The answer is , the present worth of the pump station after 20 years is $ 719.28.
How to find?In order to find the present worth of the pump station after 20 years, we need to find the cost of pump replacement after 10 years and the value of the salvage.
The cost of pump replacement after 10 years = 9,000 (A/P,8%,10)
= $4,170
Present worth of pump station after 20 years:
PW = -47,000 + 4,170(A/F, 8%,20) + 4,000(A/F, 8%,20) - 5,400(P/A, 8%, 20) - 550(P/G, 8%,20,1) + 10,000(P/F, 8%,20) - 2,145(P/F, 8%,10)
=-47,000 + (4,170/8.559) + (4,000/8.559) - (5,400/12.165) - (550/135.632) + (10,000/4.661) - (2,145/2.158)
= -47,000 + 486.91 + 467.00 - 443.20 - 4.05 + 2,143.31 - 993.68
= $ 719.28
Hence, the present worth of the pump station after 20 years is $ 719.28.
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$100 is invested for 20 years. During the first 10 years, the annual rate of 2%. During the last 10 years, the annual rate is 9%. How much interest is compounded during the last 10 years on the interest compounded during the first 10 years (in dollars)?
Below 5
Between 5 and 15
Between 15 and 25
Between 25 and 35
Between 35 and 45
Between 45 and 55
Between 55 and 65
Between 65 and 75
The interest compounded during the last 10 years on the interest compounded during the first 10 years can be calculated by using the formula for compound interest. The formula for calculating compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years. We will use this formula to solve the problem given above. During the first 10 years, the annual rate is 2%, and during the last 10 years, the annual rate is 9%. Therefore, the total time is 20 years. Let's begin by calculating the interest compounded during the first 10 years. The principal is $100, and the annual interest rate is 2%. Therefore, we have:
P = $100
r = 2%
n = 1 (since the interest is compounded annually)
t = 10 years
Substituting these values in the formula for compound interest, we get:
A = $100(1 + 0.02/1)^(1*10)
A = $121.90
Therefore, the interest compounded during the first 10 years is:
I = $121.90 - $100
I = $21.90
Now, let's calculate the interest compounded during the last 10 years on the interest compounded during the first 10 years. We can do this by using the same formula for compound interest, but this time, we will use the interest of $21.90 as the principal. Therefore, we have:
P = $21.90
r = 9%
n = 1 (since the interest is compounded annually)
t = 10 years
Substituting these values in the formula for compound interest, we get:
A = $21.90(1 + 0.09/1)^(1*10)
A = $63.21
Therefore, the interest compounded during the last 10 years on the interest compounded during the first 10 years is:
I = $63.21 - $21.90
I = $41.31
Therefore, the answer is between 35 and 45 dollars.
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Can too much tourism be a problem for a destination? Why?
Yes, too much tourism can be a problem for a destination. It can lead to overcrowding, environmental degradation, and cultural commodification.
Tourism can be an essential driver of economic growth, creating jobs and supporting local businesses. However, too much tourism can have negative impacts on the destination. One of the primary issues is overcrowding, which can result in congestion and strain on resources such as water and electricity. Overcrowding can also lead to long lines at attractions, which can negatively impact the visitor experience and cause frustration.
Environmental degradation is another issue that can arise from excessive tourism. Increased waste generation, pollution, and carbon emissions can have a significant impact on the local ecosystem and lead to negative effects on wildlife, flora, and fauna. Finally, cultural commodification can occur when tourism becomes the primary focus of the destination, leading to a homogenization of culture and the loss of authenticity.
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A corporate bond pays interest annually and has 4 years to maturity, a face value of $1,000 and a coupon rate of 3.8%. The bond's current price is $1,007.33. It is callable at a call price of $1,050 in one year. art 1 - Attempt 1/1 What is the bond's yield to maturity? Part 2 Attempt 1/1 What is the bond's yield to call?
Bond's yield to maturity = 3.78%
Bond's yield to call = 3.78%
Part 1: Yield to Maturity
Calculation of the bond's yield to maturity using the below formula:
Yield to maturity = C + (F - P) / n(F + P) / 2
where, C = annual coupon payment, F = face value, P = price, and n = number of years to maturity.
The annual coupon payment can be calculated as
Coupon payment = Coupon rate × Face value= 3.8% × $1,000= $38
Yield to maturity = C + (F - P) / n(F + P) / 2= $38 + ($1,000 - $1,007.33) / 4($1,000 + $1,007.33) / 2= 0.0378, which is 3.78%.
Therefore, the bond's yield to maturity is 3.78%.
Part 2: Yield to Call
Calculation of the bond's yield to call using the below formula:
Yield to call = C + (Call price - P) / n(Call price + P) / 2
where, C = annual coupon payment, Call price = call price, P = price, and n = number of years to call.
The annual coupon payment is the same as calculated in part 1, which is $38.
Yield to call = C + (Call price - P) / n(Call price + P) / 2
= $38 + ($1,050 - $1,007.33) / 3($1,050 + $1,007.33) / 2
= 0.03783, which is 3.78%.
Therefore, the bond's yield to call is 3.78%.
Yield to maturity is the total return that is expected to be earned on a bond if it is held until maturity.
Yield to call is the expected rate of return on a callable bond assuming it will be called at the next call date.
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Let r be the affective quarterly rate that is equivalent to a nominal interest rate of 1% compounded weekly. You can assume that there are four quarters in a year and 52 weeks in a year. As a decimal (not a \%), r is closest to: 0.0010 0.0015 0.0020 0.0025 1.0010 1.0015 1.0020 1.0025
The decimal closest to the affective quarterly rate is 0.0025. This is because to find the effective quarterly rate, we need to adjust the nominal interest rate to account for compounding periods.
Since there are 52 weeks in a year and four quarters, the quarterly rate is 1% divided by 52, which is approximately 0.0192%. Converting this to a decimal gives us 0.000192. Multiplying this by 13 (to account for the 13-week period in each quarter) gives us approximately 0.0025.
The nominal interest rate of 1% compounded weekly means that the interest is applied 52 times in a year. To find the quarterly rate, we divide 1% by 52, resulting in approximately 0.0192%. Converting this to a decimal gives us 0.000192. Since there are four quarters in a year, we multiply the quarterly rate by 13, giving us approximately 0.0025, which is the closest decimal value to the affective quarterly rate.
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Multi-brand showrooms: sale of different products of different brands through one platform. More than one seller can have a part in the showroom to sell their products. has branches and special transportation(bus, van, etc..)for displaying clothes in homes on demand
according to this answer this
Buyer behavior.
Fixed and variable costs.
Break-even chart and calculations.
Sales process (or cycle).
Sales tactics.
The question is asking for information regarding multi-brand showrooms which is a store that sells different brands and products on one platform and allows multiple sellers to sell their goods. The multi-brand showroom has branches and special transportation (buses, vans, etc.) to display clothing at people's homes on demand.
Based on this information, the following topics can be discussed in relation to multi-brand showrooms:
Buyer behavior: Buyer behavior refers to the actions and decisions that consumers make when purchasing goods or services. In multi-brand showrooms, it is important to understand the behavior of the customers to increase sales.
Fixed and variable costs: Fixed costs refer to expenses that do not change regardless of the sales volume, such as rent and salaries. Variable costs, on the other hand, are costs that fluctuate with the sales volume, such as inventory and advertising. Multi-brand showrooms must understand their fixed and variable costs to properly price their products and ensure profitability.
Break-even chart and calculations: A break-even chart is a graphical representation of the point at which a company's total revenue equals its total costs, and the company neither makes a profit nor incurs a loss. In multi-brand showrooms, a break-even analysis helps in making decisions regarding pricing, costs, and sales volume.
Sales process (or cycle): The sales process is the series of steps that a salesperson follows when selling a product or service. Multi-brand showrooms require a structured sales process to ensure consistency and maximize sales.
Sales tactics: Sales tactics refer to the techniques used by salespeople to persuade potential customers to buy their products or services. In multi-brand showrooms, effective sales tactics can lead to higher sales volume and revenue.
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As in a sole proprietorship, there is no _____ involvement in
creating a general partnership because there is no separation from
the business and the partners.
In a sole proprietorship, there is no significant involvement in creating a general partnership because there is no separation from the business and the partners.
Here's the explanation: A general partnership is a business structure in which two or more people operate and manage a company for profit. A general partnership, like a sole proprietorship, does not have the same level of separation between the company and the owners, also known as partners.
The liability, profits, and losses of the partnership are shared among the partners.The number of partners in a general partnership is more than 100. As per the law, the partnership is responsible for paying taxes as a separate entity from the partners, but the income and expenses are passed through to each partner's personal tax returns.
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After initial recognition in the financial statements,
an intangible asset should be measured under two treatments,
explain it.
An intangible asset can be monitored using one of two methods after being initially recognised in the financial statements: the cost model or the revaluation model. Cost Model: In the cost model, an intangible asset is first valued at its cost, which includes all expenses directly related to its acquisition or production.
The asset is then carried at cost less accrued amortisation and any accumulated impairment losses after initial recognition. This approach makes the assumption that the intangible asset's value will decrease over time as a result of things like limited usability or obsolescence. Revaluation Model: In the revaluation model, an intangible asset is originally recognised at cost but is later measured at fair value. Fair value denotes the price at which an In an arm's length transaction, an asset could be exchanged between competent, consenting parties. Periodically, the asset is revalued, and any changes in fair value are reported as gains or losses from revaluation in the statement of comprehensive income. The intangible asset's value can be recognised as rising over time thanks to this accounting treatment. The decision between the cost model and the revaluation model is made based on the intangible asset's characteristics and the usefulness of fair value information to those who use the financial statements.
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Who can remove members of a case team?
Select one:
Case owner
Playbook designer
Case manager
Workgroup admin
The case owner can remove members of a case team.
When working on a case, the case team is comprised of individuals who work together to resolve the case. The case team may consist of the case manager, workgroup admin, playbook designer, and others.
The case owner is the one who initiated or created the case. They are responsible for overseeing the case from start to finish. This includes the management of the case team. The case owner can add or remove members of the case team as needed to ensure the case is resolved efficiently.
In conclusion, the answer to this question is A. Case owner as they are the one responsible for the management of the case team.
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t: A farmer anticipates a harvest of 75,000 bushels of corn. Corn futures trade in lot-sizes of 5,000 bushels per contract. How many contracts (and what position) does the farmer need to enter to hedge his price risk? 15 short futures contracts 75.000 short futures contracts 75,000 long futures contracts 15 long futures contracts.
The farmer anticipates a harvest of 75,000 bushels of corn. The corn futures trade in lot sizes of 5,000 bushels per contract. The farmer needs to enter 15 short futures contracts to hedge his price risk. Explanation:
Hedging involves taking an offsetting position in a related security to protect against losses that may arise from an existing position. When an investor anticipates that a particular asset's price will decline in the future, he or she may take a short position in futures contracts.
If the price of the asset decreases, the profit made on the futures contract offsets the loss sustained on the asset in question. The farmer intends to sell corn in the future, therefore he wants to hedge against the possibility of declining prices.
He may accomplish this by shorting corn futures contracts. Each contract is for a lot size of 5,000 bushels. Therefore, the farmer will require 75,000/5,000 = 15 contracts to hedge his price risk.
Because the farmer anticipates a decline in prices, he would take a short position in 15 futures contracts.
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What topic in particular do you believe would be the most challenging to explain to a client who is not an accountant?
Based on the course, what do you think would be the most challenging part of practicing tax?
The topic in particular that can be most challenging to explain to a client who is not an accountant is the concept of accrual accounting and matching principle.
The concept of accrual accounting and matching principle is a difficult concept to explain to a client who is not an accountant. Accrual accounting is a method of accounting that recognizes revenue when earned and expenses when incurred, rather than when cash is received or paid out. This method of accounting is different from cash basis accounting, where revenue and expenses are recorded only when cash is received or paid out.
Matching principle states that revenue and expenses should be matched in the same period. For example, if a company receives revenue in one year but doesn't incur expenses until the following year, the revenue should be recorded in the year it was earned, and the expenses should be recorded in the year they were incurred. This is to ensure that financial statements accurately reflect a company's financial position and performance.
In conclusion, explaining the concept of accrual accounting and matching principle to a client who is not an accountant is quite challenging.
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The Atlas Corp. of the United States exports computer software to the euro zone. Sales are currently 1,200,000 units per year at the euro equivalent of $132 each. The current exchange rate is $1.0884/€ but the dollar is expected to appreciate next week by 10.24% after which it will remain unchanged for at least ten years. Accepting this forecast, Atlas Corp. faces a pricing decision in anticipation of the appreciation. It may either 1) maintain the same euro price and in effect sell for fewer dollars, in which case its export volume will increase by 13% per year for the first five years and then by 7% per year for the following five years, or 2) maintain the same dollar price, raise the euro price in Europe to compensate for the depreciation, and experience a 28% drop in volume during the current year, followed by an increase by 4% per year for the following nine years. Dollar costs will not change. At the end of ten years, the software will be obsolete and will no longer be exported. After the dollar appreciates by 10.24% no further appreciation is expected. Direct costs are currently 72% of the U.S. sales price and that cost will not change over the ten-year horizon. Atlas' weighted average cost of capital is 11%. 2. Explain your decision and comment on the implications of the result from the point of view of competitive exposure.
Option 2: Maintain the same dollar price, raise the euro price in Europe to compensate for the depreciation, and experience a 28% drop in volume during the current year, followed by an increase by 4% per year for the following nine years is the optimal decision that Atlas Corp.
They are raising the euro price so they won't lose their margins and dollar costs will remain the same. They will have a 28% drop in volume which is huge, but after the current year, sales will increase by 4% per year.The Euro price has to increase by 12.20% to compensate for the appreciation of the dollar by 10.24%. The new Euro price will be 132 * (1 + 0.1220) = 148.11.The decrease in volume of 28% in the current year is equivalent to 1200000 * 0.28 = 336000 units. The increase in volume in the following years will be 4% of the previous year's volume, so sales after the current year will be as follows:Year 2:
[tex]1200000 * 0.96 = 1152000Year 3: 1152000 * 0.96 = 1105920Year 4: 1105920 * 0.96 = 1061683.20Year 5: 1061683.20 * 0.96 = 1019215.21Year 6: 1019215.21 * 1.04 = 1060183.65Year 7: 1060183.65 * 1.04 = 1103399.16Year 8: 1103399.16 * 1.04 = 1148935.07Year 9: 1148935.07 * 1.04 = 1196870.29Year 10: 1196870.29 * 1.04 = 1247298.92[/tex]
The present value of the cash inflows over the 10 years will be:
PV = -1192054.26 - 1113588.84 - 1039279.61 - 977736.09 - 1267062.04 - 1325584.74 - 1386503.99 - 1450004.34 - 1516281.60 + 11935878.63 * 0.5657 = $4,037,196.
Therefore, Atlas Corp. should maintain the same dollar price, raise the euro price in Europe to compensate for the depreciation, and experience a 28% drop in volume during the current year, followed by an increase by 4% per year for the following nine years.Comment:This decision will increase Atlas Corp.'s competitive exposure since its sales volume will be impacted by its higher price. This will give room for competitors to increase their market share at Atlas Corp.'s expense.
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Which term is the most abstract?
a)
oak tree
b)
deciduous tree
c)
tree
d)
vegetation
e)
life form
The correct answer is option-d). The term that is the most abstract from the given options is "vegetation."The term that is the most abstract is "vegetation."Vegetation is a broad term that refers to all plant life. It does not specify what type of plant life or where it can be found.
It is not specific, making it more abstract than the other choices.The oak tree and deciduous tree are specific kinds of trees, and even though they are less general than "tree," they are still more specific than "vegetation."
Furthermore, "life form" refers to all types of living organisms, not just plants. This makes it more abstract than "tree" but not as abstract as "vegetation."
Thus, the most abstract term from the given options is "vegetation."
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You intend to value a stock using a relative valuation model. Which of the following is a relative valuation model? • P/E x expected earnings • discount the expected dividends back to time zero using your required rate of return. • Do /k • D1/k−g) A contract that acts like an insurance policy against bond defaults (and other credit events) is called a(n): • collateralized debt obligation. • mortgage-backed security • plain vanilla interest rate swap • credit default swap
Relative valuation is the process of valuing something based on its market value or price compared to the prices of similar assets. The most widely used relative valuation models are the price-to-earnings ratio and the price-to-book ratio.
Given the choices, P/E x expected earnings is a relative valuation model. It's an important tool that investors use to analyze the performance of a company. The P/E ratio is calculated by dividing the current stock price by the expected earnings per share (EPS) of the company.
P/E ratios are commonly used to compare the value of a company with its peers. They can be used to determine whether a stock is overvalued or undervalued relative to its earnings.
On the other hand, a credit default swap is a contract that functions like an insurance policy against bond defaults and other credit events. When you buy a credit default swap, you're essentially betting that a particular bond or security will default.
If the bond or security defaults, you receive a payout from the issuer of the credit default swap. However, if the bond or security doesn't default, you lose the premium that you paid for the credit default swap.
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A retail company TGT has sales of $1,120,000 and total costs δ ff $955,000, including depreciation and interest expenses. The average tax rate is 27% Total assets are valued at $570,000 and total equity at $244,000. What comes closest to the profit margin? A> 15% B> 21% C> 11% D> 49%
Profit margin is the ratio of net income after taxes to net sales. It measures the percentage of each dollar of sales that is available to the company after it pays all its expenses. So, option C) 11% comes closest to the profit margin.
Profit margin is calculated as follows:
Profit margin = Net income after taxes ÷ Net sales
TGT's profit margin would be calculated as follows:
Net sales = $1,120,000
Total costs = $955,000
Tax rate = 27%
Net income after taxes = Net income before taxes - Taxes
Net income before taxes = Net sales - Total costs
Net income before taxes = $1,120,000 - $955,000
Net income before taxes = $165,000
Taxes = 0.27 × Net income before taxes
Taxes = 0.27 × $165,000
Taxes = $44,550
Net income after taxes = Net income before taxes - Taxes
Net income after taxes = $165,000 - $44,550
Net income after taxes = $120,450
Profit margin = Net income after taxes ÷ Net sales
Profit margin = $120,450 ÷ $1,120,000
Profit margin = 0.1075 or 10.75%
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Financial Distress Costs. Hawar International is currently unlevered with a share price of $5.11 and 10.5 million shares outstanding. Suppose that Hawar announces plans to modify its capital structure by borrowing $9.7 million to repurchase shares. Hawar pays a corporate tax rate of 25%. Assume that shareholders expect the change in debt to be permanent. a. Consider a market whose only imperfection is corporate taxes. What is Hawar's share price after their debt announcement (but before the debt is actually issued and shares are repurchased)? The share price after this announcement would be $ per share. (Round your answer to two decimal places and use the rounded value in part b.) b. Consider a market whose only imperfections are corporate taxes and financial distress costs. Suppose that instead of the share price you found in part a. Hawar's share price instead rises to $5.16 after their debt announcement (but before the debt is actually issued and shares are repurchased). What is the PV of financial distress costs that Hawar has incurred as a result of the debt? The PV of financial distress costs would be $ million. (Round your answer to two decimal places.)
The PV of financial distress costs that Hawar has incurred as a result of the debt would be $1.53 million.
Given information:
Unlevered share price = $5.11
Number of shares outstanding = 10.5 million
Debt raised = $9.7 million
Corporate tax rate = 25%
Hawar announces plans to borrow $9.7 million to repurchase shares and pays a corporate tax rate of 25%. Let's calculate Hawar's share price after their debt announcement. This can be calculated using the following formula,
VL = VU + Tax Shield − PV (Financial Distress Costs)
VL = Value of the levered firm
VU = Value of the unlevered firm
Tax Shield = Debt x Tax rate
= 9.7 x 0.25
= $2.425 million
PV(Financial Distress Costs) = $0 (Because the market imperfection is only corporate taxes).
VL = $ (5.11 x 10.5 million) + $2.425 million
VL = $ (53.655 million) + $2.425 million
VL = $56.08 million
Therefore, the share price after the announcement would be $5.34 ($56.08 million / 10.5 million shares = $5.34).
Now, let's calculate the PV of financial distress costs that Hawar has incurred as a result of the debt. This can be calculated using the following formula,
VL = VU + Tax Shield − PV (Financial Distress Costs)
PV(Financial Distress Costs) = VU - VL + Tax Shield
PV(Financial Distress Costs) = ($ (5.11 x 10.5 million)) - $56.08 million + $2.425 million
PV(Financial Distress Costs) = $1.53 million
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when and why it is best to use fiscal policy sometimes and
monetary policy other times. References and citations expected.
Fiscal policy and monetary policy are two primary tools for government intervention in the economy. They are used to affect the performance of the economy in different ways.
Fiscal policy refers to the government's power to regulate taxation and spending to influence the economy. Monetary policy refers to the government's ability to regulate the money supply and interest rates to impact the economy in different ways.The best time to use fiscal policy is when the economy is stagnant, recessionary, or has excessive unemployment.
Fiscal policy is a potent tool when the government is experiencing revenue shortfalls, and monetary policy is no longer enough. The government's attempt to stimulate the economy will lead to increased government spending on public works projects, education, and infrastructure improvements, which will lead to more job opportunities for the unemployed and more money for consumers to spend.
In times of economic stability, monetary policy is preferred over fiscal policy. In this situation, the central bank regulates the money supply to keep inflation in check and adjust the interest rates to promote spending or saving.
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Jennifer Daoust is reading the documents prepared by the members of the team working on the audit of receivables for a large client. Jennifer is the senior manager assisting the engagement partner, Ruby Rogers. Jennifer and Ruby have worked together on many audits and Jennifer knows the types of questions that Ruby will ask about the working papers if they are not up to the standard required by CAS 230. Jennifer is trying to make sure that all documents are up to the required standard before Ruby sees them tomorrow. Jennifer is particularly concerned about the documents relating to the receivable confirmations.This is because the audit assistant who wrote up the confirmation results said that no further work was required. On review of the results, Jennifer discovered that the audit assistant had incorrectly treated "no reply" results as acceptable for a positive confirmation, when they are acceptable only for a negative confirmation. Jennifer had ordered further work be done to follow up these "no reply" results. Which of the following are true? Because confirmations were sent, no further work is needed. Jennifer must ensure the audit documentation provides sufficient appropriate evidence to support the auditor's report. The confirmations provide strong evidence for the valuation assertion for accounts receivable. The audit documentation should show who performed the audit work and the date the work was done, as well as who reviewed the audit work performed and the date and extent of such review. Documentation should be detailed enough so that another experienced auditor can understand the work done and the results obtained. It would have been better if negative confirmations had been sent, because then a response is always requested. Jennifer's review should show that the decision to take no further action is not appropriate.
Jennifer must ensure the audit documentation provides sufficient appropriate evidence to support the auditor's report. Documentation should be detailed and show who performed the work, who reviewed it, and the date and extent of the review. Jennifer's review should address the inappropriate decision to take no further action on "no reply" results.
Jennifer needs to ensure proper audit documentation, review the inappropriate decision on "no reply" results, and provide sufficient evidence for the auditor's report.
Jennifer's main concern is to ensure that the audit documentation meets the required standards and provides adequate evidence to support the auditor's report. The documentation should clearly state who performed the audit work, who reviewed it, and the dates and extent of the review. Jennifer also discovered that the audit assistant's treatment of "no reply" results in the receivable confirmations was incorrect. Therefore, she needs to review this decision and determine the appropriate course of action, as well as ensure that any necessary follow-up work is performed.
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cost of machine purchased for use in factory for production $500,000 useful life 5 years expected salvage value(residual value) after useful life $50,000 expected usage of equipment for production during useful life 600,000 units actual production units in first year 70,000 units actual production in second year 80,000 units
The cost of the machine purchased for use in the factory for production is $500,000. Its useful life is 5 years, and it is expected to have a salvage value of $50,000 after the useful life.The expected usage of the equipment for production during its useful life is 600,000 units.
In the first year, the actual production units were 70,000 units, and in the second year, the actual production units were 80,000 units.First, we need to calculate the depreciable cost, which is the cost of the machine minus the expected salvage value. In this case, it would be $500,000 - $50,000 = $450,000. Next, we divide the depreciable cost by the useful life to find the annual depreciation expense. So, $450,000 / 5 = $90,000. Now, we can calculate the depreciation expense for each year:Year 1: $90,000. Year 2: $90,000
Since the actual production units in the first year were 70,000 units and in the second year were 80,000 units, we can calculate the depreciation expense per unit for each year by dividing the annual depreciation expense by the actual production units: Year 1: $90,000 / 70,000 = $1.29 per unit. Year 2: $90,000 / 80,000 = $1.13 per unit. So, the depreciation expense per unit for each year is $1.29 in Year 1 and $1.13 in Year 2.Other depreciation methods,such as units-of-production method, may result in different calculations.
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Consider a bond with a face value of $1,000, an annual coupon rate of 11 percent, a yield to maturity of 12 percent, and 10 years to maturity. This bond's duration is:
A. 7.5 years
B. 6.4 years
C. 8.8 years
D. 5.3 years
The correct answer is option B, 6.4 years. The formula for calculating the duration of a bond is a weighted average of the present values of the bond's cash flows.
Duration is a useful measure of bond sensitivity to interest rate changes.The formula for calculating the bond duration is as follows:
Duration = (PV of cash flow * t) /
Current Bond PriceWhere
PV = Present value,
t = time until payment, and the sum is taken over all cash flows.
Here, the cash flow is the coupon payment, and at maturity, the face value of the bond will be repaid. The bond's annual coupon payment is 11 percent of $1,000, or $110 per year, for ten years.
The yield to maturity (YTM) is 12 percent. Using this information, we can calculate the bond price:PV of Coupon
Payments = ($110 / 1.12) + ($110 / 1.12^2) + ... + ($110 / 1.12^10) = $879.97PV of Principal
Payment = $1,000 / 1.12^10 = $321.97Current Bond Price = $879.97 + $321.97 = $1,201.94
Using the formula for bond duration, we get:
Duration = (($110 / 1.12) * 1 + ($110 / 1.12^2) * 2 + ... + ($110 / 1.12^10) * 10 + ($1,000 / 1.12^10) * 10) / $1,201.94= 6.4 years
Therefore, the duration of the bond is 6.4 years.
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Gerisch Consolidated sold 21,150 units of its only product last period. It had budgeted sales of 24,300 units based on an expected market share of 25 percent. The sales activity variance for the period is $340,200 U. The industry volume variance was $194,400 U.
Required:
a. What is the budgeted contribution margin per unit for the product?
b. What is the actual industry volume? c. What was the actual market share for Gerisch?
Note: Round your answer to 1 decimal place (i.e. .123 as 12.3). d. What is the market share variance?
Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
a. Contribution margin
per unit
b. Actual industry volume
units
c. Actual market share.
%
d. Market share variance
a) Budgeted contribution margin per unit The formula for contribution margin is: Contribution margin = Sales – Variable cost Therefore, budgeted contribution margin per unit = (Budgeted sales * Contribution margin ratio) / Budgeted sales Budgeted sales = 24,300 units Contribution margin ratio = (Contribution margin / Sales) = 35% (Given)Budgeted.
contribution margin per unit = (24,300 * 0.35) / 24,300 = $10.50b) Actual industry volume Actual sales = 21,150 units Industry volume variance = Sales - Industry volume Standard industry volume = Sales / Market share Therefore, industry volume variance = Sales - (Sales / Market share)Sales = 21,150 .
units Market share = 24,300 units / 0.25 = 97,200 units Standard industry volume = 97,200 units / 0.25 = 38,880 units Industry volume variance = 21,150 - 38,880 = ($17,730) Uc) Actual market share Actual market share = Actual sales /
Actual industry volume = 21,150 / 38,880 = 54.4%d) Market share variance Market share variance = (Actual market share - Budgeted market share)
Budgeted industry volume Market share variance = (54.4 - 25) * 24,300 = $633,120 U
Therefore, the answers are: a. $10.50 per unit b. 21,150 units c. 54.4%d. $633,120 U (unfavorable)
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A local government is managing ads aimed at improving public health awareness. The government pays a social networking app to show their ads in users’ news feeds. The social networking app has a variety of adds to show. If the government pays a fee, the app will guarantee that the ad will be shown, but that the add will be randomly mixed with other ads. The government believes that they will improve health outcomes if users see two consecutive ads with health initiatives. The app will show a user exactly one ad each minute. The app's algorithm also states that if an ad has been shown then it will not be shown to the user again. The social media site shows all ads that it has been contracted to display. The app is currently contracted to display 5 health-related ads, and 11 ads that are not health initiatives. Every ad is considered ‘unique’, i.e. there are no repetitions. i. How many ways can the app arrange these ads? ii. How many ways can the app arrange these ads, where there are at least two health ads in a row? iii. How many ads should the government have in their portfolio if they wish to ensure there is a probability of at least 0.5 of a user seeing at least two of their ads in a row?
There are 16,777,216 ways the app can arrange these ads. There are 96 ways the app can arrange these ads with at least two health ads in a row.
To determine the number of ways the app can arrange the ads, we calculate the total number of permutations. Since there are 16 unique ads in total (5 health-related ads + 11 non-health ads), the number of ways to arrange them is 16! (16 factorial), which is equal to 16 x 15 x 14 x ... x 3 x 2 x 1 = 16,777,216. To calculate the number of ways the app can arrange the ads with at least two health ads in a row, we can consider the health ads as a single entity. So, we have 12 entities (one group of 2 health ads and 10 non-health ads) to arrange. The number of ways to arrange these entities is 12! (12 factorial), which is equal to 12 x 11 x 10 x ... x 3 x 2 x 1 = 479,001,600. However, within the group of 2 health ads, there are 2! (2 factorial) ways to arrange them. Therefore, the total number of ways is 479,001,600 x 2! = 96.
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Total Rate of return You wish to calculate the total rate of return for General Eloctric (GE) and Notflix (NFLX), A year evarier, a share of GE stock sold for $1043. a share of NFLX stock sokd for $363.41. During the year, GE paid dividends totaling $0. 24 per share, while NFLX did not pary arry dividends, The current stock pric for GE and NFLX are $5.98 and $442.68, respectively. Calculate the total foturn in dollars and on a porcentage basis for both investments.
The formula to calculate the total rate of return on an investment is as follows:
Total Rate of Return = (Dividend + Capital Gain) / Initial Investment x 100
Here, GE's initial investment is $1043, and NFLX's initial investment is $363.41. GE paid a dividend of $0.24 per share, while NFLX did not pay any dividends. GE's current stock price is $5.98, while NFLX's is $442.68.
Let's do the calculations for both GE and NFLX.
Total Rate of Return for GE:
Dividend = $0.24
Capital Gain = $5.98 - $1043 = -$1037.02 (as the stock price has gone down)
Total Rate of Return = ($0.24 - $1037.02) / $1043 x 100= -99.95%
The total rate of return for GE is negative, which means the investment has lost almost all of its value. Total Rate of Return for NFLX:
Dividend = 0
Capital Gain = $442.68 - $363.41 = $79.27
Total Rate of Return = ($0 + $79.27) / $363.41 x 100= 21.82%
The total rate of return for NFLX is 21.82%, which means the investment has gained some value.
So, the total rate of return in dollars and on a percentage basis for both GE and NFLX is as follows:
Total Rate of Return for GE: -$1,036.78, -99.95%Total Rate of Return for NFLX: $79.27, 21.82%
Therefore, the total rate of return in dollars and on a percentage basis for both investments are given below:
GE: $1,036.78, -99.95%NFLX: $79.27, 21.82%
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Use the NPV method to determine whether Root Products should invest in the following projects: - Projoct A: Costs $265,000 and offers seven annual net cash inflows of $54,000. Root Products requires an annual return of 12% on investments of this nature. - Project 8: Costs $400,000 and otfers 9 annual net cash inflows of $73,000. Root Products demands an annual retum of 10% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Cick the icon to view Present Value of Ordinary Annuity of $1 table.) Read the teguirements. Reference Reference parentheses of a minus tign for a negative net present value.) Caclulate the NPY (net present value) of each projoct. Begin by calculating the NPV of Project A. \begin{tabular}{lccc} \hline Project A: & Net Cash & Annulty PV Factor Present \\ Yoars & inflow & (5=12%,n=7) & Value \\ \cline { 1 } \end{tabular} Requirement 2 . What is the maximum acceptable peice to pay for each project? Requirement 2. What is the maximum acceptable peice to pay for each project? Requirement 3. What is the profitability index of each project? (Round to two decimal places, X××.) Select the formula, then enter the amounts to calculate the profitability index of each project.
Given: Cost of Project A, CA = $265,000Annual net cash inflow, ANA = $54,000Years, n = 7Rate of return, R = 12%Cost of Project B, CB = $400,000Annual net cash inflow, ANB = $73,000Years, n = 9Rate of return, R = 10% NPV Calculation: Negative NPV indicates that the project will not yield the expected rate of return.
Project A:We use the NPV formula to calculate the NPV of Project A. NPVA = ∑(AN/ (1 + R)n ) - CAWhere, AN = Annual net cash inflowR = Rate of returnN = yearCA = Cost of the project NPVA = $12,731.22Thus, NPV of Project A is $12,731.22. Project B:We use the NPV formula to calculate the NPV of Project B. NPVB = ∑(AN/ (1 + R)n ) - CBWhere, AN = Annual net cash inflowR = Rate of returnN = yearCB = Cost of the project NPVB = $18,212.64Thus, NPV of Project B is $18,212.64. Maximum acceptable price to pay for each project:Project A:Maximum acceptable price = $265,000Thus, the maximum acceptable price to pay for Project A is $265,000.Project B:Maximum acceptable price = $400,000Thus, the maximum acceptable price to pay for Project B is $400,000. Profitability index of each project:Profitability index (PI) of a project is calculated as the present value of future cash flows divided by the initial investment. PI = PV of future cash flows / Initial investment Project A:Initial investment = $265,000PVIFA (n, r) = [(1 - (1 / (1 + r) n ))/ r] = [(1 - (1 / (1 + 0.12) 7 ))/ 0.12] = 4.86814PV of future cash flows = ANA x PVIFA (n, r) = $54,000 × 4.86814 = $263,010.36 PI of Project A = PV of future cash flows / Initial investment = $263,010.36 / $265,000 = 0.99 Project B:Initial investment = $400,000PVIFA (n, r) = [(1 - (1 / (1 + r) n ))/ r] = [(1 - (1 / (1 + 0.1) 9 ))/ 0.1] = 6.41747PV of future cash flows = ANB x PVIFA (n, r) = $73,000 × 6.41747 = $468,524.31 PI of Project B = PV of future cash flows / Initial investment = $468,524.31 / $400,000 = 1.17Thus, the Profitability index of Project A is 0.99 and the Profitability index of Project B is 1.17.
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If the forecasted demand for an item is 1 000 units per month and ordering cost is $350 per order, the cost per item is $8.00 and carrying cost are 15% of cost items per annum.
What is the EOQ for the product?
The Economic Order Quantity (EOQ) for the product is approximately 837 units.
To calculate the Economic Order Quantity (EOQ) for the product, we can use the following formula:
EOQ = sqrt((2 * D * S) / H)
Where:
D = Annual demand (in units)
S = Ordering cost per order
H = Holding cost per unit per year
Given:
Monthly demand = 1,000 units
Ordering cost = $350 per order
Cost per item = $8.00
Carrying cost = 15% of cost per item per annum
First, let's convert the monthly demand to annual demand:
Annual demand = Monthly demand * 12 = 1,000 units/month * 12 months = 12,000 units
Next, calculate the holding cost per unit per year:
Holding cost = Carrying cost * Cost per item = 0.15 * $8.00 = $1.20
Now, we can substitute the values into the EOQ formula and solve for EOQ:
EOQ = sqrt((2 * 12,000 * $350) / $1.20)
EOQ = sqrt(840,000 / $1.20)
EOQ = sqrt(700,000)
EOQ ≈ 836.66
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Briefly describe the concept of a wage-price spiral and explain
how the operates in economics
The wage-price spiral, also known as wage-price cycle, is a phenomenon in which higher wages lead to higher prices, which in turn lead to higher wages.
It is a self-reinforcing cycle that is initiated by either an increase in wages or an increase in prices. Let's understand how this operates in economics: The wage-price spiral starts with an increase in wages. As workers earn more money, they have more disposable income to spend. This leads to an increase in demand for goods and services, which in turn leads to an increase in prices.
As prices increase, workers demand higher wages to maintain their standard of living. This leads to another round of wage increases, which in turn leads to higher prices. The process continues, with each round of wage and price increases reinforcing the other. Inflation plays a key role in the wage-price spiral. Inflation is the rate at which prices are rising.
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Company JKW is listed in the Johannesburg stock Exchange as well
as the London Stock exchange.
What type of corporate governance model is it likely to be
following?
(2 Marks)
Gi
A company that is listed in multiple stock exchanges is likely to follow a corporate governance model that is appropriate for each region. In this case, Company JKW is listed in both Johannesburg Stock Exchange as well as the London Stock exchange.
Therefore, it is expected to follow a corporate governance model that is applicable for both countries. Generally, the corporate governance model is of two types: the Anglo-Saxon model and the stakeholder model.The Anglo-Saxon model is followed by companies in the United States and the United Kingdom. In this model, the board of directors is responsible for overseeing the management of the company and making decisions that will maximize shareholder value.On the other hand, the stakeholder model is followed by companies in Europe and Japan. This model prioritizes the interests of all stakeholders, including employees, customers, suppliers, and the environment. In conclusion, since Company JKW is listed in the London Stock Exchange, it is likely to follow the Anglo-Saxon model of corporate governance. However, since it is also listed in the Johannesburg Stock Exchange, it may also have to consider the local corporate governance practices that are applicable in South Africa. Hence, it is likely to follow a hybrid model of corporate governance that is appropriate for both regions.
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d. Establishment of responsibtity 15) List three common-sense reasons why a receivable may become uncollectible. 16) After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $479,000 and Allowance for Doubtful Accounts has a balance of $30,000. What is the net realizable value of the aceounts receivable? 15) List three common-sense reasons why a receivable may become uncollectible. 16) After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $479,000 and Allowance for Doubtful Accounts has a balance of $30,000. What is the net realizable value of the accounts receivable?
15) Three common-sense reasons why a receivable may become uncollectible are as follows:
Customers going bankrupt or facing financial problems could affect their ability to pay up their debts. If a customer loses their job, they may not be able to pay their bills on time and hence lead to an uncollectible receivable. In some cases, fraud by customers could lead to uncollectible receivables.
16) Net realizable value of accounts receivable is the total amount of money a company expects to receive from its customers after accounting for any bad debts that may be incurred. To calculate this value, we need to subtract the balance in the Allowance for Doubtful Accounts from the balance in Accounts Receivable.
Net Realizable Value = Accounts Receivable – Allowance for Doubtful Accounts
Net Realizable Value = $479,000 – $30,000
Net Realizable Value = $449,000
Therefore, the net realizable value of the accounts receivable is $449,000.
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What is the future value in dollars to two decimal places in 10 years of a regular payment of $200 every 6 months where the first payment is in 1 years time and the last payment is in 10 years time? Assume that you can invest the coupon payments at a nominal rate of 3% with biannual compounding.
The future value in dollars, to two decimal places, of the regular payment of $200 every 6 months for 10 years, with an investment rate of 3% compounded semi-annually, is approximately $5,003.92.To calculate the future value in dollars to two decimal places, we can use the formula for the future value of an ordinary annuity:
Future Value = Payment × [(1 + r/n)^(n*t) - 1] / (r/n)
Where:
Payment = $200 (amount of each payment)
r = 3% (nominal interest rate per year)
n = 2 (number of compounding periods per year)
t = 10 (number of years)
Plugging in the values:
Future Value = $200 × [(1 + 0.03/2)^(2*10) - 1] / (0.03/2)
Evaluating this expression will give us the future value in dollars after 10 years.Calculating the expression:
Future Value = $200 × [(1 + 0.015)^(20) - 1] / 0.015
Future Value = $200 × [(1.015)^(20) - 1] / 0.015
Future Value = $200 × [1.37514203416 - 1] / 0.015
Future Value = $200 × 0.37514203416 / 0.015
Future Value ≈ $5,003.92
Therefore, the future value in dollars, to two decimal places, of the regular payment of $200 every 6 months for 10 years, with an investment rate of 3% compounded semi-annually, is approximately $5,003.92.
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The future value in dollars, to two decimal places, of the regular payment of $200 every 6 months for 10 years, with an investment rate of 3% compounded semi-annually, is approximately $5,003.92.To calculate the future value in dollars to two decimal places, we can use the formula for the future value of an ordinary annuity:
Future Value = Payment × [(1 + r/n)^(n*t) - 1] / (r/n)
Where:
Payment = $200 (amount of each payment)
r = 3% (nominal interest rate per year)
n = 2 (number of compounding periods per year)
t = 10 (number of years)
Plugging in the values:
Future Value = $200 × [(1 + 0.03/2)^(2*10) - 1] / (0.03/2)
Evaluating this expression will give us the future value in dollars after 10 years.Calculating the expression:
Future Value = $200 × [(1 + 0.015)^(20) - 1] / 0.015
Future Value = $200 × [(1.015)^(20) - 1] / 0.015
Future Value = $200 × [1.37514203416 - 1] / 0.015
Future Value = $200 × 0.37514203416 / 0.015
Future Value ≈ $5,003.92
Therefore, the future value in dollars, to two decimal places, of the regular payment of $200 every 6 months for 10 years, with an investment rate of 3% compounded semi-annually, is approximately $5,003.92.
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In an effort to increase employment by stimulating investment spending, policymakers would
a. sell bonds.
b. purchase US government bonds on the open market.
c. increase the federal funds rate.
d. increase government spending.
e. increase transfer payments.
The most relevant options for policymakers aiming to increase employment and stimulate investment spending would be to increase government spending (d) and increase transfer payments (e).
In an effort to increase employment by stimulating investment spending, policymakers would typically consider options such as:
d. Increase government spending: By increasing government spending on infrastructure projects, education, healthcare, or other sectors, policymakers can create job opportunities and stimulate investment in the economy. This can lead to increased economic activity and potentially higher employment levels.
e. Increase transfer payments: Increasing transfer payments, such as unemployment benefits, welfare programs, or social security payments, can provide individuals with additional income. This, in turn, can increase their spending power and stimulate demand for goods and services, thereby potentially boosting investment and employment.
Selling bonds (a) and purchasing US government bonds on the open market (b) are monetary policy tools rather than fiscal policy tools. While they can influence interest rates and the overall economy, they are not directly targeted at increasing employment.
Increasing the federal funds rate (c) is a monetary policy tool used by central banks to control inflation and manage the money supply. It is not specifically aimed at increasing employment or investment spending. In fact, increasing the federal funds rate may have the opposite effect by making borrowing more expensive and potentially reducing investment.
Therefore, the most relevant options for policymakers aiming to increase employment and stimulate investment spending would be to increase government spending (d) and increase transfer payments (e).
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. In early 2018, Abercrombie & Fitch (ANF) had a book equity of $1250 million, a price per share of $22.48 and 68.4 million shares outstanding. At the same time, The GAP had a book equity of $3140 million, a share price of $31.74 and 389 million shares outstanding. 7 marks
a. What is the market-to-book ratio of each of these retailers?
b. What conclusions can you draw by comparing the two ratios?
Market-to-book ratio is a metric that compares a company's market value to its book value. This metric is calculated by dividing the company's market capitalization by its book equity.
Market-to-book ratio (ANF) = Market Capitalization / Book Equity
Market-to-book ratio (ANF) = [Share price * Outstanding shares] / Book Equity
Market-to-book ratio (ANF) = [$22.48 * 68.4 million] / $1250 million
Market-to-book ratio (ANF) = 1.23
Market-to-book ratio (GAP) = Market Capitalization / Book Equity
Market-to-book ratio (GAP) = [Share price * Outstanding shares] / Book Equity
Market-to-book ratio (GAP) = [$31.74 * 389 million] / $3140 million
Market-to-book ratio (GAP) = 3.92By comparing the two ratios, we can conclude that the GAP is trading at a premium to its book value, whereas ANF is trading at a discount to its book value.
We can also deduce that the GAP is considered to be a more valuable company by investors than ANF, which may be attributed to differences in growth prospects, profitability, and other factors. The market-to-book ratio can be used by investors to evaluate whether a company's shares are overvalued or undervalued relative to its book value.
The ratio can also be used to compare the valuations of companies within the same industry or sector.
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