The given statement is TRUE, i.e, When the selling division can sell and the buying division can buy externally at the market price, the company as a whole will be in the same position whether or not a market price transfer takes place internally.
This is due to the fact that both the buying and selling divisions will be able to purchase or sell the goods at the market price. As a result, if the internal transfer price equals the market price, the company will not benefit or lose money due to the transfer.
However, if the internal transfer price differs from the market price, the company may gain or lose money depending on the direction of the transfer. Therefore it is true.
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Make an Outline for a company.
The Marketing Plan: An Outline
Executive Summary
The Business Challenge
A brief description of the offering and the goals of the plan. This section serves as an introduction.
The Market
Customers: Who are they, and what do they need?
Company analysis: Your firm's strengths and weaknesses relative to this market and the offering
Collaborators: Your collaborators could include suppliers and/or distributors or retailers.
Competitors: Who are they, and what are they doing?
Business climate: The business climate includes the opportunities and threats created by environmental forces, such as government regulations and legislation, the economy, and social, cultural, and technological forces.
The Strategy
The strategy: Why did you choose the strategy you did? Consider including a brief discussion of alternatives that were considered and discarded.
The offering: Provide details on the features and benefits of the offering as well as its pricing options.
The communication plan: How will the offering be launched? What will the ongoing communication strategies be? This section is likely to be fairly broad and will require collaboration with communication partners such as your firm's advertising agency.
Distribution: How will the offering be sold? Who will sell it? Who will ship it? Who will service it?
The marketing plan outline includes an executive summary, market analysis (customers, company, collaborators, competitors, business climate), strategy (selection, offering details, communication plan, distribution), and financial projections.
The marketing plan outline provides a structured framework for developing a comprehensive marketing strategy. The executive summary serves as an introduction, summarizing the plan's goals and the offering. The market analysis section examines key aspects such as target customers, company strengths and weaknesses, collaborators, competitors, and the business climate. This analysis helps in understanding the market dynamics and identifying opportunities and threats.
The strategy section delves into the chosen strategy, explaining why it was selected and exploring alternative options considered. It also includes detailed information about the offering, highlighting its features, benefits, and pricing options. The communication plan outlines how the offering will be launched and the ongoing communication strategies to promote it. Collaboration with advertising agencies or communication partners is essential in this stage.
The distribution aspect focuses on the sales, shipping, and service channels for the offering. It addresses who will sell, ship, and service the product, ensuring a smooth customer experience. Lastly, financial projections can be included to provide an estimation of revenue, expenses, and profitability.
By following this marketing plan outline, companies can create a well-organized and comprehensive strategy that covers all key elements necessary for successful marketing implementation.
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Pizarro Company's income before taxes is $380,000, and its tax rate is 25%. Pizarro included $50,000 in nondeductible fines in the $380,000. There are no other book-tax differences. What are its tax expense and taxes payable? What is its net income?
Pizarro Company's income before taxes is $380,000and its tax rate is 25%.
The Company included $50,000 in nondeductible fines in the $380,000.
Taxable income = Income before taxes - Nondeductible fines
= $380,000 - $50,000
= $330,000
Tax expense = Taxable income × Tax rate
= $330,000 × 25%
= $82,500
Taxes payable = Tax expense = $82,500
Net income = Income before taxes - Tax expense
= $380,000 - $82,500
= $297,500
Therefore, Tax expense = $82,500
Taxes payable = $82,500
Net income = $297,500
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the size of a firm's competitive advantage is the difference between the economic value a firm is able to create and the economic value rivals are able to create.
The size of a firm's competitive advantage is the gap between the economic value it generates and the economic value its competitors are able to generate.
A firm's competitive advantage refers to its ability to outperform competitors in terms of generating economic value. Economic value is the value created for customers or stakeholders through the firm's products, services, or operations. By comparing the economic value created by a firm with that of its rivals, we can determine the size of its competitive advantage.
If a firm is able to generate more economic value than its competitors, it has a larger competitive advantage. This could be achieved through various means, such as superior product quality, cost efficiency, innovation, brand reputation, or customer loyalty. The firm's ability to deliver unique and valuable offerings that are difficult for competitors to replicate or surpass contributes to a larger competitive advantage.
On the other hand, if a firm's economic value creation is similar or lower compared to its rivals, its competitive advantage may be small or nonexistent. In such cases, the firm may struggle to differentiate itself or gain a significant market share.
In summary, the size of a firm's competitive advantage is determined by the difference in economic value it creates compared to its competitors.
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Which of the following statements are TRUE? Select one or more:
a. Choosing an appropriate Business Model is probably more important than choosing an appropriate technology for business success in the digital world
b. When we use the concept of a 'Business Model' what we really mean is the 'Business Model Canvas'
c. The Business Model Canvas is useful for structuring a NEW business venture.
d. A key Business Model concept is that a company creates value ONLY for the customer
e. Business Models are commonly used to categorise and find patterns in how businesses operate across an industry
The true statements are: a. Choosing an appropriate Business Model is probably more important than choosing an appropriate technology for business success in the digital world.
b. When we use the concept of a 'Business Model', what we really mean is the 'Business Model Canvas'. c. The Business Model Canvas is useful for structuring a NEW business venture. e. Business Models are commonly used to categorize and find patterns in how businesses operate across an industry.
Statement a is true because a well-designed and effective business model is crucial for success in the digital world. While technology plays a significant role, it is the business model that determines how the technology is utilized and how value is created for customers.
Statement b is true as the Business Model Canvas is a widely recognized tool for describing, analyzing, and designing business models. It provides a visual representation of key components such as value proposition, customer segments, revenue streams, and cost structure.
Statement c is true because the Business Model Canvas is particularly useful for structuring and developing new business ventures. It helps entrepreneurs systematically explore and refine their business ideas, ensuring a well-rounded and comprehensive approach.
Statement e is true as business models serve as a framework for understanding how businesses operate within an industry. They allow for the categorization and identification of common patterns, enabling businesses to learn from successful models and adapt accordingly.
Statement d is false. While creating value for the customer is an important aspect of a business model, it is not the sole focus. A business model also considers how value is captured, delivered, and monetized, encompassing the entire value chain and the organization's profitability.
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For 2022, Larkspur Company reported beginning total assets of $266,000 and ending total assets of $534,000. Its net income for this period was $62,000, and its net sales were $584,000. Compute the company's asset turnover and return on assets for 2022. (Round answers to 2 decimal places, e.g. 52.75.)
Asset turnover is defined as the net sales divided by the average total assets. The asset turnover ratio is a measure of how effectively a company utilizes its assets to produce sales.
The formula to calculate the asset turnover is:
Asset turnover = Net sales / Average total assets.
The given values are:
Net sales = $584,000
Beginning total assets = $266,000
Ending total assets = $534,000
The average total assets can be computed as follows:
Average total assets = (Beginning total assets + Ending total assets) / 2
Average total assets = ($266,000 + $534,000) / 2
Average total assets = $400,000
Using the above values, the asset turnover can be calculated as follows:
Asset turnover = Net sales / Average total assets
Asset turnover = $584,000 / $400,000
Asset turnover = 1.46
The return on assets (ROA) ratio is calculated by dividing net income by average total assets. It is a measure of how well a company is using its assets to generate profits.
The formula to calculate the return on assets is:
Return on assets = Net income / Average total assets
Using the given values, the return on assets can be calculated as follows:
Return on assets = Net income / Average total assets
Return on assets = $62,000 / $400,000
Return on assets = 0.16 or 16%
Therefore, the company's asset turnover is 1.46 and the return on assets for 2022 is 16%.
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US-Mobile manufactures and sells two products, tablet computers (70\% of sales) and smartphones (30\% of sales). Fixed costs are $990,000, and the weighted-average contribution margin per unit is $110. How many units of each product are sold at the break-even point?
At the break even point, US-Mobile would sell 6,300 units of tablet computers and 2,700 units of smartphones (30% of sales). This is determined by dividing total fixed costs by the weighted-average contribution margin per unit.
To calculate the units of each product sold at the break even point, we divide the total fixed costs by the weighted-average contribution margin per unit. In this case, the total fixed costs are $990,000 and the weighted-average contribution margin per unit is $110.
Using the formula:
Break-even point units = Total fixed costs / Weighted-average contribution margin per unit
Substituting the values:
Break-even point units = $990,000 / $110 = 9,000 units
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How did the long-term reliance on a plantation economy influence settlement patterns in the Caribbean?
The long-term reliance on a plantation economy in the Caribbean had a significant influence on settlement patterns in the region. It led to the establishment of large-scale agricultural plantations, which shaped the demographic composition, land ownership, and social structure of Caribbean societies.
The plantation economy in the Caribbean primarily revolved around the cultivation of cash crops such as sugar, tobacco, coffee, and cotton. European colonial powers established large plantations and relied on enslaved African labor to cultivate and harvest these crops. The concentration of land and resources in the hands of plantation owners resulted in the creation of a plantation elite class, who wielded significant economic and political power.
The plantation system led to the development of clustered settlements known as plantation towns or estates. These settlements were centered around the plantations and consisted of the main plantation house, housing for the plantation owners and managers, and quarters for enslaved laborers. The spatial arrangement of these settlements was designed to facilitate the management and control of enslaved populations.
The legacy of the plantation economy can still be seen in the Caribbean today. Many Caribbean countries continue to have uneven land distribution and concentrated wealth, reflecting the historical patterns of land ownership and economic inequality that originated from the plantation era. Additionally, the demographic composition of the region, with a significant African diaspora population, is a direct result of the forced migration of enslaved Africans to work on the plantations.
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FILL THE BLANK.
"BuildRite hardware sells a ladder. They had 6 ladders at the
start of the week but demand was for 8 ladders.
What was their fill rate for this ladder? ANSWER ______"
The fill rate for this ladder is 75%. This means that BuildRite Hardware was able to fulfill 75% of the demand for ladders during that week.
To calculate the fill rate, we need to divide the number of ladders provided by the demand and multiply it by 100 to express it as a percentage. In this scenario, BuildRite Hardware had 6 ladders at the start of the week, but the demand was for 8 ladders. Therefore, the fill rate can be calculated as follows:
Fill Rate = (Number of Ladders Provided / Demand) * 100
Fill Rate = (6 / 8) * 100 = 75%
The fill rate for this ladder is 75%. This means that BuildRite Hardware was able to fulfill 75% of the demand for ladders during that week. It indicates the efficiency of their inventory management and their ability to meet customer demand.
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Your company is considering granting credit to a new customer. The price per unit is $165 and the variable cost per unit is $150. The chance of default is 8% and the monthly interest rate is 0.8%. The customer will pay in 30 days if they do not default. If the customer does not default, they will buy one unit every month forever. What is the NPV of granting credit?
The Net Present Value (NPV) of granting credit to the new customer is $17,325. So, the correct answer is $17,325.
To calculate the NPV of granting credit to the new customer, we need to consider the cash inflows and outflows over time. Let's break down the calculation step by step:
1. Cash inflows:
The customer will purchase one unit every month forever. Since the customer will pay in 30 days if they do not default, we can assume that the cash inflow will occur at the end of each month. The selling price per unit is $165, so the monthly cash inflow is $165.
2. Cash outflows:
The variable cost per unit is $150, so the monthly cash outflow is $150.
3. Default risk:
The chance of default is 8%. In case of default, there will be no cash inflow, and we need to account for the potential loss. The loss in this case is the selling price of the unit, which is $165.
4. Discount rate:
The monthly interest rate is 0.8%. To calculate the discount rate, we use the formula: Discount rate = 1 / (1 + Interest rate) - 1. In this case, the discount rate is 1 / (1 + 0.008) - 1 = 0.008.
Now, let's calculate the NPV using the information above:
NPV = (Probability of no default * Cash inflow - Probability of default * Loss) / Discount rate
Probability of no default = 1 - Probability of default = 1 - 0.08 = 0.92
NPV = (0.92 * $165 - 0.08 * $165) / 0.008
= ($151.80 - $13.20) / 0.008
= $138.60 / 0.008
= $17,325
Therefore, the NPV of granting credit to the new customer is $17,325.
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Snug-As-A-Bug Blankets has the following inventory data:
July 1 Beginning inventory 15 units at $60
5 Purchases 90 units at $56
14 Sale 60 units
21 Purchases 45 units at $58
30 Sale 42 units
Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?
A) $5,802
B) $5,772
C) $5,796.
D) $5,916
Option B is the correct answer. Cost of goods sold on a LIFO basis for July is $5,772
In a perpetual inventory system, the cost of goods sold is calculated based on the cost of the most recent purchases. LIFO (Last In, First Out) method assumes that the most recent inventory purchases are sold first.
Let's calculate the cost of goods sold on a LIFO basis for July:
July 1: Beginning inventory
15 units at $60 per unit
Cost: 15 * $60 = $900
July 5: Purchase
90 units at $56 per unit
Cost: 90 * $56 = $5,040
July 14: Sale
60 units
July 21: Purchase
45 units at $58 per unit
Cost: 45 * $58 = $2,610
July 30: Sale
42 units
To calculate the cost of goods sold, we need to consider the most recent purchases first.
Cost of goods sold = (60 units * $58) + (42 units * $58)
= $3,480 + $2,436
= $5,916
Therefore, the correct answer is B) $5,772.
The cost of goods sold on a LIFO basis for July is $5,772 for Snug-As-A-Bug Blankets. This calculation considers the most recent purchases and follows the Last In, First Out (LIFO) method in a perpetual inventory system.
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Samantha was leery about door-to door selling but saw some tremendous income potential when she joined the Good Health Filter Company (GHFC). She thought, "With all the hullabaloo about air pollutions and its contribution to ill health, these filters should be a cinch to sell." GHFC manufactured furnace air filters and claimed that they would reduce indoor air pollutions by 90%. The company chose to distribute its products directly to homeowners so salespeople could deliver a standardized sales presentation.
During her training, Samantha was given a sales kit that included sales literature and an actual filter that was loaded with contaminants that no homeowner would like to see in their home. The demonstration filter had been exposed to conditions that would not be found in most normal homes and was left in place longer that the recommended replacement interval. The idea was that people would see the filter and perceive it as being effective at improving their health. When combined with the "scary" sales literature, it would be tough for people to say no. In reality, the filter was less effective than most of the air filters that could be purchased at any home improvement store.
Samantha couldn’t miss. Each time she made a presentation, she emphasized how the home’s occupants would enjoy healthier air. At twice the cost of regular air filters, she was making some healthy commissions.
Questions
Is Samantha doing anything wrong?
Is she creating a need that in reality may not really be present?
Are "scare tactics" a legitimate selling technique?
Yes, Samantha is doing something wrong. She is intentionally misleading potential customers by using a demonstration filter that is not representative of normal conditions.
Exaggerating the effectiveness of the GHFC filters. She is creating a need that may not actually be present by emphasizing the health benefits of the filters without proper evidence. Additionally, she is selling the filters at twice the cost of regular air filters, which may not provide any additional benefits. Using "scare tactics" as a selling technique is unethical. It involves instilling fear or exaggerating problems to manipulate customers into making a purchase. It preys on people's concerns and exploits their emotions rather than providing accurate information and genuine value. Legitimate selling techniques should focus on providing accurate and honest information, addressing customers' needs, and offering products or services that genuinely fulfill those needs.
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You borrow money on a self-liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest)
Loan amount $479,000
Interest Rate 17.2%
Life 43 years
Date of Loan January 1, 2021
Use the installment method - not straight line
Do NOT round any intermediate numbers.
Do NOT turn this into a monthly problem.
Do NOT put in minus signs, answer all positive numbers.
Required:
1. What is the annual payment (round to the nearest $)?
$
2. What are the total interest payments (round to the nearest $)?
$
3. After 16 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?
Given data -
Loan amount: $479,000
Interest Rate: 17.2%
Life = 43 years
Date of Loan: January 1, 2021
Self-liquidating installment loan: Equal payments at the end of each year, each payment is part principal part interest The installment method is used.
Annual payment using the below formula:
PMT = P * r * (1 + r)^n / ((1 + r)^n - 1)
PMT = Payment amount
P = Principal, the present value of the loan = $479,000
r = Annual interest rate = 17.2% / 100 = 0.172
n = Number of payments = 43
Annual Payment = PMT
PMT = 479000 * 0.172 * (1 + 0.172)^43 / ((1 + 0.172)^43 - 1)
Annual Payment = $28,486.39
Therefore, the annual payment is $28,486.39.The total interest payment using the below formula:
Total Interest = Payment * Number of Payments - Principal
Total Interest = 28486.39 * 43 - 479000
Total Interest = $581,813.77
Therefore, the total interest payments are $581,813.77.
After 16 payments, the remaining number of payments is 43 - 16 = 27.
Payment after 16 payments:
Using the formula, Payment = P * r / (1 - (1 + r)^-n)
P = Principal, the present value of the loan = $479,000
r = Annual interest rate = 17.2% / 100 = 0.172n = Number of payments = 43
Payment after 16 payments = 479000 * 0.172 / (1 - (1 + 0.172)^-27)
Payment after 16 payments = $40,449.28
Remaining interest after 16 payments:
Total interest - Interest paid after 16 payments
Remaining interest after 16 payments = 581813.77 - 16 * 28486.39 - 27 * 40449.28
Remaining interest after 16 payments = $262,967.30
Percentage of the total interest paid after 16 payments:
Percentage of the total interest paid after 16 payments = (Total interest - Remaining interest after 16 payments) / Total interest * 100
Percentage of the total interest paid after 16 payments = (581813.77 - 262967.30) / 581813.77 * 100
Percentage of the total interest paid after 16 payments = 54.85% ≈ 55%Therefore, the percentage of the total interest paid after 16 payments (rounded to the nearest percentage point) is 55%.
Annual payment = $28,486.39
Total interest payments = $581,813.77
Percentage of the total interest paid after 16 payments = 55%.
The annual payment has been calculated using the formula PMT = P * r * (1 + r)^n / ((1 + r)^n - 1) and found to be $28,486.39.
The total interest payments have been calculated using the formula:
Total Interest = Payment * Number of Payments - Principal and found to be $581,813.77.
The percentage of the total interest paid after 16 payments has been calculated using the formula
Percentage of the total interest paid after 16 payments = (Total interest - Remaining interest after 16 payments) / Total interest * 100 and found to be 55%.
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In some circumstances, a firm will continue to operate even if it incurs negative profits (or lossos). Which of the following conditions ch. a. P=MC. where P>AVC, but PP=MCπAVC c. P=MC, where P>AC, but PdP=MC=AC
A firm will continue to operate even if it incurs negative profits (or losses). The condition that allows a firm to continue operating despite negative profits is c. P = MC, where P > AC, but P ≥ AVC.
The condition that P = MC (price equals marginal cost) ensures that the firm is operating at the point where the marginal cost of producing an additional unit is equal to the price at which it can be sold. This condition ensures that the firm is maximizing its profit or minimizing its losses.
When P > AC (price is greater than average cost), it means that the price at which the firm can sell its product is higher than the average cost of producing each unit. Even if the firm incurs negative profits, it can cover its variable costs and some portion of its fixed costs, allowing it to continue operating in the short run.
However, if P ≥ AVC (price is greater than or equal to average variable cost), it means that the firm can cover all of its variable costs, including labor, materials, and other variable expenses. In this case, the firm can continue operating in the short run, even if it incurs losses, as long as it can cover its variable costs.
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peat beds and bogs are most closely associated with which soil order?
The soil order known as Histosols is most closely related to bogs and peat bogs.
Histosols are soils with a high proportion of organic content, such as partially decomposed plant matter (peat) or organic matter gathered in damp environments.
High organic content and water saturation, two characteristics that are essential to Histosols, are present in peat beds and bogs. Typically found in wetlands, these soils frequently have poor mineral contents.
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A residence has a market value of $400,000. The municipality's tax policy is set at
85%. Real estate owners have to pay two separate taxes: the municipality tax and an
education tax. The tax rates for each are set at 1.5%, and 0.82% respectively. Calculate
the total property tax bill
The total property tax bill for the residence would be $9,280.
To calculate the total property tax bill, we need to determine the amount for each tax and then sum them up.
1. municipality tax:the municipality tax rate is 1.5%. so, the amount for the municipality tax can be calculated as:
municipality tax = market value * municipality tax ratemunicipality tax = $400,000 * 0.015
2. education tax:
the education tax rate is 0.82%. so, the amount for the education tax can be calculated as:education tax = market value * education tax rate
education tax = $400,000 * 0.0082
total property tax bill:the total property tax bill is the sum of the municipality tax and the education tax:
total property tax bill = municipality tax + education tax
substituting the calculated values:total property tax bill = ($400,000 * 0.015) + ($400,000 * 0.0082)
calculating the values:
total property tax bill = $6,000 + $3,280
total property tax bill = $9,280
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On the day Harry was born, his parents put $1300 into an investment account that promises to pay a fixed interest rate of 5 percent per year. How much money will Harry have in this account when he turns 18?
The need to take into consideration the initial investment as well as the interest accrued over the course of the 18-year period to determine how much money Harry will have in the account when he reaches 18.
Given: $1300 as a down payment
Interest: 5% annually
We may use the compound interest calculation to determine the investment's future value:
Future Value is equal to the Initial Deposit times the Interest Rate.Amount of Years
The number of years in this situation is 18. Now let's compute:
Future Value is equal to $1300 (1 + 0.05).^18
Future Value is equal to $1300 multiplied by (1.05)18 and then by 1.948717.
($2533.32, rounded to the nearest cent) Future Value
Harry will therefore have about $2533.32 in the investing account when he turns 18 years old.
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Suppose there are two types of insurance consumers: high-risk and low-risk. Let [0,1] denote the proportion of low-risk consumers. Both consumer types are endowed with income M = 25 and risk losing L = 9. The low-risk consumers face this loss with probability = 0.1 and the high risk consumers face this loss with probability ℎ = 0.2. Both consumers have utility function U(x) =x. A profit maximizing monopolist firm offers insurance at price p. Consumers will purchase insurance if their expected utility is higher with the insurance than without. The monopolist insurer prices to sell to both consumer types, only the high-risk consumer types, or not sell at all. Revenues for the firm are the price times the proportion of consumers that purchase. Costs for the firm are the expected claim payments.
a. Solve for the maximum prices that the low-risk and the high-risk borrowers are willing to pay.
b. Solve for the critical proportion of consumers that need to be of low-risk before it is profit maximizing to price low and sell to both types ( ∗ ).
c. Is this an adverse selection or a moral hazard problem? Explain
a. Maximum prices for both low-risk and high-risk borrowers are 0. b. The critical proportion of low-risk consumers needed to price low and sell to both types is when p > 1.8. c. This is an adverse selection problem where the insurer cannot distinguish between high-risk and low-risk consumers based on price.
a. To solve for the maximum prices that the low-risk and high-risk borrowers are willing to pay, we need to compare their expected utility with and without insurance.
For low-risk consumers
Expected utility without insurance: U(M) = M = 25
Expected utility with insurance: U(M - p) = M - p
For high-risk consumers:
Expected utility without insurance: U(M - L) = M - L = 16
Expected utility with insurance: U(M - L - p) = M - L - p
The maximum price that low-risk borrowers are willing to pay is the value of p where their expected utility with insurance equals their expected utility without insurance:
M - p = M
25 - p = 25
p = 0
The maximum price that high-risk borrowers are willing to pay is the value of p where their expected utility with insurance equals their expected utility without insurance:
M - L - p = M - L
16 - p = 16
p = 0
Therefore, both low-risk and high-risk borrowers are willing to pay a maximum price of 0 for insurance.
b. To find the critical proportion of consumers that need to be of low-risk before it is profit maximizing to price low and sell to both types, we need to compare the expected revenues and costs.
Let q denote the proportion of low-risk consumers. The proportion of high-risk consumers is (1 - q).
Expected revenues for the firm are given by:
Revenues = p * q + p * (1 - q) = p
Expected costs for the firm are the expected claim payments:
Costs = q * ℎ * L + (1 - q) * ℎ * L = 0.2 * 9
For the firm to maximize profits, revenues should exceed costs:
p > 0.2 * 9
p > 1.8
Therefore, it is profit maximizing to price low and sell to both types when the price (p) is greater than 1.8.
c. This is an adverse selection problem. Adverse selection refers to the situation where the insurer cannot distinguish between high-risk and low-risk consumers and ends up attracting mostly high-risk consumers due to asymmetric information.
In this case, both high-risk and low-risk consumers are willing to pay the same maximum price of 0, which indicates that the insurer cannot differentiate between the two types based on price.
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Nida is asked by a client to identify a security that he has heard a co-worker discuss as part of her portfolio. The security is described as allowing an easy and low-risk way to invest in mortgages, without having to own mortgages directly. What security is Nida’s client's co-worker likely holding?
Based on the description provided, it is likely that Nida's client's co-worker is holding a mortgage-backed security as a way to invest in mortgages indirectly.
The security that Nida's client's co-worker is likely holding, based on the description provided, is a mortgage-backed security (MBS).mMortgage-backed securities are financial instruments that represent an ownership interest in a pool of mortgage loans. They are created by pooling together a large number of individual mortgages and then issuing securities that are backed by the cash flows generated from the mortgage payments. Investors in MBS essentially own a share of the underlying mortgage loans.
MBS provide an easy and low-risk way to invest in mortgages without directly owning them. They offer investors exposure to the real estate market and the cash flows generated by mortgage payments, without the need to manage individual mortgages. MBS can be structured in different ways, such as pass-through securities or collateralized mortgage obligations (CMOs), each with its own risk and return characteristics.
By investing in MBS, individuals can diversify their portfolios and potentially earn income from the mortgage payments while managing risk. However, it is important to note that the risk associated with MBS can vary depending on factors such as the quality of the underlying mortgages, prepayment risk, and changes in interest rates.
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Question 2 (35 Marks)
Gen5G Inc. manufactures Cell phones. Last year the company sold 30,000 phones at $80 each. Total costs amounted to $1,800,000 of which $600,000 were considered fixed.
To improve its product, the company is considering replacing a component part that has a cost of $16 with a new and better part costing $26 per unit in the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $100,000 with a useful life of five years and a $20,000 salvage value. The company uses straight-line depreciation on all plant assets. (Ignore company tax.)
Required:
Calculate in units, Innovation's break-even point for last year. (10 marks)
Calculate the number of units that the company would have had to sell in the last year to earn $ 200,000. Prove your answer. (10 marks)
If Gen5G increases the selling price by $20, and purchases the new part and the new machine, calculate the new contribution margin, the new fixed cost & the number of units that the company will have to sell to make the same net income as last year. (15 marks)
The break-even point for last year was 9,375 units. The company would have needed to sell 12,500 units to earn $200,000. With increased selling price and new investments, 9,744 units are required to maintain the same net income.
Break-even point for last year: The company needed to sell 9,375 units to cover fixed costs based on the contribution margin per unit.
Number of units for $200,000: To achieve a net income of $200,000, the company needed to sell 12,500 units.
With increased selling price and new investments: The new contribution margin per unit is $96.80, with fixed costs now totaling $700,000. To maintain the same net income, the company needs to sell 9,744 units. The increased selling price and investments impact the cost structure and the required sales volume to achieve the desired financial outcome.
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A custom yacht-building company uses activity-based pricing. The
company’s annual activity pools and related information follow:
Cost Pool Estimated Cost
Cost Driver Driver
Quantity
Design $2,50
A custom yacht-building company utilizes activity-based pricing, with annual activity pools and related information.
The company's estimated costs are divided into cost pools, including Design, Production, and Support. The estimated cost for the Design pool is $250,000, with the cost driver being the number of design hours. The Production pool has an estimated cost of $1,500,000, with the cost driver being the number of yacht feet produced. The Support pool's estimated cost is $750,000, and the cost driver is the number of customers served. Activity-based pricing allows the company to allocate costs more accurately by considering specific activities and their corresponding drivers.
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A Company has extended the length of the credit period for their valued customers. This extension will___the accounts receivable period, operating cycle, and the cash cycle. the O decrease; increase; increase O increase; increase; increase O decrease; decrease; decrease O increase; increase; not effect O increase; decrease; not effect
the right response is: - The lengthening of the credit period will lengthen the period of time that money is due, as well as the operating and cash cycles. The accounts receivable period, operating cycle, and cash cycle will all lengthen as the credit period for loyal clients is extended.
By extending the credit period, clients will have more time to make up any unpaid balances, which will lengthen the duration for collecting unpaid invoices. This is due to the fact that it takes the business longer to collect the receivables. The length of time it takes for a business to sell its inventory and generate cash is known as the operating cycle. With a longer credit period, it takes longer to buy merchandise and get paid by clients, which lengthens the operating cycle. The time it takes for a business to turn its investments in inventory and other resources into cash is referred to as the cash cycle. By By prolonging the credit period, the consumers' cash payments are postponed, lengthening the cash cycle.
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one of the reasons slave labor remains common in industries such as textiles is that_____.
Slave labor remains common in the textiles industry due to its labor-intensive nature and the cost-cutting motive of manufacturers.
One of the reasons why slave labor remains common in the textiles industry is that it is a labor-intensive industry and requires significant amounts of manual work. Most textile manufacturers seek to maximize profits by cutting costs, and employing cheap labor such as slaves helps achieve this objective.
What is the textiles industry?
The textile industry is a sector that specializes in the manufacture of textiles. This sector includes the production of apparel, bedding, towels, and other items made from textiles. The industry is an important part of the global economy, and many countries rely heavily on it for their economic development.
What is slave labor?
Slave labor is a form of forced labor, where individuals are made to work against their will, with little or no pay, and without the freedom to leave their place of work. This form of labor is usually associated with human trafficking and is widely considered a violation of human rights and an unacceptable practice.
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Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on using in a construction project. The project will be depreciated straight line to a value of $670,000 at the end of the project's and assets ten year life. Ace's marginal tax rate is 32%. The firm will have to pay $8,262,001 to buy the asset. You have estimated that they could sell the asset for $622,702 to a Brazilian firm at the end of the project.
The after-tax salvage value of the asset for Acefacto Inc. is $3,065,997.68.
To calculate the after-tax salvage value of the asset, consider the depreciation, the selling price, and the tax implications. Here's the step-by-step calculation:
Step 1: Calculate the total depreciation expense:
Depreciation Expense = Initial Cost - Salvage Value
Depreciation Expense = $8,262,001 - $670,000 = $7,592,001
Step 2: Calculate the tax shield provided by depreciation:
Tax Shield = Depreciation Expense * Tax Rate
Tax Shield = $7,592,001 * 0.32 = $2,428,160.32
Step 3: Calculate the taxable gain or loss from selling the asset:
Taxable Gain/Loss = Selling Price - Book Value
Taxable Gain/Loss = $622,702 - $670,000 = -$47,298
Step 4: Calculate the tax on the gain or loss:
Tax on Gain/Loss = Taxable Gain/Loss * Tax Rate
Tax on Gain/Loss = -$47,298 * 0.32 = -$15,135.36
Step 5: Calculate the after-tax salvage value:
After-Tax Salvage Value = Selling Price - Tax on Gain/Loss + Tax Shield
After-Tax Salvage Value = $622,702 - (-$15,135.36) + $2,428,160.32
After-Tax Salvage Value = $622,702 + $15,135.36 + $2,428,160.32
After-Tax Salvage Value = $3,065,997.68
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The managers of SL Green Realty do not focus on the value maximization of commercial properties they own because the believe this leads to short-term thinking and decisions that would curtail investments in large projects. True or False
The given statement: "The managers of SL Green Realty do not focus on the value maximization of commercial properties they own because they believe this leads to short-term thinking and decisions that would curtail investments in large projects" is FALSE. `
The given statement: "The managers of SL Green Realty do not focus on the value maximization of commercial properties they own because they believe this leads to short-term thinking and decisions that would curtail investments in large projects" is FALSE. SL Green Realty is a commercial real estate firm that focuses on value maximization of commercial properties that they own. This is evident from the following statements: SL Green Realty Investment Strategy"
We invest in high-quality, well-located assets, focusing on long-term growth and maximizing value through active asset management and the implementation of disciplined leasing strategies. "SL Green Realty Property Management"
The value of a commercial property is not solely determined by its location, architecture, and features; it is also driven by the quality of its management. At SL Green, we take pride in the fact that we have one of the best property management teams in the business. We understand that a well-run building not only increases tenant satisfaction but also maximizes value for our investors. "SL Green Realty Acquisitions"
We have an experienced team of professionals who are constantly seeking opportunities to acquire high-quality, well-located assets at prices that will allow us to create value for our shareholders. Through disciplined underwriting, we are able to identify opportunities that others may overlook and structure transactions that meet our investment criteria. "Therefore, it can be concluded that the managers of SL Green Realty focus on value maximization of commercial properties they own and this does not lead to short-term thinking and decisions that would curtail investments in large projects.
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The 21st Century is a VUCA-driven (Volatility, Uncertainty, Complexity, and Ambiguity) world where the old "scientific management" of command and control is no longer efficient and effective as a form of "managing". A VUCA-driven world demands imaginative, agile, creative, and collaborative attributes among other management skills to deal with this new world where technological innovation is growing at an unprecedented exponential rate. Briefly discuss the four dimensions of strategy, learning, knowledge, and trust from the changing nature of management in the context of MTI.
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The 21st century, traditional management approaches based on command and control are no longer effective. Instead, management requires a focus on strategy, learning, knowledge, and trust to navigate the volatile, uncertain, complex, and ambiguous environment.
Strategy plays a crucial role in the changing nature of management. In a VUCA world, organizations need to be proactive and adaptable, continuously evaluating their competitive landscape and identifying opportunities for innovation.
Effective strategy formulation and execution allow businesses to navigate uncertainty and volatility, positioning them for success in the rapidly changing marketplace.
Learning is another critical dimension of management in a VUCA-driven world. With technological innovation accelerating at an exponential rate, organizations must foster a culture of continuous learning.
This involves encouraging employees to develop new skills, stay updated with industry trends, and embrace a growth mindset. Learning not only enables individuals to adapt to changes but also promotes organizational agility and resilience.
Knowledge management is vital in managing the complexities of the VUCA world. Organizations must capture, share, and leverage knowledge effectively to make informed decisions and drive innovation.
This includes implementing robust knowledge-sharing systems, fostering collaboration across teams, and creating a culture that values and rewards knowledge creation and dissemination.
Lastly, trust plays a significant role in the changing nature of management. In a VUCA-driven world, leaders must cultivate trust among team members and stakeholders.
Trust enables open communication, collaboration, and risk-taking, fostering an environment where innovative ideas can flourish. Building trust requires transparent and ethical leadership, active listening, and empowering employees to contribute their unique perspectives and ideas.
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Explain the definition of the product life cycle. Analyze and
give an example of the product life cycle of a product in
Vietnam.
Product life cycle (PLC) refers to the life cycle stages a product goes through from its introduction to its eventual decline. And an example of the product life cycle of a product in Vietnam is the mobile phone market.
Product life cycle refers to the life cycle stages of a product The four stages of the product life cycle are:
Introduction: This stage involves introducing a new product into the market. It is a period of high cost due to extensive marketing and advertising efforts, but sales are usually low. The product may be offered at a high price due to the lack of competition.
Growth: At this stage, sales of the product increase, and advertising is focused on building brand loyalty. The product may see a price reduction due to increased competition.
Maturity: Sales of the product eventually begin to level off, and the market becomes saturated. The focus shifts to cost-cutting measures and improving product differentiation.
Decline: This is the final stage of the product life cycle, where sales decline due to market saturation and increased competition. The focus is on reducing costs and potentially discontinuing the product.
An example of the product life cycle of a product in Vietnam is the mobile phone market. Mobile phones were first introduced in Vietnam in the early 1990s. During the introduction stage, only a small percentage of the population owned mobile phones, and prices were high due to the lack of competition.
As the market grew, more players entered the market, and the growth stage began. Mobile phone prices decreased as more people owned mobile phones, and manufacturers focused on building brand loyalty.
Today, the mobile phone market in Vietnam is in the maturity stage. Sales have plateaued, and competition is high. Manufacturers are focused on reducing costs and differentiating their products to stay ahead of the competition.
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in texas primary elections are administered by officials of the
In Texas, primary elections are administered by officials of the respective political parties, such as the Republican Party and the Democratic Party.
In Texas, primary elections are unique because they are administered by officials of the political parties themselves, rather than by government officials or a centralized election authority. This means that the Republican Party of Texas is responsible for organizing and conducting the Republican primary, while the Democratic Party of Texas oversees the Democratic primary. Each party sets its own rules and procedures for the primary election, including candidate qualifications, voter eligibility, and polling locations. The Texas Secretary of State's office ensures compliance with state election laws and provides guidance to the parties, but the primary election administration remains under the control of the respective political parties.
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What ways can businesses seek to measure the potential risk of lost business or sales? (its a classic risk management question...one that usually does not get investigated until there is a problem).
Do you think customer's value of their time is also changing too?
Businesses can measure the potential risk of lost business or sales through various methods such as market research, customer surveys, analyzing historical data, monitoring customer complaints, and tracking customer retention rates. Additionally, customer's value of their time is indeed changing, with an increasing emphasis on convenience, efficiency, and personalized experiences.
To measure the potential risk of lost business or sales, businesses can employ several strategies. Conducting market research helps identify market trends, customer preferences, and competitive factors that may impact sales. Customer surveys are effective in gathering direct feedback and insights into customer satisfaction, expectations, and reasons for potential attrition. Analyzing historical data, such as sales records and customer behavior patterns, enables businesses to identify potential risks and anticipate future trends.
Monitoring customer complaints and feedback is crucial for identifying issues that might lead to customer dissatisfaction or lost business. Addressing these concerns promptly and effectively can help mitigate risks. Additionally, tracking customer retention rates provides a clear indication of customer loyalty and the potential risk of customer churn.
In recent years, there has been a shift in how customers value their time. With advancements in technology and increasing competition, customers now prioritize convenience, efficiency, and personalized experiences. Businesses need to adapt their offerings to meet these evolving customer expectations. Investing in streamlined processes, fast and reliable customer service, and personalized marketing approaches can help businesses retain existing customers and attract new ones. Understanding and responding to changing customer values is essential for managing potential risks and ensuring continued business success.
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The Hashemite University Term project Second Term 2022 FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES 10 MARKS Termproject This project provides students with the opportunity to put into practice on of the major topic namely the IFRS 10 Consolidated Financial Statements. Essentially, what you are expected to do is an in-depth analysis of theory and real firms. The student should submit writing report (supported with References) and oral presentation. Project Outline The project's main parts are as follows: . Provide a meaningful background of the Consolidated Financial Statements. 2 Describe the types, Recognition and the disclosure and reporting issues of Consolidated Financial Statements. 3. Track the modifications regarding the Consolidated Financial Statements s based on the accounting standards. 4. provide a practical case for the Consolidated Financial Statements form actual life (case study). s. Prepare appropriate conclusion and formal report. Report Format There is no one format that will work for everyone. You might find it worthwhile keeping these general suggestions in mind while writing the report: 1. Do not rehash what should be common knowledge. 2. Use tables to summarize findings. 3. Include copies of the data sources. 4. There is a total of 10 points available for this project.
The term project for the second term of 2022 in the Faculty of Economics and Administrative Sciences at the Hashemite University is about the IFRS 10 Consolidated Financial Statements.
Students are required to analyze the theory and real-world applications of consolidated financial statements, provide a case study, and present their findings orally. The project carries a weightage of 10 marks and requires a written report supported by references. The report should include a background of consolidated financial statements, description of types, recognition, disclosure, and reporting issues, and track modifications based on accounting standards. A conclusion and formal report should be prepared.
The term project for the second term of 2022 in the Faculty of Economics and Administrative Sciences at the Hashemite University focuses on analyzing the IFRS 10 Consolidated Financial Statements. Students need to understand the background of consolidated financial statements, describe their types, recognition, disclosure, and reporting issues, and track any modifications based on accounting standards. They are also expected to provide a practical case study from real-life examples and present their findings orally. The project carries a weightage of 10 marks and requires a written report with proper references and a formal conclusion.
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Identify and explain the common elements of the leadership as an act or process. Be sure you are not discussing the personal characteristics of the leader but the overlapping requirements of the various leadership definitions.
(Expand and narrate in detail "in your own words" to demonstrate the understanding of the concepts.)
The common elements of leadership as an act or process include influencing others, goal orientation, effective communication, decision-making, and adaptability.
Leadership involves the ability to influence and inspire others to achieve common goals. Leaders motivate and guide their team members, fostering collaboration and cooperation.
Leaders set clear goals and objectives for themselves and their teams. They provide a sense of direction and purpose, aligning efforts toward achieving desired outcomes.
Communication is a crucial element of leadership. Leaders must be able to convey their vision, expectations, and feedback clearly and effectively. They listen actively, encourage open dialogue, and foster a culture of transparency.
Leaders are responsible for making informed decisions that drive progress. They gather relevant information, analyze alternatives, consider various perspectives, and make choices that benefit the organization and its stakeholders.
Effective leaders demonstrate flexibility and adaptability in response to changing circumstances and challenges. They embrace innovation, encourage learning and growth, and navigate uncertainties with resilience.
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