To calculate the depreciation expense for Talia's Tutus' new sewing machine, we will use the double-declining-balance method followed by a switch to straight-line depreciation.
The double-declining-balance method depreciates the asset at a faster rate in the early years and then switches to straight-line depreciation when that method results in higher depreciation expense.
Given that the sewing machine was purchased for $70,000 and will be depreciated over 5 years, the double-declining-balance depreciation rate can be calculated as 1 / 5 = 0.2 or 20% per year.
Year 1: Depreciation Expense = Beginning Book Value * Depreciation Rate
= $70,000 * 0.2 = $14,000
Accumulated Depreciation = $14,000
Year 2: Depreciation Expense = Beginning Book Value * Depreciation Rate
= ($70,000 - $14,000) * 0.2 = $11,200
Accumulated Depreciation = $14,000 + $11,200 = $25,200
Years 3 to 5: Depreciation Expense = ($70,000 - Accumulated Depreciation) / Remaining Useful Life (in years)
Accumulated Depreciation will increase each year until it reaches $70,000
Once the Accumulated Depreciation reaches $70,000, the switch to straight-line depreciation will occur, and the annual depreciation expense will be the same until the end of the asset's useful life.
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Talia's Tutus bought a new sewing machine for $70,000 that will be depreciated over 5 years using double-declining-balance depreciation with a switch to straight-line.
Current Attempt in Progress Skysong Ltd has 58.000 shares of E10 par value ordinary shares outstanding. It declares a 10% share dividend on December 1 when the market price per share is €18. The dividend shares are issued on December 31 Prepare the entries for the declaration and since of the share dividend. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
A share dividend is a non-cash distribution of company shares to shareholders. This type of dividend is paid to shareholders in addition to regular cash dividends. It is also referred to as a stock dividend. Let's prepare entries for the declaration and since of the share dividend given below in the table.
Date Account Titles and Explanation Debit CreditDecember 1Share Dividend distributable 5800 shares Common Stock Dividend Distributable €58,000 (58,000 shares * €10 par value) Share Dividend distributable is increased for the total shares to be issued as dividend, i.e. 10% of 58,000 common shares, equal to 5,800. The par value of the shares is included in the Common Stock Dividend Distributable account.
December 31 Common Stock Dividend Distributable €58,000 (58,000 shares * €10 par value) Common Stock €58,000 (5,800 shares * €10 par value)
On the date of issue of the shares, the Common Stock Dividend Distributable account is debited for the par value of the shares to be issued as dividends, i.e. 5,800 shares * €10 par value, equal to €58,000, and Common Stock account is credited for the same amount. This account will now reflect the new shares issued as dividends.
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operating margins are defined as operating profit/cost of goods sold. true or false?
This statement is true. Operating margin is a profitability ratio that calculates the percentage of revenue generated after covering all variable and fixed operating expenses, including interest, taxes, and depreciation. It represents the profit that a company makes before factoring in taxes and interest expenses.
Operating margins are calculated as follows:Operating margin = Operating Profit / Total RevenueOperating profit is calculated by subtracting the company's operating expenses, including wages, utilities, and rent, from its gross profit. On the other hand, the cost of goods sold refers to the cost of manufacturing and distributing goods sold by the company. These costs include direct labor, direct materials, and manufacturing overhead expenses.
Operating margins are a critical indicator of a company's financial health because they show how much money the business generates per dollar of revenue after accounting for all operating expenses. Companies with high operating margins are more profitable than those with lower margins because they can generate more income from each dollar of revenue.
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Which of the following is correct? None of these The loss basis for inherited property is the lesser of the decedent's basis or the fair market value on the date of the decedent's death. The gain basis for property received by gift is the lesser of the donor's adjusted basis or the fair market value on the date of the gift. The loss basis for property received by gift is the same as the donor's basis The gain basis for inherited property is different than the decedent's basis
The correct answer is "The gain basis for inherited property is different than the decedent's basis.
"Here are the explanations of all the given statements to help you understand which of the following is correct:None of these: It's not correct because at least one of the statements is correct. The loss basis for inherited property is the lesser of the decedent's basis or the fair market value on the date of the decedent's death: It is partially correct but it describes the loss basis for inherited property, not the gain basis for it. The gain basis for property received by gift is the lesser of the donor's adjusted basis or the fair market value on the date of the gift: It describes the gain basis for property received by gift. The loss basis for property received by gift is the same as the donor's basis: It describes the loss basis for property received by gift. The gain basis for inherited property is different than the decedent's basis: This statement is correct. The gain basis of inherited property is its fair market value on the date of the decedent's death or the alternate valuation date.
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The following are selected 2020 transactions of Indigo Corporation. Sept. 1 Oct. 1 Oct. 1 (a) (b) (c) Purchased inventory from Encino Company on account for $59,400. Indigo records purchases gross and uses a periodic inventory system. Issued a $59,400, 12-month, 8% note to Encino in payment of account. Borrowed $59,400 from the Shore Bank by signing a 12-month, zero-interest-bearing $62,520 note. (2) Your answer is partially correct. Compute the total net liability to be reported on the December 31 balance sheet for: (1) The interest-bearing note The zero-interest-bearing note eTextbook and Media List of Accounts $ 69 60588 56280
The total net liability to be reported on the December 31 balance sheet for (1) the interest-bearing note is $60,864 and (2) the zero-interest-bearing note is $59,400.
What is an Interest-bearing note?
An interest-bearing note is a loan with an interest rate that varies depending on the terms of the loan and the borrower's credit score. For example, if a borrower takes out a $1,000 loan with a 10% interest rate and a one-year term, the borrower must repay $1,100 in total ($1,000 + $100 in interest).What is a Zero-interest-bearing note?A zero-interest-bearing note is a loan that carries no interest or interest expense. This implies that the borrower is obligated to repay only the principal sum borrowed over the life of the loan. The firm borrowing the money pays back the entire principal amount when the zero-interest-bearing note matures.Let us calculate the total net liability for (1) the interest-bearing note and (2) the zero-interest-bearing note:1) Calculation of net liability for interest-bearing note:Principal amount of the loan is $62,520. It is to be repaid after 12 months.Interest rate of the loan is 0% (as it is a zero-interest-bearing note).The formula to calculate the interest-bearing note is:Total amount to be repaid = Principal + Interest= Principal + (Principal × Interest Rate × Time Period in years)Substituting the values in the above formula,Total amount to be repaid = $62,520 + ($62,520 × 0% × (12/12))= $62,520Hence, the net liability for the interest-bearing note is $62,520.2) Calculation of net liability for zero-interest-bearing note:Principal amount of the loan is $59,400. It is to be repaid after 12 months.Interest rate of the loan is 8% per annum. We need to calculate the amount of interest payable.The formula to calculate the simple interest is:Simple Interest = Principal × Rate of Interest × Time Period in yearsSubstituting the values in the above formula,Simple Interest = $59,400 × 8% × (3/12) = $1,584Total amount to be repaid = Principal + Interest= $59,400 + $1,584 = $60,984
Hence, the net liability for the zero-interest-bearing note is $59,400.I hope this helps.
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what kind of people will buy the Kenzo clothes?
young people customers profile ? middle age customer
profile?
Kenzo clothing appeals to a diverse range of customers, including both young people and middle-aged individuals. The brand's unique and vibrant designs attract fashion-forward consumers who value creativity, self-expression, and individuality.
Younger customers are often drawn to Kenzo's trendy and youthful collections, while middle-aged customers may appreciate the brand's sophistication, quality, and timeless style.
Kenzo has established itself as a popular fashion brand known for its bold and innovative designs. Young people are often attracted to Kenzo's clothing due to its vibrant colors, playful patterns, and contemporary aesthetic. The brand appeals to fashion-conscious individuals who seek to make a statement with their style. Younger customers value creativity, originality, and self-expression, and they see Kenzo as a brand that allows them to showcase their individuality.
On the other hand, middle-aged customers are also drawn to Kenzo's clothing for different reasons. They may appreciate the brand's sophisticated and high-quality designs, which provide a sense of elegance and refinement. Kenzo offers a range of classic and timeless pieces that appeal to those who prefer a more understated and mature style. Middle-aged customers may also be attracted to Kenzo's reputation for craftsmanship and attention to detail, as they value durable and well-made garments.
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how efricient supply chains and reactive supply chains differ?
Efficient supply chains and reactive supply chains differ in their approach to managing and responding to supply chain operations and disruptions. Here are the key differences between the two:
1. Focus:
- Efficient supply chains: Efficient supply chains prioritize cost reduction, optimization, and maximizing operational efficiency. The goal is to streamline processes, minimize waste, and deliver products or services at the lowest cost possible while meeting customer demand.
- Reactive supply chains: Reactive supply chains focus on flexibility and responsiveness to unforeseen events and disruptions. The emphasis is on quickly adapting to changes in demand, supply, or other external factors to ensure continuity and customer satisfaction.
2. Planning and forecasting:
- Efficient supply chains: Efficient supply chains rely on accurate demand forecasting and long-term planning to optimize production, inventory, and distribution. They strive to achieve economies of scale, reduce lead times, and maintain optimal inventory levels.
- Reactive supply chains: Reactive supply chains place greater emphasis on real-time demand sensing and short-term planning. They are more agile in adjusting production and distribution based on actual customer demand and market conditions.
3. Inventory management:
- Efficient supply chains: Efficient supply chains aim to minimize inventory levels by using just-in-time (JIT) or lean principles. Inventory is closely managed to reduce carrying costs, minimize storage space, and prevent overstocking.
- Reactive supply chains: Reactive supply chains may hold higher levels of safety stock or buffer inventory to mitigate uncertainties and respond quickly to unexpected fluctuations in demand or disruptions in supply.
4. Supplier relationships:
- Efficient supply chains: Efficient supply chains often establish long-term relationships with a limited number of reliable suppliers. They focus on supplier performance management, quality control, and cost optimization through strategic partnerships.
- Reactive supply chains: Reactive supply chains may maintain a broader network of suppliers to ensure flexibility and availability in case of disruptions. They prioritize supplier diversity, redundancy, and the ability to quickly switch suppliers if needed.
5. Risk management:
- Efficient supply chains: Efficient supply chains may have risk management strategies in place but primarily focus on minimizing risks through proactive planning and optimization.
- Reactive supply chains: Reactive supply chains are more prepared to handle risks and disruptions. They have robust contingency plans, alternative sourcing options, and rapid response mechanisms to mitigate the impact of disruptions.
In summary, efficient supply chains prioritize cost optimization and long-term planning, while reactive supply chains focus on responsiveness, adaptability, and short-term decision-making to manage unforeseen events and disruptions. Both approaches have their merits depending on the specific industry, market conditions, and business objectives.
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Dana Company manufactures and sells a single he following costs were incurred during the company's first year of p Variable costs per unit: Manufacturing Direct materials $20 Direct labor 58 Variable manufacturing overhead $3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $250,000 Fixed selling and administrative expenses $ 120,000 During the year, the company produced 18,000 units and sold 15,000 units. The selling price of the company's product is 565 per unit. hp es $ 120,000 During the year, the company produced 18,000 units and sold 15,000 units. The selling price of the company's p Required: Assume that the company uses absorption costing a) Compute the unit product cost. (3 marks) b) Prepare an income statement for the year (use the detailed format of income statement which shows the calculation of the cost of goods soit 15 mark For the toolbar, press ALT F10 (PC) or ALT-FN-F10 (Mac). BIUS Paragraph Arial 10pt Av 24 LX00Q !!! THE
a) The unit product cost is $70.11. Unit product cost = Total cost of goods manufactured / Number of units produced. Total cost of goods manufactured= Total variable costs + Total fixed costs.
= (Direct materials + Direct labor + Variable manufacturing overhead) x Number of units produced + (Fixed manufacturing overhead)
= (20+58+3) x 18,000 + 250,000
= 1,262,000.
Unit product cost = 1,262,000 / 18,000. Therefore, the unit product cost is $70.11.
b) Income Statement of Dana Company under Absorption Costing : For the Year Ended December 31, 2020 Sales (15,000 units x $565 per unit) $8,475,000 . Cost of goods sold: Beginning inventory (0 units x $70.11 per Unit)$, Manufacturing costs: Direct materials (18,000 units x $20 per unit) 360,000 ,Direct labor (18,000 units x $58 per unit) 1,044,000, Variable manufacturing overhead (18,000 units x $3 per unit) 54,000, Fixed manufacturing overhead 250,000 ,Total manufacturing costs 1,708,000 ,Cost of goods manufactured (18,000 units x $70.11 per unit) 1,262,000 ,Goods available for sale (18,000 units + 0 units) 1,262,000 ,Less: Ending inventory (3,000 units x $70.11 per unit) 210,330 ,Cost of goods sold 1,051,670,Gross profit 7,423,330 ,Selling and administrative expenses:Variable selling and administrative expenses (15,000 units x $3 per unit) 45,000,Fixed selling and administrative expenses 120,000. Total selling and administrative expenses 165,000. Net income $7,258,330.
The format of the income statement shows the cost of goods manufactured and cost of goods sold separately. The cost of goods manufactured is computed as the sum of all manufacturing costs incurred during the year while the cost of goods sold is computed as the sum of the cost of goods manufactured and the change in inventory. The change in inventory is the difference between the beginning inventory and the ending inventory.
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A market equilibrium is only efficient if Multiple Choice the consumer surplus and the producer surplus associated with a given transaction are equal. consumer surplus and producer surplus are both zero. all relevant costs and benefits are reflected in the market supply and demand curves. output is distributed equitably among consumers.
A market equilibrium is only efficient if all relevant costs and benefits are reflected in the market supply and demand curves.
Consumer surplus refers to the difference between the price consumers are willing to pay and the actual price they pay. Producer surplus, on the other hand, is the difference between the price producers receive and the minimum price they are willing to accept. In an efficient market equilibrium, the sum of consumer surplus and producer surplus is maximized, indicating that both consumers and producers benefit from the transaction. It is not necessary for the consumer surplus and producer surplus to be equal in an efficient market equilibrium. The important factor is that the market price and quantity align with the forces of supply and demand, ensuring that resources are allocated efficiently. In terms of output distribution, market equilibrium does not guarantee an equitable distribution among consumers. It simply reflects the point where supply and demand intersect. The distribution of output among consumers depends on individual preferences, purchasing power, and market conditions.
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Compare the conventional cash transaction system with the electronic payment system. Briefly explain pros and cons of each.
both the conventional cash transaction system and electronic payment system have their pros and cons. While the former is easy to use and provides an immediate record of the transaction, the latter is more secure and convenient. However, electronic payments may require an internet connection and attract processing fees, while cash transactions may be inconvenient and sometimes unsafe.
The conventional cash transaction system and electronic payment system have different approaches in carrying out a transaction. The former involves physical exchange of money as a means of payment, while the latter operates using electronic means. In comparing the two systems, it is important to take into account their advantages and disadvantages. This essay aims to highlight the differences between the conventional cash transaction system and electronic payment system, along with their pros and cons.The conventional cash transaction systemConventional cash transaction system is the traditional method of payment used by people all over the world. This system involves the exchange of physical currency between the buyer and the seller at the point of sale. One of the advantages of this system is that it is easy to use, and it provides an immediate record of the transaction. This means that both the buyer and the seller have evidence of the exchange that took place. Another advantage is that cash transactions do not require any processing fees, which makes it an ideal payment method for small purchases. On the other hand, one of the disadvantages of cash transactions is that they can be inconvenient and sometimes unsafe. For instance, carrying large amounts of cash around can be risky and make one a target for robbery or theft. Also, cash transactions require physical presence at the point of sale, which may be difficult for people with mobility issues or those who are unable to visit the store in person.The electronic payment systemThe electronic payment system is a relatively new method of payment that has been gaining popularity in recent years. This system involves the use of electronic means such as credit or debit cards, mobile money transfer, and other digital payment options. One of the advantages of this system is that it is convenient, fast, and secure. Electronic payments can be made from anywhere, and they do not require physical presence at the point of sale. This makes it possible for people to make transactions even from the comfort of their homes. Additionally, electronic payments are often more secure than cash transactions since they involve encryption and other security features that protect the user's information from fraudsters. One of the disadvantages of electronic payments is that they may attract processing fees. Also, the electronic payment system requires an internet connection or mobile network coverage, which may not be available in some parts of the world.
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Define, explain, and give examples of the 4 tropes from the video "Tropes vs Women"
In the Tropes vs Women video series, Anita Sarkeesian explains various tropes (narrative devices or clichés) commonly used in video games that reinforce harmful stereotypes and contribute to the marginalization of women in gaming culture. Here are the definitions, explanations, and examples of the four tropes discussed in the series:
1. Damsel in Distress:-The Damsel in Distress trope refers to a narrative device where a female character is kidnapped or otherwise put in a perilous situation that requires a male hero to rescue her. This trope has been used in countless video games, from Super Mario Bros. to The Legend of Zelda to Grand Theft Auto. By making the female character a passive victim and the male character the active hero, this trope reinforces the idea that women are helpless and need to be saved by men.
2. Women as Background Decoration:-The Women as Background Decoration trope refers to the objectification and sexualization of female characters in video games. Often, female characters are depicted as nothing more than decoration, existing solely to provide sexual titillation to the presumed male player. This trope is particularly prevalent in games with hypersexualized female characters, such as Dead or Alive, where female characters are often shown in skimpy outfits and in suggestive poses.
3. Ms. Male Character:-The Ms. Male Character trope refers to the practice of creating female versions of male characters by simply swapping out the colors or adding a bow or other feminine accessory. This trope reinforces the idea that male is the default and normal gender, while female is an afterthought or a variant of male. This trope is particularly common in platformer games, such as Super Mario Bros., where the female version of Mario is simply called "Princess Toadstool."
4. Women as Reward:-The Women as Reward trope refers to the practice of using female characters as a reward for the player's achievements. This trope is particularly common in games with a romantic or sexual component, where the player can earn the affection or attention of a female character by completing certain tasks or challenges. This reinforces the idea that women are prizes to be won, rather than complex individuals with their own agency and desires. An example of this trope can be seen in the Mass Effect series, where the player can earn the romantic attention of various female characters by completing their loyalty missions.
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if you add an air conditioner to a home how would you estimate the cost? Who would pay for it? Would you pay for just the installation? Would you pay for the air conditioner and the installation? Would you look at comparable houses in the area with air conditioners? what would you do?
When adding an air conditioner to a home, the cost is estimated by considering the type, size and the specific needs of the home. Typically, air conditioner costs vary from $3,000 to $7,500. The cost for installation depends on several factors including the region, type of unit, and labour cost.
Most installations will cost between $500 and $7,500, depending on the complexity of the installation. Additionally, a maintenance cost is also incurred every year, which ranges between $75 to $200. These costs are a considerable investment, which makes it crucial for homeowners to evaluate the cost-benefit analysis before purchasing and installing an air conditioner. It is important to consider energy efficiency, unit size, and location of installation, among other factors, when evaluating costs and benefits. Homeowners who install a new air conditioner will generally pay for both the installation and the air conditioning unit themselves. Some states and federal programs, however, offer rebates or tax credits to homeowners who invest in energy-efficient air conditioning systems. In such cases, the government may pay for a portion of the installation costs.
Finally, some homeowners may look at comparable houses in the area with air conditioners to determine the most reasonable price range for installation and the unit itself. Ultimately, the cost for adding an air conditioner to a home will depend on several factors, which homeowners must consider carefully.
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Economic analysis is limited in its ability to forecast precise choices of a given individual because:
A) individual preferences are largely unobservable
B) most individuals are not always rational
C) most individuals make decisions at the margin
D) evidence from Behavioral economics have proved otherwise
E) all the above
Economic analysis is limited in its ability to forecast precise choices of a given individual due to several factors, as mentioned in option E. These factors include the largely unobservable nature of individual preferences (option A), the presence of irrational behavior among most individuals (option B), and the influence of decisions made at the margin (option C). Additionally, evidence from behavioral economics has shown that individuals' choices often deviate from the assumptions of rationality, further contributing to the limitations of economic analysis.
Option A states that individual preferences are largely unobservable, meaning that it is challenging for economists to accurately measure and predict the specific preferences of individuals. Preferences can be subjective, multifaceted, and vary across different contexts, making it difficult to quantify and incorporate them into precise forecasts.
Option B highlights the fact that most individuals are not always rational in their decision-making. Behavioral economics has demonstrated that individuals often exhibit biases, heuristics, and emotional influences that deviate from the assumption of perfect rationality. These behavioral factors introduce uncertainty and complexity into economic analysis, making it challenging to predict precise choices.
Option C points out that individuals make decisions at the margin, meaning they weigh the additional benefits and costs of incremental changes. This marginal decision-making can be influenced by situational factors, constraints, and varying levels of information, further adding to the complexity and unpredictability of individual choices.
Lastly, option D states that evidence from behavioral economics has shown that individuals' choices often deviate from the assumptions of rationality. Behavioral economics incorporates psychological insights into economic analysis, revealing the presence of cognitive biases and non-standard decision-making patterns. This evidence further underscores the limitations of economic analysis in precisely forecasting individual choices.
In conclusion, economic analysis is limited in its ability to forecast precise choices of individuals due to the largely unobservable nature of preferences, the presence of irrational behavior, the influence of decisions made at the margin, and evidence from behavioral economics. These factors introduce complexities, uncertainties, and deviations from the assumptions of traditional economic models, making it challenging to predict individual choices with precision.
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The utility function and the prices are the following:
U=49 x1 + 84 x2
p1=78
p2 =10 and
I = 3320
What is the optimal amount of x2?
The question requires us to find out the optimal amount of x2 with the following utility function and prices given: U = 49x1 + 84x2; p1 = 78; p2 = 10 and I = 3320.
What is the utility function? A utility function is a mathematical equation that connects the preferences of a consumer with the consumption bundle. Mathematically, it is written as U = U(x1, x2).
Where; U = utility functionx1 = amount of good 1x2 = amount of good 2Here, the utility function given is; U = 49x1 + 84x2What is the budget constraint? The budget constraint is defined as the limit to the amount of goods a consumer
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In a fractional reserve banking system, if the required reserve
ratio is 0.2, then an initial deposit of 1000 will ultimately
expand deposits by how much?
An initial deposit of 1000 in a fractional reserve banking system with a required reserve ratio of 0.2 will ultimately expand deposits by 5000.
In a fractional reserve banking system, banks are required to hold a fraction of their deposits as reserves and can lend out the rest. The required reserve ratio is the percentage of deposits that banks must hold as reserves.
Given that the required reserve ratio is 0.2 (or 20%), it means that banks are required to hold 20% of the deposits as reserves and can lend out the remaining 80%.
Let's calculate the expansion of deposits step by step:
Initial deposit: 1000
Reserve requirement: 20% of 1000 = 0.2 * 1000
= 200 (held as reserves)
Excess reserves: Initial deposit - Reserve requirement = 1000 - 200
= 800
Money multiplier: 1 / Reserve ratio = 1 / 0.2
= 5
To calculate the ultimate expansion of deposits, we multiply the excess reserves by the money multiplier:
Ultimate expansion of deposits = Excess reserves * Money multiplier
= 800 * 5
= 4000
However, the question asks for the total expansion of deposits, including the initial deposit:
Total expansion of deposits = Initial deposit + Ultimate expansion of deposits
= 1000 + 4000
= 5000
Therefore, an initial deposit of 1000 in a fractional reserve banking system with a required reserve ratio of 0.2 will ultimately expand deposits by 5000.
The initial deposit of 1000 will lead to an expansion of deposits by 5000 in a fractional reserve banking system with a required reserve ratio of 0.2.
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4.Problems and Applications Q1 Suppose that this year's money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion. The price level is , and the velocity of money is Suppose that velocity is constant and the economy's output of goods and services rises by 3 percent each year. Use this information to answer the questions that follow. If the Fed keeps the money supply constant, the price level will V, and nominal GDP will O True O False If the Fed wants an inflation rate of 11 percent instead, it should the money supply by %(Hint: The quantity equation can be rewritten as the following percentage change formula: (Percentage Change in M)+(Percentage Change in V)=(Percentage Change in P)+(Percentage Change in Y).)
The velocity of money is and the price level is Assume that the economy produces products and services at a steady rate of 3 percent each year.
If the Fed keeps the money supply constant, the price level will remain the same and nominal GDP will remain the same too. So, the answer is false. If the Fed wants an inflation rate of 11 percent instead, it should increase the money supply by 6.5%.
Given that money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion. We know the quantity equation, which is: M x V = P x Y We also know that V (velocity of money) is constant and Y (real GDP) will rise by 3%. Therefore, we can find out the percentage change in Y, which is: Percentage change in Y = 3%Now, we can rearrange the quantity equation as follows: Percentage change in M + Percentage change in V = Percentage change in P + Percentage change in Y Since V is constant and we know that percentage change in Y is 3%, we can rearrange the above equation as follows: Percentage change in M = Percentage change in P - 3%We know that inflation rate is equal to the percentage change in P.
Therefore, if the Fed wants an inflation rate of 11%, it should increase the percentage change in P by 11%.Substituting the values in the above equation, we get:11% = Percentage change in P - 3%Percentage change in P = 14%Therefore,Percentage change in M = Percentage change in P - 3%Percentage change in M = 14% - 3%Percentage change in M = 11%So, the Fed should increase the money supply by 6.5% (11% of $500 billion) to achieve an inflation rate of 11%.
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b) Currently we are experiencing war between Rassia and Ukrain,
what are the economic impact of the war on world economy? Explain
in detal.
Currently, there is a war between Russia and Ukraine and the economic impacts of the war on the world economy have been significant. This conflict has led to an increase in political tensions, a decline in trade, and an increase in military expenditures by the countries involved which has created a significant impact on the world economy.
First and foremost, the war has disrupted trade between the two countries and has led to a decline in trade between Russia and the European Union (EU). This decline in trade has led to a decrease in demand for goods and services, which has caused a decline in economic growth. The conflict has also led to a decline in foreign investment in Russia which has further contributed to the decline in economic growth.Moreover, the war has led to an increase in military expenditures by both Russia and Ukraine which has created a significant drain on their respective economies.
The increase in military spending has led to a decrease in government spending on other sectors such as health, education, and infrastructure which has further contributed to the decline in economic growth.Furthermore, the political tensions between Russia and the EU have also had an impact on the world economy. The political tensions have led to a decrease in trust between the countries and have created a significant increase in the cost of borrowing for both countries. The increase in borrowing costs has led to a decrease in investment in both countries and has created a further decline in economic growth.In conclusion, the war between Russia and Ukraine has created a significant impact on the world economy. The decline in trade between Russia and the EU, the increase in military expenditures, and the political tensions have all contributed to a decline in economic growth.
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Please define and discuss in length, contrast and analyze
Related versus Unrelated Diversification. (Chapter 8) Please
provide well thought real world examples.
In strategic management, diversification is a strategy where a company expands its operations into new products or markets. There are two main types of diversification: related and unrelated.
Related diversification occurs when a company expands into a new product or market that is related to its existing businesses. For example, a company that makes cars might also start making car parts or car accessories. Related diversification can be a good strategy for companies that want to grow their business and increase their market share. It can also help companies to reduce their risk by diversifying their revenue streams. Unrelated diversification occurs when a company expands into a new product or market that is unrelated to its existing businesses. For example, a company that makes cars might also start making food or clothing. Unrelated diversification can be a risky strategy, but it can also be very rewarding.
If a company is able to successfully enter a new market, it can grow its business very quickly. However, if the company is not able to successfully integrate the new business, it can suffer financial losses.
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Many people view marketing and ethics in tension because in their view marketing A) Is a desperate effort of a used car salesperson B) only for short-term profits for the shareholders C) Following market trends without considering consequences D) All of the above Marketing strategy should be designed with which of the following in mind A)Stakeholder cooperation principles B)Firm's value proposition C) Respect for societal standards D) All of the above
Many people view marketing and ethics in tension because they feel that marketing is following market trends without considering consequences. The answer is C) Following market trends without considering consequences.
The marketing function is inherently linked to ethical issues, such as those related to advertising, pricing, and packaging. It has been shown in research that ethical conduct results in greater customer loyalty and trust, which in turn leads to increased profitability. Marketing strategy should be designed with "all of the above" in mind, that is, with the stakeholder cooperation principles, the firm's value proposition, and respect for societal standards. Marketing is an important tool for companies to communicate with customers and consumers, but it must be used ethically and responsibly. It is the duty of marketers to understand and respect the consumers' values and to act in their best interests.
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Suppose the manager of the pizza restaurant described in the prior question wants to try out a new idea for loyal lunch-time customers. The plan is to sell a card that entitles the customer to buy all the small pizzas they want in a given month, during lunch hours, at a substantial discount. Assume there is a way to make the card non- transferable. What is the optimal price to set for the card and the optimal price to charge for each pizza?
a. Price of card: $12
Price/pizza: $11
b. Price of card: $16
Price/pizza: $3
c. Price of card: $16
Price/pizza: $11
d. Price of card: $32
Price/pizza: $3
The optimal prices for the loyalty card and the price per pizza may vary based on factors such as cost, customer demand, and competition. However, option (c) with a price of $16 for the card and $11 per pizza seems to strike a balance between attracting customers with a discount and ensuring profitability for the pizza restaurant.
To determine the optimal prices for the loyalty card and the individual pizza, the restaurant manager needs to consider the cost and revenue implications of the discount program. The goal is to set prices that attract customers while ensuring profitability for the restaurant.
Option (c) with a price of $16 for the card and $11 per pizza may be the optimal choice. This pricing strategy strikes a balance between offering a substantial discount to incentivize customers to purchase the card and setting a reasonable price per pizza to generate revenue. The manager expects that customers who purchase the card will visit the restaurant multiple times during the month, offsetting the discounted price.
Option (c) aligns with the principle of price discrimination, where customers who are more likely to buy multiple pizzas are targeted with a lower per-pizza price through the loyalty card. By offering a discount on the card, the restaurant can generate upfront revenue and build customer loyalty.
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Beta Co purchased a new machine on 1 January 2020 for $220,000 (inclusive of GST), which it used to produce containers for its product for sale to retailers. The machine has an effective life of 10 years. Beta Co uses the diminishing value method of calculating the decline in value of its machines.
What amount can Beta Co deduct for the decline in value of the machine for the 2020/21 income year?
Beta Co can deduct $40,000 for the decline in the value of the machine for the 2020/21 income year.
To calculate the decline in the value of the machine, you can use the diminishing value method.
It is an accelerated depreciation method in which depreciation expense declines over time.
It works by applying a fixed depreciation rate to the asset's net book value at the beginning of each period.
Using the diminishing value method, the following formula is used to calculate the decline in the value of the machine:
(1 - Scrap value/Cost of the asset) × Depreciation rate × Opening wrote down value = Decline in value for the year
So, for the year 2020/21, the decline in the value of the machine can be calculated as follows:
Depreciation rate = 2 × (100/10) = 20% (double the straight-line depreciation rate of 10%)Cost of the asset = $220,000 - GST = $200,000
Scrap value = 0 (not given in the question)
Opening written down value = Cost of the asset
= $200,000Decline in value for the year
=(1 - 0/200,000) × 20% × $200,000= $40,000
Therefore, Beta Co can deduct $40,000 for the decline in the value of the machine for the 2020/21 income year.
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refer to the figure. before specialization and trade, adam and deirdre each divide his and her time equally between the production of tacos and burritos. then, both decide they could be better off if they specialized in the production of one good and traded with each other. if adam specializes in burritos and deirdre specializes in tacos and they trade 200 tacos for 125 burritos, adam and deirdre's gains from trade will be
According to the figure, before specialization and trade, Adam and Deirdre each divide their time equally between the production of tacos and burritos. Then, both decide they could be better off if they specialized in the production of one good and traded with each other.
If Adam specializes in burritos and Deirdre specializes in tacos and they trade 200 tacos for 125 burritos, Adam and Deirdre's gains from trade will be:Explanation:Before Specialization and trade:Adam:2 tacos + 2 burritosDeirdre:2 tacos + 2 burritosAdam's Opportunity Cost:Burrito=1 TacoDeirdre's Opportunity Cost:Taco=1 BurritoIf they specialize and trade, and Adam specializes in burritos, he will produce 4 burritos because he is twice as efficient as Deirdre in burrito production. Similarly, Deirdre will produce 4 tacos because she is twice as efficient in taco production than Adam. By specializing in producing what they are efficient in, they can increase their production and consumption of goods.As a result, they will trade 200 tacos for 125 burritos because Adam and Deirdre would prefer to specialize in producing the product that they are good at and trading for the other product.Adam’s 125 burritos cost him 125 tacos, and it took him 250 tacos to produce them. Thus he has gained 125 tacos from this trade. Similarly, Deirdre’s 200 tacos cost her 125 burritos, and it took her 200 burritos to produce them. Thus she has gained 75 burritos from this trade. Therefore, Adam and Deirdre’s combined gains from trade are 125 tacos + 75 burritos = 200.
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Which of the following is true in terms of the main difference between the concepts of Project Manager and Functional Manager?
a) Project manager only deals with projects, not department management. The functional manager only manages the partition.
b) Functional Manager manages all projects and department, Project manager manages project and department. There is no difference between them.
c) Functional manager adopts analytical approach while Project Manager adopts systems approach.
d) Functional Managers determine the personnel within the department themselves when establishing teams. The Project Manager does not determine the team, he works with the people and/or teams determined by the management.
Option D is true in terms of the main difference between the concepts of Project Manager and Functional Manager. Functional Managers determine the personnel within the department themselves when establishing teams. The Project Manager does not determine the team, he works with the people and/or teams determined by the management.
It is the Functional Managers who determine the personnel within the department themselves when establishing teams, but the Project Manager does not determine the team; instead, they work with the people and/or teams determined by the management. T he main difference between Project Manager and Functional Manager .Project Manager A project manager is responsible for leading a team in the achievement of specific project goals. He is a professional who is in charge of initiating, designing, executing, and delivering projects while making sure they are in line with the budget, timetable, and requirements. The Project Manager works on all the aspects of the project, including budget, resources, time, and quality management. They supervise project execution and monitor the activities of the project team to ensure that the project meets the set objectives and is completed within the specified timeframe. Functional managers are responsible for the operation of specific functional units or departments within an organization. They are in charge of monitoring, planning, and coordinating various activities within their departments. They are responsible for ensuring that the department meets its goals and objectives and that the company's overall goals are met. They may also be responsible for developing strategies for the development of their departments or functional units.To sum it up, the main difference between the two is that a functional manager is in charge of a particular department, while a project manager is in charge of a specific project. A functional manager is responsible for a department's general objectives, while a project manager is responsible for specific project objectives.
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Intro Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.1% and a yield to maturity of 5%. Simple Corp 's average tax rate is 18% and its marginal tax rate is 29%. Part 1 What is the (pre-tax) cost of debt? 3+ decimals Submit Part 2 What is the after-tax cost of debt? 4+ decimals Submit BAttempt 1/10 for . BAttempt 1/10 for . » Problem 7 Intro The risk-free rate is 1.5% and the expected return for the market is 8%. Assume that the CAPM holds Part 1 What is the cost of equity for stock 1? 3+ decimals Submit Part 2 What is the cost of equity for stock 27 3+ decimals Security Stock 1 Stock 2 Stock 3 Submit Part 3 What is the cost of equity for stock 37 4+ decimals Beta 1.3 1.2 0.3 BAttempt 1/10 for . BAttempt 1/10 for . B Attempt 1/10 for «»> Problem 5 Intro Lugget Corp. has one bond issue outstanding with an annual coupon of 4%, a face value of $1,000 and a price of $922.78, which matures in 10 years. The company's tax rate is 29%. Part 1 What is Lugget's pre-tax cost of debt? 3+ decimals Submit Part 2 What is the company's after-tax cost of debt? 4+ decimals Submit
The after-tax cost of debt is 2.84%.Part 1: The pre-tax cost of debt is 3.1%, as given in the question. This is the coupon rate for the bond issue outstanding.Part 2:To find the after-tax cost of debt, we need to use the formula for after-tax cost of debt.After-tax cost of debt = pre-tax cost of debt × (1 - tax rate)
The tax rate to be used here is the marginal tax rate of 29%. Therefore,After-tax cost of debt = 3.1% × (1 - 0.29)After-tax cost of debt = 2.199% (4 decimals)Therefore, the after-tax cost of debt is 2.199%.
Part 1:
First, we need to calculate the market risk premium, which is the difference between the expected return for the market and the risk-free rate. Market risk premium = Expected return for the market - Risk-free rate = 8% - 1.5% = 6.5%Next, we can use the CAPM formula to calculate the cost of equity for stock 1:Cost of equity = Risk-free rate + Beta × Market risk premium
Here, the beta is not given, so we cannot find the cost of equity for stock 1.Part 2: Similarly, the beta for stock 27 is not given, so we cannot find the cost of equity for stock 27.Part 3:Using the given beta of 1.3 for stock 37, we can use the CAPM formula to find the cost of equity:
Cost of equity = Risk-free rate + Beta × Market risk premium= 1.5% + 1.3 × 6.5%= 1.5% + 8.45%= 9.95%Therefore, the cost of equity for stock 37 is 9.95%.Part 1:The pre-tax cost of debt is the coupon rate of 4%, which is the annual interest payment on the bond issue. Therefore,Pre-tax cost of debt = Coupon rate = 4% = 0.04Part 2:To find the after-tax cost of debt, we need to use the formula for after-tax cost of debt.
After-tax cost of debt = pre-tax cost of debt × (1 - tax rate)The tax rate to be used here is the average tax rate of 29%. Therefore,After-tax cost of debt = 4% × (1 - 0.29)After-tax cost of debt = 2.84% (4 decimals)Therefore, the after-tax cost of debt is 2.84%.
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The following regressions compare total compensation among top executives in a large set of US public corporations in the 1990s. Let Female be an indicator variable that is equal to 1 for females and 0 for males. Two more variables, the market value of the firm (a measure of firm size in millions of dollars) and stock return a measure of firm performance, in percentage points) are added to the second regression
In Earnings) 6.48 -0.44Female
In(Earnings) 3.86 0.28 Female +0.37ln(Market Value) + 0.004 Return
Based on the above result are large firms more likely than small firms to have female top executives? (Please state Yes or No before you give reasoning!
(1점)
Yes, large firms are more likely than small firms to have female top executives based on the given regression results.
In the second regression equation, the coefficient of the ln(Market Value) variable is positive (0.37), indicating that as the market value of the firm (a measure of firm size) increases, total compensation for top executives also increases. Since larger firms tend to have higher market values, this suggests that larger firms offer higher compensation to their top executives. Additionally, the coefficient of the Female variable is positive (0.28), implying that female executives have higher total compensation compared to male executives, holding other variables constant. Therefore, when considering both variables, it can be inferred that large firms, which typically have higher market values, are more likely to have female top executives. This is supported by the positive coefficients of both the ln(Market Value) and Female variables in the regression equation.
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You purchased 5,000 shares in the New Pacific Growth Fund on January 2, 2019, at an offering price of $42.40 per share. The front-end load for this fund is 5 percent, and the back-end load for redemptions within one year is 2 percent. The underlying assets in this mutual fund appreciate (including reinvested dividends) by 6 percent during 2019, and you sell back your shares at the end of the year. If the operating expense ratio for the New Pacific Growth Fund is 1.5 percent, what is your total return from this investment? (Assume that the operating expense is netted against the fund's return.) (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Total return = (Net amount received - Operating expense deduction - Amount paid) / Amount paid . To calculate the total return from the investment, we need to consider the front-end load, back-end load, expense ratio, and the appreciation of the underlying assets.
Given:
Number of shares purchased = 5,000
Offering price per share = $42.40
Front-end load = 5%
Back-end load = 2%
Expense ratio = 1.5%
Appreciation of underlying assets = 6%
Calculate the amount paid for the shares:Amount paid = Number of shares * Offering price per share
Amount paid = 5,000 * $42.40
Calculate the amount deducted for the front-end load:Front-end load amount = Amount paid * Front-end load percentage
Calculate the net amount invested:Net amount invested = Amount paid - Front-end load amount
Calculate the amount received upon redemption:Amount received = Net amount invested * (1 + Appreciation)
Calculate the back-end load deducted:Back-end load amount = Amount received * Back-end load percentage
Calculate the net amount received after deducting the back-end load:Net amount received = Amount received - Back-end load amount
Calculate the operating expense deduction:Operating expense deduction = Net amount received * Expense ratio
Calculate the total return:Total return = (Net amount received - Operating expense deduction - Amount paid) / Amount paid
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Which of the following is not considered an operating budget? A. Manufacturing cost budget. B. Production schedule. C. Capital expenditures budget. D. Sales forecast.
An operating budget is an estimate of expenditures and revenues over a set period of time (usually a year) for a particular organization, business, or project.
The objective of the operating budget is to forecast the organization's financial situation, and it generally includes all the expected revenue streams and expenditures for that period. The following are the components of an operating budget, Production Budget Sales budget Selling and administration budget Cash budget. The manufacturing cost budget, production schedule, and sales forecast are all considered parts of an operating budget. Therefore, options A, B, and D are all considered operating budgets.
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A 50-day maturity money market security has a bond equivalent yield of 3.60 percent. What is the security's EAR? State your answer as a percentage and round to two decimal places (e.g. four and a quarter percent would be expressed as 4.25).
To calculate the Effective Annual Rate (EAR) from the Bond Equivalent Yield (BEY), we need to take into account the compounding frequency. Since the money market security has a 50-day maturity, we assume that it compounds on a daily basis.
The formula to convert BEY to EAR is:
EAR = (1 + (BEY / m))^m - 1
Where BEY is the Bond Equivalent Yield and m is the number of compounding periods per year.
Since the security has a 50-day maturity, which is less than a year, we need to adjust the compounding frequency. There are 365 days in a year, so we divide 365 by 50 to find the number of compounding periods:
m = 365 / 50 = 7.3 (approx.)
Now we can calculate the EAR:
EAR = (1 + (0.0360 / 7.3))^7.3 - 1 ≈ 0.0367 or 3.67%
Therefore, the security's Effective Annual Rate (EAR) is approximately 3.67%.
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Eva spends all her 600PLN bonuses on sweets and cosmetics.
Draw the Eva's budget line, knowing that her favorite sweet costs PLN 10 per pack and the price of cosmetics is PlN25.
=how will Eva's situation affected by the bonuses of PLN 50 increase?
=what will happen if the price of cosmetics increases to PLN30?
=how, from the point of view of initial situation, we will evaluate the following quantitative combinations?
- 30 package of sweets and 15 cosmetics
-60 package of sweets and 24 cosmetics
-20 package of sweets and 10 cosmetics
-10 package of sweets and 15 cosmetics
To draw Eva's budget line, we will use a graph with sweets (x-axis) and cosmetics (y-axis) as the two goods the budget line reflects the feasible combinations of sweets and cosmetics Eva can purchase given her budget and the prices of the goods.
1. Initially, with a bonus of 600PLN, Eva's budget line can be represented by connecting two points on the graph: (60, 24) and (0, 24). These points indicate that Eva can either buy 60 packs of sweets (600PLN/10PLN) or 24 cosmetics (600PLN/25PLN). The budget line shows all possible combinations of sweets and cosmetics that Eva can afford with her bonus.
2. If the bonuses increase by 50PLN, Eva's budget line will shift outward parallel to the original line. This means that she can now afford higher quantities of both sweets and cosmetics. The new budget line would connect points (70, 28) and (0, 28), reflecting the increased purchasing power.
3. If the price of cosmetics increases to 30PLN, Eva's budget line will rotate inward from the y-axis intercept. The new budget line would connect points (60, 20) and (0, 20), indicating that she can now afford fewer cosmetics for the same quantity of sweets.
4. Evaluating the quantitative combinations:
- 30 packages of sweets and 15 cosmetics: This combination lies on the original budget line, indicating that it is affordable within Eva's budget.
- 60 packages of sweets and 24 cosmetics: This combination is also on the original budget line, showing that it is affordable within Eva's budget.
- 20 packages of sweets and 10 cosmetics: This combination is on the original budget line, indicating that it is affordable.
- 10 packages of sweets and 15 cosmetics: This combination lies inside the budget line, suggesting that it is affordable, but Eva has additional purchasing power left to buy more goods.
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The dollar amount attributed to the value of the brand, based on all the intangible qualities that create that value is called ? Brand logo 12 Brand equity 15 Customer equity brand value Question 11 (1 point) A firm can obtain new products in two ways. One is through acquisition-by buying a whole company, a patent, or a license to produce someone else's product. The other is through the firm's own new-product development efforts True False 5 Question 8 (1 point) what influences the consumer behavior ? o social factor 2 O personal factor 5 O cultural factor all of the above
Question 8: The correct answer is True. All of the above influence consumer behavior. The consumer behavior of people is influenced by various factors including social, personal, and cultural factors. These factors play a vital role in shaping the buying behavior of the consumers.
The dollar amount attributed to the value of the brand, based on all the intangible qualities that create that value is called brand value. Brand value is the dollar amount attributed to the value of the brand, based on all the intangible qualities that create that value. It represents the value of the brand name, symbol, logo, reputation, and the like, in monetary terms. It’s the most common form of brand equity used to identify the value of a brand. The following are the answers to the two other questions: Question 11: A firm can obtain new products in two ways. One is through acquisition-by buying a whole company, a patent, or a license to produce someone else's product. The other is through the firm's own new-product development efforts.
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None of the above 7. Which of the following is NOT an assumption of the Miller & Modigliani theorem? A. Investors can borrow and lend at the same rate that corporations can B. Capital markets are perfect C. Information asymmetries exist between management and stockholders D. No taxes E. All of the above are assumptions of the Miller & Modigliani theorem 8. Tetroid Corporation has $51 million worth of debt. The company pays a corporate tax rate of 17%. There are no personal taxes on debt or equity income. What is the present value of Tetroid's interest tax shield? A. $3 million B. $300 million C. $8.67 million D. $17 million E. None of the above 9. Sponsyllo Corp has debt of $15 million that pays an interest rate of 8%, equity of $5 million, and the required return on assets is 12%. The company does not pay any taxes. What is Sponsyllo's cost of equity? A. 20% B. 12% 14% D. 82/3% E. None of the above C. 10. If a Corporation must pay income taxes, the Miller & Modigliani model predicts that A. Capital structure is irrelevant B. Capital structure is important: Tax advantage for debt over equity C. Capital structure is important: Tax advantage for preferred stock D. Both A and C E. None of the above 11. According to Miller, if personal taxes on income from stocks increase, holding all else equal, then A. Gains from leverage will increase B. Gains from leverage will decrease C. The effects of changes in leverage are uncertain D. The personal tax rates on interest income are irrelevant E. None of the above D. The personal tax rates on interest income are irrelevant E. None of the above 12. According to the textbook, companies that have large amounts of nondebt tax shields A. Should not use much debt financing compared with other companies B. Should use more debt financing than other companies C. Should use debt financing with higher interest rates D. Both B and C E. All of the above 13. Why is debt financing referred to as "leverage"? A. It pulls management's levers B. It levels all firms to a common basis C. It magnifies the return on equity of a firm D. Both A and B E. None of the above 14. How do firms know their optimal debt equity ratio? A. The ratio where Weighted Average Cost of Capital is maximized B. The ratio where Weighted Average Cost of Capital is minimized C. Optimal debt equity ratio is always zero D. Optimal debt equity ratio is one E. None of the above 15. Why does the marginal benefit of debt decline as the amount of debt on a firm's balance sheet rise? A. More debt means lower interest expense and lower probability of losses B. More debt means higher interest expense and higher probability of losses C. More debt means less deductibility per IRS codes D. More debt means greater likelihood of being delisted from a stock exchange E. None of the above 16. Which of the following are examples of indirect bankruptcy costs? A. Attorneys fees B. Accountants fees C. Loss of customers D. Administrative costs E. None of the above 17 According to the Packing Order Thaona firm
7. Which of the following is NOT an assumption of the Miller & Modigliani theorem?
Option E. All of the above are assumptions of the Miller & Modigliani theorem is the correct answer.
None of the options is not an assumption of the Miller & Modigliani theorem. 8. Tetroid Corporation has $51 million worth of debt. The company pays a corporate tax rate of 17%. There are no personal taxes on debt or equity income. The present value of Tetroid's interest tax shield is Option A. $3 million.
PV of interest tax shield = DTCCost of debt= $51 millionInterest rate = tax rate = 17%PV of interest tax shield = $51 million x 17% = $8.67 million 9. Sponsyllo Corp has debt of $15 million that pays an interest rate of 8%, equity of $5 million, and the required return on assets is 12%. The company does not pay any taxes. Sponsyllo's cost of equity is 12%.
Option B. 12% is the correct answer.Given that debt (D) = $15 million, equity (E) = $5 million and the cost of debt (Kd) = 8%.The required rate of return on assets (Ks) = 12%.
Weighted Average Cost of Capital (WACC) = (E/(D+E))Ke + (D/(D+E))Kdwhere Ke = cost of equity; D = debt, E = equityKd = 8%Ke = ?WACC = 12%5,000,000/20,000,000 (Ke) + 15,000,000/20,000,000 (0.08) = 0.12Ke = 12%10.
If a Corporation must pay income taxes, the Miller & Modigliani model predicts thatOption B. Capital structure is important: Tax advantage for debt over equity is the correct answer.
11. According to Miller, if personal taxes on income from stocks increase, holding all else equal, then
Option B. Gains from leverage will decrease. is the correct answer.
12. According to the textbook, companies that have large amounts of nondebt tax shieldsOption B. Should use more debt financing than other companies is the correct answer.
13. Why is debt financing referred to as "leverage"?
Option C. It magnifies the return on equity of a firm is the correct answer.14. How do firms know their optimal debt equity ratio?
Option B. The ratio where Weighted Average Cost of Capital is minimized is the correct answer.
15. Why does the marginal benefit of debt decline as the amount of debt on a firm's balance sheet rise?
Option B. More debt means higher interest expense and higher probability of losses is the correct answer.
16. Which of the following are examples of indirect bankruptcy costs?
Option E. None of the above is the correct answer.
17. According to the Packing Order Thaona firm
Option E. None of the above is the correct answer.
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