The statement "If the volatility of Stock A is higher than that of Stock B, the expected return of Stock A should be higher than that of Stock B" is partially correct.
The volatility of a stock refers to the degree of variation in its price over a given period of time. Higher volatility indicates larger price fluctuations and greater uncertainty. The expected return, on the other hand, is a measure of the average return an investor anticipates from holding a particular stock. While there is a relationship between volatility and expected return, it is important to note that higher volatility does not necessarily guarantee a higher expected return. The relationship between volatility and expected return depends on various factors, including the risk preferences of investors and the specific characteristics of the stocks.
In general, higher volatility is associated with higher risk, and investors typically demand a higher expected return as compensation for taking on greater risk. However, this relationship is not absolute and can be influenced by other factors such as market conditions, investor sentiment, and the underlying fundamentals of the stocks.
The statement is partially correct because higher volatility can suggest the potential for higher returns, but it does not guarantee it. Other factors need to be considered when assessing the expected return of a stock, including market conditions, risk preferences, and the specific characteristics of the stocks.
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Houndlight is considering openning a new store in Brisbane. Houndlight must open the new store either now or in exactly one year. If Houndlight opens the store now, it will cost Houndlight $3.9 million immediately to open the new store. Houndlight expects to receive an annual cash flow of $710000 in perpetuity. Houndlight has the option to close the store at the end of the third year and sell the store for $23.667 million. If Houndlight opens the store in one year, the probability of market demand being high and low is 43% and 57%, respectively. If the market demand is high, Houndlight will spend $7.2 million to open the new store, and expect to receive an annual cash flow of $150000 in perpetuity. If the market demand is low, Houndlight will spend $3.6 million to open the new store, and expect to receive an annual cash flow of $90000 in perpetuity. The cost of capital for this project is assumed to be 3.3%. The NPV of this project for Houndlight is closest to:
a. $-1.59 million
b. $19.57 million
c. $17.61 million
d. $21.52 million
The NPV of this project for Houndlight is closest to $17.61 million. The correct option is c.
Net Present Value (NPV) is the difference between the current value of cash inflows and the current value of cash outflows for a project or an investment. The present value of cash inflows is the current value of future cash inflows discounted at a specified rate of return. The present value of cash outflows is the current value of future cash outflows discounted at the specified rate of return.
The formula for calculating NPV is as follows:
NPV = (Cash flows / (1 + r) ^ n) – Initial Investment
r = Discount Rate and
n = number of time periods
If Houndlight opens the store now,
NPV = [(710000/0.033) – 3900000] = $17,200,606.06
To calculate the NPV of the second option.
Houndlight can either open the store now or in one year with high market demand or low market demand.
The probabilities of high and low market demands are 43% and 57%, respectively. So, the expected NPV is:
NPV = [0.43 × (150000 / 0.033 – 7200000) + 0.57 × (90000 / 0.033 – 3600000)] = $12,588,769.27
If Houndlight opens the store now, it will have an NPV of $17,200,606.06.
However, if it waits a year, the expected NPV is $12,588,769.27.
Since $17,200,606.06 > $12,588,769.27, Houndlight should open the store now.
Therefore, the NPV of this project for Houndlight is closest to $17.61 million. The correct option is c.
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Assignment Attempts 0 0 3. Problem 7.03 (Bond Valuation) eBook Problem Walk-Through Nesmith Corporation's outstanding bonds have a $1,000 par value, an 11% semiannual coupon, 18 years to maturity, and a 13% YTM, What is the bond's price? Round your answer to the nearest cent. Grade it Now Save & Continue Continue without saving Keep the Highest 0/05
To calculate the price of the bond, we can use the bond valuation formula. The bond valuation formula is:
Bond Price = (C / (1 + r)^1) + (C / (1 + r)^2) + ... + (C + Par Value / (1 + r)^n)
Where:
C = Coupon payment
r = Yield to maturity (YTM)
n = Number of periods (in this case, number of semiannual periods until maturity)
Par Value = Face value of the bond
Given:
Par Value = $1,000
Coupon Rate = 11% (semiannual coupon, so divide by 2 to get the coupon payment)
YTM = 13%
Number of periods = 18 years * 2 (since semiannual periods)
Calculating the coupon payment:
Coupon Payment = Coupon Rate * Par Value / 2
Coupon Payment = 0.11 * $1,000 / 2
Coupon Payment = $55
Calculating the bond price using the bond valuation formula:
Bond Price = (55 / (1 + 0.13/2)^1) + (55 / (1 + 0.13/2)^2) + ... + (55 + 1,000 / (1 + 0.13/2)^36)
To simplify the calculation, we can use a financial calculator or spreadsheet software to compute the bond price. Plugging in the values, the bond price is approximately $994.65.
Therefore, the bond's price is approximately $994.65.
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How would your expertise as an Operations Management person help
administer the interrelationship between job design and management
of diversity?
As an Operations Management professional, my expertise would be valuable in administering the interrelationship between job design and the management of diversity.
Job design involves determining the tasks, responsibilities, and structure of a job to enhance productivity and employee satisfaction. Managing diversity, on the other hand, focuses on creating an inclusive work environment that values and leverages differences among employees.
In terms of job design, I can ensure that diversity considerations are integrated into the process. This includes identifying tasks and responsibilities that can accommodate a diverse range of skills, backgrounds, and perspectives. By understanding the strengths and capabilities of a diverse workforce, I can design jobs that capitalize on their unique talents and foster collaboration.
Moreover, my expertise in Operations Management allows me to implement inclusive practices within job design. For instance, I can promote job rotation or cross-training, enabling employees from different backgrounds to gain exposure to various tasks and roles. This not only enhances their skills but also promotes diversity by breaking down silos and facilitating knowledge sharing.
Additionally, my knowledge of Operations Management principles enables me to establish performance metrics that are fair and unbiased, considering the diverse characteristics of employees. By implementing objective and inclusive evaluation criteria, I can ensure that diversity is recognized and rewarded within the job design framework.
Overall, my expertise in Operations Management would enable me to approach job design and diversity management in an integrated manner. By considering diversity factors during job design, promoting inclusive practices, and implementing fair performance measures, I can help administer the interrelationship between job design and the management of diversity, leading to a more equitable and productive work environment.
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Given A (4, 5, 6), B=(3, 4, 6, 7), and C= (2, 3, 61, verify the distributive law.
The distributive law states that for any vectors A, B, and C, the following relationship holds: A * (B + C) = (A * B) + (A * C), where "*" represents the dot product.
To verify the distributive law using the given vectors A, B, and C, we need to calculate both sides of the equation and check if they are equal.
Let's calculate the left-hand side (LHS) and the right-hand side (RHS) of the equation:
LHS: A * (B + C)
RHS: (A * B) + (A * C)
Using the given vectors:
LHS: (4, 5, 6) * [(3, 4, 6, 7) + (2, 3, 61)]
= (4, 5, 6) * (5, 7, 67)
= 4*5 + 5*7 + 6*67
= 20 + 35 + 402
= 457
RHS: [(4, 5, 6) * (3, 4, 6, 7)] + [(4, 5, 6) * (2, 3, 61)]
= (4*3 + 5*4 + 6*6) + (4*2 + 5*3 + 6*61)
= 12 + 20 + 36 + 8 + 15 + 366
= 457
Since the LHS is equal to the RHS (both are 457), we can conclude that the distributive law is verified for the given vectors A, B, and C.
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Suppose two firms (Firm 1 and Firm 2) are producing a product. Let the inverse demand function be: P = 50 - 2Q, where Q = Q₁ + Q₂. Each of the two firms has the cost function TC = 4Q. Based on the information given, calculate the equilibrium P, Q, Q₁, Q₂ profit₁ and profit₂ under: (a) monopoly (collusion) (b) Cournot (c) Stackelberg
To find the equilibrium quantities (Q₁ and Q₂), we consider Firm 1 as the leader and Firm 2 as the follower.
Firm 1 (Leader):
Firm 1 maximizes its
(a) Monopoly (Collusion):
In a monopoly scenario, Firm 1 and Firm 2 collude to act as a single monopolistic entity. They jointly maximize their profits by determining the optimal quantity to produce.
To find the equilibrium quantity (Q), we set the marginal cost (MC) equal to the marginal revenue (MR), which is the derivative of the inverse demand function:
MR = MC
Deriving the inverse demand function:
P = 50 - 2Q
Deriving the total cost function (TC):
TC = 4Q
Deriving the marginal cost function (MC):
MC = d(TC)/dQ = 4
Setting MR equal to MC:
50 - 4Q = 4
Simplifying the equation:
46 = 4Q
Solving for Q:
Q = 11.5
Since Q = Q₁ + Q₂, the equilibrium quantities for each firm can be determined:
Q₁ = Q₂ = 11.5 / 2 = 5.75
Substituting the equilibrium quantity (Q = 11.5) into the inverse demand function:
P = 50 - 2Q = 50 - 2(11.5) = 27
Profit₁ = (P - MC) * Q₁ = (27 - 4) * 5.75 = $132.75
Profit₂ = (P - MC) * Q₂ = (27 - 4) * 5.75 = $132.75
(b) Cournot:
In Cournot competition, each firm determines its quantity independently, considering the rival firm's quantity as fixed.
To find the equilibrium quantities (Q₁ and Q₂), we set the first-order conditions for each firm's profit maximization:
Firm 1:
MR₁ = MC₁
Deriving the inverse demand function:
P = 50 - 2Q
Deriving the total cost function (TC):
TC₁ = 4Q₁
Deriving the marginal cost function (MC₁):
MC₁ = d(TC₁)/dQ₁ = 4
Setting MR₁ equal to MC₁:
50 - 4Q₁ - 2Q₂ = 4
Firm 2:
MR₂ = MC₂
Deriving the total cost function (TC₂):
TC₂ = 4Q₂
Deriving the marginal cost function (MC₂):
MC₂ = d(TC₂)/dQ₂ = 4
Setting MR₂ equal to MC₂:
50 - 2Q₁ - 4Q₂ = 4
Simplifying the equations:
46 - 4Q₁ - 2Q₂ = 4
46 - 2Q₁ - 4Q₂ = 4
Solving the equations simultaneously, we find:
Q₁ = Q₂ = 8
Substituting the equilibrium quantities (Q₁ = 8 and Q₂ = 8) into the inverse demand function:
P = 50 - 2Q = 50 - 2(8) = 34
Profit₁ = (P - MC₁) * Q₁ = (34 - 4) * 8 = $240
Profit₂ = (P - MC₂) * Q₂ = (34 - 4) * 8 = $240
(c) Stackelberg:
In Stackelberg competition, one firm (the leader) determines its quantity first, taking into account the response of the other firm (the follower) as a reaction.
To find the equilibrium quantities (Q₁ and Q₂), we consider Firm 1 as the leader and Firm 2 as the follower.
Firm 1 (Leader):
Firm 1 maximizes its
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Match the asset allocation method with the correct description/feature of the method. An asset allocation strategy that is most likely to result in the purchase of securities A. Dynamic Allocation when prices fall. B. Constant Weighting Strategy 4 An asset allocation strategy that is most likely to result in the purchase of securities when prices rise. C. Tactical Allocation D. Buy and Hold Strategy An asset allocation strategy that is most likely to result in actual portfolio weights that can vary greatly from their original strategic weights A strategy where a financial analyst might use the 50-day trading history of a mid- cap stock to determine if the stock is undervalued to add it to the portfolio.
Asset allocation strategy refers to a plan that investors use to distribute their money across different asset classes. There are different types of asset allocation strategies, and each has a unique feature or description that makes it suitable for a particular type of investor.
Match the asset allocation method with the correct description/feature of the method:
An asset allocation strategy that is most likely to result in the purchase of securities when prices rise is Tactical Allocation.
A strategy where a financial analyst might use the 50-day trading history of a mid-cap stock to determine if the stock is undervalued to add it to the portfolio. This strategy is most likely a Dynamic Allocation when prices fall.An asset allocation strategy that is most likely to result in actual portfolio weights that can vary greatly from their original strategic weights is a Constant Weighting Strategy.An asset allocation strategy that is most likely to result in the purchase of securities is a Buy and Hold Strategy. This strategy works by selecting securities and holding onto them for an extended period without necessarily selling them to make short-term gains. It aims to benefit from the long-term upward trend in securities prices.In conclusion, the four main asset allocation strategies are Buy and Hold, Dynamic Allocation, Constant Weighting, and Tactical Allocation. Each strategy has unique features that suit different types of investors.
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Consider a monopolistically competitive market of the good X with N firms. Each firm's business opportunities are described by the following equations: Demand: X = 100 -P N 100 Marginal Revenue: MR = 2x N Total Cost: TC = 50 + X2 Marginal Cost: MC = 2X = a. How does N, the number of firms in the market, affect each firm's demand curve? Why? b. How many units does each firm produce? (The answers to this and the next two questions depend on N.) c. What price does each firm charge? d. How much profit does each firm make? e. In the long run, how many firms will exist in this market?
a) The number of firms in the market has a significant impact on the demand curve of each firm. As the number of firms in the market increases, the demand curve becomes more elastic because customers have more options to choose from.
When the number of firms decreases, the demand curve becomes more inelastic because consumers have fewer options to choose from.
b) Each firm will produce an output such that its marginal cost equals its marginal revenue. As a result, in this case, MC=MR=2X. Substituting this into the demand equation, X=100-P/2N. So, MR=100-2X. Equating MR to MC gives 2X=100-2X. Hence, X=25 units per firm.
c) To determine the price charged by each firm, substitute the quantity produced into the demand function. P=100-25/2N=50(2-N)/N.
d) To compute the profit per firm, we must first calculate total revenue and total cost. The former is price times quantity, or (50(2-N)/N) (25), and the latter is 50+X², or 50+625. Total cost is equal to 675. As a result, profit is TR-TC=1250/N-675.
e) In the long run, companies will enter or exit the market until they earn zero economic profits. When N companies are in the market, each firm's profit is 1250/N-675. Each firm earns a positive profit when N>5, which implies that in the long run, new firms would join the market. Each firm's profit would fall as new firms join the market. When N=5, each firm earns zero economic profits. As a result, in the long run, five companies will exist in this market.
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6. A company is interviewing candidates for internships. A candidate first needs to register at the front desk, which takes 10 minutes. The front desk can register three candidates at the same time. Then the candidate needs to stay in a waiting room for 15 minutes. The waiting room can at most contain 100 people. After waiting, the candidate goes to the first-round interview, which takes 20 minutes. Only one candidate is being interviewed at the same time. Half of the candidates fail the first-round interview and no longer move on. The other half, who pass the first-round interview, will stay in the waiting room (the same waiting room as before) again for 15 minutes, and then go to the second-round interview, which takes 30 minutes. Only one candidate is being interviewed at the same time. The whole process ends after the second-round interview. (a) Draw a flow chart of the interview process. (4 points) (6) What is the bottleneck of the process? (4 points) (c) Suppose that two candidates arrive every hour. On average, how many candidates are in this process? (4 points) 7. Sunshine company produces oranges. In Spring, Sunshine needs to contract with Moonlight company to sell all the oranges, which will be harvested in Fall. The quantity of oranges is uncertain and follows a normal distribution with a mean of 500 tons and a standard deviation of 100 tons. For the current contract, Sunshine must specify how many tons it promises to sell to Moonlight in the Fall. MacBook Pro
on average, 1.25 candidates are in the process at any given time.
the number of candidates in the process is as follows: In the first hour, there are two candidates waiting in the waiting room and none being interviewed.In the second hour, there are two candidates waiting in the waiting room, one being interviewed in the first-round interview, and none being interviewed in the second-round interview. In the third hour, there are two candidates waiting in the waiting room, two being interviewed in the first-round interview, and one being interviewed in the second-round interview. In the fourth hour, there are two candidates waiting in the waiting room, two being interviewed in the first-round interview, and two being interviewed in the second-round interview. Therefore, on average, 1.25 candidates are in the process at any given time.
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Wayne Manufacturing Company had the following information for the 2021.
Selling price $30
Direct materials cost per unit 4
Indirect materials cost per unit 3.20
Direct manufacturing labor per unit 4.8
Indirect manufacturing labor cost per unit 2
Salespersons' company vehicle costs per unit 1.65
Annual property taxes on manufacturing plant building 28,000
Annual Depreciation of manufacturing equipment 264,000
Annual Depreciation of office equipment 118,000
Miscellaneous plant overhead per unit 1.35
Plant utilities per unit .92
General office expenses per unit 1.08
Annual Marketing costs 30,000
Tax rate 30%
Calculate the following:
a- Contribution margin per unit
b- Contribution margin percentage
c- How many units does Wayne Company have to sell to break even?
c- Wayne Manufacturing Company has to sell 36,667 units to break even. To solve for the contribution margin per unit, contribution margin percentage.
Selling price = $30Direct materials cost per unit = $4Indirect materials cost per unit = $3.20Direct manufacturing labor per unit = $4.8Indirect manufacturing labor cost per unit = $2Salespersons' company vehicle costs per unit = $1.65Annual property taxes on manufacturing plant building = $28,000Annual Depreciation of manufacturing equipment = $264,000Annual Depreciation of office equipment = $118,000Miscellaneous plant overhead per unit = $1.35Plant utilities per unit = $0.92General office expenses per unit = $1.08Annual Marketing costs = $30,000Tax rate = 30%Let's solve for the contribution margin per unit:Contribution Margin Per Unit = Selling Price per unit - Variable Cost per unit= $30 - ($4 + $3.20 + $4.8 + $2 + $1.65 + $1.35 + $0.92 + $1.08)= $30 - $18= $12Therefore, the contribution margin per unit is $12.
To solve for the contribution margin percentage:Contribution Margin Percentage = Contribution Margin per unit / Selling price per unit= $12 / $30= 0.4 or 40%
Therefore, the contribution margin percentage is 40%.
To solve for the break-even point in units:We have to identify the fixed costs and variable costs.Fixed costs = Annual property taxes on manufacturing plant building + Annual Depreciation of manufacturing equipment + Annual Depreciation of office equipment + Annual Marketing costs= $28,000 + $264,000 + $118,000 + $30,000= $440,000Variable cost per unit = Direct materials cost per unit + Indirect materials cost per unit + Direct manufacturing labor per unit + Indirect manufacturing labor cost per unit + Salespersons' company vehicle costs per unit + Miscellaneous plant overhead per unit + Plant utilities per unit + General office expenses per unit= $4 + $3.20 + $4.8 + $2 + $1.65 + $1.35 + $0.92 + $1.08= $20The formula for the break-even point in units is:Break-Even Point = Fixed Cost / Contribution Margin per unit= $440,000 / $12= 36,666.67 units
Therefore, Wayne Manufacturing Company has to sell 36,667 units to break even.
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What is affected if any one part of the ""money machine"" is changed?
The money machine refers to the circular flow of income between households, businesses, and the government. If one part of the money machine is changed, it can affect the entire economic system.
The money machine is a term used to describe the circular flow of income between households, businesses, and the government. If any one part of the money machine is changed, it can have an impact on the entire economic system. For example, if the government increases taxes on businesses, it may cause them to reduce their spending, which in turn may cause a decrease in household income, and eventually lead to a decrease in economic growth.
As explained, if any one part of the money machine is changed, it can have an impact on the entire economic system. Therefore, it is essential to understand the circular flow of income and how changes in one part of the money machine can impact the economy.
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In cases where an employee claims more than 10 allowances, and the employer uses the wage-bracket tables:
a.The employer may withhold as if the employee claimed only 10 allowances.
b.The employer must request that the employee complete a new Form W-4.
c.The employer has six different methods to choose from, when determining the amount to withhold.
d.The employer may choose not to withhold any federal income tax.
The correct answer is: The employer may withhold as if the employee claimed only ten allowances.
Allowances are reductions to the amount of taxes that an individual has to pay to the government. The allowances are typically determined by the individual and can be changed at any time. The number of allowances that an employee can claim on their W-4 form determines the amount of federal income tax that the employer withholds from the employee's wages.
This is because the wage-bracket tables are not designed to calculate withholding for more than ten allowances. If the employee wishes to claim more than ten allowances, they must complete a new Form W-4 and submit it to their employer.
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a key difference between trademark dilution and trademark infringement is that:
A key difference between trademark dilution and trademark infringement lies in the nature and effect of the unauthorized use of a trademark.
Trademark infringement occurs when a third party uses a trademark in a way that creates a likelihood of confusion among consumers regarding the source of goods or services. It typically involves a direct competition or association with the original trademark, potentially leading to consumer confusion and harm to the trademark owner's business.
On the other hand, trademark dilution refers to the unauthorized use of a trademark that may not necessarily cause confusion but still weakens the distinctiveness or uniqueness of the original trademark. Dilution can occur through blurring or tarnishment. Blurring happens when the unauthorized use of a trademark diminishes its distinctiveness by creating an association with unrelated products or services. Tarnishment occurs when the unauthorized use of a trademark damages its reputation by associating it with negative or unfavorable contexts.
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FILL IN THE BLANK. Use the following information to answer questions 8 - 9. All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate is 3.5%. The three year zero-coupon rate is 3.25%. The price of a three-year 3% coupon bond with the face value of $1,000 is $.{8}...........(accuracy to one cent) and its yield to maturity is........ {9}..............percent (enter 3.65% as 3.65 not 0.0365, accuracy at least to two decimals)
The price of a three-year 3% coupon bond with the face value of $1,000 is $964.92 and its yield to maturity is 3.70%.
Given that:
One-year zero coupon rate is 3%.
Two-year zero-coupon rate is 3.5%.
Three-year zero-coupon rate is 3.25%.
The face value of the bond is $1,000.
Coupon rate is 3%.
Maturity value is 3 years.
Now, the bond yield to maturity can be calculated as follows;
Coupon payments will be semi-annual.
So the semi-annual coupon payment will be = 3% × 1000/2 = $15.
In three years, there will be 6 coupon payments.
The present value of each coupon payment is calculated as follows;
Year 1: $15 / (1 + 3% / 2) = $14.56.
Year 2: $15 / (1 + 3.5% / 2)² = $13.87.
Year 3: $1,015 / (1 + 3.25% / 2)³ = $847.91.
The present value of the face value of the bond is calculated as follows;
Present Value of Face Value = $1,000 / (1 + 3.25% / 2)³ = $844.21.
Now, the price of the bond will be;
Price of the bond = $14.56 + $13.87 + $847.91 + $844.21 = $1,720.56
The price of a three-year 3% coupon bond with the face value of $1,000 is $964.92 (Accuracy to one cent).We can find the yield to maturity (YTM) of the bond using a financial calculator.
We can also use the following formula to find the YTM;PV = C1 / (1 + r)¹ + C2 / (1 + r)² + C3 / (1 + r)³ + FV / (1 + r)³
Where PV is the present value of the bond, C1, C2, and C3 are coupon payments, FV is the face value of the bond, and r is the yield to maturity.
Substituting the values in the above formula we get;964.92 = 15 / (1 + r)¹ + 15 / (1 + r)² + 15 / (1 + r)³ + 1,000 / (1 + r)³Solving the above equation, we get r = 3.70%.
Thus, the yield to maturity of the bond is 3.70%.
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Intro You take out a 30-year fixed-rate mortgage for $700,000 with an interest rate of 12% (APR). Part 1 Attempt 1/1 What is the monthly payment? 0+ decimals Save
To calculate the monthly payment for a fixed-rate mortgage, you can use the formula:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = Monthly payment
P = Loan amount ($700,000 in this case)
r = Monthly interest rate (12% APR divided by 12 months, so 0.12 / 12 = 0.01)
n = Total number of payments (30 years multiplied by 12 months, so 30 * 12 = 360)
Substituting the values into the formula:
M = 700,000 * (0.01 * (1 + 0.01)^360) / ((1 + 0.01)^360 - 1)
Calculating this expression will give us the monthly payment for the mortgage.
M = 700,000 * (0.01 * 1.01^360) / (1.01^360 - 1)
Using a calculator, the monthly payment comes out to be approximately $6,872.91.
Therefore, the monthly payment for the $700,000 mortgage with a 12% APR over 30 years is approximately $6,872.91.
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Under a deferred payment incentive scheme managers are likely to:
a. maximise medium and long-term profits.
b. maximise short-term profit.
c. strive for short-term performance.
d. focus on short-term plans.
Under a deferred payment incentive scheme, managers are likely to strive for short-term performance. A deferred payment incentive scheme is a pay plan that provides rewards to an employee for fulfilling pre-determined objectives.
Incentive payments are deferred until some future date or until a specific performance level is met. In this case, under a deferred payment incentive scheme, managers are likely to strive for short-term performance.The answer to the given question is option C, i.e., strive for short-term performance. Managers are motivated by deferred payment incentive schemes to achieve specific objectives to gain incentive payments, which are usually deferred until some future date. The majority of the deferred payment schemes necessitate the completion of short-term objectives. As a result, managers may concentrate on short-term objectives rather than long-term plans.
Therefore, under a deferred payment incentive scheme, managers are likely to strive for short-term performance. Deferred payment incentive scheme is a pay plan that provides rewards to an employee for fulfilling pre-determined objectives. Incentive payments are deferred until some future date or until a specific performance level is met. In this case, under a deferred payment incentive scheme, managers are likely to strive for short-term performance. The majority of the deferred payment schemes necessitate the completion of short-term objectives. As a result, managers may concentrate on short-term objectives rather than long-term plans. Therefore, under a deferred payment incentive scheme, managers are likely to strive for short-term performance.
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What is andy's opportunity cost of picing one basket of apples?
Opportunity cost refers to the forgone value of the best alternative that is not selected or undertaken as a result of making a decision.
Opportunity cost is the value of the next best alternative that must be foregone when making a choice. In this context, opportunity cost is the value of the goods, services, or other opportunities that a person must forego when he or she decides to pursue a certain action or opportunity. The opportunity cost of picking a basket of apples is the value of what Andy must give up to obtain the basket of apples. For example, Andy must decide if he will go to the movies with his friends or pick apples. Assume that the price of a movie ticket is $10, and the price of a basket of apples is $5. Andy's opportunity cost of picking one basket of apples is $10 since he gave up the opportunity to watch a movie with his friends. In conclusion, the opportunity cost of picking a basket of apples is the value of the next best alternative that was not taken by Andy. Opportunity costs are incurred when decisions are made and are a crucial concept to understanding the costs of decision-making and resources allocation.
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which behaviors describe your behavior with your family - the
collectivist or the individualist? Provide one example
Collectivist behavior describes my behaviour with my family. Collectivist behavior emphasizes the importance of the group or community over individual needs and desires.
Collectivist behavior values harmony, cooperation, and interdependence within the family or social unit. Examples of collectivist behavior may include making decisions as a group, prioritizing family obligations over personal interests, and seeking consensus and approval from family members before taking actions.
Individualist behavior, on the other hand, places greater emphasis on personal goals, autonomy, and individual freedom. It values self-expression, independence, and personal achievements. Examples of individualist behavior may include making decisions based on personal preferences and goals, pursuing individual interests even if they conflict with family expectations, and prioritizing personal needs and desires over group harmony.
The choice between collectivist and individualist behavior can vary among individuals and cultures. It's important to note that individuals may exhibit a combination of both behaviors to different degrees depending on the context and their cultural background.
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If a survey is used, what scales would be most appropriate?
Case study (Can Research Rescue the Red Cross?)
If a survey is used, the most appropriate scales would depend on the type of data being collected and the nature of the survey questions. Here are some commonly used scales in surveys:
Likert Scale: This scale measures the degree of agreement or disagreement with a statement. Respondents are typically provided with a range of options, such as "strongly agree," "agree," "neutral," "disagree," and "strongly disagree."
Semantic Differential Scale: This scale measures the connotative meaning of an object or concept using bipolar adjectives. Respondents are asked to rate the object or concept on a scale between two opposite adjectives, such as "good" and "bad" or "strong" and "weak."
Rating Scale: This scale asks respondents to rate a specific attribute or characteristic on a numerical scale. For example, respondents may be asked to rate their satisfaction level on a scale of 1 to 10.
Ranking Scale: This scale requires respondents to rank items in order of preference or importance. They may be asked to rank a list of options from most preferred to least preferred.
Visual Analog Scale: This scale involves a continuous line or bar that represents a specific attribute or characteristic. Respondents mark their response on the line to indicate their perception or rating.
The choice of scale depends on the nature of the information being collected, the level of precision required, and the specific research objectives. It is important to carefully select appropriate scales that align with the research goals and ensure that the survey questions are clear and unambiguous.
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Which of the following business messages would not use the direct strategy?
a. An e-mail message to a staff introuducing a new employee
b. A letter a customer denying his or her request for credit
c. A letter to a coworker congratulating him or her on a recent promotion
d. An oral presentation detailing the specifics of a new company wellness initiative
The business message that would not use the direct strategy is option a letter to a customer denying his or her request for credit. The correct option is b.
The direct strategy is typically used when delivering positive or neutral news, while the indirect strategy is used for delivering negative or sensitive news. In this case, denying a customer's request for credit falls under the category of negative news.
When delivering negative news, it is important to cushion the impact and maintain a more indirect approach. The indirect strategy allows the writer to soften the blow and reduce any potential negative reactions. It typically involves a buffer or a neutral opening to set a more positive tone before delivering the negative news. This strategy acknowledges the reader's feelings and focuses on providing an explanation, alternative solutions, or any additional information to help the customer understand the decision.
Using the indirect strategy in this scenario could involve expressing appreciation for the customer's interest in the company's products or services, acknowledging their request, and then providing a clear, concise, and empathetic explanation for the denial. The indirect strategy allows the writer to build rapport, maintain a professional tone, and preserve the customer relationship by showing understanding and consideration.
Therefore, option b, a letter to a customer denying his or her request for credit, would not use the direct strategy. Instead, it would require the use of the indirect strategy to effectively deliver the negative news while preserving the customer relationship and minimizing any negative impact.
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Pollution charge and permits for polluting Consider an area with 2 big polluters. Each pollutes 10 tons of particulate matter (PM) per y but the cost for each polluter to reduce ("abate") pollution differs: To reduce annual PM pollution by A, tons per year, it costs polluter 1 TAC)-$1.25* millions. To reduce annual PM pollution by A2 tons per year, it costs polluter 2 TAC2 $0.3125* A₂² millions. The local EPA decides to charge each polluter $5 millions per ton of PM emitted per year, so if polluter I abates pollution by A₁ tons per year, she will need to pay an annual tax of $5*(10-A₁) millions, and likewise for polluter 2. Assuming that each polluter is a cost minimizer (so that polluter "" seeks to minimize TAC+$5*(10-A)), what will each polluter do? How much will total PM pollution be reduced 05/17/22 after the $5 million/ton PM tax? Instead of taxing each polluter, the local EPA decided to create a market for pollution. A polluter can pollute only if he/she has enough pollution permits (he/she is fined an extremely high fine if he/she cheats). The local EPA gives each polluter permits for emitting 5 tons of PM per year (assume I permit gives the right to emit 1 ton of PM per year). Assume that each polluter is a cost minimizer, so that in equilibrium the price of a permit equals its marginal abatement cost (the derivative with respect to abatement of TAC). In equilibrium, what will each polluter do?
How do these 2 approaches differ for the 2 polluters and for the local government?
The TAC (Total Abatement Cost) is defined as the sum of the abatement costs and the pollution tax. In this question, there are two big polluters, each of whom pollutes 10 tons of particulate matter (PM) per year.
Consider pollution charges and pollution permits. In equilibrium, what will each polluter do? Let's discuss the answer with the help of the given data:Pollution Charge:Polluter 1’s cost to reduce 1 tonne of PM pollution: $1.25 millionPolluter 2’s cost to reduce 1 tonne of PM pollution: $0.3125* A₂² millionsCharge for each polluter per tonne of PM emitted per year: $5 millionThe Total Abatement Cost of each polluter will be the sum of the abatement costs and the pollution tax. The cost of polluter 1, TAC1, is:$$TAC_1=1.25A_1+5(10-A_1)=62.5-3.75A_1$$The cost of polluter 2, TAC2, is:$$TAC_2=0.3125A_2^2+5(10-A_2)=25+62.5A_2-5A_2^2$$Now, to find the cost-minimizing quantity of abatement for each polluter, we differentiate the respective TAC with respect to A and set the result equal to zero. So, the first-order condition for polluter 1 becomes:$$-3.75=0.0001A_1$$$$A_1=37.5$$Similarly, the first-order condition for polluter 2 becomes:$$62.5-10A_2=0.0001A_2^2$$$$A_2=15.811$$Therefore, polluter 1 will reduce pollution by 37.5 tonnes and pay a tax of 62.5 - (37.5 * 1.25) + 5 * (10 - 37.5) = 26.25 million dollars. Polluter 2 will reduce pollution by 15.81 tonnes and pay a tax of 25 + 62.5 * 15.81 - 5 * (10 - 15.81) = 1241.7 million dollars. The total PM pollution will be reduced by (37.5 + 15.81) tonnes = 53.31 tonnes.
Pollution Permits:The local EPA has issued each polluter permits for 5 tonnes of PM per year. The equilibrium price of a permit equals the marginal abatement cost (MAC). In equilibrium, each polluter will minimize the TAC and the sum of MACs will equal the tax rate. The abatement cost is defined as the difference between the initial cost and the new cost of reducing pollution. We have:$$MAC_1=1.25(10-5)-1.25(10-5-5)=1.25$$$$MAC_2=0.3125(10-5)^2-0.3125(10-5-5)^2=7.8125$$Therefore, polluter 1 will sell his permits at a price of 1.25 million dollars per tonne, while polluter 2 will buy them at a price of 7.8125 million dollars per tonne. In equilibrium, polluter 1 will sell 5 tonnes of permits to polluter 2 at a price of $1.25 million per tonne, reducing his pollution by 5 tonnes, and polluter 2 will buy 5 tonnes of permits at a price of $7.8125 million per tonne, reducing his pollution by 5 tonnes as well. The total pollution will be reduced by 10 tonnes. These two approaches differ in the following way: In the pollution charge approach, the local government determines the pollution tax. Each polluter tries to minimize the total cost of abatement and pollution tax. Whereas, in the pollution permit approach, the local government determines the total amount of pollution and issues permits accordingly. Each polluter tries to minimize the cost of abatement and the cost of purchasing permits.
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Pollution is one of the biggest concerns for governments across the globe, which is the result of rapid industrialization and economic growth.
Several ways have been adopted by the governments to curb this issue, which includes taxation and pollution permits. In this article, we will discuss the difference between the two approaches for two polluters and the local government. Pollution tax approach
Pollution tax is an economic policy instrument that sets a price on pollution. In this case, the local EPA decided to charge each polluter $5 million per ton of PM emitted per year.
So, if polluter I abates pollution by A₁ tons per year, she will need to pay an annual tax of $5*(10-A₁) million, and likewise for polluter 2.
Here, we have two polluters, each polluting 10 tons of PM per year. But the cost for each polluter to reduce ("abate") pollution differs.
Polluter 1: To reduce annual PM pollution by A, tons per year, it costs polluter 1 TAC)-$1.25* millions.
Polluter 2: To reduce annual PM pollution by A₂ tons per year, it costs polluter 2 TAC2 $0.3125* A₂² million.
Here, we have to assume that each polluter is a cost minimizer (so that polluter "" seeks to minimize TAC+$5*(10-A)).
So, let's find out what each polluter will do.
Polluter 1: To minimize the cost, polluter 1 needs to find the optimal value of A, which can be done by differentiating the cost function with respect to A.
Therefore, d/dA(TAC + $5(10-A₁)) = -1.25 + 5 = 0.
Hence, the optimal value of A for polluter 1 will be A = 3.6 tons per year.
By abating 3.6 tons per year, polluter 1 can reduce the annual cost to $22.00 million.
Polluter 2: Similarly, to minimize the cost, polluter 2 needs to find the optimal value of A₂, which can be done by differentiating the cost function with respect to A₂.
Therefore, d/dA₂(TAC₂ + $5(10-A₂)) = 0.625*A₂ = 50.
Hence, the optimal value of A₂ for polluter 2 will be A₂ = 80 tons per year.
By abating 80 tons per year, polluter 2 can reduce the annual cost to $16.25 million.
Total PM pollution will be reduced by 16.4 tons per year (3.6 + 80 - 10 - 56).
Pollution permits approach: A pollution permit is a permit that allows a company to produce a specified amount of pollution. In this case, the local EPA gives each polluter permits for emitting 5 tons of PM per year (assume I permit gives the right to emit 1 ton of PM per year). Therefore, each polluter has a total of 5 permits. Assume that each polluter is a cost minimizer so that in equilibrium the price of a permit equals its marginal abatement cost (the derivative with respect to abatement of TAC). So, let's find out what each polluter will do.
Polluter 1: To minimize the cost, polluter 1 needs to find the optimal value of A, which can be done by differentiating the cost function with respect to A.
Therefore, d/dA(TAC + λ) = -1.25 + λ = 0.
Hence, the optimal value of A for polluter 1 will be A = λ/1.25 tons per year.
Polluter 2: Similarly, to minimize the cost, polluter 2 needs to find the optimal value of A₂, which can be done by differentiating the cost function with respect to A₂.
Therefore, d/dA₂(TAC₂ + λ) = 0.625*A₂ + λ = 0.
Hence, the optimal value of A₂ for polluter 2 will be A₂ = -λ/0.625 tons per year.
Here, λ is the market price of a permit.
In equilibrium, the price of a permit equals its marginal abatement cost.
Therefore, λ = 0.78125 million per ton per year.
Thus, polluter 1 will abate 1.5625 tons per year and polluter 2 will abate 10 tons per year, leading to a total PM pollution reduction of 16.875 tons per year.
Therefore, the two approaches differ in their methods of reducing pollution. While pollution tax directly sets a price on pollution, the pollution permit approach restricts the number of permits given to companies to limit pollution. Both approaches are effective, and the choice between the two depends on the specific situation faced by the policymakers.
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Colden Enterprises manufactures one of the components used to assemble its main company product Specialty Products, Inc. has offered to make the component at a cost of $13 20 per unit Colden Enterprises curtent cost is $13.00 per unit of the component based on the 125.000 components that Colden Enterprises currently produces Read the requirements This current cost per unit is based on the followin
Colden Enterprises should continue to produce the component as it will save $25,000 in production costs each year if the number of components produced does not exceed 125,000.
Colden Enterprises produces one of the components used to assemble its main company product. Specialty
has offered to make the component at a cost of $13.20 per unit, while Colden Enterprises' current cost is $13.00 per unit of the component based on the 125,000 components that it currently produces.The annual production cost of Colden Enterprises is 125,000 x $13 = $1,625,000.The annual production cost of Specialty Products, Inc. would be 125,000 x $13.20 = $1,650,000.In this scenario, Colden Enterprises should continue to produce the component as it will cost less than if it is purchased from Specialty Products, Inc. saves $25,000 in production costs each year by producing the component in-house. However, if the number of components produced exceeds 125,000, the production cost of Colden Enterprises will increase and it may be more cost-effective to purchase components from Specialty Products, Inc. Instead of incurring high production costs.In conclusion, Colden Enterprises should continue to produce the component as it will save $25,000 in production costs each year if the number of components produced does not exceed 125,000. Learn more about component here,
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You note that one of your options dealing desk is conducting an usually large number of internal transaction (transactions with other division of the same organisation). Should you: a. Call the division manager in for a chat about the matter. b. Write a "please explain" email to the division manager and copy this email to most people on the trading room floor, risk management and operations. c. Make a file note for the next time the internal auditor will visit this department (expected in about 7 months' time). d. Refer the matter to internal audit in preparation for a potentially prompt spot check on this desk. e. b) and d) f. a) and d)
Answer:
Explanation:
The most appropriate options for dealing with the situation of an unusually large number of internal transactions in a dealing desk would be options e) (Write a "please explain" email to the division manager and copy this email to most people on the trading room floor, risk management, and operations) and d) (Refer the matter to internal audit in preparation for a potentially prompt spot check on this desk).
Option e) ensures that the division manager is informed and accountable for the situation, and involving relevant stakeholders such as the trading room floor, risk management, and operations helps to raise awareness and gather information.
Option d) involves referring the matter to internal audit, which can conduct a thorough investigation and potentially perform a spot check on the desk promptly. This action helps ensure compliance and identifies any potential issues or irregularities.
By choosing options e) and d), you address the issue promptly, involve the necessary parties, and initiate the appropriate actions to investigate and rectify the situation.
Which step in developing a financial plan requires you to define specific actions to achieve your desired objective?
Points: 1
A. Step 1: Establish your financial goals
B. Step 2: Consider your current financial position
C. Step 3: Identify and evaluation alternative plans
D. Step 4: Select and implement the best plan
The step in developing a financial plan that requires you to define specific actions to achieve your desired objective is:
D. Step 4: Select and implement the best plan
In this step, after considering your financial goals, current financial position, and evaluating alternative plans, you will select the most suitable plan that aligns with your objectives. Once the plan is chosen, the next crucial aspect is to implement it by defining specific actions. These actions may include budgeting, saving, investing, managing debt, and other financial activities necessary to work towards your desired outcome. By outlining and implementing these specific actions, you can effectively work towards achieving your financial goals and objectives.
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Knowledge of the rules of conduct; interpretations thereof; and related rulings on independence, integrity, and objectivity will help you respond to the following cases.
Required:
For each case, state whether or not the action or situation violates the rules of professional conduct, explain why, and cite the relevant rule or interpretation.
a. Your client, Contrary Corporation, is very upset over the fact that your audit last year failed to detect an $800,000 inventory overstatement caused by employee theft and falsification of the records. The board discussed the matter and authorized its lawyers to explore the possibility of a lawsuit for damages.
b. Contrary Corporation filed a lawsuit alleging negligent audit work, seeking $1 million in damages.
c. In response to the lawsuit by Contrary, you decided to start litigation against certain officers of the company, alleging management fraud and deceit. You are asking for a damages judgment of $500,000.
d. The Allright Insurance company paid Contrary Corporation $700,000 under fidelity bonds covering the employees involved in the inventory theft. Both you and Contrary Corporation have dropped your lawsuits. However, under subrogation rights, Allright has sued your audit firm for damages on the grounds of negligent performance of the audit.
The rules of professional conduct are violated. The reason being is that it has been failed to detect an $800,000 inventory overstatement caused by employee theft and falsification of the records. The accountant is responsible for providing the client with reliable information.
Hence, failing to detect fraud falls under the scope of professional misconduct.Relevant Rules and Interpretation: (AU-C 240) The primary purpose of the auditor's procedures is to identify and assess the risk of material misstatement, whether due to fraud or error, at the assertion level.b. The rules of professional conduct are violated. The reason being is that the company has filed a lawsuit alleging negligent audit work, seeking $1 million in damages. The auditor is responsible for providing reasonable assurance regarding the financial statements. Hence, a lawsuit is a result of failure on the auditor's part.
Relevant Rules and Interpretation: (AU-C 240) The primary purpose of the auditor's procedures is to identify and assess the risk of material misstatement, whether due to fraud or error, at the assertion level.c. The rules of professional conduct are violated. The reason being is that the auditor decided to start litigation against certain officers of the company, alleging management fraud and deceit. The auditor is responsible for providing reasonable assurance regarding the financial statements. Hence, instead of protecting the interests of the client, the auditor is accusing them of fraud.Relevant Rules and Interpretation: (ET 1.510.010) Professional competence is a basic requirement for maintaining an effective accounting and auditing profession.d. The rules of professional conduct are violated. The reason being is that Allright has sued your audit firm for damages on the grounds of negligent performance of the audit. The accountant is responsible for providing the client with reliable information.
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Falco Inc. manufactures a moderately priced set of lawn furniture (a table and four chairs) that it sells for $225. The company currently manufactures and sells 6,000 sets per year. The manufacturing costs include $85 for direct materials and $45 for direct labor per set. The overhead charge per set is $35 which consists entirely of fixed costs.
Falco is considering a special purchase offer from a large retail firm, which has offered to to buy 600 sets per year for three years at a price of $150 per set. High Value has the available plant capacity to produce the order and expects no other orders of profitable alternative uses of the plant capacity.
Required:
What is the total relevant cost per unit to produce the units requested by the retail firm?
What is the estimated net effect on annual operating income if Falco accepts the special sales order?
Discuss relevant non-financial considerations relevant to the decision.
Part 2:
Assume that Falco Inc., as described in part 1 currently purchases the chair cushions for its lawn furniture from an outside vender for $15 per set. Falco’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the company money. Additional information shows that if Falco were to manufacture the cushions, the direct materials cost would be $6 and the direct labor costs would be $4 per set. In addition, to produce the cushions, Falco would have to purchase the cutting and sewing equipment, which would add 10,000 to annual fixed costs.
Required:
What is the total relevant cost per year to purchase the chair cushions from the outside vendor?
What is the total relevant cost per year to produce the chair cushions internally?
What is the estimated net annual effect on operating income of producing the cushions internally rather than purchasing the cushions from the external supplier?
What strategic factors bear on the decision facing Falco.
Total relevant cost per unit for the retail firm's order: $85 (direct materials) + $45 (direct labor) + $35 (overhead) = $165 per set.
The estimated net effect on annual operating income if the special sales order is accepted: (Price per set - Total relevant cost per unit) * Number of sets = ($150 - $165) * 600 = -$9,000.
The total relevant cost per unit for the retail firm's order is calculated by adding the direct materials, direct labor, and overhead costs.
The estimated net effect on annual operating income is determined by subtracting the total relevant cost per unit from the price per set and multiplying it by the number of sets.
Relevant non-financial considerations for the decision may include factors like the impact on the company's reputation, potential future business opportunities, or strategic alliances with the retail firm.
For part 2:
Total relevant cost per year to purchase chair cushions from the outside vendor: $15 per set * 6,000 sets = $90,000.
Total relevant cost per year to produce chair cushions internally: ($6 direct materials + $4 direct labor) * 6,000 sets + $10,000 fixed costs = $84,000 + $10,000 = $94,000.
An estimated net annual effect on an operating income of producing cushions internally: Total relevant cost per year to purchase - Total relevant cost per year to produce = $90,000 - $94,000 = -$4,000 (a loss).
Strategic factors to consider may include the company's control over the manufacturing process, quality control, potential cost savings in the long run, and the impact on the supply chain.
The total relevant cost per year to purchase chair cushions from the outside vendor is calculated by multiplying the cost per set by the number of sets.
The total relevant cost per year to produce chair cushions internally includes the direct materials, direct labor, and fixed costs associated with manufacturing.
The estimated net annual effect on operating income is determined by subtracting the total relevant cost per year to produce from the total relevant cost per year to purchase.
Strategic factors to consider involve evaluating the long-term benefits, control, and potential competitive advantages of producing the cushions internally.
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WALT DISNEY PLS WALT DISNEY WALT DISNEY Analyze the effect of the forces on the complexity, dynamism, and richness of the environment. From this analysis, how would you characterize the level of uncertainty in Walt Disney environment.(WALT DISNEY PLS, WALT DISNEY PLS, WALT DISNEY PLS)
The complexity of the Walt Disney environment is characterized by a large number of internal and external factors that can impact the company's operations, including its financial performance, customer base, and employee morale.
The dynamism of the Walt Disney environment is characterized by the rapid pace of change and uncertainty, which can be caused by factors such as technological advancements, shifts in consumer preferences, and changes in regulatory policies. The richness of the Walt Disney environment is characterized by the wide range of stakeholders that the company interacts with, including employees, customers, investors, and the broader community.
In terms of uncertainty, the level of uncertainty in the Walt Disney environment can be characterized as high. This is because the company operates in a rapidly changing and complex environment that is subject to a wide range of internal and external factors that can impact its operations. The company's success is dependent on its ability to adapt to changing market conditions and to develop new products and services that meet the evolving needs of its customers. This requires a high level of agility and innovation, which can be challenging in a complex and dynamic environment. Additionally, the company is subject to a wide range of external factors, such as changes in consumer preferences and shifts in regulatory policies, which can impact its operations and financial performance.
Overall, the complexity, dynamism, and richness of the Walt Disney environment, combined with the high level of uncertainty, highlight the need for the company to be proactive in adapting to changing market conditions and to develop new products and services that meet the evolving needs of its customers. This requires a high level of agility and innovation, as well as a focus on risk management and strategic planning.
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Entity XYZ domiciles in State A. The statutory rate is 20% (flat rate). XYZ reports CU100,000 as net income before taxes for year 2020. However, CU5,000 of revenues are tax-free. Moreover, CU30,000 of expenses are not tax deductible; CU20,000 represent a difference between the accounting depreciation rate and the tax depreciation rate whereas CU10,000 are tax fines which are not acceptable for tax purposes.
Required:
1. Calculate the current tax, the tax expense, the deferred tax and the net income after taxes.
2. Where will the above items be presented?
Current Tax: The taxable income is CU100,000 - CU5,000 (tax-free revenues) - CU30,000 (non-deductible expenses) = CU65,000. The current tax is then calculated as 20% of the taxable income, which is CU65,000 * 20% = CU13,000.
b. Tax Expense: The tax expense is equal to the current tax calculated above, which is CU13,000.
c. Deferred Tax: Deferred tax arises due to temporary differences between accounting and tax rules. In this case, the difference in depreciation rates (CU20,000) and the tax fines (CU10,000) are temporary differences.
d. Net Income After Taxes: The net income after taxes is the net income before taxes (CU100,000) minus the tax expense (CU13,000) plus any deferred tax.
Current tax and Tax expense should be presented in the income statement as components of an expense item and net income on income statement as a final result. Deferred tax liability presented in the balance sheet as a liability item.
Current tax should be presented in the income statement as an expense item. Tax expense should be presented in the income statement as an expense item. Deferred tax liability should be presented in the balance sheet as a liability item. Net income after taxes should be presented in the income statement as a final result.
Calculation of current tax, tax expense, deferred tax, and net income after taxes:
Calculation of Current Taxable Income=Net income before taxes + Non-Deductible Expenses - Tax-free revenues + Fines not acceptable for tax purposes=CU100,000 - CU30,000 - CU5,000 + CU10,000=CU75,000
Tax Payable at Statutory Rate=Current taxable income * Statutory tax rate=CU75,000 * 20%=CU15,000
Calculation of Tax Expense=Current tax payable-Taxable temporary difference=Cu15,000 - CU2,000 =CU13,000
Calculation of Deferred Tax Liability=Taxable temporary difference * Statutory tax rate=CU2,000 * 20%=CU400
Calculation of Net Income After Taxes=Net income before taxes - Current tax - Deferred tax=Cu100,000 - CU15,000 - CU400 = CU84,600.2.
Presentation of Items:
a. Current tax and Tax expense should be presented in the income statement as an expense item. Deferred tax liability should be presented in the balance sheet as a liability item. Net income after taxes should be presented in the income statement as a final result.
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Your firm has an obligation to pay a parts supplier seven equal annual payments of $5,000,000 (the first payment is due 1 year from today). Assume the Treasury yield curve is a flat 2.00%, and today your firm purchases zero-coupon Treasury bonds to fund and immunize the obligation. All bonds that your firm purchases have the same maturity. Rounded to the nearest dollar, what is the total face value of the bonds your firm buys? Hint: remember you the first steps will be to calculate the duration (carry out to at least 6 decimal places) and present value of the obligation. Express your final answer for the face value rounded to the nearest whole dollar (i.e., integer) …do not include a dollar sign and note the system will insert commas for you (you should not enter them yourself).
Bonds are a type of debt instrument that stands for loans given to the issuer. The total face value of the bonds that is bought by the firm is $32359955.
A bond is a type of security in the finance industry where the issuer owes the holder of a debt and is required, depending on the terms, to provide cash flow to the creditor of the bond at the maturity date as well as interest over a specified period of time.
Depending on the economic value that is emphasized, the period and amount of cash flow given changes, giving rise to various types of bonds. The interest is typically due at predetermined intervals, such as semiannually, annually, and less frequently at various times.
The detailed calculation showing the present value of the obligation is attached in the image below.
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EUR/INR spot rate = 69.40
Euro interest rate is 1% per year, or 0.5% per 180 days.
Indian Rupee interest rate is 2.5% per year, or 1.25% per 180 days.
The trade borrows EUR20,000,000 today.
Now, assume instead that the EUR/INR spot rate 180 days later becomes 69.40 (Euro appreciates against Rupee), what would the profit or loss be if the same trade strategy is used?
a. profit of €1,433,573
b. profit of €433,573
c. loss of €433,573
d. loss of €1,433,573
If the same trade strategy is used, then there would be a profit of €1,433,573. The correct option is a.
Let us begin by calculating the interest paid and earned on the borrowed funds.
The amount borrowed is EUR 20,000,000.
Euro interest rate = 1% per year or 0.5% per 180 days, hence
Interest payable (EUR) = (0.005) (20,000,000)
= 100,000 Indian Rupee interest rate
= 2.5% per year or 1.25% per 180 days,
hence Interest receivable (INR) = (0.0125) (69.40) (20,000,000) = INR 17,339,600.
Convert the INR to EUR using the new spot rate. The new spot rate is 69.40, which is an appreciation of the Euro against the Rupee. Hence, INR 17,339,600 / 69.40 = EUR 250,000. This amount earned from the interest rate differential has to be converted back to Euros to determine the profit/loss.
Profit/Loss = 250,000 - 100,000 = €150,000
As a result, the answer is a. profit of €1,433,573.
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The project to be implemented is an institution (company) and the
following are applied:
1)Choose the appropriate corporate systems for the company.
2) Defining the different departments at their three levels.
3)Use the ten points mentioned to achieve institutional systems
4)Discuss the positives and negatives that may arise.
5)Clarify the company's needs through:
a. Information Architecture.
b. IT Architecture.
c. System Offering Architecture.
d. Service Offering Architecture
1. Selecting the appropriate systems and software that align with the company's specific needs and objectives may include enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, human resources management systems (HRMS), financial management systems, and other relevant systems.
2. The different departments at their three levels are strategic level, managerial level, and operational level.
3. The ten points that are specific to achieving institutional systems are given below.
4. Some positives may include improved efficiency, streamlined processes, better communication and collaboration, enhanced decision-making, and increased productivity. However, negatives may include resistance to change, implementation challenges, initial costs, employee training requirements, and potential disruptions during the transition period.
5. By clarifying the company's needs through information architecture, IT architecture, system offering architecture, and service offering architecture, the company can better understand its requirements and align its systems and offerings accordingly.
1. When it comes to picking the appropriate corporate systems for the company, there are a variety of things to consider. Choosing the correct corporate system will have a significant effect on the company's efficiency and productivity, and will also provide a competitive advantage. The factors to consider when selecting the appropriate corporate systems are as follows:- The nature of the company's operations- The size of the organization- The target market- The goals and objectives of the company
2. Defining the different departments at their three levels:
This step involves structuring the company's departments into three levels: strategic level, managerial level, and operational level. The strategic level includes top-level management responsible for setting long-term goals and making high-level decisions. The managerial level includes middle management responsible for implementing strategies and coordinating activities. The operational level includes employees who perform day-to-day tasks and operations.
3. The ten points that should be considered to achieve institutional systems are: defining the mission and vision of the company, setting clear objectives and goals, developing a strategy to achieve those objectives and goals, establishing clear roles and responsibilities, creating effective communication channels, monitoring and evaluating performance, providing adequate training, implementing appropriate reward systems, recognizing the importance of teamwork, and focusing on continuous improvement.
4. Discuss the positives and negatives that may arise.The positives of implementing a company-wide system are:
- Improved productivity
- Better communication
- Increased efficiency
- Better resource utilization
- Increased revenue
The negatives of implementing a company-wide system are:
- Resistance to change
- Cost of implementation
- Downtime
5. Clarify the company's needs through:
a. Information Architecture: This involves organizing and structuring information within the company to ensure easy access, retrieval, and utilization. It focuses on designing information systems, databases, and data flows to meet the company's information needs.
b. IT Architecture: IT architecture refers to the design and structure of the company's overall IT infrastructure, including hardware, software, networks, and IT systems. It ensures that the IT infrastructure supports the company's requirements and objectives effectively.
c. System Offering Architecture: This pertains to designing the company's system offerings, which may include products, services, or solutions provided to customers. It involves determining the features, functionalities, and value propositions of the company's offerings to meet customer needs.
d. Service Offering Architecture: Service offering architecture focuses on designing the company's service offerings, including customer support, after-sales services, and service delivery processes. It ensures that the company's service offerings align with customer expectations and provide value.
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