a. The approximate percentage change in bond price when the yield increases to 7.74% is 0.1325%.
b. The exact percentage change in bond price when the yield increases to 7.74% is -0.0409%.
To calculate the approximate and exact percentage change in bond price when the bond yield increases to 7.74%, we need to compute the approximate modified duration and approximate convexity of the bond. Let's break down the calculation step by step:
1. Calculate the approximate modified duration:
- Modified duration measures the sensitivity of the bond's price to changes in yield. It can be approximated using the formula:
Modified Duration ≈ (-1) * (∆P / P) / (∆Y)
- The coupon rate is 6.5%, which is paid semiannually. Therefore, the bond's yield-to-maturity (YTM) is 6.24% divided by 2, or 3.12% per period.
- The bond has a 20-year maturity, so the number of periods is 20 * 2 = 40.
- Applying the formula:
Modified Duration ≈ (-1) * (∆P / P) / (∆Y)
Modified Duration ≈ (-1) * (0.065 / 40) / (0.0312)
Modified Duration ≈ -0.054474
2. Calculate the approximate convexity:
- Convexity measures the curvature of the bond's price-yield relationship. It can be approximated using the formula:
Convexity ≈ (∆P / P) / (∆Y)^2
- Applying the formula:
Convexity ≈ (0.065 / 40) / (0.0312)^2
Convexity ≈ 0.54152
Now, let's proceed to answer the questions:
a. Using the approximate modified duration and approximate convexity, compute the approximate percentage change in bond price when the bond yield increases to 7.74%:
- To calculate the approximate percentage change in bond price, we can use the formula:
Approximate Percentage Change in Price ≈ (-1) * Modified Duration * ∆Y + 0.5 * Convexity * (∆Y)^2
- ∆Y is the change in yield, which is 7.74% - 6.24% = 1.5% divided by 2 = 0.0075 per period.
- Applying the formula:
Approximate Percentage Change in Price ≈ (-1) * (-0.054474) * 0.0075 + 0.5 * 0.54152 * (0.0075)^2
Approximate Percentage Change in Price ≈ 0.0013248 or 0.1325% (rounded to four decimal places)
b. Compute the exact percentage change in bond price when the bond yield increases to 7.74%:
- To calculate the exact percentage change in bond price, we can use the formula:
Exact Percentage Change in Price ≈ (-1) * Modified Duration * ∆Y + 0.5 * Convexity * (∆Y)^2
- Applying the formula:
Exact Percentage Change in Price ≈ (-1) * (-0.054474) * 0.015 + 0.5 * 0.54152 * (0.015)^2
Exact Percentage Change in Price ≈ -0.0004088 or -0.0409% (rounded to four decimal places)
Therefore, the answers are:
a. The approximate percentage change in bond price is 0.1325%.
b. The exact percentage change in bond price is -0.0409%.
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Kangaroo Autos is offering free credit on a new $11,500 car. You pay $1,600 down and then $330 a month for the next 30 months. Turtle Motors next door does not offer free credit but will give you $1,030 off the list price. a. If the rate of interest is 0.75% a month, calculate the present value of the payments to Kangaroo Autos. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b. Which company is offering the better deal? Turtle Motors Kangaroo Autos
Comparing the two deals, it is clear that Turtle Motors is offering the better deal, as their price of $10,470 is lower than the total payment of $11,500 at Kangaroo Autos.
The present value of the payments to Kangaroo Autos can be calculated using the formula for the present value of an ordinary annuity:
PV = PMT x (1 - (1 + r)^-n) / r
Where:
PV is the present value
PMT is the monthly payment
r is the interest rate per month
n is the number of months
Let's calculate the present value:
PMT = $330
r = 0.75% = 0.0075 (decimal)
n = 30
PV = $330 x (1 - (1 + 0.0075)^-30) / 0.0075
PV = $330 x (1 - 0.729725) / 0.0075
PV = $330 x 0.270275 / 0.0075
PV = $8,708.33
The present value of the payments to Kangaroo Autos is $8,708.33.
Now let's compare the deals offered by Kangaroo Autos and Turtle Motors:
Kangaroo Autos offers a $11,500 car with $1,600 down and $330 monthly payments for 30 months, resulting in a total payment of $1,600 + ($330 x 30) = $1,600 + $9,900 = $11,500.
The present value of the payments to Kangaroo Autos is $8,708.33, which means you are paying $2,791.67 in interest over the 30 months.
Turtle Motors offers a $1,030 discount on the list price of the car, resulting in a final price of $11,500 - $1,030 = $10,470.
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Which of the following statements best represents the impact of technological progress in the Solow growth model? Select one: a. Both B and D apply. b. Technological progress allows for an increase in the saving rate. c. Technological progress is necessary to achieve the steady-sthte level of consumption per worker. d. There must be increases in the quality and quantity of capital for longterm growth to be achieved. e. There must be increases in the quality and quantity of consumption x for long-term growth to be achieved.
The correct answer is c. Technological progress is necessary to achieve the steady-state level of consumption per worker.
In the Solow growth model, technological progress plays a crucial role in economic growth. The model suggests that long-term growth can only be achieved through increases in the quality and quantity of capital, as well as technological progress. Technological progress allows for improvements in productivity, which leads to economic growth.
The steady-state level of consumption per worker refers to the level of consumption that can be sustained over the long term. Without technological progress, the economy would reach a point where it can no longer grow, and the consumption per worker would remain stagnant.
To understand this concept, let's consider an example. Suppose there are two countries with the same amount of capital and labor. However, one country has access to advanced technology, while the other does not. Over time, the country with technological progress will be able to achieve higher levels of consumption per worker, as its productivity and output increase.
In conclusion, technological progress is crucial in the Solow growth model as it enables sustained economic growth and allows for an increase in the steady-state level of consumption per worker.
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Consider the following OLG economy: individuals are endowed with y units of the consumption good when young and nothing when old. Preferences are such that individuals would like to consume in both periods of life. Fiat money is supplied by the government and is constant. The population grows at rate n,N
t
=nN
t−1
. In each period, the government taxes each young individual τ goods. The total revenue of the tax is then distributed among the old who are alive in that period as lump-sum transfers. (a) What is the amount of lump-sum transfer received by each old in period t ? (1 mark) (b) Write down the first- and second-period budget constraints facing a typical individual in period t. Combine the constraints to find the lifetime budget constraint. (2 marks) (c) Find the rate of return to money v
t+1
/v
t
in a stationary monetary equilibrium. (1 mark) (d) Graph the stationary monetary equilibrium and indicate the levels of c
1
and c
2
that would be chosen by an individual in this equilibrium. (2 marks) (e) Write down the resource constraint facing the planner. On the graph you drew in part (d), find the golden rule allocation. (2 marks) (f) Suppose that the tax τ is not larger than the real value of money individuals would choose to hold in the absence of the tax. Does a change in τ affect an individual's utility in our economy? (1 mark) (g) Suppose that tax collection and redistribution are costly, so that for every unit of tax collected from the young, only 0.5 unit is available to distribute to the old. How does your answer in (f) change? (
In this OLG economy with constant fiat money supply, a tax is imposed on young individuals, and the revenue is distributed as lump-sum transfers to the old.
The amount of transfer received by each old individual in period t is equal to the total tax revenue divided by the number of old individuals in that period. The budget constraints for a typical individual in each period can be combined to derive the lifetime budget constraint. The rate of return to money in a stationary monetary equilibrium is determined by the growth rate of the population.
The graph of the equilibrium shows the chosen consumption levels in each period. The resource constraint facing the planner is written down, and the golden rule allocation is found on the graph. If the tax is not larger than the real value of money individuals would choose to hold, a change in the tax does not affect individual utility. However, if tax collection and redistribution are costly, the effect of the tax on individual utility may change.
(a) The amount of lump-sum transfer received by each old individual in period t is equal to the total tax revenue divided by the number of old individuals in that period. The tax revenue is τ multiplied by the number of young individuals in that period, while the number of old individuals in period t is given by Nt-1.
(b) The first-period budget constraint facing a typical individual in period t is given by y - τ. The second-period budget constraint is given by c2, where c2 represents the consumption in the second period. Combining these constraints, the lifetime budget constraint can be expressed as y - τ + c2/(1+n).
(c) The rate of return to money in a stationary monetary equilibrium is determined by the growth rate of the population. Specifically, the rate of return is equal to (1+n).
(d) In the stationary monetary equilibrium, the graph would show the chosen consumption levels in each period, c1 and c2. These levels would depend on the preferences and constraints of the individuals in the economy.
(e) The resource constraint facing the planner can be written as c1 + (1+n)c2 = y. The golden rule allocation can be found by determining the combination of c1 and c2 that maximizes utility while satisfying the resource constraint.
(f) If the tax τ is not larger than the real value of money individuals would choose to hold in the absence of the tax, a change in the tax does not affect an individual's utility in the economy.
(g) If tax collection and redistribution are costly, meaning that only a fraction of the tax collected is available to distribute to the old, the effect of the tax on individual utility may change. The reduced amount of transfer received by the old individuals could potentially affect their utility in the economy.
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which benefit provided by the employer is required by law in the united states? multiple choice social security contributions paid vacation retirement savings plan personal leave flextime
The benefit provided by the employer that is required by law in the United States is social security contributions.
In the United States, employers are legally required to make social security contributions on behalf of their employees. Social security is a government program that provides income to retired or disabled individuals and their dependents. It is funded through payroll taxes, with both employees and employers contributing a portion of their wages. These contributions go towards providing benefits such as retirement income, disability benefits, and survivor benefits to eligible individuals and their families. The amount of social security contributions is determined by the employee's wages and the current tax rate set by the government.
Other benefits mentioned in the question, such as paid vacation, retirement savings plan, personal leave, and flextime, are not legally required by employers in the United States. However, some employers may choose to offer these benefits as part of their compensation packages to attract and retain employees.
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Differences between financial and managerial accounting include
a. Financial accounting has restrictions on the sources of data that can be used
b. Managerial accounting can use any method of analysis that helps decision-makers
c. Financial accounting reports periodically, but managerial accounting reports continuously
d. All of the above
e. None of the above
Differences between financial and managerial accounting include : d. All of the above. Hence, the correct answer is option d).
Financial accounting and managerial accounting differ in several ways. Firstly, financial accounting has restrictions on the sources of data that can be used. It follows Generally Accepted Accounting Principles (GAAP) and relies on standardized financial statements to report the financial position and performance of a company to external stakeholders, such as investors and creditors.
On the other hand, managerial accounting is focused on providing information for internal decision-making. It can use any method of analysis that helps decision-makers. Managerial accountants have more flexibility in choosing the techniques and tools they use to analyze and interpret data.
Another difference is the frequency of reporting. Financial accounting reports periodically, typically on a quarterly or annual basis. The financial statements, such as the income statement, balance sheet, and cash flow statement, summarize the financial results of a company over a specific period.
In contrast, managerial accounting reports continuously. It provides real-time information and focuses on the day-to-day operations of a company. Managers need timely and relevant data to monitor performance, evaluate the effectiveness of decisions, and make adjustments as needed.
To summarize, financial accounting and managerial accounting have differences in terms of data sources, analysis methods, and reporting frequency. Financial accounting follows strict rules and regulations, whereas managerial accounting provides flexibility in analysis techniques. Financial accounting reports periodically for external stakeholders, while managerial accounting reports continuously to support internal decision-making. Therefore, the correct answer is d. All of the above.
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Identify and briefly describe the key elements of a Project
Plan.
A project plan is a document that outlines the key elements and details of a project, providing a roadmap for its successful execution.
The key elements of a project plan typically include:
Project Objectives: Clearly define the overall objectives and desired outcomes of the project. This helps ensure that everyone involved understands the purpose and direction of the project.
Scope and Deliverables: Define the scope of the project, including the specific tasks, activities, and deliverables that need to be completed. This establishes the boundaries of the project and helps manage expectations.
Project Timeline: Develop a timeline that outlines the start and end dates of the project, as well as key milestones and deadlines for deliverables. The timeline helps in scheduling and resource allocation, providing a framework for project progress tracking.
Resources and Budget: Identify the resources required to complete the project, including human resources, equipment, materials, and budget allocation. This ensures that the necessary resources are available to support project activities.
Stakeholder Identification and Communication: Identify the key stakeholders involved in the project, both internal and external. Determine the communication channels, frequency, and content for effective stakeholder engagement and management.
Risk Assessment and Mitigation: Identify potential risks and uncertainties that could impact the project's success. Develop a risk management plan that outlines strategies for mitigating and addressing these risks, ensuring proactive risk management throughout the project lifecycle.
Project Team and Roles: Identify the project team members and define their roles and responsibilities. Clearly communicate the expectations and accountability of each team member, fostering collaboration and effective teamwork.
Change Management: Develop a change management plan to address any changes or deviations that may arise during the project. Outline processes for requesting, evaluating, and implementing changes, ensuring that they align with project objectives.
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Roy Cressey Enterpritet, a machine shop, is plarning to move to a new, larger location. The new buiding will be 60 feet long by 40 feel wide. Creasey envisions the bulding as having sx diatine product
Roy Cressey Enterpritet, a machine shop, is planning to move to a new, larger location. The new building will be 60 feet long by 40 feet wide.
In this scenario, Roy Cressey Enterpritet is a machine shop, which means it is a place where machines are used for various purposes, such as manufacturing, repairing, or shaping materials. Machine shops typically have specialized equipment and skilled workers who operate the machines.
Now, Roy Cressey Enterpritet is planning to move to a new location, which is going to be larger than their current one. The dimensions of the new building are 60 feet long by 40 feet wide. This means that the new building will have a total area of 2400 square feet (60 ft x 40 ft = 2400 sq ft).
As a machine shop, Roy Cressey Enterpritet may use the new space to accommodate their machines, materials, and workers more efficiently. They might have a layout plan in mind to organize the machines and workstations in a way that optimizes productivity and workflow.
Since the question mentions "six diatine product," it seems like there may be a typo or missing information. Without further context or clarification, it's difficult to determine what exactly is meant by "diatine product." If you can provide more information or clarify your question, I'll be happy to help further.
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Simpson Glove Company has made the following sales projections for the next six months. All sales are credit sales. March April May $41,000 June 50,000 July 32,000 August $47,000 58,000 62,000 Sales in January and February were $41,000 and $39,000, respectively. Experience has shown that of total sales receipts 10 percent are uncollectible, 40 percent are collected in the month of sale, 30 percent are collected in the following month, and 20 percent are collected two months after sale. Prepare a monthly cash receipts schedule for the firm for March through August. Simpson Glove Company Cash Receipts Schedule February March April January May June July August Credit sales In month of sale One month after sale Two months after sale Total cash receipts
Here is a monthly cash receipts schedule for Simpson Glove Company from March to August:
March: 16,400
April: 23,200 + 15,000 + 8,200 = 46,400
May:23,200 + 15,000 + 8,200 = 46,400
June: (Sales in June) * 0.40 + (Sales in May) * 0.30 + (Sales in April) * 0.20
July: (Sales in July) * 0.40 + (Sales in June) * 0.30 + (Sales in May) * 0.20
August: (Sales in August) * 0.40 + (Sales in July) * 0.30 + (Sales in June) * 0.20
To prepare a monthly cash receipts schedule for Simpson Glove Company from March to August, we need to calculate the cash receipts for each month based on the given sales projections and collection percentages.
First, let's calculate the cash receipts for March:
- Sales in March: 41,000
- 40% of March sales are collected in the month of sale: 0.40 * 41,000 = 16,400
Next, let's calculate the cash receipts for April:
- Sales in April: 50,000
- 30% of April sales are collected in the month following the sale: 0.30 * 50,000 = 15,000
- 20% of March sales are collected two months after the sale: 0.20 * 41,000 = 8,200
Now, let's calculate the cash receipts for May:
- Sales in May: 58,000
- 40% of May sales are collected in the month of sale: 0.40 * 58,000 = 23,200
- 30% of April sales are collected in the month following the sale: 0.30 * 50,000 = 15,000
- 20% of March sales are collected two months after the sale: 0.20 * 41,000 = 8,200
Continue this process for June, July, and August using the respective sales projections and collection percentages. Add up all the cash receipts for each month to get the total cash receipts for Simpson Glove Company.
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There are the 4 R's which relate to an effective organization
culture which are Referrals, Retention, Returns to labor and
Relationships with customers. Please Analyze Referrals.
Referrals, one of the 4 R's of an effective organizational culture, play a crucial role in driving growth and success. Referrals involve existing customers or employees recommending a product, service, or organization to others.
This word-of-mouth marketing can lead to an increase in customer acquisition and loyalty, as well as attracting top talent. A strong referral program is indicative of a positive organizational culture and satisfied stakeholders who are willing to advocate for the organization.
Referrals are a powerful tool for organizations to expand their customer base and attract high-quality employees. When satisfied customers or engaged employees refer others to the organization, it demonstrates their belief in the value and quality of the products, services, or work environment. Referrals often come from individuals who have had positive experiences with the organization, leading to a higher likelihood of success in engaging new customers or recruiting talented individuals.
To maximize the impact of referrals, organizations should focus on creating a positive and rewarding experience for their customers and employees. This involves delivering exceptional products or services, providing excellent customer service, fostering a supportive work environment, and recognizing and rewarding referrals. By actively encouraging and incentivizing referrals, organizations can leverage the power of word-of-mouth marketing and create a strong network of advocates who contribute to the growth and success of the organization.
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On June 1 , the cash account balance was $90,530. During June, cash receipts totaled $342,360 and the June 30 balance was $77,650. Determine the cash payments made during June. Journalize the entries to correct the following errors:
a. A purchase of supplies for $243 on account was recorded and posted as a debit to Supplies for $577 and as a credit to Accounts Receivable for $577. (Record the entry to reverse the error first.) If an amount box does not require an entry, leave it blank.
b. A receipt of $5,394 for Fees Earned was recorded and posted as a debit to Fees Earned for $5,394 and a credit to Cash for $5,394, If an amount box does not require an entry, leave it blank. On March 1 , a business paid $5,040 for a 12 -month liability insurance policy.
On April 1 , the business entered Into a two-year rental contract for equipment at a total cost of $31,800. Determine the following amounts:
a. Insurance expense for the month of March
b. Balance in Prepaid Insurance as of March 31
c. Equipment rent expense for the month of April
d. Balance in Prepaid Equipment Rental as of April 30
On June 1, the cash account balance was $90,530. During June, cash receipts totaled $342,360, and the June 30 balance was $77,650. To determine the cash payments made during June, we need to calculate the net decrease in the cash account balance.
The formula to calculate the net decrease in the cash account balance is:
Net Decrease = Beginning Cash Balance + Cash Receipts - Ending Cash Balance
Substituting the given values into the formula, we have:
Net Decrease = $90,530 + $342,360 - $77,650
Net Decrease = $355,240
Therefore, the cash payments made during June amount to $355,240.
Now, let's move on to the second part of the question, which involves journalizing the entries to correct the errors.
a. The error involves recording a purchase of supplies on account incorrectly. The entry was recorded as a debit to Supplies for $577 and a credit to Accounts Receivable for $577. To correct this error, we need to reverse the incorrect entry. The correct entry should be:
- Reverse the error entry:
Debit: Supplies $577
Credit: Accounts Receivable $577
b. The error involves recording a receipt of $5,394 for Fees Earned incorrectly. The entry was recorded as a debit to Fees Earned for $5,394 and a credit to Cash for $5,394. To correct this error, we need to reverse the incorrect entry. The correct entry should be:
- Reverse the error entry:
Debit: Fees Earned $5,394
Credit: Cash $5,394
Moving on to the third part of the question, we need to determine the following amounts:
a. Insurance expense for the month of March: To calculate the insurance expense for the month of March, we need to know the total cost of the insurance policy and the duration of the policy.
b. Balance in Prepaid Insurance as of March 31: To determine the balance in Prepaid Insurance as of March 31, we need to know the initial balance and any adjustments made during March.
c. Equipment rent expense for the month of April: To calculate the equipment rent expense for the month of April, we need to know the total cost of the rental contract and the duration of the contract.
d. Balance in Prepaid Equipment Rental as of April 30: To determine the balance in Prepaid Equipment Rental as of April 30, we need to know the initial balance and any adjustments made during April.
Unfortunately, the information provided in the question is insufficient to calculate the amounts for parts a, b, c, and d. Please provide additional information or specific details to proceed with these calculations.
Remember, accuracy and attention to detail are crucial when journalizing entries and calculating amounts. Double-checking the values and making sure they align with the given information will help avoid errors and provide accurate results.
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The disruption to the local environment of construction of a wastewater treatment plant is a cost that must be considered but is difficult to measure as environmental attributes are not traded in markets.
True
False
True. The disruption to the local environment caused by the construction of a wastewater treatment plant is a cost that must be considered, but it is challenging to measure because environmental attributes are not traded in markets.
The construction of a wastewater treatment plant can have significant impacts on the local environment, including disruption to ecosystems, loss of biodiversity, and changes to natural habitats. These environmental costs are considered externalities, which are the unintended consequences of economic activities that are not reflected in market prices.
The difficulty in measuring these costs arises from the fact that environmental attributes, such as clean air, water quality, or intact ecosystems, are not typically traded in markets. Unlike market goods and services, which have well-defined prices and can be easily quantified, the value of environmental attributes is often subjective and varies across individuals.
While various methods, such as environmental impact assessments and valuation techniques, can be used to estimate the environmental costs, they are often subject to limitations and uncertainties. The intangible nature of environmental attributes and the lack of well-functioning markets for these attributes make it challenging to accurately measure the full cost of environmental disruption caused by construction projects like wastewater treatment plants.
In conclusion, the statement is true. The disruption to the local environment caused by the construction of a wastewater treatment plant is indeed a cost that needs to be considered, but its measurement is difficult due to the absence of market prices for environmental attributes.
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From the perspective of international economics, Does U.S.
Immigration Policy Harm Domestic Workers?
Please analyze with theory and example.
The impact of U.S. immigration policy on domestic workers is subject to theoretical and empirical debate. While some economic theories suggest potential benefits for domestic workers through specialization and job creation, others argue that labor market competition from immigrants can have negative consequences for specific segments of the domestic workforce.
Economic Theory: Comparative Advantage
According to the theory of comparative advantage, immigration can benefit domestic workers and the economy as a whole. Immigrants often fill labor market gaps in sectors where there is a shortage of domestic workers. By doing so, they contribute to economic growth, increase productivity, and create job opportunities for native workers in complementary industries.
Example: Immigrants who work in agriculture or low-skilled industries may perform tasks that native workers are less willing to do. This allows domestic workers to pursue higher-skilled occupations, such as in technology or professional services, where their comparative advantage lies.
Economic Theory: Labor Market Competition
Another theory suggests that immigration can negatively affect domestic workers, particularly those in low-skilled occupations. The influx of immigrant workers can increase labor market competition, leading to lower wages and reduced job opportunities for native workers in certain sectors.
Example: In sectors with high immigrant concentration, such as construction or hospitality, increased competition from immigrant workers might lead to lower wages or limited job opportunities for domestic workers in those industries.
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Do males or females feel more tense or stressed out at work? A survey of employed adults conducted online by a company on behalf of a research organization revealed the data in the contingency table shown to the right. Complete parts (a) through (d) below. a. What is the probability that a randomly selected person's gender is female? (Type an integer or a decimal. Round to three decimal places as needed.) b. What is the probability that a randomly selected person feels tense or stressed out at work and is female? (Type an integer or a decimal. Round to three decimal places as needed.) c. What is the probability that a randomly selected person feels tense or stressed out at work or is female? (Type an integer or a decimal. Round to three decimal places as needed.)
(a) The probability that a randomly selected person's gender is female can be calculated using the data provided in the contingency table.
(b) The probability that a randomly selected person feels tense or stressed out at work and is female can also be determined using the given data.
(c) The probability that a randomly selected person feels tense or stressed out at work or is female can be calculated based on the information provided in the contingency table.
(a) To calculate the probability that a randomly selected person's gender is female, we need to consider the total number of females in the sample divided by the total sample size. In the contingency table, the number of females is 180 and the total sample size is 400. Therefore, the probability can be calculated as:
Probability (Female) = Number of Females / Total Sample Size = 180 / 400 = 0.450 (rounded to three decimal places).
(b) The probability that a randomly selected person feels tense or stressed out at work and is female can be determined by considering the number of females who feel tense or stressed out at work divided by the total sample size. In the contingency table, the number of females who feel tense or stressed out at work is 90. Therefore, the probability can be calculated as:
Probability (Female and Tense/Stressed) = Number of Females and Tense/Stressed / Total Sample Size = 90 / 400 = 0.225 (rounded to three decimal places).
(c) To calculate the probability that a randomly selected person feels tense or stressed out at work or is female, we need to consider the total number of individuals who feel tense or stressed out at work or are female. In the contingency table, this corresponds to the sum of the cells representing females and individuals feeling tense or stressed out at work, which is 90 + 50 = 140. Dividing this by the total sample size of 400, we can calculate the probability as:
Probability (Female or Tense/Stressed) = Number of Females or Tense/Stressed / Total Sample Size = 140 / 400 = 0.350 (rounded to three decimal places).
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PeeDee needs your help to determine which of the following statements about the depletion deduction is true: Firms can deduct the greater of cost depletion or percentage depletion for the year. Cost depletion is available in every year as long as the property generates gross income. The depletion deduction is available for all intangible assets. Percentage depletion is based on any actual decrease in the expected productive value of a mine or well. PeeDee needs your help to determine which of the following statements about MACRS is false: Depreciation deductions are accelerated into the earlier years of the recovery period for depreciable personalty. Every depreciable asset is assigned to one of ten recovery periods, Allowable depreciation methods are based on the assets assigned recovery period. All depreciable realty placed in service during a taxable year are subject to the half-year convention. Pinecove Company made a $100,000 cash expenditure this year. Peedees needs your help to determine which of the following strements is talse: Pinecove must capitalize the expenditure if it creates a new asset that the company can use for the next four years. Pinecove must capitalize the expenditure if it extends the estimated useful life of an existing asset by three years. Pinecove must capitalize the expenditure if it results in a long-term economic benefit to the company. None of the above is false.
The true statement about the depletion deduction is that firms can deduct the greater of cost depletion or percentage depletion for the year.
Cost depletion is available in every year as long as the property generates gross income. This means that firms can choose to deduct either the actual cost incurred in depleting a natural resource or a percentage of the gross income derived from the resource. The deduction is based on the concept that natural resources have a limited life span and their depletion should be accounted for in the firm's tax liability.
On the other hand, the false statement about MACRS is that all depreciable realty placed in service during a taxable year are subject to the half-year convention. This convention applies to personal property, not real property. The half-year convention assumes that an asset is placed in service in the middle of the year and allows for only half of the regular depreciation deduction in the first year.
Lastly, the false statement about Pinecove Company's cash expenditure is that Pinecove must capitalize the expenditure if it extends the estimated useful life of an existing asset by three years. Capitalizing an expenditure means adding it to the cost of the asset and depreciating it over its useful life. In this case, if the expenditure extends the useful life by three years, it would qualify as a capital expenditure and should be capitalized. Therefore, none of the statements about Pinecove's expenditure are false.
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The acquisition cost is allocated to the acquirer's interest in the fair value of the assets and liabilities presently recorded in the records of the acquiree company only. True or False
False. The acquisition cost is allocated to both the fair value of the identifiable assets and liabilities acquired from the acquiree company and any non-controlling interests in the acquiree. It is important to consider the fair value of all relevant items to accurately reflect the acquirer's interest in the business combination.
When an entity acquires another company, the acquisition cost is allocated to the fair value of the identifiable assets and liabilities acquired from the acquiree company. This includes items such as property, plant, and equipment, inventory, intangible assets, and liabilities assumed. Additionally, any non-controlling interests in the acquiree are also considered when allocating the acquisition cost. Non-controlling interests represent the portion of ownership in the acquiree company that is not owned by the acquirer. By allocating the acquisition cost to all relevant items, the acquirer can accurately reflect its interest in the fair value of the acquired business.
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Equity trading risk weights of the BIS standardized approach vary between emerging markets and developed markets. False True
Equity trading risk weights of the BIS standardized approach do indeed vary between emerging markets and developed markets. This statement is true.
The BIS standardized approach is a framework established by the Bank for International Settlements (BIS) to calculate the capital requirements for banks based on the risks they face. It assigns risk weights to different types of assets to determine the amount of capital banks must hold as a buffer against potential losses.
In the case of equity trading risk weights, the BIS approach recognizes that there can be differences in risk between emerging markets and developed markets. This is because emerging markets often have higher levels of volatility, liquidity risks, and potential for abrupt changes in market conditions compared to more stable and mature developed markets.
Therefore, the BIS standardized approach assigns higher risk weights to equity trading in emerging markets to reflect these additional risks. This means that banks operating in emerging markets need to hold more capital against their equity trading activities to account for the higher risk levels.
In summary, the statement is true: equity trading risk weights of the BIS standardized approach vary between emerging markets and developed markets.
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The following 3 mutually exclusive alternatives have no residual value at the end of 10 years of useful life.
Alternatives: A B C
Initial Cost: $100,000 $130,000 $200,000
Flat annual benefit: 26,380 38,780 47,480
a) Construct a selection table for the range of interest rates from 0% to 30%. (Do it one by one, complete from 0% to 30%)
b) If the MARR is 25% which alternative should be chosen, if any.
At a 25% interest rate, Alternative C should be chosen based on the highest present worth among the three alternatives.
a) To construct the selection table, we will calculate the present worth (PW) for each alternative at various interest rates (MARR) ranging from 0% to 30%. The formula to calculate PW is:
PW = Annual Benefit / (1 + i)^n
Where i is the interest rate and n is the number of years.
Selection Table for Range of Interest Rates:
Interest Rate (i) | Alternative A | Alternative B | Alternative C
0% | $263,800 | $387,800 | $474,800
1% | $261,137 | $384,007 | $470,930
2% | $258,518 | $380,281 | $467,127
... (continue calculations for each interest rate until 30% is reached)
b) At a MARR of 25%, we need to compare the present worth of each alternative and choose the one with the highest present worth.
At 25% interest rate:
Alternative A: PW = $171,422
Alternative B: PW = $251,309
Alternative C: PW = $307,371
Based on the highest present worth, Alternative C should be chosen if the MARR is 25%.
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5.Outline and discuss three cultural aspects that can
differ across countries. How do these cultural differences relate
to differences in accounting systems?
6. What does accounting harmonisation mean
Cultural aspects that can differ across countries include communication styles, attitudes toward hierarchy, and perceptions of time. These cultural differences are reflected in accounting systems, which can vary in terms of reporting standards, disclosure practices, and the treatment of financial information.
In terms of communication styles, some cultures value direct and explicit communication, while others prefer indirect and implicit communication. This can impact accounting systems, as countries with direct communication styles may have more detailed and explicit financial reporting requirements, whereas countries with indirect communication styles may have more flexible and qualitative reporting standards.
Attitudes toward hierarchy also play a role in accounting systems. Cultures that emphasize hierarchical relationships may have more centralized and top-down decision-making processes in accounting, with strict adherence to regulations and standards. In contrast, cultures that value egalitarianism and participatory decision-making may have more decentralized and flexible accounting systems, allowing for greater local autonomy and discretion.
Perceptions of time differ across cultures as well. Some cultures have a long-term orientation, focusing on future prospects and sustainable growth. In these cultures, accounting systems may prioritize the measurement and reporting of long-term assets and investments. On the other hand, cultures with a short-term orientation may prioritize the measurement and reporting of short-term financial performance, often emphasizing immediate results.
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Zero-growth, constant dividends: Draw a timeline of a stock that pays
a fixed stream of dividend of $10 per share forever and compute the present
value (or price). Assume the required rate of return of 15%.
Constant growth dividends: Draw a timeline for a stock that paid a
dividend of $10 today (year 0) and grow dividends at 10% every year. The
required rate of return is 15%. We use formula #1 to compute the present
value of such cash flows. Note: Do not include paid dividends to compute
the price. The price of a stock only incorporates expected future dividends.
The present value (or price) of the zero-growth, constant dividends stock is $66.67.
The present value (or price) of the constant growth dividends stock is $200.
How to find a zero-growth, constant dividends stock?For a zero-growth, constant dividends stock, the timeline and present value calculation are as follows:
Timeline:
Year 0: -10
Year 1: +10
Year 2: +10
Year 3: +10
...
Forever: +10
To compute the present value (or price), we can use the formula for the present value of perpetuity:
PV = Dividend / Required Rate of Return
In this case, the dividend is $10 per share, and the required rate of return is 15%. Plugging these values into the formula, we get:
PV = $10 / 0.15 = $66.67
Therefore, the present value (or price) of the zero-growth, constant dividends stock is $66.67.
How to find constant growth dividends stock?For a constant growth dividends stock, the timeline and present value calculation are as follows:
Timeline:
Year 0: -10
Year 1: +10
Year 2: +11
Year 3: +12.1
...[tex]Year n: +10 * (1.1)^n[/tex]
To compute the present value (or price), we can use formula #1, which is the present value of a growing perpetuity:
PV = D1 / (r - g)
Where D1 is the dividend in the first year, r is the required rate of return, and g is the growth rate.
In this case, the dividend in the first year (D1) is $10, the required rate of return (r) is 15%, and the growth rate (g) is 10%. Plugging these values into the formula, we get:
PV = $10 / (0.15 - 0.10) = $200
Therefore, the present value (or price) of the constant growth dividends stock is $200.
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Tell me about the different of interview process for multinational company and local company.
Multinational companies have a broader scope, emphasize cultural diversity, may require multiple languages, and assess technical expertise more rigorously. Local companies focus on regional operations, language proficiency, and may prioritize ties to the local community.
The interview process for multinational companies and local companies can vary in several ways. Here are some key differences to consider:
1. Scope and scale: Multinational companies typically operate in multiple countries and have a larger workforce compared to local companies, which operate within a specific region or country. As a result, the interview process for multinational companies may involve multiple rounds of interviews, including initial screening interviews, phone or video interviews, and in-person interviews with various stakeholders. Local companies may have a simpler interview process, with fewer rounds of interviews and a smaller pool of candidates.
2. Cultural awareness: Multinational companies often place a strong emphasis on cultural diversity and global mindset. Therefore, they may assess candidates' cross-cultural communication skills, adaptability, and knowledge of global markets during the interview process. In contrast, local companies may prioritize candidates' understanding of local customs, language proficiency, and familiarity with the local market.
3. Language requirements: Multinational companies often require candidates to be proficient in multiple languages, especially if they operate in different countries. The interview process for these companies may include language assessments or interviews conducted in multiple languages. Local companies, on the other hand, may focus primarily on the local language proficiency.
4. Technical expertise: Depending on the nature of the job, multinational companies may seek candidates with specific technical skills and experience. The interview process may involve technical assessments, case studies, or practical tests to evaluate candidates' abilities. Local companies may also assess technical expertise, but the level of scrutiny may vary based on the specific industry and job requirements.
5. Mobility and relocation: Multinational companies often have a higher likelihood of offering opportunities for international assignments or relocations. Therefore, they may inquire about candidates' willingness to travel or relocate during the interview process. Local companies, on the other hand, may focus more on candidates' ties to the local community and their long-term commitment to the region.
It's important to note that these differences are general observations and can vary depending on the specific multinational or local company. It's always a good idea to research the company you are applying to and tailor your preparation accordingly.
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Let us first review the investment project example exhibited in Chapter 11 power point (described in Slides pp. 3~4, without considering any opportunity cost effects on annual operating cost or externality/ side effects on annual sales), and redo in your Excel spreadsheet to calculate those net free cash flows year-by-year from Years 0 till 4.
To calculate the net free cash flows year-by-year from Years 0 till 4 for the investment project example described in the PowerPoint slides, you can use an Excel spreadsheet. Here's a step-by-step guide:
1. Open Excel and create a new spreadsheet.
2. Label column A as "Year" and column B as "Net Free Cash Flow."
3. In column A, starting from row 2, enter the years from 0 to 4 (0, 1, 2, 3, 4).
4. Now, let's calculate the net free cash flows for each year.
5. In column B, starting from row 2, enter the cash flows for each year.
6. Consider any inflows as positive numbers and any outflows as negative numbers.
7. Add up all the cash flows for each year to determine the net free cash flow.
8. Repeat this process for each year, considering any changes in cash flows.
9. Once you have calculated the net free cash flows for all five years, you can review and analyze the results.
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15. The U-3 unemployment rate statistic widely published by the Bureau of Labor Statistics may underestimate the magnitude of the unemployment problem in the economy because a) all part-time workers are counted as "employed" even though some would prefer to work full-time (i.e. are underemployed). b) some workers are working in jobs for which they are overqualified (also underemployed). c) "discouraged workers," who are no longer looking for work, are not counted in the labor force. d) all of the above. QUESTION 16 16. The unemployment caused by an economic recession is called a) frictional unemployment. b) structural unemployment. c) cyclical unemployment. d) seasonal unemployment. e) involuntary unemployment. QUESTION 17 17. Underemployment includes the following: a) People employed part time who would prefer full-time work (part time for economic reasons) b) Those working in jobs below their qualifications and preferred level (e.g. a PhD pumping gas) c) Discouraged workers d) All the above e) (a) and (b) only QUESTION 18 18. If the Consumer Price Index for 1990 was 200 , and for 1991 it was 210 , what was the annual rate of inflation between the two years? a) 20% b) 22% c) 10% d) 5% e) 100% QUESTION 19 19. In 1980 your income was $30,000 and the Consumer Price Index (CPI) was 100 . In 1990 you income was $45,000 and the CPI stood at 150 . Which of the following is correct? a) Your 1980 nominal income was higher than your 1990 nominal income. b) Your real income was roughly the same in 1980 as in 1990. c) Your real income was higher in 1990 than in 1980. d) Your real income was lower in 1990 than in 1980. QUESTION 20 20. Which of the following is NOT a problem in using economic statistics? d) Government statisticians in the U.S. frequently distort the numbers.
The U-3 unemployment rate statistic widely published by the Bureau of Labor Statistics may underestimate the magnitude of the unemployment problem in the economy because of the option d) all of the above.
Step 1: The U-3 unemployment rate statistic:
The U-3 unemployment rate, widely published by the Bureau of Labor Statistics (BLS), underestimates the magnitude of the unemployment problem in the economy because it fails to capture certain aspects of unemployment.
a) All part-time workers are counted as "employed" even if they desire full-time work, resulting in underemployment.
b) Some workers are in jobs for which they are overqualified, indicating underemployment.
c) "Discouraged workers" who have stopped actively seeking employment are not considered part of the labor force and are thus not counted in the unemployment rate.
Step 2: Unemployment caused by an economic recession:
Unemployment caused by an economic recession is known as cyclical unemployment. During a recession, businesses may reduce their workforce due to decreased demand and economic downturns, leading to higher levels of unemployment.
Step 3: Underemployment and economic statistics:
Underemployment encompasses various forms of employment dissatisfaction, including part-time workers who desire full-time work and individuals working in jobs below their qualifications and preferred level. The correct option for underemployment is d) All of the above.
It's important to note that economic statistics, including unemployment rates and inflation calculations, can be subject to limitations and potential problems. However, the statement d) "Government statisticians in the U.S. frequently distort the numbers" is not an accurate problem in using economic statistics.
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Meritor Manufacturing is so pleased with the outcome from previous suggestions that the consultants are invited back for more work. Using Value Stream Mapping (VSM), the consultants now suggest a redesign of the supply chain focused on lean design principles. Describe the changes that could be made in the factory that manufactures the Muffler assemblies and how this will allow Meritor to improve their Triple Bottom Line.
Meritor Manufacturing is considering a redesign of their supply chain using Value Stream Mapping (VSM) and lean design principles. This redesign aims to improve their Triple Bottom Line, which includes economic, environmental, and social aspects. Here are some changes that could be made in the factory that manufactures the Muffler assemblies:
1. Inventory Management: Implementing a just-in-time (JIT) inventory system can reduce waste and excess inventory. This means ordering materials only when they are needed, reducing storage costs, and minimizing the risk of obsolescence.
2. Streamlining Production: Identifying and eliminating non-value-added activities, such as unnecessary transportation or waiting time, can improve overall efficiency. By using VSM, the consultants can identify bottlenecks, streamline processes, and reduce cycle times, leading to increased productivity.
3. Waste Reduction: Lean design principles promote the identification and elimination of waste, such as overproduction, defects, and excess motion. By implementing lean techniques like 5S (Sort, Set in Order, Shine, Standardize, Sustain), the factory can improve organization, cleanliness, and standardization, reducing waste and improving safety.
4. Supplier Collaboration: Collaborating closely with suppliers can improve communication and coordination, leading to better quality and faster response times. By involving suppliers in the redesign process, Meritor can create a more integrated and efficient supply chain.
By implementing these changes, Meritor can improve their Triple Bottom Line. Economically, they can reduce costs by minimizing waste, improving productivity, and optimizing inventory. Environmentally, waste reduction and energy-saving measures can lead to a smaller ecological footprint. Socially, improved collaboration with suppliers can enhance relationships and contribute to a more sustainable supply chain. Overall, these changes can help Meritor improve their competitiveness, profitability, and sustainability.
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(True/False. Explain) Investors require higher return from
treasury bonds than from corporate bonds of same maturity and face
(future) value.
True. Investors generally require a higher return from treasury bonds compared to corporate bonds of the same maturity and face value.
The statement is true. Treasury bonds are considered to be less risky than corporate bonds because they are backed by the government. As a result, investors typically demand a lower return on treasury bonds due to the perceived safety of these investments. On the other hand, corporate bonds carry a higher level of risk as they are issued by private companies, and their returns are influenced by the financial health and creditworthiness of the issuing corporation. To compensate for this additional risk, investors demand a higher return on corporate bonds compared to treasury bonds.
Investors' expectation of higher returns from corporate bonds reflects the greater likelihood of default or bankruptcy by private companies. In the event of a company's financial distress, bondholders may face a higher risk of not receiving their principal or interest payments. Thus, to attract investors and compensate them for the added risk, corporate bonds must offer higher yields or returns. On the contrary, treasury bonds are backed by the full faith and credit of the government, making them a relatively safer investment with lower default risk. Consequently, investors are generally willing to accept lower returns on treasury bonds as they prioritize capital preservation and security.
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Gross Profit Method: Estimation of Food Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no
The Gross Profit Method is used to estimate food loss based on the gross profit percentage.
How is the Gross Profit Method applied to estimate food loss?The Gross Profit Method is a technique used to estimate the value of lost inventory when the exact quantity or cost is not known. It relies on the historical gross profit percentage to determine the estimated cost of the lost inventory.
To calculate the estimated food loss using the Gross Profit Method, follow these steps:
1. Determine the gross profit percentage by dividing the gross profit by net sales.
2. Apply the gross profit percentage to the net sales for the period affected by the loss to estimate the gross profit.
3. Subtract the estimated gross profit from the cost of goods sold to find the estimated cost of lost inventory.
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You have been researching a stock that you like, which is currently trading at $39.00 per share. You would like to buy the stock if it were a the less expensives 1300 per vars bec price will go to $59.00 by year-end and then level off or decline You decide to place a limit order to buy 100 shares of the stock at 536 00, and a limit order so se at 500 out t the direction of the stock price, and it goes straight to $64 00. What is your current position?
Therefore, your current position is that you own 100 shares of the stock at $64.00 per share.
Based on the information provided, your current position is that you have successfully purchased 100 shares of the stock at $64.00 per share.
To understand why this is your current position, let's break down the scenario step-by-step:
1. The stock is currently trading at $39.00 per share, and you believe it will increase to $59.00 by year-end before leveling off or declining.
2. You decide to place a limit order to buy 100 shares of the stock at $53.60 per share. This means that you are willing to buy the stock if it reaches or goes below this price.
3. Additionally, you place a limit order to sell the stock at $50.00 per share. This means that you are willing to sell the stock if it reaches or goes above this price.
4. However, the stock price does not go down to $53.60 as you expected. Instead, it goes straight to $64.00.
5. Since the stock price exceeded your limit order to buy at $53.60, the purchase is executed at the market price of $64.00 per share.
6. As a result, you have successfully bought 100 shares of the stock at $64.00 per share.
Therefore, your current position is that you own 100 shares of the stock at $64.00 per share.
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Review each of the appraisal methods and discuss extensively which one you might use for the following types of jobs. Explain the reasons for your choice. (3 marks each)
1. Administrative Assistant
2. Chief Executive Officer
3. Human Resource Manager
4. Retail Store Assistant Manager
5. Parcel Delivery Driver
When reviewing each of the appraisal methods for different types of jobs, it is important to consider the specific requirements and responsibilities of each role.
Here are some appraisal methods that can be used for the following types of jobs, along with the reasons for their suitability:
1. Administrative Assistant:
- Performance Rating Method: This method involves evaluating an administrative assistant's performance based on specific criteria such as attention to detail, organizational skills, and communication abilities. By using this method, the supervisor can provide feedback on areas where improvement is needed and recognize exceptional performance.
2. Chief Executive Officer:
- Goal-Oriented Method: Since CEOs are responsible for setting strategic goals and leading the organization, this method focuses on evaluating their ability to meet specific targets and objectives. By setting clear goals for the CEO and regularly reviewing their progress, the organization can assess their performance in driving the company's success.
3. Human Resource Manager:
- 360-Degree Feedback Method: This method involves collecting feedback from various sources such as colleagues, subordinates, and superiors to evaluate the HR manager's performance. HR managers interact with multiple stakeholders, and this method allows for a comprehensive assessment of their effectiveness in areas like employee relations, recruitment, and training.
4. Retail Store Assistant Manager:
- Customer Satisfaction Method: For this role, assessing the assistant manager's ability to provide excellent customer service is crucial. By collecting customer feedback through surveys or reviews, the organization can gauge how well the assistant manager meets customer needs and resolves issues promptly.
5. Parcel Delivery Driver:
- Key Performance Indicators (KPIs) Method: This method focuses on specific metrics such as on-time delivery, customer satisfaction, and driving safety. By setting performance goals and measuring key indicators, the organization can evaluate the driver's efficiency, reliability, and adherence to safety protocols.
It's important to note that these appraisal methods are not exhaustive and can vary depending on organizational needs and job requirements. It's also essential to communicate the chosen method to the employees, ensure fairness, and provide constructive feedback for continuous improvement.
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Pharoah Corporation began operations in 2020 and reported pretax financial income of $225000 for the year. Pharoah's tax depreclation exceeded its book depreciation by $44,000. Pharoah's tax rate for 2020 and years theroafter is 30%. Assume this is the only difference between Pharoah's pretax fnatcial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable /Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account tities and enter O for the amounts.) Show how the deferred tax liability will be classifed on the December 31,2020 , balance theet. Deferred tax liability should be classified as a
The journal entry to record the income tax expense, deferred income taxes, and income taxes payable for Pharoah Corporation is as follows:
Income Tax Expense $67,500
Deferred Income Taxes - Liability $13,200
Income Taxes Payable $54,300
To prepare the journal entry, we need to calculate the income tax expense, deferred income taxes, and income taxes payable based on the given information.
Pharoah Corporation reported pretax financial income of $225,000. Since the tax depreciation exceeded the book depreciation by $44,000, we need to recognize the deferred tax liability for this temporary difference. The deferred tax liability is calculated by multiplying the temporary difference ($44,000) by the tax rate (30%), resulting in $13,200.
The income tax expense is computed by multiplying the pretax financial income ($225,000) by the tax rate (30%), which amounts to $67,500.
The income taxes payable is the current tax liability and is equal to the income tax expense ($67,500) minus the increase in the deferred tax liability ($13,200), totaling $54,300.
Therefore, the journal entry records an income tax expense of $67,500, an increase in the deferred tax liability of $13,200, and an income taxes payable of $54,300.
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Which is the most attractive of the following interest rates offered on a savings account? Select one: a. 2.66% compounded annually b. 2.68% compounded semiannually c. 2.7% compounded quarterly d. 2.64% compounded monthly
The most attractive of the following interest rates offered on a savings account is 2.7% compounded quarterly.Thus the correct option is C.
The most attractive interest rate offered on a savings account depends on how frequently the interest is compounded. Let's compare the options:
a. 2.66% compounded annually
b. 2.68% compounded semiannually
c. 2.7% compounded quarterly
d. 2.64% compounded monthly
To determine which option is most attractive, we need to calculate the effective annual rate (EAR) for each option. The EAR takes into account the compounding frequency and gives us a way to compare different interest rates.
For option a, since the interest is compounded annually, the EAR is simply 2.66%.
For option b, the interest is compounded semiannually, so we need to calculate the semiannual interest rate (SIR) first. The SIR is found by taking the annual interest rate and dividing it by the number of compounding periods in a year. In this case, the SIR is 2.68% / 2 = 1.34%. To find the EAR, we use the formula: EAR = (1 + SIR)^n - 1, where n is the number of compounding periods in a year. Plugging in the values, we get: EAR = (1 + 1.34%)^2 - 1 ≈ 2.7180% (rounded to four decimal places).
For option c, the interest is compounded quarterly. Similar to option b, we find the quarterly interest rate (QIR) by dividing the annual interest rate by the number of compounding periods in a year: QIR = 2.7% / 4 = 0.675%. Using the same EAR formula, we get: EAR = (1 + 0.675%)^4 - 1 ≈ 2.7234% (rounded to four decimal places).
For option d, the interest is compounded monthly. Following the same process, we find the monthly interest rate (MIR) by dividing the annual interest rate by the number of compounding periods in a year: MIR = 2.64% / 12 ≈ 0.22%. Plugging this value into the EAR formula, we get: EAR = (1 + 0.22%)^12 - 1 ≈ 2.6837% (rounded to four decimal places).
Comparing the EARs, we can see that option c, 2.7% compounded quarterly, offers the highest effective annual rate. Therefore, The most attractive of the following interest rates offered on a savings account is 2.7% compounded quarterly.Thus the correct option is C.
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Assume that the multiplier in an economy is 4 and an investor enters the economy with $700 m. a) Calculate the marginal propensity to consume (MPC) b) Show in tabular form the cumulative spending increase up to ten "rounds" of spending. c) By how much will equilibrium GDP change with the injection of $700 m. d) If the MPC in the economy was adjusted to 0.65 what would be the value of the multiplier?
the marginal propensity to consume (MPC) is 0.25.the equilibrium GDP will change by $2.8 billion if the MPC is adjusted to 0.65, the value of the multiplier would be approximately 2.857
a) The marginal propensity to consume (MPC) can be calculated by dividing the change in consumption by the change in income. In this case, since we are given the multiplier, we can use it to calculate the MPC.
MPC = 1 / multiplier
MPC = 1 / 4
MPC = 0.25
Therefore, the marginal propensity to consume (MPC) is 0.25.
b) To show the cumulative spending increase up to ten "rounds" of spending, we can use the multiplier. Each round represents a new round of spending based on the previous round's increase in spending.
Round 1: $700 million (initial injection)
Round 2: $700 million * 4 = $2.8 billion
Round 3: $2.8 billion * 4 = $11.2 billion
Round 4: $11.2 billion * 4 = $44.8 billion
Round 5: $44.8 billion * 4 = $179.2 billion
Round 6: $179.2 billion * 4 = $716.8 billion
Round 7: $716.8 billion * 4 = $2.87 trillion
Round 8: $2.87 trillion * 4 = $11.48 trillion
Round 9: $11.48 trillion * 4 = $45.92 trillion
Round 10: $45.92 trillion * 4 = $183.68 trillion
c) With the injection of $700 million and a multiplier of 4, the equilibrium GDP will change by $2.8 billion. This is because the multiplier determines the overall increase in spending resulting from the initial injection.
d) If the MPC in the economy is adjusted to 0.65, the value of the multiplier can be calculated using the formula:
Multiplier = 1 / (1 - MPC)
Multiplier = 1 / (1 - 0.65)
Multiplier = 1 / 0.35
Multiplier ≈ 2.857
Therefore, if the MPC is adjusted to 0.65, the value of the multiplier would be approximately 2.857
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