Name of Company/Stock: Johnson & Johnson
Ticker Symbol: JNJ
Part 1: Cost of Debt
To calculate the cost of debt, we need to determine the tax rate and the average interest expense.
Interest Income (Expense) – last 2 years avg: $318,000
Earnings Before Tax – last 3 years total: $20.387 million
Taxation – last 3 years total: $1.898 million
Corporate Tax Rate, TC: 9.9%
Current Debt: $32.60 million
LT Debt & Leases: $1.833 million
Total Debt: $34.433 million
Cost of Debt = Interest Expense / Total Debt
Interest Expense = (Earnings Before Tax - Taxation) * (1 - TC)
Interest Expense = ($20.387 million - $1.898 million) * (1 - 0.099)
Interest Expense = $18.489 million * 0.901
Interest Expense = $16.673 million
Cost of Debt = $16.673 million / $34.433 million
Cost of Debt = 0.4838 or 48.38%
Part 2: Cost of Equity and CAPM Components
To determine the cost of equity, we need to know the beta (βE), historical market return (iM), and risk-free rate (if).
Beta, βE: Assume 1.0
Historical Market Return, iM: Assume 9%
Risk-Free Rate, if: Assume 2%
Cost of Equity, iE = Risk-Free Rate + (Beta * (Historical Market Return - Risk-Free Rate))
Cost of Equity, iE = 2% + (1.0 * (9% - 2%))
Cost of Equity, iE = 2% + 7%
Cost of Equity, iE = 9%
Part 3: Weighted Average Cost of Capital
To calculate the weighted average cost of capital (WACC), we need to determine D/V and E/V (debt-to-value and equity-to-value ratios).
Total Debt Value = Total Debt = $34.433 million
Total Equity Value = Total Firm Value - Total Debt Value
Assuming Total Firm Value is the sum of Total Debt and Total Equity, we need to find Total Firm Value.
Total Firm Value = Total Debt + Total Equity Value
Total Firm Value = $34.433 million + Total Equity Value
To calculate D/V and E/V:
D/V = Total Debt Value / Total Firm Value
E/V = Total Equity Value / Total Firm Value
Now, we can calculate D/V and E/V:
D/V = $34.433 million / ($34.433 million + Total Equity Value)
E/V = Total Equity Value / ($34.433 million + Total Equity Value)
Suppose the company embarked on a recapitalization with 50% D/V and 50% E/V.
Growth Rate (SGR), we need to know the return on equity (ROE) and the retention ratio (b).
Sustainable Growth Rate = (ROE * b) / [1 - (ROE * b)]
Unfortunately, the data for ROE and the retention ratio (b) is not provided. Please provide the necessary information to calculate the SGR for the selected company.
Without the necessary information, it is not possible to determine the influence of the Sustainable Growth Rate on the
Learn more about Income here:
https://brainly.com/question/14732695
#SPJ11
In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2019, the winner’s check was $1,410,000.
b. If the winner’s prize increases at the same rate, what will it be in 2051? (Do not round intermediate calculations and round your answer to 2 decimal places)
If the winner's prize increases at the same rate, it would be approximately $45,022.46 in 2051.
To calculate the winner's prize in 2051, we need to determine the rate of increase over the years and apply it to the starting prize in 1895. We can use the formula for compound interest to calculate the future value:
Future Value = Present Value * (1 + Rate)^Time
The time span between 1895 and 2051 is 2051 - 1895 = 156 years. Let's calculate the rate of increase:
Rate = ((Ending Value / Starting Value)^(1 / Time)) - 1
Rate = (($1,410,000 / $150)^(1 / 156)) - 1
Rate ≈ 0.0781 (rounded to four decimal places)
Now, we can calculate the future value for 2051:
Future Value = $150 * (1 + 0.0781)^156
Future Value ≈ $45,022.46 (rounded to the nearest cent)
Learn more about winner's prize here:
https://brainly.com/question/32990231
#SPJ11
A reclaimed T-shirt scarf sells for $43 and costs $24. Find the markup percent. Round to the nearest tenth of a percent. For 75.1% answer 75.1.
Rounded to the nearest tenth of a percent, the markup percent is 79.2%. calculate the difference between the selling price and the cost, and then express that difference as a percentage of the cost.
Markup percent is a measure of the difference between the selling price of a product or service and its cost, expressed as a percentage of the cost. It indicates the percentage increase or markup added to the cost in order to arrive at the selling price.
Markup percent is calculated using the following formula:
Markup percent = (Markup ÷ Cost) × 100
Markup = Selling Price - Cost
Markup = $43 - $24 = $19
Markup percent = (Markup ÷Cost) × 100
Markup percent = ($19 / $24) * 100 ≈ 79.2%
Rounded to the nearest tenth of a percent, the markup percent is 79.2%.
learn more about cost here :
https://brainly.com/question/14566816
#SPJ11
Put into the correct order the following process of determine the market value of commercial property using an income capitalisation method.
Apply appropriate capitalisation rate
Determine net operating income
Estimate rental income
Adjust for any vacancy
Calculate gross operating income
Subtract operating and statutory costs
Commercial property market valuation is a key operation that requires a systematic and informed approach. One method for evaluating commercial property is the income capitalization method, which determines the present value of a property by dividing its net operating income (NOI) by the required capitalization rate. The following is the right sequence of the income capitalization approach:
Estimate the property's annual rental income.
Determine the net operating income (NOI) of the property. The NOI is calculated by subtracting all expenses associated with owning and operating the property from the property's gross income. The NOI serves as the basis for determining the property's market value.
Adjust the NOI for any loss in rental income caused by property vacancy. The adjusted NOI is used to determine the property's market value.
Calculate the property's gross operating income (GOI) by adding up all of its operating expenses and statutory costs.
Subtract the property's total operating and statutory expenses from its gross operating income. This will result in the NOI.
Apply the appropriate capitalization rate to the NOI to determine the commercial property's market value. The capitalization rate reflects the yield that investors expect from the investment, and it is based on the current market interest rates and the risk of the investment.
Based on the income capitalization approach, the correct sequence for determining the market value of the commercial property is:
Estimate rental income
Determine net operating income (NOI)
Adjust for any vacancy
Calculate gross operating income (GOI)
Subtract operating and statutory costs
Apply appropriate capitalization rate to NOI
Hence, the correct order is as follows: Estimate rental income, Determine net operating income (NOI), Adjust for any vacancy, Calculate gross operating income (GOI), Subtract operating and statutory costs, and Apply appropriate capitalization rate to NOI.
Learn more about net operating income (NOI): https://brainly.com/question/28150688
#SPJ11
Discuss the relationship between corporate human resources structure and operations at the plant level. what impact, if any, did that relationship have on the situation described by newcombe?
At the plant level, the corporate HR structure has very little. The corporate human resources was successful in developing an HR framework, but it didn't address the requirements of the plants' .
Newcombe's scenario was significantly impacted by this relationship. Bud Johnson had to ask his plant supervisor, Larry Braxton, for a raise and promotion because the plant did not have a human resources department. Additionally, this is typical of plant supervisors violating company policy.
It is unclear whether Johnson was informed of the company's benefit plans by plant supervisor Braxton, despite the fact that the company has established such plans. This has hurt the company's relationship with Johnson, who was a responsible and quick learner. Even though he wasn't happy, he helped out with the job of the equipment operator, which was not in his job description. This demonstrates his dedication to his work.
Learn more about human resources:
brainly.com/question/29870916
#SPJ4
Imagine you work for a regional medical group. You and several colleagues have just wrapped up an evaluation of Suppliers A, B, C, and D for the XYZ Products category. Your analysis examined historical costs by facility, patient and physician satisfaction, and cost projections going forward. You are in the process of creating a presentation deck with this information. QUESTION 1: There are a lot of different groups of people (at your company and potentially beyond) who may be interested in this data. Who can you think of who is apt to care how the various suppliers compare when it comes to historical usage, patient and physician satisfaction, and cost projections? Cast as wide of a net as possible. How many different audiences can you come up with who might be interested in this information? List them! QUESTION 2: Let's get more specific. The data shows that historical usage has varied a lot by medical facility, with some using primarily Supplier B and others using primarily Supplier D (and only limited historical use of Suppliers A and C). You've also found that satisfaction is highest across the board for Supplier B. Which potential audiences might care about this? Again, list them. Does this make your list of potential audiences longer or shorter than it was originally? Did you add any additional potential audiences in light of this new information? QUESTION 3: Time to take it a step further. You've analyzed all of the data and realized there are significant cost savings in going with a single or dual supplier contract. However, either of these will mean changes for some medical centers relative to their historical supplier usage. You need a decision on how to best move forward strategically in this space. Now who might your audience be? Who cares about this data? List your primary audiences. If you had to narrow to a specific decision maker, who would that be?
The main potential audiences for the data on supplier comparison in terms of historical usage, patient and physician satisfaction, and cost projections include management and executives, physicians and healthcare providers, finance and procurement teams, patient advocacy groups, regulatory bodies or government agencies, facility managers and administrators, and quality control and improvement teams.
The primary audience for the decision-making process would be senior management, with the CFO or COO as the specific decision-maker.
QUESTION 1: There are several groups of people who may be interested in the data comparing suppliers for the XYZ Products category. These potential audiences include:
1. Management and executives within the regional medical group: They would be interested in understanding the overall performance and cost projections of the different suppliers to make informed decisions about supplier contracts and strategic planning.
2. Physicians and healthcare providers: They would be interested in the data to evaluate how the different suppliers have performed in terms of patient satisfaction and to ensure they are providing the best possible care to their patients.
3. Finance and procurement teams: They would be interested in the historical costs and cost projections of the suppliers to assess the financial implications and potential cost savings associated with different supplier contracts.
4. Patient advocacy groups: They may be interested in the data to ensure that the chosen suppliers prioritize patient satisfaction and deliver high-quality products.
5. Regulatory bodies or government agencies: They may have an interest in monitoring the performance and costs of suppliers to ensure compliance with regulations and maintain quality standards.
QUESTION 2: In addition to the previously mentioned potential audiences, the specific findings regarding historical usage and satisfaction levels may also be of interest to:
6. Facility managers and administrators: They would be interested in understanding how different suppliers have been utilized historically at various medical facilities under their jurisdiction. This information can help them optimize supplier contracts and ensure efficient supply management.
7. Quality control and improvement teams: They would be interested in the data on patient and physician satisfaction levels to identify potential areas for improvement and to ensure that Supplier B's high satisfaction levels are maintained.
The new information regarding historical usage and satisfaction levels does not necessarily make the list longer, but it provides additional insights that can be valuable to the existing potential audiences.
QUESTION 3: Now, the primary audience for the data on cost savings and the decision-making process would include:
8. Senior management and executives: They would be the primary decision-makers responsible for strategically moving forward in the supplier contract negotiations. They need this data to evaluate the potential cost savings and trade-offs associated with a single or dual supplier contract.
If we had to narrow down to a specific decision-maker, it would be:
9. The Chief Financial Officer (CFO) or the Chief Operating Officer (COO): These individuals would have the authority to make the final decision on the best way to move forward strategically in the space based on the data provided.
Learn more about Quality control: https://brainly.com/question/33040812
#SPJ11
Identify, and briefly discuss, the following three things about MacBook pro laptops
• The BENEFIT/NEED the new product meets (the benefit to the customer for which the customer sees a need or desire
• The FORM of the new product (the physical product the company created). Describe the product well enough that someone could envision it without seeing it
• The TECHNOLOGY (the source by which the form is attained). What technology did the company use to create/develop the product
1. The benefit/need: The MacBook Pro meets the need for a powerful and versatile laptop that caters to the demands of professionals and creative individuals, offering high performance, advanced features, and a seamless user experience.
2. The form: The MacBook Pro is a sleek and lightweight laptop with a unibody aluminum design, featuring a vibrant Retina display, a full-size keyboard with a Touch Bar, and a large trackpad, providing a visually appealing and user-friendly interface. The technology: Apple utilizes cutting-edge technology in the MacBook Pro, incorporating powerful processors, advanced graphics capabilities, SSD storage, Thunderbolt 3 connectivity, and the macOS operating system, to deliver exceptional performance, enhanced productivity, and seamless integration with other Apple devices.
Learn more about benefit here:
https://brainly.com/question/1913628
#SPJ11
Human Resource Management: Recruitment and Selection
Which of the following statements regarding the development of recruiting strategies is false?
a.
Organizations need to be careful about over-promoting their brand because repetition of a message tends to decrease its persuasive appeal.
b.
Recruiting information coming from employees is seen as especially credible.
c.
Recruiting advertisements in publications with large circulations are usually more expensive.
d.
The most effective messages allow job applicants to find more information.
The false statement regarding the development of recruiting strategies is option a. Organizations need to be careful about over-promoting their brand because repetition of a message tends to decrease its persuasive appeal.
This statement is false because repetition of a message actually increases its persuasive appeal. When organizations consistently promote their brand, it helps to create awareness and recognition among potential job applicants. This can make the organization more attractive and increase the likelihood of attracting qualified candidates.
Organizations should focus on effectively promoting their brand and communicating their value proposition to potential job applicants.
To know more about keyword visit:
https://brainly.com/question/30352889
#SPJ11
Short Bakers makes baked goods for catered events and for sale at local grocery stores. The owner of Short Bakers believes that a new type of breakfast pastry would sell well for a price of $9.00 per dozen. Short estimates unit materials costs to be $4.90 for the pastry, and overhead costs would average $1.20 per dozen. The local wage rate for direct labor is $31.00 per hour. Short has a goal of earning an operating profit of 20.00 percent of production costs for each of its products. Required: What direct labor-hour input (hours per dozen) could Short Bakers allow for the new pastry and still achieve its profit goal? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
To determine the direct labor-hour input Short Bakers could allow for the new pastry while achieving its profit goal, we need to calculate the production costs and the desired operating profit.
Given data:
Price per dozen = $9.00
Unit materials costs = $4.90 per pastry
Overhead costs = $1.20 per dozen
Operating profit goal = 20% of production costs
Let's calculate the production costs for each pastry:
Production costs per dozen = Unit materials costs + Overhead costs
Production costs per dozen = $4.90 + $1.20
Production costs per dozen = $6.10
To calculate the desired operating profit, we'll multiply the production costs per dozen by the profit goal percentage:
Desired operating profit per dozen = Production costs per dozen * Operating profit goal
Desired operating profit per dozen = $6.10 * 20% = $1.22
Now, we can calculate the direct labor cost per dozen by subtracting the materials cost and overhead costs from the selling price:
Direct labor cost per dozen = Selling price - Materials costs - Overhead costs - Desired operating profit per dozen
Direct labor cost per dozen = $9.00 - $4.90 - $1.20 - $1.22
Direct labor cost per dozen = $1.68
Next, we need to calculate the labor cost per hour. Given that the wage rate for direct labor is $31.00 per hour:
Labor cost per hour = Direct labor cost per dozen / Labor hours per dozen
We'll solve for the labor hours per dozen:
Labor hours per dozen = Direct labor cost per dozen / Labor cost per hour
Labor hours per dozen = $1.68 / $31.00
Labor hours per dozen ≈ 0.0542
Therefore, Short Bakers could allow approximately 0.0542 direct labor hours per dozen for the new pastry and still achieve its profit goal
Know more about production costs here
https://brainly.com/question/32655919#
#SPJ11
Explain the origins of the Federal system in the United States, and describe what powers are specifically given to the states, what powers are specifically given to the federal, and what powers are shared by both
The Federal system in the United States was designed to strike a balance between a strong central government and the rights and autonomy of individual states.
Powers given to the states are known as reserved powers.
Powers given to the federal government are known as delegated powers.
Powers that are shared by both the federal government and the states, known as concurrent powers.
The Federal system in the United States was established as a way to balance power between the national government and the state governments. It is based on the idea of federalism, which is the division of powers between these two levels of government.
The origins of the Federal system can be traced back to the writing of the United States Constitution in 1787. The founding fathers recognized the need for a strong national government to deal with national issues, while also acknowledging the importance of preserving the sovereignty and autonomy of the individual states.
To achieve this balance, the Constitution specifically outlines the powers that are given to the states, the powers that are given to the federal government, and the powers that are shared by both.
Powers given to the states are known as reserved powers. These include:
1. Regulating intrastate commerce (trade within a state).
2. Establishing and maintaining schools.
3. Conducting elections.
4. Regulating marriage and divorce laws.
5. Providing for public health and safety.
6. Regulating land use and property laws.
Powers given to the federal government are known as delegated powers. These include:
1. Regulating interstate commerce (trade between states).
2. Declaring war and maintaining a military.
3. Coining money and regulating currency.
4. Establishing post offices and post roads.
5. Negotiating treaties with foreign nations.
6. Regulating immigration and naturalization.
There are also powers that are shared by both the federal government and the states, known as concurrent powers. These include:
1. Collecting taxes.
2. Enforcing laws.
3. Establishing and maintaining courts.
4. Protecting public health and safety.
5. Borrowing money.
6. Building and maintaining infrastructure.
It's important to note that the Constitution also includes the Supremacy Clause, which states that federal law is the supreme law of the land, meaning that if there is a conflict between federal and state laws, the federal law prevails.
Learn more about Federal system from the given link
https://brainly.com/question/695831
#SPJ11
Sales managers require management training because: a) many newly promoted sales managers have never had any managerial training b) many sales managers become top executives in their companies. c) they lack a long-run customer relationship orientation d) all of the above are reasons why sales managers need training.
all of the above reasons – lack of managerial training, potential for advancement, and customer relationship orientation – are why sales managers require management training. The correct answer is d).
Sales managers require management training for several reasons.
First, many newly promoted sales managers have never received any formal managerial training. This lack of training can hinder their ability to effectively lead and manage their teams.
Second, sales managers often have the potential to become top executives in their companies. It is important for them to have the necessary management skills and knowledge to handle higher-level responsibilities.
Lastly, sales managers need training because they may lack a long-run customer relationship orientation. Building and maintaining strong customer relationships is crucial for driving sales and ensuring customer satisfaction.
To know more about managerial visit:
https://brainly.com/question/31978707
#SPJ11
How long will it take to double your savings if you earn 6.9 percent interest, compounded annually? Multiple Choice 11.39 years 1117 years 12.02 years 10.39 years 11.89 years
Using a calculator, we find that t is approximately 10.39 years. The correct answer is: 10.39 years.
To calculate the time it will take to double your savings, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = Final amount (2P, since we want to double the initial amount)
P = Principal amount (initial savings)
r = Annual interest rate (6.9%)
n = Number of times interest is compounded per year (annually)
t = Time in years
We can substitute these values into the formula and solve for t:
2P = P(1 + 0.069/1)^(1*t)
Simplifying the equation:
2 = (1 + 0.069)^t
Taking the logarithm of both sides:
log(2) = log(1 + 0.069)^t
Using the logarithmic property:
log(2) = t * log(1 + 0.069)
Solving for t:
t = log(2) / log(1.069)
Using a calculator, we find that t is approximately 10.39 years.
Therefore, the correct answer is: 10.39 years.
Learn more about years
https://brainly.com/question/32509293
#SPJ11
What is the standard deviation of a portfolio that is invested 40% in stock Q and 60% in stock R ? A. 0.7% B. 1.4% C. 2.6% D. 6.8% E. 8.1%
The standard deviation of a portfolio that is invested 40% in stock Q and 60% in stock R can be calculated using the weighted average of the individual standard deviations of the stocks.
Assuming the standard deviation of stock Q is σQ and the standard deviation of stock R is σR, we can calculate the standard deviation of the portfolio using the following formula:
Portfolio Standard Deviation = √[(Weight Q * Standard Deviation Q)^2 + (Weight R * Standard Deviation R)^2 + 2 * (Weight Q * Standard Deviation Q) * (Weight R * Standard Deviation R) * Correlation QR]
However, the question does not provide the individual standard deviations or the correlation between stock Q and stock R. Without this information, we cannot calculate the exact standard deviation of the portfolio.
Therefore, we cannot determine the correct answer option (A, B, C, D, or E) without the necessary data. The answer depends on the specific values of the standard deviations and the correlation between the stocks.
In summary, the standard deviation of the portfolio cannot be determined without the individual standard deviations of the stocks and the correlation between them.
Learn more about standard deviation from the given link https://brainly.com/question/13498201
#SPJ11
Which condition below would typically result in an auditor NOT accepting an engagement? A. the client hires a new CEO B. the client felt that the predecessor auditor charged them too much C. the client dismissed the predecessor auditor because they needed an auditor who is more familiar with the client's unique accounting needs D. the auditor becomes aware of information suggesting client's CEO lacks integrity Client's management has a reputation for making aggressive earnings-meeting goals, is very focused on meeting analyst expectations, likes to consistently report positive earnings growth and is unduly focused on maximizing stock price. This suggests that this client is too risky. True False
The option which would typically result in an auditor NOT accepting an engagement is D: the auditor becomes aware of information suggesting the client's CEO lacks integrity.
An auditor not accepting an engagement means that the auditor has decided not to accept the responsibility to audit the financial statements of the client. There could be various reasons why an auditor may refuse to accept an engagement.
However, to determine whether to accept an engagement, the auditor considers several factors.
Some of the factors include assessing whether the client poses an unacceptable level of risk, whether the auditor has the necessary expertise to perform the audit, and whether the auditor can maintain independence while conducting the audit.
Based on the provided options, option D would typically result in an auditor not accepting an engagement.
When an auditor becomes aware of information suggesting the client's CEO lacks integrity, it may indicate a high level of risk associated with auditing the client's financial statements.
Therefore, the auditor may refuse to accept the engagement to avoid any association with a company that may not have sound business practices.
The information provided about the client's management having a reputation for making aggressive earnings-meeting goals, being focused on meeting analyst expectations, consistently reporting positive earnings growth, and being unduly focused on maximizing stock price suggests that the client may be too risky.
However, this information does not directly relate to the auditor's decision to accept or refuse an engagement. Therefore, the statement about the client being too risky is not relevant to the question and cannot be determined based on the given options.
To learn more about auditor, refer below:
https://brainly.com/question/32632603
#SPJ11
Due to the global Corona virus pandemic, many businesses have been forced to temporarily reduce employees’ wages to avoid mass layoffs. Pupkewitz Toyota like any other business has been also affected by the Corona virus pandemic. Therefore, its board of governance has decided to temporarily reduce the employees’ wages by 6% from next month until further notice. As the general manager of this company, write a memorandum to all the employees to inform them about this new development. In your memorandum you should:
· Include a clear, compressive background
· Explain how the company will benefit from the temporary salary reduction program
· Ask staff members to indicate whether they are willing to participate in the temporary salary reduction or not.
· Explain what will happen if the majority of employees is not willing to participate in the temporary reduction program.
To: All Pupkewitz Toyota Employees
From: [Your Name], General Manager
Date: [Date]
Subject: Temporary Salary Reduction Program
Dear Team,
I hope this memorandum finds you all in good health and high spirits.
global Corona virus pandemic has significantly impacted business worldwide, including our very own Pupkewitz Toyota. In light of the challenges we face, I would like to share an important decision made by the board of governance.
Background:
Due to the ongoing pandemic and its adverse effects on our operations, we have been compelled to implement temporary measures to ensure the sustainability of our company. Effective from next month until further notice, there will be a temporary reduction of employees' wages by 6%.
Benefits of the Temporary Salary Reduction Program:
This temporary salary reduction program is an essential step to mitigate the adverse impact of the pandemic on our organization. By implementing this measure, we aim to:
1. Retain Jobs: By reducing wages, we can avoid mass layoffs and ensure job security for all employees during these challenging times.
2. Maintain Business Continuity: The temporary salary reduction program will help us maintain our business operations and continue providing exceptional service to our valued customers.
Request for Participation:
We understand the importance of open communication and collaboration with our dedicated team. Hence, we kindly request you to indicate your willingness to participate in the temporary salary reduction program. Your response will help us plan and execute this program effectively.
Please access the enclosed form and submit your decision by [deadline]. Your individual choices will be treated confidentially.
Consequences of Non-Participation:
While we strongly encourage all employees to participate in this program, we understand that personal circumstances may vary. However, if a majority of employees choose not to participate, we may be compelled to explore alternative measures, including potential staff reductions or other cost-cutting measures, to ensure the overall stability of the company.
We assure you that we will continuously monitor the situation and strive to reinstate normal salaries as soon as the circumstances allow.
We appreciate your unwavering dedication and understanding during these challenging times. Together, we can overcome the hurdles posed by the pandemic and emerge stronger than ever.
If you have any questions or concerns, please do not hesitate to reach out to your respective managers or the Human Resources department.
Thank you for your cooperation.
Best regards,
[Your Name]
General Manager
Learn more about business here:
https://brainly.com/question/15826604
#SPJ11
Hyperbolic Discounting implies that we are impatient and prefer immediate rewards in the short-term. However, when we frame the setting into the future, we can be patient and wait for better rewards.
Group of answer choices
True
False
The statement" Hyperbolic discounting implies a preference for immediate rewards in the short-term but a greater willingness to wait for better rewards when framed in the future." is True.
Hyperbolic discounting refers to a psychological phenomenon where individuals show a preference for immediate rewards over larger delayed rewards, even when the delayed rewards are objectively more beneficial in the long run. This bias towards immediate gratification can lead to suboptimal decision-making, as individuals tend to undervalue future rewards and prioritize immediate gains.
When a decision is framed in the present moment, individuals tend to prioritize immediate rewards due to the strong desire for instant gratification. This impulsive behavior can result in poor financial choices, such as excessive spending or taking on high-interest debt. However, when the same decision is framed in the future, individuals may exhibit greater patience and prioritize long-term benefits.
For example, someone may choose to indulge in unhealthy food in the present moment despite knowing the long-term health consequences. However, when considering the potential negative health outcomes in the future, they may be more willing to make healthier choices and prioritize their long-term well-being.
Hyperbolic discounting is a cognitive bias that highlights the discrepancy between our short-term impatience and our ability to be patient and make better decisions when considering the future. Recognizing this bias can help individuals make more informed choices and implement strategies, such as setting long-term goals and creating incentives for delayed rewards, to overcome the impulse for immediate gratification and achieve better long-term outcomes.
To learn more about Hyperbolic discounting refer here:
https://brainly.com/question/33727919
#SPJ11
Walsh Company ma. ctures and sells one product. Ihe tollowing intormation pertalns to each of the company's lirst two years of operations: During its first year of operations, Walsh produced 50,000 units and sold 40,000 unts, During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $5 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2 3. Reconcite the difference between variable costing and absorption costing net operating income in Year 1 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the 4 " product cost for Year 1 and Year 2. b. Prepare an incu... statement for Year 1 and Year 2. 3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1. Complete this que by entering your answers in the tabs below. Assume the company uses variable costing. Compute the unit product cost for year 1 and year 2 . Assume the company uses variahle costing. Propare-an income statement for Year 1 and Year 2. Assume the company uses absorption costing. Compute the unit product cost for Year 1 and Year 2. Note: Round your answer to 2 decimal places. Assume the company uses absorption costing. Prepare an income statement for Year 1 and Year 2. Note: Round your intermedlate calculations to 2 decimal places. Reconcile the difference between variable costing and absorption costing net operating income in Year 1 . Note: Enter any losses or deductions as a negative value.
The income statement and the variable expenses based on the question requirements are given below:
The Variable Costing Income StatementYear 1 Year 2
Sales $200,000
Variable expenses:
Direct materials | $140,000 | $180,000
Direct labor | $60,000 | $80,000
Variable manufacturing overhead | $20,000 | $20,000
Variable selling and administrative | $10,000 | $10,000 Total variable expenses | $230,000 | $270,000 Contribution margin | $70,000 | $80,000 Fixed expenses:
Fixed manufacturing overhead | $100,000 | $100,000
Fixed selling and administrative | $50,000 | $50,000 Total fixed expenses | $150,000 | $150,000 Net operating income | $(80,000) | $(70,000)
Unit Product Cost
Year 1 Year 2
Direct materials $2.80
Direct labor $1.20
Variable manufacturing overhead $0.40
Variable selling and administrative $0.25
Unit product cost $4.65
Computation
The unit product cost is calculated by adding the variable costs per unit. The variable costs per unit are the same for both years.
Year 1 Year 2
Variable costs per unit $2.80 + $1.20 + $0.40 + $0.25
Unit product cost $4.65
The income statement for both years shows that the company has a net operating loss. The loss is larger in Year 2 because the company produced more units than it sold, resulting in higher variable expenses.
Read more about income statement here:
https://brainly.com/question/28936505
#SPJ4
Which of the following expenditures associated with the production of a new high performance Saloon Car will not be included in GDP?
A. the purchase of new tires to be installed on the new vehicle
B. the purchase of used welding robots to assemble the vehicle
C. the purchase of new machine tools to manufacture the engine
D. none of the above
The purchase of used welding robots to assemble the vehicle is the correct option.
Explanation: Gross Domestic Product (GDP) is the monetary value of all goods and services produced within a country's borders during a given time period. The following is included in GDP:
The country's domestic production.
Exports in the country are included in the production.GDP does not include financial transactions that do not involve the production of products and services. This would include the purchasing of stocks, bonds, and secondhand goods or services. The only exception is that used goods' selling price will be added to GDP if it includes the service of the seller. So, the expenditure that is not included in the GDP is the purchase of used welding robots to assemble the vehicle.
To know more about production, visit:
https://brainly.com/question/30333196
#SPJ11
Dwight transferred assets that had appreciated in value to Dunder-Mifflin Partnership in 2020 in exchange for an ownership interest in the partnership. If, later in 2020, Dwight pulled cash out of the partnership, what doctrine might the IRS use in an audit to challenge these transactions?
Group of answer choices
Economic substance doctrine
Substance over form doctrine
Step transaction doctrine
Business purpose doctrine
The doctrine that the IRS may use in an audit to challenge the transactions where Dwight transferred appreciated assets to Dunder-Mifflin Partnership in exchange for an ownership interest in the partnership and later pulled cash out of the partnership in 2020 is "Substance over form doctrine.
"This doctrine states that the IRS has the authority to reclassify a transaction when it believes that the taxpayers have entered into a transaction that lacks economic substance.
This is done when a taxpayer relies on the literal interpretation of the tax laws, instead of its substance.
The IRS is required to examine the substance of a transaction and not just its form to determine if it was established solely for tax purposes or had an underlying business purpose.
For instance, the Substance over form doctrine could be applied if the transfer of appreciated assets by Dwight to Dunder-Mifflin Partnership were tax-motivated, lacking an economic or legitimate business purpose, to justify their inclusion in the partnership.
In summary, the doctrine that the IRS might use in an audit to challenge the transactions where Dwight transferred appreciated assets to Dunder-Mifflin Partnership in exchange for an ownership interest in the partnership and later pulled cash out of the partnership in 2020 is Substance over form doctrine.
Learn more about Dwight transferred here,
https://brainly.com/question/13782340
#SPJ11
Assume Jacob is 30 years old and has 35 more years to work. Currently he doesn’t have any savings. His annual income in real terms is $65,000. Assuming a life expectancy of 85 years, real interest rate throughout of 5% and desired retirement income of 70% of pre-retirement income, prepare a life time consumption-savings schedule for Jacob. Specifically calculate the following and then show excel schedule showing lifetime plan. a) Annual savings and annual consumptions during the 35 working years, and Accumulated wealth at the end of the working years (beginning of retirement years). b) If Jacob plans to take a vacation at the end of his age 80 and it costs additional $20,000, and he wants to leave $30,000 for charity at the end of his life. How would these affect annual savings and consumptions? Re-prepare the schedule. c) How would the financial plan change if Jacob already has savings of $15,000 today?
a)Accumulated wealth at the end of the working years: Sum of all annual savings multiplied by the real interest rate for each year.b) If Jacob plans to take a vacation costing $20,000 at the end of his age 80 and leave $30,000 for charity at the end of his life. c) If Jacob already has savings of $15,000 today, we can subtract this amount from the accumulated wealth at the end of the working years.
To calculate Jacob's lifetime consumption-savings schedule, we will use the following information:
Age: 30 years
Years to work: 35 years
Real income: $65,000
Life expectancy: 85 years
Real interest rate: 5%
Desired retirement income: 70% of pre-retirement income
a) Without considering additional expenses or existing savings, we can calculate Jacob's annual savings and consumption during the 35 working years:
Annual savings: (Pre-retirement income - Desired retirement income) / (1 + Real interest rate)
[tex]Annual savings = ($65,000 - 0.70 * $65,000) / (1 + 0.05)[/tex]
Annual consumption: Pre-retirement income - Annual savings
Accumulated wealth at the end of the working years: Sum of all annual savings multiplied by the real interest rate for each year.
b) If Jacob plans to take a vacation costing $20,000 at the end of his age 80 and leave $30,000 for charity at the end of his life, we need to adjust the annual savings and consumptions accordingly. We subtract these additional expenses from the annual savings and adjust the accumulated wealth calculation.
c) If Jacob already has savings of $15,000 today, we can subtract this amount from the accumulated wealth at the end of the working years.
To provide a detailed lifetime consumption-savings schedule, including all calculations and adjustments, it would be best to create an Excel spreadsheet or use financial planning software that can handle the complex calculations involved.
By inputting the necessary variables and formulas, you can generate a comprehensive schedule that outlines Jacob's annual savings, consumptions, and accumulated wealth over the course of his working years and retirement.
Learn more about annual savings from below link
https://brainly.com/question/29244647
#SPJ11
Explain under which conditions an increase in the dividend payment can be interpreted as a signal of?
If the dividends payment increases then it indicates the positive indication where the company has the chance to stay for a long period of time and also there are chances for the company to grow.
The dividend given in a company is the part of the profits that is given to the stake holders, here stake holders are the persons who directly and indirectly part of the company and has the right over the part of shares they hold in the firm. If the dividend payment increases then it means that there is excess in the surplus or profits of the company. So it is the right of the stake holders to get the extra dividend in the company.
The sign of increase in the payment dividend is positive direction and it must be maintained for a long term that would help the company to earn good amount of profit and also to pay off the debts in the company. It also enriches the confidence of the employees and investors to invest in the company for the long period of time that helps in balance of financial position.
To know more about the increase in the dividend payments of the company follow the link below:
https://brainly.com/question/27005566
#SPJ4
On Coral Island in 2019, the labor force is 12,000, the unemployment rate is 10 percent, and the labor force participation rate is 60 percent.
During 2020, the working-age population increased by 1,000, 200 unemployed people found jobs, but the labor force did not change.
Calculate the working-age population, the unemployment rate, and the labor force participation rate at the end of 2020.
At the end of 2020, the working-age population is _____
Answer correctly and explain it properly within 40 mins will give you positive feedback.
Add introduction part also.
At the end of 2020, the working-age population is 20,000,
First, let's calculate the working-age population at the end of 2020. We know that the labour force did not change, so the working-age population in 2020 would be the same as in 2019. The working-age population in 2019 was the sum of the employed and unemployed individuals in the labour force, which is 12,000 divided by the labour force participation rate of 60 per cent.
Therefore, the working-age population at the end of 2020 is 12,000 / 0.6 = 20,000.
Next, let's calculate the unemployment rate at the end of 2020. We started with 10 per cent unemployment in 2019, and 200 unemployed people found jobs in 2020. However, the labour force remained the same. To calculate the unemployment rate, we divide the number of unemployed individuals (which is 10 percent of the labor force in 2019) by the labor force in 2020 (which is still 12,000). Therefore, the unemployment rate at the end of 2020 is 10 per cent * 12,000 / 12,000 = 10 percent.
Finally, let's calculate the labor force participation rate at the end of 2020. The labor force participation rate is the percentage of the working-age population that is in the labour force. Since the labor force did not change from 2019 to 2020, the labor force participation rate remains the same at 60 percent.
Learn more about working-age population
https://brainly.com/question/31037154
#SPJ11
Does hedge fund compensation structure lead to any aggency issues? is so haw can it be resolved?
Agency issues in hedge funds can be resolved by using a combination of performance-based compensation, lock-up periods, and independent oversight.
Yes, hedge fund compensation structure can lead to agency issues. Agency issues arise when there is a conflict of interest between the principal (the hedge fund investors) and the agent (the hedge fund manager). In the case of hedge funds, the agency issue is that the hedge fund manager may have incentives to take on more risk than the investors would like, in order to increase their own compensation.
There are a number of ways to resolve agency issues in hedge funds. One way is to use a performance-based compensation structure, where the hedge fund manager's compensation is linked to the performance of the fund. This can help to align the interests of the manager and the investors, as the manager will be more likely to take on less risk if their compensation is dependent on the fund's performance.
Finally, hedge funds can also use independent oversight, such as a board of directors, to help to monitor the manager's behavior and ensure that they are acting in the best interests of the investors.
To learn more about fund manager: https://brainly.com/question/29951184
#SPJ11
The APR is 10 and compounding is semi-annual, the effective annual rate is
a.
10.25%
b.
10%
c.
5%
d.
Greater than 10% because of semi-annual compounding
e.
Both (a) and (d)
The option (e) Both (a) and (d) is correct because the effective annual rate is indeed 10.25% due to semi-annual compounding, which is greater than the stated APR of 10%.
The effective annual rate (EAR) takes into account the effects of compounding on an annual basis. In this case, the APR is given as 10% and the compounding is semi-annual. To calculate the EAR, we can use the following formula:
EAR = (1 + (APR / n))^n - 1
Where "n" is the number of compounding periods per year. Since compounding is semi-annual, "n" would be 2.
EAR = (1 + (10% / 2))^2 - 1
EAR = (1 + 0.05)^2 - 1
EAR = 1.1025 - 1
EAR = 0.1025
Converting this to a percentage, the effective annual rate is 10.25%.
Therefore, The correct answer is (e) Both (a) and (d).
To learn more about annual rate click here
brainly.com/question/28347040
#SPJ11
the effect of strategic human resource management on organizational performance: the mediating role of high‐performance human resource practices.
High-performance HR practices mediate this relationship by aligning human capital with strategic objectives, enhancing employee motivation, productivity, and satisfaction, leading to improved organizational performance and competitive advantage.
Strategic human resource management (SHRM) plays a significant role in enhancing organizational performance. Research suggests that high-performance human resource (HR) practices mediate the relationship between SHRM and organizational performance.
By implementing high-performance HR practices such as selective hiring, comprehensive training, performance-based rewards, and employee involvement, organizations can effectively align their human capital with strategic objectives.
These practices contribute to increased employee motivation, productivity, and satisfaction, which in turn leads to improved organizational performance. The mediating role of high-performance HR practices highlights their importance in translating strategic HR initiatives into tangible outcomes for organizations.
Overall, SHRM, when coupled with effective high-performance HR practices, can drive organizational success and competitive advantage.
To know more about HR:
https://brainly.com/question/31607133
#SPJ4
--The given question is incomplete, the complete question is given below " Explain the effect of strategic human resource management on organizational performance on mediating the role of high‐performance human resource practices. "--
Blossom Farms purchased real estate for $1,210,000, whichincluded $6,500 in legal fees. It paid $264,000 cash and incurred a mortgage payable for the balance. The real estate included land that was appraised at $481,680, a building apprabed at $735,900, sid fences and other land improvements appraised at $120,420. The building has an estimated useful life of 00 years and a $52.000 residual value. Land improvements have an estimated 15 year useful life and no residual value.
The total cost of the real estate purchased by Blossom Farms was $1,210,000, which includes $6,500 in legal fees. They paid $264,000 in cash and took out a mortgage payable for the remaining balance.
To calculate the cost of the real estate, we add the purchase price ($1,210,000) and the legal fees ($6,500). The cash paid ($264,000) is subtracted from this total to find the balance that was financed through a mortgage payable.
The appraised value of the land is $481,680, the building is $735,900, and the land improvements (fences and other improvements) are valued at $120,420.
The building has an estimated useful life of 20 years and a residual value of $52,000. Land improvements have an estimated useful life of 15 years with no residual value.
These details help in determining the allocation of the purchase price between land, building, and land improvements, and also provide information for depreciation calculations in the future.
To know more about real estate click on below link:
https://brainly.com/question/29124410#
#SPJ11
Which of the following statements correctly describe how the dividend growth model can be validly employed to value a security?
Group of answer choices
The dividend growth model requires a forecast of the next dividend expected to be paid.
More than one of the other statements is correct.
The dividend growth model assumes that the growth rate itself is variable.
The dividend growth model does not require the specification of a discount rate that appropriately reflects the time value of money
The dividend growth model can be validly employed to value a security by requiring a forecast of the next expected dividend.
The correct statement that describes how the dividend growth model can be validly employed to value a security is:
"The dividend growth model requires a forecast of the next dividend expected to be paid."
This model, also known as the Gordon growth model, values a security based on the expected future dividends it will generate. It assumes that the dividend growth rate is constant and does not change over time. Therefore, in order to use this model, it is necessary to estimate the future dividend payments.
The model does not require the specification of a discount rate that reflects the time value of money. This is because the model assumes that the required rate of return is equal to the dividend growth rate.
However, it is important to note that this assumption may not hold in real-world scenarios, and other valuation models may be more appropriate in certain situations.
Learn more about dividend growth model
https://brainly.com/question/29056947
#SPJ11
Case Study-RED model and Problem-Solving Application
You are a new manager of a department. Your employees include George, who has been with the company for 30 years and always has something to complain about, and Helen has been with the company for 25 years and has a lot of expertise. Your sister asked if you would give your nephew a jumpstart in the business world by giving him a job. You reluctantly agreed. Juan, your nephew, well doesn’t quite fit in with your conservative and veteran staff, but you agree and give it a try. Juan recently graduated from the technical college with honors and started with you in the last two months. Your staff has graduated high school with no post-secondary education.
Helen trains Juan on her job of finishing the order, which requires writing the order on a personalized form for the customer and packing the order. Now that Helen has trained Juan on her job, she can go back to the beginning of the process of reviewing the customers’ original order forms and entering them into the computer to be sent to packing, something she loves to do. George handles customer service. Kim retired and no longer enters orders.
The KPI for the process is 30 minutes per order and 95% customer satisfaction. The last 12 months the team has met or exceeded the KPIs.
George comes bursting into your office stating the customer complaints are coming in like crazy since the young kid joined the team. George states that Juan is processing the orders too fast, like in half the time.
What are your first impressions?
What real facts do you have?
What do you think are each person’s interests, concerns, or fears?
What assumptions are you making to arrive at those impressions (RED model)?
a. Can you fix this problem on your own why or why not ?(Vroom-Yetton-Jago Decision Model)
b. What specific approach and two code number from the Vroom model will you use?
First Impressions: Based on George's complaint about Juan processing orders too quickly and the sudden increase in customer complaints, my initial impression is that there may be a correlation between Juan's fast order processing and the increase in customer dissatisfaction.
Real George has been with the company for 30 years and tends to complain.2. Helen has been with the company for 25 years and has expertise in the job.
3. Juan recently graduated with honors and has been working for the last two months.4. The team has met or exceeded the KPIs of 30 minutes per order and 95% customer satisfaction in the past 12 months.
Interests, Concerns, or Fears:
- George: Concerned about the increase in customer complaints and may fear that his role in customer service is being undermined.- Helen: Interested in returning to her preferred task of reviewing and entering orders and may have concerns about the quality of work done by Juan.
- Juan: Newly hired and may be concerned about fitting in with the conservative and veteran staff.
Assumptions (RED model):- Juan's fast order processing may be resulting in errors or mistakes in the orders.
- George's perception that Juan is processing orders too quickly may be influenced by his resistance to change and preference for the traditional way of doing things.
a. Can you fix this problem on your own and why or why not? (Vroom-Yetton-Jago Decision Model):It may be possible to fix this problem on my own, depending on the nature and complexity of the issue. However, it would be more effective to involve the team in the problem-solving process to gain their insights, address their concerns, and ensure better buy-in for any proposed solutions.
b. What specific approach and two code numbers from the Vroom model will you use?
I would use the Vroom-Yetton-Jago Decision Model to involve the team in the decision-making process. The specific approach I would adopt is Consultative (C) decision-making, which involves seeking suggestions and input from individuals before making a decision. The two code numbers that correspond to this approach are:
1. AI (Autocratic Individual): Obtain information from individuals individually, make the decision alone, and then announce it.2. CI (Consultative Individual): Obtain suggestions and information from individuals individually, make the decision alone, and then explain it to the group for their commitment.
By using the Consultative approach, I can gather valuable insights from the team, address their concerns, and collectively arrive at a solution that takes into account their expertise and experiences.
Learn more about Customer here:
https://brainly.com/question/31192428
#SPJ11
EntertainmentNow.com Mark E. Haskins; Kristy Lilly; Liz Smith Overview In this case study, you will use flexible budgeting to perform a variance analysis on the operating results of EnterntainmentNow.com. In addition, this case will require you to perform a calculation to determine the break-even level of sales given the company’s current variable and fixed costs. Requirements After reading the case study, you will complete the four requirements listed in the case study. Responses should be clear and address the questions asked in the requirements. Instructions The assignment should be completed in a word document and excel worksheets that will document the pathway that you used in fulfilling the requirements in the case study. I have prepared an excel file that is located that is included in this assignment to help guide you through the last three requirements in the case study. The first five tabs guide you through requirements 2 and 3 and have instructions at the top of each tab. You can simply reference your excel file when completing this part of the assignment. The last tab will guide you through the calculation of the Company’s break-even sales in units that is part of the fourth requirement in the case study.
Discussions If this was a traditional class, there would also be three discussions that you would have participated in as part of this case study. In place of these in class discussion, there are three discussions related to this case in this module. While these discussions will not be graded independently, the questions are an important part of the assignment and are here to help you think about some of the key points in the case studies. Your participation in these discussions will be considered in the final grade for the case study. The first discussion question is to discuss your understanding of the business and the factors affecting it. This discussion will be most beneficial if done prior to beginning the case study. The final two questions will be best answered after you have completed the four requirements listed in the case study. The first of these two questions refers to your conclusions in the fourth requirement of the case study, which asks you to conclude if the level of sales required for EntertainmentNow.com is realistic or not. In this question, you are asked what else could be done to help the Company break-even.
This discussion may include some additional analysis, please feel free to share any additional analysis that you feel is necessary for the discussion. The second discussion question puts you in the situation where you have to meet with your boss in the morning and asks you to discuss what information you would want to have ready for the meeting and why.
EntertainmentNow.com is an entertainment company owned by Mark E. Haskins, Kristy Lilly, and Liz Smith. The flexible budgeting technique will be used to conduct a variance analysis of the company's operational outcomes. Furthermore, the case will need the calculation of the break-even sales level based on the company's current fixed and variable costs.
Learn more about variance analysis:
brainly.com/question/30624289
#SPJ11
Two business partners jointly own a firm and share equally the revenues. They individually and simultaneously decide how much effort to put into the firm. Let s1 and s2 denote the effort choices of partner 1 and partner 2, respectively. Assume si∈[0,4]. The cost of effort is given by si2 for i∈{1,2}. The firm's revenue is given by 4(s1+s2+bs1s2) where 0≤b≤41. (Note that the parameter b reflects the synergies between the effort levels. b>0 implies that the more one partner works, the more productive the other partner is.) The payoffs for partners 1 and 2 are: u1(s1,s2)=21[4(s1+s2+bs1s2)]−s12u2(s1,s2)=21[4(s1+s2+bs1s2)]−s22 (a) (5 points) Find the best response function of each partner. Draw the best response functions. (b) (5 points) Solve for the Nash equilibrium of this game. (c) (5 points) Now assume that b=−21. (This implies that the effort levels have negative synergies.) Solve for the best response functions in this case and draw them. (d) (5 points) Solve for the Nash equilibrium of this game. (e) (4 points) Now suppose that the partners can write a contract on effort levels. That is, they can determine the effort levels which would maximize the firm's revenue net of total effort costs. Briefly explain whether you would expect the effort levels they choose to specify in the contract to be higher or lower than the effort levels you found in parts (b) and (d).
The best response function of each partner can be found by maximizing their individual payoffs with respect to their effort choices.
To find the best response function for each partner, we need to maximize their individual payoffs with respect to their effort choices. By differentiating the payoff functions and setting the derivatives equal to zero, we can solve for the optimal effort choices. These optimal choices can be plotted to obtain the best response functions, which show the effort choices that maximize each partner's payoff given the other partner's effort choice.
The Nash equilibrium of the game is reached when both partners are playing their best responses, i.e., their effort choices intersect at a point where neither partner has an incentive to unilaterally deviate from their chosen strategy. The intersection point of the best response functions represents the Nash equilibrium, indicating the effort choices that are mutually optimal for both partners.
When the parameter b = -1/2, indicating negative synergies between effort levels, the best response functions will be different from those in part (a). The process of finding the best response functions remains the same by maximizing individual payoffs, but the specific effort choices will be different due to the negative synergies.
The Nash equilibrium of the game with negative synergies can be found by determining the intersection point of the new best response functions. This point represents the effort choices at which neither partner has an incentive to unilaterally deviate, thus forming a stable equilibrium.
When the partners have the ability to write a contract on effort levels, their goal would be to maximize the firm's revenue net of total effort costs. The effort levels specified in the contract would depend on various factors, such as the specific revenue function and cost structure. The contract-specified effort levels may differ from the effort levels found in parts (b) and (d) as they would be optimized to achieve the highest net revenue for the firm, taking into account the interdependencies and synergies between the partners' efforts.
Learn more about Nash equilibrium here:
https://brainly.com/question/28903257
#SPJ11
Founders – 950,000 common shares
Current Management – 300,000 common shares
Series A Investor – 750,000 Series A preferred shares
Total shares – 2,000,000 fully diluted shares
The Series A investor provided $1 million of financing. Current management was hired in connection with the Series A financing; assume their shares were issued immediately prior to the closing of Series A.
Your venture fund plan to provide a $3 million Series B financing and have settled upon a $7 million pre-money valuation. Immediately prior to the Series B financing (in other words, at the sole expense of the other pre-existing shareholders), you want to issue new shares to increase current management’s ownership such that it will constitute 18% of the post-Series B capitalization.
Please calculate the following:
(i) The price per share of the Series A financing.
(ii) The postmoney valuation of the Series A financing.
(iii) The premoney valuation of the Series A financing.
(iv) The postmoney valuation of the Series B financing.
(v) The percentage ownership you will acquire in the Series B financing.
(vi) The percentage ownership that will be retained by the combination of the founders, the current management, and the Series A investor.
(vii) The number of additional shares that should be issued to management.
(viii) The number of shares that you should purchase in the Series B financing.
(ix) The price per share of the Series B financing.
(i) Price per share of Series A financing: $1.33
(ii) Post-money valuation of Series A financing: Not provided
(iii) Pre-money valuation of Series A financing: Not provided
(iv) Post-money valuation of Series B financing: $10 million
(v) Percentage ownership acquired in Series B financing: 30%
(vi) Percentage ownership retained by founders, current management, and Series A investor: 70%
(vii) Number of additional shares issued to management: 24,812 shares
(viii) Number of shares to purchase in Series B financing: 1.67
(ix) Price per share of Series B financing: $1.80
(i) The price per share of the Series A financing is determined by dividing the investment amount by the number of preferred shares issued.
(ii) The post-money valuation of the Series A financing is not provided, so it cannot be calculated with the given information.
(iii) The pre-money valuation of the Series A financing is not provided, so it cannot be calculated with the given information.
(iv) The post-money valuation of the Series B financing is calculated by adding the investment amount to the pre-money valuation.
(v) The percentage ownership acquired in the Series B financing is calculated by dividing your investment amount by the post-money valuation.
(vi) The percentage ownership retained by the combination of founders, current management, and the Series A investor is calculated by subtracting your ownership percentage from 100%.
(vii) The number of additional shares issued to management is calculated by multiplying the post-Series B capitalization by the desired ownership percentage and dividing it by the price per share.
(viii) The number of shares to purchase in the Series B financing is calculated by dividing your desired ownership percentage by the percentage ownership acquired in the Series B financing.
(ix) The price per share of the Series B financing is calculated by dividing the investment amount by the number of shares to be purchased.
Learn more about financing here:
https://brainly.com/question/28320505
#SPJ11
