At the end of 2020, the working-age population on Coral Island is 20,000, the unemployment rate is 98.33%, and the labor force participation rate remains at 60%.
The working-age population refers to the portion of the total population within a certain age range that is considered capable of participating in the labor market.
To analyze the changes in the labor market on Coral Island during 2020, we have information about the labor force, unemployment rate, and labor force participation rate for 2019. We will use this information along with the given data for 2020 to calculate the working-age population, unemployment rate, and labor force participation rate at the end of 2020.
Given information for 2019:
Labor force = 12,000
Unemployment rate = 10%
Labor force participation rate = 60%
Calculations for 2020:
Working-age population at the end of 2020:
The working-age population can be calculated by dividing the labor force by the labor force participation rate and multiplying it by 100.
Working-age population = Labor force / (Labor force participation rate / 100)
Working-age population = 12,000 / (60 / 100)
Working-age population = 12,000 / 0.6
Working-age population = 20,000
Unemployment rate at the end of 2020:
To calculate the unemployment rate at the end of 2020, we need to consider the change in the number of unemployed people. In this case, 200 unemployed people found jobs.
New unemployment rate = (Unemployed people - 200) / Labor force * 100
New unemployment rate = (12,000 - 200) / 12,000 * 100
New unemployment rate = 11,800 / 12,000 * 100
New unemployment rate = 98.33%
Labor force participation rate at the end of 2020:
The labor force participation rate remains unchanged since the labor force did not change.
Labor force participation rate = 60%
Therefore, at the end of 2020, the working-age population on Coral Island is 20,000, the unemployment rate is 98.33%, and the labor force participation rate remains at 60%.
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Consider the following assumed transactions of Bedford Corporation. (Click the icon to view the transactions) Requirement dollars. For example, enter 10 million as 10,000,000. For transactions that have no effect on total stockholders' equity, enter a "0" in the Amount column.) More info a. Declaration of cash dividends of $58 million. b. Payment of the cash dividend in (a). c. A 20% stock dividend. Before the dividend, 66 million shares of $2.00 par common stock were outstanding; the market value was $12.87 at the time of the dividend. d. A 30% stock dividend. Before the dividend, 66 million shares of $2.00 par common stock were outstanding; the market value was $20.25 at the time of the dividend. e. Purchase of 2,100 shares of treasury stock (par value $2.00 ) at $13.25 per share. f. Sale of 700 shares of the treasury stock for $15.00 per share. Cost of the Get more help A treasury stock was $13.25 per share. g. A 3− for-1 stock split. Prior stock were outstanding.
The impact on stockholders' equity is as follows:
Cash: -$58,017,325
Retained earnings: -$211,009,800
Contributed capital (common stock): $154
How did we get the values?To determine the effect of the assumed transactions on total stockholders' equity, let's analyze each transaction separately:
a. Declaration of cash dividends of $58 million:
The declaration of cash dividends does not have a direct effect on total stockholders' equity since it involves the distribution of profits to shareholders. Therefore, the amount is recorded as a reduction in retained earnings.
Retained earnings: -$58,000,000
b. Payment of the cash dividend in (a):
The payment of cash dividends also does not affect total stockholders' equity since it involves the distribution of cash from the company to its shareholders. It reduces the amount of cash and retained earnings.
Cash: -$58,000,000
Retained earnings: -$58,000,000
c. A 20% stock dividend:
A stock dividend is a distribution of additional shares of stock to existing shareholders. In this case, a 20% stock dividend is declared.
Number of new shares issued: 0.2 × 66,000,000 = 13,200,000
Since a stock dividend transfers amounts from retained earnings to contributed capital, we need to calculate the value transferred based on the market value per share:
Value transferred per share: 0.2 × $12.87 = $2.574
Contributed capital (common stock): $2.574 × 13,200,000 = $33,964,800
d. A 30% stock dividend:
Similar to the previous transaction, a 30% stock dividend is declared.
Number of new shares issued: 0.3 × 66,000,000 = 19,800,000
Value transferred per share: 0.3 × $20.25 = $6.075
Contributed capital (common stock): $6.075 × 19,800,000 = $120,045,000
e. Purchase of 2,100 shares of treasury stock:
When treasury stock is purchased, it is recorded as a reduction in cash and as a contra-equity account, reducing total stockholders' equity.
Cash: -$2,100 × $13.25 = -$27,825
Treasury stock: $2,100 × $2.00 = $4,200
f. Sale of 700 shares of the treasury stock:
The sale of treasury stock increases cash and reduces the treasury stock account. It does not impact total stockholders' equity.
Cash: $700 × $15.00 = $10,500
Treasury stock: -$700 × $2.00 = -$1,400
g. A 3-for-1 stock split:
A stock split increases the number of outstanding shares without affecting total stockholders' equity. The number of outstanding shares will be multiplied by the stock split factor.
New number of outstanding shares: 3 × 66,000,000 = 198,000,000
No entries are made to the stockholders' equity accounts as it only changes the number of outstanding shares.
The cost of treasury stock (transaction e) is not relevant for determining the impact on total stockholders' equity. The cost of treasury stock is important for calculating the gain or loss on the sale of treasury stock (transaction f), but it does not directly affect equity accounts.
Overall, the impact on stockholders' equity is as follows:
Cash: -$58,000,000 - $27,825 + $10,500 = -$58,017,325
Retained earnings: -$58,000,000 - $33,964,800 - $120,045,000 = -$211,009,800
Contributed capital (common stock): $33,964,800 + $120,045,000 = $154
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In preparing for an aud Management has centralized purchasing and uses a model based upon previous year's sares wuar augwim is in the market place (e.g, the trend to more casual shoes). A staff auditor has suggested that the centralized purchasing may be one of the reasons for the lower level of profitability in the Mid-Central Region. Which of the following would be the best single audit procedure to address the staff auditor's assertion? Take a sample of receiving documents at stores and trace to purchase orders to determine the length of time between the purchase and delivery of the goods. Interview store managers in the Mid-Central Region to determine their attitude toward centralized purchasing. Perform an inventory count at selected stores in the Mid-Central Region and determine if adjustments are needed to the perpetual records. Perform a product-line analysis of sales and purchases in the Mid-Central Region and compare with other regions.
Perform a product-line analysis of sales and purchases in the Mid-Central Region and compare with other regions.
The best single audit procedure to address the staff auditor's assertion would be to perform a product-line analysis of sales and purchases in the Mid-Central Region and compare it with other regions. This will help determine if the centralized purchasing model is affecting profitability in the region.
By analyzing the sales and purchases in the Mid-Central Region and comparing them with other regions, management can identify any differences or patterns that may be impacting profitability. This analysis can provide valuable insights into whether the centralized purchasing model is contributing to the lower level of profitability in the region.
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At the beginning of 2020 , Percolate Wholesale Corp. had inventory of $340,000. It ended the year with inventory of $283,000 after purchasing $567,000 worth of inventory. The cost of goods sold totalled $737,000. Determine the inventory turnover ratio and the days' sales in inventory. Do not enter dollar signs or commas in the input boxes. For the inventory turnover ratio, round your answer to 2 decimal places. Inventory Turnover = For the days' sales in inventory, round your answer to the nearest whole number. Days' Sales in Inventory = days
The Inventory Turnover Ratio is 2.37, and the Days’ Sales in Inventory is 154.
The Inventory Turnover ratio is a measure of the number of times a company has replaced its average inventory during a particular period of time. It is computed by dividing the cost of goods sold by the average inventory of the period.
The Days’ Sales in Inventory is a financial ratio that represents the average number of days a company takes to sell off its inventory. It is calculated by dividing the average inventory by the cost of goods sold per day.
- Beginning inventory = $340,000
- Ending inventory = $283,000
- Cost of goods sold = $737,000
- Purchases = $567,000
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
The average inventory is calculated by adding the beginning and ending inventory levels and dividing by two.
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = ($340,000 + $283,000) / 2
Average Inventory = $311,500
Inventory Turnover Ratio = $737,000 / $311,500
Inventory Turnover Ratio = 2.37 (rounded to 2 decimal places)
Days' Sales in Inventory = 365 days / Inventory Turnover Ratio
Days' Sales in Inventory = 365 / 2.37
Days' Sales in Inventory = 154 (rounded to the nearest whole number)
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What is the present value of a $60 perpetuity discounted back to the present at 7 percent? The present value of the perpetuity is $ (Round to the nearest cent.)
The present value of a $60 perpetuity discounted back to the present at 7 percent is $857.14.
To calculate the present value of a perpetuity, we can use the formula:
PV = C ÷ r,
where PV is the present value, C is the cash flow per period, and r is the discount rate.
In this case, C is $60 (the cash flow per period) and r is 7 percent (or 0.07). Plugging these values into the formula, we have:
PV = 60 ÷ 0.07 = $857.14.
Therefore, the present value of a $60 perpetuity discounted back to the present at 7 percent is $857.14. This means that if you were to receive $60 per period indefinitely, and the discount rate is 7 percent, the present value of all those future cash flows would be $857.14.
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jeff has 8,000 and would like to purchase a 10,000 bond. in doing so, jeff takes out a 10 year loan of 2,000 from a bank and will make interest-only payments at the end of each month at a nominal rate of 8.0% convertible monthly. he immediately pays 10,000 for a 10-year bond with a par value of 10,000 and 9.0% coupons paid monthly
Jeff will borrow $2,000 from a bank to purchase a $10,000 bond. He will make interest-only payments at the end of each month at a nominal rate of 8.0% convertible monthly.
What will be the monthly interest payment for Jeff's loan?To calculate the monthly interest payment, we need to determine the interest rate and the principal amount. Jeff's loan has a nominal rate of 8.0% convertible monthly, and the principal amount is $2,000. The formula to calculate the interest payment is:
Interest Payment = Principal × Interest Rate
Converting the nominal rate to a monthly rate, we have:
Monthly Interest Rate = (1 + Nominal Rate)^(1/12) - 1
= (1 + 0.08)^(1/12) - 1
≈ 0.006434
Now, we can calculate the interest payment:
Interest Payment = $2,000 × 0.006434
≈ $12.87
Therefore, Jeff will make a monthly interest payment of approximately $12.87 for his loan.
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company establishes a new account to pay off a debt of $125,800 due in 12 years. the account will earn an annual interest rate of 7% compounded weekly (assume 52 weeks in 1 year). rounded to the nearest cent, how much will be deposited weekly into the fund?
A weekly deposit of $134.06 should be made into the fund to accumulate enough funds to pay off the debt of $125,800 in 12 years at an annual interest rate of 7% compounded weekly.
the weekly deposit into the fund should be approximately $134.06.
to calculate the weekly deposit required to pay off a debt of $125,800 in 12 years with an annual interest rate of 7% compounded weekly, we can use the formula for the future value of an ordinary annuity. the formula is:
fv = p * ((1 + r)ⁿ - 1) / r
where:
fv = future value (debt amount) = $125,800p = weekly deposit
r = weekly interest rate = (1 + 0.07)⁽¹⁵²⁾ - 1n = total number of weeks = 52 weeks/year * 12 years = 624 weeks
plugging in the values, we have:
125800 = p * ((1 + ((1 + 0.07)⁽¹⁵²⁾ - 1))⁶²⁴ - 1) / ((1 + 0.07)⁽¹⁵²⁾ - 1)
solving this equation, we find that p is approximately $134.06.
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Assume you make an investment of $10,000 today. What would be the value of that investment in 10 years time, if
1. You manage to earn a return at a rate of 2%/y ? 2. You manage to earn a return at a rate of 7%/y ?
What would be today’s value of each investment if there was price inflation at a rate of 5%/yr ?
The answer is , The present value of the investment is $13,296.94.
How to find?Given,
Investment = $10,000
Rate of return 1 = 2%
Rate of return 2 = 7%
Price Inflation = 5%
Time = 10 years
To find out the future value of investment, we will use the formula:
[tex]FV = PV x (1 + r)n[/tex]
Investment return rate = 2%So, Future value FV = $10,000 x (1 + 2%)10
= $10,000 x (1.02)10
= $12,190.82
The value of investment after 10 years is $12,190.822.
Investment return rate = 7%
So, Future value FV = $10,000 x (1 + 7%)10
= $10,000 x (1.07)10
= $19,672.76.
The value of investment after 10 years is $19,672.76
Now, we will calculate the present value of each investment given price inflation is 5% per year.
We can calculate the present value of investment with the help of the formula
PV = FV / (1 + r)n
Where,
PV = Present Value
FV = Future Value
r = Rate of return
n = Time or no of years
1. Investment return rate = 2% and
Price inflation = 5%
So, FV = $12,190.82
PV = $12,190.82 / (1 + 5%)10
= $8,257.50
The present value of the investment is $8,257.502.
Investment return rate = 7% and
Price inflation = 5%
So, FV = $19,672.76
PV = $19,672.76 / (1 + 5%)10
= $13,296.94
The present value of the investment is $13,296.94.
Hence, the value of the investment after 10 years and the present value of each investment has been calculated.
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A bank makes a loan at a 7.0% nominal interest rate to a business. For each of the following scenarios, calculated the expected and actual real interest rates on the loan and state whether the bank is better-off, worse-off, or just as well-off as it expected.
Inflation was expected to be 4%, but actual inflation was 2%
Inflation was expected to be 3%, but actual inflation was 3%
Inflation was expected to be 2% and actual inflation was 4%
Nominal interest rate refers to the interest rate that is specified in a loan or financial instrument contract without considering the effects of inflation or compounding. In contrast, real interest rate refers to the actual rate of interest paid or earned, after inflation has been factored in and is thus, a more accurate gauge of the cost of borrowing or the return on investment.
Scenario 1: Inflation was expected to be 4%, but actual inflation was 2% Expected Real Interest Rate: 7.0 - 4.0 = 3.0%Actual Real Interest Rate: 7.0 - 2.0 = 5.0%The bank is worse-off than it expected because the actual real interest rate is higher than it had anticipated.
Scenario 2: Inflation was expected to be 3%, but actual inflation was 3% Expected Real Interest Rate: 7.0 - 3.0 = 4.0%Actual Real Interest Rate: 7.0 - 3.0 = 4.0%The bank is just as well-off as it expected because the actual real interest rate is exactly the same as it had anticipated.
Scenario 3: Inflation was expected to be 2% and actual inflation was 4% Expected Real Interest Rate: 7.0 - 2.0 = 5.0% Actual Real Interest Rate: 7.0 - 4.0 = 3.0%
The bank is better-off than it expected because the actual real interest rate is lower than it had anticipated.
Therefore, the bank is worse-off, just as well-off, and better-off in Scenarios 1, 2, and 3, respectively.
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Capital market securities are typically expected to have a ______ than money market securities.
Capital market securities are typically expected to have a higher risk than money market securities.
Understand capital market and money market securities:
Capital market securities:
These are financial instruments issued by corporations, governments, or other entities to raise long-term capital. Examples include stocks, bonds, and other long-term debt securities.
Money market securities:
These are short-term, highly liquid financial instruments with a maturity of one year or less. Examples include Treasury bills, commercial paper, and certificates of deposit.
Recognize the risk-return relationship:
In general, there is a positive relationship between risk and return. Investors expect higher returns for taking on higher levels of risk.
Evaluate risk characteristics:
Money market securities are typically considered lower risk due to their short-term nature, high liquidity, and lower susceptibility to interest rate fluctuations. They are often viewed as relatively safer investments.
Capital market securities, on the other hand, have a longer maturity and are subject to various risks such as credit risk, market risk, and interest rate risk. These securities are exposed to potential fluctuations in the value of the underlying assets, economic conditions, and the performance of the issuing entity.
Understand the expectation:
Given the higher risk associated with capital market securities compared to money market securities, investors generally expect higher returns as compensation for taking on the additional risk.
Formulate the conclusion:
Considering the risk-return relationship and the characteristics of capital market and money market securities, the conclusion is that capital market securities are typically expected to have a higher risk than money market securities.
In summary, capital market securities are expected to have a higher risk than money market securities due to their longer maturity, exposure to various risks, and potential for higher return as compensation for the additional risk.
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a manager is trying to decide whether to buy one machine or two. if only one is purchased and demand proves to be excessive, the second machine can be purchased later. some sales will be lost, however, because the lead time for producing this type of machine is six months. in addition, the cost per machine will be lower if both are purchased at the same time. the probability of low demand is estimated to be . the after-tax net present value of the benefits from purchasing the two machines together is $ if demand is low and $ if demand is high. if one machine is purchased and demand is low, the net present value is $. if demand is high, the manager has three options. doing nothing has a net present value of $; subcontracting, $; and buying the second machine, $.
Comparing the expected NPVs, subcontracting seems to be the most favorable option with an expected NPV of $160,000.
Based on the given data, let's evaluate the decision between purchasing one machine or two under different demand scenarios:
If one machine is purchased and demand is low:
NPV: $100,000
If both machines are purchased together and demand is low:
NPV: $80,000
If demand is high, the manager has three options:
a. Doing nothing:
NPV: $110,000
b. Subcontracting:
NPV: $160,000
c. Buying the second machine:
NPV: $120,000
To make the decision, we compare the NPVs for each scenario:
Under low demand:
Purchasing one machine: NPV of $100,000
Purchasing two machines: NPV of $80,000
Since the NPV is higher for purchasing one machine under low demand, it seems more favorable.
Under high demand:
Doing nothing: NPV of $110,000
Subcontracting: NPV of $160,000
Buying the second machine: NPV of $120,000
In this case, subcontracting provides the highest NPV.
Considering the probabilities associated with low and high demand, we can calculate the expected NPV for each option:
Expected NPV for purchasing one machine: (0.20 * $100,000) + (0.80 * $110,000) = $108,000
Expected NPV for purchasing two machines: (0.20 * $80,000) + (0.80 * $160,000) = $144,000
Expected NPV for subcontracting: (0.20 * $160,000) + (0.80 * $160,000) = $160,000
Therefore, comparing the expected NPVs, subcontracting seems to be the most favorable option with an expected NPV of $160,000.
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A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time.
The probability of low demand is estimated to be 0.20. The after-tax net present value of the benefits from purchasing the two machines together is $80,000 if demand is low and $160,000 if demand is high. If one machine is purchased and demand is low, the net present value is $100,000. If demand is high, the manager has three options. Doing nothing has a net present value of $110,000; subcontracting, $160,000; and buying the second machine, $120,000.
The morrissey company's bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment of $70. the market interest rate for the bonds is 8.5%. what is the bond's price?
The price of the Morrissey Company's bonds is about $1,032.61.
To calculate the charge of the Morrissey Company's bonds, we can use the system for the present price of a bond:
Bond Price = (Coupon Payment / (1 + Market Interest Rate[tex])^1[/tex]) + (Coupon Payment / (1 + Market Interest Rate)²) + ... + (Coupon Payment + Par Value) / (1 + Market Interest Rate[tex])^n[/tex]
Where:
Coupon Payment = Annual coupon charge
Market Interest Rate = Annual marketplace hobby fee (expressed as a decimal)
Par Value = Par fee of the bond
n = Number of years until maturity
Using the given values, we have:
Coupon Payment = $70
Market Interest Rate = 8.5% = 0.085
Par Value = $1,000
n = 7
Now permits calculate the bond rate:
Bond Price = [tex](70 / (1 + 0.0.5)^1) + (70 / (1 + 0.05)^2) + ... + (70 + 1000) / (1 + 0.1/2)^7[/tex]
Bond Price = [tex]70 / 1.0.5 + 70 / 1.1/2^2 + ... + 1070 / 1.05^7[/tex]
Using a monetary calculator or spreadsheet software program, we are able to calculate the bond fee as:
Bond Price ≈ $1,032.61
Therefore, the price of the Morrissey Company's bonds is approximately $1,032.61.
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the average normal stress for a given cross-section is 1MPa, and the area of that cross-section is 100 cm 2
, what is the normal force over that cross-section? - 1,000 N Note the defin σ= A
F N
Here. σ and A are given. Be careful with calculation and also unit
The normal force over the given cross-section can be calculated using the formula F = σ * A, where F is the normal force, σ is the average normal stress, and A is the area of the cross-section. In this case, σ is given as 1 MPa and A is given as 100 cm^2.
To calculate the normal force, we need to convert the units. 1 MPa is equivalent to 1 N/mm^2. So, we need to convert the area from cm^2 to mm^2 by multiplying it by 100, since 1 cm = 10 mm.
The area of the cross-section in mm^2 is 100 cm^2 * 100 mm^2/cm^2 = 10,000 mm^2.
Now, we can substitute the values into the formula:
F = σ * A
F = 1 N/mm^2 * 10,000 mm^2
F = 10,000 N
Therefore, the normal force over the given cross-section is 10,000 N.
The formula F = σ * A is used to calculate the normal force over a given cross-section. In this case, we are given the average normal stress (σ) as 1 MPa and the area (A) as 100 cm^2. To calculate the normal force, we need to convert the units and make sure they are consistent. We convert 1 MPa to 1 N/mm^2 and the area from cm^2 to mm^2. Finally, we substitute the values into the formula and calculate the normal force to be 10,000 N.
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Lily Carter works for JDK all year and earns a monthly salary of $12,300. There is no overtime pay. Lily's income tax withholding rate is 15% of gross pay. In addition to payroll taxes, Lily elects to contribute 4% monthly to United Way. JDK also deducts $200 monthly for co-payment of the health insurance premium. As of September 30 , Lily had $125,100 of cumulative earnings. (i) (Click the icon to view payroll tax rate information.) Read the requirements. cent.) Requirements 1. Compute Lily's net pay for October. 2. Journalize the accrual of salaries expense and the payment related to the employment of Lily Carter.
1. To compute Lily's net pay for October, we need to calculate the deductions from her monthly salary.
First, calculate the income tax withholding: $12,300 x 0.15 = $1,845.
1. To compute Lily's net pay for October, we need to calculate the deductions from her monthly salary.
First, calculate the income tax withholding: $12,300 x 0.15 = $1,845.
Next, calculate the contribution to United Way: $12,300 x 0.04 = $492.
Finally, subtract the health insurance premium: $12,300 - $200 = $12,100.
Lily's net pay for October is $12,100 - $1,845 - $492 = $9,763.
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Which of the following statements is true about the cash flow pattern of a company in the decline phase of the life cycle of the firm? (AC 23) It has positive cash flows from operating activities. It has positive cash flows from investing activities. It has positive cash flows from financing activities. We would need more information to answer this question.
In the decline phase of the firm's life cycle, the statement "We would need more information to answer this question" is true. (Option D)
During the decline phase, a company may experience decreasing sales, market share, and profitability. As a result, it could face challenges in generating positive cash flows from operating activities. Declining revenues and increasing costs may lead to negative operating cash flows.
Additionally, in the decline phase, a company may reduce investments in new projects or divest assets, resulting in potential negative cash flows from investing activities. The company might also face difficulties in raising capital, making positive cash flows from financing activities less likely.
However, it's important to note that each company's situation is unique, and additional information would be necessary to accurately determine the cash flow pattern of a company in the decline phase. Factors such as cost-cutting measures, divestments, restructuring efforts, or other strategic decisions could influence the cash flow dynamics during this phase.
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5. (Fixed Exchange Rate Regime: China (mainland)) Consider the USD/CNY FX market, where CNY is the Chinese currency, Yuan (also denoted RMB). Assume that China is operating a fixed exchange rate system. Suppose that there is an increase in Chinese exports to the US. (a) If the People's Bank of China (PBC), the Chinese central bank, wants the exchange rate to stay at its target level, how should it intervene in the FX market? (indicate which currency PBC buys and which it sells)
If the PBC wants the exchange rate to stay at its target level in a fixed exchange rate regime, it would intervene by buying CNY and selling USD in the FX market.
In a fixed exchange rate regime, such as the one in mainland China, the People's Bank of China (PBC) plays a crucial role in maintaining the exchange rate at its target level.
If there is an increase in Chinese exports to the US, the PBC would intervene in the FX market to ensure the exchange rate remains stable.
To achieve this, the PBC would need to buy Chinese currency (CNY or RMB) and sell US dollars (USD). By doing so, the PBC increases the demand for CNY and reduces the supply of USD in the FX market.
This increased demand for CNY and reduced supply of USD would help to keep the exchange rate at its target level.
For example, let's say the fixed exchange rate is 6 CNY per USD, and due to increased Chinese exports, there is a higher demand for USD.
To maintain the fixed exchange rate, the PBC would buy CNY from the FX market using USD. This action increases the demand for CNY, which helps to stabilize the exchange rate.
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We introduce government spending into the Solow model. The growth accounting equation now becomes: Y(t)=C(t)+I(t)+G(t). Production function still takes the standard Cobb-Douglas form: Y(t)=AK(t)
α
L(t)
1−α
where A is a constant and total population grows at rate n. Assume government spending is given by G(t)=σY(t). 1 (a) If government spending is fully financed through investment so that investment becomes I(t)=I
0
(t)−G(t), where I
0
(t) denotes the investment in the case of no government spending. Derive the physical capital accumulation equation. Characterize the steady-state of the economy. Is it possible to have multiple steady-state equilibrium? (Hint: I
0
(t) is essentially sY(t) ). (b) Suppose now that government spending partly comes out of private consumption, so that C(t)=C
0
(t)−λG(t), where λ∈[0,1] and C
0
(t) is the consumption in the case of no government spending. The remaining (1−λ) of G(t) is still financed by investment: I(t)=I
0
(t)−(1−λ)G(t). Discuss how the value of σ affects your answer to part (a)? (c) Now suppose that a fraction ϕ of G(t) is invested in the capital stock, so that total investment at t is given by: I(t)=(s−(1−λ)σ+ϕσ)Y(t) show that if ϕ is sufficiently high, the steady-state level of capital-labor ratio will increase as a result of higher σ.
(a) The steady-state level of capital per worker, which is represented by K*.
(b) The effect of the parameter σ on the steady-state level of capital per worker. As σ increases, the steady-state level of capital per worker decreases.
(c) The effect of the parameter σ on the steady-state level of capital per worker. An increase in σ leads to an increase in the steady-state level of capital per worker, implying higher productivity and output per worker.
The physical capital accumulation equation can be derived as follows:
K(t+1) = (1-δ)K(t) + I(t)Substituting I(t) with the given equation:
K(t+1) = (1-δ)K(t) + I0(t) - σY(t)Substituting I0(t) with sY(t), we get:
K(t+1) = (1-δ)K(t) + sY(t) - σY(t)K(t+1) = (1-δ)K(t) + (s-σ)Y(t)To characterize the steady-state of the economy, we set K(t+1) = K(t) = K*.
Hence, (1-δ)K* + (s-σ)Y* = K*Solving for K*, we get:
K* = [(s-σ)/δ]Y*It is possible to have multiple steady-state equilibrium if (s-σ)/δ is greater than the saving rate s. In this case, there are two steady-state levels of capital per worker, K*1 and K*2, where K*1 is smaller than K*2.
If government spending partly comes out of private consumption, then the investment equation becomes:
I(t) = I0(t) - (1-λ)σY(t)Substituting I0(t) with sY(t), we get:
I(t) = sY(t) - (1-λ)σY(t)I(t) = (s - (1-λ)σ)Y(t)The value of σ affects the answer to part (a) because it determines the level of investment in the economy. As σ increases, the level of investment decreases, leading to a decrease in the steady-state level of capital per worker.
If a fraction ϕ of G(t) is invested in the capital stock, then the investment equation becomes:
I(t) = (s - (1-λ)σ + ϕσ)Y(t)To show that the steady-state level of capital per worker increases as a result of higher σ, we differentiate K* with respect to σ:
dK*/dσ = -s/δ + 1/δAs dK*/dσ is positive, an increase in σ leads to an increase in the steady-state level of capital per worker. This implies that the economy will have higher productivity and output per worker.
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Kincaid Company's Retained Earnings balance on January 1 was $5,000. During the current year, Kincaid earned $3,500 in revenues and incurred $3,900 in expenses. Kincaid declared and paid $2,100 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be: A. $4,600. B. $6,400. C. $5,000. D. $2,500.
The correct answer is D. $2,500. Based on the information provided, we can calculate the Retained Earnings balance on December 31.
Based on the information provided, we can calculate the Retained Earnings balance on December 31.
Retained Earnings = Beginning balance + Net income - Dividends
Net income = Revenues - Expenses
Given:
Beginning balance = $5,000
Revenues = $3,500
Expenses = $3,900
Dividends = $2,100
First, let's calculate the net income:
Net income = Revenues - Expenses
Net income = $3,500 - $3,900
Net income = -$400
Next, let's calculate the Retained Earnings balance on December 31:
Retained Earnings = Beginning balance + Net income - Dividends
Retained Earnings = $5,000 + (-$400) - $2,100
Retained Earnings = $5,000 - $400 - $2,100
Retained Earnings = $4,600 - $2,100
Retained Earnings = $2,500
Therefore, the correct answer is D. $2,500.
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Banks have operated under the belief that big banks would not be allowed to fail, as this would endanger the broader economy. This has led banks to take on added risk. This concept is known as
A) Collateralization
B) Gresham’s Law
C) Moral Hazard
D) Risk/Return Paradigm
Banks have operated under the belief that big banks would not be allowed to fail, as this would endanger the broader economy. This has led banks to take on added risk. This concept is known as C. Moral Hazard.
In banking, Moral Hazard refers to the concept that occurs when one party is inclined to take more risks due to the likelihood that they will be protected against the negative consequences of such risks by a third party.In the financial system, the third party who offers the protection is typically the government.
The protection is often in the form of a bailout, which is a rescue plan for a corporation that is on the verge of bankruptcy or insolvency. This kind of protection allows financial institutions to take on excessive risks, knowing that the government will intervene if things do not go as planned.
Therefore, Moral Hazard leads to the problem of the risk-return trade off in financial decision-making.
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Do you agree with the following argument? For banks, despite existing issues with credit bureaus, their role in overcoming the information asymmetry to avoid ‘adverse selection’, and in reducing moral hazard is undeniable.
Yes, I agree with the argument. Credit bureaus play a crucial role for banks in mitigating information asymmetry and addressing adverse selection and moral hazard issues.
Banks rely on credit bureaus to access credit histories and evaluate the creditworthiness of borrowers. By providing comprehensive credit information, credit bureaus enable banks to make more informed lending decisions, reducing the risk of adverse selection (selecting high-risk borrowers) and moral hazard (the risk of borrowers behaving irresponsibly after obtaining credit). While there may be existing issues with credit bureaus, their overall contribution in facilitating risk assessment and minimizing asymmetric information in lending processes is undeniably important for banks.
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Which statement regarding individual differences and ethics is true? People with an economic value orientation tend to make more ethical choices. Employees with internal locus of control make more unethical choices. We tend to underestimate how ethical we are. How we make attributions in a given situation will determine how we respond to others' actions.
The statement "How we make attributions in a given situation will determine how we respond to others' actions" is true regarding individual differences and ethics.
Attribution refers to the process of assigning causes or motives to behavior, and it plays a crucial role in determining our reactions to others' actions. Depending on how we attribute someone's behavior (e.g., internal factors like character or external factors like circumstances), we may respond differently, including in terms of ethical judgments and actions.
Attributional processes influence our ethical decision-making and behavior, as they shape our perceptions of others' intentions and responsibility, thus influencing how we respond ethically in various situations.
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managers should select the that has the strongest cause-and-effect relationship with the indirect cost.
Managers should select the factor that has the strongest cause-and-effect relationship with the indirect cost.
By identifying and understanding the factors that drive indirect costs, managers can make informed decisions to effectively manage and control these costs. Analyzing the cause-and-effect relationship helps identify the key drivers that have the most significant impact on indirect costs.
By focusing on these factors, managers can implement targeted strategies to optimize processes, reduce waste, improve efficiency, and ultimately lower indirect costs. Selecting the factor with the strongest cause-and-effect relationship allows managers to allocate resources and implement cost-saving measures more effectively, leading to improved financial performance and profitability.
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Rosu company has total current assets of 150000 and a total current liabilities of 50000. what is the ampunt of working capital of rosu company?
Amount of working capital of Rosu's company = $100,000
Working capital is a financial metric that represents the liquidity of a company and its ability to meet short-term obligations.
The amount of working capital can be calculated by subtracting the total current liabilities from the total current assets.
Working capital = Total current assets - Total current liabilities
In this case, the total current assets of Rosu's Company are $150,000 and the total current liabilities are $50,000.
Working capital = $150,000 - $50,000
Working capital = $100,000
Thus, the amount of working capital available right now to Rosu's Company is $100,000.
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Why is change important to organizations and discuss how innovation benefits organizations
Firstly, it allows organizations to adapt to new market conditions, technologies, and customer needs. By embracing change, organizations can stay relevant and competitive in a rapidly evolving business landscape. Additionally, change can help organizations improve their efficiency, productivity, and overall performance.
Innovation, which is a key driver of change, brings numerous benefits to organizations. Firstly, innovation fosters creativity and encourages employees to think outside the box. This can lead to the development of new products, services, and processes that can differentiate the organization from its competitors. Innovation also helps organizations improve their operational effectiveness by streamlining processes, reducing costs, and enhancing customer satisfaction.
Furthermore, innovation can lead to increased revenue and profitability for organizations. By offering innovative products or services, organizations can attract more customers and gain a larger market share. Innovation also enables organizations to enter new markets and expand their customer base.
Moreover, innovation can enhance an organization's reputation and brand image, leading to increased customer loyalty and trust.
In conclusion, change is important to organizations as it allows them to adapt and thrive in a dynamic business environment. Innovation, as a catalyst for change, benefits organizations by driving creativity, improving efficiency, and fostering growth. By embracing change and promoting innovation, organizations can gain a competitive edge and achieve long-term success.
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When Ryan Smith started Modern-Shed, he considered the idea of having an organization with "an accounting position, an organizing position, and a person who answers the phone." But he rejected that structure because: He wanted a company where decision making would be more centralized He didn't like the idea of people doing multiple jobs His sales fluctuated, and he wasn't certain he could keep all of those people employed He wanted his company to have a taller organizational structure Under what conditions would it make sense for Modern-Shed to have the kind of structure that has "an accounting position, an organizing position, and a person who answers the phone"? Check all that apply. If the company decided to bring staff functions in-house If the company decided to improve coordination across all of the organizations involved in getting its products to consumers If the company decided to sell standardized products at the lowest possible cost If the company decided to focus on a niche market As Modern-Shed grows, what is likely to happen to its organizational design? It is likely to become a matrix organization. It is likely to continue growing with the same organizational design that it has now. It is likely to become more functional. It is likely to become a virtual organization.
1. Ryan Smith rejected that structure because' His sales fluctuated, and he wasn't certain he could keep all of those people employed'.2. The correct option are ' If the company decided to bring staff functions in-house' 3. The correct option is ' It is likely to continue growing with the same organizational design that it has now.'
1.This means that Ryan rejected the idea of having specialized positions in the company because he was concerned that he might not be able to sustain the employment of those positions during times when the company experiences fluctuations in sales.
2.Conditions under which it would make sense for Modern-Shed to have the kind of structure that has "an accounting position, an organizing position, and a person who answers the phone" are:
- If the company decided to bring staff functions in-house
- If the company decided to improve coordination across all of the organizations involved in getting its products to consumers
- If the company decided to focus on a niche market
3.This means that the company will likely develop a more specialized structure with clearly defined roles and responsibilities to ensure that each function is performed by someone with the necessary skills and expertise. This may include the creation of specialized positions such as an accounting position, an organizing position, and a person who answers the phone, depending on the specific needs of the company.
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Under certain conditions, Modern-Shed may benefit from having specialized roles in its organizational structure such as an accounting position, an organizing position, and a person who answers the phone. As the company grows, it is likely to evolve into a more functional organizational design.
Explanation:Modern-Shed may benefit from having the structure of "an accounting position, an organizing position, and a person who answers the phone" under the following conditions:
If the company decides to bring staff functions in-house, as having dedicated staff for these specific roles can ensure efficiency and accuracy in accounting, organizing, and customer service.If the company decides to improve coordination across all organizations involved in getting its products to consumers, as having designated roles can help streamline communication and prevent confusion.If the company decides to focus on a niche market, as specialized roles can help cater to the specific needs and demands of that market.As Modern-Shed grows, it is likely to become more functional, as the need for specialized roles and departments increases with the complexity and scale of the company.
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In interviewing a new employee, you find that they wont shake your hand, they don't make eyelrontact with you, and they speak so quietly you can barely hear them, in determining the reason for their behavior, you are most likely to ____
develop a schema
use a judgmental heuristic
make an attribution
apgly an implicit personality theory
In determining the reason for their behavior, you are most likely to make an attribution. Option c is correct.
Making an attribution involves trying to understand and explain the causes of someone's behavior. In this situation, you are observing specific behaviors of the new employee, such as not shaking your hand, avoiding eye contact, and speaking quietly. To make sense of these behaviors, you would likely analyze the situation and make attributions about the underlying reasons behind their behavior. This could involve considering possible factors such as social anxiety, cultural norms, shyness, or personal preferences. Making attributions helps in understanding the individual's motives and intentions, providing insights into their behavior. Option c is correct.
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Your bank pays 2.7% interest per year. You put $1,400 in the bank today and $750 more in the bank in one year. How much will you have in the bankin 2 years? In two years, the amount that you will have is 5 (Round to the nearest cent.)
After two years, you will have a total of $1,505.63 in the bank, which rounds to $5. To calculate the final amount in the bank after two years, we need to consider the interest earned on both deposits.
The $1,400 deposit made today will earn interest for two years, while the $750 deposit made in one year will earn interest for one year. For the first deposit of $1,400, the interest earned over two years can be calculated using the formula A = P(1 + r)^n, where A is the final amount, P is the principal amount, r is the interest rate, and n is the number of years. Plugging in the values, we have A = 1400(1 + 0.027)^2 = $1,485.38. For the second deposit of $750, it will earn interest for one year, so the interest earned can be calculated as I = P * r = 750 * 0.027 = $20.25. Adding the interest earned from both deposits, we have a total of $1,485.38 + $20.25 = $1,505.63. Therefore, after two years, you will have a total of $1,505.63 in the bank, which rounds to $5.
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For Questions 1-15, consider a competitive market for a good where the demand curve is determined by:
the demand function: P = 5+-1*Qd and
the supply curve is determined by the supply function: P = 0.5*Qs.
Where P stands for Price, QD is quantity demanded and QS is quantity supplied.
1. What is the quantity demanded of the good when the price level is P = $4?
2. What is the quantity supplied of the good when the price level is P = $4?
3. At P=$4 there is:
a. Competitive equilibrium in the market
b. Excess supply in the market;
c. Excess demand in the market;
d. Rationing in the market;
4. What is the value of the price elasticity of demand if the price of the good changes from Po=$4 to Pi=$5?
NOTE: Express your answer in NEGATIVE terms.
5. What is the value of the price elasticity of supply if the price of the good changes from Po=$4 to Pi=$5?
6. What is the equilibrium quantity level for the good in the competitive market?
7. What is the equilibrium price level for the good in the competitive market?
8. What is the consumer surplus in the competitive market?
9. What is the producer surplus in the competitive market?
10. What is the total surplus in the competitive market?
For Questions 11-15, additionally assume a market intervention of the form of per unit $2 tax on the consumption of the good.
11. How many units of the good are sold in the market at equilibrium considering this market intervention?
12. How much are consumers going to pay per unit of the good under this market intervention?
13. How much is the per unit amount that producers will receive as payment under this market intervention?
14. How much are the tax revenues under this market intervention?
15. How much is the Dead Weight Loss under this market intervention?
Quantity demanded of the good when the price level is P=$4 is 6.
Quantity supplied of the good when the price level is P=$4 is 3.
At P=$4 there is excess demand in the market.
The value of the price elasticity of demand if the price of the good changes from Po=$4 to Pi=$5 is -2.
The value of the price elasticity of supply if the price of the good changes from Po=$4 to Pi=$5 is 1.
The equilibrium quantity level for the good in the competitive market is
The equilibrium price level for the good in the competitive market is $3..
The consumer surplus in the competitive market is $7.
The producer surplus in the competitive market is $3.
The total surplus in the competitive market is $10.
Units of the good are sold in the market at equilibrium considering this market intervention are 4.
Consumers are going to pay per unit of the good under this market intervention $6.
The per unit amount that producers will receive as payment under this market intervention is $2.
The tax revenues under this market intervention are $8.
The Dead Weight Loss under this market intervention is $2.
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Grainger Company produces only one product and sells that product for $110 per unit. Cost information for the product is as follows:
Direct Material $16 per Unit
Direct Labor $24 per Unit
Variable Overhead $6 per Unit
Fixed Overhead $26,800
Selling expenses are $3 per unit and are all variable. Administrative expenses of $12,000 are all fixed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory.
A. Compute net income under
i. Absorption Costing $
ii. Variable Costing $
B. Which costing method provide higher net income? By how much?
The absorption costing method provided more net income by $ .
Absorption costing assigns all manufacturing costs to units sold, including fixed overhead costs. Variable costing only allocates variable costs to units sold, like labor, selling, and certain direct materials costs.
The correct answer is 2. Variable costing$
It does not consider any fixed overhead costs. Generally, absorption costing is required for external reporting purposes, while variable costing is used as an internal tool to help program managers make better decisions.
In this example, net income under absorption costing was $6,160 and under variable costing it was $4,560. This means that absorption costing provided higher net income ($1,600) than variable costing.
The higher net income under absorption costing is due to the allocation of fixed overhead expenses to product costs. This causes higher reported expenses and net income. By utilizing variable costing, fixed overhead costs are excluded from product expenses and thus, lower net income.
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You sold short 300 shares of common stock at $55 per share. The initial margin is 60%. a. At what stock price would you receive a margin call if the maintenance margin is 35%? b. What would be your return if you close your short position at the price in part a)?
If the stock price falls below $24.44, the investor will receive a margin call.
The return on the short sale is [tex]$9168 / $16500 = 55.6%.[/tex]
At what stock price would you receive a margin call if the maintenance margin is 35%? The initial margin is 60%
So, the margin available = [tex]300 × $55 × 0.6 = $9900[/tex] Let the stock price be x
So, the amount of the short sale = 300xAmount of margin required = [tex]300x × 0.35 = 105x$9900 - (300x) = 105x$9900 = 405x$24.44 = x[/tex]
If the stock price falls below $24.44, the investor will receive a margin call.
What would be your return if you close your short position at the price in part a)?
short sale is at $55 per share. The investor will need to pay $24.44 to buy back each share and return it to the broker. The profit per share is [tex]$55 - $24.44 = $30.56[/tex]
The total profit from the short sale = [tex]300 × $30.56 = $9168[/tex]
Therefore, the return on the short sale is [tex]$9168 / $16500 = 55.6%.[/tex]
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What are the main three financial statements? How to link them together reflect the financial position and performance of a company?
The main three financial statements are: Income Statement: Summarizes a company's revenues, expenses, and net income over a specific period. Balance Sheet: Provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and stockholders' equity. Cash Flow Statement: Shows the inflows and outflows of cash during a specific period, categorized into operating, investing, and financing activities.
The three financial statements are interconnected and provide a comprehensive view of a company's financial position and performance: The Income Statement shows the company's revenues, expenses, and net income (or net loss) over a specific period. It reflects the company's financial performance by indicating how effectively it generates sales, controls expenses, and ultimately creates profit or incurs losses. The Balance Sheet complements the Income Statement by presenting a snapshot of the company's financial position at a specific time. It provides information about the company's assets, liabilities, and stockholders' equity. The balance sheet shows what the company owns (assets), what it owes (liabilities), and the residual value (stockholders' equity) after satisfying its obligations. It helps assess the company's financial health and solvency. The Cash Flow Statement complements the Income and Balance Sheet by tracking the company's cash inflows and outflows. It shows how cash is generated from operating, investing, and financing activities. The cash flow statement highlights the company's ability to generate cash, investment decisions, and financing activities. It helps evaluate the company's liquidity, cash management, and ability to meet financial obligations. By analyzing these three financial statements together, stakeholders can understand the company's financial position, performance, and cash flow. They can assess profitability, solvency, and liquidity, and make informed decisions regarding investments, lending, or partnership with the company. The three statements provide a holistic view of the company's financial health and assist in evaluating its long-term viability and success.
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