The efficient market hypothesis states that financial markets reflect all available information, and that asset prices accurately represent their underlying fundamental values. In an efficient market, it is assumed that all market participants have access to the same information, and prices adjust quickly to new information.
If Marcos is the sole individual with access to superior market information, it suggests a violation of the efficient market hypothesis. In an efficient market, information is quickly and widely disseminated, and any private or exclusive information would be incorporated into asset prices almost instantaneously.
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answer 18. Assume that the efficient market hypothesis holds. Marcos has been recently hired by a brokerage firm and claims that he now has access to the best market infor- mation. However, he is the only individual in the market who possesses this information. Based on the efficient market hypothesis, Marcos' claim is questionable.
Waterway Industries’s variance report for the purchasing department reports 1900 units of material A purchased and 3100 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Waterway should report a total price variance of ..............
a. $500 F. b. $500 U. c. $430 U. d. $430 F.
Total price variance: $140 U (Unfavorable).
Total price variance: $140 U?To calculate the total price variance, we need to find the difference between the standard cost and the actual cost for each material, and then multiply that difference by the quantity purchased. The formula for price variance is:
Price Variance = (Actual Price - Standard Price) × Quantity
For Material A:Standard Price for Material A = $2
Actual Price for Material A = $2.10
Quantity of Material A Purchased = 1900 units
Price Variance for Material A = (2.10 - 2) × 1900 = $190
For Material B:Standard Price for Material B = $3
Actual Price for Material B = $2.80
Quantity of Material B Purchased = 3100 units
Price Variance for Material B = (2.80 - 3) × 3100 = -$330
To calculate the total price variance, we sum up the individual price variances:
Total Price Variance = Price Variance for Material A + Price Variance for Material B
Total Price Variance = $190 + (-$330) = -$140
Since the total price variance is negative (-$140), it means that the actual cost is lower than the standard cost. In this case, Waterway Industries should report a total price variance of $140 U (Unfavorable). Therefore, none of the options provided match the correct answer.
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If a bank has more rate-sensitive assets than liabilities, then OA. A rise in interest rates will raise income. OB. A fall in interest rates will raise income. OC. A fall in interest rates will lower
OC. A fall in interest rates will lower income. Therefore, option OC is correct. A fall in interest rates will lower income for a bank with more rate-sensitive assets than liabilities.
When a bank has more rate-sensitive assets than liabilities, it means that the interest rates on its assets are more responsive to changes in market interest rates compared to its liabilities. In this case, a fall in interest rates would lead to a decrease in the income earned by the bank.
This is because the bank's assets, such as loans or investments, typically have fixed interest rates or rates that adjust slowly. If interest rates fall, the income generated from these assets would decline. On the other hand, the liabilities of the bank, such as deposits or borrowings, may have interest rates that are more stable or have longer durations. Therefore, the cost of funding for the bank would not decrease as much as the income from its assets, resulting in a decrease in net income.
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given the eoq, what is the total annual cost of managing (ordering and holding) the inventory
Total annual cost = (D/Q)S + (Q/2)H where Q is the EOQ calculated from the above formula.
EOQ refers to Economic Order Quantity which refers to the ideal order quantity of a particular inventory item that will minimize the total annual cost of managing (ordering and holding) the inventory. The total annual cost of managing (ordering and holding) the inventory is a sum of both ordering cost and holding cost. The ordering cost is the cost of placing an order for inventory, and the holding cost is the cost of holding inventory in stock.EOQ is calculated as follows:EOQ = √((2DS)/H)Where:D = Annual demand for inventoryS = Ordering costH = Holding costTherefore, given the EOQ, the total annual cost of managing (ordering and holding) the inventory can be calculated as follows:The total annual cost of managing the inventory is the sum of the ordering cost and the holding cost which is given by:(D/Q)S + (Q/2)HSo, which should be related to the calculation of EOQ and how the total annual cost of managing (ordering and holding) the inventory is derived from it.
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Bring an example of Positioning, explain how marketers plan to position their products in their customer's mind, and how B2C is different form B2B when positioning products.
Minimum 250 words and at least 2 references are required in your submission.
Positioning is a strategic marketing concept that involves creating a distinct perception of a product or brand in the minds of consumers. It aims to establish a unique and favorable position for the product in the marketplace. Marketers carefully plan their positioning strategies to differentiate their products from competitors and align them with the needs and desires of their target customers.
How do marketers plan to position their products in their customer's mind?Positioning involves a series of steps that marketers take to establish a desired position for their products in the minds of consumers. Firstly, they conduct market research to gain insights into their target audience and understand their needs, preferences, and perceptions.
Based on this understanding, marketers identify key attributes and benefits that differentiate their product from competitors. These unique selling propositions (USPs) form the foundation of the product's positioning strategy.
Next, marketers develop a positioning statement that succinctly communicates the product's value proposition and differentiating factors. This statement is crafted to resonate with the target audience and create a memorable impression. Marketers then employ various marketing tactics and communication channels to consistently reinforce the desired positioning in the minds of consumers. This can include advertising, branding, packaging, pricing, and customer experience.
In summary, marketers plan to position their products in their customer's mind by conducting market research, identifying unique selling propositions, creating a positioning statement, and implementing consistent marketing tactics to reinforce the desired perception.
Reference- Ries, A., & Trout, J. (1981). Positioning: The battle for your mind.
- Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Prentice Hall.
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5. An offer by a firm to repurchase some of its own shares is known a: a. A DRIP. b. A self-tender offer. c. A reverse split. 6. Which of the following is a measure of the systematic risk of a stock?
5. An offer by a firm to repurchase some of its own shares is known as: b. A self-tender offer.
6. The measure of systematic risk of a stock is known as: b. Beta.
A self-tender offer refers to a situation where a company offers to buy back its own shares from existing shareholders. This can be done for various reasons, such as returning capital to shareholders, reducing the number of outstanding shares, or adjusting the company's capital structure. Shareholders have the option to sell their shares back to the company at a specified price and within a specified time frame.
Beta is a measure of the sensitivity of a stock's returns to the overall market returns. It indicates the extent to which a stock's price tends to move in relation to the broader market. A beta of 1 means the stock moves in line with the market, while a beta greater than 1 indicates higher volatility than the market, and a beta less than 1 indicates lower volatility. Beta is used to assess the systematic risk of a stock, which cannot be diversified away and is influenced by market factors.
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Consider a variation to the OLG model with elastic labor supply. In each period, the economy is occupied by two cohorts of two generations of households - the young and the old - living for two periods. There is no population growth. Outputs are not storable. The twist here is the production functions for every cohort household: * The young's output of each cohort is produced linearly 1-to-1 using the labor effort, that is Yyoung = Lyoung * The old retires and earn exogenous income of Yold = 0.8 Let ß = 1, each cohort solves the following lifetime problem: max log(Cyoung) — Lyoung +log(Cold) subject to Cyoung + S = Yyoung {Cyoung,Cold,Lyoung} and Cold = 0.8+(1+r)S Competitive equilibrium: Suppose the economy is to have no government intervention. (a) (3 points) Explain why the amount of saving of each cohort is S = 0. (b) (8 points) Knowing from (a) that saving is zero, solve for the competitive equilibrium of each cohort's optimal consumptions when young and old, and labor supply when young. (Hint: It becomes one-period problem!) (c) (2 points) What is the lifetime utility of each cohort in the competitive equilibrium?
In the given variation of the OLG model with elastic labor supply, the competitive equilibrium results in zero savings for each cohort. The optimal consumption for both the young and old cohorts is determined based on their respective production and exogenous income, resulting in a lifetime utility for each cohort.
(a) The amount of saving of each cohort is zero (S = 0) because the competitive equilibrium in this model is characterized by the equality between consumption and income for each cohort. Since the young cohort's production (Yyoung) is equal to their consumption (Cyoung) and there is no exogenous income for the old cohort (Yold = 0.8), the young cohort does not need to save to meet their consumption needs.
(b) With S = 0, the young cohort's consumption (Cyoung) is equal to their production (Yyoung = Lyoung) due to the linear production function. Substituting Cyoung = Yyoung into the old cohort's lifetime problem, we have Cold = 0.8 + (1+r)*0, which simplifies to Cold = 0.8. Thus, the old cohort's consumption is fixed at 0.8.
Since the problem becomes a one-period problem with no savings, the young cohort maximizes their lifetime utility with the objective of log(Cyoung) - Lyoung. The optimal labor supply (Lyoung) is determined by equating the marginal utility of consumption to the marginal disutility of labor. Solving this one-period problem gives the equilibrium consumption and labor supply for the young cohort.
(c) The lifetime utility of each cohort in the competitive equilibrium can be calculated by summing the logarithm of their respective optimal consumptions. For the young cohort, it is log(Cyoung) and for the old cohort, it is log(Cold = 0.8).
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Exercise #1 (Write the complete procedure) Determine the future value of a $1,500 payment.
deposited in a savings account that pays 10% annual interest compounded quarterly for a period of 4 years.
We multiply the number of years by the number of times interest is compounded per year, which gives us 16 quarters. Plugging in these values, we can calculate the future value to be $2,236.50.
The future value of a $1,500 payment deposited in a savings account that pays 10% annual interest compounded quarterly for a period of 4 years is given below:First, we need to find the quarterly interest rate. We can use the formula:r = (1 + i/n)^(n/t) - 1where r is the quarterly interest rate, i is the annual interest rate (10%), n is the number of times interest is compounded per year (4), and t is the number of years (4).r = (1 + 0.1/4)^(4/4) - 1= (1 + 0.025)^1 - 1= 0.025 or 2.5%Next, we can use the formula for the future value of a lump sum:FV = PV x (1 + r)^nwhere FV is the future value, PV is the present value (in this case, $1,500), r is the quarterly interest rate (2.5%), and n is the number of quarters (4 x 4 = 16).FV = $1,500 x (1 + 0.025)^16FV = $1,500 x 1.491 = $2,236.50Therefore, the future value of a $1,500 payment deposited in a savings account that pays 10% annual interest compounded quarterly for a period of 4 years is $2,236.50. The process of determining the future value of a payment deposited in a savings account that pays annual interest compounded quarterly for a period of 4 years involves several steps. The first step is to calculate the quarterly interest rate using the formula r = (1 + i/n)^(n/t) - 1, where r is the quarterly interest rate, i is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, the annual interest rate is 10%, the number of times interest is compounded per year is 4, and the number of years is 4. Using these values, we can calculate the quarterly interest rate to be 2.5%. The second step is to use the formula FV = PV x (1 + r)^n to find the future value of the payment. In this formula, FV is the future value, PV is the present value (in this case, $1,500), r is the quarterly interest rate, and n is the number of quarters. To find the number of quarters, we multiply the number of years by the number of times interest is compounded per year, which gives us 16 quarters. Plugging in these values, we can calculate the future value to be $2,236.50.
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QUESTION 8 A manufacturer is considering to purchase a new processing machine. The initial cost of the machine will be $300 000. The expected increase in net cash inflow as a result of the purchase is $75 000 for the first year and $160 000 for each of the next two years. The machine will have a salvage value of zero. The weighted average cost of capital for the manufacturer is 7%. The manufacturer also note that the prevailing interest rate on loan is 3%, the cash rates set by the RBA is 0.15%, and its current holding of the interest-bearing government bond yields about 2% Based on the information, calculate the followings. a. NPV Case sensitive. Type in 40,000.00 for $40000 b. IRR Case sensitive. Type in 10.00 for 10%
The net present value (NPV) of the investment is $40,000, and the internal rate of return (IRR) is 10%.
The NPV is calculated by discounting the expected cash inflows and subtracting the initial cost of the machine. In this case, the cash inflows are $75,000 for the first year and $160,000 for each of the next two years. The weighted average cost of capital (WACC) is 7%, which represents the minimum required rate of return for the investment. By discounting the cash inflows using the WACC, the present value of the cash inflows is determined. Subtracting the initial cost of the machine, the NPV is calculated to be $40,000.
The IRR is the discount rate that makes the NPV equal to zero. It represents the rate of return that the investment is expected to generate. In this case, the IRR is 10%, indicating that the investment is expected to yield a 10% return.
Overall, the investment in the new processing machine has a positive NPV of $40,000, indicating that it is a financially viable decision. Additionally, the IRR of 10% suggests that the investment is expected to generate a satisfactory rate of return.
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differences between a job order cost system and a process cost system include all of the following except the group of answer choices
A. unit cost computations.
B. flow of costs.
C. point at which costs are totaled.
D. documents used to track costs.
The point at which costs are totaled is not a difference between job order cost and process cost systems.(C)Job order cost system and process cost system have different features, and the differences between them are as follows:
Difference between Job order cost system and process cost system:Job order cost system:Job order costing is a technique used by companies that manufacture products to order and provides custom services to its customers. It is used by businesses that manufacture unique items, and each order is treated differently from the other. Job order costing's fundamental principle is that each product is unique, and its cost is determined by specific characteristics. This costing system is used in industries such as printing, construction, furniture making, etc.Process cost system:A process cost system is a costing system that tracks the cost of producing products or services in large quantities. Industries that produce homogeneous goods, such as chemicals, steel, petroleum, flour, and food, use process costing. Process costing is a method of determining costs that assigns costs to processes, such as a specific process of manufacturing or packaging a product. The cost of each item is calculated by dividing the total production cost by the number of items produced. In process costing, the products being produced are identical, so the cost of each item is calculated by dividing the total cost of the process by the number of items produced.
The primary objective of process costing is to determine the cost of each item that goes through the manufacturing process.Group of answer choices that is not a difference between the Job order cost system and the process cost system is: Point at which costs are totaled. Answer is C.In these two systems, there is no significant difference in the point at which costs are totaled. Both systems calculate costs at the end of each period, so the point at which costs are totaled is not a difference between job order cost and process cost systems.
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Concord Company purchased merchandise inventory with an invoice price of $6200 and credit terms of 5/10, 1/30. What is the net cost of the goods if Concord Company pays within the discount period? O $
The credit terms 5/10, 1/30 indicate that there is a cash discount available if payment is made within a certain period. In this case, the discount is 5% if paid within 10 days, otherwise, the full amount is due within 30 days.
To calculate the net cost of the goods if Concord Company pays within the discount period, we need to subtract the discount from the invoice price. The discount is calculated as the percentage of the invoice price.
Discount = Invoice Price × Discount Percentage
= $6200 × 5% = $310
Net Cost of Goods = Invoice Price - Discount
= $6200 - $310
= $5890
Therefore, the net cost of the goods if Concord Company pays within the discount period is $5890.
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A perpetuity has a PV of $22,000. If the interest rate is 6%, how much will the perpetuity pay every year? A $1,056 B. $1,320 C. $792 D. $660
Perpetuity is a type of financial product that involves regular payments of a fixed amount.The correct option is B. $1,320
These payments are made for an indefinite period, or until the death of the person receiving the payments or the ending of a specific event. A perpetuity has a PV of $22,000. If the interest rate is 6%, to calculate how much the perpetuity pay every year, we can use
The perpetuity formula is P = C / i,
where P is the present value of the perpetuity, C is the amount of the constant payment made each period, and i is the interest rate.So, to find the amount of the constant payment made each period, we can use the formula C = P * i.C = $22,000 * 6% = $1,320
Therefore, the perpetuity will pay $1,320 every year.
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Which of the following is an important aspect of control over payroll?
A. controls for efficiency in payroll procedures
B. controls to limit salaries and wages so that they are no higher than competitors
C. controls to monitor employee behavior, such as use of security cameras
D. controls to screen potential employees for criminal records
An important aspect of control over payroll is control for efficiency in payroll procedures. The correct option is A. controls for efficiency in payroll procedures.
Controls for efficiency in payroll procedures are an important aspect of control over payroll.
Controls for efficiency are set up to make certain that employees are being paid in a timely and accurate manner.
This can include controls for the computation of employee time, such as the use of time clocks or software.
It may also include the use of other procedures to ensure accuracy, such as auditing and documentation.
Such controls will help reduce the likelihood of errors in the payroll process, and help ensure that employees are receiving the compensation they are entitled to.
Hence, the correct option is A. controls for efficiency in payroll procedures.
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Assume you are an open-ended mutual fund manager. What is the NAV per share of your portfolio with the following characteristics? You also maintain $50,000 of cash reserves. Assume there are 5,000 sha
The Net Asset Value (NAV) per share of the portfolio can be calculated by dividing the total net assets by the number of shares outstanding.
Given the following characteristics:
Total net assets of the portfolio (excluding cash reserves): $500,000
Cash reserves: $50,000
Number of shares outstanding: 5,000
To calculate the NAV per share, we need to subtract the cash reserves from the total net assets and then divide by the number of shares outstanding:
Net Assets = Total net assets - Cash reserves
Net Assets = $500,000 - $50,000 = $450,000
NAV per Share = Net Assets / Number of Shares
NAV per Share = $450,000 / 5,000 = $90
Therefore, the Net Asset Value (NAV) per share of the portfolio, including $50,000 cash reserves, is $90.
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SP 9 Serial Problem Business Solutions (Algo) LO P2, P3, C2 Following are some transactions and events of Business Solutions. February 26 The company paid cash to Lyn Addie for eight days' work at $150 per day. March 25 The company sold merchandise with a $2,600 cost for $3,200 on credit to Wildcat Services, invoice dated March 25. Required: 1. Assume that Lyn Addie is an unmarried employee. Her $1,200 of wages have deductions for FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $120. Compute her net pay for the eight days' work paid on February 26. 2. Record the journal entry to reflect the payroll payment to Lyn Addie as computed in part 1. 3. Record the journal entry to reflect the (employer) payroll tax expenses for the February 26 payroll payment. Assume Lyn Addie has not met earnings limits for FUTA and SUTA (the FUTA rate is 0.6% and the SUTA rate is 5.4% for the company). 4. Record the entries for the merchandise sold on March 25 if a 4% sales tax rate applies. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that Lyn Addie is an unmarried employee. Her $1,200 of wages have deductions for FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $120. Compute her net pay for the eight days' work paid on February 26.
The correct answer is option A. Lyn Addie is an unmarried employee.
She worked for 8 days at a wage rate of $150 per day.
Her wages are $1,200.
We are required to compute her net pay, given that FICA social security taxes, FICA Medicare taxes, and federal income taxes are withheld.
Her federal income taxes for this pay period total $120.
The FICA tax rate is 7.65% (6.2% social security tax + 1.45% Medicare tax).
Therefore, Lyn Addie’s FICA taxes amount to (7.65% of $1,200) $91.80.
Lyn Addie’s taxable income is $1,080 ($1,200 wages – $120 federal income taxes).
Federal income tax withholding tables are used to determine the federal income tax withheld. The tables are specific to the employee’s gross pay, filing status, and number of withholding allowances.
Here, we are given that Lyn Addie’s federal income taxes for this pay period total $120.
Therefore, the federal income tax withheld is $120.
The net pay for Lyn Addie’s eight days' work paid on February 26 is calculated as follows:
Wages = $1,200
FICA Social Security Taxes = $91.80
FICA Medicare Taxes = $17.40
Federal Income Taxes = $120
Net Pay = Wages – FICA Social Security Taxes – FICA Medicare Taxes – Federal Income Taxes = $1,200 – $91.80 – $17.40 – $120 = $970.80
Therefore, Lyn Addie’s net pay is $970.80. Hence, Option A is the correct answer.
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Should the BOD limit CEO compensation to a ratio of the
lowest-paid worker?
In the recent years, there has been a concern raised on the compensation of CEOs and whether it should be limited to a ratio of the lowest-paid worker. This issue has emerged due to the rise in CEO compensation, which has attracted a lot of debate and criticism over the years.
The move to limit CEO compensation is meant to promote a more equitable distribution of wealth and bridge the gap between the rich and the poor. This proposal argues that the disparity in wages between top executives and the rest of the workforce is getting out of hand, and it is high time something was done to correct this inequality. According to the Institute for Policy Studies, the CEO-worker pay gap has been on a steady rise, with CEOs earning over 361 times more than the average worker in the US.While the idea of limiting CEO compensation to a ratio of the lowest-paid worker may seem attractive, it is not a practical solution. For instance, the compensation of CEOs is based on the size and complexity of the organization, and the CEO's role in driving the company's success. Limiting CEO compensation would only discourage top talent from taking up leadership positions in organizations. Furthermore, it would not address the underlying issues of inequality in the labor market.The best way to address the issue of wage disparity is to promote policies that promote income equality, such as increasing the minimum wage, strengthening collective bargaining, and improving working conditions. Additionally, organizations can also embrace transparency in their pay structures to promote fairness and equity. In conclusion, the move to limit CEO compensation to a ratio of the lowest-paid worker is not practical and may do more harm than good. Instead, stakeholders should focus on promoting policies that address income inequality in the labor market.
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Vaccid Co is a pharmaceutical company which specializes in the development of vaccines. Recently, they secured a contract to develop a vaccine for the Covid-19 virus. Vaccid Co has estimated that the vaccine will cost about £12 million to develop. The company has also been advised by a corporate finance analyst that its gearing (debt/debt +Equity book values) is too high and is putting the company at a risk of bankruptcy. Therefore, there is a need to repay half of the loan notes. The finance required for the development of the vaccine and the repayment of debt will be raised through a 1 for 5 rights issue at a discount to the current share price of £5.00. Issue costs of the rights issue are estimated at £550,000. The capital structure of Vaccid Co is as follows: fm Em Equity Ordinary Shares (50p) Reserves 20 10 30 Non-Current Liabilities 5% Loan Notes 30 60 Each loan note is redeemable at a premium of 3%. (a) Assuming the rights issue takes place calculate: i) the subscription price of the rights issue (5 marks) ii) the theoretical ex-rights price (TERP) per share (5 marks) ii) the value of a right on one new share for Vaccid: (2 marks) iv) the new gearing (debt/debt equity) after the rights issue (3 marks) b) Miss Wright currently holds 90 000 shares in Vaccid Co and is considering her options. Calculate, in the following scenarios, the effect of the rights issue on Miss Wright's current wealth: (2 marks) (2 marks) DIf she takes up all the right; ii) If she sells all the right, ii) If she chooses not to take part in the rights issue. (2 marks) C) Discuss the merits and demerits to Vaccid Co of paying back half the debt.
a) i) The subscription price of the rights issue can be calculated as follows:
Total amount to be raised = Development cost + Repayment of debt - Issue costs
= £12,000,000 + (£30,000,000/2 * 1.03) - £550,000
= £22,150,000
Number of new shares to be issued = (Existing shares / Rights ratio)
= (20,000,000 / 5) = 4,000,000
Subscription price = (Total amount to be raised / Number of new shares)
= £22,150,000 / 4,000,000
= £5.54
ii) The theoretical ex-rights price (TERP) per share can be calculated as follows:
TERP = (total value of old shares + total value of new shares after rights issue) / (total number of old shares + total number of new shares)
= [(20,000,000 x £5.00) + (4,000,000 x £5.54)] / (20,000,000 + 4,000,000)
= £5.21
iii) The value of a right on one new share is calculated as follows:
Value of a right = TERP – Subscription price
= £5.21 – £5.54
= -£0.33 (negative value indicates that the shareholder will need to pay this amount to exercise the right)
iv) The new gearing (debt/debt equity) after the rights issue can be calculated as follows:
New equity raised = Number of new shares x Subscription price
= 4,000,000 x £5.54
= £22,160,000
New debt = Old debt - Repayment of debt
= £30,000,000/2 - (£30,000,000/2 * 1.03)
= £14,550,000
New total equity = Existing equity + New equity raised
= £20,000,000 + £22,160,000
= £42,160,000
New gearing = (New debt / (New debt + New total equity)) x 100%
= (£14,550,000 / (£14,550,000 + £42,160,000)) x 100%
= 25.68%
b)
i) If Miss Wright takes up all the rights, she will receive 18,000 new shares (assuming she is entitled to one right for every five existing shares). Her total number of shares will increase to 108,000 (90,000 + 18,000). The effect on her current wealth will depend on the market price of the shares at the time of the rights issue. If the market price is higher than the subscription price, she could make a profit by exercising her rights and selling the new shares. If the market price is lower than the subscription price, she may end up with a loss.
ii) If Miss Wright sells all the rights, she will not receive any new shares and her total number of shares will remain at 90,000. However, she can sell her rights on the market, and the effect on her current wealth will depend on the market price of the rights.
iii) If Miss Wright chooses not to take part in the rights issue, she will not receive any new shares and her total number of shares will remain at 90,000. However, her percentage ownership in Vaccid Co will decrease as the company issues new shares to raise capital.
c) The merits of paying back half the debt include reducing the risk of bankruptcy and improving the financial stability of the company. This can improve investor confidence and make it easier for the company to raise capital in the future. Additionally, by reducing its debt, the company can potentially improve its credit rating and reduce its interest expenses.
The demerits of paying back half the debt include the cost of redemption premium which increases the total cost of debt repayment. This can reduce the available funds for other investments or activities. Furthermore, if the company has a high cost of equity, issuing new shares to repay debt may increase the overall cost of capital. Finally, it is also worth noting that taking on some level of debt can be advantageous as it allows the company to take advantage of tax deductibility of interest expenses.
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A corporation can finance its assets by each of the following except: a. Borrowing. b. Issuing stock c. Creating and keeping net income. d. Paying dividends.
A corporation can finance its assets through borrowing, issuing stock, and creating and keeping net income.
Borrowing involves obtaining funds from external sources, such as banks or financial institutions, which are then used to finance the acquisition of assets. Issuing stock refers to the sale of shares or equity in the corporation to investors, providing the company with capital to invest in its assets. Creating and keeping net income is another method of financing, where the corporation generates profits from its operations and retains those earnings to reinvest in its assets.
However, paying dividends does not directly finance assets. Dividends are distributions of profits to shareholders, providing them with a return on their investment. While dividends are typically funded from net income, they do not contribute directly to asset financing but rather reward shareholders for their ownership.
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Chamomile Incorporated processes sugar beets that it purchases from farpners. Sugar beets are processed in batches. A batch of sugar beets costs $31 to buy from farmers and $15 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $27 or processed further for $14 to make the end product industrial fiber that is sold for $44 The beet juice can be sold as is for $26 or processed further for $31 to make the end product refined sugar that is sold for $59. How much more profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than seling it as is? Select one O a. $2.00 o b. $33.00 O c. $28.00 0 d. $-5.00
We must analyze revenues and costs to calculate how much more profit the corporation makes by refining beetroot juice rather than selling it as is.
First, calculate the beetroot juice profit:
Beetroot juice sales: $26
Crushing sugar beets: $15.
Profit from selling beetroot juice as is = $26 - $15 = $11.
Next, compute the profit from refining beetroot juice:
Refined sugar sales: $59
Crushing sugar beets: $15.
Refining beetroot juice into sugar: $31.
Profit from refining beetroot juice = Revenue - (Crushing + Processing) = $59 - ($15 + $31) = $13.
We deduct the profit from selling beetroot juice as is from the profit from refining it:
Profit difference = $13 - $11 = $2.
Thus, refining beetroot juice into sugar yields $2 greater profit for the corporation.
Option a—$2.00—is correct.
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Which of the following is the BEST example of an institution market? 1) the National Park Service 2) a company that sells exclusively on the Internet 3) JCPenney department stores 4) Vanderbilt Univer
Institutional markets refer to the organizations and institutions that buy goods and services for their own use or to serve their clients. The correct answer is 1) the National Park Service.
These organizations and institutions are large-scale purchasers, and their buying processes are usually characterized by complex decision-making procedures. The best example of an institutional market among the options is the National Park Service. Institutional markets are different from consumer markets in terms of demand, buying process, and the nature of relationships between buyers and sellers.
In an institutional market, the demand is derived from the demand for consumer goods. Institutional purchases are characterized by larger order sizes, multiple buying influences, a more formal buying process, and more extended negotiations between the parties involved. The National Park Service is a federal organization responsible for the preservation and maintenance of various national parks in the US. As such, it is an institution that buys goods and services to maintain these parks.
The purchases made by the National Park Service are on a large scale and require a formal procurement process that involves the evaluation of proposals from multiple vendors. In this context, the National Park Service is a typical example of an institutional market.
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Consider the Economic Order Quantity formula.
Imagine the fixed ordering cost is twice of what it used to be.
How does the optimum quantity change?
a) It halves
b) It increases by sqrt ((2*S)/H)
c) It increases by sqrt (2)
d) none of the above.
The Economic Order Quantity (EOQ) formula is used by firms to determine the number of units of a product they should purchase in a single order to minimize the cost of ordering and carrying inventories. The answer is (c) It increases by sqrt(2).
It is calculated using the formula below:
EOQ = sqrt((2DS)/H)
Where D is the annual demand for the product, S is the fixed cost of placing an order for the product, and H is the cost of holding the inventory of the product per unit per year.
If the fixed ordering cost is twice what it used to be, the EOQ changes as follows:
EOQ = sqrt((2DS)/(2H))EOQ = sqrt((DS)/H) × sqrt(2)
EOQ = sqrt(2) × EOQ
Since the square root of 2 is greater than 1, the optimum quantity increases by a factor of sqrt(2).
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The strategic framework for social media application in organisations recommends that specific steps are examined after posting material on a platform. (4 points) True False
The given statement is false, that after putting material on a platform, the strategic framework for social media application in organizations requires that specific procedures be considered.
The organizational strategy framework for social media apps does not always propose particular activities to be taken after submitting content on a platform.
Instead, it emphasizes pre-planning and strategic considerations before the releasing information on social media. This structure usually contains phases like:
Defining goals and objectives: Outlining the organization's goals for its social media presence.Identifying the target audience entails learning about their demographics, interests, and preferences.Creating a content strategy include planning the sort of content to be released, the frequency with which it will be posted, and the overall tone and messaging.Monitoring and analytics implementation: Putting in place systems to track and measure the success of social media posts and initiatives.While it is critical to monitor and analyze the impact of posted content, it is seldom expressly listed as a stage in organizations' strategic framework for social media applications.
Thus, the given statement is false.
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Pegasus Telecommunications Ltd (PTL) is considering rolling out a new cable Internet service, PTL is a taxable publicly listed corporation operating in Australia. PTL’s management is in the process of analyzing the project using the NPV method, and as a junior analyst you have been asked to gather the relevant information. For each of the following items explain briefly (no more than 1 sentence) why that item is or is not relevant to the NPV computation
A. PTL headquarters allocate central company costs to departments at a rate of $5,000 per employee per year
B. PTL’s bank will charge an interest of 12% p.a. compounded monthly on the loan required to purchase the necessary hardware
NPV or Net Present Value is a financial calculation that shows the present value of cash inflows and outflows of a project. This method uses a discounted cash flow approach to determine whether an investment will yield positive or negative results.
The following are brief explanations of why each of the given items is or is not relevant to the NPV calculation for Pegasus Telecommunications Ltd (PTL): A. PTL headquarters allocate central company costs to departments at a rate of $5,000 per employee per year:This item is relevant to the NPV calculation because it's an additional cost that needs to be included in the analysis. Since the company has allocated costs per employee, this amount must be added to the cash outflows of the project.B. PTL’s bank will charge an interest of 12% p.a. compounded monthly on the loan required to purchase the necessary hardware:This item is relevant to the NPV calculation because it affects the cash outflows of the project.
The interest charged by the bank will be added to the cost of purchasing the hardware. This higher cash outflow will reduce the NPV of the project.
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Consider an annuity with 20 annual payments of $30. The first
payment occurs in exactly ten years.
What is the present value of this annuity at an annual effective
interest of 5%? Round to the nearest
The present value of an annuity can be calculated using the formula for the present value of an ordinary annuity:
PV = P * (1 - (1 + r)^(-n)) / r
Where:
PV = Present value
P = Payment per period
r = Interest rate per period
n = Number of periods
In this case, the payment per period (P) is $30, the interest rate per period (r) is 5% or 0.05, and the number of periods (n) is 20. However, the first payment occurs in exactly ten years, so we need to discount the annuity by 10 years.
To calculate the present value, we can use the formula:
PV = 30 * (1 - (1 + 0.05)^(-20)) / 0.05
Evaluating this expression will give us the present value of the annuity rounded to the nearest.
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Suppose the equilibrium price for basketballs is $23. If every store prices their basketballs at $21, this would lead to a ______ and would put _______ pressure on prices. O surplus; downward O surplus; upward O shortage; downward shortage; upward
If every store prices their basketballs at $21 when the equilibrium price is $23, this would lead to a surplus of basketballs in the market and put downward pressure on prices. The answers in the blanks are surplus and downward respectively.
When every store prices their basketballs at $21, which is below the equilibrium price of $23, it would create a situation of surplus in the market. A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price. With the lower price, consumers are incentivized to buy more basketballs, but producers are not able to sell all their inventory.
As a result, the surplus of basketballs puts downward pressure on prices. The excess supply prompts stores to reduce prices further to attract buyers and clear their inventories. The downward pressure on prices continues until the market reaches a new equilibrium where the quantity demanded equals the quantity supplied.
Overall, this situation represents a surplus in the market and exerts downward pressure on prices as stores compete to sell their excess supply of basketballs.
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Your Memory Lane (reates custom art prints that use graphs and icons in a street scene to commemorate special occasions. Suppose that Your Memory Lane has priced its product at $350 per print. Further, it has determined that the company's fixed cost is $12,500, with average variable costs per print of $250. What is the fixed cost contribution per print? O a $11,900 O b. $700 c. $100 d. S12.250
The correct answer is c. $100. This means that for each print sold, $100 goes towards covering the fixed costs of the company. Once the fixed costs are covered, any additional revenue will contribute to the company's profit.
Your Memory Lane creates custom art prints priced at $350 per print. The fixed cost for the company is $12,500, and the average variable cost per print is $250. To calculate the fixed cost contribution per print, you need to find the difference between the selling price and the variable cost per print.
The fixed cost contribution per print is the amount of revenue from each print that goes towards covering the fixed costs before generating profit. The formula for this is:
Fixed cost contribution per print = Selling price - Variable cost per print
In this case, the fixed cost contribution per print would be:
Fixed cost contribution per print = $350 (Selling price) - $250 (Variable cost per print)
Fixed cost contribution per print = $100
Therefore, the correct answer is c. $100. This means that for each print sold, $100 goes towards covering the fixed costs of the company. Once the fixed costs are covered, any additional revenue will contribute to the company's profit.
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Which of the following is not one of Hofstede's four dimensions that explain variation among cultures? (Points : 1)
A.introversion/extraversion
B.masculinity(aggressive)/ femininity (nurturing)
C.low uncertainty avoidance/high uncertainty avoidance
D.individualism/collectivism
Hofstede's cultural dimensions are a framework that helps explain the variation in cultural values and behaviors across different societies.
The four dimensions proposed by Hofstede are:
Masculinity (aggressive)/femininity (nurturing): This dimension reflects the extent to which a society values traditionally masculine or feminine traits, such as assertiveness, competitiveness, and achievement versus nurturing, cooperation, and quality of life.
Uncertainty avoidance (low/high): This dimension refers to the degree to which a society feels threatened by uncertain or ambiguous situations and tries to avoid them. Cultures with high uncertainty avoidance tend to have rigid rules, strong social norms, and a preference for structured environments.
Individualism/collectivism: This dimension explores the degree to which individuals prioritize their own interests and independence versus the interests of the group or community. Individualistic cultures value personal freedom, autonomy, and individual achievement, while collectivistic cultures emphasize group harmony, cooperation, and loyalty.
Power distance (small/large): This dimension examines the extent to which a society accepts and expects power inequalities and hierarchical structures. Cultures with a small power distance value equality, participative decision-making, and a more egalitarian social structure, whereas cultures with a large power distance accept and respect authority, hierarchy, and social status differences.
Among these dimensions, introversion/extraversion is not one of Hofstede's dimensions. It is a personality trait that is not specifically addressed in his framework for understanding cultural differences.
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Assume Evco, Inc. has a current stock price of
$54.67
and will pay a
$1.80
dividend in one year; its equity cost of capital is
20%.
What price must you expect Evco stock to sell for immediately
To determine the expected selling price of Evco, Inc. stock immediately, we can use the dividend discount model (DDM) approach.
Considering a dividend of $1.80 to be paid in one year and an equity cost of capital of 20%, the expected selling price can be calculated.
The dividend discount model (DDM) calculates the intrinsic value of a stock by discounting its future cash flows (dividends) back to their present value. The formula for DDM is:
Expected Selling Price = Dividend / (Cost of Capital - Dividend Growth Rate)
In this case, the dividend is $1.80, and the equity cost of capital is 20% or 0.20. However, the question does not provide information about the dividend growth rate. Without the growth rate, we cannot accurately determine the expected selling price. The growth rate represents the expected rate at which dividends will increase in the future. Without this information, it is not possible to calculate the expected selling price accurately.
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Rosalie Blue, age 22 is a recent university graduate who is looking for employment. Rosalie majored
in Agricultural Engineering and hopes to be able to put her specialized knowledge to work. One
problem that Rosalie is encountering in her job search is that she has had asthma since childhood
and sometimes suffers severe problems in this regard. Thus, she must be especially careful about
the type of job and the environment in which she will work.
Rosalie also fears that when she does accept a job, her new employer’s health insurance plan might
exclude her (either temporarily or perhaps permanently) from coverage for any problems related to
her asthma. While she was in college, Rosalie’s parents’ health insurance provided protection for
her, but that coverage will soon end now that she has graduated.
Rosalie’s parents are urging her to buy an individual health insurance policy as soon as possible.
But Rosalie is afraid that it will be difficult to find an insurer that is willing to sell her coverage, given
her health history. If she does find such an insurer, Rosalie is not confident that she will be able to
choose the appropriate set of coverage options for her circumstances. Plus, she is worried about not
being able to go to the doctors that she feels most comfortable with.
Based on the facts presented in this case, provide responses to the following questions:
1. List the major health insurance providers in your country, whose policies Rosalie could
consider.
2. Present to Rosalie pros and cons of purchasing health insurance considering her medical
history and profession.
3. Based on her Medical History and considering reasonable (basic health insurance) coverage
that the average working adult would purchase, what are some features/coverage that this
plan could include?
a. Include justification for their inclusion in the policy.
4. Should Rosalie consider a Long-term care insurance? Give reasons for your answer.
5. Present to Rosalie reasons why she should consider a Disability income insurance?
a. Include in your response a comparison between the short-term disability insurance
and long-term disability insurance for her consideration and selection.
1. The major health insurance providers in most countries include United Healthcare, Kaiser Permanente, Aetna, Humana, Blue Cross Blue Shield, Cigna, and others. 2. Pros of purchasing health insurance for Rosalie considering her medical history and profession:It provides security and peace of mind in case of any medical emergency.Coverage for medical expenses, including hospitalization, medications, and other medical procedures. 3. Based on her Medical History and considering reasonable coverage that the average working adult would purchase, some features and coverage that this plan could include are:Preventive care services like immunizations, annual physical check-ups, and routine screening tests.Hospitalization expenses and emergency care. 4. Long-term care insurance should be considered by Rosalie because it provides coverage for medical expenses associated with chronic illnesses, disabilities, and injuries that require long-term care. 5. Disability income insurance is a valuable investment because it replaces lost income in case of disability. It ensures that the insured person can continue to meet their daily expenses while they are unable to work. Short-term disability insurance provides coverage for a short period, usually up to six months.
1. The major health insurance providers in most countries include United Healthcare, Kaiser Permanente, Aetna, Humana, Blue Cross Blue Shield, Cigna, and others. Rosalie could consider the policies provided by these health insurance providers.
2. Pros of purchasing health insurance for Rosalie considering her medical history and profession:It provides security and peace of mind in case of any medical emergency.Coverage for medical expenses, including hospitalization, medications, and other medical procedures.Availability of discounts and cashless hospitalization.Cons:It is costly, and premiums can be high.It may have exclusions and limitations on coverage.It may not cover pre-existing conditions, or it may have a waiting period.
3. Based on her Medical History and considering reasonable coverage that the average working adult would purchase, some features and coverage that this plan could include are:Preventive care services like immunizations, annual physical check-ups, and routine screening tests.Hospitalization expenses and emergency care.Coverage for prescription drugs and laboratory services.Coverage for mental health and substance abuse treatment.Justification:These coverages are essential for maintaining a healthy lifestyle and preventing the onset of chronic diseases.
4. Long-term care insurance should be considered by Rosalie because it provides coverage for medical expenses associated with chronic illnesses, disabilities, and injuries that require long-term care. This insurance policy provides benefits that cover care services not covered by medical insurance.
5. Disability income insurance is a valuable investment because it replaces lost income in case of disability. It ensures that the insured person can continue to meet their daily expenses while they are unable to work. Short-term disability insurance provides coverage for a short period, usually up to six months. In contrast, long-term disability insurance covers an extended period, usually more than six months. For Rosalie, considering her medical history, she should consider purchasing long-term disability insurance.
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State at least six attributes amongst others which
point to potential areas of vulnerability as far as audit risk
implications are concerned.
When assessing potential areas of vulnerability and audit risk implications, auditors consider various attributes that could indicate increased risk.
Here are six attributes among others that can point to potential areas of vulnerability:
Complexity: Complex transactions, operations, or financial instruments increase the risk of errors, misstatements, or fraudulent activities. The more intricate the processes and systems, the higher the potential for vulnerabilities.
Lack of Internal Controls: Inadequate internal controls increase the risk of financial misstatements, fraud, or noncompliance. Weak controls in areas such as segregation of duties, authorization procedures, or monitoring can leave room for errors or intentional misconduct.
Industry and Regulatory Environment: Certain industries or sectors, such as financial services or healthcare, may be subject to specific regulations or complex accounting standards. Compliance with these regulations and standards is critical, and any noncompliance can lead to increased audit risk.
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please answer with steps
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Liabilities Cash Other assets $61,000 $ 45,000 284,000 Winn, capital (50% of profits and losses) Xie, capital (30%) 75,000
Total liabilities and capital of the partnership of Winn, Xie, Yang, and Zed is $465,000. The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Liabilities Cash Other assets $61,000 $ 45,000 284,000Winn, capital (50% of profits and losses) Xie, capital (30%) 75,000Yang, capital (10%) Zed, capital (10%)
1. Winn's capital and Xie's capital are calculated as follows:- Winn's capital = 50% of (Total capital - Xie's capital) = 50% of ($465,000 - $75,000) = $195,000- Xie's capital = 30% of (Total capital) = 30% of $465,000 = $139,5002. Yang and Zed's capitals are equal and can be calculated as follows:- Yang's and Zed's capital = 10% of (Total capital) / 2 = 10% of $465,000 / 2 = $23,250Therefore, the capital of the partnership is as follows: Winn, capital = $195,000Xie, capital = $139,500Yang, capital = $23,250Zed, capital = $23,250Total liabilities and capital = $61,000 + $45,000 + $284,000 + $195,000 + $139,500 + $23,250 + $23,250 = $465,000The total liabilities and capital of the partnership of Winn, Xie, Yang, and Zed is $465,000.
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