A)The revised probability of an unsuccessful food store for Juan's brother is 0.273.B) The revised probability of an unsuccessful food store for Juan's brother is 0.778. C)If the initial probability of a successful food store is 0.60, the revised probabilities are 0.2,0.3,0.7
To solve this problem, we will use the Bayes' theorem. The Bayes' theorem states that P(A|B) = P(B|A)P(A) / P(B),
(a) If the marketing research is favorable, the revised probability of a successful food store for Juan's brother is:
P(Success|Favorable) = P(Favorable|Success)P(Success) / P(Favorable)
= (0.8)(0.5) / (0.8)(0.5) + (0.3)(0.5)
= 0.4 / 0.55
= 0.727
The revised probability of an unsuccessful food store for Juan's brother is:
P(Unsuccessful|Favorable) = 1 - P(Success|Favorable)
= 1 - 0.727
= 0.273
(b) If the marketing research is unfavorable, the revised probability of a successful food store for Juan's brother is:
P(Success|Unfavorable) = P(Unfavorable|Success)P(Success) / P(Unfavorable)
= (0.2)(0.5) / (0.2)(0.5) + (0.7)(0.5)
= 0.1 / 0.45
= 0.222
The revised probability of an unsuccessful food store for Juan's brother is:
P(Unsuccessful|Unfavorable) = 1 - P(Success|Unfavorable)
= 1 - 0.222
= 0.778
(c) If the initial probability of a successful food store is 0.60, the revised probabilities are:
P(Success|Favorable) = P(Favorable|Success)P(Success) / P(Favorable)
= (0.8)(0.6) / (0.8)(0.6) + (0.3)(0.4)
= 0.48 / 0.6
= 0.8
P(Unsuccessful|Favorable) = 1 - P(Success|Favorable)
= 1 - 0.8
= 0.2
P(Success|Unfavorable) = P(Unfavorable|Success)P(Success) / P(Unfavorable)
= (0.2)(0.6) / (0.2)(0.6) + (0.7)(0.4)
= 0.12 / 0.4
= 0.3
P(Unsuccessful|Unfavorable) = 1 - P(Success|Unfavorable)
= 1 - 0.3
= 0.7
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A farmer faces a dilemma in the event of a certain weather freezing situation. The weather forecast is for a cold weather. There is a P% chance that the temperature tonight will be cold enough to freeze and to destroy his entire crop, which is worth some $50,000. He can take the following actions: first, he could set up burners in the orchard; this could cost $5,000, but he could still incur damage of $16,000 whenever the cold weather happens. Second: he could set up sprinklers to spray the tree. If the temperature drops, the water would freeze on the fruits and provide some insulation. This method is cheaper ($2,000) but is less effective. With sprinklers he could incur damage as much as $23,000. Third: the do nothing option. If the weather is freezing he could lose his entire crop. a. Construct a decision tree that represents the problem b. If P according to the forecast is assumed to be 50%, then what option should be selected i.e. has minimal expected cost c. Assess using Risk profiles Which option is the best d. Construct a cumulative Risk profile and assess dominance e. Keep p as a variable and plot a graph where the x-axis is the p value and the y-axis is the EMV. Show how EMV for each option vary with respect to p. can you see where each option has the lowest EMV cost.
a) Decision tree:
[Farmer]-->[Set up burners ($5,000)]-->[Cold weather (P%)]-->[Damage ($16,000)]
|
|-->[Not cold weather (1-P%)]-->[No damage]
|
|
|-->[Set up sprinklers ($2,000)]-->[Cold weather (P%)]-->[Damage ($23,000)]
|
|-->[Not cold weather (1-P%)]-->[No damage]
|
|
|-->[Do nothing ($0)]-->[Cold weather (P%)]-->[Damage ($50,000)]
|
|-->[Not cold weather (1-P%)]-->[No damage]
b)The option with the minimal expected cost is to set up burners, with an expected cost of $13,000. c) The option with the lowest risk profile is to set up burners, as it has the lowest fixed cost ($5,000) and the lowest variable cost ($16,000 * P). d) it has the lowest fixed cost ($5,000) and the lowest variable cost ($16,000 * P). e) The graph will also show the points at which each option has the lowest EMV cost.
a) the decision tree that represents the problem has been drawn,b) Expected cost for each option:
Set up burners: $5,000 + (P% * $16,000) = $5,000 + ($16,000 * P)
Set up sprinklers: $2,000 + (P% * $23,000) = $2,000 + ($23,000 * P)
Do nothing: P% * $50,000 = $50,000 * P
If P = 50%:
Set up burners: $5,000 + ($16,000 * 0.5) = $13,000
Set up sprinklers: $2,000 + ($23,000 * 0.5) = $13,500
Do nothing: $50,000 * 0.5 = $25,000
The option with the minimal expected cost is to set up burners, with an expected cost of $13,000.
c) Risk profiles:
Set up burners: $5,000 + ($16,000 * P)
Set up sprinklers: $2,000 + ($23,000 * P)
Do nothing: $50,000 * P
The option with the lowest risk profile is to set up burners, as it has the lowest fixed cost ($5,000) and the lowest variable cost ($16,000 * P).
d) Cumulative risk profile:
Set up burners: $5,000 + ($16,000 * P)
Set up sprinklers: $2,000 + ($23,000 * P)
Do nothing: $50,000 * P
The option with the lowest cumulative risk profile is to set up burners, as it has the lowest fixed cost ($5,000) and the lowest variable cost ($16,000 * P).
e) EMV graph:
The EMV for each option varies with respect to P:
Set up burners: $5,000 + ($16,000 * P)
Set up sprinklers: $2,000 + ($23,000 * P)
Do nothing: $50,000 * P
The graph will show that the EMV for each option decreases as P increases. The option with the lowest EMV cost at each point will be the best option. For example, at P = 0, the best option is to do nothing, as it has an EMV cost of $0. At P = 1, the best option is to set up burners, as it has an EMV cost of $21,000. The graph will also show the points at which each option has the lowest EMV cost.
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What is the approximate duration of a 5-year zero-coupon
bond?
Group of answer choices
5 years
3 years
None of these
2 years
4 years
The approximate duration of a 5-year zero-coupon bond is 5 years.
The duration of a bond measures its sensitivity to changes in interest rates, and for a zero-coupon bond, the duration is equal to its maturity. Since a 5-year zero-coupon bond has a maturity of 5 years, its duration would also be 5 years.
A zero-coupon bond is a type of bond that does not pay interest to the holder during the life of the bond. Instead, the bond is issued at a discount to its face value, and the holder receives the full face value at maturity. The duration of a zero-coupon bond is equal to its time to maturity, which means that the duration of a 5-year zero-coupon bond is 5 years.
Therefore, the correct answer is 5 years.
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a Find the mean, the median, and the mode of data set: 25.42, 18, 37, 25, 18, 40, 57, 64, 66.85.36, 92, 85, 88, 92, 67, 33, 75, 85, 48, 60, 80, 60,50 b- Find the mean, the median, and the mode of data set: 12.37, 13.33, 32.67, 12.37, 26.45 c- Find the range, variance, and the standard deviation of the following data set. 10.17, 13, 12, 15, 18, 10, 17, 14, 16:22, 22, 17,23, 12. IS, 28,10,20,35 02
a) The mean, median, and mode of the first data set are:
Mean = (25.42 + 18 + 37 + 25 + 18 + 40 + 57 + 64 + 66.85 + 36 + 92 + 85 + 88 + 92 + 67 + 33 + 75 + 85 + 48 + 60 + 80 + 60 + 50) / 23 = 52.45
Median = (48 + 50) / 2 = 49
Mode = 18, 60, 85, 92 (all appear twice)
b) The mean, median, and mode of the second data set are:
Mean = (12.37 + 13.33 + 32.67 + 12.37 + 26.45) / 5 = 19.44
Median = 13.33
Mode = 12.37 (appears twice)
c) The range, variance, and standard deviation of the third data set are:
Range = 35 - 10 = 25
Variance = [(10.17 - 16.67)^2 + (13 - 16.67)^2 + (12 - 16.67)^2 + (15 - 16.67)^2 + (18 - 16.67)^2 + (10 - 16.67)^2 + (17 - 16.67)^2 + (14 - 16.67)^2 + (16 - 16.67)^2 + (22 - 16.67)^2 + (22 - 16.67)^2 + (17 - 16.67)^2 + (23 - 16.67)^2 + (12 - 16.67)^2 + (15 - 16.67)^2 + (28 - 16.67)^2 + (10 - 16.67)^2 + (20 - 16.67)^2 + (35 - 16.67)^2] / 19 = 38.67
Standard Deviation = √38.67 = 6.22
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LONG HOURS, HUNDREDS OF EMAILS, AND NO SLEEP
DOES THIS SOUND LIKE A SATISFYING JOB?
Although the 40-hour workweek is now the exception rather than the norm, some individuals are taking things to the extreme:
- John Bishop, 31, is an investment banker who works for Citigroup's global energy team in New York. A recent workday for Bishop consisted of heading to the office for a conference call at 6:00 P.M. He left the office at 1:30 A.M. and had to be on a plane that same morning for a 9:00 A.M. presentation in Houston. Following the presentation, Bishop returned to New York the same day, and by 7:00 P.M., he was back in his office to work an additional 3 hours' Says Bishop, "I might be a little skewed to the workaholic, but realistically, expecting 90 to 100 hours a week is not at all unusual."
- David Clark, 35, is the vice president of global marketing for MTV. His job often consists of travelling around the globe to promote the channel as well as to keep up with the global music scene. If he is not travelling (Clark typically logs 200,000 miles a year), a typical day consists of waking at 6:30 A.M. and immediately responding to numerous messages that have accumulated over the course of the night. He then goes to his office, where throughout the day he responds to another 500, or so messages from clients around the world. If he's lucky, he gets to spend an hour a day with his son, but then it's back to work until he finally goes to bed around midnight. Says Clark, "There are plenty of people who would love to have this job. They're knocking on the door all the time. So that's motivating."
Questions
Given that the two individuals we just read about tend to be satisfied with their jobs, how might this satisfaction relate to their job performance, citizenship behaviour and turnover?
In the case of John Bishop and David Clark, both individuals seem to be satisfied with their jobs despite the long hours and demanding schedules. Job satisfaction is known to have a positively correlation with job performance, citizenship behavior, and turnover.
This satisfaction is likely to be reflected in their job performance, as they are likely to be motivated and committed to their work. Additionally, their satisfaction may also be reflected in their citizenship behavior, as they are likely to be more willing to help their colleagues and contribute to the overall success of their companies.
Finally, their satisfaction is likely to be reflected in their turnover, as they are less likely to leave their jobs despite the demanding nature of their work. Overall, the satisfaction of these two individuals is likely to be positively related to their job performance, citizenship behavior, and turnover.
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Harding Company is in the process of purchasing several large pieces of equipment from Danning Machine Corporation. Several financing alternatives have been offered by Danning: 1. Pay $1,080,000 in cash immediately. 2. Pay $411,000 immediately and the remainder in 10 annual installments of $89,000, with the first installment due in one year. 3. Make 10 annual installments of $151,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,680,000 five years from date of purchase.
Required: a. Assuming that Harding can borrow funds at an 9% interest rate, determine the present value. (Use PV of $1, PVA of $1, and PVAD of $1) (Round "PV Factors" to 5 decimal places and final answers to the nearest dollar amount. ) Alternative PV
1 $
2 $
3 $
4 $ b.
Which is the best alternative for Harding? Alternative 1 Alternative 2 Alternative 3 Alternative 4
Given that it has the lowest present value, Alternative 2 is the most suitable replacement for Harding. Pay $411,000 immediately and the remainder in 10 annual installments of $89,000, with the first installment due in one year.
In economics and finance, the term "present value" (PV), sometimes known as "present discounted value" (PDV), refers to the worth of an expected income stream as of the valuation date. With the exception of periods of zero or negative interest rates, when the present value will be equal to or greater than the future value, the present value is frequently less than the future value because money can earn interest, a characteristic known as the time value of money. Time value can be stated succinctly as "A dollar today is worth more than a dollar tomorrow".
An investor or lender is involved in the financial project will decide how to invest their funds, and one method is to use present value. Since it offers the same return as the other projects for the least amount of money spent, the project with the lowest initial investment, or present value, will be chosen.
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Go read
the McKinsey report - Analysis of Household Savings, in Saudi
Arabia KPMG, May 2020,
And
then answer the following questions:
Distinguish between the
following using suitable local (Bahrai), Regional (GCC) or International examples:
a. Primary and secondary markets
b. Capital and money markets
c. Debt and Equity securities
The McKinsey report is a renowned and respected publication that provides insights and analysis on various business and economic issues. The report is known for its comprehensive research, data-driven approach, and strategic recommendations, making it a valuable resource for business leaders, policymakers, and academics.
After reading the McKinsey report, here are the distinctions between the different types of markets and securities:
a. Primary and secondary markets:
Primary markets are where new securities are issued and sold for the first time. For example, when a company goes public through an initial public offering (IPO), it is selling its shares on the primary market.Secondary markets are where existing securities are bought and sold. For example, when you buy or sell stocks on the Bahrain Bourse, you are trading on the secondary market.b. Capital and money markets:
Capital markets are where long-term securities, such as stocks and bonds, are traded. These markets are important for companies looking to raise capital for growth and expansion. An example of a capital market in the GCC region is the Dubai Financial Market.Money markets are where short-term securities, such as Treasury bills and commercial paper, are traded. These markets are important for companies and governments looking to raise short-term funds. An example of a money market is the London Interbank Offered Rate (LIBOR), which is an international benchmark for short-term interest rates.To learn more about Primary markets:
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CARIBBEAN CREAM LIMITED Statement of Profit or Loss and Other Comprehensive Income Year ended February 28, 2021 Gross operating revenue Cost of operating revenue Notes 2021 2020 13 1.870,188,069 1,706,358.991 14 (a) (1,245,049,430) (1,180,747,229) 625,138,639 Gross profit Other income 545,611.762 1,994.192 547,605.954 625.138,639 Administrative, selling and distribution expenses: Administrative Selling and distribution 14 (6) 14 (c) (427,856,374) (395,323,017) (60.656,587) (68.301,238) (488.512,961) (463,624,255) 7 0 Impairment recovered/(loss) on trade receivables Operating profit before finance costs and taxation 1.804,151 138,429,829 (2.673,129) 81,308,570 Finance income - interest 1,333,200 1,133,753 Finance costs 15 (21.262,694) (20,270,787) Profit before taxation 118,500,335 62,171,556 Taxation 16 (17.819,728) 7.602,157) Profit, being total comprehensive income for the year 100.680,607 54,569.399 Earnings per stock unit 17 0.27 0.14 CARIBBEAN CREAM LIMITED Statement of Financial Position February 28, 2021 Notes 2021 2020 4 NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Total non-current assets 5(8) 825,483,694 93,044,425 918,528, 119 773, 143,905 95,435,877 868,579,782 6 7 217,283,548 93,514,369 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Tax recoverable Inventories Total current assets 129.196,815 58,211,081 779,621 117.774,685 305.982,202 8 162,352,192 473,150,109 9 185,346,512 5(b) 10 CURRENT LIABILITIES Trade and other payables Taxation payable Current portion of lease liabilities Current portion of long-term loans Total current liabilities Net current assets Total assets less current liabilities NON-CURRENT LIABILITIES Long-term loans Lease liabilities Deferred tax liability Total non-current liabilities 214,491,488 10,734,482 17,456,688 6,977,778 249,660,432 223,489,677 1.142,017,796 19.539,121 27,441,951 232,327,584 73,634,618 942,214,400 10 5(b) 11 206,927,474 86,580,789 14,576,941 308,085,204 104,972,207 79,622,207 13,389,525 197.983,939 12 EQUITY Share capital Accumulated profits Total equity Total non-current liabilities and equity 111,411,290 722,521,302 833,932,592 1.142,017,796 111.411,290 832,819,171 744,230,481 942,214,400 a. Working capital b. Acid-test Ratio c. Current Ratio d. Average Payment Period e. Days Cash on Hand, Short-Term Sources.
According to the given credentials the Working capital is $56,321,770,Acid-test Ratio is 0.75,Current Ratio is 1.23, Average Payment Period is 60.77 days, . Days Cash on Hand, Short-Term Sources is 37.94 days.
a. Working capital: This is calculated by subtracting current liabilities from current assets. In this case, working capital for 2021 would be $305,982,202 (current assets) - $249,660,432 (current liabilities) = $56,321,770.
b. Acid-test Ratio: This is calculated by subtracting inventories from current assets and then dividing by current liabilities. In this case, the acid-test ratio for 2021 would be ($305,982,202 - $117,774,685) / $249,660,432 = 0.75.
c. Current Ratio: This is calculated by dividing current assets by current liabilities. In this case, the current ratio for 2021 would be $305,982,202 / $249,660,432 = 1.23.
d. Average Payment Period: This is calculated by dividing accounts payable by the cost of goods sold and then multiplying by 365. In this case, the average payment period for 2021 would be ($206,927,474 / $1,245,049,430) * 365 = 60.77 days.
e. Days Cash on Hand, Short-Term Sources: This is calculated by dividing cash and cash equivalents by the cost of goods sold and then multiplying by 365. In this case, the days cash on hand for 2021 would be ($129,196,815 / $1,245,049,430) * 365 = 37.94 days.
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Note section disclosures in the financial statements of a public entity that sponsors adefined benefit pension plan for its employees are not required to includeA. The components of periodic pension cost.B. The funded status of the plan.C. Reclassification adjustments of other comprehensive income for the period.D. A detailed description of the plan, including employee groups covered.Which of the following defined benefit pension plan disclosures should be made in acompany’s financial statements?I. The funded status of the plans and the amounts recognized in the balance sheetThe amount of net periodic benefit cost recognized, showing its componentsseparatelyII.III. A reconciliation of beginning and ending balances of the fair value of plan assetsA. I and II.B. I, II, and III.C. II and III.D. I only.
Following are the defined benefit pension plan disclosures that should be made in a company’s financial statements:
"I. The funded status of the plans and the amounts recognized in the balance sheet";
II. "The amount of net periodic benefit cost recognized, showing its components separately";
III. "A reconciliation of beginning and ending balances of the fair value of plan assets"
Therefore, the correct answer is option B. I, II, and III.
A company’s financial statements should include disclosures about the funded status of the defined benefit pension plan, the amounts recognized in the balance sheet, the amount of net periodic benefit cost recognized and its components, and a reconciliation of the beginning and ending balances of the fair value of plan assets. These disclosures provide important information to investors and other users of the financial statements about the company’s pension obligations and the financial health of the plan.
Therefore, option B. I, II, and III is the correct answer.
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A firm invests in a project that costs $100,000 and has the following projected net cash flows. When is payback expected? year 1 - $20,000 year 2 - $30,000 year 3 - $40,000 year 4 - $10,000 year 5 - $20,000 year 6 - $15,000 group of answer choices 7 years 5 years 3 years 4 years
7 years is the payback expected time when A firm invests in a project that costs $100,000
The payback period is the amount of time needed for an investor to break even or recover the cost of their investment. Payback periods that are longer are less appealing than those that are shorter. The payback period is calculated by dividing the investment amount by the annual cash flow. Account and fund managers utilise the payback time to determine whether to move forward with an investment. The payback period has the problem of not taking the time value of money into account.
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All of the following are specifically identifiable intangibles except:
Trademarks
Goodwill
Patents
Copyrights.
Intangible assets that have a finite life are amortized over a period not to exceed:
Their useful life.
Their legal life.
20 years.
40 years.
Goodwill is not a specifically identifiable intangible asset and intangible assets with a finite life are amortized over their useful life.
The correct answers to the questions are:
1) Goodwill: Goodwill is not a specifically identifiable intangible asset. It is an intangible asset that arises from the acquisition of one company by another company and is not specifically identifiable. Goodwill represents the value of a company's brand name, customer relationships, and other intangible assets that are not specifically identifiable.
2) Their useful life: Intangible assets that have a finite life are amortized over their useful life. The useful life of an intangible asset is the period of time over which the asset is expected to contribute to the future cash flows of the company. The useful life of an intangible asset may be shorter than its legal life, and it is the useful life that should be used for amortization purposes.
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Question 28 (5 points) Please calculate the A. Exercise Value B. Time Value Given the following: Price of stock $55 Exercise Value Strike Price $47.50 Time Value Market value $10.50 Question 29 (6 points) We spent some time analyzing options in detail. Please take time to explain: 1. The difference between American Options and European Options. 2. The difference between a Put and a Call 3. The difference between the Black Scholes option pricing model and the Binomial Option pricing model.
The time value of an option is the difference between the market value of the option and its exercise value. It represents the value of the option based on the time remaining until expiration is $3.00.
A. Exercise Value
The exercise value of an option is the difference between the price of the underlying asset and the strike price of the option. It is the amount that the option holder would receive if they exercised the option at the current price of the underlying asset.
Exercise Value = Price of Stock - Strike Price
= $55 - $47.50
= $7.50
B. Time Value
The time value of an option is the difference between the market value of the option and its exercise value. It represents the value of the option based on the time remaining until expiration.
Time Value = Market Value - Exercise Value
= $10.50 - $7.50
= $3.00
Question 29
1. The difference between American Options and European Options:
American options can be exercised at any time before the expiration date, while European options can only be exercised on the expiration date.
2. The difference between a Put and a Call:
A call option gives the holder the right to buy an underlying asset at a specified price, while a put option gives the holder the right to sell an underlying asset at a specified price.
3. The difference between the Black Scholes option pricing model and the Binomial Option pricing model:
The Black Scholes model is a mathematical formula that is used to price options based on the current price of the underlying asset, the strike price, the time until expiration, and other factors. The Binomial Option pricing model is a method that uses a tree diagram to calculate the value of an option based on the possible outcomes of the underlying asset's price movements.
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What is the present value of $10,000 paid at the end of each of
the next 66 years if the interest rate is 5% per year?
The present value of $10,000 paid at the end of each of the next 66 years, with an interest rate of 5% per year, is equal to approximately $1,129.66.
The present value of $10,000 paid at the end of each of the next 66 years, with an interest rate of 5% per year, can be calculated using the following formula:
Present Value = 10,000/(1+0.05)^n
Where "n" is the number of years in the future.
In this case, n = 66, and so the present value is 10,000/(1+0.05)^66.
Using a calculator, this calculation is equal to approximately $1,129.66.
The present value of a series of payments in the future is based on the concept of the time value of money. This concept states that money has a different value depending on when it is received. In this example, the value of the payments decreases each year due to the effects of interest.
The present value of the payments is based on the concept of discounting, which means that future payments are worth less than present payments. This is because future payments are worth less due to the effects of inflation. By discounting payments, the value of the payments decreases each year.
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The 10 Tenets of Environmental management 1. Discuss the weaknesses of the following tenets of environmental management a. Ecological sustainable b.Technologically feasible c. Economically viable d. socially desirable/ tolerable
e. legally permissible
Difficult to measure the impacts of human activity, technology may not be available are some of the weaknesses of the following tenets of environmental management .
A. Ecological Sustainable: The weaknesses of this tenet are that it can be difficult to measure the impacts of human activity and to establish a balance between sustainable use.
B. Technologically Feasible: The weaknesses of this tenet are that technology may not be available or affordable for many projects.
C. Economically Viable: The weaknesses of this tenet are that the cost of some projects may be too high for certain regions or populations.
D. Socially Desirable/Tolerable: The weaknesses of this tenet are that there can be conflict between different social groups, and that not all stakeholders may be able to participate in the decision-making process.
E. Legally Permissible: The weaknesses of this tenet are that different laws may be difficult to enforce.
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Sayang Selasih Berhad is given the following quotes:
Spot rate USD0.7250/NZD
Six-month forward rate USD0.7350/NZD
Interest rate United States 7 percent per annum
Interest rate New Zealand 6 percent per annum
Assume that Sayang Selasih Berhad can borrow as much as USD1 million or NZD5 million for its coming project. If Interest Rate Parity (IRP) is not holding, determine how would Sayang Selasih Berhad carry out covered interest arbitrage (CIA) opportunity and compute the profit.
If Interest Rate Parity (IRP) is not holding, Sayang Selasih Berhad can carry out a covered interest arbitrage (CIA) opportunity by borrowing USD1 million at 7 percent per annum in the United States and swapping it into NZD5 million at the spot rate of USD0.7250/NZD.
The NZD5 million will be invested in New Zealand at 6 percent per annum, and the NZD5 million will be swapped back into USD at the six-month forward rate of USD0.7350/NZD. This will generate a profit of USD50,000, which is the difference between the interest earned from investing the NZD5 million at 6 percent in New Zealand and the difference between the spot rate and the six-month forward rate.
The profit is generated from the difference in the interest rate between the two countries, as the interest rate in New Zealand is lower than the interest rate in the United States. By entering into this covered interest arbitrage transaction, Sayang Selasih Berhad can take advantage of the difference in interest rates between the two countries, and take advantage of the deviation from the Interest Rate Parity.
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Question 2 The Numbers Behind Not-for-Profit Organizations Accounting plays an important role for a wide range of business organizations worldwide. Just as the integrity of the numbers matters for business, it matters at least as much at not-for profit organizations. Proper control and reporting help ensure that money is used the way donors intended. Donors are less inclined to give to an organization if they think the organization is subject to waste or theft. The accounting challenges of some large international not- for profits rival those of the world's largest businesses. For example, after the Haitian earthquake, the Haitian-born musician Wyclef Jean was criticized for the poor accounting controls in a relief fund that he founded. In response, he hired a new accountant and improved the transparency regarding money raised and spent.
Required:
(a) What benefits does a sound accounting system provide to a not-for-profit organization?
(b) Identified FIVE (5) ways to prevent accounting fraud. Provide an example for each suggestion. (20 marks)
A sound accounting system provides several benefits to a not-for-profit organization. These include:
- Ensuring that funds are used in accordance with donor wishes and legal requirements
- Providing accurate and timely financial information to stakeholders, including donors, board members, and the public
- Helping to prevent fraud and misuse of funds
- Facilitating decision-making and strategic planning
- Helping to maintain the organization's reputation and credibility
There are several ways to prevent accounting fraud in a not-for-profit organization. These include:
1. Segregation of duties
2. Internal controls
3. Regular audits
4. Training and education
5. Whistleblower policy
Segregation of duties involves separating responsibilities for different aspects of the accounting process, so that no one person has too much control. For example, one person should not be responsible for both receiving and disbursing funds.
Internal controls include policies and procedures to ensure that financial transactions are properly authorized, recorded, and reported. For example, requiring two signatures on checks over a certain amount can help prevent fraud.
Regular audits: Conducting regular audits can help detect and prevent fraud. This could include both internal audits by the organization's own staff, and external audits by an independent accounting firm.
Providing training and education to staff and volunteers can help prevent fraud by ensuring that everyone understands the organization's accounting policies and procedures, and the importance of following them.
Having a whistleblower policy in place can encourage staff and volunteers to report any suspected fraud or other wrongdoing. This should include protections for whistleblowers, to ensure that they are not retaliated against for coming forward.
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Instead of talking about great power, please share with us a story of you providing ‘servant leadership’ to others. Even if you are not in a leadership role now, tell us a story of something nice you did for others.
The servant leadership style is founded on the premise that leaders put the greater good first. Leaders with this style prioritise their team and organisation. They do not prioritise their own goals. Workers who work in a servant leadership setting are more likely to feel heard.
I have recently been a mentor for a local high school student who was struggling in math. I spent time every week with them, providing guidance and moral support.
I helped them to understand difficult concepts, answer challenging questions, and ultimately improve their grades. Through my servant leadership, the student was able to improve their understanding of the subject, gain confidence in themselves, and make a successful transition into their next course.
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For which capital component must you make a tax adjustment when calculating a firm’s weighted average cost of capital (WACC)?
a. Common stock
b. Preferred stock
c. Debt
Cold Goose Metal Works (CGMW) can borrow funds at an interest rate of 10.20% for a period of eight years. Its marginal federal-plus-state tax rate is 30%. CGMW’s after-tax cost of debt is (rounded to two decimal places).
At the present time, Cold Goose Metal Works (CGMW) has a series of five-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,438.04 per bond, carry a coupon rate of 14%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 30%. If CGMW wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?
a. 0.0332
b. 0.0289
c. 0.026
d. 0.0347
For Debt capital component you must make a tax adjustment when calculating a firm’s weighted average cost of capital (WACC).
Cold Goose Metal Works (CGMW) can borrow funds at an interest rate of 10.20% for a period of eight years. Its marginal federal-plus-state tax rate is 30%. CGMW’s after-tax cost of debt is 0.026 (rounded to two decimal places).
At the present time, Cold Goose Metal Works (CGMW) has a series of five-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,438.04 per bond, carry a coupon rate of 14%, and distribute annual coupon payments.
The company incurs a federal-plus-state tax rate of 30%. If CGMW wants to issue new debt, A reasonable estimate for CGMW's after-tax cost of debt is 0.0347 (rounded to two decimal places). This is calculated by subtracting the tax rate (30%) from the coupon rate (14%) to get the pre-tax cost of debt (8%), and then multiplying this by (1-tax rate) to get the after-tax cost of debt.
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QUESTION 2: HURON LTD
Huron Ltd has identified an indication of impairment and is conducting an impairment review. The carrying amount of cash-generating unit is as follows on 31 Dec, 2021:
£
Goodwill
900,000
Property
2,000,000
Plant and equipment
1,500,000
Computers
600,000
Patents
300,000
Net current assets (net realizable value)
450,000
5,750,000
The whole of the company is considered to be a single cash-generating unit (CGU).
If a company continues its operations, it is estimated to receive £950,000 net cash-flows annually at the end of the year for the duration of next 4 years. The discount rate is calculated to be 7%.
Fair value less cost to sell for CGU is estimated to be £3,050,000.
The net realizable value of the property is £1,300,000 only.
For computers, only half of the value can be recovered. Net Current Assets are recovered in full.
Required
Calculate whether an impairment loss has occurred and if so, prepare a revised schedule for Venus Ltd as at 31 Dec 2018. Show your workings fully clearly showing impairment allocation and revised carrying values.
The Present Value of future cash-flows (after deducting the costs of disposal of assets) = £2,800,000
To answer this question, we need to calculate whether an impairment loss has occurred for Huron Ltd as at 31 Dec, 2021. To do this, we need to calculate the recoverable amount of the cash-generating unit (CGU).
Recoverable amount of the CGU = Higher of fair value less cost to sell or Value in Use
Fair value less cost to sell = £3,050,000
Value in Use = Present Value of future cash-flows (after deducting the costs of disposal of assets)
The costs of disposal of assets include the following:
- Net realizable value of property = £1,300,000
- Net realizable value of computers = £300,000
- Net current assets = £450,000
Therefore, the Present Value of future cash-flows (after deducting the costs of disposal of assets) = £2,800,000
The recoverable amount of the CGU = Higher of fair value less cost to sell or Value in Use = Higher of £3,050,000 or £2,800,000 = £3,050,000
Therefore, an impairment loss of £1,200,000 (5,750,000 - 3,050,000) has occurred.
The revised schedule for Venus Ltd as at 31 Dec 2021 is shown below:
Goodwill: £900,000
Property: £1,300,000
Plant and Equipment: £1,500,000
Computers: £300,000
Patents: £300,000
Net current assets (net realizable value): £450,000
Total carrying value: £4,550,000
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(0)
The Board of Directors of M/S Bajaj Auto Ltd. met and decided to make certain adjustments in the existing staff of its Akurdi plant. After the meeting, the Managing Director informally told his Secretary that there may be changes in the staffing pattern of Akurdi plant. The Secretary told her friends during lunch break that the plant would soon be laying off employees. Even though, she took a promise that they will not tell anybody, her friends sounded some employees of the plant about the impending danger. The employees’ union not only presented memorandum to the authorities but served a notice to go on strike also.
Questions(5M)
1. Identify the barriers of communication in the case.(2M)
2. Was there any encoding and decoding of message?(2M)
3. What lessons do you draw from the issue by assuming you as the Managing Director?(1M)
1. The barriers of communication in this case are the informal and unofficial nature of the information being shared, the potential for misunderstanding and misinterpretation of the information, and the lack of control over how the information is spread.
The Managing Director's informal conversation with his Secretary was not an official communication and therefore should not have been treated as such. The Secretary's decision to share the information with her friends, despite taking a promise of secrecy, also contributed to the spread of misinformation and the potential for misunderstanding.
Additionally, the employees' union's decision to take action based on unofficial and potentially inaccurate information further exacerbated the situation.
2. Yes, there was encoding and decoding of the message. The Managing Director encoded his message when he informally told his Secretary about the potential changes in the staffing pattern of the Akurdi plant. The Secretary then decoded the message and encoded it again when she shared it with her friends.
Her friends decoded the message and encoded it again when they shared it with the employees of the plant. The employees' union decoded the message and encoded it again when they presented a memorandum to the authorities and served a notice to go on strike.
3. As the Managing Director, the lessons that can be drawn from this issue are the importance of clear and official communication, the need for discretion when sharing sensitive information, and the potential consequences of sharing unofficial and potentially inaccurate information.
It is important to ensure that all official communication is clear and accurate, and that sensitive information is only shared with those who need to know and can be trusted to keep it confidential.
Additionally, it is important to be aware of the potential consequences of sharing unofficial and potentially inaccurate information, as it can lead to misunderstandings, misinterpretations, and unnecessary actions.
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Ethics Project
Decision 3 Taylor decided to turn in the proposal based on the higher projected IRR due to the cost reclassification. Consequences of Behavioral Action: The project was funded and, when completed, the IRR came in much higher than expected. Taylor was able to reverse the reclassification by reinstating the omitted expenditure back to the project rather than normal operations and still achieve an IRR of 8% on the project. One year later Taylor was promoted to vice president.
Decision 4 Taylor decided to turn in the proposal with a 7.5% IRR and it was not accepted. Taylor was not promoted.
It is clear from the scenario presented that there were different consequences for each of the decisions made by Taylor. In Decision 3, Taylor made the unethical choice to reclassify costs in order to increase the projected IRR and get the project funded.
However, when the project was completed, the IRR came in much higher than expected, allowing Taylor to reverse the reclassification and still achieve a satisfactory IRR. As a result of this decision, Taylor was promoted to vice president.
In contrast, in Decision 4, Taylor made the ethical choice to turn in the proposal with a lower IRR, which resulted in the proposal not being accepted. As a result of this decision, Taylor was not promoted.
It is important to note that while Taylor was rewarded for his unethical behavior in Decision 3, this does not necessarily mean that unethical behavior is always rewarded. In fact, there are often negative consequences for unethical behavior, including damage to one's reputation, loss of trust from colleagues and superiors, and even legal consequences. Therefore, it is important to always make ethical decisions, even if there may be short-term benefits to unethical behavior.
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1. Explain the development of brand personality of Rolex and Richard Mille separately. While doing that, students will need to give a timeline of product development, communication, distribution along with the identification of target segments for both of these brands separately. Basically, students need to decide clearly with these two examples, how brands should be working to clarify their identities with distinct personalities. Students will need to carry out an intensive study of the brands on their respective websites and other materials that they might find in the internet.
Rolex has been a leader in the watchmaking industry since its inception in 1905. Early on, the brand focused on creating highly reliable and accurate timepieces that could be used in outdoor and underwater activities.
Over the years, Rolex has developed its brand personality by focusing on luxury and opulence, creating iconic designs that have become status symbols. It has positioned itself as a brand of distinction, aiming to be the ultimate symbol of success and achievement. Its product lineup has evolved over the years to include a wide range of luxury watches and accessories, and its distribution network has been expanded to reach customers around the world.
Richard Mille, on the other hand, has built a brand personality based on its commitment to innovation and technology. Since its inception in 2001, the brand has focused on creating luxurious timepieces that incorporate cutting-edge materials and technologies.
Its products are designed to be lightweight and highly resistant to shocks, making them ideal for sports and everyday use. Its distribution network has also been expanded to reach customers around the world, and its marketing strategies have focused on communicating the brand's technical expertise and innovative approach to watchmaking.
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Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products—sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows:As shown by these data, operating income is budgeted at $46,400 for the month, break-even sales dollars at $940,996.95, and break-even unit sales at 1,917.10.Assume that actual sales for the month total $1,008,000 (2,100 units), with the CM ratio and per unit amounts the same as budgeted. Actual fixed expenses are the same as budgeted, $740,000. Actual sales by product are as follows: sinks, $252,000 (525 units); mirrors, $420,000 (1,050 units); and vanities, $336,000 (525 units).Required:1. Prepare a contribution format income statement for the month based on actual sales data. (Round your answers to 2 decimal places.)2. Compute the break-even point in sales dollars for the month, based on the actual data. (Round your percentage answers to nearest whole percent. Round other intermediate values and final answer to the nearest whole dollar.)3. Calculate the break-even point in unit sales for the month, based on the actual data. (Do not round your intermediate calculations. Round your final answer to the nearest whole number.)
In order to answer this question, we need to prepare a contribution format income statement for the month based on actual sales data.
compute the break-even point in sales dollars for the month based on the actual data, and calculate the break-even point in unit sales for the month based on the actual data.
Contribution Format Income Statement:
Sales Revenue: Sinks ($252,000 x $100 per unit) = $25,200,000
Mirrors ($420,000 x $95 per unit) = $39,900,000
Vanities ($336,000 x $160 per unit) = $53,760,000
Total Sales Revenue = $118,860,000
Variable Costs: Sinks ($252,000 x $50 per unit) = $12,600,000
Mirrors ($420,000 x $45 per unit) = $18,900,000
Vanities ($336,000 x $90 per unit) = $30,240,000
Total Variable Costs = $61,740,000
Contribution Margin = $118,860,000 - $61,740,000 = $57,120,000
Fixed Costs = $740,000
Operating Income = Contribution Margin - Fixed Costs = $56,380,000
Break-Even Point in Sales Dollars:
Break-Even Point in Sales Dollars = Fixed Costs / Contribution Margin Ratio
Contribution Margin Ratio = Contribution Margin / Sales Revenue
Contribution Margin Ratio = $57,120,000 / $118,860,000 = 0.48
Break-Even Point in Sales Dollars = $740,000 / 0.48 = $1,541,666.67
Break-Even Point in Unit Sales:
Break-Even Point in Unit Sales = Fixed Costs / (Contribution Margin per Unit x Number of Units)
Contribution Margin per Unit = Contribution Margin / Unit Sales
Contribution Margin per Unit = $57,120,000 / 2,100 = $27,257.14
Break-Even Point in Unit Sales = $740,000 / ($27,257.14 x 2,100) = 1,910 units
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Hibou Ltd., a private company based in Vancouver, decided to sell its Industrial Design Division (IDD). After two years of losses and heavy competition, a plan to dispose of the division was put in place. At the end of 2020, the plan was finalized and approved by the board of directors. The sale is anticipated to be completed by June 30, 2021.
Other information:
1. Hibou's 2020 after-tax net income (excluding the results from the Industrial Design Division) was $450,000.
2. During the year, the division (IDD) reported an after-tax loss of $120,000 (revenues: $30,000, expenses: $150,000).
3. Management estimates that after-tax legal and audit fees of $32,000 as well as severance payments of $66,000 will be required to finalize the disposal plan. A portion of these costs is expected to be offset by the after-tax proceeds of $61,000 from the sale of the division's (IDD’s) assets.
Instructions (show all supporting calculations)
Assuming the Industrial Design Division (IDD) qualifies for treatment as a discontinued operation, prepare a partial income statement for Hibou for 2020. The statement should begin with income from continuing operations and include an appropriate footnote pertaining to the disposal of the Industrial Design Division.
Hibou Ltd.'s Partial Income Statement for 2020, beginning with income from continuing operations:
Revenues: $450,000
Expenses: $450,000
Income from continuing operations: $0
Less: Income (loss) from discontinued operations: ($48,000)
Net income: ($48,000)
Note: The results of the discontinued Industrial Design Division (IDD) included in the above statement are as follows: Revenue: $30,000, Expenses: $150,000, After-tax legal and audit fees: $32,000, Severance payments: $66,000, and After-tax proceeds from sale of IDD assets: $61,000.
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An investor purchases 1000 shares of stock for $30 per share using a 50% margin. The margin requirement is 50%. From an asset and liability perspective, what does the investor's brokerage account look like immediately after the sale?
From an asset and liability perspective, the investor's brokerage account would look like this immediately after the sale:
Assets:
- 1000 shares of stock at $30 per share = $30,000
Liabilities:
- Margin loan of 50% of the purchase price = $15,000
Equity:
- The difference between the assets and liabilities = $15,000
So, the investor's brokerage account would have $30,000 in assets, $15,000 in liabilities, and $15,000 in equity immediately after the sale. This is because the investor used a 50% margin to purchase the stock, meaning that they borrowed 50% of the purchase price from their brokerage firm and paid the other 50% with their own money. The margin loan is a liability, while the stock is an asset. The difference between the assets and liabilities is the investor's equity in the account.
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6. Assume a major investment service has just given Oasis Electronics its highest investment rating, along with a strong buy recommendation. As a result you decide to take a look yourself and to place a value on the company's stock. Here's what you find: This year, Oasis paid stockholders an annual dividend of $3 a share, but because of its high rate of growth in earnings, it dividend is expected to grow at the rate of 12 percent a year for the next four years and then to level out at 9 percent a year. So far, you have also learned that the stock has a beta of 1.80, the risk free rate of return is 6 percent, and the expected rate of return on the market is 11 percent. Using the CAPM to find the required rate of return, put a value on this stock.
The value of the stock is $36 for the first four years and $54 for the remaining years.
The required rate of return for the stock can be found using the Capital Asset Pricing Model (CAPM):
Required rate of return = Risk free rate + Beta*(Expected rate of return on the market - Risk free rate)
Plugging in the values from the question:
Required rate of return = 6% + 1.80*(11% - 6%)
Required rate of return = 6% + 1.80*5%
Required rate of return = 6% + 9%
Required rate of return = 15%
Next, we can use the Gordon Growth Model to find the value of the stock:
Value of stock = (Dividend*(1+Growth rate))/(Required rate of return - Growth rate)
For the first four years, the growth rate is 12%:
Value of stock = ($3*(1+12%))/(15% - 12%)
Value of stock = $36
For the remaining years, the growth rate is 9%:
Value of stock = ($3*(1+9%))/(15% - 9%)
Value of stock = $54
Therefore, the value of the stock is $36 for the first four years and $54 for the remaining years.
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Kilmer Corporation began the year with retained earnings of $930,000. During the year, the company issued $1,260,000 of common stock, recorded expenses of $3,600,000, and paid dividends of $240,000. If Kilmer's ending retained earnings was $990,000, what was the company's revenue for the year?
a. $3,660,000
b. $3,900,000
c. $50,169,000
d. $4,920,000
The company's revenue for the year $3,900,000. The correct answer is b.
To find the company's revenue for the year, we can use the formula:
Ending Retained Earnings = Beginning Retained Earnings + Revenue - Expenses - Dividends
We can rearrange this formula to solve for revenue:
Revenue = Ending Retained Earnings - Beginning Retained Earnings + Expenses + Dividends
Plugging in the given values:
Revenue = $990,000 - $930,000 + $3,600,000 + $240,000
Simplifying:
Revenue = $60,000 + $3,600,000 + $240,000
Revenue = $3,900,000
Therefore, the company's revenue for the year was $3,900,000. The correct answer is b.
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How must personal information be secured to comply with the
requirements of the Commonwealth Privacy Act 1988? (APP)
Personal information must be secured in a way that ensures the privacy of individuals and complies with the requirements of the Commonwealth Privacy Act 1988 (APP).
Commonwealth Privacy Act 1988 (APP)This includes using appropriate security measures, such as encryption, to protect personal information from unauthorized access, modification, or disclosure. It also includes implementing policies and procedures to ensure that personal information is only collected, used, and disclosed in accordance with the APP.
Additionally, organizations must take reasonable steps to ensure that personal information is accurate, up-to-date, and complete, and that it is protected from misuse, loss, or unauthorized access. By taking these steps, organizations can ensure that they are complying with the APP and protecting the privacy of individuals.
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Brief summary and critique on this article and the ninefactors discussed :Making Strategy Work: A Literature Review on the Factorsinfluencing strategic implementation / ICA working paper 2/2008
The article "Making Strategy Work: A Literature Review on the Factors influencing Strategic Implementation" by Alexander T. Nicolai and Julia Holtbrügge discusses the importance of strategic implementation in organizations and the factors that influence its success.
The authors conducted a literature review of previous research on strategic implementation and identified nine factors that influence its success: 1) communication, 2) leadership, 3) culture, 4) structure, 5) control, 6) human resources, 7) external environment, 8) strategic fit, and 9) resources.
The authors argue that these factors are interconnected and that organizations must consider all of them when implementing a strategy. They also discuss the importance of aligning the organization's structure, culture, and control systems with the strategy in order to ensure its success. The authors conclude that further research is needed to understand how these factors interact and to develop practical guidelines for organizations.
Overall, the article provides a comprehensive review of the literature on strategic implementation and identifies the key factors that influence its success. The authors' use of previous research and their identification of the nine factors make the article a valuable resource for organizations and researchers interested in strategic implementation.
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(b) Explain any FOUR
(4) differences between financial accounting and cost
accounting.
Financial accounting and cost accounting are two types of accounting used to evaluate the financial performance of a business.
The key differences between them include:
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Provide a synopsis of your EQ development during the course. Has the level of emotional intelligence (EI) changed? Synthesize your statement(s) with at least one EI learning concept which resonated with you
One way to reflect on your EQ development is to consider how you have responded to different situations during the course. Another way to reflect on your EQ development is to consider how your relationships with others have changed.
Have you been able to regulate your emotions and respond appropriately? Have you been able to empathize with others and understand their emotions? These are important aspects of emotional intelligence. Have you been able to form deeper connections with your classmates or instructor? Have you been able to communicate more effectively with others?
One EI learning concept that may resonate with you is the idea of emotional self-awareness. This concept involves being able to recognize and understand your own emotions and how they impact your behavior. By developing emotional self-awareness, you can better regulate your emotions and respond appropriately to different situations.
Overall, it is important to reflect on your EQ development during a course and consider how you have grown in terms of emotional intelligence. By synthesizing your reflections with EI learning concepts, you can gain a deeper understanding of your own emotional intelligence and how it impacts your relationships and experiences.
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