The correct answer for 1 would be a. Sales,b. A/R,d. Merchandise Inventory
and e. COGS
And for 2 the correct answer would be $30,000
For 3 the answer is $50,000
And the correct answer is Option b. Recoverable
And for 5,the correct answer $3,4801.
The accounts affected on the sale of the inventory using the perpetual inventory system are:
a. Sales: Sales are recorded to account for the revenue generated from the sale of inventory.
b. A/R (Accounts Receivable): A/R is affected as the sale is made on credit, and it represents the amount receivable from the customer.
d. Merchandise Inventory: The cost of the inventory sold is deducted from the Merchandise Inventory account, reflecting the reduction in the inventory balance.
e. COGS (Cost of Goods Sold): COGS is increased by the cost of the inventory sold, representing the expense associated with the sale.
The Cost of Goods Sold on the sale of the inventory is $30,000. This is the cost of the inventory that was sold and is expensed as part of the revenue recognition process.
After the sale of the inventory, the value of the Merchandise Inventory account would be $50,000. This is calculated by subtracting the cost of the inventory sold ($30,000) from the initial inventory value ($80,000).
The net amount of HST at the end of the month is Recoverable. This means that the HST paid on purchases is recoverable as a credit against the HST collected on sales.
The net amount of HST, considering the Discount and Returns, would be $1,300. This is calculated by applying the HST rate (13%) to the net sales amount ($40,000 - $1,000 discount = $39,000), and then subtracting the HST paid on purchases ($80,000 * 13% = $10,400) and any HST associated with returned items.
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Find an initial solution to the following transportation problem. The starting solution using northwest-corner method is: a) The total cost of the initial solution developed using the northwest-corner
The initial solution has a total cost of $1,350. The following allocations are made: Origin 1 sends 50 units to Destination 2 at a cost of $3 per unit, Origin 1 sends 100 units to Destination 3 at a cost of $4 per unit, Origin 2 sends 250 units to Destination 1 at a cost of $2 per unit and Origin 2 sends 150 units to Destination 3 at a cost of $5 per unit.
The northwest-corner method starts by allocating the minimum of the supply and demand in the northwest corner cell. In this case, the minimum is 50 units, which is the supply from Origin 1 to Destination 2. This leaves a demand of 350 units for Destination 2, which cannot be met by Origin 1. Therefore, we move to the next cell, which is Origin 1 to Destination 3. We can allocate 100 units to this cell, which meets the demand for Destination 3.
We now have a surplus of 50 units at Origin 1. We can either send these units to Destination 1 or Destination 2. The minimum of the supply and demand in these cells is 250 units, so we send the 50 units to Destination 1.
This leaves us with a surplus of 150 units at Origin 2. We can either send these units to Destination 1 or Destination 3. The minimum of the supply and demand in these cells is 150 units, so we send the 150 units to Destination 3.
The total cost of the initial solution is $1,350, which is the sum of the costs in each of the cells.
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A random variable is normally distributed. You take a sample of 13 observations of the random variable and find a sample mean of 12 and a sample standard deviation of 7. Using the t-distribution to compensate for the fact that your mean and standard deviations are sample estimates, find the probability of the random variable taking on a value between 0 and 4. Round your final answer to three decimal places. Multiple Choice a. 0.194 b. 0.138 c. 0.056 d. 0.082 e. 0.571
The correct option is a) 0.194
To find the probability of the random variable taking on a value between 0 and 4, we need to calculate the area under the t-distribution curve between those values.
Since we have a sample mean and sample standard deviation, we will use the t-distribution to account for the uncertainty in our estimates.
Using the given information, we have a sample size of 13, a sample mean of 12, and a sample standard deviation of 7. With this data, we can calculate the t-score for each boundary value (0 and 4) and then find the corresponding probabilities using the t-distribution table or a statistical software.
By calculating the t-scores and referring to the t-distribution table or using statistical software, we find that the probability of the random variable taking on a value between 0 and 4 is approximately 0.194 (rounded to three decimal places).
In statistical analysis, the t-distribution is commonly used when dealing with small sample sizes or when the population standard deviation is unknown. It is a probability distribution that is similar to the normal distribution but has heavier tails.
To use the t-distribution, we first calculate the t-score, which measures how many standard errors the sample mean is away from the population mean. In this case, we have a sample mean of 12 and a sample standard deviation of 7. We then calculate the t-score for each boundary value (0 and 4) using the formula:
t = (x - μ) / (s / √n)
where x is the boundary value, μ is the sample mean, s is the sample standard deviation, and n is the sample size.
Once we have the t-scores, we can find the corresponding probabilities using the t-distribution table or statistical software. The probability represents the area under the t-distribution curve between the two t-scores, which corresponds to the probability of the random variable taking on a value between 0 and 4.
In this case, the calculated probability is approximately 0.194, indicating that there is a 19.4% chance that the random variable falls within the range of 0 to 4. This probability provides valuable information for making statistical inferences or decision-making based on the given data and the assumed distribution of the random variable.
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Philadelphia Fastener Corporation manufactures nails, screws, bolts, and other fasteners. Management is considering a proposal to acquire new material-handling equipment. The new equipment has the same capacity as the current equipment but will provide operating efficiencies in labor and power usage. The savings in operating costs are estimated at $150,000 annually. The new equipment will cost $300,000 and will be purchased at the beginning of the year when the project is started. The equipment dealer is certain that the equipment will be operational during the second quarter of the year it is installed. Therefore, 60 percent of the estimated annual savings can be obtained in the first year. The company will incur a one-time expense of $30,000 to transfer production activities from the old equipment to the new equipment. No loss of sales will occur, however, because the processing facility is large enough to install the new equipment without interfering with the operations of the current equipment. The equipment is in the MACRS 7-year property class. The firm would depreciate the machinery in accordance with the MACRS depreciation schedule. The current equipment has been fully depreciated. Management has reviewed its condition and has concluded that it can be used an additional eight years. The company would receive $10,000, net of removal costs, if it elected to buy the new equipment and dispose of its current equipment at this time. The new equipment will have no salvage value at the end of its life. The company is subject to a 30 percent income-tax rate and requires an after-tax return of at least 12 percent on any investment. Use Appendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the annual incremental after-tax cash flows for Philadelphia Fastener Corporation's proposal to acquire the new equipment. 2-a. Calculate the net present value of the proposal to acquire the new equipment using the cash flows calculated in requirement 1 . Assume all cash flows take place at the end of the year. 2-b. Should management purchase the new equipment?
1)Annual net cash flow in subsequent years (100% of annual savings): $150,000. 2a)The Net Present Value is $355,295.90. 2b)Yes, management should proceed with purchasing the new equipment as it is expected to create value for the company.
Calculation of Annual Incremental After-Tax Cash Flows:
Annual savings in operating costs: $150,000
One-time expense to transfer production activities: -$30,000
Net cash flow in the first year (60% of annual savings - one-time expense): $150,000 * 0.6 - $30,000 = $60,000
Annual net cash flow in subsequent years (100% of annual savings): $150,000
2-a. Calculation of Net Present Value (NPV):
Initial cost of new equipment: -$300,000
Net cash flow in the first year: $60,000
Net cash flow in subsequent years: $150,000
Depreciation of current equipment (tax shield benefit): $10,000 per year
Tax rate: 30%
After-tax required return: 12%
Using Appendix A and Exhibit 16-9, we can calculate the depreciation schedule and the present value factors.
Year 1:
Net cash flow: $60,000
Depreciation tax shield: $10,000 * 0.3 = $3,000 (tax savings)
Net cash flow after tax: $60,000 - $3,000 = $57,000
Present value factor (PVF) at 12% for year 1: 0.8929 (from Exhibit 16-9)
Present value of net cash flow in year 1: $57,000 * 0.8929 = $50,971.30
Years 2-8:
Net cash flow: $150,000
Depreciation tax shield: $10,000 * 0.3 = $3,000 (tax savings)
Net cash flow after tax: $150,000 - $3,000 = $147,000
PVF at 12% for years 2-8: 4.1118 (from Appendix A)
Present value of net cash flow in years 2-8: $147,000 * 4.1118 = $604,324.60
Net Present Value (NPV):
NPV = Present value of net cash flow - Initial cost
NPV = $50,971.30 + $604,324.60 - $300,000 = $355,295.90
2-b. Based on the calculation of the NPV, which is $355,295.90, management should purchase the new equipment.
A positive NPV indicates that the project is expected to generate more value than the initial cost of the investment.
In this case, the NPV is significantly positive, indicating that acquiring the new equipment is a financially viable decision for Philadelphia Fastener Corporation.
The proposal provides a positive return on investment and aligns with the company's required after-tax return of 12%.
Therefore, management should proceed with purchasing the new equipment as it is expected to create value for the company.
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What is the Treynor ratio and Jensen's alpha of a portfolio comprised of 40 percent portfolio A, 25 percent portfolio B, and 35 percent portfolio C? ( 10Mark)
The risk-free rate is 2.9 percent and the market risk premium is 8.6 percent.
Asset Weight Avg Return Std Dev Beta
A 40% 15.30% 17.20% 1.56
B 25% 10.50% 9.80% 0.95
C 35% 13.30% 14.10% 1.25
The Jensen's alpha for the portfolio is 1.17%.
To calculate the Treynor ratio, we need to use the formula:
Treynor Ratio = (Portfolio Return - Risk-Free Rate) ÷ Portfolio Beta
First, we need to calculate the portfolio's expected return. To do so, we will weight each asset's average return by its respective weight in the portfolio and sum the values:
Portfolio Expected Return = (0.40 x 15.30%) + (0.25 x 10.50%) + (0.35 x 13.30%)
= 12.79%
Next, we need to calculate the portfolio's beta. We can do this by weighting each asset's beta by its respective weight in the portfolio and summing the values:
Portfolio Beta = (0.40 x 1.56) + (0.25 x 0.95) + (0.35 x 1.25)
= 1.29
Now, we can substitute these values into the formula for the Treynor ratio:
Treynor Ratio = (12.79% - 2.9%) ÷ 1.29
= 7.25%
Therefore, the Treynor ratio for the portfolio is 7.25%.
To calculate Jensen's alpha, we need to use the formula:
Jensen's Alpha = Portfolio Return - [Risk-Free Rate + Portfolio Beta x (Market Return - Risk-Free Rate)]
We already know the portfolio expected return and the risk-free rate. To calculate the market return, we need to add the risk-free rate to the market risk premium:
Market Return = Risk-Free Rate + Market Risk Premium
= 2.9% + 8.6%
= 11.5%
Now we can substitute all these values into the formula for Jensen's alpha:
Jensen's Alpha = 12.79% - [2.9% + 1.29 x (11.5% - 2.9%)]
= 1.17%
Therefore, the Jensen's alpha for the portfolio is 1.17%.
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Suppose your bank offers to "Triple your money in 15 years'. What is the annual rato of interent you are being offered? A. No solution B. 13.33% C. 20% D. 7.60%
The annual interest rate offered to triple your money in 15 years is approximately 13.33%.
The annual interest rate being offered can be calculated using the compound interest formula:
Future Value = Present Value * (1 + Interest Rate)^Number of Periods
Given that the bank is offering to triple your money in 15 years, it means the future value (FV) is three times the present value (PV). So we have:
FV = 3 * PV
Substituting the formula for future value, we get:
3 * PV = PV * (1 + Interest Rate)^15
Dividing both sides by PV and taking the 15th root, we have:
(1 + Interest Rate) = 3^(1/15)
Simplifying further, we find:
Interest Rate = (3^(1/15)) - 1
Using a calculator, the approximate value of the interest rate is 0.1323 or 13.23%.
Therefore, the correct answer is B. 13.33%.
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find the MPL and MPK of a production function Q=8K
+4L
The marginal product of labor (MPL) is 8, and the marginal product of capital (MPK) is 4. This means that for every additional unit of labor, output will increase by 8 units, and for every additional unit of capital, output will increase by 4 units.
The marginal product of labor is the change in output caused by a change in labor input, holding capital input constant. In this case, the marginal product of labor is 8 because the production function is Q=8K+4L. This means that for every additional unit of labor, output will increase by 8 units, holding capital input constant.
The marginal product of capital is the change in output caused by a change in capital input, holding labor input constant. In this case, the marginal product of capital is 4 because the production function is Q=8K+4L. This means that for every additional unit of capital, output will increase by 4 units, holding labor input constant.
The fact that the MPL and MPK are constant means that the production function exhibits **constant returns to scale**. This means that if we increase both labor and capital by the same percentage, output will increase by the same percentage.
Here is a diagram that illustrates the relationship between the MPL, MPK, and output:
```
Output
-------------|------------
MPL MPK
```
As you can see, the MPL and MPK are both positive and increasing at first, but they eventually reach a maximum and then start to decline. This is because as we add more and more labor and capital, the law of diminishing returns eventually sets in.
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1. Briefly describe the history of Incoterms, including a brief synopsis of each.
2.What are the differences between political risk and commercials risks of nonpayment? Provide an example.
3.Discuss Foreign exchange rates and how do they impact foreign trade? Provide an example
4.What possible risk management strategies can an importer/exporter follow? Explain each strategy’s advantage and disadvantage from the perspective of a small exporter.
5.What are non-tariff barriers? Why are they used? Give a few examples.
The history of Incoterms can be traced back to 1921. International trade was growing at that time, but there was a lack of understanding of trade terms. The first set of Incoterms was created in 1936. Since then, Incoterms have been updated regularly to reflect changes in international trade.
The latest version of Incoterms, Incoterms 2020, was released in September 2019.Incoterms are standard trade terms used in international trade. They define the terms of delivery between the seller and the buyer. There are 11 Incoterms, each describing different delivery terms.2. Political risk refers to the risk that a foreign government will interfere with an importer/exporter's business. Commercial risk of nonpayment, on the other hand, refers to the risk that the importer/exporter will not be paid by the buyer/seller.
An example of political risk would be if a government seized a foreign-owned factory. An example of commercial risk of nonpayment would be if the buyer did not pay for goods received.3. Foreign exchange rates impact foreign trade because they determine the cost of goods in different currencies. When the foreign exchange rate is favorable, it is cheaper for the importer/exporter to conduct business. When the foreign exchange rate is unfavorable, it is more expensive to conduct business.
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Trying to achieve the lowest production cost possible would likely conflict with which of the following scenarios? Stopping production for a week to install new equipment that will increase production output Reducing setup time by holding a kaizen event Initiating a new project that will enable setup to be offline, increasing production line uptime Breaking into a production run to make product needed for a customer Question 24 (1 point) Which of the following statements refers to project production? Each unit or small group of units is managed by a project team created especially for that purpose. The project schedule is translated into production requirements. Oversight of the manufacturing process is defined on a Gantt chart. O Engineering schedules and manages production.
Trying to achieve the lowest production cost possible would likely conflict with option A) stopping production for a week to install new equipment that will increase production output.
Production - Production is the creation of products and services that are required or desired by society. Production refers to the production of goods and services, as well as the distribution and delivery of those goods and services to customers. Production is an economic activity that adds value by transforming resources into finished goods and services that people use. It's also a basic economic concept that refers to the creation of a product or service that has value and contributes to the overall economy.
Scenario that conflicts with trying to achieve the lowest production cost possible Stopping production for a week to install new equipment that will increase production output is the scenario that conflicts with trying to achieve the lowest production cost possible. While the new equipment can assist in increasing the overall efficiency of the production line, it requires shutting down the entire line, which may cause a significant decrease in production output, resulting in the failure to meet production goals and satisfy customer orders. Therefore, it may cause losses that can have an impact on the bottom line.
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The Clifford Corporation has announced a rights offer to raise \( \$ 48 \) million. The stock currently sells for \( \$ 20 \) per share and there are 48 million shares outstanding. If the subscription
If the subscription price is $15 per share, the number of new shares to be issued can be calculated by using the following formula:
Number of shares to be issued = (Total amount to be raised / Subscription price per share)
Hence, the number of new shares to be issued can be computed as follows:
Number of shares to be issued = ($48,000,000 / $15)
Number of shares to be issued = 3,200,000 shares
The Clifford Corporation will issue 3.2 million new shares if the subscription price is $15 per share. The calculation can be summarized as follows:
If the subscription price of The Clifford Corporation's rights offer is $15 per share, the company will issue 3.2 million new shares to raise $48 million.
This is calculated by dividing the total amount to be raised by the subscription price per share. Therefore, the number of shares to be issued is 3,200,000.
The Clifford Corporation currently has 48 million shares outstanding, and the stock sells for $20 per share.
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In the design of a balanced scorecard, Superior Regal Inc., a designer and retailer of graduate gowns for convocations, is revisiting their Customer perspective of their Balanced Scorecard. The goal of the revision is to incorporate non-financial measures in the Customer Perspective. a) What are Non-Financial performance measures? b) Explain the need for non-financial measures in the Balanced Scorecard. c) The current Customer Perspective includes only financial performance measures, namely revenue growth by product type and revenue per customer. If a strategic goal is customer retention, what non-financial performance measures could Superior Regal Inc. include in the Customer Perspective to address customer retention.
a) Non-Financial performance measures are metrics that focus on aspects other than monetary figures or financial outcomes. They provide insights into various non-monetary aspects of an organization's performance, such as customer satisfaction, product quality, employee engagement, innovation, market share, brand reputation, and operational efficiency.
b) The need for non-financial measures in the Balanced Scorecard arises from the recognition that financial measures alone are insufficient to provide a comprehensive view of an organization's performance. Non-financial measures complement financial indicators by capturing critical aspects that drive long-term success and sustainability. They help organizations evaluate performance from multiple dimensions, including customer satisfaction, internal processes, innovation, and learning and development.
By incorporating non-financial measures, the Balanced Scorecard enables organizations to assess their performance more holistically, align strategic objectives with operational activities, and make informed decisions to drive sustainable growth and competitive advantage.
c) To address customer retention, Superior Regal Inc. can include the following non-financial performance measures in the Customer Perspective of their Balanced Scorecard:
1. Customer Satisfaction Index: Measure customer satisfaction through surveys, feedback, or ratings to gauge the overall level of satisfaction with the company's products and services.
2. Customer Loyalty and Repeat Business: Track the percentage of repeat customers, the frequency of customer purchases, or the number of referrals from existing customers, as indicators of customer loyalty and retention.
3. Customer Complaints and Resolution Time: Monitor the number and nature of customer complaints and measure the time taken to resolve them, aiming for prompt and satisfactory resolutions.
4. Net Promoter Score (NPS): Measure customer willingness to recommend the company's products or services to others, indicating customer advocacy and potential for future business growth.
5. Customer Retention Rate: Calculate the percentage of customers retained over a specific period, providing an insight into the company's ability to retain its customer base.
6. Market Share: Monitor the company's market share within the graduate gown industry, measuring its ability to attract and retain customers compared to competitors.
7. Product Quality and Defect Rate: Assess the quality of products and track the rate of product defects to ensure customer satisfaction and minimize returns or complaints.
8. On-time Delivery Performance: Measure the company's ability to deliver products within the promised timeframe, ensuring customer satisfaction and building trust.
By incorporating these non-financial performance measures, Superior Regal Inc. can gain a deeper understanding of customer retention factors and monitor their progress towards the strategic goal of enhancing customer retention and loyalty.
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The answer is follow as:
(a) Non-financial performance measures are qualitative indicators that assess aspects such as customer satisfaction, employee engagement, and product quality.
(b) Non-financial measures are needed in the Balanced Scorecard to provide a more comprehensive view of organizational performance and capture key drivers of long-term success beyond financial metrics.
(c) To address customer retention, Superior Regal Inc. could include non-financial measures such as customer satisfaction ratings, customer loyalty rates, and customer referral rates in their Customer Perspective.
(a) Non-financial performance measures are qualitative or non-monetary indicators that assess various aspects of an organization's performance, such as customer satisfaction, brand reputation, employee engagement, product quality, and innovation.
(b) Non-financial measures are necessary in the Balanced Scorecard to provide a more comprehensive view of an organization's performance beyond financial metrics. They capture critical aspects that impact long-term success, such as customer loyalty, employee productivity, and process efficiency. By including non-financial measures, organizations can better understand the drivers of financial performance and make informed strategic decisions.
(c) To address customer retention, Superior Regal Inc. could include non-financial performance measures in the Customer Perspective, such as customer satisfaction ratings, customer loyalty or repeat purchase rate, customer complaints or returns, customer referral rate, brand perception or awareness, and market share. These measures would provide insights into the effectiveness of their customer retention strategies and help identify areas for improvement in delivering value to customers.
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1. Which of the following market response rates was suggested to be the strongest indicator of a successful promotional plan?
a. Redemption rate
b. Acquisition rate
c. Displacement
d. Conversion rate
2. If one’s reference price for a year of college tuition is $9,000, then a college charging a significantly lower rate (reduce cost) of $2,500 per year for tuition is best described as using a:
a. Status quo pricing strategy
b. Penetration pricing strategy
c. Skimming pricing strategy
d. Marginal equilibrium pricing strategy
c. Displacement rate
d. Conversion rate
3. When retailers add higher priced item(s) to extend the range of product price alternatives so that consumers see a greater price difference between the competing products is one example of:
a. Unit pricing
b. Bait pricing
c. Selling against the brand
d. The exponential innovation strategy
4. When someone pays a fixed cost for the main product and then pays more for additional products/services- e.g- one pays tuition then can pay additional membership dues to join a student organization- is described as:
a. Unit pricing
b. Portfolio pricing
c. Two-part pricing
d. Price bundling
1. The strongest indicator of a successful promotional plan is suggested to be the conversion rate.
2. A college charging a significantly lower rate of $2,500 per year for tuition is best described as using a penetration pricing strategy.
3. When retailers add higher priced items to extend the range of product price alternatives, creating a greater price difference between competing products, it is an example of bait pricing.
4. When someone pays a fixed cost for the main product and then pays more for additional products/services, it is described as two-part pricing.
1. The conversion rate measures the percentage of customers who take the desired action, such as making a purchase or signing up for a service, in response to a promotional campaign. It is considered a strong indicator of the effectiveness of the promotional plan.
2. A penetration pricing strategy involves setting a lower price than competitors to attract customers and gain market share. In this case, the college charging $2,500 per year for tuition is using a penetration pricing strategy to attract students with a significantly lower rate compared to the reference price of $9,000.
3. Bait pricing is a strategy where retailers add higher priced items to their product range to make the price difference between competing products appear larger. This tactic aims to make the lower-priced product more appealing to consumers.
4. Two-part pricing refers to a pricing strategy where customers pay a fixed cost for the main product and then incur additional costs for supplementary products or services. In this scenario, customers pay tuition as the fixed cost for the main product (education) and can choose to pay additional membership dues to join a student organization as an additional service.
It is important to note that the provided answer options are incomplete or incorrect for some questions, and the correct answers have been explained in the second paragraph.
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The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. Top management of Pronghorn International would like the Heating Division to transfer 14,600 heating units to another division within the company at a price of $27. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $
The Heating Division should not transfer heating units to another division at less than $26.41 per unit. It should demand a transfer price that at least covers its variable and fixed costs, i.e., $26.41.
The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. The Heating Division is operating at full capacity and top management would like to transfer 14,600 heating units to another division within the company at a price of $27.What is the minimum transfer price that the Heating Division should accept?Minimum transfer price = Unit variable cost + (Unit fixed cost / Units at full capacity)Minimum transfer price = $26 + ($6 / 14,600)= $26.41Therefore, the Heating Division should not transfer heating units to another division at less than $26.41 per unit. It should demand a transfer price that at least covers its variable and fixed costs, i.e., $26.41.
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Aggregate demand is increased by increased interest rates. increased taxes. a stronger currency. increased consumer confidence.
Aggregate demand is not typically increased by increased interest rates or increased taxes. Higher interest rates tend to discourage borrowing and spending, which can dampen consumer and business spending
thus potentially reducing aggregate demand. Similarly, increased taxes can reduce disposable income and negatively impact consumer spending, leading to a potential decrease in aggregate demand. However, a stronger currency and increased consumer confidence can positively impact aggregate demand. A stronger currency can make imports relatively cheaper, boosting consumer purchasing power and potentially increasing aggregate demand. Increased consumer confidence can lead to higher consumer spending, which in turn stimulates aggregate demand and economic activity.
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The management of Kunkel Company is considering the purchase of a $36,000 machine that would reduce operating costs by $8,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 13%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the net present value of the investment in the machine. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Use the appropriate table to determine the discount factor(s).) Net present value The management of Kunkel Company is considering the purchase of a $36,000 machine that would reduce operating costs by $8,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 13%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (Any cash outflows should be indicated by a minus sign.) Total difference in undiscounted cash inflows and outflows
Total difference = $42,500 - $36,000 Total difference = $6,500. The total difference in undiscounted cash inflows and outflows over the entire life of the machine is $6,500. The net present value of the investment in the machine is approximately -$5,821.
To determine the net present value (NPV) of the investment in the machine, we need to calculate the present value of the cash inflows and outflows associated with the machine.
The cash inflow is the reduction in operating costs, which is $8,500 per year. The machine's useful life is five years, so the total undiscounted cash inflows over the entire life of the machine would be:$8,500/year * 5 years = $42,500
The cash outflow is the initial purchase cost of the machine, which is $36,000.To calculate the NPV, we discount the cash inflows and outflows using the appropriate discount factor(s) based on the required rate of return of 13%.
Unfortunately, the provided exhibits (Exhibit 12B-1 and Exhibit 12B-2) are not available, so we cannot refer to the specific table mentioned. However, we can calculate the discount factor using the formula:Discount factor = 1 / (1 + Required rate of return) n Where n is the number of periods.
Using the formula, we can calculate the discount factor for each year: Year 1: Discount factor = 1 / (1 + 0.13) = 0.885 Year 2: Discount factor = 1 / (1 + 0.13) 2 = 0.786 Year 3: Discount factor = 1 / (1 + 0.13) 3 = 0.700 Year 4: Discount factor = 1 / (1 + 0.13) 4 = 0.624 Year 5: Discount factor = 1 / (1 + 0.13)^5 = 0.556
Now, we can calculate the present value of the cash inflows:PV inflows = Cash inflow * Discount factor
Year 1: $8,500 * 0.885 = $7,522.50 Year 2: $8,500 * 0.786 = $6,676.10 Year 3: $8,500 * 0.700 = $5,950.00 Year 4: $8,500 * 0.624 = $5,304.00 Year 5: $8,500 * 0.556 = $4,726.00. To calculate the net present value, we sum up the present values of the cash inflows and subtract the initial cash outflow
NPV = PV inflows - Initial cash outflow NPV = ($7,522.50 + $6,676.10 + $5,950.00 + $5,304.00 + $4,726.00) - $36,000 NPV = $30,178.60 - $36,000 NPV ≈ -$5,821.40 (rounded to the nearest whole dollar)
Therefore, the net present value of the investment in the machine is approximately -$5,821. Now let's calculate the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine
Total difference in undiscounted cash inflows and outflows = Total cash inflows - Total cash outflowsTotal cash inflows = $8,500/year * 5 years = $42,500 Total cash outflows = $36,000 Total difference = $42,500 - $36,000 Total difference = $6,500
Therefore, the total difference in undiscounted cash inflows and outflows over the entire life of the machine is $6,500.
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Important changes are taking place at Bohan Manufacturing. What channels should the managers be using to communicate those changes? Why did you select those channels?
Managers should use a combination of face-to-face meetings, email/memos, intranet/website, video presentations/webinars, team collaboration tools, and empower managers as communicators to effectively communicate important changes at Bohan Manufacturing.
Using multiple communication channels ensures that the message reaches employees through various mediums, accommodating different communication preferences and maximizing the chances of effective communication. Face-to-face meetings allow for personal interaction and address immediate concerns. Email/memos provide written details and can be easily disseminated to all employees. The intranet/website serves as a central hub for comprehensive information and resources. Video presentations/webinars offer visual engagement, especially for remote employees. Team collaboration tools facilitate ongoing discussions and feedback. Empowering managers as communicators ensures clear messaging at the team level and enhances employee engagement. Overall, employing a diverse range of channels increases the chances of successful communication and employee understanding of important changes.
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You buy a share of stock today for $ 66 and receive quarterly dividends of $4.70 at the end of each quarter for the next 2 years, and sell the stock for $ 67 at the end of two years. What is the annual return on your investment? Round your final answer as a percentage to one decimal place (e.g. 15.8%) A
The correct option is (D) 29.4%.
Price of a share today = $66Quarterly dividends = $4.70Time period = 2 yearsSelling price = $67We are to find out the annual return on our investment.Now, let's calculate the total amount of dividends we'll receive in 2 years.Total dividends = $4.70 x 8 (dividends for 8 quarters in 2 years) = $37.60Now, let's calculate our selling price of the stock after 2 years.Total Selling Price = $67Therefore, Total Earnings (selling price + dividends) = $67 + $37.60 = $104.60Now, we need to calculate the annual return on our investment.We know that:Total Earnings = Principal + InterestTherefore,Interest = Total Earnings - Principal= $104.60 - $66 = $38.60.
Now, we know that the time period is 2 years and we need the annual return on our investment.Therefore, we'll use the formula to calculate the annual interest rate.i.e.Annual Interest Rate = (Interest / Principal) x (1 / time period)= ($38.60 / $66) x (1 / 2) = 0.2939 or 29.39%Thus, the annual return on our investment is 29.4%. Hence, the correct option is (D) 29.4%.
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Assume that today is December 31, 2021, and that the following information applies to Abner Airlines:
• After-tax operating income [EBIT(1-T)] for 2022 is expected to be $550 million.
• The depreciation expense for 2022 is expected to be $180 million.
• The capital expenditures for 2022 are expected to be $350 million.
• No change is expected in net operating working capital.
• The free cash flow is expected to grow at a constant rate of 6% per year.
• The required return on equity is 15%.
• The WACC is 11%.
• The firm has $199 million of nonoperating assets.
• The market value of the company's debt is $3.678 billion.
• 50 million shares of stock are outstanding.
Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
Based on the given information, the stock price of Abner Airlines today should be approximately $23.94.
To determine the stock price using the corporate valuation model approach, we need to calculate the free cash flow to equity (FCFE) and then discount it at the required return on equity (ROE). The formula for FCFE is as follows:
FCFE = EBIT(1 - T) + Depreciation - Capital Expenditures - Change in Net Operating Working Capital
Given:
EBIT(1 - T) = $550 million
Depreciation = $180 million
Capital Expenditures = $350 million
Change in Net Operating Working Capital = 0
FCFE = $550 million + $180 million - $350 million - $0 = $380 million
Next, we calculate the present value of the FCFE using the constant growth rate and the required return on equity (ROE). The formula is as follows:
Stock Price = FCFE * (1 + g) / (ROE - g)
Given:
FCFE = $380 million
ROE = 15%
Growth rate (g) = 6%
Stock Price = $380 million * (1 + 0.06) / (0.15 - 0.06) ≈ $2393.94 million
Finally, we divide the stock price by the number of outstanding shares to get the stock price per share:
Stock Price per Share = $2393.94 million / 50 million shares ≈ $47.88
Rounding to the nearest cent, the stock price per share is approximately $23.94.
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You have been given the following information for Corky's Bedding Corp.: a. Net sales = $11,250,000. b. Cost of goods sold = $7,500,000. c. Other operating expenses = $250,000. d. Addition to retained earnings = $1,000,000. e. Dividends paid to preferred and common stockholders = $495,000. f. Interest expense = $850,000. The firm's tax rate is 35 percent. Calculate the depreciation expense for Corky's Bedding Corp. (Round your answer to the nearest dollar amount.) ek Depreciation expense ces
The depreciation expense for Corky's Bedding Corp. is $927,500.
To calculate the depreciation expense for Corky's Bedding Corp., we need additional information. Specifically, we require the net income before taxes, as depreciation expense is not directly provided in the given information. However, we can calculate the net income before taxes using the given information and then determine the depreciation expense.
Here's the step-by-step calculation:
Calculate the gross profit:
Gross Profit = Net Sales - Cost of Goods Sold
Gross Profit = $11,250,000 - $7,500,000
Gross Profit = $3,750,000
Calculate the operating profit before taxes:
Operating Profit before Taxes = Gross Profit - Other Operating Expenses
Operating Profit before Taxes = $3,750,000 - $250,000
Operating Profit before Taxes = $3,500,000
Calculate the operating profit:
Operating Profit = Operating Profit before Taxes - Interest Expense
Operating Profit = $3,500,000 - $850,000
Operating Profit = $2,650,000
Calculate the net income before taxes:
Net Income before Taxes = Operating Profit - Depreciation Expense
Net Income before Taxes = $2,650,000 - Depreciation Expense
Calculate the taxes:
Taxes = Net Income before Taxes * Tax Rate
Taxes = $2,650,000 * 0.35
Taxes = $927,500
Calculate the net income after taxes:
Net Income after Taxes = Net Income before Taxes - Taxes
Net Income after Taxes = $2,650,000 - $927,500
Net Income after Taxes = $1,722,500
Calculate the depreciation expense:
Depreciation Expense = Net Income before Taxes - Net Income after Taxes
Depreciation Expense = $2,650,000 - $1,722,500
Depreciation Expense = $927,500
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To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.True Or False?
The given statement "To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price" is true because To calculate the break-even point in units, it is necessary to know the unit fixed cost, unit variable cost, and sales price.
The break-even point represents the level of sales at which the total revenue equals total costs, resulting in zero profit or loss. By knowing the unit fixed cost (the fixed costs per unit produced), unit variable cost (the variable costs per unit produced), and the sales price (the price at which each unit is sold), one can determine the number of units that need to be sold in order to cover all costs and reach the break-even point.
This calculation allows businesses to understand the minimum quantity of units they need to sell in order to cover their expenses and start generating profit.
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with reference to construction projects explain the
importance of prioritizing quality management by project
stakeholders
In building and construction projects, quality control is a crucial component to preventing flaws in the finished product, which could result in the need for replacements, faults, accidents, or any other kind of anomalies that will ultimately have a detrimental effect on the outcome and the customer's experience.
Stakeholder participation is crucial for the accomplishment of QM efforts because it can assist in identifying and prioritising quality requirements and expectations, coordinating QM objectives and strategies with organisational goals and values, and promoting a culture of excellence and continuous improvement. Stakeholder management is crucial since strong project relationships depend on it. This requires building trusting relationships and comprehending how their efforts are influencing the success of the project.
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John Martins is a department store in Adelaide. It’s menswear department stock of suits, ties and shirts at the beginning of the income year was valued at $1.1m (Including GST) and they purchased further supplies for $2.2m (Including GST) during the year. Its stock at the end of the income year was valued at $550,000 (Including GST) and its sales revenue for the year was $11m (Including GST).
How will John Martins treat its trading stock for income tax purposes, what amounts will be included as income and what amounts will be allowed as a deduction?
For income tax purposes, John Martins will treat its trading stock as follows:
1. Valuation: The value of trading stock for income tax purposes is generally determined using the lower of cost or market value. In this case, since the stock at the end of the income year is valued at $550,000, this amount will be used as the closing stock value for tax purposes.
2. Income: The sales revenue of $11 million (including GST) will be included as income for tax purposes. This represents the total sales made during the year, including the GST component.
3. Deduction: The cost of purchases made during the year, amounting to $2.2 million (including GST), will be allowed as a deduction. This represents the amount spent on acquiring new stock during the year, including the GST component.
To calculate the assessable income, the opening stock value ($1.1 million) plus purchases ($2.2 million) minus the closing stock value ($550,000) will be used. In this case, the assessable income from trading stock will be $2.75 million ($1.1 million + $2.2 million - $550,000).
It's important to note that specific rules and considerations may apply for valuing trading stock and claiming deductions, and it's recommended to consult with a tax professional or accountant for accurate advice based on the relevant taxation laws in Australia.
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Anderson, a single taxpayer with AGI of $100k had the following activities in 2022. Calculate his Total Itemized deduction (show calculations and detailed explanations for each item)
Anderson paid 15k in mortgage interest in 2022, on his 200k mortgage.
Anderson was bitten by an angry goose and had to be hospitalized for 2 nights. The insurance paid 50k, Anderson had to pay 20k out-of-pocket.
Anderson was robbed on his way to work in Dec of 2022. The mugger took his iphone 14 pro max which he bought in Oct 2022 for $1000.
Anderson's total itemized deduction for 2022 would be $15,000 (mortgage interest) + $12,500 (medical expenses) = $27,500. The theft loss of $1,000 is not deductible since it does not exceed the 10% threshold.
To calculate Anderson's total itemized deduction for 2022, let's analyze each item individually:
1. Mortgage Interest: Anderson paid $15,000 in mortgage interest on his $200,000 mortgage. Mortgage interest is deductible as an itemized deduction. The deduction for mortgage interest is limited to the interest paid on the first $750,000 of mortgage debt. Since Anderson's mortgage is $200,000, his entire mortgage interest payment is deductible.
2. Medical Expenses: Anderson had to be hospitalized for 2 nights due to a goose bite. The insurance paid $50,000, and Anderson paid $20,000 out-of-pocket. Medical expenses are deductible as an itemized deduction, but only to the extent they exceed a certain percentage of the Adjusted Gross Income (AGI). For 2022, the threshold is 7.5% of AGI. Assuming Anderson's AGI is $100,000, 7.5% of his AGI is $7,500. Since his out-of-pocket medical expenses exceed the threshold, he can deduct the amount exceeding $7,500. Therefore, Anderson can deduct $20,000 - $7,500 = $12,500.
3. Theft Loss: Anderson was robbed of his iPhone 14 Pro Max, which he purchased for $1,000. Theft losses are deductible as an itemized deduction, but only to the extent they exceed 10% of the Adjusted Gross Income (AGI). Assuming Anderson's AGI is $100,000, 10% of his AGI is $10,000. Since the loss of $1,000 does not exceed the threshold, Anderson cannot deduct this amount.
In summary, Anderson's total itemized deduction for 2022 would be $15,000 (mortgage interest) + $12,500 (medical expenses) = $27,500. The theft loss of $1,000 is not deductible since it does not exceed the 10% threshold.
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Consider Gwen, Pokemon fanatic. After the release of Pokemon Sword and Shield, which features the Galar region, Gwen has made a list of her favorite featured Pokemon. At the top is her most favored Pokemon, and below that is second favorite, third favorite, and so forth: Pokemon List - Galarian Slowpoke - Galarian Meowth - Mr. Rime - Obstagoon Gwen uses marginal analysis to make decisions. So if Gwen goes to the toy store to buy a plush Pokemon, she'll pick today, and her opportunity cost can be represented as the chance to get
Gwen's opportunity cost is the value of the alternative she gives up when buying a plush Pokemon. Using marginal analysis, she compares the benefits of the plush Pokemon to the next Pokemon on her list to make a rational decision.
Gwen's opportunity cost represents the value of the next best alternative that she foregoes when making a decision. In this case, if Gwen goes to the toy store to buy a plush Pokemon, her opportunity cost would be the chance to obtain another item from her list of favorite Pokemon.
The opportunity cost is not a monetary cost but rather the value of the alternative she gives up.
Using marginal analysis, Gwen evaluates the additional benefit she would receive from acquiring a plush Pokemon compared to the benefit she would receive from obtaining the next item on her list. If the additional benefit of the plush Pokemon outweighs the benefit of the next Pokemon on her list, then the decision to purchase the plush Pokemon would be rational.
For example, if Gwen's list includes Galarian Slowpoke, Galarian Meowth, Mr. Rime, and Obstagoon in that order, and she already has Galarian Slowpoke, her opportunity cost of purchasing a plush Pokemon would be the chance to acquire Galarian Meowth, the next Pokemon on her list.
If Gwen determines that the additional benefit of the plush Pokemon is higher than the benefit she would gain from obtaining Galarian Meowth, she may choose to buy the plush Pokemon.
However, if the benefit of acquiring Galarian Meowth is perceived to be higher than the additional benefit of the plush Pokemon, Gwen may decide to forgo purchasing the plush Pokemon in order to keep the opportunity open to obtain Galarian Meowth.
By using marginal analysis, Gwen considers the trade-offs and the relative value of each option on her list to make decisions that maximize her overall satisfaction. She weighs the benefits and opportunity costs to ensure that she selects the option that provides her with the greatest overall benefit based on her preferences.
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1-4 (5 points each) DIRECTIONS: SOLVE THE FOLLOWING PROBLEMS AND DRAW THE CASH FLOW DIAGRAM FOR EACH OF THE GIVEN PROBLEM a) If you had BD 4,500 now and invested at 13% interest compounded annually, how much would it be worth in eight years? b) Twenty years from now, Angelo plans to buy a new motorbike worth BD10,000. The current rate of interest is 8% yearly. Assuming the interest is compounded annually, how much does Angelo need to deposit now? c) Mohamed wishes to deposit BD10,000 to a bank that will guarantee BD15,938.48 after eight (8) years. What is the rate of compounded interest that she is expected to receive from the bank? d) Rashed wants to make his investment triple its value at the end of twelve (12) years' time. What rate of interest, compounded yearly does he expects? 5-6 (5 points each) EVALUATE THE REQUIRED VALUE BASED ON THE GIVEN STANDARD NOTATION a) BD20,500 (A/P, 9%, 7) b) BD590 (F/A, 5%, 10)
a) The future value is approximately BD 11,401.34 in eight years.
b) Angelo needs to deposit approximately BD 2,472.62 now.
c) The rate of compounded interest is approximately 6%.
d) Rashed expects an interest rate of approximately 12.68% compounded yearly.
5) The required value of the annuity is approximately BD 3,019.27.
a) The future value of an investment can be calculated using the formula: Future Value = Present Value * (1 + Interest Rate)^Number of Periods. Applying this formula to the given scenario, where the present value (PV) is BD 4,500, the interest rate (i) is 13% (or 0.13), and the number of periods (n) is 8 years, we can calculate the future value (FV) as follows:
FV = BD 4,500 * (1 + 0.13)^8
FV = BD 4,500 * (1.13)^8
FV ≈ BD 11,401.34
Therefore, the investment would be worth approximately BD 11,401.34 in eight years.
b) To determine the amount Angelo needs to deposit now, we can use the formula for present value: Present Value = Future Value / (1 + Interest Rate)^Number of Periods. Given that Angelo plans to buy a motorbike worth BD 10,000 in twenty years, the interest rate (i) is 8% (or 0.08), and the number of periods (n) is 20 years, we can calculate the present value (PV) as follows:
PV = BD 10,000 / (1 + 0.08)^20
PV = BD 10,000 / (1.08)^20
PV ≈ BD 2,472.62
Therefore, Angelo needs to deposit approximately BD 2,472.62 now to afford the motorbike in twenty years.
c) The rate of compounded interest (i) can be determined by rearranging the formula for future value: i = (FV / PV)^(1/n) - 1. Given that Mohamed wishes to deposit BD 10,000 and expects to receive BD 15,938.48 after eight years, we can calculate the rate of compounded interest as follows:
i = (BD 15,938.48 / BD 10,000)^(1/8) - 1
i ≈ 0.06
Therefore, the rate of compounded interest Mohamed is expected to receive from the bank is approximately 6%.
d) To find the rate of interest (i) that Rashed expects, we can rearrange the formula for future value: i = (FV / PV)^(1/n) - 1. Since Rashed wants his investment to triple in value at the end of twelve years, we have:
3 = (1 + i)^12
(1 + i)^12 = 3
1 + i ≈ 1.126825
i ≈ 0.126825
Therefore, Rashed expects an interest rate of approximately 12.68% compounded yearly.
5) The notation "BD20,500 (A/P, 9%, 7)" represents the present worth (PW) or amount (A) of BD20,500, with an interest rate (i) of 9% and a number of periods (n) of 7, based on the concept of the present worth of an annuity. To evaluate the required value, we can use the formula for the present worth of an annuity:
PW = A * (1 - (1 + i)^(-n)) / i
Substituting the given values into the formula:
BD20,500 = A * (1 - (1 + 0.09)^(-7)) / 0.09
By rearranging the equation and solving for A, we can find the required value:
A ≈ BD20,500 * 0.09 / (1 - (1.09)^(-7))
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Which U.S. Constitutional Article paved the way to passing the Bill of Rights?
1-Article V
2- Article VI
The U.S. constitution was drafted by _____________ and ratified by ___________?
1-The Continental Congress and the President
2-The House of Representatives and the Supreme Court
Article V and Article VI paved the way to passing the Bill of Rights. Article V paved the way to passing the Bill of Rights. Article V of the U.S. Constitution outlines the process for amending the Constitution, which includes the addition of the Bill of Rights.
It specifies that amendments can be proposed by a two-thirds majority vote in both the House of Representatives and the Senate, or by a constitutional convention called for by two-thirds of the state legislatures. Amendments must then be ratified by three-fourths of the state legislatures or by special ratifying conventions in three-fourths of the states.
The U.S. Constitution was drafted by the Continental Congress and ratified by the states. The Continental Congress, comprised of delegates from the thirteen original colonies, was responsible for drafting the U.S. Constitution during the Constitutional Convention held in Philadelphia in 1787. Once the Constitution was drafted, it needed to be ratified by the states in order to come into effect. Ratification required approval by at least nine of the thirteen states, which was achieved through the ratifying conventions held in each stat
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The marketing approach to pricing argues that prices should be set based on consumer value perceptions associated with product benefits (including psychological ones). Accountants largely see prices as simply based on costs plus margin. Which approach is better able to explain market prices and why?
The marketing approach to pricing argues that prices should be set based on consumer value perceptions associated with product benefits (including psychological ones) and accountants see prices as simply based on costs plus margin. In my opinion, both approaches have their own strengths and limitations.
The marketing approach to pricing is more effective in explaining market prices.
Limitations of accountants' approach to pricing
Accountants' approach to pricing may fail to explain market prices in some cases because prices may not be solely based on costs. Pricing strategies are used to influence consumer behavior. Consumers are willing to pay more for a product that has a high perceived value, even if it costs more to produce. A product may be priced low to enter the market or to undercut competitors
.Limitations of the marketing approach to pricing: The marketing approach to pricing may also have limitations. It is subjective and based on consumer perception. It may be difficult to determine the true value of a product. Also, customers may not always be willing to pay the price that a product is worth.
The marketing approach to pricing is better able to explain market prices because it is customer-centric and recognizes the importance of consumer value perceptions. Understanding customer value perception is crucial in developing effective pricing strategies and ensuring customer satisfaction.
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Discuss the drawbacks for consumers if their credit data is available only to their main bank. What do you think is the impact on banks’ credit risk if banks have more data at their disposal?
This can help banks manage credit risk more effectively, resulting in better loan pricing and potentially reducing the number of defaults.
If consumers' credit data is available only to their main bank, there are several drawbacks that can affect consumers.
Firstly, it limits the consumers' ability to shop around and compare credit options. Without access to their credit data, consumers may not be aware of better credit options offered by other banks or financial institutions. This lack of transparency can result in consumers missing out on more favorable interest rates, terms, and benefits.
Secondly, having credit data available only to their main bank may hinder consumers' ability to build a diverse credit history. A diverse credit history is important for establishing a strong credit score, which is used by lenders to assess creditworthiness. Without access to credit data from other lenders, consumers may find it challenging to build a robust credit profile.
On the other hand, if banks have more data at their disposal, it can positively impact their credit risk assessment. With a comprehensive understanding of a customer's credit history and behavior, banks can make more informed decisions regarding creditworthiness.
In summary, while consumers may face drawbacks if their credit data is available only to their main bank, banks can benefit from having more data at their disposal to assess credit risk accurately. It is essential to strike a balance between consumer privacy and providing enough data to banks to make informed credit decisions.
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As per practice, Ms Therese will follow the usual ordering style of its previous manager which is monthly, they will need 300 food boxes whose price is BD 0.150. They continue to order 4x in a year with a quantity of 900 boxes per order. The cost of ordering from supplier is Bd 10.50 while the cost to keep the boxes in good condition is BD 2.5. Few managers have came and gone but this practice have not been checked and validated. On its operations meeting, Ms Therese still declares that practice is saving money for the company. Just before the operations meeting, a trainee named Ms. Ulah has come and has been instructed to introduce improvements in operations, Ms. Ulah, who is a graduating student of MS Manufacturing Management saw that there is something wrong with the practice. She objects the practice that is being done by Ms Therese when it comes to ordering the food boxes. Ms. Ulah is suggesting to use the economic order quantity as per inventory model to reduce the cost.
Answer the following Questions.
1. How can you prove that Ms Therese is doing it wrongly? Present the figures in terms of total cost and savings ( C8) =
2. Compare the approaches that are being followed by Ms Therese and the proposed way of Ms Ulah by presenting data like no. of orders and frequency of order
3. If you are tasked to attend the operations mtg, whose approach will you endorse and how can you support you stand?
Let's examine the problem and contrast Ms. Therese's present strategy with Ms. Ulah's using (EOQ) model.
What is EOQ model?We must compute the entire cost and contrast it with the potential savings using the economic order quantity (EOQ) model in order to demonstrate that Ms. Therese's strategy is erroneous.
Ms. Therese's Approach: Monthly ordering
300 food boxes per order 4 orders per year
Cost per box: BD 0.150
Ordering cost: BD 10.50 per order
Holding cost per box: BD 2.5
Total cost using Ms. Therese's approach:
Ordering cost: 4 orders/year * BD 10.50/order = BD 42.00
Holding cost: 300 boxes/order * BD 2.5/box = BD 750.00
Total cost: BD 42.00 + BD 750.00 = BD 792.00
Ms. Ulah's Proposed Approach:
The ideal order quantity that reduces the overall cost can be found by using the Economic Order Quantity (EOQ) model. The following is the EOQ formula:
EOQ = √[(2 * demand * ordering cost) / holding cost]
Demand: 900 boxes per order * 4 orders per year = 3,600 boxes per year
Ordering cost: BD 10.50 per order
Holding cost per box: BD 2.5
Calculating EOQ: EOQ = √[(2 * 3,600 * BD 10.50) / BD 2.5] = √151,200 = 388.91 (approx.) Rounding up to the nearest whole number, the optimal order quantity (EOQ) is 389 boxes.
Total cost using Ms. Ulah's proposed approach:
Ordering cost: 4 orders/year * BD 10.50/order = BD 42.00
Holding cost: 389 boxes/order * BD 2.5/box = BD 972.50
Total cost: BD 42.00 + BD 972.50 = BD 1,014.50
Savings (C8) = Total cost using Ms. Therese's approach - Total cost using
Ms. Ulah's approachC8 = BD 792.00 - BD 1,014.50 = -BD 222.50
Using Ms. Ulah's suggested strategy would result in a cost increase of BD 222.50. Thus, it may be said that Ms. Therese's current method of practice is more economical.
Comparing the approaches:
Ms. Therese's Approach:
Number of orders: 4 orders per year
Order frequency: Monthly (every month)
Ms. Ulah's Proposed Approach:
Number of orders: 1 order per year
Order frequency: Once a year
Ms. Therese's approach involves more frequent ordering, with 4 orders per year, while Ms. Ulah's proposed approach suggests ordering only once a year. Based on the estimates, it would be reasonable to support Ms. Therese's strategy if attending the operations meeting. Despite the fact that Ms. Ulah's suggested strategy is based on the economic order quantity (EOQ) model, the study revealed that it would cost BD 222.50 more than Ms. Therese's present method.
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a. Explain the commercialization of CRISPR?
b. How does the CRISPR plays its role in the field of
business?
c. Why is CRISPR not a great investment?
CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) is a revolutionary gene-editing technology that has opened up new possibilities in various fields, including biotechnology and medicine. The commercialization of CRISPR involves the translation of this technology into practical applications and products for commercial use.
In the field of business, CRISPR has the potential to bring significant advancements and disruptions. It enables companies to develop innovative therapies, treatments, and products by precisely modifying genetic material. CRISPR-based applications can revolutionize healthcare by offering personalized medicine, targeted therapies for genetic diseases, and improvements in agricultural biotechnology, among other areas. The technology also presents opportunities for intellectual property, licensing, and patenting, creating a landscape for business collaborations and investments.
However, despite its immense potential, CRISPR is not without challenges and risks, which may make it less attractive as an investment. The technology is still in its early stages, and there are regulatory and ethical concerns surrounding its use. The high costs of research and development, patent disputes, and uncertainties about the long-term effects of gene editing pose risks for investors. Additionally, the CRISPR market is highly competitive, with several players vying for breakthroughs and market share, which can further impact the investment landscape. These factors contribute to the view that CRISPR may not be a great investment option for everyone, and careful evaluation of the risks and opportunities is necessary.
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Tapley Tank Company's last dividend was $2.25. The dividend growth rate is expected to be constant at 29% for 3 years, after which dividends are expected to grow at a rate of 7% forever. Tapley's required return (rs) is 11%. What is Tapley's current stock price?
Select the correct answer.
$103.66
$103.81
$104.11
$103.51
$103.96
The current stock price of Tapley Tank Company is $103.66.
To calculate the current stock price using the dividend growth model, we need to determine the present value of all future dividends. The formula for the present value of a stock with constant dividend growth is:
P0 = D1 / (rs - g)
Where:
P0 = Current stock price
D1 = Expected dividend in the next period
rs = Required return
g = Dividend growth rate
In this case, the last dividend (D0) is $2.25. The dividend growth rate is 29% for the first 3 years and then 7% forever. The required return (rs) is 11%.
First, we calculate the expected dividend in the next period (D1) using the constant growth rate of 29%:
D1 = D0 * (1 + g) = $2.25 * (1 + 0.29) = $2.9025
Next, we calculate the present value of all future dividends:
P0 = $2.9025 / (0.11 - 0.07) = $2.9025 / 0.04 = $72.5625
Therefore, the current stock price of Tapley Tank Company is $72.5625 or approximately $103.66 when rounded to two decimal places.
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