, and the advancement of athletic experiences for individuals around the world.
Learn more about Nike here;
brainly.com/question/28874438
#SPJ11
Nike, as a global brand, has made a positive impact on the world in several ways. Firstly, through its commitment to sustainability and environmental responsibility, Nike has taken significant steps to reduce its carbon footprint and promote eco-friendly practices.
The company has implemented initiatives like the Nike Grind program, which recycles and repurposes materials to reduce waste. Additionally, Nike has made efforts to eliminate hazardous chemicals from its supply chain, promoting safer working conditions and reducing environmental harm.
Secondly, Nike has actively supported social causes and advocated for positive change. The brand has taken a stand on issues such as racial inequality and social justice, supporting campaigns like "Equality" and "Just Do It." Nike's partnerships with organizations like Girls on the Run and Made to Play have also focused on empowering youth and promoting inclusivity in sports. Through these initiatives, Nike has worked towards creating a more equitable and inclusive society.
Furthermore, Nike has championed innovation and technology to enhance athletic performance and accessibility. The company's dedication to developing cutting-edge products and technologies has revolutionized the sporting industry, making sports more accessible and enjoyable for athletes of all levels. Nike's commitment to innovation extends beyond products to digital platforms and experiences, enabling individuals to connect, train, and engage with sports on a global scale.
In summary, Nike has made the world a better place by prioritizing sustainability, supporting social causes, and driving innovation. Through these efforts, the brand has contributed to environmental conservation, social progress, and the advancement of athletic experiences for individuals around the world.
Learn more about Nike here;
brainly.com/question/28874438
#SPJ11
Q2. What is the Format of audit Documentation? explain each part briefly . .
Answers
The format of audit documentation includes the title page, index or table of contents, engagement letter, planning memorandum, audit program, working papers, audit findings, and audit report. The documentation serves as evidence of the audit and provides a reference for the auditor and other members of the audit team.
Audit documentation is a record of the procedures performed, the evidence obtained, and the conclusions drawn by the auditor during the audit. The audit documentation supports the auditor's report and provides evidence that the audit was conducted in accordance with the auditing standards. The audit documentation serves as a reference for the auditor in future audits and for other members of the audit team who were not involved in the audit.
The format of audit documentation includes the following parts:
1. Title Page: The title page identifies the entity being audited, the period covered by the audit, and the date of the report. It may also include the name of the auditor or audit team and the type of audit conducted.
2. Index or Table of Contents: This provides an overview of the documentation and the sections in which they are organized.
3. Engagement Letter: This is the initial letter of agreement between the auditor and the client, outlining the scope of the audit, responsibilities of each party, and the terms of the engagement.
4. Planning Memorandum: This is a document that summarizes the auditor's understanding of the client's business and the risks involved in the audit. It also outlines the audit plan and the procedures to be performed.
5. Audit Program: This is a detailed outline of the procedures that the auditor plans to perform during the audit. The program serves as a guide for the auditor and provides a record of the procedures that were performed.
6. Working Papers: These are the records of the evidence obtained and the procedures performed during the audit. They include financial statements, schedules, analyses, and other documents that support the auditor's conclusions.
7. Audit Findings: This section contains the auditor's conclusions and recommendations based on the results of the audit. It may also include management's response to the findings.
8. Audit Report: This is the final report issued by the auditor, summarizing the findings and conclusions of the audit. The report also includes the auditor's opinion on the financial statements and any other matters required by the auditing standards.
To learn more about Audit documentation click here:
https://brainly.com/question/30617971#
#SPJ11
Describe the demographic characteristics of the Detroit
labor market. If a company relocated to Detroit, would it find the
diversity and the skill levels needed to build its technology
component?
Answers
The city of Detroit is located in Michigan state, USA. The city is predominantly African American and is the most populous city in Michigan. The demographic characteristics of the Detroit labor market are given below:Race and ethnicity: The population of Detroit is 79.1% African American and 10.6% Caucasian.
The rest of the population is Asian, Hispanic, and other races.Education level: Around 82% of the population aged 25 and above is high school graduates. Around 14% of the population aged 25 and above is college graduates.Skill level: Detroit is known for its engineering and manufacturing workforce. The city was the center of the American automobile industry and still has a strong manufacturing sector. However, there has been a shift towards the service sector, and there is a growing need for workers with technical skills.
The city has a number of vocational and technical schools that train workers in fields such as engineering, IT, and healthcare. There are also several universities and colleges in the area that offer degrees in various fields.If a company relocated to Detroit, it would find a diverse and skilled labor pool. The city has a large African American population, which could provide a diverse perspective on the needs of consumers.
To know more about Demographic visit:-
https://brainly.com/question/26283181
#SPJ11
Define
the term "separation of duties" and give an example from a casino
setting.
Answers
Separation of duties refers to the practice of dividing critical tasks and responsibilities among different individuals to enhance control, reduce the risk of fraud, and ensure accountability.
It ensures that no single person has complete control over a process or operation, thereby minimizing the potential for errors, conflicts of interest, or intentional wrongdoing.
In a casino setting, an example of separation of duties would be the segregation of responsibilities between the cashier and the floor manager. The cashier is responsible for handling cash transactions, such as exchanging chips for money or processing payouts to players. On the other hand, the floor manager oversees the gaming activities, resolves disputes, and ensures fair play.
By separating these roles, the casino reduces the risk of collusion or manipulation of funds. The cashier cannot manipulate the outcome of games or override the system to provide unwarranted payouts without the approval of the floor manager. This segregation of duties enhances transparency, fairness, and the overall integrity of the casino operations.
To know more about Casino related question visit:
https://brainly.com/question/16346880
#SPJ11
You consider opening a buissiness selling bikes . You estimate your fixed cost at $20,000 and the variable cost at of each product at $200 you expect the selling price to average at $1000. what is the break even point in units sold?
Answers
To calculate the break-even point in units sold for a business selling bikes, we need to determine the number of units that need to be sold to cover the fixed and variable costs. With fixed costs of $20,000, variable costs of $200 per unit, and an average selling price of $1000, the break-even point is 20 units.
The break-even point is the point at which the total revenue equals the total cost, resulting in neither profit nor loss. In this case, the fixed cost is $20,000, which does not vary with the number of units sold. The variable cost is $200 per unit, and the selling price is $1000 per unit.
To calculate the break-even point, we can use the following formula:
Break-even point (in units) = Fixed costs / (Selling price per unit - Variable cost per unit)
Plugging in the values, we have:
Break-even point (in units) = $20,000 / ($1000 - $200)
Simplifying the expression, we get:
Break-even point (in units) = $20,000 / $800
Break-even point (in units) = 25
Therefore, the break-even point in units sold for the business selling bikes is 20 units. This means that the business needs to sell at least 20 bikes to cover its costs and start making a profit.
Learn more about Break-even point:
brainly.com/question/32942217
#SPJ11
How does the level of complexity of a job affect the validity of general mental ability (GMA) test? A.Validity is highest at the medium level of complexity B. Validity is lowest at the medium level of complexity C. There is no apparent relationship between job complexty and validity of GMA D. The higher the level of complexity, the higher the validity E. The higher the level of complexity, the lower the validity QUESTION 4 The diversity-validity dilemma refors to A. Diverse tests are likely to have low validity 8. The situation in which GMA tests are thely to result in adverse impact C. The situation in which there are more than ane test with high validity. D. Diverse tests are likely to have high valdity
Answers
The level of complexity of a job can affect the validity of general mental ability (GMA) tests. The correct answer is option E: The higher the level of complexity, the lower the validity.
GMA tests are designed to measure a person's general cognitive abilities, such as reasoning, problem-solving, and critical thinking. However, when the job becomes more complex, these tests may not fully capture the specific skills and knowledge required for that particular job.
Therefore, the validity of GMA tests tends to decrease as the complexity of the job increases. This means that GMA tests may not accurately predict job performance for highly complex jobs.
The level of complexity of a job can affect the validity of general mental ability (GMA) tests. The correct answer is option E: The higher the level of complexity, the lower the validity.
Know more about the level of complexity
https://brainly.com/question/17166872
#SPJ11
Cold Duck Manufacturing Inc. reported sales of $775,000 at the end of last year; but this year, sales are expected to grow by 6%. Cold Duck expects to maintain its current profit margin of 23% and dividend payout ratio of 10%. The firm's total assets equaled $475,000 and were operated at full capacity. Cold Duck's balance sheet shows the following current liabilities: accounts payable of $60,000, notes payable of $35,000, and accrued llabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm's AFN for the coming year? -$185,938 -$178,500 -$193,375 -$148,750 A negatively-signed AFN value represents: A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements. A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. Because of its excess funds, Cold Duck is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Cold Duck pay to shareholders without needing to raise any external capital? (Hint: What can Cold Duck increase its dividend payout ratio to before the AFN becomes positive?) 66.5% 75.4% 88.7% 84.3%
Answers
Cold Duck can increase its dividend payout ratio to about 64.33% without raising outside capital.
Cold Duck Manufacturing Inc. reported sales of $775,000 at the end of last year. However, this year's earnings growth he is expected to be 6%. Cold Duck expects to maintain its current profit margin of 23% and payout ratio of 10%. The company had total assets of $475,000 and was at full capacity. Cold Duck's balance sheet shows the following current liabilities:
Trade payables are $60,000, notes payable are $35,000, and accrued liabilities are $60,000. Based on the AFN (additional funding needed) equation, what is the company's AFN next year? -$185,938 -$178,500 -$193,375 -$148,750
The point in time when funds generated within a company meet its cash needs to fund the company's anticipated future sales needs. Self-generated surplus funds that can be invested in tangible and financial assets or paid out as additional dividends. Lack of internally generated funds that need to be raised externally to fund the company's future growth projections. Because of its excess funds, Cold Duck is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Cold Duck pay to shareholders without needing to raise any external capital?
To calculate the Additional Funds Needed (AFN) for the coming year, we can use the AFN equation:
AFN = (A*/S₀)ΔS - (L*/S₀)ΔS - (M/S₀)ΔS - MS₁
Where:
A* = Assets required as a function of sales (assumed to be constant)
S₀ = Sales in the previous year
ΔS = Expected increase in sales
L* = Spontaneous liabilities as a function of sales (assumed to be constant)
M = Profit margin
S₁ = Dividend payout ratio (as a proportion of earnings retained)
Given:
Sales in the previous year (S₀) = $775,000
Expected increase in sales (ΔS) = 6% or 0.06
Profit margin (M) = 23% or 0.23
Dividend payout ratio (S₁) = 10% or 0.10
First, we need to calculate A* and L*:
A* = (Total Assets - Current Liabilities) - (Notes Payable + Accrued Liabilities) = ($475,000 - $60,000) - ($35,000 + $60,000) = $320,000
L* = (Accounts Payable) = $60,000
Now, we can calculate the AFN:
AFN = ($320,000/$775,000)(0.06) - ($60,000/$775,000)(0.06) - (0.23)(0.06) - (0.10)(0.06) = $16,590.3226 - $7,741.9355 - $0.0138 - $0.0036 ≈ $8,844.67
Therefore, the firm's AFN for the coming year is approximately $8,844.67. Since this value is positive, it represents a shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth.
To calculate the percentage of earnings Cold Duck can pay to shareholders without needing to raise external capital, we need to determine the maximum dividend payout ratio (S₁) that results in a non-positive AFN. In this case, the payout ratio can be increased until the AFN becomes zero. So:
AFN = 0
0 = ($320,000/$775,000)(0.06) - ($60,000/$775,000)(0.06) - (0.23)(0.06) - (S₁)(0.06)
Solve S1:
S₁ = [(($320,000/$775,000)(0.06) - ($60,000/$775,000)(0.06) - (0.23)(0.06)) / (0.06)] ≈ 0 ,6433
Convert to percentage:
S₁ ≈ 64.33%
To know more about AFN visit :
https://brainly.com/question/30891309
#SPJ4
The correct question is :
Cold Duck Manufacturing Inc. reported sales of $775,000 at the end of last year; but this year, sales are expected to grow by 6%. Cold Duck expects to maintain its current profit margin of 23% and dividend payout ratio of 10%. The firm's total assets equaled $475,000 and were operated at full capacity. Cold Duck's balance sheet shows the following current liabilities: accounts payable of $60,000, notes payable of $35,000, and accrued llabilities of $60,000. Based on the AFN (Additional Funds Needed) equation, what is the firm's AFN for the coming year? -$185,938 -$178,500 -$193,375 -$148,750 A negatively-signed AFN value represents: A point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements. A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. A shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. Because of its excess funds, Cold Duck is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Cold Duck pay to shareholders without needing to raise any external capital? (Hint: What can Cold Duck increase its dividend payout ratio to before the AFN becomes positive?)
What are the ethical issues in acquiring sales or conducting the business for Amazon in the e-commerce industry?
Answers
Acquiring sales and conducting business in e-commerce, involves several ethical issues. Some of the ethical issues include labor and working conditions, tax avoidance, market dominance, data privacy and security, and environmental impact.
Labor and Working Conditions: Amazon has faced scrutiny regarding the working conditions in its fulfillment centers, including allegations of long hours, high productivity expectations, and inadequate breaks. Ethical concerns arise when workers' rights and well-being are compromised in pursuit of operational efficiency and profit.
Tax Avoidance: Amazon has been criticized for its tax practices, including utilizing loopholes and tax havens to minimize its tax liabilities. This raises concerns about fairness and the social responsibility of multinational corporations to contribute their fair share to society through taxation.
Data Privacy and Security: As a large e-commerce platform, Amazon collects vast amounts of personal data from its customers. The ethical challenge lies in ensuring the proper handling, storage, and protection of this data to safeguard privacy and prevent unauthorized access or misuse.
To know more about e-commerce refer:
https://brainly.com/question/33326056
#SPJ11
Sompa owns a house that would cost ∈
/
200,000 to replace should it ever be destroyed by fire. There is a 20% chance that the house could be destroyed by fire during the course of the year. If the fire occurs, Sompa's house will be worth only $100,000. An insurance company has offered Sompa an irisurance policy that requires Sompa to pay a yearly premium of $25,000 iri the good state of nature (no fire) and receive $75,000 in the bad state of nature (fire) for her house. Sompathas fully insured her house to eliminate the risk. If Sompa is risk averse and has no other wealth, answer the following questions; a) What is the expected value of Sompa's house with no insurance? b) Estimate the amount of risk (use standard deviation) Sompa faces for her property with no insurance. c) Is Sompa being offered a fair insurance? Why or why not? (4 marks) d) Does Sompa has the same amount of wealth in either state of nature with or without fair insurance? Prove your answer c) Calculate the variance of the value of Sompa's house with fair insurance. (5 marks) 1) Is Sompa better off with the fair insurance? Why? (4 mariks)
Answers
Sompa is better off with the fair insurance because it provides her with a guaranteed payment in the event of a fire, protecting her from potential financial loss.
a) The expected value of Sompa's house with no insurance can be calculated by multiplying the value of the house in each state of nature by their respective probabilities and summing them.
In this case, the value of the house in the good state of nature (no fire) is 200,000 and the probability of this state is
1 - 0.20 = 0.80.
So, the expected value in the good state is
$200,000 * 0.80
= 160,000. In the bad state of nature (fire), the value of the house is $100,000 and the probability of this state is 0.20. So, the expected value in the bad state is
[tex]$100,000 * 0.20= $20,000.[/tex]
Therefore, the expected value of Sompa's house with no insurance is [tex]$160,000 + 20,000 = 180,000.[/tex]
b) To estimate the amount of risk (standard deviation) Sompa faces for her property with no insurance, we need to calculate the variance. Variance is the average of the squared differences between the value of the house in each state of nature and the expected value, weighted by their respective probabilities. In this case, the variance can be calculated as
[tex]( (200,000 - 180,000)^2 * 0.80 + (100,000 - 180,000)^2 * 0.20 )[/tex]
Taking the square root of the variance gives us the standard deviation.
c) To determine if Sompa is being offered a fair insurance, we compare the expected value of the house with insurance to the expected value of the house without insurance. If the expected value with insurance is equal to or greater than the expected value without insurance, then the insurance is considered fair.
To know more about probabilities visit:
https://brainly.com/question/29381779
#SPJ11
indus believe: question 6 options: that material quest is more important than spiritual quest. that there is but the one true omnipotent god. in reincarnation, or rebirth into a different body, after death. in the importance of individual religious freedom.
Answers
Indus believe in the importance of individual religious freedom. The Option D.
Why do Indus believe in the importance of individual religious freedom?Indus culture places significant emphasis on the importance of individual religious freedom. They believe that every person should have the right to choose and practice their own religious beliefs without any interference or coercion from others.
This belief stems from their respect for individual autonomy and the recognition that spirituality is a deeply personal and subjective journey. Indus people value diversity and understand that different individuals may connect with different religious traditions or spiritual paths. They acknowledge that each person's spiritual quest is unique and should be respected and supported.
Read more about Indus
brainly.com/question/2117177
#SPJ4
Many of the student speech cases involved schoolchildren who were minors. Why must colleges and universities be cautious in trying to regulate speech by college students at sporting events? Why are the constitutional issues less of a concern when the speaker is a minor?
Answers
While colleges and universities must be cautious when regulating speech by college students at sporting events, the constitutional issues are less of a concern when the speaker is a minor. Colleges and universities must strike a balance between protecting free speech and maintaining order on campus.
Colleges and universities need to be cautious in trying to regulate speech by college students at sporting events because free speech is protected by the First Amendment of the United States Constitution. The Constitution guarantees freedom of speech to all citizens, including college students. However, there are limits to this right, including speech that is likely to cause a violent reaction or disrupt the orderly conduct of school activities.
College students are adults and have more freedom of speech than minors who are still developing mentally and physically. The constitutional issues are less of a concern when the speaker is a minor because minors do not have the same legal rights as adults, including free speech. In addition, schools have the power to regulate speech by minors in order to promote the welfare of the students and maintain a safe and secure learning environment.
In conclusion, while colleges and universities must be cautious when regulating speech by college students at sporting events, the constitutional issues are less of a concern when the speaker is a minor. Colleges and universities must strike a balance between protecting free speech and maintaining order on campus.
Know more about universities here,
https://brainly.com/question/9532941
#SPJ11
leo, mike, donnie, and raph are forming a general partnership to consult on municipal sewer construction projects. given the below information, calculate the initial outside basis for each partner. each partner will have an equal profit sharing ratio and the partnership will take on an unsecured loan for liquidity. the partners are each have equal personal liability for the loan as the lending institution require personal guarantees from the partners.
Answers
The initial outside basis for each partner in the general partnership is $50,000, considering their equal contributions, share of liabilities, and absence of initial profits or losses.
To calculate the initial outside basis for each partner in the general partnership, we need to consider the contributions made by each partner and the allocation of profits and losses.
Since the profit sharing ratio is equal among all partners and they have equal personal liability for the loan, we can assume an equal distribution of profits, losses, and liabilities.
The outside basis for each partner consists of the following components:
Initial contribution: This includes any cash or property contributed by each partner at the formation of the partnership.
Share of liabilities: Each partner's share of the partnership's liabilities, which includes the unsecured loan for liquidity.
Share of profits and losses: Each partner's share of the partnership's profits or losses.
Since the partners have an equal profit sharing ratio, their initial outside basis will be equal. Let's assume they contribute $10,000 each and the unsecured loan is $40,000, resulting in a total liability of $160,000 ($40,000 for each partner).
Calculation of initial outside basis for each partner:
Initial contribution: $10,000
Share of liabilities: $40,000
Share of profits and losses: $0 (at the start of the partnership)
Therefore, the initial outside basis for each partner would be $50,000 ($10,000 + $40,000).
For more question on partnership visit:
https://brainly.com/question/14034519
#SPJ8
The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data:
Molding Finishing Total
Estimated Overhead $250,000 $100,000 $350,000
Actual Overhead $240,000 $120,000 $360,000
Expected Direct Labor Hours planes 5,000 5,000 10,000
race cars 5,000 35,000 40,000
Expected Machine Hours planes 17,000 3,000 20,000
race cars 3,000 7,000 10,000
Actual Direct Labor Hours planes 4,500 5,300 10,000
race cars 5,500 34,500 40,000
Actual Machine Hours planes 16,500 3,500 20,000
race cars 3,200 6,800 10,000
What is the overhead per unit for race cars? (round to 3 decimal places)
Answers
The overhead per unit for race cars is $0.090.
To calculate the overhead per unit for race cars, we need to determine the overhead assigned to the race cars and divide it by the total number of race cars produced.
The overhead assigned to the race cars can be calculated separately for the molding department and the finishing department.
In the molding department:
Overhead rate = Actual Overhead / Actual Machine Hours
Overhead rate = $240,000 / 6,800 machine hours (race cars)
Overhead rate = $35.294 per machine hour
Overhead assigned to race cars in molding department = Overhead rate * Actual Machine Hours in molding department (race cars)
Overhead assigned to race cars in molding department = $35.294 * 3,200 machine hours (race cars)
Overhead assigned to race cars in molding department = $113,017.647
In the finishing department:
Overhead rate = Actual Overhead / Actual Direct Labor Hours
Overhead rate = $120,000 / 34,500 direct labor hours (race cars)
Overhead rate = $3.478 per direct labor hour
Overhead assigned to race cars in finishing department = Overhead rate * Actual Direct Labor Hours in finishing department (race cars)
Overhead assigned to race cars in finishing department = $3.478 * 34,500 direct labor hours (race cars)
Overhead assigned to race cars in finishing department = $120,021.739
Total overhead assigned to race cars = Overhead assigned to race cars in molding department + Overhead assigned to race cars in finishing department
Total overhead assigned to race cars = $113,017.647 + $120,021.739
Total overhead assigned to race cars = $233,039.386
Overhead per unit for race cars = Total overhead assigned to race cars / Total number of race cars produced
Overhead per unit for race cars = $233,039.386 / 250,000 race cars
Overhead per unit for race cars = $0.930 (rounded to 3 decimal places)
To learn more about production departments
brainly.com/question/17074968
#SPJ11
A 95% prediction interval means that, for a given value of X, we have obtained a range of values that ___ is likely to be found.
Y
E(Y)
μ
β
Answers
A 95% prediction interval provides a range of values within which a particular variable is likely to be found. It takes into account the uncertainty associated with estimating a population parameter based on a sample. The interval encompasses 95% of the possible values, providing a measure of confidence in the prediction.
A prediction interval is a statistical tool used to estimate the range within which a future observation or value is expected to fall. In the case of a 95% prediction interval, it means that we are confident that the true value of a variable, given a specific value of X, will lie within the estimated range 95% of the time.
When constructing a prediction interval, we consider the uncertainty associated with estimating a population parameter based on a sample. This uncertainty is captured by the standard error, which measures the variability of the estimates. The prediction interval takes into account both the standard error and the variability within the data to provide a wider range of values that the true value of the variable is likely to fall within.
The 95% prediction interval can be interpreted as follows: if we were to repeat the sampling process multiple times and construct prediction intervals for each sample, approximately 95% of those intervals would contain the true value of the variable. Therefore, it provides a measure of confidence in the prediction, acknowledging that there is still a 5% chance that the true value could fall outside the interval.
In conclusion, a 95% prediction interval is a statistical tool that provides a range of values within which a particular variable is likely to be found. It considers the uncertainty associated with estimating a population parameter and provides a measure of confidence in the prediction.
Learn more about prediction interval here: brainly.com/question/32668867
#SPJ11
A company wants to evaluate the effects of a reduction in material cost of 7% and an increase in sales of 11% on a product with the following current characteristics: labor costs of $1,200,000, material costs of $4,800,000, overhead of $680,000, and sales of $9,300,000.
What are the effects on net income with a 7% reduction in material costs? What is the effect with a 11% increase in sales? A. The change in net income due to the reduction in material costs is $___________ ? enter your response here. (Enter your response as a whole number.)
B. The change in net income after the 11% increase in sales is $___________? enter your response here. (Enter your response as a whole number.)
Answers
The effect of a 7% reduction in material costs and an 11% increase in sales on net income can be calculated based on the given information.
A. To determine the change in net income due to the reduction in material costs, we need to calculate the reduction in material costs and its impact on net income. The current material costs are $4,800,000, and a 7% reduction would be 0.07 * $4,800,000 = $336,000. However, we also need to consider the impact of this reduction on net income. If the reduction in material costs reduces the total costs, it will lead to an increase in net income.
B. To calculate the change in net income after the 11% increase in sales, we need to determine the increase in sales and its impact on net income. The current sales are $9,300,000, and an 11% increase would be 0.11 * $9,300,000 = $1,023,000. An increase in sales would typically result in higher revenue and potentially higher net income, assuming the additional costs associated with increased sales are accounted for.
To know more about net income click here: brainly.com/question/31193110
#SPJ11
Balance Sheet
Liquid assets $4,500
Tangible assets $41,500
Investment assets $19,100
Short-term liabilities $3,700
Long-term liabilities $30,600
Income Statement
Gross income $102,200
Taxes paid $12,300
Debt repayment $14,300
Rent payment $11,200
All other expenses $16,400
Total expenses $54,200
Calculate their asset to debt ratio.
Answers
The asset to debt ratio is 0.527.
Asset to Debt Ratio is a financial metric used to evaluate a company's or individual's financial risk by determining how much of their total assets are financed by liabilities. The formula for asset-to-debt ratio is as follows:Asset-to-Debt Ratio= Total Liabilities/Total AssetsAsset-to-Debt Ratio= Total Liabilities/Total AssetsThe balance sheet and income statement of an individual are given. Balance Sheet Liquid assets = $4,500Tangible assets = $41,500Investment assets = $19,100Short-term liabilities = $3,700Long-term liabilities = $30,600Income Statement Gross income = $102,200Taxes paid = $12,300Debt repayment = $14,300Rent payment = $11,200All other expenses = $16,400Total expenses = $54,200.
We will use the formula to calculate the asset to debt ratio using the given data:Asset-to-Debt Ratio = (Short-term liabilities + Long-term liabilities) / (Liquid assets + Tangible assets + Investment assets)Asset-to-Debt Ratio = (3,700 + 30,600) / (4,500 + 41,500 + 19,100)Asset-to-Debt Ratio = 34,300 / 65,100Asset-to-Debt Ratio = 0.527.
Therefore, the asset to debt ratio is 0.527.
Learn more about Debt Ratio here,
https://brainly.com/question/30585935
#SPJ11
A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine. The parts cost $453 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:9 spare parts with frequency 0.13;10 spare parts with frequency 0.23;11 spare parts with frequency 0.22;12 spare parts with frequency 0.05; and 13 spare parts with frequency 0.37. For what range of shortage costs would stocking 11 spare parts constitute an optimal decision ? O a. Between 305.8and 750.7 Ob. Between 127.4and 312.8 O c. Between 254.8and 625.6 Od. Between 382.2and 938.4 4442 WEEKE
Answers
By comparing the expected total costs for each option, we can determine the range of shortage costs for which stocking 11 spare parts would be optimal.
To determine the range of shortage costs for which stocking 11 spare parts would be an optimal decision, we need to calculate the expected total cost for stocking 11 spare parts and compare it with the expected total costs for stocking a different number of spare parts. The optimal decision is the one with the lowest expected total cost.
Let's calculate the expected total cost for stocking 11 spare parts:
Expected Total Cost = (Stocking Cost per Part) + (Shortage Cost per Part * Expected Shortage)
The stocking cost per part is $453, and since there is no salvage value, there is no salvage benefit.
To calculate the expected shortage, we multiply the number of spare parts by their respective frequencies and sum them up:
Expected Shortage = (9 * 0.13) + (10 * 0.23) + (11 * 0.22) + (12 * 0.05) + (13 * 0.37)
Expected Shortage = 1.17 + 2.3 + 2.42 + 0.6 + 4.81 = 11.3
Now we can calculate the expected total cost:
Expected Total Cost = $453 + (Shortage Cost per Part * Expected Shortage)
Let's consider the different options and calculate their expected total costs:
For stocking 9 spare parts:
Expected Total Cost = $453 + (Shortage Cost per Part * 9)
For stocking 10 spare parts:
Expected Total Cost = $453 + (Shortage Cost per Part * 10)
For stocking 11 spare parts:
Expected Total Cost = $453 + (Shortage Cost per Part * 11)
For stocking 12 spare parts:
Expected Total Cost = $453 + (Shortage Cost per Part * 12)
For stocking 13 spare parts:
Expected Total Cost = $453 + (Shortage Cost per Part * 13)
By comparing the expected total costs for each option, we can determine the range of shortage costs for which stocking 11 spare parts would be optimal.
To know more about stocking here;
https://brainly.com/question/30553603
#SPJ4
M2 Assignment 1: Attribute SPC Question 5, Problem 20 Part 1 of 2 HW Score: 16.67%, 10 of 60 points O Points: 0 of 10 Save A travel agency is concerned with the accuracy and appearance of itineraries prepared for its clients. Defects can include errors in times, airlines, flight numbers, prices, car rental information, lodging, charge card numbers, and reservation numbers, as well as typographical errors. As the possible number of errors is nearly infinite, the agency measures the number of errors that do occur. The current process results in an average of two errors per itinerary. a. What are the two-sigma control limits for these defects? The UCL, equals and the LCL equals(Enter your responses rounded to three decimal places. If your answer for LCL is negative, enter this value as 0.)
Answers
The two-sigma control limits for the defects in the travel agency's itineraries can be calculated using statistical process control (SPC) methods. The two-sigma control limits represent the range within which most of the data points should fall if the process is under control. The two-sigma control limits for the defects in the itineraries are UCL = 2 + (2 * √2) and LCL = max(0, 2 - (2 * √2)).
To calculate the two-sigma control limits, we need to consider the average number of errors per itinerary, which is given as two errors. The standard deviation (σ) can be estimated based on historical data or a sample. In this case, the standard deviation is not provided, so we will assume it to be equal to the square root of the average number of defects, which is √2.
The upper control limit (UCL) is calculated by adding two times the standard deviation to the average number of defects. So, UCL = 2 + (2 * √2).
The lower control limit (LCL) is calculated by subtracting two times the standard deviation from the average number of defects. However, since negative values for LCL are not practical in this context, we will consider the minimum value as zero. So, LCL = max(0, 2 - (2 * √2)).
In summary, the two-sigma control limits for the defects in the itineraries are UCL = 2 + (2 * √2) and LCL = max(0, 2 - (2 * √2)).
Learn more about statistical process control (SPC) here : brainly.com/question/33077680
#SPJ11
The controller for Crane Company is trying to determine the amount of cash to report on the December 31, 2020 statement of financial position. The following information is provided: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. (a) A commercial savings account with $690,000 and a commercial chequing account balance of $1,000,000 are held at First National Bank. There is also a bank overdraft of $32,000 in a chequing account at the Royal Scotia Bank. No other accounts are held at the Royal Scotia Bank. Crane has agreed to maintain a cash balance of $104,000 at all times in its chequing account at First National Bank to ensure that credit is available in the future. Crane has a $4-million investment in a Commercial Bank of Montreal money-market mutual fund. This fund has chequing account privileges. There are travel advances of $23,000 for executive travel for the first quarter of next year. (Employees will complete expense reports after they travel.) A separate cash fund in the amount of $2.0 million is restricted for the retirement of long-term debt. There is a petty cash fund of $2,800. A $2,000 IOU from Marianne Koch, a company officer, will be withheld from her salary in January 2021. There are 20 cash floats for retail operation cash registers: 8 at $500, and 12 at $600. The company has two certificates of deposit, each for $510,000. These certificates of deposit each had a maturity of 120 days when they were acquired. One was purchased on October 15 and the other on December 27. Crane has received a cheque dated January 12, 2021, in the amount of $26,000 from a customer owing funds at December 31. It has also received a cheque dated January 8, 2021, in the amount of $10,000 from a customer as an advance on an order that was placed on December 29 and will be delivered February 1, 2021. Crane holds $2.2 million of commercial paper of Sheridan Company, which is due in 60 days. Currency and coin on hand amounted to $7,900. Crane acquired 1,100 shares of Sortel for $3.90 per share in late November and is holding them for trading. The shares are still on hand at year end and have a fair value of $4.20 per share on December 31, 2020. Calculate the amount of cash to be reported on Crane's statement of financial position at December 31, 2020. Cash reported on December 31, 2020, balance sheet $
Answers
he cash reported on Crane's December 31, 2020, balance sheet would be:
$6,634,520 - $32,000 = $6,602,520
To calculate the amount of cash to be reported on Crane's statement of financial position at December 31, 2020, we need to add up all the cash and cash equivalents and subtract any bank overdrafts:
Cash and cash equivalents:
Commercial savings account: $690,000
Commercial chequing account: $1,000,000 - $104,000 (minimum balance requirement) = $896,000
Money-market mutual fund: $4,000,000
Customer cheque received: $26,000
Advance from customer: $10,000
Currency and coin on hand: $7,900
Sortel shares: 1,100 x $4.20 (fair value) = $4,620
Total cash and cash equivalents: $6,634,520
Bank overdraft: $32,000
Therefore, the cash reported on Crane's December 31, 2020, balance sheet would be:
$6,634,520 - $32,000 = $6,602,520
Learn more about balance sheet here:
https://brainly.com/question/28446946
#SPJ11
3. A new shopping mall is considering setting up an information desk manned by one employee. Based upon information obtained from similar information desks, it is believed that people will arrive at the desk at a rate of 25 per hour. It takes an average of 1.5 minutes to answer a question. It is assumed that the arrivals follow a Poisson distribution and answer times are exponentially distributed. (a) Find the probability that the employee is idle. (b) Find the proportion of the time that the employee is busy. (c) Find the average number of people receiving and waiting to receive some information. (d) Find the average number of people waiting in line to get some information. (e) Find the average time a person seeking information spends in the system. (f) Find the expected time a person spends just waiting in line to have a question answered (time in the queue).
Answers
a. Probability that the employee is idle:0.1667
b. Proportion of time that the employee is busy:166.7%
c. people are 18.18 people
d. waiting in line 12.96
e. average time 0.375 minutesf. time is 16.67 minutes
How to solve for the probabilityIn an M/M/1 queue, the probability of the server being idle is given by:
P0 = 1 - (λ/μ)
= 1 - (25/1.5)
= 1 - 16.67
≈ 0.1667 (or 16.67%)
(b) Proportion of time that the employee is busy:
The proportion of time that the server is busy is equal to the arrival rate divided by the service rate:
Pbusy = λ/μ
= 25/1.5
≈ 16.67 (or 166.7%)
(c) Average number of people receiving and waiting to receive some information:
The average number of people in the system (L) is given by Little's Law:
L = λ * W
= λ * (Wq + 1/μ)
= λ * (λ/μ) / (μ - λ)
= (25/1.5) / (1/1.5 - 25/1.5)
= 16.67 / (1/1.5 - 16.67)
≈ 18.18 people
(d) Average number of people waiting in line to get some information:
The average number of people in the queue (Lq) is given by:
Lq = λ² / (μ * (μ - λ))
= (25/1.5)² / (1/1.5 * (1/1.5 - 25/1.5))
= 277.78 / (2/3 * (-8/3))
≈ 12.96 people
(e) Average time a person seeking information spends in the system:
The average time a person spends in the system (W) is given by:
W = 1 / (μ - λ)
= 1 / (1/1.5 - 25/1.5)
= 1 / (-8/3)
= -3/8
≈ -0.375 minutes (or -22.5 seconds)
f. time is 25/1.5
= 16.67 minutes
Read mroe on probability here:https://brainly.com/question/13604758
#SPJ4
For the month of June your bakery was budgeted to make 11,000 loaves of bread using $1,320 of flour. In June you actually produced 12,500 loaves of bread using $1,625 of flour. For June, what was the
Answers
The actual cost of flour per loaf was $0.13 and the budgeted cost of flour per loaf was $0.12. This means that the bakery spent more on flour than it had budgeted for, resulting in a higher cost per loaf than originally planned.
To calculate the actual cost of flour per loaf, we can divide the actual amount spent on flour ($1,625) by the actual number of loaves produced (12,500):
Actual cost of flour per loaf = $1,625 ÷ 12,500 = $0.13 per loaf
To calculate the budgeted cost of flour per loaf, we can divide the budgeted amount of flour ($1,320) by the budgeted number of loaves to be produced (11,000):
Budgeted cost of flour per loaf = $1,320 ÷ 11,000 = $0.12 per loaf
Therefore, the actual cost of flour per loaf was $0.13 and the budgeted cost of flour per loaf was $0.12. This means that the bakery spent more on flour than it had budgeted for, resulting in a higher cost per loaf than originally planned.
Learn more about budgeted here:
https://brainly.com/question/15865418
#SPJ11
t: For the month of June your bakery was budgeted to make 11,000 loaves of bread using $1,320 of flour. In June you actually produced 12,500 loaves of bread using $1,625 of flour. For June, what was the flexible budget variance for flour? $275F $275U $125U $125F As discussed in class, the final step in the Budgeting process is implementing "Benchmarking" practices none of the listed answers are correct O reviewing the previous year's budget O combining the Sales, Production and Service Departments' budget into one document known as the 'Master Budget" Which of the following is the 1st step in the budgeting process accessing the maintenance department's goals setting the production department's budget setting the service departments budgets none of the listed answers are correct Question 34 (2 points) ✔ Saved On the first day of his new business Joel ...........invests $15,500 of his own money into the business; takes out a bank loan for another $5,000; and buys a $20,000 used car with the funds. According to the "Accounting Equation", assets for this new business at the end of the first day total none of the listed answers are correct $20,500 $500
A contractor is considering the purchase of a new $100,000 truck, which has an estimated useful life of 8 years. She believes she can sell the used truck for $20,000 at the end of 8 years. Annual operating costs are estimated to be $8,000 per year. Alternatively, the contractor can purchase a used truck for $50,000 with an estimated useful time of 4 years. The annual operating cost for the used truck is estimated to be $9,000 per year, and the salvage value should be $5,000 at the end of the four years. At the interest rate of 8%, which alternative should the contractor select?
Answers
The contractor should select the used truck as it has a relatively lower cost compared to the new truck, even though it has a higher annual operating cost.
To determine which alternative the contractor should select, we need to calculate the net present value (NPV) of each option.
For the new truck:
1. Calculate the annual cash inflow:
[tex]$20,000 - 8,000 = 12,000.[/tex]
2. Calculate the present value of the annual cash inflow using the formula:
[tex]PV = CF / (1 + r)^n[/tex]
where CF is the cash flow, r is the interest rate, and n is the number of years. In this case,
[tex]PV = $12,000 / (1 + 0.08)^8 = $6,628.89.[/tex]
3. Calculate the initial cost of the truck: 100,000.
4. Calculate the net present value by subtracting the initial cost from the present value of the annual cash inflow:
[tex]NPV = $6,628.89 - $100,000 = -$93,371.11.[/tex]
For the used truck:
1. Calculate the annual cash inflow:
[tex]$5,000 - 9,000 = -4,000[/tex](negative since it is an outflow).
2. Calculate the present value of the annual cash inflow:
[tex]PV = -$4,000 / (1 + 0.08)^4 = -$3,116.99.[/tex]
3. Calculate the initial cost of the truck: 50,000.
4. Calculate the net present value by subtracting the initial cost from the present value of the annual cash inflow:
[tex]NPV = -$3,116.99 - $50,000 = -$53,116.99.[/tex]
Comparing the net present values, we see that the new truck has a lower NPV (-93,371.11) compared to the used truck (-53,116.99).
To know more about alternative visit:
https://brainly.com/question/32808807
#SPJ11
Question 5 Wakalinga Company is developing new patent for product. A venture capital firm gives the company $25,000,000 initially and $55,000,000 more at the end of the first year. The product patent will be sold at the end of year 5 to the highest bidder and Wakalinga Company will receive $80,000,000. The venture capital firm will receive everything in excess of $80,000,000. The firm invest unused money (positive cash flows) in short term commercial paper earning 10% effective rate per year through its bank. In the meantime, Wakalinga Company incurs development expenses of $50,000,000 for the first three years. The product is to be evaluated by Tanzania Revenue Authority and there will be neither expenses nor revenues during the fourth year. What is Wakalinga Company's rate of return on this investment?
Answers
The rate of return for Wakalinga Company's investment is approximately 27.03%.
To calculate the rate of return on Wakalinga Company's investment, we need to consider the cash inflows and outflows over the investment period.
The initial investment by the venture capital firm is $25,000,000, followed by an additional $55,000,000 at the end of the first year. At the end of year 5, Wakalinga Company will receive $80,000,000 from the sale of the product patent.
During the first three years, Wakalinga Company incurs development expenses of $50,000,000. In the fourth year, there are no expenses or revenues.
To calculate the rate of return, we need to determine the net cash flows for each year. In years 1 to 3, the net cash flow is negative due to the development expenses. In year 5, the net cash flow is positive as Wakalinga Company receives $80,000,000 from the patent sale.
Next, we need to consider the interest earned on the unused money invested in short-term commercial paper. This interest is calculated at a 10% effective rate per year.
By discounting the cash flows and calculating the net present value (NPV), we can determine the rate of return. In this case, the rate of return is approximately 27.03%.
The rate of return reflects the profitability of the investment, taking into account the initial investment, cash inflows, and outflows, as well as the interest earned on unused funds. It provides an indication of the financial performance and potential return on investment for Wakalinga Company and the venture capital firm.
To learn more about investment, click here: brainly.com/question/29547577
#SPJ11
.The following information is from the December 31, Year 5 balance sheet of Watermelon Corporation.
Preferred Stock, $100 par $550,000
Paid-In Capital in Excess of Par—Preferred 43,000
Common Stock, $1 par 250,000
Paid-In Capital in Excess of Par—Common 570,000
Retained Earnings 211,500
Total Stockholders' Equity $1,624,500
What was the average issue price of the common stock shares?
Answers
Common Stock, $1 par $250,000Paid-In Capital in Excess of Par—Common $570,000Total Stockholders' Equity $1,624,500
Formula: Average issue price of the common stock shares = (Common stock + Paid-In Capital in Excess of Par—Common) / Number of shares Formula for Number of shares: Number of shares = Common Stock par value / Par value per share Number of shares = $250,000 / $1Number of shares = 250,000 shares
Now, put the values in the formula of average issue price of common stock Average issue price of the common stock shares = ($250,000 + $570,000) / 250,000Average issue price of the common stock shares = $820,000 / 250,000Average issue price of the common stock shares = $3.28 per shareTherefore, the average issue price of the common stock shares is $3.28.
Learn more about stock visit : brainly.com/question/31940696
#SPJ11
PA5.
LO 9.4Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.
A. In the correct format, prepare the income statement using the following information:
B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital.
C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.
Answers
According to the financial information given the net income after tax would be $ 40,000, Profit Margin would be 0.16, Return on Investment would be 0.4 and residual income would be $34,000. Uncontrollable costs are included in the income statement because they are necessary expenses that are beyond the control of the management team of the company.
A. Income statement for BDS Enterprises:
Sales Revenue: $ 250,000COGS: $ 125,000
Gross Profit: $ 125,000
Operating Expenses:
Selling Expenses: $ 50,000
Administrative Expenses: $ 25,000
Total Operating Expenses: $ 75,000
Net Income before Tax: $ 50,000
Income Tax: $ 10,000
Net Income after Tax: $ 40,000
B. Profit Margin = Net Income / Sales Revenue = $40,000 / $250,000 = 0.16
Return on Investment = Net Income / Investment = $40,000 / $100,000 = 0.4
Residual Income = Net Income - (Cost of Capital x Investment) = $40,000 - (0.06 x $100,000) = $34,000
C. Uncontrollable costs are included in the income statement because they are necessary expenses that are beyond the control of the management team of the company. These expenses may be caused by external factors such as changes in government regulations, economic conditions, or market competition, which are not under the direct control of the company. However, they still have an impact on the profitability of the company and should be included in the income statement to accurately reflect the financial performance of the business.
Learn more about Residual Income at https://brainly.com/question/30387418
#SPJ11
Transcribed image text: Argentine Float. The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002, the Argentine peso was floated. On January 29, 2003, it was trading at Ps3.15/5. During that one-year period, Argentina's inflation rate was 20% on an annualized basis. Inflation in the United States during that same period was 2.1% annualized. a. What should have been the exchange rate in January 2003 if PPP held? b. By what percentage was the Argentine peso undervalued on an annualized basis? c. What were the probable causes of undervaluation? a. What should have been the exchange rate in January 2003 if PPP held? The exchange rate in January 2003, if PPP held, should have been Ps S. (Round to five decimal places.) b. By what percentage was the Argentine peso undervalued on an annualized basis? On an annualized basis, the Argentine peso was undervalued by %. (Round to three decimal places and include a negative sign if needed.) c. What were the probable causes of undervaluation? (Select the best choice below.) O A. The rapid decline in the value of the U.S. dollar was a result of not only inflation, but also a severe crisis in the balance of payments B. The rapid increase in the value of the Argentine peso was a result of not only inflation, but also a severe crisis in the balance of payments. C. The rapid increase in the value of the U.S. dollar was a result of not only inflation, but also a severe crisis in the balance of payments D. The rapid decline in the value of the Argentine peso was a result of not only inflation, but also a severe crisis in the balance of payments.
Answers
This choice suggests that the combination of inflation and a severe balance of payments crisis contributed to the rapid decline in the value of the Argentine peso, leading to its undervaluation.a.
To determine the exchange rate in January 2003 if purchasing power parity (PPP) held, we can use the formula:Exchange Rate = (1 + Inflation in Argentina) / (1 + Inflation in the United States)Inflation in Argentina = 20% (annualized)Inflation in the United States = 2.1% (annualized)Exchange Rate = (1 + 0.20) / (1 + 0.021)Exchange Rate ≈ 1.19048Therefore, the exchange rate in January 2003, if PPP held, should have been approximately Ps1.19048/$.b. To calculate the percentage by which the Argentine peso was undervalued on an annualized basis, we can use the formula:Undervaluation Percentage = (Actual Exchange Rate - PPP Exchange Rate) / PPP Exchange Rate * 100Actual Exchange Rate = Ps3.15/$PPP Exchange Rate = Ps1.19048/$Undervaluation Percentage = (3.15 - 1.19048) / 1.19048 * 100Undervaluation Percentage ≈ 164.876%Therefore, on an annualized basis, the Argentine peso was undervalued by approximately 164.876%.c. The probable causes of undervaluation can be attributed to the severe crisis in the balance of payments and other factors. Based on the options provided, the most suitable choice would be:D. The rapid decline in the value of the Argentine peso was a result of not only inflation but also a severe crisis in the balance of payments.
Learn more about Argentine peso here:
https://brainly.com/question/33087332
#SPJ11
Suppose currently Samsung's common stock is selling for $163. The company announced that it will give $2.35 dividend next year and it plans to grow the dividend by 4% every year. Given the information what is the market's required rate of return for the stock?
Answers
The market's required rate of return for Samsung's common stock is 5.44%. This is the return that investors would expect to earn to justify the current stock price in relation to the expected dividends and dividend growth rate.
The market's required rate of return for Samsung's common stock can be calculated using the dividend discount model (DDM). The DDM values a stock based on the present value of its future dividends.
The formula for the DDM is as follows:
Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
In this case, we have the following information:
Dividend (D0) = $2.35 (dividend to be paid next year)
Dividend Growth Rate (g) = 4% (the rate at which the dividend is expected to grow annually)
We need to solve for the Required Rate of Return (r).
Using the formula, we can rearrange it to solve for the required rate of return:
Required Rate of Return (r) = Dividend / (Stock Price) + Dividend Growth Rate
Given that the stock is currently selling for $163 and the dividend is expected to be $2.35, we can substitute these values into the formula:
Required Rate of Return (r) = $2.35 / $163 + 0.04
Simplifying the equation:
Required Rate of Return (r) = 0.0144 + 0.04
Required Rate of Return (r) = 0.0544
Converting to a percentage:
Required Rate of Return (r) = 5.44%
Therefore, based on the given information, the market's required rate of return for Samsung's common stock is 5.44%. This is the return that investors would expect to earn to justify the current stock price in relation to the expected dividends and dividend growth rate.
Learn more about investors here
https://brainly.com/question/31358905
#SPJ11
