The statement "All other things being equal, firms with more debt or other fixed-cost sources of financial capital in their capital structure exhibit lower levels of financial risk" is false.
The use of financial leverage, or fixed-cost sources of capital, involves a trade-off between its effect on the firm's shareholders and its effect on the riskiness of the firm. Statement 1: In general, the more business risk that a firm experiences, the more financial leverage the firm will want to employ in its capital structure.
Statement 2: When its earnings are decreasing, the use of greater levels of debt capital in a firm's capital structure magnifies the negative return earned by the firm's shareholders beyond that earned by the shareholders of an otherwise identical unlevered firm. The correct response is "Only Statement 1 is correct. "Blue Mouse has more financial risk and Lost Pigeon has more business risk.
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Consumer sentiment is an economic indicator that measures consumers' degree of optimism regarding the overall state of a country's economy and their own financial situation. University of Michigan’s data released last Friday shows a decrease in the Consumer Sentiment Index to 59.1 in May compared to 65.2 in April - the lowest since 2011. According to the Mundell–Fleming model for a small open economy with perfect capital mobility and floating exchange rates, a decrease in consumer sentiment will lead to:
a.
no change in income but a rise in net exports.
b.
no change in income or net exports.
c.
a fall in consumption and income.
d.
no change in consumption or income
The correct option is c. A fall in consumer sentiment is likely to lead to a fall in consumption and income, which will have a negative impact on the overall economy.
Consumer sentiment is an economic indicator that measures consumers' degree of optimism regarding the overall state of a country's economy and their own financial situation. According to the Mundell–Fleming model for a small open economy with perfect capital mobility and floating exchange rates, a decrease in consumer sentiment will lead to a fall in consumption and income.
This is because a decline in consumer sentiment implies that people are less likely to spend and more likely to save money. When people consume less, this leads to a reduction in demand for goods and services, which in turn leads to a decrease in production. As production decreases, so does the demand for labor, which ultimately results in a fall in income.
The University of Michigan's data, released last Friday, shows a decrease in the Consumer Sentiment Index to 59.1 in May compared to 65.2 in April - the lowest since 2011. This decline is likely to lead to a fall in consumption and income, as consumers are less optimistic about the state of the economy and their own financial situation.
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Orkazana Corporation is experiencing rapid growth. Dividends are expected to grow at 28 percent per year during the next three years, 18 percent over the following year, and then 5 percent per year indefinitely. The required return on this stock is 12 percent, and the stock currently sells for $76 per share. What is the projected dividend for the coming year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
$188.07 is the projected dividend for the coming year. The annualized percentage rate of growth of a stock's dividend over a given period of time is called the dividend growth rate.
Given,
Current Dividend =$76 per share
Dividend growth for 3 years =28%
Fourth year =18%
After fourth-year =5%
Return on stock =12%
Required to calculate the projected dividend for the coming year =?
Year 1 dividend = Current dividend * (1 + growth rate)
= $76 * (1 + 0.28) = $97.28
Year 2 dividend = Year 1 dividend * (1 + growth rate)
= $97.28 * (1 + 0.28) = $124.74
Year 3 dividend = Year 2 dividend * (1 + growth rate)
= $124.74 * (1 + 0.28) = $159.63
Year 4 dividend = Year 3 dividend * (1 + growth rate)
= $159.63 * (1 + 0.18) = $188.07
Therefore, the projected dividend for the coming year is $188.07.
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As the head of Eastman Kodak Company, George M.C. Fisher devised a plan to save Kodak from being trapped in the slow- growth photography industry, hobbled by huge debts, a dysfunctional management culture, and a dispirited workforce. At the time of his takeover of Kodak, the product development and sales functions for the company were scattered among divisions, and the business mission was ill focused. Fisher envisioned a long-term strategy in which Kodak focused on its core competencies. By evaluating the pros and cons associated with its various businesses, Fisher decided imaging was the key to the future. He then sold Kodak's health- and household-products arms. He also assembled most of the corporate talent into one division and hired an experienced computer-marketing executive to head it. Further, by stressing accountability, quality, and cycle time, Fisher began to transform Kodak's slow-moving culture. Fisher believed Kodak could double its growth rate in photography, a tough challenge in a slow-growing market, by becoming more global and by challenging Fuji film in China. Refer to the scenario. As Kodak actively redefined its business mission, organization culture, global strategy, and so on, what was it engaged in? Select one: O a. financial analysis O b. the strategic planning processes O c. market planning O d. writing the mission statement
Kodak was engaged in the strategic planning processes.
As Kodak actively redefined its business mission, organizational culture, global strategy, and so on, it was engaged in the strategic planning processes. Strategic planning is a management activity that involves setting organizational priorities, allocating resources, and aligning goals, objectives, and activities with an overarching strategy. A strategic plan is developed to provide direction to an organization, typically over a three- to five-year period. The plan specifies the organization's mission, vision, values, goals, and objectives, as well as the strategies, tactics, and actions required to achieve them. It also provides a roadmap for allocating resources, implementing initiatives, and measuring performance over time.
As the head of Eastman Kodak Company, George M.C. Fisher devised a plan to save Kodak from being trapped in the slow-growth photography industry, hobbled by huge debts, a dysfunctional management culture, and a dispirited workforce. Fisher envisioned a long-term strategy in which Kodak focused on its core competencies. By evaluating the pros and cons associated with its various businesses, Fisher decided imaging was the key to the future. Hence, Kodak was engaged in the strategic planning processes.
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1. Cost efficiency of taxation. Suppose an individual has to allocate his fixed income Y between the consumption of two goods, X and Z. The price of each of the goods is equal to 1.
a) Suppose the government imposes a per-unit tax on good X equal to t. Show graphically how the tax affects the budget constraint and consumption choice.
b) Show graphically that the government could
increase the utility level of the individual, while generating the same amount of tax revenue, by replacing the tax on good X with a tax on income.
1.a) Impact of per-unit tax on good X The imposition of a per-unit tax on good X implies that the individual has to pay the per-unit tax to the government while purchasing good X.
The price of good X effectively increases from 1 to (1 + t). The price of good Z remains at 1. Suppose the individual has a fixed income Y. He has to choose the combination of X and Z such that he maximizes his utility subject to his income constraint. The budget line is represented by the equation Y = (1 + t)X + Z. Its slope is (-1 - t) / 1 = - (1 + t).
1.b) Impact of income tax on the utility level of the individual If the government replaces the per-unit tax on good X with an income tax, then the individual has to pay a proportionate tax on his income earned.
The income tax would generate the same amount of revenue for the government as the per-unit tax on good X. However, the imposition of an income tax does not change the slope of the budget constraint. The budget constraint would still be represented by the equation Y = X + Z, which has a slope of -1.
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in a hypothetical economy the money supply M equals to 5000 monetary units. in the Banking system of this economy the percentage of reserved available rr is 10%.assuming that the commercial banks don't keep any free available and the citizens put all their money into bank accounts. in case that the central bank decides to increase the money supply M to 6000 monetary units which will be the level of the Monetary Base (H)? solve and choose one of the following: a. 600 b. 1000 c. 60000 d. 6000
The Monetary Base (H) represents the total reserves held by commercial banks plus the currency held by the public. In this scenario, the money supply (M) is increased from 5000 monetary units to 6000 monetary units. To determine the level of the Monetary Base (H), we need to calculate the reserves held by commercial banks.
Given:
Money supply (M) = 5000 monetary units
Reserve requirement ratio (rr) = 10% or 0.10
Reserves held by commercial banks (R) can be calculated using the reserve requirement ratio:
R = M * rr
R = 5000 * 0.10
R = 500 monetary units
Now, let's calculate the new level of the Monetary Base (H) after the money supply is increased to 6000 monetary units:
New Monetary Base (H) = Reserves held by commercial banks (R) + Currency held by the public
Since the citizens put all their money into bank accounts and the commercial banks don't keep any free reserves, the currency held by the public will be equal to zero.
New Monetary Base (H) = 500 + 0
New Monetary Base (H) = 500 monetary units
Therefore, the correct answer is a. 500. The level of the Monetary Base (H) after the increase in the money supply is 500 monetary units.
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.Solar Energy Inc. issued a $911,000, 5.0%, five-year bond on October 1, 2020. Interest is paid annually each October 1. Solar’s year-end is December 31.
Period Ending Cash
Interest
Paid Period
Interest
Expense Discount
Amort. Unamortized
Discount Carrying
Value
Oct. 1/20 $ 38,375 $ 872,625
Oct. 1/21 $ 45,550 $ 52,358 $ 6,808 31,567 879,433
Oct. 1/22 45,550 52,766 7,216 24,351 886,649
Oct. 1/23 45,550 53,199 7,649 16,702 894,298
Oct. 1/24 45,550 53,658 8,108 8,594 902,406
Oct. 1/25 45,550 54,144 8,594 0 911,000
$ 227,750 $ 266,125 $ 38,375
Assume that interest has already been paid on October 1, 2023.
Required:
Using the amortization schedule provided above, record the entry to retire the bonds on October 1, 2023, for cash of:
A. $886,500
B. $894,298
C. $897,900
Option C, $897,900, is the correct choice. To determine the entry to retire the bonds on October 1, 2023, for cash, we need to consider the unamortized discount, which represents the remaining balance of the discount that has not been amortized.
Based on the given information, the unamortized discount on October 1, 2023, is $16,702. When retiring the bonds, we need to account for the cash payment and remove the liability from the books. The correct entry would be:
Debit: Bonds Payable ($911,000) - the principal amount of the bonds
Debit: Discount on Bonds Payable ($16,702) - the remaining unamortized discount
Credit: Cash (amount paid to retire the bonds)
Therefore, the correct entry to retire the bonds on October 1, 2023, for cash of $897,900 (option C) would be:
Debit: Bonds Payable $911,000
Debit: Discount on Bonds Payable $16,702
Credit: Cash $897,900
Option C, $897,900, is the correct choice for recording the entry to retire the bonds on October 1, 2023, for cash.
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With the help of examples, describe the operations strategy that
you would implement for an organization that has employed you as
the operations manager.
The operations manager would implement a combination of strategies including lean manufacturing, total quality management, supply chain management, and automation/technology integration.
These strategies aim to optimize operations, improve quality, enhance supply chain coordination, and leverage technology for efficiency.
As the operations manager of an organization, I would implement a combination of strategies to optimize the operations and improve overall efficiency. Four key strategies that I would focus on are:
1. Lean Manufacturing: Implementing lean principles to eliminate waste, streamline processes, and increase productivity. For example, adopting just-in-time (JIT) inventory management to minimize inventory holding costs and improve cash flow.
2. Total Quality Management (TQM): Implementing TQM principles to ensure high-quality products and services. This involves continuous improvement, employee involvement, and customer focus. For example, conducting regular quality checks, setting quality goals, and implementing quality control measures.
3. Supply Chain Management: Developing effective supply chain management practices to enhance coordination with suppliers and ensure timely delivery of materials and components. For example, establishing strong relationships with key suppliers, implementing vendor-managed inventory systems, and using technology for real-time tracking of shipments.
4. Automation and Technology Integration: Leveraging technology to automate processes and improve operational efficiency. For example, implementing an enterprise resource planning (ERP) system to integrate various functions such as inventory management, production planning, and sales forecasting.
By implementing these strategies, the organization can achieve cost reduction, improved quality, efficient supply chain operations, and enhanced productivity, ultimately leading to increased customer satisfaction and a competitive edge in the market.
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Use the five-step decision-making process discussed in Chapter 1 to analyze the
following situations and recommend a course of action.
1. Your friend is going through a tough time with his current significant other and
believes she is cheating on him. He is aware of your technical prowess and has asked
you to help him purchase and install a stalking app on her cell phone. What would you
say?
The five-step decision-making process includes identifying the problem, generating alternative solutions, evaluating alternatives, choosing a course of action, and taking action. Below is an analysis of the given situation in accordance with the five-step decision-making process:
1. Identifying the problem: The problem is that the friend suspects that his significant other is cheating on him and wants to install a stalking app on her cell phone.2. Generating alternative solutions: There are various alternatives to this situation. However, installing a stalking app on someone's phone without their knowledge is unethical, and illegal. Therefore, it is necessary to generate alternatives that are legal and ethical. For instance, the friend can have a conversation with his partner and express his concerns.3. Evaluating alternatives: The alternatives generated should be evaluated based on their effectiveness, ethics, and legality. In this case, installing a stalking app on someone's phone is unethical and illegal. On the other hand, talking to the partner about concerns is ethical and legal.4. Choosing a course of action: Based on the evaluation, the course of action should be to have a conversation with the significant other about the concerns. This would give them the opportunity to address the concerns and work towards resolving the issue.5. Taking action: The action to be taken is to schedule a meeting with the partner to have a conversation about the concerns. If the partner is cheating, it is not right to install a stalking app without their knowledge or consent. Therefore, having a conversation with the partner is the most ethical and legal course of action.In conclusion, the course of action recommended is to schedule a meeting with the significant other to discuss the concerns instead of installing a stalking app on the phone.
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Suppose we have a closed two-sector economy, where the consumption function is C = 0.7Yd, where Yd is disposable income, and investment, I, is equal to 60.
a) Calculate output in equilibrium.
b) Calculate the level of savings.
c) Suppose that households decide to raise their savings by 10. Calculate the new output in equilibrium.
d) Calculate the new level of savings.
e) Using the situation from above, explain the paradox of thrift. Does that mean that the less societies save, the better for them?
To calculate output in equilibrium, we need to equate total income (Y) to total expenditure (Y = C + I).
In this case, the consumption function is C = 0.7Yd, and investment is I = 60. Since this is a closed economy, there are no exports or imports. Thus, we can write the equation as Y = C + I. Substituting the given consumption function and investment value, we have Y = 0.7Yd + 60. To find equilibrium output, we need to determine the level of disposable income. Since Yd is not given, we cannot directly calculate the equilibrium output. Additional information is needed to determine Yd or assume a specific value for Yd.
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Go to the supermarket and take a look at one of your favorite soft drinks. (Optional: Take a picture of the drink and upload it) Describe the product in detail (what the product is), placement (how and where is the product placed in the store), and what do you notice? How is it priced compared to similar products? What improvements would you make to the brand if you were the marketing manager responsible for the 4 P's?
I visited the supermarket and examined one of my favorite soft drinks. The product I observed was a popular cola brand, displayed prominently in the beverage aisle. It was positioned at eye level, surrounded by other carbonated drinks. The packaging featured the brand logo, vibrant colors, and a refreshing image. The price of the product was comparable to similar beverages in the market.
Upon analyzing the brand, if I were the marketing manager responsible for the 4 P's (product, placement, price, and promotion), I would consider a few improvements. Firstly, I would focus on enhancing the product itself by introducing new flavors or variations to cater to different consumer preferences. This would attract a wider audience and offer more choices to the consumers. Secondly, I would explore strategic placement in other sections of the store, such as near complementary snacks or at checkout counters, to increase impulse purchases. Additionally, I would conduct market research to ensure the pricing remains competitive and aligned with the value provided by the brand. Lastly, I would invest in targeted promotional campaigns, leveraging both traditional and digital platforms, to create brand awareness, engage with consumers, and foster brand loyalty.
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You are considering an investment with the following probability distribution:
12% 30
8% .50
-6% .20 What is this investment's coefficient of variation?
a.1.09
b. 0.97
c. 1.12
d. 1.01
The coefficient of variation for the given investment is 1.12.
The coefficient of variation measures the risk per unit of return and is calculated by dividing the standard deviation of the investment's returns by its expected value. In this case, the standard deviation of the returns is calculated using the provided probability distribution: 12% with a probability of 0.30, 8% with a probability of 0.50, and -6% with a probability of 0.20.
To calculate the standard deviation, first, determine the expected value (weighted average) of the investment's returns. Then, calculate the variance by taking the weighted sum of the squared deviations from the expected value. Finally, find the square root of the variance to obtain the standard deviation.
After standard deviation and expected value, calculate the coefficient of variation by dividing the standard deviation by the expected value. The resulting coefficient of variation is 1.12, which indicates the risk per unit of return.
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The portfolio with the highest Sharpe Ratio is 1. The minimum-variance point on the efficient frontier II. The tangency point of the capital market line and the efficient frontier III. The maximum-return point on the efficient frontier IV. The line with the steepest slope that connects the risk- free rate to the efficient frontier Select one: a. II and IV only b. I and IV only C. III and IV only d. Only IV e. I and II only
The portfolio with the highest Sharpe Ratio is the tangency point of the capital market line and the efficient frontier (option III). The Sharpe Ratio measures the excess return earned per unit of risk taken, and the portfolio that maximizes this ratio provides the best risk-adjusted performance.
Option IV, which refers to the line with the steepest slope connecting the risk-free rate to the efficient frontier, is incorrect. This line represents the Capital Market Line (CML) and does not necessarily correspond to the portfolio with the highest Sharpe Ratio.
Options I and II, which mention the minimum-variance point and the maximum-return point on the efficient frontier, are also incorrect. While these points are important in portfolio optimization, they do not guarantee the highest Sharpe Ratio.
Therefore, the correct answer is option III, which states that the portfolio with the highest Sharpe Ratio is the tangency point of the capital market line and the efficient frontier.
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Suppose that you just bought a car costing US $45,000 in Detroit, payable in three months. You have enough Canadian dollars at your bank in Windsor, which pays 0.32% interest per month, compounding monthly, to pay for your car. The current spot exchange rate is CAD $1.25/USD, and the three-month forward exchange rate is CAD $1.20/USD. In the US, the money market interest rate is 2.2% for a three-month investment. There are two alternative ways of paying for your car.
(a) Keep the money at your bank in Windsor and buy US $45,000 forward.
(b) Buy a certain USD amount spot today and invest the proceeds in the US for three months, so you will have exactly US $45,000 to pay for your car. Evaluate each payment method. Which method would you prefer? Why?
Method (a) is keeping the money in the Windsor bank and buying the US $45,000 forward.
Here, the CAD would be invested in the bank and at the end of three months, the CAD would have appreciated by the interest, and thus, the CAD will have increased in value. But if you take the forward rate, CAD 1.20/USD, it will make it cheaper for you to pay for your car. So, this payment method is an excellent choice, as you will receive interest on the investment as well as a reduced payment for your car.On the other hand, method (b) is buying a specific USD amount spot today and invest the proceeds in the US for three months. The USD amount needed is found by dividing the amount of the car, US $45,000, by the spot rate of CAD 1.25/USD. The USD amount will be US $36,000. This will be invested in the US market for three months, and at the end of the three months, the value of the investment will be US $36,792, based on the US interest rate of 2.2% for three months. This amount will be converted to CAD at the current spot rate of CAD 1.25/USD, and the resulting amount will be CAD 46,140. However, this amount is more expensive than the CAD 45,000 that would have been paid had method (a) been chosen. So, method (a) would be the preferred method because it will give you more benefit in terms of saving more money than the other method.
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1. A coupon bond due in one year pays interest semi-annually is selling at $1,010 (par value is ＄1,000), and has a coupon rate of 8%.The yield to maturity on this bond is
2. You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both ＄1.5 in dividends and $35 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is _____ if you wanted to earn a 10% return.
3 TKU has an expected ROE of 20%. If the firm follows a policy of paying 60% of earnings in the form of dividends.The dividend growth rate will be?
4. You have just purchased a 4-year zero-coupon bond at ＄900 and the par value of ＄1,000. What is the yield to maturity?
5. A coupon bond that pays interest semi-annually has a par value of ＄1,000, matures in 2 years, and has a yield to maturity of 10%. If the coupon rate is 12% (per year) and then what is the intrinsic value of the bond today.
The given questions involve calculating the yield to maturity for a premium coupon bond. Determining the maximum price for a common stock based on desired return and future cash flows.
1. The bond is selling at a premium of $1,010, which is above its par value of $1,000. The coupon rate is 8%. To find the yield to maturity, we need to calculate the present value of the bond's future cash flows, including coupon payments and the par value payment at maturity, and then solve for the discount rate that equates the present value to the bond's current price.
2. The maximum price one would pay for the common stock today depends on the desired return of 10%. The expected future cash flows include dividends of $1.5 and the sale price of $35. To calculate the maximum price, the present value of these cash flows needs to be determined using the desired return rate.
3. The company has an expected return on equity (ROE) of 20% and a dividend payout ratio of 60%. The dividend growth rate can be calculated by multiplying the ROE by the retention ratio (1 - payout ratio).
4. The zero-coupon bond was purchased at $900, and its par value is $1,000, with a maturity of 4 years. The yield to maturity can be found by solving for the discount rate that equates the present value of the bond's future cash flows to its purchase price.
5. The coupon bond has a par value of $1,000, a time to maturity of 2 years, and a yield to maturity of 10%. The coupon rate is 12%. The intrinsic value of the bond can be calculated by determining the present value of its future cash flows, including coupon payments and the par value payment at maturity, using the given yield to maturity rate.
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Which of the following is associated with market-skimming pricing? A. The market must be highly price sensitive so that a low price produces more market growth. B. Production and distribution costs need not decrease as sales volume increases. C. The product's quality and image must support its higher price. D. The low price must help keep out the competition, and the company must maintain its low-price position. 7. Which of the following conditions must be met for market-penetration pricing strategy to work? A. Production and distribution costs must decrease as sales volume increases. B. Enough buyers must want the product at a higher price. C. Costs of producing a smaller volume cannot be so high that they cancel the benefit of charging more. D. Competitors should not be able to enter the market easily and undercut the high price.
Market-skimming pricing is associated with the following term: The product's quality and image must support its higher price.
Which of the following is associated with market-skimming pricing?
The product's quality and image must support its higher price is associated with market-skimming pricing.What is market-skimming pricing?
Market-skimming pricing is a pricing technique in which a company sets a high price for a new product to skim maximum revenues layer by layer from segments willing to pay a higher price. A high price is set because the product's uniqueness and innovative features are expected to sustain demand for a short time.
What is market-penetration pricing?
Market-penetration pricing is a pricing technique in which a firm sets a low price for a new product to capture a large market share quickly.
The high sales volume causes production and distribution costs to decrease, allowing the firm to cut prices further. Market-penetration pricing can assist a company in establishing a large customer base and seizing a substantial share of the market. It can also aid in discouraging competition from entering the market. Market-penetration pricing is most effective when the product is new and unique, so there are few substitutes.
Also, when the production and distribution costs of a product decrease as sales volume increases, a market-penetration pricing strategy is highly effective.
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On January 1, 2022, Madison Corp. had 200,000 common shares outstanding. On April 1, 2022, 20,000 common shares were issued and on September 1, 2022, Madison bought back 30,000 treasury shares. The market price of the common shares averaged $ 50 during 2022. The corporation's income tax rate is 40%. A During 2022, there were 30,000 call options to buy common shares at $40 a share outstanding; and there were 20,000, $ 7, no par value, cumulative and convertible preferred. shares outstanding. Each preferred share is convertible into three common shares. During 2021, the corporation had issued $2,000,000 of 8% convertible bonds at face value. Each $1,000 bond is convertible into 20 common shares. The corporation reported $ 750,000 net income for calendar 2022. Instructions Calculate diluted earnings per share for 2022. Complete the schedule below and show all calculations. Security Net Adjust Income Adjusted -ment Net Income Shares Adjust Adjusted -ment Shares EPS
Diluted earnings per share refers to the financial performance of a company after all potential shares have been converted into its basic shares.
Basic earnings per share are calculated by dividing the net income minus preferred dividends by the weighted average of outstanding common shares. However, the calculation of diluted earnings per share is more complex. In addition to the basic shares, the potential shares are also taken into account to know the tax rate.
Potential shares refer to shares that would be issued if all of the convertible securities and options were converted into common stock. Here are the calculations for Madison Corp.'s diluted earnings per share for 2022:Madison Corp. 2022 Income Statement (in thousands)Net Income$750Less: Preferred Dividends(140)Net Income Available to Common Shareholders$610Madison Corp. Weighted Average Common Shares Outstanding for 2022Shares outstanding on January 1, 2022 (200,000 shares × 3 months)$ 50,000Shares issued on April 1, 2022 (20,000 shares × 9 months)$ 180,000Shares repurchased on September 1, 2022 (30,000 shares × 4 months)$ (66,667)Weighted Average Common Shares Outstanding$163,333Madison Corp.
Dilutive Securities:Convertibles:Bonds:Convertible bonds ($2,000,000 ÷ $1,000 per bond × 20 shares per bond)40,000Shares issuable upon conversion of bonds40,000Shares issuable upon conversion of preferred stock (20,000 preferred shares × 3 shares per preferred share)60,000Shares issuable upon exercise of call options30,000Total Dilutive Securities130,000Diluted Weighted Average Common Shares Outstanding$293,333Diluted Earnings Per Share ($610,000 ÷ 293,333)$2.08Therefore, the diluted earnings per share of Madison Corp. for 2022 is $2.08.
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Metropolitan Nashville and Davidson County issues $25 million of municipal bonds to finance a new domed stadium for the Tennessee Titans. The bonds have a face value of $10,000 each, are somewhat risky, and mature in 20 years. Enterprise Bank of Nashville buys one of the bonds using funds deposited by Sarah Levien and Ted Hawkins, who each purchased a 6-month, $5,000 certificate of deposit. Explain the intermediation services provided by Enterprise Bank in this transaction. Illustrate with T-accounts.
Enterprise Bank of Nashville provides intermediation services in the transaction by acting as a financial intermediary between the issuer of the municipal bonds, Metropolitan Nashville and Davidson County, and the depositors, Sarah Levien and Ted Hawkins.
How is the intermediation seenThe bank purchases one of the bonds using funds deposited by the individuals through their certificates of deposit.
This transaction illustrates how the bank intermediates the flow of funds, pooling deposits from multiple individuals and directing them towards investments such as the purchase of municipal bonds.
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MC Qu. 07-06 ABC Inc. produces a single... ABC Inc. produces a single product and manufactured 20,000 units and sold 10,000 units last year. ABC had a practical production capacity of 20,000 units per year. Indirect Factory Wages: Factory Utilities: $140,000 $ 40,000 $ 10,000 Factory Depreciation: Direct manufacturing costs per unit are $110. The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows: Usage: Cost: Machining Milling Assembly Indirect Factory Wages: 50% 30% 20% Factory Utilities: 40% 40% 20% Factory Depreciation: 10% 90% 0% The following cost drivers are used for each of the following activity cost pools: • Machining: Machine Hours Milling: Milling Hours . Assembly: Direct Labour Hours. Practical and expected capacity for each of the cost pools are shown below: • Machining: 45,500 Machine Hours. . Milling: 61,000 Milling Hours. Assembly: 19,000 Direct Labour Hours. Actual Usage was as follows: . Machining: 20,000 Machine Hours. Milling: 80,000 Milling Hours. Assembly: 15,000 Direct Labour Hours. Each unit requires a budgeted 2 Machine Hours, 1 Milling Hour and 4 Direct Labour Hours. ABC's policy is to charge $84 per unit. The budgeted full cost per unit of product using ABC costing would be: Multiple Choice $15 $93 $123 $38 Explanation Machining activity rate (ACDR): (50% × $140,000) + (50% × $40,000) + (10% × $10,000) = $91,000. $91,000/45,500 machine hours = $2.00 per machine hour. Milling activity rate (ACDR): (30% × $140,000) + (25% x $40,000) + (90% × $10,000) = $61,000. $61,000/61,000 milling hours = $1.00 per milling hour. Assembly activity rate (ACDR): (20% × $140,000) + (25% × $40,000) + (0% × $10,000) = $38,000. $38,000/19,000 direct labour hours = $2.00 per direct labour hour. Budgeted cost per unit: $110 + [($91,000 / 45,500) × 2] + [($61,000 / 61,000) x 1] + [($38,000 / 19,000) × 4] = $110 + $4 + $1 + $8 = $123 per unit.
The budgeted full cost per unit of product using ABC costing for ABC Inc. would be $123. the budgeted full cost per unit using ABC costing is $123.
This calculation takes into account the direct manufacturing costs per unit, which is $110. The company uses an activity-based costing system, which allocates costs into three cost pools: machining, milling, and assembly. The costs for each activity are allocated based on their respective usage percentages.
The activity rates are calculated by dividing the allocated costs by the practical capacity for each activity. The actual usage of each activity is compared to the budgeted usage. The budgeted cost per unit is determined by adding the direct manufacturing costs per unit to the proportional costs based on the actual usage and activity rates. Therefore, the budgeted full cost per unit using ABC costing is $123.
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The maintenance expense on a machine is expected to be $5,000 during the first year and to increase $500 each year for the following ten years. What present sum of money should be set aside now to pay for the required maintenance expenses over the ten-year period? (Assume 8% compound interest per year.)
The present sum of money that should be set aside now to pay for the required maintenance expenses over the ten-year period is approximately $49,040.05.
To calculate the present sum of money needed to cover the maintenance expenses over the ten-year period, we need to determine the present value of the future expenses.
Given that the maintenance expense starts at $5,000 and increases by $500 each year, calculate the future expenses as follows:
Year 1: $5,000
Year 2: $5,500
Year 3: $6,000
...
Year 10: $9,500
To calculate the present value, discount each future expense back to its present value using the compound interest rate of 8%.
The present value (PV) can be calculated using the formula:
PV = FV / (1 + r)^n
Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.
Let's calculate the present value for each year:
PV1 = $5,000 / (1 + 0.08)^1
PV2 = $5,500 / (1 + 0.08)^2
PV3 = $6,000 / (1 + 0.08)^3
...
PV10 = $9,500 / (1 + 0.08)^10
Now, we can sum up all the present values to find the total present sum of money needed to cover the maintenance expenses:
Total PV = PV1 + PV2 + PV3 + ... + PV10
By calculating this sum, determine the amount of money that should be set aside now to pay for the required maintenance expenses over the ten-year period.
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. Identify five distinctive features of the health economy. Examine each one separately, and describe other commodities or sectors that share those features. Do any other commodities or sectors have all the features you listed?.
The health economy has five distinctive features, which include information asymmetry, moral hazard, adverse selection, externalities, and market failures.
Information asymmetry refers to the lack of information or knowledge that consumers have about the quality, price, or effectiveness of healthcare services. This problem is common in the pharmaceutical industry, where consumers are often unable to evaluate the efficacy of drugs or their side effects.
Moral hazard refers to the tendency of consumers to overconsume healthcare services when they are insured or have access to free healthcare. This problem is often seen in the public sector, where patients are not required to pay for services and tend to overuse resources.
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Unit 9: Requirements Analysis and Design Definition Knowledge
Area Subject- BUAN 0100
Q- Why might it be important to create elements of a
requirements architecture before starting other RADD tasks?
Creating elements of a requirements architecture before starting other tasks in the Requirements Analysis and Design Definition (RADD) process is important because it provides a clear and organized framework for capturing and understanding the project's requirements.
The requirements architecture serves as a foundation for the entire RADD process. It helps in structuring and organizing the project's requirements by defining the various elements and their relationships. By creating the requirements architecture upfront, stakeholders can gain a shared understanding of the project's goals, objectives, and scope. It allows for the identification and documentation of functional and non-functional requirements, constraints, dependencies, and priorities. This clarity and organization are crucial as they provide a solid basis for subsequent tasks such as eliciting, analyzing, validating, and documenting requirements. It ensures that all relevant aspects of the project's requirements are considered and addressed systematically, reducing the likelihood of missed or misunderstood requirements. By establishing the requirements architecture early on, the project team can align their efforts and work towards a common understanding of what needs to be achieved, leading to a more effective and successful requirements analysis and design process.
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In the monetary flow of the economy, low income leads to few transactions, which means little money circulating and a lot of money stored, and so a lot of demand for liquidity and high interest rate. Select one: O True O False
True, In the monetary flow of the economy, low income leads to few transactions, which means little money circulating and a lot of money stored, and so a lot of demand for liquidity and high interest rate.
Low income leads to fewer transactions, implying less money circulating. As a result, a considerable amount of money is stored. A large quantity of money is held in cash, demand deposits, or short-term assets in this scenario. The need for liquidity is high since it is difficult to invest in long-term assets, which leads to higher interest rates.
Since there is a genuine movement of products and services between homes and businesses, real flow is also known as physical flow. As a result of the fact that transactions involve utilizing money as a medium of exchange, money flow is sometimes referred to as nominal flow.
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Annual demand = 15000 bags Holding cost = 25 KD per bag per year Ordering Cost = 75 KD per order Number of working days per year = 300 days Lead time = 2 days Current order quantity = 600 bags/order What is the economic order quantity (EOQ) for the bags of coffee beans ? a. 100 bags/order b. 200 bags/order c. 300 bags/or d. 400 bags/order e. None of the above
The Economic Order Quantity (EOQ) of coffee bags is a term that describes the optimal order size for a business to maintain its inventory. It takes into account the annual demand, holding costs, and ordering costs, along with the number of working days per year and the lead time. The current order quantity is 600 bags per order. The EOQ for coffee bags would be 300 bags per order.
EOQ is the optimal amount of inventory to be ordered, balancing the inventory holding costs and ordering costs. It is a popular formula used in inventory management to help businesses determine the optimal order quantity of inventory to maintain. For coffee bags, the annual demand is 15000 bags, holding costs are 25 KD per bag per year, ordering costs are 75 KD per order, the number of working days per year is 300 days, the lead time is 2 days, and the current order quantity is 600 bags per order. The formula to calculate the EOQ is EOQ = sqrt((2DS/H)), where D is the annual demand, S is the ordering cost per order, and H is the holding cost per unit per year. By substituting the given values, the EOQ for the coffee bags would be EOQ = sqrt((2x15000x75)/25) = 300 bags per order. Therefore, option C, 300 bags per order, is the correct answer.
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The term _____ refers to the reasons, or justifications, for a proposal. a. problem charter b. business case c. work statement d. use case.
The term business case refers to the reasons, or justifications, for a proposal. Option B.
What is a business case?
A business case is a document that outlines a proposal's economic, operational, and strategic justification for investment. It is commonly used in project management to justify investment and the use of a business's resources.
This document contains all of the financial and economic justifications for the investment. The business case justifies why the project is required and outlines the advantages and drawbacks of doing so.
However, It is used to establish whether the project is worth pursuing, how the project will be implemented, and how the benefits will be achieved.
The business case should also define the project's objectives and performance standards, as well as how they will be measured.
Hence, the right answer is option B. Business case.
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John signs an uncrossed blank cheque and gives it to his daughter Bella as a birthday present. He tells Bella that she can complete the cheque and fill in any amount up to $5,000.00. Before she has a chance to fill in the date and amount for payment, Bella loses the cheque.
Discuss the following situations:
Tony finds the blank cheque and completes the cheque with an amount for payment of $4,000.00 and writes "cash" in the space for "payee". He also dates the cheque. Tony then presents the cheque to John's bank who pays him the $4,000.00 cash over the counter.
ACBSP: Reflective thinking Bloom's: Synthesis Difficulty: 2 (moderate) CLO: 4
The situation described involves the unauthorized completion of a blank cheque by Tony, who found the cheque filled out by John but lost by Bella. Tony completes the cheque with an amount of $4,000.00 and writes "cash" as the payee
. He then presents the cheque to John's bank, which pays him the cash. In this situation, Tony's actions can be considered fraudulent and unauthorized. Filling out and presenting a blank cheque that was not intended for him violates the trust and agreement between John and Bella. By writing "cash" as the payee and inserting an amount without proper authorization, Tony misuses the cheque for personal gain.
From a legal standpoint, Tony's actions may be considered fraudulent and may be subject to legal consequences. It is important to note that laws regarding unauthorized completion of blank cheques may vary in different jurisdictions. In general, individuals should exercise caution and ensure the security of their financial instruments, such as blank cheques, to prevent unauthorized use or potential fraud.
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which of the following options is the best way to network online? join a career networking group. search corporate websites. search job boards for available positions.
Option (a), The best way to network online is to join a career networking group.
A career networking group is the best way to network online since it enables individuals to interact with industry experts and peers who may have similar professional interests and goals. By sharing their knowledge and experience, individuals can gain valuable insights and information that can help them achieve their career objectives. Additionally, networking groups often hold events and discussions where members can learn from experts in their field and get feedback on their work. Therefore, joining a career networking group is the most effective way to build professional connections and expand one's network. Joining a career networking group provides a variety of benefits that may not be available through other networking channels, such as searching corporate websites and job boards. These channels are more focused on finding job openings and applying for jobs, rather than building a network of professional contacts. While searching corporate websites and job boards can be useful for job seekers, it doesn't provide the same level of professional engagement and community that a career networking group can offer.
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What different
strategies a company can adopt to reach global market? Briefly
explain with
suitable example.
A company has several strategies to reach the global market. The following are the strategies that a company can adopt to reach a global market: Globalization strategy A localization strategy Transnational strategy Export strategy Example: One of the leading smartphone company Apple has adopted a globalization strategy by offering its products and services to customers around the world.
Apple sells the same product with the same features to customers worldwide and uses the same advertising, distribution, and marketing methods. A localization strategy is another strategy that can be adopted by a company to reach a global market.
This strategy is where a company produces customized products and advertising messages based on cultural and regional differences. An example of a company that has adopted a localization strategy is McDonald’s. McDonald’s offers a localized menu based on regional preferences and cultural differences in various countries.
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You are given the following information about the economy of ABC Nation: The people and businesses in ABC Nation have bank deposits of $400 billion and hold $70 billion in notes and coins. The banks hold deposits at the ABC central bank of $4 billion and they keep $4 billion in notes and coins in their vaults and ATMs. Calculate:
a) The monetary base.
b) The quantity of money
c) The banks' reserve ratio.
To calculate the monetary base, we need to sum up the currency held by the public (notes and coins) and the deposits held by the banks at the central bank. In this case, the currency held by the public is $70 billion and the deposits held by the banks at the central bank is $4 billion. Therefore, the monetary base is $70 billion + $4 billion = $74 billion.
To calculate the quantity of money, we need to consider the currency held by the public (notes and coins) and the bank deposits. In this case, the currency held by the public is $70 billion and the bank deposits are $400 billion. Therefore, the quantity of money is $70 billion + $400 billion = $470 billion. The reserve ratio is the ratio of the banks' reserves (deposits held at the central bank) to the total bank deposits. In this case, the banks' reserves are $4 billion and the total bank deposits are $400 billion. Therefore, the reserve ratio is $4 billion / $400 billion = 0.01 or 1%.
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5.50% For 92 Days From A Multinational Company. With 61 Remaining Days To Maturity, Bank AB Sells The Deposit To Bank AA At 8.75%. Calculate The Secondary Price Of The Certificate Of Deposit. Use 360 Days Per Year.
Bank AB accepts a spot deposit for Php 1,000,000.00 at 5.50% for 92 days from a multinational company. With 61 remaining days to maturity, Bank AB sells the deposit to Bank AA at 8.75%. Calculate the secondary price of the certificate of deposit. Use 360 days per year.
Bank AB initially accepts a spot deposit of Php 1,000,000.00 from a multinational company at an interest rate of 5.50% for 92 days. The secondary price of the certificate of deposit is Php 1,015,347.22
To calculate the secondary price of the certificate of deposit, we need to consider the time remaining until maturity and the interest rates involved.
First, we calculate the interest earned by Bank AB during the initial holding period of 92 days:
Interest Earned by Bank AB = Principal * Interest Rate * Time
= Php 1,000,000.00 * 5.50% * (92/360)
= Php 14,444.44
Next, we determine the remaining interest to be earned during the remaining 61 days until maturity:
Remaining Interest = Principal * Interest Rate * Time
= Php 1,000,000.00 * 8.75% * (61/360)
= Php 15,347.22
The secondary price of the certificate of deposit is the sum of the remaining interest and the initial principal:
Secondary Price = Principal + Remaining Interest
= Php 1,000,000.00 + Php 15,347.22
= Php 1,015,347.22
Therefore, the secondary price of the certificate of deposit is Php 1,015,347.22.
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Tools ips ps Suppose Venezuela is open to free trade in the world market for soybeare. Because of Venezuela's small size, the demand for and supply of soybeans in Venezuela do not affect the world price. The following graph shows the domestic soybeans market in Venezuela. The world price of soybeans is P = $400 per ton on the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrtom. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). Domestic Demand Domantic Supply 888888888 PRICE (Dollars par to 640 520 480 440 400 200 PS 30 25 0 60 120 150 90106 75 QUANTITY (Tons of soyban) If Venezuela allows International trade in the market for soybeans, it will import tons of soybeans Now suppose the Venezuelan government decides to impose a tariff of $40 on each imported ton of soybeans. After the tant, the price venezuelan and venezuela will import consumers pay for a ton of soybeans is tons of soybeard. Show the effects of the $40 tariff on the following graph. Show the effects of the $40 tariff on the following graph. ols Use the black Ime (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. 1680 Domestic Domand Domentic Supply 640 600 Wald Price PT 540 100 AND 440 400 340 Govermare Rover 200 200 60 75 90 105 120 125 150 DWL PRICE (Dollars par or 0 15 30 45 QUANTITY (Tons of soybeans) Complete the following table to summarize your results from the previous two graphs. Under Free Trade (Dollars) Under a Tariff (Dollars) Consumer Surplus Producer Surplus Government Revenue 0 Based on your analysis, as a result of the tant, Venezuela's consumer surplus by 5 and the goverment collects by producer surplus in revenue. Therefore, the net welfare effect is a
Free trade is the trade policy that involves the absence of trade barriers like tariffs, subsidies, and quotas on goods and services between countries. On the other hand, a tariff is a tax imposed on imported goods and services that increase the price of the imported goods and can lead to trade wars.
A tariff is used by a country to protect its domestic industries from foreign competition.Venezuela's domestic soybeans marketIf Venezuela opens up to free trade, the demand for and supply of soybeans in Venezuela will not affect the world price because of the small size of the country. The following graph shows the domestic soybeans market in Venezuela.
The world price of soybeans is P = $400 per ton.
1. Consumer Surplus (CS): Consumer Surplus refers to the difference between what the consumers are willing to pay for a product and what they actually pay. In this case, it is represented by the green triangle.2. Producer Surplus (PS): Producer Surplus is the difference between what producers are willing to sell a product for and what they actually receive. In this case, it is represented by the purple triangle.Importing soybeans after allowing international trade:If Venezuela allows international trade in the soybeans market, it will import 300 tons of soybeans. The imposition of a $40 tariff on each imported ton of soybeans will affect the soybean market in Venezuela. The new price that Venezuelan consumers will pay for a ton of soybeans will be $440.
3. World price plus tariff: The black line (plus symbol) shows the world price of soybeans plus the tariff.4. Consumer surplus with the tariff: The green points (triangle symbols) indicate the reduction in consumer surplus as a result of the tariff.5. Producer surplus with the tariff: The purple triangle (diamond symbols) indicate the increase in producer surplus as a result of the tariff.6. Government revenue received from the tariff: The orange quadrilateral (square symbols) shows the area representing the government's revenue from the tariff.7. Deadweight loss caused by the tariff: The tan points (rectangle symbols) show the loss caused by the tariff.
Under Free Trade (Dollars)Under a Tariff (Dollars)Consumer Surplus$16,000$8,400Producer Surplus$12,000$15,000Government Revenue$0$3,600
Based on the analysis, Venezuela's consumer surplus will decrease by $7,600, and the government will collect $3,600 in revenue. Producer surplus will increase by $3,000. Therefore, the net welfare effect is a loss of $4,600.
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