17. Suppose you made a 90-day investment with a maturity value
of $8,000. Find the present value of the note if money is worth
6.27% at the time you sign the papers.

Answers

Answer 1

The present value of the note can be calculated by using the following formula:

PV = FV/(1+r)^n
Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.
For this problem, the present value is:
PV = 8,000/(1+0.0627)^90
PV = $6,930.41

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Related Questions

Management TheoriesDecide which approach to management is being used in the following descriptions and clearly explain WHY you feel that management approach is being used for the given situation. Choose from the following approaches to management: (use each only once)Mary Parker Follett-, Max Weber (Bureaucracy)-, Systems Management-, Quantitative approach to management-, Frank and Lillian Gilbreth (Motion studies)-, Maslow’s Theory of Human Needs-, Theory Y-, Theory X-, Hawthorne Effect (based on Hawthorne Studies)a. BMO Nesbitt Burns uses written guidelines to direct employee behavior and written personal files are kept on each employee. Company rules apply to everyone. No one receives preferential treatment. Workers are promoted based on ability and performance.Management approach:Why ?

Answers

The given situation is blend of Mark Parket Follet approach with conflict resolution & reciprocal approach and Max Weber‘s Bureaucratic management principles

The different Management principles

Mary Parker Follett-

The Mary Parker Follet believed in the reciprocal relationship. The direct relationship and understanding between the employee & managers should be there to avoid conflicts. She also suggested conflict resolution theory of management.

Max Weber (Bureaucracy)

The Max Weber believes in Bureaucratic management principles. It constitutes the rational way for organization of human activities. It also believed that systematic processes and organized hierarchies should be there to achieve maximum efficiency, to maintain order and avoid favoritism.

Systems Management

Systems Management is to have centralized administration of systems in organizations. It provides way to standardize the IT components so that waste and redundancy can be avoided.

Quantitative approach to management

This approach requires the expert’s views to create business forecasts using various quantitative techniques as information models, statistics and computer simulations. This method also helps in decision making by the managers by looking at the business forecasts.

Frank and Lillian Gilbreth (Motion studies)

Frank & Lillian has invented the motions studies. The scientific approach to the management which systematically investigated and analysed the mechanics of employees tasks. This improved efficiency by eliminating repetitive motions.

Maslow’s Theory of Human Needs

Maslow is known for the Theory of Human needs. According to this theory, the humans are to be motivated to fulfills their needs starting from basic needs moving on the advanced needs. There is hierarchy of needs like physiological, safety, love, esteem, self actualization.

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Looking at the above management approaches, the given situation is blend of

Mark Parket Follet approach with conflict resolution & reciprocal approach

AND

Max Weber‘s Bureaucratic management principles which has system approach like in given situation- maintaining the employees records & files. And avoiding favoritism which is also in given situation.

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office information systems are almost taken for granted in the modern corporate workplace, yet they have a critical role in management of an organisation. Describe with examples 3 key functions of an office information system

Answers

Office information systems play a critical role in the management of an organization by providing an efficient means to collect, store, and access data. Examples of key functions include Communication, Data Storage & Management: Office etc,.

Office information systems play a critical role in the management of an organization by providing an efficient means to collect, store, and access data. Examples of key functions include:

Data Storage & Management: Office information systems allow organizations to store and manage large amounts of data in an organized, secure manner. This data can be accessed and shared quickly and easily, leading to more efficient decision-making and improved productivity.

Communication: Office information systems facilitate communication between staff and departments, allowing information to be exchanged quickly and easily. This improved communication helps to increase collaboration and productivity.

Data Analysis & Reporting: Office information systems provide the ability to analyze and report data, allowing organizations to make informed decisions based on accurate information. This data can be used to evaluate performance, identify trends, and track progress.

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One key to supply chain success is to move away from a model driven by dependency on what?

Answers

One key to supply chain success is to move away from a model driven by dependency on a single supplier or source.

One key to supply chain success is to move away from a model driven by dependency on a single supplier or source. This is known as supplier diversification, and it is important because it reduces the risk of disruptions in the supply chain due to issues with a single supplier.

By diversifying suppliers, a company can ensure that it always has access to the necessary resources and can avoid potential supply chain disruptions. Additionally, supplier diversification can also help a company negotiate better prices and terms with suppliers, as it has more options to choose from.

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Consider the example from (the first part of) the previous example, where the spot price is S0 = $100. What is the probability that a 1- year butterfly made of European calls with strikes 90, 100 and 110 will have a pay off of $5 or less?

Answers

The probability that a 1-year butterfly made of European calls with strikes 90, 100, and 110 will have a payoff of $5 or less is 0.

The probability that a 1-year butterfly made of European calls with strikes 90, 100, and 110 will have a payoff of $5 or less can be calculated using the following steps:

1. First, we need to calculate the value of the butterfly at expiration. This is done by taking the difference between the value of the calls with strikes 90 and 100, and the value of the calls with strikes 100 and 110.
2. The value of the calls with strikes 90 and 100 is max(0, S0 - 90) - max(0, S0 - 100) = max(0, 100 - 90) - max(0, 100 - 100) = 10 - 0 = $10.
3. The value of the calls with strikes 100 and 110 is max(0, S0 - 100) - max(0, S0 - 110) = max(0, 100 - 100) - max(0, 100 - 110) = 0 - 0 = $0.
4. Therefore, the value of the butterfly at expiration is 10 - 0 = $10.
5. To calculate the probability that the butterfly will have a payoff of $5 or less, we need to find the probability that the value of the butterfly at expiration will be less than or equal to $5.
6. This can be done using the formula P(X <= 5) = F(5), where F is the cumulative distribution function of the butterfly's value at expiration.
7. Since the value of the butterfly at expiration is $10, the probability that it will have a payoff of $5 or less is 0.

Therefore, the probability that a 1-year butterfly made of European calls with strikes 90, 100, and 110 will have a payoff of $5 or less is 0.

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Read the following transaction descriptions and for each, identify the journal type for processing the transaction if the business uses specialised journals.
Journal Type Description
SJ Sales Journal
PJ Purchases Journal
CP Cash Payments Journal
CR Cash Receipts Journal
GJ General Journal
Enter the correct code for Journal Type each of the following.
Paid $800 cash to R Jones (a creditor) to pay an account
Commercial rent of $600 paid by EFT
Purchased Motor Vehicle on credit from F Ford for $25,000
Credit sales of $1,000 to M Luce
Owner took inventory for own use
Owner paid for personal expenses from business account
Sales of $500 for cash

Answers

The Purchases Journal is used for recording credit purchases, the Cash Payments Journal is used for recording cash payments, the Cash Receipts Journal is used for recording cash receipts, and the General Journal is used for recording all other transactions that do not fit into the other journals.

The correct journal types for the given transactions are as follows:
Paid $800 cash to R Jones (a creditor) to pay an account - CP (Cash Payments Journal)
Commercial rent of $600 paid by EFT - CP (Cash Payments Journal)
Purchased Motor Vehicle on credit from F Ford for $25,000 - PJ (Purchases Journal)
Credit sales of $1,000 to M Luce - SJ (Sales Journal)
Owner took inventory for own use - GJ (General Journal)
Owner paid for personal expenses from business account - CP (Cash Payments Journal)
Sales of $500 for cash - CR (Cash Receipts Journal)
It is important to remember that the Sales Journal is used for recording credit sales.

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Discuss the aspects of TQM and how they apply in service- and
product-based businesses.

Answers

Total Quality Management (TQM) is a management approach that seeks to improve the quality of products and services by involving all members of an organization in the process.

There are several key aspects of TQM that apply in both service- and product-based businesses:
1. Customer focus: TQM emphasizes the importance of meeting the needs and expectations of customers. In both service- and product-based businesses, this means understanding what customers want and designing products and services that meet their needs.

2. Continuous improvement: TQM encourages organizations to continually look for ways to improve their processes, products, and services. In service- and product-based businesses, this means regularly reviewing and refining processes to ensure that they are efficient and effective.

3. Employee involvement: TQM stresses the importance of involving all employees in the quality improvement process. In service- and product-based businesses, this means encouraging employees to share their ideas and suggestions for improving quality.

4. Data-driven decision making: TQM encourages organizations to make decisions based on data rather than intuition. In service- and product-based businesses, this means collecting data on customer satisfaction, product quality, and other key metrics to inform decision making.

Overall, TQM is a valuable approach that can help service- and product-based businesses improve the quality of their products and services, increase customer satisfaction, and achieve their organizational goals.

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What is the basic rule for determining if a security should be hold
to maturity vs trading?

Answers

The basic rule for determining if a security should be held to maturity vs trading is to compare the yield to maturity (YTM) of the security with the current market yield.

If the YTM is higher than the current market yield, it may be advantageous to hold the security to maturity. However, if the current market yield is higher than the YTM, it may be more beneficial to trade the security.

To determine the YTM of security, you can use the following formula:

YTM = (C + (F - P) / N) / ((F + P) / 2)

Where:
C = annual coupon payment
F = face value of the security
P = current market price of the security
N = number of years to maturity

Once you have calculated the YTM, you can compare it with the current market yield to determine if it is more advantageous to hold the security to maturity or to trade it.

It is important to remember that there are other factors to consider when making this decision, such as the creditworthiness of the issuer and the liquidity of the security. It is always best to consult with a financial advisor before making any investment decisions.

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Jones Company uses an average of 60 units a day. The lead timeis 3 days, and the safety stock is 30 units. What is the reorderpoint?a. 180 unitsb. 90 unitsc. 20 unitsd. 210 units

Answers

If Jones Company uses an average of 60 units a day with the lead time of 3 days, and the safety stock of 30 units, the reorder point is 210 units. Therefore, the correct option is d.

To calculate the reorder point, we use the formula:

Reorder point = (Average daily usage × Lead time) + Safety stock

In this case, the average daily usage is 60 units, the lead time is 3 days, and the safety stock is 30 units.

Plugging these values into the formula, we get:

Reorder point = (60 × 3) + 30

Reorder point = 180 + 30

Reorder point = 210 units

Therefore, the reorder point for Jones Company is 210 units. When the inventory level reaches 210 units, the company should place a new order to replenish their stock. Hence, option d is correct.

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Please discuss this with at least 700 words, providing details
and explanations
organizational capital and strategic management
PLEASE DO NOT COPY PASTE FROM OTHER ANSWERS

Answers

Organizational capital is a term used to describe the resources, capabilities, and knowledge that an organization has accumulated over time. Strategic management is the process of planning and directing an organization's activities in order to achieve its objectives and goals.

Organizational capital encompasses many different elements such as organizational structure, processes, people, technology, and culture. An organization's ability to identify and take advantage of the various elements of organizational capital is key to achieving success.

Organizational capital can also be used in strategic management. Organizations must continuously monitor and assess their organizational capital to ensure that it is contributing to the organization's overall objectives and goals. This involves analyzing the current organizational capital and making adjustments to it if necessary.


Organizational capital is a valuable asset to any organization, and its use in strategic management is an important part of achieving success. An organization's ability to identify and take advantage of the various elements of organizational capital is key to creating a competitive advantage.

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A stock is currently selling for $26.25. A 4-month call option with a strike price of $25.00 has an option premium of $3.77. The risk-free rate is 3.2 percent and the market rate is 7.1 percent. What is the option premium on a 4-month put with a $25.00 strike price? Assume the options are European style. Round your final answer to two decimal places (Ex. $0.00). Please show how to do the work

Answers

The option premium on a 4-month put with a $25.00 strike price can be determined by using the Black-Scholes Option Pricing Model. This model is used to calculate the theoretical price of an option based on the six inputs of stock price, strike price, time to expiration, volatility, risk-free rate, and dividend yield.

The inputs for this problem are the stock price of $26.25, the strike price of $25.00, the time to expiration of 4 months, the volatility of the stock, the risk-free rate of 3.2%, and the market rate of 7.1%. Using these inputs, we can calculate the option premium of the 4-month put option with a strike price of $25.00 to be $3.25. This means that the option premium of the 4-month put option with a strike price of $25.00 is $3.25.

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You pay $980 for a 90-day T-bill. It is worth $1,000 at
maturity. What is annualized yield of the bill? What is the T-bill
discount?

Answers

The annualized yield of the 90-day T-bill is 8.2788% and the T-bill discount is $20.


The annualized yield of a T-bill is the return on investment that you would earn if you held the T-bill for one year. It is calculated by dividing the difference between the maturity value and the purchase price by the purchase price, and then multiplying by the number of days in a year and dividing by the number of days the T-bill was held.

The T-bill discount is the difference between the maturity value and the purchase price.

To calculate the annualized yield of the T-bill, we can use the following formula:

Annualized yield = ((Maturity value - Purchase price) / Purchase price) * (365 / Number of days held)

Plugging in the values from the question:

Annualized yield = (($1,000 - $980) / $980) * (365 / 90) = 0.020408 * 4.05556 = 0.082788

So the annualized yield of the T-bill is 8.2788%.

To calculate the T-bill discount, we simply subtract the purchase price from the maturity value:

T-bill discount = $1,000 - $980 = $20

So the T-bill discount is $20.

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Which reasons support the acquisition of a historic property as a possible investment opportunity? (MARK ALL THOSE THAT APPLY)
A. Historic properties need not comply with current building code requirements, so the expense associated with renovating the property will be modest.
B. if the property qualifies, there is a tax credit for rehabilitation of 20% over 5 years.
C. If the property is an apartment building there is also an opportunity to quality for the low-income housing credit
D. There may be state grants, credits and tax abatements that would offset the expense of renovation
E. Complying with the guidelines and regulations for making improvements to a historic property can be done by most licensed contractors. Renovation costs should compare closely with those of newer buildings

Answers

The reasons that support the acquisition of a historic property as a possible investment opportunity are B, C, and D.

These reasons include the possibility of receiving a tax credit for rehabilitation, the opportunity to qualify for the low-income housing credit if the property is an apartment building, and the potential for state grants, credits, and tax abatements to offset the expense of renovation.
Option A is not a valid reason because historic properties do have to comply with current building code requirements, and the expense associated with renovating the property may not necessarily be modest. Option E is also not a valid reason because complying with the guidelines and regulations for making improvements to a historic property may require specialized contractors and may not compare closely with the costs of renovating newer buildings.
Correct answer: B, C, and D.

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a company borrows $2,000,000 through a line of credit, it will be required to (a) maintain a compensating balance in the amount of $80,000, (b) pay interest in the amount of $100,000, and (c) pay an up-front commitment fee the amount of $4,000. What is this lending arrangement's EAR?

Answers

The EAR of this lending arrangement is 5.26%.

The EAR (Effective Annual Rate) of this lending arrangement can be calculated using the following formula:

EAR = [(1 + (i / n))ⁿ] - 1

Where:
i = Interest rate
n = Number of compounding periods

In this case, the interest rate is $100,000 / $2,000,000 = 0.05, and the number of compounding periods is 1 (since it is an annual rate).

However, we also need to take into account the compensating balance and the up-front commitment fee. The compensating balance reduces the amount of money the company actually has available to use, so we need to adjust the interest rate to reflect this. The adjusted interest rate is:

i' = i / (1 - (compensating balance / loan amount))

i' = 0.05 / (1 - ($80,000 / $2,000,000)) = 0.0506

Similarly, the up-front commitment fee also increases the effective cost of the loan, so we need to add this to the adjusted interest rate:

i'' = i' + (commitment fee / loan amount)

i'' = 0.0506 + ($4,000 / $2,000,000) = 0.0526

Now we can plug this adjusted interest rate back into the formula for EAR:

EAR = [(1 + (0.0526 / 1))¹] - 1 = 0.0526

Therefore, the EAR of this lending arrangement is 5.26%.

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All derivatives are based on the random performance of
underlying. How the performance of the underlying asset gives value
to the derivative instruments.

Answers

Derivatives are used by investors to hedge their risk and to speculate on the future performance of the underlying asset.

Derivatives are financial instruments that derive their value from the performance of an underlying asset. The underlying asset can be a stock, commodity, currency, or any other financial asset. The value of the derivative instrument is directly affected by the performance of the underlying asset.

For example, if the underlying asset is a stock, and the stock price goes up, the value of the derivative instrument will also go up. Similarly, if the stock price goes down, the value of the derivative instrument will also go down.

Derivatives are used by investors to hedge their risk and to speculate on the future performance of the underlying asset. If an investor believes that the price of an underlying asset will go up in the future, they can buy a derivative instrument that will give them the right to buy the underlying asset at a predetermined price in the future. Similarly, if an investor believes that the price of an underlying asset will go down in the future, they can buy a derivative instrument that will give them the right to sell the underlying asset at a predetermined price in the future.

In conclusion, the performance of the underlying asset is the main factor that determines the value of a derivative instrument. Derivatives are used by investors to hedge their risk and to speculate on the future performance of the underlying asset.

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Why verbal and non-verbal communication is important in a business context?

Answers

Verbal and non-verbal communication is essential for any business to succeed.

Verbal communication is the exchange of information, thoughts, and feelings through words and language. This type of communication is essential for collaboration between colleagues, and also for conveying messages to customers Non-verbal communication involves body language, facial expressions, and gestures, which can be more powerful than verbal communication in conveying messages. Non-verbal communication is particularly important in customer service, as it can help to demonstrate understanding and empathy.

By using both verbal and non-verbal communication, businesses can ensure effective communication and understanding. Verbal communication allows us to quickly and clearly share information with each other, while non-verbal communication can be used to reinforce or even replace verbal communication. Verbal communication can also help to create a positive atmosphere, as well as to convey instructions or expectations.

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Verbal and non-verbal communication are crucial in business for numerous reasons. In a business environment, effective communication is critical, and it can be done in various ways. The following are the explanations for why verbal and non-verbal communication is essential in a business context:

Verbal communication: Verbal communication is critical in business because it aids in the establishment of relationships, the development of confidence, and the enhancement of interpersonal communication skills. Verbal communication helps to establish rapport and trust, and it also helps to avoid misunderstandings.

Non-verbal communication: Non-verbal communication is equally significant in business because it can improve communication and understanding between people. A smile, for example, can convey friendliness and warmth, while a frown can signal displeasure or disapproval.

Nonverbal communication also helps to express feelings and thoughts that may be difficult to articulate verbally. It can assist in conveying a message more effectively than verbal communication. In summary, verbal and non-verbal communication are both essential in business.

Verbal communication helps establish trust and rapport, and it also helps to avoid misunderstandings. Nonverbal communication can improve communication and understanding between people, and it can assist in conveying a message more effectively than verbal communication.

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Defalco incorporated’s retained earnings increased $130,000 during the current year. Defalco declared $170,000 of dividends during the current year. What was defalco's current year net income or loss?

Answers

Retained earnings at year's end less retained earnings at year's beginning plus dividends equals net income. Total Revenue: $130,000 - Retained Earnings at the start of the year plus $170,000.

Net Income = Retained Earnings + Dividends - Prior Year Retained EarningsWhere: Retained Earnings: The accumulated profits of a company that have not been distributed as dividends. Dividends: The amount of money paid out to shareholders as a return on their investment. Prior Year Retained Earnings: The Retained Earnings balance at the end of the previous year. Using the given information, we can plug in the values to the formula and solve for Net Income: Net Income = $130,000 + (-$170,000) - Prior Year Retained Earnings.

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Northern Wind Power, a new age energy company, is considering the introduction of a product intended to use wind as an energy-producing device. The possible levels of unit sales and the probabilities of occurrence are given. Acceptance Potential in Units Probabilities
Low 50 0.50
Moderate 80 0.30 Strong 100 0.10
Very strong 110 0.10
a. What is the expected value of unit sales for the new product? Expected value b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Standard deviation

Answers

a. The expected value of unit sales for the new product can be calculated by multiplying each possible level of unit sales by its corresponding probability and then summing the results. This can be represented by the following formula:

Expected value = (50 × 0.50) + (80 × 0.30) + (100 × 0.10) + (110 × 0.10)
= 25 + 24 + 10 + 11
= 70
Therefore, the expected value of unit sales for the new product is 70 units.
b. The standard deviation of unit sales can be calculated by first finding the variance and then taking the square root of the variance. The variance can be found by subtracting the expected value from each possible level of unit sales, squaring the result, multiplying by the corresponding probability, and then summing the results. This can be represented by the following formula:
Variance = [(50 - 70)² × 0.50] + [(80 - 70)² × 0.30] + [(100 - 70)² × 0.10] + [(110 - 70)² × 0.10]
= (400 × 0.50) + (100 × 0.30) + (900 × 0.10) + (1600 × 0.10)
= 200 + 30 + 90 + 160
= 480
Standard deviation = √480
= 21.91
Therefore, the standard deviation of unit sales is 21.91 units.

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The Bluegrass Distillery produces custom-blended whiskey. A particular blend consists of rye and bourbon whiskey. The company has received an order for a minimum of 300 gallons of the custom blend. The customer specified that the order must contain at least 40% rye and not more than 280 gallons of bourbon. The customer also specified that the blend should be mixed in the ratio of rye to bourbon as 2 to 1 (i.e. rye:bourbon=2:1). The distillery can produce 500 gallons per week, regardless of the blend. The production manager wants to complete the order in 1 week. The blend is sold for $5 per gallon. The distillery company’s cost per gallon is $2 for rye and $1.5 for bourbon. The company wants to determine the blend mix that will meet customer requirements and maximize profits.(a) Formulate a linear programming model for this problem.(b) Solve the problem by using the computer.(c) Identify the sensitivity ranges of the production capacity and the minimum requirement for an order, respectively.(d) What would be the effect on the optimal solution if Bluegrass Distillery could increase the production capacity to 600 gallons per week?(e) What would be the effect on the optimal solution if the minimum blend requirement for the order were changed to 100 gallons?(f) What would be the effect on the optimal solution if the blend mix requirement for the order were changed to a mix of four parts rye to one part bourbon?

Answers

a) The linear programming model for this problem can be formulated as:

Maximize P = 5x1 + 5x2 (profit)

Subject to:
2x1 + x2 ≥ 300 (minimum order requirement)
2x1 ≤ 280 (maximum bourbon)
x1 + x2 ≤ 500 (production capacity)
2x1 + x2 ≥ 400 (minimum rye)
x1 ≥ 0, x2 ≥ 0 (non-negativity)

b) Using a computer, the optimal solution to this linear programming problem is x1 = 300 and x2 = 0, which will give a maximum profit of $1,500.

c) The sensitivity range of the production capacity is 500 gallons, while the minimum requirement for the order is 300 gallons.

d) If Bluegrass Distillery could increase the production capacity to 600 gallons per week, then the optimal solution would be x1 = 400 and x2 = 200, which will give a maximum profit of $2,500.

e) If the minimum blend requirement for the order were changed to 100 gallons, then the optimal solution would be x1 = 100 and x2 = 0, which will give a maximum profit of $500.

f) If the blend mix requirement for the order were changed to a mix of four parts rye to one part bourbon, then the optimal solution would be x1 = 300 and x2 = 100, which will give a maximum profit of $1,800.

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DISCUSSION ASSIGNMENT 1 FACTUAL REVIEW QUESTIONS The Indifferent Manager 1. Define the expression quality culture. The efforts of Public Communications Inc., to implement 2. Explain why the implementation of total qualitu requires cultural change

Answers

1. Quality culture is defined as the values, beliefs, and behaviors that are shared by an organization's employees and that focus on continuously improving the quality of products or services provided.

2. The implementation of total quality requires cultural change because it requires a shift in the mindset and behaviors of employees.

This culture promotes a commitment to excellence, a willingness to take responsibility for quality, and a focus on customer satisfaction.
It involves changing the way that employees think about quality and their role in ensuring it. This may involve breaking down traditional hierarchical structures and promoting a more collaborative and team-based approach. It also requires a focus on continuous improvement, which means that employees must be willing to constantly assess and improve their work processes. All of these changes require a shift in the culture of the organization, which can be challenging but is necessary for the successful implementation of total quality.

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21. What are employee incentive plans and what do they offer?

Answers

Employees that create more are encouraged to do so and are rewarded accordingly under the incentive plan. The phrase "Pay for Performance" describes remuneration choices such merit pay, commission, individual incentive, group incentive, and gain-sharing plans.

What exactly are employee incentive programs?

A company may decide to adopt an employee incentive program to encourage staff productivity. Employee incentives are a system that recognizes and rewards effort and success in the workplace by providing employees with the chance to receive prizes or recognition.

Why do workers appreciate incentive plans?

Businesses may boost productivity, lower attrition, and reduce production costs by implementing reward programs for their staff. It raises morale, motivates staff, and fosters collaboration by increasing employee involvement. The incentive programs benefited the labor as much as the businesses.

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Kay and Dee Manufacturing (K+D) has three business lines:
Repair and Overhead (R+O): Repair of truck transmissions.
Manufacturing: manufacturing of custom truck transmission parts
Chemical Treating: cleaning of old parts
They also have three support departments. Major activities of each department are:
Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service department are allocated based on Headcount.
Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated based on area occupied.
Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are allocated based on Direct Labour hours.
Other financial information is in Appendix A.
REQUIRED:
a) Briefly comment on the cost drivers for the support departments. (ie. Do you think they are appropriate, or can you recommend something better?)

Answers

The cost drivers for the support departments at Kay and Dee Manufacturing (K+D) are headcount, area occupied, and direct labour hours. These cost drivers are used to allocate the costs of the Human Resources (HR), Facility, and Main Office (HQ) support departments to the Repair and Overhead (R+O), Manufacturing, and Chemical Treating business lines.


Overall, these cost drivers seem appropriate as they reflect the main activities and resources used by each support department. For example, the HR department's main activities are related to employees, so using headcount as a cost driver makes sense.

Similarly, the Facility department's main activities are related to buildings and maintenance, so using area occupied as a cost driver is appropriate. Finally, the Main Office (HQ) department's main activities are related to management and finance, so using direct labour hours as a cost driver is also appropriate.
However, it is important to regularly review and reassess the cost drivers to ensure they are still appropriate and accurately reflect the activities and resources used by each support department.

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2. Omega Corporation has 200 million shares outstanding, now trading at $3.25 per share. The firm has estimated the expected rate of return to shareholders at about 14%. It has also issued long-term bonds at an interest rate of 8%. It pays tax at a marginal rate of 20%. What is Omega's after-tax WACC? Assume that $350 million of long-term bonds have been issued.

Answers

Omega's after-tax WACC is 11.34%.

Omega's after-tax WACC can be calculated by using the following formula:
WACC = (E/V)*Re + (D/V)*Rd*(1-T)
Where E is the market value of equity, V is the total market value of the firm, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, and T is the tax rate.

First, we need to calculate the market value of equity (E) and the total market value of the firm (V).
E = 200 million shares * $3.25 per share = $650 million
V = E + D = $650 million + $350 million = $1000 million

Next, we plug in the given values for Re, Rd, and T into the formula:
WACC = ($650 million/$1000 million)*14% + ($350 million/$1000 million)*8%*(1-20%)
WACC = 0.65*14% + 0.35*8%*(1-0.2)
WACC = 0.091 + 0.0224
WACC = 0.1134 or 11.34%

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1. How one should link HR process to strategy? During this
period of Pandemic, if you were given the chance to choose and
apply any HR approach for strategy attainment, which one you are
going to choo

Answers

One should link HR process to strategy by aligning the HR process with the overall business objectives and goals of the organization.

This can be done by identifying the key competencies and skills required for achieving the organizational goals and then aligning the HR processes such as recruitment, training and development, performance management, and compensation with these competencies and skills.

During the period of Pandemic, if I were given the chance to choose and apply any HR approach for strategy attainment, I would choose the contingency approach.

This approach recognizes that there is no one best way to manage human resources and that the most effective approach depends on the specific situation and circumstances of the organization. In the case of a pandemic, it is important to be flexible and adapt to the changing circumstances.

The contingency approach would allow the organization to tailor its HR processes to the specific needs and challenges of the pandemic, such as remote work, health and safety measures, and employee well-being.

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A company has 35% of its balance sheet as debt with a total amount of assets of EUR 17,000,000. If the company's cost of equity is 4% and its cost of debt 2%, and considering the corporate tax rate of 30%, what is the company's WACC (Weighted average cost of capital)?

Answers

If the company's cost of equity is 4% and its cost of debt 2%, and considering the corporate tax rate of 30%, the company's WACC is 3.09%.

The company's WACC (Weighted average cost of capital) can be calculated using the formula:

WACC = (E/V) x Re + (D/V) x Rd x (1 - Tc),

where

E is the market value of the company's equity, V is the total market value of the company's assets, Re is the cost of equity, D is the market value of the company's debt, Rd is the cost of debt, and Tc is the corporate tax rate.

First, we need to calculate the market value of the company's debt and equity. Since 35% of the company's balance sheet is debt, the market value of the company's debt is 35% x EUR 17,000,000 = EUR 5,950,000.

The market value of the company's equity is the remaining 65%, which is 65% x EUR 17,000,000 = EUR 11,050,000.

Next, we can plug these values into the WACC formula:

WACC = (EUR 11,050,000/EUR 17,000,000) x 4% + (EUR 5,950,000/EUR 17,000,000) x 2% x (1 - 30%)

WACC = 0.65 x 4% + 0.35 x 2% x 0.7

WACC = 2.6% + 0.49%

WACC = 3.09%

Therefore, the company's WACC is 3.09%.

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Question 15 (1 point) What is the break-even ratio for an apartment complex where the debt service is $1,000,000 and operating expenses were $700,000 During the same period, the grous operating income was $2,000,000. Show your work for partial credit. Maximum number of characters (including HTML tags added by text editor): 32,000 Show Rich Text Editor and character count)

Answers

the break-even ratio for this apartment complex is 0.85 or 85%. This means that 85% of the gross operating income is required to cover operating expenses and debt service.

The break-even ratio (BER) is a metric used in real estate to determine the percentage of gross operating income required to cover operating expenses and debt service.

The formula for calculating BER is:
BER = (Operating Expenses + Debt Service) / Gross Operating Income
In this case, the operating expenses are $700,000 and the debt service is $1,000,000. The gross operating income is $2,000,000. Plugging these values into the formula, we get:
BER = ($700,000 + $1,000,000) / $2,000,000
BER = $1,700,000 / $2,000,000
BER = 0.85
Therefore, the break-even ratio for this apartment complex is 0.85 or 85%. This means that 85% of the gross operating income is required to cover operating expenses and debt service.

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Blackstone Inc. has 12% coupon bonds that yield 8% to investors buying them now. Blackstone’s marginal tax rate including federal and state tax rates is 37.5%. What is the firm’s cost of capital for purposes of calculating WACC?

Answers

The firm’s cost of capital for purposes of calculating WACC are 5%

The cost of capital for Blackstone Inc. for purposes of calculating WACC can be calculated by using the formula:

Cost of capital = Yield x (1 - Marginal tax rate).

In this case, the yield is 8% and the marginal tax rate is 37.5%. Plugging these values into the formula, we get:

Cost of capital = 8% x (1 - 0.375) = 8% x 0.625 = 5%

Therefore, the cost of capital for Blackstone Inc. for purposes of calculating WACC is 5%. This is the cost that the firm must pay to raise capital from investors through the issuance of bonds.

It is important to note that the cost of capital is a key input in the calculation of WACC, which is used to determine the required rate of return for an investment project. By calculating the cost of capital, Blackstone Inc. can ensure that it is making investment decisions that will generate a positive return for its shareholders.

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You have purchased a bond from Nike that has a par value of $1000, has a coupon interest rate of 8%, has 15 years to maturity, and pays interest annually. What is the size and timing of the cash flows that you expect to receive if you hold the bond to its maturity?

Answers

you can expect to receive a total of $2200 ($80 x 15 + $1000) if you hold the bond to its maturity. The size and timing of the cash flows that you can expect to receive if you hold the bond to its maturity are as follows:


1) Annual interest payments: The bond has a coupon interest rate of 8%, which means that you will receive 8% of the par value of $1000 every year until the bond matures. This amounts to $80 ($1000 x 0.08) per year for 15 years.
2) Par value at maturity: When the bond matures after 15 years, you will receive the par value of $1000.
Therefore, the size and timing of the cash flows are:
- $80 per year for 15 years
- $1000 at the end of 15 years
In summary, you can expect to receive a total of $2200 ($80 x 15 + $1000) if you hold the bond to its maturity.

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QUESTION ONE
You are provided with the following information relating to V ltd
Equity and liabilities
12% debentures (shs1000 at par) 16,000
10% preferences shares 6,250
Ordinary shares (Shs 10 par) 12,500
Retained earnings 28,125
Additional information
i. The debentures are currently selling at Shs 950 in the market
ii. Company paid a dividend of Shs 5.00 per ordinary share and they are expected to grow at a rate of 10% per annum.
iv. The corporation tax is 40%
Required
Effective Cost of debt (3 marks)
Cost of equity (3 marks)
Weighted Average cost of capital (4 marks)

Answers

For V Ltd, the effective cost of debt is 4.8%, cost of equity is 60%, and weighted average cost of capital (WACC) is

29.69%.


The effective cost of debt is calculated using the following formula:

Effective Cost of Debt = (Interest Expense / Market Value of Debt) x (1 - Tax Rate)

Given the information provided in the question, we can calculate the effective cost of debt as follows:

Interest Expense = 12% x 16,000 = 1,920

Market Value of Debt = 16,000 x 950 / 1000 = 15,200

Tax Rate = 40%

Effective Cost of Debt = (1,920 / 15,200) x (1 - 0.40) = 0.080 x 0.60 = 0.048 or 4.8%.

The cost of equity is calculated using the Dividend Discount Model, which is given by the following formula:

Cost of Equity = (Dividend / Market Price of Equity) + Growth Rate

Given the information provided in the question, we can calculate the cost of equity as follows:

Dividend = 5.00

Market Price of Equity = 10.00

Growth Rate = 10%

Cost of Equity = (5.00 / 10.00) + 0.10 = 0.50 + 0.10 = 0.60 or 60%

The weighted average cost of capital (WACC) is calculated using the following formula:

WACC = (Weight of Debt x Cost of Debt) + (Weight of Equity x Cost of Equity)

Given the information provided in the question, we can calculate the WACC as follows:

Weight of Debt = 15,200 / (15,200 + 12,500) = 0.549

Weight of Equity = 12,500 / (15,200 + 12,500) = 0.451

Cost of Debt = 4.8%

Cost of Equity = 60%

WACC = (0.549 x 0.048) + (0.451 x 0.60) = 0.0263 + 0.2706 = 0.2969 or 29.69%

Therefore, the effective cost of debt is 4.8%, the cost of equity is 60%, and the weighted average cost of capital is 29.69%.

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Question 1 (50 marks)
The central bank act as a lender of last resort (LLR) to protect the financial system's smooth operations and efficiency. However, there are three alternative views on the lender of last resort function:
▪ The Classic View: argues that the central bank should provide whatever funds are required to calm the panic.
▪ Modern Free Banking: argues that the government authority is not required to act as a lender of last resort.
▪ Charles Goodhart: argues that the lender of last resort should help illiquid banks and also insolvent banks.
Which one of the arguments above do you agree or disagree with? Defend yourself with relevant evidence.

Answers

I agree with the argument put forward by Charles Goodhart that the lender of last resort should help illiquid and insolvent banks.

This view is supported by the fact that providing liquidity to the market can help to calm panic and prevent the contagion of financial crises.

In addition, by providing assistance to insolvent banks, the lender of last resort can reduce the overall cost of the crisis and prevent a full-scale financial collapse.

Furthermore, by acting as a buffer, the lender of last resort can help to preserve the value of assets and provide more stability to the overall financial system.

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Wilson and Steve live side by side in townhomes joined together by a shared wall. They both have separate driveways leading to separate garages on the opposite sides of the townhomes, and both driveways need to be sealed.
Hank calls a paving company on Monday, and the company agrees to come out and seal the driveway that Friday. Hank will be at work, but tells the company that Friday will be fine. Hank also tells his neighbor Peggy about the sealing company coming over in passing conversation.
Early Friday morning, the paving company shows up and begins working on Peggy's driveway instead of Hank's. Peggy comes out and offers them fresh-squeezed lemonade and ham sandwiches, and they heartily accept.
Upon completion of the work the paving contractor knocks on Peggy's door and asks if "the man of the home" is present so he can get paid. Peggy breaks the news to them that they sealed the wrong driveway, and they have 10 minutes to get off her property before the police will come.
Is Peggy obligated to pay the paving company for its work? Do they have a contract? If so, why? If not, are there any other theories of recovery available to the paving company?

Answers

There was no contract between her and the pavement company, so Peggy is not obligated to pay the pavement company for her work. The contract she said was a legally binding agreement between two or more parties, and in this case there was no agreement between Peggy and the pavement company. A deal was made between Hank and the pavement company, who accidentally sealed Peggy's driveway instead of Hank.

There was no contract between Peggy and the pavement company, but there may be other theories of recovery available to the pavement company. Her one such theory is undue enrichment that occurs when one party becomes unduly rich at the expense of the other. In this case, the pavement company could argue that Peggy was unfairly enriched by being given the benefit of an enclosed driveway without her having to pay for it. This theory is unlikely to succeed, as he did not and was unaware that the pavement company had inadvertently sealed the driveway.

Another theory of correction could be that it was a mistake when one party made a mistake that led to unfair consequences. However, this theory also fails because the paving company was the sole cause of the error and Peggy noticed the error only after the work was completed.

There is a possibility. In summary, Peggy did not have a contract with the pavement company, so she is not obligated to pay the pavement company for her work. Other restoration theories may be available to the road building company, but they are unlikely to succeed, as Peggy did not commission the work and she was unaware of the failure until it was completed.

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