To determine the number of different securities required for a market to be complete, we need to consider the number of states of the world. Each state represents a distinct outcome or scenario. In this case, since the question mentions Arrow-Debreu securities are available, we can assume that each state corresponds to a specific security.
The number of different securities required for the market to be complete is equal to the number of states of the world. Let's denote this as "n". Therefore, at least "n" different securities are required for the market to be complete.
To compute the equilibrium fair weather state price, we need more information regarding the specific probabilities of different states and their corresponding payoffs. Without this information, it is not possible to compute the equilibrium fair weather state price. Similarly, to compute the equilibrium traded quantity of the fair weather atomic (Arrow-Debreu) security, we need additional information such as the risk preferences of market participants, utility functions, and other market dynamics. Without these details, it is not possible to determine the equilibrium traded quantity.
In summary, while we can determine the minimum number of securities required for market completeness, further information is needed to compute the equilibrium fair weather state price and the equilibrium traded quantity of the fair weather atomic secu
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a) Provide a reason why a company would prefer to hedge over taking an insurance to minimize on risks. (4 marks) b) Your house is worth $200,000. Your risk of a catastrophic flood is 0.5 percent. Such a flood would destroy your house and would not be covered by homeowner's insurance. Although you grumble, you buy flood coverage for $1,200. Are you being Risky or Risk Averse? Justify your answer. (4 marks) c) There are 200 people of two types on the road: good drivers and bad drivers. Good drivers (G) have a 1% chance of causing an accident while bad drivers (B) have a 5% chance of causing an accident. The proportion of bad drivers is 0.5, so the proportic of good drivers is 0.5. The cost of an accident is $6,000. Good drivers have a willingness to pay for insurance of $200 while bad drivers have a willingness to pay of $400. I. Suppose the insurance company knows each driver's type. What premium would th insurance company charge each type of driver? (Assume the insurance company breaks even, so the premium is equal to the expected cost.) (4 marks) II. Now suppose that the insurance company does not know the driver's type. What would the insurance company's expected profit be if it charged premiums based on the individual's self-reported type? (4 marks) III. Now suppose that the insurance company does not know the driver's type. What premiums would the insurance company charge if they did not have any information on the driver's type? Is there a pooling equilibrium? (4 marks)
a) A company may prefer to hedge over taking insurance to minimize risks because hedging allows them to directly manage and control their exposure to specific risks, tailor the hedge to their specific needs, and potentially avoid costs associated with insurance premiums and coverage limitations.
b) By buying flood coverage for $1,200 despite the low risk of a catastrophic flood, the person is being risk averse. They are willing to pay a premium to protect themselves against the potential loss, indicating a preference for avoiding the risk altogether rather than accepting the possibility of a significant financial loss.
c) I. The insurance company would charge good drivers a premium of $60 ($6,000 accident cost multiplied by 1% accident probability) and bad drivers a premium of $300 ($6,000 accident cost multiplied by 5% accident probability).
II. If the insurance company charges premiums based on self-reported types, the expected profit would be zero. Good drivers would pay $200, and bad drivers would pay $400, but the claims paid out would equal the premiums collected, resulting in no profit.
III. Without any information on driver types, the insurance company would charge a single premium of $150 ($6,000 accident cost multiplied by the weighted average accident probability of 3%). This creates a pooling equilibrium where both good and bad drivers pay the same premium, and the insurance company covers the overall risk.
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Question 5 Risk management is a process of identifying loss exposures faced by an organization and selects the most appropriate techniques for treating such exposures. (a) Explain SIX (6) steps of ris
Risk management is a process of identifying loss exposures faced by an organization and selecting the most appropriate techniques for treating such exposures. The six (6) steps of risk management are:
Step 1: Identify the risk Risk identification is the first and crucial step in risk management. In this phase, risk management experts collect data and information to understand and identify potential risks that the organization may face. Identifying these risks is essential to develop an effective risk management plan and strategy.
Step 2: Analyze the risk After identifying the risk, the next step is to analyze the risks to understand the probability of occurrence and the severity of the consequences. The risk analysis will determine the likelihood of the risk, its potential impact, and the organization's vulnerability.
Step 3: Evaluate the risk After analyzing the risks, risk managers need to evaluate the risks to determine their priority. They assess the likelihood of the risks occurring and the severity of the consequences.
Step 4: Treat the risk After evaluating the risk, the next step is to develop a treatment plan. The plan should outline specific actions to take to mitigate or avoid the risks identified. Different techniques can be used to treat the risks, including transferring the risk to an insurance company, accepting the risk, reducing the risk, or avoiding the risk.
Step 5: Monitor and review After treating the risk, the next step is to monitor and review the implemented treatment plans. Risk management experts should ensure that the plans are being followed, and evaluate the effectiveness of the treatments. They also need to review and update the risk management plan regularly.
Step 6: Communicate the risk Finally, communication is essential in risk management. Risk management experts must communicate the risks and risk management strategies with all stakeholders. Effective communication will ensure that everyone involved understands the risks and how they are being managed.
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Is demand elastic or inelastic at the profit-maximizing price
that a monopolist charges? Explain. Assume uniform price (no price
discrimination).
To determine whether demand is elastic or inelastic at the profit-maximizing price charged by a monopolist, we need to examine the price elasticity of demand.
Elasticity of demand measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.If the absolute value of price elasticity of demand (|PED|) is greater than 1, demand is considered elastic. If |PED| is less than 1, demand is considered inelastic. In the case of a monopolist, the profit-maximizing price is typically set where marginal revenue (MR) equals marginal cost (MC).
However, this price does not necessarily indicate whether demand is elastic or inelastic. To determine the elasticity of demand at the profit-maximizing price, we would need additional information, specifically the specific demand function or data points that describe the relationship between price and quantity demanded.
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What shifts the AD curve?
O Stickier prices
O Change in the growth of the money supply
O Change in the velocity of the money supply
O Productivity changes/technology changes
O A change in the expected inflation rate
O Smooth or disruptive production (pandemics, wars, natural disasters, or lack thereof)
O Changes in regulation
O Weather
It's important to note that these factors can interact with each other and other macroeconomic variables, leading to complex dynamics in the economy. Additionally, the direction and magnitude of the shifts in the AD curve can vary depending on the specific circumstances and context of the economy.
Several factors can shift the aggregate demand (AD) curve, representing the total demand for goods and services in an economy at different price levels. The following factors can cause shifts in the AD curve:
Change in the growth of the money supply: An increase in the money supply can lead to lower interest rates and increased borrowing and spending, shifting the AD curve to the right. Conversely, a decrease in the money supply can have the opposite effect, shifting the AD curve to the left.
Change in the velocity of the money supply: Changes in how quickly money circulates in the economy can impact aggregate demand. For example, if people start spending money more rapidly (higher velocity), it can lead to an increase in aggregate demand and a rightward shift of the AD curve.
Productivity changes/technology changes: Improvements in productivity or technological advancements can increase the overall output and efficiency of an economy. This can lead to an increase in aggregate demand as more goods and services are produced, causing the AD curve to shift to the right.
Change in the expected inflation rate: Expectations of future inflation can influence consumer and business spending decisions. If people anticipate higher inflation, they may increase their current spending, leading to a rightward shift of the AD curve. Conversely, if expectations of lower inflation prevail, it can shift the AD curve to the left.
Smooth or disruptive production: Events such as pandemics, wars, natural disasters, or lack thereof can have significant impacts on production and consumer spending. These disruptions can cause shifts in the AD curve depending on the severity and duration of the events.
Changes in regulation: Changes in government regulations can affect various sectors of the economy, impacting consumer and business spending patterns. For example, deregulation can stimulate economic activity and shift the AD curve to the right, while increased regulation can have the opposite effect.
Weather: Extreme weather conditions, such as severe storms or droughts, can disrupt production and affect consumer spending patterns. Changes in weather conditions can lead to shifts in the AD curve, depending on the specific impact on the economy.
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Wang Company manufactures and sells a single product that sells for $320 per unit; variable costs are $176 per unit. Annual fixed costs are $927,000. Current sales volume is $4,260,000. Management targets an annual income of $1,185,000. Compute the unit sales to earn the target income. Multiple Choice 6,438 11.109
The unit sales required to earn the target income can be calculated using the following formula:
Unit Sales = (Fixed Costs + Target Income) / Contribution Margin
First, we need to calculate the contribution margin per unit. The contribution margin is the difference between the selling price and the variable cost per unit.
Contribution Margin = Selling Price - Variable Cost
Contribution Margin = $320 - $176
Contribution Margin = $144
Next, we substitute the values into the formula:
Unit Sales = ($927,000 + $1,185,000) / $144
Unit Sales = $2,112,000 / $144
Unit Sales ≈ 14,667
Therefore, the unit sales required to earn the target income of $1,185,000 is approximately 14,667 units.
To determine the unit sales required to earn the target income, we need to calculate the contribution margin per unit. The contribution margin represents the amount of revenue that remains after deducting variable costs and is available to cover fixed costs and provide profit. In this case, the contribution margin is $144 per unit ($320 - $176). Then, we use the unit sales formula, which divides the sum of fixed costs and target income by the contribution margin. By substituting the values, we find that the unit sales required to earn the target income of $1,185,000 is approximately 14,667 units.
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: Zoe Young is a citizen of Argentina. She is employed by Idols (Pty) Limited, a South African company, at its branch in Argentina. Before 29 June 2014 (see below) she had never been to South Africa. She is not ordinarily resident in South Africa. Zoe Young was physically present in the following countries for the following periods, and for the following purposes: 2015 year of assessment - 1 March 2014 to 28 June 2014 working in Argentina (120 days), and - 29 June 2014 to 28 February 2015 working in South Africa (245 days). 2016 year of assessment - 1 March 2015 to 31 August 2015 working in South Africa (184 days), and - 1 September 2015 to 29 February 2016 working in Argentina (182 days). 2017 year of assessment - 1 March 2016 to 1 September 2016 working in Argentina (185 days), and - 2 September 2016 to 28 February 2017 working in South Africa (180 days).
2018 year of assessment - 1 March 2017 to 22 May 2017 working in South Africa (83 days), - 23 May 2017 to 17 February 2018 working in Argentina (271 days), and - 18 February 2018 to 28 February 2018 working in South Africa (11 days). 2019 year of assessment - 1 March 2018 to 31 May 2018 working in Argentina (92 days), - 1 June 2018 to 30 June 2018 on holiday in the United Kingdom ( 30 days), and - 1 July 2018 to 28 February 2019 working in South Africa (243 days). 2020 year of assessment - 1 March 2019 to 31 May 2019 working in South Africa (92 days), - 1 June 2019 to 31 July 2019 working in Argentina (61 days), - 1 August 2019 to 31 October 2019 working in South Africa (92 days), - 1 November 2019 to 30 November 2019 on holiday in South Africa (30 days), and - 1 December 2019 to 29 February 2020 working in Argentina (91 days). 2021 year of assessment - 1 March 2020 to 31 October 2020 working in Argentina (245 days), - 1 November 2020 to 30 November 2020 working in South Africa (30 days), - 1 December 2020 to 31 December 2020 on holiday in France (31 days), and - 1 January 2021 to 28 February 2021 working in Argentina (59 days). You are required to 1. determine whether Zoe Young is a resident of the Republic for the 2020 year of assessment, 2. if she is, state from which date she is subject to normal tax as a resident, 3. if she is, state from which date she ceases to be subject to normal tax as a resident, 4. determine whether she is a resident of the Republic for the 2021 year of assessment, and 5. Re-determine whether she is a resident of the Republic for the 2021 year of assessment on the basis that she had been working in Argentina from 1 March
2020 to 31 October 2020 (245 days) and working in South Africa from 1 November 2020 to 28 February 2021 (120 days).
Zoe Young is a resident of the Republic (South Africa) for the 2020 year of assessment.
She is subject to normal tax as a resident from 1 March 2019, based on her physical presence and work in South Africa.
She ceases to be subject to normal tax as a resident from 31 May 2019 when she finished working in South Africa and returned to Argentina.
Based on the provided information, Zoe Young meets the residency criteria for the 2020 year of assessment. According to South African tax regulations, an individual is considered a resident if they meet the physical presence test (more than 91 days in total during the year of assessment and at least 91 days in each of the preceding five years of assessment) and the ordinarily resident test (meaning their primary or permanent home is in South Africa).
In 2020, Zoe Young spent a total of 92 days working in South Africa from 1 March 2019 to 31 May 2019, which satisfies the physical presence test. However, as she is not ordinarily resident in South Africa, her residency status is solely based on the physical presence test.
As a result, Zoe Young is considered a resident for the 2020 year of assessment, subject to normal tax from 1 March 2019 when she started working in South Africa. She ceases to be subject to normal tax as a resident from 31 May 2019 when she finished working in South Africa and returned to Argentina.
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A bond selling at a discount will have:
Group of answer choices
A coupon rate lower than the YTM, and a price lower than the face value.
A coupon rate lower than the YTM, and a price higher than the face value.
A coupon rate higher than the YTM, and a price lower than the face value.
A coupon rate higher than the YTM, and a price higher than the face value.
When a bond sells at a discount, it will have a coupon rate lower than the YTM, and a price lower than the face value.T
he bond is sold at a discount when the bond's coupon rate is lower than the market interest rate of the bond. The market interest rate is also referred to as the yield to maturity (YTM). This is because investors are willing to pay a lesser amount for the bond if the interest rate is lower than the market interest rate. Therefore, when a bond is sold at a discount, it has a coupon rate lower than the YTM, and a price lower than the face value.
The face value of a bond is the principal amount that the issuer of the bond has to pay the bondholder at the time of maturity. It is the amount that the bondholder will receive if the bond is held until maturity. In contrast, the coupon rate is the annual interest rate paid on the bond, and it is calculated as a percentage of the bond's face value.
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Over the past few months, gold price has increased with heightened tensions in the Middle East. However, in recent days, the price of gold begins to bounce back to normal level due to several rounds of global peace talk. Consider a trader working for an investment bank. The trader took a long position in a forward contract at the onset of the gold price increase several months ago, and she is now concerned of losing any unrealized gains made on the original long forward position. As such, the trader takes a short position in the gold spot market.
How would you describe the trader’s initial position when she long the forward several months ago, and current position when she short gold in the spot market?
The trader speculated several months ago, and she is now also speculating
The trader speculated several months ago, and she is now hedging
The trader hedged several months ago, and she is now also hedging
The trader hedged several months ago, and she is now speculating
The correct description is:
The trader speculated several months ago, and she is now hedging.
The trader's initial position when she took a long position in the forward contract several months ago can be described as speculation. By going long on the forward contract, the trader was taking a speculative position, anticipating that the price of gold would increase in the future.
However, the trader's current position, where she takes a short position in the gold spot market, can be described as hedging. By shorting gold in the spot market, the trader is taking a position to offset or mitigate potential losses on her original long forward position. This action is taken to hedge against the risk of losing unrealized gains made on the long forward position.
Therefore, the correct description is:
The trader speculated several months ago, and she is now hedging.
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which ics function is responsible for documentation of mutual agreements
Answer:
The ICS function responsible for documentation of mutual agreements is the Planning Section.
Explanation:
Within the Incident Command System (ICS), the Planning Section is responsible for documenting mutual agreements. This section assists in the development of the Incident Action Plan (IAP), which outlines the objectives, strategies, and tactics for managing the incident. As part of the planning process, the Planning Section maintains records of agreements made with other agencies, organizations, or stakeholders involved in the incident response.
These mutual agreements may include resource sharing, coordination protocols, and operational procedures. Proper documentation of these agreements is crucial for maintaining clear communication, accountability, and effective collaboration among all involved parties.
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QUESTION 3
Mugg & Peanuts (Pty) Ltd ("Mugg & Peanuts") is a full-service "on-the-move", coffee-themed franchise restaurant chain originating from South Africa, founded in 1998. The company has elected to apply the International Financial Reporting Standards in its financial reporting and has a 30 June financial year-end.
Mugg & Peanuts entered into a contract with a specialist coffee roaster, Roasted Beans Limited ("Roasted Beans"), to purchase 250 kg of coffee beans per month for a three-year period. The origin of the beans and the level of roasting is specified in the agreement. The coffee beans are to be the "house-blend" for Mugg & Peanuts.
Roasted Beans has only one coffee roasting machine that can be meet the needs of Mugg & Peanuts and is unable to supply the beans from another roaster. Roasted Beans has capacity to produce 1 000 kg of beans per month. Roasted Beans makes all decisions relating to the operation of the coffee roasting machine including the level of production and can supply any customers with the remaining output after fulfilling the contract with Mugg & Peanuts.
The finance director of Mugg & Peanuts, a registered and experienced chartered accountant, has analysed the terms and conditions of the agreement and concluded that, in substance, the agreement contains a lease in terms of IFRS 16 Leases. He has explained that since the coffee roasting machine is dedicated to the needs of Mugg & Peanuts, a right- of-use asset and a corresponding lease liability should be recognised in the statement of financial position.
REQUIRED MARKS
(1) Discuss whether you agree with the comments
of the finance director of Mugg & Peanuts (Pty) Limited,
in terms of IFRS 16 Leases. [13]
Communication skills-clarity of expression [1]
Yes, I agree with the comments of the finance director of Mugg & Peanuts (Pty) Ltd. that the agreement with Roasted Beans should be treated as a lease in accordance with IFRS 16 Leases.
IFRS 16 Leases provides guidelines for the recognition, measurement, presentation, and disclosure of leases in financial statements. Under this standard, a lease is defined as a contract that conveys the right to use an asset for a period of time in exchange for consideration.
In the case of Mugg & Peanuts, the agreement with Roasted Beans involves the dedicated use of the coffee roasting machine for a specified period. The coffee roasting machine is essential for Mugg & Peanuts' business operations and represents a right-of-use asset that should be recognized on their statement of financial position. Simultaneously, a corresponding lease liability should be recognized, representing the obligation to make lease payments over the lease term.
By recognizing the lease asset and liability, Mugg & Peanuts will provide a more comprehensive and accurate representation of their financial position. It aligns with the objective of IFRS 16 to ensure transparency and comparability in financial reporting.
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According to Harris, value traders:
a.
Buy and sell misvalued instruments
b.
Other
c.
Trade on price discrepancies between two or more markets
d.
Complete quick round-trip trades without assuming much inventory risk
e.
Offer liquidity to obtain better prices for trades they want to do
According to Harris, block dealers traders:
a.
Buy and sell misvalued instruments
b.
Offer liquidity to obtain better prices for trades they want to do
c.
Trade on price discrepancies between two or more markets
d.
Complete quick round-trip trades without assuming much inventory risk
e.
Other
Value traders and block dealers are two different types of traders in the financial market. According to Harris, both types of traders have their own distinctive features. Value traders generally focus on purchasing undervalued securities and selling them once their market value rises to realize a profit. They perform quick round-trip trades without assuming much inventory risk.
On the other hand, block dealer traders focus on buying and selling large blocks of securities, such as stocks and bonds. They typically trade with institutional clients, such as mutual funds and pension funds, and perform market-making services.
Quick round-trip trades are trades that are executed quickly, with the aim of generating a profit in a short period. Value traders perform such trades by looking for securities that are undervalued in the market, purchasing them, and then selling them once the market price increases.
Block dealers, on the other hand, perform market-making services, which involves buying and selling large blocks of securities at the bid and ask prices quoted by them. They do not usually hold any inventory positions, and their profits are generated through the bid-ask spread. Overall, value traders and block dealers play different roles in the financial market but both of these traders perform quick round-trip trades.
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A financial investment equal to BRL 100,000.00 allows a withdrawal of BRL 20,000.00 in the first year and an annual growth of 2% in the other withdrawals, up to the tenth year. Get the internal rate of return for this application
The internal rate of return (IRR) for the given financial investment is approximately 6.6%. This means that the investment is expected to generate a return of 6.6% per year, taking into account the initial withdrawal of BRL 20,000.00 in the first year and subsequent annual withdrawals with a growth rate of 2% up to the tenth year.
To calculate the internal rate of return, we need to find the discount rate that makes the present value of the cash inflows equal to the initial investment. In this case, the initial investment is BRL 100,000.00, and the cash inflows include the initial withdrawal of BRL 20,000.00 in the first year and subsequent withdrawals with a 2% growth rate. We can set up a discounted cash flow equation and solve for the discount rate using a financial calculator or software. By solving the equation, we find that the internal rate of return is approximately 6.6%, indicating the expected annual return on the investment. It's important to note that the IRR assumes that the cash inflows are reinvested at the same rate, which may not be realistic in practice.
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the hawthorne studies showed how _____ can influence work.
The Hawthorne studies showed how social and psychological factors can influence work.
The Hawthorne studies were a series of experiments conducted at the Western Electric Hawthorne Works in Chicago during the 1920s and 1930s. These studies aimed to understand the relationship between work conditions and employee productivity. However, the researchers discovered that various social and psychological factors had a significant impact on work outcomes.
The Hawthorne studies revealed that factors such as interpersonal relationships, group dynamics, leadership styles, and employee attitudes could significantly influence work performance. Researchers found that when employees felt valued, listened to, and included in decision-making processes, their productivity and job satisfaction increased. Additionally, the studies highlighted the importance of social interactions and informal social organization within the workplace.
The Hawthorne studies contributed to the development of the field of organizational behavior, emphasizing the significance of human factors in the workplace. They demonstrated that work outcomes are not solely determined by physical conditions or economic incentives but are also influenced by social and psychological factors.
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Toronto Food Services is considering installing a new refrigeration system that will cost $500,000. The system will be depreciated at a rate of 20% (Class 8) per year over the system’s five-year life and then it will be sold for $70,000. The new system will save $250,000 per year in pre-tax operating costs. An initial investment of $60,000 will have to be made in working capital. The tax rate is 35% and the discount rate is 10%. Calculate the NPV of the new refrigeration system.
The NPV of the new refrigeration system is $154,243.05. This suggests that the investment is expected to generate a return higher than the discount rate of 10%, making it a financially viable decision.
To calculate the Net Present Value (NPV) of the new refrigeration system, we need to determine the present value of the cash flows associated with the investment. Let's break down the cash flows and calculate the NPV.
Initial Investment:
Cost of the new refrigeration system: -$500,000
Working capital investment: -$60,000
Yearly Cash Flows:
Pre-tax operating cost savings: $250,000
Depreciation: -$500,000 * 20% = -$100,000 (Year 1)
Depreciation: -$500,000 * 20% = -$100,000 (Year 2)
Depreciation: -$500,000 * 20% = -$100,000 (Year 3)
Depreciation: -$500,000 * 20% = -$100,000 (Year 4)
Depreciation: -$500,000 * 20% = -$100,000 (Year 5)
Sale of the system: $70,000 (Year 5)
To calculate the NPV, we need to discount each cash flow to its present value using the discount rate of 10%. The formula for calculating the present value (PV) is:
[tex]PV = CF / (1 + r)^n[/tex] where CF is the cash flow, r is the discount rate, and n is the period.
Year 0:
Initial investment: -$500,000 - $60,000 = -$560,000
Present value of Year 0 cash flow = -$560,000 / (1 + 0.1)⁰ = -$560,000
Years 1-5:
Pre-tax operating cost savings: $250,000
Depreciation: -$100,000
Present value of Year 1-5 cash flows:
[tex]= (\$250,000 - \$100,000) / (1 + 0.1)^1 + (\$250,000 - \$100,000) / (1 + 0.1)^2 + (\$250,000 - \$100,000) / (1 + 0.1)^3 + (\$250,000 - \$100,000) / (1 + 0.1)^4 + (\$250,000 - \$100,000 + \$70,000) / (1 + 0.1)^5[/tex]
[tex]= \$150,000 / 1.1 + \$150,000 / 1.21 + \$150,000 / 1.331 + \$150,000 / 1.4641 + \$320,000 / 1.61051[/tex]
[tex]= \$136,363.64 + \$123,966.94 + \$112,233.45 + \$101,121.32 + \$198,881.60[/tex]
= $672,566.95
Sale of the system in Year 5:
Present value of cash flow = $70,000 / (1 + 0.1)⁵ = $41,677.10
NPV = PV of Year 0 cash flow + PV of Year 1-5 cash flows + PV of Sale in Year 5
= -$560,000 + $672,566.95 + $41,677.10
= $154,243.05
The NPV of the new refrigeration system is $154,243.05.
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If real GDP grew by 6 percent and population grew by 2 percent,
then real GDP per person grew by approximately ______ percent.
Select one:
A. 2
B. 3
C. 4
D. 8
The real GDP per person grew by approximately 4 percent (C).This means that, on average, each individual experienced an increase in their share of the total economic output.
The growth rate of real GDP per person is calculated by subtracting the population growth rate from the real GDP growth rate. In this case, real GDP grew by 6 percent and population grew by 2 percent.
To calculate the real GDP per person growth rate, we subtract the population growth rate from the real GDP growth rate:
Real GDP per person growth rate = Real GDP growth rate - Population growth rate
Substituting the given values:
Real GDP per person growth rate = 6% - 2% = 4%
Therefore, the real GDP per person grew by approximately 4 percent.
When real GDP grows, it indicates an expansion of the economy, reflecting increased production and higher incomes. However, population growth needs to be taken into account to understand the impact on individual well-being.
If population grows at a faster rate than real GDP, it can lead to a decrease in real GDP per person, indicating a decline in living standards. Conversely, when real GDP growth outpaces population growth, real GDP per person increases, implying improved living standards.
In this case, the 6 percent growth in real GDP outpaced the 2 percent population growth, resulting in a positive growth rate of 4 percent in real GDP per person. Hence, the answer is C.
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Concord Company has two divisions, Rice and Pine. Rice produces an item that Pine could use in its production. Pine currently is purchasing 15,000 units from an outside supplier for $21 per unit. Rice is currently operating at less than its full capacity of 503,000 units and has variable costs of $11.50 per unit. The full cost to manufacture the unit is $17. Rice currently sells 453,000 units at a selling price of $23 per unit.
a. What will be the effect on Concord Company's operating profit if the transfer is made internally?
b. What is the minimum transfer price from Rice's perspective?
c. What is the maximum transfer price from Pine's perspective?
Pine should not pay more than $21 per unit to acquire the item internally from Rice.
a. Concord Company's operating profit will increase if the transfer is made internally.
The variable cost of Rice for producing the item is $11.50 per unit.
The full cost of producing the item is $17 per unit. However, Pine buys the same item for $21 per unit from outside suppliers.
Therefore, the transfer price must not be more than $21 per unit.
Thus, the internal transfer will increase the operating profit.
b. The minimum transfer price from Rice's perspective is $11.50 per unit.
This is the variable cost of producing the item.
Therefore, the transfer price should be equal to or greater than $11.50 per unit from Rice's perspective.
c. The maximum transfer price from Pine's perspective is $21 per unit.
This is the cost at which Pine currently buys the item from the outside supplier.
Therefore, Pine should not pay more than $21 per unit to acquire the item internally from Rice.
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D15.3 [Comparing business cycles across countries] During the 2007- 2009 period, the economies of the United Kingdom and the United States experienced similar problems. High oil prices and a housing bubble affected both economies. The financial crisis in the United States also affected investment in the United Kingdom, both by limiting credit and by increasing risk premiums. Using data from the Federal Reserve Economic Data (FRED) website (fred.stlouisfed.org), examine the behavior of the U.K. economy from 2007 to 2011.
a. Download quarterly data for real GDP (GBRRGDPQDSNAQ) and the GDP deflator (GBRGDPDEFQISMEI) for the United Kingdom from 2006 to 2011. Calculate the growth rate of real GDP as the percentage change from the same quarter in the previous year and calculate the inflation rate as the percentage change in the GDP deflator from the same quarter in the previous year. Download data on the unemployment rate (LRHUTTTTGBQ156S) for the same time period. For the frequency of the unemployment rate data, select quarterly to match the frequency of the real GDP and GDP deflator data.
b. Download the three data series from part (a) for the years from 2007 to the present in the same graph. Download the same three data series GDP (GDPCl), GDP deflator (USAGDPDEFQISMEI) and unemployment rate (LRHUTTTTUSQ156S) for the United States for the same years. Briefly discuss the similarities and differences in the experiences of the United Kingdom and the United States during those years.
During the 2007-2009 period, both the economies of the United Kingdom and the United States experienced problems due to high oil prices and a housing bubble.
The behavior of the UK economy from 2007 to 2011 is analyzed using data from the Federal Reserve Economic Data (FRED) website, which provides quarterly data for real GDP, the GDP deflator, and the unemployment rate for the United Kingdom.
The frequency of the unemployment rate data is selected quarterly to match the frequency of the real GDP and GDP deflator data.
The United States and the United Kingdom experienced similar problems during the 2007-2009 period, including high oil prices and a housing bubble. The financial crisis in the United States also affected investment in the United Kingdom by limiting credit and increasing risk premiums.
The United States GDP growth rate decreased more significantly than the United Kingdom's GDP growth rate. The United States inflation rate also decreased more significantly than the United Kingdom's inflation rate. The United States unemployment rate increased more significantly than the United Kingdom's unemployment rate.
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Protex is a firm with market power that manufactures electronic wall safes used by both residential and commercial buyers. The firm has two separate plants where it produces its output. Engineers at the firm have estimated the variable costs of weekly production at each plant. These estimated functions are: TVC 1 =15Q 1 +0.5Q 1 2 and TVC 2 =40Q 2 +2Q 2 2 Notice that the variable costs of production are higher in plant 2 since it was the original manufacturing facility that was built in 2010. Plant 1 is a newer facility that was built in 2020 that takes advantage of newer technology and is therefore generally more efficient. The marketing department for the firm has estimated the following simple weekly demand function for the product: P=300−Q a. The company is considering whether to close the old plant. If it does, it will operate with plant 1 in a monopoly environment. Determine the profit maximizing output, price, and profits if it follows this strategy and fixed cost is $500 per week in the newer facility. b. If the company decides not to close the old plant, it will continue to operate both plants as a multi-plant monopoly. Determine the profit maximizing output at each plant and the total output. What price will the company charge and what are its profits if it follows this strategy and fixed costs are $500 per week at the old plant. c. Compare the outcomes of the 2 strategies and advise the firm on which strategy it should pursue. How exactly is it possible that utilizing both plants when one is clearly more cost efficient, produces higher profits than shutting down the relatively inefficient plant and serving the customer base using only the more efficient plant?
By operating both plants, the firm can produce a higher total output and potentially capture a larger market share, which can offset the higher costs of the less efficient plant.
a. If the company decides to close the old plant and operate with plant 1 as a monopoly, the profit-maximizing output can be determined by setting marginal cost equal to marginal revenue.
In this case, the marginal cost is given by the derivative of TVC1 with respect to Q1, which is MC1 = 15 + Q1, and the marginal revenue is equal to the derivative of the demand function with respect to Q, which is MR = 300 - 2Q.
Setting MC1 equal to MR, we have:
15 + Q1 = 300 - 2Q1
Solving for Q1, we get:
3Q1 = 285
Q1 = 95
Substituting this value of Q1 into the demand function, we can find the price:
P = 300 - Q1
P = 300 - 95
P = 205
The profit can be calculated as:
Profit = (P - MC1) * Q1 - Fixed Cost
Profit = (205 - (15 + Q1)) * Q1 - 500
Profit = (205 - 15 - 95) * 95 - 500
Profit = 95 * 95 - 500
Profit = $7,025
b. If the company decides to operate both plants as a multi-plant monopoly, the profit-maximizing output at each plant can be determined by setting marginal cost equal to marginal revenue for each plant. The marginal cost for plant 1 is MC1 = 15 + Q1, and for plant 2 it is MC2 = 40 + 4Q2.
Setting MC1 equal to MR and MC2 equal to MR, we have:
15 + Q1 = 300 - 2(Q1 + Q2)
40 + 4Q2 = 300 - 2(Q1 + Q2)
Solving these equations simultaneously, we can find the optimal outputs:
Q1 = 85, Q2 = 25
The total output is the sum of the outputs at each plant:
Total Output = Q1 + Q2
Total Output = 85 + 25
Total Output = 110
Substituting this value of Total Output into the demand function, we can find the price:
P = 300 - Total Output
P = 300 - 110
P = 190
The profit can be calculated as:
Profit = (P - MC1) * Q1 + (P - MC2) * Q2 - Fixed Cost
Profit = (190 - (15 + Q1)) * Q1 + (190 - (40 + 4Q2)) * Q2 - 500
Profit = (190 - 15 - 85) * 85 + (190 - 40 - 4 * 25) * 25 - 500
Profit = 85 * 85 + 25 * 25 - 500
Profit = $5,725
c. To compare the outcomes of the two strategies, we can compare the profits obtained from each strategy. The firm should pursue the strategy that results in higher profits.
It is possible that utilizing both plants, even with one being less cost-efficient, can lead to higher profits due to the economies of scale and the ability to meet a larger portion of the market demand. By operating both plants, the firm can produce a higher total output and potentially capture a larger market share, which can offset the higher costs of the less efficient plant.
Additionally, operating both plants allows the firm to potentially differentiate its products and serve different segments of the market. This can lead to higher overall profits by catering to a wider range of customer preferences.
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Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 10,000 units of the part that are needed every year.
Direct materials......$9.00
Direct labor....$3.00
Varibale overhead...$4.00
Supervisor's salary....&1.50
Depreciation of special equipment....$1.40
Allocated general overhead....$5.00
An outside supplier has offered to make the part and sell it to the company for $18.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $8,000 of these allocated general overhead costs would be avoided. Required:
a. Prepare a report that shows the effect on the company's total net operating income of buying part U67 from the supplier rather than continuing to make it inside the company.
b. Which alternative should the company choose?
a. To determine the effect on the company's total net operating income of buying part U67 from the supplier, we need to compare the costs of making the part internally with the cost of purchasing it externally.
Cost of making the part internally:
Direct materials: $9.00 per unit * 10,000 units = $90,000
Direct labor: $3.00 per unit * 10,000 units = $30,000
Variable overhead: $4.00 per unit * 10,000 units = $40,000
Supervisor's salary: $1.50 per unit * 10,000 units = $15,000
Depreciation of special equipment: $1.40 per unit * 10,000 units = $14,000
Allocated general overhead (avoided cost): $5.00 per unit * 10,000 units - $8,000 = $42,000
Total cost of making the part internally = $90,000 + $30,000 + $40,000 + $15,000 + $14,000 + $42,000 = $231,000
Cost of purchasing the part externally:
Number of units needed: 10,000 units
Cost per unit from the supplier: $18.00 per unit
Total cost of purchasing the part externally = $18.00 per unit * 10,000 units = $180,000
Effect on net operating income = Cost of making internally - Cost of purchasing externally
Effect on net operating income = $231,000 - $180,000 = $51,000 (a decrease in net operating income)
b. Based on the calculations, if the company chooses to buy part U67 from the supplier instead of making it internally, the total net operating income would decrease by $51,000. Therefore, the company should consider continuing to make the part internally as it results in higher net operating income.
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You have been tasked with creating the project charter for your new project to formally
authorize the project in your company. In this context, what should be done FIRST
Develop Project Management Plan
Identify a project manager for the project
Acquire Project Team
Integrate the work of the project with the ongoing operations of the performing organization
The project charter is a document that formally authorizes a project or phase. It formally identifies a project manager for the project and integrates the work of the project with the ongoing operations of the performing organization. It provides the project manager with the authority to apply organizational resources to project activities.
The project charter is a statement of the scope, objectives, and participants of a project. It is the first stage in the project planning process and helps to establish a framework for project management. A project charter should contain the following information:• Project name and description• Project scope and objectives• Key stakeholders and their roles and responsibilities• Project sponsor and project manager• Project duration and key milestones• Resource requirements• Budget and cost estimates• Risk management plan• Communication plan• Change management planIn conclusion, the project charter is an important document that provides the project manager with the authority to apply organizational resources to project activities. It integrates the work of the project with the ongoing operations of the performing organization and helps to establish a framework for project management.
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Which of the following would allow a Quebec employer to review their statement of account from Revenu Quebec on a regular basis?
Releve-1
My Account for Businesses online service
TeleReply
None of the above
The My Account for Businesses online service is an online platform that allows businesses to manage their accounts and access information about their statement of account from Revenu Quebec.
Therefore the answer is My Account for Businesses online service
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Assume that the demand curve D(p) given below is the market demand for widgets:
Q=D(p)=2631−23pQ=D(p)=2631-23p, p > 0
Let the market supply of widgets be given by:
Q=S(p)=−4+8pQ=S(p)=-4+8p, p > 0
where p is the price and Q is the quantity. The functions D(p) and S(p) give the number of widgets demanded and supplied at a given price.
1.What is the equilibrium price?
Please round your answer to the nearest hundredth.
2. What is the equilibrium quantity?
Please round your answer to the nearest integer.
3. What is the price elasticity of demand (include negative sign if negative)?
Please round your answer to the nearest hundredth.
4. What is the price elasticity of supply?
Please round your answer to the nearest hundredth.
The market equilibrium price is $113.96, the quantity is 219 units, the price elasticity of demand is -1.23, and the price elasticity of supply is 2.
To find the equilibrium price and quantity, we need to equate the quantity demanded and supplied. Setting D(p) equal to S(p), we have 2631 - 23p = -4 + 8p. Solving this equation, we find the equilibrium price to be approximately $113.96.
Substituting the equilibrium price into either the demand or supply function, we can calculate the equilibrium quantity. Using the demand function D(p), we have Q = 2631 - 23(113.96) ≈ 219 units.
To calculate the price elasticity of demand, we use the formula: PED = (ΔQ/Δp) * (p/Q). Using the equilibrium values, we can find the percentage change in quantity (∆Q) and price (∆p) and then substitute them into the formula. The price elasticity of demand is approximately -1.23.
Similarly, the price elasticity of supply can be calculated using the formula: PES = (ΔQ/Δp) * (p/Q). The elasticity is equal to the slope of the supply curve, which is the derivative of the supply function S(p). Calculating the derivative, we find PES = 2.
Therefore, the equilibrium price is $113.96, the equilibrium quantity is 219 units, the price elasticity of demand is -1.23, and the price elasticity of supply is 2.
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1,160 and the actual number of suits started and completed is 1,200. Opulence Clothing allocates FMOH to each suit using budgeted (DMLH) per suit. Data pertaining to (FMHO) for June 2018 are $52,200 budgeted and S63,915 actual. Required Begin by computing the following amounts for the FMOH. Required 1. Calculate the rate variance for FMOH. Comment on these results.
FMOH stands for Factory overheads. It is used to denote the indirect manufacturing costs such as rent, utilities, property taxes, etc. that are not included in direct labor and direct materials.
Calculating the rate variance for FMOH is essential to determine the differences in FMOH expenditure from the budgeted to the actual expenditure.Below are the calculations for rate variance for FMOH:Actual FMOH: $63,915Budgeted FMOH: $52,200
Difference: $11,715FMOH Rate: $52,200 / 1,160 = $45Rate Variance = (Actual Rate - Budgeted Rate) x Actual Hours= ($63,915 / 1,200) - $45 x 1,200= ($53.26 - $45) x 1,200= $102.72 (favorable variance).
The favorable variance suggests that the company paid a lower rate than the standard rate for FMOH. As a result, the company has saved money on FMOH expenditure.
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The CRA may assess a penalty of up to 10% of the required remittance amount the first time a remittance is late.
True
False
The statement The CRA may assess a penalty of up to 10% of the required remittance amount the first time a remittance is late is False.
The Canada Revenue Agency (CRA) may assess a penalty of up to 10% of the required remittance amount if a remittance is late more than once in a calendar year. The penalty for the first late remittance is 3% of the required remittance amount.
The following are the late remittance penalties that the CRA may assess:
3% if the amount is one to three days late.
5% if the amount is four to five days late.
7% if the amount is six to seven days late.
10% if the amount is more than seven days late, or if no amount is remitted.
If you are late with a remittance, you should contact the CRA as soon as possible to discuss your options. You may be able to avoid the penalty if you can show that the late remittance was due to extenuating circumstances.
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A customer has two payment options at a local furniture store when purchasing appliances worth $6000. a) Option1 - Down payment of 15%. - If paid off within 12 months, no interest charged. - If paid off after 12 months, simple interest is charged at 18% per year from the date of purchase. How much would the customer pay using this option if he made one payment for the entire balance after 12 months?
If the customer decides to make one payment for the entire balance after 12 months, he would have to pay $7080.
The customer has two payment options at a local furniture store when purchasing appliances worth $6000. Option 1 is to pay a down payment of 15% of the purchase price, and if the balance is paid within 12 months, no interest will be charged. However, if the balance is not paid within 12 months, simple interest will be charged at 18% per year from the date of purchase.
The customer wants to know how much he would pay using this option if he made one payment for the entire balance after 12 months.The first step in solving this problem is to find the amount of interest that would accrue if the balance is not paid within 12 months.
To do this, we will use the simple interest formula:
I = PRT,
where I is the interest, P is the principal, R is the interest rate, and T is the time in years.
In this case, the principal is $6000, the interest rate is 18%, and the time is 1 year.I = PRT = $6000 × 0.18 × 1 = $1080
So if the customer does not pay off the balance within 12 months, he will be charged $1080 in interest.Now let's assume that the customer does not pay off the balance within 12 months and instead decides to make one payment for the entire balance after 12 months.
In this case, the total amount owed would be the original purchase price plus the interest that has accrued. So the total amount owed would be:$6000 + $1080 = $7080
Therefore, if the customer decides to make one payment for the entire balance after 12 months, he would have to pay $7080.
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Reasons for the RDP House program’s existence, i.e. "business
drivers" and other factors that brought about the need for this
program: (Max. 5 lines, not 5 points)
The reasons for the RDP House program's existence, i.e., the business drivers and other factors that brought about the need for this program, include addressing the housing shortage, promoting socio-economic development, reducing inequality, improving living conditions, and fulfilling government commitments.
The RDP House program was established to tackle the housing shortage in South Africa and provide adequate housing for the population. It serves as a response to the social and economic challenges faced by many citizens, particularly those living in informal settlements and disadvantaged communities. By providing affordable housing, the program aims to uplift marginalized individuals and families, contributing to socio-economic development and poverty alleviation.
Additionally, the RDP House program seeks to reduce inequality by ensuring that all citizens have access to decent housing. It recognizes the importance of providing safe and secure living environments, which have a direct impact on the overall well-being and quality of life of individuals and communities.
Furthermore, the program aligns with the government's commitments and goals, such as the provision of basic services and the fulfillment of constitutional rights. It reflects a commitment to social justice and the realization of the right to adequate housing for all South Africans.
Overall, the RDP House program's existence is driven by the urgent need to address the housing crisis, promote socio-economic development, reduce inequality, improve living conditions, and fulfill government obligations to provide decent housing for all.
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QUESTION THREE (3)
a) Discuss three (3) types of compensation, along with
examples.
PLEASE I NEED SHORT ANSWERS
a) Three types of compensation include base salary, incentive-based pay, and benefits.
Base salary is the fixed amount of money an employee receives on a regular basis for performing their job. It is typically determined by factors such as job role, experience, and market rates. For example, a software engineer may have a base salary of $80,000 per year.
Incentive-based pay refers to compensation that is tied to an individual's performance or the achievement of specific goals. This can take the form of commissions, bonuses, or profit-sharing. For instance, a salesperson may receive a commission of 5% for every sale they make, motivating them to increase their sales volume.
Benefits encompass non-monetary rewards provided to employees, such as health insurance, retirement plans, vacation days, and tuition reimbursement. These benefits contribute to the overall well-being and job satisfaction of employees. As an example, a company may offer a comprehensive health insurance plan that covers medical, dental, and vision expenses. In summary, base salary provides a fixed amount of compensation, incentive-based pay aligns rewards with individual or organizational performance, and benefits offer additional perks and support to employees.
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Which of the following is an example of a decentralized privilege management solution?
Tacos
Work group
Active directory
Active directory is an example of a decentralized privilege management solution.
A decentralized privilege management solution refers to a system or approach where the control and management of privileges and access rights are distributed across various entities or individuals within an organization. This decentralization allows for more granular control and flexibility in managing user access to resources.
Tacos and work group are not examples of decentralized privilege management solutions. Tacos are a type of food, unrelated to privilege management. A work group typically refers to a team or a group of individuals working together on a specific task or project, which does not directly relate to privilege management either.
On the other hand, Active Directory is an example of a decentralized privilege management solution. Active Directory is a directory service provided by Microsoft Windows Server that allows for the centralized management of user accounts, authentication, and access control within a network environment. It enables administrators to define and manage access permissions for users and groups across various resources, such as files, folders, applications, and network services.
Active Directory decentralizes the privilege management process by distributing the control and management of user access rights to individual user accounts and groups. It provides a hierarchical structure where administrators can define and assign privileges based on organizational units, domains, and group policies, allowing for a more decentralized approach to privilege management.
Among the given options, Active Directory is an example of a decentralized privilege management solution. It provides a framework for decentralized control and management of user access rights within a network environment.
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(a) Treasury bond markets in New Zealand and the U.S. are dealer markets. What are the pros and cons of this market structure as compared to trading securities on an exchange? (b) The Reserve Bank of New Zealand reports the following (annually compounded) treasury bond spot rates (as of 26 July 2022). Can we conclude that the market is expecting short term interest rates to rise over the next 10 years? Discuss. (c) You are in the United States. The date is 26 July 2022. You decide that the market has under-estimated the yield on long term Treasury bonds. You observe the following bond: Describe how you would use this bond to trade in order to profit from your beliefs.
Pros: Higher liquidity, faster trades, competitive prices. Cons: Reliance on dealer integrity, limited transparency, potentially higher transaction costs compared to exchange trading. Not enough information. Spot rates alone do not indicate market expectations for short-term interest rates. Buy the bond at a lower price and hold it until the market realizes the higher yield, leading to capital gains upon selling.
(a) Dealer markets in treasury bond trading offer advantages such as increased liquidity, faster trade execution, and competitive prices due to market-making activities. However, cons include reliance on dealer integrity, limited transparency, and potentially higher transaction costs compared to exchange trading.
(b) The given spot rates alone do not provide enough information to conclude the market's expectations for short-term interest rates. Other factors like market sentiment, economic indicators, and monetary policy actions need to be considered for a comprehensive assessment of interest rate expectations.
(c) To profit from the belief of under-estimated long-term Treasury bond yields, one can buy the bond at a lower price and hold it until the market recognizes the higher yield. Selling the bond at a later date would generate capital gains as the bond price increases due to the realization of the higher yield.
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Benion Corp issued the following bond at 103 : Maturity amount and date: $160,000 due in 10 years Interest: 10 percent per year payable each December 31 Determine the carrying value reported on the balance sheet at the issue date. Multiple Choice $155,200 $160,000 $160,480
The carrying value reported on the balance sheet at the issue date would be $160,000.
The carrying value reported on the balance sheet at the issue date would be $160,000. This value represents the maturity amount of the bond, which is the amount that Benion Corp is obligated to repay to bondholders at the end of the bond's maturity period. Since the bond was issued at 103, indicating a premium of 3%, the carrying value remains the same as the maturity amount. Therefore, the carrying value reported on the balance sheet at the issue date is $160,000.
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