The statement in the question is incorrect. The United States is not experiencing increased foreign ownership of assets primarily because of large current account deficits. In fact, the United States has experienced an increase in its net outflow of investment income.
The current account is a component of the balance of payments, which measures the inflows and outflows of goods, services, and transfers between a country and the rest of the world. A current account deficit occurs when a country imports more goods and services than it exports. This means that the United States is buying more from other countries than it is selling to them.
A large current account deficit can lead to an increase in foreign ownership of assets, but it is not the main driver. The main factor behind increased foreign ownership of assets in the United States is the attractiveness of its economy and investment opportunities. The United States has a stable political system, strong legal protections for investors, and a highly developed financial market. These factors make it an attractive destination for foreign investment.
Foreign investors may choose to invest in the United States by purchasing assets such as stocks, bonds, real estate, or companies. These investments can provide the foreign investors with a return on their investment, such as dividends or capital gains.
It is also worth noting that the United States is not the leading exporting nation in the world. China currently holds that title, followed by the European Union. The United States is a significant exporter, but it is not the top exporter in terms of total value of goods and services exported.
In summary, the United States has experienced increased foreign ownership of assets due to the attractiveness of its economy and investment opportunities, rather than primarily because of large current account deficits. It is important to understand the factors that contribute to foreign ownership of assets in order to have a clear and accurate understanding of the situation.
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When applying NPV, If an asset's future net cash flows yleld a positive net present value, then a company should Invest. True or False
Previous question
True. When applying Net Present Value (NPV) analysis, if the future net cash flows of an asset result in a positive NPV, it indicates that the present value of the cash inflows exceeds the present value of the cash outflows.
In such a case, investing in the asset is considered favorable and financially beneficial. A positive NPV suggests that the investment is expected to generate more value than the cost of capital, providing a potential return on investment. Therefore, a company should typically choose to invest in projects or assets that yield a positive net present value. Net Present Value (NPV) is a financial metric used to assess the profitability and viability of an investment or project. It takes into account the time value of money by discounting future cash flows to their present value. NPV is calculated by subtracting the initial investment cost from the present value of expected future cash inflows. A positive NPV indicates that the investment is expected to generate more value than the cost of capital, representing a financially favorable opportunity. Conversely, a negative NPV suggests that the investment may not meet the desired return threshold. NPV is widely used in financial decision-making to evaluate investment opportunities and compare alternative projects.
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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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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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Workplace Mental Health In 2021: How Can Leaders Build Enduring Change?
The crises, challenges, and trauma of 2020 and 2021 have put mental health front-andcenter for employers like never before. But will this period represent a fundamental turning p workplace mental health? Can we usher in enduring change that not only addresses the COVID-19 pandemic, but outlasts it? These questions are on the minds of business and HR mental health experts, and, perhaps most importantly, employees, who are reexamining why and how they want to work.
Responding to Tragedy and Trauma in the Workplace
Employers know that stress and trauma can each have a negative impact on mental health, especially given the traumatic events of the past 18 months. However, while stress can be managed, trauma is distinct and requires a heightened level of care and support. Because people dealing with trauma can often feel helpless, employers are increasingly directing mental health resources to proactively support these employees. A trauma-informed workplace has a plan in place to facilitate employees' healing and resilience as they navigate crisis and recovery.
Framing Workplace Mental Health as a Source of Positivity
Workplace mental health is often presented in terms of risk or negative consequences. By contrast physical wellness is often depicted in terms of being an overall healthier and higher functioning individual. What would it mean to apply this positive framework to mental health? Instead of reacting to mental health and wellbeing with an acute or diagnostic approach, leaders should take a holistic view that frames the need for preventative care in a positive manner. Leaders can change the conversation around mental health in the workplace by ensuring employees can easily access resources and services and putting a positive frame on why they should proactively seek out these resources, even if they are not currently experiencing mental health challenges. Explain two (2) ways globalization are at play from the case study above.
Explain two (2) ways globalization are at play from the case study above.
The two ways globalization is at play from the case study above are as follows:1. Diversity of the WorkforceThe first way globalization is at play from the case study above is the diversity of the workforce. The global workforce is diverse, and this can present a challenge to leaders.
It is essential that leaders address the diverse needs of their employees and tailor their approach to meet these needs. A company can have employees from various parts of the world, and the culture, beliefs, and practices of these employees may differ from one another. In such a scenario, the leader needs to ensure that the mental health resources and services they provide are accessible and relevant to all employees.
2. Mental Health Stigma and Awareness : The second way globalization is at play from the case study above is the mental health stigma and awareness. Globalization has brought mental health stigma and awareness to the forefront. In the past, mental health was not considered a priority, and employees who had mental health issues were often stigmatized and discriminated against.
With globalization, there has been an increase in awareness of the importance of mental health, and employees are now more aware of their rights and the resources available to them. As a result, leaders need to ensure that their approach to mental health is proactive, and they put a positive frame on why employees should proactively seek out these resources.
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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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formula assume sid is paid $20/hour to teach economics and that his disutility of effort at this job is $8/hour. he works 20 hours a week. if he loses his job, he will be unemployed for 13 weeks. what is his total unemployment rent assuming he would not receive any unemployment benefit if he were fired?
Based on the concept of income calculation and the available information, Sid's total unemployment rent would be $5,200 assuming he would not receive any unemployment benefits if he were fired.
What is Unemployment benefits?Unemployment benefits is a term that is used to describe temporary income when an individual loses his job through a fault not associated with him.
Generally, unemployment benefits somewhat replace lost earnings and help people pay expenses while looking for new work.
In this case,
To calculate Sid's total unemployment rent, we need to find the distinction between his income while working and his income while unemployed.
Income while working:
Sid is paid $20/hour to teach economics and works for 20 hours a week.
His income per week while working = $20/hour * 20 hours/week = $400/week
Income while unemployed:
If Sid loses his job, he will be unemployed for 13 weeks.
Given that he does not receive any unemployment benefits, his income per week while unemployed will be $0/week.
Total unemployment rent = (Income while working - Income while unemployed) * Number of weeks unemployed
=> ($400/week - $0/week) * 13 weeks
=> $400/week * 13 weeks
=> $5,200
Hence, in this case, it is concluded that Sid's total unemployment rent would be $5,200 if he does not receive any unemployment benefits if he were fired.
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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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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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2. Indicate whether the following statements are true or false. If the statement is false explain why.
a) You must report income from tips.
b) Only a student can claim a credit for tuition fees.
c) If you invest money in an RRSP, you will never have to pay taxes on this amount.
d) If you pay for child care, you can claim this amount on your return to lower the amount you owe in taxes.
If you earn tips while working, you must report them on your tax return as income.
Students or their spouses or common-law partners can claim a credit for tuition fees.
While the amount of the RRSP contribution is deductible from the current year's income, the money invested will eventually be taxed when it is withdrawn.
To lower the amount of taxes owed, eligible expenses for child care can be claimed on the tax return.
A brief explanation for each of the given statements is as follows:
If you work and earn tips, they are taxable income and must be reported on your tax return.
Tips include any money, gift or benefit received for a service you provide.
If you are an employer, you must also report the tips your employees receive.
Individuals who pay tuition fees for themselves, their spouse, or common-law partner, or their children or grandchildren, can claim a tax credit for tuition fees paid.
While the amount of the RRSP contribution is deductible from the current year's income, the money invested will eventually be taxed when it is withdrawn.
The withdrawal is known as the RRSP's maturity or withdrawal.
To lower the amount of taxes owed, eligible expenses for child care can be claimed on the tax return.
These include payments to a daycare, babysitter, or nanny, among other things.
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fishbone corporation bought a new machine and agreed to pay for it in equal annual installments of 4000 at the end ocf each of the next 10 years
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, $28,527.21 Fishbone record as the cost of the machine.
Given information
PV = present valuePMT = payment amountr = interest raten = number of periodsPMT = $4,000r = 8%n = 10The following formula can be used to determine the present value of the cash payments using the information provided:
PV = PMT x [1 - (1 / (1 + r)n)] / r
PV = $4,000 x [1 - (1 / (1 + 0.08)10)] / 0.08
PV = $28,527.21
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Your question is incomplete, but most probably the full question was.
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, how much should Fishbone record as the cost of the machine?
Future Value of an Annuity for Various Compounding Periods Find the future values of the following ordinary annuities. FV of $200 each 6 months for 10 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ FV of $100 each 3 months for 10 years at a nominal rate of 12%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ The annuities described in parts a and b have the same amount of money paid into them during the 10-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 10 years. Why does this occur?
a) FV of $200 each 6 months for 10 years at a nominal rate of 12%, compounded semiannually
Time (n) = 10 years = 20 semiannual periods
FV can be calculated using the formula given below;
FV = P [{(1 + r/m)^(m*n) - 1} / (r/m)]
Substitute the given values in the formula;
FV = $200 [{(1 + 0.12/2)^(2*10) - 1} / (0.12/2)]FV = $7,878.57
The Future value of the given ordinary annuity is $7,878.57 (approx).
b) FV of $100 each 3 months for 10 years at a nominal rate of 12%, compounded quarterly
Time (n) = 10 years = 40 quarterly periods
FV can be calculated using the formula given below;
FV = P [{(1 + r/m)^(m*n) - 1} / (r/m)]Substitute the given values in the formula;
FV = $100 [{(1 + 0.12/4)^(4*10) - 1} / (0.12/4)]FV = $8,073.51
The Future value of the given ordinary annuity is $8,073.51 (approx).
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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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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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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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Susanti Berhad is considering a project which requires an investment of RM500,000. The project sales forecast under a normal economic scenario for the next 10 years is 20,000 units per annum. The selling price per unit is RM20. The labor costs per unit are RM8 and the material costs per unit are RM4. The fixed costs are RM50,000 per annum (relevant) and the project does not require any additional working capital. The projected project is for 10 years, and the cost of capital is 11.7%. From the above information you are required to answer the following questions. a. Calculate the Net Present Value for this project. b. Based on your calculation in part (a), perform a sensitivity analysis on the selling price, labor cost, material cost and fixed cost. c. Interpret your findings in part (b).
a. Net Present Value for the project.The formula for calculating
NPV = (-I) + (CF1 / (1+r)) + (CF2 / (1+r)2) + (CF3 / (1+r)3) +… + (CFn / (1+r)n)
Where,CF = Cash flowI = Investmentn = the period in year of the projectr = the required rate of return, which is 11.7%
Here, the project is for 10 years and the initial investment is RM500,000. The management should take into consideration the impact of these factors when making decisions related to this project.
Therefore,Cash flow = (Unit Price × Quantity Sold) - (Labor cost × Quantity Sold) - (Material cost × Quantity Sold) - Fixed cost= [(RM20 × 20,000) - (RM8 × 20,000) - (RM4 × 20,000) - RM50,000] = RM190,000I = RM500,000n = 10 yearsr = 11.7%NPV = (-500,000) + (190,000 / (1+0.117)1) + (190,000 / (1+0.117)2) + (190,000 / (1+0.117)3) + … + (190,000 / (1+0.117)10) = (-500,000) + 142,857.14 + 113,793.09 + 90,297.15 + … + 22,566.26= RM222,406.98b.
b)
Sensitivity analysis on the following factors:
Sensitivity analysis is performed on the following factors:• Selling price• Labor cost• Material cost• Fixed cost
We will determine the impact of changes in these factors on the NPV of the project.
Selling price (SP) is increased by 5%, 10% and 20% from the original SP.
The new prices are SP+5%, SP+10% and SP+20% respectively.
Labor cost (LC) is increased by 5%, 10% and 20% from the original LC.
The new labor costs are LC+5%, LC+10% and LC+20% respectively.
Material cost (MC) is increased by 5%, 10% and 20% from the original MC.
The new material costs are MC+5%, MC+10% and MC+20% respectively.
Fixed cost (FC) is increased by 5%, 10% and 20% from the original FC.
The new fixed costs are FC+5%, FC+10% and FC+20% respectively.
Selling Price Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -SP + 5% 219,023.03 -3,383.95 -1.5SP + 10% 215,639.09 -6,767.89 -3SP + 20% 208,871.20 -13,535.78 -6.1Labor Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -LC + 5% 211,286.06 -11,120.92 -5LC + 10% 200,165.13 -22,241.85 -10LC + 20% 178,367.27 -44,039.71 -19.8Material Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -MC + 5% 213,412.73 -8,994.25 -4.1MC + 10% 204,418.49 -17,988.49 -8.1MC + 20% 186,429.99 -35,976.99 -16.2Fixed Cost Net Present Value(RM) Impact (RM) Impact (%)Original 222,406.98 - -FC + 5% 217,184.92 -5,222.06 -2.3FC + 10% 211,962.87 -10,444.11 -4.7FC + 20% 201,518.76 -20,888.22 -9.4c.
c)
Interpretation of Findings,The findings of the sensitivity analysis indicate that the Net Present Value (NPV) of the project is sensitive to changes in the selling price, labor cost, material cost and fixed cost. When the selling price, labor cost, material cost, and fixed cost increases, the NPV decreases.The result shows that, if the selling price increases by 20%, it will reduce the NPV by 6.1%. If labor cost increases by 20%, it will reduce the NPV by 19.8%. If the material cost increases by 20%, it will reduce the NPV by 16.2%.If the fixed cost increases by 20%, it will reduce the NPV by 9.4%.Therefore, the management should take into consideration the impact of these factors when making decisions related to this project.
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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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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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At year-end 2019, Wallace Landscaping’s total assets were $1.53 million, and its accounts payable were $330,000. Sales, which in 2019 were $2.1 million, are expected to increase by 30% in 2020. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $590,000 in 2019, and retained earnings were $300,000. Wallace has arranged to sell $150,000 of new common stock in 2020 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2020. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 50% of earnings will be paid out as dividends.
What was Wallace's total long-term debt in 2019? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
What were Wallace's total liabilities in 2019? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
How much new long-term debt financing will be needed in 2020? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations.
The total long-term debt in 2019 for Wallace Landscaping cannot be determined with the information given.
The question provides data on total assets, accounts payable, common stock, and retained earnings, but it does not specify the amount of long-term debt.
To calculate the total liabilities in 2019, we need to consider the accounting equation: Assets = Liabilities + Equity. We are given the total assets ($1.53 million) and the common stock ($590,000) and retained earnings ($300,000). To find the total liabilities, we subtract the equity from the total assets:
Liabilities = Assets - Equity
Liabilities = $1,530,000 - ($590,000 + $300,000)
Liabilities = $1,530,000 - $890,000
Liabilities = $640,000
Therefore, Wallace's total liabilities in 2019 were $640,000.
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Why are last-minute airplane tickets so expensive? Why are last-minute Broadway show tickets so cheap?
Last-minute airplane tickets are more expensive than regular ones due to the uncertainty involved in such purchases.
As the time of departure approaches, the airline becomes increasingly uncertain about the ability of the plane to fill up, and it begins to raise the price of the remaining seats to try and recoup its costs.
Broadway show tickets, on the other hand, tend to be cheaper at the last minute due to the competitive nature of the industry. If a show has not sold out, the producers may choose to reduce the price of remaining tickets in order to attract more customers and fill the seats.
Overall, while there are several factors that contribute to the price differences between last-minute airplane tickets and Broadway show tickets, the primary factor is the level of uncertainty involved in each purchase. Airlines must raise prices to offset this uncertainty, while Broadway producers can afford to lower prices to generate interest and sell more tickets.
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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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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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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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For all branches, explain and then give examples that show your
understanding of the topic
What are the differences between needs and demands In
addition, add: 5 Needs – examples | 8 Demands -
ex
Needs and demands are two terms that are often used interchangeably, however, they have different meanings. Needs are the basic necessities of life that are essential for survival, while demands refer to the wants or desires of individuals which may or may not be necessary for survival.
Needs are the basic requirements for human survival, while demands are the wants or desires that an individual seeks to satisfy. The following are five examples of needs: Food and water: These are the most basic needs for human survival. Without food and water, humans cannot survive.
Shelter: Shelter is necessary to protect individuals from the elements and provide them with a place to rest. Clothing: Clothing is needed to protect the body from the elements and maintain modesty. Healthcare: Medical attention is necessary to maintain good health.
Education: Education is necessary to acquire knowledge and skills and secure employment. Eight examples of demands are: Mobile phones: These are devices that are used to communicate with others and access the internet.
Internet: The internet is used to access information, communicate with others, and conduct business.
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under macrs, an asset which originally cost $10,000 is being depreciated using a 5 year normal recovery period. what is the depreciation expense in year 3?
Under MACRS, an asset which originally cost $10,000 is depreciate being using a 5-year normal recovery period. The depreciation expense in year 3 is given below. The Modified Accelerated Cost Recovery System (MACRS) is a cost recovery method that is used to depreciate assets.
It is mainly used in tax law in the United States. MACRS allows taxpayers to claim larger deductions for assets that have a shorter recovery period, thereby reducing their taxable income. For an asset with a recovery period of five years, the depreciation percentage rates for the first three years are 20%, 32%, and 19.2%, respectively.
Thus, the depreciation expense for year 3 is calculated as follows; Depreciation expense in year 1 = $10,000 x 20% = $2,000Depreciation expense in year 2 = ($10,000 - $2,000) x 32% = $2,560Depreciation expense in year 3 = ($10,000 - $2,000 - $2,560) x 19.2% = $1,213.44Therefore, the depreciation expense for year 3 is $1,213.44.
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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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By 1812 the widespread cotton was now a major production in the United States. The people began to make use of the process called textile and farming moved to a powerful force of over a billion pounds a year and slave labor increased dramatically over time.
b.
The nineteenth-century unfolded, and more and more farm families began engaging in commercial rather than subsistence agriculture, producing surplus crops and livestock to sell to distant markets. Americans were forced to look to themselves for the finished goods and manufactured items they needed such as cotton mills.
c.
The first textile mills and shoe factories and mines began to be developed in the United States. Americans, men, and women worked according to a whistle or a foreman or a manager who told them when to get up when to go to work, when to finish and how much time they might have for lunch rather than getting up and going to work on the farms at their own schedules
In 19th century in the United States witnessed the rise of cotton production, the growth of commercial agriculture, and the development of industrial establishments.
In the 19th century, the United States experienced significant changes in its economy and workforce. The widespread cultivation of cotton became a major production, driven by advancements in textile manufacturing.
This led to a significant increase in farming productivity, with over a billion pounds of cotton being produced annually. However, this growth was heavily reliant on slave labor, which saw a dramatic increase during this time.
As the century progressed, more farm families shifted from subsistence agriculture to commercial farming. They began producing surplus crops and livestock to sell in distant markets.
This transition towards commercial agriculture meant that Americans had to rely on themselves for finished goods and manufactured items, such as textiles. Consequently, the United States saw the development of textile mills, shoe factories, and mines.
With the rise of these industrial establishments, a new work culture emerged. Workers, both men, and women, were employed in factories and mines, working under the supervision of foremen or managers.
They followed strict schedules dictated by whistles and were told when to start, finish, and even how much time they could take for lunch. This marked a shift from the more flexible schedules of agricultural work on farms.
Overall, the 19th century in the United States witnessed the rise of cotton production, the growth of commercial agriculture, and the development of industrial establishments, which brought about significant changes in the economy and work practices of Americans.
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Suppose the monetary policy curve is given by r = 1.5% +0.75 π, and the IS curve is Y = 13 - 100r.
a. Calculate an expression for the aggregate demand curve.
b. Calculate aggregate output when the inflation rate is 2%, 3%, and 4%.
c. Draw graphs of the IS. MP, and AD curves, labelling the points in the appropriate graphs from part (b) above.
a. Aggregate demand is a relationship between the overall demand for goods and services and the price level in the economy.
It gives the total output that will be purchased at different price levels. We can calculate the expression for the aggregate demand curve by combining the IS and MP curves, that is by substituting the expression for r in the IS equation with the given MP curve.
r = 1.5% + 0.75πY = 13 - 100r = 13 - 100(1.5% + 0.75π)Y = 13 - 150% - 75πY = - 37 - 75π
Aggregate demand curve is AD = -37 - 75π.
b. Aggregate output (Y) can be calculated when the inflation rate (π) is 2%, 3%, and 4% by substituting the values of π in the aggregate demand curve.
AD(π = 2%) = -37 - 75(2%) = -38.5AD(π = 3%) = -37 - 75(3%) = -39.25AD(π = 4%) = -37 - 75(4%) = -40
Aggregate output when the inflation rate is 2% is -38.5.
Aggregate output when the inflation rate is 3% is -39.25.
Aggregate output when the inflation rate is 4% is -40.c.
The graphs of IS, MP, and AD curves with labeled points are shown below:
IS Curve: Graph of the IS curve
MP Curve:
Graph of the MP curve
AD Curve:
Graph of the AD curve
In the AD curve, the inflation rate (π) is on the horizontal axis, and the aggregate output (Y) is on the vertical axis. The labeled points (2%, -38.5), (3%, -39.25), and (4%, -40) are plotted on the AD curve.
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You are preparing a free cash flow analysis for Jensen Corporation. The net working capital charge for year three of a five-year cash flow proforma is derived from? A. The difference in net working capital between year two and year one B. The difference in current assets between year two and year one C. The difference in net working capital between year three and year two D. Current assets in year four less current liabilities in year three
The answer to the question is-C. "The difference in net working capital between year three and year two."
What does it entail?The net working capital charge for year three of a five-year cash flow proforma is derived from the difference in net working capital between year three and year two.
Free cash flow is defined as the cash available after expenditures required to keep a business working (Capital Expenditures).
Companies use free cash flow to estimate cash flow available to shareholders, reduce debt, and make new investments.
How to calculate the free cash flow?
Free cash flow is calculated as:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Where,
Operating Cash Flow = EBIT + Depreciation - Taxes
What is net working capital?
Net working capital is the amount by which current assets exceed current liabilities. It's an important financial metric used to assess a company's short-term liquidity.
It represents the cash that a business may spend on operations or investments if it is in good financial condition.
Hence, option c. is correct.
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Fire sprinkler protection systems must be inspected, tested, and regularly maintained in California. Assume 8% of inspected fire sprinklers must be repaired or replaced upon inspection. A random sample of four hundred fire sprinklers in a large manufacturing facility are inspected. What is the (approximate) probability that more than 50 fire sprinklers will need to be repaired or replaced?
The probability that more than 50 fire sprinklers will need to be repaired or replaced is 0.0006.
The probability that more than 50 fire sprinklers will need to be repaired or replaced is 0.0008. To approximate this probability using the normal distribution, we can calculate the mean value as 32 (which is 8% of 400), and the standard deviation (σ) as the square root of npq, which is the square root of 31.36, resulting in 5.6.
Next, we can calculate the Z-score by subtracting the mean (32) from the desired value (50) and dividing it by the standard deviation (5.6), giving us a Z-score of 3.21.
The probability that less than or equal to 50 sprinklers are faulty is equivalent to the probability that the Z-score is less than or equal to 3.21. This probability can be obtained from the z-table and is approximately 0.9994.
To find the probability that more than 50 fire sprinklers will need to be repaired or replaced, we take the complement of this probability, which is 1 - 0.9994 = 0.0006.
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Suppose the labour market is summarised as: Demand: P=100−Q Supply: P=Q The government imposes a minimum wage. However, consumers (firms) are unsurprisingly unhappy with the increase in wages and are negotiating with labour unions to return to the equilibrium wage. The union will agree to this if fitms offer a lump sum transfer to producers (workers) equivalent to the maximum firms are willing to give, $1069.5. How much was the minimum wage? a. $97 b. $81 c. $73 d. $87
The minimum wage is $81. Therefore, the correct option is b. $81.
Given below is the table illustrating the equilibrium wage:
Equilibrium wage P=$50
Wage increase 1 P=$60
Wage increase 2 P=$70
Wage increase 3 P=$80
Wage increase 4 P=$90
Wage increase 5 P=$100
From the table above, it is clear that the equilibrium wage is $50. It is important to note that the equilibrium wage is at the intersection of the demand and supply curves. Now, the government imposes a minimum wage. The effect of this will be as follows:The supply curve will remain the same.
The demand curve will not change if the minimum wage is less than or equal to the equilibrium wage. If it is more than the equilibrium wage, the demand curve will shift to the left.The minimum wage is equivalent to the wage increase that makes the demand curve tangent to the supply curve.
From the table above, we see that this occurs when P=$81.
Hence, the minimum wage is $81. Therefore, the correct option is b. $81.
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