To calculate the manufacturing overhead cost per unit for each product, we need to allocate the overhead costs to the products using the chosen cost drivers. Based on the given data, we can assign the following cost drivers:
Cost driver for Machining costs: Machine-hours
Cost driver for Setup costs: Number of production runs
Cost driver for Inspection costs: Inspection hours
Now let's calculate the manufacturing overhead cost per unit for each product:
Mathematical Calculator:
Machining costs: $271,950 / 49,000 machine-hours = $5.55 per machine-hour
Setup costs: $98,000 / 49 production runs = $2,000 per production run
Inspection costs: $500 / 1,000 inspection hours = $0.50 per inspection hour
Financial Calculator:
Machining costs: $271,950 / 98,000 machine-hours = $2.78 per machine-hour
Setup costs: $90,000 / 49 production runs = $1,836.73 per production run
Inspection costs: $500 / 500 inspection hours = $1 per inspection hour
Next, let's compute the manufacturing cost per unit for each product:
Mathematical Calculator:
Direct materials cost: $205,800
Direct manufacturing labor cost: $83,300
Manufacturing overhead cost: ($5.55 * 24,500 machine-hours) + ($2,000 * 49 production runs) + ($0.50 * 500 inspection hours)
Total manufacturing cost per unit: (Direct materials cost + Direct manufacturing labor cost + Manufacturing overhead cost) / 49,000 units
Financial Calculator:
Direct materials cost: $411,600
Direct manufacturing labor cost: $166,600
Manufacturing overhead cost: ($2.78 * 49,000 machine-hours) + ($1,836.73 * 49 production runs) + ($1 * 500 inspection hours)
Total manufacturing cost per unit: (Direct materials cost + Direct manufacturing labor cost + Manufacturing overhead cost) / 98,000 units
By plugging in the values, you can calculate the manufacturing cost per unit for each product.
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Please answer both part A and
B. They are part of the the same question.
2. The price of a bag of Patty's Premium Pretzels increased from $3 to $4 and as a result the quantity demanded decreased from 500 to 300. a. Use the midpoint formula to calculate the price elasticity
a. To calculate the price elasticity of demand using the midpoint formula, we can use the following formula:
Price elasticity of demand = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2))
Using the given information:
Q1 = 500 (initial quantity demanded)
Q2 = 300 (final quantity demanded)
P1 = $3 (initial price)
P2 = $4 (final price)
Plugging these values into the formula, we have:
Price elasticity of demand = ((300 - 500) / ((500 + 300) / 2)) / (($4 - $3) / (($3 + $4) / 2))
Calculating the numerator first:
(300 - 500) / ((500 + 300) / 2) = -200 / 400 = -0.5
Calculating the denominator:
($4 - $3) / (($3 + $4) / 2) = $1 / ($7 / 2) = $1 / $3.5 ≈ 0.2857
Putting it all together:
Price elasticity of demand = -0.5 / 0.2857 ≈ -1.75
Therefore, using the midpoint formula, the price elasticity of demand for Patty's Premium Pretzels is approximately -1.75.
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Let’s take a look at Invisible Hand Property 2 in action using a mathematical example. Suppose an industry is characterized by the following equations. We’re going to assume that all individual firms are identical to make this problem a little simpler.
Demand: =100−2P
Individual firm's supply: =0.5+0.1P
Market supply with n firms: =×=0.5+0.1P
Individual firm's average cost: =5−5+24.2
b. Suppose 35 firms are in this industry. What is the equation for market supply?
QS =_____
What are the equilibrium price and quantity?
Equilibrium price: $ _____
Equilibrium quantity: _____
How many units of output is each firm producing? At this level of production, what is the average cost that a firm faces?
Individual firm's quantity: _____
Firm's average cost: $ _____
How much profit is each firm earning?
Individual firm profit: $ _____
The equation for market supply with 35 firms in the industry is QS = 35(0.5 + 0.1P).
To find the equilibrium price and quantity, we need to set the market supply equal to the demand. From the given equations, we have:
100 - 2P = 35(0.5 + 0.1P)
Simplifying the equation:
100 - 2P = 17.5 + 3.5P
Combining like terms:
5.5P = 82.5
Solving for P:
P = 15
Substituting the equilibrium price back into the demand equation:
Q = 100 - 2(15)
Q = 70
Therefore, the equilibrium price is $15 and the equilibrium quantity is 70 units.
Each firm in the industry is producing the same quantity of output, which is determined by dividing the market quantity by the number of firms:
Individual firm's quantity = 70 / 35 = 2 units
The average cost that each firm faces can be calculated using the individual firm's average cost equation:
Firm's average cost = 5 - 5 + 24.2(2)
Firm's average cost = 48.4
To calculate the profit earned by each firm, we subtract the average cost from the equilibrium price:
Individual firm profit = $15 - $48.4 = -$33.4
Each firm is experiencing a loss of $33.4.
In summary, with 35 firms in the industry, the equation for market supply is QS = 35(0.5 + 0.1P). The equilibrium price is $15 and the equilibrium quantity is 70 units. Each firm is producing 2 units of output and facing an average cost of $48.4. However, due to the equilibrium price being below the average cost, each firm is incurring a loss of $33.4.
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A is useful for HR professionals as it maps out strategy that will be used to recruit highly qualified candidates. (A) SWOT Analysis (B) Executive Plan D Mission Statement Recruitment Plan
SWOT Analysis is useful for HR professionals as it maps out strategies that will be used to recruit highly qualified candidates.
SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a strategic planning tool commonly used by HR professionals to assess the internal and external factors that can impact an organization's recruitment efforts. By conducting a SWOT analysis, HR professionals can identify the strengths and weaknesses of the organization's recruitment process, as well as the opportunities and threats in the external environment. Based on the findings of the SWOT analysis, HR professionals can develop recruitment strategies that leverage the organization's strengths, address its weaknesses, capitalize on opportunities, and mitigate threats. For example, if the analysis reveals that the organization has a strong employer brand (strength), HR professionals can focus on employer branding initiatives to attract top talent. Conversely, if the analysis identifies a lack of diversity in the candidate pool (weakness), HR professionals can implement diversity recruitment programs to address this issue. In summary, SWOT analysis helps HR professionals make informed decisions and develop effective recruitment strategies that align with the organization's overall strategic goals and objectives.
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Payback period. What are the payback periods of projects E and F? Assume all the cash flow is evenly spread throughout the year. If the cutoff period is three years, which project(s) do you accept? Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow year 6 $44,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $100,000 $40,000 $30,000 $20,000 $10,000 $0 $0 What is the payback period for project E? years (Round to one decimal place.) With a three-year cutoff period for recapturing the initial cash outflow, project E would be What is the payback period for project F? V. (Select from the drop-down menu.) years (Round to one decimal place.) With a three-year cutoff period for recapturing the initial cash outflow, project F would be . (Select from the drop-down menu.) Enter your answer in each of the answer boxes
If the cutoff period is three years, project e would be accepted, while project f would not be accepted.
to calculate the payback period for projects e and f, we need to determine the time it takes to recoup the initial cash outflow for each project.
for project e:
initial cash outflow = $44,000
cash inflows per year: $11,000
to calculate the payback period, we'll accumulate the cash inflows until they equal or exceed the initial cash outflow:
year 1: $11,000
year 2: $11,000 + $11,000 = $22,000
year 3: $22,000 + $11,000 = $33,000
since the accumulated cash inflows equal the initial cash outflow at the end of year 3, the payback period for project e is 3 years.
for project f:
initial cash outflow = $100,000
cash inflows per year: $40,000, $30,000, $20,000, $10,000
year 1: $40,000
year 2: $40,000 + $30,000 = $70,000
year 3: $70,000 + $20,000 = $90,000
year 4: $90,000 + $10,000 = $100,000
since the accumulated cash inflows exceed the initial cash outflow at the end of year 4, the payback period for project f is 4 years.
given a three-year cutoff period for recapturing the initial cash outflow:
- project e meets the cutoff period since it recoups the initial cash outflow within 3 years.
- project f does not meet the cutoff period since it takes 4 years to recoup the initial cash outflow.
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FORUM DESCRIPTION For this Discussion Board, you will be using the following ethical situation: Bethany Goleman was discharged from her job as an advertising executive at Farnsworth, Yardley, and Brook. Her credit cards were maxed out, her savings account depleted, and her rent was due. On the bright side, James Farnsworth, the senior partner in the advertising firm, had given Goleman a sizable severance check as she left the office on her last day. Goleman was feeling lucky until she tried to retrieve her car from the service station where Tommy Henderson had just finished fixing the brakes on her Saturn. When Goleman tried to pay by credit card, her card was rejected. Henderson refused to allow her to take her car until she gave him some type of payment. To satisfy Henderson, she wrote him a check for the new brakes, even though she knew that the account was empty. She fully intended to place the severance check into the account the next morning so that the check would not bounce. Unfortunately, when she arrived at her apartment, she found that the landlord had changed the locks because her rent was six months overdue. In order to get into her apartment, she signed the severance check over to the landlord. As a result, she never deposited any money in her checking account and her check to Henderson bounced... Original Post Stance: Read through the ethical situation. For the Original Post, you will answer the following questions: • Was it ethical for Goleman to write Henderson the check knowing there was no money in the account? Remember that, at the time she wrote the original check to Henderson, she fully intended to place the severance check in the account the next day. • From an ethical perspective, does her intent to deposit funds in her checking account tomorrow permit her to write the bad check today? Why or why not? NOTE: You will not be able to see any of your classmates Original Posts" prior to posting your Original Post". This better ensures that all Original Posts are unique and adds a greater variety of responses for you to reply to on the Reply Post" Reply Post Stance: When it is time to complete the Reply Post, you will need to read through your classmate's original thoughts. Find one Original Post" to reply to. You have the option of agreeing or disagreeing with your classmate's Original Post". If you disagree, you must produce counter arguments to the point(s) made. If you agree, you must bring new arguments or points to the discussion to reinforce your classmate's stance in the Original Post Grading information Forum: Discussion 2: Bad Checks and Ethics For this Discussion Board, you will be using the following ethical situation: Bethany Goleman was discharged from her job as an advertising executive at Farnsworth, Yardley, and Brook. Her credit cards were maxed out, her savings account depleted, and her rent was due. On the bright side, James Farnsworth, the senior partner in the advertising firm, had given Goleman a sizable severance check as she left the office on her last day. Goleman was feeling lucky until she tried to retrieve her car from the service station where Tommy Henderson had just finished fixing the brakes on her Saturn. When Goleman tried to pay by credit card, her card was rejected. Henderson refused to allow her to take her car until she gave him some type of payment. To satisfy Henderson, she wrote him a check for the new brakes, even though she knew that the account was empty. She fully intended to place the severance check into the account the next morning so that the check would not bounce. Unfortunately, when she arrived at her apartment, she found that the landlord had changed the locks because her rent was six months overdue. In order to get into her apartment, she signed the severance check over to the landlord. As a result, she never deposited any money in her checking account and her check to Henderson bounced.. Original Post* Stance: Read through the ethical situation. For the Original Post*, you will answer the following questions: • Was it ethical for Goleman to write Henderson the check knowing there was no money in the account? Remember that, at the time she wrote the original check to Henderson, she fully intended to place the severance check in the account the next day. • From an ethical perspective, does her intent to deposit funds in her checking account tomorrow permit her to write the bad check today? Why or why not? NOTE: You will not be able to see any of your classmates' Original Posts* prior to posting your Original Post*. This better ensures that all Original Posts* are unique and adds a greater variety of responses for you to reply to on the Reply Post*.
Writing a check knowingly without sufficient funds is against ethical values, and this situation raises a question of whether Goleman's intentions were ethical or not. This situation reveals that Goleman acted unethically when she wrote the check to Henderson.
Writing a bad check knowingly is illegal and unethical as well. The situation shows that Goleman did not have enough money in her account to pay Henderson, which means that she knew she was not following the ethical and legal standards by writing the check. Even if Goleman intended to deposit the funds the next day, it did not justify her writing the bad check, which violated the law. Ethically speaking, she needed to settle her payment through legal means rather than by writing the bad check. Writing a bad check can ruin a person's credibility and result in a negative impact on their reputation. It is an unethical behavior that contradicts the ethical principles of honesty, fairness, and responsibility. Goleman could have opted to pay Henderson through legal means or inform him of her situation. However, instead of doing so, she chose the unethical route and ultimately caused financial harm to Henderson. As a result, Goleman's action could not be justified from an ethical point of view.
Goleman's intention to deposit the funds the next day does not justify her action of writing the bad check to Henderson. From an ethical perspective, writing a bad check is against the ethical principles of honesty and responsibility. Goleman should have opted for legal means to settle her payment rather than writing a bad check that caused harm to Henderson.
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Barriers to Exit-The Steel Trap¹ If firms incur a cost to exit the market, they may not shut down in the short run even if their revenues do not cover variables costs. The firms stay in operation, at least for awhile, so that they can avoid paying the exit costs. For decades, many integrated U.S. steel mills-factories that produce steel from iron ore-were operating at losses. Before the 1950s, U.S. firms could produce at lower costs than international rivals despite having high wages because their mills were more productive and abundant supplies of coal and iron ore kept their energy and material costs relatively low. In the 1950s and 1960s, discoveries of rich iron ore sources, lower wages, and newly built, state-of-the-art mills enabled many foreign steel firms to produce at lower cost than U.S. firms. As a result, the share of worldwide sales of U.S. integrated steel firms fell from 90% in 1960 to less than 65% in the 1980s. U.S. firms have been too slow to leave the market. Not until the late 1970s, did Youngstown Sheet & Tube and the United States Steel Corporation in Youngstown, Ohio, close. The next closing did not occur until 1982. Rather than close, firms have continued to operate aging, inefficient, and unprofitable plants. A steel firm faces substantial costs in closing a mill and terminating contracts. Union contracts obligate the firm to pay workers severance pay, supplemental unemployment benefits, and to make payments to cover additional pensions and insurance benefits in the future. Usually, union members are eligible for pensions when their age plus years of service equals 75; however, workers laid off due to plant closings are eligible when their age plus years of service equals 70. Thus, by not closing plants, firms can substantially reduce pension payments. The United States Steel Corporation's cost of closing down various operations in 1979, was $650 million, of which about $415 million-or $37,000 per laid-off worker-was labor related. These costs have risen 45% since then. Because they avoided shutting down to avoid exit costs, U.S. steel mills have sold most products at prices below average variable cost since the 1970s. For example, in 1986, the average variable cost of hot-rolled sheets per ton was $305 and the average cost was $406, but the price was only $273. Many of these mills stayed in business for decades despite sizable losses. Eventually, these mills will close unless the recent increase in profitability in the industry continues. a. Can you think of other firms or industries that would suffer large shut-down costs? What would be the source of these costs? b. Is it possible that the firms are playing a "waiting game" to see if others will drop out before them? Under what circumstances might this allow a remaining firm to become profitable again?
a. Other firms or industries that could suffer large shut-down costs include heavy manufacturing industries, such as automobile manufacturing or chemical production, where the closure of plants would involve significant expenses.
The sources of these costs may vary but can include severance pay and benefits for laid-off workers, termination of contracts and leases, dismantling and disposal of equipment, environmental cleanup, and potential legal liabilities. Additionally, industries with long-term capital investments, such as oil refineries or power plants, may face substantial costs in shutting down operations and decommissioning infrastructure.
b. It is possible that firms are playing a "waiting game" to observe if others will exit the market before them. This strategy is often employed when firms anticipate that competitors' exit will lead to a reduction in industry capacity and potential market consolidation.
Under such circumstances, a remaining firm may benefit from reduced competition, increased market share, and improved pricing power. With fewer competitors, the remaining firm could achieve economies of scale, better utilize its resources, and potentially improve profitability. However, the success of this strategy depends on various factors, including the nature of the industry, market demand, cost structure, and the ability of the remaining firm to adapt and capitalize on the changing market dynamics.
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1. During the period from January 1, 19, through December 31, 19, the number of charge account customers has increased by 26 percent. 2. During the past six months, the mall ran a total of sixteen newspaper advertisements in five area newspapers and eight television commercials encouraging customers to visit the mall. 3. The majority of the advertisements and television commercials ran during the months of November and December, and the number of credit card customers increased by 12.5 percent during these two months. 4. Credit card customers in the 32- to 54-year-old age group account for the highest dollar amount of credit sales. 5. Credit card customers in the 20- to 29-year-old age group account for the largest number of sales. 6. The largest individual credit card purchases were made by customers in the 30- to 38-year-old age group. 7. Only 31 percent of the credit card customers pay the entire account balance within 30 days. 8. Credit card purchases by women are triple the number made by men. 9. A little over 70 percent of all purchases made in mall stores are made by credit card customers. 10. The most popularly used credit cards rank in this order, from highest to lowest: Visa, MasterCard, American Express, and all others.
If a statement is based on the facts in Above 1- 10, True or False:
1. Credit card customers are not important to the mall stores. 2. Women use their credit cards more than men do. 3. There is no apparent connection between the increase in credit card customers and when the ads were run. 4. The ads were run only in newspapers. 5. More total sales dollars came from credit card customers in the 32-to-54 age group. 6. Younger credit card customers don't make many purchases. 7. People in the 30-to-38 age group buy more expensive items. 8. People in the 30-to-38 age group buy electronic equipment. 9. Forty percent of the mall customers pay cash for their purchases. 10. Thirty-one percent of mall customers pay off their accounts within thirty days. 11. Store employees should give special treatment to customers who use credit cards to make their purchases. 12. Among credit card purchases of $22.50, $88.75, and $421.75, the latter purchase was more likely to have been made by someone between 30 and 38 years of age. 13. Stores profit less from purchases made by credit card users. 14. Most advertising should be done during holiday periods. 15. Credit card customers increased in number in periods of advertising. 16. Older people make many more small purchases. 17. Credit card purchases are costly for mall stores. 18. More than 1.5 percent of credit card users never pay their bills. 19. The MasterCard credit card is used most frequently by credit card users in the mall. 20. The mall has no customers younger than 19. 21. The mall has no charge account customers younger than 19. 22. Better than 6 out of every 10 of the mall's customers charge their purchases. 23. Men in the youngest age group mentioned charge more than women. 24. Credit card account customers present an accounting problem. 25. Shoplifters are not found among the mall's charge customers. 26. Additional advertising ought to bring in more new customers. 27. Orders would be cheaper to process if all customers had credit card accounts. 28. During half of the year, charge account customers did not increase at all. 29. The mall's credit card acceptance seems to attract customers. 30. The credit card companies should make their credit terms more appealing.
The information provided gives insights into credit card customers and advertising impact, but some statements lack evidence or contradict the facts.
1. False - Credit card customers are important to mall stores as indicated by the majority of purchases being made by credit card customers and the high dollar amount of credit sales in certain age groups.
2. True - The statement is supported by the fact that credit card purchases by women are triple the number made by men.
3. False - There is an apparent connection between the increase in credit card customers and when the ads were run, as evidenced by the increase in credit card customers during the months when advertisements and commercials were predominantly run.
4. False - The ads were not run only in newspapers, as indicated by the mention of television commercials.
5. True - The statement is supported by the fact that credit card customers in the 32-to-54 age group account for the highest dollar amount of credit sales.
6. False - Younger credit card customers, specifically those in the 20-to-29 age group, account for the largest number of sales.
7. False - The statement contradicts the fact that only 31 percent of credit card customers pay the entire account balance within 30 days.
8. False - There is no information provided to support the claim that people in the 30-to-38 age group specifically buy electronic equipment.
9. False - The statement contradicts the fact that over 70 percent of all purchases made in mall stores are made by credit card customers.
10. True - The statement is supported by the fact that 31 percent of mall customers pay off their accounts within thirty days.
11. False - The statement is not supported by the given information.
12. True - Among the given credit card purchases, the amount of $421.75 falls within the age group of 30-to-38, supporting the statement.
13. False - There is no information provided to support the claim that stores profit less from purchases made by credit card users.
14. False - While the majority of advertisements were run during November and December, there is no explicit mention that most advertising should be done during holiday periods.
15. True - The statement is supported by the fact that the number of credit card customers increased during the months when advertisements were predominantly run.
16. False - There is no information provided to support the claim that older people make many more small purchases.
17. False - Credit card purchases are not explicitly stated to be costly for mall stores.
18. False - The given information does not mention the percentage of credit card users who never pay their bills.
19. False - The given information does not provide specific usage statistics for each credit card company.
20. False - The given information does not mention the presence or absence of customers younger than 19 at the mall.
21. False - The given information does not mention the presence or absence of charge account customers younger than 19 at the mall.
22. True - The statement is supported by the fact that over 60 percent of the mall's customers charge their purchases.
23. False - There is no information provided to support the claim that men in the youngest age group mentioned charge more than women.
24. True - Credit card account customers may present an accounting problem, although the extent or nature of the problem is not specified.
25. False - The given information does not provide any information about the presence or absence of shoplifters among charge customers.
26. True - The statement suggests that additional advertising is expected to bring in more new customers.
27. False - The given information does not provide enough context to determine the cost-effectiveness of processing orders with credit card accounts.
28. False - The given information does not mention any specific periods where charge account customers did not increase at all.
29. True. The mall's acceptance of credit cards appears to attract customers, as indicated by the increase in credit card customers.
30. True. Credit card companies should consider making their credit terms more appealing in order to further incentivize credit card usage and attract more customers.
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The _______ form helps avoid limited agency if the agent already has a buyer contract.
The "exclusive right-to-sell" form helps avoid limited agency if the agent already has a buyer is an "exclusive right-to-to-sell agreement is a contract between a real estate agent and a property owner that authorizes the agent to sell the owner's property during a specified period.
In most cases, this type of agreement is structured so that the agent receives a commission when the property is sold, regardless of who actually purchases it. An exclusive right-to-sell agreement can help agents avoid limited agency if they already have a buy limited agency arrangement, the agent only represents the seller or the buyer, but not both. When the same agent represents both the seller and the buye.
it can be difficult to remain impartial and work in the best interests of both parties. However, by using an exclusive right-to-sell agreement, the agent is able to represent the seller and the buyer while avoiding a limited agency situation. An exclusive right-to-sell agreement can help agents avoid limited agency if they already have a buyer n a limited agency arrangement, the agent only represents the seller or the buyer, but not both. When the same agent .
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Question Two Consider the case of pricing for the UNZA Basketball games at the University of Zambia Sport Hall. The freedom fighters have a demand function given as pa(qa) = 100-qa, while students have demand function ps(qs) = 20 - qs / 10. The analysis in the notes concludes that if MC = 0, the profit maximizing quantity (i.e. stadium capacity) is 150, with q'a = 50 and q*s = 100. Suppose that the capacity of the Sport Hall is equal to Q < 150. (a) For what values of Q is it profit maximizing to sell only to students? (HINT: It may be helpful to solve this question: For what values of qa is MR(alumni) > 20?) (b) Assume that it is profit maximizing to sell to both groups. Solve for profit- maximizing prices and quantities as a function of Q.
If the capacity of the Sports Hall is less than 40, then it is profitable to sell only to students. If it is profitable to sell to both groups, the profit-maximizing prices and quantities are qa = 50, qs = 200, p = 50 for the alumni, and p = 0 for the students.
(a) The quantity demanded for the alumni is given by, p(qa) = 100 - qa, where p = the price and qa is the quantity demanded. Therefore, the marginal revenue function can be derived as follows:
MR(qa) = ΔTR / Δqa= Δ(pqa) / Δqa= p + q(dP / dqa)
where P is the price and q is the quantity demanded.
Thus, we have:MR(alumni) = 100 - 2qaAt profit maximization, MR = MC. Therefore, 100 - 2qa = 20 or qa = 40.
Thus, if Q < 40, it is profitable to sell only to students.
(b) If it is profitable to sell to both groups, then the price for each group must be set such that the marginal cost is equal to the marginal revenue of each group.
The marginal cost is zero since it is given in the question that MC = 0.
Hence, we can set the prices such that: MR(alumni) = 100 - 2qa = MC = 0 so that qa = 50 and (students) = 20 - (qs / 10) = MC = 0 so that qs = 200
Thus, the profit-maximizing prices and quantities as a function of Q are qa = 50, qs = 200 and p = MR(alumni) = 100 - qa = 50, and p = MR(students) = 20 - qs / 10 = 0.
In conclusion, if the capacity of the Sports Hall is less than 40, then it is profitable to sell only to students. If it is profitable to sell to both groups, the profit-maximizing prices and quantities are qa = 50, qs = 200, and p = 50 for the alumni, and p = 0 for the students.
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QUESTION 14 Which criteria are considered when deciding to use an quid pro quo strategy? (choose as many as apply) Need for communication efficiency Need for consensus-building All answers are correct The amount of information
The criteria considered when deciding to use a quid pro quo strategy include the need for communication efficiency, consensus-building, and the amount of information involved.
'
The need for communication efficiency arises when there is a requirement to exchange goods, services, or agreements promptly and effectively. This strategy allows for clear and direct communication, ensuring that both parties understand the terms and conditions of the exchange.
Consensus-building is another important criterion as it ensures that all parties involved are in agreement and have a shared understanding of the benefits and obligations of the exchange. This helps to establish a mutually beneficial relationship and promotes trust and cooperation.
Additionally, the amount of information involved plays a role in deciding whether to use a quid pro quo strategy. If there is a substantial amount of information to be exchanged or if the terms of the exchange are complex, a quid pro quo strategy can help streamline the process and ensure a fair and equitable exchange.
Overall, all of these criteria are considered when deciding to use a quid pro quo strategy, as they contribute to effective communication, consensus-building, and managing the exchange of valuable resources or agreements.
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Which of the following statements about Social Security is NOT true?
In some states, for those at full retirement age, social security benefits are not taxable.
The "full retirement age" is 62½ years for those born in 1960 or later.
Social Security benefits include Medicare Parts A and B insurance.
Annual cost-of-living increases are factored into Social Security benefit payments.
For tax purposes, the term "experience rating" is associated with which employee benefit?
Disability insurance
Unemployment insurance
Survivor’s insurance
Old-age insurance
The statement that is NOT true about Social Security is that the "full retirement age" is 62½ years for those born in 1960 or later. In fact, the full retirement age has been gradually increasing for those born in 1960 or later, and it is currently 67 years old.
The full retirement age is the age at which a person can receive their full Social Security retirement benefit, and it is based on the year in which the person was born. For those born before 1960, the full retirement age ranges from 65 to 66 years old.
Regarding the other statements, it is true that in some states, for those at full retirement age, Social Security benefits are not taxable. Additionally, Social Security benefits do include Medicare Parts A and B insurance, and annual cost-of-living increases are factored into Social Security benefit payments.
For tax purposes, the term "experience rating" is associated with unemployment insurance. It is a system used to calculate an employer's unemployment insurance tax rate based on their past experience with layoffs and unemployment claims. This rate is then used to determine the amount of unemployment insurance taxes the employer must pay.
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5. Explain the techniques you use to deal with your ‘hot buttons’ during times of conflict. Attach copies of at least two documents (i.e., module application activities or other) that prove your use of these techniques.
When dealing with ‘hot buttons’ during times of conflict, there are several techniques that can be employed to defuse the situation and prevent it from escalating into something more severe. One technique is the use of active listening.
When active listening is used, the individual will listen intently to the other person's concerns and perspective without interrupting them. This can be an effective tool in preventing misunderstandings, reducing hostility, and reaching a resolution to the conflict. Another technique that can be used is compromise. A compromise is a situation in which each party agrees to give up something in order to reach a mutually acceptable solution. This technique is particularly useful in situations where both parties have a stake in the outcome. Finally, another technique is the use of empathy. Empathy is the ability to understand and share the feelings of another person.
When empathy is used, the individual will put themselves in the other person's shoes and try to see the situation from their perspective. This can be an effective tool in reducing hostility and preventing the conflict from escalating. Here are some examples of how these techniques have been used in practice:EXAMPLE 1: Module Application ActivitiesIn one module application activity, the individual was asked to reflect on a past conflict they had experienced and describe how they could have handled it differently. The individual described a situation where they had become very angry with a co-worker who had criticized their work. Instead of listening to the co-worker's concerns and trying to understand their perspective, the individual had become defensive and argumentative. To deal with this ‘hot button’ in the future, the individual identified several techniques that they could use. These included active listening, empathy, and compromise.
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The role of inflation and real versus nominal interest rates Which of the following are likely consequences of rising inflation? Check all that apply. Savers wanting to save less and borrowers wanting to borrow more O Savers wanting to save more and borrowers wanting to borrow less O A misallocation of resources O A distorted price-signaling mechanism
The rising inflation can disrupt the behavior of savers and borrowers, create resource misallocation, and distort the price-signaling mechanism in the economy.
- Savers wanting to save less and borrowers wanting to borrow more
- A misallocation of resources
- A distorted price-signaling mechanism
Rising inflation often leads to a decrease in the purchasing power of money. As a result, savers may be motivated to save less because the value of their savings will erode over time. On the other hand, borrowers may want to borrow more because inflation reduces the real burden of debt. Inflation can also cause a misallocation of resources. When prices are increasing rapidly, it becomes challenging for businesses and individuals to accurately assess the true value of goods and services. This can lead to inefficient allocation of resources as decisions are based on distorted price signals.
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A unit of account is ..... a. an individual account or deposit b. a means of preserving stored value, c. the measure in which prices are quoted. d. a price regulated by law. e. a medium of exchanging one good for another,
The correct option is c. A unit of account is the measure in which prices are quoted , and economic values are also expressed.
How is a unit of account defined?A unit of account refers to the standard measure in which prices are quoted and economic values are expressed. It serves as a common denominator for evaluating and comparing the relative worth of different goods, services, or assets in an economy.
In essence, it provides a consistent and standardized basis for pricing and economic calculations.
By using a unit of account, individuals, businesses, and governments can quantify the value of goods, services, and financial transactions. It allows for effective price comparisons, facilitating efficient decision-making and resource allocation. For example, prices of goods and services are typically quoted in a specific unit of account, such as a national currency.
Moreover, a unit of account plays a crucial role in financial and economic systems by enabling the recording and tracking of economic transactions, measuring wealth and income, and facilitating economic analysis. It provides a framework for measuring economic performance, inflation, and changes in purchasing power over time.
While a unit of account is closely associated with a currency, it is important to note that it is not limited to a specific medium of exchange. It represents a broader concept that underlies the measurement and comparison of economic values within an economy.
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Please provide answers with detailed explanations why other
choices are wrong. Thank you so much!
16)___________refers to the incentive for sellers of loans to
offload their "bad"
loans, while retaini
Answer: Moral hazard refers to the incentive or risk-taking behavior that arises when one party, in this case, the sellers of loans, has the opportunity to take risks knowing that they will not bear the full consequences of those risks. In the context of loans, moral hazard can occur when lenders or sellers of loans have an incentive to offload their "bad" loans to other parties while retaining the benefits of making those loans in the first place.
Explanation:
When sellers of loans offload their bad loans, it means they transfer the ownership or risk associated with those loans to other parties, such as investors or financial institutions, while keeping the profits or benefits they gained from originating those loans. This behavior can be motivated by the desire to avoid losses or negative consequences resulting from the default or non-performance of those loans.
Other choices that could be considered but are incorrect in this context:
Adverse selection: Adverse selection refers to the situation where one party has more information about the quality or risk of a product or service than the other party. It typically occurs before the transaction takes place, and it can lead to the selection of lower-quality or riskier loans by buyers or lenders.
Principal-agent problem: The principal-agent problem refers to the misalignment of incentives between a principal and an agent. It arises when a principal (such as a lender) delegates decision-making authority to an agent (such as a borrower), and the agent may act in their own self-interest rather than in the best interest of the principal.
Moral suasion: Moral suasion refers to the use of persuasion or moral influence by authorities, such as central banks or regulatory bodies, to encourage or discourage certain behaviors or actions in the financial system. It is not directly related to the offloading of bad loans by sellers.
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Let the base year used for calculating CPI be 2010. • CPI in 2019 equals 127. What nominal amount in 2019 has the same purchasing power as receiving $7000 in the 2010? Do not enter the $ sign. Round to one decimal place. Answer:
To determine the nominal amount in 2019 that has the same purchasing power as receiving $7,000 in 2010, we need to adjust for inflation using the Consumer Price Index (CPI). In 2019, an amount of $8,890 has the same purchasing power as receiving $7,000 in 2010, considering the given CPI values.
The formula to calculate the equivalent nominal amount is:
Equivalent Nominal Amount = (Original Amount) x (CPI in 2019 / CPI in the Base Year)
Substituting the given values:
Equivalent Nominal Amount = $7,000 x (127 / 100)
Calculating the result:
Equivalent Nominal Amount = $8,890
Therefore, in 2019, an amount of $8,890 has the same purchasing power as receiving $7,000 in 2010, considering the given CPI values.
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2 The account Allowance for Doubtful Accounts is what type of account and appears on which financial statement? TYPE Debit FINANCIAL STATEMENT Income Statement TYPE FINANCIAL STATEMENT Balance Sheet D
The account "Allowance for Doubtful Accounts" is a type of contra-asset account and it appears on the financial statement called the Balance Sheet.
The account Allowance for Doubtful Accounts is a type of contra asset account and appears on the financial statement called the Balance Sheet. It is used to reduce the value of accounts receivable to reflect the estimated amount of receivables that may not be collected. The Allowance for Doubtful Accounts has a credit balance and is deducted from the accounts receivable on the Balance Sheet to provide a more realistic representation of the company's receivables.
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Pr 1 Sierra Department Store is located near the Village Shopping Mall. At the end of the company's fiscal year on Feb. 28, 20X1, the following amounts appeared in the Adjusted Trial Balance. Prepare a multi-step Income Statement (including a separation of selling expenses and administrative expenses and Other Revenues and Expenses, see page 304 in Chapter 6, Exhibit 11) for a great example), a Statement of Owner's Equity, and a Classified Balance Sheet (good example in Chapter 6 page 306, Exhibit 14). Debit Credit Accounts Payable Accounts Receivable Accumulated Depr-Store Building Accumulated Depr-Office Equipment Store Building Cash B. Swett, Capital (-0- Investments this year) Cost of Merchandise Sold Depr. Expense-Store Building Depr. Expense-Office Equipment B. Swett, Drawing Office Equipment Insurance Expense Interest Expense Interest Payable Interest Revenue Merchandise Inventory Mortgage Payable, Long Term Office Salaries Expense Prepaid Insurance Property Tax Expense Property Taxes Payable Sales Sales Safary Expense Sales Commissions Expense Sales Commissions Payable Utilities Expense Utilities Payable Totals 79,300 50,300 52,500 42,900 190,000 23,800 176,600 412,700 10,400 13,300 28,000 . 110,000 7,200 11,000 8,000 4,000 75,000 80,000 32,000 2,400 4,800 4,800 620,000 76,000 14,500 4,300 12,000 1,000 1,073,400 1,073,400
The multi-step Income Statement, Statement of Owner's Equity, and Classified Balance Sheet of PR 1 Sierra Department Store were prepared using the figures provided in the Adjusted Trial Balance.
In accounting, the Income Statement is a financial report that reports a business's income and expenses over a specific accounting cycle. To achieve the objectives of the revenue report, it is essential to prepare a multi-step Income Statement for PR 1 Sierra Department Store for the fiscal year ending February 28, 20X1. This is important because it is used to evaluate the financial performance of an organization.
Multi-Step Income Statement
The Income Statement for PR 1 Sierra Department Store can be prepared using the following headings:
Income Statement
PR 1 Sierra Department Store
For the Fiscal Year Ended February 28, 20X1
Sales Revenue $620,000
Cost of Merchandise Sold $(412,700)
Gross Profit $207,300
Selling Expenses:
Sales Commissions Expense $(14,500)
Safari Expense $(4,300)
Other Selling Expenses $(12,000)
Total Selling Expenses $(30,800)
Administrative Expenses:
Office Salaries Expense $(80,000)
Utilities Expense $(2,400)
Insurance Expense $(7,200)
Depreciation Expense-Store Building $(52,500)
Depreciation Expense-Office Equipment $(42,900)
Property Tax Expense $(4,800)
Total Administrative Expenses $(190,600)
Total Operating Expenses $(221,400)
Operating Income $(14,100)
Other Revenues and Expenses:
Interest Revenue $1,000
Interest Expense $(11,000)
Total Other Revenues and Expenses $(10,000)
Net Income $4,100
Statement of Owner's Equity
The Statement of Owner's Equity is a financial statement that shows the changes in the owner's equity of a business over a specific accounting cycle. It can be calculated as follows:
Statement of Owner's Equity
For the Fiscal Year Ended February 28, 20X1
B. Swett, Capital, February 28, 20X0 $80,000
Investments This Year $0
Net Income $4,100
Less: Drawings $(12,000)
B. Swett, Capital, February 28, 20X1 $72,100
Classified Balance Sheet
The Classified Balance Sheet for PR 1 Sierra Department Store can be prepared as follows:
Classified Balance Sheet
February 28, 20X1
Assets
Current Assets:
Cash $23,800
Accounts Receivable $50,300
Merchandise Inventory $75,000
Prepaid Insurance $4,000
Total Current Assets $153,100
Long-Term Assets:
Store Building $620,000
Less: Accumulated Depreciation $(52,500)
Office Equipment $190,000
Less: Accumulated Depreciation $(42,900)
Total Long-Term Assets $714,600
Total Assets $867,700
Liabilities and Equity
Current Liabilities:
Accounts Payable $79,300
Interest Payable $1,000
Property Taxes Payable $4,800
Sales Commissions Payable $4,800
Utilities Payable $2,400
Total Current Liabilities $92,300
Long-Term Liabilities:
Mortgage Payable, Long Term $80,000
Total Long-Term Liabilities $80,000
Total Liabilities $172,300
Owner's Equity:
B. Swett, Capital $72,100
Total Liabilities and Equity $867,700
In conclusion, the multi-step Income Statement, Statement of Owner's Equity, and Classified Balance Sheet of PR 1 Sierra Department Store were prepared using the figures provided in the Adjusted Trial Balance.
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why risks might the use od project portfolio
management minimize? DO YOU THINK PPM CAN GUARANTEE HONEST AND
UNBAISED PROJECT approvals or not? Explain your position.
the use of PPM can minimize several risks associated with project management and improve overall performance. However, it cannot guarantee honest and unbiased project approvals without a framework of evaluators with strong integrity.
Project Portfolio Management (PPM) can help organizations minimize several risks. The use of PPM can aid in better decision-making, identify and rectify problems early, maximize resource allocation, and improve the overall performance of a company. By utilizing PPM, organizations can minimize the following risks:1. Duplication of efforts: PPM can help identify the overlap of projects and prioritize them based on their importance.2. Budget and resource constraints: PPM can help allocate resources efficiently and reduce the risk of overutilization or wastage of resources.3. Unclear objectives: PPM can help set clear goals and objectives for projects, which can improve the chances of achieving success.4. Insufficient project management: PPM can help identify problems in project management, allowing for early intervention and rectification.5. Unanticipated changes: PPM can help identify and plan for potential changes in projects, which can reduce the risk of failure.6. Poor performance: PPM can help improve overall performance by identifying underperforming projects and taking corrective measures.As for the second part of the question, PPM cannot guarantee honest and unbiased project approvals. However, it can provide a framework for evaluating projects based on established criteria, which can reduce the risk of bias and subjective decision-making. PPM can help organizations create a standardized process for evaluating projects based on their merit and aligning them with organizational objectives. However, the success of PPM depends on the integrity of the evaluators and their adherence to the established process.
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Hello There, any help would be greatly appreciated with the
below question. Thank you in advance!
Explain the differences between a sales forecast and an
operating budget
An operating budget, on the other hand, outlines projected expenses and revenues for specific operational activities and departments within an organization.
A sales forecast is an estimate of future sales revenue that helps organizations anticipate demand and plan production, inventory, and marketing strategies. It considers factors such as market trends, customer behavior, competition, and historical sales data. The sales forecast provides a top-down view of expected sales volume and revenue, serving as a basis for strategic decision-making and resource allocation.
On the other hand, an operating budget focuses on the financial plan for various operational activities and departments within an organization. It outlines projected revenues and expenses related to specific business functions, such as production, marketing, research and development, and administration. The operating budget includes detailed estimates of costs, such as raw materials, labor, overhead, marketing expenses, and administrative costs. It helps in setting targets, monitoring performance, and controlling expenses to ensure efficient and effective operations.
In summary, while a sales forecast provides an estimate of future sales revenue based on market analysis and customer trends, an operating budget focuses on projected expenses and revenues for specific operational activities within an organization. The sales forecast guides strategic decisions, while the operating budget helps in planning and controlling day-to-day operational expenses.
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1. Record the investment by owner.
2. Record the purchased equipment on credit.
3.Record the performed services for cash.
4.Record the paid expenses.
5. Record the completed services on account.
6. Re
Manny Gill is an entrepreneur who started West Secure, a business that provides a number of security guard services. West Secure incurred the following transactions during July 2020, its first month o
1. Record the investment by owner:Date: [Date of investment]
Account Title Debit
CreditOwner's Equity -
[Amount of investment]
Cash [Amount of investment]
2.
Debit CreditOwner's Equity -
[Amount of investment]
Cash
[Amount of investment]
2. Record the purchased equipment on credit:Date: [Date of purchase]
Account Title Debit CreditEquipment [Amount of purchase]
Accounts Payable [Amount of purchase]
3. Record the performed services for cash:Date: [Date of service]
Account Title Debit CreditCash [
Amount of service]
Service Revenue
Amount of service]
4. Record the paid expenses:Date: [Date of expense payment]
Account Title Debit CreditExpenses [Amount of payment]
Cash [Amount of payment]
5. Record the completed services on account:Date: [Date of service]
Account Title Debit CreditAccounts Receivable [Amount of service]
Service Revenue [Amount of service]
6. Record the withdrawal by the owner:Date: [Date of withdrawal]
Account Title Debit Credit
Owner's Withdrawal [Amount of withdrawal]Cash [Amount of withdrawal]
Please note that the specific account titles may vary depending on the chart of accounts used by the business. It is essential to consult the company's accounting policies and guidelines to ensure accurate recording of transactions.
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Mathew Philp, president of North Idaho Mining Ltd., has made budgets a major focus for managers. Making budgets was such an important goal that the only two managers who had missed their budgets in 20X7 (by 2% and 4%, respectively) had been summarily fired. This caused all managers to be wary when setting their 20X8 budgets.
The Red Mountain division of North Idaho Mining had the following results for 20X7:
Sales, 1.6 million pounds at $.95/ pound $1,520,000
Variable costs 880,000
Fixed costs, primarily depreciation 450,000
Pretax profit 190,000
Molly Stark, general manager of Red Mountain, received a memo from Philp that contained the following:
"We expect your profit for 20X8 to be at least $209,000. Prepare a budget showing how you plan to accomplish this."
Stark was concerned because the market had recently softened. Here market research staff forecast that sales would be at or below the 20X7 level, and prices would likely be between $0.92 and $0.94 per pound. Her manufacturing manager reported that most of the fixed costs were committed and there were few efficiencies to be gained in the variable costs. He indicated that perhaps a 2% savings in variable costs might be achievable, but certainly no more.
Prepare a budget for Stark to submit to headquarters. Identify some dilemmas she faces in preparing this budget.
Comment on problems you see in the budgeting process at North Idaho Mining.
Suppose Stark submitted a budget showing a $209,000 profit. It is now late in 20X8 and she has had a good year. Despite an industry-wide decline in sales, Red Mountain's sales matched last year's 1.6 million pounds, and the average price per pound was $0.945, nearly at last year's level and well above that forecast. Variable costs were cut by 2% through extensive efforts. Still, profit projections were more than $9,000 below budget. Stark was concerned for her job so she approached the controller and requested that depreciation schedules be changed. By extending the lives of some equipment for 2 years, depreciation in 20X8 would be reduced by $15,000. Estimating the economic lives of equipment is difficult, and it would be hard to prove that the old lives were better than the new proposed lives. What should the controller do? What ethical issues does this proposal raise?
The controller should prioritize ethical behavior and reject the proposal to manipulate depreciation schedules.
How to handle the request to change depreciation schedules?In preparing the budget for Red Mountain division, Molly Stark faces several dilemmas. Firstly, the market conditions have softened, and sales are expected to remain at or below the previous year's level with lower prices. Secondly, most of the fixed costs are committed, limiting the potential for cost savings. These challenges make it difficult to achieve the targeted profit of $209,000.
Additionally, the budgeting process at North Idaho Mining seems to have a punitive approach, as managers who miss their budgets are summarily fired, which may lead to unrealistic budget expectations and discourage open communication.
In the given scenario, when Stark falls short of the profit target despite achieving good sales and cost reductions, she considers manipulating depreciation schedules to artificially reduce expenses. However, this raises ethical concerns. The controller should prioritize ethical behavior and integrity, and not engage in misleading accounting practices. Instead, they should encourage open communication, review the budgeting process for fairness, and explore alternative strategies to address the profit shortfall.
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The following facts apply to Oehler Company for the year 2012:
Plan assets, 1/1/12........................................................................... $450,000
Projected benefit obligation, 1/1/12.................................................... 450,000
Annual service cost for 2012................................................................. 27,000
Settlement rate for 2012............................................................................. 7%
Actual return on plan assets for 2012.................................................... 30,000
Contributions (funding) in 2012............................................................. 32,000
Benefits paid to retirees in 2012............................................................ 17,000
The amount of pension expense to be reported for 2012 is
a. 57,000
b. 450,000
c. 28,500
d. 62,000
Pension Expense = $27,000 + $31,500 - $30,000 + $0. Simplifying this expression, we find that the pension expense for 2012 is $28,500 (option c). Therefore, the correct answer is option c.
The pension expense for the year 2012 consists of several components: the service cost, interest cost, expected return on plan assets, and gains or losses. Service Cost: The annual service cost is the cost associated with providing benefits to employees during the current year. In this case, the annual service cost for 2012 is given as $27,000.
Interest Cost: The interest cost is the increase in the projected benefit obligation due to the passage of time. It is calculated by multiplying the projected benefit obligation at the beginning of the year by the settlement rate. In this case, the projected benefit obligation at the beginning of the year is $450,000, and the settlement rate is 7%. Therefore, the interest cost for 2012 is $31,500 (450,000 * 0.07).
Expected Return on Plan Assets: The expected return on plan assets is the income generated from the plan assets. In this case, the actual return on plan assets for 2012 is given as $30,000.
Gains or Losses: No information is provided regarding gains or losses, so we assume there are none. To calculate the pension expense for 2012, we can use the following formula: Pension Expense = Service Cost + Interest Cost - Expected Return on Plan Assets + Gains/Losses
Substituting the given values, we have: Pension Expense = $27,000 + $31,500 - $30,000 + $0
Simplifying this expression, we find that the pension expense for 2012 is $28,500 (option c). Therefore, the correct answer is option c.
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in the week about to bogin, a bank expects $30 million in incoming deposits, $20 million in dopout withdrawals $15 million in rovonuos from the sale of nondeposit services, $25 million in customar loan repayments, $5 million in sale of bank assets $45 million in money matust borrowings, $60 million in acceptable loan requests, $10 million in npayments of bank borrowings, $5 million in cash outflows to cover other operating expernes, and $10 milion in dividend payments to its stockholders What is the banks net liquidity position for the wook is cxpected to be? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10(Mac) BIVS Paragraph TELE Arial 10pt E IX 4 Ĵ
Therefore, the bank's net liquidity position for the week is expected to be $135 million.
To calculate the bank's net liquidity position for the week, we need to subtract the cash outflows from the cash inflows. Let's calculate it step by step:
Cash Inflows:
Incoming deposits: $30 million
Revenues from the sale of non-deposit services: $15 million
Customer loan repayments: $25 million
Sale of bank assets: $5 million
Money market borrowings: $45 million
Acceptable loan requests: $60 million
Total Cash Inflows: $30 million + $15 million + $25 million + $5 million + $45 million + $60 million = $180 million
Cash Outflows:
Dropout withdrawals: $20 million
Payments of bank borrowings: $10 million
Cash outflows to cover other operating expenses: $5 million
Dividend payments to stockholders: $10 million
Total Cash Outflows: $20 million + $10 million + $5 million + $10 million = $45 million
Net Liquidity Position: Cash Inflows - Cash Outflows = $180 million - $45 million = $135 million
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Based on what you have learned about the communications loop, Explain the following by providing an example
Four marketing communications objectives.
Note: this is a marketing question and I need a brief answer with the examples please.
The Communication Loop is an interactive process between two people or groups in which there is a shared understanding of a message being communicated.
Here are four marketing communication objectives:
Informative objective: The goal of an informative communication objective is to provide customers with information about the product or service. The company must educate consumers about its goods and services, as well as their characteristics and features. For example, Apple informs customers about the newest iPhone’s features, camera, and battery life.
Persuasive objective: Persuasive communication objective aims to persuade potential customers to buy or use the product or service. The communication should encourage people to take some sort of action, such as making a purchase. For example, L’Oréal may use this type of communication to persuade customers to try their latest skincare product.
Reminding objective: The objective of a reminding communication is to remind customers about the product or service. This is often used to keep the brand in the customers' minds. For example, Coca-Cola reminds customers about its soft drink products via social media or billboards.
Lead generation objective: The lead generation communication objective seeks to generate leads for the company. The aim is to persuade the customer to sign up for a service or provide their contact information. For example, Amazon offers an exclusive discount if the customer signs up for their Prime service and provides their contact information.
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A. Harriet just inherited $50,000,000. She knows nothing about money management and has decided to educate herself in that area before making any major decisions. She has a short-term investment for that period. She has the choice between two investments: Investment A: at 6.5% compounded daily Investment B: at 7% compounded semi-annually i. Which option should she choose and why? (5 marks) B. Harry is saving towards the down payment on a house. If he accumulates $5,000,000, his parents have offered to match his savings. He invests $2,000,000 at 9%. i. How long will it be before he can approach his parents for their contribution? (3 marks) C. Jabari is planning for his retirement in 5 years’ time. He plans to deposit $200,000 immediately into an investment plan that promises 11% annually. He will deposit $30,000 and the end of each of the next five years. i. What will be the value of the investment when Jabari retires in 5 years? (7 marks) D. Explain TWO (2) factors that affect the nominal interest rate.
In Scenario A, Harriet should choose Investment B, which offers a 7% interest rate compounded semi-annually. In Scenario B, Harry can approach his parents for their contribution when he accumulates $5,000,000. In Scenario C, the value of Jabari's investment when he retires in 5 years will depend on the annual deposits and the interest rate of 11%. In Scenario D, two factors that affect the nominal interest rate are inflation and risk.
In Scenario A, Harriet should choose Investment B, which offers a 7% interest rate compounded semi-annually. The interest rate compounded semi-annually will result in a higher effective annual interest rate compared to daily compounding. This means that Harriet's investment will grow faster with Investment B.
In Scenario B, Harry can approach his parents for their contribution when he accumulates $5,000,000. Once his savings reach this amount, his parents will match his savings, indicating that he has achieved the goal set for the down payment on a house.
In Scenario C, the value of Jabari's investment when he retires in 5 years will depend on the annual deposits of $30,000 and the interest rate of 11%. The investment plan promises an annual interest rate of 11%, and the regular deposits contribute to the growth of the investment over time. By calculating the future value of the regular deposits and the initial deposit using the given interest rate and time period, the total value of Jabari's investment can be determined when he retires in 5 years.
In Scenario D, two factors that affect the nominal interest rate are inflation and risk. Inflation refers to the general increase in prices over time, which erodes the purchasing power of money. Lenders and investors require compensation for the loss of value caused by inflation, resulting in higher nominal interest rates. Risk is another factor that influences interest rates. Lenders and investors expect higher returns for taking on higher levels of risk. Therefore, investments or loans with higher risk levels will have higher nominal interest rates to reflect the additional risk involved.
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Adverse Selection Consider the market for coffee machines. There are 200 risk-neutral buyers and 160 risk-neutral sellers. Each buyer wants to buy at most one coffee machine; each seller owns exactly one coffee machine. There are two types of coffee machines: high quality and low quality machines. High quality machines have a failure probability of 0.2, whereas the low quality machines have a failure probability of 0.75. The utility that a buyer derives from a coffee machine without failure amounts to 400 (measured in monetary terms). If the coffee machine has a failure the utility of the buyer decreases - by the amount of the repair costs – to 200. Assume that 25% of the coffee machines are of high quality. Each seller has a reservation price of 300 for a high quality machine and a reservation price of 240 for a low quality machine. a) Derive a buyer's maximum willingness to pay for a high quality and a low quality coffee machine. Suppose that sellers know the quality of their machines, whereas the buyers can- not distinguish between high and low quality machines (asymmetric informati- on). b) Derive aggregate supply and aggregate demand as a function of the market price. c) Characterize the market outcome. Comment briefly on its efficiency. d) How large may the failure probability of the low quality machines maximally be, so that there is just no partial market breakdown?
a) In this asymmetric information setting, buyers cannot distinguish between high and low-quality machines. Therefore, their maximum willingness to pay for a high-quality machine is equal to the expected utility they derive from it, considering the failure probabilities. The expected utility for a high-quality machine is given by:
0.8 * 400 + 0.2 * 200 = 360
Hence, a buyer's maximum willingness to pay for a high-quality machine is 360.
Similarly, for a low-quality machine, the expected utility is:
0.25 * 400 + 0.75 * 200 = 250
So, a buyer's maximum willingness to pay for a low-quality machine is 250.
b) Aggregate supply is determined by the number of sellers offering machines at or below a given price. Since there are 160 sellers, the aggregate supply function can be represented as:
Supply(p) = 160, for p ≥ 0
Aggregate demand is determined by the number of buyers willing to purchase at or above a given price. Since there are 200 buyers, the aggregate demand function can be represented as:
Demand(p) = 200, for p ≥ 360
Demand(p) = 160, for 250 ≤ p < 360
Demand(p) = 0, for p < 250
c) In this market, there is a market breakdown due to adverse selection. Buyers are willing to pay a maximum of 360 for high-quality machines, but sellers have a reservation price of 300 for high-quality machines. As a result, there will be no transactions for high-quality machines. However, there will be transactions for low-quality machines, as the buyers' maximum willingness to pay for a low-quality machine is 250, which is higher than the sellers' reservation price of 240. This leads to an inefficient outcome where only low-quality machines are traded, and buyers with higher valuations for high-quality machines are left unsatisfied.
d) To avoid a partial market breakdown, the failure probability of the low-quality machines should not be too high. Buyers' maximum willingness to pay for a low-quality machine is 250. Therefore, the failure probability should be such that the expected utility of a low-quality machine does not fall below 250. Using the formula for expected utility:
0.25 * 400 + (1 - p) * 200 ≥ 250
100 + 200 - 200p ≥ 250
-100 ≥ 200p - 250
150 ≥ 200p
p ≤ 0.75
The failure probability of the low-quality machines can be maximally 0.75 (or 75%) to avoid a partial market breakdown.
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A bond offers a coupon rate of 9%, paid semiannually, and has a
maturity of 19 years. Face value is $1,000. If the current market
yield is 15%, what should be the price of this bond?
To calculate the price of the bond, we can use the present value formula. The bond has a coupon rate of 9%, which is paid semiannually, so the periodic coupon payment is $45 (9% of $1,000 divided by 2). The bond has a maturity of 19 years, which corresponds to 38 periods (19 years * 2 periods per year).
Using the current market yield of 15%, we can determine the discount rate for each period, which is 7.5% (15% divided by 2).
Next, we calculate the present value of the bond's future cash flows, which include the periodic coupon payments and the final face value. The present value of the coupon payments is $45 per period discounted at 7.5% for 38 periods. The present value of the face value is $1,000 discounted at 7.5% for 38 periods.
By summing up the present values of the coupon payments and the face value, we can determine the price of the bond. It should be noted that the calculation assumes that the coupon payments are reinvested at the same yield.
The price of the bond, based on these calculations, is approximately $657.36.
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Please show all of your work.
Avagon Industries is thinking about replacing the current 2 year old computers that cost $40 million with an original life of 5 years. The cost of the new computers is $90 million. The new computers will be depreciated to zero book value using straight-line over 3 years. The existing computers has a salvage value of $5 million and a book value of $24 million. The new computers will reduce operating expenses by $38 million a year. The new computers will have a salvage value of $9 million and a book value of zero in three years. Avagon has an income tax rate of 25% & has a cost of capital of 12%.
(A) Determine the initial cash flow of the investment at time 0.
(B) Determine the operating cash flows of the investment for the next three years.
(C) Determine the terminal cash flow of the investment.
(D) Should this replacement be taken? Explain.
(A) To calculate the initial cash flow at time 0, we take into account the cost of the new computers, which is -$90 million.
The initial cash flow of the investment at time 0 is -$90 million. This represents the cost of acquiring the new computers, which is an immediate outflow of cash. Avagon Industries will need to invest $90 million upfront to purchase the new computers.
(B) The operating cash flows for the next three years are $53 million, $53 million, and $53 million, respectively.
The operating cash flows for the next three years are determined by subtracting the operating expenses reduction of $38 million from the depreciation expense. Since the new computers will be depreciated to zero book value over 3 years using straight-line depreciation, the annual depreciation expense is ($90 million - $9 million) / 3 = $27 million. Therefore, the operating cash flows for each year are $27 million (depreciation) + $38 million (expense reduction) = $53 million.
(C) The terminal cash flow is the salvage value of the new computers, which is $9 million.
The terminal cash flow of the investment is $9 million. This refers to the cash flow that occurs at the end of the investment period, specifically when the new computers reach the end of their useful life. In this case, after three years, the new computers will have a salvage value of $9 million. The salvage value is the estimated resale value of the asset at the end of its useful life.
(D) If the NPV is positive, it indicates a profitable investment, and if the NPV is negative, it indicates a non-profitable investment.
To decide whether this replacement should be taken, we need to calculate the net present value (NPV) of the investment. The NPV considers the initial cash flow, operating cash flows, and terminal cash flow, discounted to their present value using the cost of capital.
NPV = Initial cash flow + Present value of operating cash flows + Present value of terminal cash flow
Using the given cost of capital of 12%, we can calculate the present value of cash flows. However, since the specific time periods for the cash flows are not mentioned, I am unable to provide an accurate calculation for the NPV. To make a decision, compare the NPV to zero. If the NPV is positive, it indicates a profitable investment, and if the NPV is negative, it indicates a non-profitable investment.
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As an HR Director for a manufacturing firm in Maryland, you believe that it is best to select employees for their attitudes, and not skills because skills can be trained on the job (your firm has a strong record of on-the-job training), but not attitudes. In addition, successful companies that follow this selection practice (e.g., Southwest Airlines) are known for their high performance, employee morale, and low turnover rate during the pandemic. Which of the following supports your belief as well as Southwest airlines' selection practice?
a. Attraction - Selection - Attrition process
b. Selection - attrition - attraction process
c. acquisition - selection - attrition process
d. acquisition - selection - integration process
The option that supports the belief of selecting employees for their attitudes and aligns with Southwest Airlines' selection practice is **c. acquisition - selection - attrition process**.
In this process, the company focuses on acquiring a pool of potential candidates, then carefully selecting individuals based on their attitudes rather than just skills. By prioritizing attitudes during the selection process, the company ensures that they bring in employees who have the desired qualities and mindset that contribute to high performance, employee morale, and low turnover rate. This approach acknowledges that skills can be developed through on-the-job training, but attitudes are inherent and harder to change.
Southwest Airlines is renowned for its successful selection practice that emphasizes hiring for attitude. They have demonstrated that by selecting candidates with the right attitudes, they can cultivate a strong company culture, foster employee satisfaction, and achieve exceptional performance even during challenging times such as the pandemic.
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