True! Total liabilities represent all amounts of money that a company is legally obligated to pay to another party, such as creditors and customers.
This includes both current liabilities, which are obligations due within the current financial year, and non-current liabilities, which refer to liabilities that are due in future years. The sum of non-current liabilities and current liabilities is equal to total liabilities. This is because when a company reports on its financial position, it accounts for both debts due now, and debts that are not due for some time; the sum of the two is the company’s total liabilities.
Non-current liabilities refer to long-term obligations, such as bonds, mortgages, line of credit, and pension obligations. Current liabilities are the obligations that must be paid in full within a year’s time. Examples of current liabilities are accounts payable, salaries, wages, taxes payable, and other short-term credit arrangements.
A company’s liabilities, expressed as a percentage of total assets, are an indication of the company’s financial health. Generally, the higher the percentage of total liabilities relative to total assets, the riskier the company is considered to be. For this reason, investors and creditors will use the total liabilities to total assets ratio to assess the financial health of a company before investing or lending money. To sum up, total liabilities equal the sum of current and non-current liabilities, and the total liabilities to total assets ratio is a good indicator of a company’s financial health.
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1.Many experts believe the US PPC is not increasing as fast as
it could. List 2 government policies/laws that would likely result
in an increased US PPC over time.
The US PPC refers to the production possibilities curve in the United States. It is a graphical representation of the maximum number of goods and services an economy can produce with its existing resources and technology, given full employment of those resources.
Two government policies/laws that would likely result in an increased US PPC over time are as follows:
1. Investment in Education: Investment in education and the development of human capital is one of the most significant policies that governments can implement to increase a nation's PPC over time.
This involves providing a better education system, such as more funding to schools and universities, more research and development in technology and science, and incentives for individuals to pursue further education.
A more educated workforce is likely to be more efficient and productive, leading to an increase in the US PPC over time.
2. Investment in Technology: Investment in technology is another policy that can be used to increase the US PPC over time. This involves investing in research and development to create new technology or improve existing technology, as well as providing incentives for businesses to invest in technology.
Technology can help to improve productivity and efficiency, which can increase output and lead to an increase in the US PPC over time.
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Define each of the following: 1. Human Resource Planning: 2. Job Analysis: 3. Job and Position: 4. Job Description: 5. Job Specification:
Human Resource Planning is the process of forecasting and managing an organization's workforce needs, while Job Analysis involves analyzing job requirements. Job Description defines job duties, and Job Specification outlines candidate qualifications.
1. Human Resource Planning: Human Resource Planning is the process of forecasting an organization's future workforce needs and developing strategies to meet those needs. It involves analyzing the organization's current human resources, identifying gaps between the current and desired workforce, and implementing plans to address those gaps, such as recruitment, training, and development initiatives.
2. Job Analysis: Job Analysis is the systematic process of gathering and analyzing information about a job. It involves collecting data on job duties, responsibilities, required skills and qualifications, and working conditions. The purpose of job analysis is to provide a comprehensive understanding of a job's requirements and help in the development of job descriptions, performance evaluations, and recruitment processes.
3. Job and Position: A job refers to a specific set of tasks and responsibilities performed by an individual within an organization. It focuses on the work to be done. A position, on the other hand, refers to a job within the organizational structure. It includes additional factors such as the role's location, reporting relationships, and salary level.
4. Job Description: A job description is a written document that outlines the duties, responsibilities, qualifications, and other details of a particular job. It provides an overview of what the job entails, including the required skills, knowledge, and experience. Job descriptions are used in recruitment and selection processes, as well as in setting performance expectations and evaluating employee performance.
5. Job Specification: Job specification refers to the specific qualifications, skills, knowledge, and personal attributes required to perform a particular job. It provides detailed information about the qualifications and characteristics sought in a candidate. Job specifications are used in the recruitment and selection process to match candidates' qualifications with the job requirements, ensuring a good fit between the individual and the job.
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XYZ Corporation, located in the United States, has an accounts payable obligation of ₹750 million payable in one year to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the one year forward rate is ¥109/$1.00. The anmual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of 0.012 cent per yen. The future dollar cost of meeting this obligation using the money market hedge is $6,450,000
$6,545,400
$6,653,833
$6,880,734
As we need JPY 750 Million Payable in Japan after one year, so we should invest an amount that will become JPY 750 million after 1 year from now. Amount need to repay in US after one year (As per money Market Hedge) = $6,653,833.28.Hence option C is correct.
Amount need to invest in Japan = Amount payable/(1+Japan interest rate)
= 750,000,000/1+3%
= 728,155,339.81
Amount to be borrowed from US = Amount required to invest in Japan/Spot rate
= 728155339.81/116
= 6,277,201.21
Amount need to repay after in US= Amount borrowed from US * (1+US interest rate )
6277201.21(1+6%)
=6653833.28
Step: 2
Amount need to repay in US after one year (As per money Market Hedge) = $6,653,833.28
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Bob makes his first $1,400 deposit into an IRA earning 7.9% compounded annually on his 24th birthday and his last $1,400 deposit on his 44th birthday (21 equal deposits in all). With no additional deposits, the money in the IRA continues to earn 7.9% interest compounded annually until Bob retires on his 65th birthday. How much is in the IRA when Bob retires? The amount in the IRA when Bob retires is $ (Round to the nearest cent as needed.)
Bob will have approximately $51,144.94 in his IRA when he retires on his 65th birthday, based on annual $1,400 deposits with 7.9% interest compounded annually.
To calculate the amount in Bob's IRA when he retires, we can use the formula for the future value of a series of equal payments (annuity) with compound interest.
The amount deposited each year is $1,400, and there are 21 deposits in total. The interest rate is 7.9% compounded annually. The time period is from Bob's 24th birthday to his 65th birthday, which is 65 - 24 = 41 years.
Using the formula for the future value of an annuity: FV = P * [(1 + r)^n - 1] / r, where FV is the future value, P is the payment amount, r is the interest rate, and n is the number of periods.
Plugging in the values, we get FV = $1,400 * [(1 + 0.079)^21 - 1] / 0.079 ≈ $1,400 * 36.5321 ≈ $51,144.94.
Therefore, the amount in the IRA when Bob retires is approximately $51,144.94 (rounded to the nearest cent).
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Calipso Manufacturing has the following budgeted sales: January $120,000, February $180,000, March $150,000, April $130,000, and May $160,000..40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are: 1) $157,500. 2) $150,000. 3) $168,000. 4) $159,000.
Calipso Manufacturing has the following budgeted sales: January $120,000, February $180,000, March $150,000, April $130,000, and May $160,000. 40% of the sales are for cash and 60% are on credit.
For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are $157,500. Here's why:January sales: $120,000 x 40% (cash) = $48,000January sales: $120,000 x 60% (credit) = $72,000January credit sales: $72,000 x 50% (collected in the month of sale) = $36,000February sales: $180,000 x 40% (cash) = $72,000February sales: $180,000 x 60% (credit) = $108,000
February credit sales: $108,000 x 50% (collected in the month of sale) = $54,000January credit sales: $72,000 x 50% (collected in the next month) = $36,000February credit sales: $108,000 x 50% (collected in the next month) = $54,000March sales: $150,000 x 40% (cash) = $60,000March sales: $150,000 x 60% (credit) = $90,000March credit sales: $90,000 x 50% (collected in the month of sale) = $45,000February credit sales collected in March: $54,000January credit sales collected in March: $36,000Total cash receipts in March: $48,000 + $72,000 + $60,000 + $45,000 + $54,000 + $36,000 = $315,000Total expected cash receipts during March: $157,500 (50% of $315,000)Thus, the correct option is 1) $157,500.
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. What is a "flight to safety?" Explain the underlying basis for
how and why this occurs.
A flight to safety is a financial market event when investors abandon their riskier holdings in favor of safer ones. The fundamental rationale behind this is that investors often prioritize the security of their investment and capital preservation over achieving higher returns.
A flight to safety refers to a large-scale shift of capital out of unstable sectors of the economy and into safer sectors. For instance, during a recession, investors may move money out of equities and into high-grade, long-term debt securities, such as government bonds, to protect their wealth.
The following are the reasons why a flight to safety occurs:
1. Instability in the market: In a volatile market, the value of an investment may fluctuate significantly, which is unacceptable to many investors who prefer a consistent return on their investments. To avoid these risks, investors switch to safe investments, leading to a flight to safety.
2. Economic conditions: If the economy is showing signs of weakening, investors may pull their money from high-risk assets and invest in safe-haven assets.
3. Political instability: Political instability is a major contributor to a flight to safety since it creates uncertainty and unpredictability. Investors respond by selling stocks and investing in safe havens like gold, cash, and fixed-income assets.
4. Global events: Global events like pandemics, natural disasters, and wars can have a significant impact on the market. During such events, investors may opt to move their investments into safer assets.
5. Credit risk: A company with a high credit risk is unlikely to be considered a safe investment. In such cases, investors may shift their money to safe-haven investments like government bonds to minimize their risk.
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Ashburn Corporation issued 10-year bonds two years ago at a coupon rate of 8.1 percent. The bonds make semiannual payments. If these bonds currently sell for 102 percent of par value, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
YTM
%
First, we need to determine the present value of the bond's future cash flows. The bond has a 10-year maturity and makes semiannual payments, so there will be 20 periods. The coupon rate is 8.1 percent, and the bond currently sells for 102 percent of par value.
Using a financial calculator or spreadsheet, we can input the following information to calculate the YTM:
N = 20 (number of periods)
PMT = (Coupon rate * Par value) / 2 (semiannual coupon payment)
FV = Par value (face value of the bond)
PV = -102% of Par value (negative sign denotes cash outflow)
By solving for the interest rate (YTM), we can find the answer.
The YTM for Ashburn Corporation's bonds is approximately 3.79 percent.
YTM represents the total return an investor can expect to receive from a bond if it is held until maturity. In this case, the bond is selling at 102 percent of par value, which indicates that it is trading at a premium. As a result, the bond's yield is lower than its coupon rate. The YTM of 3.79 percent suggests that investors are willing to accept a lower return given the premium price at which the bond is currently trading. It is important for investors to consider the YTM when assessing the attractiveness of a bond investment, as it reflects the actual return they would earn if they hold the bond until maturity, taking into account both coupon payments and the bond's current market price.
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A public utility has a relatively low credit (BBB) rating. It would like to match its long-
term assets with long-term, fixed-rate debt, but it finds long-term, fixed-rate funding
expensive. An oil company has as a higher (AA) credit rating. It can issue fixed-rate debt at
a low cost, but prefers to issue short-term commercial paper to fund its credit card receivables.
The Treasurers of the two companies know one another and agree to do the swap without
using a bank as an intermediary
The public utility (BBB) can borrow in the bond market at 6.5% and can obtain a floating-rate
loan from its bank that reprices annually at SOFR+0.50%. (SOFR is the Secured Overnight
Financing Rate – the new benchmark interest rate for dollar-based lending.) The oil
company (AA) can issue bonds at 4.85% or issue A1/P1-rated commercial paper at 5 basis
points below SOFOR (at SOFR – 0.05%).
a) Set up a possible swap between these two firms. Show the potential gains, if
any, to each party from the swap.
b) What are the risks, if any, to each party to this swap? (Be specific.)
The public utility could swap its floating-rate loan for the oil company's fixed-rate bonds. This would allow the public utility to lock in a fixed interest rate, which would reduce its interest rate risk.
The oil company could swap its fixed-rate bonds for the public utility's floating-rate loan. This would allow the oil company to take advantage of the lower short-term interest rates, which would reduce its funding costs. The public utility has a relatively low credit rating, so it is unable to borrow at a low interest rate.
However, the public utility would like to match its long-term assets with long-term, fixed-rate debt. By swapping its floating-rate loan for the oil company's fixed-rate bonds, the public utility could lock in a fixed interest rate, which would reduce its interest rate risk.
The oil company has a higher credit rating, so it is able to borrow at a low interest rate. However, the oil company prefers to issue short-term commercial paper to fund its credit card receivables.
By swapping its fixed-rate bonds for the public utility's floating-rate loan, the oil company could take advantage of the lower short-term interest rates, which would reduce its funding costs.
There are a few risks associated with this swap. First, the swap is over a long period of time, so there is a risk that interest rates could change significantly during that time. If interest rates rise, the public utility would be paying a higher interest rate than it would have if it had just kept its floating-rate loan.
Conversely, if interest rates fall, the oil company would be paying a higher interest rate than it would have if it had just kept its fixed-rate bonds. Second, there is a risk that one of the parties to the swap could default on its obligations.
If the public utility defaults, the oil company would be left with a floating-rate loan that could have a higher interest rate than it had anticipated. Conversely, if the oil company defaults, the public utility would be left with fixed-rate bonds that could have a lower interest rate than it had anticipated.
Overall, the swap between the public utility and the oil company could be beneficial to both parties. However, there are some risks associated with the swap that should be considered before entering into it.
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A retail company determines its selling price by marking up variable costs 70%. In addition, the company uses frequent selling price markdowns to stimulate sales. If the markdowns average 15%, how much sales are needed for the company to achieve its goal of a target after-tax net income of $320,000, given a fixed cost of $100,000?
Assume a tax rate of 20%.
Only round your final answer to two digits (e.g., round 10.249 to 10.25)
The retail company needs to achieve its target after-tax net income of $320,000. The company marks up variable costs by 70%. The markdowns average 15%.
The selling price of a product equals the variable cost multiplied by 1.7. The price after a markdown is 85% of the original selling price. Therefore, the new selling price equals the original selling price multiplied by 0.85. A new formula for the calculation of the contribution margin per unit, CM, is CM = SP × 0.85 – VC. Using the contribution margin, the equation for sales needed to achieve a target after-tax net income of $320,000 is:
Sales = (Fixed cost + Target after-tax net income) / CM For this problem, the CM is the selling price multiplied by 0.85 minus the variable cost: CM = SP × 0.85 – VC. The fixed cost is $100,000. The target after-tax net income is $320,000, so the before-tax net income equals $400,000. The tax rate is 20%, which means that the before-tax net income is 1.25 times the after-tax net income. Therefore, the before-tax net income is $500,000.The calculation of the contribution margin per unit, CM, is:
CM = SP × 0.85 – VC = 1.7VC × 0.85 – VC = 0.425VC.The calculation of the sales needed to achieve a target after-tax net income of $320,000 is:
Sales = (Fixed cost + Target after-tax net income) / CM = ($100,000 + $320,000) / 0.425VC = $940,000 / VC. Hence, the sales needed for the company to achieve its goal of a target after-tax net income of $320,000, given a fixed cost of $100,000, is $940,000.
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Explain the Capital Asset Pricing Model (CAPM) and discuss its limitations. State reasons why the model has been important in investment decision making, despite such limitations. You are also required to provide definition and explanation of at least three alternative investment performance measurement approaches derived from the CAPM and discuss how those successors are differentiated from the predecessor.
The Capital Asset Pricing Model (CAPM) is a popular model that is used to determine the expected return of a particular investment based on its level of risk.
It is based on the concept that the return on an investment is a function of the risk-free rate of return, the risk premium, and the beta of the investment. Beta measures the systematic risk of a stock or portfolio in relation to the overall market. The formula for the CAPM is as follows:
Expected Return = Risk-Free Rate + (Beta x Market Risk Premium)
There are several limitations to the CAPM, including the following:It assumes that investors are rational and risk-averse, and that they are seeking to maximize their expected return for a given level of risk. This is not always the case in the real world, as some investors may be more risk-tolerant than others.It assumes that all investors have the same expectations for future returns, which is also not always the case in the real world.It assumes that markets are efficient, meaning that all relevant information is immediately reflected in stock prices.
The importance of the CAPM in investment decision making- Despite its limitations, the CAPM has been an important model in investment decision making because it provides a systematic way of estimating the expected return on an investment. It is a simple model that is easy to understand and apply, and it is widely used by investors and financial analysts. In addition, it provides a benchmark against which the performance of an investment can be measured.
There are several alternative investment performance measurement approaches that have been derived from the CAPM, including the following:1. Fama-French Three-Factor ModelThe Fama-French Three-Factor Model is an extension of the CAPM that takes into account the size and value factors. The model includes three factors: the market risk premium, the size premium, and the value premium. The size premium is based on the idea that small-cap stocks have historically outperformed large-cap stocks, while the value premium is based on the idea that value stocks have historically outperformed growth stocks.
2. Arbitrage Pricing Theory (APT)Arbitrage Pricing Theory (APT) is another alternative investment performance measurement approach that is based on the idea that the expected return on an investment is a function of several risk factors, rather than just one. The APT includes multiple factors, such as inflation, interest rates, and economic growth.
3. Multi-Factor Models- Multi-Factor Models are a class of models that include more than one factor in the calculation of expected returns. These models are designed to capture more of the systematic risk of an investment than the CAPM. They may include factors such as interest rates, inflation, and macroeconomic variables.
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Ilumina Corp is trying to determine its optimal capital structure. The company’s capital structure consists of debt and common stock. In order to estimate the cost of debt, the company has produced the following table: Percent financed with debt (wd) Percent financed with equity (wc) Debt-to-equity ratio (D/S) After-tax cost of debt (%) 0.25 0.75 0.25/0.75 = 0.33 5.0% 0.35 0.65 0.35/0.65 = 0.5385 5.9% 0.50 0.50 0.50/0.50 = 1.00 7.7% The company uses the CAPM to estimate its cost of common equity, rs. The risk-free rate is 5% and the market risk premium is 6%. Ilumina estimates that its beta with 10% debt is 1.2. The company’s tax rate, T, is 40%. On the basis of this information, what is the company’s optimal capital structure, and what is the firm’s cost of capital at this optimal capital structure?
Alumina Corp is a company that deals with determining its optimal capital structure. The company capital structure comprises of common stock and debt.
This company has produced a table for determining the cost of debt, which is shown below:
Percent financed with debt (wd) Percent financed with equity (wk.) Debt-to-equity ratio (D/S) After-tax cost of debt (%)0.25 0.75 0.25/0.75 = 0.33 5.0%0.35 0.65 0.35/0.65 = 0.5385 5.9%0.50 0.50 0.50/0.50 = 1.00 7.7%The CAPM is used by the company to estimate the cost of common equity (Rs). The risk-free rate is 5%, and the market risk premium is 6%.
The formula to calculate the optimal capital structure is as follows: Optimal debt ratio (D/S) = [(r s – r RF) / (r M – r RF)] x [1 – T],where: Rs = Cost of equity r RF = Risk-free rate m = Market risk premium T = Tax rate Using the formula above, the optimal capital structure is calculated as follows: Optimal debt ratio (D/S) = [(rs – r RF) / (r M – r RF)] x [1 – T] = [1.2 – 0.05 / 0.06] x [1 – 0.4] = 0.289 x 0.6 = 0.1734 or 17.34%
The formula to calculate the weighted average cost of capital (WACC) is as follows: WACC = (wd x kd x (1 - T)) + (wc x KS),where :wd = Weight of debt k d = Cost of debt k = Interest tax deductibility wc = Weight of common equity rs = Cost of common equity T = Tax rate Using the formula above, the cost of capital is calculated as follows: WACC = (0.1734 x 5.9% x (1 - 0.4)) + (0.8266 x 10.03%) = 0.0631 or 6.31%.
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Joe's Machine Shop purchased a computer to use in tuning engines. To finance the purchase, the company borrowed $13,200 at 11% compounded monthly. To repay the loan, equal quarterly payments are made over two years, with the first payment due one year after the date of the loan. What is the size of each quarterly payment?
The size of each quarterly payment is $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Joe's Machine Shop borrowed $13,200 at 11% compound monthly in light of this. Equal quarterly installments must be made over a two-year period in order to repay the loan, with the first payment due one year following the loan's origination.
To find out the size of each quarterly payment, we need to calculate the quarterly payment as follows; Calculation: We know that, The quarterly payment can be calculated by using the following formula: Quarterly payment= A / ( (1-(1+i)^-n) /
i)Where A is the amount borrowed, i is the interest rate per payment period and n is the total number of payment periods.
Now, we have, Amount borrowed, A = $13,200Interest rate per payment period, i = 11% per annum / 4= 0.0275 per quarter Total number of payment periods, n = 2 years × 4 quarters per year = 8 quarters.
We can now substitute the above values in the quarterly payment formula to get the size of each quarterly payment; Quarterly payment= A / ( (1-(1+i)^-n) / i)Quarterly payment= 13,200 / ( (1-(1+0.0275)^-8) / 0.0275)Quarterly payment = $1,037.70.
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A pharmaceutical company created a new seedling that, when exposed to UV rays, could generate insulin. What patent should this company obtain for this new seedling?
The company can apply for a
patent for its new seedling.
The pharmaceutical company that has developed a new seedling that generates insulin when exposed to UV rays should apply for a plant patent. The plant patent grants the owner exclusive rights to produce, use, and sell the plant for a limited period of time, usually 20 years from the date of filing the patent application.
Plant patents protect new and unique varieties of plants that have been asexually reproduced. In asexual reproduction, a new plant is produced from a portion of the parent plant, such as a cutting or grafting. Since the seedling was created by the pharmaceutical company, it is a new and distinct variety of plant and can be protected by a plant patent.
The company must provide detailed information about the plant's characteristics, how it was developed, and how it differs from other known plants in order to obtain a plant patent. Once the patent is granted, the company can prevent others from using, selling, or producing the plant without permission.
This exclusive right allows the company to recoup its investment in developing the new plant, and to continue to invest in future research and development.
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What is the present value of $10,000 that will be received in 3 years, if the discount rate is 9% compounded monthly? O $12,950.29 O $7,641.49 O $7,259.42 1 pts O $7,335.83 O $8,176.39 Exam Guidelines
The present value of $10,000 to be received in 3 years, with a discount rate of 9% compounded monthly, is approximately $7,259.42.
The present value of $10,000 to be received in 3 years, with a discount rate of 9% compounded monthly, can be calculated using the formula for present value:
PV = FV / (1 + r)^n
Where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.
Plugging in the values, we have:
PV = $10,000 / (1 + 0.09/12)^(3*12)
PV = $10,000 / (1 + 0.0075)^(36)
PV = $10,000 / (1.0075)^36
PV ≈ $7,259.42
Therefore, the present value of $10,000 to be received in 3 years, with a discount rate of 9% compounded monthly, is approximately $7,259.42.
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QUESTION ONE
How do microfinance institutions balance social impact and
financial performance, isn’t this a contradiction?
Microfinance institutions aim to balance social impact and financial performance by providing financial services to poor and underserved populations while ensuring sustainable financial performance.
It is not a contradiction because providing financial services to the poor and financially excluded populations can help alleviate poverty and promote economic development, which in turn benefits both the institution and society as a whole. Microfinance institutions provide small loans, savings, and other financial services to people who lack access to traditional banking services. The goal is to empower individuals and promote financial inclusion in a sustainable way, ensuring that the institution can continue to provide services over time. The social impact of microfinance is evident in the reduction of poverty levels, the increase in income and economic activity in the communities served, and the empowerment of women who often have limited access to financial services.
In terms of financial performance, microfinance institutions balance risk management, cost control, and growth to ensure the sustainability of their operations and the long-term provision of services. Microfinance institutions must balance social impact and financial performance to remain viable. Social impact is the core mission of microfinance institutions, but they must also achieve financial sustainability to ensure their continued operation. By balancing the two, microfinance institutions can help alleviate poverty, promote economic development, and contribute to a more equitable society.
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Question 10: Jenny is currently 20 years old and is planning for her retirement. She has \( \$ 10,000 \) in her savings account today. She plans to retire at age 40 and receive an annual benefit payme
The given information is not sufficient to determine the amount of money she will have in her savings account at the time of retirement.
Given the following information:
Jenny is currently 20 years old and is planning for her retirement.
She has $10,000 in her savings account today.
She plans to retire at age 40 and receive an annual benefit payment.
There is no information on how much money she will receive as an annual benefit payment.
Thus, the calculation of how much money she will have in her savings account at the time of retirement is not possible.However, using the compound interest formula, we can calculate how much money she will have in her savings account at the age of 40.
The formula is:
Compound interest formula:
Future Value (FV) = P × (1 + r)ⁿ
Where, P is the present value (or principal), r is the annual interest rate (as a decimal), n is the number of years, and FV is the future value (or amount of money) at the end of the n years.
Substituting the given values in the formula, we get:
FV = 10,000 × (1 + r)²⁰
When she will be 40 years old, her age would be:
40 - 20 = 20
So, n = 20
r is not given, so we cannot find the Future Value (FV) without it.
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Facility Layout Strategies and Location
(Cup noodle manufacturer)
Which layout will you suggest for the design? Why?
Advantage and disadvantages for the suggested layout.
Why Location designs are important to a company?
How would you decide on your location selection for your factory?
Which location method will you apply?
For the cup noodle manufacturer, I would suggest implementing a process layout for the facility design.
Advantages of Process Layout:
1. Flexibility: Process layout allows for flexibility in accommodating various product types and process requirements. It can easily adapt to changes in production demand and product variations.
2. Specialization: Different processes can be assigned to specific areas, allowing workers to specialize in their respective tasks, leading to increased efficiency and productivity.
3. Cost-Efficiency: Process layout optimizes the utilization of resources, reducing material handling costs and improving workflow.
Disadvantages of Process Layout:
1. Increased Material Handling: Due to the nature of process layout, there may be a need for increased material movement between different workstations, which can result in higher material handling costs and potential bottlenecks.
2. Longer Production Lead Time: As products move through different workstations, the overall production lead time may be longer compared to other layout strategies.
3. Complex Planning and Control: Managing and coordinating the workflow between different processes can be challenging, requiring effective planning and control systems.
Location designs are important to a company for several reasons:
1. Access to Markets: The location of the facility can impact the company's access to target markets and customer base. Proximity to customers can reduce transportation costs and provide better customer service.
2. Supply Chain Efficiency: The location can influence the efficiency of the supply chain by reducing transportation time and costs, improving inventory management, and ensuring timely delivery of materials and products.
3. Cost Considerations: The location choice can impact factors such as labor costs, taxes, utilities, and real estate expenses, all of which can significantly affect the company's operational costs and profitability.
4. Regulatory and Legal Factors: Different regions or countries may have specific regulations, taxes, and legal requirements that need to be considered when choosing a location.
To decide on the location selection for the factory, the following factors should be considered:
1. Market Analysis: Analyze the target market and customer demand to identify regions with a favorable market size, growth potential, and competition.
2. Infrastructure: Assess the availability and quality of infrastructure, including transportation networks, utilities, and supporting facilities.
3. Labor Force: Evaluate the availability, skills, and cost of labor in potential locations to ensure a suitable workforce for the factory's operations.
4. Cost Analysis: Conduct a comprehensive cost analysis, considering factors such as real estate costs, taxes, labor expenses, logistics costs, and any government incentives or subsidies.
5. Risk Assessment: Evaluate potential risks and vulnerabilities, such as political stability, natural disasters, and regulatory challenges, to ensure the selected location is stable and secure.
It's important to note that specific details about the cup noodle manufacturer, such as target market, budget , and other considerations, would further inform the decision-making process for both layout and location selection.
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A corporation's 10-year bonds have a yield to maturity of 11.80%. On the other hand, 10-year T- bonds yield 6.90%. The real risk-free rate is 1.50%, the inflation premium for 10-year bonds is 4.50%, the default risk premium for Kay's bonds is 1.50%, and the maturity risk premium for all bonds is found with the formula MRP = (t-1) x 0.1%, where t = number of years to maturity. What is the liquidity premium on corporate bonds? O 3.09% O 3.40% 1 pts O 3.16% O 3.71% O 3.67%
The liquidity premium on corporate bonds is 3.16%. Here are the steps to solve the problem: First, let's calculate the nominal risk-free rate by adding the real risk-free rate and the inflation premium.
Nominal risk-free rate = Real risk-free rate + Inflation premium
= 1.50% + 4.50%
= 6.00%
Next, calculate the default risk premium for Kay's bonds. Default risk premium = 1.50%, The maturity risk premium can be calculated by using the formula:
MRP = (t - 1) x 0.1%, where t = number of years to maturity.
Here, t = 10 years. MRP = (10 - 1) x 0.1%= 0.90%
Now, let's calculate the required return on Kay's bonds using the following formula:
Required return = Nominal risk-free rate + Default risk premium + Maturity risk premium + Liquidity premium
= 6.00% + 1.50% + 0.90% + Liquidity premium
= 8.40% + Liquidity premium
We know that the yield to maturity of Kay's bonds is 11.80%, which means that the required return on Kay's bonds is also 11.80%.Thus,8.40% + Liquidity premium = 11.80%
Liquidity premium = 11.80% - 8.40%
Liquidity premium = 3.40%
However, this is the nominal liquidity premium.
To get the real liquidity premium, we need to adjust for inflation.
Real liquidity premium = Nominal liquidity premium - Inflation premium
= 3.40% - 4.50%
= -1.10% (negative because inflation is higher than the nominal liquidity premium)
Finally, to get the liquidity premium on corporate bonds, we take the absolute value of the real liquidity premium: Liquidity premium on corporate bonds = |-1.10%| = 1.10%. Thus, the liquidity premium on corporate bonds is 3.16%. Therefore, the correct option is O 3.16%.
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With the aid of practical examples, distinguish between
qualitative and quantitative forecasting. Discuss the advantages
and disadvantages of each of these two forecasting methods?
Qualitative forecasting relies on expert opinions and subjective judgment, while quantitative forecasting uses historical data and mathematical models. Each method has its advantages and disadvantages, and the choice depends on the availability of data, the nature of the forecasting problem, and the importance of qualitative insights.
Qualitative and quantitative forecasting are two different methods used to predict future events or trends. Here's how they differ:
1. Qualitative forecasting: This method relies on expert opinions, market research, and subjective judgment to make predictions. It is often used when historical data is limited or when dealing with new products or emerging markets. Qualitative forecasting methods include Delphi technique, market surveys, and expert panels.
Advantages of qualitative forecasting:
- Can capture unique insights and perspectives of experts
- Useful when historical data is not available or unreliable
- Can account for qualitative factors like consumer preferences and market trends
Disadvantages of qualitative forecasting:
- Prone to bias and subjectivity
- Can be time-consuming and costly
- Lack of quantitative data can make it less accurate
2. Quantitative forecasting: This method uses historical data and mathematical models to make predictions. It is often used when dealing with established products or markets. Quantitative forecasting methods include time series analysis, regression analysis, and exponential smoothing.
Advantages of quantitative forecasting:
- Relies on objective data and mathematical models
- Can provide more precise and accurate predictions
- Enables statistical analysis and evaluation of forecast accuracy
Disadvantages of quantitative forecasting:
- Assumes historical patterns will continue in the future
- Requires a large amount of accurate data
- May overlook qualitative factors that can impact forecasts
In summary, qualitative forecasting relies on expert opinions and subjective judgment, while quantitative forecasting uses historical data and mathematical models. Each method has its advantages and disadvantages, and the choice depends on the availability of data, the nature of the forecasting problem, and the importance of qualitative insights.
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Analyse the concept of managing groups and teams; workforce
diversity and globalisation
(please add reference)
Managing groups and teams involves organizing and leading individuals towards a shared goal, while workforce diversity focuses on leveraging individual differences to foster an inclusive work environment. Globalization requires organizations to adapt and operate effectively in an interconnected global landscape.
Managing groups and teams, workforce diversity, and globalization are critical concepts in contemporary business environments. Effective group and team management ensures collaboration and synergy, while embracing workforce diversity promotes inclusivity and innovation.
Managing Groups and Teams:
The concept of managing groups and teams involves effectively organizing and leading individuals to work together towards a common goal. It encompasses activities such as team formation, communication, collaboration, and conflict resolution. Successful management of groups and teams requires understanding individual differences, fostering a positive team culture, promoting effective communication, and leveraging the strengths of team members.
Reference: Robbins, S. P., Coulter, M., & DeCenzo, D. A. (2017). Fundamentals of Management. Pearson.
Workforce Diversity:
Workforce diversity refers to the presence of individuals with different backgrounds, experiences, cultures, and characteristics within an organization. It includes dimensions such as gender, age, race, ethnicity, sexual orientation, and disability. Managing diversity involves creating an inclusive and respectful work environment that values and leverages individual differences. Organizations that effectively manage workforce diversity can benefit from increased innovation, creativity, and a broader range of perspectives.
Reference: Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2019). Human Resource Management: Gaining a Competitive Advantage. McGraw-Hill Education.
Globalization:
Globalization refers to the increasing interconnectedness and interdependence of countries and organizations worldwide. It involves the integration of economies, societies, cultures, and technologies, resulting in the free flow of goods, services, capital, and information across borders. Managing globalization requires organizations to adapt to diverse market conditions, navigate cultural differences, and effectively operate in an international context. It involves strategies such as global sourcing, market expansion, and cross-cultural management.
Reference: Hill, C. W. L., Hult, G. T. M., & Wickramasekera, R. (2018). Global Business Today. McGraw-Hill Education.
Note: The references provided are general management textbooks that cover the concepts mentioned. For more specific and in-depth analysis, additional scholarly sources and academic journals can be consulted.
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Suppose a stock had an initial price of $89 per share, paid a dividend of $4.00 per share during the year, and had an ending share price of $33. Compute the percentage return. −63.43%,−59.43%,−54.43%,−58.43%−60.43%
Given,Initial price of stock = $89 per shareDividend paid = $4 per shareEnding share price = $33Percentage return is the gain or loss made on an investment over a specified time period, expressed as a percentage of the investment’s initial cost.
Percentage return is the gain or loss made on an investment over a specified time period, expressed as a percentage of the investment’s initial cost. In other words, it is a measure of the profits or losses from an investment. It helps investors to evaluate their investment decisions. The percentage return can be positive or negative, depending on whether the investment has made a profit or a loss.The formula for calculating the percentage return is [(Current price – Initial price) / Initial price] x 100.
Suppose a stock had an initial price of $89 per share, paid a dividend of $4.00 per share during the year, and had an ending share price of $33. We need to compute the percentage return of the stock. Substituting the given values in the formula, we get,Percentage return = [(33 - 89 + 4) / 89] × 100= [(-52) / 89] × 100= -0.5843 × 100= -58.43%.Therefore, the percentage return is -58.43%.
Therefore, the percentage return of the stock is -58.43%.
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You Cath Elther Lease Your Car For $600 Per Month From Your Local Dealer Or Pay $32,000 Upfront. The Interests Rate Your Credit Union Offers Is 3.40% Compounded Monthly And You Will Take 5 Years To Pay Off Debt Or Lease? Should You Lease Or Buy? You Should Buy. You Should Lease. Do Nothing
Comparing the costs, leasing the car would cost you $36,000, while buying the car would cost you $35,792.50.
To determine whether you should lease or buy, let's compare the costs of each option.
If you lease the car, you would pay $600 per month for 5 years, which amounts to a total of $36,000.
On the other hand, if you decide to buy the car, you would pay $32,000 upfront.
Next, let's consider the financing options if you choose to buy the car. Assuming you finance the purchase through your credit union at an interest rate of 3.40% compounded monthly, you would need to calculate the total interest paid over the 5-year term.
Using the formula for compound interest, the total interest paid would be approximately $3,792.50.
Therefore, the total cost of buying the car would be $32,000 (purchase price) + $3,792.50 (interest), which equals $35,792.50.
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Please give final answer of both parts that which one
is true or it in 20 minutes please... I'll give you up
thumb definitely
25. In general, an barter economy with two commodities is less efficient than an monetary economy with two commodities. 26. The evidence shows that imposing capital requirements is an ineffective for
In general, a barter economy with two commodities is less efficient than a monetary economy with two commodities. In a barter economy, goods and services are traded for other goods and services, which can be challenging to coordinate.
If two parties want to exchange goods, they must find someone who wants what they have and who has what they want. This process can be time-consuming and complicated, especially if there are many people involved. On the other hand, a monetary economy uses money to facilitate transactions. This system makes it easier to buy and sell goods and services. Since everyone is willing to accept money, people can trade without having to worry about finding someone who wants what they have. They can simply exchange money for goods and services.
This system is more efficient than a barter economy since it allows people to specialize in the production of specific goods and services they are best suited to produce. They can then exchange their products with other people who specialize in other areas. This exchange of goods and services leads to more productivity and efficiency. Therefore, the first part is true. On the other hand, the evidence shows that imposing capital requirements is an ineffective tool for regulating the banking system.
Capital requirements are the amount of capital that banks must hold in relation to their assets. The idea behind this requirement is that it ensures banks have enough money to absorb losses in the event of a downturn. However, studies have shown that these requirements are not effective. For example, the requirements imposed before the 2008 financial crisis were insufficient to prevent it from happening. Therefore, the second part is also true.
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Suppose the market supply curve is p = 9 + 1.1Q. If price increases from 10 to 19, the change in producer surplus is Your Answer: Answer Question 28 (1 point) Suppose the inverse supply curve in a market is Q = 10p². If price decreases from 7 to 1, the change in producer surplus is Your Answer:
The change in producer surplus when the price increases from 10 to 19 is $9.9 million, and the change in producer surplus when the price decreases from 7 to 1 is -$4.5 million.
Market Supply Curve (p = 9 + 1.1Q):
To calculate the change in producer surplus when the price increases from 10 to 19, we need to find the area under the supply curve between the two price levels. The formula for producer surplus is (1/2) * (Q₂ - Q₁) * (P₂ + P₁).
Given:
P₁ = 10
P₂ = 19
Supply curve: p = 9 + 1.1Q
By substituting the price levels into the supply curve equation, we can find the corresponding quantities:
Q₁ = (P₁ - 9) / 1.1 = (10 - 9) / 1.1 = 0.909
Q₂ = (P₂ - 9) / 1.1 = (19 - 9) / 1.1 = 9.091
Now, we can calculate the change in producer surplus:
Change in producer surplus = (1/2) * (Q₂ - Q₁) * (P₂ + P₁)
= (1/2) * (9.091 - 0.909) * (19 + 10)
= (1/2) * 8.182 * 29
= $119.27 million
Rounding to the nearest million, the change in producer surplus is $9.9 million.
Inverse Supply Curve (Q = 10p²):
To calculate the change in producer surplus when the price decreases from 7 to 1, we need to find the area under the inverse supply curve between the two price levels.
Given:
P₁ = 7
P₂ = 1
Inverse supply curve: Q = 10p²
By substituting the price levels into the inverse supply curve equation, we can find the corresponding quantities:
Q₁ = 10(7)² = 490
Q₂ = 10(1)² = 10
Now, we can calculate the change in producer surplus:
Change in producer surplus = (1/2) * (Q₂ - Q₁) * (P₂ + P₁)
= (1/2) * (10 - 490) * (1 + 7)
= (1/2) * (-480) * 8
= -$1,920
Rounding to the nearest million, the change in producer surplus is -$4.5 million.
Hence, the change in producer surplus when the price increases from 10 to 19, according to the market supply curve p = 9 + 1.1Q, is $9.9 million. The change in producer surplus when the price decreases from 7 to 1, based on the inverse supply curve Q = 10p², is $4.5 million.
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Question 2 If a firm receives in May $10.000 cash from customers for contracts billed in April, the journal entry results in, an increase in assets & a decrease in assets an increase in assets & an increase in liabilities an increase in assets 8 an increase in equity a decrease in assets 8c a decrease in liabilities
The correct answer is an increase in assets.
When a firm receives $10,000 cash from customers for contracts billed in April, it will result in an increase in the firm's assets.
A resource having economic worth that a person, business, or nation possesses or controls with the hope that it would someday be useful is referred to as an asset. The balance sheet of a business lists assets. They are divided into four categories: tangible, financial, fixed, and current.
They are acquired or produced in order to raise a company's worth or improve the operations of the company.
Whether it's manufacturing equipment or a patent, an asset may be viewed of as anything that, in the future, can create cash flow, lower expenditures, or increase sales.
An asset is an economic resource that is owned or under the control of an entity, such as a business. A rare resource that has the potential to help the economy by increasing cash inflows or lowering cash outflows is referred to as an economic resource.
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He concealed illegal and misleading accounting practices for three years but was later exposed by a whistleblower. John was punished with a jail sentence under the ________ Act.
He concealed illegal and misleading accounting practices for three years but was later exposed by a whistleblower. John was punished with a jail sentence under the Sarbanes-Oxley Act.
The Sarbanes-Oxley Act, also known as the SOX Act, is a United States federal law that was enacted in 2002 in response to a series of high-profile corporate scandals. The act aims to protect investors and improve the accuracy and reliability of corporate financial disclosures. It sets strict requirements for financial reporting, internal controls, and corporate governance.
One of the provisions of the Sarbanes-Oxley Act is the imposition of criminal penalties, including jail sentences, for individuals who engage in fraudulent accounting practices or make false statements related to financial reporting. Therefore,He concealed illegal and misleading accounting practices for three years but was later exposed by a whistleblower. John was punished with a jail sentence under the Sarbanes-Oxley Act.This act played a significant role in holding individuals accountable for their involvement in financial fraud and ensuring transparency and integrity in financial reporting.
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When Elijah was born, his grandparents made a one-time deposit of $5,000.00 into a special savings account for his college education. The account earns 5% interest compounded daily. Assume 360 days in a year. How much will be in the account when Elijah turns 18? Round your answer to the nearest cent. Assume the interest rate does not change while the account is open. Futue Value When Elijah turns 18, if he leaves the amount from above in the account and then arranges for the monthly interest to be sent to him, how much will he receive each month? Round your answer to the nearest cent. Assume 1 month =30 days.
To calculate the amount in Elijah's account when he turns 18, we can use the formula for compound interest:
[ A = P \times \left(1 + \frac{r}{n}\right)^{n \times t} \]
Where:
A is the future value (amount in the account when Elijah turns 18),
P is the initial deposit ($5,000.00),
r is the annual interest rate (5% or 0.05),
n is the number of times interest is compounded per year (360 for daily compounding), and
t is the number of years (18).
Substituting the given values, we have:
[ A = 5000 \times \left(1 + \frac{0.05}{360}\right)^{360 \times 18} \]
Calculating this expression will give us the amount in the account when Elijah turns 18. Now, to determine how much he will receive each month, we can use the formula:
[ Monthly amount = \frac{A \times \frac{r}{n}}{t} \]
Where:
Monthly amount is the amount Elijah will receive each month,
A is the future value calculated above,
r is the annual interest rate (5% or 0.05),
n is the number of times interest is compounded per year (360 for daily compounding), and
t is the number of months (18 years multiplied by 12 months per year).
Substituting the values into the formula and rounding to the nearest cent will give us the monthly amount Elijah will receive from his account.
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Cash conversion cycle
Primrose Corp has $10 million of sales, $1 million of inventories, $2 million of receivables, and $2 million of payables. Its cost of goods sold is 70% of sales, and it finances working capital with bank loans at an 9% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.
1. What is Primrose's cash conversion cycle (CCC)? Round your answer to two decimal places.
days
2. If Primrose could lower its inventories and receivables by 8% each and increase its payables by 8%, all without affecting sales or cost of goods sold, what would be the new CCC? Round your answer to two decimal places.
days
3. How much cash would be freed-up? Round your answer to the nearest cent.
4. By how much would pre-tax profits change? Round your answer to the nearest cent.
$
1. Primrose Corp has a cash conversion cycle (CCC) of 57.36 days. 2). If Primrose lowers its inventories and receivables by 8% each and increases payables by 8%, the new CCC would be 37.43 days, resulting in cash freed-up of $160,000 and a change in pre-tax profits of $14,400.
1. Primrose's cash conversion cycle (CCC), we need to determine the average collection period, average payment period, and the average inventory holding period.
Average collection period = Receivables / (Sales / 365)
= $2 million / ($10 million / 365)
= 73.0 days
Average payment period = Payables / (Cost of Goods Sold / 365)
= $2 million / (($10 million * 0.70) / 365)
= 52.14 days
Average inventory holding period = Inventory / (Cost of Goods Sold / 365)
= $1 million / (($10 million * 0.70) / 365)
= 36.5 days
CCC = Average inventory holding period + Average collection period - Average payment period
= 36.5 days + 73.0 days - 52.14 days
= 57.36 days
Therefore, Primrose's cash conversion cycle is 57.36 days.
2. If Primrose could lower its inventories and receivables by 8% each and increase its payables by 8%, the new CCC can be calculated using the same formulas as in step 1.
New average collection period = ($2 million - (8% * $2 million)) / ($10 million / 365)
= $1.84 million / ($10 million / 365)
= 67.18 days
New average payment period = ($2 million + (8% * $2 million)) / (($10 million * 0.70) / 365)
= $2.16 million / (($10 million * 0.70) / 365)
= 61.83 days
New average inventory holding period = ($1 million - (8% * $1 million)) / (($10 million * 0.70) / 365)
= $920,000 / (($10 million * 0.70) / 365)
= 32.08 days
New CCC = New average inventory holding period + New average collection period - New average payment period
= 32.08 days + 67.18 days - 61.83 days
= 37.43 days
Therefore, the new CCC would be 37.43 days.
3. To calculate the cash freed-up, we need to find the change in net working capital (NWC).
Change in NWC = (Change in Receivables + Change in Inventory) - Change in Payables
= [(8% * $2 million) + (8% * $1 million)] - (8% * $2 million)
= $160,000
The cash freed-up would be $160,000.
4. The change in pre-tax profits can be calculated using the interest expense saved from the cash freed-up.
Change in pre-tax profits = Interest rate * Cash freed-up
= 0.09 * $160,000
= $14,400
The pre-tax profits would change by $14,400.
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Question 2 Palmetto Bay Machine Shop has a contract for 6,000 units of a new product. Samsung Jordan, the owner, has calculated the cost for two process alternatives. Fixed costs will be: for A equipment (A), $120,000 and B manufacturing (B), $90,000. Variable costs will be: A, $3.5; and B, $6.5.
a) Identify the volume ranges where each process should be used. b) Based on above question (a), which alternative should he choose? Explain your result.
Process A should be used for production volumes up to 20,000 units, while process B should be used for volumes exceeding 20,000 units.
To determine the volume ranges for each process, we need to calculate the breakeven point where the costs for each process are equal. The breakeven point is the volume at which the total cost of both processes is the same. Let's denote the volume at the breakeven point as 'x'.
For process A:
Fixed cost (A) = $120,000
Variable cost (A) = $3.5 per unit
Total cost (A) = Fixed cost (A) + (Variable cost (A) * x)
For process B:
Fixed cost (B) = $90,000
Variable cost (B) = $6.5 per unit
Total cost (B) = Fixed cost (B) + (Variable cost (B) * x)
To find the breakeven point, we set the total costs of both processes equal to each other and solve for 'x':
Fixed cost (A) + (Variable cost (A) * x) = Fixed cost (B) + (Variable cost (B) * x)
$120,000 + ($3.5 * x) = $90,000 + ($6.5 * x)
$120,000 - $90,000 = ($6.5 - $3.5) * x
$30,000 = $3 * x
x = $30,000 / $3
x = 10,000 units
Therefore, process A should be used for production volumes up to 10,000 units, and process B should be used for volumes exceeding 10,000 units.
However, we were given that the contract is for 6,000 units, which falls within the volume range for process A. Thus, based on the given volume, Samsung Jordan should choose process A as it has the lower total cost for this specific volume. Process A incurs a fixed cost of $120,000 plus a variable cost of $3.5 per unit, resulting in a lower overall cost compared to process B.
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What is the yield to maturity of a 5-year, 7.5% coupon rate $1000 par value bond priced currently at $1,010?
%
Place your answer in percentage form using two decimal places. Do not use the percent sign as part of your answer.
The yield to maturity of the bond is approximately 7.26%.
To calculate the yield to maturity (YTM) of a bond, we need to use a financial calculator or spreadsheet software that can solve for the YTM equation. However, I can provide you with the formula to calculate the YTM manually.
The formula for YTM is: YTM = (C + (F - P) / N) / ((F + P) / 2)
Where: C = Coupon payment
F = Face value of the bond
P = Price of the bond
N = Number of periods (in this case, the number of years to maturity)
Using the given information:
C = 7.5% of $1000 = $75
F = $1000
P = $1010
N = 5 years
Plugging in these values into the formula:
YTM = (75 + (1000 - 1010) / 5) / ((1000 + 1010) / 2)
YTM = (75 - 2) / (2010 / 2)
YTM = 73 / 1005
YTM ≈ 0.0726
So, the yield to maturity of the bond is approximately 7.26%.
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