Based on our understanding of Amazon's supply chain, Amazon has come a long way towards achieving its vision of intelligent supply and dynamic fulfillment.
Amazon has invested in multiple technologies and strategic partnerships that have allowed them to automate and optimize their supply chain. This includes a focus on predictive analytics and artificial intelligence (AI) to anticipate customer demand, robotic process automation to improve productivity, and machine learning to improve inventory management.
Additionally, Amazon has developed a network of warehouses and delivery centers across the US, allowing them to quickly and efficiently fulfill customer orders.
Overall, Amazon's supply chain is well on its way to being a truly intelligent, dynamic, and efficient supply chain. With the investments and advancements they have made, Amazon is well-positioned to continue to make strides in this area.
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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
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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Exercise: Coca cola Company has two support departments, HR and Maintenance, and two production departments A and B. HR Department costs are allocated based on the number of employees. Maintenance Department costs are allocated on the basis of budgeted maintenance-hours. Data on budgeted costs and allocation bases are as follows: Support Departments Production Departments HR Maintenance А B Dep. Dep. Budgeted costs $ 100,000 $ 80,000 $ 24,000 $ 160,000 Number of employees NA 20 80 100 Budgeted maintenance-hours 10 NA 50 40 # of units produced 1000 2000 Required: 1. Using the direct method, what amount of HR Department costs will be allocated to department A and B. 2. Using the step-down method, allocate the costs of support departments to production departments; assume HR will be allocated first. Then compute the cost/unit.
Question: Exercise: Coca cola Company has two support departments, HR and Maintenance, and two production departments A and B. HR Department costs allocated based on the number of employees.
Maintenance Department costs are allocated on the basis of budgeted maintenance-hours. Data on budgeted costs and allocation bases are as follows:
Support Departments Production Departments HR Maintenance А B Dep. Dep. Budgeted costs $ 100,000 $ 80,000 $ 24,000 $ 160,000 Number of employees NA 20 80 100 Budgeted maintenance-hours 10 NA 50 40 # of units produced 1000 2000 Required:
1. Using the direct method, what amount of HR Department costs will be allocated to department A and B.
Answer: Using the direct method, the amount of HR Department costs allocated to department A is $80,000 ($100,000 x 80/100) and the amount of HR Department costs that will be allocated to department B is $20,000 ($100,000 x 20/100).
Question: 2. Using the step-down method, allocate the costs of support departments to production departments; assume HR will be allocated first. Then compute the cost/unit.
Answer: Using the step-down method, the amount of HR Department costs allocated to department A is $64,000 ($100,000 x 80/100) and the amount of HR Department costs that will be allocated to department B is $36,000 ($100,000 x 20/100).
The allocated costs for department A is then $80,400 ($64,000 + $16,000 for Maintenance) and for department B it is $45,600 ($36,000 + $9,600 for Maintenance). The cost per unit for department A is then $80.40 (80,400/1000) and for department B it is $45.60 (45,600/1000).
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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.
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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Binta Niambi Brown
CEO and co-founder of Fermata Entertainment Ltd. and lawyer
Fifteen years ago, hours before closing a $3 billion asset acquisition, Brown, who
was a senior associate in her late 20s, received some information that could have
damaged the entire deal. At the time, her partner wasn’t reachable and Brown had a choice to make: either tell her client and risk losing the deal, or keep quiet until the papers were signed. She chose to tell the client. "It was early in my career," she says. "Even if the deal had been blown up for good, honest reasons rooted in decent integrity and morality, there’s always the fear that you’re going to become the associate whose deal blew up, and now everybody’s talking about how the senior
the person wasn’t around and you’re being Goody Two-shoes and you ruined the deal."
After disclosing the information she uncovered to her client, Brown was able to help both sides come to a solution, and in the end, a deal was finalized. Her ability to have good judgment, do what she thought was right, and not let fear drive her decisions are lessons Brown has carried with her throughout her career.
Sometimes the things we think could really embarrass us end up becoming our most glorious moments. "Without question, I have repeatedly in my career seen that to be the case—just proceeding from a place of love and integrity and looking to solve the problem and to move the ball forward, as opposed to fear. Because usually when there’s a moral dilemma like this, the main thing that’s getting in the way of the ability to make a good decision is that we’re motivated by our fears," she explains.
Her advice: "It’s the moment where we start giving in to our fears, that’s when people start making really bad decisions that can be very hurtful and harmful to others. People are afraid their piece of the pie is going to be cut up and given to someone else, and so that motivates some of what you see in the business context." The lesson: Sometimes the things we think could really hurt us or embarrass us end up being the things that become our shining, most glorious moments.Identify
- The Ethical Issue the leader faced
- Identify 2 negative outcomes of the Ethical Dilemma Analyse and provide your opinion.As a leader, what would you do differently to solve the dilemma?
The ethical issue that Binta Niambi Brown faced was whether to tell her client about the information she received that could have damaged the entire deal or to keep quiet until the papers were signed.
This was a difficult decision because if she chose to tell the client, she risked losing the deal and potentially damaging her reputation. On the other hand, if she chose to keep quiet, she would be withholding important information from her client and potentially compromising her integrity.
Two negative outcomes of this ethical dilemma could have been that if Brown had chosen to keep quiet, her client could have suffered financial losses or legal consequences as a result of not having all the information. Additionally, if Brown had chosen to tell the client and the deal had fallen through, she could have been blamed for the failure and potentially lost her job or damaged her reputation.
In my opinion, Brown made the right decision by choosing to tell her client about the information she received. While it was a difficult decision, it was the ethical thing to do and ultimately led to a successful deal.
As a leader, I would have done the same thing because it is important to prioritize honesty and integrity, even if it means potentially risking a deal or damaging my reputation. It is better to be honest and potentially face short-term consequences than to compromise my integrity and potentially face long-term consequences.
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Why verbal and non-verbal communication is important in a business context?
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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D sold capital property in the current year for net proceeds of $900,000. The property has an adjusted cost base of $400,000. B received $100,000 at the time of the sale and a note for the balance to be paid in equal annual instalments over the following eight years. What is the minimum taxable capital gain to be reported in the current year?
The minimum taxable capital gain to be reported in the current year is $100,000.
Capital gains are calculated as the difference between the net proceeds from the sale of the property and the adjusted cost base of the property. In this case, the net proceeds are $900,000 and the adjusted cost base is $400,000. This results in a capital gain of $500,000.
However, B only received $100,000 at the time of the sale, with the balance to be paid in equal annual instalments over the following eight years. According to the Canada Revenue Agency, when a capital property is sold and the proceeds are received in instalments, the taxable capital gain is spread over the number of years the instalments are received.
Therefore, the minimum taxable capital gain to be reported in the current year is the amount received in the current year, which is $100,000. The remaining $400,000 will be reported as taxable capital gains in the following eight years.
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Which accounting changes will result to a prospective approach in accounting treatment affecting only current and future periods? Select one: a. Correction of Prior Period Errors b. Accounting Estimate Changes c. Accounting Policy Changes d. Accounting Measurement Changes
The accounting change that will result in a prospective approach in accounting treatment affecting only current and future periods is b. Accounting Estimate Changes.
Accounting estimate changes are changes in estimates used in financial reporting that result from new information, new developments, or revised judgments by management. These changes are accounted for on a prospective basis, meaning that they only affect current and future periods.
This is because the changes in estimates are made to reflect new information or developments that were not available or known at the time the original estimates were made. Therefore, it is not appropriate to retroactively adjust prior periods for these changes. Instead, the changes are reflected in the current and future periods to provide more accurate and relevant information for decision-making.
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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?
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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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
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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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)?
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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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
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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Discuss the aspects of TQM and how they apply in service- and
product-based businesses.
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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One key to supply chain success is to move away from a model driven by dependency on what?
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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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
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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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
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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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 ?
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 principlesMary 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.
-------------------------------------------------------------------------------------------------------------------------------
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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A crew of mechanics at the Highway Department garage repair vehicles that break down at an average of lambda = 8 vehicles per day (approximately Poisson in nature). The mechanic crew can service an average of mu = 11 vehicles per day with a repair time distribution that approximates an exponential distribution. The crew cost is approximately $300 per day. The cost associated with lost productivity from the breakdown is estimated at $150 per vehicle per day.
a. If there is currently one service crew, what is the expected number of vehicles in the system?
b. If we add another service crew, what is the expected number of vehicles in the system? c. Which is cheaper, the existing system with one service crew, or a revised system with two service crews?
The expected number of vehicles in the system with one crew is 2.67 vehicles and in the system with two crews is 0.57 vehicles and the revised system with two service crews is cheaper.
The expected number of vehicles in the system can be calculated using the formula L = lambda / (mu - lambda), where lambda is the arrival rate and mu is the service rate.
a. With one service crew, lambda = 8 and mu = 11, so the expected number of vehicles in the system is L = 8 / (11 - 8) = 8 / 3 = 2.67 vehicles.
b. With two service crews, the service rate is doubled, so mu = 22. The expected number of vehicles in the system is now L = 8 / (22 - 8) = 8 / 14 = 0.57 vehicles.
c. The cost of the existing system with one service crew is $300 per day for the crew cost plus $150 per vehicle per day for the lost productivity cost, for a total of $300 + (2.67 * $150) = $700.50 per day. The cost of the revised system with two service crews is $600 per day for the crew cost plus $150 per vehicle per day for the lost productivity cost, for a total of $600 + (0.57 * $150) = $685.50 per day. Therefore, the revised system with two service crews is cheaper.
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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?
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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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?
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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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?
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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An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 7% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent. Present value: $ Future value: $
question 8
You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 4% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR? Do not round intermediate calculations. Round your answer for the monthly loan payment to the nearest cent and for EAR to two decimal places.
Monthly loan payment: $
EAR: %
question 9
Find the present values of the following cash flow streams at an 11% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent.
0 1 2 3 4 5
Stream A $0 $100 $350 $350 $350 $250
Stream B $0 $250 $350 $350 $350 $100
Stream A: $
Stream B: $
What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar.
Stream A: $
Stream B: $
PV of Stream A at 0% discount rate is $1,400 and PV of Stream B at 0% discount rate is $1,400.
Monthly loan payment = (Loan amount x monthly interest rate) / (1 - (1 + monthly interest rate)^(-number of months))
Monthly interest rate = 4% / 12 = 0.00333
Monthly loan payment = [tex]($40,000 x 0.00333) / (1 - (1 + 0.00333)^(-60)) = $736.81[/tex]
EAR = (1 + monthly interest rate)^12 - 1 = (1 + 0.00333)^12 - 1 = 4.07%
PV of Stream A = [tex]$100 / (1 + 0.11)^1 + $350 / (1 + 0.11)^2 + $350 / (1 + 0.11)^3 + $350 / (1 + 0.11)^4 + $250 / (1 + 0.11)^5 = $915.10[/tex]
PV of Stream B =[tex]$250 / (1 + 0.11)^1 + $350 / (1 + 0.11)^2 + $350 / (1 + 0.11)^3 + $350 / (1 + 0.11)^4 + $100 / (1 + 0.11)^5 = $1,014.62[/tex]
PV of Stream A at 0% discount rate = $100 + $350 + $350 + $350 + $250 = $1,400
PV of Stream B at 0% discount rate = $250 + $350 + $350 + $350 + $100 = $1,400
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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)
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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Explain two influences on whether demand for a product is price elastic or price inelastic
Answer:
Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price.
21. What are employee incentive plans and what do they offer?
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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What is the basic rule for determining if a security should be hold
to maturity vs trading?
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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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?)
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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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
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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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
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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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)
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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assume we have a cycle-servixe level of 90%, and we deliver 4 items
on a customers order, what is the overall customer service level
for the order?
The overall customer service level for the order is 90%.
This is because the cycle-service level is a measure of the probability that a customer will receive their order within a specified period of time. In this case, the cycle-service level is 90%, which means that there is a 90% chance that the customer will receive their order within the specified period of time.
Since we are delivering 4 items on the customer's order, the overall customer service level for the order is also 90%.
It is important to note that the cycle-service level is only one aspect of customer service, and there are many other factors that can affect the overall customer service level for an order, such as the quality of the products, the speed of delivery, and the level of customer support provided.
However, in this case, the cycle-service level is the only factor that we are considering, so the overall customer service level for the order is 90%.
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