The depreciation expense for Year 1 using the double-declining-balance method is $204,800, and for Year 2, it is $122,880.
(a) Straight-line Method: To calculate the depreciation expense using the straight-line method, we will use the following formula:
Depreciation Expense = (Cost - Salvage Value) / Useful Life
Given:
Cost = $1,024,000
Salvage Value = $64,000
Useful Life = 10 years
For Year 1:
Depreciation Expense = ($1,024,000 - $64,000) / 10
Depreciation Expense = $96,000
For Year 2:
Depreciation Expense = ($1,024,000 - $64,000) / 10
Depreciation Expense = $96,000
Therefore, the depreciation expense for Year 1 and Year 2 using the straight-line method is both $96,000.
(b) Double-Declining-Balance Method:
To calculate the depreciation expense using the double-declining-balance method, we will use the following formula:
Depreciation Expense = (Book Value at the Beginning of the Year) x (Double the Straight-line Rate)
The straight-line rate can be calculated as:
Straight-line Rate = 1 / Useful Life
For Year 1:
Straight-line Rate = 1 / 10 = 0.1
Double the Straight-line Rate = 0.1 x 2 = 0.2
Depreciation Expense = ($1,024,000 - Accumulated Depreciation at the Beginning of Year 1) x 0.2
Since it's the first year, there is no accumulated depreciation, so:
Depreciation Expense = $1,024,000 x 0.2
Depreciation Expense = $204,800
For Year 2:
Accumulated Depreciation at the Beginning of Year 2 = Accumulated Depreciation at the Beginning of Year 1 + Depreciation Expense in Year 1
Accumulated Depreciation at the Beginning of Year 2 = $204,800 + $204,800
Accumulated Depreciation at the Beginning of Year 2 = $409,600
Depreciation Expense = ($1,024,000 - $409,600) x 0.2
Depreciation Expense = $122,880
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Expected future value of a currency is reflected in its spot
rate.
A. True
B. False
The answer to the question "Expected future value of a currency is reflected in its spot rate. True or False?" is: A. True
Expected future value of a currency is reflected in its spot rate is a true statement. The exchange rate between two currencies refers to the value of one currency in terms of the other. The spot exchange rate is the current exchange rate at which two currencies can be traded. It is important to note that the spot rate is affected by both the current exchange rate as well as expected future exchange rates. Since the spot rate reflects both current and expected future exchange rates, it is used to indicate the expected future value of a currency. Therefore, it is true that the expected future value of a currency is reflected in its spot rate.
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*****No plagiarism and at least 250 words****
What are the implications of these strategic decisions for
stakeholders and society, and what ethical issues were—or should
have been—considered?
The strategic decisions taken by a company have various implications for the stakeholders, society, and ethical issues, which are generally considered before implementing such decisions. The main stakeholders of a business are the employees, customers, shareholders, suppliers, and the community around the business. Any strategic decision, whether positive or negative, has consequences for the stakeholders.
If the company decides to downsize or outsource jobs, employees will be directly affected. In the same vein, a strategic decision to focus on environmentally friendly products may positively impact society. Additionally, strategic decisions should be ethically sound; companies should consider ethical issues that may arise. For example, a decision to sell an addictive product that causes health problems may be perceived as unethical.
Therefore, the implications of strategic decisions for stakeholders and society should be carefully considered, and ethical concerns should be weighed in any strategic decision-making process.
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Consider our IS/LM/BOP analysis. Suppose also that we are in a fixed price, fixed exchange rate setup (with automatic money supply adjustment). If the capital account were highly interest sensitive (such that the BOP curve is flatter than the LM curve), an increase in the money supply would cause none of the other options. the interest rate, r, to rise, but national income, Y, to fall. r and Y to fall. no change in r and Y. r and Y to rise.
An increase in the money supply would cause the interest rate, r, to rise, but national income, Y, to fall if the capital account were highly interest sensitive (such that the BOP curve is flatter than the LM curve) when considering the IS/LM/BOP analysis in a fixed price, fixed exchange rate setup (with automatic money supply adjustment).
Therefore, the answer is: the interest rate, r, to rise, but national income, Y, to fall .Let's see the reason behind this :In the context of the IS/LM/BOP model, a fixed exchange rate regime necessitates that the central bank takes on the obligation of maintaining the exchange rate by intervening in the foreign exchange market. To keep the exchange rate steady, the central bank must make continuous adjustments to the supply of money in response to capital inflows or outflows. The LM curve shifts to the right when there is a monetary expansion, and the LM curve shifts to the left when there is a monetary contraction .The BOP curve shifts upward when there is an increase in the interest rate differential and downward when there is a decrease in the interest rate differential. The capital account is more interest-sensitive than the LM curve when the BOP curve is flatter than the LM curve .When the capital account is highly interest-sensitive and the BOP curve is flatter than the LM curve, an increase in the money supply will cause the interest rate to rise and national income to fall. Thus, we can conclude that an increase in the money supply would cause the interest rate, r, to rise, but national income, Y, to fall.
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On May 3, 2020, Leven Corporation negotiated a short-term loan of $930,000. The loan is due October 1,2020 , and carries a 7.20% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Use Days in a year table.) Note: Do not round intermediate calculations. Round your answer to the nearest cent.
The total amount Leven would pay on the maturity date is $964,450.28.
1. Calculate the number of days the loan is outstanding. The loan was negotiated on May 3, 2020 and is due October 1, 2020. There are 31 days in May, 28 days in June, 31 days in July, 30 days in August, 31 days in September, and 1 day in October for a total of 161 days.
2. Calculate the interest using the following formula:
Interest = Principal * Interest Rate * Number of Days / 365
Principal = $930,000
Interest Rate = 7.20% = 0.072
Number of Days = 161
Interest = 930,000 * 0.072 * 161 / 365 = $34,450.28
3. Calculate the total amount Leven would pay on the maturity date by adding the interest to the principal.
Total Amount = Principal + Interest
Principal = $930,000
Interest = $34,450.28
Total Amount = 930,000 + 34,450.28 = $964,450.28
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Planters enter into a contract with Walmart to buy three thousand containers of Almonds. The contract must be in writing if the Almonds cost
a. $250.
b. $150.
c. $100.
d. $500.
Planters enter into a contract with Walmart to buy three thousand containers of Almonds must be in writing if the Almonds cost $500 or more.
According to the Statute of Frauds, contracts that deal with the sale of goods valued over $500 must be in writing. Therefore, the correct answer is (d) $500. The Statute of Frauds is a legal rule that demands certain types of contracts to be in writing. Its purpose is to prevent misunderstandings that may arise from oral or unsigned agreements. Additionally, it encourages fair and trustworthy business dealings by requiring legal enforceability of agreements. It was first enacted in England in 1677 and then codified in most US states.
The Statute of Frauds requires the following types of contracts to be in writing: Sale of real estate Contracts that cannot be completed within one year Contracts that exceed a certain dollar value Contracts to pay someone else's debt Marriage contracts Contracts involving the sale of goods costing more than $500 (under the Uniform Commercial Code).
Therefore, Planters enter into a contract with Walmart to buy three thousand containers of Almonds must be in writing if the Almonds cost $500 or more.
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Under the Corporations Act 2001, company directors are bound by a number of legal duties which govern the way in which they exercise their powers and functions. One of these duties - the s 180(1) duty of care and diligence - provides that company directors must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person in their circumstances would exercise. Recently, there has been much discussion about how this duty applies to climate change and what exactly company directors would be required to do to ensure they are managing the financial risks posed by climate change with the required level of care and diligence. From the list below, which of the statements best describes what is required of company directors in relation to climate change? Select one: a. Given the financial risks posed by climate change, company directors must develop business strategies to transition their companies away from climate-damaging activities as soon as possible, including immediately phasing out activities such as fossil fuel development and exploitation. b. Company directors should obtain expert advice about the implications of climate change for their business and ensure that climate risk is considered, managed and reported by the company where appropriate. In terms of managing these risks, directors have some discretion to make a judgement on what is in the best interests of the company as long as this judgement is based on informed and rational assessment. c. The duty of care and diligence does not require directors to take a particular course of action. It does not impose liability for an incorrect commercial judgement that harms the company. Rather, the duty is focused on the rigour and robustness of processes of information gathering and deliberation; as well as whether the director took proportionate steps to manage known and foreseeable risks in the particular context. d. Company directors must ensure that their companies adopt the TCFD recommendations. They should also ensure their company sets targets for greenhouse gas emissions and reports on progress to meet these targets in the annual sustainability report. e. Both b and c.
Option (e) is the best statement that describes what is required of company directors in relation to climate change.What is the duty of care and diligence under the Corporations Act 2001?Under the Corporations Act 2001, the duty of care and diligence (s 180(1) duty) provides that company directors must perform their duties and exercise their powers with the degree of care and diligence that a reasonable person in their circumstances would exercise.
This duty is a positive obligation, not just a requirement not to act negligently.What is required of company directors in relation to climate change?Option (e) is the best statement that describes what is required of company directors in relation to climate change. It states that company directors should obtain expert advice on the implications of climate change for their business and ensure that climate risk is considered, managed, and reported by the company where appropriate.
Directors have some discretion in deciding what is in the best interests of the company as long as their decision is based on informed and rational assessment. It also emphasizes that the duty of care and diligence does not impose liability for an incorrect commercial judgement that harms the company. Rather, the duty is focused on the rigour and robustness of processes of information gathering and deliberation; as well as whether the director took proportionate steps to manage known and foreseeable risks in the particular context.
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Which of the following affects business risk? Select one: A. operating leverage B. financial lease C. preferred stock D. interest rate stability
Business risk is influenced by A. operating leverage, B. financial lease, C. preferred stock, and D. interest rate stability.
Operating leverage refers to the extent to which fixed costs are present in a company's cost structure. Higher fixed costs result in higher operating leverage, which increases the business risk. When sales decline, companies with high operating leverage experience a more significant impact on their profitability.
Financial lease involves obtaining assets through lease agreements, which affects the business risk by increasing the financial obligations and potential risks associated with the lease payments. Companies with a high level of financial lease commitments may face higher financial risk.
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Sally sends an offer to Bud to purchase Bud's cabin for $55,000. After sleeping on the idea, she changes her mind and sends Bud a letter revoking her offer. Her revocation is effective when:
Group of answer choices
A. Bud receives it.
B. She mails it.
C. She signs it.
D. (None of the above)
Sally sends an offer to Bud to purchase Bud's cabin for $55,000. After sleeping on the idea, she changes her mind and sends Bud a letter revoking her offer. Her revocation is effective when she mails it.
The revocation of an offer is effective when the offeror dispatches (sends) the revocation; it need not be received by the offeree to be effective. However, once an offeree accepts the offer, the offeror cannot revoke it.
Option A: Bud receives it is incorrect as the revocation is effective when Sally dispatches (sends) the revocation. Option C: She signs it is incorrect as Sally sending the revocation is enough for it to be effective.
Option D: None of the above is incorrect as option B, that is, She mails it, is the correct answer.
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7. Interest Rates and Arbitrage The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in the United States is .24 percent per month. The interest rate in Great Britain is .31 percent per month. The spot exchange rate is £.73, and the three-month forward rate is £.75. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why?
The Treasurer of a major US firm has $30 million to invest for three months, the interest rate in the US is .24 percent per month, while in Great Britain it's .
31 percent per month. Ignoring transaction costs, the Treasurer would want to invest in the country that has a higher interest rate. In the US, the amount that the firm will make over three months will be
[tex]0.24 percent x $30 million = $72,000[/tex]
In Great Britain, the amount the company will make over three months will be
[tex]0.31 percent x $30 million = $93,000[/tex]
However, if the US firm decides to invest in Great Britain, there are foreign exchange risks to consider. In this situation, the spot exchange rate is £.73, and the three-month forward rate is £.75.If the US firm decides to invest in Great Britain, it will have to convert US dollars to British pounds, which means it will pay the current exchange rate of.
In conclusion, because the company wants to maximize its returns, it will choose to invest in the country that has a higher interest rate and less forex risk. In this situation, the company would choose Great Britain.
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b) ABC Ltd is a private corporation with developed and advanced ranges of technologies over the past five years. This company is considering entering the stock market. Discuss briefly and list the advantages of the corporation as a public listing
The decision to enter the stock market is a strategic one that companies make after weighing the benefits and drawbacks of becoming publicly traded.
Going public enables a private corporation to acquire additional funding and recognition, which are critical to the corporation's long-term expansion and profitability. Here are the benefits of ABC Ltd becoming a public corporation.
1. Access to additional capital
When a corporation goes public, it can access a more extensive range of funds to finance its operations. The proceeds can be used to enhance the existing technology and develop new technologies or hire new staff. ABC Ltd's improved funding may enable it to expand its product line, enter new markets, and enhance its marketing efforts.
2. Increased market visibility
Going public allows the corporation to increase its visibility to customers and potential investors. ABC Ltd can market its services and products to a broader audience, leading to higher revenues and profits.
3. Facilitating mergers and acquisitions
When the corporation's stock price rises, it will become more attractive to other corporations, increasing the possibility of mergers and acquisitions. ABC Ltd may benefit from mergers and acquisitions since it can obtain new products, technology, and distribution channels.
4. Incentives for Employees
Going public provides employees with opportunities to own shares in the corporation, which can enhance their job satisfaction and encourage them to work harder. The share option schemes provide employees with an opportunity to participate in the corporation's success.
5. Valuation
Going public is a way for the corporation to discover the true value of its assets and operations. An initial public offering (IPO) provides the corporation with an opportunity to raise funds while simultaneously valuing its operations. The IPO process allows the corporation to learn more about its investors' valuation and expectations, which can aid in long-term strategy planning.
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David recently received an inheritance, and he is planning to invest the inheritance in one of four stock portfolios. Which of these portfolios would you expect to have the highest risk?
a.
A portfolio with an average annual rate of return of 10%.
b.
A portfolio with an average annual rate of return of 8%.
c.
A portfolio with an average annual rate of return of 5%.
d.
A portfolio with an average annual rate of return of 14%.
David recently received an inheritance, and he is planning to invest the inheritance in one of four stock portfolios. The highest risk is expected to be in the portfolio with an average annual rate of return of 14%.
A portfolio with an average annual rate of return of 14%.More than 200.The portfolio with an average annual rate of return of 14% would have the highest risk. It should be kept in mind that portfolios that offer the highest potential returns may also pose the greatest risk of significant loss.
Portfolio risk is related to both the average return and the volatility of the return of the assets. The greater the standard deviation of return is, the greater the portfolio risk, and vice versa.
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An investor acquired a property worth R$ 670,000.00 under the following conditions: down payment of 10.00% and the remainder financed in 180 equal monthly installments, with effective interest of 7.00% per year. Immediately after the payment of all the installments, that is, immediately after the payment of the last installment, he sold this property for R$ 3,500,000.00 in cash. Calculate the percentage profit or loss that occurred on this sale, that is, the percentage profit or loss that the investor had at the time of sale of the property, in relation to the investments he could have made, at his minimum attractive rate of 0.95% per month.
Profit Percentage = (R$2,977,801.51 / R$522,198.49) x 100 = 570.06%So the investor had a profit percentage of 570.06% at the time of sale of the property.
The first step to calculating the profit or loss percentage for this situation would be to find out the total cost of the property. To do this, you can use the following formula:
Total Cost = Down payment + Total amount paid in 180 monthly installments
The down payment is 10% of R$670,000.00, which is R$67,000.00.
To find the total amount paid in installments, you can use the formula for the present value of an annuity:
PV = PMT * [1 - (1 + r/n)^(-nt)] / (r/n), where PMT is the monthly payment, r is the annual interest rate, n is the number of times interest is compounded in a year, and t is the number of years.
In this case, PMT is the total amount borrowed divided by the number of months, which is (R$670,000.00 - R$67,000.00) / 180 = R$3,294.44.
Plugging in the values, we get:
PV = R$3,294.44 * [1 - (1 + 0.07/12)^(-180)] / (0.07/12) = R$455,198.49
So the total cost of the property is R$67,000.00 + R$455,198.49 = R$522,198.49.
To find the profit or loss percentage, we need to compare this total cost to the selling price of R$3,500,000.00.
The profit is the difference between the selling price and the total cost, which is R$3,500,000.00 - R$522,198.49 = R$2,977,801.51.
The percentage profit can be found using the formula:
Profit Percentage = (Profit / Cost) x 100Substituting the values, we get:
Profit Percentage = (R$2,977,801.51 / R$522,198.49) x 100 = 570.06%So the investor had a profit percentage of 570.06% at the time of sale of the property.
This is much higher than his minimum attractive rate of 0.95% per month.
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In
addition to Apple, who else benefits from Apple's decisions to
outsource assembly to China? Who are the Potential losers here?
( please be as descriptive as possible ) thank you
Since the Apple Corporation outsources assembly to China, other companies that are involved in the manufacture of Apple products benefit from this move.
However, in the long term, there are potential losers. Some of these losers may include workers in the United States who have lost their jobs as a result of Apple's decision to outsource assembly to China. Suppliers to Apple that operate outside of China are also negatively impacted by Apple's move.
In conclusion, while Apple's decision to outsource assembly to China has benefits for Apple and some other companies involved in the manufacture of Apple products, there are potential losers. These include workers in the US who lose their jobs, suppliers outside of China, and workers in China who face poor working conditions.
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You own a factory that hand-manufactures clay pots and molcajetes*. 8oth use the same amount of material, but the clay pot requires 2 labor hours to produce, while the mokajete requires only 1 hour. The clay pot. sells for $50 and has variable costs of $38. The molcajete sells for $35 and has wanable costs of $25, You're only able to employ workers for 2,000 total hours permonth. 1 What is the unit of conctroined resource in this scenario, and how much coetribution margin does each product provide per unit of constrained resource? 2. How many of each unit should this factory produce permonth if there are no demand constraints? 3 . If demand is limited to 1,500 of each type, how mamy of each type should be produced per month?
1. The total available labour hours, which are restricted to 2,000 hours per month, serve as the unit of constrained resource in this scenario.
By dividing the contribution margin of each product by the number of labour hours necessary to make that product, it is possible to determine the contribution margin per unit of constrained resource.The clay pot:
Selling price minus variable costs equals contribution margin per unit.= $50 - $38 = $12Contribution margin per unit of constrained resource equals contribution margin per unit / labour hours necessary, which is $12 divided by 2 hours, or $6 per labour hour.For the molecular jug:
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Identify the combined shifts in long-run aggregate supply and aggregate demand that could explain the following simultaneous occurrences. An increase in equilibrium real GDP and an increase in the equilibrium price level A decrease in equilibrium real GDP with no change in the equilibrium price level An increase in equilibrium real GDP with no change in the equilibrium price level A decrease in equilibrium real GDP and a decrease in the equilibrium price level"
Long-run aggregate supply refers to the potential output an economy can produce given its natural rate of unemployment. Aggregate demand, on the other hand, refers to the total amount of goods and services demanded in an economy at a particular price level. The simultaneous occurrence of an increase in equilibrium real GDP and an increase in the equilibrium price level could be due to a shift in aggregate demand to the right.
This shift could occur due to various factors, including an increase in government spending, a decrease in taxes, or an increase in investment. The shift in aggregate demand would cause a higher equilibrium price level and higher real GDP. An increase in real GDP but no change in the equilibrium price level could be due to a shift in the long-run aggregate supply curve to the right.
This shift could occur due to factors such as an increase in productivity or an increase in the labor force. This shift would cause a higher real GDP but no change in the price level. A decrease in equilibrium real GDP with no change in the equilibrium price level could be due to a shift in the aggregate demand curve to the left.
This shift could occur due to factors such as a decrease in consumer confidence or a decrease in government spending. The shift in aggregate demand would cause a lower real GDP but no change in the price level. A decrease in equilibrium real GDP and a decrease in the equilibrium price level could be due to a shift in the long-run aggregate supply curve to the left.
This shift could occur due to factors such as a decrease in productivity or an increase in the natural rate of unemployment. This shift would cause a lower real GDP and a lower price level.
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Questions 18-22 are based on the simple quantity theory of money, and in each case we assume that ceteris paribus holds. 18. If the demand to hold money rose, the (exchange) value of money would A fall B rise B A 23. Which statements below are TRUE? (Choose one or more.) A Open market operations occur when the Fed buys and sells government bonds. B Quantitative easing occurs when the Fed sells longer-term government bonds or other securities. C A lender of last resort loans money to banks and other financial institutions when no one else will. D The (privately owned) Bank of England became the lender of last resort in the nineteenth century. E The Federal Reserve was designated the lender of last resort when it was established by act of Congress in 1913. 24. Which statement below is TRUE? A When the Fed buys government bonds, bond prices rise, interest rates fall, and the monetary base contracts. B When the Fed buys government bonds, bond prices rise, interest rates fall, and the monetary base expands. C When the Fed sells government bonds, bond prices fall, interest rates fall, and the monetary base expands. D When the Fed sells government bonds, bond prices fall, interest rates rise, and the monetary base expands.
18. If demand for money rises, its value increases.
23. True: A (open market operations), C (lender of last resort), E (Federal Reserve).
24. True: B (Fed buying bonds raises bond prices, lowers interest rates, expands monetary base).
18. If the demand to hold money rose, the value of money would rise. (B)
23. The following statements are TRUE:
- A: Open market operations occur when the Fed buys and sells government bonds.
- C: A lender of last resort loans money to banks and other financial institutions when no one else will.
- E: The Federal Reserve was designated the lender of last resort when it was established by an act of Congress in 1913.
24. The statement that is TRUE is:
- B: When the Fed buys government bonds, bond prices rise, interest rates fall, and the monetary base expands.
If the demand to hold money rises, individuals and businesses prefer to hold more money relative to other assets. This increased demand for money leads to an increase in the value of money, as people are willing to give up more goods and services in exchange for each unit of money. This is because money becomes relatively scarce compared to other goods and services. Therefore, the answer to question 18 is B.
Regarding question 23, open market operations involve the buying and selling of government bonds by the central bank (in this case, the Fed). Quantitative easing, on the other hand, refers to the Fed's purchase of longer-term government bonds or other securities. A lender of last resort is an entity that provides loans to banks and financial institutions when they face liquidity problems. In this context, both statements A and C are true, as open market operations involve the buying and selling of government bonds, and a lender of last resort does provide loans to banks in need.
As for question 24, when the Fed buys government bonds, it injects money into the economy, which leads to an increase in the monetary base. This injection of money increases the demand for bonds, causing bond prices to rise. Consequently, interest rates fall due to the inverse relationship between bond prices and interest rates. Therefore, the correct statement is B.
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suppose a homeowner has an existing mortgage loan with these terms remaining balance 150,000 interest rate of 8% and remaining term of 10 years monthly payments this loan can be replaced by loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount what is the monthly payment on the old loan
A homeowner with an existing mortgage loan of 150,000 at an 8% interest rate with a remaining term of 10 years and monthly payments.The monthly payment for the old loan can be calculated using an amortization formula. The formula for calculating the monthly payment of a mortgage loan is given as:
Where:P = monthly payment
L = loan amount
I = interest rate (annual interest rate divided by 12 months)
N = term of the loan (number of months)
Plugging in the values, we have:
[tex]P = 150,000 * (0.08 / 12) * [(1 + (0.08 / 12))^120] / [(1 + (0.08 / 12))^120 - 1][/tex]
P = 1,795.51
Rounded to two decimal places, the monthly payment on the old loan is 1,795.51.Suppose the homeowner wants to replace this loan with a new loan at an interest rate of 6%, and they will pay 8% of the outstanding loan amount as the cost to refinance. The outstanding loan amount is simply the remaining balance on the old loan.
Therefore, the cost to refinance is:
Cost to refinance = 8% * 150,000
Cost to refinance = 12,000
To calculate the new loan amount, the cost to refinance is subtracted from the remaining balance on the old loan:
New loan amount = 150,000 - 12,000 n
New loan amount = 138,000
Now that we have the new loan amount and the interest rate, we can use the same formula to calculate the monthly payment of the new loan:
[tex]P = 138,000 * (0.06 / 12) * [(1 + (0.06 / 12))^120] / [(1 + (0.06 / 12))^120 - 1][/tex]
P = 828.83
Rounded to two decimal places, the monthly payment on the new loan is 828.83. Therefore, the homeowner can save 966.68 per month by refinancing their mortgage loan.
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a firm wants to use an option to hedge 12.5 million in receivalbes from new zealond firms the premium is
The total amount of dollars received (after accounting for the premium paid) is $6,872,500.
As per data,
Amount of receivables from New Zealand firms = $12.5 million,
Premium = $0.03,
Exercise price = $0.55.
When the option is exercised, the firm will receive the exercise price per dollar of the receivables from the option writer.
If the exercise price is more than the spot rate on the exercise date, the firm will exercise the option. Otherwise, the firm will sell its foreign currency receivables in the spot market.
So, the total amount of dollars received (after accounting for the premium paid) can be calculated as follows:
Total amount of dollars received = Exercise price × Amount of receivables − Premium Amount of receivables from New Zealand firms
Substitute all values respectively,
Total amount of dollars received = $0.55 × $12.5 million − $0.03
Total amount of dollars received = $6,872,500
Therefore, Total amount of dollars received is $6,872,500.
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At year-end, Xenon Manufacturers had Sales Revenue of $987,000. Its Cost of Goods Sold was 30% of Sales Revenue. Operating expenses for the year included $205,000 of Selling Expenses and $56,000 of General and Administrative Expenses. The balance in the Prepaid Expenses was $22,000 at the end of the year. What was the net income for Xenon Manufacturers at the end of the year?
a. $451,900
b. $429,900
c. $407,900
d. $704,000
The option B is correct. Net income for Xenon Manufacturers at the end of the year is $429,900.
Solution: Calculation of cost of goods sold:
Given, Sales revenue = $987,000
Cost of goods sold = 30% of sales revenue = 30/100 × 987,000 = $296,100
Total operating expenses = Selling expenses + General and administrative expenses = $205,000 + $56,000 =
$261,000
Calculation of net income:
Net income = Sales revenue – Cost of goods sold – Operating expenses
Net income = $987,000 – $296,100 – $261,000 = $429,900.
Thus, the net income for Xenon Manufacturers at the end of the year is $429,900. Therefore, option B is correct.
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Head of Household
Jaclyn Biggs, who files as a head of household, never paid AMT before 2021. In 2021 , her regular tax liability was \( \$ 102,220 \) which included \( \$ 39,900 \) capital gain taxe
The Alternative Minimum Tax (AMT) is an additional tax paid by taxpayers who earn high income, often used by taxpayers who claim a lot of exemptions or deductions to reduce their federal tax liability.
The amount of AMT due is the amount by which the AMT exceeds the taxpayer's regular tax liability. If the AMT is less than or equal to the taxpayer's regular tax liability, the taxpayer is not liable for the AMT.
Head of Household In 2021, Jaclyn Biggs, who files as a head of household, had a regular tax liability of $102,220, which included capital gain taxes of $39,900. Before 2021, Jaclyn Biggs had never paid the AMT.
The following steps are taken to calculate the AMT for a head of household filer:
Step 1: Calculate the head of household's alternative minimum taxable income (AMTI).The AMTI is calculated as follows:
AMTI = Taxable income + Adjustment and preferences
Step 2: Determine the head of household's AMT tax bracket. AM rate Income limit10% $0 - $14,60020% $14,600 - $56,00030% $56,000 - $132,20035% $132,200 - $213,20037% Over $213,200
Step 3: Calculate the amount of Alternative Minimum Tax Due. The AMT is calculated as follows:
Alternative Minimum Tax Due = AMT Rate × (AMTI - Exemption) - AMT Credit
Step 4: Determine whether the taxpayer must pay the AMT or the regular tax liability.
The amount of AMT due is the amount by which the AMT exceeds the taxpayer's regular tax liability. If the AMT is less than or equal to the taxpayer's regular tax liability, the taxpayer is not liable for the AMT.
Since the AMT is less than her regular tax liability of $102,220, Jaclyn Biggs is not liable for the AMT.
Hence, the amount of Alternative Minimum Tax (AMT) that Jaclyn Biggs must pay is $0.
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The manager of a large apartment complex knows from experience that 110 unis will be occupled if the rent is 400 dollars per month. A market survey suggests that, on the averago, one additional unit will remain vacant for each 1 dollar increase in rent. Similarly, one additional unit will be occupled for each 1 dollar decrease in rent. What rent should the managor charge to maximize revenue?
Given information: A market survey suggests that, on the average, one additional unit will remain vacant for each 1 dollar increase in rent Similarly, one additional unit will be occupied for each 1 dollar decrease in rent.
The manager of a large apartment complex knows from experience that 110 units will be occupied if the rent is 400 dollars per month. Formula for total revenue is,
[tex]Revenue = Price × Quantity[/tex]
Let's find the total quantity, if the price is [tex]$400[/tex] Per dollar increase, one additional unit will remain vacant. So, for [tex]400+x rent[/tex], [tex]400+x units[/tex] will be occupied.[tex](110 units - x vacant units)[/tex]
[tex]= 400 + x occupied units(400 + x) + (110 - x)[/tex]
[tex]= 510 units will be occupied at 400 + x rent[/tex]
Let's find the total quantity, if the price is [tex]$399[/tex] Per dollar decrease, one additional unit will be occupied. So, for [tex]399-x rent[/tex], [tex]111+x units[/tex] will be occupied. [tex](111 units + x occupied units)[/tex]
[tex]= 399 - x vacant units(399 - x) + (111 + x)[/tex]
[tex]= 510 units will be occupied at 399 - x rent[/tex]
Now, we can write down the revenue equation for two different prices: When the price is [tex]$400[/tex],
[tex]Revenue = $400 × 110[/tex]
[tex]= $44,000[/tex] When the price is [tex]$399[/tex]
[tex]Revenue = $399 × 111[/tex]
[tex]= $44,289[/tex] As we can see, if the price is [tex]$399[/tex] then the total revenue is [tex]$44,289[/tex] which is more than the total revenue obtained at [tex]$400[/tex] rent.
Hence, to maximize revenue, the manager should charge [tex]$399[/tex] rent per month.
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Equity Rollforward
Purpose:
To provide an equity rollforward and to tie out to the trial
balance
Procedure:
Accountant should run the General Ledger (Reports >
Equity Roll forward The equity roll forward statement is a summary of the changes in an entity's equity balance that occurred during a reporting period.
This report is also known as the "Statement of Changes in Equity" and is used to keep track of changes to the company's equity accounts.Accounting for EquityThe equity rollforward statement is an essential component of the financial reporting process for companies. The purpose of this statement is to summarize the changes in the equity balance of the company over the course of the period covered by the financial statements.
The Equity rollforward statement is prepared by the company's accounting department, and it is based on information obtained from the general ledger. The general ledger contains all the transactions that have been recorded for the company's equity accounts throughout the period.
A company's equity accounts may include common stock, preferred stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income. The equity rollforward statement summarizes the beginning balance of each account, the changes that occurred during the period, and the ending balance for each account.
Equity Rollforward and Trial BalanceThe equity rollforward statement is used to tie out to the trial balance. The trial balance is a report that summarizes the account balances in the company's general ledger.
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Suppose the Fed pays no interest on bank reserves. For every $1000 in deposits, how much do banks lose in forgone interest due to the reserve requirement (after rounding to the nearest two decimal place) if the reserve requirement is 11% and the rate at which banks lend is 7% ? A. 110 B. 70 C. 77 D. 7.7 If the interest rate on the loans increases, then the opportunity cost of the reserves____________
If the Fed pays no interest on bank reserves, and the reserve requirement is 11%, the banks would lose 7.70 on every 1,000 in deposits in forgone interest (after rounding to the nearest two decimal place).
This is because the reserve requirement is the percentage of deposits that banks are required to hold in reserve, which means they cannot lend that portion of the deposits and earn interest on it.
At an interest rate of 7%, the forgone interest on the reserve requirement is calculated as follows:
Reserves = Deposit × Reserve
Requirement= 1,000 × 11% = 110
Forgone Interest = Reserves × Interest Rate= 110 × 7% = 7.70
Banks would lose 7.70 on every 1,000 in deposits in forgone interest due to the reserve requirement (after rounding to the nearest two decimal place).
If the interest rate on loans increases, then the opportunity cost of the reserves would also increase.
This is because banks would be able to earn more on loans than they would by holding reserves, making the opportunity cost of holding reserves higher.
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Which of the following is an example of discretionary fiscal policy? an increase in income tax receipts with rising income during an expansion a decrease in food stamps issued during an expansion or boom the tax cuts passed by Congress in 2001 to combat the recession an increase in unemployment insurance payments during a recession Question 29 (Mandatory) Which of the following is an example of monetary policy? decreasing unemployment benefits open market operations increasing income taxes increasing government spending on roads and bridges
The answer to the given question is "The tax cuts passed by Congress in 2001 to combat the recession is an example of discretionary fiscal policy, and open market operations is an example of monetary policy."
Discretionary fiscal policy refers to the government's deliberate changes in taxation, spending, or transfer payments to promote economic stability and growth, smooth out business cycles, and reduce unemployment and inflation. The options provided are the examples of discretionary fiscal policy, and an increase in unemployment insurance payments during a recession is an example of discretionary fiscal policy.
Monetary policy refers to the central bank's actions to regulate money supply and interest rates in the economy to achieve the goals of maximum employment, price stability, and economic growth. The options provided are the examples of monetary policy, and open market operations is an example of monetary policy. Open market operations refer to the central bank's purchase or sale of government securities in the open market to increase or decrease the money supply.
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In response to the student's question, an example of discretionary fiscal policy is the tax cuts introduced by Congress in 2001 to combat the recession. On the other hand, open market operations stand as an example of monetary policy.
Explanation:In the context of fiscal and monetary policy, the examples provided can be broken down as follows. An example of discretionary fiscal policy would be the tax cuts passed by Congress in 2001 to combat the recession. This is a deliberate change in government policy to either stimulate economic activity during a recession or slow down economic activity during a boom.
The monetary policy example is open market operations, which are the buying and selling of government bonds by a central bank to control the money supply and interest rates. Decreasing unemployment benefits, increasing income taxes, and increasing government spending on roads and bridges are fiscal policies, not monetary policies. They involve changing government spending and tax rates, rather than controlling the monetary supply and interest rates.
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Office2U sells a wide variety of office equipment and furniture. The company recently launched its new ergonomic office chair, Comfy. Ergonomic chairs are designed with adjustable features that enhance sitting comfort, improve sitting posture and prevent from neck or backache. As for the year 2022, the management expects to sell 10,000 units of Comfy for RM750 per unit. Mr. Sim, the production manager, is considering producing either 10,000 or 16,000 units for the year. The company provides the following information: Required (a) Calculate manufacturing cost per unit (i) based on 10,000 units and (ii) based on 16,000 units, assuming that the company is using absorption costing. (b) Prepare an absorption costing Statement of Profit or Loss, by showing two columns: (i) 10,000 units produced and (ii) 16,000 units produced. (c) Briefly explain why is the net income different for the two production levels, even though the units sold remain the same at 10,000 units?
Office2U sells a wide variety of office equipment and furniture. The company recently launched its new ergonomic office chair, Comfy. Ergonomic chairs are designed with adjustable features that enhance sitting comfort, improve sitting posture and prevent from neck or backache.
As for the year 2022, the management expects to sell 10,000 units of Comfy for RM750 per unit. Mr. Sim, the production manager, is considering producing either 10,000 or 16,000 units for the year. The company provides the following information:
Required (a) Calculation of Manufacturing cost per unit: Absorption costing is an accounting method for costing that assigns all manufacturing costs (variable and fixed) to the product. Manufacturing costs include direct materials, direct labor, and overheads costs.
The formula for the manufacturing cost per unit is:
Manufacturing cost per unit = Total manufacturing costs / Number of units produced (i) Based on 10,000 units: Manufacturing cost per unit = (Direct materials + Direct labor + Overheads) / 10,000
(ii) Based on 16,000 units:
Manufacturing cost per unit = (Direct materials + Direct labor + Overheads) / 16,000
(b) Absorption Costing Statement of Profit or Loss: Particulars10,000 units produced 16,000 units produced
Less: Operating Expenses Selling and distribution expenses(200,000)(200,000) Administration expenses(75,000)(75,000) Net Income475,000475,000
(c) Explanation of difference in net income for the two production levels, even though the units sold remain the same at 10,000 units:
According to the above calculation of (a), it is clear that the manufacturing cost per unit is reduced by producing more units. The fixed manufacturing overhead cost is divided by the number of units produced, resulting in a lower per-unit cost when more units are produced.
In conclusion, the statement of profit and loss is affected by the change in manufacturing overheads. As more units are produced, the fixed overheads are divided between a greater number of units, reducing the fixed overhead per unit. Therefore, the profit margin will be higher when more units are produced, and the net income for the year will be higher.
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There are two pieces to this assignment - In APA format.
1. Write 1 to 2 paragraphs on each of the 5 forces of any industry of your choice. (400 to 500 words)
2. Write about the intensity of rivalry and the power of buyers (consumers) in the wine industry, as described in the "wine wars" case. Cite specific details from the case with regard to those two of the five forces. (400 to 500 words)
Industry analysis is a crucial business strategy for any organization to comprehend the competitive environment and define a competitive strategy.
Porter's five forces analysis is a well-known analytical framework for industry analysis. This framework includes five forces that play a significant role in shaping the industry's competitive landscape: The threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, and the rivalry among existing firms.The wine industry is a vast, highly fragmented, and increasingly competitive sector.
The industry is characterized by significant differentiation of products and branding. The following is a description of the intensity of rivalry and the power of buyers (consumers) in the wine industry:The intensity of rivalry: The wine industry is highly competitive due to the increasing number of players in the industry. In this industry, rivalry is high due to the low differentiation among products.
In addition, the wine industry is characterized by a high degree of price competition. For instance, in the United States, consumers have a wide range of wines to choose from, ranging from cheap, generic wine to costly, premium wine.
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If the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired, which variance is directly impacted? 1) Materials price variance 2) Labour price variance 3) Labour efficiency variance 4) Materials efficiency variance If the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired, which variance is directly impacted? 1) Materials price variance 2) Labour price variance 3) Labour efficiency variance 4) Materials efficiency variance
If the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired, the variance that is directly impacted is Labour efficiency variance.
Labour efficiency variance is a variation that is used to measure the difference between the actual amount of labor used and the actual amount of labor that should have been used to produce a product. It is calculated by subtracting the actual hours of labor used from the standard hours of labor that should have been used, multiplied by the standard rate per hour.
This variance is used to determine the efficiency of labor utilized in production. When the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired, this means that the new workers will take more time to complete the same tasks as the regular workers.
As a result, the actual labor hours used will be more than the standard hours that should have been used, causing an increase in labor efficiency variance.
Therefore, the variance that is directly impacted is the labor efficiency variance.
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(a) Explain the link between efficiency and wages using an appropriate model in the context of developing countries. With the help of diagrams, explain how involuntary unemployment may arise in this context and outline the equilibrium outcomes in this model. Critically evaluate the pros and cons of this model. (b) Labour markets in developing countries are often highly segmented and exhibit high levels of involuntary unemployment. Critically discuss the implications of labour market segmentation in developing countries and provide examples of policy implications. (c) Osmani (1990) proposes a theoretical model for the process of wage determination as an act of implicit cooperation amongst workers. Select any two assumptions of this model to critically discuss and assess this model's relevance to explain the features of a typical South Asian rural labour market.
a) Link between efficiency and wages:Efficiency is the output level achieved from inputs, labor being one of the inputs. The better the efficiency of the labor, the higher the wages it receives. The production function for labor is y = f (k, h), where k denotes the capital stock per worker, h denotes the hours worked per worker, and y denotes output per worker. The wage for labor is determined by the demand and supply forces in the labor market.Involuntary unemployment arises when the wages are above the equilibrium level. This situation can be explained by using a Keynesian cross diagram.
The wage rate is on the y-axis, and the labor supply and demand are on the x-axis. The intersection of labor demand and supply curves determines the equilibrium wage rate, W* (Q* is the equilibrium quantity of labor).If the wage rate is above the equilibrium level, the quantity of labor supplied will exceed the quantity of labor demanded, resulting in involuntary unemployment. The pros of this model include the provision of a framework for analyzing the labor market. The cons of this model are its assumptions, which do not reflect the real world. In addition, it does not consider the role of institutions in labor market outcomes.
b) Implications of labor market segmentation: Labor market segmentation has significant implications for developing countries, which are characterized by low productivity, poor working conditions, and low wages. In such markets, segmentation arises due to differences in skill levels, geographic location, gender, and social status. The implication of labor market segmentation is the presence of involuntary unemployment, low wages, and limited employment opportunities.
The policy implications of labor market segmentation are that policymakers need to create incentives to eliminate the barriers to entry into the labor market. They also need to promote education and training programs to enhance the skills of workers and to provide equal access to employment opportunities.
c) Osmani's model of wage determination: Osmani proposes a theoretical model for the process of wage determination as an act of implicit cooperation amongst workers. The model is based on the assumption that there is no competition among workers and that workers coordinate their wage-setting behavior. The two assumptions of this model are the implicit cooperation among workers and the absence of competition among workers.
These assumptions are not realistic, as workers do compete with each other for jobs, and cooperation among workers is not always guaranteed. In addition, the model does not account for the role of employers in wage-setting. Therefore, this model is not relevant to explaining the features of a typical South Asian rural labor market.
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Kelly-Lambing, Inc., a builder of government contracted small ships, has a steady work force of 10 very skilled craftspeople. These workers can supply 2,440 labor-hours each per year. Kelly-Lambing is about to undertake a new contract, building a new style of boat. The first boat is expected to take 6,100 hours to complete. The firm thinks that 80% is the expected learning rate. What is the firm's "capacity" to make these boats-that is, how many units can the firm make in 1 year? If the operations manager can increase the learning rate to 75% instead of 80%, how many units can the firm make? (Round all numerical responses in this exercise to the nearest whole number.)
In order to calculate the firm's capacity to make boats, it is important to know that the first boat requires 6,100 labor hours to complete. Since the skilled workers can supply 2,440 labor hours per person per year, the total labor hours of the workforce are:
10 workers × 2,440 labor-hours/worker/year = 24,400 labor-hours/year
To calculate the firm's capacity, the first step is to apply the expected learning rate of 80%. The formula for learning curves is:
Y = aX^b
where Y is the time required for the nth unit of output, a is the time required for the first unit of output, b is the log of the learning rate divided by the log of 2, X is the cumulative number of units produced, and n is the number of the unit being produced.
To find the capacity, the cumulative number of units produced is divided by the number of hours in a year (2,080):
Units produced = Hours available ÷ Hours per unit
Y = aX^bY = 6,100 × (1/1)^log 0.80 ÷ log 2 = 6,100 × 1 = 6,100
Therefore, the company's capacity to produce the new style of boat is one boat per year.
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Which of the following charts would show whether net cash flow and sales share a linear relationship?
Select one:
a. Pie chart
b. Bar chart
c. Scatter plot
d. Trend chart
Option (c), A scatter plot would show whether net cash flow and sales share a linear relationship.
What is a Scatter Plot?A scatter plot is a kind of mathematical diagram that employs Cartesian coordinates to show values for two variables for a set of data. It is used to show the connection or association between two variables or sets of data.
The chart that shows whether net cash flow and sales share a linear relationship is a scatter plot.
Scatter plots are helpful for examining relationships between two variables. A scatter plot uses dots to represent values for two separate numeric variables. The position of each dot on the horizontal and vertical axis implies values for an individual data point. By displaying a variable in each axis, you may look for patterns that might be detected.
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