It is important to limit CEO salaries to reasonable amounts based on the performance of the company. These are some of the persuasive or informative business law speech topics that you can choose from.
Business law refers to the branch of law that deals with the legal aspects of businesses and commerce. It governs the establishment, operation, and termination of businesses. Persuasive and informative business law speeches are vital in persuading people to take specific actions or in informing them on certain issues.Sample topics for persuasive or informative business law speeches include:Why professional athletes are paid too much money and the harm it has on society.Why universal health care is unconstitutional and the harm it has on private business.Why employers are invading an employee's right to privacy when they monitor an employee's activities outside of the workplace.
Why corporate CEOs are overpaid, and the harm it causes to shareholders and society.1. Why professional athletes are paid too much money and the harm it has on societyProfessional athletes, especially in popular sports like football and basketball, are paid exorbitant amounts of money. Although some people believe that they deserve the pay due to their talent, there is a need to consider the broader impact on society, particularly on the poor. Professional athletes earn significantly more than the average worker, and this income inequality could contribute to social unrest.2. Why universal health care is unconstitutional and the harm it has on private business.The healthcare system has been a source of debate for many years, particularly regarding the provision of universal health care.
Advocates argue that it is necessary to ensure that everyone has access to health care services. However, others argue that it is unconstitutional and that it harms private businesses by increasing the cost of healthcare. 3. Why employers are invading an employee's right to privacy when they monitor an employee's activities outside of the workplace.Employers have started to monitor their employee's activities outside the workplace through social media platforms, among others. Although it is legal, it can be argued that it invades the employee's right to privacy.
Therefore, employees should have the right to protect their personal information from their employers. 4. Why corporate CEO's are overpaid and the harm it causes to shareholders and society.Corporate CEOs earn exorbitant amounts of money compared to the average worker, which leads to income inequality. This inequality can lead to a decrease in shareholder value due to excessive executive compensation. Therefore, it is important to limit CEO salaries to reasonable amounts based on the performance of the company. These are some of the persuasive or informative business law speech topics that you can choose from.
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Imagine that the government was concerned about spending more on government spending than it was collecting in taxes. They decide to instead run a balanced budget.| Because they don't think people pay their fair share for services the government provides, they decide to set T equal to 100 . Solve for the new equilibrium level of output. Imagine that the economy can be modeled as follows: C=250+.8Y d
I=200
G=100
T=100
The equation to solve for the new equilibrium level of output is: Y = 550 + 0.8Yd.
How to solve?To solve for the new equilibrium level of output, we can use the equation Y = C + I + G, where Y represents the output, C represents consumption, I represents investment, and G represents government spending.
Given that C = 250 + 0.8Yd,
I = 200,
G = 100, and
T = 100, we can substitute these values into the equation:
Y = (250 + 0.8Yd) + 200 + 100 - 100
Simplifying this equation, we get:
Y = 550 + 0.8Yd
To find the new equilibrium level of output, we need to determine the value of Yd.
Since the question does not provide information about Yd, we cannot solve for the exact value of Y.
However, we can determine the relationship between Y and Yd.
Therefore, the equation to solve for the new equilibrium level of output is:
Y = 550 + 0.8Yd.
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You Are The Manager Of A Project To Improve A Billing Process At Your Firm. The Table Below Contains The Data You Will Need To Conduct A Cost Analysis Of The Project. Indirect Costs Are $1,600 Per Week, And Penalty Costs Are $600 Per Week After Week 12. Activity,Immediate Predecessor(S),Normal Time (Weeks),Crash Time (Weeks),Normal Cost ($),Crash Cost
You are the manager of a project to improve a billing process at your firm. The table below contains the data you will need to conduct a cost analysis of the project. Indirect costs are $1,600 per week, and penalty costs are $600 per week after week 12.
Activity,Immediate Predecessor(s),Normal Time (weeks),Crash Time (weeks),Normal Cost ($),Crash Cost ($)
A,-,4,1,"4,500","7,500"
B,-,5,3,"8,000","10,500"
C,A,1,1,"4,000","4,000"
D,B,6,3,"6,500","12,000"
E,"B, C",7,6,"4,000","7,000"
F,D,7,6,"4,500","7,500"
a. What is the minimum-cost schedule for this project?
The minimum-cost schedule is 13 weeks. (Enter your response as an integer.)
b. What is the difference in total project costs between the earliest completion time of the project using "normal" times and the minimum-cost schedule you derived in part (a)?
The minimum-cost schedule costs $ ??? less than using the "normal" times. (Enter your response as an integer.)
The minimum-cost schedule for this project is 13 weeks.
The difference in total project costs between the earliest completion time using "normal" times and the minimum-cost schedule is $5,500.
To find the minimum-cost schedule for the project, we need to identify the critical path, which is the longest path in terms of duration. This path determines the minimum time required to complete the project. In this case, the critical path consists of activities A-C-E-F, with a total duration of 13 weeks.
To calculate the total project cost for the minimum-cost schedule, we sum up the crash costs of each activity on the critical path:
Activity A: Crash cost = $7,500
Activity C: Crash cost = $4,000
Activity E: Crash cost = $7,000
Activity F: Crash cost = $7,500
Total project cost for the minimum-cost schedule = $7,500 + $4,000 + $7,000 + $7,500 = $26,000.
To calculate the difference in total project costs between the earliest completion time using "normal" times and the minimum-cost schedule, we subtract the total project cost using "normal" times from the total project cost for the minimum-cost schedule:
Total project cost using "normal" times = $4,500 + $8,000 + $4,000 + $6,500 + $4,000 + $4,500 = $31,500.
The difference in total project costs = Total project cost using "normal" times - Total project cost for the minimum-cost schedule = $31,500 - $26,000 = $5,500.
Therefore, the difference in total project costs between the earliest completion time using "normal" times and the minimum-cost schedule is $5,500.
The minimum-cost schedule for the project is 13 weeks, and it results in a cost saving of $5,500 compared to using the "normal" times. By optimizing the schedule and completing the project in the minimum time required, the overall project costs can be reduced.
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Tim just earned his MBA and received a job offer. The offer is as follows:
• His annual salary will be $96,000. For simplicity, assume he gets paid once a year at the end of each year.
The salary is expected to increase 3% per year.
If Tim expects to work at the company for 27 years and the appropriate discount rate is 6%, what is the present value of this offer?
The value of the offer $
The present value of Tim's job offer depends on the calculation using the provided information.
What is the present value of Tim's job offer?To calculate the present value of Tim's job offer, we need to discount the future salary payments to their present value using the appropriate discount rate. The formula for present value is:
Present Value = Future Value / (1 + Discount Rate)^n
Where:
Future Value = Annual Salary ˣ (1 + Salary Increase Rate)^n
Discount Rate = 6%
n = Number of years (27 in this case)
Using the given information, we can calculate the future value of Tim's salary at the end of 27 years:
Future Value = $96,000 ˣ (1 + 0.03)^27
Next, we can calculate the present value by dividing the future value by (1 + Discount Rate)^n:
Present Value = Future Value / (1 + Discount Rate)^n
Substituting the values:
Present Value = [$96,000 ˣ (1 + 0.03)^27] / (1 + 0.06)^27
Evaluating this expression will give us the present value of the job offer.
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in a double slit experiment, the ratio of slit separation to the slit width is 1.7 (three bright fringes in the central peak). if the slit separation is increased by a factor of four, keeping the slit width the same, how many interference fringes will now fit in the central diffraction peak? select answer from the options below 6 13 5 12
Approximately 6 interference fringes will fit in the central diffraction peak.
In a double-slit experiment, the interference pattern is determined by the ratio of the slit separation to the slit width. The greater this ratio, the more interference fringes will be observed in the central diffraction peak.
In the given scenario, the initial ratio of slit separation to slit width is 1.7, and it is stated that there are three bright fringes in the central peak. This implies that the initial ratio corresponds to three interference fringes.
If the slit separation is increased by a factor of four while keeping the slit width constant, the new ratio becomes 4 * 1.7 = 6.8.
To determine the number of interference fringes in the central diffraction peak, we consider the integer part of the ratio. In this case, the integer part of 6.8 is 6. Therefore, there will be approximately six interference fringes in the central diffraction peak.
Therefore, if the slit separation is increased by a factor of four while keeping the slit width the same, approximately six interference fringes will fit in the central diffraction peak.
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6. Inventory balances at the end of 31 December 2021 were as follows: a) Raw Materials Work in Process Finished Goods Required: RM3,700 RM4,070 RM10,445 Prepare the Statement of Cost of Goods Manufactured for the year ended 31 December 2021. b) Prepare the Statement of Profit or Loss for the year ended 31 December 2021.
a) Statement of Cost of Goods Manufactured for the year ended 31 December 2021: Calculation of Cost of Goods Manufactured: Particulars Amount Direct Materials: Raw Materials $3,700
Add: Work in Process $4,070 Add: Direct Labor $22,190
Manufacturing Overhead: Indirect materials $1,800 Indirect labor $5,200 Depreciation of factory equipment $4,500
Property taxes on factory building $1,200 Total Manufacturing Overhead $12,700 Less: Ending work in progress $10,445 Total Cost of Goods Manufactured $31,215
b) Statement of Profit or Loss for the year ended 31 December 2021: Calculation of Cost of Goods Sold: Particulars Amount Beginning finished goods inventory $9,000
Add: Cost of goods manufactured $31,215 Goods available for sale $40,215 Less: Ending finished goods inventory $11,000 Cost of goods sold $29,215
Calculation of Gross Profit: Particulars Amount Sales $50,000 Less: Cost of goods sold $29,215 Gross profit $20,785Calculation of Operating Expenses: Particulars Amount Selling expenses $4,000 Administrative expenses $3,000 Total operating expenses $7,000Calculation of Net Profit: Particulars Amount Gross profit $20,785 Less: Operating expenses $7,000 Net profit $13,785
Therefore, the statement of cost of goods manufactured and statement of profit or loss for the year ended 31 December 2021 have been prepared.
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If a company gives a profit-sharing bonus, should it be
offered to employees covered by a union contract even if it is not
the Collective Bargaining Agreement (CBA)?
Yes, if a company gives a profit-sharing bonus, it should be offered to employees covered by a union contract, even if it is not specified in the Collective Bargaining Agreement (CBA).
When a company offers a profit-sharing bonus, it is typically intended to incentivize and reward employees for their contributions to the company's financial success. If there is a union contract in place, it establishes the terms and conditions of employment for the covered employees. However, the absence of explicit language regarding profit-sharing in the CBA does not necessarily preclude the company from providing such bonuses.
Companies have the discretion to offer additional compensation or benefits beyond what is specified in the CBA, as long as they comply with applicable labor laws and regulations. Offering a profit-sharing bonus to employees covered by a union contract, even if not explicitly required by the CBA, can be a way to enhance employee morale, incentivize productivity, and promote a positive working relationship between the company and the union.
It is important for the company to ensure that any additional compensation or benefits, such as profit-sharing bonuses, are administered fairly and consistently to avoid any potential grievances or disputes with the union. Clear communication and transparency regarding the eligibility criteria, calculation methodology, and distribution process are essential to maintain trust and avoid any perception of discrimination or favoritism.
While it is not required by the CBA, offering a profit-sharing bonus to employees covered by a union contract can be a strategic and positive approach to recognize and reward their contributions to the company's success.
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Which of these is an advantage of the corporation?
significant government regulation
difficulty in transferring ownership
unlimited liability
ability to raise money by selling stock
double taxation
One of the significant advantages of the corporation is the limited liability protection it offers to its shareholders. It implies that the shareholders have limited liability for the corporation's debt and legal issues. This is a critical benefit for shareholders who want to minimize their personal liability.
In a corporation, ownership is divided into stocks, and shareholders can purchase and sell their stocks on the open market. This ease of ownership transfer makes it easier to raise capital, which is another advantage of the corporation.
Another advantage of the corporation is that it allows for perpetual existence, meaning that the corporation can continue to exist even after the owners or shareholders are deceased or have left the company. This means that the company can continue to operate indefinitely.
Finally, the corporation can also issue shares of stock to attract investors or shareholders who may provide the necessary funds for the corporation's growth and expansion. Double taxation may be a disadvantage of a corporation, but the advantages outweigh the negatives.
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You are working as the Project Manager for an international
contractor. Your company has just been awarded a contract by the
Japanese Government to decommission and demolish a 1,000 MVA
nuclear power
As the Project Manager for an international contractor, responsible for the decommissioning and demolition of a 1,000 MVA nuclear power plant, there are a number of important factors that must be considered to ensure a safe and successful project.
The decommissioning and demolition of a nuclear power plant is a complex and highly regulated process, and requires close collaboration with regulatory bodies and other stakeholders to ensure that all safety and environmental standards are met. The safety of the workforce must be of the utmost concern, and appropriate measures must be taken to minimize radiation exposure and other hazards. Additionally, the environmental impact of the project must be carefully managed, with measures taken to prevent contamination and to ensure that waste materials are properly disposed of.Furthermore, the decommissioning and demolition process is likely to be highly complex and require the use of specialized equipment and technologies.
A detailed project plan, including timelines, budgets, and risk management strategies, will be required to ensure that the project is completed on time and within budget. Effective communication and coordination with all stakeholders, including local communities, will also be essential to ensure that the project is completed safely and with minimal disruption.As Project Manager, it will be your responsibility to oversee all aspects of the project, from planning and design to execution and monitoring.
You will need to work closely with your team to ensure that all tasks are completed on time and to the required standard, and to ensure that any issues or challenges that arise are addressed promptly and effectively. With careful planning, effective communication, and strong leadership, the decommissioning and demolition of a nuclear power plant can be completed safely and successfully.
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In general, should firms try to operate where average cost is at its minimum? Explain.
In general, firms should try to operate where average cost is at its minimum. This is because operating at the point of minimum average cost allows firms to achieve maximum efficiency in their production processes, resulting in higher profitability.
Operating at the minimum average cost is beneficial for firms due to several reasons. When a firm operates at the point of minimum average cost, it means that it has optimized its production processes and minimized its costs per unit of output. This leads to increased profitability as the firm can produce goods or services at the lowest possible cost.
At the minimum average cost, the firm benefits from economies of scale. Economies of scale refer to the cost advantages that firms gain when they increase their production levels. As production increases, the firm can spread its fixed costs over a larger output, leading to lower average costs. This allows the firm to produce goods more efficiently and compete effectively in the market.
Operating at the minimum average cost also provides a competitive advantage. Firms that can produce goods at a lower cost than their competitors have the potential to offer lower prices, which can attract more customers and increase market share. Alternatively, they can maintain their prices and enjoy higher profit margins compared to their competitors.
Moreover, operating at the point of minimum average cost ensures that the firm is utilizing its resources optimally. It indicates that the firm has identified the most efficient combination of inputs (such as labor, capital, and raw materials) to produce its goods or services. This efficient resource allocation helps the firm to achieve higher productivity and maximize its output.
In summary, operating where average cost is at its minimum enables firms to achieve efficiency, take advantage of economies of scale, gain a competitive edge, and maximize profitability. By minimizing their average costs, firms can enhance their long-term sustainability and success in the marketplace.
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What are the 2 fundamental categories of risk encountered on projects and how do they differ from each other?
Why do projects tend to focus much more on dealing with one category of risk and not the other?
What tools and strategies can projects use to manage their risks?
Discuss in detail and preferably with examples?
Answer every part
Risk is the potential for loss, damage, or any negative event that can occur in the future. Projects, like any other undertaking, are subjected to a wide range of risks. Identifying, analyzing, and addressing these risks is a critical element of project management.
Business risk: This category of risk occurs outside the control of the project team. It is mainly due to the dynamics of the business environment. It encompasses risks that arise from regulatory and legal changes, economic trends, market conditions, and changes in client demand. The project team has no control over these risks, and they can only monitor them closely and plan how to respond to them. The business risks, therefore, cannot be fully mitigated or managed, but the project team can minimize their impact by having contingency plans in place.
Project risk: This category of risk relates to the activities and tasks required to complete the project. The risks in this category can be mitigated and managed effectively through the project management process. Project risks are classified into four categories: technical, schedule, cost, and performance. The project team can identify and address project risks through risk management strategies such as risk avoidance, risk reduction, risk transfer, and risk acceptance.
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Julie has just retired. Her company’s retirement program has two options as to how retirement benefits can be received. Under the first option, Julie would receive a lump sum of $143,000 immediately as her full retirement benefit. Under the second option, she would receive $22,000 each year for six years plus a lump-sum payment of $62,000 at the end of the six-year period. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1a. Calculate the present value for the following assuming that the money can be invested at 12%. (Round discount factor(s) to 3 decimal places.)
The present value calculation of the following, assuming the money can be invested at 12%, is given below:The present value of the two options is:Option 1: $28,787.88Option 2: $126,030.00
Lump sum payment = $143,000
Discount factor = 4.968
PV = 143,000/4.968
PV = $28,787.88
Option 2 6 Annuity payments = $22,000
Discount factor = 4.111
Lump sum payment at the end of six years = $62,000
Discount factor = 0.574PV of annuity
= 22,000 × 4.111
PV of annuity = $90,442.00
PV of the lump sum = 62,000 × 0.574
PV of the lump sum = $35,588.00
PV = PV of annuity + PV of lump sum
PV = 90,442.00 + 35,588.00
PV = $126,030.00
Therefore, the present value of the two options is:Option 1: $28,787.88Option 2: $126,030.00
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Fixer Upper: Expanding the Magnolia Brand.
1.-What are the major elements of Magnolia Inc.’s competitive strategy? How well do the pieces fit together? Is the strategy evolving?
2. Explain the pressures facing Magnolia Inc. in its internal and external environments. How would you prioritize those pressures?
3. What strategic issues confront Magnolia Inc. in 2018? What market or internal circumstances should most concern owners Chip and Joanna Gaines and the company’s senior management team?
4. What recommendations would you make to Magnolia Inc. to address the strategic issues confronting it in 2016 in order to sustain its impressive growth in revenues and achieve profitability?
The major elements of Magnolia Inc.'s competitive strategy are brand expansion, diversification of revenue streams, and leveraging their strong customer base. The strategy is well-aligned and evolving to adapt to market demands.
Magnolia Inc.'s competitive strategy revolves around three major elements. Firstly, the brand expansion aspect is evident through their various business ventures, including their home renovation TV show, product lines, and Magnolia Market. These endeavors allow them to extend their brand reach and connect with a broader audience. Secondly, Magnolia Inc. focuses on diversifying their revenue streams.
By offering a range of products and services, such as home goods, real estate, and home renovation consultations, they reduce reliance on a single source of income and create multiple avenues for profitability. Lastly, they leverage their strong customer base, built through their TV show and previous business ventures, to generate ongoing customer loyalty and support.
These elements of Magnolia Inc.'s competitive strategy fit together well. Their brand expansion efforts complement their revenue diversification initiatives, while their loyal customer base provides a solid foundation for growth.
The strategy is also evolving as they continue to explore new opportunities and adapt to changing market dynamics. For example, they have expanded into online retail, capitalized on social media marketing, and explored partnerships to further enhance their brand presence.
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Relationship between cintrast line authority and staff authority with the use of examples
The main difference between staff authority and line authority is that staff authority gives advice, support, and service to the line managers, while line authority grants managers the right to direct or control subordinates in order to achieve organizational goals.
On the other hand, contrast line authority and staff authority can be regarded as two types of organizational authority. The line authority is basically associated with line managers who hold an immediate or direct responsibility for the company's revenue and customer satisfaction. It is the authority that follows the chain of command from top management to the bottom.
Staff authority, in contrast, is not directly responsible for achieving company objectives but instead provides the line managers with counsel and support. It is the authority that is not involved in the day-to-day operations of the organization but rather supports the operations of line managers.
A good example of line authority is a production supervisor, who is responsible for making sure that the company's products are manufactured to the required quality standard. They have the power to instruct subordinates on what to do and how to do it.
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a) SDS Bhd has a funded defined benefit plan for its employees. On 1 January 2020, the fair value of the plan assets was RM1, 080,000 and the present value of the obligation was RM750,000. It was recorded that the past service cost of RM3,600 was the results of changes introduced during the year ended 31 December 2020. During the year of 2020, the entity had contributed RM187,500 to the scheme. The current service cost was RM75,000 and the payment to its retired employees during the year amounted to RM97,500. The entity uses a discount rate of 10% and expects its return on the plan assets to be 12%. Required: (i) Explain the differences between Defined Contribution Plan and Defined Benefit Plan. (5 marks) (ii) Compute the defined benefit costs that should be recognised in the statement of profit or loss for the year ended 31 December 2020. (3 marks) (b) On 1 January 2021, RAMF Bd entered into an agreement to sell machine that fair value of RM100,000 to WK Bhd. Delivery of the machine is expected on 31 April 2021. WK Bhd offered to settle the purchase by cash or by issuing share options 50,000 shares of WK Bhd. If RAMF Bhd chooses the share alternative, the options will be exercisable by 31 December 2021 at RM4 per share. The fair value of the share options on 1 January 2021 was RM2.10. RAMF Bd agreed to accept shares options instead of cash. Required: (i) State two (2) possible reasons for RAM Bhd's decision. (4 marks) (ii) Explain how WK Bd will record the acquisition of the machine.
The defined benefit cost that should be recognized in the statement of profit or loss for the year ended 31 December 2020 can be calculated by summing the current service cost, past service cost, net interest expense/income, and adjusting for the expected return on plan assets.
(i) Differences between Defined Contribution Plan and Defined Benefit Plan:
Defined Contribution Plan: In a defined contribution plan, the employer's contribution is fixed, and the benefit received by employees is based on the contributions made and the investment returns earned on those contributions. The employer's obligation is limited to the amount contributed, and there is no guarantee of a specific benefit amount upon retirement. The risk is borne by the employee.
Defined Benefit Plan: In a defined benefit plan, the employer guarantees a specific retirement benefit to employees based on factors such as salary, years of service, and a predetermined formula. The employer is responsible for funding the plan and assumes the investment and longevity risks. The benefit amount is predetermined, and the employer's obligation extends beyond the contributions made.
(ii) Computation of defined benefit costs for SDS Bhd:
Defined Benefit Cost = Current Service Cost + Past Service Cost + Net Interest Expense/Income + Actuarial (Gain)/Loss - Expected Return on Plan Assets
Given:
Current Service Cost = RM75,000
Past Service Cost = RM3,600
Net Interest Expense/Income = (Obligation at the beginning * Discount Rate) - (Plan Assets at the beginning * Expected Return Rate)
= (RM750,000 * 10%) - (RM1,080,000 * 12%)
Actuarial (Gain)/Loss = 0 (No information provided)
Expected Return on Plan Assets = RM1,080,000 * 12%
Substituting the values:
Defined Benefit Cost = RM75,000 + RM3,600 + [((RM750,000 * 10%) - (RM1,080,000 * 12%))] - (RM1,080,000 * 12%)
The defined benefit cost that should be recognized in the statement of profit or loss for the year ended 31 December 2020 can be calculated by summing the current service cost, past service cost, net interest expense/income, and adjusting for the expected return on plan assets. It is important for SDS Bhd to accurately calculate and recognize these costs to reflect the financial impact of the defined benefit plan on its operations.
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ABC has 100 million shares outstanding and no debt. Currently, its stock is trading at $20 per share. ABC's management thinks that the shares are underpriced, and believes that the true value is $24 per share. ABC plans to repurchase shares from existing shareholders with $240 million in cash. At the same time, management expects that very soon new information about firm fundamentals will come out and the stock price will converge to the firm’s true value as expected by the management.
Assume that ABC is not able to repurchase shares prior to the market becoming aware of the new information regarding its true value. If ABC repurchases the shares following the release of the new information, what is the number of shares outstanding following the repurchase? After the release of the new information regarding the true value of ABC, and following the repurchase, what is the firm's share price?
ABC has 100 million shares outstanding and no debt. Currently, its stock is trading at $20 per share. ABC's management thinks that the shares are underpriced, and believes that the true value is $24 per share. ABC plans to repurchase shares from existing shareholders with $240 million in cash.
ABC has planned to buy back its shares from the existing shareholders with $240 million in cash. However, before the repurchase of the shares, ABC has received new information about the firm fundamentals, after which the stock price will converge to the firm’s true value expected by the management. Therefore, the company will repurchase the shares once the market is aware of the new information. Now, assuming the market has priced the shares at the expected value of $24 per share after the release of the new information.
Therefore, the current price of $20 per share represents undervaluation per share of $4 ($24 – $20 = $4). The cash available for share repurchase is $240 million, and therefore ABC can repurchase 12 million shares ($240 million ÷ $20 per share = 12 million shares) since the current market price is $20 per share. Following the repurchase, the number of shares outstanding would become 88 million shares (100 million – 12 million).After the repurchase, the market capitalization of the company will be $2.112 billion ($24 per share × 88 million shares).
The company would have $240 million less cash ($240 million – $240 million used to buy shares). The new enterprise value (EV) would be $1.872 billion ($2.112 billion – $240 million). The price per share is determined by dividing the enterprise value by the number of shares outstanding, which is equal to $21.27 per share.
Therefore, after the release of the new information, the number of shares outstanding following the repurchase will be 88 million shares. The firm's share price would be $21.27 following the repurchase.
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Why did advertising agencies need strategic planning department in the first place? What is the difference between strategic planning and creative strategy?
Describe T-square and the planning cycle.
Choose an ad and identify the cultural, human and brand truth behind it.
Advertising agencies needed a strategic planning department to provide a systematic and strategic approach to their clients' advertising and marketing efforts.
The department is responsible for conducting market research, analyzing consumer behavior, identifying target audiences, setting objectives, and developing effective strategies to achieve clients' goals.
The strategic planning department in advertising agencies serves as a bridge between clients' objectives and the creative execution of advertising campaigns. It helps agencies align their clients' business goals with the advertising and marketing strategies, ensuring that the creative work is effective in reaching the target audience and achieving desired outcomes.
Strategic planning involves conducting thorough research to understand the market dynamics, competition, and consumer behavior. It includes identifying the target audience, defining objectives, and developing a comprehensive strategy that outlines the key messaging, media channels, and tactics to be employed in the advertising campaign.
On the other hand, creative strategy focuses on the development of the creative concepts and ideas that will communicate the message to the target audience. It involves crafting the visual and verbal elements of the advertising campaign, such as copywriting, design, and storytelling techniques.
T-square is a planning tool used in strategic planning processes. It represents the intersection of the agency's objectives, the target audience's needs, and the available resources. It helps agencies prioritize their efforts and allocate resources effectively to achieve the desired outcomes.
The planning cycle refers to the iterative process of strategic planning, which involves multiple stages such as research, analysis, goal-setting, strategy development, implementation, and evaluation. It is a continuous loop that allows agencies to refine their strategies based on feedback and insights gained throughout the process.
To choose an ad and identify the cultural, human, and brand truth behind it, we would need a specific ad to analyze. Without a specific example, it is challenging to provide a detailed analysis. However, cultural truth refers to the aspects of the ad that resonate with the cultural values, beliefs, and norms of the target audience. Human truth represents the universal human insights or emotions that the ad taps into, creating a connection with the viewers.
Brand truth refers to the unique qualities or attributes of the brand that are communicated in the ad, distinguishing it from competitors and reinforcing the brand's positioning.
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Assume a bank offers an effective annual rate of 7.29%. If compounding is monthly what is the APR?
Submit
Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))
The APR is approximately 0.5994%.
To find the APR (Annual Percentage Rate) when compounding is monthly, we need to convert the effective annual rate (EAR) to APR.
The formula to convert EAR to APR when compounding is monthly is:
APR = (1 + EAR)^(1/12) - 1
The effective annual rate is 7.29%, we can calculate the APR as follows:
APR = (1 + 0.0729)^(1/12) - 1
Calculating this expression gives:
APR ≈ 0.005994
Converting it to a percentage with 4 decimal places, the APR is approximately 0.5994%.
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As of December 31, 2019, Oriole Company had $2500 of raw materials inventory. At the beginning of 2019, there was $2000 of materials on hand. During the year, the company purchased $395000 of materials; however, it paid for only $332500. How much inventory was requisitioned for use on jobs during 2019? O $394500 O $382000 O $395500 $383000
The correct option is O $383000 Explanation: To calculate the amount of materials requisitioned for use on jobs during the year, we need to know the amount of materials purchased, the amount paid for the materials and the ending inventory of raw materials.
We can calculate the amount of materials requisitioned using the following formula:Amount of materials requisitioned = Beginning inventory + Purchases - Ending inventoryHowever, we need to adjust the purchases figure for the amount of purchases that were not paid for. This is because purchases that are not paid for are not available for use on jobs during the year.Amount of purchases made on credit = Purchases - Amount paid for purchases.
Amount of materials requisitioned = Beginning inventory + Amount of purchases made on credit - Ending inventory Amount of materials requisitioned = $2000 + ($395000 - $332500) - $2500Amount of materials requisitioned = $383000 Therefore, the amount of inventory requisitioned for use on jobs during 2019 is $383000.
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Based on what you have learned about customer satisfaction, Fis competition, and digital banking in financial services field, read the following case study and answer the questions. (4marks) Even though personal financial management (PFM) tools have been available for more than a dozen years, more than half of consumers still use old-school methods of tracking their finances like pen and paper (38%) and spreadsheets (20%), according to RFi Group. This is an opportunity for banks and credit unions to offer personal financial management (PFM) tools. Traditional banking providers might fear that firms such as Mint and Quicken have already cornered the market on PFM, but that's not the case. The RFi Group found that more than three- quarters of consumers would prefer PFM tools offered by their primary financial institution, compared to just 6% who say they would prefer PFM tools come from non-bank third-party providers. Unfortunately, those consumers who do use PFM tools from their bank and credit union are not impressed. Oracle found that consumers are more dissatisfied with personal financial management services (along with investment management services) compared other banking services "Whether a retail bank sees PFM services as a core part of its strategy or not, they play a vital role in customer retention." Oracle wrote in a report on digital banking strategies. "Banking providers can't afford to ignore this decline in customer satisfaction. "The message is clear: banks and credit unions can ignore PFM no longer. This article was originally published on June 20, 2018 by The Financial Brand
Questions:
1- What is the role of PFM according to your understanding from the case? Explain at length with evidence from the case.
2- Who are the competitors of banks here in this case? Do customers trust those competitors and why?
3. "The consumers would prefer PFM tools offered by their primary financial institution, compared to just 6% who say they would prefer PFM tools come from non-bank third-party providers. From your point of view, Do you prefer PFM service from primary Fls or from non-bank third-party and why?
1. Personal financial management (PFM) tools offer banks and credit unions the chance to increase customer retention, as they play a critical role in retaining customers. Although these tools have been available for more than a dozen years.
According to RFi Group, this provides a chance for banks and credit unions to offer PFM tools. RFi Group found that more than three-quarters of customers would prefer PFM tools offered by their primary financial institution, compared to only 6% who prefer PFM tools from non-bank third-party providers. However, the consumers who use PFM tools from their bank and credit union are not satisfied, according to Oracle.
Compared to other banking services, consumers are more dissatisfied with personal financial management services, Oracle discovered. According to Oracle's report on digital banking strategies, PFM services play a critical role in customer retention, whether a retail bank considers them to be a core part of its strategy or not. Banking providers cannot afford to overlook this decline in customer satisfaction, Oracle added.
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For the data given below, what would the naive forecast be for
period 5?
Period
Demand
1
59
2
58
3
60
4
61
Group of answer choices
62
59
60
58
61
The forecast for period 5 would be equal to the demand for period 4, which is 4.
Naive forecasting is a type of forecasting approach that involves predicting future values based on the previous value of the variable, assuming that the previous value is a good predictor of the future value.
This method is based on the assumption that historical data can be used to forecast future outcomes. It is a simplistic method that doesn't require any complex algorithms or mathematical models.
For this type of forecasting, the last known value of the time series is used as a basis for the forecast. In other words, the forecast for the next period is equal to the demand for the current period.
Naive forecasting is a simple approach that works well for time series data that have a stable trend. For period 5, the demand for the current period is 4.
Therefore, the naive forecast for period 5 would be 4. The naive forecast for period 5 would be equal to the demand for period 4, which is the most recent period with available data.
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Explain the use of the most recent approaches of management in an organization in connection with the development of information and communication technologies (for example, how a manager's interpersonal, information and decision-making role changes under the influence of information and communication technologies).
The use of information and communication technologies (ICT) has significantly impacted the role of managers in organizations, leading to the adoption of new approaches to management. With the integration of ICT into various business processes, managers have experienced changes in their interpersonal, informational, and decision-making roles.
In terms of the interpersonal role, ICT enables managers to communicate and collaborate with employees, stakeholders, and customers more efficiently and effectively. Tools such as email, instant messaging, and video conferencing facilitate remote communication and virtual team collaboration, allowing managers to connect with individuals across different locations and time zones.
Regarding the informational role, ICT provides managers with access to vast amounts of data and information. Through advanced analytics and reporting tools, managers can gather, analyze, and interpret data in real-time, enabling them to make informed decisions and develop data-driven strategies. ICT also enhances the speed and accuracy of information sharing within the organization, ensuring that managers have up-to-date information to support their decision-making process.
In the decision-making role, ICT offers managers improved decision support systems and simulation tools that enable them to model different scenarios and evaluate potential outcomes. This helps managers make more informed and strategic decisions, considering various factors and potential implications. Additionally, ICT facilitates the automation of routine tasks, freeing up managers' time to focus on more critical decision-making activities.
Overall, the integration of ICT in organizations has transformed the way managers fulfill their roles, enhancing their ability to communicate, access information, and make effective decisions. It has enabled managers to become more agile, adaptable, and data-driven in their approach, leading to improved organizational performance and competitive advantage.
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A semiconductor company recognizes that there is shortage in chip supply and decides to build a new plant to meet the increasing demand. They have to to make a decision whether they should build a big plant or starts with a small one and expands the plant after 2 years (if the demand is remaining high). The decision will be made based on projected net cash flow generated in 10 years from various probable outcomes. The assumptions: Probably for High Average Demand: PH= 50%, for low average demand: PL = 50% The cash flow the company is able to make: Big Plant: a. High Demand yield $ 800,000 annually, b. Low Demand yield $100,000 annually Small Plant with initial high demand: $450,000/yr for year 1-2 (2 years); after 2 years Expand Plant: c. High Demand, $700,000/yr (from yr 3 to 10) for 8 years; d. Low Average Demand: $50,000 for 8 years (low efficiency) No change in plant: e: High Demand: $300,000/yr for 8 years; f. Low Demand: $400,000/yr for 8 years Small Plant with initial low demand: g: $400,000 for 10 years Cost for build the plant: A.large plant: $3,000,000; B.small plant: $1,300,000; C. expand plant: $2,200,000 A. Build Big Plant B. Build Small Plant Initial High Demand 2 C. Exnand Plant D. No Change in Plant Initial Low Demand a. High Average Demand b. Low Average Demand High Average Demand d. Low Average Demand High Average Demand f. Low Average Demand Use decision-tree calculation to answer the following six questions: ALTIENA510 (Mac) g. Initially Low Demand
The semiconductor company is considering building a new plant to increase their chip supply. They must decide between building a big plant or a small one that will be expanded in two years.
Considering the given data, below are the calculations for the decision-tree regarding the building of a new plant:For building a large plant, the cash flow will be as follows:
If the demand is high, the company will earn $800,000 annually and if it is low, the company will earn $100,000 annually. The cost of building a large plant will be $3,000,000.
For building a small plant with initial high demand, the cash flow will be as follows:
For the first two years, the company will earn $450,000 annually and after 2 years, the plant will be expanded. If the demand is high, the company will earn $700,000 annually for 8 years and if it is low, the company will earn $50,000 annually for 8 years.
The cost of building the plant and expanding it will be $1,300,000 + $2,200,000 = $3,500,000. For building a small plant with initial low demand, the cash flow will be as follows:
For 10 years, the company will earn $400,000 annually. The cost of building a small plant will be $1,300,000. Therefore, using the decision tree calculation, the best option for the semiconductor company would be to build a large plant if the demand is initially high, as it will generate the most cash flow.
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Stone Works is a paving stone installation business that operates from about April to October cach yeac. The cornpany has an Outstanding reputation for the quality of its work and as a result pre-books customers a full year in advance. Customers must pay 40%. at the time of booking and the balance on the completion date of the job. Stone Works records the 40% cash advance received from customers in the Unearned Revenues account. The December: 31,2020 , balance sheet shows Unearned Revenues totalling $269.000. During 2021, $354,000 of cash was collected in total from customers: $246,000 regarding work completed during the year for Customers who paid 40% down in 2020 , and the balance representing the 40% prepayments for work to be done in 2022 . Required: 1. Prepare the entry to record the collection of cash in 2021 . (Do not round intermedlate calculations. Round the final answers to the nearest whole dollar amount) 2. Determine the balance in Unearned Revenue at December 3t, 2021. (Round the final answer to the nearest whole dollar afmetint.)
1. To record the collection of cash in 2021, we need to recognize the revenue for the work completed during the year and adjust the Unearned Revenues account. The entry would be as follows:
Date: December 31, 2021
Debit: Cash - $354,000
Credit: Unearned Revenues - $246,000
Credit: Revenue - $108,000 ($354,000 - $246,000)
Explanation: We debit Cash to record the cash collection. We credit Unearned Revenues with the portion of the cash collected in 2021 that relates to work completed in 2021 ($246,000). The remaining portion ($108,000) is recognized as Revenue, as it represents the 40% prepayments for work to be done in 2022.
2. To determine the balance in Unearned Revenue at December 31, 2021, we need to consider the opening balance and the adjustments made during the year:
Opening balance (December 31, 2020): $269,000
Adjustment for cash collected in 2021 related to work completed in 2021: -$246,000 (credit)
Adjusted balance: $23,000 ($269,000 - $246,000)
The balance in the Unearned Revenue account at December 31, 2021, is $23,000.
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Margin, Turnover, ROI
Required:
1. Consider the data for each of the following four Independent companies. Calculate the missing values in the table below. For margin and ROI, enter your answers as percentages, rounded to two decimal places. For example, the decimal value .03827 would be entered as "3.83" percent. For turnover, enter your answer as a decimal value rounded to two decimal places.
A
$10,000
$47,000
$95,000
Expenses
$8,000
$90,240
Operating Income
Assets
$2,000
$14,100
348,000
$40,000
D
Revenue
$9,500
Margin
30 %
6.00%
Turnover
0.50
2.00
ROI
2. Assume that the cost of capital is 9 percent for each of the four firms. Compute the residual income for each of the four firms. If the residual income is negative, enter a negative amount.
A's residual income
B's residual income:
C's residual income
D's residual income
Company A has a margin of 20%, a turnover of 0.25, and an ROI of 5%. Company B has a negative margin, negative ROI, and a high turnover. Company C also has a negative margin, negative ROI, and a low turnover. Company D has a margin of 30%, a turnover of 0.50, and an ROI of 15%.
To calculate the missing values and residual income for each company, we need to use the given data and formulas.
1. For Company A:
Revenue: $10,000
Expenses: $8,000
Operating Income: Revenue - Expenses = $10,000 - $8,000 = $2,000
Assets: $40,000
Margin: (Operating Income / Revenue) x 100 = ($2,000 / $10,000) x 100 = 20%
Turnover: Revenue / Assets = $10,000 / $40,000 = 0.25
ROI: Margin x Turnover = 20% x 0.25 = 5%
Company A has a margin of 20%, a turnover of 0.25, and an ROI of 5%.
2. For Company B:
Revenue: $47,000
Expenses: $90,240
Operating Income: $47,000 - $90,240 = -$43,240 (negative)
Assets: $14,100
Margin: (Operating Income / Revenue) x 100 = (-$43,240 / $47,000) x 100 = -92%
Turnover: Revenue / Assets = $47,000 / $14,100 ≈ 3.33
ROI: Margin x Turnover = -92% x 3.33 ≈ -306.36% (negative)
Company B has a negative margin, negative ROI, and a high turnover.
3. For Company C:
Revenue: $95,000
Expenses: $348,000
Operating Income: $95,000 - $348,000 = -$253,000 (negative)
Assets: $348,000
Margin: (Operating Income / Revenue) x 100 = (-$253,000 / $95,000) x 100 = -266.32%
Turnover: Revenue / Assets = $95,000 / $348,000 ≈ 0.273
ROI: Margin x Turnover = -266.32% x 0.273 ≈ -72.71% (negative)
Company C also has a negative margin, negative ROI, and a low turnover.
4. For Company D:
Revenue: $9,500
Margin: 30%
Turnover: 0.50
ROI: Margin x Turnover = 30% x 0.50 = 15%
Company D has a margin of 30%, a turnover of 0.50, and an ROI of 15%.
In conclusion, Company A has positive financial performance with a 20% margin, while Company B and Company C both show negative financial performance with negative margins and ROIs. Company D has a higher margin and ROI, indicating better performance compared to the other companies.
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b) Consider the case in which rt = r = q/s for all t (the economy starts out with the long run ratio of
human to physical capital). Rewrite the per-capita production function just in terms of per-capita
capital. Does the production function exhibit diminishing returns in capital anymore?
(c) Using the result from part b, re-derive the Solow-Swan equation. That is, find the expressions
that gives you kt+1 as a function of kt and the parameters.
The production function still exhibits diminishing returns in capital because the exponent on kt, (α + β), is less than 1. As kt increases, the marginal product of capital decreases, indicating diminishing returns. Solow-Swan equation, describes the change in capital per worker in a steady-state economy.
b) In the case where rt = r = q/s for all t, the per-capita production function can be rewritten just in terms of per-capita capital (k) as follows:
Yt / Lt = (k^α)(h^β)
Since rt = r = q/s, we can substitute q/s for r in the production function:
Yt / Lt = (r * Lt * kt^α * (Lt * kt / Yt)^β) = (r * Lt^(1+β) * kt^(α + β)) / Yt^β
Simplifying further, we get:
Yt / Lt = (r * (Lt/ Yt)^β * (Lt/ Yt)^β * kt^(α + β)) / Yt^β
Yt / Lt = (r * (Lt / Yt)^(α + 2β) * kt^(α + β)) / Yt^β
The production function still exhibits diminishing returns in capital because the exponent on kt, (α + β), is less than 1. As kt increases, the marginal product of capital decreases, indicating diminishing returns.
c) To derive the Solow-Swan equation, we start with the per-capita production function from part b:
Yt / Lt = (r * (Lt / Yt)^(α + 2β) * kt^(α + β)) / Yt^β
Assuming that the economy is in a steady-state, where kt = k and Yt = Y, we can simplify the equation:
Y / L = (r * (L / Y)^(α + 2β) * k^(α + β)) / Y^β
Since the economy is in a steady-state, output per worker (Y / L) is constant. We can denote it as y:
y = (r * (L / Y)^(α + 2β) * k^(α + β)) / Y^β
To find kt+1 as a function of kt and the parameters, we can use the investment per worker equation, which is given by:
It = sYt / L
Assuming that the savings rate (s) is constant, we can write:
It = sk
Since in a steady-state, investment per worker is equal to the depreciation rate (δ) times capital per worker (k), we have:
It = δk
Setting It = δk = sk, we can solve for k:
k = (s / δ) * y
Therefore, kt+1 is a function of kt and the parameters:
kt+1 = (s / δ) * y
This is the Solow-Swan equation, which describes the change in capital per worker in a steady-state economy.
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2 Nokia is a Finnish telecommunication, consumer electronics, and information technology company founded in 1865 that, by 1998, had overtaken Motorola to become the world's largest mobile phone brand. The Nokia brand is now controlled by HMD Global - a company founded by former Nokia employees that released a line of smartphones in 2017. The company's failure to keep up with software-based iOS and Android operating systems made it lose its market leader position. The failure of Nokia is one of the most well-known examples of a disruptive technology wiping out an established player in a market. (Source: Quofano (2021)) (a) Illustrate the Valley of Death for Nokia, which leads the company to failure. (b) Outline FIVE (5) adopter categories based on the relative time of adoption of innovations.
The Valley of Death for Nokia can be illustrated by the company's inability to keep up with software-based iOS and Android operating systems. As these operating systems gained popularity and offered more advanced features, Nokia's traditional hardware-focused approach became outdated.
(a) The company failed to adapt quickly enough to the changing market demands and consumer preferences, resulting in a decline in sales and loss of market share. Additionally, Nokia's delay in entering the smartphone market further contributed to its downfall. The lack of a competitive software ecosystem and the inability to provide a seamless user experience ultimately led to Nokia's failure.
(b) The five adopter categories based on the relative time of adoption of innovations are:
1. Innovators: These are the first individuals to adopt a new technology or innovation. They are typically adventurous and eager to try out new products or services, even if they come with some risks or uncertainties.
2. Early Adopters: These are the individuals who adopt an innovation shortly after the innovators. They are often opinion leaders within their social networks and have a higher degree of financial resources and social status. Early adopters play a crucial role in influencing the adoption behavior of others.
3. Early Majority: The early majority represents a larger group of individuals who adopt an innovation after it has been proven successful by the innovators and early adopters.
4. Late Majority: The late majority comprises individuals who are skeptical and adopt an innovation only after the majority of the market has already done so.
5. Laggards: Laggards are the last individuals to adopt an innovation. They are typically resistant to change and may have limited access to resources or be less motivated to adopt new technologies.
By understanding these adopter categories, companies can develop targeted strategies to reach different segments of the market and facilitate the adoption of their innovations.
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Rockhill Industries received payment after the expiration of the discount period from a customer who had purchased merchandise on account. The sales invoice was for $3,000, and credit terms were 3/15n/30. The cost of the merchandise was $1,800. In the cash receipts journal, A. $3,000 will appear in the accounts receivable debit column B. $3,000 will appear in the sales revenue credit column C. $90 will appear in the sales discounts debit column D. $3,000 will appear in the accounts receivable credit column
A. $3,000 will appear in the accounts receivable debit column
The correct answer is A. $3,000 will appear in the accounts receivable debit column. This is because when the customer pays after the expiration of the discount period, the full amount of the invoice ($3,000) will be recorded as a debit to the accounts receivable account. The accounts receivable account represents the amount owed by the customer to the company for the merchandise purchased on account.
When a customer purchases merchandise on account, it creates a credit transaction where the company records an account receivable for the amount owed by the customer. The credit terms specified on the sales invoice determine any applicable discounts and the payment due date.
In this case, the credit terms are 3/15n/30, which means that the customer can take a 3% discount if the payment is made within 15 days. Otherwise, the full amount is due within 30 days. In the given scenario, the customer pays after the expiration of the discount period, so the full amount of $3,000 is owed.
The journal entry for recording the payment in the cash receipts journal would be:
Debit: Accounts Receivable ($3,000)
Credit: Cash ($3,000)
This entry debits the accounts receivable account to reduce the amount owed by the customer and credits the cash account to reflect the receipt of the payment. The $3,000 will appear in the accounts receivable debit column of the cash receipts journal.
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Auto Group is a company that produces component parts for automobile engines. The total market demand for these component parts is 800 million units per year. With the fixed expenses of $98 million and average variable cost of $8 per unit, Auto Group has to sell its component parts at $16 per unit in order to achieve its target gross profit. Question 1 Determine the required volume (sales volume in units) if the company is targeting $38 million in operating income.
Auto Group needs to sell approximately 4.75 million units to achieve a target operating income of $38 million, with a contribution margin per unit of $8.
To determine the required volume (sales volume in units) for Auto Group to achieve a target operating income of $38 million, we need to calculate the contribution margin per unit.The contribution margin per unit is the selling price per unit minus the variable cost per unit. In this case, the selling price per unit is $16, and the variable cost per unit is $8. So, the contribution margin per unit is $16 - $8 = $8.
Next, we calculate the required sales volume by dividing the target operating income by the contribution margin per unit. Thus, $38 million divided by $8 gives us a required sales volume of 4.75 million units.
Therefore, Auto Group needs to sell approximately 4.75 million units to achieve its target operating income of $38 million.
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Concept Write Up (Summary Four) Section 11.2 of the text discussed marketing strategy and the four components - product, pricing, placement (distribution), promotion. Using your business that you choose in Week 1 of this course, create a marketing strategy for your business. Make sure you discuss the challenges in distribution and the cost of promotion. The deliverable should be a minimum of one page double spaced in length and include an introduction paragraph, discussion paragraphs, and a conclusion paragraph. Be sure to use APA style citation, if necessary.
For our mobile app development company, we have developed a marketing strategy that emphasizes high-quality products and competitive pricing while leveraging digital marketing techniques to reach a global audience.
We recognize the challenges of distribution, especially in a highly competitive market, and will focus on building partnerships with other businesses and participating in industry events to showcase our products. Cost-effective marketing channels such as social media and email marketing will also be utilized to minimize promotion costs. Additionally, we will leverage our existing customer base through referrals and word-of-mouth marketing to drive growth. Overall, our marketing strategy is designed to create a strong brand identity and establish our business as a leader in the mobile app development market.
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The following information is given on three mutually exclusive projects. Assume a cost of capital of 15%.
Project 1 Project 2 Project 3
Cash Flow Year 0 -$400,000 -$500,000 -$1,000,000
Year 1 200,000 300,000 500,000
Year 2 300,000 300,000 700,000
Year 3 300,000 350,000 700,000
Which project has the highest PI?
a. Project 1
b. Project 2
c. Project 3
d. All Projects
Present value refers to the current value of a future sum of money or cash flow, discounted to reflect the time value of money. To determine the project that has the highest PI, we need to compute the Present Value of each project. The formula for Present Value is:
PVi = CFi / (1 + r) ^i
Where:PVi = Present Value of cash flow iCFi = Cash Flow i r = Discount rate (15%) i = year of cash flowi = 0 for initial investment of cash flow
Project 1:PI1 = Present Value of Cash Flow / Initial Investment
PI1 = (PV1 + PV2 + PV3 + PVn) / IIPV0
= -$400,000PV1
= $200,000 / (1 + 0.15) ^ 1
= $173,913PV2
= $300,000 / (1 + 0.15) ^ 2
= $221,326PV3
= $300,000 / (1 + 0.15) ^ 3
= $178,392PV1 + PV2 + PV3
= $573,632PI1
= $573,632 / $400,000
= 1.43
Project 2:
PI2 = Present Value of Cash Flow / Initial Investment
PI2 = (PV1 + PV2 + PV3 + PVn) / IIPV0
= -$500,000PV1
= $300,000 / (1 + 0.15) ^ 1
= $260,870PV2
= $300,000 / (1 + 0.15) ^ 2
= $184,783PV3
= $350,000 / (1 + 0.15) ^ 3
= $231,565PV1 + PV2 + PV3 = $677,218PI2 = $677,218 / $500,000
= 1.35
Project 3:
PI3 = Present Value of Cash Flow / Initial Investment
PI3 = (PV1 + PV2 + PV3 + PVn) / IIPV0
= -$1,000,000PV1
= $500,000 / (1 + 0.15) ^ 1
= $434,783PV2
= $700,000 / (1 + 0.15) ^ 2
= $489,130PV3
= $700,000 / (1 + 0.15) ^ 3
= $392,157PV1 + PV2 + PV3
= $1,316,070PI3
= $1,316,070 / $1,000,000
= 1.32.
Therefore, the project with the highest PI is Project 1 with a PI of 1.43.
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