Read the following extracts and answer the questions that follow. The increased exposure to an influx of information that consumers encounter daily because of the internet and multiple media platform, provides a challenge to marketers to be more intentional with their messages design to effectively serve marketing communication objectives. The AIDA model emphasizes that a message should attract Attention, arouse Interest, create Desire, and lead to Action. The model proposes that consumers respond to marketing messages in a cognitive, affective and conative sequence. Advertisement messages should in their delivery influence consumers invoke thoughts, feeling, emotions and ultimately provoke a positive action. An expanded version of the AIDA concept is the hierarchy of effects model. According to Lamb, Hair, Boshoff, Terblance, Klopper (2015), the marketing communication mix is that combination of these basic elements that management believes will meet the needs of the target market and realize the firm’s overall objectives.

1. One of the important decisions of marketing management is setting advertising objectives. Identify and analyse the characteristics and purpose of the three objectives of advertising.

2 (20 Marks) Discuss the hierarchy of effects model and describe the steps of the consumer purchase-decision process.

3 (20 Marks) One of the elements of marketing communication mix involves techniques that elicit consumers to make purchases from their homes, offices or any place of convenience without using intermediaries. Discuss the benefits and forms of above mentioned element of the marketing mix.

Answers

Answer 1

Advertising objectives serve the purpose of guiding marketing efforts.

The three objectives of advertising are informative, persuasive, and reminder-oriented.

Each objective aims to communicate specific messages to the target audience.

The informative objective focuses on providing knowledge about a product or service to the target audience. It aims to create awareness, educate consumers about features and benefits, and emphasize product differentiation. The persuasive objective aims to influence consumer attitudes and preferences, with the goal of encouraging them to make a purchase.

It focuses on creating a desire for the product or service through emotional appeals, testimonials, or comparisons. The reminder-oriented objective aims to maintain awareness and reinforce the brand in the minds of consumers.

The hierarchy of effects model explains the stages a consumer goes through in the process of making a purchase decision. The model suggests that consumers move through several sequential stages: awareness, knowledge, liking, preference, conviction, and finally, the purchase. Initially, consumers become aware of a product or service through advertising or other forms of marketing communication.

One of the elements of the marketing communication mix that enables consumers to make purchases without intermediaries is known as direct marketing.

Direct marketing techniques allow consumers to buy products or services from their homes, offices, or any convenient location. This element offers several benefits, including convenience for consumers, cost-effectiveness for marketers, and personalized communication.

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Related Questions

Consider a single factor APT. Suppose asset A has βA = 1.3 and a A = 2%, and asset B has βB = 0.9 and a B = 1% with regards to the APT factor. A fund manager constructs a portfolio comprising entirely of asset A and asset B and the portfolio β is zero. The weights of assets A and B are: Select one:
A. wA = −3.25 and wB = 2.25
B. wA = 3.25 and wB​ = −2.25
C. wA = −2.25 and wB = 3.25
D. wA = 2.25 and wB = −3.25
E. None of the options provided.

Answers

To construct a portfolio with a beta of zero, we need to find weights for assets A and B that satisfy the equation:To solve this equation, we need another equation that relates the weights of the assets to their expected returns. Let's use the equation:

Therefore, the correct answer is option E: None of the options provided. This is because the weights of assets A and B in the portfolio are both zero, indicating that neither asset is included in the portfolio.To solve this equation, we need another equation that relates the weights of the assets to their expected returns. Let's use the equation:To solve this equation, we need another equation that relates the weights of the assets to their expected returns. Let's use the equation:To construct a portfolio with a beta of zero, we need to find weights for assets A and B that satisfy the equation:

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the entry to establish a petty cash fund includes:

Answers

When a business establishes a petty cash fund, an entry is required to record the cash in the general ledger.

The entry to establish a petty cash fund includes the following.

The petty cash system is an accounting system that allows a company to keep track of small expenditures without having to create a journal entry for each transaction. It involves maintaining a small amount of cash on hand, which is typically used for small expenses such as office supplies or postage. The amount of cash kept in the fund varies depending on the size of the business and the nature of its expenses, but is generally between $50 and $200.

Cash fund:

The cash fund, also known as the petty cash fund, is a small amount of cash that is kept on hand to pay for minor expenses such as postage, office supplies, and other miscellaneous items. The amount of cash in the fund is typically set by management and is replenished as needed.

To establish a petty cash fund, an entry is required to record the cash in the general ledger. This entry usually includes a debit to the Petty Cash account and a credit to Cash. Once the fund is established, the cash on hand is used to pay for small expenses as they arise. The fund is then replenished periodically, based on the level of activity and the amount of cash used.

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To what extent does a country's geographic location contribute to its level of poverty. Use economic and geographic knowledge to explain with approproate economic models. 3 points explained in detail - 10 sentences

Answers

A country's geographic location can contribute to its level of poverty, although it is not the sole determining factor. Several economic and geographic factors interact to shape a country's poverty levels. Firstly, proximity to markets and trade routes can facilitate economic growth and development, reducing poverty. Secondly, natural resource endowments can either alleviate or exacerbate poverty, depending on how they are managed and distributed. Finally, geographic factors such as climate, terrain, and susceptibility to natural disasters can impact agricultural productivity, infrastructure development, and overall economic opportunities.

Proximity to Markets and Trade Routes: Geographic location plays a crucial role in determining a country's access to markets and trade routes. Countries situated close to major markets or connected to global trade networks can benefit from increased trade opportunities, foreign investment, and technological advancements. These factors can contribute to economic growth, job creation, and poverty reduction. For example, landlocked countries may face higher transportation costs and limited market access, which can hinder economic development and perpetuate poverty.

Natural Resource Endowments: Geographic location often determines a country's natural resource endowments, such as minerals, oil, forests, or fertile land. These resources can be a significant source of wealth and economic growth, but their management and distribution are critical. Countries that effectively harness and distribute their natural resources can generate revenue, create employment opportunities, and invest in poverty reduction programs. Conversely, mismanagement, corruption, or reliance on a single resource can lead to economic volatility, inequality, and increased poverty levels.

Climate, Terrain, and Natural Disasters: Geographic factors such as climate, terrain, and susceptibility to natural disasters can significantly impact a country's agricultural productivity, infrastructure development, and overall economic opportunities. Countries with unfavorable climates or challenging terrains may face difficulties in agriculture, which can affect food security, employment, and income levels. Moreover, regions prone to natural disasters like earthquakes, hurricanes, or droughts can experience severe economic setbacks, leading to increased poverty. Building resilience through infrastructure development, disaster preparedness, and diversification of economic activities can mitigate these challenges.

It's important to note that while geographic location plays a significant role, it is not the sole determinant of a country's poverty levels. Factors such as governance, political stability, education, healthcare, and social policies also influence poverty outcomes. Understanding the complex interactions between geographic, economic, and social factors is crucial for implementing effective policies and interventions to alleviate poverty and promote sustainable development.

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Which business is the best example of a limited partnership? Kasem and Harkison operate a nsusic studio and are both personally liable for the debt of the business. Kasem investefrsse.000 in the business, while Marrison contributed the nuusic studio and paid for tertain equipment. They beth share in the plipfits ff the business. Terry owns and operates a heating and cooling repair business and is personally liable for the debts of the business. Julian, Zachary, and Ryan are all employed as service technicians. Terry offered each of them the option to buy a 5% share of the business. They each decided to exercise the option, and they will be entitled to a share of the business profits. They will also be responsible for business debts up to the amount of their initial investment. Chin and Jiro operate a coffee shop and are both personally liable for the debts of the business. Chin contributed the building in which the coffee shop operates. Jiro invested $10,000 and also contributes his labor; he works as a barista several days a week. They both share in the profits of the business

Answers

The best example of a limited partnership among the given options is the business operated by Kasem and Harkison.

The best example of a limited partnership among the given options is the business operated by Kasem and Harkison, who owns a music studio. In this partnership, Kasem invested $15,000 in the business, while Harkison contributed to the music studio and paid for certain equipment. Both partners are personally liable for the debts of the business, meaning they have unlimited liability. However, they both share in the profits of the business. This aligns with the characteristics of a limited partnership where there is at least one general partner with unlimited liability (Kasem and Harkison) and one or more limited partners (not mentioned in the provided information) who have limited liability and share in the profits.

Therefore, the Kasem and Harikson business is the best example of a limited partnership.

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when a firm's total revenue exceeds all its economic costs

Answers

True, The firm is earning an economic profit when a firm's total revenue is greater than its total economic costs.

The company makes an economic profit when total sales surpass both explicit and hidden costs. Accounting profit is higher than economic profit. The economic cost is the sum of all losses involving items that have been valued by a single person. The economic cost is primarily used by economists as a tool to assess the wisdom of one course of action vs another. The amount of total revenue over entire costs constitutes economic profit. Economic profit is the surplus profit that the business owner obtains over the bare minimum necessary (the usual profit) by the owner of the company to remain in the specific business.

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Complete question:

When a firm's total revenue is greater than its total economic costs, the firm is earning an economic profit.

True/false

Suppose that the Short-Run Phillips Curve is given by π
t

=E(π
t

)−0.5(u
t

−u
n
)+v
t

where the natural rate of unemployment is 7.5%. The economy has Rational expectations and no inflation shocks. "? the central bank credibly announces that inflation will go down by 2.9 percentage points a year from today, what is the uneriployment rate one year from now? Round your answer to the nearest two decimal place. Write your answer in percentage terins so if your answer is 10%, write 10 .

Answers

Inflation will decrease by 2.9 percentage points per year. The unemployment rate one year from now, after the central bank's announcement, is estimated to be 1.7%.

According to the Short-Run Phillips Curve equation provided:

πt = E(πt) - 0.5(ut - un) + vt

Where:

πt represents the inflation rate at time t,

E(πt) represents the expected inflation rate at time t,

ut represents the actual unemployment rate at time t,

un represents the natural rate of unemployment, and

vt represents the inflation shock (assumed to be zero in this case).

Since the economy has rational expectations and no inflation shocks, we can assume that E(πt) = πt-1, meaning that people's expectations of future inflation are based on their observations of past inflation.

Now, with the central bank's announcement that inflation will decrease by 2.9 percentage points per year from today, we can calculate the inflation rate one year from now (πt) using the equation:

πt = πt-1 - 2.9

To find the corresponding unemployment rate, we substitute this value into the Short-Run Phillips Curve equation:

πt = E(πt) - 0.5(ut - un)

πt = πt - 2.9 - 0.5(ut - 7.5)

Simplifying the equation, we can isolate the unemployment rate (ut):

0.5(ut - 7.5) = -2.9

ut - 7.5 = -2.9 * 2

ut - 7.5 = -5.8

ut = -5.8 + 7.5

ut = 1.7

Therefore, the unemployment rate one year from now, after the central bank's announcement, is estimated to be 1.7%.

Based on the given information and the assumptions of rational expectations and no inflation shocks, the unemployment rate one year from now is estimated to be 1.7% after the central bank credibly announces a decrease in inflation by 2.9 percentage points per year.

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Case 2

Strasburg Loan Company is in the consumer loan business. Strasburg borrows from banks and loans out the money at higher interest rates. Strasburg’s bank requires Strasburg to submit quarterly financial statements to keep its line of credit. Strasburg’s main asset is Notes Receivable. Therefore, Uncollectible-Account Expense and Allowance for Uncollectible Accounts are important accounts for the company.

Raquel Lanser, the company’s owner, prefers that net income reflect a steady increase in a smooth pattern, rather than an increase in some periods and a decrease in other periods. To report smoothly increasing net income, Lanser underestimates uncollectible-account expense in some periods. In other periods, Lanser overestimates the expense. She reasons that the income overstatements roughly offset the income understatements over time.

What is the accounting issue in this case? What ethical decision needs to be made?
Who are the stakeholders?
Analyze the potential impact on the stakeholders from the following standpoints: (a) economic, (b) legal, and (c) ethical.

Answers

The accounting issue in this case is the deliberate manipulation of the uncollectible-account expense by the company owner, Raquel Lanser, to smooth out the pattern of net income.

The ethical decision that needs to be made is whether to continue manipulating the expense to present a false picture of the company's financial performance or to report the expense accurately and honestly.

The stakeholders in this case include:

1. Strasburg Loan Company: The manipulation of the uncollectible-account expense can have a potential economic impact on the company. Over time, it may lead to misrepresentation of the company's financial stability and profitability, which could affect its ability to secure loans and maintain its line of credit.

2. Banks: The banks that lend money to Strasburg Loan Company are stakeholders. If the company's financial statements inaccurately represent its financial health, it could impact the banks' decisions to continue providing loans or adjust the terms and conditions of the existing credit facility.

3. Investors and Shareholders: If Strasburg Loan Company has external investors or shareholders, they have a stake in the company's financial performance. Manipulating the uncollectible-account expense can distort the reported net income, potentially leading to false expectations and misleading investors or shareholders.

From an economic standpoint (a), the potential impact on stakeholders can include reduced access to credit, increased borrowing costs, loss of investment value, and overall financial instability. From a legal perspective (b), deliberately misrepresenting financial statements can be considered fraudulent and may lead to legal consequences, including fines and penalties. From an ethical standpoint (c), manipulating financial statements violates principles of transparency, honesty, and fair representation, potentially damaging trust among stakeholders and the broader business community.

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Consider the Stoltes' article for this week. Summarize its key conclusions. Then reflect on your own behaviour. Have you ever made a poor ethical decision? What was it? Thinking back on it now, what do you believe the causes were of your own poor decision? What can Stoltes teach us about the problems with normative ethical decision making? Are you a "good" person? Please explain?

Answers

When it comes to ethical decision-making, it is crucial to consider the consequences of our actions, the principles and values involved, and the potential impact on stakeholders. Making poor ethical decisions can happen to anyone, as ethical dilemmas can be complex and subjective. It's important to learn from these experiences and strive to improve our decision-making process in the future.

Reflecting on personal experiences of making poor ethical decisions, it is essential to identify the causes or factors that contributed to those choices. Some common causes could include lack of awareness or understanding of ethical implications, external pressures, conflicts of interest, biases or prejudices, or even emotional or situational factors that cloud judgment.

Being a good person is subjective and can depend on individual beliefs, values, and actions. It is a continuous journey of self-reflection, growth, and striving to act in a morally upright and empathetic manner towards others.

In summary, ethical decision-making requires careful consideration of consequences, values, and stakeholder impact. Making poor ethical decisions can happen to anyone, and it's important to learn from such experiences. Normative ethical decision-making has limitations, and a broader perspective is necessary for complex ethical dilemmas. Being a "good" person is subjective and involves continuous self-reflection and efforts to act ethically.

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Argentine peso needs devaluing, Goldman Sachs report says
A macroeconomic report from Wall Street operators Goldman Sachs released Tuesday has warned that "without fiscal or monetary anchors" the country is up for strong "headwinds" in 2022 and 2023 and, therefore, "the peso needs to be devalued." The document also points to the "accumulation of macro and financial imbalances", and focus on the evolution of the official dollar, the exchange rate gap and devaluation pressures, the rise in inflation and the recurring fiscal deficit that is financed through a monetary policy by the Central Bank which consists of printing more pesos.
The report also points out that there are "growing" micro distortions and an inefficient allocation of resources due to a set of controls on prices, labor, trade, the exchange rate and financial assets, "combined with" weak political credibility. Goldman Sachs considered that an agreement with the International Monetary Fund to refinance short-term maturities (US $19,020 million in 2022 and US \$ 19,270 million in 2023), continues to be "an open issue of difficult and uncertain resolution." n this scenario, Goldman Sachs projects a gloomy scenario for 2022. According to the bank's estimates, the local GDP will grow 9.9% this year (after the 9.9% collapse in 2020), but that growth rate will slow down "significantly" next year, when a 2.9% rise in GDP is expected, although it could be below those figures, due to macro and micro imbalances and relative price distortions.

(a) Explain why a government might wish to devalue its currency, and discuss those factors that will determine the success of a such a policy. Justify your answer with relevant literature.
(b) Discuss whether a fixed or a floating exchange rate would be more beneficial for businesses.
(c) What are the measures could the Malaysian firms take to minimize the risks associated with a fluctuating exchange rate? Justify your answer with relevant literature

Answers

(a) Governments devalue currency to boost exports, attract investment, and reduce trade deficits; success depends on factors like demand elasticity and economic stability.

(b) The choice between fixed and floating exchange rates depends on stability, flexibility, and monetary policy objectives.

(c) Measures for Malaysian firms: hedging, diversification, cost management, pricing strategies, and research to minimize exchange rate risks.

(a) Governments might wish to devalue their currency to stimulate exports, boost economic competitiveness, attract foreign investment, and reduce trade deficits. Factors that determine the success of a devaluation policy include the elasticity of demand for exports, the responsiveness of domestic industries to increased competitiveness, the country's inflation rate, and the overall stability of the economy. Relevant literature, such as studies on exchange rate devaluations and trade balances, can provide empirical evidence on the effects and outcomes of devaluation policies.

(b) The choice between a fixed or floating exchange rate depends on various factors and the specific circumstances of the country. A fixed exchange rate provides stability and predictability, making it easier for businesses to plan and conduct international trade. However, it requires robust foreign exchange reserves and strict monetary policies. On the other hand, a floating exchange rate allows for market forces to determine the exchange rate, which can help absorb economic shocks and adjust to changing conditions. It offers more flexibility but introduces uncertainty for businesses in their international transactions. The optimal exchange rate regime depends on the country's economic goals, level of integration with global markets, and monetary policy objectives.

(c) Malaysian firms can take several measures to minimize the risks associated with a fluctuating exchange rate. These include:

Hedging: Firms can use financial instruments such as forward contracts, options, or futures to hedge against exchange rate fluctuations and reduce transaction risks.

Diversification: Expanding into multiple markets and currencies can help spread risk and reduce dependence on a single currency or market.

Cost management: Firms can enhance cost efficiency and competitiveness to mitigate the impact of exchange rate fluctuations on their profitability.

Pricing strategies: Adopting flexible pricing strategies, such as adjusting prices in response to exchange rate movements, can help maintain competitiveness in international markets.

Research and forecasting: Monitoring exchange rate trends and conducting thorough market research can assist firms in making informed decisions and anticipating currency movements.

Relevant literature on international finance, risk management, and exchange rate exposure can provide insights and strategies to address the risks associated with fluctuating exchange rates.

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If you are the owner of MBA corporation, what would you do to reduce agency problem in the corporation.

Answers

As the owner of MBA Corporation, several measures can be implemented to reduce the agency problem within the corporation.

These measures include improving corporate governance, aligning incentives, enhancing transparency, and fostering effective communication. To address the agency problem, the first step is to establish strong corporate governance practices. This involves creating a board of directors with independent members who can provide oversight and accountability. The board should actively monitor the actions of executives and ensure they act in the best interests of the company and its shareholders. Another approach is to align the interests of managers with those of the shareholders through appropriate incentive structures. This can be achieved by implementing performance-based compensation plans that link executive remuneration to the company's performance and long-term goals. By tying managerial rewards to shareholder value creation, the agency problem can be mitigated. Transparency is crucial in reducing agency problems. Implementing robust reporting and disclosure mechanisms ensures that information is readily available to shareholders and stakeholders.

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The inability to function effectively as a result of ongoing stress
1. Employees feel emotionally exhausted
2. Perception of others become calloused
3. Views his or her effectiveness negatively

Answers

Burnout can be defined as the inability to function effectively as a result of ongoing stress. This occurs when individuals are exposed to an excessive amount of stress over an extended period.

Burnout is characterized by three main symptoms:

1. Employees feel emotionally exhausted. This is one of the most common symptoms of burnout. The stress of the job causes individuals to become emotionally depleted, leading to a lack of energy and motivation. This can also lead to feelings of detachment and disengagement from the job.

2. Perception of others becomes calloused. When individuals experience burnout, they often develop a cynical attitude towards their colleagues and superiors. This can lead to a lack of trust and a breakdown in communication, further exacerbating the problem.

3. Views his or her effectiveness negatively. Burnout can also cause individuals to question their own abilities and effectiveness. They may feel as though they are not performing at their best, which can lead to a loss of confidence and further stress.

In conclusion, burnout is a serious issue that can have a significant impact on individuals mental and physical health. It is essential that employers take steps to prevent and manage burnout, such as providing stress-management training and support.

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Use data from finance.yahoo.com to answer the following questions:a.Collect the following data for 25 firms of your choosing.i.Book-to-market ratio.ii.Price–earnings ratio.iii.Market capitalization (size).iv.Price–cash flow ratio (i.e., market capitalization/operating cash flow).v.Another criterion that interests you.You can find this information by choosing a company and then clicking on Statistics. Rank the firms based on each of the criteria separately, and divide the firms into five groups based on their ranking for each criterion. Calculate the average rate of return for each group of firms.Do you confirm or reject any of the anomalies cited in this chapter? Can you uncover a new anomaly? Note: For your test to be valid, you must form your portfolios based on criteria observed at the beginning of the period. Why?b.Now form stock groups that use two criteria simultaneously. For example, form a portfolio of stocks that are both in the lowest quintile of price–earnings ratio and in the highest quintile of book-to-market ratio. Does selecting stocks based on more than one charac-teristic improve your ability to devise portfolios with abnormal returns? Repeat the analy-sis by forming groups that meet three criteria simultaneously. Does this yield any further improvement in abnormal returns?SOLUTIONS TO CONCEPT CHECKS1.a.A high-level manager might well have private information about the firm. Her ability to trade profitably on that information is not surprising. This ability does not violate weak-form efficiency: The abnormal profits are not derived from an analysis of past price and trading data. If they were, this would indicate that there is valuable information that can be gleaned from such analysis. But this ability does violate strong-form efficiency. Apparently, there is some private information that is not already reflected in stock prices.b.The information sets that pertain to the weak, semistrong, and strong form of the EMH can be described by the following illustration:Strong-formsetSemistrong-formsetWeak-formsetThe weak-form information set includes only the history of prices and volumes. The semistrong-form set includes the weak form set plus all publicly available information. In turn, the strong-form set includes the semistrong set plus insiders’ information. It is illegal to act on this incremental information (insiders’ private information). The direction of valid implication isStrong-form EMH ⇒ Semistrong-form EMH ⇒ Weak-form EMHThe reverse direction implication is not valid. For example, stock prices may reflect all past price data (weak-form efficiency) but may not reflect relevant fundamental data (semistrong-form inefficiency).Final PDF to printer

Answers

Data needs to be collected for 25 firms including book-to-market ratio, price-earnings ratio, market capitalization, price-cash flow ratio, and another criterion of interest.

The process involves gathering the required financial data for the chosen firms from finance.yahoo.com, specifically by selecting a company and clicking on "Statistics" to obtain the necessary ratios and market capitalization. Once the data is collected, the firms will be ranked separately based on each criterion, dividing them into five groups (quintiles) according to their rankings. The average rate of return for each group will then be calculated. By analyzing the average rate of return for each group, it will be possible to determine if there are any anomalies that confirm or reject the concepts discussed in the chapter.

Anomalies refer to patterns or trends that deviate from the efficient market hypothesis (EMH), such as the presence of abnormal returns. The analysis will provide insights into whether certain criteria or combinations of criteria can lead to abnormal returns, potentially uncovering new anomalies. To ensure the validity of the test, portfolios should be formed based on criteria observed at the beginning of the period, as using updated information would introduce hindsight bias and potentially invalidate the results.

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Other than the examples given in the marketplace article, what’s an example of a monopsony? Explain how it fits into that category.
Should the government get involved In regulating monopsony actions? If yes, give an example of a rule/law that would help and explain how it would work. If no, why not? Explain your thinking as to why this is an acceptable state.

Answers

Monopsony is a market structure where there is only one buyer for a product. An example of a monopsony can be the employer in a company who hires employees.

A monopsony is a market situation in which there is only one buyer for a particular product or service. A monopsony is the opposite of a monopoly in which there is only one seller. However, unlike a monopoly, a monopsony is an imperfect market structure in which the buyer has market power and can influence the price of the product or service. A company that controls the majority of the market share in the labor market can be considered a monopsony. Other than the examples given in the marketplace article, an example of a monopsony can be the employer in a company who hires employees. A single employer who controls a significant percentage of the labor market can set lower wages for their employees than what would be the market wage, which can result in a lower labor supply due to the reduced incentive for workers to enter the labor market. Should the government get involved in regulating monopsony actions? Yes, the government should get involved in regulating monopsony actions. An example of a rule/law that would help is the Sherman Antitrust Act, which was passed in 1890. The act is intended to prevent the formation of cartels and monopolies that may reduce competition in the market and cause harm to consumers. It has been used to break up large companies that were deemed to have a monopoly or monopsony power over a particular market. The act helps in promoting fair competition in the market and preventing companies from engaging in anticompetitive behavior that harms consumers.

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Axe Appliances in Vancouver produces a new coffee machine worth $700. - Bob's Brews in Toronto takes $600 of beans from another deuntry, and produces roasted coffee worth $2000. - Coffee with Karen in Calgary buys Axe's coffee machine and Bob's roasted coffee to produce $7000 worth of coffee to its customers. The contribution of these transactions to the Canadian GDP is $ Round to two decimal places. Do not enter the $ sign.

Answers

The contribution of the transactions to the Canadian GDP is $7000.

To calculate the contribution to GDP, we consider the final value of goods and services produced. In this case, Axe Appliances produces a coffee machine worth $700, which is included in the GDP. Bob's Brews takes $600 worth of beans and produces roasted coffee worth $2000. The value of the roasted coffee ($2000) is also included in the GDP. Finally, Coffee with Karen buys the coffee machine from Axe Appliances and the roasted coffee from Bob's Brews, and produces $7000 worth of coffee for its customers. The value of the final product, which is $7000, is added to the GDP.

Therefore, the contribution of these transactions to the Canadian GDP is $7000. This represents the total value of the final goods and services produced in these transactions and is an indicator of the economic activity generated within the country.

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Suggest a promotional campaign for a FMCG (fast-moving consumer
goods) which is on the threshold of the maturity stage of life
cycle.

Answers

Promotional campaigns for FMCG (Fast-moving consumer goods) can help brands boost sales and remain competitive, particularly as their products enter the maturity stage of the product life cycle.

To suggest a promotional campaign for an FMCG brand, it's essential to understand what happens at the maturity stage of the product life cycle, and how promotional campaigns can be effective during this time.

At the maturity stage of the life cycle, sales growth slows, and the product begins to approach market saturation. It is the ideal time to implement promotional activities to encourage repeat purchases and maintain consumer interest.

A promotional campaign can help an FMCG brand to engage with customers and reinvigorate sales. Here are some promotional campaign suggestions for an FMCG brand at the maturity stage of its life cycle:

1. Offer discounts and deals: Provide discounts to customers who purchase a specific quantity of the product.

2. Bundle sales: Bundle sales are a great way to offer customers a selection of your products at a discount. For instance, "Buy three of our products, and get one free."

3. Free samples: Give away free samples of your product to encourage trial and repeat purchase.

4. Social media promotion: Social media platforms offer a great opportunity for FMCG brands to create a buzz and generate consumer interest.

5. Loyalty programs: Offer rewards or discounts to customers who make repeat purchases of the product.

6. Influencer partnerships: Partner with social media influencers to create buzz around the product and increase brand awareness.

7. Cross-promotion: Partner with another brand that offers complementary products to cross-promote and increase sales.

FMCG brands in the maturity stage of the product life cycle can use these promotional campaigns to attract new customers, retain current customers, and build brand loyalty.

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Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is Q=A-P, where Q is the total quantity produced. Firm 1's marginal cost is C1. Firm 2's marginal cost of production is cl with probability and cś with probability 1 – , where 0 <0< 1. Firm 2 knows its own cost function and firm 1's cost function. Firm 1 knows its own cost function and the probability distribution of the marginal cost faced by firm 2. Is the following statement TRUE? In this setting, firm 1 produces identical amount to firm 1 in a Cournot duopoly with complete information. True False Consider the following Cournot duopoly. Both firms produce a homogenous good. The demand function is Q= 100 – P, where is the total quantity produced. Firm 1's marginal cost is MC1= 91. Firm 2's marginal cost of production is MCE = 4 with probability 0.25 and McE = 2 with probability 0.75. Firm 2 knows its own cost function and firm 1's cost function. Firm 1 knows its own cost function and the probability distribution of firm 2's marginal cost. What is the quantity produced by firm 2? 873/22 151/4 if the cost is high and 155/4 if the cost is low 205/11 if the cost is high and 230/11 if the cost is low 153/4

Answers

The statement is True. In a Cournot duopoly with incomplete information, firm 1 produces an identical amount to firm 2 in a Cournot duopoly with complete information. The quantity produced by firm 2 is 151/4 if the cost is high (4) and 155/4 if the cost is low (2).

In the given Cournot duopoly with incomplete information, firm 1 knows its own cost function and the probability distribution of firm 2's marginal cost. Firm 2, on the other hand, knows both its own cost function and firm 1's cost function.

Despite the incomplete information, firm 1 can calculate the expected payoffs based on firm 2's cost probabilities and determine its optimal quantity choice, resulting in producing an identical amount to firm 2 in a Cournot duopoly with complete information.

Considering the second Cournot duopoly scenario, where firm 1's marginal cost is q1 and firm 2's marginal cost is either 4 (MCH2) with a probability of 0.25 or 2 (MCL2) with a probability of 0.75, firm 2 knows both cost functions.

By calculating the expected payoffs for different quantity choices, firm 2 determines the quantity that maximizes its expected payoff. The expected payoffs are 151/4 if the cost is high (4) and 155/4 if the cost is low (2). Hence, the quantity produced by firm 2 is 151/4 if the cost is high and 155/4 if the cost is low.

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Question 26 (1 point) Amount of money demanded in billions If the supply of money is equal to 280 B, what is the equilibrium rate of interest? A Question 34 (2 points) Using the information in the previous question. If the Fed sells securities in an attempt to change the interest rate bv 2%, what is the new supply of money (Sm) ? A.

Answers

The new supply of money (Sm) would be 252 billion.

To determine the equilibrium rate of interest, we need more information about the demand for money. The equilibrium rate of interest is determined by the intersection of the money demand and money supply curves.

However, based on the given information that the supply of money is 280 billion (B), we can calculate the new supply of money (Sm) if the Federal Reserve (Fed) sells securities to change the interest rate by 2%.

When the Fed sells securities, it decreases the money supply in the economy. This action is known as an open market operation. By selling securities, the Fed withdraws money from circulation, reducing the overall supply of money.

To calculate the new supply of money, we need to know the proportion of the money supply affected by the Fed's actions. Let's assume that the Fed's securities sale affects 10% of the money supply.

Therefore, the reduction in the money supply due to the Fed's actions would be 10% of 280 billion, which is 28 billion (0.10 * 280 billion).

The new supply of money (Sm) would be the original supply of money (280 billion) minus the reduction (28 billion), resulting in a new supply of money equal to 252 billion (280 billion - 28 billion).

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Pharoah Company has issued three different bonds during 2022. Interest is payable annually on each of these bonds. 1. On January 1, 2022, 1,300, 8\%,5-year, $1,000 bonds dated January 1,2022 , were issued at face value. 2. On July 1,$845,000,9%,5-year bonds dated July 1,2022 , were issued at 104 . 3. On September 1, $355,000,7%,5-year bonds dated September 1, 2022, were issued at 98. Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automatically indented wher amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answers

Pharoah Company issued three different bonds in 2022: 8%, 5-year, $1,000 bonds on January 1; 9%, 5-year bonds on July 1; and 7%, 5-year bonds on September 1. The journal entries to record each bond transaction at the date of issuance are as follows:

On January 1, 2022, Pharoah Company issued 1,300 8% bonds with a face value of $1,000 each. The journal entry to record this transaction would be:

Dr. Cash $1,300,000

Cr. Bonds Payable $1,300,000

This entry records the cash received from the issuance of the bonds and increases the liability of the company for the bond principal.

On July 1, 2022, Pharoah Company issued $845,000 9% bonds. The bonds were issued at 104, meaning they were sold for 104% of their face value. The journal entry to record this transaction would be:

Dr. Cash $879,800

Cr. Bonds Payable $845,000

Cr. Premium on Bonds Payable $34,800

The entry records the cash received from the issuance of the bonds and creates a liability for the bond principal. Additionally, a premium on bonds payable account is created to reflect the excess amount received over the face value of the bonds.

On September 1, 2022, Pharoah Company issued $355,000 7% bonds. The bonds were issued at 98, meaning they were sold for 98% of their face value. The journal entry to record this transaction would be:

Dr. Cash $347,900

Cr. Bonds Payable $355,000

Cr. Discount on Bonds Payable $7,100

The entry records the cash received from the issuance of the bonds and creates a liability for the bond principal. Additionally, a discount on bonds payable account is created to reflect the difference between the cash received and the face value of the bonds.

These journal entries accurately record the bond transactions at the date of issuance and reflect the impact on the company's cash and liabilities.

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What is the DFL (Degree of Financial
Leverage), and how is it used in an organization?

Answers

The Degree of Financial Leverage (DFL) is a financial metric that measures the sensitivity of a company's earnings per share (EPS) to changes in its operating income or earnings before interest and taxes (EBIT). It is used to assess the impact of financial leverage on a company's profitability and risk profile.

DFL is calculated by dividing the percentage change in EPS by the percentage change in EBIT. It indicates how much the EPS will change in response to a given percentage change in EBIT. A higher DFL indicates that a company has a higher level of financial leverage, meaning that small changes in EBIT can have a significant impact on its EPS. On the other hand, a lower DFL indicates a lower level of financial leverage and a relatively more stable EPS.

DFL is used by organizations to evaluate the potential risks and rewards associated with financial leverage. It helps management and investors understand the impact of changes in operating income on the company's profitability. By analyzing the DFL, companies can make informed decisions about their capital structure and financing choices. It allows them to assess the trade-off between higher financial leverage, which can amplify profits during favorable conditions, and the increased risk of financial distress during economic downturns. Additionally, DFL analysis is useful for financial planning, forecasting, and making strategic decisions related to capital investment, debt financing, and dividend policy.

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Which if the following is an advantage of rules-based accounting standards?
a. Can cover most situations.
b. Reduced complexity of standards.
c. Reduced opportunities for earnings management through judgements.
d. Improve representational fathfulness of financial statements.

Answers

An advantage of rules-based accounting standards is that they can cover most situations. The correct answer is option (a). Rules-based standards provide specific guidelines and detailed rules for recording and reporting financial transactions.

By covering most situations, rules-based standards promote consistency and uniformity in financial reporting. They help ensure that similar transactions are accounted for in a consistent manner across different entities, industries, and jurisdictions. This promotes comparability and facilitates the analysis and understanding of financial statements by investors, analysts, and other stakeholders.

However, it's important to note that rules-based standards also have limitations. They can sometimes result in complex and lengthy accounting standards, making it challenging for users to understand and apply them correctly. Additionally, strict adherence to rules-based standards may reduce the opportunities for professional judgment, potentially limiting the ability to provide relevant and reliable financial information. Hence, option (a) is the correct answer.

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If you determined your nominal YTM on a bond to be 15% per
annum and inflation is currently running at 9% per annum, what is
your real return?
(6 marks)

Answers

The real return on the bond, adjusted for inflation, is approximately 5.5% per annum. This reflects the actual purchasing power gained from the investment after accounting for the effects of inflation.

To calculate the real return on a bond, we need to adjust the nominal yield to account for inflation. The real return is calculated using the Fisher equation

Real Return = (1 + Nominal Yield) / (1 + Inflation) - 1

In this case, the nominal yield is 15% per annum, and inflation is 9% per annum. Let's calculate the real return

Real Return = (1 + 0.15) / (1 + 0.09) - 1

= 1.15 / 1.09 - 1

≈ 0.055 = 5.5%

Therefore, the real return on the bond is approximately 5.5% per annum.

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You have been appointed as the new Municipal Manager of Bela-Bela municipality in Limpopo, part of your task as municipal manager is to critically discuss the importance of loans in local municipalities. In the discussion, you need to pay attention to the raising and administration of external

Answers

Loans play a crucial role in local municipalities, including Bela-Bela municipality in Limpopo. They are essential for raising funds to finance various development projects and infrastructure improvements. Loans enable municipalities to bridge the gap between available revenue and the high costs associated with providing essential services to the community.

Loans are an important financial tool for local municipalities as they provide a means to secure funding for large-scale projects and initiatives that benefit the community. These projects can include the construction or maintenance of infrastructure such as roads, water supply systems, waste management facilities, and public buildings. Loans enable municipalities to access the necessary capital upfront, allowing them to initiate and complete these projects in a timely manner.

The raising of external loans involves entering into agreements with financial institutions, governments, or development agencies to borrow funds. Municipalities must carefully assess their borrowing capacity, taking into account factors such as revenue streams, debt ratios, and the ability to repay the loan over the agreed-upon terms. Proper financial planning and analysis are essential to ensure that loans are obtained at favorable interest rates and within the municipality's financial capabilities.

Effective administration of loans involves prudent financial management and monitoring of loan proceeds. It requires maintaining accurate records of loan disbursements, tracking the utilization of funds, and ensuring compliance with loan terms and conditions. Municipalities must establish transparent reporting mechanisms to provide accountability to stakeholders and demonstrate the responsible use of borrowed funds.

Therefore, loans play a vital role in local municipalities by providing access to necessary funds for development projects and infrastructure improvements. However, the raising and administration of external loans require careful consideration and responsible financial practices to ensure long-term sustainability and avoid undue financial burdens on the municipality and its residents.

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Most investors are refuctant to irvest in Hotel Automation, How would you as a GM infiuence the irvestor to invest money in Hotel Automation?

Answers

To influence investors to invest money in hotel automation as a GM, it is crucial to follow specific strategies: Develop a comprehensive proposal that outlines the benefits and potential returns of investing in hotel automation—present data on cost savings, increased operational efficiency, enhanced guest experiences, and improved revenue generation. Emphasize the growing demand for automation in the hospitality industry. Demonstrate how automation can position the hotel as an innovative and technologically advanced property, attracting tech-savvy customers and gaining a competitive edge. Provide examples of successful hotel automation implementations within the industry. Share case studies, testimonials, and success stories that illustrate automation's positive impact on guest satisfaction, operational efficiency, and financial performance. Address any concerns or reservations investors may have regarding hotel automation. Provide detailed risk assessments, contingency plans, and strategies to overcome potential challenges. Assure investors that their investment is supported by thorough research and analysis.

To influence investors, it is essential to present a compelling business case that clearly articulates the benefits and potential returns of investing in hotel automation. By creating a comprehensive proposal, investors can understand the value proposition and the competitive advantages of automation. Highlighting industry trends is crucial because it demonstrates the market demand for automation solutions. Investors are more likely to invest in a technology that is in high order and aligns with industry advancements. Showcasing successful implementations provides concrete evidence of the positive impact that hotel automation can have on guest experiences and business performance. Real-life examples help investors visualize the potential outcomes and build confidence in the investment. Addressing investor concerns is essential to alleviate any doubts or hesitations. By conducting thorough risk assessments and providing mitigation strategies, investors can better understand the potential risks and how they can be managed effectively.

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T/F: a wrongful mental state is typically required to establish criminal liability

Answers

True. A wrongful mental state is typically required to establish criminal liability. In most legal systems, a wrongful mental state, also known as mens rea, is an essential element in establishing criminal liability.

Mens rea refers to the mental state or intention of the person committing a criminal act. It involves the awareness and conscious decision to engage in conduct that is prohibited by law. Criminal liability often requires the presence of both the wrongful act, known as the actus reus, and the wrongful mental state, the mens rea. The mens rea component demonstrates that the individual had the necessary intent, knowledge, or recklessness to commit the offense. It signifies that the person not only committed the physical act but also possessed the required mental state that makes the act blameworthy. Different crimes may require different levels of mens rea, ranging from intentional and knowing conduct to negligence or even strict liability, where no wrongful mental state is necessary. Nonetheless, in general, a wrongful mental state is typically an essential factor in establishing criminal liability.

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In a cash flow calculation spreadsheet what is the sign (positive or negative) of each of the following: a) Net sales b) Fixed costs c) Depreciation d) Salvage value

Answers

a) Net sales: Net sales are typically represented as a positive value. Net sales represent the revenue generated from the sale of goods or services and contribute to the cash inflows of a business.

b) Fixed costs: Fixed costs are generally represented as negative values. Fixed costs are expenses that do not vary with the level of production or sales and are deducted from the revenue. They represent cash outflows for the business. c) Depreciation: Depreciation is typically represented as a negative value. Depreciation is an accounting method used to allocate the cost of an asset over its useful life. It is a non-cash expense but is subtracted from the revenue to reflect the decrease in the value of the asset. d) Salvage value: Salvage value is usually represented as a positive value.

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What action must a licensee take with a purchase and sells
agreement signed by both the buyer and the seller?

Answers

The action must a licensee take with a purchase and sells agreement signed by both the buyer and the seller should ensure that all the necessary contingencies are satisfied, and that the transaction is closed in a timely manner.

When a licensee has a purchase and sale agreement that is signed by both the buyer and the seller, it becomes their responsibility to ensure that the agreement is completed. The licensee should ensure that all the necessary contingencies are satisfied, and that the transaction is closed in a timely manner. In addition, the licensee should take the necessary steps to protect the interests of their clients. For example, the licensee should advise their client of any potential issues that may arise during the transaction, such as title problems, zoning issues, or inspection problems.

The licensee should also provide their clients with regular updates on the status of the transaction, and should be available to answer any questions that may arise. Ultimately, the licensee should act in the best interests of their clients, and should take all necessary steps to ensure that the transaction is completed to the satisfaction of all parties involved. So therefore the action must a licensee take with a purchase and sells agreement signed by both the buyer and the seller should ensure that all the necessary contingencies are satisfied, and that the transaction is closed in a timely manner.

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Has
the recent decline in the US$ been beneficial for Canadian
companies exporting to the US? If not, explain why not, using data
or recent company examples to justify your argument.

Answers

The recent decline in the value of the US dollar (US$) may not necessarily be beneficial for Canadian companies exporting to the US.

The impact of currency fluctuations on exporting companies can vary depending on various factors such as pricing, competition, and input costs. In order to determine the actual impact, it is necessary to analyze specific data or recent company examples.

While a decline in the US dollar can potentially make Canadian products more affordable for US consumers, there are other factors to consider. For example, if Canadian companies have a significant portion of their costs denominated in US dollars, such as raw materials or production inputs, a weaker US dollar may increase their costs and erode profit margins. Additionally, increased competition from other countries exporting to the US market can offset any potential benefits of the currency decline.

Furthermore, individual company strategies and circumstances play a crucial role. Some Canadian companies may have hedging mechanisms in place to mitigate currency risk, while others may have long-term contracts with fixed pricing that limit the immediate impact of currency fluctuations.

It is important to consider specific data and recent company examples to accurately assess the effects of the US dollar decline on Canadian exporters.

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Determine the market value of a bond with a 10% annual
coupon, face value $1000, with 8, 5 and 3 years to maturity, using
kd=8%. Show the magic buttons for all three
calculations.

Answers

The market value of the bond with a 10% annual coupon, $1000 face value, and maturities of 8, 5, and 3 years using a discount rate of 8% would need to be calculated using the present value formula for bond cash flows.

To determine the market value of the bond with different maturities, we need to calculate the present value of the bond's cash flows using the given information:

Coupon rate: 10% annual coupon

Face value: $1000

Maturity: 8, 5, and 3 years

Discount rate (required yield): 8%

Let's calculate the market value of the bond for each maturity:

1. For 8 years to maturity:

Coupon payments: $1000 * 10% = $100 per year for 8 years

Face value payment: $1000 at the end of 8 years

Using the formula for present value of a bond's cash flows:

Market value = (Coupon payments / (1 + Discount rate)^1) + (Coupon payments / (1 + Discount rate)^2) + ... + (Coupon payments / (1 + Discount rate)^8) + (Face value payment / (1 + Discount rate)^8)

Plugging in the values:

Market value = ($100 / (1 + 0.08)^1) + ($100 / (1 + 0.08)^2) + ... + ($100 / (1 + 0.08)^8) + ($1000 / (1 + 0.08)^8)

2. For 5 years to maturity:

Repeat the calculation above for 5 years instead of 8.

3. For 3 years to maturity:

Repeat the calculation above for 3 years instead of 8.

Performing these calculations will provide the market value of the bond for each respective maturity.

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You are the financial director of WestCo Ltd, a company that is listed on the Alternative
Exchange (AltX). Since listing on the exchange, the company has performed above market
expectations and the company is considering listing on the JSE’s main exchange in the
near future. The board of directors have decided to embark on a plan of expansion, which
will require an investment of R2 million. You have ascertained the following useful
information:
1. When the company listed on the AltX, 500 000 shares of R1 each were issued. The
company plans to meet the dividend projections made in the prospectus by growing
dividends by 10% per annum for the next two years and by a constant rate of 12%
thereafter. The current dividend is R1 per share.

2. The average cost of equity for similar listed companies includes a risk premium of
8% and the beta of WestCo is approximately 1.25 times that of the market. The risk
free rate is currently 5%.

3. WestCo has 100 000 convertible preference shares in issue, each with a par value of
R40 and a dividend rate of 7% per annum. The shareholders have an option to
convert these preference shares into ordinary shares or to redeem the shares at a
premium of 30% of par value in two years’ time. The current return on similar
preference shares is 11%.

BACHELOR OF COMMERCE IN ACCOUNTING YEAR 2 – ACADEMIC AND ASSESSMENT CALENDAR

(RICH DISTANCE)

REGENT BUSINESS SCHOOL (RBS) – JANUARY 2022 27
4. The company has also issued 1 000 debentures of R1 000 each. There is no fixed
redemption date and these securities carry a coupon rate of 20% per annum. The
current return for this type of security is 15%.

5. The firm’s target capital structure is 60% equity and 40% debt.

6. New investments are evaluated at a rate of 17%.

7. The current company tax rate is 28%.

Required:

2. Advise the company how the additional R2 million should be raised.
All calculations that support your advice must be shown. (6 marks)

Answers

To advise WestCo Ltd on how to raise the additional R2 million for their expansion plan, we need to consider their target capital structure, cost of capital, and available financing options.

Given that the company's target capital structure is 60% equity and 40% debt, we can calculate the proportion of funds to be raised through equity and debt.

1. Equity:

The cost of equity can be calculated using the Capital Asset Pricing Model (CAPM):

Cost of equity = Risk-free rate + Beta * Equity risk premium

= 5% + (1.25 * 8%) = 15%

Since the company plans to grow dividends at a constant rate of 12% after two years, we can use the Gordon Growth Model to estimate the current value of the equity:

Current dividend = R1 per share

Dividend growth rate for the next two years = 10%

Dividend growth rate thereafter = 12%

Cost of equity = Dividend / (Current value of equity)

Using these inputs, we can calculate the current value of the equity.

2. Debt:

To raise debt financing, we can consider issuing additional debentures. The coupon rate of 20% per annum is the cost of debt. We need to calculate the present value of the debentures using the current return of 15%.

3. Calculation:

Let's calculate the proportion of funds to be raised through equity and debt based on the target capital structure of 60% equity and 40% debt.

Equity portion: 60% * R2 million = R1.2 million

Debt portion: 40% * R2 million = R800,000

From the calculations, it is recommended that WestCo Ltd raises R1.2 million through equity and R800,000 through additional debentures to meet the R2 million investment required for their expansion plan.

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A Company issues preferred stock which has a required return of
9.5% per annum. What is the price of that preferred stock if it
pays an annual dividend of $11,000?

Answers

The price of the preferred stock is approximately $115,789.47.

To calculate the price of preferred stock, we can use the formula:

Price of Preferred Stock = Dividend / Required Return

In this case, the annual dividend is $11,000 and the required return is 9.5% or 0.095.

Price of Preferred Stock = $11,000 / 0.095

Using a calculator, we can evaluate this expression to find the price of the preferred stock.

The price of the preferred stock is approximately $115,789.47.

The price of preferred stock is determined by dividing the annual dividend by the required return rate. In this case, if the preferred stock pays an annual dividend of $11,000 and the required return is 9.5% per annum, the price of the preferred stock would be approximately $115,789.47. This means that investors are willing to pay this amount for the preferred stock in order to earn a return of 9.5% on their investment through the annual dividend. The price of preferred stock reflects the present value of the expected future dividends, taking into account the required return rate.

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