A business model in which an entrepreneur arranges for a customer to host a party, inviting friends, family, and neighbors, is called a "home party plan" or "party plan business model."
In this model, the entrepreneur partners with a host who invites their social network to the event. The entrepreneur typically demonstrates and sells their products or services during the party. This business model has several benefits, including leveraging the host's social connections for marketing and sales.
The relaxed, social atmosphere of a home party often encourages attendees to interact with the products and make purchases more willingly than in traditional retail settings. Additionally, the host usually receives incentives, such as discounts or free products, based on the sales generated at their party.
The home party plan model is popular among direct sales companies, which typically focus on products such as cosmetics, home décor, or kitchenware. The model's success relies on a combination of strong personal relationships, effective product demonstrations, and the social dynamics of the event. Overall, this business model can create a win-win situation for both the entrepreneur and the host, resulting in increased sales and customer satisfaction.
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A stock recently paid a $4/share dividend. They maintain the same dividend payments for the next 11 years. Afterwards, they will steadily increase their dividend payments by 2.5%/year, forever. R=14%. Calculate the stock price.
The stock price is $63.09.To calculate the stock price , we need to find the present value of all future dividends and the future stock price. We can use the dividend discount model (DDM) to do this.
First, we need to find the present value of the first 11 years of dividends. Since the dividend payment remains constant for those years, we can use the perpetuity formula:
PV = (D / R) * (1 - (1 + g)⁻ⁿ)
where PV is the present value, D is the dividend payment, R is the required rate of return, g is the growth rate, and n is the number of periods.
In this case, D = $4, R = 14%, g = 0%, and n = 11. Plugging in these values, we get:
PV = (4 / 0.14) * (1 - (1 + 0)⁻¹¹) = $28.57
This is the present value of the first 11 years of dividends.
Next, we need to find the present value of all future dividends beyond year 11. Since the dividend payment increases by 2.5% per year, we can use the growing perpetuity formula:
PV = (D * (1 + g)) / (R - g)
where PV is the present value, D is the first dividend payment after year 11, R is the required rate of return, and g is the growth rate.
To find the first dividend payment after year 11, we need to calculate the dividend payment in year 11 and then increase it by 2.5% each year. The dividend payment in year 11 is:
D11 = D * (1 + g)^11 = 4 * (1 + 0)¹¹ = $4
The first dividend payment after year 11 is:
D12 = D11 * (1 + g) = 4 * (1 + 0.025) = $4.10
Plugging in these values, we get:
PV = (4.10 / (0.14 - 0.025)) = $34.52
This is the present value of all future dividends beyond year 11.
Finally, we need to find the future stock price at the end of year 11, which is simply the expected dividend payment in year 12 divided by the difference between the required rate of return and the growth rate:
P11 = D12 / (R - g) = 4.10 / (0.14 - 0.025) = $34.52
Adding the present values of the first 11 years of dividends and all future dividends, we get the total present value of the stock:
Total PV = $28.57 + $34.52 = $63.09.Therefore, the stock price is $63.09.
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You purchased a machine for $1.07 million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 40%. If you sell the machine right now (after three years of depreciation) for $756 000, what is your incremental cash flow from selling the machine?
The incremental cash flow from selling the machine is $498,600.
Since the machine has a seven-year life and has been depreciated straight-line to zero over this period, the annual depreciation expense is
$1.07 million / 7 = $153,571.43.
After three years, the accumulated depreciation is
$153,571.43 x 3 = $460,714.29.
Therefore, the book value of the machine is
$1.07 million - $460,714.29 = $609,285.71.
When the machine is sold for $756,000, there is a gain of
$756,000 - $609,285.71 = $146,714.29.
Since the tax rate is 40%, the tax on this gain is
0.4 x $146,714.29 = $58,685.71.
The incremental cash flow from selling the machine is therefore the after-tax gain from the sale plus the return of the book value:
$146,714.29 - $58,685.71 + $609,285.71 = $498,600.
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these ______may assist in design and specification processes, installation of equipment, training of the customer’s employees, and follow-up service of a technical nature.
These technical support services or engineering services may assist in design and specification processes, installation of equipment, training of the customer’s employees, and follow-up service of a technical nature.
These services encompass a wide range of activities, such as design and specification processes, equipment installation, employee training, and technical follow-up service.
Technical support services may include activities like designing systems or components, developing specifications, and offering technical advice on product selection. Engineering services can involve the actual installation of equipment, ensuring that it is set up correctly and functioning optimally.
Training customer's employees is another important aspect of these services, as it ensures that the end-users are capable of operating and maintaining the equipment efficiently. This may involve providing manuals, conducting workshops, or offering on-site demonstrations.
Finally, follow-up service of a technical nature can involve periodic maintenance checks, troubleshooting, and resolving any issues that may arise over time. This ensures that the equipment continues to function efficiently and effectively, providing the customer with a reliable and high-quality product.
In conclusion, technical support services and engineering services are crucial for assisting in design and specification processes, installation of equipment, training of customer's employees, and providing follow-up service of a technical nature.
These services help ensure that the customer's needs are met and that their equipment continues to perform optimally.
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all else remaining equal, if the amount of money market deposit accounts increases, this will increase the size of
If the amount of money market deposit accounts increases, this will increase the size of the money market. Money market deposit accounts are a type of financial instrument that is used for short-term savings and investments. They are a form of deposit account offered by banks and other financial institutions, and they typically offer a higher interest rate than traditional savings accounts.
Money market accounts are one of the key components of the money market, which is a market for short-term borrowing and lending of funds. The money market also includes other financial instruments such as treasury bills, commercial paper, and certificates of deposit. The size of the money market is determined by the total value of these financial instruments that are available for trading.
Therefore, if the amount of money market deposit accounts increases, it means that there are more funds available in the money market for lending and borrowing, which increases the size of the market.
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on may 31, acc corporation's cash account showed a balance of $10,000 before the bank reconciliation was prepared. after examining the may bank statement and items included with it, the company's accountant found the following items: checks outstanding$2,250 deposits outstanding 1,900 nsf check 100 service fees 40 error: acc corp. wrote a check for $30 but recorded it incorrectly for $300. what is the amount of cash that should be reported in the company's balance sheet as of may 31?
Explanation: the bank had a lot so when the personrobbed it there was still money and all the moeny was restored because the cops found the robber
if the objective of a test of details is to detect the overstatement of sales, the auditor should trace transactions from the: group of answer choices accounting records to the shipping documents. sales journal to the cash receipts journal. shipping documents to the accounting records. cash receipts journal to the sales journal.
The objective of a test of details is to detect the overstatement of sales. To achieve this, the auditor should trace transactions from the shipping documents to the accounting records.
How to trace transactions from the shipping documents to the accounting recordsThis process helps ensure that recorded sales transactions are supported by actual shipments of goods or services.
By comparing shipping documents (evidence of goods/services delivered) with the accounting records (sales entries), the auditor can identify any discrepancies or overstatements in sales figures.
Tracing from the sales journal to the cash receipts journal or the cash receipts journal to the sales journal would not provide the necessary information to detect overstatements in sales effectively.
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other things the same, if the fed increases the rate at which it increases the money supply then the short-run phillips curve shifts right in the long run. a. true b. false
False. An increase in the money supply does not cause the Phillips curve to shift in either the short or long run.
The Phillips Curve is an economic theory that states that there is an inverse relationship between inflation and unemployment. It does not directly factor in changes in the money supply.
In the short run, an increase in the money supply can lead to an increase in aggregate demand, and can cause inflation to increase.
In the long run, the increase in the money supply has no effect, as it is offset by an equal decrease in the demand for money.
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The appropriate discount rate to use when finding present value is the rate of return we can earn on other investments of similar risk Select one: True O False
The statement "The appropriate discount rate to use when finding present value is the rate of return we can earn on other investments of similar risk" is true because the appropriate discount rate to use when finding the present value of a future cash flow is the rate of return that could be earned on an investment with similar risk.
This is known as the opportunity cost of capital, which represents the return foregone by investing in one opportunity instead of another with similar risk. Using a discount rate that is too low or too high can result in inaccurate valuations and investment decisions.
Therefore, selecting an appropriate discount rate that reflects the level of risk associated with the cash flow is critical to accurately determining its present value.
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00 8 Skipped Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.0 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $310,800 after 3 years. The project requires an initial investment in net working capital of $444,000. The project is estimated to generate $3,552,000 in annual sales, with costs of $1.420,800. The tax rate is 23 percent and the required return on the project is 14 percent What is the project's year o net cash flow? Year O cash flow -Book References What is the project's year 1 net cash flow? Year 1 cash flow Ť What is the project's year 2 net cash flow? Year 2 cash flow What is the project's year 3 net cash flow? Year 3 cash flow ما What is the NPV? NPV Year Seven-Year 1 2 Property Class Three-Year Five-Year 33.33% 20.00% 44.45 32.00 14.81 19.20 7.41 11.52 11.52 5.76 3 4 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5 6 7 8.
The project's year 0 net cash flow is given as the amount of $4,444,000, project's year 1 net cash flow is $1,947,660, project's year 2 net cash flow is $2,049,964 and project's year 3 net cash flow is $2,528,764.
After all debts have been settled, net cash flow can represent either a gain or a loss in money over a time period. A company is considered to have positive cash flow if, after paying all of its operational expenses, it still has cash left over. A corporation is considered to have a negative cash flow if it has to pay more in commitments and liabilities than it makes from operations.
A negative cash flow simply indicates that the funds received for that time period were inadequate to fulfil the firm's commitments for that same time period. This does not imply that a corporation cannot meet all of its obligations. if other savings accounts are emptied to pay the debt.
When utilising net cash as a gauge to assess a company's financial health, it is crucial to examine what factors lead to positive or negative net cash. A well-run, healthy company may show positive net cash from occasions like rising sales profits or declining commitments. However, some operations, such as those connected with a lump-sum loan deposit or money received as a result of acquiring additional debt, may provide a positive cash flow that may not be beneficial to a company's financial health.
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a cisco switch has four area modules that store various files and the ios. in which area module is the startup-configuration file stored?
The area module that is the startup-configuration file stored is NVRAM.
Configuration documents are saved withinside the following locations: • The strolling configuration is saved in RAM. On all systems besides the Class A Flash document machine systems, the startup configuration is saved in nonvolatile random-get admission to reminiscence (NVRAM).The IOS is saved in a reminiscence place referred to as flash. The flash lets in the IOS to be upgraded or shops more than one IOS documents. In many router architectures, the IOS is copied into and run from RAM. A reproduction of the configuration document is saved in NVRAM for use at some point of startup. The configuration document is saved in NVRAM; however, you could configure the router to load the configuration document from a Trivial File Transfer Protocol (TFTP) server.
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The startup-configuration file in a Cisco switch is stored in the NVRAM (non-volatile random access memory) area module. NVRAM is a type of memory that is used to store configuration files, as it retains data even after the switch has been powered off.
The other area modules on a Cisco switch are the RAM (random access memory), ROM (read-only memory), and Flash memory.
RAM is a volatile memory module that is used for temporary storage of running configurations and data, but it does not retain information when the switch is powered off. The ROM module contains the switch's basic operating system and boot loader. It is a read-only memory, meaning that the information stored in it cannot be modified. Flash memory is used for storing the switch's operating system and other critical files, such as firmware updates.
The startup-configuration file is a crucial part of a switch's configuration, as it contains the initial configuration settings that are loaded when the switch is powered on. This file includes settings such as interface configurations, VLAN settings, and security settings, among others. Storing the startup-configuration file in NVRAM ensures that the settings are retained even after the switch is powered off and back on again.
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which of the following statements applies to the discount rate? the federal funds rate is the same as this rate. this rate is charged to depositors who are unable to meet their reserve requirement. the fed does not directly control this rate. this rate is used when banks borrow directly from the fed.
The discount rate is the interest rate that the Fed charges commercial banks when they borrow directly from the Fed's discount window. It is a tool used by the Fed to provide liquidity to the banking system, and its level influences borrowing and lending decisions by banks. The federal funds rate is not the same as the discount rate, and the Fed does not directly control the discount rate.
The discount rate is the interest rate that the Federal Reserve charges commercial banks to borrow funds from the Fed's discount window. The primary purpose of the discount rate is to provide liquidity to the banking system. When banks face a shortage of funds, they can borrow from the Fed's discount window to meet their reserve requirements and continue their lending operations.
Out of the given statements, the statement that applies to the discount rate is this rate is used when banks borrow directly from the Fed.This is because the discount rate is the interest rate charged by the Fed to commercial banks when they borrow directly from the Fed's discount window.
The federal funds rate, on the other hand, is the interest rate that banks charge each other for overnight loans of their excess reserves. This rate is not the same as the discount rate, as stated in one of the given statements. The Fed sets the federal funds rate through its open market operations, where it buys and sells government securities to influence the supply of reserves in the banking system.
Another statement that is not applicable to the discount rate is ""this rate is charged to depositors who are unable to meet their reserve requirement."" This statement describes the penalty rate that the Fed charges banks for failing to maintain the required level of reserves. The penalty rate is higher than the discount rate and is meant to encourage banks to maintain adequate reserves to meet their obligations.
Lastly, the Fed does not directly control the discount rate, but it does influence it through changes in its monetary policy. When the Fed wants to stimulate economic activity, it can lower the discount rate to encourage borrowing and lending by commercial banks. Conversely, when the Fed wants to slow down the economy, it can increase the discount rate, making it more expensive for banks to borrow from the Fed and reducing the money supply.
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You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for dollar 10, 000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of 5 years). If your discount rate is 7.1 percentage, what should you do? The net present value of the leasing alternative is dollar. (Round to the nearest dollar.)
For your production process, you require a specific piece of machinery. If you agree to a guaranteed leasing 5-year lease (the lease is paid at the end of each year), an equipment leasing business has offered to lease the equipment to you for $10,400 a year.
As part of the leasing, the business would also take care of the equipment maintenance for you. You might also purchase and look after the equipment on your own. The following table details the cash flows as well as the discount rate, which is 7.4%. To decide what to do, (NPV) of each option and select the one with the highest NPV.
You must determine the present value of the cash flows for the lease in order to determine the NPV of leasing. Leasing NPV is PV of cash inflows minus PV of cash outflows. The annual PV of cash inflows, which will be paid out at the end of each year for five years, is $10,400. PV = PMT x [(1 - (1 + r-n)/r, where PMT is the payment per period, r is the discount rate, and n is the number of periods, is the formula to calculate the PV of an annuity. Using the formulas, we arrive at the following result: PV of cash inflows = $10,400 x [(1 - (1 + 0.074)-5)/ 0.074] = $40,030.78. The cost of leasing for five years, or $10,400.
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after the civil war, the geostrategic importance of hawai'i declined, as the american economy focused more on domestic production and trade. True or false?
False. After the Civil War, Hawaii's geostrategic importance increased due to its strategic location for American expansion in the Pacific and growing trade with Asia.
Hawaii's geostrategic significance rose following the Civil War for several reasons. Hawaii was a key place for American development in the region because of its location in the Pacific. Second, Hawaii was a crucial port of call for American ships as commerce with Asia increased considerably.
Thirdly, Hawaii's sugar business expanded quickly, which increased American investment there significantly. Therefore, rather than diminishing after the Civil War, Hawaii's geostrategic significance expanded, and it continued to be an important American possession in the Pacific for many years to come.
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False. After the civil war, the geostrategic importance of Hawaii declined, as the American economy focused more on domestic production and trade.
After the Civil War, the United States began to expand its influence in the Pacific region, and Hawaii's location became increasingly valuable. American business interests also saw Hawaii as a potential market for goods and a source of raw materials. In 1875, the United States and Hawaii signed a reciprocity treaty, which reduced tariffs on Hawaiian sugar and increased trade between the two countries. The treaty was renewed in 1887, and in 1890, Congress passed the McKinley Tariff, which increased tariffs on sugar and effectively ended the reciprocity agreement. This led to political instability in Hawaii, culminating in the overthrow of the Hawaiian monarchy in 1893 and the eventual annexation of Hawaii by the United States in 1898.
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You bought put options on 2,000 shares of Amazon with a strike
of $30 for $14.60. The current spot price is $19.43. What is the
option's time value?
To calculate the option's time value, we first need to determine its intrinsic value.
Since the current spot price of Amazon is $19.43 and the strike price of the put option is $30, the intrinsic value of the option is:
Intrinsic Value = Strike Price - Spot Price
= $30 - $19.43
= $10.57 per share
Since the option covers 2,000 shares, the total intrinsic value of the option is:
Total Intrinsic Value = Intrinsic Value per Share x Number of Shares
= $10.57 x 2,000
= $21,140
Next, we can calculate the total cost of the put option:
Total Cost of Put Option = Price per Option x Number of Options
= $14.60 x 2,000
= $29,200
To calculate the time value of the option, we can subtract the intrinsic value from the total cost of the option:
Time Value = Total Cost of Option - Intrinsic Value
= $29,200 - $21,140
= $8,060
Therefore, the time value of the put option on 2,000 shares of Amazon is $8,060.
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Imagine that you are filing for bankruptcy. Make a list of your assets and a list of your debts (can be pretend) and analyze what you own compared to what you owe. Then determine which assets you could choose to exempt. From a financial point of view, does declaring bankruptcy appear to be a favorable alternative for you at this time? Why or why not? If you choose to file for bankruptcy, which type would you file for and why?
The assets include properties, cars, investments, and cash in bank accounts. The debts could be credit card balances, medical bills, or personal loans. Exempt assets: primary residence, retirement accounts, and tools used for work. Depending on a person's particular financial situation, bankruptcy may or may not be a good option for them. It is advisable to file for Chapter 7 bankruptcy, as you are not obligated to pay some debts.
In general, when someone files for bankruptcy, they need to make a list of their assets and debts. The assets may consist of real estate, automobiles, investments, and money in bank accounts. The debts may include unpaid personal loans, credit card balances, and medical expenses.
After analyzing what they own compared to what they owe, the person filing for bankruptcy may choose to exempt certain assets. These could be assets that are protected by state or federal law from being used to pay off debts.
From a financial point of view, declaring bankruptcy could be a favorable alternative for someone who has a significant amount of debt and no realistic way to pay it off.
However, bankruptcy has long-term consequences, such as a negative impact on credit scores and difficulties obtaining credit in the future.
If someone decides to file for bankruptcy, they would need to choose between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is often chosen when the individual has little income and few assets to protect.
In contrast, Chapter 13 bankruptcy is chosen when the individual has a regular income and wants to pay off their debts through a payment plan.
Ultimately, whether or not declaring bankruptcy is a favorable alternative for an individual depends on their unique financial situation, the amount of debt they have, and their long-term financial goals.
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one health insurance policy provision states that after the policy has been in force for two years, the insurer cannot void the policy or deny a claim because of a misstatement in the application. this provision is called the
The provision mentioned in your question is known as the "incontestability clause."
This clause protects the policyholder from having their insurance policy voided or a claim denied due to any misstatement in their application, but only after the policy has been in force for two years. It is a consumer protection measure that ensures that insurance companies cannot use minor errors or omissions in the application to deny claims or cancel policies after a certain period. However, if the misstatement was found to be intentional, the incontestability clause may not apply, and the insurer may still be able to deny a claim or void the policy.
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The following facts are available about a convertible bond: Face Value = $2,000; Issue Price = $1,900; Parity = $1,750; Coupon 4%; Dividend Yield = 2.5%; Premium = $150. What is this CB s breakeven in years?
a. 4
b. 5
c. 6
d. 7
To calculate the breakeven in years for the convertible bond, we need to determine how long it would take for the convertible bond to earn enough interest and dividends to offset the difference between the issue price and the conversion price.
The conversion price is calculated by dividing the face value by the parity value:
Conversion Price = Face Value / Parity
= $2,000 / $1,750
= $1.143 per share
The premium is the difference between the issue price and the conversion price:
Premium = Issue Price - Conversion Price
= $1,900 - $1.143
= $756.00
To calculate the annual interest and dividend income, we first need to determine the annual coupon and dividend payments:
Annual Coupon Payment = Face Value x Coupon Rate
= $2,000 x 0.04
= $80.00
Annual Dividend Payment = Parity x Dividend Yield
= $1,750 x 0.025
= $43.75
The total annual income from the bond is the sum of the annual coupon and dividend payments:
Total Annual Income = Annual Coupon Payment + Annual Dividend Payment
= $80.00 + $43.75
= $123.75
To calculate the breakeven in years, we divide the premium by the total annual income:
Breakeven in Years = Premium / Total Annual Income
= $756.00 / $123.75
= 6.1 (rounded to the nearest tenth)
Therefore, the breakeven in years for this convertible bond is approximately 6 years. The answer is (c) 6.
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The Booth Company's sales are forecasted to double from $1,000 in 2019 to $2,000 in 2020. Here is the December 31, 2019, balance sheet:
Cash $ 100 Accounts payable $ 50
Accounts receivable 200 Notes payable 150
Inventories 200 Accruals 50
Net fixed assets 500 Long-term debt 400
Common stock 100
Retained earnings 250
Total assets $1,000 Total liabilities and equity $1,000
Booth's fixed assets were used to only 50% of capacity during 2019, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5% and its payout ratio to be 70%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.
Booth's additional funds needed for the coming year is $335, rounded to the nearest dollar.
How to Calculate the Additional Funds Needed?To calculate the Additional Funds Needed (AFN), we can use the following formula:
AFN = (A*/S) ΔS - (L*/S) ΔS - MS1(RR)
In this case, Booth Company's sales are expected to double from $1,000 in 2019 to $2,000 in 2020. We are given that the company's fixed assets were used to only 50% of capacity during 2019, but its current assets were at their proper levels in relation to sales. This means that all assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist.
Using this information, we can calculate the assets that vary directly with sales (A*) and the spontaneous liabilities that vary directly with sales (L*) as follows:
A* = (Accounts receivable + Inventories) + (Net fixed assets x 50%)
= ($200 + $200) + ($500 x 50%)
= $450
L* = (Accounts payable + Accruals) + (Notes payable x (1 - payout ratio))
= ($50 + $50) + ($150 x (1 - 0.7))
= $95
Next, we can use the AFN formula to calculate the additional funds needed:
AFN = (A*/S) x (ΔS) - (L*/S) x (ΔS) - (MS1 x (RR))
where S = projected sales, ΔS = increase in sales, MS1 = increase in retained earnings, and RR = retention ratio.
Substituting the values, we get:
AFN = ($450/$1,000) x ($2,000 - $1,000) - ($95/$1,000) x ($2,000 - $1,000) - ($250 x (1 - 0.7))
= $335
Therefore, Booth Company's additional funds needed for the coming year is $335. The company will need to raise external financing of this amount to support its projected increase in sales.
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If someone asks you a question in the workplace, but you don't know what to answer, what is something you should not say
When you're stumped for an answer in workplace to a question, use this tried-and-true "fail-safe" solution.
What to say in an interview when you're unable to respond to a question?Think about responding with something like, "That's a good question; can I think about it for a bit and get back to you later?" or "Great query! I can respond to some of it, but I'd like to consider it further and get back to you.
What should you say when you don't have the answer to a question?Try saying something like, "That's an interesting question, could I take some time to think it over and get back to you?" or "I can give you a partial answer to that enormous question.
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Question:-
How do you respond when you don't know the answer at work?
The cost to build a motel is $2,200,000. The lot costs $600,000. Fur niture and furnishings cost $400,000 and should be recovered in 7 years (7-year MACRS property), while the motel building should be recovered in 39 years (39-year MACRS real property placed in service on January 1). The land will appreciate at an annual rate of 5% over the project period, but the building will have a zero-salvage value after 25 years. When the motel is full (100% capacity), it takes in (receipts) $4,000 per day, 365 days per year. Exclusive of depreciation, the motel has fixed operating expenses of $230,000 per year. The variable operating expenses are $170,000 at 100% capacity, and these vary directly with percent capacity down to zero at 0% capacity. If the interest is 10% compounded annually, at what percent capacity over 25 years must the motel operate in order to break even.
To calculate the break-even point, we need to determine the annual cash inflows and outflows of the project. So the answer is the motel must operate at a capacity of at least 70.5% over 25 years in order to break even, assuming an interest rate of 10%.
First, let's calculate the annual cash inflows. At 100% capacity, the motel generates daily receipts of $4,000, or $1,460,000 per year. At 50% capacity, the motel generates half of that amount, or $730,000 per year. In general, the annual cash inflows can be expressed as:
Annual cash inflows = Daily receipts x 365 x % capacity
Next, let's calculate the annual cash outflows. The fixed operating expenses are $230,000 per year, and the variable operating expenses vary directly with percent capacity, down to zero at 0% capacity. In general, the annual cash outflows can be expressed as:
Annual cash outflows = Fixed operating expenses + Variable operating expenses x % capacity
Now, let's calculate the depreciation expenses. The furniture and furnishings have a 7-year MACRS recovery period, and the motel building has a 39-year MACRS recovery period. The annual depreciation expenses can be calculated using the MACRS tables, as follows:
Furniture and furnishings depreciation expense = $400,000 x 0.1429 = $57,160
Motel building depreciation expense = $2,200,000 x 0.0256 = $56,320
Note that we used the 7-year and 39-year MACRS percentages for the furniture and furnishings and the motel building, respectively.
Finally, let's calculate the net cash flow for each year. The net cash flow is the difference between the annual cash inflows and outflows, minus the depreciation expense. In general, the net cash flow can be expressed as:
Net cash flow = Annual cash inflows - Annual cash outflows - Depreciation expense
Now, we can calculate the break-even point. The break-even point is the percent capacity at which the net cash flow is zero, or:
0 = Annual cash inflows - Annual cash outflows - Depreciation expense
Solving for % capacity, we get: % capacity = (Annual cash inflows - Annual cash outflows - Depreciation expense) / Annual cash inflows
Plugging in the numbers, we get: % capacity = (1,460,000 x X) - (230,000 + 170,000 x X) - (57,160 + 56,320) / (1,460,000 x X
Simplifying and solving for X, we get: X = 0.705 or 70.5%
Therefore, the motel must operate at a capacity of at least 70.5% over 25 years in order to break even, assuming an interest rate of 10%.
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how are investments in equity securities with readily determinable market values, and their related unrealized gains and losses, reported by a not-for-profit entity?
Investments in equity securities with readily determinable market values and their related unrealized gains and losses are reported by a not-for-profit entity on its financial statements at fair value.
The fair value of these investments is readily determinable because they are traded in active markets, and the values can be obtained from published stock prices or quotes. Any changes in fair value, including unrealized gains and losses, are recognized in the statement of activities as a component of change in net assets for the period in which they occur.
These changes are not included in the statement of cash flows, as they do not represent cash inflows or outflows. The not-for-profit entity should disclose information about the methods and significant assumptions used to determine fair value, as well as the nature and risks of the investments held.
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sensitivityreport assembly plants in jefferson city and omaha supply warehouses in des moines, kansas city, and st. louis. the supplies, demands, and transportation costs per unit were determined. the optimal solution for this problem was found using solver and the attached sensitivity report was generated. if the supply at jefferson city could be increased by 9 units, what would be the change in the total cost of the optimal solution? round your answer to whole dollars and include a sign if required.
.This results in the same total supply and demand as the original solution, but with a different set of allocations that also has a total cost of $540.
To find an alternative optimal solution for the transportation problem, we need to identify a different set of allocations that also satisfies the constraints and has the same total cost as the original solution.
One way to do this is by using the "Stepping Stone" method, which involves evaluating the opportunity cost of moving one unit of supply from an existing allocation to a vacant cell. The opportunity cost is the amount by which the total cost would increase if we were to move that unit.
Using the Stepping Stone method, we can identify the following alternative optimal solution:
Des Moines Kansas City St. Louis
Jefferson City 20 10 0
Omaha 5 15 10
Supply:
Jefferson City: 30
Omaha: 20
Demand:
Des Moines: 25
Kansas City: 15
St. Louis: 10
Total Cost: $540
In this solution, we have moved one unit of supply from Jefferson City to St. Louis, and one unit of supply from St. Louis to Omaha. This results in the same total supply and demand as the original solution, but with a different set of allocations that also has a total cost of $540.
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Full Question ;
Consider the following network representation of a transportation problem: Des Moines 25 30 Jefferson City Kansas City 115 20 Omaha St. Louis 10 Supplies Demands The supplies, demands, and transportation costs per unit are shown on the network. The optimal (cost minimizing) distribution plan is given below. Des Moines Kansas City St.Louis Supply Jefferson City 20 10 30 Omaha 5 15 Demand | 25 15 10 Total Cost: $540. Find an alternative optimal solution for the above problem. If your answer is zero, enter "0". Des Moines Kansas City St.Louis Jefferson City 20 Do 100 Omaha 20 15 00 Total Cost: $ 540 .
since nominal wages fell by the same percentage as the price level, you explain that a decrease in the price level leads to
A decrease in the price level leads to a decrease in nominal wages.
Nominal wages refer to the actual dollar amount paid to employees. When the price level decreases, the cost of goods and services decreases. Therefore, businesses do not need to pay as much for the same amount of goods or services. In order to maintain profitability, businesses decrease the amount they pay in nominal wages to their employees.
As nominal wages decrease, the real wage (the purchasing power of the wage) may remain constant or increase. This is because the decrease in nominal wages may be less than the decrease in the price level, resulting in a higher real wage. Alternatively, the real wage may remain the same if the decrease in nominal wages is equal to the decrease in the price level.
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Sheffield Inc. now has the following two projects available: Project Initial CF After-tax CF1 After-tax CF2 After-tax CF3 1 -11,864.01 5,250 6,125 9,500 2 -3,336.42 3,750 3,150 = - Assume that RF = 5.How do you calculate working capital for a new project?
To calculate the working capital for a new project, you need to determine the difference between the project's current assets and current liabilities.
Working capital is the difference between a project's current assets (such as cash, accounts receivable, and inventory) and its current liabilities (such as accounts payable and short-term debt).
To calculate working capital, subtract the total value of a project's current liabilities from its total current assets. The resulting figure represents the amount of working capital available for the project.
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-According to the law of demand, when all other factors are held constant, the higher the price, the greater the quantity supplied.
true
false
-According to the law of demand, when all other factors are held constant, the higher the price, the greater the quantity supplied. false
The law of demand states that, all other factors being equal, as the price of a good or service increases, the quantity demanded of that good or service will decrease, and vice versa. In other words, there is an inverse relationship between price and quantity demanded.
This means that if the price of a good or service increases, people will demand less of it, assuming all other factors remain constant. The law of supply, on the other hand, states that as the price of a good or service increases, the quantity supplied of that good or service will also increase.
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false -According to the demand, when all other factors are held constant, the higher the price, the greater the quantity supplied. The law of demand states that,
all other factors being equal, as the price of a good or service increases, the quantity demanded of that good or service will decrease, and vice versa. In other words, there is an inverse relationship between price and quantity demanded. This means that if the price of a good or service increases, people will demand less of it, assuming all other factors remain constant. The law of supply, on the other hand, states that as the price of a good or service increases, the quantity supplied of that good or service will also increase.
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If the firm's fixed costs double while variable costs are unchanged, then
A) marginal cost remains unchanged.
B) marginal cost more than doubles.
C) marginal cost doubles.
D) average total cost remains unchanged.
If the firm's fixed costs double while variable costs are unchanged, then the total cost of production will increase. This means that both the average total cost and the marginal cost will increase.
However, since only the fixed costs have increased, the increase in marginal cost will not be as high as the increase in average total cost. Therefore, the correct answer is D) average total cost remains unchanged. If a firm's fixed costs double while variable costs remain unchanged, then the correct answer is:
A) Marginal cost remains unchanged.
This is because marginal cost is the additional cost incurred in producing one more unit of a good and is only affected by variable costs. Fixed costs do not impact marginal cost as they remain constant regardless of the level of production.
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In the condition when the firm's fixed costs double while variable costs are unchanged, then the average total cost remains unchanged, option D.
This is because fixed costs do not affect the marginal cost, which is the additional cost of producing one more unit. However, fixed costs do affect the average total cost, which is the total cost divided by the quantity produced. Since the variable costs remain unchanged, the cost per unit (average total cost) will remain the same even if the fixed costs double. Therefore, if the firm costs double while variable costs are unchanged, then average then average total cost remains unchanged.
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is one external mechanism that provides a solution to opportunistic behavior by managers. multiple choice question. strategic control
Strategic control is an essential external mechanism for mitigating opportunistic behavior by managers. It involves the monitoring and adjustment of organizational strategies to ensure they align with established goals.
Strategic control involves setting clear objectives, monitoring performance, and making necessary adjustments to address deviations. This process enables the organization to identify potential issues before they escalate and negatively impact the business.
A well-designed strategic control system ensures that managers are held accountable for their actions, providing transparency and visibility into their decision-making processes.
External stakeholders, such as shareholders and the board of directors, play a crucial role in strategic control. They oversee management performance and ensure that managers act in the best interests of the organization. These stakeholders also provide an external check and balance system, reducing the likelihood of opportunistic behavior going unnoticed or unchecked.
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which of the following statements are true? multiple select question. a project with a positive npv creates cash inflows, but it may or may not recover the cost of the original investment. a project with a positive npv will recover the original cost of the investment plus sufficient cash inflows to compensate for tying up funds. the net present value method automatically provides for return of the original investment. the net present value method does not provid
Based on the given statements, the true statements are:
1. A project with a positive NPV will recover the original cost of the investment plus sufficient cash inflows to compensate for tying up funds.
2. The net present value method automatically provides for return of the original investment.
1. A positive NPV indicates that the present value of cash inflows is greater than the present value of cash outflows, which means the project will generate more cash than the initial investment, compensating for the funds tied up.
2. The net present value (NPV) method calculates the difference between the present value of cash inflows and the present value of cash outflows, inherently accounting for the return of the original investment.
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Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a 30-year maturity. At the time of the purchase, it had an expected yield to maturity of 12.2%. If Janet sold the bond today for $1,045.79, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
The rate of return Janet earned for the past year on the corporate bond is 15.58%.
We'll use the terms face value, annual coupon rate, maturity, yield to maturity, and rate of return in the explanation.
Calculate the annual coupon payment.
Face value = $1,000
Annual coupon rate = 11%
Annual coupon payment = Face value * Annual coupon rate
Annual coupon payment = $1,000 * 0.11 = $110
Calculate the total amount Janet received from selling the bond.
Selling price = $1,045.79
Calculate Janet's total return for the past year.
Total return = Annual coupon payment + Selling price - Face value
Total return = $110 + $1,045.79 - $1,000 = $155.79
Calculate the rate of return as a percentage.
Rate of return = (Total return / Face value) * 100
Rate of return = ($155.79 / $1,000) * 100 = 15.579%
After rounding to two decimal places, Janet's rate of return for the past year is 15.58%
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The modern Keynesian Model assumes that
Since the modern Keynesian Model allows for some price response, the aggregate supply curve
The modern Keynesian Model assumes that there can be short-term market failures and imbalances in the economy that can result in high unemployment and low economic growth. It emphasizes the role of government intervention through fiscal policies, such as increased spending and tax cuts, to stimulate demand and boost economic activity.
In contrast to the traditional Keynesian Model, the modern version recognizes that prices can adjust to changes in supply and demand in the long run, allowing for some price response in the aggregate supply curve. This means that the economy can eventually return to its natural equilibrium level of output and employment, even without government intervention. However, in the short run, the modern Keynesian Model still stresses the need for government intervention to address economic imbalances and stabilize the economy.
The modern Keynesian Model assumes that there is a combination of both rigid and flexible prices in the economy. Since the modern Keynesian Model allows for some price response, the aggregate supply curve will have a positive slope, indicating that as the price level increases, the quantity of goods and services produced will also increase.
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The modern Keynesian Model assumes that the economy may experience short-run fluctuations in output and employment, which are primarily caused by changes in aggregate demand. Unlike the classical model, the modern Keynesian Model allows for some degree of price stickiness, which means that changes in aggregate demand may not always result in immediate price adjustments.
As a result, the modern Keynesian Model suggests that changes in aggregate demand can have a significant impact on the level of output and employment in the short run. However, over time, prices and wages will eventually adjust, leading to a new long-run equilibrium.
Since the modern Keynesian Model allows for some price response, the aggregate supply curve is upward sloping in the short run. This means that as aggregate demand increases, firms will be willing to increase output, but at higher prices. Conversely, if aggregate demand decreases, firms will reduce output, but at lower prices.
In the long run, the aggregate supply curve becomes more elastic as prices and wages adjust to changes in aggregate demand. At this point, the economy reaches a new equilibrium level of output and employment.
Overall, the modern Keynesian Model provides a framework for understanding the short-run dynamics of the economy and the role of aggregate demand in driving fluctuations in output and employment. By allowing for some degree of price stickiness, the model can help to explain why changes in aggregate demand can have a significant impact on the economy, even in the absence of major supply-side shocks.
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