The following is not a key consideration when a company chooses a supplier: Size of the supplier. Key considerations when a company chooses a supplier.
What are the considerations?These key considerations are as follows:
Quality control procedures of suppliers.
Reputation and financial stability
Lead time and on-time delivery
Flexibility in handling changes.
Size of the supplier
Quality control procedures of suppliers-
Quality control procedures refer to the set of systematic measures that ensure that the products or services meet the required standards and customer expectations. This is a key consideration when a company chooses a supplier because it assures the company that the product supplied by the supplier is of high quality and is safe for consumption.
Reputation and financial stability-
Reputation and financial stability refer to the reputation and financial status of the supplier. This is a key consideration when a company chooses a supplier because it assures the company that the supplier is reliable and can deliver quality products on time.
Lead time and on-time delivery-
Lead time and on-time delivery refer to the duration taken to deliver products or services to the customer. This is a key consideration when a company chooses a supplier because it assures the company that the supplier can deliver products on time and in the right condition.
Flexibility in handling changes-
Flexibility in handling changes refers to the supplier's ability to make changes to the product or service if necessary. This is a key consideration when a company chooses a supplier because it assures the company that the supplier is flexible and can make changes when necessary.
Size of the supplier-
The size of the supplier is not a key consideration when a company chooses a supplier. However, it is worth noting that large suppliers tend to have a wider range of products and services than small suppliers.
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Discuss your purpose in life. How does that relate to what we have learned about effective leadership practices that build strong foundations for ethical practices within change organizations? Refer to the Adam Leipzig TEDx Talk video in this week's Readings and Resources as a guide to defining your life purpose.
In the TEDx Talk, Adam Leipzig suggests five key questions to help define one's life purpose:
Who are you?What do you do?Who do you do it for?What do those people want or need?How do they change as a result?Relating these questions to effective leadership practices and ethical foundations within change organizations, it is crucial for leaders to have clarity about their own identity and values (question 1) to serve as a moral compass in their decision-making processes. This self-awareness helps leaders maintain integrity and authenticity, fostering trust and respect within the organization.
Leaders must also understand the purpose of their role (question 2) and the impact it has on others (question 3). Effective leaders align their actions with the greater good, considering the needs and aspirations of their teams and stakeholders (question 4). They strive to create positive change and contribute to the growth and development of individuals and the organization as a whole (question 5).
Ethical practices within change organizations require leaders to demonstrate transparency, fairness, and accountability. They should communicate openly, involve stakeholders in decision-making, and ensure that change initiatives align with organizational values and ethical guidelines. Leaders who are driven by a clear purpose can inspire others, motivate teams, and foster a culture of integrity and ethical behavior within the organization.
In summary, defining one's life purpose, as discussed in the Adam Leipzig TEDx Talk, can provide a foundation for effective leadership practices and ethical foundations within change organizations. By aligning personal values and goals with the needs of others and the organization, leaders can lead with authenticity, foster ethical practices, and drive meaningful change.
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1. A company is forecasted to generate free cash flows of $40 million next year and $60 million the year after (t=2). After that, cash flows are projected to grow at a 2.0% annual rate in perpetuity. The company's cost of capital is 11%. What's its enterprise value today? Answer in $million, rounded to one decimal place (e.g., $12,611,988 = 12.6)
2. Suppose you estimate that a company's enterprise value is $150 million. If it has $20 million debt outstanding, $5 million in cash, and there are 10 million shares outstanding, what's the estimated value of each share? Round to one decimal place.
The enterprise value of the company today is $430 million.
The enterprise value can be calculated by discounting the projected free cash flows and the perpetuity cash flow at the company's cost of capital. Using the formula for the present value of a growing perpetuity, the enterprise value is calculated as follows:
Enterprise Value = (FCF1 / (1 + r)) + (FCF2 / (1 + r)^2) + (FCF3 / (r - g))
where FCF1 = $40 million, FCF2 = $60 million, r = 11% (cost of capital), and g = 2% (growth rate in perpetuity).
The estimated value of each share is $13.0.
To calculate the estimated value per share, we divide the enterprise value by the number of shares outstanding:
Estimated Value per Share = Enterprise Value / Number of Shares
In this case, the enterprise value is $150 million, and there are 10 million shares outstanding. Therefore, the estimated value per share is $15.0 million / 10 million shares = $13.0.
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Which describes how you are able to pay off a closed or open mortgage at the end of the mortgage term?
a. With mortgage insurance
b. With a nominal financial penalty
c. Without any financial penalty
d. With title insurance
b. With a nominal financial penalty. At the end of a mortgage term, whether it is a closed or open mortgage, paying off the remaining balance typically involves a financial penalty.
The penalty is often referred to as a prepayment penalty or a discharge fee. This penalty is a charge imposed by the lender for breaking the mortgage contract before the agreed-upon term ends. The specific penalty amount varies depending on the terms of the mortgage agreement, such as the interest rate, the remaining balance, and the time remaining on the mortgage. It is important to review the mortgage terms and conditions to understand the exact penalty amount or discuss it with the lender. This penalty is separate from any mortgage insurance or title insurance that may be applicable in certain situations.
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Which of the following terms does not refer to the amount that is paid by the note issuer to the creditors at the end of the life of the note?
a. Face value
b. Maturity value
c. Carrying value
The term which does not refer to the amount that is paid by the note issuer to the creditors at the end of the life of the note is carrying value. The correct answer is option c.
Carrying value is the accounting value of a firm's assets after the company's liabilities have been deducted. When the assets' carrying value exceeds their market value, the assets are deemed to be overvalued. When the market value exceeds the carrying amount, the assets are considered undervalued. Carrying value is also known as net book value or book value. The carrying value is important because it provides stakeholders with information about the net value of an asset or the remaining obligation of liability.
It is used in financial analysis, decision-making, and reporting purposes. However, it is not a term that refers to the amount that is paid by the note issuer to the creditors at the end of the life of the note. Face value refers to the par value of the note. The maturity value is the final amount of principal and interest that is due at the maturity date of a note.
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It is now December 31, 2022 and it was discovered that in 2021 the company incorrectly recorded too much depreciation in the amount of $15,000. The company has a tax rate of 20%. The company had retained earnings at January 1, 2022 of $220,000, profit for the year of $68,000 and declared $28,000 of dividends, with $23,000 of those being paid by December 31, 2022. Required: a) Provide the adjusting journal entry to correct the prior period error from 2021. (2.5 marks) b) Prepare the restated statement of retained earnings for December 31, 2022. (2.5 marks)
Dividends declared and paid in 2022 will decrease retained earnings by $23,000. As a result, retained earnings on December 31, 2022, is $265,000.
The following adjusting entry is needed to fix the mistake:
Depreciation Expense $15,000
Accumulated Depreciation $15,000
Accumulated Depreciation is a contra-asset account.
It's used to reduce the asset's value. A reduction in this account has the opposite effect of increasing the asset account. Depreciation Expense is a cost that must be charged to income. Since it was mistakenly overstated by $15,000 in 2021, we must subtract $15,000 from accumulated depreciation to correct the mistake. That way, our books will show that we've taken too much expense and taken too little cost recovery in prior years. The new statement of retained earnings for December 31, 2022 is calculated as follows: Retained earnings, January 1, 2022 $220,000Net income for the year ended December 31, 2022 $68,000Less dividends declared and paid in 2022 ($23,000)Retained earnings, December 31, 2022 $265,000Retained earnings, January 1, 2022, will remain the same.
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Intro
Global Mickey Inc. has 27 million shares outstanding and a market capitalization of $2,028.24 million. The company plans to distribute $200 million to shareholders by repurchasing its own shares at the current market price. Assume perfect capital markets (ignore taxes and signalling effects).
Part 1 | Attempt 1/5 for 2 pts. What should be the stock price just before the repurchase?
Part 2 How many shares will the company repurchase (in million)?
Part 3 What should be the stock price right after the repurchase?
Part 1:
To calculate the stock price just before the repurchase, we need to subtract the amount to be distributed ($200 million) from the market capitalization and divide it by the number of shares outstanding.
Stock price just before repurchase = (Market capitalization - Amount distributed) / Number of shares outstanding
Given:
Market capitalization = $2,028.24 million
Amount distributed = $200 million
Number of shares outstanding = 27 million
Stock price just before repurchase = ($2,028.24 million - $200 million) / 27 million
Stock price just before repurchase = $1828.24 million / 27 million
Stock price just before repurchase ≈ $67.70
Part 2:
To calculate the number of shares the company will repurchase, we need to divide the amount to be distributed ($200 million) by the stock price just before the repurchase.
Number of shares repurchased = Amount distributed / Stock price just before repurchase
Number of shares repurchased = $200 million / $67.70
Number of shares repurchased ≈ 2.95 million
Part 3:
To calculate the stock price right after the repurchase, we need to subtract the amount distributed ($200 million) from the market capitalization and divide it by the new number of shares outstanding.
New market capitalization = Market capitalization - Amount distributed
New number of shares outstanding = Number of shares outstanding - Number of shares repurchased
Stock price right after repurchase = New market capitalization / New number of shares outstanding
Given:
Market capitalization = $2,028.24 million
Amount distributed = $200 million
Number of shares outstanding = 27 million
Number of shares repurchased = 2.95 million
New market capitalization = $2,028.24 million - $200 million
New number of shares outstanding = 27 million - 2.95 million
Stock price right after repurchase = (New market capitalization) / (New number of shares outstanding)
Stock price right after repurchase = ($1,828.24 million) / (24.05 million)
Stock price right after repurchase ≈ $75.98
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Complete the following. (Value: 2 x 5= 10 marks) The following interoffice messages are too long and too formal to be effective as electronic transmissions to others on the same computer network. Revise each message to make it direct and less formal-that is, appropriate for electronic communication. Make sure that each message contains 50 or fewer words in one paragraph. 1. In an effort to stimulate sales, we are hosting demonstrations for special clients here in the Eastern Region. In Ontario, we will sponsor a demonstration in Niagara Falls, one in Oshawa, and one in Ottawa. These three demonstrations will be held in March. In New Brunswick, we plan to sponsor two demonstrations. One will be held in Edmundston; the other will be in Saint John. These demonstrations are tentatively scheduled for April. In Québec, the demonstrations will be in Hull and Montreal-tentatively set for May. A schedule of dates and times is forthcoming. We will distribute the "final" schedule of demonstration times and dates, as well as the names of the hotels, during the next month or so. 2. Many employees have been requesting information concerning extended medical benefits for themselves and their families. Connors Worldwide Insurance, which provides our employees with their company-paid insurance has several attractive packages available to any interested employee at reasonable costs. Employees who are interested can pay the cost of premiums through payroll deductions. If you feel that you might need some additional insurance above and beyond what the company now offers, by all means be sure to get more information on the specific packages available and the cost of each. For more information, contact Gretchen Heinz in the Benefits Department. Gretchen's extension is 4384.
The following interoffice messages are too long and too formal to be effective as electronic transmissions to others on the same computer network.
1. We're hosting demos for select clients in the Eastern Region. In Ontario, demos will be held in Niagara Falls, Oshawa, and Ottawa in March. In New Brunswick, we'll have 2 demos in April - Edmundson and Saint John. In Québec, we'll host demos in Hull and Montreal tentatively in May. Dates and times are coming soon.
2. Many employees want information on extended medical benefits. Connors Worldwide Insurance has attractive packages available at a reasonable cost. If you're interested, you can pay premiums via payroll deductions. If you want more information, contact Gretchen Heinz in Benefits. Gretchen's extension is 4384.
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In making strategic purchasing decisions in business, we study the relationship between the market supply of an item and the price of the item charged by the suppliers. Suppose that for a particular product the number x of units available and the price p per unit demanded by the suppliers satisfy the following relationship:
−2x + 35p = 7000
a) If possible, express the supply as a function of the price and determine its domain. Explain briefly what each of them represent in the context of the question. If it is not possible, explain why. b) If possible, express the price as a function of the supply and determine its domain. Explain briefly what each of them represent in the context of the question. If it is not possible, explain why.
a) The supply can be expressed as a function of the price using the equation x = (7000 - 35p) / -2. The domain of this function is x ≥ 0 and p ≥ 0.
b) The price can be expressed as a function of the supply using the equation p = (7000 + 2x) / 35. The domain of this function is x ≥ 0 and p ≥ 0.
a) To express the supply as a function of the price, we need to solve the equation −2x + 35p = 7000 for x.
Let's rearrange the equation:
−2x + 35p = 7000
−2x = 7000 - 35p
x = (7000 - 35p) / -2
The supply function is given by x = (7000 - 35p) / -2. In this context, the supply represents the number of units available for the particular product.
The price represents the price per unit charged by the suppliers. The domain of the supply function will depend on the practical constraints of the situation.
However, in this case, since we are dealing with a real-world scenario, we can assume that both x (number of units) and p (price per unit) are non-negative values. Therefore, the domain of the supply function would be x ≥ 0 and p ≥ 0.
b) To express the price as a function of the supply, we need to solve the equation −2x + 35p = 7000 for p.
Let's rearrange the equation:
−2x + 35p = 7000
35p = 7000 + 2x
p = (7000 + 2x) / 35
The price function is given by p = (7000 + 2x) / 35. In this context, the price represents the price per unit charged by the suppliers. The supply represents the number of units available for the particular product. The domain of the price function will depend on the practical constraints of the situation.
However, in this case, since we are dealing with a real-world scenario, we can assume that both x (number of units) and p (price per unit) are non-negative values. Therefore, the domain of the price function would be x ≥ 0 and p ≥ 0.
a) The supply can be expressed as a function of the price using the equation x = (7000 - 35p) / -2. The domain of this function is x ≥ 0 and p ≥ 0.
b) The price can be expressed as a function of the supply using the equation p = (7000 + 2x) / 35. The domain of this function is x ≥ 0 and p ≥ 0.
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Which of the following attributes is NOT for lean operations? O Empower employees O Focus on value added operations O Develop collaborative partnerships with suppliers O Build processes that increase variability O Develop worker flexibility
Attributes of lean operations include empowering employees, focusing on value-added operations, developing collaborative partnerships with suppliers, and fostering worker flexibility.
The attribute that is NOT for lean operations is to build processes that increase variability.What is lean operations?Lean operations refer to a set of manufacturing processes and business practices developed to reduce waste while maximizing productivity. It involves identifying and eliminating all forms of waste in the production process and streamlining operations. Lean operations are characterized by a strong focus on value-added activities, continuous improvement, and employee empowerment.What are the attributes of lean operations?The attributes of lean operations include:Empower employeesFocus on value-added operationsDevelop collaborative partnerships with suppliersDevelop worker flexibilityHowever, building processes that increase variability is not an attribute of lean operations. Instead, lean operations involve building processes that minimize variability to ensure consistent quality and reduce the risk of errors or defects.
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The summarized balance sheet of Separate Company on January 1, 20X3, contained the following amounts: Total Assets Total Assets $385,000 $385,000 view transaction Bat On January 1, 20X3, Point Corporation acquired 90 percent of the common shares and 80 percent of the preferred shares of Separate Company at underlying book value. At that date, the fair value of the noncontrolling interest in Separate's common stock was equal to 10 percent of the book value of its common stock. Consolidation Worksheet Entries <₁ A Required: Prepare the worksheet consolidation entries needed to prepare a consolidated balance sheet immediately following Point's purchase of shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Event 1 Total Liabilities Preferred Stock Common Stock Retained Earnings Total Liabilities and Equities Record the basic consolidation entry. Note: Enter debits before credits Record entry Accounts $ 45,000 115,000 Clear entry 65,000 160,000 $385,000 Debit Credit view consolidation entries
Based on the given information, the consolidation entries needed to prepare a consolidated balance sheet following Point Corporation's purchase of shares in Separate Company are as follows:
Record the basic consolidation entry:
No journal entry is required because the underlying book value method is used, and the fair value of the noncontrolling interest is equal to 10% of the book value of Separate Company's common stock.
Therefore, there is no specific consolidation entry needed for this transaction.
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Create a spreadsheet modeling trajectories of geometric Brownian motion starting at 100 with growth rate 2 percent (it is also risk-free rate) and volatility 28 percent. Make a spreadsheet that calculates European call maturing in 1 year with strike 100 on a non-dividend paying stock using Monte-Carlo method and using 20,000 trajectories with 250 steps per year in each trajectory. Compare Monte-Carlo price with 20,000 trajectories to a theoretical model price. Calculate with 50,000 trajectories. Compare Monte-Carlo price with 50,000 trajectories to theoretical model price. PLEASE SHOW THE SPREADSHEET AND CELL FORMULA IN FULL
To create a spreadsheet modeling trajectories of geometric Brownian motion, follow these steps Step 1: Create a new Excel spreadsheet and enter the following headings in cells A1, B1, C1, D1, E1, F1, and G1: “Trajectory”, “Time Step”, “Price”, “Drift”, “Shock”, “Drift+Shock”, “Log Returns”. Step 2: In cell A2, enter the starting value of the stock, i.e., 100. This is the first value in the first trajectory.
Step 3: In cell B2, enter the value 0.004. This is the time increment for the first trajectory, which will simulate daily changes in the stock price. Step 4: In cell C2, enter the formula “=A2*EXP((0.02-0.5* ))This formula calculates the new price of the stock after one time increment. Step 5: In cell D2, enter the formula “=0.02*A2*B2”. This formula calculates the drift of the stock. Step 6: In cell E2, enter the formula “=0.28*A2*SQRT(B2)*NORMINV(RAND(),0,1)”. This formula calculates the shock to the stock price. Step 7: In cell F2, enter the formula “=D2+E2”.
This formula calculates the drift plus shock. Step 8: In cell G2, enter the formula “=LN(C2/A2)”. This formula calculates the log returns of the stock. Step 9: Highlight cells A2 to G2 and drag down to fill the formulas down to cell G251, which is the final value in the first trajectory. Step 10: Copy the first trajectory by highlighting cells A2 to G251 and pasting them into cells A252 to G501. This is the second trajectory. Step 11: Repeat step 10 to create 20,000 trajectories. The final value in each trajectory is the simulated stock price after one year. Step 12: Calculate the price of a European call option maturing in one year with a strike price of 100 using the Monte Carlo method. In cell H1, enter the formula “=AVERAGE(MAX(0,E2-100))”. This formula calculates the average of the maximum of zero and the difference between the final simulated stock price and the strike price of 100 for all 20,000 trajectories. The result is the Monte Carlo estimate of the call option price.
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Homework: M3 Assignment 1 Question 2, Problem 12 Part 1 of 3 HW Score: 12.5%, 5 of 40 points O Points: 0 of 20 Save The number of heart surgeres performed at Heartvile General Hospital has increased steadily over the past several years. The hospita's administration is seeking the best method to forecast the demand for such surgeries in your 6.The data for the past five years are shown below Year Demand 7 3 4 16 The he's administration is considering the following forecasting methods Begin error measurement in year 3, so at methods are compared for the same years Expenental smoothing, with a-06. Let the ind forecast for year 1 be 42, the same as the actual demand & Exponential smoothing with a 09. Let the initial forecast for year 1 be 42, the same as the actual demand Trend projection with egression. In Two-year moving average Two-year weighted moving average, using weights 0.6 and 0.4, with the more recent data given more weight MA is the performance crtention chosen by the administration, which forecasting method should choose? Year Demand 1 42 2 50 3 53 4 55 5 58 The hospital's administration is considering the following forecasting methods. Begin error measurement in year 3, so all i. Exponential smoothing, with a = 0.6. Let the initial forecast for year 1 be 42, the same as the actual demand. ii. Exponential smoothing, with a = 0.9. Let the initial forecast for year 1 be 42, the same as the actual demand. iii. Trend projection with regression. iv. Two-year moving average. v. Two-year weighted moving average, using weights 0.6 and 0.4, with the more recent data given more weight. If MAD is the performance criterion chosen by the administration, which forecasting method should it choose? 3, so all methods are compared for the same year Exponential smoothing with a = 0.6 Exponential smoothing with a = 0.9 Trend projection with regression Two-year moving average Two-year weighted moving average e actual demand. e actual demand. iven more weight. it choose?
The administration of Heartvile General Hospital is seeking the best forecasting method for the demand of heart surgeries. They are considering exponential smoothing, trend projection with regression, two-year moving average, and two-year weighted moving average.
The administration of Heartvile General Hospital wants to determine the most suitable forecasting method for the demand of heart surgeries. The methods being considered are exponential smoothing with different values of α (0.6 and 0.9), trend projection with regression, two-year moving average, and two-year weighted moving average. To evaluate the performance of these methods, the Mean Absolute Deviation (MAD) is chosen as the performance criterion. MAD measures the average absolute difference between the forecasted values and the actual demand. By calculating the MAD for each method and comparing the results, the administration can determine which forecasting method provides the most accurate predictions for the demand of heart surgeries.
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In 2017-18, Ahmed has capital gains of £125,000 and allowable losses of £28,000. He also has capital losses brought forward of £4,800. Ahmed's taxable income for 2017-18 (after deduction of the personal allowance) is £18,600. He makes no Gift Aid donations during the year. Compute his capital gains tax (CGT) liability for the year assuming his gains of £125,000 comprise either: a) a gain of £115,000 which qualifies for entrepreneurs' relief (ER) and a non-ER gain of £10,000 on the disposal of chattels, or b) An ER gain of £10,000 and a non-ER gain of £115,000 arising on the disposal of residential property, or c) An ER gain of £7,500, a non-ER gain of £75,000 on the disposal of residential property and a non-ER gain of £42,500 on the disposal of shares. 2) Karen bought a house in 1990 for £46,000. In November 1991 she spent £18,000 on dividing the house into two self-contained flats. In September 2015 she sold one of the flats for £90,000, at which time the other flat was valued at £110,000. In January 2018 she sold the second flat for £115,000. Karen has never lived in either of the flats.< Compute the chargeable gains arising on Karen's two disposals.
The chargeable gain on Kares first flat is £54,600 , the chargeable gain is £69,400
How to solve for the chargeable gainsAhmed’s case:
Net capital gains = £125,000 - £28,000 - £4,800
= £92,200
Taxable gains
= £92,200 - £11,300 (annual exempt amount) = £80,900
Unused basic rate band = £33,500 - £18,600 = £14,900
CGT on unused basic rate band = £14,900 * 10% (or 18% if residential property gain) = £1,490
CGT on remaining gains = £66,000 * 20% = £13,200
Total CGT liability = £1,490 + £13,200 (or £2,682 + £18,480)
Kare case:
Total cost of both flats = £46,000 + £18,000 = £64,000
Cost of each flat = £90,000 - (£64,000 / £200,000) * £90,000
= £54,600
Chargeable gain on second disposal
= £115,000 - (£64,000 / £200,000) * £115,000
= £69,400
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How do IT communications support leaner, more efficient organizations?
A) By increasing collaborative efforts among all employees
B) By supporting shared activities between buyers and sellers
C) By providing better use of employee skills and greater efficiencies instead of resources
D) By allowing for more rapid exchange of information in the global market
E) By improving the management process
IT communications support leaner, more efficient organizations by providing better use of employee skills and greater efficiencies instead of resources.
The correct option is C. IT communications support leaner, more efficient organizations by providing better use of employee skills and greater efficiencies instead of resources. The focus of IT communication is to optimize employee skills, knowledge, and expertise by providing better communication and information-sharing systems that ultimately lead to increased productivity and better use of resources.
Furthermore, IT communication allows for better collaboration among employees, especially in today's digital era where information sharing is faster and more efficient. By improving communication and information sharing among employees, IT communication enables organizations to make more informed decisions, which in turn can lead to better performance.
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Assess the social and cultural proximity for new product in
India and Sweden
The assessment of social and cultural proximity for a new product in India and Sweden should consider factors such as demographics, language, culture, market trends, and consumer behavior.
Social and cultural proximity for a new product in India and Sweden can be assessed in several ways. The primary focus should be on understanding the cultural differences and similarities between the two countries. Here are some factors that can be considered:1. Demographics: The demographic profiles of India and Sweden are vastly different. India is a developing country with a large population, while Sweden is a developed country with a much smaller population. Therefore, the marketing strategy for a new product in India will be different from that in Sweden.2. Language: English is widely spoken in India, while Swedish is the official language of Sweden. Therefore, companies looking to introduce a new product in Sweden may need to consider translating their marketing materials into Swedish.3. Culture: India is a country with a rich cultural heritage, while Sweden has a more modern and liberal culture. Therefore, the marketing strategy for a new product in India may need to take into account cultural sensitivities, while in Sweden, a more straightforward and modern approach may be more effective.4. Market Trends: The market trends in India and Sweden are different. In India, there is a growing middle class, while in Sweden, the market is mature and established. Therefore, companies looking to introduce a new product in India may need to focus on affordability, while in Sweden, the focus may be on quality and innovation.5. Consumer Behavior: Consumer behavior in India and Sweden can be vastly different. Indians tend to be more price-sensitive, while Swedes tend to value quality and sustainability. Therefore, companies need to consider these factors when developing their marketing strategies for a new product in India and Sweden.
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Calculate the numerical value of the coefficient of the price elasticity of demand in each of the following situations. Do not round your interim calculations before obtaining the final solution (e. do not clear your calculator). In each case, express the number to two decimal places and do not include a positive or negative sign (e. 167, not-17 or +1667) a. Consumer A's purchases of romance novels fall from 5 to 3 per month when their price increases from $9 to $11. The coefficient of the price elasticity of demand is [ b. Weekly purchases of packs of chewing gum rise from 1.2 million to 1.3 million packs when their price declines from $1.00 to $0.90. The coefficient of the price elasticity of demand is c. A rise in the price of a health supplement from $20 to $25 per bottle reduces the number of bottles sold from 75,000 from 70.000. The coefficient of the price elasticity of demand is d. The annual quantity demanded of tablet computers rises from 200,000 to 250,000 when the price of tablets fails from $550 to $500. The coefficient of the price elasticity of demand is
The coefficient of the price elasticity of demand is,-2.75 (rounded to two decimal places).
a) The formula for calculating the coefficient of the price elasticity of demand is: Price Elasticity of Demand
= % Change in Quantity Demanded / % Change in Price Quantity demanded of romance novels by Consumer A falls from 5 to 3 per month when the price increases from $9 to $11. So,% Change in Quantity Demanded
= [(New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded] x 100%
Change in Quantity Demanded
= [(3 - 5) / 5] x 100%
Change in Quantity Demanded
= -40%Also,%
Change in Price = [(New Price - Old Price) / Old Price] x 100%
Change in Price = [(11 - 9) / 9] x 100%
Change in Price = 22.22%
Therefore, the coefficient of the price elasticity of demand is,-1.82 (rounded to two decimal places)b) Weekly purchases of packs of chewing gum rise from 1.2 million to 1.3 million packs when the price declines from $1.00 to $0.90. So,% Change in Quantity Demanded
= [(New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded] x 100%
Change in Quantity Demanded = [(1.3 - 1.2) / 1.2] x 100%
Change in Quantity Demanded = 8.33%
Also,% Change in Price
= [(New Price - Old Price) / Old Price] x 100%
Change in Price = [(0.90 - 1.00) / 1.00] x 100%
Change in Price = -10%
Therefore, the coefficient of the price elasticity of demand is,0.83 (rounded to two decimal places)c)A rise in the price of a health supplement from $20 to $25 per bottle reduces the number of bottles sold from 75,000 to 70,000. So,% Change in Quantity Demanded
= [(New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded] x 100%
Change in Quantity Demanded = [(70,000 - 75,000) / 75,000] x 100% Change in Quantity Demanded = -6.67%Also,%
Change in Price = [(New Price - Old Price) / Old Price] x 100%
Change in Price = [(25 - 20) / 20] x 100%
Change in Price = 25%
Therefore, the coefficient of the price elasticity of demand is,0.27 (rounded to two decimal places)d) The annual quantity demanded of tablet computers rises from 200,000 to 250,000 when the price of tablets falls from $550 to $500. So,% Change in Quantity Demanded
= [(New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded] x 100%
Change in Quantity Demanded = [(250,000 - 200,000) / 200,000] x 100%
Change in Quantity Demanded = 25%
Also,%
Change in Price = [(New Price - Old Price) / Old Price] x 100%
Change in Price = [(500 - 550) / 550] x 100%
Change in Price = -9.09%
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Identify each of the following accounts as either: b. Unearned Rent a. e. Fees Earned Prepaid Insurance Accounts Payable Equipment Sue Jones, Capital Supplies Expense a. an Asset account b. a Liabilit
Identifying accounts as either an Asset, Liability, Fees Earned or Unearned Rent is important in accounting. The following accounts are identified as follows: Unearned Rent is b. a Liability account.
It's a liability account because it refers to the rent that has been paid by a tenant in advance of the rental period. This means that the tenant owes the landlord the rental period which makes it a liability. Supplies Expense is e. Fees Earned. It's a revenue account because it's earned from selling goods or services. Prepaid Insurance is a. an Asset account. It's an asset account because the company has made a payment to the insurance company for the future, and the benefit will be received in the future.
Equipment is a. an Asset account. It's an asset account because the equipment has a future economic benefit to the company. Accounts Payable is b. a Liability account. It's a liability account because the company owes money to its suppliers or creditors. Sue Jones, Capital is a. an Asset account. It's an asset account because it shows the amount of investment made by the owner.
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Allison plans to buy a house which contains a restaurant. The area is zoned residential. If she opens her own restaurant in place of the existing one, she should check for: A variance. Conditional use. Nonconforming use. A taking
Allison should check for a conditional use permit before opening her own restaurant in a house-zoned residential area.
A conditional use permit is required for a property that is zoned for one type of use but intended for a different use.
In this case, the property is zoned for residential use, but Allison wants to open a restaurant.
A residential property with a restaurant would be considered a conditional use.
Therefore, she would need to apply for a conditional use permit.
This would involve submitting a proposal to the local planning commission, meeting certain requirements, and receiving approval for the use of the property as a restaurant.
This is necessary to ensure that the property complies with zoning laws and that the use will not have a negative impact on the surrounding community. Without a conditional use permit, Allison may run the risk of fines and closure of her restaurant.
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5) Given the following information, please provide the estimated value of the following A stocks using the P/E Valuation Model. Firm Boeing $8.35 Consolidated Edison $4.62 Walmart $9.75 Amazon $10.32 Industry Aerospace / Defense Railroads Retail (general) Retail (online) Utility (general) Industry P/E Ratios 35.7 20.3 44.2 60.3 18.3 25.7 Paper/Forest Products
Given the following information, the estimated value of the A stocks using the P/E Valuation Model is as follows:
Firm Boeing $8.35
Industry Aerospace / Defense
Industry P/E Ratio 35.7
Boeing's earnings per share = $8.35 / 35.7 = $0.2341
Estimated value of Boeing's stock = $0.2341 x 35.7 = $8.36
Consolidated Edison $4.62
Industry Utility (general)
Industry P/E Ratio 18.3
Consolidated Edison's earnings per share = $4.62 / 18.3 = $0.2525
Estimated value of Consolidated Edison's stock = $0.2525 x 18.3 = $4.62
Walmart $9.75
Industry Retail (general)
Industry P/E Ratio 44.2
Walmart's earnings per share = $9.75 / 44.2 = $0.2206
Estimated value of Walmart's stock = $0.2206 x 44.2 = $9.74
Amazon $10.32
Industry Retail (online)
Industry P/E Ratio 60.3
Amazon's earnings per share = $10.32 / 60.3 = $0.1711
Estimated value of Amazon's stock = $0.1711 x 60.3 = $10.32
The P/E Valuation Model is a useful tool for investors and analysts who want to estimate the value of a company's stock based on its P/E Ratio and earnings per share. By using this model, they can get a better idea of the relative value of a company's stock and make informed investment decisions.
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Using the table below, determine how many locations each SKU should occupy in the forward area assuming that there are 30 available locations in the forward area, pallet restock takes 5 minutes, and 2 minutes are saved by picking from the forward area. Also, show the order of SKUs IF all SKUs were able to be assigned into the forward area. Indicate each SKU's initial bid (NOT benefit) for space in the forward area rounded to the tenth place. SKU Carton picks (p:) LT-Pallet Demand (d) Pallet Demand (D) Min (1) Max (u;) А 450 25 50 10 25 ਹਨ । B 300 30 60 10 30 C 150 10 15 5 15 D 200 20 50 10 20 E 600 75 100 15 30 SKU How many locations are occupied in the Forward Area? bi Order А B D E What's the total benefit gained by filling the 30 available locations in the forward area?
To determine how many locations each SKU should occupy in the forward area and the order of SKUs, we need to calculate the benefits for each SKU and assign locations based on those benefits. The benefits are calculated by dividing the LT-Pallet Demand (d) by the time saved per pick.
First, let's calculate the benefits for each SKU:
SKU A: Benefit = d / (p * 2) = 25 / (450 * 2) ≈ 0.0278
SKU B: Benefit = d / (p * 2) = 30 / (300 * 2) = 0.05
SKU C: Benefit = d / (p * 2) = 10 / (150 * 2) ≈ 0.0333
SKU D: Benefit = d / (p * 2) = 20 / (200 * 2) = 0.05
SKU E: Benefit = d / (p * 2) = 75 / (600 * 2) ≈ 0.0625
Next, let's sort the SKUs based on their benefits in descending order:
SKU E > SKU B > SKU D > SKU C > SKU A
Now, let's assign locations to the SKUs in the forward area until we reach the limit of 30 available locations:
SKU E: 30 locations (top priority)
SKU B: 10 locations
SKU D: 5 locations
SKU C: 5 locations
SKU A: 0 locations (lowest priority)
The total benefit gained by filling the 30 available locations in the forward area would be the sum of the benefits for each SKU occupying a location:
Total Benefit = Benefit of SKU E + Benefit of SKU B + Benefit of SKU D + Benefit of SKU C
Total Benefit = 30 * 0.0625 + 10 * 0.05 + 5 * 0.05 + 5 * 0.0333
Please note that the actual values in the table are required to provide precise calculations. The above calculations are based on the provided formula and assumptions.
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explain two types of business environment with example.
2. Explain the 2 types of business environments? Provide examples? I
The business environment refers to the external factors that have an impact on a business's operations. There are two main types of business environments: the internal and external business environment.
Internal business environment
Internal business environment refers to the factors within an organization that affect its operations, productivity, and employee satisfaction. These factors may include the organization's structure, culture, and resources. Here are some examples of internal business environment:
Organizational culture: This includes the values, beliefs, and practices that are unique to an organization. The organizational culture is what drives the behavior and actions of employees in the company.
Organizational structure: This refers to how the company is organized and how authority is distributed. For example, a company may be structured as a functional, divisional, or matrix organization.
Economic factors: These include the state of the economy, interest rates, and inflation rates. For example, when the economy is booming, businesses tend to do well.
Technological factors: This includes advances in technology that can change the way a business operates. For example, the use of social media can be a game-changer for small businesses.
In conclusion, the business environment is a complex set of factors that have an impact on a business's operations. It is essential for businesses to understand both the internal and external business environment and how it affects their operations.
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View Picis Current Attempt in Progress Gladow Corporation began operations in 2020 and has these transactions related to intangible assets is that year Purchased a patent (5-year Goodwill purchased as part of an acquisition of another company Acquired a 9-year franchio expiration date July 1, 2025 Determined that the recoverable amount of the potent and franchise to be $214.000 a $641.000 respectively. There was no indication that the goodwill was impaired Jan 2 Apr. 1 M1 Dec 31 Date Account Titles and Explanation Jan. 2 Apt. 1 -15 Prepare the necessary entries to record these intangibles. Assume all costs incurred were for cash On account ster automatically indented when the amount is entered. Do not indent manually if no entry is requiredt, select "No Entry for the account titles and enter O for the amounts Debit I Credit $364.000 SACR000 $400 Act 1 Jd. 1 (Part of the entry to record purchase of another company) eTextbook and Media List of Accounts Prepare any adjusting journal entries required at December 31, 2020. (Credit account sicles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts) Date Account Titles and Explanation Credit Dec. 31 (Amortization of Patent) Debit Question 9 of 9 Date Account Titles and Explanation Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 dusortization Pat Amortization of rand ngatment of Pe limpsement of Fenchel pent of Goodw Textbook and Media Credit SHI ^64 KO eTextbook and Media Dimpairment of Goodwill) List of Accounts Calculate the carrying amount at December 31, 2020 for each of the intangibles Patents Goodwill S Franchises $ $ eTextbook and Media) List of Accounts Save for Later Using multiple attempts will impact your score Attempts: 0 of 3 used S
Gladow Corporation engaged in several transactions related to intangible assets in the year 2020. They purchased a patent, acquired a franchise, and obtained goodwill as part of an acquisition. The recoverable amounts of the patent and franchise were determined to be $364,000 and $641,000, respectively, with no impairment of goodwill indicated. At December 31, 2020, the necessary entries were made to record these intangibles, and any adjusting journal entries required were also made. The carrying amounts at December 31, 2020, for each of the intangibles (patents, goodwill, and franchises) need to be calculated.
In 2020, Gladow Corporation engaged in various transactions related to intangible assets. They purchased a patent for $364,000, acquired a franchise with an expiration date of July 1, 2025, and obtained goodwill as part of an acquisition. The recoverable amounts of the patent and franchise were determined to be $364,000 and $641,000, respectively, indicating no impairment of goodwill.
To record these transactions, appropriate journal entries were made on the respective dates. For example, on January 2, the entry to record the purchase of the patent would include a debit to the Patent account for $364,000 and a credit to Cash for the same amount.
Additionally, at December 31, 2020, adjusting journal entries were made. The details of these entries are not provided in the question, but they would typically include adjustments for amortization or impairment. For instance, an adjusting entry may be made to amortize the patent over its useful life or to recognize any impairment of goodwill if it occurred.
To calculate the carrying amount of each intangible asset at December 31, 2020, the respective initial amounts need to be adjusted based on any amortization or impairment recorded during the year. The carrying amount is the original cost minus any accumulated amortization or impairment.
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Stockholders equity is usually equal to cash on hand includes paid-in capital and liabilities Includes retained earnings and paid-in capital Is shown on the income statement Nebraska Inc. issues 3.000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock insurance would induce a credit to Common Stock for
The stockholder's equity is defined as the residual amount that remains in the assets of the company after the liabilities are deducted. It has two components: paid-in capital and retained earnings. Paid-in capital refers to the amount received by the company from the issuance of shares of stock.
On the other hand, retained earnings refer to the amount accumulated over the years due to profitable business operations. The journal entry to record the issuance of common stock is as follows: Cash 45,000 Common Stock 30,000 Paid-in Capital in Excess of Par 15,000The debit to cash account represents the cash received by the company from the issuance of shares.
The credit to common stock represents the amount received from the issuance of the shares. Lastly, the credit to paid-in capital in excess of par represents the amount received from the issuance of shares over and above its par value.In this case, the stated value of the common stock is $10 per share. Thus, the common stock account is credited for $30,000, which is computed as follows:Common Stock = Number of shares issued x Stated value per shareCommon Stock = 3,000 x $10Common Stock = $30,000Therefore, the journal entry to record the stock issuance would induce a credit to Common Stock for $30,000.
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Vector B has x, y, and z components of 2.2, 5.8, and 8.2 units, respectively. Calculate the magnitude of B. 005 (part 2 of 2) 10.0 points What is the angle between B and the x-axis? Answer in units of °
Vector B has x, y, and z components of 2.2, 5.8, and 8.2 units, respectively. We have to calculate the magnitude of B and the angle between B and the x-axis.Magnitude of vector B (|B|) is given as:|B| = √(Bx² + By² + Bz²)where Bx, By, and Bz are the x, y, and z components of vector B.
Substitute the given values in the above equation,|B| = √(2.2² + 5.8² + 8.2²)= √(4.84 + 33.64 + 67.24)= √105.72= 10.28 (approx)Thus, the magnitude of vector B is 10.28 units.Now, to find the angle between vector B and the x-axis, let's consider a diagram where vector B is represented in the xyz-plane as shown below:Diagram:Here, the angle between vector B and the x-axis is given by θ, which is the angle between vector B and its projection on the xy-plane.Let's calculate the projection of vector B on the xy-plane.
The projection of B on the xy-plane is given as:|Bxy| = √(Bx² + By²)where Bx and By are the x and y components of vector B.Substitute the given values in the above equation,|Bxy| = √(2.2² + 5.8²)= √(4.84 + 33.64)= √38.48= 6.2 (approx)Thus, the projection of vector B on the xy-plane is 6.2 units.The angle between vector B and the x-axis is given as:θ = tan⁻¹(By/Bx)Substitute the given values in the above equation,θ = tan⁻¹(5.8/2.2)= 70.6° (approx)Thus, the angle between vector B and the x-axis is 70.6°.Therefore, the answer to the given problem is,|B| = 10.28 units and the angle between vector B and the x-axis is 70.6°.
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1. Pick up which ones are cost centre and which ones are cost unit :- (a) Passenger-km (b) Canteen (c) Machine shop (d) Tonne (e) Lathe (f) Salesman (g) Delivery Van (h) Litre.
In cost accounting, a cost center refers to a specific department, function, or activity within an organization that incurs costs. On the other hand, a cost unit is a measurement or quantifiable item used to determine the cost of producing a particular product or delivering a service. Let's analyze each item to determine whether it is a cost center or a cost unit:
(a) Passenger-km: This is a cost unit. It represents the measurement of distance traveled by passengers and is used to calculate the cost per kilometer.
(b) Canteen: This is a cost center. The canteen is a specific department within an organization that incurs costs for providing food and beverages to employees.
(c) Machine shop: This is a cost center. A machine shop is a department where various machining operations take place, and it incurs costs related to labor, machinery, and materials.
(d) Tonne: This is a cost unit. It represents a unit of weight and is used to calculate the cost per ton in various industries.
(e) Lathe: This can be both a cost center and a cost unit. If the organization has a dedicated lathe department, it would be considered a cost center. However, if it is used as a measurement for costing purposes, it can also be a cost unit.
(f) Salesman: This is a cost center. Salesmen incur costs such as salaries, commissions, travel expenses, and other costs associated with their sales activities.
(g) Delivery Van: This is a cost center. The delivery van is a specific asset used for transportation purposes, and it incurs costs related to fuel, maintenance, and depreciation.
(h) Litre: This is a cost unit. It represents a unit of volume and is commonly used in industries such as fuel, beverages, and chemicals to calculate the cost per liter.
In summary, (b) Canteen, (c) Machine shop, (f) Salesman, and (g) Delivery Van are cost centers, while (a) Passenger-km, (d) Tonne, (e) Lathe (as a cost unit), and (h) Litre are cost units.
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Problem 1: Social Security with Population Growth Consider the following two-period, Overlapping Generations model of an economy. POPULATION The economy's population consists of N, households. Of these households, n, are young, and are old; therefore, N, = n, + 1,1 where n = (1 + n ly and 0 <7<1 is the population growth rate. GOVERNMENT'S "PROBLEM" Provide social security to each retired individual in each time period. Specifically, let t denote the payroll tax rate levied on the labour earnings of each young worker in each time period. Now, in reality, individual social security payments are a function of what an individual puts into the system; in this sense, you can think of the payroll tax rate as a "social" savings rate. The social security trust fund (sstf) is as follows: sstf , = n,tw, bo - .-7W,-2 h;:-1 = [SSTF] CONSUMER'S PROBLEM max U = tort1, 0<<1, subject to erfaren Cyg + $:+1 = (1 – t)w, Cos+1 = (1 +1+1) 's+1 + TW, 60,1+1 1 + (1 - 1)17+1 [1] [2] w LBC] 1 +1+1 1 +1+1 where the Euler Equation for this problem is 1-a 603+1 = (1 + 3+2) SI [EE] α FIRM'S PROBLEM max + T4+1 1 +1 +1 H,,,-1.1.1 such that 7, = AH?K!," - WH, 0
Answer: Security is of the utmost importance to people, businesses, and countries alike. With the advent of technological advancement, cybercrime has become more prevalent, resulting in a greater need for internet security.
Social Security with Population Growth This is a two-period, overlapping generations model of an economy. The economy's population consists of N, households. Of these households, n, are young, and are old; therefore,
N, = n, + 1,1
where n = (1 + n ly and 0 <7<1 is the population growth rate.The social security trust fund (sstf) is as follows:
sstf, = n,tw, bo - .-7W,-2 h;:-1 = [SSTF].
The consumer's problem max U = tort1, 0<<1, subject to erfaren
Cyg + $:+1 = (1 – t)w, Cos+1 = (1 +1+1) 's+1 + TW, 60,1+1 1 + (1 - 1)17+1 [1] [2] w LBC] 1 +1+1 1 +1+1
where the Euler Equation for this problem is
1-a 603+1 = (1 + 3+2) SI [EE] α.
The firm's problem is max + T4+1 1 +1 +1 H,,,-1.1.1 such that 7, = AH?K!," - WH, 0. The government's problem is to provide social security to each retired individual in each time period. The payroll tax rate is denoted as t and is levied on the labor earnings of each young worker in each time period. In reality, individual social security payments are a function of what an individual puts into the system. In this sense, the payroll tax rate can be considered a "social" savings rate. Hackers and cybercriminals are becoming more sophisticated, and internet security is becoming more difficult to maintain. Therefore, internet security is a top priority for individuals and businesses alike.Social Security is a federal government program in the United States that provides social insurance and benefits to individuals who are retired, disabled, or unemployed. Social Security is funded through payroll taxes, which are levied on the earnings of working Americans. Social Security has been an important program for millions of Americans who rely on it for retirement income. The government's problem is to provide social security to each retired individual in each time period. The payroll tax rate is denoted as t and is levied on the labor earnings of each young worker in each time period.
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Suppose a firm's total revenue function and total cost function are given by: R(q) = 70q q² where R: R+ → R C(q) = q² - 30q+ 100 where C: R+ → R 1. What is the type of the firm facing this particular revenue function? 2. Based on the given information, can you deduce the inverse demand function? 3. Solve this firm's profit maximization problem. Make sure to clearly indicate the profit maximizing solution at the end (i.e. q,p*,& n(q)). 4. Find the supply function for this particular firm. Is it equal to the market supply? Please explain. Hint: Supply function can either be defined by an exact quantity or it can be defined by a set of possible quantities. 5. Suppose that the barrier to entry for this market has been removed by a change in regulation. You wish to start a new business in this market. What is the type of the new firm in this case? 6. Solve this new firm's profit maximization problem. Make sure to clearly indicate the profit maximizing solution at the end (i.e. q*,p*,& n(q*)). Hint: DO NOT use the inverse demand function. Example in Section 11.2 was finding for the point of intersection between the inverse demand function and MC. Your answers might not be in clean numbers as opposed to part 3. 7. Find the supply function for this new firm. Is it equal to the market supply? Please explain. Hint: Supply function can either be defined by an exact quantity or it can be defined by a set of possible quantities. 8. By part 5, what would be the initial market price p demanded by consumers? Please explain. Then, using this market price p, solve q* and 7(q) for this new firm. 9. Do you think that this market price p is going to stay the same in the long-run? Please explain. 10. Compare your answers in Part 3 (i.e. the original firm's q* and 7(q")) and Part 8 (i.e. the new firm's q* and π(q)). Is π(q*) the same for two firms? If so, why does one firm enjoy better profit than the other? Please explain. 11. Please draw marginal revenue, marginal cost, and supply curve for both firms in the same graph. Let subscript m denote the monopolist's curves and let subscript c denote the competitive firm's curves. Hint: For the competitive firm's supply curve, draw as if we are not given the market price p.
1. The firm facing this particular revenue function is a monopolist.
2. To deduce the inverse demand function, we need to equate the revenue function R(q) to the price P and solve for q. Given that R(q) = 70q - q^2, we have P = 70 - q. Therefore, the inverse demand function is P(q) = 70 - q.
3. To solve the profit maximization problem, we need to find the quantity that maximizes the firm's profit. Profit (π) is given by the difference between total revenue (TR) and total cost (TC): π(q) = R(q) - C(q).
We know that R(q) = 70q - q^2 and C(q) = q^2 - 30q + 100. Substituting these expressions into the profit equation, we have: π(q) = (70q - q^2) - (q^2 - 30q + 100). Simplifying the equation: π(q) = 40q - 2q^2 - 100.
To find the profit-maximizing quantity, we take the derivative of π(q) with respect to q, set it equal to zero, and solve for q:
π'(q) = 40 - 4q = 0
4q = 40
q* = 10.
The profit-maximizing quantity is q* = 10.
To find the corresponding price, we substitute q* into the inverse demand function:
P(q*) = 70 - q* = 70 - 10 = 60.
So, the profit-maximizing quantity is q* = 10, and the corresponding price is p* = 60. The firm's profit at this quantity is π(q*) = π(10) = (70*10 - 10^2) - (10^2 - 30*10 + 100) = $200.
4. The supply function for this firm is q = q*, where q* is the profit-maximizing quantity. Since a monopolist controls the entire market supply, the firm's supply function is equal to the market supply.
5. The new firm, after the removal of the barrier to entry, would be a perfectly competitive firm.
6. In a perfectly competitive market, the profit-maximizing quantity is determined where marginal cost (MC) equals the market price (P). The firm does not need to consider the inverse demand function.
The total cost function C(q) = q^2 - 30q + 100 remains the same. To find the profit-maximizing quantity, we equate MC to P and solve for q:
MC = C'(q) = 2q - 30
P = 70 - q
Setting MC equal to P:
2q - 30 = 70 - q
3q = 100
q* = 100/3.
So, the profit-maximizing quantity for the new firm is q* = 100/3.
7. In a perfectly competitive market, the supply function for the firm is determined by its cost structure. Since the firm is a price taker, its supply function is equal to its marginal cost curve.
8. In a perfectly competitive market, the market price (p) is determined by the intersection of the market demand and supply curves. Since we don't have information on market demand or supply, we cannot determine the initial market price (p) demanded by consumers.
9.In the long run, market price (p) in a perfectly competitive market tends to equal the marginal cost (MC) of production. If firms in the market are making economic profits, new firms will enter the market, increasing supply and driving down prices. Conversely, if firms are incurring losses, some firms may exit the market, reducing supply and driving up prices. In the long run, the market price tends to adjust to the equilibrium level where firms earn zero economic profit.
10.In Part 3, the original firm's profit-maximizing quantity (q*) is 10, and the profit is $200. In Part 8, the new firm's profit-maximizing quantity (q*) is 100/3, and the profit is unknown since we don't know the market price (p). The profit (π) for both firms depends on their cost structures and the market conditions. If the market price (p) is higher than the average total cost (ATC) for both firms, they will earn positive economic profits. However, one firm may enjoy better profit than the other if its cost structure is more efficient, allowing it to produce at a lower cost.
11. Unfortunately, I'm unable to draw graphs here as I can only provide text-based responses. However, in a graph, the marginal revenue (MR) curve for the monopolist would lie below the demand curve (P(q)), while the marginal cost (MC) curve would intersect the demand curve at the profit-maximizing quantity (q*).
For the perfectly competitive firm, the supply curve would be represented by the marginal cost (MC) curve, which would intersect the market price (p) at the profit-maximizing quantity (q*). The marginal revenue curve would be horizontal at the market price level (p).
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the constraint on deposit creation related to the idea that if banks are holding sufficient reserves they must also be willing to make new loans is related to ______.
The constraint on deposit creation related to the idea that if banks are holding sufficient reserves, they must also be willing to make new loans is related to the concept of the money multiplier.
The money multiplier is a concept in banking that explains the relationship between reserves held by banks and the potential creation of new deposits through lending. The constraint mentioned in the question is directly linked to the money multiplier principle. Banks are required to hold a certain percentage of their deposits as reserves, known as the reserve requirement. This reserve requirement ensures that banks have a certain level of liquidity to meet customer demands for withdrawals. However, if banks hold more reserves than required, it limits their ability to create new loans and generate additional deposits.
When banks have excess reserves, they have the potential to make new loans and create additional deposits in the economy through the process of deposit multiplication. This process works by banks using a fraction of their excess reserves to extend new loans, which in turn become new deposits in other accounts. Therefore, the constraint on deposit creation related to banks holding sufficient reserves but also needing to make new loans is directly tied to the concept of the money multiplier. Banks must strike a balance between maintaining adequate reserves and being willing to extend new loans to support economic activity and deposit creation.
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When a city holds pension monies for city employees, the monies should not be recorded in which of the following (select all that apply):
A) The general fund.
B) A private purpose trust fund.
C) A fiduciary fund.
D) An agency fund.
E) A special revenue fund.
The pension monies for city employees should not be recorded in the general fund, a private-purpose trust fund, or a special revenue fund.
The monies held for city employees' pensions should be recorded in specific types of funds that are designed to handle fiduciary responsibilities. These funds ensure that the pension assets are separate from the general operating funds of the city. The appropriate funds for recording pension monies are a fiduciary fund or an agency fund.
A) The general fund is used to record the city's general operating activities and should not include pension monies, as they are separate and designated for specific purposes.
B) A private-purpose trust fund is not appropriate for recording pension monies, as it is typically used for assets held for the benefit of individuals, organizations, or other entities.
C) A fiduciary fund is the appropriate fund type for recording pension monies. It is used for assets held in a trustee capacity, such as pension funds.
D) An agency fund is also appropriate for recording pension monies. It is used when the city acts as a custodian or agent for the assets, with no ownership interest.
E) A special revenue fund is not the appropriate fund type for recording pension monies. It is used for specific revenue sources that are legally restricted for particular purposes other than pension obligations.
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Homework:Unit 10 Lab Assignment
Question 6, P10-13 (similar to)
Part 3 of 9
HW Score: 93.25%, 18.65 of 20 points
Points: 0.4 of 1
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Part 1
(Common stock valuation) Assume the following:
• the investor's required rate of return is
15
percent,
• the expected level of earnings at the end of this year
(E1)
is
$8,
• the retention ratio is
50
percent,
• the return on equity
(ROE)
is
12
percent (that is, it can earn
12
percent on reinvested earnings), and
• similar shares of stock sell at multiples of
5.555
times earnings per share.
Questions:
a. Determine the expected growth rate for dividends.
b. Determine the price earnings ratio
(P/E1).
c. What is the stock price using the P/E ratio valuation method?
d. What is the stock price using the dividend discount model?
e. What would happen to the P/E ratio
(P/E1)
and stock price if the company increased its retention rate to
75
percent (holding all else constant)? What would happen to the P/E ratio
(P/E1)
and stock price if the company paid out all its earnings in the form of dividends?
f. What have you learned about the relationship between the retention rate and the P/E ratios?
**please show calculations
Calculation of dividend growth rate
Given:
Investor's required rate of return, Ke = 15%
Expected level of earnings at the end of this year, E1 = $8
Retention ratio, b = 50%
Return on equity, ROE = 12%
Similar shares of stock sell at multiples of 5.555 times earnings per share.
We know that Retention ratio, b = (Dividends paid - Dividends distributed) / Dividends paid
Therefore, Dividends distributed = Dividends paid - (Retention ratio * Dividends paid)
Dividends distributed = Dividends paid - (0.5 * Dividends paid) = 0.5 * Dividends paid
Since the company pays out 50% of earnings as dividends, the earnings retained by the company can be computed as follows:
Earnings retained = Net income – Dividend paid
Where, Net income = Earnings per share (EPS) * Number of shares
Given, EPS = E1 = $8
Suppose the company has x number of shares outstanding. Then,
Net income = $8 * x
Dividend paid = 0.5 * Net income = 0.5 * $8 * x = $4x
Earnings retained = Net income - Dividend paid = $8x - $4x = $4x
The company's Return on Equity (ROE) is given as 12%. Therefore, the earnings retained by the company will grow at the rate of 12%.
Therefore, Expected growth rate (g) = Retention ratio * ROE = b * ROE
= 0.5 * 0.12 = 0.06 or 6%
Part 2: Calculation of price-earnings (P/E) ratio
Price-earnings (P/E) ratio (P/E1) = Market price per share / Earnings per share
The P/E ratio can be rewritten as P/E1 = 1 / Ke - g * (1 - b)
P/E1 = 1 / 0.15 - 0.06 * (1 - 0.5) = 1 / 0.12 = 8.33 times earnings per share
Part 3: Calculation of stock price using P/E ratio valuation method
The stock price can be calculated as follows:
Stock price = Earnings per share * P/E ratio
= $8 * 8.33 = $66.64
Part 4: Calculation of stock price using the dividend discount model
The dividend discount model is given as: PV = D / (Ke - g)
Where, PV = Present value of the stock
D = Expected dividend at the end of year 1 = Dividend payout ratio * Earnings per share = b * E1
Ke = Investor's required rate of return
g = Expected growth rate
Using the above values, the stock price can be computed as:
D = 0.5 * $8 = $4
PV = $4 / (0.15 - 0.06) = $4 / 0.09 = $44.44
Part 5: Effect of increase in retention ratio on P/E ratio and stock price
When the retention ratio increases to 75%, the dividend payout ratio decreases to 25%.
Dividend payout ratio = 1 - Retention ratio = 1 - 0.75 = 0.25
Expected dividend at the end of year 1 = Dividend payout ratio * Earnings per share = 0.25 * $8 = $2
The new expected growth rate can be calculated as follows:
g = Retention ratio * ROE = 0.75 * 0.12 = 0.09 or 9%
The P/E ratio can be calculated as follows:
P/E1 = 1 / Ke - g * (1 - b)
P/E1 = 1 / 0.15 - 0.09 * (1 - 0.75) = 1 / 0.12 = 8.33 times earnings per share
The stock price can be calculated as follows:
Stock price = Earnings per share * P/E ratio
= $8 * 8.33 = $66.64
When the retention ratio is 100%, all earnings are retained by the company. Therefore, the expected dividend at the end of year 1 will be zero.
Expected dividend at the end of year 1 = Dividend payout ratio * Earnings per share = 0
The new expected growth rate can be calculated as follows:
g = Retention ratio * ROE = 1 * 0.12 = 0.12 or 12%
The P/E ratio can be calculated as follows:
P/E1 = 1 / Ke - g * (1 - b)
P/E1 = 1 / 0.15 - 0.12 * (1 - 1) = 1 / 0.15 = 6.67 times earnings per share
The stock price can be calculated as follows:
Stock price = Earnings per share * P/E ratio
= $8 * 6.67 = $53.36
Part 6: From the above calculations, it can be observed that the retention ratio has a direct impact on the growth rate of dividends and an indirect impact on the P/E ratio and the stock price. An increase in the retention ratio leads to a higher expected growth rate of dividends, which increases the P/E ratio and stock price. Conversely, a decrease in the retention ratio results in a lower expected growth rate of dividends, which reduces the P/E ratio and stock price. If the company retains all earnings, it would lead to a higher expected growth rate but a lower P/E ratio and stock price. Therefore, companies must strike a balance between dividend payout and retention to maintain a stable P/E ratio and stock price.
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