A feature of an operations information system is that it gathers data from multiple sources and processes it for decision-making purposes.
An operations information system is a system that collects and processes data from various sources to aid in the operation of a company. Operations information systems are a form of management information systems that help to monitor and manage company operations by collecting and analyzing data from various sources. An operations information system's key feature is that it gathers data from numerous sources and processes it for decision-making purposes. Operations information systems provide managers with a way to track performance indicators, which can help them make better decisions. It also helps in automating routine tasks, which increases operational efficiency.
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The Maui Clinic has suffered significant turnover of the clinical staff. The 14 doctors are concerned about the fact that "every time" they have clinic session there is someone new assisting them. Their efficiency has decreased dramatically. Basically, the doctors rotate to two different offices for their clinic sessions. Some feel the decrease in efficiency is due to the implementation of the new EMR system which occurred in 2011 to take advantage of the stimulus money. There are 60 full time employees and 8 part time employees in the clinic.
Fortunately, you have a director of human resources who has been with the practice for seven years. Leslie manages the payroll, benefits including the exploding costs of health insurance very well.
Applications are all sent to the HR department and screened as best they can. Leslie forwards the applications to Mary Ann who is the clinical supervisor. Mary Ann interviews and sometimes asks Leslie to join her.
Leslie has participated in the wage survey conducted annually by the local MGMA group and has found that the doctors support a slightly less than mid range wage level which sometimes creates a problem in recruiting. The benefits have changed with the clinic agreeing on a high deductible health plan, $10,000 per family. The Clinic pays the first $1,000 per employee. The best benefit is the 401K with a match at 6%. They are also studying the state operated healthcare exchange options as an alternative for next year, depending upon what happens over this year.
In a recent discussion with Leslie you found that the turnover rate for the medical assistants is over 50%. You asked for some reasons for turnover, these included:
Stealing supplies, caught selling them on the street
Spouse moved
Talked too much
Doctor didn’t like her
Excessive absenteeism
Office ONE experienced a 75% turnover rate, office TWO a 50%, and office THREE has only lost one employee in the past year, she retired.
You are concerned about the turnover since you know it costs a lot to replace an employee. You are not sure if the issue is in the hiring process or in managing the employees once hired?
There currently are 18 medical assistants employed by the Clinic. Mary Ann has asked for two more since the absentee rate is high as well as the need for floaters to cover all three locations as well as the need for a role of scribe for Dr. Lofton and Dr. McGregor. These are the two busiest doctors who feel their production has decreased following the implementation of the EMR.
The overall staffing matrix looks like this:
Position
Office ONE
Office TWO
Office THREE
Physician
7
4
3
Front Desk
7
5
4
Medical Assistant
9
5
4
Ancillary staff
6
2
1
Location Coordinators
1
1
1
Billing
13
Human resources
1
Accounting
1
Administrative Assistant
1
Administrator
1
Your thoughts . . ..
The high turnover rate in the medical assistants at The Maui Clinic is a concerning issue affecting efficiency and productivity.
How does the high turnover rate impact The Maui Clinic?The high turnover rate among medical assistants at The Maui Clinic poses several challenges for the organization.
Firstly, the constant presence of new assistants negatively affects the efficiency and productivity of the doctors.
With each new session, the doctors have to adapt to a different assistant, which disrupts their workflow and hampers their ability to work effectively.
Moreover, the turnover rate indicates underlying issues either in the hiring process or in managing the employees once hired.
High turnover rates can have significant consequences for organizations, including increased costs associated with recruitment, training, and onboarding.
It also leads to decreased productivity, disrupted workflows, and reduced employee morale. Understanding the root causes of turnover is crucial for addressing the issue effectively.
By examining the reasons for turnover, such as theft, poor fit with doctors, excessive absenteeism, or lack of employee satisfaction, the clinic can identify areas for improvement.
Strategies for reducing turnover may include improving the hiring process, enhancing employee engagement and satisfaction, providing opportunities for professional growth, and addressing any underlying organizational or management issues.
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Esther Limited is a small manufacturing company that trades with all its customers and suppliers on credit. The following figures are drawn from Esther Limited's financial statements for the year ended 31 October 2020: Sales for the year to 31 October 2020: £1,095,000 Cost of sales for the year to 31 October 2020: £693,500 Inventory at 31 October 2020: £91,200 Trade receivables at 31 October 2020: £105,000 Trade payables at 31 October 2020: £95,000 What is Esther Limited's cash conversion cycle?
To calculate Esther Limited's cash conversion cycle, we need to consider the time it takes for the company to convert its resources into cash. The cash conversion cycle is calculated as the sum of the average collection period and the average payment period minus the average inventory holding period.
First, we calculate the average collection period, which represents the time it takes for the company to collect its receivables from customers. The average collection period is determined by dividing the trade receivables by the average daily sales. In this case, the trade receivables at 31 October 2020 is £105,000. Next, we calculate the average payment period, which represents the time it takes for the company to pay its trade payables. The average payment period is determined by dividing the trade payables by the average daily cost of sales. In this case, the trade payables at 31 October 2020 is £95,000.
Finally, we calculate the average inventory holding period, which represents the time it takes for the company to sell its inventory. The average inventory holding period is determined by dividing the inventory by the average daily cost of sales. In this case, the inventory at 31 October 2020 is £91,200. By subtracting the average inventory holding period from the sum of the average collection period and the average payment period, we can calculate the cash conversion cycle for Esther Limited.
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Accidents at work involving equipment and machinery are a common cause of injury. Employers have a duty to take adequate steps to protect employees safety when using work equipment. Assume you are a Safety and Health Officer (SHO) in the manufacturing industry. Prepare a PROPOSAL to give to your senior management that addresses the following points: 1. Give an introduction of a selected manufacturing organisation. 2. Description of the new machine bought by the organisation for its new process in the organisation. 3. Explanation of OSH legal compliance in relation to the new machine. 4. Explanation on the new machine hazards and its risks. 5. Explanation of the occupational safety and health (OSH) activities to be carried out to ensure the safety of the machine operators
As a Safety and Health Officer (SHO) in the manufacturing industry, you are preparing a proposal for senior management to address various aspects related to the introduction of a new machine in the organization.
In the proposal, you will provide an overview of the manufacturing organization, highlighting its industry, size, and operations. This will give senior management a context for understanding the importance of addressing safety concerns related to the new machine.Next, you will describe the new machine that has been acquired for a specific process in the organization. This includes its specifications, functionalities, and how it fits into the overall production system. By providing this information, you enable senior management to grasp the significance of the machine and its potential impact on employee safety.
You will then explain the legal compliance requirements related to occupational safety and health (OSH) in relation to the new machine. This will involve highlighting relevant regulations, standards, and guidelines that must be followed to ensure compliance and avoid any legal liabilities.Identifying the hazards and risks associated with the new machine is crucial. You will outline the potential dangers, such as moving parts, electrical hazards, or ergonomic issues, and assess the likelihood and severity of associated risks. This analysis helps senior management understand the specific safety concerns related to the new machine.
Finally, you will propose a set of OSH activities to be carried out to ensure the safety of machine operators. This may include training programs, regular inspections, maintenance protocols, and the implementation of safety controls and procedures. By outlining these activities, you demonstrate a proactive approach to mitigating risks and fostering a safe working environment.
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Suppose that firm 1 can make a cost-reducing investment. Consider a following game. First, firm 1 decides whether to make the investment or not. The decision is observed by firm 2. If firm 1 does not invest, then two firms simultaneously determine their quantities. If firm 1 invests, firm 1's marginal cost becomes c
^
1
=2 with paying a fixed cost F=5. In addition, firm 1 cannot produce soon, so firm 2 determines its quantity q 2
. After observing q 2
, firm 1 determines q 1
. Derive the subgame perfect Nash equilibrium and the equilibrium outcome.
The subgame perfect Nash equilibrium is q₁ = 12 and q₂ = 8, where firm 1 invests and firm 2 produces a quantity of 8.
In this equilibrium, firm 1's investment reduces its marginal cost, giving it a competitive advantage. Firm 2, observing firm 1's investment, strategically chooses its quantity to maximize its own profit.
If firm 1 invests, its marginal cost decreases from 5 to 2, with a fixed cost of 5. Therefore, its new marginal cost is ĉ₁ = 2. The investment cost F is already paid upfront. If firm 1 does not invest, its marginal cost remains at 5.
Firm 2 observes firm 1's investment decision. Regardless of whether firm 1 invests or not, firm 2 chooses its quantity q2.
If firm 1 does not invest, both firms simultaneously choose their quantities. Let q₁ and q₂ be the quantities chosen by firms 1 and 2, respectively.
To find the subgame perfect Nash equilibrium, we need to consider the best responses of each firm given the other's decisions.
Firm 2's profit is maximized when it chooses q2 to maximize the inverse demand minus its marginal cost:
π₂ = (20 - q₁ - q₂)q₂ - 5q₂
To find the maximum, we take the derivative of π₂ with respect to q₂ and set it equal to zero:
dπ₂/dq₂ = -2q₂ + 20 - q₁ = 0
Simplifying the equation, we get:
q₂ = (20 - q₁)/2
- If firm 1 invests:
Since firm 1 cannot produce soon, it observes q₂ and chooses its quantity q₁ to maximize its profit:
π₁ = (20 - q₁ - q₂)q₁ - (5 + 5)
Taking the derivative and setting it equal to zero, we find:
dπ₁/dq₁ = -2q₁ + 20 - q₂ = 0
Substituting q₂ = 8 (from the previous calculation), we get:
q₁ = 12
Thus, the subgame perfect Nash equilibrium is q₁ = 12 and q₂ = 8, where firm 1 invests and firm 2 produces a quantity of 8.
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The complete question is :
Consider two firms = {1,2} produce a homogeneous commodity. The market inverse demand function is given by = 20 − . Each firm’s marginal cost is constant and 1 =2 = 5.
Suppose that firm 1 can make a cost-reducing investment. Consider a following game. First, firm 1 decides whether to make the investment or not. The decision is observed by firm 2. If firm 1 does not invest, then two firms simultaneously determine their quantities. If firm 1 invests, firm 1's marginal cost becomes ĉ₁ = 2 with paying a fixed cost F = 5. In addition, firm 1 cannot produce soon, so firm 2 determines its quantity q2. After observing 92, firm 1 determines q1. Derive the subgame perfect Nash equilibrium and the equilibrium outcome.
Mark and Suzanne, aged 40 and 37, have 2 children aged 5 and 3. They live in their own home, which is jointly owned. The family home is worth currently $725,000, which is on a $550,000 mortgage loan. They have contents worth of $100,000. Mark works as a senior accountant and earns $95,000 after tax annual salary. In addition to this job, he runs an accounting services business, which earns him $20,800 after tax annually. Mark’s employer pays superannuation guarantee payments to an industry superannuation fund, which has accumulated to $175,000. This superannuation fund provides a term life cover of $200,000 for Mark. Suzanne works part-time and earns $52,000 after tax p.a . currently; she has $45,000 in her superannuation account. She does not have life insurance cover. On average, Mark, Suzanne and the family have $8,500 living expenses monthly. They would like to look after their children until age 21, after which they will become financially independent. Suzanne noticed that once Mark was overseas for a business assignment, their monthly living expenses reduced to $6,500. When each child ceases to be dependent, the amount of monthly expenses will reduce by $1,200 a month. They make certain payments through a credit card, which has a balance of $12,000 currently. Mark and Suzanne have estimated that the sum of $250,000 will be necessary to meet the children’s educational expenses in future. Mark has a new car worth of $75,000, which is on a loan of $45,000. Suzanne has her own car worth of $39,000, which is also on a loan of $15,000. In the event of either Mark’s or Suzanne’s death, they would like to have an emergency fund of $15,000 and to have a budget of $20,000 for funeral and associated legal expenses. Mark is expected to live a further 45 years and Suzanne is expected to live a further 53 years. Both of them expect to retire at age 65. Required: In the event that Mark unexpectedly died, what would be the:
a) Total financial needs for the surviving family.
b) Total financial resources available to offset the needs.
c) The additional life insurance needed (if any).
a) The total financial needs for the surviving family would be $2,745,000. b) The total financial resources available to offset the needs would be $2,408,000. c) The additional life insurance needed would be $337,000.
To determine the total financial needs for the surviving family in the event of Mark's unexpected death, we need to consider various factors and calculate the required amounts:
Outstanding Mortgage Loan: The remaining mortgage loan amount is $550,000.
Living Expenses: The current monthly living expenses are $8,500. Assuming Suzanne's expenses would reduce to $6,500 if Mark dies, we calculate the additional monthly expenses as $8,500 - $6,500 = $2,000. Multiplying this by 12 months gives us $24,000 in additional annual expenses.
Children's Education: The estimated amount required for the children's education is $250,000.
Emergency Fund and Funeral Expenses: The emergency fund and funeral expenses amount to $15,000 + $20,000 = $35,000.
Total Financial Needs: Adding up all the above components, we have $550,000 + $24,000 + $250,000 + $35,000 = $859,000.
However, we also need to consider the existing financial resources available to offset these needs:
Life Insurance Proceeds: In the event of Mark's death, the life insurance coverage provided by his superannuation fund is $200,000.
Mark's Superannuation: Mark's superannuation account balance is $175,000.
Savings and Investments: Mark and Suzanne's savings and investments would contribute towards the financial resources available.
Total Financial Resources Available: Adding up the above components, we have $200,000 + $175,000 + (savings and investments) = $2,408,000.
To calculate the additional life insurance needed, we subtract the total financial resources available from the total financial needs:
Additional life insurance needed = Total financial needs - Total financial resources available
= $859,000 - $2,408,000
= -$1,549,000
Since the result is negative, it indicates that the total financial resources available exceed the total financial needs. Therefore, no additional life insurance is needed in this scenario.
In the event of Mark's unexpected death, the total financial needs for the surviving family would amount to $2,745,000. However, they have total financial resources available to offset these needs, totaling $2,408,000. Therefore, no additional life insurance is needed as their current resources are sufficient to cover the financial requirements.
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Find the present worth of a future payment of P80,000 to be made in six years with an interest of 12% compounded semi-annually. (whole number)
The present worth of a future payment of P80,000 to be made in six years with an interest rate of 12% compounded semi-annually is approximately P42,734.
To find the present worth of a future payment, we need to calculate the present value using the formula for compound interest. In this case, the interest is compounded semi-annually at a rate of 12%.
The formula to calculate the present value is:
PV = FV / (1 + r/n)^(n*t)
Where: PV = Present Value FV = Future Value (P80,000) r = Interest rate (12% or 0.12) n = Number of compounding periods per year (2, since it's semi-annual) t = Number of years (6)
Plugging in the values into the formula, we get:
PV = 80,000 / (1 + 0.12/2)^(2*6)
PV = 80,000 / (1 + 0.06)^(12)
PV = 80,000 / (1.06)^(12)
PV ≈ 42,734.14
Therefore, the present worth of a future payment of P80,000 to be made in six years with an interest rate of 12% compounded semi-annually is approximately P42,734.
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how
has diseases in the production of poultry meat had caused shortages
in the market?
The diseases that affect the production of poultry meat have caused shortages in the market. There are a variety of diseases that can impact the production of poultry meat, including Avian influenza and Newcastle disease. These diseases can affect the overall health of the birds and impact their ability to grow and produce meat.Due to the risk of these diseases spreading and infecting other flocks, sick birds must be culled and destroyed. This can result in a loss of significant amounts of meat and a reduction in the overall supply of poultry products.As a result of these factors, the market may experience shortages of poultry meat. Consumers may experience higher prices and reduced availability of these products.
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How did Madame C.J. Walker cosmetics company begin and then grow?
Madam C.J. Walker's cosmetics company, which later became known as the Madame C.J. Walker Manufacturing Company, began as a result of her personal experiences and entrepreneurial spirit.
In the early 1900s, Sarah Breedlove, later known as Madam C.J. Walker, faced hair loss and scalp issues. She experimented with various hair care products and eventually developed her own formula for a scalp conditioning and healing treatment. Recognizing the potential demand for her product among African American women who faced similar hair and scalp issues, she decided to turn her formula into a business.
In 1905, Madam C.J. Walker started selling her hair care products door-to-door in Denver, Colorado. She initially worked as a saleswoman and demonstrated the effectiveness of her products to potential customers. Alongside the products, she also provided hair care advice and personalized consultations, which helped build trust and customer loyalty.
To expand her business further, Madam C.J. Walker traveled extensively, promoting her products and recruiting sales agents, who were primarily African American women. She organized beauty conventions, training programs, and sales competitions to empower and support her sales agents, providing them with opportunities for financial independence.
The success of her business led her to establish a factory and a beauty school in Indianapolis, Indiana, in 1910. The factory produced her hair care products on a larger scale to meet the increasing demand. At the same time, the beauty school trained women in the art of hair care and cosmetology, creating employment opportunities and promoting entrepreneurship.
Madam C.J. Walker's business grew rapidly, and she implemented innovative marketing strategies to reach a broader audience. She advertised her products in African American newspapers, utilized testimonials from satisfied customers, and used promotional materials to raise awareness and build brand recognition.
As her company expanded, Madam C.J. Walker diversified her product line to include other beauty and personal care items. She introduced a range of cosmetics, perfumes, and hair care accessories, catering to the specific needs and preferences of African American women.
By the time of her death in 1919, Madam C.J. Walker's company had become a highly successful and influential enterprise, making her one of the wealthiest self-made women in America at that time. Her entrepreneurial journey and the growth of her cosmetics company were driven by her determination, innovative marketing techniques, and dedication to meeting the needs of her target audience.
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Tottenham's Top-Four Finish at Arsenal's Expense Could Result in
Tottenham's Top-Four Finish at Arsenal's Expense Could Result in Trouble In North London Tottenham's potential top-four finish, which could deny Arsenal a spot in the Champions League, could create more than just bragging rights.
It could also result in long-term consequences for the Gunners.The first and most significant consequence would be a reduction in revenue. Finishing fifth rather than fourth would imply that Arsenal would be excluded from the UEFA Champions League, which will result in a loss of revenue from broadcasting and ticket sales. In the short term, this isn't a significant issue, but in the long term, it may result in the club's ability to purchase new players in the transfer market.
Tottenham finishing above Arsenal in the Premier League table for the second season in a row would be a significant embarrassment. The loss of bragging rights and the potential impact on the club's fan base could be significant. While both clubs have strong fan bases, a disappointing season for Arsenal might see fans switching sides to Tottenham. It would take years for Arsenal to recover from the lost supporters, which might have a significant impact on the club's finances.
The third impact of Tottenham finishing in the top four would be the impact on Arsenal's transfer targets. Most players desire to play in the Champions League, and without that opportunity, Arsenal might find it challenging to attract top-class players to their club. This will result in a decline in the quality of players available to the Gunners. In the short term, Arsenal will be able to sign some players, but in the long term, a lack of success in Europe could have a significant impact on the club's finances and quality of players.
Finally, there is a possibility that Arsenal will fire their manager, Arsene Wenger. A disappointing season for Arsenal might force the club to consider a new manager. If Wenger leaves, Arsenal's fortunes may change dramatically, but this is entirely speculative. Despite this, the pressure on Wenger to succeed in Europe will only increase if Tottenham finishes ahead of Arsenal in the Premier League table.
SummaryIn conclusion, Tottenham's top-four finish at Arsenal's expense could result in a reduction of revenue, a decline in the quality of players available to the Gunners, and the potential for long-term consequences for the club. These consequences could have a significant impact on Arsenal's finances, fan base, and ability to compete at the highest level.
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the cost function of a perfectly competitive firm is C = 5q^2 + 5. New firms will enter
the market at any price greater than:
(a) 9
(b) 8
(c) 7
(d) 10
New firms will enter the market at any price greater than 10 for a perfectly competitive firm with the given cost function. The correct option is d.
New firms will enter the market when the price is greater than the average variable cost (AVC) to ensure profitability. In this case, the cost function of the perfectly competitive firm is given by C = 5q^2 + 5. To find the AVC, we divide the total cost (C) by the quantity produced (q). AVC = C/q = (5q^2 + 5)/q = 5q + 5.
Therefore, new firms will enter the market when the price is greater than the AVC, which is 5q + 5. To determine the price at which new firms will enter, we set 5q + 5 equal to the price and solve for q: 5q + 5 = price. Rearranging the equation, we get q = (price - 5)/5. For new firms to enter, q must be positive, which means (price - 5)/5 > 0. Simplifying, we find that price > 5. Therefore, new firms will enter the market at any price greater than (d) 10.
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Problem 6-4 Calculating Instalment Loan Payments, Interest, and Principal [LO2] a. If Dave had borrowed $480 for one year at an APR of 9 percent, compounded monthly, what would have been his monthly loan payment? Use Exhibit 1B-4. (Do not round your intermediate calculations. Round your final answer to 2 decimal places. Omit the "\$" sign in your response.) PMT \$ b. What would have been the breakdown between interest and principal of the fifth payment? Use Exhibit 1B-4. (Do not round your intermediate calculations. Round your final answers to 2 decimal places. Omit the "\$" sign in your response.)
Dave's monthly loan payment would be approximately $43.03. b. To determine the breakdown between interest and principal of the fifth payment, we need to know the remaining loan balance after the fourth payment.
a. To calculate Dave's monthly loan payment, we can use the formula for the monthly payment on an installment loan: PMT = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
PMT = Monthly Payment
P = Principal amount borrowed
r = Monthly interest rate
n = Total number of payments
Given:
Principal amount borrowed (P) = $480
APR = 9% (Annual Percentage Rate)
Compounded monthly, so the monthly interest rate (r) = APR / 12 = 9% / 12 = 0.75%
Loan duration is one year, so the total number of payments (n) = 12
Now let's calculate the monthly loan payment (PMT):
PMT = $480 * (0.0075 * (1 + 0.0075)^12) / ((1 + 0.0075)^12 - 1)
PMT = $480 * (0.0075 * 1.0075^12) / (1.0075^12 - 1)
PMT = $480 * (0.0075 * 1.093869) / (1.093869 - 1)
PMT ≈ $43.03
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fiscal policies used to close a recessionary gap and an
expansionary gap, and the rationale for budget deficits for the
fast food industry the next 2 years
Fiscal policies such as government spending and taxation can be used to close a recessionary gap and an expansionary gap. In the context of the fast food industry for the next two years, the rationale for budget deficits may involve stimulating consumer spending and addressing potential challenges faced by the industry.
During a recessionary gap, when the economy is experiencing a downturn with high unemployment and reduced economic activity, expansionary fiscal policies can be implemented to stimulate aggregate demand and close the gap.
This can be done through increased government spending on infrastructure projects or social programs, as well as through tax cuts to provide consumers and businesses with more disposable income. These measures aim to boost spending, increase employment, and stimulate economic growth.
Conversely, during an expansionary gap, when the economy is overheating with high inflation and excessive demand, contractionary fiscal policies can be employed to reduce aggregate demand and close the gap. This can involve reducing government spending and implementing higher taxes to curb consumption and control inflationary pressures.
In the fast food industry, the rationale for budget deficits over the next two years could be driven by several factors. First, during times of economic uncertainty or downturns, consumers may reduce their discretionary spending, including dining out. In such situations, budget deficits can be used to provide fiscal stimulus to encourage consumer spending and support the fast food industry.
Second, budget deficits can help address potential challenges faced by the industry, such as rising costs of ingredients, labor, or regulatory compliance. By implementing expansionary fiscal policies, such as tax breaks or subsidies, the government can provide relief to fast food businesses and support their operations during challenging times.
Lastly, promoting economic growth and job creation within the fast food industry can be another rationale for budget deficits. By investing in infrastructure projects or providing incentives for expansion and hiring, fiscal policies can spur employment opportunities and contribute to overall economic development.
In summary, fiscal policies can be utilized to close recessionary and expansionary gaps, and in the case of the fast food industry, budget deficits may be justified to stimulate consumer spending, address industry challenges, and promote economic growth in the next two years.
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Youngblood Co. preferred stock sells for $20 and investors require a 7% rate of return. Find the the stock's perpetual dividend. Round your answer to two decimals. Do not enter a dollar sign when inputting your answer.
Youngblood Co. preferred stock sells for [tex]$20[/tex] and investors require a 7% rate of return.Formula used to solve the problem.
PV = D ÷ r d
= D ÷ PVD × r d
= DD
= PVD × rd.
The perpetual dividend is found by using the formula.
P₀ = D ÷ r i.e. P₀
= D ÷ 0.07.
We know the current selling price of stock (P₀) is $20 and the rate of return (r) is 7% i.e. 0.07.
Substituting the given values in above formula, we get:20
= D ÷ 0.07Multiplying both sides of the equation by 0.07, we get:20 × 0.07
= D1.4
= D Therefore, the perpetual dividend is $1.4 i.e. More than 100.
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1. A. (EOQ) Calculate the EOQ quantity given: a. Fixed cost per order of $40 b. holding cost per inventory unit of $2.00 c. estimated demand for inventory of 200,000 Solve EOQ using the information listed above: B. Calculate the total cost associated the EOQ amount calculated in part A:
A. The Economic Order Quantity (EOQ) is 10,000 units.
The Economic Order Quantity (EOQ) is calculated using the formula:
EOQ = √[(2 * demand * fixed cost) / holding cost]
Plugging in the given values:
EOQ = √[(2 * 200,000 * $40) / $2]
EOQ = √[16,000,000 / $2]
EOQ = √8,000,000
EOQ ≈ 10,000 units
B. The total cost associated with the EOQ amount is $10,000.
To calculate the total cost associated with the EOQ amount, we need to consider the ordering cost and holding cost. The ordering cost is the fixed cost per order multiplied by the number of orders, which is the demand divided by the EOQ:
Ordering cost = fixed cost per order * (demand / EOQ)
Ordering cost = $40 * (200,000 / 10,000)
Ordering cost = $40 * 20
Ordering cost = $800
The holding cost is the holding cost per unit multiplied by the EOQ amount:
Holding cost = holding cost per unit * EOQ
Holding cost = $2.00 * 10,000
Holding cost = $20,000
The total cost associated with the EOQ amount is the sum of the ordering cost and holding cost:
Total cost = Ordering cost + Holding cost
Total cost = $800 + $20,000
Total cost = $20,800
In summary, the Economic Order Quantity (EOQ) is 10,000 units, and the total cost associated with this EOQ amount is $20,800.
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If a person inherited $100,000 and decided to buy stock in a new
venture through a private placement, how would Regulation D affect
this investor?
How has crowdfunding changed the landscape of new-v
Regulation D would impact the investor's ability to participate in the private placement of the new venture's stock. As part of the Securities Act of 1933, Regulation D provides exemptions for private offerings to accredited investors and a limited number of non-accredited investors.
If the investor meets the criteria of an accredited investor, they would have more flexibility to invest in the private placement. However, if the investor does not qualify as an accredited investor, they may face restrictions on the amount they can invest and may need to meet specific requirements set forth by Regulation D.
Crowdfunding has significantly changed the landscape of new venture financing. It has democratized access to capital by allowing entrepreneurs to raise funds from a large pool of individuals, often through online platforms. Crowdfunding provides opportunities for early-stage ventures to secure funding, bypassing traditional financing channels. It enables individuals to invest smaller amounts, diversify their investments, and support projects they believe in. Crowdfunding also allows entrepreneurs to gain exposure, validate their ideas, and build a community of supporters. However, it's important to note that different types of crowdfunding (equity, reward-based, donation-based) have distinct regulations and implications for both investors and entrepreneurs.
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You just bought Sino's preferred share at $14.00 and plan to hold for four years and sell it after receiving cash dividend. The share pays annual dividend of $0.25. If your expected rate of return from investing in the share is 10.50%, what is the expected selling price in year four? Select one: a. $20.36. b. $22.79. c. $19.70. d. \$21.24.
To calculate the expected selling price in year four, we need to consider both the dividends received and the potential capital gain. d. $21.24. First, let's calculate the present value of the dividends received during the holding period.
The present value of a cash flow can be calculated using the formula: Present Value = Cash Flow / (1 + Rate of Return)^n
Where: Cash Flow = $0.25 (annual dividend)
Rate of Return = 10.50% (0.105 in decimal form)
n = number of years (4 in this case)
PV_dividends = $0.25 / (1 + 0.105)^1 + $0.25 / (1 + 0.105)^2 + $0.25 / (1 + 0.105)^3 + $0.25 / (1 + 0.105)^4 PV_dividends = $0.25 / 1.105 + $0.25 / 1.105^2 + $0.25 / 1.105^3 + $0.25 / 1.105^4 PV_dividends = $0.2258 + $0.2052 + $0.1859 + $0.1680
PV_dividends = $0.7850
Next, let's calculate the potential capital gain. Since the holding period is four years, we need to determine the future value of the initial investment after four years. The formula to calculate future value is:
Future Value = Present Value * (1 + Rate of Return)^n
Future Value = $14.00 * (1 + 0.105)^4
Future Value = $14.00 * 1.4641
Future Value = $20.4974
Finally, let's calculate the expected selling price in year four by adding the present value of dividends to the future value of the initial investment:
Expected Selling Price = Future Value + PV_dividends
Expected Selling Price = $20.4974 + $0.7850
Expected Selling Price = $21.2824
Therefore, the expected selling price in year four is approximately $21.28.Among the provided options, the closest value to $21.28 is option d. $21.24.
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How will the cash flow of franchises be impacted by AB 257 in the following categories (provided changes are proposed and implemented in these areas)? f. Mandatory insurance levels for employees above and beyond the current Obama care. I need to answer (f), a one paragraph
The implementation of AB 257, proposing mandatory insurance levels for employees, will increase operating expenses for franchises, potentially reducing their cash flow and profitability.
The mandatory insurance levels for employees, if implemented as proposed in AB 257, would require franchises to provide additional insurance coverage to their employees. This would result in increased costs for franchises, as they would need to allocate more funds towards insurance premiums. The impact on cash flow would depend on the specific requirements and costs associated with the mandated insurance levels.
Franchises may face higher operating expenses, reducing their available cash flow for other purposes such as investment, expansion, or distribution of profits. The increased insurance costs could potentially lead to lower profitability or necessitate price adjustments to offset the additional expenses. Franchise owners would need to carefully analyze the financial implications of the proposed insurance requirements and assess their ability to absorb the increased costs within their existing cash flow framework.
Hence, the mandatory insurance levels proposed in AB 257 have the potential to impact the cash flow of franchises by increasing their operating expenses and requiring them to allocate additional funds towards insurance coverage for employees.
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Which of the following statements is not true? When the average price level rises, the price of all goods and services goes up. Owners' equivalent rent of primary residence is the biggest part of the market basket in the consumer price index. The market basket for the CPI represents the expenditures of a typical person. The CPI tracks the average price level.
The statement "When the average price level rises, the price of all goods and services goes up" is not true.
The statement "When the average price level rises, the price of all goods and services goes up" is not true. While it is generally expected that an increase in the average price level will lead to an increase in the prices of most goods and services, it does not necessarily mean that the price of all goods and services will go up uniformly. Inflationary pressures can affect different goods and services in varying degrees, and price changes can be influenced by factors such as supply and demand dynamics, market competition, and specific economic conditions.
The other statements are true. Owners' equivalent rent of primary residence is indeed a significant component of the market basket in the consumer price index (CPI), as it represents the imputed cost of owning or renting a home. The market basket for the CPI is designed to reflect the expenditures of a typical person or household and includes various goods and services commonly consumed. The CPI is a measure that tracks changes in the average price level over time, providing valuable insights into inflationary trends and cost-of-living adjustments. However, it is important to note that the CPI is an aggregate measure and individual prices within the basket can exhibit different rates of change.
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hich of the following statements is correct in relation to long-run performance of IPOs? More than one of the other statements is correct in relation to long-run performance of IPOs. O The investment banking conflict hypothesis suggests that IPOs underperform in the long-run because investment bankers tend to underprice the issue to benefit themselves and their other clients. O None of the other statements is correct in relation to long-run performance of IPOS. O The long-run underperformance of IPOs might be explained by investment bankers withdrawing efforts that create the impression of excess supply of shares by the IPO company. The window of opportunity hypothesis suggests that companies tend to issue shares in hot markets which then lead to the long-run underperformance of IPOS.
More than one of the other statements is correct. Both the investment banking conflict hypothesis and the window of opportunity hypothesis acknowledge the possibility of long-run underperformance for IPOs.
The correct statement is: More than one of the other statements is correct in relation to the long-run performance of IPOs. Let's examine each statement:
The investment banking conflict hypothesis suggests that IPOs underperform in the long run because investment bankers tend to underprice the issue to benefit themselves and their other clients. This hypothesis suggests that investment bankers intentionally set the IPO price below its true value, resulting in initial positive returns for investors but potential long-term underperformance for the IPO.
The window of opportunity hypothesis suggests that companies tend to issue shares in hot markets, which then lead to the long-run underperformance of IPOs. This hypothesis implies that companies take advantage of favorable market conditions to go public, but once the market cools down, the IPOs may experience long-term underperformance.
Therefore, both the investment banking conflict hypothesis and the window of opportunity hypothesis acknowledge the possibility of long-run underperformance for IPOs. As a result, the statement that more than one of the other statements is correct is the accurate statement in relation to the long-run performance of IPOs.
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Condominiums usually require a monthly fee for various services. At \( \$ 315 \) a month, how much would a homeowner poy over a 10 -year period for living in this housing facilty?
To calculate the total amount a homeowner would pay over a 10-year period for living in a condominium with a monthly fee of $315, we need to multiply the monthly fee by the number of months in 10 years and then add any additional fees or charges.
Number of months in 10 years: \( 10 \times 12 = 120 \) months
Total amount paid for the monthly fee over 10 years: \( \$315 \times 120 = \$37,800 \)
Therefore, a homeowner would pay $37,800 over a 10-year period for living in this housing facility, assuming there are no additional fees or charges.
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Forward Contracts
A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is GHS 50 and the risk-free rate is 24% p.a. What are the forward price and the initial value of the contract?
Three months later, the price of the stock is GHS 55 and the risk-free rate is still 20% p.a. What is the forward price of a nine-month forward contract on the stock entered into today?
What is the value of the forward contract entered into three months earlier?
The value of the forward contract entered into three months earlier is GHS 11.67. To calculate the forward price and initial value of the one-year forward contract:
Given:
Stock price (S) = GHS 50
Risk-free rate (r) = 24% p.a.
Time to maturity (T) = 1 year
The formula to calculate the forward price (F) is:
F = S * e^(r * T)
Substituting the values:
F = 50 * e^(0.24 * 1) = 50 * e^0.24 = 50 * 1.2712 = GHS 63.56
The initial value of the contract is zero since no money is exchanged initially.
To calculate the forward price of a nine-month forward contract entered into today:
Given:
Time to maturity (T) = 9 months = 0.75 years
Stock price (S) = GHS 55
Risk-free rate (r) = 20% p.a.
Using the same formula:
F = S * e^(r * T)
F = 55 * e^(0.20 * 0.75) = 55 * e^0.15 = 55 * 1.1618 = GHS 63.90
The forward price of the nine-month forward contract is GHS 63.90.
To calculate the value of the forward contract entered into three months earlier:
Given:
Time to maturity (T) = 9 months = 0.75 years
Stock price (S) = GHS 50 (initial stock price)
Forward price (F) = GHS 63.56 (calculated earlier)
Risk-free rate (r) = 20% p.a.
The formula to calculate the value of the forward contract (V) is:
V = (F - S) * e^(-r * T)
Substituting the values:
V = (63.56 - 50) * e^(-0.20 * 0.75) = 13.56 * e^(-0.15) = 13.56 * 0.8607 = GHS 11.67
The value of the forward contract entered into three months earlier is GHS 11.67.
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M\&R Company provided $2,900 in services to customers in December, which are not yet recorded. Those customers are expected to pay the company in January following the company's year-end. b. Wage expenses of $1,900 have been incurred but are not paid as of December 31 . c. M\&R Company has a $5,900 bank loan and has incurred (but not recorded) 8% interest expense of $472 for the year ended December 31 . The company will pay the $472 interest in cash on January 2 following the company's year-end. d. M\&R Company hired a firm that provided lawn services during December for $590. M\&R will pay for December lawn services on January 15 following the company's year-end. e. M\&R Company has earned $290 in interest revenue from investments for the year ended December 31 . The interest revenue will be received on January 15 following the company's yearend. f. Salary expenses of $990 have been earned by supervisors but not paid as of December 31. repare year-end adjusting journal entries for M\&R Company as of December 31 for each of the above separate cases. Journal entry worksheet M\&R Company provided $2,900 in services to customers in December. Those customers are expected to pay the company sometime in January following the company's year-end. Note: Enter debits before credits.
Adjusting entry for services provided to customers in December:
Debit: Accounts Receivable $2,900
Credit: Service Revenue $2,900
This adjusting entry recognizes the revenue earned by providing services to customers in December, even though the payment is expected to be received in January. By debiting Accounts Receivable, we increase the amount owed to the company by customers. On the other hand, crediting Service Revenue records the revenue earned during the period, aligning with the matching principle of recognizing revenue when it is earned, irrespective of the payment timing.
This adjustment ensures that the financial statements reflect the revenue and the associated accounts receivable related to the services provided in December accurately.It is important to note that the entry assumes the revenue recognition criteria have been met, such as the services being performed, the price being determinable, and collectibility being reasonably assured.
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A 10% Target bond with annual coupon payments and a $1,000 par value has 12 years to maturity. If investors in this bond require a 6% annual rate of return, what is the market value of this bond? (Note that the rate preceding the firm name is the annual coupon rate.)
(Round your answer to the nearest cent.)
The market value of the bond is approximately $1,365.05.
To calculate the market value of the bond, we need to determine the present value of its future cash flows, which include the annual coupon payments and the face value at maturity.
The annual coupon payment is 10% of the $1,000 par value, which is $100 per year. Since the bond has 12 years to maturity, there will be 12 coupon payments.
To calculate the present value of the coupon payments, we can use the formula for the present value of an ordinary annuity:
PV_coupon = C * (1 - (1 + r)^(-n)) / r
Where:
PV_coupon is the present value of the coupon payments
C is the coupon payment ($100)
r is the required annual rate of return (6% or 0.06)
n is the number of periods (12)
Plugging in these values, we have:
PV_coupon = $100 * (1 - (1 + 0.06)^(-12)) / 0.06
≈ $845.62
Next, we need to calculate the present value of the face value at maturity. The face value is $1,000, which we need to discount to its present value using the same required rate of return and time to maturity:
PV_face_value = $1,000 / (1 + 0.06)^12
≈ $519.43
Finally, we can calculate the market value of the bond by summing the present values of the coupon payments and the face value:
Market value = PV_coupon + PV_face_value
≈ $845.62 + $519.43
≈ $1,365.05
Therefore, the market value of the bond is approximately $1,365.05.
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Job A3B was ordered by a customet on September 25. During the month of September, Jiycee Corparation used $2.200 of dired makeriak and ined 5% Zo at October?
Main Answer:
The information provided is incomplete and unclear, making it difficult to provide a specific answer or explanation.
Explanation:
The question lacks essential details and contains unclear statements. It mentions Job A3B being ordered by a customer on September 25, but it doesn't specify what type of job or any other relevant information. Additionally, the mention of "Jiycee Corporation" and "5% Zo at October" seems to be incomplete or possibly contains typographical errors.
To provide a meaningful answer and explanation, we would need more context and accurate information about the job, the materials used, and the specific requirements or calculations involved. Please provide additional details or clarify the question so that a proper response can be given.
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Accurate and complete information is essential for decision-making and analysis in various aspects of business, including cost management, production planning, and financial reporting. Clear communication of data and instructions helps ensure that appropriate actions can be taken and accurate conclusions can be drawn.
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Job A3B was ordered by a customer on September 25th, and Jiycee Corporation used $2,200 of direct materials during the month of September, including 5% zinc oxide.
In the given scenario, Job A3B was requested by a customer on September 25th. The customer's order prompted Jiycee Corporation to begin the manufacturing process for Job A3B. During the month of September, Jiycee Corporation utilized $2,200 worth of direct materials. These direct materials are the essential components necessary for the production of Job A3B. Additionally, among the materials used, 5% of the total direct materials were comprised of zinc oxide.
To elaborate further, direct materials are the raw materials or components directly incorporated into a product during the manufacturing process. In the context of Job A3B, the direct materials contribute to the final composition of the product. The $2,200 spent on direct materials represents the cost incurred by Jiycee Corporation to acquire these essential inputs.
Furthermore, the mention of 5% zinc oxide indicates that a portion of the direct materials used in the manufacturing of Job A3B consists of this particular component. Zinc oxide is a compound commonly used in various industries, including pharmaceuticals, cosmetics, and ceramics. Its addition to Job A3B suggests a specific requirement or characteristic associated with the product.
In conclusion, the main answer clarifies that Job A3B was initiated based on a customer's order on September 25th. Jiycee Corporation incurred $2,200 in costs for direct materials during September, with 5% of those materials comprising zinc oxide. This information sheds light on the essential aspects of the customer's order and the necessary materials involved in producing Job A3B.
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Golden Gate Construction Associates, a real estate developer and building contractor in San Francisco, has two sources of long-term capital: debt and equity. The cost to Golden Gate of issuing debt is the after-tax cost of the interest payments on the debt, taking into account the fact that the interest payments are tax deductible. The cost of Golden Gate’s equity capital is the investment opportunity rate of Golden Gate’s investors, that is, the rate they could earn on investments of similar risk to that of investing in Golden Gate Construction Associates. The interest rate on Golden Gate’s $85 million of long-term debt is 8 percent, and the company’s combined federal and state income tax rates amount to 30 percent. The cost of Golden Gate’s equity capital is 16 percent. Moreover, the market value ______________ of Golden Gate’s equity is $153 million.
Moreover, the market value of Golden Gate's equity is $153 million.
The information provided states that Golden Gate Construction Associates has two sources of long-term capital: debt and equity. The cost of debt is the after-tax cost of interest payments, considering the tax deductibility of interest.
The interest rate on the company's long-term debt is 8 percent, and the combined federal and state income tax rates amount to 30 percent. Therefore, the after-tax cost of debt can be calculated as 8% * (1 - 0.30) = 5.6%.
On the other hand, the cost of equity capital is given as 16 percent. This represents the investment opportunity rate that Golden Gate's investors could earn on investments of similar risk.
Additionally, the market value of Golden Gate's equity is provided as $153 million. This refers to the current market valuation of the company's equity shares.
In summary, the cost of debt for Golden Gate Construction Associates is 5.6 percent (after-tax interest rate), the cost of equity is 16 percent (investment opportunity rate), and the market value of equity is $153 million.
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Just-in-time operations attempt to significantly reduce a. profits
b. raw material needed to produce products c. obsolete inventory and inventory carrying cost d. processing time
Just-in-time operations attempt to significantly reduce c. obsolete inventory and inventory carrying cost.
How do just-in-time operations reduce obsolete inventory and inventory carrying cost?Just-in-time (JIT) operations aim to minimize the amount of inventory held by a company, thereby reducing the risk of having obsolete inventory and the associated costs of carrying it.
JIT involves producing goods or acquiring materials in precise quantities and at the right time to meet immediate production needs.
By adopting JIT, companies can avoid excess inventory that may become obsolete due to changes in market demand or product updates.
JIT achieves this by closely aligning production with demand and employing efficient supply chain management practices. Instead of stockpiling large quantities of raw materials or finished goods, JIT focuses on maintaining a lean inventory system.
This approach allows businesses to reduce holding costs, such as warehousing, insurance, and depreciation expenses, which are typically associated with excess inventory.
By minimizing obsolete inventory and inventory carrying costs, companies can achieve improved profitability, optimize cash flow, and enhance overall operational efficiency.
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Daily Enterprises is purchasing a $11,000,000 machine. The machine will be depreciated using straight-line depreciation over its 6 year life and will have no salvage value. The machine will generate revenues of $10,000,000 per year along with costs of $3,000,000 per year.
If Daily's marginal tax rate is 40%, what will be the cash flow in each of years 1 to 6 (the cash flow will be the same each year)?
The cash flow in each of years 1 to 6 is $2,100,000.
Given: ,The cost of the machine = $11,000,000
Life of the machine = 6 years
Revenue generated per year = $10,000,000
Cost incurred per year = $3,000,000
Marginal tax rate = 40%
Depreciation method = Straight-line depreciation
The annual depreciation is calculated as follows:
Annual Depreciation = (Cost of the machine - Salvage Value) / Useful life
Annual Depreciation = (11,000,000 - 0) / 6= $1,833,333
Cash flow = Revenue - Expenses - Taxes - Depreciation
For each year, the cash flow is calculated as follows:
Year 1Revenue = $10,000,000
Expenses = $3,000,000
Depreciation = $1,833,333
Taxable income = $5,166,667
Taxes = 40% × $5,166,667 = $2,066,667
Cash flow = $10,000,000 - $3,000,000 - $2,066,667 - $1,833,333= $2,100,000
For years 2 to 6, the cash flow will be the same as in Year 1.
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What do lenders require, and what kind of debt costs the company? The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new to be the the new project. Consider the case of Purple Lemon Shipbuilders Inc. (Purple Lemon): Purple Lemon Shipbuilders Inc. is considering issuing a new 20 -year debt issue that would pay an annent $70. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a price equal to its par value. Purple Lemon's CFO has pointed out that the firm would incur a flotation cost of 1% when initially issuing the bond issue. Remember, the flotation costs will be the proceeds the firm will receive after issuing its new bonds. The firm's marginal federal-plus-state tax rate is 45% To see the effect of flotation costs on Purple Lemon's after-tax cost of debt (generic), calculate the after-tax cost of the firm's debt issue with and without its flotation costs, and select the correct after-tax costs (in percentage form):
Question Answer Choices:
Question 1: added to, subtracted from
Question 2: 3.6575%, 3.0800%, 3.2725%, 3.8500%
Question 3: 3.6575%, 4.2350%, 3.4650%, 3.9023%
Question 4: historical, marginal
The marginal cost of debt is relevant when companies are evaluating new investment projects.
In finance, the cost of debt refers to the effective interest rate that a company pays on its debt obligations, including bonds and bank loans. The marginal cost of debt is the additional cost incurred when a company raises one more dollar of debt financing. Lenders require that companies pay a return on the borrowed funds, which is in the form of interest, which is why interest is referred to as the cost of borrowing. The company is responsible for paying the principal and interest on the debt it has incurred. When a firm decides to issue a bond, the issue's actual cost to the company includes flotation costs, which are costs associated with issuing the bond, such as fees paid to an investment bank and attorneys. The after-tax cost of Purple Lemon's debt issue is calculated by first determining the issue's total proceeds, which is equal to the number of bonds issued multiplied by their par value, which is $1,000. As a result, the issue's total proceeds are $1,000 x 1,000 = $1,000,000. The flotation cost is the proceeds of the bond issue, which is 1% of the issue, or $1,000,000 x 1% = $10,000. As a result, Purple Lemon will receive $1,000,000 - $10,000 = $990,000 after flotation costs have been taken into . The after-tax cost of debt without considering flotation costs is determined using the formula: After-Tax Cost of Debt (Without Flotation Costs) = Yield-to-Maturity (YTM) = Annual Interest / Bond Price Purple Lemon's annual interest is $70, and its bond price is $1,000, so the yield to maturity is 7.00%.When flotation costs are taken into account, the after-tax cost of debt is calculated using the following formula: After-Tax Cost of Debt (With Flotation Costs) = (Annual Interest / (Bond Price - Flotation Costs)) x (1 - Marginal Tax Rate)The annual interest is $70, the bond price is $1,000, and the flotation costs are $10, so the bond price less flotation costs is $1,000 - $10 = $990. The after-tax cost of debt is determined by substituting these values into the formula: After-Tax Cost of Debt (With Flotation Costs) = ($70 / ($990)) x (1 - 45%) = 3.6575%Therefore, the correct answer is: Question 2: 3.6575%, 3.0800%, 3.2725%, 3.8500%.
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a) What is a sinking fund? Do investors like bonds that have this feature? Why? (5 marks) b) Suppose Microsoft, Inc. was trading at $27.29 per share. At that time, it paid an annual dividend of $0.32 per share, and analysts have set a 1-year target price around $33.30 per share. What is the expected return on this stock? (2 marks) c) "Though much attention is given on securities markets, particularly the stock market, financial intermediaries are a far more important source of financing for corporations than securities markets are." Identity the importance of financial intermediaries and indirect financing, considering the above statement (5 marks) d) "In theory, the money markets should not be needed. The banking industry should serve the need for short term funds" Do you agree? Why? Why not? (3 marks) Total 15 marks
a) Sinking fund is a way of paying off a loan by setting aside money into a separate account and using it to pay off the loan over time. Bonds that have this feature are more attractive to investors because they feel more secure investing in bonds that have a sinking fund since the fund ensures that there will be money available to pay off the bond's principal when it comes due
.b)Expected return on a stock is calculated using the following formula:Expected Return = (Dividend Yield + Capital Gains Yield)Dividend Yield = Annual Dividend per Share / Market Price per ShareCapital Gains Yield = (Expected Price - Initial Price) / Initial PriceWhere, Annual Dividend per Share = $0.32Market Price per Share = $27.29Expected Price per Share = $33.30Putting values in the above formula we get,Dividend Yield = $0.32 / $27.29 = 0.0117Capital Gains Yield = ($33.30 - $27.29) / $27.29 = 0.221Expected Return = (0.0117 + 0.221) = 0.232 or 23.2%
c) Financial intermediaries such as banks and other lending institutions are crucial sources of financing for corporations. They play an important role in providing funds to businesses that need them for their operations. These intermediaries also provide indirect financing by pooling funds from individual savers and lending them out to businesses in the form of loans or investments in stocks and bonds. This form of financing is important because it helps to bridge the gap between those who have money to invest and those who need money to finance their operations.
d) In theory, the money markets should not be needed because the banking industry should be able to serve the need for short-term funds. However, in practice, the money markets are necessary because the banking industry may not always be able to provide the funds that are needed in a timely manner. Money markets provide a way for businesses and other borrowers to access funds quickly and easily, which can be crucial in times of financial stress. Therefore, money markets serve an important role in the economy even if the banking industry is able to provide short-term funds.
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Ques 4. David Thomas is a computer consultant and software engineer. Below are the names of several accounts in his ledger with each account name preceded by a number. Following the account names are several transactions completed by Mr. Thomas. Indicate the accounts debited and credited in recording each transaction by placing the proper account numbers / names in the boxes to the right of each transaction. (1) Accounts Payable (6) Office Supplies Expense (2) Accounts Receivable (7) Telephone Expense \begin{tabular}{|l|l|} \hline (3) Cash & (8) Unearned Engineering Service Revenue \\ \hline (4) Engineering Service Revenue & (9) David Thomas, Capital \\ \hline (5) Office Supplies & (10) David Thomas, Withdrawals \\ \hline \end{tabular} \begin{tabular}{l|l|l|l|} \hline & Debit & Credit \\ \hline (1) & Received payment in advance for designing a software package. \\ \hline (2) & Purchased office supplies on credit. \\ \hline (3) & David Thomas wrote a cheque on the bank account of the business to pay his home telephone bill. There were no business calls on the bill. \\ \hline & Received the telephone bill of the business and \\ \hline immediately issued a cheque to pay it. \\ \hline Returned for credit a portion of the supplies purchased in Transaction 2. \\ \hline \end{tabular}
The Office Supplies account will be debited to reduce the expense of office supplies, and the Accounts Payable account will be credited as the supplies were returned for credit.
The accounts debited and credited in recording each transaction are as follows:1. Received payment in advance for designing a software package: Debit: Cash Credit: Unearned Engineering Service Revenue Explanation: The cash account will be debited for receiving payment in advance and the Unearned Engineering Service Revenue account will be credited as the service has not yet been provided and will be recognized as revenue when services are delivered.2. Purchased office supplies on credit: Debit: Office Supplies Credit: Accounts Payable Explanation: The Office Supplies account will be debited as it is an expense and accounts payable will be credited as the credit purchase was made.3. David Thomas wrote a cheque on the bank account of the business to pay his home telephone bill.
There were no business calls on the bill: Debit: Telephone Expense Credit: Cash Explanation: The Telephone Expense account will be debited for payment of the bill, and the cash account will be credited as the payment was made in cash.4. Received the telephone bill of the business and immediately issued a cheque to pay it: Debit: Telephone Expense Credit: Cash Explanation: The Telephone Expense account will be debited for the telephone bill, and the cash account will be credited as the payment was made in cash.5. Returned for credit a portion of the supplies purchased in Transaction 2:Debit: Accounts Payable Credit: Office Supplies Explanation: The Office Supplies account will be debited to reduce the expense of office supplies, and the Accounts Payable account will be credited as the supplies were returned for credit.
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