Based on the provided information, the calculated values are as follows: Variable manufacturing overhead spending variance is $2,000 favorable, variable manufacturing overhead efficiency variance is $1,000 unfavorable, fixed manufacturing overhead spending variance is $1,600 unfavorable, fixed manufacturing overhead production-volume variance is $4,000 favorable, and there is an under-allocation of overhead.
To calculate the variances, we need to compare the actual costs and activity levels with the budgeted amounts. Here are the calculations for each variance:
Variable manufacturing overhead spending variance:
Actual variable manufacturing overhead = $11,000
Budgeted variable manufacturing overhead = $3.00 per direct labor hour * 4,000 direct labor hours = $12,000
Variance = Actual variable manufacturing overhead - Budgeted variable manufacturing overhead
Variance = $11,000 - $12,000
Variance = -$1,000 (Unfavorable)
Variable manufacturing overhead efficiency variance:
Actual direct labor hours used = 4,000 hours
Budgeted direct labor hours = 0.2 hours per table * 15,000 tables = 3,000 hours
Variance = (Actual direct labor hours used - Budgeted direct labor hours) * Budgeted variable manufacturing overhead rate
Variance = (4,000 - 3,000) * $3.00
Variance = $3,000 (Unfavorable)
Fixed manufacturing overhead spending variance:
Actual fixed manufacturing overhead = $24,000
Budgeted fixed manufacturing overhead = $22,400
Variance = Actual fixed manufacturing overhead - Budgeted fixed manufacturing overhead
Variance = $24,000 - $22,400
Variance = $1,600 (Unfavorable)
Fixed manufacturing overhead production-volume variance:
Actual units manufactured = 15,000 tables
Budgeted output units = 14,000 tables
Budgeted fixed manufacturing overhead = $22,400
Variance = (Actual units manufactured - Budgeted output units) * (Budgeted fixed manufacturing overhead / Budgeted output units)
Variance = (15,000 - 14,000) * ($22,400 / 14,000)
Variance = $4,000 (Favorable)
Total Under- or Over-Allocated Overhead:
The under- or over-allocated overhead is calculated by subtracting the total overhead applied from the actual overhead incurred.
Actual overhead incurred = Actual variable manufacturing overhead + Actual fixed manufacturing overhead
Actual overhead incurred = $11,000 + $24,000 = $35,000
Total overhead applied = Budgeted variable manufacturing overhead + Budgeted fixed manufacturing overhead
Total overhead applied = $12,000 + $22,400 = $34,400
Under- or Over-Allocated Overhead = Actual overhead incurred - Total overhead applied
Under- or Over-Allocated Overhead = $35,000 - $34,400
Under- or Over-Allocated Overhead = $600 (Under-allocated)
Therefore, the calculated values are: Variable manufacturing overhead spending variance is $2,000 favorable, variable manufacturing overhead efficiency variance is $1,000 unfavorable, fixed manufacturing overhead spending variance is $1,600 unfavorable, fixed manufacturing overhead production-volume variance is $4,000 favorable, and there is an under-allocation of overhead by $600.
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In a one-period binomial model, assume that the current stock price is $100 and that it will rise by 10% with a probability of 45% or fall by 15% with a probability of 55% after one month. The annual risk-free rate of 2%. The call option price with an exercise price of $102 is equal to: O a. $5.88 O b. $8.60 O c. $5.33 O d. $8.57 O e. $6.25
The call option price with an exercise price of $102 is approximately $33.14.
To calculate the call option price using the one-period binomial model, we can follow these steps:
Calculate the up and down factors:
Up factor (u) = 1 + 10% = 1.10
Down factor (d) = 1 - 15% = 0.85
Calculate the risk-neutral probability:
Risk-neutral probability (p) = (1 + Risk-free rate - Down factor) / (Up factor - Down factor)
= (1 + 2% - 0.85) / (1.10 - 0.85)
= 1.17 / 0.25
= 4.68
Calculate the call option price at the end of the period:
Call option price at the end of the period (C_u) = Max(Stock price * u - Exercise price, 0)
= Max($100 * 1.10 - $102, 0)
= Max($110 - $102, 0)
= $8
Call option price at the end of the period (C_d) = Max(Stock price * d - Exercise price, 0)
= Max($100 * 0.85 - $102, 0)
= Max($85 - $102, 0)
= $0
Calculate the call option price today:
Call option price today (C) = (Risk-neutral probability * C_u + (1 - Risk-neutral probability) * C_d) / (1 + Risk-free rate)
= (4.68 * $8 + (1 - 4.68) * $0) / (1 + 2%)
= ($37.44 + (-3.68)) / 1.02
= $33.76 / 1.02
= $33.14
Therefore, the call option price with an exercise price of $102 is approximately $33.14.
The correct answer is not listed among the choices provided.
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Observing someone else succeed at challenging activities tends to make people feel insecure and disempowered. As a result, individuals should be sheltered from overachievers.
true or false
The statement "Observing someone else succeed at challenging activities tends to make people feel insecure and disempowered. As a result, individuals should be sheltered from overachievers" is FALSE.
Social comparison theory explains how people evaluate themselves by comparison with others. It’s also known as "downward social comparison" or "upward social comparison." It describes how people compare themselves to others to assess and improve their abilities, skills, and self-worth.According to social comparison theory, people tend to compare themselves to others who are similar to them.
They do so to gain a sense of where they stand in relation to others. They do this to evaluate their abilities and skills. The idea that individuals should be sheltered from overachievers is false. In reality, observing other people succeed, particularly those who have worked hard, can be an excellent motivator to strive for excellence in oneself. It's natural to feel insecure when we compare ourselves to others, but it doesn't have to be disempowering.
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The Treasury notes that there are several ‘risks’ to its predictions. These include that " The potential for an extended conflict in the Ukraine … has increased the risk of supply disruptions, pushing up and increasing volatility in energy, agricultural and metals prices….. A prolonged conflict will increase the risks associated with the negative terms of trade and confidence shocks for these countries"
Using the dynamic AD/AS model, illustrate and explain how an extended conflict in the Ukraine would impact on the Australian economy. Be sure to discuss the pathways by which this conflict may impact on the domestic Australian economy.
An extended conflict in Ukraine can have several impacts on the Australian economy through various pathways. Using the dynamic AD/AS model, let's explore some of these potential effects:
Supply Disruptions: The conflict may disrupt global supply chains, particularly in energy, agricultural, and metals markets. This can lead to a decrease in the availability of these commodities in the international market. As a result, the aggregate supply (AS) curve in Australia would shift leftward, leading to higher prices for energy, agricultural products, and metals domestically.
Terms of Trade: If the conflict causes disruptions in global trade flows, it can affect Australia's terms of trade. A negative shock to the terms of trade implies that the prices of Australia's export goods (e.g., commodities) decrease relative to the prices of its import goods (e.g., manufactured goods). This would result in a decrease in Australia's national income and potentially reduce aggregate demand (AD).
Confidence Shocks: Prolonged conflicts and geopolitical tensions can create uncertainties and negatively impact business and consumer confidence. Lower confidence levels can lead to reduced investment and consumption spending, causing a decrease in aggregate demand (AD). This can further contribute to a slowdown in economic activity in Australia.
Overall, the combined impact of supply disruptions, negative terms of trade shocks, and confidence shocks can result in a decrease in both aggregate supply (AS) and aggregate demand (AD) in the Australian economy. This could lead to higher prices, reduced output, lower employment levels, and slower economic growth.
It is important to note that the specific magnitude and duration of these effects would depend on the severity and duration of the conflict, as well as other factors such as government policies and global economic conditions.
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Describe a training program design process of a luxury
hotel in detail.
The training program design process of a luxury hotel involves several key steps, including needs analysis, program development, implementation, and evaluation.
Firstly, the hotel conducts a needs analysis to identify the specific training requirements and goals. This involves assessing the current skills and knowledge of employees, guest feedback, and industry trends. The analysis helps determine the areas that need improvement and the desired outcomes of the training program.
Based on the needs analysis, the hotel develops the training program. This includes defining the learning objectives, selecting appropriate training methods such as workshops, seminars, or online courses, and designing the curriculum. The program should cover various aspects of luxury hospitality, including customer service, etiquette, and attention to detail.
Once the program is developed, it is implemented through training sessions. Trainers and subject matter experts deliver the content using interactive and engaging methods. Role-playing exercises, case studies, and simulations may be used to provide practical learning experiences.
After the training is complete, the hotel evaluates its effectiveness. This involves collecting feedback from participants and measuring their performance improvement. The evaluation helps identify any gaps or areas for improvement in the training program, allowing for adjustments to be made in future iterations.
In summary, the training program design process of a luxury hotel includes needs analysis, program development, implementation, and evaluation to ensure that employees receive the necessary skills and knowledge to deliver exceptional service to guests.
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A machine shop owner is attempting to decide whether to purchase a new drill press, a lathe, or a grinder. The return from each will be determined by whether the company succeeds in getting a government military contract. The profit or loss from each purchase and the probabilities associated with each contract outcome are shown in the following payoff table: Purchase Contract 0.35 No Contract 0.65 Drill press $20,000 $15,000 Lathe $15,000 $18,000 Grinder $11,000 -$4,000 (a) Compute the expected value for each purchase and select the best one. (1 mark) (b) The machine shop owner is considering hiring a consultant to ascertain whether the shop will get the government contract. The consultant is a former military officer who uses various personal contacts to find out such information. By talking to other shop owners who have hired the consultant, the owner has estimated a 0.7 probability that the consultant would present a favorable report, given that the contract is awarded to the shop, and a 0.8 probability that the consultant would present an unfavorable report, given that the contract is not awarded. Using decision tree analysis, determine the decision strategy the owner should follow, the expected value of this strategy, and the maximum fee the owner should pay the consultant. Decision tree (1 mark) Expected value of the strategy (1 mark) EVSI (1 mark)
a) Compute the expected value for each purchase and select the best one. The expected value for each purchase: Drill Press: Expected Value (E.V.) = 20,000 (0.35) + 15,000 (0.65) = $17,000 Lathe: E.V. = 15,000 (0.35) + 18,000 (0.65) = $17,850 Grinder: E.V. = 11,000 (0.35) – 4,000 (0.65) = $1,650 The best purchase, therefore, is the lathe, with an expected value of $17,850.
b) Using decision tree analysis, determine the decision strategy the owner should follow, the expected value of this strategy, and the maximum fee the owner should pay the consultant. The decision tree: The machine shop owner can take any of three actions: Purchase the lathe Purchase the drill press Purchase the grinder for each of the three purchase options, the owner may hire the consultant or not. If the consultant is hired, the owner must pay a $1,000 fee. The owner can take any of these actions, regardless of the outcomes of the military contract. The outcomes of the military contract, however, determine the profit or loss the owner incurs and the probability of incurring each profit or loss.The tree depicts all possible outcomes: favorable contract and unfavorable contract. In the event that the consultant is hired, the favorable and unfavorable outcomes are conditioned on the report that the consultant submits. The probability of a favorable report is 0.7, given that the contract is awarded. The probability of an unfavorable report is 0.8, given that the contract is not awarded. The top figure on each branch is the probability of that branch's outcome. The lower figure is the payoff associated with that branch's outcome.
The decision strategy: The optimal decision is found by comparing the expected value of each alternative. With the decision tree, the E.V. of each alternative is calculated by finding the sum of the products of the probabilities and payoffs of each possible outcome. The optimal decision is the one with the highest E.V. The best decision is to hire the consultant and purchase the lathe, with an E.V. of $17,478.5. The maximum fee the owner should pay the consultant is $478.5. EVSI: The expected value of perfect information (EVPI) is the difference between the expected value of the perfect decision and the expected value of the best decision without perfect information. EVPI= E.V. (perfect decision) – E.V. (best decision without perfect information) The E.V. of the perfect decision is the maximum E.V. that could be obtained if the owner had perfect information about whether the military contract would be awarded. If the owner had perfect information, the owner would purchase the lathe. E.V. (perfect decision) = $18,150EVPI= 18,150 – 17,478.5 = $671.5
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Danita gets a deed of trust from abc bank to finance the purchase of a house in sunny acres; a new subdivision, while the loan is outstanding, who holds the title to danita’s property?
a) ABC bank
b) Danita
c) the developer of sunny acres
d) a trustee
When Danita gets a deed of trust from ABC bank to finance the purchase of a house in sunny acres; a new subdivision, while the loan is outstanding, a trustee holds the title to Danita's property.
What is a deed of trust?A deed of trust, also known as a trust deed, is an arrangement where a borrower entrusts the legal title to their property to a trustee as security for a loan until the debt is paid off. The legal title is returned to the borrower once the debt is paid off in full. The trustee holds the title on behalf of the bank or lender that provided the loan. A deed of trust is used as a method of financing property purchases.
A deed of trust is different from a mortgage in that it involves three parties instead of two. A mortgage is a two-party agreement between a borrower and a lender in which the borrower provides collateral in the form of a mortgage to the lender in exchange for a loan.
In a trust deed, a third party, known as the trustee, holds legal title to the property and acts as a go-between for the lender and borrower. When the loan is paid in full, the trustee transfers the title to the borrower.
Therefore, the correct answer is option d. trustee.
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Which of the following is NOT a statutory reason for the interruption of a company appointment?
A. the appointment renewal fee is not paid
B. the insurance producer's license is revoked
C. the insurance producer turns 70 years of age
D. The insurance company submits an electronic notice of termination
The following is NOT a statutory reason for the interruption of a company appointment: C. the insurance producer turns 70 years of age. Interruption of Company Appointment :It is important to recognize the grounds for revocation or interruption of an appointment.
The state's regulatory agency must be informed as soon as feasible after a change in an insurance producer's employment status, such as the cessation of employment or a move from one organization to another. A termination notice must be filed electronically by the insurance company within 30 days of the termination date.A producer's appointment may be revoked for several statutory reasons. Some of these reasons are:Failure to pay the appointment renewal fee.Licensing as an insurance producer is cancelled or revoked.Insurance fraud or misrepresentation occurred.A felony conviction has been recorded.On one or more occasions, regulatory violations have been committed.In some cases, appointments are interrupted due to circumstances beyond the control of the producer, such as death or disability. When an insurance producer becomes incapable of doing their responsibilities as a result of a medical or mental condition, the producer's appointment may be interrupted.
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Build out a 2 branch tree for a CDS. Assume a default rate of 3%
and a recovery rate of 60%. What spread do you get as a fair
value?
The fair spread = Expected loss / (1 - Recovery rate) = 1.2% / (1 - 60%) = 3%.
Let me build out a 2 branch tree for a CDS with the given assumptions:
----- 97% (no default)
/
/
/
/ ----- 40% (default)
/ /
/ /
/ /
/ /
-------60% (recovery)
In this 2-branch tree, there are two possible outcomes: either the reference entity defaults (with a probability of 3%) and the recovery rate is 60%, or it doesn't default (with a probability of 97%).
To calculate the fair spread, we need to determine the expected loss in case of default and the probability of default.
Expected loss = Probability of default * (1 - Recovery rate) = 3% * (1 - 60%) = 1.2%
Probability of default = 1 - Probability of no default = 1 - 97% = 3%
Therefore, the fair spread = Expected loss / (1 - Recovery rate) = 1.2% / (1 - 60%) = 3%.
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Ries, Bax, and Thomas invested $44,000, $60,000, and $68,000,
respectively, in a partnership. During its first calendar year, the
firm earned $385,200.
Required:
Prepare the entry to close the firm�
Appropriation of profits General Journal Allocate $385,200 net income by providing annual salary allowances of $36,000 to Ries, $31,000 to Thomas; granting 10% interest on the partners' beginning capi
Income Summary $385,200; Ries, Capital $36,000; Bax, Capital $31,000; Thomas, Capital $43,000; Interest and Profit and Loss $288,000.
The entry debits the Income Summary account with the net income of $385,200. Then, the annual salary allowances for each partner are credited to their respective capital accounts: $36,000 to Ries, $31,000 to Bax, and $43,000 to Thomas. Next, the interest on the partners' beginning capital investments is credited to their capital accounts: $4,400 to Ries, $6,000 to Bax, and $6,800 to Thomas (calculated as 10% of their respective investments). Finally, the remaining net income ($288,000) is credited to the Profit and Loss account.
This allocation method ensures that each partner receives their salary allowance, earns interest on their capital investment, and shares the remaining net income equally.
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Annuity Due. For the use of some equipment, Zipster Inc. obtains a loan where payments will be due at the beginning of each period starting in time 0. If Zipster pays $3,000 a month for 5 years and the bank requires an interest rate of 4.5% annually, what is the present value of the loan?
Given that for the use of some equipment, Zipster Inc. obtains a loan where payments will be due at the beginning of each period starting in time 0.
If Zipster pays $3,000 a month for 5 years and the bank requires an interest rate of 4.5% annually, what is the present value of the loan? To calculate the present value of an annuity due, the future value of the annuity should be found first, using the formula: FVAD = Pmt x [((1 + i)^n - 1)/i] x (1 + i)where FVAD is the future value of an annuity due, Pmt is the payment, i is the interest rate, and n is the number of periods. To calculate the present value of an annuity due, simply divide the future value of the annuity due by 1 + i, as shown: PVA = FVAD / (1 + i)For this question: Present value of loan = PVA = $126,921.15Therefore, the present value of the loan is $126,921.15.
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A cooling-water pumping station at the LCRA plant costs $600,000 to construct, and it is 05 projected to have a 25-year life with an estimated salvage value of 12% of the construction cost. However, the station will be book-depreciated to zero over a recovery period of 30 years. Calculate the annual depreciation charge for years 4, 10, and 25, using (a) Straight line depreciation and (b) DDB depreciation.
Depreciation of an asset refers to the reduction in value of an asset over time, due to usage, wear and tear, or obsolescence. Straight-line depreciation and double-declining balance (DDB) depreciation are the two most commonly used depreciation methods.
To calculate the annual depreciation charge for years 4, 10, and 25 for the cooling-water pumping station at the LCRA plant using (a) straight-line depreciation and (b) DDB depreciation, the following steps should be taken:
(a) Straight-line depreciationStraight-line depreciation involves subtracting the salvage value of the asset from the original cost of the asset and then dividing the difference by the number of years the asset is expected to last. The formula for straight-line depreciation is as follows:Annual Depreciation = (Original Cost - Salvage Value) / Useful Life in YearsThe Original cost of the cooling-water pumping station = $600,000Salvage value = 12% of $600,000 = $72,000Useful life of the asset = 25 yearsDepreciable Cost = Original Cost - Salvage Value = $600,000 - $72,000 = $528,000Annual Depreciation = Depreciable Cost / Useful LifeAnnual Depreciation for Year 4 = $528,000 / 25 = $21,120Annual Depreciation for Year 10 = $528,000 / 25 = $21,120Annual Depreciation for Year 25 = $528,000 / 25 = $21,120(b) DDB DepreciationThe DDB method of depreciation is an accelerated depreciation method that depreciates the asset at a higher rate in the early years and at a lower rate in the later years. The formula for DDB depreciation is as follows:Depreciation Rate = (2 / Useful Life)DDB Depreciation = Depreciation Rate x Book Value at the Beginning of the YearIn this case, the useful life of the asset is 25 years. Since the asset is being depreciated to zero over a recovery period of 30 years, the useful life must be adjusted as follows:Adjusted Useful Life = 30 - 0 = 30 yearsUseful Life Remaining = Adjusted Useful Life - Year Depreciation Was Last TakenFor year 4:Depreciation Taken in Years 1 to 3 = (2 / 30) x $600,000 = $40,000Year 4 Depreciation = (2 / 30) x ($600,000 - $40,000) = $36,000Annual Depreciation for Year 4 = $36,000For year 10:Depreciation Taken in Years 1 to 9 = (2 / 30) x $600,000 = $40,000Year 10 Depreciation = (2 / 21) x ($600,000 - $40,000 - $240,000) = $49,058Annual Depreciation for Year 10 = $49,058For year 25:Depreciation Taken in Years 1 to 24 = (2 / 30) x $600,000 = $40,000Year 25 Depreciation = (2 / 6) x ($600,000 - $40,000 - $480,000) = $193,333Annual Depreciation for Year 25 = $193,333Therefore, the annual depreciation charge for the cooling-water pumping station at the LCRA plant for years 4, 10, and 25 using (a) straight-line depreciation and (b) DDB depreciation is as follows:Depreciation for Year 4: Straight-Line = $21,120; DDB = $36,000Depreciation for Year 10: Straight-Line = $21,120; DDB = $49,058Depreciation for Year 25: Straight-Line = $21,120; DDB = $193,333
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Should we impose capital market first or arrest Anwar
first?
A capital market is a market where people purchase and sell securities that have a maturity of over one year. Companies and governments make use of the capital markets to finance their long-term capital needs.
Anwar: Anwar Ibrahim is a Malaysian politician who served as the country's Deputy Prime Minister between 1993 and 1998. He has been detained on several occasions and convicted of several offenses, including sodomy and corruption.
Arrest: The process of taking an individual into custody and restricting their liberty is referred to as arrest.
A person who is apprehended is typically charged with a crime, and the arrest is the first stage of the legal process
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Which of the following is a characteristic of monopolistically competitive market?
I. Each firm is a price-taker.
II. Firms sell slightly differentiated products.
III. Each firm faces a downward-sloping demand curve
The characteristic of a monopolistically competitive market is that each firm faces a downward-sloping demand curve. Hence the correct option is III.
Monopolistically competitive market is characterized by the following: It is essential to note that Monopolistic competition, as the name suggests, is a blend of two forms of markets: Monopoly and Perfect competition. This means that some of the features of perfect competition are there, while some are not, and the same goes for a monopoly market. In this market structure, there is a lot of sellers, but they are all selling slightly different products.
The slight differentiation can be in terms of size, shape, color, taste, or anything else. Hence the products are not homogeneous. Hence the correct option is II. Firms sell slightly differentiated products. The second characteristic of a monopolistically competitive market is that firms have control over their prices, unlike a perfect competition market.
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One key difference between IFRS and United States GAAP is: Select one: a. The number of financial statements P b. There are no differences c. Rules-based vs. principle-based d. Their characteristics and principles
One key difference between IFRS (International Financial Reporting Standards) and United States GAAP (Generally Accepted Accounting Principles) is that they follow different approaches in terms of rules-based vs. principle-based accounting.
Explanation: Option (c) is the correct answer. IFRS and US GAAP differ in their approach to accounting standards. US GAAP is known for being more rules-based, meaning it provides specific and detailed guidance on how to account for various transactions and events. It consists of a comprehensive set of specific rules and regulations that must be followed.
On the other hand, IFRS is considered more principle-based. It relies on a set of principles and concepts that provide guidance for financial reporting. The principles are more general in nature, allowing for more flexibility and judgment in applying them to specific situations. IFRS focuses on presenting the financial statements fairly and faithfully, providing a true and fair view of the financial position and performance of an entity.
The difference in approach between rules-based (US GAAP) and principle-based (IFRS) accounting can lead to variations in the interpretation and application of accounting standards. This can result in differences in financial reporting practices and presentation between companies following IFRS and US GAAP.
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For a sum of money invested at 6.1% compounded quarterly for 5 years state the following values. (a) the number of compounding periods (b) the periodic rate of interest (c) the compounding factor (1 + i)^ (d) the numerical value of the compounding factor (a) The number of compounding periods is (Type an integer or a decimal.) (b) The periodic rate of interest is %. (Round to six decimal places as needed.) (c) The compounding factor is (1 - + (Type integers or decimals.) (d) The numerical value of the compounding factor is (Round to six decimal places as needed.)
For a sum of money invested at an annual interest rate of 6.1%, compounded quarterly for 5 years, the values are as follows: (a) The number of compounding periods is 20. (b) The periodic rate of interest is 1.525726%. (c) The compounding factor is (1 + 0.01525726). (d) The numerical value of the compounding factor is approximately 1.381449.
To determine the number of compounding periods, we multiply the number of years by the number of compounding periods per year. In this case, since the interest is compounded quarterly, there are 4 compounding periods per year, resulting in a total of 20 compounding periods over 5 years.
The periodic rate of interest is calculated by dividing the annual interest rate by the number of compounding periods per year. In this case, the annual interest rate is 6.1% (or 0.061 in decimal form), and since there are 4 compounding periods per year, the periodic rate of interest is 0.061 divided by 4, which is approximately 0.01525726 or 1.525726%.
The compounding factor is determined by adding 1 to the periodic rate of interest. In this case, the compounding factor is (1 + 0.01525726).
The numerical value of the compounding factor is the actual calculation of the compounding factor. In this case, the numerical value is approximately 1.381449, which can be obtained by evaluating (1 + 0.01525726) using a calculator or rounding the value to six decimal places.
These values are important in calculating the future value of an investment using compound interest formulas, as they help determine the growth and accumulation of the invested amount over time.
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Question 5 A. Assume you are working as a risk mitigation and management officer at YTM Financials. Write a short memo to your supervisor explaining the use of securitisation to manage YTM's risk exposures. Make sure that you consider interest rate and credit risks.
[Your Name]
Risk Mitigation and Management Officer
YTM Financials
Date: [Current Date]
To: [Supervisor's Name]
Subject: Use of Securitization for Risk Management
Dear [Supervisor's Name],
I am writing to provide an overview of the use of securitization as a risk management tool, specifically in managing interest rate and credit risks at YTM Financials. Securitization offers several benefits that can help us effectively mitigate these risks and enhance our overall risk management framework.
Securitization is the process of transforming illiquid assets, such as loans or mortgages, into marketable securities that can be sold to investors. By securitizing assets, we can transfer the associated risks to external investors, thereby reducing our exposure and improving our risk profile. Here's how securitization can help us manage interest rate and credit risks:
Interest Rate Risk Management:
Securitization allows us to convert fixed-rate assets into variable-rate securities. This helps us mitigate the risk of interest rate fluctuations. For instance, if we hold a portfolio of fixed-rate mortgages, we can securitize them into mortgage-backed securities (MBS) with floating interest rates. By doing so, we shift the interest rate risk to the investors who purchase these MBS. This reduces our exposure to changes in interest rates and provides more stability to our earnings.
Credit Risk Management:
Through securitization, we can transfer credit risk to investors who are willing to bear it in exchange for higher potential returns. By selling securitized assets, such as collateralized debt obligations (CDOs) or asset-backed securities (ABS), we effectively distribute the credit risk associated with the underlying assets to a broader market. This diversification of risk across multiple investors helps us mitigate concentration risk and reduces the impact of potential defaults or credit events.
In addition to risk transfer, securitization offers other advantages for risk management:
a. Improved liquidity: Securitization allows us to convert illiquid assets into marketable securities, enhancing our ability to raise funds quickly and efficiently.
b. Enhanced capital management: By securitizing assets, we can free up capital that was previously tied up in those assets. This provides us with additional flexibility in managing our capital structure and pursuing new business opportunities.
c. Credit enhancement: In some cases, securitization structures include credit enhancement mechanisms, such as overcollateralization or credit guarantees, which provide additional protection against credit losses.
However, it is important to note that securitization also involves certain risks and considerations. These include potential market disruptions, regulatory changes, and the need for effective risk monitoring and management of the securitized assets.
In conclusion, securitization can be a valuable tool for managing interest rate and credit risks at YTM Financials. By transferring these risks to external investors through securitized securities, we can improve our risk profile, enhance liquidity, and optimize capital management. It is crucial that we continue to evaluate the specific risks and benefits associated with each securitization transaction and ensure robust risk monitoring practices are in place.
Please let me know if you require any further information or analysis on this topic. I look forward to discussing this in more detail.
Thank you for your attention.
Sincerely,
[Your Name]
Risk Mitigation and Management Officer
YTM Financials
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Galbraith Co. is considering a four-year project that will require an initial investment of $5,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst-case cash flows are projected to be -$3,000 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and a 25% probability of the project generating the worst-case cash flows What would be the expected net present value (NPV) of this project if the project's cost of capital is 12%? O $25,374 O $22,837 O $20,299 O $29,180 Galbraith now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenario cash flows. If it decides to abandon the project at the end of year 2, the company will receive a one-time net cash inflow of $4,500 (at the end of year 2). The $4,500 the company receives at the end of year 2 is the difference between the cash the company receives from selling off the project's assets and the company'S-$3,000 cash outflow from operations. Additionally, if it abandons the project, the company will have no cash flows in years 3 and 4 of the project. Using the information in the preceding problem, find the expected NPV of this project when taking the abandonment option into account. O $34,849 O $26,485 O $27,879 O $32,061 What is the value of the option to abandon the project?
The expected net present value (NPV) of the project, taking into account the abandonment option, would be $27,879.
Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment by calculating the present value of expected cash inflows and outflows. In this case, the NPV is calculated by discounting the projected cash flows of the project at a 12% cost of capital and weighting them by their respective
. The value of the option to abandon the project is calculated by considering the additional cash inflow that would be received if the project is abandoned. In this case, if the project is abandoned at the end of year 2, the company will receive a one-time net cash inflow of $4,500. Therefore, the expected NPV of the project, taking into account the abandonment option, would be $27,879.
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at what amount is the investment in securities reported on the balance sheet under each of these methods at december 31, 2026? what is the total net income reported in 2026 under each of these methods?
In financial accounting, a balance sheet is a statement that outlines an organization's financial position on a specific date by listing all of its assets, liabilities, and equity.
It is calculated through two methods: cost method and equity method. In the cost method, the investment in securities is reported at the acquisition cost (i.e., purchase price plus all acquisition costs), and in the equity method, the investment in securities is reported as an asset at the initial acquisition cost plus the investor's share of the investee's earnings (less losses) since the investment was made.
As per the question, the amount that will be reported on the balance sheet in 2026 under each of these methods is as follows:Cost Method: The investment in securities will be reported at the acquisition cost. Equity Method: The investment in securities will be reported as an asset at the initial acquisition cost plus the investor's share of the investee's earnings (less losses) since the investment was made.
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Required information [The following information applies to the questions displayed below.] Project Y requires a $340,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1. and FVA of $.1) (Use appropriate factor(s) from the tables provided.)
Annual Amounts Project Y
Sales of new product $375,000
Expenses
Materials, labor, and overhead (except depreciation) 168,000
Depreciation-Machinery 85,125
Selling, general, and administrative expenses 27,000
Income $94,875
3. Compute Project Y's accounting rate of return.
The accounting rate of return for Project Y is 27.9%.
To compute the accounting rate of return, we need to divide the average annual income by the average investment. The average annual income is the sum of the four-year income divided by the number of years, which is $94,875. The average investment is half of the initial investment since the machinery has a four-year life. Therefore, the average investment is $170,250.
Dividing the average annual income by the average investment and multiplying by 100 gives us the accounting rate of return of 27.9%. The accounting rate of return provides a measure of profitability based on the average income generated relative to the average investment made.
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Identifying the opportunity that IT offers to a business is an analytical process. Which one of the following is among the questions that executives should not use/ask as they search for ways to leverage IT to drive business model strategy? A. Can IT diminish the strategy of a competitor? B. Can IT change the basis of competition? C. Can IT build barriers to entry? D. Can IT raise switching costs?
Among the given options, the question that executives should not use/ask as they search for ways to leverage IT to drive business model strategy. Can IT diminish the strategy of a competitor? Correct option is A.
While understanding the competitive landscape and the potential impact of IT on competitors is important, focusing solely on diminishing a competitor's strategy may not be the most productive approach. Instead, executives should concentrate on leveraging IT to strengthen their own business model and create a sustainable competitive advantage.
The questions executives should ask when searching for ways to leverage IT to drive business model strategy include:
B. Can IT change the basis of competition?
This question focuses on how IT can disrupt existing industry dynamics and create new sources of competitive advantage.
C. Can IT build barriers to entry?
This question explores how IT can create barriers that make it difficult for new entrants to compete effectively, thereby protecting the company's market position.
D. Can IT raise switching costs?
This question examines how IT can enhance customer loyalty and make it more costly for customers to switch to competitors.
By asking these questions, executives can identify opportunities to use IT strategically to transform their business model, gain a competitive edge, and drive growth. It is crucial to focus on proactively leveraging IT to enhance the company's value proposition, improve operational efficiency, and create a differentiated customer experience rather than solely on diminishing competitors' strategies.
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Outline* the extended marketing mix 7Ps and explain how the extended marketing mix contribute to effective marketing planning.
The extended marketing mix 7Ps consists of product, price, place, promotion, people, process, and physical evidence. This combination has an essential role in the success of marketing planning since it concentrates on catering to the needs and wants of customers.
This mix was developed to cater to the services industry since there was a requirement to cater to the requirements of services businesses, which differ significantly from those of the goods.
This marketing It also ensures that all the aspects of the product or service are covered under this combination to satisfy customer demand and adapt to any errors or shortcomings that may occur within the business.
The 7Ps of the extended marketing mix are briefly explained below:
Product: It refers to the core products or services offered to the customers.Price: It relates to the cost of the product or service.Place: It refers to the channel of distribution to reach the target audience.Promotion: It encompasses all the strategies and tactics employed to promote the product or service.People: This includes the personnel who interact with customers and their requirements.Process: It relates to the procedures that the organization employs to deliver a product or service.Physical evidence: It refers to the tangible elements, such as packaging, physical appearance, and branding.The extended marketing mix is essential to effective marketing planning since it caters to all the aspects of the business. This mix ensures that the business covers every aspect of the product or service to satisfy customer demand and adapt to any errors or shortcomings that may occur within the business.
It also helps in ensuring the success of the business, especially in the services sector, since it caters to all the requirements of the customers.
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Consider an economy called Tentland in the very short run where prices are fixed. Tentland is currently in its equilibrium. Suppose the Covid-19 pandemic hits Tentland, reducing its exports. Draw the Keynesian Cross to illustrate how Tentland moves from the original equilibrium to the new equilibrium. Briefly explain the adjustment process in the very short run.
Keynesian cross: The Keynesian cross is a diagram that shows the equilibrium level of national income in an economy. It combines two variables, aggregate demand (total spending) and aggregate supply (total output), to show the equilibrium level of income where the two are equal. It is based on the Keynesian theory of economics, which emphasizes the role of aggregate demand in the short run.
Explanation of adjustment process in very short run:In the very short run, Tentland is in equilibrium where aggregate demand equals aggregate supply. Suppose the Covid-19 pandemic hits Tentland, reducing its exports. This will lead to a decrease in aggregate demand, shifting the AD curve to the left. The new equilibrium will be at a lower level of income and output. The Keynesian cross diagram will illustrate this adjustment process as follows:
The original equilibrium is shown as point E, where AD intersects with AS. When exports fall due to the pandemic, AD shifts left to AD', leading to a new equilibrium at point E'. This results in a decrease in income and output from Y to Y'. Since prices are fixed in the very short run, there is no adjustment in the price level. Thus, the adjustment process in the very short run involves a decrease in income and output due to a fall in exports.
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Which of the following statements concerning the notes to the audited financial statements of a company is least accurate? Financial statement notes:
are audited.
contain information about contingent losses that may occur.
include management's assessment of the company's operating performance and financial results.
The statement that is least accurate concerning the notes to the audited financial statements of a company is Include management's assessment of the company's operating performance and financial results. What are the notes to the audited financial statements Financial statement notes are an integral component of the audited financial statements.
These notes provide more detail about the amounts and disclosures provided in the financial statements of a company. The notes may provide additional details about the company's operations, the composition of specific financial statement line items, contingencies that might occur, or other significant accounting policies The notes to the financial statements are audited by the auditor as part of the financial statement audit. The auditor assesses the accuracy and completeness of the notes, as well as their compliance with generally accepted accounting principles .The least accurate statement about the notes to the audited financial statements of a company is that they include management's assessment of the company's operating performance and financial results.
This is incorrect because management's assessment of the company's performance is not included in the notes to the financial statements. It might be included in management's discussion and analysis (MD&A), which is typically found in the annual report.
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The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 55% of direct labor cost. 1. In the Raw Materials Inventory T-account, insert amounts for beginning and ending balances along with purchases and indirect materials used. Solve for direct materials used in the period. 2. Compute the cost of direct labor used for the period.
The Direct labor hours is $458,909.09.
1. Raw Materials Inventory T-accountParticulars
DebitCreditBalance (Beginning)$0
Purchases$114,000Indirect materials$8,600Balance (Ending)$18,000 Direct materials used can be calculated as follows:
Direct materials used = Beginning balance + Purchases - Ending balance
Direct materials used = $0 + $114,000 - $18,000
Direct materials used = $96,0002.
Cost of direct labor used for the period
The predetermined overhead rate of ADT Company is 55% of direct labor cost. Therefore, direct labor cost can be computed using the following formula:Direct labor cost = Direct labor hours x Direct labor rateNow, the direct labor rate is not given in the question. Therefore, we cannot compute the direct labor cost. However, we can compute the direct labor cost used by using the direct labor hours as follows:
Direct labor hours = Manufacturing overhead applied ÷ Predetermined overhead rate
We know that the manufacturing overhead applied is $252,400. Therefore, the direct labor hours can be calculated as follows:
Direct labor hours = $252,400 ÷ 55%
Direct labor hours = $252,400 ÷ 0.55
Direct labor hours = $458,909.09
The cost of direct labor used can now be calculated using the direct labor hours and the direct labor rate.
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Jefferson qualifies for an income-adjusted monthly payment of $435. If Jefferson has a subsidized student loan of $44,000 at an annual interest rate of 4% (compounded monthly), how many months are required to repay the loan? (Round your answer up to the nearest month.)
To determine the number of months required to repay the loan, we can use the formula for the monthly payment of a loan:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))
Where:
Loan Amount = $44,000
Annual Interest Rate = 4%
Monthly Interest Rate = Annual Interest Rate / 12
Monthly Payment = $435
Let's calculate the number of months required to repay the loan:
Monthly Interest Rate = 4% / 12 = 0.3333%
Monthly Interest Rate = 0.003333
Number of Months = (Loan Amount * Monthly Interest Rate) / (Monthly Payment - (Loan Amount * Monthly Interest Rate))
Number of Months = (44000 * 0.003333) / (435 - (44000 * 0.003333))
Number of Months ≈ 119.94
Rounding up to the nearest month, it will take approximately 120 months to repay the loan.
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Consider a three-firm supply chain consisting of a retailer, manufacturer and supplier. The retailer's demand over an 8-week period was 90 units each of the first 2 weeks, 220 units each of the second 2 weeks, 290 units each of the third 2 weeks, and 410 units each of the fourth 2 weeks The following table presents the orders placed by each firm in the supply chain. Notice, as is often the case in supply chains due to economies of scale, that total units are the same in each case, but firms further up the supply chain (away from the retailer) place farger, less frequent, orders a) What is the bullwhip measure for the retailer? The bullwhip measure for the retaller is (Enter your response rounded to two decimal places) b) What is the bullwhip measure for the manufacturer? The bullwhip measure for the manufacturer is (Enter your response rounded to two decimal places) c) What is the bullwhip measure for the supplier? The bullwhip measure for the supplier is (Enter your response rounded to two decimal places) d) What conclusions can you draw regarding the impact that economies of scale may have on the bullwhip effect? Select all of the correct statements belowi A. Larger, less frequent orders imply a smaller variance of orders. B. The effect of increasing variance of orders with the less frequent orders could be reduced via channel coordination by determining lot sizes C. Larger, less frequent orders imply a larger variance of orders, D. The effect of decreasing variance of orders with the less frequent orders could be reduced via channel coordination by determining lot sizes
a) The bullwhip measure for the retailer is 0.64. b) The bullwhip measure for the manufacturer is 0.82. c) The bullwhip measure for the supplier is 1.17.
a. To calculate the bullwhip measure, we use the formula:
Bullwhip measure = (Standard Deviation of Retailer's Orders) / (Average Demand)
The average demand for the retailer over the 8-week period is (90 + 90 + 220 + 220 + 290 + 290 + 410 + 410) / 8 = 262.5 units. To calculate the standard deviation of the retailer's orders, we find the deviation from the average demand for each week:
(90 - 262.5) = -172.5, (90 - 262.5) = -172.5, (220 - 262.5) = -42.5, (220 - 262.5) = -42.5, (290 - 262.5) = 27.5, (290 - 262.5) = 27.5, (410 - 262.5) = 147.5, (410 - 262.5) = 147.5.
The standard deviation of these deviations is calculated to be 121.58 units. Therefore, the bullwhip measure for the retailer is 121.58 / 262.5 = 0.64 (rounded to two decimal places).
b. Using the same formula as above, we calculate the standard deviation of the manufacturer's orders. The average demand for the manufacturer is also 262.5 units. The deviations from the average demand for each week are as follows: (180 - 262.5) = -82.5, (180 - 262.5) = -82.5, (250 - 262.5) = -12.5, (250 - 262.5) = -12.5, (330 - 262.5) = 67.5, (330 - 262.5) = 67.5, (330 - 262.5) = 67.5, (330 - 262.5) = 67.5.
The standard deviation of these deviations is calculated to be 66.62 units. Therefore, the bullwhip measure for the manufacturer is 66.62 / 262.5 = 0.82 (rounded to two decimal places).
c. Again, using the same formula, we calculate the standard deviation of the supplier's orders. The average demand for the supplier is also 262.5 units. The deviations from the average demand for each week are as follows: (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5, (200 - 262.5) = -62.5.
The standard deviation of these deviations is calculated to be 0 units. Therefore, the bullwhip measure for the supplier is 0 / 262.5 = 0 (rounded to two decimal places).
d) The correct statements regarding the impact of economies of scale on the bullwhip effect are:
A. Larger, less frequent orders imply a smaller variance of orders.
B. The effect of increasing variance of orders with the less
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Complete the cash budget for February 2022 for BWS Corp. per the table below. Sales and inventory schedule Dec. 2021 Sales $31,000 cash sales 60% receivables 40% $12,000 This month cash sales cash receipts from prior month. Total cash in-flow $12,400 Inventory (COGS at 40%) cash 50% 6, 200 payables 50% $6,200 Total cash Inventory payment Total cash operating expenses Total cash outflow Net cash flow 2022 forecast January February $30,000 $32,000 $18,000 $12,000 $18,000 $12,000 $30,000 $12,000 $6,000 $6,000 $12,200 $14,000 $14,000 $26,200 $3,800
To complete the cash budget for February 2022 for BWS Corp, we need to calculate the cash inflows and outflows based on the given information. Let's break it down:
Cash Inflows:
Cash sales for February: $30,000
Cash receipts from prior month's sales: $12,000
Total cash inflow: $30,000 + $12,000 = $42,000
Inventory:
Cost of Goods Sold (COGS) at 40% of sales: 40% of $30,000 = $12,000
Cash Outflows:
Cash payment for 50% of inventory: 50% of $12,000 = $6,000
Cash payment for operating expenses: $14,000
Total cash outflow:
$6,000 + $14,000 = $20,000
Net Cash Flow:
Net Cash Flow = Total Cash Inflow - Total Cash Outflow
Net Cash Flow = $42,000 - $20,000
Net Cash Flow = $22,000
Therefore, the completed cash budget for February 2022 for BWS Corp is as follows:
Total Cash Inflow: $42,000
Total Cash Outflow: $20,000
Net Cash Flow: $22,000
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(Capital Asset Pricing Model) CSB, Inc. has a beta of 0.811. If the expected market return is 125 percent and the link beerates 60 percent what is the appropriatu pertet nun esa jong the CAPMA The appropriate expected return of CSB - * (Round to two decimal places)
CAPM is an abbreviation for Capital Asset Pricing Model. CAPM is a financial model that compares the expected return on an investment to the risk-free rate and the anticipated market premium.
CAPM provides an estimate of the appropriate rate of return on a security given its systematic risk (also known as beta), the expected market risk premium, and the risk-free rate. Beta is a measure of an asset's systematic risk in the context of CAPM.
The formula for calculating CAPM is:E (ri) = Rf + Beta * (Rm - Rf)Here:E (ri) = expected return on asset irf = risk-free rateBeta = asset's systematic riskRm = expected return of the marketIn this scenario, we know that:Beta of CSB, Inc. = 0.811Expected market return = 125%Risk-free rate = 60%.
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Controlling:
- Describe the controlling practices in Amazon (financial & operational controls)
- Describe Amazon's usage of information systems in operations and decision
making. (e.g., ERP, SCM, CRM, HRM systems)
Do the employees or management team need a more computerized environment? If then, which areas?
Amazon has implemented both financial and operational controls to help maintain efficiency and reduce costs. They utilize several information systems in operations and decision-making, such as ERP, SCM, CRM, and HRM systems.
Amazon has implemented both financial and operational controls to help maintain efficiency and reduce costs. Some of the financial controls that Amazon implements are a comprehensive budget and forecast system and frequent financial reports that are analyzed and monitored. Amazon also employs operational controls by keeping inventory levels low, utilizing advanced automation and technology, and implementing a stringent supplier selection process. Amazon is a firm believer in utilizing information systems in operations and decision-making. Some examples of systems they use are enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and human resources management (HRM) systems.
These information systems help Amazon keep track of inventory, orders, and payments, as well as provide customer service and employee management. If Amazon's employees or management team requires a more computerized environment, then it would be in the areas of order fulfillment and inventory management. Amazon can develop new technologies to support these areas. They can develop systems that would allow products to be tracked throughout the entire fulfillment process.
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An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 9 percent.
a. What is the discounted payback period for these cash flows if the initial cost is $5,200?
b. What is the discounted payback period for these cash flows if the initial cost is $6,400?
c. What is the discounted payback period for these cash flows if the initial cost is $10,400?
a. If the initial cost is $5,200, then the annual net cash inflow will be:$2,800 + $3,700 + $5,100 + $4,300 = $16,900Using the formula of discounted payback period:Payback period = Last year before full recovery + (Unrecovered cost at the end of the last year / Total cash inflow in the current year)Payback period for year 1 = 1 + ($5,200 – $2,800) / ($3,700) = 1.43 yearsPayback period for year 2 = 2 + ($5,200 – $2,800 – $3,331) / ($5,100) = 2.35 yearsPayback period for year 3 = 3 + ($5,200 – $2,800 – $3,331 – $3,989) / ($4,300) = 3.30 years
Therefore, the discounted payback period for these cash flows is 3.30 years.b. If the initial cost is $6,400, then the annual net cash inflow will be:$2,800 + $3,700 + $5,100 + $4,300 = $16,900Using the formula of discounted payback period:Payback period for year 1 = 1 + ($6,400 – $2,800) / ($3,700) = 2.30 yearsPayback period for year 2 = 2 + ($6,400 – $2,800 – $3,310) / ($5,100) = 2.74 yearsPayback period for year 3 = 3 + ($6,400 – $2,800 – $3,310 – $3,628) / ($4,300) = 3.32 yearsTherefore, the discounted payback period for these cash flows is 3.32 years.c. If the initial cost is $10,400, then the annual net cash inflow will be:$2,800 + $3,700 + $5,100 + $4,300 = $16,900Using the formula of discounted payback period:Payback period for year 1 = 1 + ($10,400 – $2,800) / ($3,700) = 2.62 yearsPayback period for year 2 = 2 + ($10,400 – $2,800 – $3,231) / ($5,100) = 2.94 yearsPayback period for year 3 = 3 + ($10,400 – $2,800 – $3,231 – $3,358) / ($4,300) = 3.54 years
Therefore, the discounted payback period for these cash flows is 3.54 years.
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