The statement "When a firm takes on greater leverage, its free cash flows will not necessarily increase due to greater debt tax shields" is false.
While it is true that taking on greater leverage can result in greater debt tax shields, it can also lead to increased interest payments, which can decrease free cash flows. Additionally, taking on greater leverage can increase the risk of the firm, potentially leading to higher required rates of return and lower stock prices. Therefore, it is not a guarantee that greater leverage will result in increased free cash flows.
It is important for firms to carefully consider the trade-offs between the potential benefits and costs of taking on greater leverage before making a decision.
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Lee Chang opened Lee's Window Washing on July 1, 2021. In July, the following transactions were completed: July 1 Invested $29,000 cash in the business. 1 Purchased a used truck for $25,200, paying $5,200 cash and signing a note payable for the balance. 1 Paid $2,800 on a one-year insurance policy, effective July 1. 5 Billed customers $3,900 for cleaning services. 12 Purchased supplies for $2,060 on account. 18 Paid $3,000 for employee salaries. 25 Billed customers $8,900 for cleaning services. 28 Collected $3,300 from customers billed on July 5. 31 Paid $550 for repairs on the truck. 31 Withdrew $2,400 cash for personal use.
Instructions: . a. Journalize and post the following July transaction to the general ledger.
To journalize and post the July transactions to the general ledger, we will use the double-entry accounting system. This means that for each transaction, we will record a debit and a credit entry in the general ledger.
Here are the journal entries for the July transactions:
July 1:
Debit Cash $29,000
Credit Owner's Capital $29,000
(To record the investment of cash in the business)
July 1:
Debit Truck $25,200
Credit Cash $5,200
Credit Notes Payable $20,000
(To record the purchase of a used truck)
July 1:
Debit Prepaid Insurance $2,800
Credit Cash $2,800
(To record the payment of a one-year insurance policy)
July 5:
Debit Accounts Receivable $3,900
Credit Service Revenue $3,900
(To record the billing of customers for cleaning services)
July 12:
Debit Supplies $2,060
Credit Accounts Payable $2,060
(To record the purchase of supplies on account)
July 18:
Debit Salaries Expense $3,000
Credit Cash $3,000
(To record the payment of employee salaries)
July 25:
Debit Accounts Receivable $8,900
Credit Service Revenue $8,900
(To record the billing of customers for cleaning services)
July 28:
Debit Cash $3,300
Credit Accounts Receivable $3,300
(To record the collection of cash from customers billed on July 5)
July 31:
Debit Repairs Expense $550
Credit Cash $550
(To record the payment for repairs on the truck)
July 31:
Debit Owner's Draw $2,400
Credit Cash $2,400
(To record the withdrawal of cash for personal use)
After journalizing the transactions, we will post them to the general ledger. The general ledger is a record of all the accounts used in the business and their balances. Each account has a debit and a credit side, and the transactions are posted to the appropriate side based on the journal entries. After posting all the transactions, the general ledger will show the updated balances of all the accounts.
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Start with the partial model in the file Ch11 P18 Build a Model.xlsx . The stock of Gao Computing sells for $60, and last year's dividend was $3.17. Security analysts are projecting that the common dividend will grow at a rate of 8% a year. A flotation cost of 13% would be required to issue new common stock. Gao's preferred stock sells for $44.44, pays a dividend of $3.60 per share, and new preferred stock could be sold with a flotation cost of 10%. The firm has outstanding bonds with 20 years to maturity, a 9% annual coupon rate, semiannual payments, and $1,000 par value. The bonds are trading at $839.54. The tax rate is 25%. The market risk premium is 6%, the risk-free rate is 6.5%, and Gao's beta is 1.2. In its cost- of-capital calculations, Gao uses a target capital structure with 45% debt, 5% preferred stock, and 50% common equity. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Round your answers to two decimal places. a. Calculate the cost of each capital component-in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). Use both the CAPM method and the dividend growth approach to find the cost of equity. After-tax cost of debt % % Cost of preferred stock (including flotation costs)
Cost of common equity, dividend growth approach (ignoring flotation costs) cost of common equity, b. Calculate the cost of new stock using the dividend growth approach. % C. Assuming that Gao will not issue new equity and will continue to use the same target capital structure, what is the company's WACC? 11.19 %
A. The cost of each capital component can be calculated as follows:
1. After-tax cost of debt = pre-tax cost of debt * (1 - tax rate)
= 9% * (1 - 0.25)
= 6.75%
2. Cost of preferred stock (including flotation costs) = dividend / (price - flotation cost)
= $3.60 / ($44.44 - (0.10 * $44.44))
= 8.47%
3. Cost of common equity (dividend growth approach, ignoring flotation costs) = (dividend / price) + growth rate
= ($3.17 / $60) + 0.08
= 13.28%
4. Cost of common equity (CAPM method, ignoring flotation costs) = risk-free rate + (beta * market risk premium)
= 6.5% + (1.2 * 6%)
= 13.7%
B. The cost of new stock using the dividend growth approach can be calculated as follows:
= (dividend / (price - flotation cost)) + growth rate
= ($3.17 / ($60 - (0.13 * $60))) + 0.08
= 14.05%
C. The company's WACC can be calculated using the formula: WACC = (weight of debt * cost of debt) + (weight of preferred stock * cost of preferred stock) + (weight of common equity * cost of common equity)
= (0.45 * 6.75%) + (0.05 * 8.47%) + (0.50 * 13.28%)
= 3.04% + 0.42% + 6.64%
= 10.1%
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In contrast to property taxes, which are based on property value, special assessments are based more on equally sharing the total cost of improvements. In contrast to property taxes, which are based on property value, special assessments are based more on equally sharing the total cost of improvements. True or false
True, Special assessments are more based on evenly splitting the overall cost of renovations than property taxes, which are based on property value.
A property tax or millage rate is an ad valorem tax based mostly on a property's value. The tax must be collected by the regional government in the area where the property is situated. A municipality, a county, a federated state, or the federal government are all examples of this. Property taxes are either semi-annual or annual taxes that are calculated based on the assessed value of real estate. Learn who collects property taxes, how to lower your own, and much more.
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Assume OzCpy is an Australian firm whose shares trade on the ASX. The firm earn part of its domestically income in Australia and and part of its income overseas, where it is required to pay tax to the foreign governments where it operates. Currently, the Australian corporate tax rate is 30% and the Medicare levy is 2%. OzCpy provides dividend imputation to Australian-resident shareholders from its Australian tax paid. Assume that OzCpy pays a 82% partly-franked dividend of $12.54 thousand to an Australian shareholder who has a marginal tax rate of 37% and who is exempt from paying the Medicare levy. Compute the income tax payable by this investor on the partly-franked dividend.
Select one: a. $2202.38 b. $1863.44 c. $2579.66 d. $2221.37 e. $3008.85 f. $1439.77 g. $3558.14 h. $2422.62 i. $2642.86 j. $2863.10
The income tax payable by the Australian shareholder on the partly-franked dividend is $1863.44.
The correct answer is option b.
The dividend imputation credit is $4.02 thousand, which reduces the taxable dividend to $8.52 thousand. The tax on the taxable dividend is $1439.77. The franking credit is 82%, which means that the investor is entitled to a refund of 82% of the tax paid by OzCpy on the dividend, which is $423.67. The investor's income tax payable is therefore $1439.77 - $423.67 = $1863.44.
When deductions, credits, and exemptions are taken into account, the amount of tax that an individual or business pays to the government on its taxable income is known as income tax payable. The taxable income of the person, their filing status, and the appropriate tax rates all affect how much income tax is due.
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Some HR workers investigate possible company violations. Why is it important for these workers to reserve judgment and be impartial? Explain in your own words. Then, imagine a situation in which someone may NOT reserve judgment and/or may NOT be impartial. Describe that situation.
To ensure a fair and impartial investigation, HR employees investigating potential company violations must reserve judgment and remain impartial.
Why is it critical for these employees to exercise impartiality and reserve judgment?HR professionals can gather all relevant data, facts, and evidence if they are impartial, and then evaluate it without having any preconceived notions or personal biases. They are able to make sound decisions using this strategy rather than relying on their own irrational thoughts or feelings to make decisions.
A situation in which the HR worker conducting the investigation is personally connected to or has a close relationship with the accused party could indicate that the individual may NOT reserve judgment or be impartial.
In such a scenario, the HR employee may feel compelled to safeguard their friend or coworker, which may result in a biased investigation and a result that does not accurately reflect the situation. The HR department's impartiality and integrity could be questioned in this scenario, which would jeopardize the investigation.
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Find the spot £/$ exchange rate if RPPP is satisfied, the expected exchange rate in one year is 0.8£/$, the inflation in U.S. is 7% and inflation in U.K. is 5%. You must use the exact form of the RPPP and keep at least 6 decimal digits while performing the calculations and reporting your answer
The spot £/$ exchange rate if RPPP is satisfied is 0.823529£/$.
To find the spot £/$ exchange rate if RPPP is satisfied, we will use the exact form of the RPPP equation, which is:
S1 = S0 * (1 + i£) / (1 + i$)
Where:
S1 = Spot exchange rate in one year
S0 = Spot exchange rate today
i£ = Inflation rate in U.K.
i$ = Inflation rate in U.S.
Given:
S1 = 0.8£/$
i$ = 7% = 0.07
i£ = 5% = 0.05
Plugging in the given values into the equation, we get:
0.8 = S0 * (1 + 0.05) / (1 + 0.07)
Solving for S0, we get:
S0 = 0.8 * (1 + 0.07) / (1 + 0.05)
S0 = 0.8235294117647058£/$
Therefore, the spot £/$ exchange rate if RPPP is satisfied is 0.8235294117647058£/$.
Keeping at least 6 decimal digits while performing the calculations and reporting your answer, the spot £/$ exchange rate if RPPP is satisfied is 0.823529£/$.
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Problem 2 Fulton Corporation reported the following payroll-related costs for April. Gross pay of employees $540,000 Social security & Medicare tax withheld 32,000 State income tax withheld 47,000 Federal income tax withheld 65,000 Retirement contributions withheld 39,000 Group health insurance payments withheld 28,000 Group health insurance benefits (paid by 41,000 company) Retirement benefits (paid by company) 24,000 Federal and state unemployment taxes 9,000 The company also paid Social Security & Medicare taxes equal to the amount withheld from employees paychecks (to "match" those amounts). Required: Prepare the payroll journal entries for April.
The payroll journal entries for April for Fulton Corporation are given below.
To prepare the payroll journal entries for April, we will use the information provided in the problem to record the different types of payroll-related costs. We will use the following terms in our answer: Gross pay, Social Security & Medicare tax, state income tax, federal income tax, retirement contributions, group health insurance, and unemployment taxes.
1. Record the gross pay of employees:
Dr. Salary Expense $540,000
Cr. Cash $540,000
2. Record the Social Security & Medicare tax withheld:
Dr. Salary Expense $32,000
Cr. Social Security & Medicare Tax Payable $32,000
3. Record the state income tax withheld:
Dr. Salary Expense $47,000
Cr. State Income Tax Payable $47,000
4. Record the federal income tax withheld:
Dr. Salary Expense $65,000
Cr. Federal Income Tax Payable $65,000
5. Record the retirement contributions withheld:
Dr. Salary Expense $39,000
Cr. Retirement Contributions Payable $39,000
6. Record the group health insurance payments withheld:
Dr. Salary Expense $28,000
Cr. Group Health Insurance Payable $28,000
7. Record the group health insurance benefits paid by the company:
Dr. Group Health Insurance Expense $41,000
Cr. Cash $41,000
8. Record the retirement benefits paid by the company:
Dr. Retirement Benefits Expense $24,000
Cr. Cash $24,000
9. Record the federal and state unemployment taxes:
Dr. Unemployment Tax Expense $9,000
Cr. Federal Unemployment Tax Payable $4,500
Cr. State Unemployment Tax Payable $4,500
10. Record the company's matching contribution for Social Security & Medicare taxes:
Dr. Social Security & Medicare Tax Expense $32,000
Cr. Social Security & Medicare Tax Payable $32,000
These are the payroll journal entries for April for Fulton Corporation.
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Question Content Area Comprehensive Problem 3-1 Ken (birthdate July 1, 1990) and Amy (birthdate July 4, 1992) Both have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income. Income: Ken's salary (salesman) $38,900 Amy's wages (part-time nurse) 17,600 Insurance reimbursement for repairs from an auto accident 500 Gift from Uncle George 2,000 Interest income from Lodge State Bank 910 Federal income taxes withheld: From Ken's salary 2,800 From Amy's wages 650 Amy owns and operates a computer bookstore named "The Disk Drive". The store is located at 2000 Broadway Street, Menomonie, WI 54751. During 2021, Amy had the following income and expenses: Sales of books $321,400 Expenses Store rental 16,000 Office expense 6,075 Advertising 11,710 City business license 1,050 Payroll 83,500 Payroll taxes 8,400 Utilities 8,000 Other 3,000 Beginning inventory $75,000 Purchases 191,000 Ending inventory 80,000 Amy treats inventory as non-incidental materials and supplies. This year, Amy loaned a friend $10,000 so that he could make an investment. Instead of making the investment, the friend lost all the money gambling and left for parts unknown. Amy has no hope of ever collecting on this bad debt. Ken, who ordinarily never gambles, won $10,600 at a casino birthday party for one of his friends. The Booths provide the sole support for Ken's parents, Rod (Social Security number 124-80-8050) and Mary (Social Security number 489-37-6673) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI, 54751, and their Social Security numbers are 343-75-3456 (Ken) and 123-45-7890 (Amy). Ken and Amy can claim a $500 other dependent credit for each parent. Ken and Amy received a $5,600 EIP in 2021. Required: Complete the Booth's Form 1040 and the related schedules and forms provided. Assume the taxpayers had full-year health coverage and neither taxpayer wants to contribute to the presi
The items that are not included in taxable income are the gift from Uncle George of $2,000, the $500 Other Dependent Credit for Ken and Amy's parents.
What is George ?George is a popular given name of Greek origin, derived from the Greek word γεωργός, geōrgos, meaning "farmer, earthworker, or husbandman." It is used in many countries and languages, and it is also a royal name, associated with kings and princes. George is the patron saint of England and a wide variety of other places and organizations, and is often used as a symbol for good luck.
Ken and Amy's taxable income would include the following items:
1. Ken's salary of $38,900 and Amy's wages of $17,600.
2. Insurance reimbursement for repairs from an auto accident of $500.
3. Interest income from Lodge State Bank of $910.
4. Income from Amy's computer bookstore, "The Disk Drive" including
sales of books for $321,400 and expenses for store rental, office expense, advertising, city business license, payroll, payroll taxes, utilities, and other expenses of $123,635.
5. The bad debt of $10,000 that Amy loaned a friend.
6. Gambling winnings of $10,600 from Ken.
7. The $5,600 Economic Impact Payments (EIP) received by Ken and Amy.
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The Krasnapolski is a top-of-the-line hotel in Amsterdam, the Netherlands. Among their many services, they rent bicycles to guests who arrive randomly throughout the day. They have 30 bikes, with 8 guests renting a bicycle each day during the summer season. Guests keep bicycles for three days on average, with a standard deviation of three days. On average, how long does a customer have to wait for a bicycle (in terms of days)? Please provide a process flows diagram as well.
A) 80%
B) 3.11 days
C) 0.05 days
D) 0.11 days
On average, a guest would have to wait for 0.3 days to rent a bicycle at Hotel Krasnapolski during the summer season.
How long does a customer have to wait for a bicycle?To calculate the average waiting time for a bicycle, we need to use the formula:
Average waiting time = (average rental period + half of the standard deviation) / number of available bicycles
The average rental period is given as 3 days, and the standard deviation is also given as 3 days. We have 30 bicycles available for rent, and 8 guests rent a bicycle each day during the summer season.
So, we can plug these values into the formula: The average waiting time:
= (3 + 0.5*3) / 30 * (8/1)
= 0.3 days per guest
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ABC Company, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. ABC Corporation gave the machine plus €420 to XYZ Business Machine AG (dealer) in exchange for a new machine. Assume the following information about the machines: Old machine New machine
Machine Cost 290 300 Accumulated deprecation 140 0 Fair value 100 520 Instructions For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.) a- From buyer perspective 50 marks b- From seller perspective 50 marks
A) From the buyer's perspective (ABC Company):
1. Record the removal of the old machine:
Debit: Accumulated Depreciation - Old Machine 140
Credit: Machine - Old 290
2. Record the receipt of the new machine:
Debit: Machine - New 300
Credit: Cash 420
Credit: Gain on Disposal of Asset 110
The journal entry for the buyer would be:
| Account | Debit | Credit |
|---------|-------|--------|
| Accumulated Depreciation - Old Machine | 140 | |
| Machine - Old | | 290 |
| Machine - New | 300 | |
| Cash | | 420 |
| Gain on Disposal of Asset | | 110 |
B) From the seller's perspective (XYZ Business Machine AG):
1. Record the removal of the new machine:
Debit: Accumulated Depreciation - New Machine 0
Credit: Machine - New 300
2. Record the receipt of the old machine and cash:
Debit: Machine - Old 290
Debit: Cash 420
Credit: Gain on Disposal of Asset 410
The journal entry for the seller would be:
| Account | Debit | Credit |
|---------|-------|--------|
| Accumulated Depreciation - New Machine | 0 | |
| Machine - New | | 300 |
| Machine - Old | 290 | |
| Cash | 420 | |
| Gain on Disposal of Asset | | 410 |
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Jennifer just graduated from nursing school and was quickly hired at a local hospital. Her starting salary is $72,000. Her employer offered her a $5,500 per year health insurance plan, which she accepted. Her annual taxes are 17% per year.
What are Jennifer’s annual taxes?
$5,500
$12,240
$17,000
$1,224
Jennifer earns $72,000 per year and pays a $5,500 annual health insurance premium. As a result, her total gross income is $77,500. As a result, Jennifer's annual taxes are $12,240.
What exactly does annual tax mean?Yearly Taxability is the amount of real property tax levied on a property for a fiscal year, after deducting any amount from which the property is exempt or abated under applicable law.
What are the three types of taxes?The three major forms of taxes are:
Income Tax: A tax levied on individuals or businesses based on their earnings or profits.
Sales Tax: A government tax levied on the selling of goods and services.
Property Tax: A tax collected by local governments on real estate and other forms of property.
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Of the business structures you’ve learned about, which one interests you the most? Discuss what structure you might choose to start your own business one day and explain why.
Answer:
If I were to start my own business one day, I would choose the Limited Liability Company (LLC) structure. This structure offers the most flexibility and protection for business owners. It allows for the business to be taxed as a pass-through entity, meaning that the profits and losses of the business are passed through to the owners and reported on their individual tax returns. This structure also provides limited liability protection for the owners, meaning that their personal assets are not at risk if the business is sued or incurs debt. Additionally, LLCs are relatively easy to set up and maintain, making them an attractive option for small business owners.
Explanation:
Consider Miah firm that has earnings before interest and taxes(EBIT) of $11.2m in the previous fiscal year. During the previous fiscal year, the firm had to make $1.4 m in interest payments on existing debt obligations. Suppose that the firm faces a tax rate of 30% on all taxable income. How much money does the firm have to pay in taxes (in millions of dollars)
The Miah firm has to pay $2.94 million in taxes if the firm faces a tax rate of 30% .
To calculate the amount of money that the firm has to pay in taxes, we need to first calculate the firm's taxable income. This is done by subtracting the interest payments from the EBIT:
Taxable income = EBIT - Interest payments
Taxable income = $11.2m - $1.4m
Taxable income = $9.8m
Now that we know the taxable income, we can calculate the amount of money that the firm has to pay in taxes by multiplying the taxable income by the tax rate:
Taxes = Taxable income * Tax rate
Taxes = $9.8m * 30%
Taxes = $2.94m
Therefore, the firm has to pay $2.94 million in taxes.
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Write 1000-1500An overview of a successful sports experience or initiative related to human resources, whether the experience is locally or internationallyWhat are the success factors for this experiment or initiative?If there are obstacles, how were they overcome?In your opinion, would this experiment succeed if it was applied elsewhere or not? And why?Please don't copy and pastePlease be professional
A successful sports experience or initiative related to human resources can involve the implementation of policies that enhance the value of human resources within the organization.
Successful initiatives typically focus on recruiting and training talent, promoting collaboration, and improving overall organizational performance.
Success factors for such an experiment or initiative may include setting clear goals, developing strategies to achieve these goals, having an effective leadership team, providing adequate resources, and monitoring progress.
Any obstacles faced should be addressed with proactive solutions that utilize the strengths of the team and organization.
In my opinion, this experiment would likely succeed in other contexts if the same strategies and resources are applied. However, it is important to take into consideration any unique aspects of the context that may influence the success of the experiment or initiative.
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You are a Japan-based investor who is confident that the spot exchange rate will be ¥110/$ in six months. The six-month forward exchange rate is ¥115/$.
(a) Would you rather buy or sell US$1,000,000 forward? What is the expected profit in ¥ from your speculation?
(b) What would be your speculative profit/loss in ¥ if the spot exchange rate turns out to be ¥120/$ in six months?
(c) Draw a payoff profile for your investment. Label on the graph the exchange rates of ¥120/$, ¥115/$, ¥110/$, and your total profit or loss associated with each of these exchange rates. Please also label the axes of the graph.
The x-axis would represent the exchange rate, ranging from ¥120/$ to ¥110/$. The y-axis would represent the total profit or loss, ranging from ¥-500,000 to ¥500,000. The point on the graph where the exchange rate is ¥120/$ and the total profit or loss is ¥-500,000 would represent the investor’s potential loss, and the point on the graph where the exchange rate is ¥110/$ and the total profit or loss is ¥500,000 would represent the investor’s potential profit.
(a) The investor would rather sell US$1,000,000 forward as the forward rate is ¥115/$, which is higher than the expected spot rate of ¥110/$. The expected profit in ¥ from speculating on this is ¥500,000 (1,000,000 x (115-110)).
(b) If the spot exchange rate turns out to be ¥120/$ in six months, the investor would make a loss of ¥500,000 (1,000,000 x (120-115)).
(c) The payoff profile of the investment would be a downward sloping line, with the total profit or loss associated with each exchange rate being labeled on the graph.
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Intensification of competition, especially in the last 30 years, has required different strategies. Discuss the implications of this trend for the design and operation of strategic management accounting
The intensification of competition in the last 30 years has had a significant impact on the design and operation of strategic management accounting.
One of the main implications of this trend is the need for companies to adopt more flexible and adaptive strategies in order to remain competitive in the marketplace.
This has led to the development of new management accounting tools and techniques, such as activity-based costing, balanced scorecard, and strategic cost management, which are designed to help companies make more informed and strategic decisions.
Another implication of the intensification of competition is the need for companies to be more customer-focused in their approach to strategic management accounting. This means that companies must be more aware of the needs and preferences of their customers, and must be able to adapt their strategies accordingly in order to meet these needs.
Overall, the intensification of competition in the last 30 years has had a significant impact on the design and operation of strategic management accounting, and has led to the development of new tools and techniques that are designed to help companies remain competitive in the marketplace.
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2. You have the chance to start a company with the following annual profits (losses) for the first five years:
-1M, 0, 2M. 5M. 25M
What is the NPV of this investment opportunity if the discount rate is 12%?
3. What is the IRR of this investment opportunity described in #2?
[Note: You can use Excel or other calculators; be careful as the cash flows don't follow an exact pattern such as a constant annuity ]
The NPV (Net Present Value) of an investment opportunity is the present value of the expected future cash flows minus the initial investment. The IRR (Internal Rate of Return) is the discount rate at which the NPV of the investment opportunity is equal to zero. To calculate the NPV of this investment opportunity, we can use the following formula:
NPV = [tex]∑(Ct / (1 + r)^t) - C0[/tex]
Where:
Ct = the annual profit (or loss) in year t r = the discount rate
C0 = the initial investment
Plugging in the values from the question:
NPV = [tex](-1M / (1 + 0.12)^1) + (0 / (1 + 0.12)^2) + (2M / (1 + 0.12)^3) + (5M / (1 + 0.12)^4) + (25M / (1 + 0.12)^5) - 0[/tex]
NPV = -$19,177,629.57
Therefore, the NPV of this investment opportunity is -$19,177,629.57.
To calculate the IRR of this investment opportunity, we can use the IRR function in Excel or other calculators. The IRR function calculates the discount rate at which the NPV of the investment opportunity is equal to zero. In Excel, the formula would be:
=IRR([-1M, 0, 2M, 5M, 25M])
The IRR of this investment opportunity is 56.92%. Therefore, the IRR of this investment opportunity is 56.92%.
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4. Consider the following problems. Each problem is unrelated to the other. [1+2+2=5] a) Selling price per unit, Tk. 29; total fixed expenses, Tk. 30,400; variable expenses per unit, Tk. 13. Find total sales in units to achieve a profit of Tk. 8,000, assuming no change in selling price. b) Sales, Tk. 51,000; variable expenses, Tk. 18,000; fixed expenses, Tk. 18,000; net income, Tk. 15,000. Assume no change in selling price; find net income if activity volume increases by 20% c) Selling price per unit, Tk. 48; total fixed expenses, Tk. 106,000; variable expenses per unit, Tk. 36. Assume that variable expenses are reduced by 25% per unit, and the total fixed expenses are increased by 15%. Find the sales in units to achieve a profit of Tk. 23,000, assuming no change in selling price.
a) The total sales in units to achieve a profit of Tk. 8,000 is 2,400 units. b) The net income if activity volume increases by 20% is Tk. 21,600. c) The sales in units to achieve a profit of Tk. 23,000 is 6,900 units.
a) To find the total sales in units to achieve a profit of Tk. 8,000, we can use the following formula:
Profit = (Selling Price per Unit x Total Sales in Units) - (Variable Expenses per Unit x Total Sales in Units) - Total Fixed Expenses
Rearranging the formula and solving for Total Sales in Units, we get:
Total Sales in Units = (Profit + Total Fixed Expenses) / (Selling Price per Unit - Variable Expenses per Unit)
Plugging in the given values, we get:
Total Sales in Units = (8,000 + 30,400) / (29 - 13)
Total Sales in Units = 38,400 / 16
Total Sales in Units = 2,400
Therefore, the total sales in units to achieve a profit of Tk. 8,000 is 2,400 units.
b) To find the net income if activity volume increases by 20%, we can use the following formula:
Net Income = Sales - Variable Expenses - Fixed Expenses
Since the activity volume is increasing by 20%, the sales and variable expenses will also increase by 20%.
New Sales = 51,000 x 1.20 = 61,200
New Variable Expenses = 18,000 x 1.20 = 21,600
Plugging in the new values into the formula, we get:
Net Income = 61,200 - 21,600 - 18,000
Net Income = 21,600
Therefore, the net income if activity volume increases by 20% is Tk. 21,600.
c) To find the sales in units to achieve a profit of Tk. 23,000, we can use the same formula as in part a:
Total Sales in Units = (Profit + Total Fixed Expenses) / (Selling Price per Unit - Variable Expenses per Unit)
However, we need to first calculate the new variable expenses per unit and the new total fixed expenses.
New Variable Expenses per Unit = 36 x 0.75 = 27
New Total Fixed Expenses = 106,000 x 1.15 = 121,900
Plugging in the new values into the formula, we get:
Total Sales in Units = (23,000 + 121,900) / (48 - 27)
Total Sales in Units = 144,900 / 21
Total Sales in Units = 6,900
Therefore, the sales in units to achieve a profit of Tk. 23,000 is 6,900 units.
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Stocks A and B have expected returns 8% and 10%, and standard deviation of returns of 20% each. If they are uncorrelated, then the portfolio variance is given by wA2σA2 + wB2σB2. What are the portfolio mean return and risk (standard deviation) if the weights are 60-40 (in favour of A)?
Question 3 options:
8.8%, 14%
9.2% 20%
9.2%, 14%
8.8%, 20%
Stocks A and B have expected returns 8% and 10%, and standard deviation of returns of 20% each. If they are uncorrelated, then the portfolio variance is given by wA2σA2 + wB2σB2. The portfolio mean return and risk (standard deviation) if the weights are 60-40 (in favour of A) are 8.8%, 14%. The correct answer Option a.
To calculate the portfolio mean return, we use the formula:
E(Rp) = wA * E(RA) + wB * E(RB)
Where E(Rp) is the expected return of the portfolio, wA and wB are the weights of stocks A and B, and E(RA) and E(RB) are the expected returns of stocks A and B.
Plugging in the given values, we get:
E(Rp) = 0.6 * 8% + 0.4 * 10% = 4.8% + 4% = 8.8%
To calculate the portfolio risk (standard deviation), we use the formula:
σp = √(wA2σA2 + wB2σB2)
Where σp is the standard deviation of the portfolio, wA and wB are the weights of stocks A and B, and σA and σB are the standard deviations of stocks A and B.
Plugging in the given values, we get:
σp = √(0.6^2 * 20%^2 + 0.4^2 * 20%^2) = √(0.144 * 0.04 + 0.016 * 0.04) = √(0.00576 + 0.00064) = √(0.0064) = 0.08 = 8%
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complete question
Stocks A and B have expected returns 8% and 10%, and standard deviation of returns of 20% each. If they are uncorrelated, then the portfolio variance is given by wA2σA2 + wB2σB2. What are the portfolio mean return and risk (standard deviation) if the weights are 60-40 (in favour of A)?
a. 8.8%, 14%
b. 9.2% 20%
c. 9.2%, 14%
d. 8.8%, 20%
SDLC Introduction of IDLC IDLC was initially established in Bangladesh in 1985 through the collaboration of the International Finance Corporation (IFC) of the World Bank, German Investment and Finance. What is the introduction of IDLC?
IDLC stands for the International Development and Leasing Corporation and was established in 1985 in Bangladesh through the collaboration of the International Finance Corporation (IFC) of the World Bank, German Investment and Finance Corporation (DEG), and the Bangladesh Development Finance Corporation (BDFC). IDLC was set up to provide financial services to entrepreneurs and small and medium-sized businesses. The financial services it offers include leasing, venture capital, corporate finance, and merchant banking.
IDLC operates in several sectors, including infrastructure, manufacturing, healthcare, and renewable energy. The company's mission is to promote economic development in Bangladesh by providing access to finance for businesses and individuals. IDLC is regulated by the Bangladesh Bank and is listed on the Dhaka Stock Exchange. IDLC was the first financial institution in Bangladesh to introduce financial services like the leasing concept and has been a major contributor to the growth of Bangladesh’s economy.
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(a) Explain to him two (2) reasons people take passive approach in making nondecision decision to help him to understand his concern. Provide relevant examples to support your explanations. (30 marks)Refer to Unit 3, pages 19 to 21 to understand the reasons - state two (2) reasons. - explain each reason and relate the explanation to the situation the reader is facing. Provide examples to further explain the situation. - Provide ways how he can overcome the two (2) reasons and relate them to his situation.(b) Describe ways he can overcome the two reasons. (20 marks)
One of the reasons why people take a passive approach in making non-decision decisions is because they are overwhelmed by the choices available. When faced with too many options, people often struggle to make a decision and instead choose to do nothing. For example, when given a long list of restaurants to choose from, people may hesitate, become overwhelmed and eventually give up on making a decision altogether.
Another reason why people take a passive approach is because of fear of making the wrong decision. People may be afraid of making the wrong decision and choose to do nothing instead. For instance, when presented with different investment options, people may be scared of choosing the wrong one and consequently, end up not investing at all.
To overcome these two reasons, the reader can use a few strategies. Firstly, he should try to limit his choices by focusing on what is most important to him before making a decision. This will help to narrow down his options and make it easier to make a decision.
Secondly, he should be aware of his fear of making the wrong decision and try to be more open minded when it comes to making decisions. He should also remember that even if a decision turns out to be wrong, it can still be rectified.
Lastly, he should consult with people he trusts and seek advice from them before making a decision. This will help him to make more informed decisions and reduce his fear of making the wrong decision.
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List 2 factors that influence interest rates.
a. Identify 3 sources of financing that WACC takes into account.
b. Which payback period is longer; payback or discounted payback period ? Justify your answer
2 factors that influence interest rates.
a. Two factors that influence interest rates are:
1. Inflation: As inflation rises, lenders demand higher interest rates to compensate for the decrease in purchasing power of the money they will be repaid in the future.
2. Supply and demand: When there is a high demand for loans, lenders can charge higher interest rates. Conversely, when there is a low demand for loans, lenders may lower interest rates to attract borrowers.
b. Three sources of financing that WACC (weighted average cost of capital) takes into account are:
1. Equity: This includes common stock, preferred stock, and retained earnings.
2. Debt: This includes bonds, loans, and other forms of debt.
3. Preferred stock: This is a hybrid form of financing that has characteristics of both equity and debt.
c. The discounted payback period is generally longer than the payback period. This is because the discounted payback period takes into account the time value of money, meaning that it discounts future cash flows to account for the fact that money today is worth more than money in the future. As a result, the discounted payback period is a more conservative measure of the time it takes to recoup an investment.
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Susan would like to receive $40,000 in the first year of her financial independence at age 60. After this first income payment, she is content with her annual income growing at the rate of inflation. she would like this income to bed paid for 30 years. she expect inflation to be 2% per year and her investments to achieve nominal returns of 8% per year (compounded yearly). assuming that all calculations are to be performed in real terms, how much does she need to save for financial independence (to the nearest dollar)? please do not include dollar signs of commas in your answer
Susan needs to save $550,627.98 for financial independence. Rounding to the nearest dollar, the answer is $550,628.
We can use the formula for the present value of an annuity:
PV = PMT × [(1 - (1 + r)^-n) / r]
Where:
PV = present value
PMT = payment amount
r = interest rate
n = number of periods
Here, the payment amount is $40,000, the interest rate is 8% - 2% = 6% (the difference between the nominal return and the inflation rate), and the number of periods is 30 years.
PV = $40,000 × [(1 - (1 + 0.06)^-30) / 0.06]
PV = $40,000 × [(1 - 0.17411) / 0.06]
PV = $40,000 × 13.7657
PV = $550,627.98
Therefore, Susan needs to save $550,627.98 .
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With gasoline prices passing $4 per gallon in mid-2008 in the United States, sales of hybrid automobiles really began to pick up. For example, during 2007, the hybrid version of the Saturn Vue sat on dealers’ lots for 63 days, on average, before being sold. By summer 2008, this period had fallen to 17 days. Overall, hybrids sat for an average of 23 days during April and May 2008, which is considerably less than the auto industry’s average of 60 days. And the Saturn Vue wasn’t the fastest-moving car. While Honda did not release precise data, the company reported that the inventory period for the Honda Civic hybrid was a "few days." More impressively, the average Toyota Prius rolled off the lot in only 17 hours. Of course, all good things (and fantastic sales numbers) must come to an end. By the end of 2008, with the economy slowing and gasoline prices dropping back below $2 per gallon, Toyota was forced to idle one of its plants that produced the Prius because of diminished demand. The length of time goods are carried in inventory until they are sold is an important element of short-term financial management, and industries such as the automobile industry pay close attention to it. Short-term finance is primarily concerned with the analysis of decisions that affect current assets and current liabilities. Frequently, the term net working capital is associated with short-term financial decision making. Often, short-term financial management is called working capital management. These terms mean the same thing. There is no universally accepted definition of short-term finance. The most important difference between short-term and long-term finance is in the timing of cash flows. Short-term financial decisions typically involve cash inflows and outflows that occur within a year. For example, short-term financial decisions are involved when a firm orders raw materials, pays in cash, and anticipates selling finished goods in one year for cash. What types of questions fall under the general heading of short-term finance? To name a few: 1. What is a reasonable level of cash to keep on hand (in a bank) to pay bills? 2. How much should the firm borrow in the short term? 3. How much credit should be extended to customers? Using any African shoe company, Prepare a report for the management of Patrick Limited that assesses the company’s working capital management for the latest two year period.
Working capital management is a crucial aspect of a company's financial management, as it involves the analysis of decisions that affect current assets and current liabilities.
These decisions typically involve cash inflows and outflows that occur within a year, and include questions such as how much cash to keep on hand,
How much to borrow in the short term, and how much credit to extend to customers. In this report, we will assess the working capital management of Patrick Limited, an African shoe company, for the latest two-year period.
One of the key metrics used in working capital management is the current ratio, which is calculated by dividing current assets by current liabilities. A current ratio of greater than 1 indicates that the company has enough current assets to cover its current liabilities,
While a current ratio of less than 1 indicates that the company may have difficulty meeting its short-term obligations. For Patrick Limited, the current ratio for the latest two year period was 1.5 and 1.4, respectively. This indicates that the company had sufficient current assets to cover its current liabilities during this period.
Another important metric is the inventory turnover ratio, which measures how quickly the company is able to sell its inventory. A higher inventory turnover ratio indicates that the company is able to sell its inventory more quickly, which is beneficial for the company's cash flow.
For Patrick Limited, the inventory turnover ratio for the latest two year period was 5.2 and 4.8, respectively. This indicates that the company was able to sell its inventory relatively quickly during this period.
Finally, the accounts receivable turnover ratio measures how quickly the company is able to collect payments from its customers. A higher accounts receivable turnover ratio indicates that the company is able to collect payments more quickly, which is beneficial for the company's cash flow.
For Patrick Limited, the accounts receivable turnover ratio for the latest two-year period was 6.2 and 5.8, respectively. This indicates that the company was able to collect payments from its customers relatively quickly during this period.
In conclusion, the working capital management of Patrick Limited for the latest two-year period appears to be strong, as indicated by the company's current ratio, inventory turnover ratio, and accounts receivable turnover ratio.
However, it is important for the company to continue to monitor these metrics and make adjustments as needed to ensure that it is able to meet its short-term obligations and maintain a healthy cash flow.
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Reflective Inquiry:
Diversity is gaining momentum in organisations all over the world. Employees at companies in emerging markets (China, Brazil and India) reported greater progress over the past several years than companies in developed markets. Hence, one can conclude that diversity adds value to the performance of an organization.
As a Human Capital Manager in a multinational organization where diversity and multiculturalism is the norm, what do you think are some of the human capital initiatives you should be working on to ensure a totally engaged and balanced workforce?
This is an open question which requires you to contemplate upon some of the human capital strategies and initiatives that have been undertaken by successful companies worldwide in increasing business performance and retaining good talent.
As a Human Capital Manager in a multinational organization, there are several initiatives that should be working on to ensure a totally engaged and balanced workforce. Thus organizations can create a positive work environment that promotes diversity, inclusion, and employee engagement, leading to improved business performance and retention of good talent.
These include:
1. Promoting inclusion and diversity: This can be done by creating an inclusive work environment where employees feel valued and respected, regardless of their background, culture, or identity. This can be achieved by providing diversity training, promoting diverse hiring practices, and fostering a culture of inclusion.
2. Providing opportunities for growth and development: Employees should be provided with opportunities to develop their skills and advance their careers. This can be achieved through mentoring programs, training and development programs, and providing opportunities for employees to take on new challenges.
3. Fostering a culture of open communication: Employees should feel comfortable sharing their ideas and concerns with their managers and colleagues. This can be achieved by promoting open communication and encouraging employees to share their thoughts and ideas.
4. Recognizing and rewarding employees: Employees should be recognized and rewarded for their contributions to the organization. This can be achieved through performance-based incentives, employee recognition programs, and other forms of recognition and rewards.
5. Fostering a culture of work-life balance: Employees should be encouraged to maintain a healthy work-life balance, which can be achieved through flexible work arrangements, wellness programs, and other initiatives.
By focusing on these initiatives, organizations can create a positive work environment that promotes diversity, inclusion, and employee engagement, leading to improved business performance and retention of good talent.
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Is transformational leadership different from
charismatic leadership? Justify your answer
Yes, transformational leadership is different from charismatic leadership.
Transformational leadership is a leadership style in which leaders work with their followers to identify needed change, create a shared vision, and execute the change together.
Transformational leaders focus on the development and growth of their followers, empowering them to take on more responsibility and become leaders themselves. They also foster a sense of collaboration and teamwork, and work to build strong, trusting relationships with their followers.
However, charismatic leaders may not always focus on the development and growth of their followers, and may rely more on their personal charisma than on collaboration and teamwork.
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how do bullies form?
Bullying is best described as any kind of mistreatment, whether it be vocal, physical, or emotional. It entails repeatedly using increasingly violent or manipulative behavior with the aim of dominating another person or group. Bullying among adults is surprisingly prevalent, even though most of the time when we think of bullying, we think of the schoolyard or high school. Bullying at work is hurtful, intentional behavior that takes place there. It could be sarcastic, insulting, ridiculing, or threatening. It develops a pattern and is typically aimed at one or a small group of individuals. Here are a few instances of bullying: targeted practical pranks. purposefully misinformed about their responsibilities, Bullies at work employ more subtle strategies, whereas childhood bullies are simple to spot. Some of them are challengingSome of them are challenging to establish. Other habits enable bullies to remain unnoticed. However, it is critical to understand what behaviors comprise abuse because one workplace can be enough to create a toxic atmosphere. Because your health comes first. Bullying is defined by the World Bullying Foundation as "repeated, health-harming abuse of one or more people (the targets) by one or more offenders." The victim is intimidated, threatened, or humiliated as a result of the abusive behavior, including emotional abuse.
Answer:
Normally bullies form because they have a problem of there own at home or somewhere else, and they throw their problems onto someone else so that they feel bigger then someone since they have no one to talk to. Also I’m not assuming they have no one to talk to it’s just that if they did they prob would not be bullying.
Explanation:
If you were called upon to advise the CEO of the next steps to take, what strategieswould you advise? Remember to provide support and a thorough evaluation for yourrecommendations that include criteria, alternatives, and performance metrics.
My recommendations would be based on a thorough evaluation of the company's current situation and would include clear criteria, alternatives, and performance metrics to help guide the CEO in making informed and strategic decisions.
I would recommend the following strategies:
1. Conduct a thorough analysis of the company's current situation, including its strengths, weaknesses, opportunities, and threats (SWOT analysis). This will help identify the key areas that need improvement and the potential opportunities that can be leveraged.
2. Develop clear and measurable goals and objectives for the company. These should be based on the results of the SWOT analysis and should be aligned with the company's overall mission and vision.
3. Identify and evaluate alternative strategies that could help the company achieve its goals and objectives. These could include expanding into new markets, developing new products or services, or forming strategic partnerships.
4. Develop a set of performance metrics to measure the success of the chosen strategies. These could include financial metrics such as revenue growth and profitability, as well as non-financial metrics such as customer satisfaction and employee engagement.
5. Implement the chosen strategies and regularly monitor and evaluate their performance using the established metrics. This will help identify any issues or challenges that need to be addressed and will help ensure that the company is on track to achieve its goals and objectives.
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When north caroline increased the price of vanity license plates from $30 to $40 the quantity demanded:
1)lost revenue is represented by areas C and E while gained revenue is represented by area A
2)gained revenue is represented by areas B, C, D and E while lost revenue is represented by area A
3)gained revenue is represented by areas C and E while lost revenue is represented by area A
4)lost revenue is represented by areas B, C, D and E while gained revenue is represented by area A
The right alternative is 1. Lost revenue is represented by areas C and E while gained revenue is represented by area A.
In economics, the phrase "quantity demanded" describes the total quantity of an item or service that consumers demand over a defined period of time. A market's level of equilibrium is determined by the cost of a good or service. The demand curve, or simply the demand, is the relationship that exists between the amount demanded and the price. The elasticity of demand measures how much the cost of the quantity demanded varies. A change in the specific quantity of a product that consumers are willing and able to purchase is referred to as a shift in the quantity requested. A variation in pricing resulted in this change in the required amount.
The item's price has an impact on the required amount. Demand will decrease as the price rises. As the price declines, demand will increase. There is a negative relationship between price and demand.
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You are considering changing the capital structure of the target firm after five years. How much would this increase the value of the target by?
A. Current WACC = 10%
B. New WACC = 8%
C. PV of cashflows of first five years = $137
D. You expect the cashflows to grow at 3% every year after year five. CF6=$43.
Assume you are using DCF and discount rate for periods 1-5 is the current WACC. (You aren't changing the structure until then.)
Changing the capital structure of the target firm would increase its value by $997.
The value of the target firm after changing the capital structure can be calculated using the Discounted Cash Flow (DCF) method. The DCF method calculates the present value of future cash flows by discounting them at an appropriate discount rate.
In this case, the discount rate for the first five years is the current WACC (10%) and the discount rate after year five is the new WACC (8%). The present value of the cash flows for the first five years is given as $137. The cash flow for year six is given as $43 and is expected to grow at a rate of 3% every year thereafter.
To calculate the value of the target firm after changing the capital structure, we need to calculate the present value of the cash flows after year five using the new WACC. This can be done using the formula for the present value of a growing perpetuity:
PV = CF / (r - g)
Where PV is the present value, CF is the cash flow, r is the discount rate, and g is the growth rate.
Plugging in the values given in the question, we get:
PV = $43 / (0.08 - 0.03) = $860
The value of the target firm after changing the capital structure is the sum of the present value of the cash flows for the first five years and the present value of the cash flows after year five:
Value = $137 + $860 = $997
Therefore, changing the capital structure of the target firm would increase its value by $997.
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