The financial manager's gains and losses if oil prices are $52, $55, $57, $59, and $62 are as follows: Oil Prices Gains / Losses$52 Loss on call options and gain on put options$55 Loss on call options and gain on put options$57 No gains or losses$59 Gain on call options and loss on put options$62 Gain on call options and loss on put options.
A call option is the right but not the obligation to buy the underlying asset at a specified price, whereas a put option is the right but not the obligation to sell the underlying asset at a specified price. Here, the financial manager buys call options on 50,000 barrels of oil with an exercise price of $57 per barrel, and she simultaneously sells a put option on 50,000 barrels of oil with the same exercise price of $57 per barrel.Suppose the oil prices are $52, $55, $57, $59, and $62. Let's calculate the gains and losses for each scenario:1. Oil price is $52 If the oil price is $52, then the call option becomes worthless since the market price is lower than the exercise price. Therefore, the financial manager suffers a loss on the call option. At the same time, the put option is exercised since the market price is lower than the exercise price. Therefore, the financial manager gains on the put option. The overall gains and losses are:Loss on call options = $5 x 50,000 = $250,000 Gain on put options = $5 x 50,000 = $250,000 Net gains and losses = $0.2. Oil price is $55 If the oil price is $55, then the call option is still worthless since the market price is lower than the exercise price. Therefore, the financial manager suffers a loss on the call option. The put option is not exercised since the market price is higher than the exercise price. Therefore, the financial manager gains on the put option. The overall gains and losses are:Loss on call options = $2 x 50,000 = $100,000 Gain on put options = $2 x 50,000 = $100,000 Net gains and losses = $0.3. Oil price is $57 If the oil price is $57, then the call option is still worthless since the market price is equal to the exercise price. Therefore, the financial manager suffers a loss on the call option. The put option is not exercised since the market price is equal to the exercise price. Therefore, the financial manager gains on the put option. The overall gains and losses are:Loss on call options = $0 Gain on put options = $2 x 50,000 = $100,000 Net gains and losses = $100,0004. Oil price is $59 If the oil price is $59, then the call option is exercised since the market price is higher than the exercise price. Therefore, the financial manager gains on the call option. The put option is not exercised since the market price is higher than the exercise price. Therefore, the financial manager suffers a loss on the put option. The overall gains and losses are:Gain on call options = $2 x 50,000 = $100,000 Loss on put options = $2 x 50,000 = $100,000 Net gains and losses = $0.5. Oil price is $62 If the oil price is $62, then the call option is exercised since the market price is higher than the exercise price. Therefore, the financial manager gains on the call option. The put option becomes worthless since the market price is higher than the exercise price. Therefore, the financial manager suffers a loss on the put option. The overall gains and losses are:Gain on call options = $5 x 50,000 = $250,000 Loss on put options = $0 Net gains and losses = $250,000.
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The traditional economic framework suggests that criminals:
A) Are irrational
B) Do not have a social conscience
C) Weigh the benefits and costs of their criminal activity
D) Usually commit crimes on impulse
E) All the above
The traditional economic framework suggests that criminals weigh the benefits and costs of their criminal activity. Therefore, the correct answer is (C) Weigh the benefits and costs of their criminal activity.
Criminals, according to the traditional economic framework, are viewed as rational decision-makers who engage in criminal behavior after evaluating the potential gains and losses associated with their actions. This perspective is rooted in the assumption that individuals make rational choices based on their self-interest and the pursuit of maximizing their personal utility or gains.
The economic framework suggests that criminals engage in a cost-benefit analysis, weighing the potential benefits of their criminal activities against the potential costs, such as the risk of apprehension, legal consequences, and potential loss of reputation or social standing. By evaluating these factors, individuals make decisions on whether to engage in criminal behavior.
It is important to note that the traditional economic framework does not assume that criminals are irrational, lacking a social conscience, or acting on impulse. While these factors may be relevant in certain cases, the economic framework primarily focuses on the rational decision-making process and the consideration of costs and benefits in the context of criminal behavior.
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You start your own business on 1/1/2019. During the year 2019, your sales revenues are $200,000. You pay your assistant $40,000 and pay $20,000 for materials and utilities. You work in your own business, but in your next best alternative you could earn an annual labor income of $90,000. [You do not own any capital equipment or other resources. -- do not worry about depreciation or any costs associated with capital in this question.] Your economic profit for 2019 is O $110,000 O $90,000 O $200,000 O $140,000 $50,000
the economic profit for the year 2019 is $0. The economic profit for the given business in the year 2019 is $50,000.
Economic profit is the difference between the total revenue earned and the total opportunity cost incurred. Here, the total revenue earned in the year 2019 is $200,000. The total opportunity cost includes the labor cost, materials, and utilities. In this case, the labor cost includes the labor income that could have been earned in the next best alternative. It is given that the annual labor income that could have been earned is $90,000.
So, the total opportunity cost incurred in the year 2019 is:
Total Opportunity Cost = Labor Cost + Materials Cost + Utilities Cost
= $90,000 + $20,000 + $0 (Assuming utilities cost is $0)
= $110,000
Therefore, the economic profit for 2019 is:
Economic Profit = Total Revenue - Total Opportunity Cost
= $200,000 - $110,000
= $90,000
However, this is not the final answer because the question mentions that the individual "works in his own business". This implies that the labor income of $90,000 is already earned and included in the total revenue of $200,000. Hence, the economic profit for 2019 will be:
Economic Profit = Total Revenue - Total Opportunity Cost= $200,000 - $110,000 = $90,000 - $90,000 = $0
We still need to subtract the labor income from the economic profit calculation. Therefore, the final economic profit is:
$0 - $90,000 = -$90,000
However, the question mentions that the individual works in his own business and earns a labor income. Therefore, the final economic profit calculation needs to include the labor income. The economic profit calculation with the labor income is:
Economic Profit = Total Revenue - Total Opportunity Cost - Labor Income= $200,000 - $110,000 - $90,000 = $0
Therefore, the economic profit for the year 2019 is $0.
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Bermuda Triangle Corporation (BTC) currently has 395,000 shares of stock outstanding that sell for $83 per share. Assume no market imperfections or tax effects exist. Determine the share price and new number of shares outstanding if: (Do not round intermediate calculations. Round your price per share answers to 2 decimal places, e.g., 32.16, and shares outstanding answers to the nearest whole number, e.g., 32.)
a. BTC has a five-for-three stock split.
b. BTC has a 15 percent stock dividend.
c. BTC has a 42.5 percent stock dividend.
d. BTC has a four-for-seven reverse stock split.
The correct option is (a). Five-for-three stock split:
In a five-for-three stock split, the number of shares increases by a factor of 5/3, and the share price decreases by the same factor.
New number of shares outstanding = 395,000 * (5/3) = 658,333.33 (rounded to 658,333 shares)
New share price = $83 / (5/3) = $49.80
b. 15 percent stock dividend:
In a 15 percent stock dividend, the number of shares increases by 15 percent, and the share price remains unchanged.
New number of shares outstanding = 395,000 * (1 + 0.15) = 453,425 (rounded to 453,425 shares)
New share price = $83
c. 42.5 percent stock dividend:
In a 42.5 percent stock dividend, the number of shares increases by 42.5 percent, and the share price remains unchanged.
New number of shares outstanding = 395,000 * (1 + 0.425) = 561,875 (rounded to 561,875 shares)
New share price = $83
d. Four-for-seven reverse stock split:
In a four-for-seven reverse stock split, the number of shares decreases by a factor of 4/7, and the share price increases by the same factor.
New number of shares outstanding = 395,000 * (4/7) = 225,714.29 (rounded to 225,714 shares)
New share price = $83 / (4/7) = $145.75
Summary:
a. After a five-for-three stock split, the new share price is $49.80, and the new number of shares outstanding is 658,333.
b. After a 15 percent stock dividend, the share price remains at $83, and the new number of shares outstanding is 453,425.
c. After a 42.5 percent stock dividend, the share price remains at $83, and the new number of shares outstanding is 561,875.
d. After a four-for-seven reverse stock split, the new share price is $145.75, and the new number of shares outstanding is 225,714.
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depreciation is typically reported on the tax return _____ it is reported on the income statement.
Depreciation is typically reported on the tax return before it is reported on the income statement. Depreciation is an accounting method used to allocate the cost of an asset over its useful life.
While the concept of depreciation is the same for both tax and financial reporting purposes, the timing of when it is reported can differ. In general, for tax purposes, depreciation is reported earlier on the tax return compared to its reporting on the income statement. This is because tax regulations allow businesses to claim depreciation deductions to reduce taxable income and the associated tax liability. By reporting depreciation on the tax return, businesses can benefit from tax savings in the earlier years of an asset's useful life.
On the other hand, for financial reporting purposes, depreciation is reported on the income statement over the asset's useful life as an expense. This gradual recognition of depreciation expense reflects the matching principle in accounting, which aims to align expenses with the revenues generated from the asset.
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If the market price equals average cost at the profit-maximizing level of output then the firm is making zero profits. True False Question 6 (1 point) If the market price faced by a perfectly competitive firm is below average variable cost at the profit-maximizing quantity of output, then the firm should produce a positive quantity of output. True False nositive profits then what
If the market price equals average cost at the profit-maximizing level of output, then the firm is making zero profits is true. What does profit-maximizing level of output mean? The profit-maximizing level of output is the point where the difference between total revenue and total cost is the highest.
The firm earns zero profit if the market price is equal to the average cost at the profit-maximizing level of output. At the profit-maximizing level of output, if the market price is less than average total cost, the firm incurs losses, and if the market price is more than average total cost, the firm earns profits.
Thus, the statement is true. Secondly, If the market price faced by a perfectly competitive firm is below average variable cost at the profit-maximizing quantity of output, then the firm should produce a positive quantity of output is false.
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Hughes Continental is assessing its business risk. Which of the following factors would least likely be considered in the analysis? A. Input price variability. B. Debt-equity ratio. C. Unit sales levels D. Gross profit margin
The correct option is (d).
The factor that would least likely be considered in the analysis of Hughes Continental's business risk is Gross profit margin.
Business risk analysis typically focuses on factors that directly impact the company's ability to generate profits and maintain its financial health. Input price variability (A) is important as it affects the cost of production and can impact profitability. Debt-equity ratio (B) is crucial as it reflects the company's financial leverage and its ability to meet its financial obligations. Unit sales levels (C) are significant as they determine the company's revenue and cash flow generation.
While the gross profit margin is an important financial metric, it is not directly related to assessing business risk. It is a measure of profitability that indicates the percentage of revenue remaining after deducting the cost of goods sold. Other factors such as operating expenses, competition, market demand, and industry dynamics may have a more direct influence on business risk assessment.
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what do you expect to happen in the long run for the corn industry given this recent success?
The corn industry has achieved recent success due to various factors like good weather, effective planting, and efficient farming practices. In the long run, it is expected that the corn industry will continue to experience growth and expansion, and become even more profitable.
In the long run, it is expected that the corn industry will continue to expand and thrive, thanks to the advances and successes that it has achieved. The industry's focus will be on promoting more environmentally friendly practices that will help to minimize the industry's impact on the environment, while also meeting the demands for corn as a food and fuel source.The industry will also be focused on developing new and innovative technologies and practices that will help to increase yields and enhance overall crop quality. In addition to this, the industry will need to remain competitive in order to remain profitable and stay ahead of other competing crops, like soybeans and wheat.In conclusion, the corn industry is expected to continue its success in the long run by focusing on sustainable farming practices, innovation, and competitiveness. This will help the industry to remain profitable while also meeting the demands of consumers and the environment.
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32489574857
PQR corporation is a leader the manufacturing of a wide array of audio-visual technology such as blu-ray players, flat panel TVs and other consumer electronics for a number of end-users who are very concerned about product features and quality. Based on this information, and our discussion in lecture about fitting structure to support strategy, PQR’s generic competitive strategy is most likely one of , which here is best supported by a -type structure
Group of answer choices
differentiation, functional
focus, matrix
differentiation, product
cost, functional
focus, function
PQR corporation is a leader in the manufacturing of a wide array of audio-visual technology such as blu-ray players, flat panel TVs and other consumer electronics for a number of end-users who are very concerned about product features and quality.
Based on this information, and our discussion in lecture about fitting structure to support strategy, PQR’s generic competitive strategy is most likely one of differentiation, which is best supported by a functional type structure. PQR corporation specializes in high quality, feature-rich audio-visual products.
Their products are targeted to customers who are extremely quality and feature conscious. Hence, it is clear that PQR corporation’s generic competitive strategy is differentiation. In order to support this strategy, the best organizational structure is a functional structure. The functional structure provides a high level of expertise and efficiency in specific business functions, resulting in high-quality products and customer satisfaction.
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DONATION DONATION ID DATE AMOUNT DONOR ID DONOR_NAME STAFF_ID STAFF NAME Construct a corresponding ER diagram to the above donation form display that shows the amount collected by a staff member from a donor. $0.00
The ER diagram for the given donation form would consist of three entities: Donor, Staff, and Donation.
The relationships between these entities would be as follows:
The Donor entity would have a one-to-many relationship with the Donation entity, indicating that a donor can make multiple donations.
The Staff entity would also have a one-to-many relationship with the Donation entity, indicating that a staff member can collect multiple donations.
The Donation entity would have a many-to-one relationship with both the Donor and Staff entities, indicating that multiple donations can be made by a donor and collected by a staff member.
The ER diagram would visually represent these relationships using appropriate symbols and lines connecting the entities.
The given donation form displays information about donations made by donors. To construct an ER diagram based on this form, we identify the entities and their attributes. The Donor entity has attributes like Donor ID and Donor Name, representing unique identification and name of the donor. The Staff entity has attributes like Staff ID and Staff Name, representing unique identification and name of the staff member. The Donation entity has attributes such as Donation ID, Date, and Amount, representing unique identification, date of donation, and the amount donated.
To represent the relationships, we consider the possible connections between the entities. A donor can make multiple donations, so the Donor entity has a one-to-many relationship with the Donation entity. A staff member can collect multiple donations, so the Staff entity also has a one-to-many relationship with the Donation entity. Lastly, a donation is made by a donor and collected by a staff member, so the Donation entity has a many-to-one relationship with both the Donor and Staff entities.
The resulting ER diagram visually represents these relationships using appropriate symbols and lines connecting the entities. It provides a clear understanding of how the amount collected by a staff member from a donor can be represented in a structured manner.
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The Economy Inn maintains an average selling price per room of $40 and incurs a variable cost per room soldof $10. If the property’s fixed costs are $24,000 for the month, the breakeven point for the month would be: Calculate: How many rooms must be sold to break even? ( ) (ie 1536.13 round up to 1537)
Kitchen equipment was sold for $1,000. It originally cost $5,000 and had been depreciated by $3,500. This transaction will be shown on the income statement as a:( ) $ for( ) (gain or loss)
Food Drinks Beginning Inventory $6,000 $2,000 Purchases $40,000 $20,000 Ending Inventory $10,000 $3,500 Employee meals $500 - Food transfer to drink department $300 - Required:Find the following1) Cost of Food used $( )
2) Cost of Food sold $( )
3) Cost of Beverages sold $( )
1. Breakeven point: 1,537 rooms. 2. Selling kitchen equipment: $3,500 loss. 3. Cost of food used: $45,200. Cost of food sold: $35,800. Cost of beverages sold: $20,800.
1. To calculate the breakeven point, we divide the fixed costs by the contribution margin per room, which is the selling price per room minus the variable cost per room: $24,000 / ($40 - $10) = 1,537 rooms (rounded up). 2. The transaction of selling the kitchen equipment results in a loss. The gain or loss is calculated by subtracting the depreciated cost ($3,500) from the selling price ($1,000): $1,000 - $3,500 = -$2,500 (a loss of $2,500). 3. To calculate the cost of food used, we subtract the ending inventory from the beginning inventory and add the purchases: ($6,000 - $10,000) + $40,000 = $36,000. The cost of food sold is calculated by subtracting the ending inventory from the beginning inventory: $6,000 - $10,000 = -$4,000. The cost of beverages sold is given as $20,000. Therefore, the cost of food used is $36,000, the cost of food sold is -$4,000 (or a gain of $4,000), and the cost of beverages sold is $20,000.
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Which of the below is an important challenge facing managers today?
A. Making business decisions
B. Cultivating
C. Competing to win in today's market
D. All of these are correct
Managers must make business decisions, cultivate culture, and compete to win in today's market.
In the modern business landscape, managers face multifaceted challenges that require their attention and expertise. Making effective business decisions is crucial for the success and sustainability of an organization. Managers must analyze data, evaluate options, consider risks, and make informed choices that align with the organization's goals and objectives.
Cultivating organizational culture and talent is another critical challenge for managers. They are responsible for fostering a positive and productive work environment, developing and retaining skilled employees, and nurturing a culture that supports innovation, collaboration, and employee engagement. Effective leadership and people management skills are required to address these challenges.
Competing to win in today's market is an ongoing challenge for managers. Organizations operate in a highly competitive landscape where they must continuously strive to differentiate themselves, innovate, and deliver value to customers. Managers need to identify market trends, assess competitors, develop strategic plans, and execute them effectively to achieve and maintain a competitive advantage.
In summary, managers today face the important challenge of making business decisions, cultivating organizational culture and talent, and competing successfully in the market. They must demonstrate a range of skills, from decision-making and leadership to strategic thinking and adaptability, to navigate these challenges and drive organizational success.
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Zero to One book— comment on this book, reflect it. How it affected you. With your own ideas and sentences.
Answer:
Overall, "Zero to One" had a profound impact on me by encouraging me to think big, embrace originality, and strive for transformative change. It reminded me that in the pursuit of innovation, there are immense opportunities to create something truly remarkable, and that with the right mindset and determination, it is possible to make a significant and lasting impact in the world.
Explanation:
"Zero to One" by Peter Thiel is a thought-provoking and inspiring book that challenges conventional thinking and encourages entrepreneurs to pursue innovative ideas that have the potential to create significant impact. Thiel's emphasis on building something new and unique, rather than simply improving existing products or services, resonated deeply with me.
The book's central concept of going from zero to one, symbolizing the journey of creating something truly groundbreaking, sparked my imagination and motivated me to think differently about problem-solving and entrepreneurship. Thiel's insights on the importance of monopolies in driving innovation and the need for businesses to focus on building sustainable competitive advantages provided a fresh perspective.
One aspect of the book that particularly affected me was Thiel's emphasis on the power of technology and its potential to shape the future. He highlights the importance of harnessing technology to drive progress and create transformative solutions to global challenges. This reinforced my belief in the transformative potential of technology and inspired me to explore innovative ways to leverage it for positive change.
Furthermore, Thiel's contrarian viewpoints and bold assertions challenged my preconceived notions and encouraged me to question established wisdom. While not all of his ideas may align with everyone's perspective, the book stimulated critical thinking and prompted me to evaluate assumptions and biases that may limit my own entrepreneurial endeavors.
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In a job order cost accounting system, which journal entry would be made when raw materials are transferred into production during the month? Debit Goods in Process Inventory and Credit Materials Expense Debit Factory Overhead and Credit Raw Materials Inventory Debit Finished Goods Inventory and Credit Goods in Process Inventory Debit Goods in Process Inventory and Credit Raw Materials Inventory Debit Raw Materials Inventory and Credit Goods in Process Inventory In a job order cost accounting system, which journal entry would be made when raw materials are purchased on account for use in production at a later date? Debit Finished Goods Inventory and Credit Work in Process Inventory Debit Raw Materials Inventory and Credit Accounts Payable Debit Goods in process inventory and Credit Raw Materials Inventory Debit Factory Overhead and Credit Accounts Payable Debit Accounts Payable and Credit Raw Materials Inventory
In a work order cost accounting system, the following journal entry would be generated when raw materials are moved into production during the month: Debit Inventory Goods in Process and Credit Inventory of raw materials
In a job order cost accounting system, when raw materials are transferred into production during the month, the journal entry that would be made is to debit Goods in Process Inventory and credit Raw Materials Inventory. The Goods in Process Inventory account represents the cost of partially completed work and is also known as Work in Progress (WIP) inventory. On the other hand, when raw materials are purchased on account for use in production at a later date, the journal entry that would be made is to debit Raw Materials Inventory and credit Accounts Payable.
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Safeway and monopolization in New Mexico and Texas: Suppose the Demand and Supply equations for food are:
Demand: Price = 30 - (Quantity/100)
Supply: Price = (Quantity/100)
1) Determine the equilibrium price that consumers pay for food in this market. Show graphically
2) Suppose that Safeway is indeed able to monopolize this market. What price would Safeway now charge for food? Assume the original supply curve is now Safeway's marginal cost curve. Show graphically on the same graph as above.
3) Consumers dislike monopolies. Show how upset they are, and quantify how much worse off they are by the change in their consumer surplus.
1) The equilibrium price that consumers pay for food in this market is $15 2) if Safeway is able to monopolize the market, it would charge a price of $15 for food, which is the same as the equilibrium price in a competitive market 3) There is no change in consumer surplus between the competitive market and the monopoly situation. Consumers are not worse off in terms of consumer surplus when Safeway monopolizes the market.
1) To determine the equilibrium price that consumers pay for food in this market, we need to find the intersection point of the demand and supply curves. Let's start by setting the demand and supply equations equal to each other:
Demand: Price = 30 - (Quantity/100)
Supply: Price = (Quantity/100)
Equating the two equations, we get:
30 - (Quantity/100) = (Quantity/100)
To solve for Quantity, we can simplify the equation:
30 = (Quantity/100) + (Quantity/100)
30 = (2*Quantity)/100
3000 = 2*Quantity
Quantity = 1500
Now we can substitute the value of Quantity back into either the demand or supply equation to find the equilibrium price. Let's use the demand equation:
Price = 30 - (1500/100)
Price = 30 - 15
Price = 15
Therefore, the equilibrium price that consumers pay for food in this market is $15.
2) If Safeway is able to monopolize the market, it can set the price at a level that maximizes its profits. In this case, Safeway's marginal cost curve will determine the price it charges for food. Let's assume that Safeway's marginal cost curve is given by the original supply curve.
The original supply curve is: Price = (Quantity/100)
To find the price Safeway would charge, we need to determine the quantity at which Safeway's marginal cost intersects the demand curve. Let's equate the marginal cost and demand equations:
(Quantity/100) = 30 - (Quantity/100)
Simplifying the equation:
2*(Quantity/100) = 30
Quantity/50 = 30
Quantity = 1500
Substituting the quantity back into the demand equation to find the price:
Price = 30 - (1500/100)
Price = 30 - 15
Price = 15
Therefore, if Safeway is able to monopolize the market, it would charge a price of $15 for food, which is the same as the equilibrium price in a competitive market and we can plot the demand curve (Price = 30 - (Quantity/100)), the original supply curve (Price = (Quantity/100)), and the monopolistic price of $15.
3) To show how upset consumers are with the monopoly and quantify the change in their consumer surplus, we need to compare the consumer surplus under monopolistic conditions with the consumer surplus in a competitive market.
In a competitive market, the consumer surplus is represented by the area between the demand curve and the market price. However, under a monopoly, the price is higher, resulting in a reduction in consumer surplus.
Let's calculate the consumer surplus in both scenarios and determine the change:
1. Competitive market consumer surplus:
In a competitive market, the equilibrium price is $15. To calculate the consumer surplus, we need to find the area between the demand curve and the price line up to the quantity demanded at that price.
Consumer surplus in a competitive market = 0.5 * (Quantity * Price)
Consumer surplus in a competitive market = 0.5 * (1500 * 15)
Consumer surplus in a competitive market = $11,250
2. Monopoly consumer surplus:
Under the monopoly, the price is still $15, so the consumer surplus will be the same as in the competitive market:
Consumer surplus under monopoly = $11,250
There is no change in consumer surplus between the competitive market and the monopoly situation. Consumers are not worse off in terms of consumer surplus when Safeway monopolizes the market.
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QUESTION 18 Which statement is true? O An investment center is responsible for revenues and expenses, as well as earning a return on assets. An investment center is only responsible for its investments. An investment center is only responsible for revenues and expenses. O A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI. QUESTION 19 In the Goblette Manufacturing Company, indirect labor is budgeted for €108,000 and factory supervision is budgeted for €36,000 at normal capacity of 160,000 direct labor hours. If 180,000 direct labor hours are worked, flexible budget total for these costs is: O €144,000. €162,000 0 €157,500 €148,500.
Question 18 Answer: An investment center is responsible for revenues and expenses, as well as earning a return on assets
(19.) Answer: €162,000
Explanation: An investment center is a department that is responsible for its investments, expenses, and revenues, as well as earning a return on its investments. Managers in charge of these centers are accountable for deciding which assets to invest in and how much money should be spent. The manager is responsible for ensuring that all invested resources generate a return on investment (ROI).Question (19.) Answer: €162,000
Explanation:First, let's calculate the normal indirect labor rate:Indirect labor rate per direct labor hour = Indirect labor costs / Direct labor hours= €108,000/160,000 = €0.675 per direct labor hour. Then, let's calculate the normal factory supervision rate: Factory supervision rate per direct labor hour = Factory supervision costs / Direct labor hours= €36,000/160,000 = €0.225 per direct labor hour. With these rates, we can find the flexible budget amount for indirect labor and factory supervision at 180,000 direct labor hours worked:Indirect labor costs = Indirect labor rate x Direct labor hours worked = €0.675 x 180,000 = €121,500.Factory supervision costs = Factory supervision rate x Direct labor hours worked= €0.225 x 180,000 = €40,500.Flexible budget amount = Indirect labor costs + Factory supervision costs= €121,500 + €40,500 = €162,000.
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how can rising sea levels affect the tourism industry in indonesia?
Rising sea levels can affect the tourism industry in Indonesia in various ways. The tourism industry may be severely impacted by rising sea levels in Indonesia. It is estimated that the tourism sector contributes significantly to the country's GDP. As a result, any disruption or damage to the industry might have significant economic implications.
Some ways that rising sea levels can affect the tourism industry in Indonesia are :
1. Damage to natural resources and attractions: Coastal areas and beaches are popular tourist destinations, but they may be harmed as a result of the sea-level rise. Storm surges, erosion, and saltwater inundation might all harm natural resources such as coral reefs, mangroves, and marine life. When the quality of these attractions declines, visitors may be deterred from coming.2. Infrastructure destruction and relocation: As a result of the sea-level rise, infrastructure may be damaged or washed away. Roads, bridges, piers, and other tourist facilities might be destroyed. This can cause difficulties for tourists, as well as extra expenditures for local authorities to repair or rebuild facilities that have been damaged.3. Reduced attraction and experience: The quality of the tourist experience may be affected by a variety of environmental impacts. High sea levels, storm surges, and coastal erosion may cause flooding in low-lying areas, such as hotels and shops, affecting visitors' satisfaction levels. The beaches may also be less appealing to visitors due to damage to the local environment and infrastructure.4. Changes in the economic impact: Tourism may have a direct and indirect economic impact on the region. Businesses such as hotels, restaurants, and transport providers may experience a decline in visitors, resulting in a decrease in income. If tourist numbers fall, the local government may also lose out on tax revenue.It is critical for stakeholders in the tourism industry to consider the long-term impacts of climate change and prepare for the consequences. They may engage in sustainable development and adaptation measures to reduce the negative impact of sea-level rise on the tourism industry in Indonesia.
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Consider the following table: PLANNED GOVT OUTPUT NET CONSUMPTION INVESTMENT SPENDING 2100 100 300 400 2600 100 300 400 3100 100 300 400 3600 100 300 400 4100 100 300 400 4600 100 300 400 Assume the following Consumption Function C=800+0.6*Yd, with Yd=Disposable Income For questions e-g, provide the multiplier formulas a. Write the Aggregate Expenditure formula (including Government) b. Complete the table c. What is the level of unplanned inventory change for output equal to 2600 d. What is the equilibrium output level e. Assume that government spending increases by 50. What is the new equilibrium output f. Assume that taxes are cut to 50. What is the new equilibrium output? g. Assume that government spending and taxes are both cut by 50. What is the new equilibrium output TAXES DISPOSABLE INCOME PLANNED UNPLANNED AGGREGATE INVENTORY EXPENDITURE CHANGE
a. The Aggregate Expenditure formula (including Government) is as follows:Aggregate Expenditure (AE) = Consumption + Investment + Government Spending Where,AI = Planned Investment . AE = C + I + G
b. The following table is the completed table:
PLANNED GOVT OUTPUT C (800+0.6*Yd) I G AE 2100 1960 400 400 2760 2600 2120 400 400 2920 3100 2340 400 400 3140 3600 2560 400 400 3360 4100 2780 400 400 3580 4600 3000 400 400 3800
c. The level of unplanned inventory change for output equal to 2600 is 200.
d. The equilibrium output level is 3100.e. New equilibrium output is 3350.f. New equilibrium output is 3720.g. New equilibrium output is 3035.
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Computing the Future Value of an Annuity Stone will deposit $25,500 at the beginning of each year for 10 years in a fund that earns 4%, compounded annually. What is the total amount of the fund at the end of 10 years?
Future Value of an Annuity can be defined as the total value of a series of payments at a specified future date, also called the maturity date, with a given interest rate. The total amount of the fund at the end of 10 years is $946,732.5.
The formula for calculating the future value of an annuity is FV = PMT x [(1 + r)n - 1 / r]
where: PMT is the amount of each payment
n is the total number of payments
r is the interest rate per period
Here, Stone will deposit $25,500 at the beginning of each year for 10 years in a fund that earns 4%, compounded annually.
Thus, PMT = $25,500n = 10r = 4% = 0.04FV
= $25,500 x [(1 + 0.04)10 - 1 / 0.04]
FV = $25,500 x [1.48024 / 0.04]
FV = $25,500 x 37.0059
FV = $946,732.5
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Richel, a renowned portfolio investor, has a brokerage account with Kyei Securities Ltd, a
brokerage firm. A couple of weeks ago, she placed an order with Kyei Securities to purchase
10,000 shares of Rachel Venture Plc trading at GHS 26 per share. Richel financed the purchase
with her savings plus a GHS100,000 loan from Kyei Securities at 20% annual interest rate.
Required:
i. Compute the initial margin.
ii. Suppose Kyei Securities sets the maintenance margin at 55% and the share price falls to
GHS24.18 in the coming week. Would Richel receive a margin call? Support your answer
with relevant computations. [4 marks]
iii. Suppose the share price rises further to GHS26.18 per share by the end of the year, and
Rachel Ventures distributes dividends of GHS0.10 per share to its shareholders. Compute
the rate of return on Richel's investment. (Assume the investment period is exactly one
year).
i. The initial margin is GHS 160,000, ii. Richel would not receive a margin call since the equity (GHS 141,800) is greater than the maintenance margin (GHS 132,990) and iii. The rate of return on Richel's investment is 1.08%.
In this scenario, Richel placed an order to purchase 10,000 shares of Rachel Venture Plc at GHS 26 per share. She financed the purchase with her savings and a GHS 100,000 loan from Kyei Securities at a 20% annual interest rate.
The initial margin, which is the portion of the purchase financed by Richel's savings, is calculated to be GHS 160,000.
Considering the maintenance margin set at 55%, we analyze the situation when the share price falls to GHS 24.18. In this case, the equity in Richel's account is GHS 141,800, which is higher than the maintenance margin requirement of GHS 132,990. Therefore, Richel would not receive a margin call.
Moving on to the rate of return calculation, when the share price rises to GHS 26.18 and Rachel Ventures distributes dividends of GHS 0.10 per share, the total return on Richel's investment is GHS 2,800. This translates to a rate of return of 1.08% based on the initial investment of GHS 260,000.
Therefore, Richel's initial margin allows her to make the purchase, and due to the equity exceeding the maintenance margin, no margin call is triggered. The rate of return on her investment is modest at 1.08%, considering the increase in share price and dividends received.
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Gibson's has sales for the year of $534,900, cost of goods sold equal to 65 percent of sales, and an average inventory of $75,900. The profit margin is 7 percent and the tax rate is 21 percent. How many days, on average, does it take the company to sell an inventory item? Assume 365 days per year. 55.78 days
85.37 days 73.04 days 51.79 days
79.68 days
Sales in inventory is an efficiency ratio that helps us measure the number of days a company takes to turn its inventory into sales. In other words, this ratio tells us the average time inventory items sit on the company's shelves before being sold. The answer is 79.68 days (rounded to two decimal places).
Here are the steps to calculate the days' sales in inventory:
Step 1: Calculate the cost of goods sold (COGS)Cost of goods sold = Sales x COGS percentage= $534,900 x 0.65= $347,685
Step 2: Calculate the average inventory Average inventory = $75,900
Step 3: Calculate the cost of goods sold per day. Cost of goods sold per day = Cost of goods sold ÷ Number of days= $347,685 ÷ 365= $951.50
Step 4: Calculate the days' sales in inventory days sales in inventory = Average inventory ÷ Cost of goods sold per day= $75,900 ÷ $951.50= 79.68 days. Therefore, the answer is 79.68 days (rounded to two decimal places).
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Capital structure of companies especially IT companies have changed significantly in the last 10 years. Explain what changes you see with an example of a company that has experienced a change in capital structure.
Capital structure is the way in which a company finances its assets through a combination of equity and debt. IT companies, like all other companies, have changed their capital structure in the last decade.
What is changed?Let's explore what has changed and how it has affected companies, with an example of a company that has experienced a change in capital structure.
The last 10 years have seen a major shift in the capital structure of IT companies. In recent years, companies have reduced their use of debt financing and moved toward equity financing. This is because of the low-interest-rate environment that has prevailed since the 2008 financial crisis.
Equity financing has become more attractive as a result, because it is a way for companies to raise funds without incurring high-interest costs, unlike debt financing.
One company that has experienced a change in capital structure is Applee.
Aprple, which has been one of the world's most profitable companies for the past decade, has moved away from debt financing and towards equity financing.
According to its financial statements, in the last ten years, the company's debt to equity ratio has declined from 0.24 to 0.15. This means that Applee is now relying more on equity financing than on debt financing.
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MARIGOLD COMPANY Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) Cash Flow from Operating Activities Net Income 760 Adjustments to recondle net income to Net Cash Provided by Operating Activities V Depreciation Experte V $ 20.00 Gainon Sale of investments 19000) Increase in Accounts Receivable (43000) Decrease in Inventory V 250.00 Increase in Accounts Payable 320.00 Decrease in Accrued Liabilities 50.00 30 Cash Flows from Operating Activities > 790 Cash Flows from thistine Activities V Purchase of Plant Assets V (130001 Sale of restents 220,00 Cash Flows from Operatin Activities 90 Cash Flows from investing Activities Purchase of Plant Assets (130.00 Sale of Investments 220.00 Cash Flows from Operating Activities 90 Cash Flows from Financing Activities Payment of Cash Dividends -260 Sale of Bonds Payable 140 Issuance of Capital Stock 190 Cash Flows from Financing Activities -210 Cash Flows from Financing Activities 670 670 1130 Net Cash Used by investing Activities Decrease in inventory $ 1800 hu Media Condensed financial data of Teal Company for 2020 and 2019 are presented below. TEAL COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019 Cash $1,800 $1,130 Receivables 1.770 1,320 Inventory 1.560 1.890 Plant assets 1.900 1.700 Accumulated depreciation (1.220 (1.180) Long-term investments (held-to-maturity) 1.300 1.430 $7 110 $6,290 Accounts payable $1 220 $890 Accrued liabilities 190 250 Bonds payable 1410 1.520 Common stock 1.870 1.730 Retained earnings 2.420 1.900 $7A110 $6,290 TEAL COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6.860 Cost of goods sold 4,710 $7110 $6.290 TEAL COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,860 4.710 Cost of goods sold Gross margin 2.150 Selling and administrative expenses 920 Income from operations 1.230 Other revenues and gains 80 Gain on sale of investments Income before tax 1,310 Income tax expense 530 Net income 780 Cash dividends 260 Income retained in business $520 Additional Information: During the year $70 of common stock was issued in exchance for plant assets No plant assets were sold in 2020 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a signes -15 parenthesises (15,0001) TEAL COMPANY Statement of Cash Flows (Indirect Method) TEAL COMPANY Statement of Cash Flows (Indirect Method) Adjustments to reconcile net income to < $ < > V V > > < > > > > > < < < << e Textbook and Media
The statement of cash flows using the indirect method shows that cash flows from operating activities are $1,090, cash flows from investing activities are $130, cash flows from financing activities are $(-10), and the net increase in cash is $1,210.
A statement of cash flows using the indirect method is prepared by following these steps:Firstly, net income is reconciled by removing non-cash activities from the income statement. Secondly, changes in balance sheet accounts other than cash are used to adjust the cash balance.
Finally, the net change in cash is reconciled by subtracting the opening cash balance from the closing cash balance.
Let's prepare a statement of cash flows using the indirect method for Teal Company: TEAL COMPANY Statement of Cash Flows (Indirect Method)For the Year Ended December 31, 2020Cash Flows from Operating Activities: Net Income $780 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation Expense$40Loss on Sale of Investments$0Decrease in Receivables$(-450) Decrease in Inventory $330Increase in Accounts Payable$330Decrease in Accrued Liabilities $60Cash Flows from Operating Activities $1,090 Cash Flows from Investing Activities:
Purchase of Plant Assets($0)Sale of Investments$130Cash Flows from Investing Activities$130Cash Flows from Financing Activities: Payment of Cash Dividends($260)Sale of Bonds Payable$110Issuance of Common Stock$140 Cash Flows from Financing Activities$(-10)Net Increase in Cash$1,210Add: Beginning Cash Balance$1,130Ending Cash Balance$2,340 .
Therefore, the statement of cash flows using the indirect method shows that cash flows from operating activities are $1,090, cash flows from investing activities are $130, cash flows from financing activities are $(-10), and the net increase in cash is $1,210.
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Let's Analyze Activity 1. Guided by the lessons on the introduction of reading visual, it is best to note that you can articulate the sub-topics in a manner of explanation. Now, it is your chance to explain the following succinctly. 1. Text and Genres 2. Text and Intertext 3. Seeing as Reading 4. New Technologies of Seeing 5. Tacit Seeing 6. Techniques of Seeing as Reading 26 7. Seeing as Literacy 8. Arresting Reality 9.
Text and Genres: This sub-topic explores the relationship between text and different genres. It examines how different forms of writing, such as fiction, poetry, and non-fiction, have distinct characteristics and structures that shape the way we read and interpret them.
Text and Intertext: This sub-topic delves into the concept of intertextuality, which refers to the way texts are interconnected and influenced by other texts. It explores how texts reference or respond to other works, creating layers of meaning and engaging readers in a dialogue with various literary and cultural references.
Seeing as Reading: This sub-topic examines the idea that visual images can be read in a similar way to written texts. It explores how we interpret and derive meaning from visual stimuli, such as photographs, paintings, and advertisements, using similar cognitive processes and analytical skills as we do when reading written texts.
New Technologies of Seeing: This sub-topic focuses on the impact of technological advancements on our ways of seeing and interpreting visual information. It discusses how digital media, virtual reality, and other emerging technologies have transformed the visual landscape and influenced our understanding of images.
Tacit Seeing: This sub-topic explores the concept of tacit seeing, which refers to the intuitive and unconscious processes involved in visual perception. It examines how our prior knowledge, experiences, and cultural contexts shape our interpretation of visual stimuli, even without conscious awareness.
Techniques of Seeing as Reading: This sub-topic discusses different techniques and approaches to engage in visual analysis as a form of reading. It explores methods such as semiotics, iconography, and visual rhetoric, which help us analyze and interpret visual images in a systematic and critical manner.
Seeing as Literacy: This sub-topic examines the idea that visual literacy is an essential component of overall literacy skills. It emphasizes the importance of understanding and interpreting visual information in contemporary society, where images play a significant role in communication and media.
Arresting Reality: This sub-topic explores the concept of arresting reality, which refers to the power of visual images to capture and represent aspects of reality in a compelling and thought-provoking way. It discusses how visual representations can shape our perceptions and challenge our understanding of the world.
[The question is cut off at this point, and it seems to be incomplete. If you provide the full question or the remaining part, I'll be happy to assist you further.]
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.The accounting equation for Eagle Enterprises is as follows:
Assets = Liabilities + Stockholders' Equity
$360,000 = $180,000 + $180,000
If the company now pays employee wages for $30,000, the accounting equation will change to:
Select one:
A. Assets Liabilities Stockholders' Equity
$330,000 = $180,000 + $150,000
B. Assets Liabilities Stockholders' Equity
$330,000 = $150,000 + $180,000
C. Assets Liabilities Stockholders' Equity
$360,000 = $180,000 + $180,180,000
D. Assets Liabilities Stockholders' Equity
$390,000 = $210,000 + $180,000
The correct answer is:
**B. Assets Liabilities Stockholders' Equity**
$330,000 = $150,000 + $180,000
When the company pays employee wages for $30,000, it will affect the equation as follows:
Assets ($360,000) - Wages ($30,000) = Liabilities ($180,000) + Stockholders' Equity ($150,000)
Simplifying the equation, we have:
$330,000 = $150,000 + $180,000
Therefore, the accounting equation will change to $330,000 = $150,000 + $180,000 after paying employee wages.
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. Describe the basic premise of the book Atlas Shrugged by Ayn Rand. Explain whether you support the book’s premise.
2. Discuss whether the book’s premise is defensible in light of the ethical and social responsibilities of business as it markets its products or services.
please answer it more than four sentences
Atlas Shrugged by Ayn Rand presents a dystopian novel that explores themes of individualism, capitalism , and the pursuit of rational self-interest.
The book's basic premise revolves around the idea that society depends on the creative and productive abilities of exceptional individuals, and when these individuals are oppressed or exploited, they may choose to withdraw their talents and contributions from society as a form of protest. The narrative follows the story of various industrialists and inventors who, feeling unappreciated and burdened by excessive government intervention, go on strike and retreat to a hidden utopia.
Whether one supports the book's premise largely depends on their perspective on individualism, capitalism, and the role of government. Supporters of the book may appreciate its emphasis on personal liberty, self-determination, and the importance of free markets. They might agree with Rand's portrayal of exceptional individuals as engines of progress and believe that excessive regulations and government intervention stifle innovation and economic growth.
However, critics argue that the book's premise oversimplifies complex societal issues and neglects the ethical and social responsibilities of businesses. They contend that businesses have a duty to operate with integrity, prioritize the well-being of all stakeholders, and consider the broader impact of their actions on society and the environment. From this perspective, the book's promotion of unrestricted self-interest without regard for social and ethical responsibilities may be seen as unrealistic and potentially harmful.
Ultimately, whether one supports or challenges the book's premise is a matter of personal values, ideological beliefs, and the balance they perceive between individual rights and societal obligations.
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Given that the opening cash balance for April is $100,000 with
total cash collection of $50,000 and cash payment of $40,000, what
is the opening cash balance for May?
$100,000.
$90,000.
The opening cash balance for May as per the information provided through the calculation is $110,000.
Given that the opening cash balance for April is $100,000 with total cash collection of $50,000 and cash payment of $40,000, the opening cash balance for May is $110,000.
We can calculate the opening cash balance for May by adding the cash balance for April with cash collection for April and subtracting cash payments for April.
Mathematically, it can be represented as:
Cash balance for May = Cash balance for April + Cash collection for April - Cash payment for April
= $100,000 + $50,000 - $40,000 = $110,000
Hence, the opening cash balance for May is $110,000.
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Nike Owns Equipment That Cost $101,900 With Accumulated Depreciation Of $69.600 Nike Asks $37100 For The Equipment But Sells The Equipment For $34.400 Compute The Amount Of Gain Or Loss On The Sale
(a) $4,800 Loss (b) $2,100 Loss
(c) $4,800 Gain
(d) $2,700 Gain
(e) $2,100 Gain
To evaluate the effectiveness of the tool and the correctness of Barry's recommendation using the Internal Rate of Return (IRR) method, calculate the IRR based on the cash flows and compare it to the Minimum Acceptable Rate of Return (MARR) of 16%.
The effectiveness of the tool can be evaluated by calculating its Internal Rate of Return (IRR) and comparing it to the Minimum Acceptable Rate of Return (MARR) of 16%. The cash flows associated with the tool, including the initial investment of $250,000 and the subsequent savings generated over the years, need to be considered. If the calculated IRR is greater than the MARR, it indicates that the tool is effective in generating returns that meet or exceed the required rate of return. In this case, Barry's recommendation can be considered correct, as the tool has proven to be effective in saving Texas Crude a significant amount of money.
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Assume the following:
1) Absolute PPP holds
2) The price index is calculated over the exact same basket of goods and services in Australia and Europe
3) While calculating the price index, the weight attached to a good or a service may differ in Australia and Europe
If E$/€=1 and the price of good A = $100 in Australia, then:
Good A costs €100 in Europe
Good A costs less than €100 in Europe
Good A costs more than €100 in Europe
Good A costs less than or equal to €100 in Europe
The above information is not sufficient to calculate the cost of Good A in Europe
Assume that relative to today, Australian Dollar is expected to depreciate against the Euro by 5% in real terms over the next one period. Assume further that the expected rates of inflation (over the next one period) is 9% and 5% in Australia and Europe respectively. If the real interest rate in Europe r€ = 2%, choose the correct option:
A. r$ = 9%
B. r$ = 5%
C. r$ = 2%
D. r$ = 7%
E. The above information is not sufficient to calculate r$
The answer is Good A costs equal to €100 in Europe.
The correct option is D) [tex]r$[/tex]= 7%.
According to the given information, the absolute PPP holds and the price index is calculated over the exact same basket of goods and services in Australia and Europe. However, the weight attached to a good or service may differ in Australia and Europe. Therefore, if E$/€=1 [tex]E$/€=1[/tex]and the price of Good A
= $100
in Australia, then Good A costs €100 in Europe .Given that ,Real interest rate in Europe, r€
= 2%
Expected inflation in Australia
= 9%
Expected inflation in Europe
= 5%
Expected real depreciation of Australian dollar relative to Euro
= 5%
Real interest rate in Australia
= [tex]r$[/tex]
Now, we can use the Fisher effect to calculate the real interest rate in Australia.i.e.,
[tex](1 + r$) = (1 + r€) (1 + expected inflation$) / (1 + expected inflation€)1 + r$[/tex][tex](1 + r$) = (1 + r€) (1 + expected inflation$) / (1 + expected inflation€)1 + r$[/tex]= [tex](1 + 2%) (1 + 9%) / (1 + 5%)1 + r$[/tex]
= 1.11r$
= 11%
Therefore, the real interest rate in Australia (r$) is 11%.
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If the real interest rate in Europe r€ = 2%. The option A. r$ = 9% is the correct option.
Given that Absolute PPP holds, price index is calculated over the same basket of goods and services in Australia and Europe and while calculating the price index, the weight attached to a good or a service may differ in Australia and Europe.
If E$/€=1 and the price of good A = $100 in Australia, then Good A costs €100 in Europe. If the Australian Dollar is expected to depreciate against the Euro by 5% in real terms over the next one period, and expected rates of inflation is 9% and 5% in Australia and Europe respectively and the real interest rate in Europe r€ = 2%, then the real interest rate in Australia r$= 9%.
Therefore, the option A. r$ = 9% is the correct option.
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Refer to the demand and supply schedule shown in the table below.
a. If pizza parlors charge $3.50 per slice, there will be an excess:
supply of 200 units.
supply of 400 units.
demand of 400 units.
demand of 200 units.
b. If pizza parlors charge $1.00 per slice, there will be an excess:
supply of 100 units.
demand of 150 units.
demand of 100 units.
supply of 150 units.
c. The equilibrium price is $ __per slice, and the equilibrium quantity is __
slices of pizza.
a. demand of 400 units.
b. supply of 150 units.
a. demand of 400 units.
If pizza parlors charge $3.50 per slice, there will be an excess demand of 400 units. This means that at the given price, consumers are willing to buy 400 more units of pizza slices than the quantity supplied by the pizza parlors.
b. supply of 150 units.
If pizza parlors charge $1.00 per slice, there will be an excess supply of 150 units. This means that at the given price, the pizza parlors are supplying 150 more units of pizza slices than the quantity demanded by the consumers.
c. The equilibrium price is the price at which the quantity demanded equals the quantity supplied, resulting in no excess supply or demand. Similarly, the equilibrium quantity is the quantity at which the quantity demanded equals the quantity supplied. The specific values of the equilibrium price and quantity would depend on the supply and demand curves for pizza slices, which are not provided in the given question.
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Impact on substantive procedures Carringbush Ltd is a large listed company which makes small electrical appliances. It is late April 2005 and you are currently planning the 30 June 20x5 audit. The auditor's report is due to be signed on 20 August 2005. During your planning, the following independent and material situations come to your attention: 1. On 1 January 20X5, Carringbush signed a 3-year contract with PK Pty Ltd for the supply of cardboard packing boxes for its entire range of products, PK was selected as an exclusive supplier after an exhaustive tender process. One of PK's two directors is Ms M, the wife of one of Carringbush's directors, Mr M. Company minutes reveal that Mr M did not take part in either the preparation of the tender documents or the selection of the successful tenderer. You note that details of this contract were omitted from the preliminary list of related party transactions supplied to you by the financial controller. 2. Carringbush introduced a new system for the control of inventory on 1 January 20X4. The company performed extensive testing on this new system and management was convinced that it was operating effectively. This system has a utility that can produce many specialised reports for internal use by management. The system is a perpetual inventory system; management decided that a year-end stocktake would no longer be required and instead decided to perform monthly cyclical counts to ensure the system was functioning correctly. produce many specialised reports for internal use by management. The system is appeal istory den, mugment decided that a year end stocktake would no longer be required and instead decided to perform monthly cythead us to ensure the system was functioning correctly. 3. During the year ended 30 June 20X4, Carringbush changed several of its accounting policies. One of the policies changed was accounting for employee entitlements. The effect on the 30 June 20X4 financial statements was immaterial and so it was not disclosed, although it was expected to have a material effect in subsequent years. The financial controller is new to the company and appears to be unaware that recent changes have occurred in accounting policies. 4. In 20X3, Carringbush introduced a 'budget buster' range of small electrical appliances. The range was introduced to recapture the lower end of the appliance market, which Carringbush was slowly losing to cheaper imported products. Over the last 2 years, Carringbush began receiving reports that some budget buster electric kettles had been giving their users small electric shocks. Some of these kettles are still covered by warranty.
Required :Discuss how your audit plan and audit approach would be affected as a result of each item. (5 marks each) Where possible, relate the effects noted to specific financial statement assertions
The audit plan and approach would be affected by the omission of the contract with PK Pty Ltd from the preliminary list of related party transactions.
The auditor should investigate the nature of this transaction and evaluate whether it was conducted on an arm's length basis. The auditor should also assess if any additional related party transactions exist and if they have been properly disclosed. This impacts the completeness assertion of the financial statements, as the omission of material related party transactions could result in an incomplete representation of the company's financial position and performance. The decision to rely solely on the perpetual inventory system and forgo the year-end stocktake has implications for the audit plan. The auditor should review the design and effectiveness of the transactions inventory system, including the accuracy of input data, system controls, and reconciliations.
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