The amount added to the Cash account is $7,550.
To calculate the rise in the Cash account, we must examine the transactions involving cash inflows.
Transaction 1: I received $850 in cash for services rendered in July. This transaction adds $850 to the Cash account.
Transaction 2: Received $5,200 in cash as a result of the issuing of common stock to shareholders. This transaction adds $5,200 to the Cash account.
Transaction 3: Received $425 from a customer for services rendered in June. This transaction adds $425 to the Cash account.
Transaction 4: Billed clients $3,650 for services done on account in July. This transaction has no effect on the Cash account because it does not include a cash inflow.
Transaction 5: Acquired a promissory note and borrowed $2,500 from the bank. Despite the fact that this transaction includes receiving money, the Cash account is increased indirectly through a liability (a loan) as opposed to directly. As a result, it has no impact on the Cash account.
Transaction 6: I was paid $1,075 by a client for services rendered in August. The Cash account gets boosted by $1,075 after this transaction.
The total amount of money received from transactions 1, 2, 3, and 6 is $850 + $5,200 + $425 + $1,075 = $7,550.
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Cost of capital Makhado Limited has a target capital structure of 60% equity and 40% debt. The before-tax cost of debt is 7.64% and the cost of new equity is 13%. The finance manager is currently considering a project with an expected return of 12% which will be financed from the issue of ordinary shares as all retained income is already budgeted for in more profitable projects. The company recently issued debentures and, as a result, the present capital is more heavily weighted towards debt. The company tax rate is 28%. 2.1 Calculate the weighted average cost of capital by making use of target capital structure. (4 marks) 2.2 Briefly explain (giving reasons) whether the project under consideration should be accepted or not. (5 marks) 2.3 List the three steps used to calculate the weighted average cost of capital. (6 marks) 2.4 Outline the fundamental assumptions of weighted average cost of capital.
2.1 To calculate the weighted average cost of capital (WACC) using the target capital structure, we need to consider the cost of equity and the cost of debt.
First, let's calculate the weighted cost of equity:
Weighted cost of equity = Equity weight × Cost of equity
Equity weight = 60% (target equity weight)
Cost of equity = 13%
Weighted cost of equity = 60% × 13% = 7.8%
Next, let's calculate the weighted cost of debt:
Weighted cost of debt = Debt weight × Cost of debt
Debt weight = 40% (target debt weight)
Cost of debt = 7.64%
Weighted cost of debt = 40% × 7.64% = 3.056%
Now, we can calculate the WACC:
WACC = Weighted cost of equity + Weighted cost of debt
WACC = 7.8% + 3.056% = 10.856%
2.2 The project under consideration should be accepted if the expected return on the project is higher than the WACC. In this case, the expected return on the project is 12%, which is higher than the WACC of 10.856%. Therefore, the project should be accepted as it is expected to generate a return higher than the company's cost of capital.
2.3 The three steps used to calculate the weighted average cost of capital are:
1. Determine the target capital structure: This involves determining the proportion of equity and debt in the company's capital structure based on the company's goals and risk appetite.
2. Calculate the weighted cost of equity and debt: Multiply the equity and debt weights by their respective costs to obtain the weighted cost of equity and debt.
3. Sum the weighted costs: Add the weighted cost of equity and the weighted cost of debt to obtain the weighted average cost of capital.
2.4 The fundamental assumptions of weighted average cost of capital are:
1. The company's capital structure remains constant: The weights assigned to equity and debt are assumed to remain constant over time.
2. The cost of equity is higher than the cost of debt: This assumption reflects the higher risk associated with equity compared to debt.
3. The cost of capital reflects the required return: The WACC represents the minimum return the company needs to earn on its investments to satisfy its investors and creditors.
In summary, the weighted average cost of capital (WACC) is calculated by considering the target capital structure and the cost of equity and debt. The WACC is used as a benchmark to evaluate the acceptability of projects. In this case, the project should be accepted as it is expected to generate a return higher than the company's WACC.
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EP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $635,000 ROA 12% Interest expense $247,650 Accounts payable and accruals $1,000,000 Broward's tax rate is 40%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to two decimal places. BEP % ROE % ROIC %
To calculate Broward Manufacturing's basic earning power (BEP), we need to divide its earnings before interest and taxes (EBIT) by its total assets.
Given that the net income is $635,000 and the interest expense is $247,650, we can calculate EBIT as follows:
EBIT = Net Income + Interest Expense
EBIT = $635,000 + $247,650
EBIT = $882,650
Next, we divide EBIT by total assets to find BEP:
BEP = EBIT / Total Assets
BEP = $882,650 / Total Assets
To calculate Broward's return on equity (ROE), we divide its net income by its common equity:
ROE = Net Income / Common Equity
ROE = $635,000 / (Total Invested Capital * Common Equity Percentage)
ROE = $635,000 / (Total Invested Capital * 0.6)
Lastly, to find the return on invested capital (ROIC), we divide the net income by the total invested capital:
ROIC = Net Income / Total Invested Capital
ROIC = $635,000 / Total Invested Capital
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when the board of directors asked, that the company no longer underwrite the pga event, the ceo knew that the decision which he made with the company’s best interest in mind had lacked foresight.
When the board of directors asked that the company no longer underwrite the PGA event, the CEO realized that the decision he had made, although intended with the company's best interest in mind, lacked foresight.
The CEO understood that the decision to withdraw the company's underwriting support for the PGA event was made based on the information and circumstances available at that time. However, as the situation unfolded and the consequences of the decision became apparent, it became evident that there was a lack of foresight.
The CEO recognized that the company's involvement in the PGA event provided various benefits, such as brand exposure, networking opportunities, and potential business partnerships. By discontinuing the underwriting support, the company risked losing these advantages and potentially damaging its reputation within the industry.
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For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2024.
For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2025.
To calculate the amortization of net loss or gain for pension expense in 2024, determine the beginning balance, identify components, calculate amortization amounts, and sum them up. To determine net loss or gain for 2025, calculate the balance at the beginning of the year.
To calculate the amortization of the net loss or gain that should be included as a component of pension expense for 2024, follow these steps:
1. Determine the beginning balance of the net loss or gain—AOCI (Accumulated Other Comprehensive Income) as of January 1, 2024.
2. Identify any components of the net loss or gain—AOCI that should be amortized over a specific period. This could include items such as prior service costs or actuarial gains/losses.
3. Calculate the amortization amount for each component by dividing the total net loss or gain—AOCI by the expected remaining service years of the plan participants or any other appropriate basis.
4. Add up the amortization amounts for all components to determine the total amortization of the net loss or gain to be included as a component of pension expense for 2024.
To determine the net loss—AOCI or net gain—AOCI as of January 1, 2025, simply calculate the balance of the net loss—AOCI or net gain—AOCI at the beginning of that year. This will include any amortization amounts from the previous year, as well as any new net losses or gains that have occurred during 2024.
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University tuition and fees can be paid by using one of two plans. Early-bird: Pay total amount due 1 year in advance and get a (15)% discount. On-time: Pay total amount due when classes start. The cost of tuition and fees is $(10,000+100xn) per year. (a) How much is paid in the early-bird plan? (b) What is the equivalent amount of the savings compared to the on-time payment at the time that the on-time payment is made?
The equivalent amount of the savings compared to the on-time payment at the time that the on-time payment is made is $1,500.
Given information:
University tuition and fees can be paid by using one of two plans.
Early-bird: Pay total amount due 1 year in advance and get a 15% discount.
On-time: Pay total amount due when classes start.
The cost of tuition and fees is $10,000+100n per year.
(a) Early bird payment = $10,000 + 100n - 15% of ($10,000 + 100n)
= $10,000 + $100n - $1,500 - $15n
= $8,500 + $85n
Therefore, the early bird payment is $8,500 + $85n.(b) Let's say the on-time payment is x.
From the given question, we know that the cost of tuition and fees per year is $10,000 + $100n.
Therefore, x = $10,000 + $100n.
The savings in the early bird plan compared to the on-time payment when the on-time payment is made is equal to the difference between the amount paid by the on-time payment and the amount paid by the early bird payment when n = 0.
Therefore, savings = on-time payment - early bird payment when n = 0
= ($10,000 + $100(0)) - ($8,500 + $85(0))
= $10,000 - $8,500
= $1,500
Therefore, the equivalent amount of the savings compared to the on-time payment at the time that the on-time payment is made is $1,500.
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On June 30, 2020, Sunland Limited issued $4 million of 20-year, 14% bonds for $4,601,844, which provides a yield of 12%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June 30 and December 31.
Part 1
Prepare the journal entries to record the following transactions: (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
1.
The issuance of the bonds on June 30, 2020
2.
The payment of interest and the amortization of the premium on December 31, 2020
3.
The payment of interest and the amortization of the premium on June 30, 2021
4.
The payment of interest and the amortization of the premium on December 31, 2021
Date
Account Titles and Explanation
Debit
Credit
June 30, 2020
Dec. 31, 2020
June 30, 2021
Dec. 31, 2021
Saved work will be auto-submitted on the due date. Auto-submission can take up to 10 minutes.
Part 2
Show the proper presentation for the liability for bonds payable on the December 31, 2020 SFP. (Round answer to 0 decimal places, e.g. 5,275.)
Sunland Limited
Statement of Financial Position (Partial)
For the Quarter Ended December 31, 2020For the Year Ended December 31, 2020December 31, 2020
Current AssetsTotal Non-current LiabilitiesTotal Intangible AssetsTotal AssetsTotal Current LiabilitiesLong-term LiabilitiesIntangible AssetsPartners' EquityTotal Partners' EquityTotal Property, Plant and EquipmentProperty, Plant, and EquipmentTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Liabilities and Partners' EquityTotal LiabilitiesLong-term debt InvestmentsCurrent LiabilitiesTotal Current Assets
$
In part 1, the journal entries for the issuance of bonds, payment of interest, and amortization of the premium are provided. The liability for bonds payable on December 31, 2020, is summarized as $4,000,000 in part 2.
Part 1: The journal entries for the issuance of bonds, payment of interest, and amortization of the premium are provided as follows:
1. June 30, 2020:
- Debit: Cash $4,601,844
- Credit: Bonds Payable $4,000,000, Premium on Bonds Payable $601,844
2. December 31, 2020:
- Debit: Interest Expense $280,303, Premium on Bonds Payable $33,303
- Credit: Cash $313,606
3. June 30, 2021:
- Debit: Interest Expense $280,303, Premium on Bonds Payable $31,742
- Credit: Cash $312,045
4. December 31, 2021:
- Debit: Interest Expense $280,303, Premium on Bonds Payable $30,206
- Credit: Cash $310,509
Part 2:
Liability for bonds payable on December 31, 2020:
The liability for bonds payable is $4,000,000.
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Sheridan Company sold goods with a total selling price of $808,800 during the year. It purchased goods for $393,600 and had beginning inventory of $69,800. A count of its ending inventory determined that goods on hand was $56,300.
What was its cost of goods sold?
The cost of goods sold for Sheridan Company is $407,100.
To calculate the cost of goods sold, we need to subtract the ending inventory from the sum of beginning inventory and purchases.
Beginning Inventory: $69,800
Purchases: $393,600
Ending Inventory: $56,300
To find the cost of goods sold, we can use the formula:
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
Plugging in the values:
Cost of Goods Sold = $69,800 + $393,600 - $56,300
Calculating:
Cost of Goods Sold = $463,400 - $56,300
Cost of Goods Sold = $407,100
Therefore, the cost of goods sold for Sheridan Company is $407,100.
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Monthly measure of the sales of durable and nondurable goods bought by consumers.
Retail sales is a measure of durable and nondurable goods bought by consumers.
What are durable goods nondurable goods and services?Durable goods provide a stream of services or utility over time. In contrast, non-durable goods and services tend to be consumed immediately. In the case of consumers, examples of durable goods are motor vehicles and household furnishings; examples of non-durable goods and services include food and transport services.
Examples of consumer durable goods include vehicles, books, household goods (home appliances, consumer electronics etc.
Nondurable goods or soft goods (consumables) are the opposite of durable goods.
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The complete question is:
What is the sales of durable and nondurable goods bought by consumers called?
give a short simple explanation and give each example;
1. What is international suppliers in global supply chain system?
2. What is offshore manufacturing in global supply chain system?
3. What is fully integrated global supply chain?
4. Explain the benefits of global supply chain management?
1. International suppliers in global supply chain systemInternational suppliers in the global supply chain system refer to suppliers of goods or services that are located in other countries other than the buyer's country.
They provide components and raw materials for manufacturing or finished goods for distribution and resale. Examples of international suppliers include Chinese manufacturers, Indian IT services, and European logistics companies.2. Offshore manufacturing in global supply chain systemOffshore manufacturing in global supply chain system is a business model whereby a company outsources its manufacturing process to a foreign company that specializes in a particular product line.
The foreign company is responsible for producing the product according to the buyer's specifications. Examples of offshore manufacturing include Nike shoes produced in China, iPhones produced in India, and cars produced in Mexico.3. Fully integrated global supply chainA fully integrated global supply chain is a system where all the components, suppliers, and manufacturers are interdependent and interconnected.
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What is the Cost of Equity for this Ma financial company Consolidated statement of profit or loss and other Consolidated statement of financial position comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows F
The Cost of Equity for a financial company can be calculated using various methods, such as the Dividend Discount Model (DDM) or the Capital Asset Pricing Model (CAPM).
Let's focus on the CAPM method, which is commonly used to determine the Cost of Equity. The formula for the CAPM is as follows:Cost of Equity = Risk-Free Rate + Beta * Equity Risk Premium1. Risk-Free Rate: This represents the return on an investment with no risk, typically the yield on government bonds. It serves as a baseline for determining the required return on equity.2. Beta: Beta measures the sensitivity of a company's stock price to the overall market movements. It reflects the systematic risk associated with investing in the company's stock.
3. Equity Risk Premium: This represents the additional return required by investors to compensate for the risk associated with investing in stocks instead of risk-free assets. It is the difference between the expected return on the market and the risk-free rate. To calculate the Cost of Equity, you will need to gather the necessary inputs: Risk-Free Rate: Find the current yield on a government bond, such as a 10-year Treasury bond. Beta: Obtain the beta value for the financial company. This can be found from financial databases or calculated using regression analysis.
Once you have these inputs, you can plug them into the CAPM formula and calculate the Cost of Equity for the financial company.Remember, the Cost of Equity is an estimate and can vary depending on the assumptions made and the data used. It is important to consider multiple sources and validate the inputs to ensure accuracy.
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How is the value of an Annuity with N cash flows starting at time 1 related to the value of two Perpetuities, one whose cash flows start at time 1 and one whose cash flows start at time N+1? WHY?
The value of the annuity is related to the value of two perpetuities by representing the sum of their present values, capturing the cash flows occurring at different time periods within the annuity's time frame.
The value of an annuity with N cash flows starting at time 1 is related to the value of two perpetuities, one whose cash flows start at time 1 and one whose cash flows start at time N+1 in the following way:
Value of the annuity: An annuity represents a series of cash flows occurring at regular intervals over a specific period. The value of an annuity is calculated by discounting each cash flow back to the present value and summing them up.
Value of the perpetuity starting at time 1: A perpetuity represents an infinite series of cash flows that occur at regular intervals starting from time 1. The value of a perpetuity starting at time 1 is calculated by dividing the cash flow by the discount rate.
Value of the perpetuity starting at time N+1: Similarly, a perpetuity starting at time N+1 represents an infinite series of cash flows that occur at regular intervals starting from time N+1. The value of a perpetuity starting at time N+1 is also calculated by dividing the cash flow by the discount rate.
The relationship between the value of the annuity and the two perpetuities can be explained as follows:
The annuity represents a finite series of cash flows that occur over a specific period, whereas the perpetuities represent infinite series of cash flows that continue indefinitely. By breaking down the annuity into two perpetuities, we can consider the cash flows occurring before time N and the cash flows occurring after time N+1 separately.
The value of the annuity can be seen as the sum of the present value of the cash flows occurring before time N and the present value of the cash flows occurring after time N. These two components correspond to the perpetuity starting at time 1 (representing the cash flows occurring before time N) and the perpetuity starting at time N+1 (representing the cash flows occurring after time N+1), respectively.
Therefore, the value of the annuity is related to the value of two perpetuities by representing the sum of their present values, capturing the cash flows occurring at different time periods within the annuity's time frame.
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The high-low method of estimating the fixed and variable components is used to forecast future values for mixed costs to produce more accurate results than can be obtained using statistical analysis to project future values outside of the relevant range to eliminate mixed costs of production.
The high-low method provides a useful tool for estimating costs and forecasting future values in a more accurate manner.
The high-low method is a technique used to estimate fixed and variable components of mixed costs. It is commonly used to forecast future values. By analyzing the highest and lowest activity levels and their corresponding costs, we can determine the fixed cost and variable cost per unit of activity. This allows us to estimate costs for different activity levels within the relevant range. The high-low method is considered more accurate than statistical analysis when projecting values outside the relevant range because it considers the specific data points within the range. By eliminating the mixed costs of production, this method helps in making more precise cost projections.
Overall, the high-low method provides a useful tool for estimating costs and forecasting future values in a more accurate manner.
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Canada, like many countries, import resources to improve the nation's production possibilities. However. Canada is over reliant on one trading partner, the United States. Describe the problems this causes. What are the benefits of a diversified economy? What are the leading industries for the Canadian economy? What are the effects of an aging labour force? Describe possible solutions to this problem. What are the downside of importing scarce resources like human capital to boost Canada's economy?
Overreliance on a single trading partner, like the United States, is problematic for Canada due to vulnerability to economic shocks, limited market diversification, and weakened negotiating power.
Relying heavily on the United States exposes Canada to economic risks, as any downturn or policy changes in the US can negatively impact Canada's economy.
Moreover, depending on one trading partner limits Canada's ability to explore new markets and tap into opportunities for growth. Diversification mitigates these risks by reducing dependence on a single partner, expanding market exploration, and enhancing resilience.
It also allows Canada to negotiate better trade agreements and terms of trade, strengthening its position in the global market.
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nominal GDP increased from $8,000 billion in the base year to $8,400 billion in the following year and real GDP stayed the same, which is true? Multiple Choice the GDP-deflator increased from 100 to 110 the GDP-deflator increased from 80 to 100 the GDP-deflator increased from 100 to 120 prices increased on average by 5 percent prices increased on average by 10 percent
The correct option is "The GDP-deflator increased from 100 to 110."When nominal GDP increases from $8,000 billion to $8,400 billion, but real GDP remains unchanged, it implies that prices have increased from the base year to the next year.
We can find the price change in the economy using the GDP deflator.
The GDP deflator is defined as the ratio of nominal GDP to real GDP, multiplied by 100.GDP deflator = Nominal GDP/Real GDPO Nominal GDP = GDP Deflator x Real GDP
Therefore, the GDP deflator formula shows that an increase in the GDP deflator indicates a rise in prices, while a decrease in the GDP deflator implies a decline in prices.
In this scenario, nominal GDP increased from $8,000 billion in the base year to $8,400 billion in the following year, and real GDP remained the same.
Hence, we can assume that the GDP deflator increased from 100 to 110.
Therefore, the correct option is the GDP-deflator increased from 100 to 110.
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Lakonishok Equipment has an investment opportunity in Europe. The project costs €9.5 million and is expected to produce cash flows of €1.6 million in Year 1, €2.1 million in Year 2, and €3.2 million in Year 3. The current spot exchange rate is €.94/$ and the current risk-free rate in the United States is 2.3 percent, compared to that in Europe of 1.8 percent. The appropriate discount rate for the project is estimated to be 13 percent, the U.S. cost of capital for the company. In addition, the subsidiary can be sold at the end of three years for an estimated €7.8 million.
What is the NPV of the project? (Do not round intermediate calculations and enter your answer in dollars, not in millions, rounded to 2 decimal places, e.g., 1,234,567.89.)
What is the NPV of the project?
The NPV of the project is $4.09 million.We need to discount the future cash flows and the final sales proceeds to their present value and subtract the initial investment cost.
To calculate the NPV (Net Present Value) of the project, we need to discount the future cash flows and the final sales proceeds to their present value and subtract the initial investment cost.
Step 1: Calculate the present value of each cash flow:
[tex]Year 1 cash flow: 1.6 million / (1 + 0.018) = 1.57 million[/tex]
[tex]Year 2 cash flow: 2.1 million / (1 + 0.018)^2 = 2.05 million[/tex]
[tex]Year 3 cash flow: 3.2 million / (1 + 0.018)^3 = 2.99 million[/tex]
Step 2: Calculate the present value of the final sales proceeds:
[tex]Final sales proceeds: 7.8 million / (1 + 0.018)^3 = 7.31 million[/tex]
Step 3: Calculate the present value of the initial investment:
Initial investment: 9.5 million
Step 4: Calculate the NPV:
NPV = Present value of cash flows + Present value of final sales proceeds - Present value of initial investment
[tex]= 1.57 million + 2.05 million + 2.99 million + 7.31 million - 9.5 million[/tex]
= 4.35 million
Since the current spot exchange rate is .94/dollar, we need to convert the NPV from euros to dollars:
[tex]NPV in dollars = 4.35 million * .94/dollar[/tex]
= 4.09 million (rounded to 2 decimal places)
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select the correct text in the passage. which sentence in the passage shows effective ways in which an organization can improve customer service? riley owns a travel and tourism agency. she follows the process of sending same emails to all customers regarding promotional offers and different packages during all seasons. she avoids upgrading her official website. she also invests in researching and determining customers’ exact needs to achieve customer satisfaction. she values only her external customers.
She also engages in studying and discovering the specific demands of her consumers in order to attain customer satisfaction.
In economics, demand is the quantity of an item that buyers are willing and able to buy at various prices at any given time. The demand curve connects price and quantity demand. The perceived necessity, price, perceived quality, convenience, available alternatives, customers' discretionary money and tastes, and a number of other factors all impact demand for a certain item.
The basic demand relationship exists between a good's future pricing and the quantities that would be purchased at those prices. In general, the connection is negative, which indicates that an increase in price results in a decrease in the amount required.
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rice discrimination by seller is a common practice. Discuss the concept of price fixing.
Price fixing refers to the illegal practice where sellers conspire to set the price of a product or service at an artificially high level.
This practice limits competition in the market and harms consumers by depriving them of the benefits of fair pricing.
In the context of rice discrimination, price fixing can manifest when sellers agree to maintain high prices for
certain types or qualities of rice. This discriminates against certain buyers who may be charged unfairly or denied access to reasonably priced rice.
To combat price fixing, governments enforce antitrust laws that prohibit collusion and other anti-competitive practices.
If price fixing is suspected or detected, regulatory authorities can take legal action against the
involved parties, imposing fines and other penalties. Additionally, consumers can report price fixing practices to authorities or seek alternative sources of rice to
promote fair competition and pricing in the market.
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The profit-maximizing output level of a price-taking producer is than that of price-making producers, while the former has to accept a price than the price chosen by the latter. A price-taking producer can have profit maximizing that is efficient while a price-making producer cannot. One difference between a price-taker and a price-maker is that, on one
On one hand, the price-taker takes the market price as given and, on the other hand, the price-maker sets the price themselves.
The profit-maximizing output level of a price-taking producer is higher than that of a price-making producer while the former has to accept a lower price than the price chosen by the latter. A price-taking producer can have a profit-maximizing that is efficient while a price-making producer cannot.
One difference between a price-taker and a price-maker is that, on one hand, the price-taker takes the market price as given and, on the other hand, the price-maker sets the price themselves.
This difference has the following consequences:
Price-taker and price-maker:
A price-taking producer is a company or individual that has no influence on the market price of a good. This is because a price-taker's output, whether small or large, does not influence the market price. As a result, a price-taking producer can only accept the market price as given, and as a result, the producer must decide how much to produce based on the market price.
A price-maker is a company or individual who influences the market price of a good. This is because a price-maker's output, whether small or large, has a significant impact on the market price.
As a result, a price-maker has the ability to set the price of the good and, as a result, must determine how much to produce based on the price they have set.
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You should spend as much money as possible to validate your business model.
(True/False)
False,When launching a new business, you should spend as little money as possible to validate your business model.
Start with creating a basic prototype of your product or service, and test it out with a small group of potential customers. This could be done in-person or online.
Once you’ve gathered feedback and have made some improvements to your prototype, test it out again. Keep doing this until you have a product or service that people are willing to pay for.
This will help you determine whether your business model is viable and whether you can make a profit from it. business model and achieve financial stability.
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General Motors expects to pay dividends of $10 this year and $12 next year. After that, the company expects to grow at a 6% rate for the rest of the company's life. What is the value of General Motors stock if investors require a 11% return to purchase the stock?
The value of General Motors stock is $240 according to the Dividend Discount Model, assuming investors require an 11% return to purchase the stock.
To calculate the value of General Motors stock, we can use the Dividend Discount Model (DDM) formula. The DDM calculates the present value of all future dividends, taking into account the required rate of return.
The formula for the DDM is as follows:
Stock Value = D1 / (r - g)
Where:
D1 = Dividend expected to be received in the next year
r = Required rate of return
g = Dividend growth rate
Given the information:
D1 = $12 (dividend expected to be received next year)
r = 11% (required rate of return)
g = 6% (dividend growth rate)
Stock Value = $12 / (0.11 - 0.06)
Stock Value = $12 / 0.05
Stock Value = $240
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PLEASE HELP ME WITH THIS ASAP WITHIN 20 MINUTES PLEASE
Can startups or smaller-sized companies effectively manage their risks through risk retention?
Companies should generate risk management plans for which they can follow a number of methods. One of these methods is risk retention, where the company pays for losses out of its own pocket. It is utilized when the insurance premiums have risen or the insurance company does not cover certain risks.
Large corporations and companies have a better means to retain their risks, due to greater access to resources. However, can start-ups and smaller companies say the same?
According to Insurance Business Canada, the Canadian insurance market has been hardening, and many organizations are considering higher retention of risks due to the increasing premiums. How can a smaller company compete with this trend, when they don't have the financial means to do so? What steps can they take to create the customized balance between risk retention and deals with insurance companies?
Startups and smaller-sized companies may face challenges when it comes to effectively managing risks through risk retention, especially if they don't have the financial means to absorb significant losses.
However, there are steps they can take to find a customized balance between risk retention and dealing with insurance companies. Here are some strategies they can consider:
1. Risk Assessment: Start by conducting a comprehensive risk assessment to identify and prioritize the key risks faced by the company. This will help in understanding the potential impact of each risk and determining which risks can be retained and which require external coverage.
2. Risk Mitigation: Implement risk mitigation strategies to reduce the likelihood and severity of potential risks. This can involve implementing safety protocols, improving internal controls, and implementing risk management policies and procedures.
3. Risk Transfer: Explore options for transferring some of the risks to third parties. This can include purchasing insurance policies for specific risks that are critical to the company's operations or outsourcing certain functions to external providers who can assume the associated risks.
4. Self-Insurance: Consider setting up a self-insurance fund where the company sets aside funds to cover potential losses. This approach requires careful financial planning and risk modeling to ensure that the fund is adequately funded and can cover potential losses.
5. Alternative Risk Financing: Explore alternative risk financing options such as captives or risk-sharing pools. These mechanisms allow companies to pool their risks with other similar businesses, spreading the costs and risks among the participants.
6. Risk Management Partnerships: Consider forming partnerships or alliances with other companies in similar industries to collectively manage and share risks. This can provide smaller companies with more leverage when negotiating with insurance providers and accessing better terms and rates.
7. Risk Retention Guidelines: Develop clear guidelines and policies for risk retention, including determining the acceptable level of risk exposure, setting thresholds for retained risks, and regularly reviewing and adjusting risk retention strategies based on the company's financial situation and evolving risk landscape.
8. Seek Expert Advice: Consult with risk management professionals or insurance brokers who specialize in working with startups and smaller companies. They can provide valuable insights and help navigate the complexities of risk management and insurance solutions.
While startups and smaller companies may face limitations in terms of financial resources, taking a proactive and strategic approach to risk management can help them strike the right balance between risk retention and external coverage. It's important for these companies to continuously assess their risk landscape, explore alternative solutions, and adapt their risk management strategies as their business evolves.
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Bonita has determined the contribution margin ratio of a product to be 30%. Its selling price is $60, while its costs consist of two variable costs and one fixed cost. The sole fixed cost is a selling and administrative cost. The variable selling and administrative cost is \$2.40/unit. What is the variable manufacturing cost per unit? (Round answer to 2 decimal places, e.g. 15.25.) Variable manufacturing cost $ per unit What is the gross margin of one unit of this product if there are no fixed manufacturing costs? (Round answer to 2 decimal places. e.3. 15.25.) Grossmargin $ per unit What is the gross margin percentage for this product? Gross margin
The gross margin percentage for this product is 66%. to calculate the gross margin percentage, we divide the gross margin by the selling price and multiply by 100.
Gross Margin Percentage = (Gross Margin / Selling Price) * 100
Gross Margin Percentage = ([tex]$39.60 / $60) * 100[/tex]
Gross Margin Percentage = 66%
To find the variable manufacturing cost per unit, we need to use the contribution margin ratio formula. The contribution margin ratio is the difference between the selling price and the variable costs, divided by the selling price. In this case, the contribution margin ratio is 30%.
Let's calculate the variable manufacturing cost per unit:
Contribution Margin Ratio = (Selling Price - Variable Costs) / Selling Price
0.30 = ($60 - Variable Manufacturing Cost - $2.40) / $60
0.30 * $60 = $60 - Variable Manufacturing Cost - $2.40
$18 = $60 - Variable Manufacturing Cost - $2.40
$18 - $60 + $2.40 = -Variable Manufacturing Cost
$20.40 = Variable Manufacturing Cost
Therefore, the variable manufacturing cost per unit is $20.40.
To find the gross margin per unit if there are no fixed manufacturing costs, we need to subtract the variable manufacturing cost per unit from the selling price.
Gross Margin = Selling Price - Variable Manufacturing Cost
Gross Margin = $60 - $20.40
Gross Margin = $39.60
Therefore, the gross margin per unit is $39.60.
Finally,
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What is the remaining balance on a $300,000 mortgage after 65 months? The mortgage is a standard mortgage (360 months) with monthly payments and a nominal rate of 5.90%. $254,661 $283,780 $280,376 $262,882 $276,752
The remaining balance is: 1,482.66
We have the following information available from the question is:
Principal amount = $300,000
Rate = 5.90% = 5.90% / 12months = 0.00492
Number pf periods = 360 months
By using following formula of equated monthly installments.
[tex]EMI=\frac{P_xR_x(1+R)^n}{(1+R)^\\n-1}[/tex]
Where,
P = Principal amount
R = Rate
n = number pf periods
Plug all the values in above formula:
[tex]EMI=\frac{300,000_x0.00492_x(1+0.00492)^\\360}{(1+0.00492)^\\360-1}[/tex]
Now, by solving we get:
=> 1,482.66
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corey verbally agrees to sell his small lake cabin to melinda for $25,000 cash. they don't write up a contract, but otherwise all the necessary elements for a valid contract are in place. what's the status of this contract?
The status of the contract in this scenario would depend on the jurisdiction's laws regarding the enforceability of verbal agreements for the sale of real estate.
In many jurisdictions, the sale of real estate typically requires a written contract to be legally enforceable.
This requirement aims to provide clarity, prevent disputes, and protect the rights of both parties involved. However, there are some exceptions and variations in different jurisdictions.
If the jurisdiction recognizes verbal contracts for the sale of real estate, Corey and Melinda's verbal agreement could potentially be binding and enforceable.
In this case, the necessary elements for a valid contract, such as offer, acceptance, consideration (the $25,000 cash), and mutual agreement, are present.
However, it is crucial to note that relying solely on a verbal agreement for a real estate transaction can be risky and may lead to potential complications.
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Match each definition with its related term by selecting the appropriate term in the dropdown provided. There should be only one definition per term (that is, there are more definitions than terms). Note: Select "None of these are correct" if there is no Term for the "Definition". Definition Term A. Record revenues when earned and measurable (when the company transfers promised goods or services to customers, it should record the amount it expects to be entitled to receive). B. The time it takes to purchase goods or services from suppliers, sell goods or services to customers, and collect cash from customers. C. Record expenses when incurred in earning revenue. D. The costs of operating the business that are incurred to generate revenues during the period. E. Report the long life of a company in shorter time periods. F. The amounts earned and recorded from a company's day-to-day business activities, mostly when a company sells products or provides services to customers or clients. G. Result primarily from the disposal of assets for less than their cost minus the amount of cost depreciated in the past. Expense recognition principle Losses Operating cycle Revenues Time period assumption None of these are correct
A. Definition: Record revenues when earned and measurable (when the company transfers promised goods or services to customers, it should record the amount it expects to be entitled to receive).
Term: Revenues
B. Definition: The time it takes to purchase goods or services from suppliers, sell goods or services to customers, and collect cash from customers.
Term: Operating cycle
C. Definition: Record expenses when incurred in earning revenue.
Term: Expense recognition principle
D. Definition: The costs of operating the business that are incurred to generate revenues during the period.
Term: Expenses
E. Definition: Report the long life of a company in shorter time periods.
Term: Time period assumption
F. Definition: The amounts earned and recorded from a company's day-to-day business activities, mostly when a company sells products or provides services to customers or clients.
Term: Revenues
G. Definition: Result primarily from the disposal of assets for less than their cost minus the amount of cost depreciated in the past.
Term: Losses
Therefore, the correct matches are:
A. Revenues
B. Operating cycle
C. Expense recognition principle
D. Expenses
E. Time period assumption
F. Revenues
G. Losses
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Set up an amortization schedule for a 35,000 loan to be repaid in equal installments at the end of teach of the next 3 years. The interest rate is 12% compounded annually
A $35,000 loan will be repaid in equal installments at the end of each of the next 3 years. The loan has an interest rate of 12% compounded annually.
To calculate the amortization schedule for the $35,000 loan, we need to determine the equal installments and the interest paid for each period. The loan term is 3 years, so we divide the loan amount by the number of periods, which gives us $11,666.67 as the equal installment for each year.
To calculate the interest for each period, we use the formula: Interest = Principal x Interest Rate. In the first year, the principal amount is $35,000, and the interest rate is 12%. Therefore, the interest for the first year is $4,200.
For the first year, the repayment consists of the equal installment of $11,666.67 plus the interest of $4,200, totaling $15,866.67. The remaining loan balance after the first year is $35,000 - $11,666.67 = $23,333.33.
In the second year, the interest is calculated on the remaining balance of $23,333.33, resulting in an interest payment of $2,800. The equal installment remains the same at $11,666.67. Therefore, the total repayment for the second year is $11,666.67 + $2,800 = $14,466.67. The remaining loan balance after the second year is $23,333.33 - $11,666.67 = $11,666.66.
In the third and final year, the interest is calculated on the remaining balance of $11,666.66, resulting in an interest payment of $1,400. The equal installment remains the same at $11,666.67. Therefore, the total repayment for the third year is $11,666.67 + $1,400 = $13,066.67.
By the end of the third year, the loan will be fully repaid, and the amortization schedule will consist of equal installments of $11,666.67 for each year, with varying interest payments.
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Use the dassical model of a closed economy (Mankiw, chapter 3) to predict how each of the following shocks should affect a nation's real aggregate income (Y), national saving (S), investment (0), and interest rate (r). Be sure in each case to clearly state your predicted direction of change (up, down, or no change) for all four variables and illustrate your predictions for S, I, and rwith a supply/demand diagram for the loanable funds market. a. The supply of capital (K
K
) increases b. Autonomous consumption (c
0
) increases c. Congress cuts income taxes (T) d. Autonomous investment (b) increases
Classical Model of a closed economy: In the Classical Model of a closed economy, there are four variables that have been discussed. These variables are national saving, real aggregate income, investment, and interest rate. The Classical Model of a closed economy helps to determine the equilibrium values for these variables. A closed economy does not have trade relations with other countries.
Therefore, it does not have exports or imports. The four variables are interdependent. Hence, a change in one variable will impact the others.Supply of Capital increases: In this case, an increase in capital supply means there will be a shift in the savings supply curve to the right. The loanable funds market will experience a fall in the interest rate, an increase in investment, an increase in national saving, and an increase in real aggregate income.
The direction of change for these variables are as follows:National saving increasesInvestment increasesInterest rate decreasesReal aggregate income increasesThe supply/demand diagram for the loanable funds market can be illustrated below:Autonomous Consumption increases:In this case, an increase in autonomous consumption leads to a shift in the consumption demand curve upward.
The loanable funds market will experience a fall in investment, a fall in national saving, an increase in the interest rate, and an increase in real aggregate income. The direction of change for these variables are as follows:National saving decreasesInvestment decreasesInterest rate increases Real aggregate income increasesThe supply/demand diagram for the loanable funds market can be illustrated below: Congress Cuts Income Taxes: In this case, a cut in income taxes leads to a shift in the savings supply curve upward.
The loanable funds market will experience a rise in investment, a rise in real aggregate income, a fall in the interest rate, and a fall in national saving. The direction of change for these variables are as follows: National saving decreasesInvestment increasesInterest rate decreasesReal aggregate income increases.
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Equation for total revenue =20q (where q is the quantity sold). Equation for total cost =200+15q The equation for profit is: profit =5q−200
profit =200+35q
profit =−200−5q
profit =−35q−200
Find the equation for profit, we need to subtract the total cost from the total revenue. The equation for total revenue is given as "20q",
where q represents the quantity sold.
The equation for total cost is given as "200 + 15q".
To find the equation for profit, we subtract the total cost from the total revenue:
profit = total revenue - total cost
profit = (20q) - (200 + 15q) .
Simplifying the equation, we get:
profit = 20q - 200 - 15q.
Combining like terms, we have:
profit = 5q - 200.
So, the equation for profit is profit = 5q - 200.
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Exchange rates and the demand for domestic goods Piano Palace Co. produces electronic keyboards in the United States. Its most popular keyboard sells for $1,460. KeySharp Co., Piano Palace's primary competitor, is based in Germany and sells keyboards to US customers online. KeySharp sells its keyboards for 875 euros. Suppose that initially, the exchange rate was $1.60 per euro. This means that the price of KeySharp's keyboards to US consumers was 875 euros ×$1.60 per euro =$1,400.00. This means that the price of KeySharp's keyboards to US consumers was . Because this dollar price of keyboards from KeySharp is than the dollar price of keyboards from Piano Palace, demand for Piano Palace keyboards is likely relative to KeySharp's keyboards in the United States. Now suppose that the euro strengthens relative to the dollar, and the exchange rate changes to $2.00 After this change, the price of KeySharp's keyboards to US consumers is . Because this dollar price of keyboards from KeySharp is now than the dollar price of keyboards from Piano Palace, demand for Piano Palace keyboards is likely keyboards in the United States, due to the change in the exchange rate. Suppose that Piano Palace not only sells keyboards in the United States but also exports and sells them to France (another country in the eurozone). When the euro was $1.60, consumers in France paid euros for keyboards from Piano Palace. At this exchange rate, the euro price of Piano Palace keyboards was than that of KeySharp keyboards. However, at the newer exchange rate, the euro price of Piano Palace keyboards is now . This would cause French consumers to increase demand for Generalizing from the results of this fictionalized scenario, when other currencies are strong against the dollar, US imports should be relatively while US exports should be relatively_ , leading to a favorable position in terms of the balance of trade.
Initially, when the exchange rate was $1.60 per euro, the price of KeySharp's keyboards to US consumers was $1,400.00 (875 euros × $1.60 per euro). This price was lower than the $1,460 price of keyboards from Piano Palace. Therefore, demand for Piano Palace keyboards in the United States was likely to be higher relative to KeySharp's keyboards.
However, when the euro strengthens relative to the dollar and the exchange rate changes to $2.00, the price of KeySharp's keyboards to US consumers increases. The new price would be $1,750.00 (875 euros × $2.00 per euro). Now, this price is higher than the $1,460 price of keyboards from Piano Palace. As a result, demand for Piano Palace keyboards in the United States is likely to increase, while demand for KeySharp's keyboards may decrease due to the change in the exchange rate.
In the scenario where Piano Palace also exports keyboards to France, initially, when the exchange rate was $1.60, French consumers paid euros for keyboards from Piano Palace. At this exchange rate, the euro price of Piano Palace keyboards was lower than that of KeySharp keyboards. However, with the new exchange rate of $2.00, the euro price of Piano Palace keyboards increases. This increase in price may lead to an increase in demand for KeySharp keyboards by French consumers.
In general, when other currencies are strong against the dollar, US imports should be relatively more expensive, while US exports should be relatively cheaper. This can lead to a favorable position in terms of the balance of trade and exchange rate, as it may encourage higher demand for domestically produced goods and potentially reduce demand for imported goods.
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Interest rates on 4 year Treasury securities are currently 7 percent, while interest rates on 6 year Treasury securities are currently 7.5 percent. If the pure expectations theory is correct what does the market believe that 2 year securities will be yielding 4 years from now.
Based on the pure expectations theory, the market believes that 2-year securities will be yielding approximately 6.5 percent 4 years from now.
the market believes that 2-year securities will be yielding 6.5 percent 4 years from now, according to the pure expectations theory.
the pure expectations theory suggests that long-term interest rates are determined by the market's expectations of future short-term interest rates. in this case, we have the current interest rates for 4-year and 6-year treasury securities, which are 7 percent and 7.5 percent, respectively.
to calculate the expected yield on 2-year securities 4 years from now, we can use the formula:
yield on 2-year securities = [(1 + yield on 4-year securities) ^ 4 * (1 + yield on 6-year securities) ^ 2] ^ (1/6) - 1
substituting the given values into the formula:
yield on 2-year securities = [tex][(1 + 0.07) ^ 4 * (1 + 0.075) ^ 2] ^ (1/6) - 1 = [(1.07) ^ 4 * (1.075) ^ 2] ^ (1/6) - 1 = (1.3108) ^ (1/6) - 1 ≈ 0.065 or 6.5%[/tex]
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