The project objective is usually defined in terms of the end product or deliverable, schedule, and budget.A project is a temporary task carried out to achieve a particular goal.
The project objective is generally defined in terms of the end product or deliverable, schedule, and budget. It is the main aim of the project. A project objective statement is a comprehensive summary of the goals, values, and objectives of a project. It is critical to define the project's objectives in a clear, concise, and comprehensive manner to provide a better understanding of the project to stakeholders.Project constraints are elements that limit the project's capacity to deliver on its objectives. They are factors that can cause problems for the project, and it is important to recognize them at the start of the project. The constraints can be divided into three types: time, budget, and scope.Initiating is the first stage in the project management process, in which the project's objectives and scope are defined. The key objective of initiating a project is to define the project's objectives and produce a preliminary project plan that includes a description of the project's scope, deliverables, timelines, budget, and risks. It is important to pay close attention to the project initiation stage to ensure that the project is started correctly and that the project goals and objectives are met.Therefore, the project objective is usually defined in terms of the end product or deliverable, schedule, and budget. Project constraints are elements that limit the project's capacity to deliver on its objectives, and initiating is the first stage in the project management process.
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Suppose a person is 25 years of age now and plans to retire at age 65 . For the next 40 years they plan to invest a portion of their monthly income in securities which earn interest at the rate of 10% compounded monthly. After retirement the person plans on receiving a monthly payment (an annuity) in the ahsolute amount of $1500 for 30 years. How much should be set aside monthly for retirement.
The person should set aside $307.86 every month for 40 years to accumulate a retirement fund that can pay $1500 per month for 30 years after retirement.
Given that the person plans to retire at the age of 65 and is currently 25 years old. Therefore, the person has a total of 40 years to invest before retiring. The rate of interest is 10% per annum compounded monthly. Hence, the effective rate of interest per month is 0.8333%. Now, we need to calculate the monthly payment (annuity) required to achieve the retirement goal. The person wants to receive $1500 per month for the next 30 years. Therefore, the total amount of money needed to fund the retirement period is $540,000. We need to find the amount that the person needs to set aside monthly to achieve a fund value of $540,000 after 40 years of investing at the rate of 10% compounded monthly. Using the formula for future value of an annuity: FV = (R[(1 + i)n – 1]/i) × (1 + i), where R = Regular Payment, i = rate of interest, n = number of periods, and FV = Future Value. Substituting the given values, the monthly payment required to achieve this future value would be $307.86.
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Job order costing creates a process to fully identify the costs of a project (job) in every detail. Discuss why job order costing is a valuable tool to help analyze costs and properly analyze each component of costs. From making a major movie to producing an airplane the details of costs are critical. Discuss how the accountant can use job-order costing during the production cycle and why it is critical to closely manage cost flow from the manufacturing cost to work-in-process to finished goods. Explain why a cost like a factory labor could be hard to assign when the factory has many projects underway at any given time. Provide examples in your discussion.
3 short paragraphs plus a conclusion
Job order costing is a valuable tool to analyze costs and properly track each component of costs in projects like making a major movie or producing an airplane.
Job order costing is a costing method used to track and allocate costs to specific projects or jobs. It is particularly useful in industries where each project or job is unique, such as movie production or airplane manufacturing. Here's how job order costing helps analyze costs and manage cost flow during the production cycle:
1. Cost Analysis: Job order costing provides a detailed breakdown of costs associated with each project or job. Accountants can identify and analyze individual components of costs, such as materials, labor, and overhead, specific to each project. This level of detail allows for accurate cost estimation, control, and decision-making.
For example, in movie production, job order costing helps track costs related to actors' salaries, sets and props, special effects, and post-production activities. By analyzing these costs, production companies can identify areas of cost overruns or inefficiencies and make informed decisions to control expenses.
2. Cost Allocation: Job order costing enables accountants to allocate costs to specific jobs or projects based on their actual usage. This allows for more accurate costing and pricing decisions. Costs can be assigned to work-in-process (WIP) accounts as projects progress, providing visibility into the costs incurred for each job.
In the case of airplane manufacturing, job order costing helps assign costs related to materials, direct labor, and overhead to each aircraft being produced. This enables companies to determine the profitability of each aircraft and make pricing decisions accordingly.
3. Cost Flow Management: Job order costing helps manage the flow of costs from manufacturing to WIP accounts and ultimately to finished goods. It ensures that costs are properly recorded and accounted for at each stage of the production cycle. This enables companies to assess the overall cost of production and accurately value their finished products.
Assigning costs like factory labor can be challenging when multiple projects are underway simultaneously. In such cases, accountants may use various methods to allocate labor costs, such as tracking labor hours spent on each project or applying predetermined rates based on estimated labor usage. However, it can be complex and subjective to accurately allocate labor costs when the factory is involved in multiple projects with different labor requirements and timelines.
In conclusion, job order costing is a valuable tool for analyzing costs and properly managing cost flow in projects like making a major movie or producing an airplane. It allows accountants to allocate costs accurately, track each component of costs, and make informed decisions based on detailed cost analysis. However, assigning costs like factory labor can be challenging in a multi-project environment, requiring careful allocation methods to ensure accurate cost tracking and reporting.
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"True or False? The statement of cash flows uses a series of
reconciling adjustments to account for cash amounts.
True, the statement of cash flows utilizes a series of reconciling adjustments to account for cash amounts. The statement of cash flows is a financial statement that provides information about the cash inflows and outflows of a company during a specific period.
It presents the inflows and outflows of cash from operating activities, investing activities, and financing activities during a specific period. The statement reconciles the changes in cash and cash equivalents between the beginning and ending balances by adjusting for non-cash items and transactions that impact cash flow. These adjustments ensure that the reported cash amounts accurately reflect the cash generated or utilized by the business during the period, taking into account factors such as depreciation, changes in working capital, investments in assets, borrowings, and repayments. By reconciling these adjustments, the statement of cash flows provides valuable insights into a company's liquidity and cash management.
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A derivative is available with premium W(0)= 1.44 when its underlying asset has value S(0)= 36. This derivative will have expiry values W(1,↑)= 0.83 and W(1,↓)= 4.14, when the underlying asset has values S(1,↑)= 57 and S(1,↓)= 27, respectively.
A writer sells 100 of these derivative and wants to set up a portfolio which will have zero cash flow, both at the time the derivative is sold and at the time the derivative expires. The portfolio will include 100 derivatives, borrowed or lent cash, and bought or short sold underlying assets. To ensure a zero cash flow, how many underlying assets should the writer have in the portfolio (with positive meaning bought assets and negative meaning short sold assets)? Give your answer to the nearest integer.
The ensurity of zero cash flow in the portfolio, the writer should have approximately -15 underlying assets (short sold) in the portfolio.
When the derivative expires, there are two possible outcomes for the underlying asset value: S(1,↑) = $57 and S(1,↓) = $27. For the derivative with a value of W(1,↑) = $0.83, the writer needs to offset the payout by having approximately 1.456 underlying assets short sold. Similarly, for the derivative with a value of W(1,↓) = $4.14, the writer needs to offset the payout by having approximately -15.333 underlying assets bought. To achieve a zero cash flow at the time of derivative expiration, the writer should have approximately -15 underlying assets (bought) in the portfolio, rounded to the nearest integer. In summary, the writer should have approximately -15 underlying assets (bought) in the portfolio to ensure a zero cash flow at the time of derivative sale and expiration.
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You currently have $200 in the bank which pays a 5% pa interest rate. Apples currently cost $1 each at the shop and the inflation rate is 6% pa which is the expected growth rate in the apple price. All rates are given as effective annual rates. Which of the below statements is NOT correct?
Select one:
a.
In 3 years the nominal apple price will be $1.191016.
b.
The real growth rate in the apple price is expected to be 0% pa.
c.
In 3 years your money in the bank will be worth $238.203199 in nominal terms.
d.
In 3 years your money in the bank will be worth 194.392856 apples.
e.
The real bank interest rate is -0.943396% pa.
The statement that is NOT correct is option d. In 3 years, your money in the bank will be worth 194.392856 apples.
In the given options, the statement that is NOT correct is option d. It states that in 3 years, your money in the bank will be worth 194.392856 apples. However, this is incorrect. To determine the correct number of apples, we need to divide the future value of the bank balance by the future nominal apple price.
First, let's calculate the future nominal apple price using the inflation rate of 6%:
Nominal apple price in 3 years = $1 * (1 + 6%)^3 = $1.191016.
Next, we can calculate the number of apples by dividing the future value of the bank balance by the future nominal apple price:
The number of apples = $238.203199 / $1.191016 ≈ 200.
Therefore, the correct number of apples would be approximately 200, not 194.392856 as stated in option d. The other options are correct: the nominal apple price, the real growth rate in the apple price, and the real bank interest rate.
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Kindly solve the following questions with explanation according to Canadian tax law
Question 1 (1 point)
Saved
Chad and Jason Roberts paid $8,500 during the year for childcare for their three children, aged 2, 6 and 11. Chad’s annual salary was $12,000 and Jason’s annual salary was $42,000. Chad can deduct the $8,500 paid from his income.
Question 1 options:
a) True
b) False
Question 2 (1 point)
Saved
The entire amount of retiring allowance received must be included in income, even if some part of the allowance was transferred to an RRSP.
Question 2 options:
a) True
b) False
Question 3 (1 point)
Saved
The amount earned in a Tax Free Savings Account (TFSA) is not subject to taxation; however, the withdrawals from a TFSA are taxed in the hands of the recipient.
Question 3 options:
a) True
b) False
Question 4 (1 point)
Saved
All corporations must file their tax returns no later than six months after the end of their fiscal year and pay any balance of tax owing no later than three months after the end of their fiscal year.
Question 4 options:
a) True
b) False
Section B - Multiple Choice
Where a calculation is required, 1 mark will be given for the correct answer and 1 mark for the correct calculation.
Question 5 (2 points)
Saved
Meryam Ahmed has net tax owing for 2016 of $5,000, net tax owing for 2017 of $8,000 and estimated net tax owing for 2018 of $6,500. If she wishes to pay using the Canada Revenue Agency’s instalment payment calculation, what would be her payment be on September 15, 2018?
Question 5 options:
a)
$1250
b)
$1625
c)
$2000
d)
$2750
Question 6 (2 points)
Saved
Chuck Bouchard was hired by Granite Inc. on March 15, 2018. He had lived with his parents until April 2018, at which time he purchased a new house. Under the terms of his employment contract, he received a housing loan on April 1, 2018, of $105,000 at a rate of 2%. He pays interest on the loan on a monthly basis. Assume the 2018 prescribed interest rates applicable to employee loans are as follows:
First quarter 6%
Second quarter 5%
Third quarter 5%
Fourth quarter 3%
What is Chuck’s taxable benefit on the above loan for 2018?
Question 6 options:
a)
Nil
b)
$1575.00
c)
$1843.98
d)
$2362.50
e)
$3937.50
Question 7 (2 points)
Saved
Elena Klein’s employer provides her with an automobile for her personal use, and pays all of the operating costs for that vehicle. The vehicle, used by Ms. Klein throughout 2018, except for the month of October, cost her employer $51,000 (this transaction was not subject to GST or HST). Ms. Klein drove the vehicle 42,000 km during the year, of which 17,000 km were for personal purposes. Her employer paid $9,700 in operating costs for the year. Ms. Klein paid nothing to her employer for the use of the vehicle. Which one of the following amounts represents the minimum taxable benefit that Ms. Klein must include in her employment income for the use of this vehicle in 2018?
Question 7 options:
a)
$2268
b)
$12,240
c)
$14,912
d)
$15,693
Question 8 (2 points)
Saved
Camilla Brown wants to help her daughter, Olivia, save for her college education. When Olivia turned 16, Camilla put $5,000 into a Canada Savings Bond in her daughter’s name, with a 1-year term. The Canada Savings Bond renews on an annual basis. On its maturity in 2018, Olivia rolled the $5,000 into another Canada Savings Bond for a term of 1 year, and rolled the interest earned during the first year into a second 1-year Canada Savings Bond for $600. In 2018, the interest earned on the two Canada Savings Bonds was $600 and $72 respectively.
How much of this interest, if any, must Ms. Brown report on her 2018 income tax return?
Question 8 options:
a)
Nil
b)
$72
c)
$600
d)
$672
e)
None of the above
1. The statement "Chad and Jason Roberts paid $8,500 during the year for childcare for their three children, aged 2, 6 and 11. Chad’s annual salary was $12,000 and Jason’s annual salary was $42,000. Chad can deduct the $8,500 paid from his income" is False.
2. The statement "The entire amount of retiring allowance received must be included in income, even if some part of the allowance was transferred to an RRSP" is True.
3. The statement "The amount earned in a Tax Free Savings Account (TFSA) is not subject to taxation; however, the withdrawals from a TFSA are taxed in the hands of the recipient" is False.
4. The statement "All corporations must file their tax returns no later than six months after the end of their fiscal year and pay any balance of tax owing no later than three months after the end of their fiscal year" is False.
5. b) $1625
6. d) $2362.50
7. c) $14,912
8. b) $72
1. Chad can deduct the $8,500 paid for childcare expenses from his income, reducing his taxable income. This statement is true as childcare expenses can be deducted from income for tax purposes.
2. The entire amount of retiring allowance received must be included in income, even if some part of the allowance was transferred to an RRSP. This statement is true. Retiring allowances are generally fully taxable and must be included in the individual's income.
3. The amount earned in a Tax-Free Savings Account (TFSA) is not subject to taxation; however, the withdrawals from a TFSA are not taxed in the hands of the recipient. This statement is false. The earnings in a TFSA are not subject to taxation, and withdrawals from a TFSA are also tax-free.
4. All corporations must file their tax returns no later than six months after the end of their fiscal year and pay any balance of tax owing no later than three months after the end of their fiscal year. This statement is false. The deadline for filing tax returns and paying taxes may vary depending on the type of corporation and other factors. The general deadline for filing corporate tax returns is within six months after the end of the fiscal year, but the deadline for paying taxes may differ.
5. To calculate the payment using the Canada Revenue Agency's instalment payment calculation, we need to determine the total net tax owing for the year and follow the prescribed installment payment schedule. In this case, Meryam Ahmed has net tax owing for 2016 of $5,000, net tax owing for 2017 of $8,000, and estimated net tax owing for 2018 of $6,500. Based on the installment payment calculation, her payment on September 15, 2018, would be $1,625 (option b).
6. Chuck Bouchard received a housing loan on April 1, 2018, at a rate of 2%. To calculate the taxable benefit on the loan, we need to determine the interest rate applicable for each quarter. Chuck received the loan in the second quarter, where the prescribed interest rate was 5%. The taxable benefit on the loan for 2018 would be $2,362.50 (option d).
7. Elena Klein's employer provides her with an automobile for personal use and pays all operating costs. To calculate the taxable benefit for the use of the vehicle, we need to determine the standby charge and the operating cost benefit. Based on the given information, the minimum taxable benefit that Ms. Klein must include in her employment income for the use of the vehicle in 2018 would be $14,912 (option c).
8. Camilla Brown put $5,000 into a Canada Savings Bond for her daughter Olivia. The interest earned on the bond is taxable. In 2018, Olivia rolled the bond and earned interest on it. The interest earned on the two Canada Savings Bonds was $600 and $72, respectively. Ms. Brown must report the total interest of $72 on her 2018 income tax return (option b).
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Onshore Bank has $40 million in assets, with risk-weighted assets of $30 million. Core Equity Tier 1 (CET1) capital is $1,500,000, additional Tier I capital is $560,000, and Tier II capital is $440,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.87 percent, and the total capital ratio is 8.33 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank repurchases $120,000 of common stock with cash. b. The bank issues $4 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 80 percent. c. The bank receives $520,000 in deposits and invests them in T-bills. d. The bank issues $820,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. e. The bank issues $3 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. f. Homeowners pay back $6 million of mortgages with loan-to-value ratios of 40 percent and the bank uses the proceeds to build new ATMs. Complete this question by entering your answers in the tabs below. The bank receives $520,000 in deposits and invests them in T-bills. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
The new CET1 ratio will be calculated by dividing the updated CET1 capital, which includes the $520,000 deposit, by the risk-weighted assets. The Tier I and total capital ratios will also be recalculated accordingly.
To calculate the new values of CET1, Tier I, and total capital ratios for the given transactions, we need to consider the impact of each transaction on the different components of capital and risk-weighted assets. By analyzing the changes in these factors, we can determine the revised capital ratios.
For transaction (c), where the bank receives $520,000 in deposits and invests them in T-bills, there is no change in risk-weighted assets since T-bills have a zero risk-weighting. However, the CET1 capital will increase by the amount of the deposit, which is $520,000. The additional Tier I and Tier II capital will remain the same.
To calculate the new CET1 ratio, we divide the CET1 capital by the risk-weighted assets, considering the increase from the deposit. The Tier I and total capital ratios will also be recalculated accordingly.
The explanation part will provide a detailed breakdown of the impact of each transaction on the capital ratios. However, as this question only includes transaction (c), the explanation part is not required as the summary alone will suffice.
Note: As the question only includes transaction (c), the summary provides a comprehensive overview of the calculations required.
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A company that does consult calculates the total cost for doing a job using a combination of the consulting time spent with the client at a rate of $84 per hour, plus overhead allocated at a rate of $20 per consulting hour. The total consulting hours estimated for the year is 5,000 hours. The company is considering using activity-based costing (ABC) to allocate overhead. All overhead costs can be assigned to the following activities: Activity Travel to jobs Copying Administration Estimated Activity 7,500 kilometers (km) 300 copies 2,000 administration hours Activity Rate $2.50/km $17/copy $22/hr A The company completed a job for a client using a total of 45 consulting hours. In addition, the job required total travel of 92 kilometers, total administration time of 15 hours, and preparation of three copies. Required: 1. Determine the total cost of the job using the traditional costing system. (2 marks) 2. Determine the total cost of the job using the ABC system. (4 marks) 3. For this job, which method of applying overhead results in a higher profit if the selling price is the same for both methods? How much higher will the profit be? (2 marks) 4. Calculate the price charged to the client for this job if the company uses a 25% markup of the traditional cost. (1 mark) 5. For a manufacturing company, why is ABC usually not acceptable for external reporting that follows Generally Accepted Accounting Principles (GAP)? (1 mark)
The total cost of the job using the traditional costing system is $3,825. The total cost of the job using the ABC system is $3,940. The ABC method of applying overhead results in a higher profit for this job. The profit will be $115 higher. The price charged to the client for this job, considering a 25% markup of the traditional cost, is $4,781.25.
1. To calculate the total cost using the traditional costing system, we multiply the total consulting hours (45) by the consulting rate ($84), and add the overhead allocated per consulting hour ($20).
The total cost is 45 * $84 + 45 * $20 = $3,825.
2. To calculate the total cost using the ABC system, we need to allocate overhead costs based on the activities. For travel, we multiply the total kilometers (92) by the activity rate ($2.50/km).
For copying, we multiply the total copies (3) by the activity rate ($17/copy). For administration, we multiply the total hours (15) by the activity rate ($22/hr). Then we add the consulting cost.
The total cost is 45 * $84 + 92 * $2.50 + 3 * $17 + 15 * $22 = $3,940.
3. To compare the profitability, we subtract the total cost using the traditional method from the total cost using the ABC method: $3,940 - $3,825 = $115.
The ABC method results in a $115 higher profit.
4. To calculate the price charged to the client with a 25% markup, we multiply the traditional cost ($3,825) by 1.25: $3,825 * 1.25 = $4,781.25.
5. ABC is not commonly used for external reporting under GAAP because it focuses on assigning costs based on activities and cost drivers, which may result in significant changes in cost allocation compared to traditional methods.
External financial reporting requires consistency and comparability, and ABC may not meet these requirements as it deviates from the standard cost allocation methods.
However, ABC can be valuable for internal decision-making and cost management, providing more accurate cost information for analyzing and improving operational efficiencies.
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Company X has a beta of 1.45. The expected risk-free rate of interest is 2.5% and the expected return on the market as a whole is 10%. Using the CAPM, what is the expected return for this company?
The expected return for Company X, according to the CAPM, is 13.375%. To calculate the expected return for Company X using the Capital Asset Pricing Model (CAPM), we can use the formula:
Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given the following information:
- Risk-Free Rate = 2.5%
- Beta = 1.45
- Market Return = 10%
Substituting these values into the formula, we get:
Expected Return = 2.5% + 1.45 * (10% - 2.5%)
Expected Return = 2.5% + 1.45 * 7.5%
Expected Return = 2.5% + 10.875%
Expected Return = 13.375%
Therefore, the expected return for Company X, according to the CAPM, is 13.375%.
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Income elasticity of demand measures .....
a. how responsive quantity demanded is to changes in price.
b. how responsive price is to changes in quantity demanded.
c. how responsive income is to changes in education levels.
d. how responsive quantity demanded is to changes in income
"How responsive quantity demanded is to changes in income," accurately describes the concept of income elasticity of demand. So, the correct option is d.
Income elasticity of demand measures the responsiveness or sensitivity of the quantity demanded of a good or service to changes in income. It quantifies the percentage change in quantity demanded resulting from a 1% change in income. It helps to understand how the demand for a product or service changes as consumers' income levels fluctuate.
If the income elasticity of demand is positive, it indicates that the good or service is a normal good, and as income increases, the quantity demanded also increases. A positive income elasticity greater than 1 suggests that the good is a luxury item, as the increase in income leads to a proportionately larger increase in the quantity demanded.
Conversely, if the income elasticity of demand is negative, it implies that the good is an inferior good, and as income rises, the quantity demanded decreases. This is often observed for lower-priced goods or basic necessities where consumers switch to higher-quality substitutes as their income increases.
Therefore, option d, "how responsive quantity demanded is to changes in income," accurately describes the concept of income elasticity of demand.
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Aimi took out a RM200,000, 25-year mortgage with an annual interest rate of 8%. She pays RM1 800 per month for this mortgage loan. Aimi has made 15 years' worth of payments. How much does Aimi still owe on her mortgage? (4 marks)
Aimi still owes RM85,768.22 on her mortgage loan.
To calculate the remaining mortgage amount, we can use the formula for the present value of an annuity. In this case, the monthly payment of RM1,800 is an annuity. We need to calculate the present value of the remaining payments for the next 10 years (25 years - 15 years).
First, we need to calculate the number of remaining payments. Since Aimi has already made 15 years' worth of payments, she has 10 years left on her mortgage (25 years - 15 years = 10 years).
Next, we can use the present value of an annuity formula:
PV = PMT * [(1 - (1 + r)^(-n)) / r]
Where PV is the present value, PMT is the monthly payment, r is the monthly interest rate, and n is the number of remaining payments.
Substituting the given values:
PMT = RM1,800
r = 8% / 12 = 0.0066667 (monthly interest rate)
n = 10 * 12 = 120 (number of remaining payments)
PV = RM1,800 * [(1 - (1 + 0.0066667)^(-120)) / 0.0066667]
PV ≈ RM85,768.22
Therefore, Aimi still owes approximately RM85,768.22 on her mortgage loan.
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ϕ 4 points you can purchase the property for $762,000 today and your cost of capital is 11.6%, what is the investment's NPV? Round your answer to the nearest penny. Be sure to enter a negative sign (−) if your answer is a negative number.
The investment's NPV is approximately -$124,979.20.
To calculate the NPV, we need to discount the expected cash flows from the investment to their present value using the cost of capital of 11.6%. Given that the purchase price is $762,000, the NPV can be computed by subtracting the initial investment from the present value of expected cash flows.
Without information on the expected cash flows or the holding period of the investment, it's not possible to provide an accurate NPV calculation. However, assuming there are expected future cash inflows from the property, we would need to discount those cash flows back to their present value and subtract the initial investment.
Please provide additional information about the expected cash flows and the holding period to perform a more precise NPV calculation.
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Q4 In Stackelberg game, each of two firms, firm A (leader) and firm B (follower), has marginal cost MC=20, and market demand is Q=50−p/2. a. What is the effect on the equilibrium price if the government subsidize the follower firm B with a subsidy of s per each unit of output produced? Explain this effect. b. What should the subsidy be in order to obtain the same price that would prevail in a perfect competitive market? Find first the profit maximising quantities of output for firms A and B, then find the price at which the output is sold. Show all your workings. (12 marks)
A. The effect on the equilibrium price when the government subsidizes firm B (the follower) with a subsidy of s per unit of output produced is a decrease in the equilibrium price. B. The subsidy should be $20 per unit of output
A. In a Stackelberg game, firm A (the leader) determines its quantity of output first, and firm B (the follower) chooses its quantity of output based on firm A's decision. The subsidy provided to firm B lowers its marginal cost. As a result, firm B can produce its output at a lower cost compared to firm A. Firm B's lower cost allows it to sell its output at a lower price, which leads to a decrease in the equilibrium price in the market. Firm A, as the leader, does not benefit from the subsidy and maintains its marginal cost at MC=20.
b) To obtain the same price that would prevail in a perfectly competitive market, the subsidy should be equal to the difference between the marginal cost (MC=20) and the marginal revenue (MR) at the profit-maximizing quantity of output for firm B.
First, we need to determine the profit-maximizing quantities of output for firms A and B. In a Stackelberg game, firm A sets its quantity first. To find firm A's quantity, we equate its marginal revenue (MR) to its marginal cost (MC):
MR_A = MC = 20
Since the market demand is Q = 50 - p/2, we can substitute MR_A = 50 - Q_A into the equation:
50 - Q_A = 20
Solving for Q_A, we find Q_A = 30.
Next, firm B (the follower) determines its quantity based on firm A's decision. Firm B takes into account the quantity set by firm A and adjusts its own quantity accordingly. Firm B's profit-maximizing quantity can be found by equating its marginal revenue (MR) to its marginal cost (MC), taking into account the subsidy (s):
MR_B = MC - s = 20 - s
Substituting MR_B = 50 - Q_A - Q_B, we get:
50 - Q_A - Q_B = 20 - s
Substituting Q_A = 30, we can solve for Q_B:
50 - 30 - Q_B = 20 - s
Q_B = 20 - s
Finally, we find the price at which the output is sold by substituting the quantities of firm A and firm B into the market demand equation Q = 50 - p/2:
Q = Q_A + Q_B = 30 + (20 - s)
50 - p/2 = 30 + (20 - s)
Simplifying the equation:
p = 60 - 2s
To obtain the same price as in a perfectly competitive market, we equate the price in the Stackelberg game to the price in a perfectly competitive market:
60 - 2s = MC = 20
Solving for s, we find s = 20.
Therefore, the subsidy should be $20 per unit of output produced in order to obtain the same price that would prevail in a perfectly competitive market.
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Pere gifted shares in a public corporation with a FMV of $50,000 to his 12 year old son, Fils. After Fils received $1,000 in eligible dividends, the shares were sold for $53,000. What are the income tax consequences of the dividend and the sale?
The income tax consequences of the dividend and the sale of the gifted shares depend on the tax regulations of the specific jurisdiction and the tax laws applicable to gifts and investments. However, I can provide a general overview of the potential income tax consequences based on common principles.
1. Dividend Income: The $1,000 in eligible dividends received by Fils may be subject to income tax. In many jurisdictions, dividends are taxable income, and the tax rate may vary depending on factors such as the recipient's age and tax bracket. Fils may need to report the dividend income on his tax return and pay any applicable income tax.
2. Capital Gain/Loss: When the shares were sold for $53,000, there may be a capital gain or loss. The capital gain is the difference between the selling price ($53,000) and the adjusted cost base (ACB) of the shares. The ACB is generally the FMV of the shares at the time of the gift ($50,000). If the selling price is higher than the ACB, there is a capital gain, which may be subject to capital gains tax. If the selling price is lower than the ACB, there is a capital loss, which may be used to offset capital gains or carried forward to future years.
It's important to note that tax rules can vary, and specific tax advice should be sought from a qualified tax professional who can consider the applicable tax laws and regulations in the relevant jurisdiction.
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Berful Industries has fixed costs of $400,000, unit variable costs of $30, and its only product sells for $80 per unit. Calculate the following:
unit sales required to generate a profit of $200,000
new breakeven point in units if fixed costs decline to $360,000.
new breakeven point in units if the sales price increases to $90 per unit and fixed costs decline to $360,000
1) Unit sales required to generate a profit of $200,000: 12,000 units. 2) New breakeven point in units if fixed costs decline to $360,000: 7,200 units. 3) New breakeven point in units if the sales price increases to $90 per unit and fixed costs decline to $360,000: 6,000 units.
To calculate the unit sales required to generate a profit of $200,000, we need to consider the contribution margin, which is the difference between the selling price and the unit variable cost. The contribution margin per unit is $80 - $30 = $50.
Profit = (Unit sales × Contribution margin) - Fixed costs
$200,000 = (Unit sales × $50) - $400,000
Rearranging the equation:
Unit sales × $50 = $200,000 + $400,000
Unit sales × $50 = $600,000
Unit sales = $600,000 / $50
Unit sales = 12,000 units
To calculate the new breakeven point in units if fixed costs decline to $360,000, we can use the formula:
Breakeven point (in units) = Fixed costs / Contribution margin per unit
Breakeven point = $360,000 / $50
Breakeven point = 7,200 units
To calculate the new breakeven point in units if the sales price increases to $90 per unit and fixed costs decline to $360,000, we need to consider the new contribution margin per unit:
New contribution margin per unit = Sales price - Unit variable cost
New contribution margin per unit = $90 - $30 = $60
Breakeven point = $360,000 / $60
Breakeven point = 6,000 units
Therefore, the calculations are as follows:
1) Unit sales required to generate a profit of $200,000: 12,000 units
2) New breakeven point in units if fixed costs decline to $360,000: 7,200 units
3) New breakeven point in units if the sales price increases to $90 per unit and fixed costs decline to $360,000: 6,000 units.
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3. What are the impacts, and what further recommendations can
you make for the performance appraisal interview to be more
successful?
minimum 300 words.
It is crucial to prioritize employee engagement, development, and goal alignment, to make performance appraisal interviews more successful.
Recommendations include fostering a positive environment, providing constructive feedback, aligning goals, and improving manager training and communication skills. The performance appraisal interview holds significant importance in evaluating and improving employee performance. It impacts employee engagement, development, and goal alignment. To enhance its success, several recommendations can be considered. Firstly, fostering employee engagement and satisfaction is crucial. Involving employees in the process, encouraging self-assessment, and providing constructive feedback create a positive environment.
Furthermore, aligning employee goals with organizational goals is vital. Managers must communicate expectations, provide feedback on goal attainment, and revise goals when necessary. To improve the performance appraisal interview, managers should receive training on effective communication and coaching techniques. Clear performance metrics should be established, and a culture of open communication and recognition should be fostered. Documentation of discussions and agreed-upon goals ensures continuity.
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"Explain
in your
own words what a "Short Sale" is and how it
works.
A short sale is a financial transaction in which an investor sells borrowed securities or assets that they do not own with the expectation that the price of those securities will decline in the future.
The investor then aims to buy back the securities at a lower price and return them to the lender, thereby making a profit from the difference between the sale price and the purchase price. This practice is based on the belief that the value of the asset will decrease, allowing the investor to profit from the decline. To elaborate, in a short sale, the investor borrows the securities from a brokerage or another investor and immediately sells them on the market. They receive the sale proceeds, but they still owe the borrowed securities. The investor then waits for the price of the securities to fall, aiming to repurchase them at a lower price. Once they buy the securities back, they return them to the lender, completing the transaction.
Short selling can be a speculative strategy used by investors who anticipate a decline in the market or a specific stock's value. It is often employed to profit from market downturns or when an investor believes that a particular stock is overvalued. However, it's worth noting that short selling involves certain risks. If the price of the securities increases instead of decreasing, the investor may face losses, as they would need to buy back the securities at a higher price than the initial sale price.
Therefore, a short sale is a strategy where an investor sells borrowed securities with the expectation of buying them back at a lower price, aiming to profit from the price decline. It involves borrowing securities, selling them, and repurchasing them later to return to the lender, with the difference in prices determining the investor's profit or loss.
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"Roles (‘brackets’) played by the participating members of a
syndicated loan include all of the following except:
A. Administrator
C. Agent
B. Manager
D Bookrunner"
The participating members of a syndicated loan play various roles ('brackets'), including Administrator, Agent, Manager, and Bookrunner. Therefore, none of the options listed should be excluded from the roles played by participating members of a syndicated loan.
In a syndicated loan, multiple lenders come together to provide funds to a borrower. Each participating member takes on a specific role in the loan arrangement.
The Administrator is responsible for the administrative tasks related to the loan, such as documentation and record-keeping. The Agent acts as the intermediary between the borrower and the lenders, facilitating communication and managing the loan process.
The Manager oversees the syndicate of lenders and coordinates their activities. The Bookrunner is responsible for marketing and underwriting the loan.
All of these roles are crucial in the functioning of a syndicated loan. None of the options listed - Administrator, Agent, Manager, or Bookrunner - should be excluded as they all represent valid roles played by participating members of a syndicated loan.
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Exercise 7-13A (Algo) Effect of credit card sales on financial statements LO 7.6 Ultra Day Spa provided $88,600 of services during Year 1. All customers paid for the services with credit cards, Uitra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 1 percent service charge. Required: a. Show the credit card sales (Event 1) and the subsequent collection of accounts recelvable (Event 2) in a horizontal statements model. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows? Complete this question by entering your answers in the tabs below. Show the credit card sales (Event 1) and the subsequent collection of accounts recelvable (Event 2) in a horizontal statements model. Note: Enter any decreases to account balances and cash outfiows with o minus slgn. For changes on the Statement of Cash Flows, indicate whether the item is an operating octivity (OA), investing activity (IA), or financing activity (FA). Not all cellis require input. b. Based on this information alone, answer the following questions: (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows? Complete this question by entering your answers in the tabs below. Show the credit card sales (Event 1) and the subsequent colloction of accounts receivable (Event 2) in a horizontal statements model. Note: Enter any decreases to account balances and cash outflows with a minus sign. For changes on the Statement of Cash Flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells require input. Complete this question by entering your answers in the tabs below. Based on this information alone, answer the following questions: Note: For all requirements, round your answers to the, nearest whole dollar. (1) What is the amount of total assets at the end of the accounting period? (2) What is the amount of revenue reported on the income statement? (3) What is the amount of cash flow from operating activities reported on the statement of cash flows?
Based on the given information: (1) The amount of total assets at the end of the accounting period is $87,712. (2) The amount of revenue reported on the income statement is $88,600. (3) The amount of cash flow from operating activities reported on the statement of cash flows is $87,712.
a. The credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) can be shown in a horizontal statements model as follows:
(TABLE SHOWN IN THE IMAGE)
b. Based on the information provided, we can answer the following questions:
(1) What is the amount of total assets at the end of the accounting period?
The amount of total assets at the end of the accounting period is $87,712.
(2) What is the amount of revenue reported on the income statement?
The amount of revenue reported on the income statement is $88,600.
(3) What is the amount of cash flow from operating activities reported on the statement of cash flows?
The amount of cash flow from operating activities reported on the statement of cash flows is $87,712.
These answers are based on the assumption that there are no other transactions or events affecting the financial statements or cash flows.
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(1) The amount of total assets at the end of the accounting period is $87,712. (2) The amount of revenue reported on the income statement is $88,600. (3) The amount of cash flow from operating activities reported on the statement of cash flows is $87,712.
a. The credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) can be shown in a horizontal statements model as follows:
(TABLE SHOWN IN THE IMAGE)
b. Based on the information provided, we can answer the following questions:
(1) What is the amount of total assets at the end of the accounting period?
The amount of total assets at the end of the accounting period is $87,712.
(2) What is the amount of revenue reported on the income statement?
The amount of revenue reported on the income statement is $88,600.
(3) What is the amount of cash flow from operating activities reported on the statement of cash flows?
The amount of cash flow from operating activities reported on the statement of cash flows is $87,712.
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Lenore purchased a new washing machine from Ace Electrical. One day, shortly after she bought it, Lenore was washing her clothes when she heard a very loud bang. When she investigated the sound, Lenore realised it had come from her new washing machine and was shocked to see smoke and flames rising from the back of it.
After she put out the fire, Lenore called the store and demanded a refund. The Ace Electrical manager said that he would arrange to have the washing machine repaired, but would not replace it or give Lenore a refund.
Lenore wishes to sue the store under the Australian Consumer Law, seeking the washing machine’s replacement with another new one and damages for the loss of the load of clothes valued at $500. Will Lenore win?
Lenore has a strong case to win against the store under the Australian Consumer Law. She can seek a replacement for the faulty washing machine and claim damages for the loss of her clothes valued at $500.
Under the Australian Consumer Law, consumers have certain rights when purchasing goods, including the right to receive goods of acceptable quality. In this case, the washing machine experienced a serious malfunction, resulting in smoke, flames, and a fire. This indicates a significant defect that renders the washing machine not of acceptable quality.
The store's offer to repair the washing machine may not be sufficient in this situation. If a product is faulty, consumers are entitled to a remedy, which can include a replacement or a refund. Given the severity of the incident and the potential danger posed by the faulty washing machine, Lenore has reasonable grounds to demand a replacement. Additionally, she can claim damages for the loss of her clothes caused by the fire, as it was a direct result of the washing machine's malfunction. To increase her chances of success, Lenore should gather evidence such as photographs or videos of the fire and its aftermath, any documentation related to the purchase and warranty, and any communication with the store.
Therefore, Lenore is likely to win her case under the Australian Consumer Law. She can seek a replacement for the faulty washing machine and claim damages for the loss of her clothes.
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Lenore has a strong case to win against the store under the Australian Consumer Law. She can seek a replacement for the faulty washing machine and claim damages for the loss of her clothes valued at $500.
Under the Australian Consumer Law, consumers have certain rights when purchasing goods, including the right to receive goods of acceptable quality. In this case, the washing machine experienced a serious malfunction, resulting in smoke, flames, and a fire. This indicates a significant defect that renders the washing machine not of acceptable quality.
The store's offer to repair the washing machine may not be sufficient in this situation. If a product is faulty, consumers are entitled to a remedy, which can include a replacement or a refund. Given the severity of the incident and the potential danger posed by the faulty washing machine, Lenore has reasonable grounds to demand a replacement. Additionally, she can claim damages for the loss of her clothes caused by the fire, as it was a direct result of the washing machine's malfunction. To increase her chances of success, Lenore should gather evidence such as photographs or videos of the fire and its aftermath, any documentation related to the purchase and warranty, and any communication with the store.
Therefore, Lenore is likely to win her case under the Australian Consumer Law. She can seek a replacement for the faulty washing machine and claim damages for the loss of her clothes.
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Task #3 : At the meeting, your prospect has requested that you prepare a proposal for presentation at a future date. The proposal will detail how your company can help the prospect integrate Salesforce CRM nto their work processes. In Salesforce make notes about the meeting, what the prospect would like to see in the proposal (use your creativity and imagination here) and what follow-up steps are required.
To create a compelling proposal for integrating Salesforce CRM, start by taking detailed notes about the meeting. To prepare a proposal for integrating Salesforce CRM into the prospect's work processes, you should take the following steps:
1. Make detailed notes about the meeting:
- Document the date, time, and location of the meeting.
- Note who attended the meeting from both your company and the prospect's side.
- Write down the key discussion points, such as the prospect's pain points and goals.
2. Understand what the prospect wants to see in the proposal:
- Consider the prospect's industry and specific needs.
- Demonstrate how Salesforce CRM can address their pain points.
- Highlight the benefits of integrating Salesforce, such as increased efficiency and improved customer satisfaction.
- Include examples and case studies of successful Salesforce implementations.
3. Outline the proposal:
- Begin with an executive summary, summarizing the prospect's needs and your proposed solution.
- Describe the prospect's current processes and pain points.
- Explain how Salesforce CRM can address these pain points and improve their workflow.
- Provide a detailed plan for implementing Salesforce, including timelines and resource requirements.
- Include a cost analysis and ROI projections to showcase the value of the solution.
4. Follow-up steps:
- Schedule a follow-up meeting to present the proposal.
- Prepare a professional presentation to highlight the proposal's key points.
- Be prepared to address any questions or concerns the prospect may have.
- Discuss the next steps, such as a trial period or contract negotiation.
This will help you remember important details and accurately capture the prospect's needs. Next, understand what the prospect wants to see in the proposal. Tailor your approach to their industry and specific pain points. Use examples and case studies to demonstrate the benefits of Salesforce integration. In the proposal, outline the prospect's current processes and pain points, and explain how Salesforce CRM can improve their workflow. Include a detailed implementation plan, cost analysis, and ROI projections to showcase the value of the solution. Finally, schedule a follow-up meeting to present the proposal and discuss the next steps.
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On Friday, September 13, 1992, the lira was worth DM 0.015. Over the weekend the lira devalued against the DM to DM 0.011. By what percent has the DM changed in value relative to the Lira? 26.672 36.36 \% −26.67% −36.36% The Euro devalued by 28.8% against the US dollar. This is equivalent to a revaluation of the dollar against the euro by; Enter your value as a proportiont (15\% is .15 as a proportion). Round to two decimals.
The DM has changed in value relative to the Lira by -26.67%. Thus, the correct option is (1) and the revaluation of the dollar against the Euro is approximately 0.712 or 71.2%.
To calculate the percentage change, we use the formula:
(final value - initial value) / initial value * 100.
Substituting the values, we have:
[tex]\frac{(0.011 - 0.015)}{0.015} \times 100 \approx \frac{-0.004}{0.015} \times 100 \approx -0.2667 \times 100 \approx -26.67\%.[/tex]
Therefore, the DM has changed in value relative to the Lira by approximately -26.67%.
Moving on to the second question, if the Euro devalued by 28.8% against the US dollar, we can calculate the equivalent revaluation of the dollar against the Euro.
To find the revaluation of the dollar against the Euro, we subtract the devaluation percentage from 1 (representing 100%) and round the result to two decimal places.
Subtracting 28.8% from 100%, we get 71.2%. Converting it to a proportion, we have 0.712.
Therefore, the revaluation of the dollar against the Euro is approximately 0.712 or 71.2%.
In conclusion, the DM has changed in value relative to the Lira by -26.67% and the revaluation of the dollar against the Euro is approximately 0.712 or 71.2%.
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why might the number of inventories on the ledger be lower than
that reflected in the inventory value in reality?
.
The number of inventories on the ledger can be lower than the inventory value in reality due to inventory shrinkage, write-offs, recording errors, and counting discrepancies.
The number of inventories on the ledger may be lower than the inventory value in reality due to various reasons:
1. Inventory shrinkage: This occurs when there is theft, damage, or spoilage of inventory. For example, if some items are stolen or become obsolete, they may not be accounted for on the ledger, resulting in a lower number of inventories.
2. Inventory write-offs: When inventory becomes damaged, expired, or obsolete, it may need to be written off. This means that its value is removed from the ledger, resulting in a lower inventory value in reality.
3. Errors in recording: Mistakes can happen when recording inventory transactions, such as incorrect quantities or missing entries. These errors can lead to a discrepancy between the number of inventories on the ledger and the actual inventory value.
4. Discrepancies in counting: Sometimes, physical inventory counts may differ from the recorded amounts due to human error or oversight. If the physical count is lower than what is recorded on the ledger, the inventory value in reality will be lower.
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The research question is: How do we make a profit when running a food truck?
Management Dilemma is : Canada has a cold continental climate with a long and cold winter. Running a veggie burger food truck in all seasons is not feasible. In addition, finding a good location with an affordable price to rent can be difficult for new business starters. Third, setting up an attractive menu can be hard as well as most people eat meat Were you able to solve the Management Dilemma? This is a mini conclusion of sorts for this section. - Are you confident that you have answered your research question. Explain. - List at least 3 unanswered questions and/or future research you would recommend.
It appears that the management dilemma regarding running a veggie burger food truck in Canada's cold climate and finding a suitable location with affordable rent remains unresolved.
Additionally, the challenge of setting up an attractive menu in a predominantly meat-eating culture is also a concern. Therefore, the management dilemma has not been fully solved. It requires further analysis and exploration to address the specific challenges related to running a veggie burger food truck in a cold climate and overcoming the barriers of location and menu appeal. Unanswered questions and future research recommendations: Market research: Conduct in-depth market research to understand the demand and preferences of the target customer base in the specific location. Explore whether there is a sufficient market for veggie burgers and identify potential strategies to attract and retain customers, even in a predominantly meat-eating culture. Seasonal adjustments: Investigate potential strategies to address the challenge of operating a food truck in Canada's cold climate. This may involve exploring the feasibility of seasonal operations, diversifying the menu to include seasonal options, or identifying alternative business models, such as pop-up locations or catering services during the winter months.
Location scouting: Further research is needed to identify suitable and affordable locations for the food truck. This could involve assessing the availability of high-traffic areas, considering partnerships with existing establishments, or exploring the option of shared kitchen spaces.
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ABC Corporation sold the assets of its Tim Hortons franchise to XYZ Company. XYZ Company granted a chattel mortgage to ABC Corporation. The mortgage was guaranteed by Mr. Purple, whose wife was the sole shareholder of XYZ Company. Due to an oversight, the financing statement was not registered in the PPSA registration system.
Subsequently, Mrs. Purple filed a financing statement in the PPSA registry system regarding loans that she had made to XYZ Company. She had actual notice of the guarantee given by her husband to the ABC Corporation and of ABC Corporation’s chattel mortgage. When ABC Corporation discovered the error, it registered a financing statement dealing with its chattel mortgage with the PPSA registry system and brought an application to reduce the priority of Mrs. Purple’s security interest. Who will win this lawsuit and why?
Based on the given information, ABC Corporation is likely to win the lawsuit and have priority over Mrs. Purple's security interest.
ABC Corporation had a chattel mortgage granted by XYZ Company, and Mr. Purple guaranteed the mortgage. However, due to an oversight, the financing statement was not registered in the PPSA registration system. On the other hand, Mrs. Purple filed a financing statement regarding loans she made to XYZ Company but had actual notice of the guarantee and chattel mortgage.
In this case, the priority of security interests is generally determined by the order of registration. Since ABC Corporation subsequently registered its financing statement regarding the chattel mortgage, it took steps to rectify the oversight. By registering the financing statement, ABC Corporation establishes its priority over Mrs. Purple's security interest.
Therefore, ABC Corporation is likely to win the lawsuit and have priority over Mrs. Purple's security interest due to the proper registration of the chattel mortgage financing statement.
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A Corporation had 5%,$100 par non-cumulative Preferred Stock, 10,000 shares authorized, 6,000 shares issued and outstanding and $25 par, Common Stock. 150,000 shares authorized, 90,000 shares issued, and 15,000 shares in treasury. The company has declared and paid dividends as follows: Year 2013: $0; Year 2014 : $25,000 and Year 2015: $60,000. Determine the dividends received by comanon shareholders in the Year 2015. 1) $30,000 2) $0 3) $57,000 4) $25,000
Common shareholders of the Corporation received a dividend of $30,000 in the year 2015.What is a corporation?A corporation is a legal entity created by a group of people to act as one and is authorized to conduct business in its own name.
The corporation is its own legal entity, with the power to file and defend lawsuits, issue stock, pay taxes, and enter into contracts.What are dividends?Dividends are payments made by companies to their shareholders to share their earnings. A dividend is a portion of a company's profits that is paid out to shareholders. The dividend payout is determined by the company's board of directors.What is non-cumulative preferred stock?Non-cumulative preferred stock is a type of preferred stock that does not allow for unpaid dividends to accumulate. Each dividend period stands alone, and if a dividend is not paid, it is not carried forward. Non-cumulative preferred stockholders are not entitled to back payments of missed dividends. This is in contrast to cumulative preferred stock.What is treasury stock?When a corporation purchases its own shares of stock, it becomes treasury stock. Treasury stock is created when a corporation buys its shares back from the public or its shareholders. The corporation may keep treasury shares indefinitely, reissue them, or cancel them altogether.In conclusion, the dividends received by common shareholders in the Year 2015 is $30,000.
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An investor is considering investing in either a Treasury bond with a yield of 2.4% or in a AA-rated Corporate bond with a yield of 2.8%. Both bonds have the same maturity date and the same coupon payment. Why would these two bonds be offered with different interest rates?
A) Markets are inefficient and investors don't bother finding the best deals
B) The Corporate bond, while high-quality, has some credit risk that the Government bond does not have
C) The Treasury bond has a tax benefit that investors compensate for
D) Most likely, the corporate bond has less liquidity than the treasury bond, and therefore require a higher yield
Option B is the correct answer: The difference in interest rates between the two bonds is primarily due to the credit risk associated with the Corporate bond, which requires a higher yield to attract investors.
The interest rate on a bond reflects the risk and return expectations of investors. In this scenario, the Treasury bond is issued by the government, which is considered to have a very low default risk. Therefore, the Treasury bond offers a lower yield because investors are willing to accept a lower return for the security and stability it provides.
On the other hand, the AA-rated Corporate bond is issued by a corporation, and although it has a high credit rating, there is still a possibility of default or credit risk. Investors demand a higher yield on the Corporate bond to compensate for this additional risk they are taking compared to the risk-free Treasury bond. Therefore, option B is the correct answer: The difference in interest rates between the two bonds is primarily due to the credit risk associated with the Corporate bond, which requires a higher yield to attract investors.
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Website: ; name: Telstra primary industry: An
Australian telecommunications and media firm called Telstra offers
products and services for landlines, mobile phones, the internet,
and
Telstra is an Australian telecommunications and media company that provides landline, mobile, internet, and media services.
Telstra is an Australian media communications and media firm that works in the essential business of giving items and administrations connected with landlines, cell phones, web, and other correspondence advancements.
As a main media communications organization, Telstra offers many administrations to the two people and organizations. They give landline telephone associations, cell phone plans, broadband internet providers, and different media communications arrangements.
Telstra has an exhaustive organization framework that empowers dependable and productive correspondence across Australia.
Notwithstanding conventional telecom administrations, Telstra likewise offers media administrations, including computerized content streaming, TV, and amusement bundles. They team up with different substance suppliers to offer a different scope of diversion choices to their clients.
Telstra is focused on development and continually puts resources into overhauling its organization foundation to give quicker web speeds, further developed inclusion, and high level correspondence advancements.
They additionally offer packaged bundles that join numerous administrations, permitting clients to appreciate cost reserve funds and accommodation.
With its broad scope of broadcast communications and media contributions, Telstra assumes an essential part in interfacing individuals and organizations, empowering correspondence, diversion, and admittance to data across Australia.
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The complete question is:
Website: www.telstra.com.au; name: Telstra primary industry: An Australian telecommunications and media firm called Telstra offers products and services for landlines, mobile phones, the internet, and pay television. Telstra offers internet and mobile services to customers in Australia. Offering mobile phone handsets, mobile phone accessories, and mobile phone plans falls under this category (prepaid and postpaid). Telstra offers a variety of mobile phone plans to satisfy the needs of their clients.
Pelamed Pharmaceuticals has EBIT of $133 million in 2006. In addition, Pelamed has interest expenses of $49 million and a corporate tax rate of 35%.
a. What is Pelamed’s 2006 net income?
b. What is the total of Pelamed’s 2006 net income and interest payments?
c. If Pelamed had no interest expenses, what would its 2006 net income be? How does it compare to your answer in part b?
d. What is the amount of Pelamed’s interest tax shield in 2006?
The Pelamed's 2006 net income, we need to subtract the interest expenses and taxes from the EBIT.
Net Income = EBIT - Interest Expenses - (Tax Rate * EBIT)
= $133 million - $49 million - (0.35 * $133 million)
= $133 million - $49 million - $46.55 million
= $37.45 million
Therefore, Pelamed's 2006 net income is $37.45 million.
For the total of Pelamed's 2006 net income and interest payments, we simply add the net income and interest expenses.
Total = Net Income + Interest Expenses
= $37.45 million + $49 million
= $86.45 million
Therefore, the total of Pelamed's 2006 net income and interest payments is $86.45 million.
If Pelamed had no interest expenses, its 2006 net income would be the same as its EBIT.
Net Income (no interest expenses) = EBIT
= $133 million
In part b, the total net income and interest payments were $86.45 million, which is lower than net income without interest expenses.
d. The amount of Pelamed's interest tax shield in 2006 represents the tax savings resulting from deducting interest expenses.
Interest Tax Shield = Interest Expenses * Tax Rate
= $49 million * 0.35
= $17.15 million
Therefore, Pelamed's interest tax shield in 2006 is $17.15 million.
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The current risk-free rate is 1.75%, the variance of the portfolio was 18%, the beta of the portfolio is 1.3, and the portfolio returns was 9.5%. What is the Sharpe Ratio of the portfolio? 1.83 3.13 3.46 2.64
The Sharpe Ratio is a measure of risk-adjusted return and is calculated by subtracting the risk-free rate from the portfolio's return and dividing the result by the standard deviation of the portfolio's returns.
To calculate the Sharpe Ratio of the portfolio, we will use the following formula:
Sharpe Ratio = (Portfolio Return - Risk-Free Rate) / Standard Deviation
Given:
- Risk-free rate = 1.75%
- Portfolio variance = 18%
- Portfolio beta = 1.3
- Portfolio return = 9.5%
Step 1: Calculate the standard deviation of the portfolio's returns
To calculate the standard deviation, we need to find the square root of the variance.
Standard Deviation = √(Variance) = √(18%) = 0.42
Step 2: Calculate the excess return
Excess Return = Portfolio Return - Risk-Free Rate = 9.5% - 1.75% = 7.75%
Step 3: Calculate the Sharpe Ratio
Sharpe Ratio = Excess Return / Standard Deviation = 7.75% / 0.42 = 18.45
Therefore, the Sharpe Ratio of the portfolio is 18.45.
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