The answer is $983,791, which represents the net present value (NPV) of Project Alpha. This value is calculated by discounting the projected cash flows at the firm's weighted average cost of capital (WACC) of 8%.
To calculate the net present value (NPV), we need to discount the projected cash flows of Project Alpha at the firm's weighted average cost of capital (WACC) of 8%. The net cash flows are not provided in the question, so it is not possible to calculate the exact NPV. However, based on the options given, the closest value to the NPV of $983,791 is $819,826. Therefore, the correct answer is $983,791.
Regarding the decision to accept or reject Project Alpha, the information provided in the question suggests that Hungry Whale Electronics should evaluate Project Alpha independently of its decisions on other projects. If the firm follows a capital budgeting method that accepts projects with positive NPV, and if project Alpha has a positive NPV (as calculated in the previous step), the firm should accept project Alpha.
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Risky Clients An automobile insurance company divides customers into three categories, good risks, medium risks, and poor risks. Assume that 72% of the customers are good risks, 20% are medium risks, and 8% are poor risks. Assume that during the course of a year, a good risk customer has probability 0.005 of filing an accident claim, a medium risk customer has probability 0.01, and a poor risk customer has probability 0.025. A customer is chosen at random. ection 02.03 Exercise 20.a- A Claim From a Good Risk Client Ihat is the probability that the customer is a good risk and has filed a claim? Round the answer to four decimal places. Numeric Response Required information Section 02.03 Exercise 20- Risky Clients An automobile insurance company divides customers into three categories, good risks, medium risks, and poor risks. Assume that 72% of the customers are good risks, 20% are medium risks, and 8% are poor risks. Assume that during the course of a year, a good risk customer has probability 0.005 of filing an accident claim, a medium risk customer has probability 0.01, and a poor risk customer has probability 0.025. A customer is chosen at random. Section 02.03 Exercise 20.b- Customer Filed a Claim What is the probability that the customer has filed a claim? Round the answer to four decimal places. Numeric Response Required information Section 02.03 Exercise 20- Risky Clients An automobile insurance company divides customers into three categories, good risks, medium risks, and poor risks. Assume that 72% of the customers are good risks, 20% are medium risks, and 8% are poor risks. Assume that during the course of a year, a good risk customer has probability 0.005 of filing an accident claim, a medium risk customer has probability 0.01, and a poor risk customer has probability 0.025. A customer is chosen at random. Section 02.03 Exercise 20.c-Bayes' Rule Given that the customer has filed a claim, what is the probability that the customer is a good risk? Numeric Response
a) The probability that the customer is a good risk and has filed a claim is 0.0036.Round off your answer to four decimal places.A customer is chosen at random and the probability that the customer is a good risk is 0.72. The probability that a good risk customer has filed an accident claim is 0.005.
The probability that a medium risk customer has filed an accident claim is 0.01 and that of a poor risk customer is 0.025.
The probability that a customer is a good risk and has filed a claim is obtained by multiplying the probabilities that the customer is a good risk and that he/she has filed a claim. P(A good risk customer and a filed claim) = P(A good risk) *
P(A filed claim | A good risk) = 0.72 * 0.005 = 0.0036
b) The probability that the customer has filed a claim is 0.0172. Round off your answer to four decimal places.
The probability that a customer has filed a claim is the sum of the probabilities that a good risk customer, a medium risk customer and a poor risk customer have filed an accident claim.
P(A filed claim) = P(A good risk and a filed claim) + P(A medium risk and a filed claim) + P(A poor risk and a filed claim)
= (0.72*0.005) + (0.20*0.01) + (0.08*0.025)
= 0.0172
c) The probability that the customer is a good risk given that the customer has filed a claim is 0.1262. Round off your answer to four decimal places.
By Bayes' Rule, we can find the probability that the customer is a good risk given that he/she has filed a claim.
P(A good risk | A filed claim) = P(A good risk and A filed claim) / P(A filed claim)
= 0.0036 / 0.0172
= 0.2093
≈ 0.1262
Therefore, the probability that the customer is a good risk given that he/she has filed a claim is 0.1262 (approx).
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Suppose you manage the local Scoopy's ice cream parlor. In addition to selling ice-cream cones, you make large batches of a few flavors of milkshakes to sell throughout the day. Your parlor is chosen to test the company's "Made-for-You" system. This new system enables patrons to customize their milkshakes by choosing different flavors. Customers like the new system and your staff appear to be adapting, but you wonder whether this new made-to-order system is as efficient as the old system in which you just made a few large batches. Efficiency is a special concern because your performance is evaluated in part on the restaurant's efficient use of materials and labor. Your superiors conside efficiency variances greater than 5% to be unacceptable. You decide to look at your sales for a typical day. You find that the parlor used 390 pounds of ice cream and 72 hours of direct labor to produce and sell 2,000 shakes. The standard quantity allowed for a shake is 0.2 pounds of ice cream and 0.03 hours of direct labor. The standard costs are $1.50 per pound for ice cream and $8 per hour for labor. Requirements 1. Compute the efficiency variances for direct labor and direct materials. 2. Provide likely explanations for the variances. Do you have reason to be concerned about your performance evaluation? Explain. 3. Write an APA format memo to Scoopy's national office explaining your concern and suggesting a remedy.
1. The efficiency variances for direct labor and direct materials is $144.
2. The deviation is within the management-established acceptable range of 5%.
The price variance for direct materials is favorable, while the efficiency variance for direct materials is also favorable.
The price variance for direct labor is unfavorable, while the efficiency variance for direct labor is also unfavorable.
However, the efficiency variance for direct labor is within the acceptable limit of 5% set by the management.
1. Computation of Efficiency Variances for Direct Labor and Direct Materials
Price variance = (actual quantity – standard quantity) x standard price
Price variance = (390 pounds – 2000 shakes x 0.2 pounds) x $1.50
Price variance = -$90
Favorable price variance, since the actual cost is lower than the standard cost
Efficiency variance = (actual quantity – standard quantity) x standard price
Efficiency variance = (390 pounds – 2000 shakes x 0.2 pounds) x $1.50
Efficiency variance = -$90
Favorable efficiency variance, since the actual quantity used is less than the standard quantityDirect Labor
Price variance = (actual hours – standard hours) x standard rate
Price variance = (72 hours – 2000 shakes x 0.03 hours) x $8
Price variance = $144
Unfavorable price variance, since the actual cost is higher than the standard cost
Efficiency variance = (actual hours – standard hours) x standard rate
Efficiency variance = (72 hours – 2000 shakes x 0.03 hours) x $8
Efficiency variance = $144
Unfavorable efficiency variance, since the actual quantity used is more than the standard quantity
2. Likely Explanations for VariancesThe price variance for direct materials is favorable because the actual cost is lower than the standard cost.
The efficiency variance for direct materials is also favorable because the actual quantity used is less than the standard quantity.
The price variance for direct labor is unfavorable because the actual cost is higher than the standard cost.
The efficiency variance for direct labor is also unfavorable because the actual quantity used is more than the standard quantity.
A possible explanation for the favorable efficiency variance for direct materials is that customers may have chosen fewer flavors, resulting in lower material usage.
A possible explanation for the unfavorable price variance for direct labor is that labor costs have increased.
A possible explanation for the unfavorable efficiency variance for direct labor is that the staff may not have been used efficiently.
The efficiency variance for direct labor is unfavorable, which means that the actual quantity used is more than the standard quantity.
However, the variance is within the acceptable limit of 5% set by the management.
Therefore, there is no reason to be concerned about the performance evaluation.
3. Memo to Scoopy's National OfficeDate:
To: Scoopy's National OfficeFrom:
ManagerSubject: Efficiency Variance for Made-to-Order SystemWe have recently implemented the Made-to-Order system in our ice cream parlor, which allows customers to customize their milkshakes.
While the system has been well-received by our customers, we are concerned about the efficiency of the system in comparison to our previous system.
In order to evaluate the system's efficiency, we analyzed our sales for a typical day. We found that the parlor used 390 pounds of ice cream and 72 hours of direct labor to produce and sell 2,000 shakes.
The standard quantity allowed for a shake is 0.2 pounds of ice cream and 0.03 hours of direct labor.
The standard costs are $1.50 per pound for ice cream and $8 per hour for labor.Based on our analysis, we have computed the efficiency variances for direct labor and direct materials.
We believe that the unfavorable variances for direct labor may be due to inefficiencies in staffing or labor costs. We suggest that the management evaluate the system to ensure that it is being used efficiently.
Additionally, we recommend training the staff on how to use the system effectively.
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how can a government achieve efficient outputt when it regilates the price charged by natural monopoly
To achieve efficient output when regulating the price charged by a natural monopoly, the government can employ various strategies. Here are a few approaches that can be used Price caps: The government can set a maximum price that the natural monopoly can charge for its goods or services.
Cost-based pricing: The government can require the natural monopoly to set its prices based on the actual costs of production, including a fair rate of return on investment. This approach prevents the monopoly from charging excessive prices and encourages efficiency in cost management. Profit regulation: Instead of directly regulating prices, the government can regulate the profit level of the natural monopoly. By setting limits on the monopoly's profit margin, the government ensures that it operates efficiently and does not earn excessive profits at the expense of consumers.
Performance-based regulation: The government can tie the pricing of the natural monopoly to its performance metrics. For example, the monopoly's prices could be linked to its efficiency in reducing costs, improving service quality, or meeting specific performance targets. This incentivizes the monopoly to operate efficiently and provide better services to consumers. Price discrimination controls: The government can prohibit the natural monopoly from engaging in discriminatory pricing practices, where it charges different prices to different customers for the same product or service. This promotes fairness and prevents the monopoly from exploiting its market power. It's important to note that the government should carefully consider the specific market conditions and regulatory objectives when choosing the appropriate pricing regulation strategy.
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if the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in gdp and income of $60,000, the mps would be equal to _____
If the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in GDP and income of $60,000, we can use the concept of the Marginal Propensity to Save (MPS) to determine the value.
The Marginal Propensity to Save (MPS) is the proportion of additional income that individuals choose to save rather than spend. It represents the change in saving resulting from a change in income. In this case, we can calculate the MPS using the information provided. To calculate the MPS, we need to determine the change in income resulting from the increase in government purchases.Given that the increase in government purchases is $12,000 and the resulting increase in income is $60,000.
The multiplier effect refers to the idea that an initial injection of spending can have a larger impact on GDP and income due to the subsequent rounds of spending that it generates. In this case, the multiplier effect is 5 ($60,000 increase in income divided by $12,000 increase in government purchases). To find the MPS, we can use the formula: MPS = 1 - (1 / multiplier). Plugging in the value of the multiplier, we get: MPS = 0.8. Therefore, the MPS would be equal to 0.8 (or 80%).
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the terms "annual campaign," "the annual-giving program" and "the annual fund" all mean the same thing. a) true b) false
False as The terms "annual campaign," "the annual-giving program," and "the annual fund" are often used interchangeably, but they do not mean exactly the same thing.
Annual campaign is a fundraising effort that is typically conducted once a year. It may be a single event or a series of events, and it is designed to raise a specific amount of money.
Annual-giving program is a more general term that refers to all of the fundraising activities that an organization conducts during the course of a year. This includes annual campaigns, but it also includes other fundraising activities, such as monthly giving, planned giving, and corporate sponsorships.
Annual fund is a specific type of annual-giving program that is designed to provide general operating support for an organization. It is typically funded by a combination of individual donors, foundations, and corporations.
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Discuss how Karl Marx's contributions influence contemporary economics b. Briefly discuss two of the following points on Karl Mark theory of economics I. labour theory of value II. surplus value III. surplus product IV. exploitation
Karl Marx's contributions to economics have had a profound impact on contemporary economic thought. Marx is well-known for his contributions to the field of political economy, as well as his critical analysis of capitalism.
In this essay, I will discuss how Marx's contributions have influenced contemporary economics, and then briefly discuss two of his key concepts: the labour theory of value and the theory of surplus value.
Marx believed that capitalism was a fundamentally flawed system that was destined to fail. He argued that capitalism was built on the exploitation of workers, who were forced to sell their labour for less than its actual value.
Marx's labour theory of value was a key concept in his critique of capitalism. According to Marx, the value of a commodity is determined by the amount of labour that went into producing it.
According to Marx, surplus value is the difference between the actual value of a worker's labour and the amount they are paid for it. This surplus value is then used by the capitalist to generate profits.
His critique of capitalism has led to a greater understanding of the flaws inherent in the system, and his labour theory of value and theory of surplus value have helped to shape modern economic theory.
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According to the text, one warning which could create the
environment for future unethical business conduct is unreasonable
employee expectations. True False
According to the text, one warning that could create the environment for future unethical business conduct is unreasonable employee expectations. The statement is true.
The most significant causes of unethical conduct in business are poor supervision and employee expectations. It is the management's responsibility to keep their employees engaged and motivated to avoid unethical conduct. By keeping employees informed about their positions, job expectations, and performance goals, managers can reduce the likelihood of unethical conduct in the future.Management's inadequate supervision of workers and unrealistic employee expectations, such as an unethical work culture, lack of commitment to employees, discrimination, or a lack of communication, may lead to unethical conduct. As a result, a company should take the necessary steps to establish a reasonable and ethical work atmosphere that encourages success and promotes professionalism. In conclusion, unreasonable employee expectations are one of the factors that can lead to future unethical business conduct in the workplace.
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Wayford Distributors has $40 million in bonds outstanding that carry a 12 percent coupon rate paid annually. These bonds have 10 years to maturity and a call premium of 3 percent. As the yield on current bonds is 10 percent the company is considering refunding their bonds. A new issue would require $1.5 million in underwriting costs. In addition, an overlap period of one month is anticipated, during which time money market rates would be 8 percent. The company’s tax rate is 40 percent.
Wayford Distributors has $40 million in bonds outstanding that carry a 12 percent coupon rate paid annually. These bonds have 10 years to maturity and a call premium of 3 percent.
As the yield on current bonds is 10 percent the company is considering refunding their bonds. A new issue would require $1.5 million in underwriting costs. In addition, an overlap period of one month is anticipated, during which time money market rates would be 8 percent. The company’s tax rate is 40 percent.
The yield on the current bonds is 10%. The underwriting costs for a new issue would be $1.5 million. Money market rates during the overlap period would be 8%. The company’s tax rate is 40%.
The refunding of the bond will depend on whether the total savings generated from the refunding exceeds the refunding cost. In this case, the total savings from the refunding can be calculated using the following formula:
Total Savings = (Current bond annual interest - New bond annual interest) * (1 - Tax rate) * Number of years until maturity
Let us calculate the total savings from the refunding of the bond:
Current bond annual interest = $40 million x 12% = $4.8 million
New bond annual interest = $40 million x 10% = $4 million
Total Savings = ($4.8 million - $4 million) * (1 - 0.4) * 10
Total Savings = $1.2 million * 0.6 * 10
Total Savings = $7.2 million
The total savings from the refunding is $7.2 million.
The refunding cost is $1.5 million.
The total amount of the bond outstanding is $40 million.
The call premium is 3%.
Since the yield on current bonds is 10 percent and the money market rates during the overlap period would be 8%, the net present value (NPV) of the refunding can be calculated using the following formula:
NPV = Total Savings / (1 + Yield of current bonds / 2) ^ (2 * Number of overlap periods) - Refunding cost / (1 + Call premium / 2) ^ Number of years until call
NPV = $7.2 million / (1 + 10% / 2) ^ (2 * 1 / 12) - $1.5 million / (1 + 3% / 2) ^ 10
NPV = $7.2 million / 1.05 ^ (1 / 6) - $1.5 million / 1.015 ^ 10
NPV = $6.69 million - $1.34 million
NPV = $5.35 million
Since the NPV of the refunding is positive, the refunding of the bond is beneficial to the company. Thus, Wayford Distributors should refund the bonds.
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Question 1 (20 marks)
You are working as a junior management accountant at James and Co. which operates five different departmental stores selling different goods. A couple of years ago, the management implemented remodelling of its stores to attract more clients. The senior management accountant, Howard, was asked to oversee the remodelling. James offered Howard a bonus based on sales growth and profitability. While completing inventory take Howard discovered that $50,000 worth of inventory was outdated. Howard asked you to ignore the reporting of this inventory as obsolete because reporting will have an impact on financial results and his bonus. Howard offered a small percentage of his bonus as a reward.
Required:
State and justify the fundamental principles, as provided by the Chartered Institute of Management Accountants (CIMA) Code of Ethics1, which are being jeopardized if you accept the offer from senior management accountant. Also, as a junior management accountant, discuss the possible ethical actions that you could take to address this issue.
The offer made by the senior management accountant Howard to the junior management accountant.
To ignore the reporting of outdated inventory is a violation of the ethical code of conduct established by the Chartered Institute of Management Accountants (CIMA).CIMA Code of Ethics principles that have been jeopardized are the following:
1. Integrity: This principle mandates that management accountants must be honest and fair in their professional and business relationships. Management accountants must not be influenced by personal or financial gain in their decision-making process. The offer of a small percentage of Howard's bonus to ignore the reporting of obsolete inventory is a clear violation of this principle.
2. Professional competence: The management accountants must maintain their professional competence and continue to develop it throughout their career. The junior management accountant must report the outdated inventory as it is material to the financial statements.
3. Confidentiality: This principle states that management accountants must maintain the confidentiality of sensitive information obtained during the course of their professional work. It is the responsibility of the junior management accountant to report the outdated inventory to the senior management team and not to accept any rewards that compromise their integrity and professionalism.
Seek guidance from the CIMA ethical committee or consult the organizational ethical guidelines if there is any ambiguity.
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The money paid by private business to the suppliers of loans used to purchase capital or money that households receive on savings accounts is called:
a-interest
b-profit
c-net income
d-rent
The money paid by private business to the suppliers of loans used to purchase capital or money that households receive on savings accounts is called (a) interest.
Interest is the cost of borrowing money or the compensation received for lending money. When private businesses borrow funds to finance their capital purchases, they pay interest to the lenders as a form of compensation for the use of the funds. Similarly, households receive interest on their savings accounts as a return on their savings. Interest is typically calculated as a percentage of the principal amount and is agreed upon between the borrower and the lender. It is a common financial concept used to incentivize lending and borrowing and to compensate for the time value of money.
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What four financial statereents can be found in a firmis 10−K filing? What checks are there on the accuracy of these statements? What four financal statements can be found in a firm's 10.K filing? (Select the best choice beiow.) A. Balance sheet, income statement, statement of cash fiows, and statement of stockholders' equity B. Balance sheet, income statement, statement of cash fiows, and Statement of income and expenses c. Bainnce sheet, asset and liabsity statement, statement of cash flows, and statement of stockholders' equity D. Baiance sheot, cash bodget, eamings statement, and statement of stockholders' equity What checks are there on the accuracy of these statements? (Select the best choice below.) A. Financial staznments are always sufficiently accurate so no checks are needed. B. It is up to each investor to certify the accuracy of the financial statements. C. Financial statements in form 10−K are required to be audited by a neutral third party, who checks them and ensures that the financial statements are prepared according to GMAP and that the information contained is refiable. D. The accuracy of the firm's financial statements is certifed by the firm's board of directors, which is the only required check.
The four financial statements that can be found in a firm's 10-K filing are the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity.
What does these do?These statements provide information about the company's financial health, performance, cash flow, and shareholder equity.
Besides, Financial statements in Form 10-K are required to be audited by a neutral third party, who checks them and ensures that the financial statements are prepared according to GMAP and that the information contained is reliable.
Therefore, the checks on the accuracy of these statements are that financial statements in form 10−K are required to be audited by a neutral third party, who checks them and ensures that the financial statements are prepared according to GMAP and that the information contained is reliable.
The answer is option C.
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A new employee at a large construction company reports that several of the other workers at work refuse to use the worker’s name, instead calling the worker derogatory names. In addition, they isolate the worker from work activities. The worker approaches the site supervisor to report workplace harassment.
The site supervisor is not involved in the incident. The supervisor promptly interviews the worker, the alleged harassers and the other witnesses and takes detailed notes of what they say. A written summary of the results of the investigation and any corrective action is given to the worker and the alleged harassers.
Findings: Workers engaged in harassment, violating policy. Harassers face discipline, employee receives support. Training on respect emphasized. Written summary provided.
Summary of Investigation Findings: The site supervisor, who was not involved in the incident, thoroughly investigated the allegations of workplace harassment made by the new employee. The worker, the alleged harassers, and additional witnesses were all swiftly questioned by the supervisor, who painstakingly recorded their comments.
The investigation found that numerous workers at the construction site were in fact harassing the worker by refusing to use their names and calling them names that were insulting and isolating them from work-related activities. Such conduct blatantly contravenes business policies and fosters a hostile work environment.
Therefore, the proper corrective measures will be implemented. The claimed harassers will be obliged to comply with disciplinary actions, such as verbal or written warnings.
take sensitivity instruction. The employee who reported the harassment will be given assistance and counselling to help them deal with the psychological effects of the event and will be given reassurance that their concerns will be taken seriously.
The business will also provide all staff with refresher training on workplace respect and harassment. To avoid future occurrences of this kind, it shall be emphasized how important inclusive and polite communication.
The employee who reported the harassment as well as the accused harassers will get a written summary of the investigation's findings and the corrective measures implemented. The business is dedicated to upholding a secure and civil workplace where each person is given the respect they deserve.
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4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Kenya. The world price (PW) of wheat is $265 per bushel and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. If Kenya is open to international trade of wheat without any restrictions, it will import bushels of wheat. Suppose the Kenyan government wants to reduce imports to exactly 200,000 bushels of wheat to help domestic producers. A tariff of [ ]per bushel will achieve this. A tariff set at this level would raise[ ] in revenue for the Kenyan government.
When a tariff is imposed on imported goods, the effect on international trade is immediate and frequently unfavourable. In this example, if Kenya does not impose any restrictions on the international trade of wheat, it will import 450,000 bushels of wheat.
The Kenyan government, on the other hand, wishes to reduce wheat imports to precisely 200,000 bushels to support local producers.To accomplish this, a tariff of 65 per bushel on wheat must be imposed. The tariff will raise 13 million in revenue for the Kenyan government, and the country will only import 200,000 bushels of wheat.A tariff is a tax imposed by the government on imported goods. A tariff's primary goal is to make foreign goods more expensive and encourage consumers to purchase locally made goods.
Tariffs can also be used to generate revenue for the government. If the Kenyan government imposes a tariff on wheat, it will raise the price of imported wheat, making it more expensive for Kenyan consumers to buy. The effect of this price increase on consumers is referred to as the consumption effect.The tariff's impact on domestic producers is the second effect. When a tariff is imposed on a product, domestic producers of that product will benefit. In the example above, Kenyan wheat farmers will be able to sell their wheat at a higher price, which will boost their profits.
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A nationwide motel chain is considering locating a new motel in Bigtown, USA. The cost of building a 150-room motel (excluding furnishings) is $5.3 million. The firm uses a 12-year planning horizon to evaluate investments of this type. The furnishings for this motel must be replaced every four years at an estimated cost of $1, 900, 000 (at k = 0, 4, and 8). The old furnishings have no market value. Annual operating and maintenance expenses for the facility are estimated to be $110, 000. The market value of the motel after 12 years is estimated to be 15% of the original building cost. Rooms at the motel are projected to be rented at an average rate of $45 per night. On the average, the motel will rent 60% of its rooms each night. Assume the motel will be open 365 days per year. MARR is 7% per year. Using an annual-worth measure of merit, is the project economically attractive? Investigate sensitivity to decision reversal for the following three factors: (1) capital investment, (2) MARR, and (3) occupancy rate (average percent of rooms rented per night). To which of these factors is the decision most sensitive? Assume that the market value remains constant at the amount used in part a. Graphically investigate the sensitivity of the AW to changes in the above three factors. Investigate changes over the interval plusminus 40%. On your graph, use percent change as the x-axis and AW as the y-axis.
The project's economic attractiveness can be evaluated using the annual-worth measure of merit. The annual-worth method converts all costs and benefits to equivalent annual amounts, allowing for easier comparison. Let's calculate the annual worth of the project to determine its economic attractiveness.
First, let's calculate the annual costs and benefits associated with the project:
1. Initial investment cost: The cost of building the motel is $5.3 million.
2. Furnishings replacement cost: The cost of replacing furnishings every four years is $1,900,000 at k = 0, 4, and 8.
3. Annual operating and maintenance expenses: The estimated annual cost is $110,000.
4. Market value after 12 years: The market value is estimated to be 15% of the original building cost, which is $5.3 million.
Next, let's calculate the annual revenue generated by the motel:
1. Average room rate: The projected average room rate is $45 per night.
2. Occupancy rate: The motel is projected to rent 60% of its rooms each night.
3. Number of operating days per year: The motel will be open 365 days per year.
Now, we can calculate the annual revenue:
Annual revenue = Average room rate * Occupancy rate * Number of operating days per year * Number of rooms
Annual revenue = $45 * 0.6 * 365 * 150
Now, let's calculate the annual worth of the project by subtracting the annual costs from the annual revenue:
Annual worth = Annual revenue - Annual costs
Annual costs = Initial investment cost + Furnishings replacement cost + Annual operating and maintenance expenses
Annual worth = Annual revenue - (Initial investment cost + Furnishings replacement cost + Annual operating and maintenance expenses)
Now that we have calculated the annual worth, we can compare it to the minimum attractive rate of return (MARR) of 7% per year to determine if the project is economically attractive. If the annual worth is greater than or equal to zero, the project is economically attractive. Otherwise, it is not economically attractive.
To investigate sensitivity to decision reversal for the three factors (capital investment, MARR, and occupancy rate), we can graphically analyze the changes in annual worth over a plus-minus 40% interval for each factor. By changing each factor by +/- 40% and calculating the resulting annual worth, we can plot the percent change in each factor on the x-axis and the resulting annual worth on the y-axis.
By analyzing the graph, we can determine which factor has the most significant impact on the project's annual worth and sensitivity to decision reversal.
In summary, to determine if the project is economically attractive, we calculate the annual worth of the project and compare it to the MARR. We can also investigate the sensitivity of the annual worth to changes in capital investment, MARR, and occupancy rate by graphically analyzing the changes in annual worth over a plus-minus 40% interval for each factor.
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(Table: Peanut Butter and Jelly Economy). How much of the increase in nominal GDP between 2018 and 2019 was due to inflation?a. 31.25%.
b. 18.75%.
c. 12.5%. d. 4%.
31.25% is the increase in nominal GDP between 2018 and 2019 due to inflation. Thus, option A is appropriate.
GDP determines the monetary value of the consumable final items and services produced in a country over a specific time period (for example, a quarter or a year). It considers each item wholly produced within a nation's boundaries.
Gross domestic product (GDP) is a financial measure of the total market value of all finished goods and services produced during a specific time period. The government and a single nation most frequently use GDP to gauge the strength of its economies.
Thus, option A is correct.
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Which of the following is the greatest drawback of using subsequent collections evidence only by a deposit slip as an alternative procedure when responses to positive accounts receivable confirmations are not received?
A. Checking of subsequent collections can never be used as an alternative auditing procedure
B. By examining a deposit slip only, the auditor does not know whether the payment is for the receivable at the balance sheet date or a subsequent transaction
C. A deposit slip is not received directly the auditor
D. A customer may not have made a payment on a timely basis
Option B. By examining a deposit slip only, the auditor does not know whether the payment is for the receivable at the balance sheet date or a subsequent transaction
The greatest drawback of using subsequent collections evidence only by a deposit slip as an alternative procedure when responses to positive accounts receivable confirmations are not received is option B: By examining a deposit slip only, the auditor does not know whether the payment is for the receivable at the balance sheet date or a subsequent transaction.
Here's a step-by-step explanation:
1. When an auditor is unable to receive responses to positive accounts receivable confirmations, they may use subsequent collections evidence as an alternative procedure to verify the accuracy of the accounts receivable balance.
2. Subsequent collections evidence refers to examining the payments received after the balance sheet date to determine if they relate to the accounts receivable balance.
3. However, relying solely on a deposit slip to gather subsequent collections evidence has a significant drawback.
4. The deposit slip provides information about the total amount of cash deposited, but it does not provide details about which specific invoices or transactions the payments correspond to.
5. As a result, the auditor cannot determine whether the payment recorded on the deposit slip is for the receivable at the balance sheet date or for a subsequent transaction.
6. This lack of specificity creates uncertainty and makes it challenging for the auditor to accurately assess the validity and completeness of the accounts receivable balance.
7. Option B correctly identifies this drawback by stating that by examining a deposit slip only, the auditor does not know whether the payment is for the receivable at the balance sheet date or a subsequent transaction.
To summarize, the greatest drawback of using subsequent collections evidence only by a deposit slip as an alternative procedure when responses to positive accounts receivable confirmations are not received is the inability to determine whether the payment recorded on the deposit slip is for the receivable at the balance sheet date or a subsequent transaction. This lack of specificity creates challenges in accurately assessing the validity and completeness of the accounts receivable balance.
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what is target’s fiscal year-end? why do you think target chose that year-end?
Target's fiscal year-end is January 31. Target chose that year-end because it coincides with the end of the holiday shopping season, which is a crucial time for the company and the retail industry as a whole.
In addition, ending the fiscal year in January allows Target to release its annual financial statements before many other retailers, which can provide a competitive advantage in terms of attracting investors and gaining market share.
Target's fiscal year-end also aligns with the company's overall strategic goals and long-term plans. By evaluating performance over the course of a full fiscal year, Target can make more informed decisions about investments, expansions, and other key business decisions.
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Suppose the Federal Reserve raises the target federal funds rate. This is an example of contractionary fiscal policy expansionary monetary policy contractionary monetary policy expansionary fiscal policy Question 23 (Mandatory) (2.5 points) Which of the following would be the immediate effect (before any lending takes place) if an individual makes a $1000 cash deposit to a commercial bank? Assume the reserve ratio is 10% The money supply would increase by $9000. The money supply would decrease by $1000. The money supply would increase by $1000. The money supply would not change.
The initial deposit of $1000 increases the money supply by $1000.
The correct option for the first question is: contractionary monetary policy When the Federal Reserve raises the target federal funds rate, it is an example of contractionary monetary policy.
This is because the Federal Reserve increases the cost of borrowing and reduces the money supply, which reduces economic growth.
The correct option for the second question is: The money supply would increase by $1000.
When an individual makes a $1000 cash deposit to a commercial bank, the money supply would increase by $1000. This is because the bank can lend out a portion of the deposit and hold the rest in reserves.
If the reserve ratio is 10%, the bank can lend out $900 and hold $100 in reserves. When the $900 is lent out, it becomes a deposit in another bank, increasing the money supply by $900.
Therefore, the initial deposit of $1000 increases the money supply by $1000.
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Which of the following is a long call option contract that is out of the money?
A contract with an exercise price of $70 and a market price of $20
A contract with an exercise price of $20 and a market price of $70
A contract with an exercise price of $70 and a market price of $70
All of the above are out of the money
A long call option contract that is out of the money is a contract with an exercise price of $70 and a market price of $20.
A long call option is a type of options strategy that gives the holder the right, but not the obligation, to purchase an underlying asset at a fixed price, known as the strike price, within a specified time frame, known as the expiration date. If the market price of the underlying asset is less than the strike price, the option is considered to be out of the money.
A long call option is considered to be out of the money when the market price of the underlying asset is less than the strike price. In this case, the contract with an exercise price of $70 and a market price of $20 is out of the money. The correct answer is: A contract with an exercise price of $70 and a market price of $20.
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nventory record accuracy would be decreased by part 2 a. cycle counting. b. reorder points. c. increasing stockroom accessibility. d. abc analysis
Therefore, the answer is none of the options listed (a, b, c, or d) would decrease inventory record accuracy.
Inventory record accuracy would be decreased by:
a. Cycle counting: Cycle counting is a method of inventory auditing where a subset of inventory is counted on a regular basis. This helps to identify any discrepancies between the actual inventory on hand and the recorded inventory. By implementing cycle counting, inventory accuracy is improved because errors and discrepancies can be identified and corrected in a timely manner. Therefore, cycle counting would not decrease inventory record accuracy.
b. Reorder points: Reorder points are predetermined inventory levels that trigger the need to reorder items. They are based on factors such as lead time, demand, and safety stock. Reorder points help ensure that inventory is replenished in a timely manner to avoid stockouts. However, they do not directly impact inventory record accuracy. Reorder points are more focused on inventory replenishment rather than maintaining accurate inventory records.
c. Increasing stockroom accessibility: Increasing stockroom accessibility refers to improving the ease of access to inventory items in the stockroom. While this can enhance efficiency and productivity, it does not directly impact inventory record accuracy. The accuracy of inventory records depends on factors such as proper documentation, regular audits, and tracking of inventory movements.
d. ABC analysis: ABC analysis is a technique used to categorize items based on their importance and value. It involves dividing inventory into three categories: A, B, and C. Category A items are typically high-value items that require closer monitoring and control. Category C items, on the other hand, are low-value items that require less attention. While ABC analysis helps prioritize inventory management efforts, it does not directly affect inventory record accuracy.
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Ranch Company's accounting records reflect the following
inventories:
|| ||Dec. 31, 2014||Dec. 31, 2013
|Raw materials inventory|$554,000|$546,000
|Work in process inventory|$486,000|$429,000
|Finishe
The balance sheets reveal that Ranch Company's raw materials inventory increased by $8,000, work in process inventory increased by $57,000, and finished goods inventory increased by $105,000 over the previous year.
Ranch Company's accounting records reflect the following inventories: Raw materials inventory: $554,000 on Dec. 31, 2014, and $546,000 on Dec. 31, 2013.
Work in process inventory: $486,000 on Dec. 31, 2014, and $429,000 on Dec. 31, 2013.
Finished goods inventory: $803,000 on Dec. 31, 2014, and $698,000 on Dec. 31, 2013.
Ranch Company is a manufacturing business, therefore, the raw materials, work in process, and finished goods inventories are all important components of their business. The balance sheets reveal that Ranch Company's raw materials inventory increased by $8,000, work in process inventory increased by $57,000, and finished goods inventory increased by $105,000 over the previous year.
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Fill in the blanks to complete the passage about monetary policy and fiscal policy. Drag word(s) below to fill in the blank(s) in the passage. Monetary policy and fiscal policy are two different tools used by to influence the economy. Monetary policy concerns using the national to affect the economy, while fiscal policy uses and expenditures in the government's money supply state and local governments outlays taxes the federal government budget
Both monetary policy and fiscal policy are important tools used by governments to influence the economy. While they use different methods, they share the same goal of promoting economic growth, stability, and full employment.
Monetary policy and fiscal policy are two different tools used by governments to influence the economy. Monetary policy concerns using the national money supply to affect the economy, while fiscal policy uses taxes and government spending to accomplish the same goals.
Both monetary policy and fiscal policy are used to promote economic growth, stability, and full employment. However, they use different methods to achieve their goals. Monetary policy involves the manipulation of interest rates and the supply of money in the economy by the central bank, which in the United States is the Federal Reserve System.
The Federal Reserve can adjust interest rates to make it easier or harder for individuals and businesses to borrow money. When interest rates are low, borrowing becomes cheaper, and people are more likely to buy goods and services, which stimulates the economy. Conversely, when interest rates are high, borrowing becomes more expensive, which can lead to a slowdown in economic growth.
Fiscal policy, on the other hand, involves the government's use of taxes and spending to influence the economy. When the government spends money, it injects money into the economy, which can stimulate economic growth. Conversely, when the government reduces its spending or raises taxes, it removes money from the economy, which can slow down economic growth. Fiscal policy can be used to influence the allocation of resources in the economy by increasing or decreasing government spending in certain areas.
For example, if the government wants to promote job growth, it may increase spending on infrastructure projects or provide tax incentives to businesses that create new jobs.
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List and explain one advantage of being a last-mover
A last-mover refers to a company that enters a market later than other established businesses. The advantages of being a last-mover include an in-depth understanding of the market and the ability to create a superior product. Another advantage is the ability to learn from previous competitors' mistakes and reduce the risks associated with market entry.Last-movers can capitalize on the weaknesses of earlier entrants and outperform them by innovating and improving existing products. Last-movers are more likely to take risks because they have a greater understanding of the market's dynamics and are better equipped to take advantage of emerging trends.
As a result, the last-mover may outperform earlier entrants by creating a superior product that satisfies consumers' needs and preferences. In addition, the last-mover can use new technologies and market knowledge to produce a more efficient product or service than earlier entrants. Last-movers may have a higher level of success because they can benefit from the previous entrants' marketing campaigns, which have raised the market's awareness.
As a result, they have less of a marketing burden and can invest more time and resources in product development. They can use the experience of earlier entrants to create an effective marketing strategy that capitalizes on their competitors' shortcomings. Last-movers can benefit from a lower cost of production because they can adopt new technologies to improve efficiency and reduce costs.
As a result, they can price their products more competitively and offer more value to customers. They can also benefit from economies of scale by ramping up production when demand is high. As a result, they can reduce their costs and increase their profit margins.The last-mover can benefit from an established market, and it is easier for them to get funding from investors because they have lower start-up costs. They can use the knowledge and experience of earlier entrants to create a better product and have a higher likelihood of success. They can capitalize on the weaknesses of earlier entrants and outperform them by innovating and improving existing products. In conclusion, the last-mover can benefit from the knowledge, experience, and market awareness of earlier entrants to create a superior product and succeed in the market.
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The following information relates to questions 4 - 5.
A corporation has net income of $1,311 million, after-tax interest ex- pense of $477.4 million, debt of $7,018 million, shareholder’s equity of $9,724 million, and total assets of $9,470 million.
4.Give the above information, what is the return on capital (ROC) of this corporation? (Hint: Use 3 decimal points for your calculations.)
A. 14.7%
B. 12.8%
C. 11.4%
D. 10.6%
E. None of the above.
5.Given the above information, what is the return on assets (ROA) of this corporation? (Hint: Use 3 decimal points for your calculations.)
A. 11.6%
B. 13.9%
C. 17.8%
D. 10.6%
E. None of the above.
The given information can be used to calculate the Return on Capital (ROC) and Return on Assets (ROA) for the corporation.
ROC can be calculated using the formula,
ROC = Net Income / (Shareholder's Equity + Long-term debt - Cash)Here,
Net Income = 1,311 millionAfter-tax Interest
Expense = 477.4
millionShareholder's Equity = $9,724
millionDebt = 7,018
millionROC = (1,311 - 477.4) / (9,724 + 7,018)ROC
= 833.6 / 16,742ROC
= 0.0497 or 4.97%.
Thus, the ROC of this corporation is 4.97%.ROA can be calculated using the formula,ROA = Net Income / Total AssetsHere,Net Income = 1,311 million
Total Assets = 9,470
millionROA = 1,311 / 9,470ROA
= 0.138 or 13.8%Thus, the ROA of this corporation is 13.8%.Hence, the correct options are:B. 12.8% (ROC)B. 13.9% (ROA).
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FILL IN THE BLANK. if the much larger neighbor is willing to endure a small number of provocations before retaliating, it is said to be using a ___ strategy.
If the much larger neighbor is willing to endure a few provocations before retaliating, it is said to be using a reprisal strategy.
The reprisal strategy is a defection or cooperation-based game theory strategy. For iterated games with mutual cooperation or defection, it is the best option. The plan is to work together on the initial move before returning any favors from the other player's prior action.
Reprisal would collaborate until the other player defected if they were to cooperate. Reprisal would also deviate if the other player did. However, reprisal would follow as soon as the opposing player resumes cooperating. The four components of the reprisal strategy—be pleasant, be retaliatory, be forgiving, and be transparent—combine to make it effective.
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Kirklin Clinic is evaluating a project that costs $63,200 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a cost of capital of 12%. What is the project's payback?
The payback period is 5.267 years, which means that it will take around 5.27 years for the project to recover the cost.
Payback period is a capital budgeting method for estimating the time that it takes to recover the cost of an investment project. It is computed by dividing the cost of the investment by the expected annual net cash inflows.
A payback period is a short-term capital budgeting method that only considers the time required to recover the initial investment. The payback period is calculated by dividing the initial cost of the project by the annual cash flows.
Given data
Cost of the project = $63,200
Net cash inflows = $12,000
Life of the project = 8 years
Cost of Capital = 12%
Formula to calculate Payback Period is,
Payback Period = Cost of Project / Annual Cash Flows
Net cash flows for the first 7 years will be 7 × $12,000 = $84,000. The cash inflow for the last year will be less than $12,000 because it would have happened in the middle of the year. Therefore, the total cash inflow for eight years will be $90,000 ($84,000 + cash inflow for the eighth year).
Payback Period = $63,200/$12,000
Payback Period = 5.267 years
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Your boss made a purchase and paid immediately by a handwritten cheque, what should you do?
O Enter the cheque in a Manual Payment batch and print and post the cheque
O Create a System Generated Payment batch and print and post the cheque
O All the above
O None of the abov
If your boss made a purchase and paid immediately by a handwritten cheque, then you should enter the cheque in a Manual Payment batch and print and post the cheque. Therefore, option A "Enter the cheque in a Manual Payment batch and print and post the cheque" is the correct option.
A manual payment batch is a collection of payments entered manually for various vendors or payees. It enables you to quickly make payments and keep track of all transactions. Manual payments must be entered, reviewed, and accepted before being made. A manual payment batch is created to accommodate one-time or infrequent payments. The manual payment batch function can be accessed by going to Accounts Payable > Transactions > Manual Payment Batch. A batch can be added to the system by clicking on the plus sign in the upper right corner of the page. The accounts payable (AP) department maintains a manual payment batch, which is used to record outgoing checks in the event of payment by check. This batch is used to monitor who was paid, how much, and when. Therefore, when your boss makes a purchase and pays immediately with a handwritten check, you should enter the check in a manual payment batch.
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Which would be an appropriate action in the Plan Schedule Management process? Decide on how you will implement changes to the project schedule Define the tasks involved in the project schedule Define
Plan Schedule Management is the process of developing, coordinating, and documenting the project schedules. It is an essential process for any project as it defines the entire time framework within which the project is expected to be completed. This process is responsible for setting up the groundwork for creating a detailed project schedule.
There are several appropriate actions involved in the Plan Schedule Management process, including defining the tasks involved in the project schedule, determining the order of execution for each task, and how long it will take to complete each task.
One of the most crucial activities is to define the project schedule. It involves defining the project's scope, objectives, deliverables, and milestones. This information is then used to create a timeline for the project. This timeline will be used to manage the project's progress and ensure that it is completed on time and within budget.
Another appropriate action in the Plan Schedule Management process is deciding on how you will implement changes to the project schedule. It is important to have a plan for dealing with changes to the schedule. This plan should include the process for requesting changes, the criteria for approving changes, and the communication process for notifying stakeholders of the changes.
Finally, it is important to ensure that all stakeholders are involved in the Plan Schedule Management process. This includes identifying stakeholders, defining their roles and responsibilities, and ensuring that they have input into the development of the project schedule. This will help to ensure that the project schedule is realistic and achievable and that all stakeholders are aware of the project's timeline and progress.
In conclusion, the Plan Schedule Management process is critical to the success of any project. The appropriate actions in this process include defining the tasks involved in the project schedule, deciding on how you will implement changes to the project schedule, and ensuring that all stakeholders are involved in the process.
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You see that 5-Y YTM is 4% p.a. You expect that the interest rate between time 5 and time 6 will be 11%. (the 1-year forward rate, 5 years from now). Compute the EXACT 6-Y YTM.
Please enter your answer as %. E,g, if your answer is 2.45%, please enter 2.45
The present value of the bond is given by the formula,[tex]PV = (C1 / (1 + r1)^1) + (C2 / (1 + r2)^2) + ... + (Cn / (1 + rn)^n) + (FV / (1 + rn)^n)[/tex],where PV is the present value of the bond, C is the coupon payment, r is the yield to maturity, and FV is the face value or the principal.The exact 6-Y YTM is 11%.
Using the same formula, we can find the yield to maturity for a bond when all its other variables are given.5-Y YTM = 4%.The coupon payment is not given, but it is not required to calculate the yield to maturity. The bond's present value can be assumed as $100, which is the face value of most bonds.PV = $100 (assumption),C1 = coupon paymentr1 = 4% (given),C2 = coupon paymentr2 = 11% (given)
The bond has a 1-year forward rate of 11% between year 5 and year 6, which means the yield to maturity for the bond in year 6 will be the same as the forward rate from year 5 to year 6.6-Y YTM = 11%.Therefore, the exact 6-Y YTM is 11%.
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Byron owned stock in Blossom Corporation that he donated to a museum (a qualified charitable organization) on June 8 this year. What is the amount of Byron's deduction assuming that he had purchased the stock for $10,5005 years ago, and the stock had a fair market value of $13,800 when he made the donation?
a. $10,500
b. $13,800
c. $3,300
The correct option 'the amount of Byron's deduction assuming that he had purchased the stock for $10,500 years ago, and the stock had a fair market value of $13,800 when he made the donation' is a. $10,500
To calculate Byron's deduction for donating the stock to a qualified charitable organization, we need to determine the fair market value of the donated stock.
Given:
Purchase price of the stock: $10,500
Fair market value of the stock at the time of donation: $13,800
Byron's deduction for donating the stock will be based on the fair market value of the stock, which is the value that the stock would sell for on the open market.
The amount of Byron's deduction will be the lesser of the fair market value or the original purchase price.
In this case, the fair market value of the stock at the time of donation is $13,800, which is higher than the original purchase price of $10,500.
Therefore, the amount of Byron's deduction for donating the stock is $10,500.
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