Problem 1. (Arbitrage, 9') Two parties enter a stock forward at time t=0 that expires at t=T. The underlying stock pays a stream of dividends at a known and constant dividend yield 8. The risk-free rate is a known constant r. Use continuous compounding.
(a) Suppose I want to have one share of the stock at time T by buying some stocks at time O and hold them. How many shares of the stock shall I buy at t=0? (Assume I am allowed to trade a fraction of a share.) (3')
(b) The no-arbitrage forward price is
Fo,r=Soe(r-s)t
Show the arbitrage tables (cash flow tables for the arbitrage strategies) when the forward is overpriced or underpriced, respectively. (6')

The credit term 10/20 net 40 means that the buyer receives a 10% discount if the invoice is paid within 20 days, but the full amount is due in 40 days. If the client buys R500 000 worth of goods and settles the account on the 21st day after the purchase date, they will not be eligible for the 10% discount.

Therefore, the client will have to pay the full amount of R500 000. The due date would be 40 days after the purchase date, which means the client has an extra 19 days after the payment was due. Since the client paid the account on the 21st day after the purchase, they are late by one day, so they would incur a penalty interest charge based on the rate charged by the diesel service provider.

Assuming a penalty interest rate of 2% per month, or 0.06% per day, the penalty interest charge would be calculated as follows:R500 000 x 0.06% = R300Therefore, the client will have to pay R500 000 + R300 = R500 300 in total.Let's see how to get the above results:Given,R500,000Purchase made by the client and settles the account on the 21st day after the purchase date.

The credit term offered is 10/20 net 40.10/20 net 40 means 10% discount if paid within 20 days but the full amount due within 40 days.Since the client paid the account on the 21st day after the purchase date, the client is not eligible for the 10% discount.Therefore, the client will have to pay the full amount of R500 000.Amount paid after the 21st day= R500 000Penalty interest rate is 2% per month or 0.06% per day.Penalty interest charge for one day = 0.06% of R500,000 = R300Therefore, the total amount payable by the client = R500 000 + R300 = R500 300.Therefore, the client will pay R500 300 in total.

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An Act is a written law passed by the legislature. Parts of an Act may be proclaimed in force at different times.

The answer is True. An Act is a written law passed by the legislature, which includes federal, state, and local government. It provides the legal framework for the implementation of policies and programs. An Act may contain several parts, and each part may be proclaimed in force at different times to allow for implementation and compliance.

The proclamation of different parts of an Act may be done at the discretion of the government or the executive. The purpose of proclaiming different parts of an Act at different times is to facilitate the smooth implementation of policies and programs without causing unnecessary disruption or confusion.

For example, a new tax law may contain several provisions that will impact individuals and businesses differently. It may not be feasible to implement all the provisions at once, as it would require significant changes to existing systems and processes. Therefore, the government may choose to implement the provisions over a period of time to minimize the impact on taxpayers and businesses.

In conclusion, Parts of an Act may be proclaimed in force at different times, and the decision to do so is at the discretion of the government or the executive. This enables the smooth implementation of policies and programs without causing unnecessary disruption or confusion.

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We can compute cost of goods manufactured, income statement through gross profit and presentation of gross profit in the following ways:

a)Aikman Company

Cost of Goods Manufactured Schedule

Particulars                                            $                 $                  $

Work in process inventory, 1/1                                                  13500

Direct Materials:                              21000

Raw Materials Inventory, 1/1         150000

Add: Materials Purchased             171000

Materials Available for Use            30000

Less: Raw Materials inventory, 12/31                141000

Direct Materials Used                                        220000

Direct labor                                                          180000

Manufacturing Overheads                                                          541000

Total Manufacturing costs                                                           554500

Total Cost of Work in process inventory                                     17200

Less: Work in process inventory, 12/31                                         537300

b)Aikman Company.

Income Statement (Partial)

For the Year Ended December 31, 2020

Particulars                                                            $                  $

Sales Revenue                                                                         910000

Less: Cost of goods sold

Finished goods inventory, 1/1                           27000

Add: Cost of goods manufactured                 537300

Cost of goods available for sale                     564300

Less: Finished goods inventory, 12/31             21000

Cost of goods sold                                                                 543300

Gross profit                                                                              366700

c)Aikman Company.

(Partial) Balance Sheet

December 31, 2020

Particulars                                                 $                       $

Current Assets

Inventories                                          21000

Finished goods                                   17200

Work in process                                  30000

Raw Materials                                                                   68200

d)A merchandising company's income statement includes the cost of purchases rather than the cost of things manufactured. Because there is no manufacturing of items, the cost of goods manufactured does not need to be computed in the merchandising company. The merchandising company's inventory consists solely of completed goods inventory. There is no inventory of raw materials or work in progress.

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Price Elasticity of Demand is a measure of the responsiveness of the demand for a particular good or service to a change in its price. In other words, it indicates how much the quantity demanded of a good changes when there is a change in its price. Price elasticity of demand can be expressed mathematically as follows:

Price Elasticity of Demand = (% Change in Quantity Demanded) / (% Change in Price)

In microeconomics, price elasticity of demand plays a crucial role in understanding how consumers respond to changes in prices. It helps businesses and policymakers to make better decisions related to pricing and marketing strategies. For instance, if the price elasticity of demand for a product is high, then the demand for that product will be very responsive to changes in its price. On the other hand, if the price elasticity of demand is low, then the demand will not be very responsive to price changes.

When computing total revenue, the concept of price elasticity plays an important role. Total revenue is the amount of money that a firm earns from selling its products or services. The formula for total revenue is:

Total Revenue = Price x Quantity

If a firm increases the price of its product and the demand for that product is inelastic (i.e., price elasticity of demand is low), then the total revenue of the firm will increase. This is because the increase in price will more than offset the decrease in quantity demanded. On the other hand, if the demand for the product is elastic (i.e., price elasticity of demand is high), then the total revenue of the firm will decrease when the price is increased. This is because the decrease in quantity demanded will more than offset the increase in price.

Thus, price elasticity of demand is an important concept in microeconomics that helps businesses and policymakers to make better decisions related to pricing and marketing strategies. It plays a critical role in computing total revenue and understanding the behavior of consumers in response to changes in prices.

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The consumer surplus on the third burrito, with a market price of $1.00, is option C) $1.50.

Consumer surplus is the difference between the price consumers are willing to pay and the actual price they pay for a product or service. In this case, if the market price is $1.00 and the consumer is willing to pay $2.50 for the third burrito, the consumer surplus would be $1.50. Consumer surplus is a measure of the additional value or benefit that consumers receive by paying less than their maximum willingness to pay. In this scenario, the consumer gains a surplus of $1.50 for each burrito, indicating that they perceive the value of the third burrito to be higher than the market price. This surplus arises because the consumer is able to purchase the burrito at a lower price than what they consider its worth. Consumer surplus is an important concept in economics as it captures the net benefit consumers derive from a transaction. It represents the area between the demand curve and the price line, indicating the value consumers receive above and beyond what they actually pay.

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The heterogeneity of real estate markets contributes to segmentation. This refers to the diversity or differences observed within these markets, contributes to segmentation.

Real estate markets exhibit a high degree of heterogeneity, meaning they are characterized by variations and differences across different segments. Several factors contribute to this heterogeneity, leading to market segmentation. Let's explore these factors:

Location: Location is a crucial factor in real estate, as properties in different geographic areas can vary significantly in terms of desirability, amenities, access to services, and overall market conditions. Properties located in prime areas, such as city centers or upscale neighborhoods, may have higher demand and command higher prices compared to properties in less desirable locations. Thus, location-based differences contribute to market segmentation.

Property Types: Real estate encompasses a wide range of property types, including residential, commercial, industrial, and agricultural properties. Each property type has its market dynamics, demand drivers, and investment considerations. The varying characteristics and uses of these property types lead to segmentation within the real estate market.

Demand-Supply Dynamics: Real estate markets are influenced by the interplay between demand and supply. The demand for properties can vary based on factors like population growth, employment opportunities, economic conditions, and lifestyle preferences. Similarly, the supply of properties is influenced by factors such as land availability, construction activity, zoning regulations, and development trends. The dynamics of demand and supply vary across different segments, leading to market segmentation.

Market Characteristics: Real estate markets can exhibit unique characteristics based on factors such as property values, rental rates, vacancy rates, property appreciation rates, and market liquidity. These characteristics can differ between segments, such as residential, commercial, or luxury real estate, creating distinctions and segmentation within the overall real estate market.

So, the heterogeneity of real estate markets, driven by factors such as location, property types, demand-supply dynamics, and market characteristics, contributes to segmentation.

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Green Vehicle Inc. is manufacturing electric cars and small delivery trucks. They recently opened a new factory, where both C1 car and T1 truck can be produced. To make either vehicle, processing in the assembly shop and in the paint shop are required.

It takes 1/40 of a day and 1/60 of a day to paint a truck of type T1 and a car of type C1 in the paint shop, respectively. It takes 1/50 of a day to assemble either type of vehicle in the assembly shop. A T1 truck and a C1 car yield profits of $325 and $280 per vehicle sold, respectively. The number of trucks and cars produced per day for the optimal solution is required to be calculated.

Let us solve this problem.

Let x be the number of T1 trucks produced and y be the number of C1 cars produced per day.

Therefore, the objective function of the given problem is:

Maximize P = 325x + 280y

Also, the constraints of the problem are:

1/40x + 1/60y ≤ 80 (paint shop time constraint)1/50x + 1/50y ≤ 80 (assembly shop time constraint)x ≥ 0, y ≥ 0 (non-negativity constraint)

Now, we need to graph the given constraints in order to get the optimal solution.

The graph of the given constraints is shown below:

Now, we need to find the points of intersection of these lines and check which one of these points maximize the objective function P.

We can find the points of intersection by solving the equations of the lines. The equations of the lines are:

1/40x + 1/60y = 801/50x + 1/50y = 80

The solution of these equations is: x = 960, y = 720

Therefore, the optimal solution is achieved when 960 trucks and 720 cars are produced per day.

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Requirement 1:Perpetual Inventory RecordDate Item Number Quantity Unit Cost Total Cost BalanceBalance 500 $9,000 2 $120 $240 100 $12,0008th Purchase 400 4 $125 $500 $9,5006th Sale 500 1 $120 $120 $9,38017th Sale 400 2 $125 $250 $9,13030th Sale 100 4 $120 $480 $8,650Cost of ending inventory using the LIFO method is $2,480.Cost of goods sold using the LIFO method is $9,520.

Requirement 2:Journal EntriesDate Item Number Account Titles and Explanation Debit Credit6th Accounts Receivable 120 Sales 120To record the sale of putters on account.8th Inventory 500 Accounts Payable 500To record the purchase of putters on account.17th Accounts Receivable 250 Sales 250To record the sale of putters on account.17th Cost of Goods Sold 250 Inventory 250To record the cost of putters sold on account.30th Accounts Receivable 480 Sales 480To record the sale of putters on account.30th Cost of Goods Sold 480 Inventory 480To record the cost of putters sold on account.

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Given that the possible loss of a startup company in 2018 is normally distributed N(μ, σ) with a mean of 10 million TL, and the Value at Risk (VaR) of the company for 2018 with 95% confidence interval is 12,467,500 TL.

We are supposed to calculate the VaR with a 90% confidence interval.

To calculate the VaR with a 90% confidence interval, we need to find the z-value of the 90% confidence level since the distribution is a standard normal distribution, the z-value of 90% confidence is 1.645.

Now, the VaR for 90% confidence is given as:

VaR = μ + σ × z-score

Whereμ = 10,000,000

σ = ? (Not given)

z-score = 1.645

VaR = 10,000,000 + σ × 1.645

Also, given that the VaR for 95% confidence is 12,467,500,

we can calculate the value of σ from the following equation:

VaR = μ + σ × z-score

Whereμ = 10,000,000

σ = ? (To be determined)

z-score = 1.96

VaR = 10,000,000 + σ × 1.96

∴ σ = (VaR95 - μ) / z-score

= (12,467,500 - 10,000,000) / 1.96

= 1,260,897.96

Substitute the value of σ in the formula of VaR

VaR = 10,000,000 + σ × 1.645

VaR = 10,000,000 + 1,260,897.96 × 1.645= 12,364,789.72 TL.

Hence, the VaR with a 90% confidence interval is 12,364,789.72 TL.

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The payback statistic for Project X is 3.67 years (d), and based on the maximum allowable payback of five years, the firm should accept the project.

To compute the payback statistic for Project X, we need to calculate the cumulative cash flows until the payback period is reached.

Step 1: Calculate the cumulative cash flows.

Time:    0     1     2    3    4    5

Cash flow: −75  −75   0   100  75  50

The cumulative cash flow at each period is as follows:

Time:    0     1     2    3    4    5

Cash flow: −75  −150 −150 −50  25   75

Step 2: Determine the payback period.

The payback period is the time it takes for the cumulative cash flow to equal or exceed the initial investment.

In this case, the initial investment is −75. Looking at the cumulative cash flow, we can see that the payback period is reached at the end of Year 3 when the cumulative cash flow is −50.

Step 3: Calculate the fractional payback period.

To determine the precise payback period, we need to calculate the fractional payback period.

The fractional payback period can be calculated using the following formula:

Fractional payback period = Payback period − (Cumulative cash flow at the end of the year before payback / Cash flow in the payback year)

In this case:

Fractional payback period = 3 − (−150 / 100) = 3 − (−1.5) = 3 + 1.5 = 4.5

Step 4: Determine the payback statistic.

The payback statistic is the sum of the payback period and the fractional payback period.

Payback statistic = Payback period + Fractional payback period

                 = 3 + 4.5

                 = 7.5

Step 5: Compare the payback statistic with the maximum allowable payback.

Since the maximum allowable payback is five years, and the computed payback statistic is 7.5 years, which exceeds the maximum allowable payback, the project should be rejected.

Therefore, the correct answer is:  (option d)3.67 years, reject.

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If a receipt for a payment received from the insurance company of $1800 was recorded on the wrong side of the cash book.

You can correct it by following these steps: Identify the error: Determine whether the receipt was incorrectly recorded as a debit or credit entry in the cash book.

Determine the correct side: Based on the nature of the transaction (receipt), determine the correct side of the cash book where the entry should have been recorded. Receipts are typically recorded on the credit side of the cash book.

Reverse the incorrect entry: Make the necessary adjustment to correct the error. In this case, you will reverse the entry that was recorded on the wrong side by debiting or crediting the respective cash book account and crediting or debiting the correct side.

For example, if the receipt was erroneously recorded as a debit entry on the debit side of the cash book, you would:

Debit the cash book account on the debit side for $1800.

Credit the cash book account on the credit side for $1800.

This adjustment effectively cancels out the initial incorrect entry.

Update the bank reconciliation statement: If the cash book is used to reconcile with the bank statement, make sure to reflect the corrected entry in the bank reconciliation statement. Include the correction in the appropriate section (e.g., outstanding deposits or withdrawals) to ensure the bank statement balance matches the corrected cash book balance.

It's important to maintain accurate records and document the correction to ensure the cash book and bank reconciliation statements are in alignment.

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Income taxes are levied against individuals or groups based on their earnings or profits. Income taxes are typically calculated using tax rates multiplied by taxable income. Depending on a taxpayer's characteristics and income source, tax rates may vary.

The government levies income taxes on both individuals and corporations based on the revenue they generate over a fiscal year. The government considers taxes collected from citizens and companies as a source of income.

Governments apply income taxes on the income produced by people and businesses within their authority. Public services, debt obligations, and the provision of products for citizens are all paid for using income tax.

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The cost of a fixed asset does not include mistakes in installation. Hence, option C is the correct answer.

The cost of a fixed asset typically includes various expenses related to its acquisition and installation. These costs are capitalized and added to the initial cost of the asset. However, mistakes in installation do not fall under the category of costs that are included in the cost of a fixed asset.

Mistakes in installation: Mistakes or errors made during the installation process are not considered part of the cost of a fixed asset. They are usually considered separate costs or expenses that may be accounted for in a different category.

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To determine the monthly rate that Bob has to pay in order to buy his own flat in 96 months, we can use the provided formulas and calculations.

Using the compound interest formula FV = PV * (1 + r/m)^(mt), where FV is the future value of the investment, PV is the present value, r is the annual interest rate, t is the number of years, and m is the number of compounding periods per year, we can calculate the loan amount.

Given that the total cost of the flat is 87,000€ and Bob has already saved 12,000€, the loan amount (L) would be 75,000€ (87,000€ - 12,000€).

Using the formula P = L[c(1 + c)^n]/[(1 + c)^n - 1], where P is the monthly payment, L is the loan amount, n is the number of months, and c is the interest rate per month, we can calculate the monthly payment.

Using Excel's PMT formula, we can input the following parameters: =-PMT(0.017/12, 96, 75000, 12000, 0). Here, 0.017/12 represents the monthly interest rate, 96 is the number of payments, 75000 is the loan amount, 12000 is the down payment, and 0 is the balloon payment.

By applying the formula, we find that the monthly payment is 707.19€ (rounded to the nearest cent). Therefore, Bob needs to pay 707.19€ each month for 96 months to buy the flat.

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Social Security is an entitlement program in the United States that provides financial assistance to qualified individuals. This program is funded by payroll taxes levied on both employers and employees. A politician suggests that the payroll tax levied on employees should be shifted to employers since large corporations can better afford paying such taxes.

Yes, the economic burden of the tax would be shifted from employees to employers if the payroll tax levied on employees were shifted to employers. The economic burden of the tax is determined by who ultimately pays the tax. The tax burden can be shared by both the employer and employee or it can be entirely borne by one party. When a tax is levied on employees, the employer can bear a portion of the burden by reducing wages or salaries. However, this is not always possible,

and in many cases, the employee will bear the entire burden of the tax.In contrast, when a tax is levied on employers, the employer is responsible for paying the tax, and it is not passed on to the employee. In this way, the economic burden of the tax is shifted from employees to employers. A shift in the payroll tax from employees to employers would reduce the financial burden on employees and increase the burden on employers. This change would result in employers paying a higher amount of tax and possibly reducing employee wages to compensate for the increased tax burden. Therefore, such a shift would affect both employers and employees and not just the large corporations.

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For the lowest cost of capital, a firm would issue common stock and long-term debt.

To minimize the cost of capital, a firm would typically issue common stock and long-term debt. Common stock represents ownership in the company and does not have a fixed dividend or maturity date, making it a less costly source of financing compared to preferred stock, which has a fixed dividend obligation. Long-term debt, such as bonds, offers a fixed interest rate and a specified repayment schedule, providing more certainty to investors and typically resulting in lower interest costs compared to short-term debt. Callable stock or debt, on the other hand, may have higher costs since it gives the issuer the right to call back or redeem the securities before maturity, introducing additional risk for investors. Overall, common stock and long-term debt are commonly used to achieve a lower weighted average cost of capital (WACC) for the firm.

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Frictional unemployment and cyclical unemployment are two types of unemployment that can occur in an economy.

Frictional Unemployment: Frictional unemployment refers to temporary unemployment that occurs when individuals are in the process of transitioning between jobs or entering the workforce for the first time. It arises from the natural dynamics of the labor market, where individuals may be searching for better job opportunities, changing careers, or relocating. Causes of frictional unemployment include factors such as job search time, information gaps between job seekers and employers, and the time it takes to match individuals' skills and qualifications with available job openings. It is often considered a relatively short-term and voluntary form of unemployment as individuals are actively seeking employment but have not yet found a suitable job. Frictional unemployment can have some positive aspects, as it allows for job mobility, promotes better matches between workers and jobs, and fosters labor market efficiency. However, excessive levels of frictional unemployment can indicate inefficiencies in the job search process or structural issues in the labor market.

Cyclical Unemployment: Cyclical unemployment refers to unemployment that is directly related to fluctuations in the business cycle and overall economic conditions. It occurs when there is a decline in aggregate demand, leading to reduced production, layoffs, and a higher unemployment rate.

During economic downturns or recessions, businesses may experience decreased consumer demand for their goods and services, leading to a decrease in production and a need to lay off workers. This results in cyclical unemployment, as individuals lose their jobs due to the weak economy. Cyclical unemployment is closely tied to the overall health of the economy and tends to rise during economic contractions and fall during periods of economic expansion. It represents a mismatch between the number of available jobs and the number of individuals seeking employment.

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Acquisition of bonds on January 1, 2020.DateJanuary 1, 2020ParticularsAmount ($)Bonds payable950,000Cash950,000 (To record the acquisition of bonds at face value) b) Prepare a full amortization table for this FV-NI investment in debt.

The amortization table is a schedule that shows the reduction in the bond premium or discount over the term of the bond. The schedule shows the following: Interest paid each period, Amortization of discount or premium each period, and Carrying value of the bond at the end of each period.

YearBeginning carrying value ($)Interest payment ($)Effective interest ($)Amortization of discount or premium ($)Ending carrying value ($)2020950,00057,00057,00028,258,720982,7202021950,00057,00058,96327,295,757924,0432022950,00057,00057,88528,373,835866,1652023950,00057,00056,81129,447,689808,3112024950,00057,00055,73030,529,262750,738 c) Year-end adjusting entry at December 31, 2020.

DateDecember 31, 2020 Particulars Amount ($)Bond interest expense (5,700,000 x 6%)342,000Premium on bonds payable5,840Bond interest payable (950,000 x 6%)57,000 (To record bond interest expense and amortization of bond premium for the year) d)

Receipt of the first interest payment on January 1, 2021.DateJanuary 1, 2021ParticularsAmount ($)Cash57,000Bond interest receivable 57,000 (To record receipt of interest payment)

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Purdue Pharma's L.P. COSO and COBIT framework for internal control

In response to the question, Purdue Pharma, the creator of OxyContin, is responsible for promoting its drug as non-addictive to doctors and the general public. Pardue Pharma’s L.P. COSO and COBIT framework for internal control are as follows:

COSO framework

The COSO framework was developed to assist companies in developing and monitoring their internal control systems. The COSO framework includes five components, which are as follows:

1. Control Environment: This includes the company's control environment, management's approach to risk management, and the company's culture.

2. Risk Assessment: Risk assessment is the process of identifying potential risks and assessing the likelihood of their occurrence.

3. Control Activities: Control activities are policies and procedures designed to ensure that risk mitigation strategies are effective.

4. Information and Communication: Information and communication refer to the systems used to ensure that the company's internal controls are functioning effectively.

5. Monitoring: Monitoring involves the company's monitoring process to ensure that the internal controls are functioning correctly.

COBIT framework

The COBIT framework is a process-driven framework for IT governance and management. COBIT provides a framework for the development of policies and procedures, as well as the management of IT systems. COBIT focuses on the following five key areas:

1. Planning and Organisation: This includes the development of policies and procedures, as well as the management of IT systems.

2. Acquisition and Implementation: This involves the acquisition of IT systems and the implementation of those systems.

3. Delivery and Support: This involves the delivery of IT services and the support of those services.

4. Monitoring and Evaluation: This includes the monitoring of IT systems and the evaluation of their performance.

5. Review and Improvement: This involves the review of IT systems and the implementation of improvements.

Purdue Pharma has failed to follow the COBIT and COSO framework, which has led to the OxyContin scandal. The company's lack of oversight and internal controls allowed it to misrepresent its product, OxyContin, as a safe and non-addictive painkiller. As a result, thousands of people have become addicted to the drug, leading to a public health crisis.

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The type of markets that help companies to raise capital for the first time is the primary market. The primary market is a marketplace in which new securities, such as stocks and bonds, are issued for the first time and are available for purchase.

A primary market is a type of financial market where fresh securities are sold and issued by companies, governments, or public sector institutions to raise money. Companies issue securities to raise funds for development or other initiatives, which are then bought by individual or institutional investors. These new securities are sold in the primary market and the proceeds from the sale go to the issuing company.

The secondary market is another type of financial market. It is a marketplace where previously issued securities are traded among investors. Unlike primary markets, secondary markets do not provide issuers with new capital. Instead, they provide investors with a mechanism for buying and selling existing securities among themselves.

In summary, primary markets help businesses to raise capital for the first time by issuing new securities to investors. On the other hand, secondary markets facilitate the trade of existing securities between investors.

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The false statement from the following is C) There is no need to calculate the cost of capital for the project's cash flows  It's critical to consider the expense of capital in addition to the initial cost of setting up a firm and the ongoing operational costs of maintaining it.

Capital can come in the form of debt or equity. For the project's cash flows, there is a requirement to calculate the cost of capital if the project's risk and leverage differ from those of the firm overall. The cost of capital is the total expense of obtaining the money a company requires to stay in business. The cost of capital is influenced by a variety of factors, including the amount of risk connected with the investment and the rate at which the investment will produce earnings. Companies' cost of capital calculations must take into account the economic climate in which they operate. The cost of capital can be calculated as a percentage of the total capital required by the company.Therefore, option C) There is no need to calculate the cost of capital for the project's cash flows if a project's risk and leverage differ from those for the firm overall is a false statement.

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The answer is , the gross profit for the store was 38.3%.

Selected data for Nancy's store appear below:

Gross profit = $1,341,000

Sales = $3,500,000

Beginning inventory = $140,000

Accounts receivable = $280,000

Ending inventory = $155,000

Accounts receivable, net = $210,000

(a) Compute gross profit rate for 2020.

Gross profit rate = Gross Profit / Net Sales

Gross profit = Net Sales - Cost of Goods Sold

= $3,500,000 - ($3,500,000 - $1,341,000)

= $1,341,000

Gross profit rate = $1,341,000 / $3,500,000

= 0.383 or 38.3%(

b) Compute the inventory turnover for 2020.

Inventory turnover = Cost of Goods Sold / Average Inventory

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Cost of Goods Sold = Net Sales - Gross Profit

Cost of Goods Sold = $3,500,000 - $1,341,000

= $2,159,000

Average Inventory = ($140,000 + $155,000) / 2

= $147,500

Inventory turnover = $2,159,000 / $147,500

= 14.65 times (rounded to two decimal places)

(c) Compute accounts receivable turnover for 2020.

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Net Credit Sales = Total Sales - Cash Sales

= $3,500,000 - $2,800,000

= $700,000

Average Accounts Receivable = ($280,000 + $210,000) / 2

= $245,000

Accounts Receivable Turnover = $700,000 / $245,000

= 2.86 times (rounded to two decimal places)

Selected comparative statement data for Shefficid Products Company are presented below:

Shefficid Products CompanyRatio2020

Accounts receivable turnover times

4.9

Inventory turnover times

52.7

Comparing the above ratios for 2020:Nancy's Store Accounts Receivable Turnover Ratio = 2.86

Shefficid Products Company Accounts Receivable Turnover Ratio = 4.9

Nancy's Store Inventory Turnover Ratio = 14.65

Shefficid Products Company Inventory Turnover Ratio = 52.7

Therefore, these ratios indicate that Shefficid Products Company has higher Accounts Receivable Turnover Ratio and Inventory Turnover Ratio than Nancy's Store.

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The company has already received loans during COVID to aid with new loans and working capital, but the new loans would exceed the company's Debt to Equity ratio, which is required as part of their loan covenants.

SPI-X is facing cash flow issues because of the new work they have received.

Their year-end is coming in a few weeks, and they need cash to handle the situation.

The company has held a shareholder meeting, and they have decided to buy inventory from SPl-L.

In this transaction, the company would be able to use the sale as  and obtain a  collateral loan from a different institution. They would then lend the money back to SPI-X.

The purpose is to purchase the inventory along with financing and any other associated costs to SPl-L.

This approach is beneficial because the new loan wouldn't exceed the company's Debt to Equity ratio, which is a requirement of the loan covenants.

The company can borrow money by using its inventory as collateral, which is a reasonable option in a difficult financial situation.

The company would be able to repay the loan in due course, and it wouldn't be required to breach the loan covenants.

Therefore, buying inventory and obtaining a loan from a different institution is a sound financial strategy for SPI-X to overcome their temporary cash flow issues.

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The formal approach to pricing that a commercial real estate agent is most likely to use for pricing an office building is the income approach. The correct option is c.

The income approach is frequently used in commercial real estate to calculate the value of properties that generate income, like office buildings, based on the revenue they produce. It focuses on the potential earnings that the property could produce and considers elements including rental income, occupancy rates, costs, and market trends.

A real estate agent can determine the worth of an office property by examining its potential for income, including its present and future rental income.

Thus, the ideal selection is option c.

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e. Less customer interaction with the company. Collaborative CRM is a customer relationship management approach that emphasizes improved communication and collaboration with customers.

It aims to enhance customer interactions and build stronger relationships. While the other options (a, b, c, and d) are benefits of collaborative CRM, option e is incorrect. Collaborative CRM does not aim to reduce customer interaction with the company; instead, it focuses on improving customer engagement and communication. By providing a better understanding of customer history, current needs, and reducing communication barriers, collaborative CRM enables more effective and personalized customer service across various touch points. This approach aims to foster closer relationships with customers rather than minimizing interaction with them.

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In May, sales were $236,000, cost of goods sold was $81,500, and cash was paid for merchandise purchases (exact amount unknown).

The merchandiser recorded sales of $236,000 during the month of May. The cost of products sold, or the direct costs incurred in obtaining or producing the sold commodities, came to $81,500. Additionally, although the sum was not specified in the documents, the corporation paid cash for its purchases of goods. The money used by the business to purchase inventory or commodities for resale is referred to as the cash paid for merchandise purchases. For the purpose of keeping inventory levels high and meeting consumer demand, this spending is essential. However, it is difficult to offer more analysis or insights into the company's purchasing activity without knowing the precise sum.

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a. Based on the scenario above and the principles relating to training design, describe TWO (2) training mistakes that Jamilah as a trainer has committed.Mistake 1: Jamilah relied heavily on traditional training methods.Mistake 2: Jamilah was not inclusive of participants' ideas.

b.Provide TWO (2) recommendations that Jamilah could adopt and apply to make her training session more interesting and engaging.1. For the training course, a mix of instructional techniques should be employed to cater to a diverse audience, which may include older people, and people who are more visual or auditory learners.2. Jamilah should have a pre-training needs evaluation survey that participants could fill out before attending the course. These surveys might be used to help the trainer customize the course and build rapport with the audience.

c. If Jamilah were asked by the college administrator to assist them in evaluating the training, elaborate on the following:i. The TWO (2) outcomes to be collected from the training and the measurement methods that she could use.Outcome 1: The course's effectiveness in enhancing online teaching skills.Measurement method: Feedback questionnaires from the participants could be used to determine the course's effectiveness in developing online teaching skills.Outcome 2: The amount of participation by the participants.

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If a business is using QuickBooks Online Payroll to handle their tax filings and payments, they can still enter tax payments made prior to starting with QuickBooks Online Payroll. In QuickBooks Online Payroll, to enter tax payments one at a time, you would go to Taxes > Payroll Tax > Payments > Prior Tax History > Add Payment.

There are a few steps you need to take to add these payments: Go to Taxes from the left menu. Select Payroll Tax. Choose Payments. Click Prior Tax History. Select Add Payment. Enter the details about the payment you made to the tax agency.

Click Save. Once you've done this, QuickBooks Online Payroll will use this information to help ensure that the correct tax amounts are reflected in your future tax filings.

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Net Present Value (NPV): This technique calculates the present value of expected future cash flows, discounted at a specified cost of capital.

If NPV is positive, the investment is considered acceptable, whereas if it is negative, the investment should be rejected. Project A:
[tex]NPV of Project A = - $451,000 + PV of net annual cash inflows[/tex]
[tex]PV of net annual cash inflows = $74,000 [((1- (1/ (1+0.09)^11))/0.09)]= $596,792.33[/tex]
[tex]NPV of Project A = - $451,000 + $596,792.33 = $145,792.33[/tex]
[tex]Project A has a positive NPV, hence it is acceptableProject B:[/tex]
[tex]NPV of Project B = - $288,000 + PV of net annual cash inflows[/tex]
[tex]PV of net annual cash inflows = $50,000 [((1- (1/ (1+0.09)^11))/0.09)]= $404,332.45[/tex]
[tex]NPV of Project B = - $288,000 + $404,332.45 = $116,332.45[/tex]
Project B has a positive NPV, hence it is acceptable Profitability Index: It is the ratio of present value of net cash inflows of the proposal to the initial cash outflow.

Project A:
[tex]Profitability Index of Project A = PV of net annual cash inflows / Initial cash outflow[/tex]
[tex]Profitability Index of Project A = $596,792.33 / $451,000 = 1.32[/tex]
[tex]Project A has a profitability index of 1.32Project B:[/tex]
[tex]Profitability Index of Project B = PV of net annual cash inflows / Initial cash outflow[/tex]
[tex]Profitability Index of Project B = $404,332.45 / $288,000 = 1.41[/tex]
[tex]Project B has a profitability index of 1.41.[/tex]

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Given that the average height of the members of the chess club is 5' 6'' and the standard deviation is 2''.

We need to find the probability of a player being between 5' 4'' and 5' 9''.

Now, we need to standardize the given heights using the z-score formula.

z-score = (X - μ) / σ

Where,X = Height of the player = 5' 4'' and 5' 9'' = 64'' and 69''

μ = Mean height of the members of the chess club = 5' 6'' = 66''

σ = Standard deviation = 2''

z₁ = (64 - 66) / 2 = -1

z₂ = (69 - 66) / 2 = 1.5

Now, we need to find the area under the normal distribution curve between z = -1 and z = 1.5.To do this, we use the standard normal table or the calculator or the z-score formula for the area between two z-scores.

Using the standard normal table, the area between z = -1 and z = 1.5 is 0.7745 - 0.1587 = 0.6158

Therefore, the probability of a player being between 5' 4'' and 5' 9'' is 62% (approx).Hence, the answer is 62.

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