The four key characteristics essential to an effective guiding coalition are: Position power, expertise, credibility, and leadership.
A guiding coalition is a small group of people who have the ability to influence the whole organization and lead change from the front. It is critical to have a guiding coalition as it is a driving force for the organization's change efforts. A coalition is a group of people who are responsible for leading and guiding the change process.
The four key characteristics essential to an effective guiding coalition are as follows:1. Position Power: The guiding coalition should comprise people who have a position of power and can make decisions in the organization.2. Expertise: The guiding coalition should have members who possess the skills and expertise to lead change efforts. These skills may include knowledge of organizational structures, policies, procedures, and technical knowledge of the business.
3. Credibility: The members of the guiding coalition should be credible and have a track record of successful leadership. They should be respected and have the trust of other members of the organization.4. Leadership: The guiding coalition should have strong leaders who can motivate others, set the direction, and drive change efforts effectively. Leadership skills such as visioning, communication, and team-building are essential to an effective guiding coalition.
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Select any multinational company and explain the following based on Global Value Chain:
Inventory Management: (3 Mark each)
1. Explain in detail company’s major types of inventory, their costs and their relationships to inventory decisions and with examples effective management of inventories in the supply chain is one of the key factors in company’s success.
Apple Inc. employs a comprehensive approach to inventory management, encompassing raw materials, work-in-progress, and finished goods.
Company: Apple Inc.
Inventory Management at Apple Inc.:
Apple Inc., a multinational technology company, manages various types of inventory to ensure efficient supply chain operations and enhance its overall success.
Major Types of Inventory:
a. Raw Materials: Apple maintains an inventory of raw materials such as aluminum, glass, and various electronic components used in the manufacturing of its products like iPhones and MacBooks.
b. Work-in-Progress (WIP): WIP inventory includes partially completed products that are in the production process. Apple's assembly lines often have WIP inventory in the form of partially assembled devices.
c. Finished Goods: This inventory comprises fully assembled products ready for sale, such as iPhones, iPads, and Macs, stored in Apple's distribution centers and retail stores.
Costs and Relationships:
a. Carrying Costs: Apple incurs costs related to holding inventory, including warehousing, storage, insurance, and depreciation. These costs increase as the inventory levels rise, making effective inventory management crucial.
b. Stockouts and Lost Sales: Insufficient inventory can lead to stockouts, resulting in lost sales and dissatisfied customers. Conversely, excess inventory can tie up capital and increase carrying costs.
c. Supplier Relationships: Apple collaborates closely with suppliers to manage inventory effectively. Timely communication and coordination with suppliers help in maintaining appropriate inventory levels and mitigating supply chain disruptions.
Effective Management and Examples:
Apple's effective inventory management is evident in its product launch strategies. For instance, prior to a new iPhone release, Apple carefully manages its inventory to minimize excess stock and avoid shortages. This involves accurately forecasting demand, coordinating production schedules, and closely monitoring component supplies.
In conclusion, Apple Inc. employs a comprehensive approach to inventory management, encompassing raw materials, work-in-progress, and finished goods. By considering carrying costs, stockouts, and maintaining strong supplier relationships, Apple ensures the efficient flow of inventory throughout its supply chain. This approach allows Apple to meet customer demand effectively, avoid excessive inventory costs, and contribute to the company's overall success.
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Ivan is an international fish supplier based in Russia. One of Ivan’s biggest clients is Robert who is based in the United States(U.S.). Over the years Ivan and Robert have entered into various common law contracts where Ivan hassold and exported Russian fish and seafood to Robert in the U.S. In November 2021 Robert and Ivan entered into new negotiations for the supply of Russian fish and seafood. The two parties agreed on a supply contract where Ivan would export 5000kgs of Alaska Pollock and 3000kg of red king crab, all sourced from Russian waters, to Robert in the U.S. The contract was to be performed in phases, requiring Ivan to ship a load of the seafood every three months and ensure that they had completed the entire load by June the following year. As part of the agreed terms of the contract Robert had to pay the entire contract amount of $750,000. At the start of December 2021 Robert paid the entire $750,000 contract amount into Ivan’s account. Ivan confirmed receiving the sum and notified Robert that he was in the process of preparing the first shipment of seafood, which included 2000kgs of Alaska Pollock and 500kg of red king crab, all valued at $200,000. The first shipment of seafood arrived in the U.S. in Feb 2022 and was received by Robert. A few weeks later in March 2022, Ivan was in the process of finalising the second shipment of seafood when the U.S. government passed a law banning all Russian seafood imports. Following the ban, Ivan has not been able to send any other shipments and has refused to refund Robert. Robert is not sure about the legal implications of the ban on his contract with Ivan and his money. By referring to the common law of contract, advise Robert. Please use the IRAC format.
The contract was a common law contract where the parties mutually agreed to perform a lawful act. The basic principles of common law contracts are that the parties must have mutual assent, consideration, legality, and capacity. Also, common law contracts are subject to the doctrine of the frustration of purpose.
Analysis: In March 2022, the U.S. government passed a law banning all Russian seafood imports, and following the ban, Ivan has not been able to send any other shipments and has refused to refund Robert. Robert is unsure about the legal implications of the ban on his contract with Ivan and his money.
In this case, it is clear that the contract between Ivan and Robert has been frustrated. This is because the U.S. government has passed a law that has made it impossible for Ivan to send any other shipments to Robert. The doctrine of the frustration of purpose applies where the parties are unable to fulfill their contractual obligations because of circumstances that were beyond their control. In this case, it is beyond Ivan’s control to send the other shipments to Robert, and therefore Ivan is excused from performing the contract.
However, Robert is entitled to a refund of the $550,000 that he paid to Ivan for the shipments that were not delivered, as Ivan is in breach of the contract.
Conclusion:Therefore, Robert should pursue legal action against Ivan to recover the $550,000 paid to Ivan for the undelivered shipments.
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High fixed costs bankrupted the Hertz car rental company.
1. Identify the cause of the bankruptcy in terms of variable costs and fixed costs.
2. Utilize your knowledge of costs to suggest a plan that could have saved the Hertz car rental company.
High fixed costs were a contributing factor to the bankruptcy of the Hertz car rental company, and a cost reduction plan focusing on fixed costs could have potentially saved the company.
The cause of the bankruptcy for the Hertz car rental company can be attributed to high fixed costs. Fixed costs are expenses that do not vary with the level of production or business activity. In the case of Hertz, these fixed costs could include lease payments for rental locations, vehicle maintenance costs, administrative expenses, and other overhead costs that need to be covered regardless of the number of cars rented or the revenue generated.
To suggest a plan that could have saved the Hertz car rental company, a focus on reducing fixed costs would be crucial. Some potential strategies could include:
Renegotiating lease agreements: Hertz could have explored renegotiating lease terms with their rental locations to lower their fixed rental expenses.
Optimizing fleet size: By assessing demand patterns and adjusting their fleet size accordingly, Hertz could have reduced vehicle maintenance costs and other expenses associated with excess vehicles.
Streamlining administrative processes: Implementing efficient systems and processes to reduce administrative costs and improve overall operational efficiency.
Exploring alternative business models: Hertz could have considered partnerships, collaborations, or innovative approaches to adapt to changing consumer preferences and reduce fixed costs.
Increasing revenue streams: Diversifying revenue streams by offering additional services or exploring new markets could have helped offset high fixed costs.
It's important to note that the specific plan would depend on a detailed analysis of Hertz's financials, market conditions, and industry dynamics, but these suggestions highlight some potential avenues to address the high fixed costs and potentially save the company.
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Question 1
Resistance to change comes from all of the following except
A. Employee characteristics
B. Change agent/employee relationship
C. Change agent characteristics
D. competitors
Resistance to change comes from all of the following except competitors. The correct option is D.
Resistance to change is a common phenomenon in organizations, and it can stem from various factors. However, competitors are not typically a source of resistance to change. Competitors may be an external factor that influences the need for change or triggers the change process, but they themselves do not exhibit resistance.
Employee characteristics, such as fear of the unknown, lack of trust, and the desire to maintain the status quo, can contribute to resistance to change. When employees are uncertain about the implications of change on their roles, responsibilities, and job security, they may resist the proposed changes.
The relationship between change agents (those initiating and driving the change) and employees is also a critical factor. If there is a lack of communication, involvement, and trust between change agents and employees, resistance is more likely to occur. Effective change agents build rapport, address concerns, and involve employees in the change process to minimize resistance.
Similarly, change agent characteristics, such as their credibility, expertise, and ability to communicate and facilitate change, can influence the level of resistance. If change agents are perceived as lacking these qualities, employees may resist their proposed changes.
While competitors may create a need for change, they do not directly exhibit resistance. Instead, it is the internal factors related to employees, the change agent-employee relationship, and the change agent's characteristics that contribute to resistance to change within an organization. The correct option is D.
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An analyst who compares the debt ratios of firms under U.S. GAAP and IFRS must consider key differences in the two sets of standards related to convertible debt and troubled debt restructurings. In general, which system would most likely yield lower debt and higher equity? Explain.
Under U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), there are key differences in accounting treatment for convertible debt and troubled debt restructurings.
In general, the IFRS system would most likely yield lower debt and higher equity compared to U.S. GAAP.
Convertible Debt: Under U.S. GAAP, convertible debt is typically recorded as a liability on the balance sheet, representing the debt component separate from the embedded conversion feature. In contrast, IFRS allows entities to bifurcate the debt and equity components of convertible debt and recognize the equity component separately. As a result, under IFRS, the liability portion of convertible debt is lower, reducing the overall debt levels and increasing equity.
Troubled Debt Restructurings: U.S. GAAP has specific guidelines for troubled debt restructurings, where debt is modified to alleviate financial difficulties of the borrower. These guidelines often result in the recognition of impairment losses and potentially higher debt levels. On the other hand, IFRS has a more principles-based approach, focusing on the substance of the restructuring. If the restructuring is deemed to be a modification rather than a new loan, IFRS may not necessarily recognize impairment losses, leading to potentially lower debt levels and higher equity compared to U.S. GAAP.
Overall, due to the differences in accounting treatment for convertible debt and troubled debt restructurings, the IFRS system would likely result in lower reported debt and higher equity compared to U.S. GAAP. It's important to note that the actual impact may vary depending on the specific circumstances and the entities involved, and professional judgment should be applied when assessing the accounting effects of these transactions.
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"You have been asked to analyze the value of equity in a company that has the following features:
student submitted image, transcription available belowThe earnings before interest and taxes is $25 million, and the corporate tax rate is 40%.
student submitted image, transcription available belowThe earnings are expected to grow 4% a year in perpetuity, and the return on capital is 10%. The cost of capital of comparable firms is 9%.
student submitted image, transcription available belowThe firm has two types of debt outstanding—two-year zero coupon bonds with a face value of $250 million and bank debt with 10 years to maturity with a face value of $250 million. (The duration of this debt is four years.)
student submitted image, transcription available belowThe firm is in two businesses—food processing and auto repair. The average standard deviation in firm value for firms in food processing is 25%, whereas the standard deviation for firms in auto repair is 40%. The correlation between the businesses is 0.5.
student submitted image, transcription available belowThe riskless rate is 7%.
Use the option pricing model to value equity as an option."
To value the equity in the company using the option pricing model, several factors need to be considered: the earnings before interest and taxes, growth rate, return on capital, cost of capital, debt structure, business diversification, and riskless rate.
The option pricing model is used to value equity as an option by considering the various factors mentioned. In this case, the earnings before interest and taxes (EBIT) is given as $25 million, and the corporate tax rate is 40%.
The earnings are expected to grow at a rate of 4% per year indefinitely, and the return on capital is 10%. The cost of capital for comparable firms is 9%.
The company has two types of debt: two-year zero-coupon bonds with a face value of $250 million and bank debt with a face value of $250 million and a duration of four years.
Additionally, the company operates in two businesses with different standard deviations of firm value: food processing with a standard deviation of 25% and auto repair with a standard deviation of 40%.
The correlation between the businesses is 0.5.
To value equity as an option, the option pricing model takes into account these factors along with the riskless rate, which is given as 7%.
By applying the option pricing model, the value of equity in the company can be determined.
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R8 Co. is considering one of three projects, each of which will cost $42,000. The expected cash flows for each project are:
Project A Project B Project C
Year 1 $11,400 $29,000 $3,500
Year 2 20,100 20,550 15,000
Year 3 13,800 7,650 14,100
Year 4 9,050 11,850 16,400
R8's maximum acceptable payback period for accepting projects is 2 years. What is the payback period for Project B?
Input your answer as a number with two decimal places (for example, 1.23).
The payback period for Project B is 2.39 years. This means that it will take approximately 2 years and 4.7 months to recover the initial investment of $42,000.
To calculate the payback period, we start by subtracting the cash inflows from the initial investment until the cumulative cash inflow becomes equal to or greater than the initial investment. In the case of Project B, the cumulative cash inflows at the end of Year 1 is $20,550. We still need to recover $42,000 - $20,550 = $21,450.
Next, we calculate the cumulative cash inflows at the end of Year 2, which is $20,550 + $20,550 = $41,100. We still need to recover $42,000 - $41,100 = $900.
To determine the payback period, we divide the remaining cash to be recovered ($900) by the cash inflow during Year 3 ($15,000) and convert it into years:
Payback period = 2 + ($900 / $15,000) = 2.39 years.
Therefore, the payback period for Project B is 2.39 years.
The payback period is a simple method to assess the time required to recover the initial investment in a project. In this case, Project B requires 2.39 years to recoup the $42,000 investment. The payback period is calculated by identifying the point at which the cumulative cash inflows equal or exceed the initial investment.
For Project B, we observe that by the end of Year 2, the cumulative cash inflows are $41,100, leaving a remaining recovery amount of $900. Dividing this remaining amount by the cash inflow in Year 3 ($15,000), we find that it takes approximately 0.06 years (or about 22 days) to recover the remaining investment.
Therefore, the payback period for Project B is 2.39 years, indicating that it will take around 2 years and 4.7 months to recover the initial investment. Since R8's maximum acceptable payback period is 2 years, Project B would not meet the company's criteria.
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Eagle Company is a domestic common carrier engaged in the transport of cargoes and passengers in Visayas and Mindanao. For the current taxable quarter, it has the following gross receipts:
Transportation of Cargoes
By land 2,800,000
By sea 3,000,000
Transportation of passengers
By land 2,500,000
By sea 2,300,000
The percentage tax due for the taxable period would be?
The percentage tax due for the taxable period is 318,000. This is calculated by applying a 3% tax rate to the gross receipts of each category of transportation services provided by Eagle Company.
To calculate the percentage tax due for the taxable period, we need to determine the taxable base for each category of transportation and apply the appropriate tax rate.
The current tax rates for transportation services in the Philippines are as follows:
1. Land Transportation of Cargoes: 3% of the gross receipts
2. Sea Transportation of Cargoes: 3% of the gross receipts
3. Land Transportation of Passengers: 3% of the gross receipts
4. Sea Transportation of Passengers: 3% of the gross receipts
Let's calculate the taxable base and percentage tax due for each category:
1. Land Transportation of Cargoes:
Taxable Base = 2,800,000 (gross receipts)
Percentage Tax Due = 2,800,000 * 3% = 84,000
2. Sea Transportation of Cargoes:
Taxable Base = 3,000,000 (gross receipts)
Percentage Tax Due = 3,000,000 * 3% = 90,000
3. Land Transportation of Passengers:
Taxable Base = 2,500,000 (gross receipts)
Percentage Tax Due = 2,500,000 * 3% = 75,000
4. Sea Transportation of Passengers:
Taxable Base = 2,300,000 (gross receipts)
Percentage Tax Due = 2,300,000 * 3% = 69,000
Total Percentage Tax Due = 84,000 + 90,000 + 75,000 + 69,000 = 318,000
Therefore, the percentage tax due for the taxable period would be 318,000.
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Who will lose when coffee prices fall as countries become more efficient at growing coffee and begin exporting them? Please explain your answer using the specific-factors model.
When coffee prices fall as countries become more efficient at growing coffee and begin exporting them, coffee producers in the exporting country will lose while coffee consumers in the importing country will benefit.
The specific factors model is used to explain this phenomenon. In the specific-factors model, there are two types of factors of production: specific and mobile factors.
Specific factors can only be used in the production of one good, while mobile factors can be used in the production of multiple goods. In this case, coffee producers in the exporting country are specific factors, while consumers in the importing country are mobile factors. When coffee prices fall, the specific factors (coffee producers) will lose because they will earn less revenue.
However, the mobile factors (coffee consumers) will benefit because they will be able to buy coffee at a lower price. This is because the exporting country has become more efficient at producing coffee and is able to produce more coffee at a lower cost. As a result, the price of coffee falls on the world market, and consumers in the importing country can buy more coffee at a lower price.
In conclusion, coffee producers in the exporting country will lose when coffee prices fall as countries become more efficient at growing coffee and begin exporting them, while coffee consumers in the importing country will benefit.
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Which one of the following statement is FALSE?
a. If the pension benefits obligation (PBO) is greater than the fair value (FV) of plan assets, the plan is underfunded, resulting in a net obligation.
b. In a typical defined benefit pension plan, the payment formula considers the number of years of employee service, a credit for each year of service, and final salary at retirement.
c. The discount (interest) rate used to determine the projected benefit obligation is called the settlement rate, which represents the current market rate at which an outside party would effectively settle the PBO.
. For defined benefit pension plans, pension expense is the actuarially determined present value of estimated retirement payments to be paid employees for work employees will do in the future
The false statement is:
c. The discount (interest) rate used to determine the projected benefit obligation is called the settlement rate, which represents the current market rate at which an outside party would effectively settle the PBO.
The statement in option c is incorrect. The discount rate used to determine the projected benefit obligation (PBO) is not called the settlement rate. The discount rate used for pension accounting purposes is commonly referred to as the discount rate or the discount yield. It represents the rate at which the PBO is discounted to its present value. The discount rate is typically determined based on high-quality corporate bond yields that have maturities matching the expected payout period of the pension obligations. It reflects the time value of money and the risk associated with the pension obligations.
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Which one of the following is not correct about Haier?
O In its global strategy, Haier focus on developing markets first
O Haier had to overcome institutional voids in China
O Haier diversified into a wide range of home appliances
O Haier acquired firms with good products but bad management
O Having built in-house capabilities, the institutional voids in China helped Haier create a barrier to entry
The statement that is not correct about Haier is that having built in-house capabilities, the institutional voids in China helped Haier create a barrier to entry.
Haier is a multinational home appliance and consumer electronics company based in China. It has a global strategy that focuses on developing markets first, making the first statement correct. As Haier expanded globally, it faced institutional voids in China, such as weak legal and regulatory frameworks, which it had to overcome. This enabled Haier to develop strategies and adapt to different markets, making the second statement correct.
Haier is known for its diversification into a wide range of home appliances, including refrigerators, washing machines, air conditioners, televisions, and more. This diversification has been a key part of Haier's growth strategy, making the third statement correct. Additionally, Haier has pursued an acquisition strategy to enhance its product offerings and expand its market presence. It has acquired firms with good products but bad management, improving their operations and integrating them into the Haier ecosystem, thus making the fourth statement correct.
However, the fifth statement that claims institutional voids in China helped Haier create a barrier to entry is not correct. Institutional voids typically refer to deficiencies or gaps in formal institutions such as legal systems or regulatory frameworks. While Haier faced institutional voids in China, it actively worked to overcome them rather than leveraging them as a barrier to entry. Haier's success can be attributed to its focus on innovation, customer-centric approach, and global expansion strategies, rather than relying on institutional voids to create entry barriers.
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Instructions: Use four decimal places for your calculations. Show your answers by rounding the calculation results to two decimal places if answers are in dollars. For example, if your calculation results in $100.1265, show your answer as $100.13. If you need to show your answers as a percent, take four decimal places from your calculation, converting them into a percent. For example, if your calculation results in 0.4567, show 45.67%, not 46%. To set your Texas Instrument BA II PLUS calculator at 4 decimal places, press [2ND] FORMAT 4 [ENTER]. Please follow the instructions for homework assignments on the syllabus.
Questions
Part I (TVM of lump-sum amounts): Find the following values.
(1) The future value of $300 compounded for 10 years at 10%
(2) The present value of $300 due in 10 years at a discount rate of 10%
Part II (Annuities): Find the following values.
(3) The future value of $500 per year for 20 years at 10%. Assume that payments are made at the end of each year.
(4) The future value of $500 per year for 20 years at 10%. Assume that payments are made at the beginning of each year.
(5) The present value of $500 per year for 20 years at 10%. Assume that payments are made at the end of each year.
(6) The present value of $500 per year for 20 years at 10%. Assume that payments are made at the beginning of each year.
(7) The future value of $600 each 6 months for 5 years at nominal rate of 8%, compounded semiannually. Assume that payments are made at the end of each semiannual period.
(8) The future value of $300 each 3 months for 5 years at nominal rate of 8%, compounded quarterly. Assume that payments are made at the end of each quarter.
(9) The present value of $600 each 6 months for 5 years at nominal rate of 8%, compounded semiannually. Assume that payments are made at the end of each semiannual period.
Part III (Loan amortization)
(10) You are planning to borrow $500,000 on a 5 -year, 10%, annual payment, fully amortized term loan. What fraction (percentage) of the payment made at the end of the second year will represent repayment of principal?
In Part I, we find the future value and present value of lump-sum amounts. The future value of $300 compounded for 10 years at 10% is $811.62. The present value of $300 due in 10 years at a discount rate of 10% is $111.42.
In Part II, we calculate values related to annuities. The future value of $500 per year for 20 years at 10% with end-of-year payments is $20,234.73. With beginning-of-year payments, the future value is $22,258.20. The present value of $500 per year for 20 years at 10% with end-of-year payments is $6,710.08, and with beginning-of-year payments, it is $7,381.20.
In Part III, we consider loan amortization. The fraction (percentage) of the payment made at the end of the second year that represents repayment of principal for a $500,000, 5-year, 10% fully amortized term loan is 10.50%.
Part I:
To find the future value of $300 compounded for 10 years at 10%, we use the formula: Future Value = Present Value × (1 + Interest Rate)^(Number of Periods). Plugging in the values, we get Future Value = $300 × (1 + 0.10)^10 = $811.62.
To find the present value of $300 due in 10 years at a discount rate of 10%, we use the formula: Present Value = Future Value / (1 + Discount Rate)^Number of Periods. Substituting the given values, we have Present Value = $300 / (1 + 0.10)^10 = $111.42.
Part II:
For the future value of $500 per year for 20 years at 10% with end-of-year payments, we use the formula for the future value of an ordinary annuity: Future Value = Payment × [(1 + Interest Rate)^Number of Periods - 1] / Interest Rate. Plugging in the values, we get Future Value = $500 × [(1 + 0.10)^20 - 1] / 0.10 = $20,234.73.
For the future value of $500 per year for 20 years at 10% with beginning-of-year payments, we use a similar formula, but we adjust the number of periods: Future Value = Payment × [(1 + Interest Rate)^Number of Periods - 1] / Interest Rate × (1 + Interest Rate). Substituting the given values, we find Future Value = $500 × [(1 + 0.10)^20 - 1] / 0.10 × (1 + 0.10) = $22,258.20.
To calculate the present value of $500 per year for 20 years at 10% with end-of-year payments, we use the formula for the present value of an ordinary annuity: Present Value = Payment × [1 - (1 + Interest Rate)^(-Number of Periods)] / Interest Rate. Plugging in the values, we get Present Value = $500 × [1 - (1 + 0.10)^(-20)] / 0.10 = $6,710.08.
For the present value of $500 per year for 20 years at 10% with beginning-of-year payments, we again use a similar formula but adjust the number of periods: Present Value = Payment × [1 - (1 + Interest Rate)^(-Number of Periods)] / Interest Rate × (1 + Interest Rate). Substituting the given values
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As of December 31, 2020, Oxford-Welsh Inc. had assets of £9,780,000, liabilities of £2,970,000, and
share capital of £4,230,000. Retained earnings as of that date are_____
As of December 31, 2020, Oxford-Welsh Inc. had retained earnings of £2,580,000. Retained earnings represent the accumulated profits of a company that have not been distributed to shareholders as dividends.
Retained earnings represent the accumulated profits or losses of a company over time, and additional details such as net income, dividends, and any other adjustments are needed to calculate the exact amount. Retained earnings are derived from the company's net income or loss, which is the difference between revenue and expenses over a specific period. It can be affected by factors such as dividends paid to shareholders and any adjustments made to previous years' earnings. Without access to this additional information, it is not possible to determine the exact amount of retained earnings for Oxford-Welsh Inc. as of December 31, 2020.
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Tony Industries plan to sell a machine in the current tax year. The cost basis presented is RM500,000 and the accumulated depreciation is RM450,000. The effective income tax rate is 0.30.
Determine:
(i) the minimum sold price required of the machine to gain on the disposal and
(ii) the revised minimum sold price required of the machine to gain on the disposal if the effective income tax rate adjusted to 0.50 while accumulated depreciation increased 10%.
The minimum sold price required would be RM50,000 or higher. The new minimum sold price required to gain on the disposal would be RM5,000 or higher.
To determine the minimum sold price required to gain on the disposal of the machine, we need to calculate the book value of the machine first. The book value is the cost basis minus the accumulated depreciation.
(i) With an effective income tax rate of 0.30:
Book Value = Cost Basis - Accumulated Depreciation
= RM500,000 - RM450,000
= RM50,000
To gain on the disposal, the sold price should be higher than the book value. Therefore, the minimum sold price required would be RM50,000 or higher.
(ii) If the effective income tax rate is adjusted to 0.50 and accumulated depreciation increases by 10%:
New Accumulated Depreciation = Accumulated Depreciation + (10% * Accumulated Depreciation)
= RM450,000 + (0.10 * RM450,000)
= RM495,000
New Book Value = Cost Basis - New Accumulated Depreciation
= RM500,000 - RM495,000
= RM5,000
With the revised effective income tax rate and increased accumulated depreciation, the new minimum sold price required to gain on the disposal would be RM5,000 or higher.
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Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost of the machine is $600,000. Part A will have variable cost per unit of $95.00 and the sales price per unit will be $150.00. Fixed costs will be $75,000. The machine is expected to have a life of ten years. Jasper Auto requires a return of 12% on their investments.
Required:
Ignoring the effect of taxes, calculate the following. Round your answers to two decimal points:
Accounting Break-even quantity
Cash Break-even quantity
Financial Break-even quantity
Degree of operating leverage.
The accounting break-even quantity is 1363.64 units, the cash break-even quantity is 789.47 units, the financial break-even quantity is 2479.27 units, and the degree of operating leverage is 0.011.
To calculate the accounting break-even quantity, we need to determine the number of units that need to be sold to cover both variable and fixed costs. The accounting break-even quantity can be calculated as fixed costs divided by the contribution margin per unit. The contribution margin is the sales price per unit minus the variable cost per unit.
Accounting Break-even Quantity = Fixed Costs / Contribution Margin per unit
Fixed Costs = $75,000
Contribution Margin per unit = Sales Price per unit - Variable Cost per unit = $150 - $95 = $55
Accounting Break-even Quantity = $75,000 / $55 = 1363.64 units
To calculate the cash break-even quantity, we consider only the variable costs since fixed costs do not require immediate cash outflow. The cash break-even quantity can be calculated as fixed costs divided by the variable cost per unit.
Cash Break-even Quantity = Fixed Costs / Variable Cost per unit
Cash Break-even Quantity = $75,000 / $95 = 789.47 units
The financial break-even quantity takes into account the return on investment required by Jasper Auto. It considers both variable costs and fixed costs, as well as the required return. The financial break-even quantity can be calculated as follows:
Financial Break-even Quantity = (Fixed Costs + (Return on Investment / Unit Contribution)) / Contribution Margin per unit
Return on Investment = Investment * Required Rate of Return = $600,000 * 12% = $72,000
Unit Contribution = Sales Price per unit - Variable Cost per unit = $150 - $95 = $55
Financial Break-even Quantity = ($75,000 + ($72,000 / $55)) / $55 = 2479.27 units
Lastly, the degree of operating leverage measures the sensitivity of the company's operating income to changes in sales. It can be calculated as Contribution Margin per unit divided by Operating Income.
Degree of Operating Leverage = Contribution Margin per unit / Operating Income
Operating Income = (Sales Quantity * Contribution Margin per unit) - Fixed Costs
Let's assume the company sells 2000 units.
Operating Income = (2000 * $55) - $75,000 = $5,000
Degree of Operating Leverage = $55 / $5,000 = 0.011
These calculations help Jasper Auto understand the sales quantities required to cover costs, achieve the desired return on investment, and assess the sensitivity of their operating income to changes in sales.
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Explain why the focus on improving the quality of information used for decision making has one common characteristic of all assurance services (35)
The common characteristic of all assurance services is their focus on improving the quality of information used for decision making, ensuring its reliability and credibility.
Assurance services refer to professional services provided by certified public accountants (CPAs) and other qualified professionals to enhance the reliability and credibility of information. These services aim to improve the quality of information used by stakeholders in making informed decisions.
Whether it is auditing financial statements, conducting performance evaluations, or assessing the effectiveness of internal controls, the primary objective is to provide assurance regarding the accuracy, completeness, and reliability of the information.
The focus on improving the quality of information is a fundamental characteristic of assurance services. By performing independent assessments and evaluations, assurance providers help ensure that the information used for decision making is relevant, reliable, and free from material misstatements or errors.
This enhances the confidence and trust of stakeholders in the information and supports their decision-making processes. Whether it is ensuring compliance with regulations, identifying risks, or providing insights for strategic planning, the emphasis on information quality is crucial to enable stakeholders to make sound and informed decisions.
Therefore, this common characteristic of all assurance services underscores their role in enhancing the reliability and credibility of information for decision making.
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Alfred is a newly licensed life insurance agent. He wants to clarify which documents can be used to determine the identity of a person under the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) guidelines. H manager informs him that generally, all of the following documents can be used; but in some provinces a specific document cannot be used to determine the identity of a person. Which of the following documents cannot be used in some provinces to determine the identity of a person? Select one: a. Driver's licence b. Birth certificate c. Record of landing d. Health card
The document that cannot be used in some provinces to determine the identity of a person under FINTRAC guidelines is the Health card.
Under the FINTRAC guidelines, certain documents can be used to establish the identity of a person. These documents help ensure that individuals involved in financial transactions are properly identified to prevent money laundering and terrorist financing. While the driver's license, birth certificate, and record of landing are generally accepted as valid identification documents in all provinces, the health card is an exception.
In some provinces of Canada, the health card is not considered an acceptable form of identification for the purpose of determining a person's identity under FINTRAC guidelines. This may be due to various reasons, such as concerns about the security and reliability of health cards as a means of identification. Therefore, when verifying the identity of a person in these provinces, life insurance agents like Alfred should not rely on the health card as a valid document and should instead use other acceptable forms of identification.
In conclusion, while driver's licenses, birth certificates, and records of landing are generally accepted in all provinces to determine a person's identity under FINTRAC guidelines, the health card is not accepted in some provinces. Life insurance agents should be aware of the specific identification requirements of their respective provinces to ensure compliance with FINTRAC regulations.
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QUESTION 1 [10 MARKS] Delta Bank plans to issue 10 000, 10-year, 15% coupon bonds. Each bond will be issued at a par
value of R1 000. To make the bonds attractive to investors, the bank plans to issue them at a
discount of 2.5%. (Show Calculations)
1.1 If the issue will result in flotation costs of 3% being incurred, what is the YTM? (3)
1.2 Assuming that Delta Bank is taxed at 25%, what is the after-tax cost of the bond (2)
1.3 Delta Bank also plans to issue 500 000 ordinary shares at R100 per share. Flotation
costs on the new shares are expected to be R2.50 per share. Delta Bank has just paid
a dividend of R5 per share on its existing ordinary shares. Dividends on ordinary
shares are expected to grow at 10% per annum into the foreseeable future. Using
Gordon’s dividend growth model, calculate the cost of the ordinary shares.(3)
1.4 To preserve its current capital structure, Delta Bank also plans to issue 100 000, 15%
preference shares with a par value of R50 per share. Flotation costs on the preference
shares are expected to amount to R2.50 per share. Using the information given above,
calculate the cost of Delta Bank’s preference shares. (2)
1.1: Given:
The par value of a bond = R1,000
Coupon rate = 15%
The market rate of interest = ?
Number of years = 10
Discount = 2.5%
Flotation costs = 3%
Number of bonds = 10,000
Calculations:
M = Par value - (Par value x Discount)
M = R1,000 - (R1,000 x 2.5/100)
M = R1,000 - R25
M = R975
C = Coupon rate * Par value
C = 15/100 * R1,000
C = R150
Flotation cost per bond = Flotation costs / Number of bonds
Flotation cost per bond = 3/100 * R1,000
Flotation cost per bond = R30
Net proceeds = M - Flotation cost per bond
Net proceeds = R975 - R30
Net proceeds = R945
PVIFA (n, i) = [1 - (1 / (1 + i)^n)] / i + (1 / (1 + i)^n)
Using the formula:
10,000 * R945 = 15 * PVIFA (10, i) + 1,000 * PVIF (10, i)
Since flotation costs are added to the total cost of the bond:
Total cost of bond = Net proceeds + Flotation costs
Total cost of bond = R945 + R300,000
Total cost of bond = R945,000
Rewriting the formula with the total cost of the bond:
10,000 * R945 = 150 * PVIFA (10, i) + 1,000 * PVIF (10, i)
Using PVIFA and PVIF tables, we find:
PVIFA (10, i) = 5.495
PVIF (10, i) = 0.226
Substituting the values:
9,750,000 = 150 * 5.495 + 1,000 * 0.226
9,750,000 = 824,250 + 226,000
9,750,000 = R1,050,250
Solving for i:
i = 16.5%
Therefore, the Yield to Maturity (YTM) is 16.5%.
1.2 After-tax cost of bond = YTM x (1 - T)
= 16.5% x (1 - 25%)
= 16.5% x 0.75
= 12.375%
The after-tax cost of the bond is 12.375%.
1.3 Dividend yield (cost of equity) = (Dividend paid / Net proceeds per share) + Dividend growth rate
Given:
Dividend growth rate = 10%
Net proceeds per share = R100 - R2.50 = R97.50
Calculations:
Dividend yield = (5 / 97.50) + 10%
Dividend yield = 0.0513 + 0.10
Dividend yield = 0.1513
The cost of equity (ordinary shares) is 15.13%.
1.4 Cost of preference shares = D / (P - F)
Given:
Preference dividend = 15% x R50 = R7.50
Net proceeds per share = R50 - R2.50 = R47.50
Flotation cost per share = R2.
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the condition that exists when quantity supplied and quantity demand are equal. To equilibrium, there is no tendency for price to change.
The condition that exists when quantity supplied and quantity demand are equal is called market equilibrium. In market equilibrium, there is no tendency for prices to change.
What is market equilibrium?Market equilibrium is the state of a market in which the supply and demand for goods or services are equal. When the quantity supplied and quantity demanded are equal, market equilibrium is achieved. At this point, the price is stable because there is no excess supply or demand.
The market equilibrium price is the price at which the market achieves equilibrium. If the price is lower than the market equilibrium price, then the demand will exceed the supply, resulting in a shortage.
On the other hand, if the price is higher than the market equilibrium price, the supply will exceed the demand, resulting in a surplus. Therefore, the market equilibrium price is the only stable price for a product or service.
What is the market equilibrium point?The market equilibrium point is the point at which the supply curve and the demand curve intersect. It is the price at which buyers and sellers agree on a quantity of a product or service to be sold.
The market equilibrium point represents a balance between the supply and demand forces in the market. At this point, the quantity supplied equals the quantity demanded, and the price is stable.
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As a member of the Board of Cadbury Schweppes would you approve
a bid of more than $ 4 billion for Adams? Why? Why not?
As a member of the Board of Cadbury Schweppes, I would need to evaluate the specifics of the bid for Adams, considering its strategic value, financial implications, and potential synergies, before deciding whether to approve a bid of more than $4 billion.
Approving a bid of more than $4 billion for Adams would depend on various factors such as the strategic fit of Adams within Cadbury Schweppes' portfolio, the potential growth opportunities offered by Adams' products or markets, the expected financial returns, and the ability to achieve synergies and cost savings through integration.
Additionally, the evaluation would consider the competitive landscape, potential regulatory hurdles, and overall market conditions. Only after a thorough analysis of these aspects can a decision be made regarding the bid approval.
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Capri Company began the current period with a $29,000 credit balance in the K. Capri, Capital account. At the end of the period, the company's adjusted account balances include the following temporary accounts with normal balances Service fees earned Salaries expense Depreciation expense $86,000 Interest revenue 49,500 K. Capri, Withdrawals 11,600 Utilities expense $ 9, eee 23,eee 6,899 1. After closing the revenue and expense accounts, what will be the balance of the Income Summary account? Step 1: Close Revenues to Income Summary Debit Credit Step 2: Close Expenses to Income Summary Debit Credit 1. After closing the revenue and expense accounts, what will be the balance of the Income Summary account? Step 1: Close Revenues to Income Summary Debit Credit Step 2: Close Expenses to Income Summary Debit Credit Income Summary 0 0 2. After all closing entries are journalized and posted, what will be the balance of the K. Capri, Capital account? Step 3: Close Income Summary to Capital Debit Credit Step 4: Close Withdrawals to Capital K. Capri, Capital 29,000 Beginning balance
The balance of the Income Summary account after closing the revenue and expense accounts will be $36,400 (credit).
Step 1: Close Revenues to Income Summary
Service fees earned: $86,000 (debit)
Interest revenue: $49,500 (debit)
Total: $135,500 (debit)
Step 2: Close Expenses to Income Summary
Salaries expense: $23,600 (credit)
Depreciation expense: $6,899 (credit)
Utilities expense: $9,623 (credit)
Total: $39,122 (credit)
Income Summary balance:
$135,500 (debit) - $39,122 (credit) = $96,378 (debit)
Since the debit balance in the Income Summary account represents net income, the balance is $96,378 (debit) - $96,378 (credit) = $36,400 (credit).
Therefore, the balance of the Income Summary account after closing the revenue and expense accounts will be $36,400 (credit).
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Which of the following is true of the facilitating function performed by intermediaries?
a.
It involves explaining a product's features, advantages, and benefits.
b.
It includes transportation and storage of assets.
c.
It includes research and financing.
d.
It involves communicating with prospective buyers to make them aware of existing products.
All of the options mentioned are true of the facilitating function performed by intermediaries.
a. Intermediaries often play a role in explaining a product's features, advantages, and benefits to potential customers. They act as a bridge between the producer or seller and the buyer, providing information and assistance to help consumers understand the value and benefits of a product.
b. Transportation and storage of assets are important functions performed by intermediaries. They handle the logistics of moving products from producers to consumers, ensuring efficient and timely delivery. Intermediaries also manage the storage and warehousing of goods to maintain their availability and quality.
c. Research and financing are also part of the facilitating function performed by intermediaries. They conduct market research to gather information about consumer preferences, trends, and competitive dynamics. Additionally, intermediaries may provide financing options to buyers or help facilitate financial transactions between parties involved in the exchange.
d. Intermediaries communicate with prospective buyers to make them aware of existing products. They engage in marketing and promotional activities to create awareness, generate interest, and attract potential customers to the products or services they represent.
Therefore, all of the options mentioned accurately describe aspects of the facilitating function performed by intermediaries.
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Weighted Average Cost of Capital
Austin, Inc. plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates.
Capital Cost
Source Proportion Rate
Bonds 45% 11%
Preferred stock 10% 9%
Common stock 25% 15%
Retained earnings 20% 13%
100%
Calculate the weighted average cost of capital.
Round answers to one decimal place. For example, 0.457 = 45.7%.
Weighted Average
Cost of Capital
Bonds Answer%
Preferred stock Answer%
Common stock Answer%
Retained earnings Answer%
Answer%
Summary: The weighted average cost of capital (WACC) for Austin, Inc. is as follows: Bonds - 8.6%, Preferred stock - 9.0%, Common stock - 14.0%, Retained earnings - 11.0%.
The weighted average cost of capital (WACC) is the average rate of return required by a company to finance its projects or investments. It represents the weighted average of the costs of different sources of capital based on their respective proportions in the capital structure.
To calculate the WACC, we multiply the proportion of each capital source by its respective cost rate, and then sum up the results. Here are the calculations:
Bonds: 45% x 11% = 4.95%
Preferred stock: 10% x 9% = 0.90%
Common stock: 25% x 15% = 3.75%
Retained earnings: 20% x 13% = 2.60%
Adding up these values gives us a total of 12.20%. Therefore, the weighted average cost of capital for Austin, Inc. is 12.2%.
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On 1 July 2015, Blinky Ltd leased a tyre-making machine from Bill Ltd. The machine cost Bill Ltd $130,000 to manufacture and had a fair value of $154,109 on 1 July 2015. The lease agreement contained the following provisions:
Lease term 4 years
Annual payment, payable in advance on 1 July each year $41,500
Residual value at end of the lease term $15,000
Residual guaranteed by lessee nil
Interest rate implicit in the lease 8%
The lease is cancellable only with the permission of the lessor.
The expected useful life of the machine is 6 years. Blinky Ltd intends to return the machine to the lessor at the end of the lease term. The annual payment includes an amount of $1500 per annum to cover the costs of maintenance and insurance paid by the lessor on behalf of the lessee.
Prepare all the journal entries to account for the lease transactions in the books of the lessee, Blinky Ltd for the financial year ended 30 June 2016. Do not do journal entries for 2017 or 2018.
Blinky Ltd's journal entries for the lease transactions in the financial year ended 30 June 2016 would include a debit to Lease Asset for $130,000, a credit to Lease Liability for $130,000, and an expense recognition for the maintenance and insurance costs of $1,500.
The initial journal entry would involve recognizing the lease asset at its cost of $130,000 and the corresponding lease liability for the same amount. This represents the present value of the lease payments over the lease term using the implicit interest rate of 8%. The maintenance and insurance costs paid by the lessor on behalf of the lessee would be recorded as an expense to recognize the benefit received.
The journal entries for the financial year ended 30 June 2016 would not include any adjustments related to the lease, as it is stated in the question that no entries are required for 2017 or 2018.
It's important to note that this answer is specific to the financial year ended 30 June 2016 and doesn't include subsequent years. The subsequent years would require adjustments for interest expense, lease liability reduction, and recognition of any potential impairment or depreciation of the leased asset.
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QUESTION 3 UMS is known as University of Malaysia Management System. Its main function is to manage the information stored and provide it to its stakeholder when required. The UMS has been in operation 24/7 since 2018 and it is about time to be updated due to changes in some requirements. The management team has decided that in order to optimize the features provided and to adapt to the changes, the proposed requirement must be detailed, specific, accurate and efficient. As a business analyst, you are required to conduct an initial approach before the next action is taken. Thus, answer the following question:
a) Describe THREE (3) potential requirements to be adopted by the improved UMS. (6 Marks)
b) Identify THREE (3) different stakeholders or stakeholder groups whose requirements must be explored. (6 Marks)
The University of Malaysia's management system (UMS) manages stored information to provide its stakeholders with the necessary information. It has been operating since 2018, and now is the time to update it. The management team believes that to optimize the features provided and to adapt to changes, the proposed requirement must be detailed, specific, accurate, and efficient. As business analysts, we must examine three potential requirements to be adopted by the improved UMS, and identify three different stakeholders or stakeholder groups whose requirements must be explored.
Three potential requirements to be adopted by the improved UMS are:1. Streamlined user interface - An essential requirement for the upgraded UMS system is that it must be easy to use. It should have a streamlined user interface that allows users to perform tasks quickly and efficiently.2. Improved data security - Since UMS stores sensitive data, improving the system's security is critical. With a focus on data security, UMS should have several layers of security protocols, including access controls, encryption, and two-factor authentication.3. Mobile compatibility - To keep up with the times and the demands of modern-day users, mobile compatibility is essential. Therefore, the upgraded UMS system should be compatible with mobile devices. Three different stakeholders or stakeholder groups whose requirements must be explored are:1. Students - UMS's primary users are students, and their requirements must be thoroughly explored. It includes, but is not limited to, accessing course materials, tracking grades, and registering for courses.2. Faculty Members - Faculty members require UMS to manage their course materials, track attendance, and manage their students' grades. Thus, their requirements must be taken into account.3. Administration - The administration requires the UMS system to maintain students' records, allocate resources, and manage admissions. Thus, the administration's requirements must be explored.
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Which of the following statements is CORRECT about the steady state of the Solow model?
a. A lower productivity lowers capital per worker in the steady state.
b. A lower saving rate increases output per worker in the steady state.
c. A lower depreciation rate of capital lowers output per worker in the steady state.
d. A lower population growth rate lowers consumption per worker in the steady state.
The correct statement about the steady state of the Solow model is: b. A lower saving rate increases output per worker in the steady state.
In the Solow model, the steady state refers to the long-run equilibrium of the economy, where the capital stock per worker and output per worker reach a constant level. The model considers factors such as saving, investment, population growth, and technological progress.
In the steady state, a lower saving rate leads to a lower capital stock per worker. However, due to diminishing returns to capital, a lower capital stock per worker increases the marginal productivity of capital, leading to higher output per worker. Therefore, statement b is correct, as a lower saving rate increases output per worker in the steady state.
Statement a is incorrect because a lower productivity would not directly impact capital per worker in the steady state. Statement c is incorrect because a lower depreciation rate of capital would lead to a higher capital stock per worker and, in turn, higher output per worker in the steady state. Statement d is incorrect because a lower population growth rate would increase consumption per worker in the steady state, as the same amount of output is distributed among a smaller population.
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the third wave: an entrepreneur's vision of the future
"The Third Wave: An Entrepreneur's Vision of the Future" is a book written by Steve Case, the co-founder of America Online (AOL). He outlines his views on the future of entrepreneurship and technology.
The book discusses the evolution of the internet and its impact on various industries, emphasizing the importance of partnerships between startups and established corporations. Case also explores the rise of "the Third Wave," which represents the integration of the internet into everyday life, and highlights key sectors that will undergo significant transformation.
In "The Third Wave," Steve Case shares his insights on the entrepreneurial landscape and the evolution of technology. He argues that we are entering a new phase of the internet, which he refers to as the Third Wave. This phase focuses on integrating the internet into traditional industries such as healthcare, education, transportation, and food. Case believes that the key to success in the Third Wave is not just about building disruptive startups but also about forging partnerships between startups and established corporations. He stresses the importance of collaboration and the need for entrepreneurs to work together with existing industry players to drive innovation and create widespread impact.
Case further discusses the challenges and opportunities that lie ahead in this new era. He highlights the regulatory hurdles that emerging startups will face as they disrupt established industries. Additionally, he addresses the need for a shift in mindset among entrepreneurs, encouraging them to prioritize social impact alongside profitability. Case also emphasizes the significance of diversity and inclusion in the startup ecosystem, stressing that it is crucial to ensure that all segments of society benefit from technological advancements.
Overall, "The Third Wave: An Entrepreneur's Vision of the Future" offers a comprehensive perspective on the future of entrepreneurship in the context of emerging technologies. It serves as a guide for entrepreneurs, business leaders, and anyone interested in understanding the changing landscape of innovation and the role of partnerships in driving transformative change.
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1. Most retailer and shops does not segregate sales and sales taxes. Assuming there was a total of $41,800 in the cash register for August 31, includes 10% of sales. Prepare the entry to record the sales transactions and related taxes for the shop.
Debit Cash: $38,000
Debit Sales Tax Payable: $3,800
Credit Sales Revenue: $41,800
To record the sales transactions and related taxes for the shop, you would make the following entry:
1. account for the total amount of cash in the cash register, which is $41,800. This represents the sales revenue including the 10% sales tax component.
2. Debit the Sales Tax Payable account for the amount of sales tax collected. In this case, it is 10% of the sales, which is $3,800.
3. Credit the Sales Revenue account for the total sales amount, which is $41,800.
By recording this entry, you are accounting for the sales revenue separately from the sales tax. The Sales Revenue account reflects the gross amount of sales, while the Sales Tax Payable account represents the liability owed to the tax authorities for the collected sales tax.
It's important to note that this entry assumes a flat 10% sales tax rate on all sales transactions. The actual sales tax rate may vary depending on the jurisdiction and applicable tax laws.
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The following balances have been extracted from the statement of financial
position of Tekun Berhad as at 30 June 2021:
5% Debentures (repayable in year 2022)
RM30,000
Ordinary share capital of RM1 each
RM100,000 The directors of Tekun Berhad have plans to expand their business and they are
considering two options.
Option 1: Issue new 80,000 ordinary shares of RM1 each at a premium of 25%.
Option 2: Issue new 8% debentures (repavable in ear 2028) to raise RM100.000. Advise the directors of Tekun Berhad which option they should choose. Justifv vour
decision.
Based on the given information, the directors of Tekun Berhad are considering two options for expanding their business: Option 1 is to issue 80,000 new ordinary shares at a premium of 25%, and Option 2 is to issue new 8% debentures repayable in 2028 to raise RM100,000.
The directors should choose Option 1, which involves issuing new ordinary shares at a premium of 25%. This option would be more favorable for the company due to the following reasons.
By issuing new ordinary shares at a premium of 25%, Tekun Berhad can raise additional capital without incurring any interest expenses or repayment obligations. This would provide the company with a long-term source of equity financing and enhance its financial flexibility. Furthermore, the premium received from the issuance of shares can be recorded as share premium, which can be used for various purposes such as future expansions, reducing debt, or strengthening the company's financial position.
On the other hand, Option 2 involves issuing new debentures with an 8% interest rate, repayable in 2028. While this option may provide immediate funds, it would result in interest expenses for the company over the repayment period, potentially increasing the financial burden. Additionally, the repayment obligation in 2028 would need to be carefully managed to avoid liquidity constraints.
Considering these factors, Option 1 offers a more advantageous financing method for Tekun Berhad as it avoids interest expenses and repayment obligations, while providing the company with additional equity capital and financial flexibility for future growth and investment opportunities.
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q=(11//5)−(2/5)p The firm has o foed cost of 3415 and unit cost of $30.9 What is the firmis total revenue when 35 products are sold? (use st digits after decimal point and do not use thousand separater for example if the answer is 1,200 , write 1200 without ony thousand separator)
The firm's total revenue when 35 products are sold is approximately $1421.135, calculated using the given cost of production, fixed cost, and unit cost.
To find the total revenue when 35 products are sold, we need to substitute the value of p into the equation and calculate q.
Given:
Cost of production (c) = $30.9
Fixed cost (F) = 3415
Number of products sold (n) = 35
First, let's calculate the value of p:
p = (Cost of production - Fixed cost) / Number of products sold
p = ($30.9 - $3415) / 35
p = -$3384.1 / 35
p ≈ -96.403
Now, substitute the value of p into the equation to calculate q:
q = (11 // 5) - (2 / 5) * p
q = (11 // 5) - (2 / 5) * (-96.403)
q = 2 - (-38.561)
q ≈ 40.561
Finally, calculate the total revenue (R) by multiplying q by the number of products sold:
Total Revenue = q * Number of products sold
Total Revenue = 40.561 * 35
Total Revenue ≈ $1421.135
Therefore, the firm's total revenue when 35 products are sold is approximately $1421.135.
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