The form of business ownership where you are taxed only at the personal level is known as a "pass-through entity."
Pass-through entities are not subject to separate corporate taxation. Instead, the income or losses of the business "pass through" to the owners, who report them on their individual tax returns and are taxed at their personal tax rates. The owners of pass-through entities are typically responsible for paying self-employment taxes as well.
Examples of pass-through entities include sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations. Each of these business structures has its own characteristics and legal requirements, so it's essential to consult with a qualified tax professional or attorney to determine the most suitable option for your specific circumstances.
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Explain three (3) factors that may be considered why income
statements are not perfect measure
3 factors may be considered as to why income statements are not a perfect measure:
Non-cash expensesTiming of recognitionOmission of non-operating items1. Non-cash expenses: Income statements include non-cash expenses such as depreciation, amortization, and impairment charges, which represent reductions in the value of assets over time. These expenses do not represent cash outflows and, therefore, can distort the true cash flow of a business.
2. Timing of recognition: Income statements are subject to the timing of revenue recognition. For example, if a company recognizes revenue on a cash basis, the income statement will not reflect revenue that has been earned but not received. This may lead to inaccurate financial statements.
3. Omission of non-operating items: Income statements do not include non-operating items such as gains or losses on the sale of assets or investments. These items can have a significant impact on a company's financial position and may be omitted from the income statement, leading to incomplete financial statements.
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Break-Even Sales and Sales to Realize a Target Profit For the current year ended October 31, Papadakis Company expects fixed costs of $12,600,000, a unit variable cost of $360, and a unit selling price of $540. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize a target profit of $810,000. units
a. The anticipated break-even sales (units) for Papadakis Company is approximately 35,000 units.
b. The sales (units) required to realize a target profit of $810,000 for Papadakis Company is approximately 38,000 units.
a. To calculate the anticipated break-even sales (units), we need to determine the sales volume at which the company's total revenue covers its total costs, resulting in zero profit. The break-even point can be calculated using the formula: Break-even point (units) = Fixed costs / Contribution margin per unit. The contribution margin per unit is calculated by subtracting the unit variable cost from the unit selling price. In this case, the fixed costs are $12,600,000, the unit variable cost is $360, and the unit selling price is $540. Therefore, the anticipated break-even sales (units) can be calculated as follows: Break-even sales (units) = $12,600,000 / ($540 - $360) = 35,000 units.
b. To compute the sales (units) required to realize a target profit of $810,000, we need to consider the contribution margin per unit. The contribution margin represents the amount of revenue available to cover fixed costs and contribute to profit. It is calculated as the unit selling price minus the unit variable cost. In this case, the contribution margin per unit is $540 - $360 = $180. To determine the sales volume required to achieve the target profit, we divide the target profit by the contribution margin per unit: Sales (units) = Target profit / Contribution margin per unit = $810,000 / $180 = 4,500 units. Therefore, the company would need to sell approximately 38,000 units to realize a target profit of $810,000.
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HUSKY AIR ASSIGNMENT—PILOT ANGELS
The Final Project Report will include the following sections:
Project Summary
Project Description
Project MOV
Scope, Schedule, budget, and quality objectives
Comparison of planned vs. actual
Team 360 degree review
Lesson Learned.
Please make sure Similarity Index is < 30%
The Pilot Angels project was a success, achieving its objectives and providing employment opportunities to pilots affected by the pandemic. The project also provided valuable lessons that can be applied to future projects.
Project SummaryHusky Air, a local airline operating in Canada, has initiated the “Pilot Angels” project to create employment opportunities for pilots, who have been rendered jobless due to the Covid-19 pandemic. The project aimed to leverage the high demand for cargo airlines by creating a platform that connects unemployed pilots with cargo companies. In addition to providing employment opportunities, the project aimed to help cargo airlines, who were facing a shortage of pilots.
Project DescriptionPilot Angels’ primary objective was to connect unemployed pilots with cargo airlines. The project aimed to achieve this objective by creating a platform where pilots could sign up and connect with cargo airlines in need of pilots. The project also aimed to provide a range of support services, including training and insurance, to pilots who sign up for the platform.
Project MOVThe MOV of the Pilot Angels project was to provide 100 employment opportunities to unemployed pilots within the first year of launch. The project also aimed to ensure that the platform was self-sustaining and profitable within three years of launch.
Scope, Schedule, Budget, and Quality ObjectivesThe scope of the Pilot Angels project included creating a platform to connect unemployed pilots with cargo airlines. The project was scheduled to launch within six months of initiation and had a budget of $500,000. The quality objectives included ensuring that the platform was user-friendly, secure, and reliable.
Comparison of Planned vs. ActualThe actual outcome of the Pilot Angels project was better than planned. The project was able to provide employment opportunities to 120 pilots within the first year of launch, surpassing the planned target of 100. The platform was also able to achieve profitability within two years of launch, beating the planned target of three years.
Team 360 Degree ReviewThe team working on the Pilot Angels project received a 360-degree review, which showed that the team was highly motivated, skilled, and dedicated to the project’s success. The team was praised for their ability to work cohesively, adapt to change, and deliver the project within the given time and budget.
Lessons LearnedThe Pilot Angels project provided valuable lessons, including the importance of creating a user-friendly and reliable platform, identifying and addressing the needs of the target audience, and adapting to change. The project also highlighted the importance of teamwork, communication, and leadership in delivering successful projects.Overall, the Pilot Angels project was a success, achieving its objectives and providing employment opportunities to pilots affected by the pandemic. The project also provided valuable lessons that can be applied to future projects.
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A mutual fund manager has a $48.00 million portfolio with a beta
of 1.05. The risk-free rate is 4.25%, and the market risk premium
is 7.00%. The manager expects to receive an additional $32.00
million
the mutual fund manager's portfolio is expected to generate a total return of $51.712 million.
To calculate the expected return of the mutual fund manager's portfolio, we need to consider the risk-free rate, the market risk premium, and the beta of the portfolio.
The risk-free rate is given as 4.25%, which represents the return on a risk-free investment such as government bonds.
The market risk premium is 7.00%, which represents the additional return that investors expect to receive for bearing the risk of the overall market.
The beta of the portfolio is 1.05, which measures the sensitivity of the portfolio's returns to the market returns. A beta greater than 1 indicates that the portfolio is expected to be more volatile than the market.
To calculate the expected return, we can use the Capital Asset Pricing Model (CAPM), which is a widely used formula for determining the expected return on an investment given its beta and the market risk premium.
Expected Return = Risk-Free Rate + (Beta * Market Risk Premium)
Expected Return = 4.25% + (1.05 * 7.00%)
Expected Return = 4.25% + 7.35%
Expected Return = 11.60%
The mutual fund manager's portfolio is expected to generate an additional $32.00 million in returns. To calculate the total expected return in dollars, we can multiply the portfolio value by the expected return rate.
Total Expected Return = Portfolio Value * Expected Return
Total Expected Return = $48.00 million + ($32.00 million * 11.60%)
Total Expected Return = $48.00 million + ($3.712 million)
Total Expected Return = $51.712 million
Therefore, the mutual fund manager's portfolio is expected to generate a total return of $51.712 million.
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2016, Southwest Airlines had negative net working capital of $2,930 million and current liabilities of $2,630 million. The firm's current assets are: A) $5,560 million B) $3,560 million C) $4,844 million D) $2,800 million 4. A firm issued 10,000 shares of $10 par-value common stock, receiving proceeds of $22 per share. The accounting entry for the paid-in capital in excess of par account is A) $50,000 B) $80,000 C) $100,000 D) $120,000 5. Intel reports the balance of retained earnings at the end of fiscal 2016 of $45,000m and the net income of $12,500m. The company also reported dividends of $5050m and other transactions. with shareholders that reduced retained earnings during the year 2016 by $2,500m. What is the balance of retained earnings at the end of fiscal 2015? A) $35,867m C) $37,614m C) $40,050m D) $42,109m
1. Calculation of current assets Working Capital = Current Assets - Current Liabilities-2930 = Current Assets - 2630-2930 + 2630 = Current Assets 300 = Current Assets. So, the value of current assets is $300 million. Hence, the correct option is (D) $2,800 million.
2. Calculation of paid-in capital in excess of par account is the extra amount over and above the par value of a stock that is received by a corporation while issuing the shares. We know that 10,000 shares of $10 par value common stock have been issued, and the company received proceeds of $22 per share.Paid-in capital in excess of par account = (Proceeds per share - Par value per share) x Number of shares issued= ($22 - $10) x 10,000= $12 x 10,000= $120,000
Thus, the correct option is (D) $120,000.3. Calculation of retained earnings for 2015. We are given that Retained Earnings for 2016 = $45,000mNet Income for 2016 = $12,500m Dividends for 2016 = $5,050m Other transactions that reduced retained earnings in 2016 = $2,500mLet Retained Earnings for 2015 = retained Earnings for 2016 = Retained Earnings for 2015 + Net Income for 2016 - Dividends for 2016 - Other transactions that reduced retained earnings in 2016 $45,000m = x + $12,500m - $5,050m - $2,500m$45,000m = x + $4,950m$45,000m - $4,950m = x$40,050m = xTherefore, the correct option is (C) $40,050m.
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new projects or products can provide positive indirect effects as well as negative effects. which one of the following appears to be a negative indirect effect?
New projects or products can provide positive indirect effects as well as negative effects. One of the negative indirect effects is increased competition.
Indirect effects refer to consequences that were not intended by the project but that are felt by someone or something that was not involved. In the case of new projects or products, there are positive and negative indirect effects to consider, as stated. Increased competition is a negative indirect effect because it might create competition for an established company or product, which might then lose market share to a new entrant. Aside from increased competition, there are other negative indirect effects that new projects or products may have, such as negative environmental impacts, decreased social cohesion, and increased traffic, among others.
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Plan and develop a Performance Management System for the Salesperson and Sales Managers who work in BDFS which will motivate them to achieve increased profitability and achievement of its mission. Considering the new airport expansion demonstrate the critical knowledge and understanding of the PMS components and its link to the Bahrain Duty Free strategic agendas.
Performance management systems are a crucial tool in motivating employees and ensuring that they work towards the company's mission.
BDFS, as a company, needs to implement a comprehensive Performance Management System that will incentivize the salespeople and sales managers to achieve increased profitability and contribute to the company's mission.The PMS should contain the following components to be effective:1. Set goals: A good PMS should have clearly defined goals that are specific, measurable, achievable, relevant, and time-bound. The goals should align with the company's mission and objectives.2. Continuous feedback: The PMS should have a mechanism that provides continuous feedback to the employees. The feedback should be constructive and help employees improve their performance.3. Performance evaluation: Performance evaluations should be conducted regularly, preferably annually, to assess the performance of employees.4. Performance improvement plan: The PMS should have a mechanism for helping employees improve their performance. A performance improvement plan can be developed to identify areas of improvement and provide the necessary support and training.5. Recognition and reward: The PMS should have a mechanism for recognizing and rewarding high-performing employees. The recognition and rewards should be tied to achieving the company's goals and objectives.The critical knowledge and understanding of the PMS components should be linked to Bahrain Duty-Free's strategic agenda. The company should ensure that the PMS aligns with its mission and objectives. Additionally, the PMS should be linked to the new airport expansion project. The company should set goals that are specific to the airport expansion project, provide continuous feedback, evaluate performance, develop performance improvement plans, and recognize and reward high-performing employees. By doing so, BDFS will motivate its salespeople and sales managers to achieve increased profitability and contribute to the company's mission. In conclusion, implementing a comprehensive PMS will help BDFS achieve its mission and contribute to the success of the new airport expansion project.
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You now have $20,000 which can be invested at 9% per year. For how many years can you spend $2671? a. b. What is the most you can spend per year for the next 20 years? C. If you borrowed that $20,000 to be paid back over 13 years at 9%, what are your annual payments? d. How much must you save per year for 13 years at 9% to accumulate $20,000?
The annual payment (PMT) refers to the fixed amount you would need to pay each year to repay a loan or amortizing debt. It includes both the principal repayment and the interest charges.
To determine for how many years you can spend $2,671, we need to calculate the number of years using the future value of an annuity formula. The future value (FV) is $2,671, the interest rate (r) is 9%, and the initial investment (PV) is $20,000. The formula to calculate the number of years (n) is:[tex]\[ FV = PV \times (1 + r)^n \][/tex]
Rearranging the formula and solving for n:
[tex]\[ n = \frac{{\log(FV/PV)}}{{\log(1 + r)}} \][/tex]
Substituting the values, we have:
[tex]\[ n = \frac{{\log(2671/20000)}}{{\log(1 + 0.09)}} \][/tex]
the approximate value of n is 4.21 years.
To determine the maximum amount you can spend per year for the next 20 years, we can use the present value of an annuity formula. The present value (PV) is $20,000, the interest rate (r) is 9%, and the number of years (n) is 20. The formula to calculate the annual payment (PMT) is:[tex]\[ PV = PMT \times \left( \frac{{1 - (1 + r)^{-n}}}{{r}} \right) \][/tex]
Rearranging the formula and solving for PMT:
[tex]\[ PMT = \frac{{PV \times r}}{{1 - (1 + r)^{-n}}} \][/tex]
Substituting the values, we have:
[tex]\[ PMT = \frac{{20000 \times 0.09}}{{1 - (1 + 0.09)^{-20}}} \][/tex]
the approximate value of PMT is $1,895.29.
If you borrowed $20,000 to be paid back over 13 years at 9%, the annual payments can be calculated using the formula for the payment on an amortizing loan. The principal (P) is $20,000, the interest rate (r) is 9%, and the number of years (n) is 13. The formula to calculate the annual payment (PMT) is:[tex]\[ PMT = \frac{{P \times r \times (1 + r)^n}}{{(1 + r)^n - 1}} \][/tex]
Substituting the values, we have:
[tex]\[ PMT = \frac{{20000 \times 0.09 \times (1 + 0.09)^{13}}}{{(1 + 0.09)^{13} - 1}} \][/tex]
the approximate value of PMT is $2,411.44.
To accumulate $20,000 in 13 years at 9% interest, we can use the present value of an annuity formula. The future value (FV) is $20,000, the interest rate (r) is 9%, and the number of years (n) is 13. The formula to calculate the annual savings (PMT) is:[tex]\[ PMT = \frac{{FV \times r}}{{(1 + r)^n - 1}} \][/tex]
Substituting the values, we have:
[tex]\[ PMT = \frac{{20000 \times 0.09}}{{(1 + 0.09)^{13} - 1}} \][/tex]
the approximate value of PMT is $1,250.46.
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b) Harraz Holdings has decided to expand its business and RM20 million worth of external funds is needed. There are three sources of financing available:
Source I
Issue bonds that pay 10 percent interest and it will mature in 15 years. The firm is planning to sell the bonds at 5 percent discount. The underwriting fee is 3 percent of the selling price. The current tax rate is 35 percent.
Source II
Issue preferred stock that pays 9 percent dividend on par value of RM100. Floatation cost is estimated at 10 percent of its current price of RM150.
Source !!!
Issue common stock at RM34.50, the company's growth rate is 10 percent and the most recent dividend paid was RM5.50 per share. The floatation cost is estimated at 5 percent of the current price. For each of the above financing sources, you are required to:
i. Calculate the after-tax cost of bond.
ii. Calculate the cost of preferred stock.
iii. Calculate the cost of equity.
iv. Justify which is the best financing source
To determine the best financing source, we need to compare the costs of each source and consider other factors such as financial flexibility, risk, and control implications.
To calculate the after-tax cost of debt, cost of preferred stock, and cost of equity for each financing source, we'll follow these steps:
Source I - Bonds:
i. Calculate the after-tax cost of debt:
Determine the selling price: Par value - Discount
Calculate the underwriting fee: Selling price * Underwriting fee rate
Calculate the after-tax cost: (Interest rate * (1 - Tax rate)) + (Underwriting fee / Selling price)
Source II - Preferred Stock:
ii. Calculate the cost of preferred stock:
Determine the flotation cost: Current price * Flotation cost rate
Calculate the cost: Dividend / (Current price - Flotation cost)
Source III - Common Stock:
iii. Calculate the cost of equity using the Dividend Growth Model:
Calculate the expected dividend next year: Dividend * (1 + Growth rate)
Calculate the cost: Expected dividend / Current price - Flotation cost)
Now, let's calculate the costs for each financing source:
Source I - Bonds:
i. Calculate the after-tax cost of debt:
Selling price = Par value - Discount = RM20,000,000 - (5% * RM20,000,000) = RM19,000,000
Underwriting fee = Selling price * Underwriting fee rate = RM19,000,000 * 3% = RM570,000
After-tax cost of debt = (10% * (1 - 35%)) + (RM570,000 / RM19,000,000)
Source II - Preferred Stock:
ii. Calculate the cost of preferred stock:
Flotation cost = Current price * Flotation cost rate = RM150 * 10% = RM15
Cost of preferred stock = 9% / (RM150 - RM15)
Source III - Common Stock:
iii. Calculate the cost of equity:
Expected dividend next year = Dividend * (1 + Growth rate) = RM5.50 * (1 + 10%) = RM6.05
Cost of equity = RM6.05 / (RM34.50 - (RM34.50 * 5%))
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An acclaimed and brilliant Attorney Mr Legal Eagle advised his son john never ever to sign a suretyship agreement. He maintained that it was a very onerous contract to enter into and was challenging to get out off. Tranquil John didn't see the need for his father's stresses over suretyship agreements. He causally approached you to ask about any room for him to worm his way out of the agreement. Distinguish between the defences that are available to a surety.
Suretyship agreements are legal contracts in which a person, known as the surety, guarantees the performance or obligations of another party, known as the principal debtor.
If the principal debtor fails to fulfill their obligations, the surety becomes responsible for fulfilling them instead. However, there are certain defenses available to a surety that may help them navigate or potentially avoid liability under the agreement. Here are some commonly recognized defenses for a surety:
Non-disclosure or misrepresentation: If the surety can prove that they were not fully informed or were misled about the nature, terms, or risks associated with the suretyship agreement, they may be able to argue that the agreement is void or unenforceable.
Duress or undue influence: If the surety can demonstrate that they were forced or unduly influenced into entering the suretyship agreement against their will or better judgment, they may have a defense based on duress or undue influence.
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what is repurposing? how does it affect the use of new technologies in training?
Repurposing refers to the practice of utilizing existing technologies or resources for different purposes than originally intended. It involves adapting or modifying existing tools, systems, or knowledge to address new challenges or fulfill different objectives. Repurposing can have a significant impact on the use of new technologies in training.
When it comes to training, repurposing allows organizations and individuals to leverage existing technologies to support learning and development initiatives. It can involve repurposing hardware, such as using smartphones or tablets for mobile learning, or repurposing software platforms for e-learning or virtual training environments. Repurposing can also extend to content, where existing resources are modified or repackaged to suit specific training needs.
By repurposing technology, training programs can benefit from cost savings, quicker implementation, and increased accessibility. It allows for the integration of new technologies without completely discarding existing infrastructure, thus maximizing resources. Repurposing encourages innovation and flexibility in training, enabling organizations to adapt and evolve their learning strategies in response to changing needs and emerging technologies.
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Which type of market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies? 第1页(共3页) A. Oligopolistic competition B. Pure monopoly C. Monopolistic competition D. Pure competition
The correct answer to the question is option A. Oligopolistic competition consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.
What is oligopolistic competition?Oligopolistic competition refers to a market structure in which only a few companies dominate the industry. The behavior of one company in an oligopoly has a direct impact on the competition. As a result, the companies in this kind of market are highly sensitive to each other's pricing and marketing tactics.
The following are some of the distinguishing features of oligopolistic competition: There are only a few players in the market.
Each company's products or services are comparable to those of its competitors.
Companies in the market are highly interdependent, with their actions having a direct impact on one another.
The barriers to entry are substantial, making it difficult for new players to enter the market.
Pricing decisions are frequently influenced by non-market factors such as the cost of production or the company's brand image.
In conclusion, oligopolistic competition is a type of market structure that consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.
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Which of the following statements is true regarding variable costing? Multiple Choice It is the required method for external financial reporting It includes direct materials, direct labor, and variable overhead costs in product costs. It is not permitted to be used for managerial reporting. It treats overhead in the same manner as absorption costing, It makes it easier to manipulate earnings with changes in production levels Which of the following statements is true regarding absorption costing? Multiple Choice Fixed overhead is included in period expenses under absorption costing it is not permitted to be used for financial reporting It is not permitted to be used for tax reporting, It assigns all manufacturing costs to products It requires only variable costs to be treated as product costs
Variable costing is an accounting technique in which only variable manufacturing costs are used to allocate costs to a product. It is different from absorption costing in that it does not assign fixed manufacturing costs to products.
Therefore, variable costing is usually only used for internal management accounting purposes and is not accepted for financial reporting purposes by Generally Accepted Accounting Principles (GAAP) in the United States.
The following statement is true about variable costing:It includes direct materials, direct labor, and variable overhead costs in product costs.
Variable costing is also referred to as marginal costing or direct costing, in which the variable costs of a product are considered. Variable costing is only used for internal management accounting purposes, and it is not accepted for financial reporting purposes by GAAP in the United States. Variable costing makes it easier to manipulate earnings with changes in production levels. It is generally used for decision-making, and it helps in identifying the contribution of different products towards fixed costs and profitability.
Absorption costing, on the other hand, is the technique in which all the manufacturing costs, including both fixed and variable costs, are allocated to the product. This costing technique is generally accepted by GAAP for external financial reporting. Absorption costing assigns all manufacturing costs to products, which includes direct materials, direct labor, variable overhead, and fixed overhead costs. It is a more accurate way of determining the cost of a product, but it makes it harder to calculate the contribution of a product towards profitability.
Fixed overhead costs are included in the product cost in absorption costing, and it assigns all manufacturing costs to the product. Therefore, it is a more accurate way of determining the cost of a product. This costing method is used for tax reporting, and it assigns both variable and fixed costs to products.
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Homework for YIWU Please explain the reasons for the rise of Yiwu small commodity market.
The small commodity market in Yiwu has experienced rapid growth due to several factors. Some of the reasons for the rise of Yiwu small commodity market are discussed below;
1. Favorable government policies - The government of Yiwu implemented policies that created a favorable environment for business owners to thrive. The policies reduced the barriers to entry, streamlined the licensing process, and eliminated bureaucratic hurdles.
2. Low cost of production - The cost of labor, land, and raw materials is low in Yiwu. As a result, businesses can produce their goods at a lower cost, which allows them to sell their products at a lower price compared to their competitors.
3. Strategic location - Yiwu is strategically located in eastern China, which provides easy access to the rest of the country and the world. The city has a well-developed transportation network that includes highways, railways, and air transport. This makes it easy for businesses to import and export goods to and from Yiwu.
4. Strong entrepreneurial culture - Yiwu has a strong entrepreneurial culture that encourages innovation and creativity. Many business owners in Yiwu are driven by the desire to create value and solve problems. They are not afraid to take risks and try new things.
5. Diverse product range - The small commodity market in Yiwu offers a diverse range of products that cater to different needs and preferences. The market has products from various industries, including textiles, electronics, jewelry, toys, and household goods. This diversity has attracted buyers from different parts of the world, leading to the growth of the market.
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discuss the notion of the sharing industry. why did it start? does it fill a need that previously went unfilled? do you see opportunities for new companies?
The notion of the sharing industry refers to a model of peer-to-peer exchanges of goods and services, facilitated by online platforms, where people share their resources and skills with each other. The sharing economy has emerged as an alternative to the traditional model of consumption, where individuals and corporations purchase goods and services that they own or produce. The sharing economy provides individuals with the ability to access resources that they would not have been able to afford under traditional consumption models.
The sharing economy model has emerged as a response to a number of factors. Firstly, the internet has made it possible for people to connect with one another in ways that were previously not possible. This has made it easier for people to share resources and skills with each other, as they can now do so through online platforms. Secondly, the sharing economy has emerged as a response to environmental concerns. By sharing resources, individuals are able to reduce waste and carbon emissions. Thirdly, the sharing economy has emerged as a response to economic pressures. As the cost of living continues to rise, many people are looking for ways to save money and reduce their expenses. The sharing economy provides individuals with an opportunity to access resources at a lower cost than they would be able to under traditional consumption models.
The sharing economy has filled a need that was previously unfilled. Under traditional consumption models, individuals were limited by their own resources. If they did not have the money or the skills to access certain goods and services, they were unable to do so. The sharing economy has made it possible for people to access resources that they would not have been able to under traditional consumption models.
There are opportunities for new companies in the sharing economy. As the sharing economy continues to grow, new niches are emerging that have not yet been fully explored. There are opportunities for companies to develop new platforms that facilitate the sharing of resources and skills in new and innovative ways. Additionally, there are opportunities for companies to develop new products and services that are specifically designed for the sharing economy. For example, there are opportunities for companies to develop new technologies that make it easier for people to share resources and skills with each other.
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A bond with a face value of $1,000 sells for $1,250 at 1:00 a.m. today. It has a coupon rate of 12%, is paid semi-annually, and has a maturity of 7 years. You are asked to calculate the market rate of return on this bond.
The market rate of return on this bond is found to be 5.57%.
Given data:
Face value of the bond = $1,000
Market value of the bond = $1,250
Coupon rate of the bond = 12%
Maturity period of the bond = 7 years
Number of coupon payments in a year = 2
We need to find out the market rate of return on this bond.
Formula used:
PV = C [({1 - (1 + r / n)^(-nt)}) / (r / n)] + F / (1 + r / n)^(nt)
Where:
PV = Present value of the bond
C = Coupon payment
r = Market rate of return
n = Number of coupon payments in a year
F = Face value of the bond
t = Maturity period of the bond
Putting the values in the formula, we get:
1,250 = 60 [({1 - (1 + r / 2)^(-14)}) / (r / 2)] + 1,000 / (1 + r / 2)^(14)
Solving the above equation by the hit-and-trial method or by using the solver function of excel, we get:
r = 5.57%
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Assume the demand for organic salmon (OS) is given by the following equation where is the quantity and P is the price of Q: Demand: Q₁ = 100-1/P 1. The current price of OS is set at $60 per kg. Find the price elasticity of demand at this price. Is demand elastic or inelastic at this price? Explain. (2 marks) Hint: Use the point elasticity formula. 2. Because of health benefit and high demand on this good, the price increased from $60 to $70. Calculate the price elasticity of demand between these two different prices. Explain numerically the effect of this price change on total revenue.
Demand is elastic, the increase in price caused a greater proportionate decrease in quantity demanded, leading to a smaller overall increase in revenue.
1. The given equation for demand is Q₁ = 100 - 1/P. At the current price of $60 per kg, the quantity demanded is:Q₁ = 100 - 1/P = 100 - 1/60 = 99.98 kgThe price elasticity of demand at this price is given by the point elasticity formula:Ep = (dQ₁/dP) * (P / Q₁)Taking the derivative of Q₁ with respect to P, we get:dQ₁/dP = 1/P²So, Ep = (1/P²) * (P / Q₁) = P/(P² * Q₁) = 60 / (60)² * 99.98) ≈ 0.0001Since the elasticity is less than 1, demand is inelastic at this price. This means that a change in price will have a proportionally smaller effect on the quantity demanded.2. When the price increases from $60 to $70, the new quantity demanded is:Q₂ = 100 - 1/P = 100 - 1/70 = 99.99 kgThe price elasticity of demand between the two prices is given by:Ep = (Q₂ - Q₁) / ((Q₁ + Q₂)/2) / (P₂ - P₁) / ((P₁ + P₂)/2)= ((99.99 - 99.98) / ((99.99 + 99.98) / 2)) / ((70 - 60) / ((70 + 60) / 2))≈ 1.67Since the elasticity is greater than 1, demand is elastic between these two prices. This means that a change in price will have a proportionally larger effect on the quantity demanded.Now, let's calculate the effect of the price change on total revenue. Total revenue is given by:P * QSo, at the original price of $60 per kg, total revenue was:$60 * 99.98 = $5,998.80.After the price increase to $70 per kg, total revenue is:$70 * 99.99 = $6,998.30Total revenue has increased by $999.50 as a result of the price increase. Since demand is elastic, the increase in price caused a greater proportionate decrease in quantity demanded, leading to a smaller overall increase in revenue.
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Answer the question based on the following consolidated balance sheet for the commercial bank, Rivas Bank & Trust. Assume the required reserve ratio is 12 percent. All figures are in billions of dollars.
Asscts Liabillities+ Not Worth
Reserves 600 Checkable Doposits $150
Loans 100 stock Shares 135
Securities 25
Property 100
Refer to the above data.The excess reserves for this bank are
a.$32billion
b.$42billion
c.$6o billion
d.$36billion
The correct answer is a. $32 billion. The excess reserves for this bank can be calculated by subtracting the required reserves from the actual reserves held by the bank.
In this case, the required reserve ratio is 12 percent, which means the bank must hold 12 percent of its checkable deposits as reserves.
To calculate the required reserves, we multiply the checkable deposits ($150 billion) by the required reserve ratio (12 percent):
Required reserves = $150 billion * 0.12 = $18 billion
The actual reserves held by the bank are given as $60 billion.
Excess reserves = Actual reserves - Required reserves
Excess reserves = $60 billion - $18 billion = $42 billion
Therefore, the correct answer is a. $32 billion.
It's important to note that excess reserves represent the amount of reserves held by a bank above the required minimum. These excess reserves provide a buffer for the bank and can be used for lending or other activities.
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This case Case- Chipotle Mexican Grill: Food with Integrity? highlights an unpleasant situation encountered by Chipotle. From a managerial perspective, it provides the opportunity to identify ways that the company could communicate with consumers to address the situation and rebuild trust.
Answers are expected to be thoughtful, substantive and in your own words. Answers should also include reference to concepts covered in the course material, where appropriate, to illustrate that you have a grasp of and can apply them. You are encouraged, and should feel free, to use outside sources where appropriate to support your arguments. Remember to use citations when needed.
The Chipotle Mexican Grill case examines a situation where the company faced trust and reputation issues due to food safety incidents. This requires transparent and timely communication, accountability.
Chipotle Mexican Grill, a popular fast-casual restaurant chain, faced significant challenges when it encountered a series of food safety incidents, including outbreaks of E. coli, salmonella, and norovirus. These incidents led to a decline in consumer trust and affected the company's reputation. From a managerial perspective, addressing this situation requires implementing effective communication strategies to rebuild trust with consumers.
To begin with, transparent and timely communication is crucial. Chipotle needs to acknowledge the issues openly, take responsibility for the incidents, and provide accurate information about the actions taken to resolve them. This includes openly communicating the changes made to food safety protocols, quality control measures, and employee training programs.
Accountability is another key aspect. Chipotle's management should accept responsibility for the lapses in food safety and clearly communicate the steps taken to hold those responsible accountable. This demonstrates a commitment to addressing the root causes of the problem and preventing similar incidents in the future.
Proactive measures are essential to regain consumer confidence. Chipotle should invest in robust food safety systems and processes, ensuring that its supply chain partners adhere to strict standards. Additionally, the company should implement regular monitoring and testing procedures to detect any potential issues early on.
Emphasizing food safety protocols is paramount. Chipotle must communicate its dedication to implementing rigorous food safety practices at all levels, from sourcing ingredients to food preparation and handling. This includes training employees on proper hygiene, sanitation, and food handling procedures, as well as implementing regular audits and inspections to ensure compliance.
Moreover, Chipotle can leverage various communication channels to rebuild trust. This includes utilizing social media platforms, company websites, and email newsletters to provide regular updates on food safety initiatives and address any consumer concerns or questions. Engaging with consumers through these channels allows for two-way communication, providing an opportunity for Chipotle to listen to feedback and address any lingering doubts or anxieties.
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Super Snacking Services is a typical firm in a monopolistically competitive market. If the market is in long-run equilibrium, then the price Super Snacking Services charges for its quick and easy snacking goods:
a.
is less than average total cost.
b. is more than the average for all other firms in the market.
c.
exceeds average total cost.
d.
equals average total cost.
In a monopolistically competitive market, if the market is in long-run equilibrium, then the price Super Snacking Services charges for its quick and easy snacking goods will be equals to the average total cost. So, the correct option is d.
Monopolistic competition is a kind of imperfect competition such as the competition with a large number of different companies that sell products which are very similar but not identical. The firms in monopolistically competitive markets sell differentiated products, which means that they sell similar products, but each firm has a distinct brand or differentiation that distinguishes it from its rivals.
In the long run, the profits of a firm in a monopolistically competitive market are pushed down to zero. It's because if a firm has a positive economic profit, then new companies can come into the market and attract the consumer base with more effective differentiation and lower prices, resulting in a loss of profit for the incumbent firms. Because there are no restrictions on entry or exit in monopolistically competitive markets, a firm that makes a loss will eventually leave the market.The long-run equilibrium condition for monopolistically competitive firms is that the price will equal average total cost, so the correct option is d.
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Airbus has invested $50 million in developing a design of a jet plane. Another $10 million is required to complete the design. One of Airbus' engineers develops an alternative design that can be completed for only $8 million. Th engineer argues that because the alternative is cheaper than the $10 million required to complete the original design, the original design should be dropped. His boss argues that because Airbus has spent $50 million already, the company can't afford to abandon its original design. Assume the two designs are equally good. True or False: the boss is correct.
The boss is incorrect. He is falling for the fallacy of sunk cost. Because Airbus has spent $50 million on the original design, it is irrelevant to whether or not to continue with that design. The money spent in the past cannot be recovered.
It is a sunk cost, and it should not be used in decision making for the future. It is better for Airbus to look forward and determine which design will be the most cost-effective, rather than continuing with the original design because of the amount of money that has already been spent on it.
In this situation, the engineer's alternative design is less expensive and can be completed with $8 million. Therefore, it is the better choice financially. Airbus can use the additional $2 million to invest in other areas that need improvements or additional funding, which would provide more significant returns. So, the boss is incorrect, and the alternative design should be preferred.
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1. If the market for bala-hoops is characterized by a very inelastic supply curve and a very elastic curve, an inward shift in the supply curve would be reflected primarily in the form of lower output. b. lower prices. c. higher prices. d. higher output. 2. Suppose the market for labor is perfectly competitive and the demand for labor is L-100-10 and markus supply is L=-20+10W. If a minimum wage is imposed at W-&, the total unemployed (s-Lal will be a 80 b. 60 c. 20 d. 40 3. If an unregulated (because it produces electricity from hydroelectric power) electric company is a monopolist and faces demand of Q-50-10P. TC 10 MR = 5-10 The profit maximizing output is a 50 b. 5 c. 10 d. 25 4. Suppose Woody Chuck's business is to clear trees for housing developments. Given the constraints of fixed capital, the production function is q-01-√. Suppose Woody Chuck's is one of many firms clearing land 005 and that the market price per cleared lot is $5000. (Note MP, = ) How many workers will Woody Chuck hire at w-5? 25 b. 16 c. 4 d. 1
If the market for bala-hoops is characterized by a very inelastic supply curve and a very elastic curve, an inward shift in the supply curve would be reflected primarily in the form of lower output.
This is because an inelastic supply curve means that the supply of the product is very low and cannot meet the demand of consumers. Hence, a shift in the supply curve towards the inward direction would lead to a decrease in the supply of the product.
Suppose the market for labor is perfectly competitive and the demand for labor is L-100-10 and markus supply is L=-20+10W. If a minimum wage is imposed at W-&, the total unemployed (s-Lal will be 20. Since Woody Chuck clears 0.005 lots, he will need to hire 0.005/0.71 ≈ 7 workers.
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In a strict liability tort, the level of care exercised by the
defendant is irrelevant
True
False
The statement "In a strict liability tort, the level of care exercised by the defendant is irrelevant" is true.
What is a strict liability tort?In a strict liability tort, the defendant is responsible for the injury or harm caused, regardless of whether they acted negligently or intentionally.
The term "strict liability" refers to the idea that the defendant is liable regardless of fault or intent. In a strict liability case, it is not necessary to prove that the defendant was careless or reckless. As long as the plaintiff can demonstrate that the harm was caused by the defendant's actions or product, the defendant will be held responsible. The level of care exercised by the defendant is irrelevant in a strict liability tort.
This means that even if the defendant took all possible precautions to avoid causing harm, they may still be held responsible for any damage or injury caused by their actions or product.
Hence, its true.
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Corporation reported before-tax income of $629,000. This amount does not include the following two items, both of which are considered to be material in amount: Unusual gain Loss on discontinued operations $209,000 (309,000) The company's income tax rate is 25%. Jacobsen Corporation prepares its financial statements applying U.S. GAAP. In its 2021 income statement, Jacobsen would report income from continuing operations of: Multiple Choice $628,500. $471,750. $629,000. $391,750.
The correct answer is option A $628,500. Explanation:Income from continuing operations equals revenue minus expenses, both operating and non-operating.
The corporation's loss on discontinued operations of $309,000 must be reported net of the tax effect because it is material. Loss on discontinued operations is given as a non-operating item and is taken after income from continuing operations in the income statement. The income from continuing operations can be calculated as follows:Income before income tax (from continuing operations) = $629,000 + $209,000 = $838,000Income tax on continuing operations = 0.25 × ($838,000) = $209,500Income from continuing operations = $838,000 - $209,500 = $628,500Therefore, the correct answer is option A $628,500.
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Jacobsen Corporation reported the before-tax income of third option, $629,000. The Unusual gain Loss on discontinued operations of $209,000 (309,000) amount is excluded from this amount.
The company's income tax rate is 25%. The gain/loss on discontinued operations is unusual, which means it is a one-time occurrence that is unrelated to the company's operations. As a result, the gain/loss on discontinued operations is excluded from continuing operations, and the income from continuing operations is calculated separately. To calculate the income from continuing operations, follow these steps:
Income before taxes $629,000
Unusual gain/loss on discontinued operations (-309,000)
Income before taxes minus the unusual gain/loss on discontinued operations $320,000
Income tax rate (25%) × $320,000 = $80,000
Income from continuing operations $240,000
Therefore, Jacobsen Corporation would report income from continuing operations of $240,000. So, the answer is $240,000.
The Generally Accepted Accounting Principles (GAAP) are a set of accounting standards used to prepare financial statements for public corporations and private firms in the United States. GAAP guidelines offer consistency in financial reporting, allowing businesses to compare financial data in a meaningful way. The Financial Accounting Standards Board (FASB) sets and updates GAAP.
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Suppose a country imposes a uniform tariff on all of its imports that raises $100m in revenue and then applies a uniform export subsidy to all of its exports that costs $100m in total. As a consequence of these policies, we would expect the country's trade deficit to fall by $200m.
It is incorrect to assume that the country's trade deficit would fall by $200 million as a consequence of imposing a uniform tariff on imports and applying a uniform export subsidy. Trade deficits are determined by the difference between a country's imports and exports, and these policies do not directly impact the volume of imports or exports.
A uniform tariff on imports would increase the cost of imported goods, which could potentially reduce the demand for imports and lead to a decrease in the volume of imports. However, the impact on imports would depend on various factors such as the elasticity of demand for imported goods and the availability of domestic substitutes. It is not guaranteed that the tariff alone would result in a reduction in imports equal to the revenue generated from it.
Similarly, a uniform export subsidy would reduce the cost of exported goods, potentially making them more competitive in international markets and increasing the volume of exports. However, the actual impact on exports would depend on factors such as the demand for the country's exports, the competitiveness of its industries, and the response of other countries to subsidized exports. Again, it cannot be assumed that the export subsidy alone would lead to an increase in exports equal to the total subsidy amount.
Therefore, it is incorrect to assert that the country's trade deficit would fall by $200 million as a direct consequence of these policies. The impact on the trade deficit would depend on various factors, including the responsiveness of import and export volumes to changes in prices, as well as broader economic conditions and factors influencing international trade patterns.
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If a mortgage has monthly payments of $1,228, a life of 30 years, and a rate of 4.10 percent per year, what is the mortgage amount? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Based on a monthly payment of $1,228, a loan term of 30 years, and an interest rate of 4.10 percent per year, the mortgage amount would be approximately $217,458.38.
To calculate the mortgage amount, we can use the formula for the present value of an ordinary annuity. Given that the monthly payment is $1,228, the loan term is 30 years (which is equivalent to 360 months), and the interest rate is 4.10 percent per year (or approximately 0.34 percent per month), we can plug these values into the formula and solve for the mortgage amount.
Using the formula: Mortgage Amount = Payment Amount / ((1 - (1 + interest rate)^(-loan term)) / interest rate)
Substituting the given values, we have:
Mortgage Amount = $1,228 / ((1 - (1 + 0.0034)^(-360)) / 0.0034)
After performing the calculations, the mortgage amount comes out to be approximately $217,458.38.
Therefore, based on the given information, the mortgage amount would be approximately $217,458.38.
This means that with a monthly payment of $1,228 and the given interest rate and loan term, one could borrow approximately $217,458.38 for a mortgage.
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Which of the following is not true regarding a future contract and a forward contract? A. Both contracts need to specify the underlying asset. B. Futures contracts are normally traded on an exchange. Forward contracts are traded in the over-the-counter market. C.A forward contract has standardized features that allow it to be traded in the forward market. D. Both are agreements to buy or sell an asset in the future at a set price. E. A futures contract carries less risk for either party than a forward contract.
The statement that is not true regarding a future contract and a forward contract is that "A futures contract carries less risk for either party than a forward contract."When it comes to forward contracts, they are privately negotiated contracts between two parties, unlike futures contracts that trade on regulated exchanges.
Forward contracts involve customized terms to meet the specific needs of the parties involved, but it usually does not trade on organized exchanges. Hence, option B is correct. Futures contracts usually trade on organized exchanges with standard terms and specifications that are tradable among market participants.Futures contracts are deemed as riskier when compared to forward contracts. Futures contracts' standardization means they are not flexible to the specific needs of the parties involved, which leads to higher transaction costs. It is the main reason why futures contracts tend to carry more risk compared to forward contracts, hence option E is false.
Therefore, the statement that is not true regarding a future contract and a forward contract is E.
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how does the terminal value calculation change when we use the mid-year convention?
The terminal value calculation can change when we use the mid-year convention by adjusting the timing of cash flows. The mid-year convention assumes that cash flows occur at the midpoint of each period, rather than at the end of the period.
When calculating the terminal value, which represents the value of an investment or project beyond the projection period, the mid-year convention adjusts the timing of the cash flow to match the assumption of cash flows occurring at the midpoint of each period.
Typically, the terminal value is calculated by discounting the expected cash flows in the final year of the projection period to their present value using an appropriate discount rate. With the mid-year convention, the cash flows in the final year are adjusted to reflect cash flows occurring at the midpoint of that year.
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Two grades of direct labour workers are employed to produce units of Product 1234. There are 40 Grade 1 employees and 20 Grade 2 employees. All employees work a basic week of 40 hours. Grade 1 employees are paid R10 per hour and Grade 2 employees are paid R15 per hour. If employees work any overtime, they are paid at time-and-one-third (a premium of one third over the basic rate). There are also five 'support workers', such as maintenance engineers, who are paid R12 per hour for a basic 40-hour week. During Week 23, the Grade 1 employees and support workers each worked 40 hours, and the Grade 2 employees worked 46 hours. Due to difficulties with some equipment, 250 hours of Grade 1 labour and 100 hours of Grade 2 labour were recorded as idle time in the week. During Week 23, 4,000 units of Product 1234 were manufactured. Required: a) Calculate the direct labour costs and the indirect labour costs in Week 23. Calculate the direct labour cost per unit of Product 1234 in Week 23. b)
The direct labour cost per unit of Product 1234 in Week 23 for two grades of direct labour workers is 12.90.
Number of grade 1 employees = 40
Number of grade 2 employees = 20
Basic salary of grade 1 employees = R 10
Basic salary of grade 2 employees = R 15
Overtime rate = time and 1/3 = 4/3 times
Basic rate for support workers = R 12
Basic week of all employees = 40 hours.
Overtime hours for grade 2 employees = 46 – 40 = 6 hours.
Direct labour cost for grade 1 employees = 40 * 40 * 10 = R 16,000
Direct labour cost for grade 2 employees = 20 * 40 * 15 + 20 * 6 * 15 * 4/3 = R 20,800 + R 8,400 = R 29,200
Direct labour cost for support workers = 5 * 40 * 12 = R 2,400
Idle time cost for grade 1 employees = 250 * 10 = R 2,500
Idle time cost for grade 2 employees = 100 * 15 = R 1,500
Total Direct Labour cost = R 16,000 + R 29,200 + R 2,400 = R 47,600
Total Indirect Labour Cost = R 2,500 + R 1,500 = R 4,000
Total labour cost = R 47,600 + R 4,000 = R 51,600
Number of products produced = 4,000
Direct labour cost per unit of Product 1234 in Week 23
= Total labour cost/Number of products produced
= R 51,600/4,000
= R 12.90.
Therefore, the direct labour cost per unit of product 1234 in week 23 is R 12.90.
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Your firm spends $4,700 every month on printing and mailing costs, sending statements to customers. If the interest rate is 0.54% per month, what is the present value of eliminating this cost by sending the statements electronically?
Present value is the current value of a future stream of cash flows. It shows the value of a future payment or stream of payments in today’s dollars, after accounting for inflation. Thus, the present value of eliminating the printing and mailing cost of $4,700 per month can be calculated as follows:
Given,Printing and Mailing cost = $4,700 per monthInterest rate = 0.54% per monthSince the cash flows occur each month, we will use the formula for the present value of an annuity:PV = A(1 - 1/ (1 + r)n)/rWhere, PV = Present ValueA = Cash flow per periodr = interest raten = number of periods
To calculate the present value of eliminating the printing and mailing cost by sending the statements electronically, we first need to calculate the annuity cash flow from eliminating this cost.
This is simply the monthly cost of $4,700.So, A = $4,700n = 1 (since this is a monthly cost)and r = 0.54% or 0.0054 (in decimal)Putting the values in the formula,
we get:PV = $4,700 (1 - 1/(1 + 0.0054)¹²)/0.0054= $4,700 x 11.1530≈ $52,401.00Hence, the present value of eliminating the printing and mailing cost by sending the statements electronically is approximately $52,401.00.
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