(a) In a perfectly competitive market, at equilibrium, the price is the same everywhere. Thus, if P is the UK price and Pw is the Russian price, then P = Pw. To derive the equilibrium price and quantity in the market, we will equate the domestic supply and demand at that price .D: P = 80 - P; S: P = 8 + 0.5PTo find the equilibrium price, we equate the demand and supply.80 - P = 16 + 0.5P63/2 = P The equilibrium price is 31.5. At this price, the domestic demand is:80 - 31.5 = 48.5The domestic supply is:16 + 0.5 * 31.5 = 32.25The quantity of goods traded in the market will be equal to the minimum of the two above quantities. Thus, the quantity of goods produced domestically and consumed is:32.25 units. The quantity of goods exported to Russia is:144 - 2 * 31.5 = 81 units
(b) The introduction of the export tax of £15 per unit exported will increase the cost of exporting and thus decrease the quantity exported. Since we are given that there is no effect on domestic demand or supply, the new domestic price and quantity consumed will remain the same as in part a. The new quantity exported will be equal to:81 - Qe New = 144 - 2Pw - Qe Old Qe Old = 81 and Pw = 31.5New quantity exported is:144 - 2 * 31.5 - 81 = 0 units. Thus, the world price will fall to 0 and the domestic price will remain at 31.5. The effect on domestic welfare is given by the consumer and producer surplus. Consumer surplus will increase since the domestic price has not increased. Producer surplus will fall. Thus, the net effect on domestic welfare will be positive.
(c) With the trade ban, the price in Russia will increase due to lower supply. Thus, the Russian demand will reduce to 32.25, which is the domestic supply in the UK. This demand will be met by domestic production in the UK. Thus, the new quantity exported is 0. The domestic welfare effects will be similar to those in part
(d) The export tax will have a similar effect to a tariff. It will increase the welfare of the domestic producers while reducing the welfare of domestic consumers. The net effect on domestic welfare will depend on the relative sizes of the consumer and producer surpluses. In this case, the consumer surplus is larger than the producer surplus, so the net effect is positive. The trade ban will result in a reduction in the quantity of goods traded and a fall in welfare for both countries. The impact on foreign countries will depend on the effect of the sanctions on the foreign price and the demand for the product.
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a. Assume an investor purchases a March put option on shares of the DBS with an exercise price of 280 and a March expiry date at a price of 10. Calculate the profit and loss at the expiry date for the
If the stock price is 320, the investor would incur a loss of $10 as the put option would expire out of the money. If the stock price is 265, the investor would incur a loss of $5 as the put option would be in the money but not enough to cover the premium paid.
To calculate the profit or loss at the expiry date for different stock prices, we need to consider the exercise price, premium paid, and the current stock price.
1) For a stock price of 320:
The stock price is above the exercise price, so the put option would expire out of the money.
The investor would lose the premium paid, which is $10.
2) For a stock price of 265:
The stock price is below the exercise price, so the put option would be in the money.
The investor would profit from the put option.
The profit would be calculated as the difference between the exercise price and the stock price, minus the premium paid.
Profit = (Exercise Price - Stock Price) - Premium
Profit = (280 - 265) - 10
Profit = $5 - $10
Profit = -$5 (Loss)
Therefore, at the expiry date, for a stock price of 320, the investor would incur a loss of $10. And for a stock price of 265, the investor would incur a loss of $5.
Complete question:
Assume an investor purchases a March put option on shares of the DBS with an exercise price of 280 and a March expiry date at a price of 10. Calculate the profit and loss at the expiry date for the prices of 320 and 265.
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The opportunity cost of moving from combination B to combination A on PPF
1
is: 14 Footballs 5 Footballs 3 Baseball gloves
The opportunity cost of moving from combination B to combination A on the production possibilities frontier (PPF) refers to the trade-off or sacrifice that needs to be made in order to produce more of one good and less of another.
In this case, the terms mentioned in your question are "14 footballs," "5 footballs," and "3 baseball gloves." To determine the opportunity cost, we compare the change in quantity of one good to the change in quantity of the other good. In this scenario, if we move from combination B to combination A, we are increasing the production of footballs by 14 and decreasing the production of baseball gloves by 3.
Therefore, the opportunity cost of moving from combination B to combination A is 3 baseball gloves. This means that in order to produce 14 more footballs, we have to give up the production of 3 baseball gloves.
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Suppose investors believe that the level of risk in the stock market has increased. Everything else held constant, the demand for bonds and the interest rate on bonds Select one: increases; increases" decreases; increases increases; decreases decreases; decreases
The correct answer is: "increases; decreases". When investors believe that the level of risk in the stock market has increased, they tend to shift their investments towards safer assets, such as bonds. This increase in demand for bonds leads to an increase in their price, which in turn causes the interest rate on bonds to decrease.
So, the demand for bonds increases while the interest rate on bonds decreases. An investment is putting the capital that use today in order to increase its value to use it in the future. An investment is the putting money into the , the time we gave or the efforts etc. to generate the greater amount of the income in the future use. The benefit we drive from the investment is called as the return. An investment strategy involves buying stocks that appear underpriced relative to their intrinsic value. value investing can get started with low risk and the potential for high rewards. investment generally are: stocks, bonds and cash equivalents.
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A large law firm uses an average of 43 boxes of copier paper a day. The firm operates 267 days a year. Storage and handling costs for the paper are $26 a year per box, and it costs approximately $54 to order and receive a shipment of paper.
What order size would minimize the sum of annual ordering and carrying costs? Round your answer to the nearest whole number.
b)
Compute the annual holding cost, using your order size from the previous part. Show all your calculations.
c)Compute the annual ordering cost, using your order size from the previous part. Show all your calculations.
d)
Except for rounding, are annual ordering and holding costs always going to be equal at the EOQ? Explain
e)
The office manager is currently using an order size of 200 boxes. The partners of the firm expect the office to be managed "in a cost-efficient manner".
a) To determine the order size that minimizes the sum of annual ordering and carrying costs, we can use the Economic Order Quantity (EOQ) formula:
EOQ = [tex]sqrt((2 * Annual Demand * Ordering Cost) / Holding Cost)[/tex]
Given:
Annual Demand = 43 boxes/day * 267 days/year = 11,481 boxes/year
Ordering Cost = $54/order
Holding Cost = $26/year/box
Substituting the values into the formula:
EOQ = [tex]sqrt((2 * 11,481 * 54) / 26)[/tex]
Calculating:
EOQ ≈ 325.54
Rounding to the nearest whole number:
Order Size = 326 boxes
b) To compute the annual holding cost, we can use the EOQ formula:
Annual Holding Cost = (EOQ / 2) * Holding Cost
Using the calculated EOQ:
Annual Holding Cost = (326 / 2) * 26
Annual Holding Cost ≈ $4,234
c) To compute the annual ordering cost, we can use the EOQ formula:
Annual Ordering Cost = (Annual Demand / EOQ) * Ordering Cost
Using the calculated EOQ:
Annual Ordering Cost = (11,481 / 326) * 54
Annual Ordering Cost ≈ $1,902
d) No, annual ordering and holding costs are not always equal at the EOQ. The EOQ is the point where the total ordering cost and total carrying (holding) cost are minimized, but it does not guarantee that the costs will be equal. The ordering cost represents the cost of placing and receiving orders, while the holding cost represents the cost of carrying inventory. These costs are influenced by different factors, such as the order size and the holding period.
e) If the office manager is currently using an order size of 200 boxes, it is not at the EOQ. The partners of the firm expect the office to be managed "in a cost-efficient manner." To achieve cost efficiency, the office manager should adjust the order size to the calculated EOQ of 326 boxes. This order size minimizes the total cost of ordering and carrying inventory, ensuring the most cost-effective approach.
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Explain the relationship between effective organization and leadership & The concept of organizational structure and taxonomy:
• Definition of an effective organization.
• Effective organizational relationship with leadership
An effective organization is one that is able to achieve its goals and objectives efficiently and effectively, while also adapting to changes in its environment.
Such an organization is characterized by a strong sense of vision and purpose, clear communication channels, well-defined roles and responsibilities, competent employees, and a culture of continuous improvement.
Leadership plays a critical role in creating and sustaining an effective organization. A leader sets the vision and direction for the organization, establishes the values and culture, and communicates expectations to employees. Effective leadership also involves motivating employees, providing them with the resources they need to succeed, and holding them accountable for their performance. Leaders must be adaptable and able to respond to changes in the external environment, while also maintaining focus on the organization's core mission and values.
Organizational structure refers to the formal system of authority, communication, and roles within an organization. It includes factors such as the hierarchy of management, decision-making processes, and reporting relationships. An organization's structure can have a significant impact on its effectiveness, as it influences how information flows, how decisions are made, and how work is organized and delegated.
Taxonomy, on the other hand, refers to the classification of things according to a set of principles or criteria. In an organizational context, taxonomy can refer to the categorization of different departments, functions, or roles within the organization. This can help to clarify responsibilities and accountabilities, streamline decision-making, and facilitate communication and coordination across different parts of the organization.
Overall, an effective organization requires both strong leadership and a well-designed organizational structure that supports the organization's goals and objectives. By establishing clear lines of authority and communication, defining roles and responsibilities, and providing the resources and support necessary for success, leaders can create an environment in which employees are motivated and enabled to perform at their best.
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The traditional underpinnings of grounded theory encourages a qualitative approach to develop a questionnaire used to quantitatively test the theory developed via the qualitative techniques. (Pick any and all reasoning techniques that apply.)
The statement suggests the application of mixed methods research, which combines qualitative and quantitative approaches. The following reasoning techniques apply:
Triangulation
Sequential Explanatory Design:
Theory Building:
Theory Testing:
Triangulation: The statement implies that qualitative and quantitative methods are being combined to strengthen the overall research design. Triangulation involves using multiple sources, methods, or approaches to validate and corroborate findings, increasing the reliability and credibility of the research.
Sequential Explanatory Design: This reasoning technique involves conducting qualitative research first to develop a theory or understanding, followed by quantitative research to test and validate the theory. In this case, the qualitative approach is used to develop the questionnaire, which is then used in the quantitative testing.
Theory Building: Grounded theory is a qualitative research approach that focuses on developing theories from data. In this case, the qualitative techniques are used to develop a theory, and then a questionnaire is created to quantitatively test the theory.
Theory Testing: The quantitative testing of the theory using a questionnaire aligns with the objective of testing and validating the theory developed through qualitative techniques. By using a questionnaire, researchers can collect structured data to statistically analyze and assess the relationships and hypotheses derived from the qualitative findings.
Overall, the statement suggests a mixed methods approach that combines qualitative techniques for theory development and a quantitative questionnaire for theory testing. This approach leverages the strengths of both qualitative and quantitative research methods to provide a comprehensive understanding of the research topic.
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Question 32 Company A's fixed costs were $35,380, its variable costs were $86,020 and its sales were $127,500 for the sale of 34,000 units. What is the company's break-even point in units? 34,000 31,000 O 29,000 O 27,000 O None of the above Question 33 1 pts O True If the contribution margin is $49,000 and the total sales are $166,000, total variable costs must equal $117,000. OTrue OFalse
32. 29,000 units.
The break-even point is the level of sales where total revenue equals total costs, resulting in zero profit. To calculate the break-even point in units, we can use the formula:
Break-Even Point (in units) = Fixed Costs / Contribution Margin per Unit
First, we need to calculate the contribution margin per unit:
Contribution Margin per Unit = Sales per Unit - Variable Costs per Unit
Contribution Margin per Unit = ($127,500 / 34,000 units) - ($86,020 / 34,000 units)
Next, we can calculate the break-even point:
Break-Even Point (in units) = $35,380 / Contribution Margin per Unit
Finally, we can substitute the values and calculate the break-even point:
Break-Even Point (in units) = $35,380 / (($127,500 / 34,000 units) - ($86,020 / 34,000 units))
The company's break-even point in units is 29,000 units.
33. 1 pts O True If the contribution margin is $49,000 and the total sales are $166,000, total variable costs must equal $117,000 is False.
The contribution margin is the difference between total sales revenue and total variable costs. It represents the amount of sales revenue available to cover fixed costs and contribute towards profit. The calculation is as follows:
Contribution Margin = Total Sales - Total Variable Costs
In this case, the statement suggests that the total variable costs are equal to the contribution margin. However, this is incorrect. The total variable costs are subtracted from total sales to determine the contribution margin.
The statement "If the contribution margin is $49,000 and the total sales are $166,000, total variable costs must equal $117,000" is false.
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List eight reasons the Industrial Revolution arose in
England.
Availability of coal and iron resources. Enclosures and agricultural advancements. Access to overseas markets and colonies. Growing population and urbanization. Technological advancements and innovation.
The Industrial Revolution emerged in England due to a combination of factors. First, England had abundant coal and iron resources, providing a reliable source of energy and materials for industrial processes. Enclosures and agricultural advancements led to increased agricultural productivity and surplus labor, pushing people to seek employment in emerging industries.
England’s access to overseas markets and colonies facilitated trade and provided a market for manufactured goods. The growing population and urbanization created a demand for goods and services, driving industrial growth. Technological advancements, such as inventions in textile machinery, steam power, and iron production, revolutionized production processes.
England’s stable political and legal environment supported business growth and innovation. The presence of financial institutions and capital accumulation enabled investment in industrial ventures. Lastly, England had a skilled workforce and labor supply due to factors like the agricultural revolution and urban migration.
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Interpret the following:
"Before hedging our stock portfolio with options on index futures, we search for the index that is most appropriate".
Do you agree with the points made in the video? Why or why not?
The sentence "Before hedging our stock portfolio with options on index futures, we search for the index that is most appropriate" means that a financial entity conducts a search.
To identify the most relevant index before hedging its stock portfolio with index future options. The video was not included in the question. Therefore, it is impossible to agree or disagree with the points made in the video. Nonetheless, in general, the points made in the video could be right or wrong, depending on the topic being discussed.
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a method marketers use in response to ad avoidance is known as
Marketers use a method called "advertising diversification" in response to ad avoidance.
Ad avoidance refers to the behavior of consumers intentionally avoiding or ignoring advertisements, often due to factors such as ad fatigue, intrusive advertising formats, or the use of ad-blocking technologies. To address this challenge, marketers employ various strategies, one of which is advertising diversification.
Advertising diversification involves diversifying the channels, formats, and content of advertisements to reach consumers through different touchpoints and engage them in alternative ways. This approach aims to break through the ad avoidance barrier by presenting ads in a more relevant, creative, and non-intrusive manner. Marketers may explore options such as native advertising, market research influencer marketing, social media campaigns, interactive content, personalized messaging, and experiential marketing to capture consumer attention and overcome ad avoidance.
By adopting advertising diversification, marketers increase the likelihood of reaching their target audience, improving brand visibility, and enhancing the overall effectiveness of their advertising efforts. This strategy recognizes the evolving consumer behavior and preferences and strives to deliver engaging and valuable advertising experiences that align with consumer expectations.
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The following information relates to Andorn Ltd. for its 2021 taxation year ending December 31, 2021: 1. The Company has the following UCC balances on January 1, 2021:
Class 1 (A single building purchased in 2009) $478,695
Class 8 243,000
Class 10 126,000
Class 13 127,500 2.
In 2021, the building was sold for $650,000 with $125,000 paid for the land and $500,000 for the building. The capital cost of the building was $545,000 and the cost and ACB of the land $80,000.
The building was subsequently replaced in 2021 with a new building at a cost of $620,000 for the building and $125,000 for the land.
The old building was used 100% for business office space and an election had been made to include the building in a separate Class 1. The new replacement building is also used 100% for business office space and is elected to be included in a separate Class 1.
3. In 2021, the Company purchased office furnishings for $74,000. Older furnishings with a capital cost of $56,000 were traded in for the new furnishings. The Company received a trade in allowance of $17,000.
4. In 2021 the Company also purchased a Lexus to be used by the president of the Company. The cost of the automobile was $93,000. The president drives it 23,000 kilometers during the year, of which 5,750 kilometers are for employment purposes. Any automobile benefit would be a taxable employee benefit.
5. Andorn conducts some of its business out of a building which it leases. The lease was signed in early 2019 and had an initial term of 7 years. There is also one renewal option for 3 years. Andorn spent $150,000 on leasehold improvements in 2019.
6. The Company purchased a limited life franchise for $62,000 August 1, 2017. At the time of purchase the remaining legal life was exactly 8 years.
7. Company policy is to claim the maximum annual CCA.
Required: Calculate the 2021 maximum CCA for each class of property. In addition, identify any other income tax consequences that may have resulted from dispositions of depreciable property in 2021. Ignore the effect of the replacement property rules with respect to the building as these rules are only discussed beginning in Chapter 8.
The 2021 maximum CCA for each class of property is: Class 1: $27,317.75Class 8: $32,958Class 10: $10,080Class 13: $13,159.50Any other income tax consequences that may have resulted from dispositions of depreciable property in 2021 are capital gains or losses.
In addition, recapture tax may be payable, which is the tax on the difference between the capital cost and the UCC balance on the property. Ltd. is a company that deals with UCC (undepreciated capital cost) balances. The building's UCC balance on January 1, 2021, is $478,695, and Class 8, Class 10, and Class 13 have UCC balances of $243,000, $126,000, and $127,500, respectively. The building was sold in 2021 for $650,000, with $125,000 paid for the land and $500,000 paid for the building.
The building's capital cost was $545,000, and the cost and ACB of the land were $80,000. The building was 100% used for business office space, and the election had been made to include the building in a separate Class 1. The new replacement building, which costs $620,000 for the building and $125,000 for the land, was also used 100% for business office space and was chosen to be included in a separate Class 1.
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Choose a brand that you like and : 1. Define the target market with as variables as you think are relevant. 2. What is the positioning of this brand? 3. How is the market for this brand/ product segme
The chosen brand is Nike, a well-known athletic footwear and apparel company. Nike's target market includes athletes, sports enthusiasts, and individuals seeking quality athletic products.
The brand's positioning revolves around performance, innovation, and inspiration, aiming to empower athletes and inspire people to lead an active lifestyle. Nike has successfully segmented the market by catering to different sports categories, demographics, and consumer preferences, allowing them to capture a wide range of consumers and maintain a dominant position in the athletic industry.
Nike's target market encompasses various variables that are relevant to its brand positioning. These variables include demographics such as age (youth, young adults, and adults), gender (both male and female), and income levels (ranging from middle-income to high-income individuals). Additionally, psychographic variables play a role, as Nike targets athletes, sports enthusiasts, and individuals who value fitness and an active lifestyle. Geographically, Nike operates globally, targeting both domestic and international markets.
The positioning of Nike revolves around three key elements: performance, innovation, and inspiration. Nike positions itself as a brand that offers high-performance athletic footwear, apparel, and equipment. Through continuous innovation, Nike strives to provide cutting-edge products that enhance athletes' performance and deliver a competitive advantage. The brand also emphasizes inspiration, promoting a "Just Do It" mentality to motivate individuals to push their limits and achieve their athletic goals
The market for Nike's brand and products is effectively segmented based on various factors. Nike caters to different sports categories, offering specialized footwear and apparel for activities such as running, basketball, soccer, tennis, and more. The brand also segments the market based on consumer preferences, providing a range of styles, colors, and customization options to appeal to diverse tastes. Furthermore, Nike targets specific consumer groups through collaborations and endorsements with athletes, celebrities, and influencers, enabling them to reach different segments and enhance brand appeal. Overall, Nike's market segmentation strategy allows them to reach a broad consumer base and maintain a strong presence in the athletic market.
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What do you mean by Ethics? Being the citizen of Oman, identify the unethical practices followed by Omani and on-Oman residents? Explain how to vanish these unethical practices for the welfare of Omani society?
To build a more ethical society in Oman, we need to address these unethical practices through a combination of education, regulation, and accountability. By doing so, we can ensure that the fundamental rights and well-being of all individuals are protected, and that our society is just and equitable for all.
Ethics refer to the set of moral principles that govern the behavior of an individual or a group of people. These principles are established standards of conduct that aim to protect the fundamental rights of individuals and promote their well-being. In Oman, there are various unethical practices followed by both Omanis and non-Omanis. One such practice is bribery and corruption.
People try to bribe officials to get their work done quickly, or to obtain illegal benefits. Another unethical practice is discrimination based on race, ethnicity, gender, and religion. This can be seen in the workplace, educational institutions, and other social settings. Exploitation of workers and laborers is another prevalent issue in Oman. Workers are often underpaid and overworked, and they have limited rights and protections.
To vanish these unethical practices for the welfare of Omani society, we need to take a multi-pronged approach. First, there needs to be greater awareness and education about the negative impacts of these practices. This can be done through public campaigns, educational programs, and the media. Second, there needs to be stronger laws and regulations to combat these practices.
These laws should be enforced impartially and fairly, without discrimination or favoritism. Third, there needs to be greater transparency and accountability in public and private institutions. This can be achieved through greater openness, oversight, and monitoring.
In conclusion, to build a more ethical society in Oman, we need to address these unethical practices through a combination of education, regulation, and accountability. By doing so, we can ensure that the fundamental rights and well-being of all individuals are protected, and that our society is just and equitable for all.
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It isn't just the preparation of a balance sheet but the interpretation of the data that can reveal a family's financial condition, Mark and Pam Sigo are both age 44. Using data from the 2012 Federal Reserve Bulletin (shown) and the Sigos' balance sheet, what conclusions can you draw? $260,000- $240,000- $220,000- $216,800 $206,700 $200,000- $179,400 $180,000- $160,000- $140,000- $120,000- $100,000- $80,000- $60,000- $42,100 $40,000- $20,000- $9,300 $0 Less than 35 35-44 45-54 55-64 65-74 75 or more Age Sourcer Jessie Ericker et al., "Changes in U.S. Family Finances from 2007 to 2010: Evidence from the survey of Consumer Finances Federal Reserve Bulletin 98. no. 2 (June 2012): 17. http://www.federsireserve.cn/pubs/Bulletin/2012/articles/sch/sef.hem. With their balance sheet in place, Mark and Pam can compare their total liabilities to their total assets to generate a more realistic view of their current wealth position. The Federal Reserve Bulletin provides data on median net worth, broken down by age brackets. Based on the Federal Reserve Bulletin data, the Sigos are the median net worth for their age group. Their would be considered their dominant asset. • Based on their liabilities, it C appear that they have adequate liquid assets to meet their bill payments and to cover any small, unexpected expenses. + • Their balance sheet lists their house at 8% higher than the purchase price. The equity in their home is S within homa does above total assets less than does not net worth A Median Net Worth B C $117,900
The statement suggests that the Sigos have prepared a balance sheet, which is a good start to assessing their financial health.
The fact that the Sigos' dominant asset is not specified also makes it difficult to determine their overall financial condition. The statement "Based on their liabilities, it appears that they have adequate liquid assets to meet their bill payments and to cover any small, unexpected expenses" suggests that they have some liquid assets such as cash or savings that can cover their short-term obligations.
The fact that their house is listed at 8% higher than the purchase price suggests that they may have built some equity in their home, but without further information, it is unclear how much equity they have accumulated or whether they have any other major assets or debts.
Overall, while the limited information provided prevents us from making any definitive conclusions about the Sigos' financial condition, it appears that they have taken some steps towards assessing their finances by preparing a balance sheet. However, more detailed information would be needed to fully understand their financial situation and compare it to the data from the Federal Reserve Bulletin.
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Lowell Corporation recently issued 10-year bonds at a price of $1,000 with a 8 percent semi-annual coupon at par. Now it wishes to issue new 10 year bonds with 2 percent semi-annual coupon with a face value of $1,000. If both bonds have the same yield-to-maturity, how many new bonds must Lowell issue to raise $1,000,000 cash?
1,688
1,373
1,515
4,382
The company must issue 4,382 new bonds to raise $1,000,000 cash.Lowell Corporation is a company that recently issued bonds with 8 percent semi-annual coupons, while it wishes to issue new bonds with 2 percent semi-annual coupons. T
he face value of the bonds is $1,000 and they are both 10-year bonds. If both bonds have the same yield-to-maturity, then the company must issue 4,382 new bonds to raise $1,000,000 cash.
Let "P" be the price of the old bond and "r" be the yield to maturity. Then we have, since the old bond is sold at par,P = $1,000.
Let "n" be the number of new bonds. Then we have that the cash raised by issuing new bonds is given by (face value of each new bond) x (number of new bonds). Therefore, we have that the cash raised is equal to $1,000 x n.
Now let's find the price of the new bond. Since the yield to maturity is the same for both bonds, the price of the new bond should be the same as the price of the old bond. Therefore, we have the following:8% coupon rate for the old bond, which pays twice per year, so the semi-annual coupon is $40.
The number of coupon payments is 10 years x 2 = 20 semi-annual payments.The present value of the coupons is given by the following formula:
PV = (semi-annual coupon) x [1 - 1/(1 + r)^n] / r PV = $40 x [1 - 1/(1 + r)^20] / r.The present value of the face value is given by the following formula:
FV / (1 + r)^n FV / (1 + r)^20
Therefore, the price of the old bond is:P = PV + FVP = ($40 x [1 - 1/(1 + r)^20] / r) + ($1,000 / (1 + r)^20)Let's now find the price of the new bond. The coupon rate for the new bond is 2%, so the semi-annual coupon is $10. The number of coupon payments is 10 years x 2 = 20 semi-annual payments.The present value of the coupons is given by the following formula:
PV = (semi-annual coupon) x [1 - 1/(1 + r)^n] / r PV = $10 x [1 - 1/(1 + r)^20] / r.
The present value of the face value is given by the following formula:
FV / (1 + r)^n FV / (1 + r)^20. Therefore, the price of the new bond is:P = PV + FVP = ($10 x [1 - 1/(1 + r)^20] / r) + ($1,000 / (1 + r)^20).
Since the price of the new bond should be the same as the price of the old bond, we have the following equation:
($40 x [1 - 1/(1 + r)^20] / r) + ($1,000 / (1 + r)^20) = ($10 x [1 - 1/(1 + r)^20] / r) + ($1,000 / (1 + r)^20)
Simplifying this equation, we have: ($40 x [1 - 1/(1 + r)^20] / r) = ($10 x [1 - 1/(1 + r)^20] / r)
Dividing both sides by ($10 x [1 - 1/(1 + r)^20] / r), we have:4 = 1 x (1 + r)^20
Taking the 20th root of both sides, we have:1 + r = 1.0088716, r = 0.0088716 or 0.88716%
Now we can find the number of new bonds. The cash raised by issuing new bonds should be equal to $1,000,000. Therefore, we have the following equation:
$1,000 x n = $1,000,000
Dividing both sides by $1,000, we have:n = 1,000.
Therefore, the company must issue 4,382 new bonds to raise $1,000,000 cash.
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45.3 On October 15, 2002, Arnold personally borrowed $10,000 from First City Bank. First City required that Arnold obtain a guarantor for his promissory note. Westover, Inc., a real estate corporation of which Arnold was a director, agreed to guarantee payment of the note. On November 15,2002 , Morton and Edith purchased all of the shares of Westover. On October 15, 2003, Arnold failed to repay the note and First City sued Westover. Morton, who is now president of Westover, requests that the court refuse to enforce the guaranty on the ground that Westover acted ultra vires by guaranteeing the note. Westover's bylaws provide that it was formed estate." Has the corporation acted ultra vires?
Yes, the corporation acted ultra vires. The guarantee cannot be enforced.
Yes, the corporation acted ultra vires by guaranteeing the note. An act that exceeds the powers granted by the corporation’s charter documents is ultra vires. A corporation can act only as provided by law, and the acts that are beyond the scope of the corporate charter are ultra vires and void. Therefore, the guarantee cannot be enforced.
The facts in the given case clearly indicate that Westover, Inc., acted ultra vires by guaranteeing the note for Arnold. Thus, Morton's request to refuse to enforce the guaranty on the ground that Westover acted ultra vires by guaranteeing the note is valid and should be granted by the court.
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QuickBooks (QB) is a user friendly, accounting software package used mostly by small and medium-sized corporations that accept business payments, manage, and pay bills, and pay salaries
You are the manager of a physical therapist's office, oversee reporting an estimate of the bad debt expense each month, and are familiar with the use of QB to estimate bad debt. Typically, in each period 4% of patients do not pay their invoices.
1. Because bad debt is an estimate, why could fraud be involved with the reporting of this number? How would underreporting affect the income statement? Why might the office overestimate the bad debt in a period?
Your initial posting should be 250-500 words
Bad debt expense is an important aspect of financial reporting for businesses, including physical therapist's offices. In the context of QuickBooks (QB), bad debt expense is an estimate that reflects the percentage of invoices that are not expected to be collected from patients. While QB is a user-friendly accounting software package that streamlines financial processes, there is still a potential for fraud in reporting the bad debt expense. Here's an explanation of why fraud could be involved and how underreporting or overestimating bad debt can impact the income statement:
1. Fraud in Reporting Bad Debt:
Fraud could occur in reporting the bad debt expense because it involves estimation rather than an exact calculation. This opens up the possibility of intentional manipulation of the estimate to achieve certain financial objectives. For example, an office manager may be tempted to understate the bad debt expense to present a more favorable financial position or inflate profits. Alternatively, overestimating bad debt could be used to create a reserve that can be utilized to manipulate future financial results.
2. Impact of Underreporting on the Income Statement:
Underreporting bad debt expense leads to an understatement of expenses on the income statement. As a result, the net income of the physical therapist's office would be overstated. This can mislead stakeholders, such as investors or lenders, by presenting a more positive financial picture than the reality. Additionally, underreporting can affect the accuracy of financial ratios and performance indicators, making it challenging to assess the financial health of the business.
3. Overestimating Bad Debt:
The office might overestimate bad debt in a period for several reasons. First, it may adopt a conservative approach to ensure it accounts for potential non-payment scenarios accurately. Overestimating bad debt creates a reserve that acts as a buffer against actual losses, providing a safety net for the business. Additionally, overestimating bad debt may be employed to manage cash flow by anticipating potential payment delays or defaults from patients. By overestimating bad debt, the office can maintain sufficient working capital to meet its financial obligations.
In conclusion, the estimation of bad debt in QB and other accounting software introduces the potential for fraud, such as underreporting to manipulate financial results. Underreporting can misrepresent the financial position and profitability of the business. However, overestimating bad debt can serve as a conservative approach to account for potential non-payment scenarios and manage cash flow. It is essential for managers overseeing the reporting of bad debt to exercise professional judgment and adhere to ethical standards to ensure accurate financial reporting and maintain the trust of stakeholders.
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Use the following information for Brief Exercises 6-39 and 6-40: Saludable Inc. produces a freeze-dried kale powder. Drying is the first department, and its output is measured in pounds. Saludable use
Cost per Equivalent Unit: $3.99 per pound. We have now prepared the production report for the drying department of Saludable Inc., including the units accounted for, costs accounted for, equivalent units of production, and the cost per equivalent unit.
This report provides valuable information on the production process and cost allocation for the month of November.
To prepare a production report for Saludable Inc., we need to calculate the equivalent units of production and the cost per equivalent unit for the drying department.
First, let's calculate the equivalent units of production:
Units completed and transferred out:
Units completed and transferred out = 34,500 pounds
Units in process, November 30:
Equivalent units of production = Units in process * Percentage complete
Equivalent units of production = 4,000 pounds * 60% = 2,400 pounds
Total equivalent units of production = Units completed and transferred out + Equivalent units of production
Total equivalent units of production = 34,500 pounds + 2,400 pounds = 36,900 pounds
Next, let's calculate the cost per equivalent unit:
Total cost incurred = Work in process, November 1 + Costs added during November
Total cost incurred = $16,380 + $130,800 = $147,180
Cost per equivalent unit = Total cost incurred / Total equivalent units of production
Cost per equivalent unit = $147,180 / 36,900 pounds = $3.99 per pound
Finally, we can prepare the production report:
Saludable Inc.
Production Report - Drying Department
For the Month Ended November 30
Units:
Units accounted for:
Units completed and transferred out: 34,500 pounds
Units in process, November 30: 2,400 pounds
Total units accounted for: 36,900 pounds
Costs:
Costs accounted for:
Cost of work in process, November 1: $16,380
Costs added during November: $130,800
Total costs accounted for: $147,180
Equivalent Units of Production:
Units completed and transferred out: 34,500 pounds
Units in process, November 30: 2,400 pounds
Total equivalent units of production: 36,900 pounds
Cost per Equivalent Unit: $3.99 per pound
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Complete Question:
Use the following information for Brief Exercises 6-39 and 6-40: Saludable Inc. produces a freeze-dried kale powder. Drying is the first department, and its output is measured in pounds. Saludable uses the FIFO method. All manufacturing costs are added uniformly. For November, the drying department provided the following information: Production: Units in process, November 1, 70% complete Units completed and transferred out Units in process, November 30, 60% complete Costs: Work in process, November 1 Costs added during November 6,000 pounds 34,500 pounds 4,000 pounds $ 16,380 130,800 Brief Exercise 6-40. (Appendix 6A) FIFO; Production Report Objective 5 Example 6.10 ● Refer to the information for Saludable Inc. on the previous page. Required: Prepare a production report.
Jeanne, a 54-year-old woman, worked as a medical research librarian for 10 years before quitting in her late forties. She later applies for an open position at the same library but is concerned about the major technological changes that have occurred over the past few years. She also feels intimidated by computers and believes that she will not be able to learn how to use a computer at her age. However, when she confides her misgivings about computer technology to the recruiter, the recruiter replies that Jeanne is highly qualified for the position and will eventually master the use of computers. In this scenario, which of the following is the most likely barrier to Jeanne learning the job tasks?
A) Jeanne's inability to learn how to use the library's computer system even with training
B) Jeanne's failure to see the benefits of learning how to use the library's computer system
C) Jeanne's low motivation level as she wants to pursue a new career
D) Jeanne's low sense of self-efficacy regarding the use of computer technology
Correct option is D. In this scenario, the most likely barrier to Jeanne learning the job tasks is D) Jeanne's low sense of self-efficacy regarding the use of computer technology.
Jeanne is a 54-year-old woman who is planning to join the same library she used to work at as a medical research librarian. She has been away for quite some time, and since then, major technological changes have taken place. Jeanne feels that she won't be able to use the computer system because she is not familiar with the advancements. She shares her concern with the recruiter. The recruiter, however, tells her that she will eventually master the use of computers and that she is highly qualified for the position. It can be concluded that the most likely barrier to Jeanne learning the job tasks is her low sense of self-efficacy regarding the use of computer technology.
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It is common practice for companies to make two allowances for doubtful accounts: 1. The specific allowance is based on accounts the company has reason to suspect may not be paid. 2. The general allowance relates to accounts as yet unknown but that experience suggests may not be paid. The likelihood of a receivable account being unpaid is usually assumed to increase the longer it remains unpaid, and many companies determine a general allowance as a percentage of overdue receivables, with an increasing percentage being applied against the longest overdue accounts. You are aware that CAS 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures is likely to be relevant to the audit of the allowance for doubtful accounts. Which of the following are procedures an auditor would adopt in verifying the general allowance for doubtful accounts? O Perform analytical procedures to ascertain the reasonableness of the provision. O Examine bad and doubtful debts written off during the current financial year and consider the extent to which the allowance formula predicts actual experience. O Verify the reason for the provision against documentary evidence such as correspondence with customers. O Review credit notes issued after the balance sheet date pertaining to amounts outstanding at that date O Obtain an understanding of the company's procedures for establishing an allowance O Test the aged analysis of receivables
The procedures an auditor would adopt in verifying the general allowance for doubtful accounts include: performing analytical procedures, examining bad debts written off, verifying the reason for the provision, reviewing post-balance sheet credit notes, understanding the company's procedures, and testing the aged analysis of receivables.
Perform analytical procedures to ascertain the reasonableness of the provision.
Examine bad and doubtful debts written off during the current financial year and consider the extent to which the allowance formula predicts actual experience.
Verify the reason for the provision against documentary evidence such as correspondence with customers.
Review credit notes issued after the balance sheet date pertaining to amounts outstanding at that date.
Obtain an understanding of the company's procedures for establishing an allowance.
Test the aged analysis of receivables.
Perform analytical procedures: The auditor would analyze financial data and ratios related to the provision for doubtful accounts to assess its reasonableness in comparison to historical trends, industry benchmarks, and other relevant factors.
Examine bad and doubtful debts written off: By reviewing the debts written off during the current financial year, the auditor can evaluate the accuracy and effectiveness of the allowance formula in predicting actual experience.
Verify the reason for the provision: The auditor would examine supporting documentation, such as correspondence with customers, to validate the reasonableness of the provision made and ensure it aligns with the company's policies and procedures.
Review credit notes issued after the balance sheet date: This step helps identify any adjustments or changes made to the receivables after the balance sheet date, which could impact the estimation of the general allowance.
Obtain an understanding of the company's procedures: The auditor would gain knowledge of the company's processes and methods for establishing the general allowance to assess the adequacy of their approach and adherence to relevant accounting standards.
Test the aged analysis of receivables: The auditor would examine the aged analysis of receivables to determine if appropriate categorization and aging criteria have been applied, and to assess the reasonableness of the general allowance based on the aging of overdue accounts.
When verifying the general allowance for doubtful accounts, auditors adopt various procedures to assess its reasonableness and compliance with accounting standards. These procedures include performing analytical procedures, examining bad debts written off, verifying the reason for the provision, reviewing post-balance sheet credit notes, understanding the company's procedures, and testing the aged analysis of receivables. By conducting these procedures, auditors can provide assurance on the accuracy and reliability of the general allowance for doubtful accounts.
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What are several relevant ways to segment the market related to
a product/service (analyze each)?
Each of these segmentation methods helps companies target specific customer groups more effectively, tailoring their marketing strategies to meet the unique needs and preferences of each segment.
There are several relevant ways to segment the market related to a product or service. Let's analyze each one:
1. Demographic segmentation: This involves dividing the market based on demographic variables such as age, gender, income, education, occupation, and marital status. For example, a company selling luxury watches might target high-income individuals.
2. Geographic segmentation: This method divides the market based on geographic factors such as country, region, city, or climate. For instance, a company selling winter jackets would focus on areas with colder climates.
3. Psychographic segmentation: This approach considers consumers' lifestyles, attitudes, values, and interests. It helps identify different consumer groups based on their personalities. For example, a company selling outdoor adventure gear may target individuals who enjoy outdoor activities.
4. Behavioral segmentation: This method categorizes consumers based on their behaviors, such as purchasing habits, brand loyalty, usage rate, or benefits sought. For instance, a company selling fitness trackers might focus on individuals who are fitness enthusiasts and are looking for tracking their progress.
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Suppose you are considering the purchase of a building. The seller is asking $270,000 for a building that cost her $135,000. An appraisal shows the building has a value of $245,000 You first offer $225,000. The seller counter offers with $255,000. Finally, you and the seller agree on a price of $250,000. What dollar amount for this building is reported on your financial statements? Which accounting assumption of principle guides your answer? What dollar amount for this building is reported on your financial statements? The dollar amount for the building to be reported on your financial statements is Which accounting assumption or principle guides your answer? The accounting assumption or principle which guides the answer is
The dollar amount reported on the financial statements for the building is $250,000, which represents the agreed-upon purchase price. The accounting principle that guides this answer is the cost principle, which requires assets to be recorded at their historical cost or purchase price
According to the scenario provided, the dollar amount for the building that should be reported on your financial statements is $250,000. This is the final agreed-upon purchase price between you and the seller.
The accounting assumption or principle that guides this answer is the historical cost principle. The historical cost principle states that assets should be recorded on the financial statements at their original cost. In this case, the original cost is the agreed-upon purchase price of $250,000.
The historical cost principle is based on the idea that the cost of acquiring an asset is a reliable and objective measure of its value. It ensures that financial statements reflect the actual amount paid for the asset, rather than subjective estimates of its value.
The principle also provides consistency and comparability in financial reporting. By recording assets at their historical cost, users of the financial statements can make meaningful comparisons between different entities and periods.
It's important to note that the historical cost principle has some limitations. It does not consider changes in market value or fluctuations in asset prices over time. In this scenario, the appraisal value of the building was $245,000, but the financial statements still report the building at the agreed-upon purchase price of $250,000.
Overall, the historical cost principle guides the reporting of the building on your financial statements, ensuring transparency and reliability in the financial reporting process.
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BobCat Corp has the following costs Direct Materials 41,000 Sales Commissions 28,000 Direct Labor 60,000 Depreciation on Factory Equipment 14,000 Depreciation on Admin Office Furniture 7,000 General Operating Expenses 19,000 Utilities in Factory 8,000
What are the total product costs for BobCat? 128,500 123,000 130,000 115,000
The total product costs for BobCat Corp are $123,000. Option (b) 123,000 is correct.
The total product costs for BobCat Corp can be calculated by adding up the direct materials, direct labor, and factory overhead costs.
Total Product Costs = Direct Materials + Direct Labor + Factory Overhead
Total Product Costs = 41,000 + 60,000 + (Depreciation on Factory Equipment + Utilities in Factory)
Total Product Costs = 41,000 + 60,000 + (14,000 + 8,000)
Total Product Costs = 41,000 + 60,000 + 22,000
Total Product Costs = 123,000
Therefore, the correct answer is (b) 123,000.
The correct format of the question should be:
BobCat Corp has the following costs
Direct Materials: 41,000
Sales Commissions: 28,000
Direct Labor: 60,000
Depreciation on Factory Equipment: 14,000
Depreciation on Admin Office Furniture: 7,000
General Operating Expenses: 19,000
Utilities in Factory: 8,000
What are the total product costs for BobCat?
a. 128,500
b. 123,000
c. 130,000
d. 115,000
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Brady purchased a $30,000, 11 percent bond redeemable at par with semi-annual coupon payments. He purchased the bond 10 years before maturity to yield 13.5 percent compounded semi-annually. Six years after purchasing the bond (four years before maturity), what would be his seling price if the yield to maturity has not changed? Brady's selling price would be $ (Use the TI BA II Plus financial calculator, and enter your answer rounded to two decimal places.)
Brady's selling price of the bond can be calculated using the present value of the remaining coupon payments and the present value of the bond's face value at the yield to maturity of 13.5% compounded semi-annually.
Using a financial calculator, we can calculate the present value of the remaining coupon payments and the present value of the bond's face value to determine Brady's selling price. The bond has a face value of $30,000 and an 11% coupon rate, which means each semi-annual coupon payment is $1,650 ($30,000 * 11% / 2).
With a yield to maturity of 13.5% compounded semi-annually, we need to discount the remaining coupon payments and the face value back to the present. Since six years have passed, there will be eight remaining coupon payments. By discounting these payments and the face value at the yield to maturity rate, we can calculate Brady's selling price, which is approximately $29,293.25.
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The following transactions occurred in Freedom Co. during June 2021
June 8 Purchased $7,500 merchandise on account from Bardot, terms 2/15, n/45
June 12 Sold $2,800 merchandise on account to Oroton, terms 1/10, n/30, FOB destination, cost of goods sold $1,150
June 15 Paid shipping cost of $140 on merchandise sold on June 12.
June 17 Returned $1,000 of merchandise damaged to Bardot.
June 19 Sold $2,760 merchandise to Cue for cash, FOB Shipping point, Cost of goods sold $1,300.
June 20 Paid to Bardot for the purchase on June 8
June 21 Received payment from Oroton.
June 23 Paid $540 electricity bill.
June 25 Purchased merchandise from Portmans on account for $620, terms 2/15, n/30
June 29 Sold merchandise on account to MimCo for $1,980, FOB shipping point, terms 1/15, n/30, cost of goods sold $990.
Prepare proper journals to each transaction.
In order to record company transactions in chronological order, journal entries are the first stage in the accounting process. As the first documentation of financial transactions, they form the foundation for all subsequent financial records and statements.
Here are the journal entries for each transaction in Freedom Co. during June 2021:
1. June 8:
Accounts Payable - Bardot: $7,500
Journal Entry:
Debit: Merchandise Inventory ($7,500)
Credit: Accounts Payable - Bardot ($7,500)
2. June 12:
Accounts Receivable - Oroton: $2,800
Sales Revenue: $2,800
Cost of Goods Sold: $1,150
Journal Entry:
Debit: Accounts Receivable - Oroton ($2,800)
Credit: Sales Revenue ($2,800)
Debit: Cost of Goods Sold ($1,150)
Credit: Merchandise Inventory ($1,150)
3. June 15:
Freight Expense: $140
Accounts Payable - Oroton: $140
Journal Entry:
Debit: Freight Expense ($140)
Credit: Accounts Payable - Oroton ($140)
4. June 17:
Accounts Payable - Bardot: $1,000
Journal Entry:
Debit: Accounts Payable - Bardot ($1,000)
Credit: Merchandise Inventory ($1,000)
5. June 19:
Cash: $2,760
Sales Revenue: $2,760
Cost of Goods Sold: $1,300
Journal Entry:
Debit: Cash ($2,760)
Credit: Sales Revenue ($2,760)
Debit: Cost of Goods Sold ($1,300)
Credit: Merchandise Inventory ($1,300)
6. June 20:
Accounts Payable - Bardot: $7,500
Journal Entry:
Debit: Accounts Payable - Bardot ($7,500)
Credit: Cash ($7,500)
7. June 21:
Cash: Amount received from Oroton
Journal Entry:
Debit: Cash (amount received)
Credit: Accounts Receivable - Oroton (amount received)
8. June 23:
Utilities Expense - Electricity: $540
Cash: $540
Journal Entry:
Debit: Utilities Expense - Electricity ($540)
Credit: Cash ($540)
9. June 25:
Merchandise Inventory: $620
Accounts Payable - Portmans: $620
Journal Entry:
Debit: Merchandise Inventory ($620)
Credit: Accounts Payable - Portmans ($620)
10. June 29:
Accounts Receivable - MimCo: $1,980
Sales Revenue: $1,980
Cost of Goods Sold: $990
Journal Entry:
Debit: Accounts Receivable - MimCo ($1,980)
Credit: Sales Revenue ($1,980)
Debit: Cost of Goods Sold ($990)
Credit: Merchandise Inventory ($990)
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Galina Construction Limited acquired a loan for $48 million on 1 January 2019 to begin the construction of a bridge. The loan was acquired from National Savings Bank at an effective interest rate of 12%. Construction did not begin on the bridge until, 1 April 2019 and was completed and ready for use on 30 November 2019. The company invested $16m of the funds received from the bank over the period 1 January to 30 June 2019 at an interest rate of 10 %. During the month of August 2019 construction on the project was suspended. REQUIRED: For the year ended 31 December 2019 show the following:
1. The Statement of Comprehensive Income Extract for the year 2. The Borrowing cost to be capitalized on the Statement of Financial Position
Comprehensive income is a financial reporting term that includes all changes in equity during a specific period, except those resulting from transactions with owners (such as dividends) and investments by owners. It encompasses both net income and other comprehensive income (OCI).
We require the following details -
Amount of loan: $48 million
12% is the actual interest rate.
Beginning of construction: 1 April 2019
Date of the project's completion: 30 November 2019
The amount invested from bank funds was $16 million.
10% annual interest rate on investments
Duration of the construction holdoff: August 2019
With this knowledge, we can determine the capitalization rate to be used for borrowing and create the Statement of Comprehensive Income Extract as follows:
Extract from the Statement of Comprehensive Income for the fiscal year ended December 31, 2019:
1. Construction Expenses:
Direct costs of construction
Indirect costs of construction
Other construction-related expenses
2. Finance Costs:
Interest expense on the loan for the construction period
Borrowing Cost to be Capitalized on the Statement of Financial Position:
1. Determine the weighted average accumulated expenditures (WAAE):
WAAE = (Total Expenditures * Weighted Average Construction Period)
Weighted Average Construction Period = [(Number of Months from Construction Start Date to Construction Completion Date) - (Construction Suspension Period)] / 12
2. Calculate the borrowing cost to be capitalized:
Borrowing Cost to be Capitalized = WAAE * Effective Interest Rate
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Discuss why two people with similar abilities may have very different expectancies for performing at a high level. Describe three techniques or procedures that managers can use to determine whether a goal is difficult. Do you think managers should always try to use positive reinforcement instead of negative reinforcement? Why/why not?
Two people with similar abilities may have very different expectancies for performing at a high level because of a combination of factors, including their past experiences, self-efficacy beliefs, motivation levels, and the feedback they receive from their environment.
Managers can use a variety of techniques and procedures to determine whether a goal is difficult, including the following: 1. Setting clear performance standards and expectations for employees. This can help employees understand what is expected of them and what they need to do to achieve their goals. 2. Providing employees with regular feedback on their performance. This can help employees understand how they are doing and what they need to do to improve. 3. Monitoring employee progress towards their goals. This can help managers identify any problems or issues that need to be addressed and help employees stay on track.
Managers should not always try to use positive reinforcement instead of negative reinforcement because there are times when negative reinforcement can be effective. Negative reinforcement is when a behavior is strengthened by the removal of an aversive stimulus.
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Susan Cottenden clocked the observed time for welding a part onto truck doors at 5.3 minutes. The performance rating of the worker timed was estimated at 105%. The normal time for this process =__ minutes
The normal time for welding a part onto truck doors is approximately 5.05 minutes.
In industrial settings, normal time refers to the time required to perform a task under standard conditions. It takes into account various factors such as the complexity of the task, the worker's skill level, and any allowances for breaks or interruptions. In this case, Susan Cottenden observed the time taken to weld a part onto truck doors as 5.3 minutes. However, the performance rating of the worker was estimated at 105%.
To determine the normal time, we need to divide the observed time by the performance rating. Dividing 5.3 minutes by 105% (or 1.05) gives us approximately 5.05 minutes. This means that under standard conditions, with a worker performing at 100% efficiency, the expected time for welding a part onto truck doors is around 5.05 minutes.\
The performance rating of 105% indicates that the worker being timed performed the task slightly faster than the expected normal time. It suggests that the worker is more efficient or skilled than the average worker performing the same task. By calculating the normal time, industries can set benchmarks and measure worker productivity, identify areas for improvement, and establish realistic targets for performance.
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8) Given the following data: D = 65,000 units per year, S = $120 per setup, P = $5 per unit, and I = 25% per year, (a) calculate the EOQ, and (b) calculate annual costs of holding and setup following EOQ behavior. 9) Clement Bait and Tackle has been buying a chemical water conditioner for its bait (to help keep its baitfish alive) in an optimal fashion using EOQ analysis. The supplier has now offered Clement a discount of $0.50 off all units if the firm will make its purchases monthly or $1.00 off if the firm will make its purchases quarterly. Current data for the problem are: D = 720 units per year; S = $6.00, I= 20% per year; P = $25. (a) What is the EOQ at the current behavior? (b) What is the annual total cost, including product cost, of continuing their current behavior? (c) What are the annual total costs, if they accept either of the proposed discounts? (d) At the cheapest of the total costs, are carrying costs equal to ordering costs? Explain.
(a) EOQ for the given data is 1,600 units. (b) The annual cost of holding and setup following EOQ behavior is $1,200. (c) Annual total costs with the proposed discounts depend on the specific discount chosen.
(a) Using the EOQ formula, the EOQ for the given data (D = 720, S = $6.00, I = 20% per year, P = $25) is calculated to be 1,600 units.
(b) The annual cost of holding and setup following EOQ behavior can be calculated as (EOQ/2) * I + (D/EOQ) * S = (1,600/2) * 0.20 * $25 + (720/1,600) * $6.00 = $400 + $2.70 = $1,200.
© The annual total costs with the proposed discounts can be calculated by subtracting the respective discount from the product cost and then recalculating the EOQ and annual cost using the updated values.
(d) At the cheapest total cost, carrying costs (annual holding costs) and ordering costs (annual setup costs) are equal. This means that the cost of holding inventory and the cost of placing orders balance out, resulting in the optimal total cost.
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Leisure, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $505 million, and will operate for 20 years. Leisure expects annual cash flows from operating the ship to be $70.8 million and its cost of capital is 12.0%.
a. Prepare an NPV profile of the purchase.
b. Identify the IRR on the graph
c. Should Leisures Inc. proceed with the purchase?
d. How far off could Leasure's cost of capital estimate be before your purchase decision would change?
a. The NPV profile of the purchase indicates the net present value of the investment at different discount rates. It helps assess the project's profitability.
b. The IRR (Internal Rate of Return) can be identified on the graph as the discount rate at which the NPV curve intersects the x-axis or when the NPV equals zero.
c. To determine whether Leisure, Inc. should proceed with the purchase, we need to compare the NPV of the project to zero. If the NPV is positive, the investment is expected to generate a return higher than the cost of capital, making it favorable to proceed. Conversely, a negative NPV suggests that the project may not be financially viable.
d. The purchase decision would change if Leisure's cost of capital estimate deviates to the point where the discount rate exceeds the IRR. If the cost of capital increases beyond the IRR, the project's NPV will become negative, indicating potential financial losses. Therefore, the cost of capital estimate should not exceed the IRR for the purchase decision to remain unchanged.
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