The break-even sales for the current year are 4,310 units or $862,000 and the maximum income from operations that could be realized during the year is -$39,000.
C) To construct a cost-volume-profit chart indicating the break-even sales for the current year, we need to take into account the additional $32,750 on billboard advertising. This will increase the fixed costs to $107,750 ($75,000 + $32,750). The variable cost per unit and the unit selling price remain the same. The break-even equation is:
Break-even sales (units) = Fixed costs / (Unit selling price - Variable cost per unit)
Break-even sales (units) = $107,750 / ($200 - $175) = 4,310 units
Break-even sales (dollars) = Break-even sales (units) * Unit selling price = 4,310 units * $200 = $862,000
Therefore, the break-even sales for the current year are 4,310 units or $862,000.
D) To determine the income from operations if sales total 2,200 units, we can use the following equation:
Income from operations = (Unit selling price * Number of units sold) - (Variable cost per unit * Number of units sold) - Fixed costs
Income from operations = ($200 * 2,200) - ($175 * 2,200) - $107,750 = $440,000 - $385,000 - $107,750 = -$52,750
Therefore, the income from operations if sales total 2,200 units is -$52,750.
To determine the maximum income from operations that could be realized during the year, we can use the same equation with the maximum sales within Interchange Inc.'s relevant range of 2,750 units:
Income from operations = ($200 * 2,750) - ($175 * 2,750) - $107,750 = $550,000 - $481,250 - $107,750 = -$39,000
Therefore, the maximum income from operations that could be realized during the year is -$39,000.
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Magnolia Electric Car Cleaning has the following accounts:
- Equipment Notes Payable
- Accounts Payable Owner’s Capital
- Cash Owner’s, Drawing
- Supplies Equipment
- Accounts Receivable
Identify which items are (1) Assets
a. Liabilities
b. Owner's Equity
The items in the Magnolia Electric Car Cleaning's accounts can be categorized into three main groups: (1) Assets, (2) Liabilities, and (3) Owner's Equity. Here is how each item can be categorized:
(1) Assets:
- Cash: This is an asset because it is a resource that the company owns and can use to generate revenue.
- Supplies: This is also an asset because it is a resource that the company owns and can use to generate revenue.
- Equipment: This is an asset because it is a resource that the company owns and can use to generate revenue.
- Accounts Receivable: This is an asset because it represents money that is owed to the company and will be collected in the future.
(2) Liabilities:
- Equipment Notes Payable: This is a liability because it represents money that the company owes and will have to pay back in the future.
- Accounts Payable: This is a liability because it represents money that the company owes and will have to pay back in the future.
(3) Owner's Equity:
- Owner's Capital: This is owner's equity because it represents the owner's investment in the company.
- Owner's Drawing: This is also owner's equity because it represents the owner's withdrawals from the company.
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i) "The legislator’s and the regulator’s main goal is to keep itself in power. So, they design regulation in a way that can attend the needs of the interest group that exercises more relative pressure on them" (Source: Cardoso,2008, p.6).Required:a- The statement above is related to economic interest theory. Explain the concept of economic interest theory.b- Politically connected firm means the close relationship between business and political elements. Describe this relationship according to economic interest theory.
a) Economic interest theory posits that legislation and regulation are heavily influenced by economic interest groups. b) In economic interest theory, a politically connected firm is a business that has a close relationship with political elements, such as legislators and regulators.
a) Economic interest theory is a concept that suggests that individuals and groups are motivated by their own economic self-interest. This means that people will make decisions and act in ways that will benefit them financially.
According to this theory, legislators and regulators are also motivated by their own economic self-interest, and will design regulations in a way that benefits the interest groups that have the most influence on them. This is because these interest groups can provide financial support to the legislators and regulators, which can help them stay in power.
b) Politically connected firms refer to firms that have a close relationship with the political elements in a given jurisdiction. According to economic interest theory, these firms may be granted access to special treatment and regulations, including preferential taxation, access to government loans or subsidies, or access to regulations that restrict competition.
This relationship can be beneficial for both the firm and the political elements, as the firm can use its influence to get favorable regulations and policies, while the political elements can receive financial support from the firm. This relationship can lead to a situation where the interests of the politically connected firm are prioritized over the interests of other stakeholders, such as consumers and competitors.
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Discuss the main features of an activity-based costing system
and cite the benefits companies report from using this approach
The main features of an activity-based costing system are:
1. Allocating costs based on activities performed in the organization instead of products.
2. Assigning indirect costs to activities and then to the products that use those activities.
3. Utilizing cost drivers to assign costs to activities and products.
Benefits of using an activity-based costing system include:
1. Increased accuracy in product costs.
2. Improved cost control.
3. Improved cost allocation decisions.
4. Increased understanding of the costs associated with activities.
5. Increased ability to identify inefficient activities and make necessary changes.
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Blue devil restaurant chain purchases food ingredients from 4 different suppliers. The chain wants to construct a Central Kitchen, where all the food ingredients are received and processed before they are shipped to the various restaurants. The individual restaurants will then complete the food preparations and there by reduce their operating costs. Your task is to find a location (X & Y coordinates) that is central to the 4 major food ingredient suppliers using the Center-of-Gravity approach. Details follow:Food Supplier: Amazing Foods Best Foods Cozy Foods Desirable FoodsX-Coordinate: 200 100 250 500Y Coordinate: 200 500 600 300Weekly Load shipped: 75 105 135 60
The Center-of-Gravity approach can be used to find a location that is central to the 4 major food ingredient suppliers. The x-coordinate for the central location is 333.33, and the y-coordinate is 333.33. This is the optimal location for the Central Kitchen, as it is equidistant from each of the 4 suppliers.
The formula for calculating the Center-of-Gravity is:
X Coordinate: (200x75 + 100x105 + 250x135 + 500x60)/(75+105+135+60)
Y Coordinate: (200x75 + 500x105 + 600x135 + 300x60)/(75+105+135+60)
The Center-of-Gravity of the four suppliers is at (333.33, 333.33). This is the optimal location for the Central Kitchen, as it is equidistant from each of the 4 suppliers.
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If the value of the Swiss Franc (CHF) is currently $1.08, and
the value of Polish Zloty (PLN) is $0.24, then the value of one
Zloty in Swiss Francs is CHF ____
If the value of the Swiss Franc (CHF) is currently $1.08, and the value of Polish Zloty (PLN) is $0.24, then the value of one Zloty in Swiss Francs is CHF 0.22
The value of one Zloty in Swiss Francs can be found by dividing the value of the Zloty by the value of the Swiss Franc. This can be written as:
Value of one Zloty in Swiss Francs = (Value of Zloty) / (Value of Swiss Franc)
Plugging in the given values, we get:
Value of one Zloty in Swiss Francs = ($0.24) / ($1.08)
Value of one Zloty in Swiss Francs = 0.2222222222222222
Therefore, the value of one Zloty in Swiss Francs is CHF 0.2222222222222222, or approximately CHF 0.22.
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1. Do you agree that anti-spam legislation should be part of Canada's strategy to combat spam? Why not leave the problem of spam to the marketplace to resolve? 2. What factors will determine whether a contract will be the result of lengthy negotiations or will be easily and quickly concluded? 3. Why might a business decide to accept an offer by conduct instead of formally communicating acceptance to the other side? What are the risks of doing so? 4. Critical Analysis: Legislation has removed some of the uncertainty about online contracting. However, questions still remain concerning whether communications on a website are an offer or invitation to do business and whether an electronic acceptance is effective on sending or receipt. What risks do these uncertainties pose for business? What steps can a business take to minimize these risks and avoid contractual disputes? 5. Family members are presumed not to intend legal relations, while businesspeople are subject to the opposite presumption, namely, that an intention to create legal relations is present. Why should the relationship between the parties affect the enforceability of their promises?
1. Yes, anti-spam legislation should be part of Canada's strategy to combat spam.
2. Factors that will determine whether a contract will be easily and quickly concluded include how detailed the contract is.
3. To save time, a company may choose to accept an offer by action rather than formally announcing acceptance.
4. Businesses face risks due to the uncertainty of online contracting since they cannot be confident if an offer or acceptance is legally binding.
5. The parties' relationship influences the enforceability of their pledges since family members do not expect legal consequences when they make a promise, but business people do.
1. Yes, anti-spam legislation should be part of Canada's strategy to combat spam as it serves as a form of deterrence for the illegal activity. Marketplace solutions are often not enough to properly address the problem of spam.
2. Factors that will determine whether a contract will be easily and quickly concluded include how detailed the contract is, how well the parties understand the terms of the contract, and how willing each party is to compromise and accept the other party's terms.
3. A business might decide to accept an offer by conduct instead of formally communicating acceptance in order to save time. However, there is a risk that the other party will not be aware that the offer has been accepted, which could lead to a contractual dispute.
4. The uncertainties of online contracting pose risks to businesses because they are unable to know with certainty whether an offer or acceptance is legally binding. Businesses can minimize these risks by ensuring that all online communications regarding contracts are clear and unambiguous, and by sending a written confirmation of all accepted offers and contracts.
5. The relationship between the parties affects the enforceability of their promises because, when family members make a promise, they are not expecting legal consequences, while business people are.
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Assignment Question(s): A. Discussion questions 1. How can a decision maker identify strategic factors in a corporation's external international environment? (2 marks) 2. Discuss the relationship between corporate governance and social responsibility? Give examples. (2 marks) B. Critical thinking Review the figure 4-3, p.110 from your textbook and answer the following questions: 1. Choose any example of industry from the real national or international market, and detail Porters' five forces framework with a graphic representation. (2.5 marks) 2. According to Porter's framework, what determines the level of competitive intensity in your chosen industry? (1.5 marks) 3. Assess the threat of new entrants, and substitute products/services for your chosen industry. (1 mark) 4. Is your chosen industry attractive for investment? Why or why not? (1 mark)
1. A decision maker can identify strategic factors in a corporation's external international environment by conducting a PESTEL analysis. This analysis examines the political, economic, social, technological, environmental, and legal factors that can impact a corporation's operations and profitability. 2. Corporate governance refers to the set of rules, policies, and practices that dictate how a corporation is managed and corporation's obligation to consider the impact of its actions on society and the environment.
By assessing these factors, a decision maker can identify potential risks and opportunities in the external international environment and make informed decisions about the corporation's strategy.
2. Corporate governance refers to the set of rules, policies, and practices that dictate how a corporation is managed and controlled. Social responsibility, on the other hand, refers to a corporation's obligation to consider the impact of its actions on society and the environment. There is a strong relationship between corporate governance and social responsibility because both are concerned with ensuring that a corporation operates ethically and responsibly.
B. Critical thinking
1. An example of an industry from the real national or international market is the fast food industry. Porter's five forces framework for this industry can be represented graphically as follows:
[Insert graphic representation of Porter's five forces framework for the fast food industry]
2. According to Porter's framework, the level of competitive intensity in the fast food industry is determined by the bargaining power of suppliers, the bargaining power of buyers, the threat of new entrants, the threat of substitute products/services, and the intensity of rivalry among existing competitors.
3. The threat of new entrants in the fast food industry is relatively low because of the high barriers to entry, such as the need for significant capital investment and the established brand recognition of existing firms.
4. The fast food industry may be attractive for investment because of its relatively low barriers to entry and the potential for high profit margins.
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What is social entrepreneurship and how is it related to thebottom of the pyramid (BOP)? Why are integrated reports increasingin popularity?
Social entrepreneurship is the use of innovative and creative approaches to solve social problems or meet social needs. It involves creating and implementing solutions that are sustainable, scalable, and can create a positive impact in the lives of the people it serves.
Social entrepreneurship is related to the bottom of the pyramid (BOP) because it often focuses on creating solutions for underserved or marginalized communities that are typically at the bottom of the economic pyramid.
Integrated reports are increasing in popularity because they provide a more holistic and comprehensive view of a company's performance. They not only include financial information, but also information on environmental, social, and governance (ESG) factors. This allows companies to better communicate their impact and value to stakeholders, including investors, customers, employees, and the community. Integrated reporting also helps companies to better understand their risks and opportunities, and to make more informed decisions about their strategy and operations.
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ABC was a small video rental store 15 years ago. It lent videos to customers for a fee. ABC’s owners would like to cut labour costs by streamlining and automating some of its operations by machines or computer systems. The following scenario describes the manual activities done by ABC’s staff:Customers must become member before borrowing any videos. New customers must fill out a form with their personal details and credit card details. ABC’s staff would approve each membership after checking credit card details etc. After approval, new customer would be given a membership card, and new customer's form would be added to the customer file by ABC’s staff.Any customer wishing to borrow a video would present to ABC’s staff the empty box of the video, their membership card, and payment – payment is always with the credit card used to open the membership account. ABC’ staff would approve this video loan by checking if this member owed any money to ABC, and validity of member’s credit card. If approved, ABC’s staff would process the credit payment for this video loan. If bank approves the credit payment, ABC’s staff present the video and loan’s receipt to the member, then update the video stock file.The customer then returns the video to the store after watching it. ABC’s staff need to update the video stock file regularly when videos are returned. If a loaned video is overdue by a day, the customer's credit card is charged, and a reminder letter is sent to them. Each day after the due date, a further deduction is made on member’s credit card, and each week a reminder letter is sent to the member. This continues until either the member returns the video, or the charges are equal to the cost of replacing the video.From the above description, draw a data flow diagram showing the flow of input information (and/or data) and output information (and/or data) to and from processes for the activities of ABC’s staff and any data stores, external environmental elements that interact with the activities. In this diagram, you must identify the following:processes for ABC’s staff activities (15 marks)external environmental elements, data stores that interact with any of theprocesses identified in (a) (2 marks)input and output information (and/or data) to and from each of the processes, external environmental elements, data stores identified in (a) and (b) (8 marks)(Hint: there are two environmental elements, and six main processes)(State any assumptions – if any – you make about this system.)
The processes for ABC's staff activities are: Approve Membership, Process Payment, Approve Video Loan, Update Video Stock, Charge Overdue Fees and Send Reminder Letters.
The external environmental elements are:
1. Customers
2. Banks
The data stores are:
1. Customer File
2. Video Stock File
The input and output information for each of the processes, external environmental elements, and data stores are as follows:
Approve Membership:
- Input: New customer form, credit card details
- Output: Membership card, updated customer file
Process Payment:
- Input: Credit card details, payment amount
- Output: Approval or denial from bank, updated customer file
Approve Video Loan:
- Input: Empty video box, membership card, payment
- Output: Approval or denial of loan, updated video stock file
Update Video Stock:
- Input: Returned videos
- Output: Updated video stock file
Charge Overdue Fees:
- Input: Overdue videos, customer credit card details
- Output: Updated customer file, updated video stock file
Send Reminder Letters:
- Input: Overdue videos, customer information
- Output: Reminder letters
Customers:
- Input: Membership card, payment, empty video box, returned videos
- Output: New customer form, credit card details
Banks:
- Input: Credit card details, payment amount
- Output: Approval or denial of payment
Customer File:
- Input: New customer form, credit card details, payment information, overdue fees
- Output: Membership card, approval or denial of membership, approval or denial of video loan, updated customer file
Video Stock File:
- Input: Empty video box, returned videos, overdue videos
- Output: Approval or denial of video loan, updated video stock file
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Basseterre, St. Kitts, April 29, 2021 (SKNIS): St. Kitts and Nevis Youth Ambassador Corps officially launched a new project on Wednesday (April 28, 2021) designed to increase the contributions of young people to the sustainable development of the twin-island Federation. The initiative, dubbed the Youth Capacity Building Small Grants Project on Youth in Sustainable Development, will build the capacity and practical skills of young people to design, implement, and monitor interventions relevant to the social, economic, and sustainable development of youth and their communities. The project is geared towards members of youth groups specifically. It is spearheaded by the national youth ambassador corps in collaboration with the GEF Small Grants Programme (SGP), and the Departments of Youth in St. Kitts, and Nevis. The Small Grants Project is funding the initiative to the tune of US$49,970.00. SGP Coordinator, Illis Watts, noted that her organization has a long and productive partnership with the Department of Youth Empowerment in St. Kitts that has resulted in several environmental-centric projects such as seabed and beach clean-ups, an art exhibition, and coral reef tours and education sessions. Ms. Watts added that she is constantly seeking new opportunities to promote sustainable actions and this project fits the strategic objective of the organizations. "The committee is very pleased with what this project is going to deliver and particularly that this project is going to be a national project," she stated, adding that it will help to "set a standard for similar national projects in the Federation. Minister of Youth, the Honourable Jonel Powell, said the creativity and resilience of young people are evident in this project. "This initiative is indeed a testament to the ability of our young people to rise to the occasion, to identify a critical community need, to develop creative interventions, and to build and mobilize a network of partners for an effective response to that need," he stated. "… It also unveils the inherent ability to lead in realizing the necessary community improvements and growth, ultimately shaping a stronger, more sustainable St. Kitts and Nevis." CARICOM Youth Ambassador, Dwane Hendrickson, encouraged members of youth groups to register for the interactive youth building project, noting that it will be a tremendous benefit to their organization. Groups can register at the respective Departments of Youth in the Federation. The project begins on May 01. 2021 and concludes at the end of August 2022.
As the project management team responsible for the successful implementation of the youth development project in St. Kitts, create five (5) subsidiary project plans to show how your project team will effectively manage the project. Your team’s focus should be on developing the five (5) subsidiary plans below:
(a) identify the Project Scope in the scenario above.
The Youth Capacity Building Small Grants Project on Youth in Sustainable Development is a comprehensive initiative aimed at increasing the contributions of young people to the sustainable development of the twin-island Federation of St. Kitts and Nevis.
To effectively manage the project, the project management team will need to develop the following five (5) subsidiary project plans:
1. Scope Management Plan: This plan will define the project scope and outline the process for managing scope changes. It will include a detailed description of the project goals, objectives, deliverables, and boundaries, as well as the process for managing scope changes throughout the project lifecycle.
2. Time Management Plan: This plan will outline the process for managing the project schedule, including the identification of key milestones, the development of a project timeline, and the process for managing schedule changes.
3. Cost Management Plan: This plan will outline the process for managing the project budget, including the identification of project costs, the development of a budget, and the process for managing budget changes.
4. Quality Management Plan: This plan will outline the process for ensuring that the project meets the required quality standards, including the identification of quality metrics, the development of quality control processes, and the process for managing quality changes.
5. Risk Management Plan: This plan will outline the process for identifying, analyzing, and responding to project risks, including the identification of potential risks, the development of risk response plans, and the process for managing risk changes.
By developing these five subsidiary project plans, the project management team will be able to effectively manage the Youth Capacity Building Small Grants Project on Youth in Sustainable Development and ensure that it is successfully implemented.
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Josephine picks up a handbag. She brings it to the cashier. The cashier refuses to sell the handbag to Josephine because the handbag has been reserved for another customer. Advise Josephine whether she can force the shop to sell her the handbag. (20mark) (b) Yen Yen offered to sell her dog for RM 500. Ah Beng offers to purchase Yen Yen's dog for RM 200. Yen Yen answered "hello, no way". Ah Beng replied that he now wants to accept the original offer of RM 500. Yen Yen did not reply to Ah Beng. Discuss whether there is a contract between the parties.(20mark) (c) Pinky is a sought-after speaker. She asks Ah Meng, her husband, to prepare her speech in one of her seminars. She says she will give him 50% of the fees she earns for speaking in the event. Ah Meng completed the speech and claims for the money. Pinky refuses to pay her husband. Advise Ah Meng whether Pinky's promise to pay him is binding. (20mark) (d) Christy, a 17 year old daughter of a rich businessman, is currently studying at Segi University College. She signed a contract to buy a luxurious handbag that costs RM 5,000. Is this contract valid? (20mark)
In the passage shop cannot be stopped forcefully by Josephine , The contract was not made between Yen Yen and Ah Beng. Because of the domestic agreement between a husband and wife Pinky's promise was not binding
(a) Josephine cannot force the shop to sell her the handbag because the handbag has been reserved for another customer. The shop has the right to refuse to sell the handbag to Josephine as it is not available for sale.
(b) There is no contract between Yen Yen and Ah Beng. An offer is a proposal to enter into a contract, and an acceptance is an agreement to the terms of the offer. In this case, Yen Yen offered to sell her dog for RM 500, but Ah Beng countered with an offer of RM 200.
Yen Yen rejected Ah Beng's counteroffer, and there was no acceptance of the original offer. Therefore, there is no contract between the parties.
(c) Pinky's promise to pay Ah Meng is not binding because it is a domestic agreement between a husband and wife. Domestic agreements are generally not enforceable because they are not intended to create legal relations. Therefore, Ah Meng cannot enforce Pinky's promise to pay him for preparing her speech.
(d) The contract between Christy and the seller of the luxurious handbag is not valid because Christy is a minor. Minors are not legally capable of entering into contracts, and any contract entered into by a minor is voidable. Therefore, the contract between Christy and the seller is not enforceable.
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FACTUAL REVIEW QUESTIONS 1. Define the expression quality culture. 2. Explain why the implementation of total quality requires cultural change. 3. List and describe the steps involved in laying the foun- dation for a quality culture. 4. What are the characteristics shared by companies that have a quality culture? 64
1. Quality culture is an organizational culture that prioritizes quality in every aspect of the business, from production processes to customer service.
2. The implementation of total quality requires cultural change because it requires a shift in mindset and behavior throughout the organization.
3. The steps involved in laying the foundation for a quality culture includes like Setting quality goals ,Creating a system,Establishing a vision .
4. Companies that have a quality culture share several characteristics, including focus on customer satisfaction,Employee empowerment,commitment to quality .
1, It is characterized by a focus on continuous improvement, employee empowerment, and customer satisfaction.
2.This includes a commitment to quality at all levels of the organization, a willingness to continually improve processes and products, and a focus on customer satisfaction.
3. The steps involved in laying the foundation for a quality culture are:
- Establishing a vision for quality and communicating it throughout the organization
- Setting quality goals and objectives
- Creating a quality management system
- Developing a quality training program for employees
- Creating a system for measuring and monitoring quality performance
- Implementing continuous improvement processes
4. Companies that have a quality culture share several characteristics, including:
- A commitment to quality at all levels of the organization
- A focus on customer satisfaction
- Employee empowerment and involvement in quality improvement efforts
- A willingness to continually improve processes and products
- A system for measuring and monitoring quality performance
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Imagine that you are a venture capitalist at Conrad Ventures evaluating the following startup idea today (assume today’s date is January 1, 2022). Your fund typically seeks a 25% IRR on its investments. The startup requires 4 rounds of financing over the next 7 years: $1 million today, $1 million in two years, $2 million in 3 years, and $3 million in 7 years. If the company has an IPO at the end of 10 years, the company will be worth $1.2 billion; the probability of an IPO is 10%. Otherwise, if the company is acquired by another company in 10 years (which happens with 35% probability), the expected acquisition value will be $900 million. If the company does not get acquired, it will be worth 0. The founders of the company initially allocate 1,100,000 shares to themselves, and decide keep 250,000 shares in reserve in case they wish to hire any additional employees in the future.
a) Please provide the share price of the startup in each round of financing and the number of shares issued to investors in each round.
b) How do your answers to part a) change if the probability of acquisition is only 15% (assume all other information in the problem stays the same)? Please provide one sentence explaining intuition for how the results change.
c) Suppose the founders wish to understand how potential changes in the investment amounts would impact the share price in each round. If the share price in round 2 were to decrease by 2.36%, due to a change of x% in the investment amount in the third year, what would x be? (Assume all other information in the problems stays the same as originally posed, so the probability of acquisition is 35%. Also assume that the number of new shares issued to investors at time 0 stays the same as what you calculated in part a). If you are unable to answer this question, please provide equations that describe the conditions that x must satisfy.
a) For Round 1, the share price is $1,000,000/1,100,000 = $909.09 per share and the number of shares issued to investors is 1,100,000-250,000=850,000.
For Round 2, the share price is $1,000,000/1,850,000 = $541.37 per share and the number of shares issued to investors is 1,850,000-250,000=1,600,000.
For Round 3, the share price is $2,000,000/3,450,000 = $580.52 per share and the number of shares issued to investors is 3,450,000-250,000=3,200,000.
For Round 4, the share price is $3,000,000/5,650,000 = $529.51 per share and the number of shares issued to investors is 5,650,000-250,000=5,400,000.
b) If the probability of acquisition is only 15%, then the expected acquisition value decreases to $600 million and the share price in Round 4 would decrease to $107.89 per share.
The lower probability of acquisition has decreased the value of the startup and thus the share price decreases.
c) The x value is the percentage change in the investment amount in the third year. It is calculated as x = (2.36/580.52)*100 = 0.41%.
If the investment amount in the third year decreases by 0.41%, the share price in Round 2 will decrease by 2.36%.
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Question 2. Consider the following goal:
GOAL Achieve [PCN Issued When CC Not Paid]
GIVEN a vehicle travels through the CC zone on a day and time where CC is due
AND the vehicle is not exempt from CC on the day of travel
AND no CC payment for that vehicle and that day has been received by midnight of the day
following the day of travel
THEN within a day the CCMS will send a PCN to the vehicle owner
2.1. Sketch a conceptual model of the world phenomena used in the goal definition.
A conceptual model of the goal "Achieve [PCN Issued When CC Not Paid]" could be visualized with a flow diagram. The process begins when a vehicle travels through the CC zone on a day and time where CC is due.
Next, the system must confirm that the vehicle is not exempt from CC on the day of travel. Following this, the system must check to see if a CC payment for that vehicle and day has been received by midnight of the day following the day of travel. Finally, the CCMS will send a PCN to the vehicle owner if the payment has not been received.
The flow of this process is as follows: Vehicle enters CC Zone → Check for Exemption → Payment Received? → Send PCN to Owner.
To implement this concept, a computer system must be created that can handle the various components of this process. This could include data management software to store vehicle information, payment systems to manage payments, and a system to track the time and date of travel.
The conceptual model for the goal "Achieve [PCN Issued When CC Not Paid]" is a simple yet efficient system. By following this process, the system can ensure that all vehicles that enter the CC zone are appropriately charged, even if payment is not received.
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Q21) You would like to retire in 25.0 years. The expected rate of inflation is 3.04% per year. You currently have a standard of living that requires $6,050.00 of monthly expenses. Assuming you want to maintain the Same standard of living in retirement, what are your monthly expenses expected to be the first year of retirement? (2 points)
The answer are monthly expenses in the first year of retirement expected to be $12,768.28
To determine the monthly expenses in the first year of retirement, we need to account for the expected rate of inflation over the next 25 years. We can do this by using the formula:
Future Value = Present Value * (1 + Inflation Rate) ^ Number of Years
Plugging in the given values:
Future Value = $6,050.00 * (1 + 0.0304) ^ 25
Future Value = $6,050.00 * 2.11
Future Value = $12,768.28
Therefore, your monthly expenses in the first year of retirement are expected to be $12,768.28 in order to maintain the same standard of living.
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The HR department at Fresh Munchables is considering a point factor approach for establishing internal alignment. The company is mid-sized but is growing steadily, and it is projected to become a large organization within the next 10 years. What is true about the point factor approach that would benefit Fresh Munchables?
Employees now qualify for discounts on packaged meat goods as a result of Fresh Munchables' acquisition of a new freeze-dried meat business.
What is Fresh Munchables?
The HR team has instructed Kenna, a supervisor, to notify her staff members about these new perks through formal training, supervisor-based training, and easily accessible internet material.
Fresh Munchables, a mid-sized but rapidly expanding food-processing business, was established in 1967. The business has made a commitment to solely sell premium-quality health goods ever since it was founded.
The business is based in Wichita, Kansas, and is one of the biggest producers of soups and easy dinners there. The business started producing healthful food and beverages 20 years ago.
Therefore, Employees now qualify for discounts on packaged meat goods as a result of Fresh Munchables' acquisition of a new freeze-dried meat business.
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An investment in a machine costs $615,000 and net cash inflows of $X are expected for the next 9 years. The applicable discount rate is 8.5%. If the project is accepted, what is the minimum that X can be?
A) $98,449
B) $118,125
C) $107,019
D) $109,058
E) $100,506
An investment in a machine costs $615,000 and net cash inflows of $X are expected for the next 9 years. The applicable discount rate is 8.5%. If the project is accepted, the minimum that X can be is $109,058.
The correct answer is option D) $109,058.
To find the minimum that X can be, we need to use the present value of an annuity formula:
PV = X × [(1 - (1 + r)^-n)/r]
Where:
PV = Present value
X = Net cash inflow
r = Discount rate
n = Number of years
We are given the following values:
PV = $615,000
r = 8.5% = 0.085
n = 9
Substituting the values into the formula, we get:
$615,000 = X × [(1 - (1 + 0.085)^-9)/0.085]
Solving for X, we get:
X = $615,000/[(1 - (1 + 0.085)^-9)/0.085]
X = $109,058
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The Hershey Company:
Research and describe the company’s primary business activities. In addition, provide information regarding the company’s history, position within their industry, competition, recent developments, and future direction.
The Hershey Company is a leader in the U.S. chocolate and confectionery industry. The company was founded in 1894 by Milton Hershey and is headquartered in Hershey, Pennsylvania. Primary business activities include the manufacture and distribution of confectionery and chocolate products, food and beverage enhancers, snacks, and grocery products.
The Hershey Company’s position within the industry is one of leadership and innovation. In terms of competition, the company competes with large, multinational corporations such as Nestlé, Mars, and Mondelez International.
Recent developments include the acquisition of Ripple Brand Collective and its portfolio of brands in 2019, and the launch of its S’mores product line in 2020.
Looking forward, the Hershey Company is focused on continuing to drive innovation, build on its e-commerce strategy, and capitalize on new opportunities in emerging markets.
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Is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization?
Yes, identification and description of the strategies that managers can use to achieve better performance and a competitive advantage for their organization is a key part of strategic management.
Strategic management involves setting goals and objectives for the organization, analyzing the competitive environment, assessing the internal organization, and implementing and evaluating strategies. Managers must identify and implement strategies that will help the organization to achieve its goals and gain a competitive advantage in the market. This may involve developing new products or services, expanding into new markets, improving operational efficiency, or implementing new technology. By identifying and implementing effective strategies, managers can help the organization to achieve better performance and a competitive advantage.
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With the aid of appropriate examples, show to what extent companies need to listen to their customers when it comes to ethics, even if they know that they can avoid doing what is right and still make huge profits
With the aid of appropriate examples, show to what extent companies need to listen to their customers when it comes to ethics, even if they know that they can avoid doing, Companies need to listen to their customers when it comes to ethics to a great extent, even if they know that they can avoid doing what is right and still make huge profits.
This is because listening to customers and valuing their opinions is essential for maintaining a good reputation and building long-term relationships with customers.
One example of this is the case of Nike, which faced backlash in the late 1990s for its use of sweatshop labor. While the company may have been able to continue making profits by ignoring the concerns of customers and activists, it ultimately decided to listen and implement changes to improve working conditions in its factories. This decision not only helped to improve the lives of workers, but also helped to improve the company's reputation and build trust with customers.
Another example is the case of Johnson & Johnson, which faced a crisis in the 1980s when it was discovered that some of its Tylenol products had been tampered with and caused deaths. The company responded by recalling all of its Tylenol products, even though it was not legally required to do so and it cost the company millions of dollars. This decision helped to maintain the trust of customers and protect the company's reputation.
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Question 23 (5 points) Please name and describe the four theories we discussed related to market efficiency Question 24 (5 points) What is a. the expected return b. standard deviation for the following two stock portfolio? (please take out to 100th, example: 56) Stock Weight Return Standard Dev Correlation between A/B
А 0.4 0.12 0.25 0.45
B 0.6 0.1 0.15
Question 23 (5 points) Please name and describe the four theories we discussed related to market efficiency Question 24 (5 points) What is a. the expected return b. standard deviation for the following two stock portfolio? (please take out to 100th, example: 56) Stock Weight Return Standard Dev Correlation between A/B А 0.4 0.12 0.25 0.45 B 0.6 0.1 0.15
Answer 23:
The four theories related to market efficiency are:
1. The Efficient Market Hypothesis (EMH): This theory suggests that all available information is reflected in the prices of stocks, and that it is impossible to consistently beat the market.
2. The Random Walk Theory: This theory suggests that stock prices are unpredictable and move randomly, making it impossible to consistently make profits by trying to predict the future prices of stocks.
3. The Behavioral Finance Theory: This theory suggests that investors are not always rational and that their decisions can be influenced by biases and emotions, which can lead to market inefficiencies.
4. The Fundamental Analysis Theory: This theory suggests that it is possible to determine the intrinsic value of a stock by analyzing the financial health and prospects of the company, and that stocks can be undervalued or overvalued based on this analysis.
Answer 24:
a. The expected return of the portfolio is calculated by multiplying the weight of each stock by its return and then summing the results:
Expected return = (0.4 x 0.12) + (0.6 x 0.1) = 0.048 + 0.06 = 0.108 or 10.8%
b. The standard deviation of the portfolio is calculated using the following formula:
Standard deviation = √[(0.4^2 x 0.25^2) + (0.6^2 x 0.15^2) + (2 x 0.4 x 0.6 x 0.25 x 0.15 x 0.45)]
= √[0.01 + 0.0054 + 0.0081] = √0.0235 = 0.1532 or 15.32%
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Burt is saving up for his retirement. Today is his 36th birthday. Burt first started saving when he was 25 years old. On his 25th birthday, Burt made the first contribution to his retirement account when he deposited $1,500. Each year on his birthday, Burt has contributed another $1,500 to the account. The 12th (and last) of these contributions was made earlier today on his 36th birthday. The account has paid an effective annual rate of return of 6.4%.
a) How much will Burt have in the account on his 36th birthday (after the contribution mentioned above)?
Burt wants to close the account tomorrow and move the money to a stock fund which is expected to earn an effective annual return of 8.3% a year. Burt’s plan is to continue making contributions of an undetermined amount to this account each year on his birthday. His next contribution will be one year from today (age 37) and his final planned contribution will be on his 66th birthday (30 additional contributions in all). Burt hopes to withdraw $8,000 a month for 20 years after he retires (240 withdrawals starting one month after his 66th birthday).
b) How much does Burt need in his account on his 66th birthday to fund the future withdrawals?
c) How much does each of the 30 annual contributions (from age 37 to 66) need to be to reach this goal?
a) Burt will have $14,208.66 in the account on his 36th birthday after the contribution mentioned above. b) Burt needs $412,041.96 in his account on his 66th birthday to fund the future withdrawals. c) each of the 30 annual contributions needs to be $3,424.43 to reach this goal.
a) The formula to calculate the future value of an annuity is FV = P * [(1 + r)^n - 1] / r, where P is the payment, r is the interest rate, and n is the number of payments. In this case, P = $1,500, r = 0.064, and n = 12. Plugging these values into the formula, we get:
FV = $1,500 * [(1 + 0.064)^12 - 1] / 0.064
FV = $1,500 * 9.472
FV = $14,208.66
So, Burt will have $14,208.66 in the account on his 36th birthday after the contribution mentioned above.
b) To find out how much Burt needs in his account on his 66th birthday to fund the future withdrawals, we need to use the 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 payments. In this case, FV = $8,000 * 240 = $1,920,000, r = 0.083, and n = 20. Plugging these values into the formula, we get:
PV = $1,920,000 / (1 + 0.083)^20
PV = $1,920,000 / 4.661
PV = $412,041.96
So, Burt needs $412,041.96 in his account on his 66th birthday to fund the future withdrawals.
c) To find out how much each of the 30 annual contributions needs to be to reach this goal, we need to use the formula P = FV * r / [(1 + r)^n - 1], where P is the payment, FV is the future value, r is the interest rate, and n is the number of payments. In this case, FV = $412,041.96, r = 0.083, and n = 30. Plugging these values into the formula, we get:
P = $412,041.96 * 0.083 / [(1 + 0.083)^30 - 1]
P = $34,199.48 / 9.986
P = $3,424.43
So, each of the 30 annual contributions needs to be $3,424.43 to reach this goal.
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For tax-reporting purposes, qualified dividends are considered to be what type of income? A) Phantom. B) Passive. C) Portfolio. D) Earned
For tax-reporting purposes, qualified dividends are considered to be (c) portfolio income.
Dividends are payments made by a corporation to its shareholders, usually as a distribution of profits. The tax treatment of dividends depends on whether they are classified as qualified or nonqualified.
Qualified dividends are dividends that meet certain requirements set by the Internal Revenue Service (IRS). In general, to be considered qualified, dividends must be paid by a U.S. corporation or a qualified foreign corporation, and the shareholder must have held the stock for a certain period of time (usually at least 60 days for common stock, or 90 days for preferred stock).
Qualified dividends are taxed at the same rate as long-term capital gains, which is generally lower than the tax rate for ordinary income. This makes them a particularly attractive form of income for investors.
Portfolio income is income generated from investments, such as dividends, interest, and capital gains. This is in contrast to earned income, which is income from wages, salaries, and self-employment. Passive income, on the other hand, generally refers to income that is earned without active involvement, such as rental income or royalties.
In summary, for tax-reporting purposes, qualified dividends are considered to be portfolio income, which is income generated from investments such as dividends, interest, and capital gains.
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The authorised capital of a limited company is BD. 5,000,000 divided into 50,000 equity shares of BD.100 each. Out of these, some shares have been issued to the public, payable BD. 25 on application, BD. 30 on the allotment, BD. 25 on the first call and BD. 20 on the second and final call. All amounts have been duly received. Requirement: use the last five numbers of your student ID as the numbers of shares issued by the company. Pass necessary journal entries and prepare a Balance sheet 1 A- B I UN III E E
The journal entries and balance sheet for the issued shares will depend on the last five numbers of your student ID. For example, if the last five numbers of your student ID are 12345, then the company issued 12,345 shares.
The journal entries and balance sheet will be as follows:
Journal Entries:
1. Cash Dr. 308,625 (12,345 shares x BD. 25)
Equity Share Application A/C Cr. 308,625
2. Equity Share Application A/C Dr. 308,625
Equity Share Capital A/C Cr. 308,625 (12,345 shares x BD. 25)
3. Cash Dr. 370,350 (12,345 shares x BD. 30)
Equity Share Allotment A/C Cr. 370,350
4. Equity Share Allotment A/C Dr. 370,350
Equity Share Capital A/C Cr. 370,350 (12,345 shares x BD. 30)
5. Cash Dr. 308,625 (12,345 shares x BD. 25)
Equity Share First Call A/C Cr. 308,625
6. Equity Share First Call A/C Dr. 308,625
Equity Share Capital A/C Cr. 308,625 (12,345 shares x BD. 25)
7. Cash Dr. 246,900 (12,345 shares x BD. 20)
Equity Share Second and Final Call A/C Cr. 246,900
8. Equity Share Second and Final Call A/C Dr. 246,900
Equity Share Capital A/C Cr. 246,900 (12,345 shares x BD. 20)
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Using a corporate example analyze the application of Vroomsexpectancy theory of motivation. OR what intrinsicmotivation you towards your career and personal goals ?
Vroom's Expectancy Theory of Motivation states that individuals are motivated to act when they believe their actions will lead to desirable outcomes. This theory posits that motivation is a function of three factors: expectancy, instrumentality, and valence. Expectancy refers to an individual's belief that their effort will lead to successful performance.
An example of the application of Vroom's Expectancy Theory in a corporate setting is a company offering bonuses to employees for meeting certain performance targets. The expectancy factor is present because employees believe that if they put in the effort, they will achieve the performance targets. The instrumentality factor is present because employees believe that if they achieve the performance targets, they will receive the bonus.
Intrinsic motivation is the drive to engage in an activity for its own sake, rather than for external rewards. For me, intrinsic motivation towards my career and personal goals comes from a desire to learn and grow, a sense of accomplishment, and a passion for what I am doing. For example, I am intrinsically motivated to pursue a career in a field that I am passionate about, even if it may not be the most financially rewarding.
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Financial Data collected 20X1 20X2 Financial Department Note Cash Common Stock Accounts Receivable Retained earnings Inventories Prepaid Expenses Land Building China, Glass, etc. Accumulated depreciation Deferred income taxes ---Current Accounts payable Long-term debt Current portion of long-term debt Accrued Expense Marketable Securities 18,000 255,587 15,000 200,000 15,650 3,500 150,000 1,008,000 300,000 460,263 8,500 14,000 560,000 21,000 2,000 11,200 21,000 Business bank account balance at the end of the year 313,420 Common shares at the end of the year 7,600 Outstanding Accounts Receivable at the end of the year 160,000 Accumulated earning for previous years 32,000 Warehouse inventory balance at the end of the year 3,320 Advance payment for future 150,000 Land property balance at the end of the year 1,008,000 Building property balance at the end of the year 350,000 Other investment assets property 560,000 Total accumulated depreciation 8,400 Current deferred income tax owing 16,000 Owing balance at the end of the year 500,000 Total long-term loan borrowed from the bank 18,000 Current portion of the loan owing 2,100 Owing to utility providers 6,000 Investment in GIC and securities Date First Last Student ID MGMT(52A) In-class Assignment2 Required 1) Rearrange the Accounts order following the Balance Sheet Format 2) Calculate the sub-total for each category accounts on the Balance sheet 3) Calculate net working capital for 20x1 and 20x2 4) Calculate the amount change and percentage changes from 20x1 to 20x2. 5) Calculate the following ratio Current Ratio Acid Test Ratio A/R turn-over Ratio and Avg collection period Solvency Ratio Debt to Equity Ratio Asset turn-over Ratio Profit Margin (Assume the 2001 Revenue 1,300,000, profit is 65,000, Operating Cash flow is 201,000. 2002 Revenue 1,090,000, profit is 472,000, operating cash flow is $192,000 HERZO Dust Extraction Cutting Guard for 4
Rearranged Accounts in Balance Sheet Format:
Assets:
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Accrued Expense
Marketable Securities
Land
Building
China, Glass, etc.
Less: Accumulated Depreciation
Deferred Income Taxes
Total Assets
Liabilities:
Accounts Payable
Long-term Debt
Current Portion of Long-term Debt
Owing to Utility Providers
Total Liabilities
Equity:
Common Stock
Retained Earnings
Total Equity
Sub-total for each category accounts on the Balance Sheet:
Assets:
Current Assets:
Cash: 18,000 (20x1) / 313,420 (20x2)
Accounts Receivable: 15,000 (20x1) / 160,000 (20x2)
Inventories: 200,000 (20x1) / 15,650 (20x2)
Prepaid Expenses: 3,500 (20x1) / 2,000 (20x2)
Accrued Expense: 14,000 (20x1) / 11,200 (20x2)
Marketable Securities: 560,000 (20x1) / 21,000 (20x2)
Total Current Assets: 810,500 (20x1) / 523,470 (20x2)
Property, Plant, and Equipment:
Land: 1,008,000 (20x1 and 20x2)
Building: 1,008,000 (20x1) / 350,000 (20x2)
China, Glass, etc.: 150,000 (20x1 and 20x2)
Less: Accumulated Depreciation: (8,400) (20x1 and 20x2)
Total Property, Plant, and Equipment: 2,157,600 (20x1) / 1,399,600 (20x2)
Other Assets:
Deferred Income Taxes: 16,000 (20x1 and 20x2)
Total Other Assets: 16,000 (20x1 and 20x2)
Total Assets: 2,984,100 (20x1) / 1,923,070 (20x2)
Liabilities:
Current Liabilities:
Accounts Payable: 460,263 (20x1) / 8,500 (20x2)
Current Portion of Long-term Debt: 14,000 (20x1) / 2,100 (20x2)
Owing to Utility Providers: 6,000 (20x1 and 20x2)
Total Current Liabilities: 480,263 (20x1) / 10,600 (20x2)
Long-term Liabilities:
Long-term Debt: 300,000 (20x1 and 20x2)
Total Long-term Liabilities: 300,000 (20x1 and 20x2)
Total Liabilities: 780,263 (20x1) / 310,600 (20x2)
Equity:
Common Stock: 255,587 (20x1 and 20x2)
Retained Earnings: 1,948,250 (20x1) / 1,356,883 (20x2)
Total Equity: 2,203,837 (20x1) / 1,612,470 (20x2)
Total Liabilities and Equity: 2,984,100 (20x1) / 1
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case study-Sabina decides to set up a business selling flowers. She gets up early in the morning, visits the market, and then sets up a stall by the side of the road. For the first year, all goes well. She sells all the flowers she is able to buy and she derives some income from the business. However, Sabina feels that she could sell more flowers if she was able to transport more to the place where she sells them, and she also knows that there are several other roads nearby where she could sell flowers, if she could be in two places at once.She could achieve these two things by buying a van and by employing other people to sell flowers in other locations. Sabina needs more money to achieve this expansion of her business. She decides to ask her rich friend Ibrahim to invest in the business. Ibrahim can see the potential of Sabina's business and wants to invest, but he doesn't want to be involved in the management of the business. He also does not want to have ultimate liability for the debts of the business if it fails.He therefore suggests that they set up a limited company. He will own the majority of the shares and be entitled to dividends. Sabina will be managing director and be paid a salary for her work. At the end of the first year of trading as a limited company, Ibrahim receives a copy of the financial statements. Profits are lower than expected, so his dividend will not be a large as he had hoped. He knows that Sabina is paid a salary so does not care as much as him that profits are low.Ibrahim is concerned by the level of profits and feels that he wants further assurance on the accounts. He doesn't know whether they give a true reflection on the last year's trading, particularly as the profits do not seem as high as those Sabina had predicted when he agreed to invest. Ibrahim approached their auditing firm Bilal & Co. (Imagine you are the auditing firm) and requested them to conduct an audit of their company and give an assurance report
1. Consider the elements of assurance engagment and discribe the roles of Bilal & Co and Ibrahim in this assurance service.2.what is the subject matter of the assurance engagement ?3- What kind of review engagement has to be done?4- who has to give the audit report and at whom?
1. The elements of an assurance engagement are the three-party relationship between the auditor, the client, and the intended users, the subject matter, the criteria used to evaluate the subject matter, the assurance report, and the evidence obtained by the auditor.
In this case, Bilal & Co is the auditor, Sabina and Ibrahim are the clients, and the intended users are the shareholders and potential investors. Bilal & Co's role is to conduct an independent and objective examination of the financial statements and provide an assurance report on their findings. Ibrahim's role is to provide the necessary information and access to the company's records for the audit to be conducted.
2. The subject matter of the assurance engagement is the financial statements of the company, including the balance sheet, income statement, and cash flow statement.
3. A review engagement has to be done, which involves a less detailed examination of the financial statements than an audit. A review engagement provides limited assurance on the financial statements and is less extensive than an audit.
4. The audit report is given by Bilal & Co, the auditing firm, and is directed at the shareholders and potential investors of the company. The report provides an opinion on the fairness and accuracy of the financial statements and whether they are in accordance with generally accepted accounting principles (GAAP).
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You have been appointed policy advisor of the country Economia. The country is an open economy, has a floating exchange rate regime and uses the Econ as its currency.
The government is unsure how to record some international transactions in the Balance of Payment. Show (using the credit/debit tables) how each of the following transactions should be recorded in Economia’s Balance of Payments. You should specify the account that is affected and the accompanying credit/debit entry.
a. A car manufacturer in Economia imports 600,000 Econs in parts from a German company. It pays for the purchase using a bank account in Economia.
b. The Central Bank of Economia buys 2 million Econs of US bonds from an American securities firm.
c. A Japanese tourist spends 300 Econs on his credit card (issued by a Japanese bank) for a hotel room in Economia.
d. An engineer from Economia receives 1,000 Econs for services provided to a Spanish company. The payment is made using a Spanish bank account.
For the car manufacturer in Economia importing 600,000 Econs in parts from a German company Credit/Debit Entry: Debit 600,000 Econs, For the Central Bank of Economia buying 2 million Econs, For a Japanese tourist spending 300 Econs and For an engineer from Economia receiving 1,000 Econs.
a. For the car manufacturer in Economia importing 600,000 Econs in parts from a German company and paying for the purchase using a bank account in Economia, the transaction should be recorded in Economia’s Balance of Payments as follows:
Account Affected: Current Account
Credit/Debit Entry: Debit 600,000 Econs (the import of parts from Germany has resulted in a net outflow of currency from Economia).
b. For the Central Bank of Economia buying 2 million Econs of US bonds from an American securities firm, the transaction should be recorded in Economia’s Balance of Payments as follows:
Account Affected: Capital Account
Credit/Debit Entry: Credit 2 million Econs (the purchase of US bonds has resulted in a net inflow of currency into Economia).
c. For a Japanese tourist spending 300 Econs on his credit card (issued by a Japanese bank) for a hotel room in Economia, the transaction should be recorded in Economia’s Balance of Payments as follows:
Account Affected: Current Account
Credit/Debit Entry: Credit 300 Econs (the spending of a Japanese tourist has resulted in a net inflow of currency into Economia).
d. For an engineer from Economia receiving 1,000 Econs for services provided to a Spanish company and the payment being made using a Spanish bank account, the transaction should be recorded in Economia’s Balance of Payments as follows:
Account Affected: Current Account
Credit/Debit Entry: Credit 1,000 Econs (the payment received from the Spanish company has resulted in a net inflow of currency into Economia).
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Is the following statement true or false?
Marginal cost of capital uses lowest cost debt and cost of
retained earnings in proportion to their market value weight in the
capital structure.
The statement is true.
Marginal cost of capital uses lowest cost debt and cost of retained earnings in proportion to their market value weight in the capital structure.
Marginal cost of capital (MCC) is the cost of raising an additional unit of capital. It is calculated by using the weighted average cost of capital (WACC) formula, which takes into account the proportion of debt and equity in the capital structure and their respective costs.
The lowest cost debt and cost of retained earnings are used in the calculation because they are the most cost-effective sources of financing. Therefore, the statement that "marginal cost of capital uses lowest cost debt and cost of retained earnings in proportion to their market value weight in the capital structure" is true.
Here is the formula for calculating MCC:
MCC = (Wd x Rd) + (We x Re)
Where:
Wd = proportion of debt in the capital structure
Rd = cost of debt
We = proportion of equity in the capital structure
Re = cost of equity
By using the lowest cost debt and cost of retained earnings in the calculation, a company can minimize its cost of capital and maximize its profitability.
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question 1
If you deposit $2,000 in a bank account that pays 4% interest annually, how much will be in your account after 5 years? Do not round intermediate calculations. Round your answer to the nearest cent.
Explanation:
The formula to calculate the future value of a present sum of money with compound interest is:
FV = PV x (1 + r)n
Where: FV = Future Value PV = Present Value r = Interest Rate per Period n = Number of Periods
In this case, the present value (PV) is $2,000, the interest rate (r) is 4% or 0.04 per year, and the number of periods (n) is 5 years. Therefore, we can calculate the future value (FV) as follows:
FV = $2,000 x (1 + 0.04)5 FV = $2,000 x 1.21665 FV = $2,433.30
Therefore, after 5 years, the amount in the account will be $2,433.30 (rounded to the nearest cent).