Entrepreneurship is in Alyssa Stuart's blood. Alyssa has been starting businesses since she was 10 years old, and she finally has the perfect business of custom-made furniture. Customers who visit Alyssa's shop can choose from a number of different fabrics and 50 different styles of couch and chair designs to create their custom-made furniture. Once the customer decides on a fabric pattern and furniture design, the information is sent to China where the furniture is built and shipped to the customer via the West Coast. Alyssa is excited about her business; all of her hard work has finally paid off as she has more than 17,000 customers and 875 orders currently in the pipe. Alyssa's business is booming. Her high-quality products and outstanding customer service have created an excellent reputation for her business.
In order to expand the business, Alyssa Stuart has hired you as an external financial consultant. You are expected to provide her with advice on financial management issues, business strategy and future development.
Alyssa Stuart is thinking of starting a store that specializes in handmade Viennese style bentwood chairs. Before opening her store, Alyssa is curious about how her profit, revenue, and variable costs will change depending on the amount she charges for the chairs. Alyssa would like you to perform the work required for this analysis and has given you the data. Here are a few things to consider while you perform your analysis:
• Current competitive prices for Viennese style bentwood chairs are between $225 and $275 a chair.
• Variable costs will be either $100 or $150 a chair depending on the types of material Alyssa chooses to use.
• Fixed costs are $10,000 a month.
1. Excel file containing the information in the next page:
Alyssa's chairs - Price One
Alyssa's chairs - Price Two
Chair Price
$ 225 Chair Price
$ 275 Variable Cost per chair
$ 125 Variable Cost per chair
$ 150 Fixed Cost
$ 10,000 Fixed Cost
$ 10,000 Number of chairs to sell
Number of chairs to sell
Total revenue
Total revenue
Note: Define the names for the cells with numbers (select the cell(s) to be named, click in the Name box (to the left of the formula bar), valid one-word name for the list, e.g. Chair_Price_One, and press the Enter key).
Calculate the break-even point for Alyssa's shop (the quantity of chairs and total revenue) for both scenarios of pricing. In your opinion, which of the pricing strategies is preferable? Why? For your answer, make sure that your Excel table contains calculations so the Instructor can see the formula in the formula bar for the populated cells.
How can Alyssa boost her profits by cost cutting or increase sales? Provide at least three recommendations that you consider the most important.
Answers
1. Break-even Point for Chair Price One: For the first scenario, the break-even point is when Alyssa needs to sell 92 chairs to break even, with a total revenue of $20,700.
What is scenario?Scenario is a term used to describe the narrative of a story, plan, or situation. It is usually used in the context of a business plan, where it outlines the various causes and effects of a particular action or set of actions. A scenario typically describes a sequence of events, potential outcomes, and potential responses to those outcomes.
Break-even Point for Chair Price Two: For the second scenario, the break-even point is when Alyssa needs to sell 71 chairs to break even, with a total revenue of $20,025.
In my opinion, the first scenario is preferable. This is because the first scenario has a lower break-even point of 92 chairs, compared to the second scenario which has a break-even point of 71 chairs. Additionally, the total revenue of the first scenario is $20,700, which is higher than the total revenue of the second scenario, which is $20,025. Therefore, the first scenario is more likely to generate more profit for Alyssa's business.
How can Alyssa boost her profits by cost cutting or increase sales?
1. Alyssa can use digital marketing to increase sales. Digital marketing platforms such as social media, search engine optimization, and email campaigns can help Alyssa reach a wider customer base and increase sales.
2. Alyssa can focus on customer loyalty programs or discounts. This will encourage customers to come back and buy more chairs.
3. Alyssa can look for alternative suppliers that offer cheaper materials. This will help reduce the variable cost per chair and increase profits.
4. Alyssa can also look into bulk buying materials to reduce costs. Buying in bulk will enable Alyssa to get a lower price for the materials she needs for her chairs.
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Break-even Point for Chair Price One: In the first case, Alyssa must offer 92 chairs for a total of $20,700 in sales in order to break even.
What is Break-even Point?Break-even Point for Chair Price Two:
In the second situation, Alyssa must sell 71 chairs for a total of $20,025 in sales before she breaks even.
I think the first possibility is better. This is so that the first scenario's break-even point, which is 92 chairs, is lower than the second scenario's break-even position, which is 71 chairs. Additionally, the first scenario's total revenue, which is $20,700, is greater than the second scenario's total revenue, which is $20,025. As a result, Alyssa's company is more likely to make more money under the first situation.
To boost sales, Alyssa can use internet marketing. Alyssa can expand her customer base and boost revenue by using digital marketing tools like email campaigns, social media, and search engine optimization.Alyssa can concentrate on promotions or client loyalty programs. This will entice clients to return and purchase additional seats.Alyssa can search for different vendors who provide less expensive materials. Profits will rise and the variable expense per chair will be decreased as a result.To cut expenses, Alyssa can also consider buying supplies in bulk. Alyssa will be able to get the supplies she needs for her chairs for less money by purchasing in quantity.To know more about Break-even Point, visit:
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Related Questions
During the COVID 19 pandemic organizations experienced many changes where they fast forwarded into activities that previously seemed impossible. Technology played a major role in the response to this shift. In 2023, it is said that 50% of companies want workers back in office full time. As the CEO in your organization you have chosen to (a) Have workers return to work full time (5 days a week) justify your response by giving (4) pros and (4) cons Assignment requirements: When preparing your response, take into consideration the following issues: · Leadership and Motivation · Workplace Communication · Conflict Management · Teamwork The introduction and conclusion must included.
Answers
The COVID-19 pandemic caused organizations to experience unprecedented changes, including the shift towards remote work.
However, in 2023, as the CEO of an organization, I have decided to have workers return to the office full time, five days a week. This decision has both pros and cons, which I will discuss in this essay.Being in the office can help employees feel more connected to their colleagues, which can increase their motivation to work and improve team dynamics. Working in a shared environment can help employees feel more supported and encouraged by their supervisors, which can lead to improved leadership and mentorship opportunities.Some employees may have become accustomed COVID 19 to working from home and may experience a dip in motivation if forced to return to the office.Depending on the nature of the work, some employees may feel that returning to the office full time hinders their ability to balance work and personal responsibilities, which could lead to burnout and decreased motivation.
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Problem 7-13 Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 55% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 8% per year. If the required return on the stock is 14%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.
Answers
To value the stock of Simpkins Corporation, we need to determine the present value of all expected future dividends and the expected price of the stock at the end of Year 5.
What is a stock ?A stock, also known as a share or equity, represents a unit of ownership in a corporation. When an individual or an entity purchases a stock, they become a shareholder in the corporation and therefore have a claim to a portion of the company's assets and earnings. Shareholders are also entitled to vote on certain corporate decisions, such as the election of the board of directors and major company policies.
Stocks are traded on public exchanges, such as the New York Stock Exchange (NYSE) and the NASDAQ, where investors can buy and sell shares in listed companies. The price of a stock is determined by the supply and demand for that particular stock, with the market value reflecting investors' expectations of the company's future earnings and growth prospects. Stocks can be classified into different categories, such as common and preferred stock, and can also be categorized by the size and type of company, industry, and country. Stocks are considered to be a risky investment, but they also offer the potential for higher returns than other types of investments over the long.
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Suppose that in 2014, currency in circulation was $1,100 billion, required reserves were $65 billion, and excess reserves were $935 billion. At that time, the value of open market operations by the federal reserve was $80 billion. The monetary base was
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The total amount of legal tender in use and bank reserve balances at the Federal Reserve is called as the monetary base.
The amount of money now in use is $1,100 billion, while the necessary reserves are $65 billion. The surplus reserves are given as $935 billion as well. As a result, the amount of reserves that banks have in total at the Federal Reserve is:
Total reserves = Required reserves + Excess reserves
Total reserves = $65 billion + $935 billion
Total reserves = $1,000 billion
the monetary base can be calculated as:
Monetary base = Currency in circulation + Total reserves
Monetary base = $1,100 billion + $1,000 billion
Monetary base = $2,100 billion
thus, the monetary base was about $2,100 billion dollars.
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What trends do you expect to see in 2031? How might you use your
smartphone differently in 2031? What everyday devices might be able
to connect to the Internet in 2031?
Answers
It's difficult to predict exactly what trends we will see in 2031, as technology and societal trends can shift rapidly. However, based on current trends, it's likely that we will see continued growth in areas like artificial intelligence, wearable technology, and the Internet of Things. We may also see increased use of virtual and mixed reality technologies in everyday life.
In terms of how we might use our smartphones differently in 2031, we can expect to see even more integration with other Internet-connected devices and services, as well as more advanced features like augmented reality and advanced voice assistants. It's possible that smartphones themselves may become less central to our daily lives as they are increasingly integrated with other devices.
As for everyday devices that might connect to the Internet in 2031, we could see a wide range of household appliances and products become part of the Internet of Things ecosystem. This could include everything from refrigerators and thermostats to clothing and personal care products. The goal of these devices would be to improve efficiency, convenience, and connectivity in our daily lives.
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Identify and discuss any professional conduct issues in the following independent scenarios.
Jason Crane became a CPA in 2023. He is now glad to be finished his education as he does not plan to take any further accounting courses.
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Samantha Karadzic received a letter from Malik and Rudolph, another accounting firm, asking if there is any reason they should not accept the audit engagement of her biggest client, Franks Plumbing Inc. Samantha was so upset about losing the client, she threw the letter away and decided not to reply. She ignored all requests for the client’s records.
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Sophie Kramer received a letter from Malik and Rudolph, another accounting firm, asking if there is any reason they should not accept one of her clients, Vanderkrujk Farm Ltd. Because she had disputes with management of Vanderkrujk, she was glad to see them go. She called Malik and Rudolph right away and told them about all of the issues she had.
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William Aruna decided to start his own CPA firm as a sole practitioner. In order to attract new clients, he wants potential clients to believe he has a large established firm with many partners. Therefore, he has called his firm Aruna and Partners. His advertising materials indicate the firm has the largest number of audit partners in the region.
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Alan Reed discovered his long-time client, the Daily Diner, was in financial distress. He decided to lend the Diner $20,000 and he had the owner sign a note payable. He informed Canada Bank, the primary user of the financial statements, of this loan after the audit report was issued.
type your answer here
Answers
The identification and the discussion about the issues are:
Jason Crane: Professional conduct issues include not planning to take any further accounting courses which could limit his professional development, as well as any potential professional liability issues related to not keeping up-to-date with current accounting trends.
Samantha Karadzic: Professional conduct issues include not replying to Malik and Rudolph's request, not providing the client's records, and not informing the client of the request from the other firm.
Sophie Kramer: Professional conduct issues include providing biased information to Malik and Rudolph due to her personal disputes with Vanderkrujk, and not providing an objective assessment of the client.
William Aruna: Professional conduct issues include false advertising regarding the size of his firm and the number of audit partners, as well as potential professional liability issues related to any services that could be provided by a sole practitioner.
Alan Reed: Professional conduct issues include not informing Canada Bank of the loan to the client before the audit report was issued, and potential professional liability issues related to lending money to clients.
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Consider a three-year mortgage with annual payments in arrears. Suppose the probability of default is 1% in the first year and 5% each year thereafter given that default has not occurred previously.
a. What is the hazard function of this loan?
b. What is the unconditional default probability in Year 2?
c. What is the cumulative (or lifetime) default probability in this loan as of the time of its origination?
Answers
A three-year mortgage with annual payments in arrears has a probability of default of 1% in the first year and 5% each year thereafter given that default has not occurred previously.
The unconditional default probability in Year 2 is 5%.c. The cumulative (or lifetime) default probability in this loan as of the time of its origination is 0.157, i.e., 15.7%.Loan default probability is an estimation of the likelihood of a borrower defaulting on a loan.
The term "default" refers to a debtor's failure to pay an outstanding obligation to a lender. The probability of default is frequently computed for a bond or loan portfolio, as well as for an individual loan. The likelihood of default is computed using the following factors: credit rating, interest rates, payment frequency, loan duration, collateral, and other factors.
For example, if an individual wants to know the likelihood of defaulting on a loan with a three-year maturity, they must first look at the creditworthiness of the borrower to determine the probability of default. Then, based on this data, the borrower can estimate the likelihood of defaulting on their loan using an actuarial calculation.
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Based on the discussion of Case 11"MacDonald’s half a century of growth" demonstrate the chronological changes in the operations strategy of the company since its inception till 2005. Also, demonstrate how application of Industry 4.0 technologies have revised its operations strategy decisions.
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The operations strategy of McDonald's has changed significantly over the past fifty years. In the beginning, McDonald's was an assembly-line restaurant focused on producing large amounts of food at a low cost.
In the 1980s, McDonald's shifted to a more customer-focused model, where they began to customize their food and offer a wide variety of menu items. In the 1990s, McDonald's shifted their focus to expanding globally, which was seen as a success for the company.
In the 2000s, McDonald's implemented a strategy of creating healthier menu options and menu items that could be customized to fit the needs of customers.
In recent years, the application of Industry 4.0 technologies has revised McDonald's operations strategy decisions. For example, McDonald's has implemented digital technologies to improve its supply chain, improve the customer experience, and increase its customer base.
McDonald's has also implemented Artificial Intelligence (AI) to increase efficiency and accuracy of its customer order taking. Finally, McDonald's has also adopted Big Data and Predictive Analytics to analyze customer buying patterns and trends to further improve their operations strategy.
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How does Walmart's use of technology help the company manage its
supply chain more effectively? Provide specific examples of
technologies that Walmart uses and explain how they contribute to
the company's success.
Please answer the question in the context on the article : Case Study: Supply Chain Management at Walmart
Answers
Walmart uses technology to manage its supply chain more effectively by implementing a variety of systems such as inventory management, radio frequency identification (RFID), and transportation management.
These technologies allow Walmart to optimize its inventory, reduce waste, and increase efficiency. RFID, for example, helps Walmart track its products from the manufacturer to the store shelf, reducing the time it takes to restock items and improving accuracy.
Walmart's inventory management system uses real-time data to predict demand and ensure the right amount of stock is available in stores. Overall, these technologies help Walmart reduce costs, improve customer satisfaction, and maintain a competitive edge in the retail industry.
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Sociologists have long defined publics as the categorical opposite of crowds, diffuse rather than assembled. Political theories have characterized publics as discussion rather than action-oriented, deliberative rather than impulsive, rational rather than emotional.32 It is a term with many meanings, etymologically and conceptually. Political theorist Jeffrey Weintraub identifies four distinct usages of the term: public as in the political sphere; public in the economic sense of state ownership versus private ownership, public as sociability and as public space where it may occur, and public as contrasted to the private domestic sphere of family. The first sense of public is the primary focus here, the idea of publics, public opinion, public sphere and their relation to the state.The second plays a Introduction 11 part in the story insofar as media and entertainments are products and enterprises of private corporations who influence the representations of audiences.The third is intertwined with the concept of community and its opposite, with public places as sites of community, the mass and the consequences for forming political publics.The last is part of the story insofar as middle-class withdrawal or confinement to the domestic sphere has been implicated in the vitality of publics and the exclusions of women from publics.33 Publics in the political sense have been conceptualized as bound up with media. Unlike crowds, publics are dispersed and therefore necessitate means of communication. In one of the first formulations of the concept at the turn of the twentieth century, French theorist Gabriel Tarde linked publics to newspapers. More than a half century later, projecting his concept of public sphere onto eighteenth-century London and Paris, Jurgen Habermas also described print media playing an important role in the conversation of public houses and other public places.34The second characteristic feature of publics in both Tarde’s and Habermas’ concepts, was conversation. This reflects the consistent conceptualizing of publics in terms of discussion and the conceptual neglect of its relation to action. Indeed, most theorists have discussed public discussion as leading to "public opinion," not public action, with the presumption that elected officials of a democratic state would be influenced by opinion.
Compose two multiple-choice questions to test the understanding of the material covered in that section. Each question must be specifically and exclusively based on the section of the text and include four plausible answer options Briefly explain why you asked the question you did, and how you approached the task.
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According to the passage, what distinguishes publics from crowds?
a) Publics are emotional, while crowds are rational
b) Publics are assembled, while crowds are diffuse
c) Publics are action-oriented, while crowds are discussion-oriented
d) Publics are impulsive, while crowds are deliberative
Explanation: This question tests the reader's understanding of the definition of publics and crowds as presented in the passage. The correct answer is b, as the passage states that publics are "diffuse rather than assembled."
What role do media and entertainment play in shaping publics, according to the passage?
a) They are owned by the state and therefore influence public opinion
b) They are not relevant to the formation of publics
c) They are products of private corporations that influence audience representation
d) They are primarily responsible for public action
Explanation: This question tests the reader's understanding of the passage's discussion of the different senses in which the term "public" is used. The correct answer is c, as the passage states that media and entertainments are "products and enterprises of private corporations who influence the representations of audiences."
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Workers in a culture of _____ blow the whistle on an unethical
manager. 1. Individualism 2. High power distance 3. Low power
distance 4. Collectivism
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Workers in a culture of Low power distance blow the whistle on an unethical manager.
Power distance refers to the extent to which a society accepts or challenges the unequal distribution of power in relationships, institutions, and organizations.
In societies with a low power distance, the distribution of power is equal, or rather equal. In these societies, hierarchical relationships are discouraged or eliminated, and egalitarianism is promoted.
However, in societies with a high power distance, the distribution of power is extremely unequal, and hierarchical relationships are common. Workers in a culture of High power distance fear their supervisors, and they will not stand up for what they believe in if it puts their position in jeopardy. They will instead keep silent, respect authority, and maintain a respectful distance from their superiors.
In individualistic cultures, people prioritize their own interests, goals, and personal welfare over those of others, even their groups or communities. Collectivist societies, on the other hand, prioritize the needs and interests of the group or community over the needs and interests of the individual.
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The metaphor for an invisible barrier preventing women and minorities from being promoted to top executive jobs is called the
a.) immovable barrier
b.) glass ceiling
c.) discrimination wall.
d.) invisible door
e.) steel curtain
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In the following question, among the given options, option b). The metaphor for an invisible barrier preventing women and minorities from being promoted to top executive jobs is called the "Glass ceiling"
What is a Glass Ceiling? A glass ceiling is a barrier that prevents women and minorities from reaching high-level positions in a company or organization. This barrier is not visible, but it exists, and it prevents women and minorities from progressing beyond a certain point in their careers.
There is no such thing as a "glass wall," "invisible door," or "steel curtain." These terms are not relevant to the question because they do not relate to the phenomenon of the glass ceiling. The term "immovable barrier" is somewhat similar to the glass ceiling, but it is not the right answer. The answer to the question is b.) Glass ceiling.
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part u67 is used in one of broce corporation's products. the company's accounting department reports the following costs of producing the 15,600 units of the part that are needed every year. per unit direct materials $ 2.50 direct labor $ 3.50 variable overhead $ 6.30 supervisor's salary $ 6.80 depreciation of special equipment $ 7.90 allocated general overhead $ 5.00 an outside supplier has offered to make the part and sell it to the company for $27.00 each. if this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. the special equipment used to make the part was purchased many years ago and has no salvage value or other use. the allocated general overhead represents fixed costs of the entire company. if the outside supplier's offer were accepted, only $21,600 of these allocated general overhead costs would be avoided. required: a. prepare a report that shows the financial impact of buying part u67 from the supplier rather than continuing to make it inside the company. b. which alternative should the company choose?
Answers
Part U67 is used in one of Broce Corporation's products. If the outside supplier's offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided.
The special equipment used to make the part has no salvage value or other use, and the allocated general overhead represents fixed costs of the entire company.
A. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company.
If the company chooses to buy the part from the outside supplier, the following costs will be saved:
Direct Materials: $2.50 x 15,600 = $39,000
Direct Labor: $3.50 x 15,600 = $54,600
Variable Overhead: $6.30 x 15,600 = $98,880
Supervisor's Salary: $6.80 x 15,600 = $104,480
Depreciation of Special Equipment: $7.90 x 15,600 = $125,440
Allocated General Overhead: $5.00 x 15,600 = $78,000
Total Cost Savings = $390,800 - $21,600 = $369,200
B. Which alternative should the company choose?
Based on the financial report, it is more cost-effective for the company to buy Part U67 from the outside supplier. This alternative would result in a cost savings of $369,200.
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the ceo of a tech company has decided to lay off employees in order to reduce wages by 40%, but the flow rate of new products will also decrease by 30%. what is the percentage change in the cost of direct labor in this case?
Answers
The percentage change in the cost of direct labor is -10%.
In this case, the percentage change in the cost of direct labor can be calculated as follows:
Percentage change in cost of direct labor = Percentage change in wages - Percentage change in flow rate of new products
Let us calculate the percentage change in wages first. The CEO has decided to reduce wages by 40%. Therefore,
Percentage change in wages = -40%
Note that we use a negative sign because the wages have decreased. Next, we need to calculate the percentage change in the flow rate of new products. The flow rate of new products will decrease by 30%. Therefore,
Percentage change in flow rate of new products = -30%
Note that we use a negative sign because the flow rate of new products has decreased. Finally, we can substitute these values to get the percentage change in the cost of direct labor:
Percentage change in cost of direct labor = Percentage change in wages - Percentage change in flow rate of new products
= (-40%) - (-30%)
= -40% + 30%
= -10%
Therefore, the percentage change in the cost of direct labor is -10%.
Note that this is a decrease in the cost of direct labor because the percentage change is negative.
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in spite of the many advantages of alternative dispute resolution, litigation still has its place in resolving disputes. In light of the principles and legal materials studied in the business law course, determine and explain four circumstances where litigation will be the most appropriate method of resolving disputes.
Answers
Litigation may be the most appropriate method of resolving disputes in four circumstances:
(1) when a party's legal rights are at stake and need to be enforced through a court order;
(2) when the parties are unable to reach a mutually acceptable resolution through alternative methods;
(3) when the dispute involves complex legal or factual issues that require the expertise of a judge or jury; and
(4) when the dispute involves a matter of public interest or policy that requires a judicial decision.
In such cases, litigation may provide a formal, structured process for resolving the dispute, with the court acting as an impartial third party to interpret and apply the law. Additionally, litigation may provide an opportunity for establishing legal precedent or setting a standard for future cases.
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a 10-year treasury bond has an 8% coupon, and an 8-year treasury bond has a 10% coupon. neither is callable, and both have the same yield to maturity. if the yield to maturity of both bonds increases by the same amount, which of the following statements would be correct? a. both bonds would decline in price, but the 10-year bond would have the greater percentage decline in price. b. the prices of both bonds would increase by the same amount. c. both bonds would increase in price, but the 10-year bond would have the greater percentage increase in price. d. both bonds would decline in price, but the 8-year bond would have the greater percentage decline in price.
Answers
Among the options, the correct statement is: both bonds would decline in price, but the 10-year bond would have the greater percentage decline in price. (option a)
When a bond's yield to maturity increases, its price decreases. This is because when interest rates rise, newly issued bonds will have a higher yield to maturity than existing bonds with lower yields.
As a result, investors will demand a higher yield on existing bonds in order to compensate for the difference in yields. Conversely, when interest rates decrease, bond prices increase.
In the scenario given, both the 8-year and 10-year treasury bonds have the same yield to maturity. Therefore, if the yield to maturity on both bonds increases by the same amount, both bonds will decline in price by the same percentage. The coupon rate on the bonds (8% and 10%) is not relevant to the answer, as it only affects the interest payments the investor receives, not the bond's price.
Therefore the correct answer is option a.
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The ______ that permits price differentials based on differences in the cost of manufacture, sale, or delivery of commodities is recognized by the Robinson-Patman amendment.
Answers
The antitrust law that permits price differentials based on differences in the cost of manufacture, sale, or delivery of commodities is recognized by the Robinson-Patman amendment.
The Robinson-Patman Act, also known as the Anti-Price Discrimination Act of 1936, is a US law that prohibits price discrimination, which is the act of charging different prices to different consumers for the same goods or services. It is an amendment to the Clayton Antitrust Act of 1914.
According to the given question, we have to identify the correct option that fills the blank. So, let's look at the options.(a) Clayton Act(b) Sherman Act(c) Robinson-Patman Act(d) Federal Trade Commission (FTC) Act. Option (c) seems to be the correct option that fills the blank. So, let's move to the explanation. The Robinson-Patman Act is a US law that prohibits price discrimination, which is the act of charging different prices to different consumers for the same goods or services.
The law applies to a wide range of businesses, from manufacturers to wholesalers to retailers. It is an amendment to the Clayton Antitrust Act of 1914.The Robinson-Patman Act permits price differentials based on differences in the cost of manufacture, sale, or delivery of commodities.
Therefore, the antitrust law that permits price differentials based on differences in the cost of manufacture, sale, or delivery of commodities is recognized by the Robinson-Patman amendment.
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In terms of writing style, what are your most common errors?
What tips do you have for your cohorts in terms of improving your
writing style and avoiding these errors?
Answers
When it comes to writing style, the most common errors are incorrect grammar and punctuation, improper use of words, and confusing sentence structure.
To improve your writing style and avoid these errors, here are some tips:
1. Read your writing out loud: Hearing yourself read your writing can help you identify mistakes you may not have seen on the page.
2. Use proper grammar and punctuation: Make sure to follow the basic rules of grammar and punctuation, like using the correct forms of words and having the proper punctuation.
3. Check for any typos: Spell checkers can help with this, but sometimes they can miss mistakes or suggest an incorrect word.
4. Use the active voice: Using active voice, rather than passive voice, will make your writing more direct and clear.
5. Read over your work: After writing your work, take the time to read over your work and correct any errors.
Following these tips should help you improve your writing style and avoid common errors. Good luck!
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Miranda’s Burger House uses a weighted average method to forecast burger sales. It assigns a weight of 35% to the previous month’s demand, 48% to the demand for burgers two months ago, and 27% to the demand for burgers three months ago.
- Suppose burger sales in June were 4000, 2900 burgers in July and 6,500 burgers in July. What should be the forecast for burgers in August?
- Under which circumstances are weighted averages important to use?
Answers
- The forecast for burgers in August should be 4747 burgers.
- Circumstances in which weighted averages are important to use: In finance, weighted averages are commonly used for portfolio analysis, financial forecasting, and statistical modeling.
Miranda’s Burger House uses the weighted average method to forecast burger sales. It assigns a weight of 35% to the previous month’s demand, 48% to the demand for burgers two months ago, and 27% to the demand for burgers three months ago. Using the given data, the forecast for burgers in August can be calculated by using the weighted average method. The weighted average formula is:
Weighted Average = (W1 x X1) + (W2 x X2) + (W3 x X3)
Where, W = weightage, X = sales
We have, W1 = 35%, W2 = 48%, W3 = 27%, X1 = 6500, X2 = 2900, X3 = 4000. Substituting the given values in the formula:
Weighted Average = (0.35 x 6500) + (0.48 x 2900) + (0.27 x 4000)
Weighted Average = 2275 + 1392 + 1080
Weighted Average = 4747
In the same way, we can forecast the sales of the next month or any number of months. The method of assigning weights to the previous data to forecast future data is called the weighted average method. In order to forecast future sales or revenue streams, weighted averages are commonly used in business. These data sets may be influenced by past values of a variable or by trends, and a weighted average can account for these influences.
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Calculate the price of a zero coupon bond that matures in 13
years if the market interest rate is 5.70 percent. Assume
semiannual compounding.
Zero coupon bond price: $_____
Answers
Based on the information given, the price of the zero coupon bond is $577.11.
How to solveTo calculate the price of a zero coupon bond, we need to use the following formula:
P = F / (1 + r/n)^(n*t)
Where:
P = price of the bondF = face value of the bondr = annual interest raten = number of compounding periods per yeart = time to maturity in yearsIn this case, the face value of the bond is not given, but we can assume it to be $1000 for simplicity.
Also, the annual interest rate is 5.70%, which is the market interest rate, and the compounding is semiannual, which means n = 2. Finally, the time to maturity is 13 years.
Plugging in the values into the formula, we get:
P = 1000 / (1 + 0.057/2)^(2*13)P = 1000 / (1.0285)^26P = 1000 / 1.7331P = $577.11 (rounded to the nearest cent)Therefore, the price of the zero coupon bond is $577.11.
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1. How would you utilize Open AI/ChatGPT, CRM, ERP, AI and
blockchain technology in your new business venture? In your
submission you are to cover the following in your submission: •
What is your business? Identify the industry your business is operating within? What value will your business offer to your customers?
Why will there be a need to utilize technology in your business venture?
Outline how you would incorporate and daily utilize the following technologies to start and build your business? –
Open AI/ChatGPT
CRM –
ERP –
AI
Blockchain
Answers
Based on the search results, it appears that Open AI/ChatGPT, CRM, ERP, AI, and blockchain technologies can be utilized in a variety of ways to enhance and optimize business operations.
Here is a suggested approach on how to utilize these technologies in a new business venture:
Define Your Business and Industry: Start by defining your business and the industry you want to operate within. Determine what value your business will offer to your customers, what sets you apart from competitors, and why there will be a need to utilize technology in your business venture.Incorporate Open AI/ChatGPT: Open AI/ChatGPT has various use cases, including customer service, lead generation, and marketing automation. By incorporating this technology, you could create a virtual assistant or chatbot that can assist customers with general inquiries, provide product recommendations, or even offer personalized support. This technology can help you boost customer satisfaction by providing an efficient and personalized experience.Utilize CRM: A Customer Relationship Management (CRM) system can help you keep track of customer interactions, sales leads, and market trends. By utilizing a CRM, you can centralize customer data, track customer engagement and interactions, and personalize customer experiences. This can help you provide better customer service, optimize sales processes, and drive higher customer engagement and loyalty.Implement ERP Systems: Enterprise Resource Planning (ERP) systems help businesses automate and streamline core processes such as finance, inventory management, and supply chain management. By implementing an ERP system into your business, you can centralize and optimize your critical business processes and improve productivity and efficiency.Leverage AI: Artificial Intelligence (AI) technology can help you automate and optimize certain tasks within your business such as data analysis, predictive modeling, and process automation. By leveraging AI to analyze customer data, you can identify buying patterns, anticipate demand, and personalize customer offerings. This technology can help you reduce operational costs, increase efficiency, and enhance customer experience.Utilize Blockchain: Blockchain technology can help you secure and automate financial transactions within your business. By using smart contracts and decentralized ledgers, you can enhance security and streamline transactions, resulting in better accountability and transparency.In summary, incorporating Open AI/ChatGPT, CRM, ERP, AI, and blockchain technology can help you optimize business operations, enhance customer experience, and increase productivity and efficiency. By integrating these technologies into your business model, you can differentiate your business from competitors and stay ahead of the competition.
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William was the marketing director of a trading company which carries business in Hong Kong. He received an annual salary of HK$700,000 for the year ended 31 March 2022.
In December 2021, William took a 10-days trip to Canada to visit his son who is now taking a full-time degree program in the University of Canada. He spent one afternoon to visit one of the major customers. He spent HK40,000 for the entire trip and his employer fully reimbursed him.
During the period from 1 April 2021 to 30 September 2021, he and his family lived in a hotel of two rooms which was rented for HK$20,000 per month by his employer. Starting from 1 October 2021 he and his family lived in a flat which was rented by him for HK$25,000 per month and his employer only reimbursed him HK$24,000 per month. Documentary evidence had to be submitted for the reimbursement.
During the year ended 31 Mach 2022, William made the following payment:-
1) Paid annual membership fee of HK$4,000 to Chartered Institute of marketing
2) Donated two computers of HK$8,000 to the Red Cross
3) Paid MPF of HK$20,000
4) Paid care expenses of HK$110,000 to a registered care home for maintaining his
grandfather who was 88 years old. William has a son aged 22 and his wife is a housewife who stays in Canada to takecare the so n. William’s parents, both are aged 58, live with him throughout the year. William also maintains his wife’s parents, both aged 60, by contributing HK$30,000 to them during the year. His wife’s parents lived in a flat which was owned by him in China and he paid mortgage loan interest of HK$88,000 during the year ended 31 March 2022.
a) Calculate the salaries tax liability of William for the year of assessment
2021/22. (Ignore provisional tax and tax rebate)
b) Based on your answer in (a) above, explain your tax treatment regarding
the 10-days trip of HK$40,000 to Canada.
Answers
a) The salaries tax liability of William for the year of assessment 2021/22 is determined by his total assessable income and the applicable tax rate.
His total assessable income is calculated as follows:
Annual salary: HK$700,000
Hotel Rent: HK$20,000 (for period April 2021 to Sept 2021) + HK$24,000 (for period October 2021 to March 2022) = HK$44,000
Membership Fee: HK$4,000
Computer Donation: HK$8,000
MPF Payment: HK$20,000
Care Expenses: HK$110,000
Mortgage Interest: HK$88,000
Total assessable income = HK$866,000
The applicable tax rate for salaries of HK$700,000 or less is 15%.
Therefore, William’s salaries tax liability for the year of assessment 2021/22 is HK$129,900 (HK$866,000 x 15%).
b) The 10-days trip to Canada is a tax-deductible expense for William, as long as it is related to his employment in Hong Kong. Since his employer fully reimbursed the expenses of HK$40,000, it is not considered taxable income for him and the amount is deducted from his total assessable income.
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The Riverside Company had the following inventories on Aug. I of the current Problem 1 The following information pertains to August operations: 1) Materials purchased on account, P70,000. 2) Materials issued for production, P62,500. Of this amount, P7,500 was for indirect materials; the difference was distributed: P13,750 to Job 401; P17,500 to Job 402; and P23,750 to Job 403 . 3) Materials returned to the warehouse from the factory, P2,000, of which P750 was for indirect materials, the balance from Job 403 . 4) Materials returned to vendors, P2,500. 5) Payroll after deducting P7,562.50 for withholding taxes, P4,000 for SSS Premiums, P937.50 for Medicare, and P3,000 for Pag-ibig, was P82,000. The payroll due the employees was paid during the month. 6) The payroll was distributed as follows: P26,000 to Job 401; P31,250 to Job 402,P26,250 to Job 403 and the balance represents indirect labor. 7) The share of the employer for payroll was recorded - P5,000 for SSS Premiums, P937.50 for Medicare Contributions, and P3,000 for Pag-ibig Funds. 8) Factory overhead, other than any previously mentioned, amounted to P37, 500. Incl ded in this figure were P7,500 for depreciation of factory building and equipment, and P2,375 for expired insurance on the factory. The remaining overhead was unpaid at the end of August. 9) Factory overhead was applied to production at the rate of 80% of direct labor cost. 10) Jobs 401 and 402 were completed and transferred to the finished goods warehouse 11) Job 401 was shipped and billed at a gross profit of 40% of the cost. 12) Cash collections from accounts receivable during August were P87,500.. Requirements for Problem 1 1. Journal entries to record the above transactions. 2. job order cost sheets. 3. Cost of goods sold statement
Answers
The Riverside Company had the following inventories on Aug. The journal entry of the following transaction are:
Materials Purchased:
Materials Inventory 70,000
Accounts Payable 70,000
Materials Issued for Production:
Work in Process - Job 401 13,750
Work in Process - Job 402 17,500
Work in Process - Job 403 23,750
Manufacturing Overhead 7,500
Materials Inventory 7,500
Materials Inventory (Indirect) 7,500
Materials Returned to Warehouse:
Materials Inventory 1,25
Manufacturing Overhead 750
Work in Process - Job 403 500
Materials Returned to Vendors:
Accounts Payable 2,500
Materials Inventory 2,500
Payroll:
Salaries and Wages Expense 82,000
Withholding Taxes Payable 7,562.50
SSS Premiums Payable 4,000
Medicare Payable 937.50
Pag-ibig Fund Payable 3,000
Cash 66,500
Payroll Distribution:
Work in Process - Job 401 26,000
Work in Process - Job 402 31,250
Work in Process - Job 403 26,250
Manufacturing Overhead 8,500
Employer Payroll:
SSS Premiums Payable 5,000
Medicare Payable 937.50
Pag-ibig Fund Payable 3,000
Salaries and Wages Expense 9,937.50
Factory Overhead:
Manufacturing Overhead 37,500
Accumulated Depreciation 7,500
Prepaid Insurance 2,375
Accounts Payable 27,625
Factory Overhead Applied:
Work in Process - Job 401 10,400
Work in Process - Job 402 12,500
Work in Process - Job 403 10,500
Manufacturing Overhead 8,500
Completion of Jobs:
Finished Goods Inventory - Job 401 32,400
Work in Process - Job 401 32,400
Finished Goods Inventory - Job 402 39,375
Work in Process - Job 402 39,375
Sale of Job 401:
Accounts Receivable 45,360
Sales 63,504
Cost of Goods Sold 36,864
Finished Goods Inventory - Job 401 32,400
Cash Collections:
Cash 87,500
Accounts Receivable 87,500
Job order cost sheets: Job 401
Direct Materials:
Materials Issued 13,750
Materials Returned (500)
Direct Materials Used 13,250
Direct Labor:
Salaries and Wages Expense 26,000
Employer Payroll 2,125
Direct Labor Costs 28,125
Manufacturing Overhead:
Factory Overhead Applied 10,400
Total Manufacturing Costs 51,775
Job 402
Direct Materials
What are journal entries?A business transaction is recorded in your books as a journal entry. For every transaction, double-entry bookkeeping requires at least two journal entries. A bookkeeper keeps track of all the changes that a transaction can bring about in a business with journal entries.
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During 2023, Blossom Company constructed various assets at a total cost of $4.10 million. The weighted-average accumulated expenditures on assets qualifying for capitalization of interest during 2023 were $2.80 million. The company had the following debts outstanding at December 31, 2023:
1. 8%, five-year note to finance construction of various assets, dated January 1, 2023, with interest payable annually on January 1 $1,780,000
2. 10%, ten-year bonds issued at par on December 31, 2018, with interest payable annually on December 31 $2,040,000
3. 7%, three-year note payable, dated January 1, 2022, with interest payable annually on January 1 $1,020,000
(a) Calculate the avoidable interest for 2023. (Round answer to 0 decimal places, e.g. 1,525.)
Answers
Since the company had three debts outstanding, the avoidable interest for 2023 is $165,200.
To calculate the avoidable interest for 2023, we need to determine the amount of interest that could have been avoided if Blossom Company had not capitalized interest on assets during the year.
We can use the following formula to calculate avoidable interest:
Avoidable interest = Weighted-average accumulated expenditures x Interest rate
In this case, the weighted-average accumulated expenditures on assets qualifying for capitalization of interest during 2023 is $2.80 million.
To determine the interest rate, we need to calculate the weighted-average interest rate on the outstanding debts. We can do this by multiplying each debt's interest rate by its outstanding balance, summing these values, and dividing by the total outstanding debt.
For the 8%, five-year note, the outstanding balance is $1,780,000 and the interest rate is 8%, so the interest on this debt is $142,400.For the 10%, ten-year bonds, the outstanding balance is $2,040,000 and the interest rate is 10%, so the interest on this debt is $204,000.For the 7%, three-year note, the outstanding balance is $1,020,000 and the interest rate is 7%, so the interest on this debt is $71,400.The total outstanding debt is $1,780,000 + $2,040,000 + $1,020,000 = $4,840,000.
Therefore, the weighted-average interest rate is:
($142,400 + $204,000 + $71,400) / $4,840,000 = 0.0589 or 5.89%
Using the formula for avoidable interest, we get:
Avoidable interest = $2.80 million x 5.89% = $165,200
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Problem 7-5
Nonconstant Growth Valuation
A company currently pays a dividend of $2.5 per share (D0 = $2.5). It is estimated that the company's dividend will grow at a rate of 15% per year for the next 2 years, then at a constant rate of 8% thereafter. The company's stock has a beta of 1.7, the risk-free rate is 4.5%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
$
Answers
the estimated stock price today is $89.82.
How to calculate?
First, we need to calculate the expected dividends for the next two years:
D1 = D0 x (1 + g1) = $2.5 x (1 + 0.15) = $2.875
D2 = D1 x (1 + g2) = $2.875 x (1 + 0.15) = $3.30625
After year 2, dividends will grow at a constant rate of 8%, so we can use the constant growth model to calculate the stock price:
P2 = D2 x (1 + g) / (r - g) = $3.30625 x (1 + 0.08) / (0.045 - 0.08) = $95.05682
Now we can use the dividend discount model to calculate the present value of the expected dividends and the stock price today:
PV = (D1 / (1 + r)²1) + (D2 / (1 + r)²2) + (P2 / (1 + r)²2)
= ($2.875 / 1.045) + ($3.30625 / 1.045^2) + ($95.05682 / 1.045²2)
= $2.7361 + $2.9449 + $84.1392
= $89.8202
Therefore, the estimated stock price today is $89.82.
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Bill Gates, entrepreneur, opened a computer business and completed the following transactions in May. Show the effects of the transactions on the accounting equation below. Show that the accounting equation balances. (a) (b) (c) (d) (e) (1) (g) B. Gates, Owner invested $65,000 cash in the business Purchased computer equipment for $26,000 on credit Received $75,000 cash for computer services performed in May Paid $15,000 for a portion of the computer equipment purchased in (b) above Billed $48,000 to customers who used credit to purchase computer services performed in May Gates withdrew $10,000 cash from the business Paid $9,000 for rent for May Assets Liabilities + Equity + + + Cash Accounts Receivable Equipment Accounts Payable Bill Gates Capital Bill Gates Withdrawals Revenues Expenses a b C d e f g Balances
Answers
The accounting equation balances. The effects of the transactions on the accounting equation can be shown as follows:
a) Assets (Cash) +$65,000; Liabilities + Equity (Bill Gates Capital) +$65,000
b) Assets (Equipment) +$26,000; Liabilities (Accounts Payable) +$26,000
c) Assets (Cash) +$75,000; Equity (Revenues) +$75,000
d) Assets (Equipment) -$15,000; Liabilities (Accounts Payable) -$15,000
e) Assets (Accounts Receivable) +$48,000; Equity (Revenues) +$48,000
f) Assets (Cash) -$10,000; Equity (Bill Gates Withdrawals) -$10,000
g) Expenses +$9,000; Equity (Revenues) -$9,000
The accounting equation balances when the total assets and total liabilities and equity equal zero:
Assets: Cash +$107,000 + Equipment +$11,000 = $118,000
Liabilities: Accounts Payable +$11,000
Equity: Bill Gates Capital +$65,000 + Bill Gates Withdrawals -$10,000 + Revenues +$112,000 - Expenses -$9,000 = $158,000
$118,000 (Assets) + $11,000 (Liabilities) = $129,000
$129,000 (Assets + Liabilities) = $158,000 (Equity)
$129,000 = $158,000
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at december 31, amy jo's appliances had account balances in accounts receivable of $305,000 and in allowance for uncollectible accounts of $950 (credit) before adjustment. an analysis of amy jo's december 31 accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. bad debt expense for the year should be:
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Amy Jo's Appliance had an account balance of $305,000 in accounts receivable and $950 in allowance for uncollectible accounts.
Based on the analysis of December 31 accounts receivable, the allowance for uncollectible accounts should be 2% of accounts receivable. Therefore, the amount that should be adjusted is calculated as follows:
2% × $305,000 = $6,100.
The balance of the allowance for uncollectible accounts at the end of the year after adjustment is:
$950 + $6,100 = $7,050.
The bad debt expense for the year is calculated by the formula:
Bad debt expense = End balance of allowance for uncollectible accounts - Beginning balance of allowance for uncollectible accounts + Uncollectible accounts written off therefore, the bad debt expense is calculated as:
$7,050 - $950 + Uncollectible accounts written off.
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mary kay uses a sales force of independent beauty consultants comprised of nearly three million women across the globe to distribute its products, which are customized based on regional preferences. based on this marketing strategy, mary kay would be best classified as a(n) ______ firm.
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Based on the given information, Mary Kay can be best classified as a direct selling firm or a multi-level marketing firm.
Direct selling refers to the marketing and selling of products directly to consumers in a non-retail environment. Mary Kay uses a sales force of independent beauty consultants to distribute its products, indicating that they engage in direct selling.
Multi-level marketing (MLM) is a business model where salespeople earn income not only from their own sales but also from the sales of the people they recruit into the sales force.
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Question 19 options: The following information has been extracted from the financial statements of a company. Use it to answer the 4 questions that follow it. When answering the questions (filling in the blanks), DO NOT use dollar signs, USE commas to separate thousands, DO NOT use parenthesis to denote negative numbers, USE the negative sign in front of first digit for negative numbers. Round to the nearest dollar. Earnings before interests and taxes: EBIT = in 2020 500 Tax rate: T = 25% Accumulated depreciation in balance sheet of 2019 50 Accumulated depreciation in balance sheet of 2020 70 Net Fixed Assets in 2019 1,200 Net Fixed Assets in 2020 1,600 Other Long-Term assets in 2019 0 Other Long-Term assets in 2020 0 Net operating working capital (NOWC) in 2019 20 Current assets in balance sheet of 2020 30 Current liabilities in balance sheet of 2020 20
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The change in net working capital from 2019 to 2020 is $10,000.
The given financial information has been provided for the purpose of answering the following questions: Earnings before interests and taxes: EBIT = in 2020 500Tax rate: T = 25%
Accumulated depreciation in balance sheet of 2019 50Accumulated depreciation in balance sheet of 2020 70Net Fixed Assets in 2019 1,200Net Fixed Assets in 2020 1,600Other Long-Term assets in 2019 0Other Long-Term assets in 2020 0Net operating working capital (NOWC) in 2019 20Current assets in balance sheet of 2020 30
Current liabilities in balance sheet of 2020 20
What is the change in net working capital from 2019 to 2020?
The change in net working capital from 2019 to 2020 can be calculated by the formula;
Δ NWC = Δ CA - Δ CLWhere;
Δ NWC = Change in Net Working Capital
Δ CA = Change in Current Assets
Δ CL = Change in Current Liabilities
Given,Current assets in balance sheet of 2020 = $30,000
Current liabilities in balance sheet of 2020 = $20,000Net operating working capital (NOWC) in 2019 = $20,000Substituting the values in the formula;
Δ NWC = $30,000 - $20,000Δ NWC = $10,000
Therefore, the change in net working capital from 2019 to 2020 is $10,000.
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Turnbull co. Is considering a project that requires an initial investment of $570,000. The firm will raise the $570,000 in capital by issuing $230,000 of debt a before-tax cost of 9. 6%, $20,000 of preferred stock at a cost of 10. 7%, and $320,000 of equity at a cost of 13. 5%. The firm faces a tax rate of 40%. What will be the wacc for this project?
Answers
The WACC for this project is 8.87% if Turnbull co. Is considering a project that requires an initial investment of $570,000.
To calculate the weighted average cost of capital (WACC), we need to determine the cost of each capital component, weight them based on their proportion in the capital structure, and then sum the weighted costs.
The cost of debt (Kd) can be calculated using the before-tax cost of debt and adjusting it for taxes:
[tex]Kd = before-tax cost of debt x (1 - tax rate)[/tex]
[tex]Kd = 9.6% x (1 - 0.4)[/tex]
Kd = 5.76%
The cost of preferred stock (Kp) can be calculated as the dividend yield:
Kp = preferred stock dividend / net issuing price
[tex]Kp = $20,000 x 10.7% / $20,000[/tex]
Kp = 10.7%
The cost of equity (Ke) can be calculated using the capital asset pricing model (CAPM):
Ke = risk-free rate + beta x market risk premium
Assume a risk-free rate of 3.5%, a beta of 1.2, and a market risk premium of 8.5%:
[tex]Ke = 3.5% + 1.2 x 8.5%[/tex]
Ke = 13.1%
Next, we need to calculate the weights of each component in the capital structure:
[tex]Debt weight = $230,000 / $570,000 = 0.4035[/tex]
[tex]Preferred stock weight = $20,000 / $570,000 = 0.0351[/tex]
[tex]Equity weight = $320,000 / $570,000 = 0.5614[/tex]
Finally, we can calculate the WACC:
[tex]WACC = Kd x debt weight + Kp x preferred stock weight + Ke x equity weight x (1 - tax rate)[/tex]
[tex]WACC = 5.76% x 0.4035 + 10.7% x 0.0351 + 13.1% x 0.5614 x (1 - 0.4)[/tex]
WACC = 8.87%
Therefore, the WACC for this project is 8.87%.
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Country a is relatively land-abundant, and wheat is relatively land-intensive. Given the assumptions of the Heckscher-ohlin model, the opening of a trade by this country will cause the domestic price of wheat to ____
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Country a is relatively land-abundant, and wheat is relatively land-intensive. Given the assumptions of the Heckscher-Ohlin model, the opening of a trade by this country will cause the domestic price of wheat to rise.
Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics created the Heckscher-Ohlin model, a general equilibrium mathematical model of global trade.
The Heckscher-Ohlin model evaluates the balance of trade between two countries with different natural resources and areas of expertise. The model describes how a nation should operate and conduct business in the face of global resource disparities. The Heckscher-Ohlin model's fundamental premise is that, other from the difference in resource endowments, the two countries are comparable. This implies that people's tastes are similar in general as well.
According to Heckscher and Ohlin, the reasons for international trade include disparities in factor endowments, or the availability of all factors, not only labor efficiency and the various factor ratios needed for various commodities.
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