When lending standards are tightened, lenders typically require borrowers to meet stricter criteria to receive credit. This is done to reduce the risk of defaults and ensure that lenders have adequate collateral to cover their losses.
In most cases, tighter lending standards involve higher credit score requirements, lower debt-to-income ratios, and more documentation to prove income and assets.
Lenders may also require larger down payments or higher interest rates to offset the risk of lending to less creditworthy borrowers.Tighter lending standards are often implemented during times of economic uncertainty or when lenders have experienced a high number of loan defaults.
This was particularly evident in the aftermath of the 2008 financial crisis, when many lenders were forced to tighten their standards due to the high number of defaults on subprime mortgages.By requiring borrowers to meet stricter criteria, lenders hope to reduce their exposure to risk and minimize the likelihood of losses. However, tighter lending standards can also make it more difficult for some borrowers to access credit, particularly those with lower credit scores or less stable employment.
In conclusion, when lending standards are tightened, lenders typically require borrowers to meet stricter criteria to receive credit, which reduces the risk of defaults and ensures that lenders have adequate collateral to cover their losses.
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courts usually award punitive damages in cases in which the offender has committed _____.
Courts usually award punitive damages in cases in which the offender has committed malicious, oppressive, or fraudulent acts that resulted in harm to the victim. Punitive damages are a monetary award that exceeds the actual damages that the plaintiff has suffered.
The primary purpose of this type of damages is to punish the offender and deter others from committing similar acts. Punitive damages are commonly awarded in tort cases, including product liability, medical malpractice, and intentional torts like assault, battery, and fraud.
In these cases, the defendant's actions have caused harm to the plaintiff beyond physical injury, such as emotional distress or loss of reputation.
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Explain ABC analysis in detail. What is EOQ Model along with assumptions.
ABC analysis is a strategy for inventory management that involves categorizing inventory items based on their value to the business. In ABC analysis, inventory items are grouped into three categories: A, B, and C, with A items being the most valuable and C items being the least valuable. EOQ Model is an inventory management model that helps businesses determine the optimal order quantity for a particular item.
The model assumes that demand is constant and known, that ordering costs and holding costs are known and constant, and that lead time is known and constant. The model aims to minimize the total cost of ordering and holding inventory by determining the order quantity that will result in the lowest total cost.
The EOQ formula is:
EOQ = √((2DS)/H)
Where: D = annual demand
S = ordering cost per order
H = holding cost per unit per year
Assumptions of EOQ Model are:
1. The demand for the product is known and constant
2. The lead time for the product is known and constant
3. The order quantity is received in a single delivery
4. The order is received all at once
5. There is no uncertainty or variation in demand
6. There is no uncertainty or variation in lead time
7. The only costs involved are ordering costs and holding costs
8. Ordering costs and holding costs are known and constant
9. The ordering cost is independent of the order quantity
10. The holding cost is proportional to the order quantity
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The Baron Basketball Company (BBC) earned $11 a share last year and paid a dividend of $5 a share. Next year, you expect BBC to earn $13 and continue its payout ratio. Assume that you expect to sell the stock for $129 a year from now. Do not round intermediate calculations. Round your answers to the nearest cent.
If you require 12 percent on this stock, how much would you be willing to pay for it?
If you expect a selling price of $113 and require a 9 percent return on this investment, how much would you pay for the BBC stock?
Given data:Earnings last year = $11 a share Dividend last year = $5 a shareExpected earnings next year = $13 a shareExpected selling price = $129 a year from now Required rate of return (RRR) = 12% = 0.12 (as a decimal)Solution:To find the maximum price you would be willing to pay, we need to use the dividend discount model as follows Maximum price = (dividend next year + expected selling price) / (1 + required rate of return).
Dividend next year = earnings next year * payout ratio = $13 * ($5 / $11) = $5.91Maximum price = ($5.91 + $129) / (1 + 0.12) = $107.27Therefore, you would be willing to pay up to $107.27 for the BBC stock at a required rate of return of 12%.Now, let's calculate the maximum price you would be willing to pay if you expect a selling price of $113 and require a 9% return on this investment.
To find the maximum price you would be willing to pay, we can use the same dividend discount model:Maximum price = (dividend next year + expected selling price) / (1 + required rate of return) Dividend next year = earnings next year * payout ratio = $13 * ($5 / $11) = $5.91Maximum price = ($5.91 + $113) / (1 + 0.09) = $98.48 Therefore, you would be willing to pay up to $98.48 for the BBC stock if you expect a selling price of $113 and require a 9% return on this investment.
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a limited partnership is an agreement between two or more individuals to operate a business as co-owners for a limited period of time. true or false
The statement "a limited partnership is an agreement between two or more individuals to operate a business as co-owners for a limited period of time" is false.
A limited partnership is a type of business structure where there are two types of partners: general partners and limited partners. General partners have unlimited liability and are actively involved in the management of the business, while limited partners have limited liability and do not participate in the day-to-day operations of the business.
Unlike the statement suggests, a limited partnership does not have a limited period of time. It can continue indefinitely as long as the partners agree and fulfill the legal requirements.
In a limited partnership, the general partners have more control and are responsible for the management and decision-making of the business. They also have personal liability for the debts and obligations of the partnership.
On the other hand, limited partners have limited liability, meaning their personal assets are protected from the partnership's debts and obligations beyond their initial investment. However, limited partners typically have no management authority and cannot make decisions on behalf of the partnership.
Overall, a limited partnership is a business arrangement that allows for both active and passive participation in the management and ownership of a business, but it is not limited to a specific time period.
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Net Present Value-Unequal Lives Project 1 requires an original investment of $57,000. The project will vield cash flow 5 of $15,000 per year for five years. Project 2 has a calculated net present value of $15,100 over a three-year life. Project 1 could be sold at the end of three years for a price of $67,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest Present Value of an Annuity of $1 at Componnd Interest Present Value of an Annuity of $1 at Compound Interest a. Determine the net present value of Project 1 over a three-vear life with residual value, assuming a minimum rate of return of 20%. If required, found to the nearest dollar. b. Which project provides the oreatest net present value?
The net present value of Project 1 over a three-year life with a residual value, assuming a minimum rate of return of 20%, is $89,000.
a. To determine the net present value of Project 1 over a three-year life with a residual value, we need to calculate the present value of the cash flows and the residual value. Using the information provided and the Present Value of $1 at Compound Interest table, we can calculate the present value of the cash flows:
Year 1: $15,000 / (1 + 0.20)^1 = $12,500
Year 2: $15,000 / (1 + 0.20)^2 = $10,416.67
Year 3: ($15,000 + $67,000) / (1 + 0.20)^3 = $66,083.33
Next, we calculate the net present value by subtracting the initial investment:
Net Present Value = Present Value of Cash Flows - Initial Investment
Net Present Value = ($12,500 + $10,416.67 + $66,083.33) - $57,000
Net Present Value = $89,000
Therefore, the net present value of Project 1 over a three-year life with a residual value, assuming a minimum rate of return of 20%, is $89,000.
b. To determine which project provides the greatest net present value, we compare the net present value of Project 1 with the net present value of Project 2, which is given as $15,100 over a three-year life. Since the net present value of Project 1 ($89,000) is higher than the net present value of Project 2 ($15,100), Project 1 provides the greater net present value.
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In the last 2 years, your company has posted losses in the financial statements. You have recently been employed as the production manager to help with restoring the finances of the company. In your first 3 weeks you have been inundated with various strategies and solutions from staff on how to move the organization forward. Using models studied in the classroom how will you go about identifying the correct solution to propose to executive management?
As the production manager, the first step to identifying the correct solution to propose to the executive management is to conduct a financial analysis of the company using models studied in the classroom.
The financial analysis involves assessing the financial performance of the company in the last two years.
The models studied in the classroom can include the SWOT analysis, Porter’s five forces model, and PESTEL analysis.
The SWOT analysis helps to identify the internal strengths and weaknesses of the company as well as the external opportunities and threats it faces.
Porter’s five forces model helps to analyze the competitive environment of the company and the profitability of the industry.
PESTEL analysis assesses the political, economic, social, technological, environmental, and legal factors affecting the company.
After conducting a financial analysis using the appropriate model, the next step would be to develop a comprehensive strategy to restore the finances of the company.
The strategy should address the identified weaknesses, capitalize on opportunities, and mitigate threats.
The strategy should be specific, measurable, achievable, realistic, and time-bound. It should also be communicated to all stakeholders to ensure their buy-in and commitment to its implementation.
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In ascertaining whether a borrower has the ability to pay off his loan over time, a mortgage bank may rely on calculating a total debt ratio as part of its underwriting process. Using the following information, calculate the total debt ratio: monthly principal and interest on mortgage loan: $635; monthly tax and insurance payments into escrow: $125; monthly car lease payment (lease term is 3 years): $350; gross monthly income: $2,500. 25.4%
30.4%
44.4%
53.2%
If an ascertaining whether a borrower has the ability to pay off his loan over time. The total debt ratio is: C. 44.4%.
What is the total debt ratio?First step is to determine the borrower's total monthly debt payments
Total monthly debt payments = Monthly mortgage payment + Monthly tax and insurance payments + Monthly car lease payment
Total monthly debt payments = $635 + $125 + $350
Total monthly debt payments = $1,110
Now let find the total debt ratio
Total debt ratio = (Total monthly debt payments / Gross monthly income) * 100
Total debt ratio = ($1,110 / $2,500) * 100
Total debt ratio ≈ 44.4%
Therefore the correct option is C.
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The standard cost of Product B includes 2 units of DM at $3 per unit Durimg Jurv, 19740 units of Dm were purchasod and used at a cost of $3.3 per unit to produce 10000 units of Product B Compute the variance recuested below and indicate whether the variance is favorable or unfavorable, by indicating U or F Place the letter by the number, DO NOT add a space. Example, if the variance is 100 unfavorable, enter 1000 (DO NOT PUT 100 U) The Direct Materials Quantity variance is $
The Direct Materials Quantity Variance is as follows: First, determine the standard quantity for Direct Materials (DM) by multiplying the number of units produced (10,000) by the standard amount of DM used per unit
(2).Standard Quantity of [tex]DM = 10,000 × 2 = 20,000 units[/tex]
Then, calculate the Actual Quantity of DM used in production, which is given as 19,740 units.
Actual Quantity of DM = 19,740 units
Finally, calculate the Direct Materials Quantity Variance using the following formula: DM Quantity Variance = (Standard Quantity of DM – Actual Quantity of DM) × Standard Cost per Unit of DMDM
[tex]Quantity Variance = (20,000 – 19,740) × $3DM[/tex] Quantity Variance =[tex]260 × $3DM Quantity Variance = $780[/tex]
This variance is unfavorable because it has a positive value, which means that the actual quantity of DM used in production is less than the standard quantity allowed for the production of 10,000 units of Product B.
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Anushka purchased 200 shares of Apple stock at $250. One year later, she sold the stock for $300. Apple paid a dividend of $25 per share. Calculate Anushka's holding period return (\%). a. 20 b. 30 c. 10 d. 50 2.
The holding period return for Anushka's investment in Apple stock is 30%. The correct option is b. 30.
Holding period return is the rate of return on an investment over a specific period of time, usually measured from the purchase date until the sale date or until the date when the investment was liquidated. Holding period return is the total return earned by an investor over the holding period. The formula for calculating the holding period return is:
Holding period return = (Ending price - Beginning price + Dividends) / Beginning price
Therefore, Anushka's holding period return can be calculated as follows:
Initial price per share = $250
Ending price per share = $300
Dividend per share = $25
Number of shares = 200
Total cost of shares = Number of shares x Initial price per share
= 200 x $250
= $50,000
Total sale proceeds = Number of shares x Ending price per share
= 200 x $300
= $60,000
Total dividends received = Number of shares x Dividend per share
= 200 x $25
= $5,000
Holding period return = (Ending price - Beginning price + Dividends) / Beginning price
= ($300 - $250 + $25) / $250
= $75 / $250
= 0.3 or 30%
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Cheney Company established a predetermined variable overhead cost rate at $21.00 per direct labor hour. The actual variable overhead cost rate was $19.20 per hour. The planned level of labor activity was 76,000 hours of labor. The company actually used 80,000 hours of labor. Required Determine the total flexible budget variable overhead cost variance and indicate the effect of the variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
The total flexible budget variable overhead cost variance is $144,000. The actual variable overhead cost is lower than the flexible budget variable overhead cost, it indicates a favorable variance (F). The calculation is shown in the attached image below.
Overhead costs, also known as indirect costs or operating expenses, refer to the ongoing expenses incurred by a business or organization that are not directly attributable to a specific product, service, or project.
Overhead costs are necessary for the operation of the business as a whole and support its overall functioning. These costs include various expenses that are not directly tied to the production or delivery of goods or services
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If the marginal propensity to save (MPS) is \( 0.07 \), Instructions: Round your responses to two decimal places. a. the marginal propensity to consume (MPC) is b. the multiplier is
The Marginal Propensity to Consume (MPC) and the multiplier can be determined using the following formulas: MPC = 1 - MPS Multiplier = 1/MP Sa. The marginal propensity to consume (MPC) is:
To determine the MPC, we can use the formula: MPC = 1 - MPS where MPS = 0.07MPC = 1 - 0.07MPC = 0.93Therefore, the marginal propensity to consume (MPC) is 0.93.b. The multiplier is: To determine the multiplier, we can use the formula:
Multiplier = 1/MPS where MPS = 0.07Multiplier = 1/0.07Multiplier = 14.29Therefore, the multiplier is 14.29.
Note: The multiplier shows how much a change in autonomous expenditure (investment, government spending, exports - imports) can change the equilibrium level of national income.
In this case, a $1 change in autonomous expenditure will change the equilibrium level of national income by $14.29.
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Two investment options are as follows.
Choice 1: Payments of $ 2500 now, $ 3000 a year from now, and $ 3560 two years from now.
Choice 2. Three yearly payments of $ 3000 starting now.
Assume interest is compounded continuously
(a) If the interest rate on savings were 6.74 %, which would you prefer? 2
(Type in 1 for Choice 1, or 2 for Choice 2)
(b) What is the interest rate that would make both choices equally lucrative? Enter an EXACT answer using a logarithm (NO DECIMALS). |
(a) Two investment options are given as follows: Choice 1: Payments of $2500 now, $3000 a year from now, and $3560 two years from now. Choice 2. Three yearly payments of $3000 starting now. Assume interest is compounded continuously.
Now, the given interest rate is 6.74%.We have to find out which option is preferred.(i) Choice 1:Payments of $2500 now is worth $2500 after 0 years.$3000 a year from now is worth 3000*e^(0.0674*1) = $3208.54 after 1 year.$3560 two years from now is worth 3560*e^(0.0674*2) = $3945.70 after 2 years.
Total amount received by choosing Choice 1 = $2500 + $3208.54 + $3945.70 = $9654.24(ii) Choice 2:Three yearly payments of $3000 starting now is worth $3000+3000*e^(0.0674*1)+3000*e^(0.0674*2) = $9413.46Total amount received by choosing Choice 2 = $9413.46Therefore, Choice 2 is preferred over Choice .
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Suppose that the manager of a construction supply house determined from historical records that demand for sand averages 47 tons. In addition, suppose the manager determined that demand during lead time could be described by a normal distribution that has a mean of 47 and a standard deviation of 4 tons. Answer the following questions assuming that the manager is willing to accept a stockout risk of no more than 3 percent. (Round your answer to two decimal points.) a. What value of z is appropriate? b. How much safety stock should be held? (Round your answer to two decimal points.) c. What reorder point should be used? (Round your answer to two decimal points.)
The reorder point that should be used is 54.52 tons. The manager should reorder the sand when the inventory level reaches 54.52 tons.
a) What value of z is appropriate?
The z-score formula is used to calculate z-score which tells us the deviation of a score from its mean, taking into account the standard deviation. If the manager is willing to accept a stock out risk of no more than 3 percent, it means that she wants the product to be in stock 97 percent of the time.
Therefore, the z value associated with 97 percent is 1.88.
To find the value of z, use the following formula;
Z = (x - μ) / σWhere,x = 0.03μ = 0σ = 1Z = (0.03 - 0) / 1Z = 0.03.
The value of z is 1.88b) How much safety stock should be held?
The safety stock is the extra inventory you keep on hand to protect against stock out due to unexpected fluctuations in demand or supply chain problems. It is calculated as the product of the standard deviation of lead time demand and the z-value.
Therefore, the safety stock is calculated as follows:
Safety stock = Z × σLTD.
Demand for lead time = 47 tons.
Standard deviation of lead time demand = 4 tons Z = 1.88.
Safety stock = 1.88 × 4Safety stock = 7.52 tons.
Therefore, the amount of safety stock that should be held is 7.52 tons.
c) What reorder point should be used?
The reorder point is the inventory level at which an order should be placed to replenish stock. To calculate the reorder point, add the expected lead time demand to the safety stock and subtract this value from the expected demand during the lead time.
Therefore, the reorder point is calculated as follows:
Reorder point = (Demand during lead time × Lead time) + Safety stock.
Demand during lead time = 47 tons.
Lead time = 1 week.
Safety stock = 7.52 tons.
Reorder point = (47 × 1) + 7.52.
Reorder point = 54.52 tons.
Therefore, the reorder point that should be used is 54.52 tons. The manager should reorder the sand when the inventory level reaches 54.52 tons.
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The primary types of tax systems are (Check all that apply.) A. proportional tax systems. B. average tax systems. C. regressive tax systems. D. marginal tax systems. E. progressive tax systems. An example of a progressive tax is the A. sales tax. B. income tax. C. Social Security tax. D. property tax. An example of a regressive tax is the A. Medicare tax. B. income tax. C. Social Security tax. D. inheritance tax. An example of a proportional tax is the A. Medicare tax. B. property tax. C. Social Security tax. D. income tax.
Taxation is the process of collecting money from citizens in order to fund the government's operations. A tax system is a set of rules and regulations that governs the collection of taxes from citizens and organizations.
A variety of tax systems exist around the world, and different countries use different methods to collect taxes. Here are the primary types of tax systems: Proportional Tax SystemsA proportional tax system is one in which the tax rate is the same for all taxpayers, regardless of their income. This implies that everyone pays the same percentage of their income in taxes.
. As a result, the poor pay more in taxes than the rich. Average Tax Systems An average tax system is one in which the tax rate is the same for all taxpayers, but the amount of taxes paid varies based on income. This implies that the tax system is progressive, but not as progressive as the progressive tax system.
The progressive tax system is used to collect income tax in most countries. In the United States, for example, the tax rate ranges from 10% to 37% of taxable income, depending on the taxpayer's income level. The higher the income level, the higher the tax rate.
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Prepare the Total Cost of Ownership (TCO) Schedule for your ERP
System. (10 marks)
Total Cost of Ownership (TCO) Schedule for ERP (Enterprise Resource Planning) is a method that calculates the whole life-cycle expense of a company's system from planning and procurement to maintenance and decommissioning.
Total cost of ownership (TCO) is a financial model that is used to calculate the complete cost of purchasing and maintaining a particular asset over its entire life cycle. ERP implementation is a major long-term investment, and estimating its total cost of ownership (TCO) is critical to ensure that it delivers real value to the organization. The total cost of ownership (TCO) schedule for the ERP system includes all costs, including the initial cost of procurement, installation, and customization, as well as ongoing expenses for maintenance, upgrades, and support.
To estimate the cost of ownership of the ERP system, companies must consider all costs, including hardware, software, network infrastructure, customization, maintenance, support, upgrades, training, and even decommissioning. The cost of acquiring an ERP system includes hardware and software licenses, which can vary based on the complexity of the solution.
The initial implementation cost is followed by maintenance, support, and upgrade fees, which vary based on the support level chosen by the company. Regular upgrades are required to maintain the system, which entails additional expenses. Training costs are also a significant aspect of the total cost of ownership since it is critical to ensure that all end-users are properly trained to use the system effectively. Other expenses, such as hardware replacement and disposal, must also be considered.
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Fill In The Blank, The "dual-rate" cost-allocation method classifies costs in each support dept into a ____. (select all that apply)
budgeted-cost pool and an actual-cost pool
direct-cost pool and an indirect-cost pool
variable-cost pool and a fixed-cost pool
direct-cost pool and a reciprocal-cost pool
manufacturing-cost pool and a non-manufacturing cost pool
Which of the following describes the direct method's allocation of support-dept costs?
It allocates support-dept costs to operating dept by fully recognizing the mutual services provided among all support depts
It allocates each support dept costs to operating depts only
It allocates support-dept cost to other support depts and to operating depts in a sequential manner that partially recognizes the mutual services provided among all support dept.
It requires managers to rank the support depts after predicting the usage of multiple support depts
The "dual-rate" cost-allocation method classifies costs in each support dept into a budgeted-cost pool and an actual-cost pool and direct-cost pool and an indirect-cost pool.Both direct-cost pool and an indirect-cost pool are used to classify the costs in each support dept.
The direct-cost pool includes costs incurred for a single department while the indirect-cost pool includes costs incurred for several departments.
The direct method's allocation of support-dept costs allocates support-dept costs to operating dept by fully recognizing the mutual services provided among all support depts. The direct method is an alternative method for allocating support-department costs to operating departments.The direct method allocates each support department's total costs to operating departments without considering any services provided by other support departments.
The direct method only accounts for the services the support department provides to the operating department.In conclusion, The "dual-rate" cost-allocation method classifies costs in each support dept into a budgeted-cost pool and an actual-cost pool and a direct-cost pool and an indirect-cost pool.
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You have identified the following four peers for a private target company, and you gathered four metrics for each company. Assume the business profile for each comp is an equally suitable comparison. Based on the table of metrics, select the two best comps for the target company.
Revenues Profit Margin 3y CAGR Sales Debt/Equity
Private target co. $500 million 35% 5.0% 80%
Comp A $1.1 billion 37% 4.1% 80%
Comp B $300 million 33% 5.5% 60%
Comp C $700 million 41% 8.0% 130%
Comp D $5 billion 33% 3.3% 80%
To select the two best comps for the target company based on the table of metrics given below, the private target co and four peers are compared based on the metrics given in the table of metrics.
The metrics include revenues, profit margin, 3y CAGR sales, and debt/equity. The four peers for the private target company are as follows:
[tex]Comp A with revenues of $1.1 billion, profit margin of 37%,[/tex]
[tex]3y CAGR sales of 4.1%, and debt/equity of 80%.[/tex]
Comp B with revenues of $300 million, profit margin of 33%,
3y CAGR sales of 5.5%, and debt/equity of 60%.
[tex]Comp C with revenues of $700 million, profit margin of 41%,[/tex]
[tex]3y CAGR sales of 8.0%, and debt/equity of 130%.[/tex]
Comp D with revenues of $5 billion, profit margin of 33%,
[tex]3y CAGR sales of 3.3%, and debt/equity of 80%.[/tex]
To choose the two best comps for the target company, the criteria that need to be considered are profit margins, revenue, and debt/equity. Profit margins will indicate how well the company is doing, while revenues will indicate the [tex]Comp B with revenues of $300 million, profit margin of 33%,[/tex]size of the company.
[tex]($700 million) > Comp B ($300 million) > Comp D ($5 billion)[/tex]
[tex]Profit Margin: Comp C (41%) > Comp A (37%) > Private target co.[/tex]
[tex](35%) > Comp B (33%) = Comp D (33%)3-year CAGR Sales:[/tex]
[tex]Comp C (8.0%) > Comp B (5.5%) > Private target co.[/tex]
C[tex]Comp C (8.0%) > Comp B (5.5%) > Private target co.[/tex]
Comp B (60%) < Private target co. (80%) = Comp A
Based on the above comparison, the two best comps for the private target company are Comp A and Comp C, since they are both superior in all four categories to the private target company.
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what are the project deliverables for a self-checkout kiosk
implementation project for a supermarket?
A project deliverable is a result that is delivered at the conclusion of a project. It is a tangible outcome that is used to assess project success and whether project objectives have been met. The following are the project deliverables for a self-checkout kiosk implementation project for a supermarket:1. Project charter: This document provides a summary of the project's objectives, scope, and resources required to complete it.
It also outlines the roles and responsibilities of the project team.2. Project plan: This document provides a comprehensive project plan that details the activities, timelines, and resources required to deliver the project. It is a roadmap for the project team to follow and ensure that the project is delivered on time and within budget.3. Design specifications:
This document provides detailed specifications for the self-checkout kiosks, including hardware, software, and user interface.4. Procurement plan: This document outlines the procurement process for the self-checkout kiosks, including vendor selection, negotiation, and contract execution.
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The fastest microprocessors in the world are made in Japan. absolute advantage comparative advantage
QUESTION 2 Saudi Arabia's access to inexpensive oil gives them the ability to produce chemicals at a lower cost than the United States. _____ absolute advantage comparative advantage
QUESTION 3 Jennifer can fold laundry faster than Steve. ______ absolute advantage comparative advantage
QUESTION 4 Mary broke a world record in the 100 meter dash and is considered the fast woman on earth. ______ absolute advantage comparative advantage
QUESTION 5 American companies locate call centers in India due to the relatively low cost of labor. _____ absolute advantage comparative advantage
Absolute advantage refers to superior efficiency or performance in a particular task or industry, while comparative advantage relates to producing goods or services at a lower opportunity cost compared to others.
QUESTION 1: The statement "The fastest microprocessors in the world are made in Japan" refers to absolute advantage. Absolute advantage refers to a situation where a country or entity can produce a good or service more efficiently or with higher quality than other countries or entities.
QUESTION 2: The statement "Saudi Arabia's access to inexpensive oil gives them the ability to produce chemicals at a lower cost than the United States" refers to comparative advantage. Comparative advantage refers to a situation where a country or entity can produce a good or service at a lower opportunity cost compared to other countries or entities. In this case, Saudi Arabia's access to inexpensive oil gives them a cost advantage in chemical production.
QUESTION 3: The statement "Jennifer can fold laundry faster than Steve" refers to absolute advantage. Absolute advantage relates to an individual's ability to perform a task more efficiently or with better outcomes compared to others.
QUESTION 4: The statement "Mary broke a world record in the 100 meter dash and is considered the fastest woman on earth" refers to absolute advantage.
Absolute advantage pertains to an individual's or entity's ability to perform a task or achieve a result more effectively or with superior performance compared to others.
QUESTION 5: The statement "American companies locate call centers in India due to the relatively low cost of labor" refers to comparative advantage.
Comparative advantage involves a situation where a country or entity can produce a good or service at a lower opportunity cost compared to others.
In this case, American companies choose to locate call centers in India due to the lower cost of labor compared to the United States.
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SAP Inc. received a $2 million grant under its Small Business Innovation program. SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $700,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards from the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 12% per year? Assume a cost of operations and other costs for SAP equal 60% of revenue. A. $7.3 million B. $7.7 million C. $6.2 million D. $5.9 million
To find the present value of the project, you need to use the formula:
PV = CF1 / (1 + r) + CF2 / (1 + r)2 + CF3 / (1 + r)3 + . . . + CFn / (1 + r)n
CF2, CF3, ........., CFn = $0 (Cash flow in subsequent years)
Total Cash flows in future = $2,800,000Discount rate, r = 12%
Present Value, PV = ?
Now put all the values in the above formula,
PV = CF1 / (1 + r) + CF2 / (1 + r)2 + CF3 / (1 + r)3 + . . . + CFn / (1 + r)n
= $2,800,000 / (1 + 0.12) + 0 + 0 + 0 + ............+ 0 = $2,500,000.89 (approx)
Investment cost = $2 million Cost of operations and other costs for SAP = 60% of revenue.
Hence, 40% of revenue is the profit. Profit per annum will be,40% of revenue = $700,000
Revenue = $700,000 / 0.40 = $1,750,000
Profit = Revenue - Cost of operations and other costs for SAP = $1,750,000 - 60% of revenue = $1,750,000 - 0.6($1,750,000) = $700,000
The profit in each of the first years will be $700,000.
Net Present Value, NPV = Present Value (PV) - Investment Cost= $2,500,000.89 - $2,000,000= $500,000 (approx)
The present value (PV) of the project (net of investment) if the cost of capital for SAP is 12% per year is $5.9 million (rounded off to the nearest tenth).
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a driver knows more than his auto insurer about how cautiously he drives. this is an example of a. the condorcet paradox. b. a hidden characteristic. c. a hidden action. d. adverse selection.
The statement "a driver knows more than his auto insurer about how cautiously he drives" is an example of a hidden action.
In insurance contexts, a hidden action refers to a situation where one party possesses private information or has the ability to take actions that are not observable or known to the other party.
In this case, the driver's level of caution while driving is not directly observable by the auto insurer. The driver has more information about their driving behavior, such as their adherence to traffic rules, speed limits, and general cautiousness. The insurer, on the other hand, relies on observable factors such as the driver's age, driving record, and other relevant information to assess the risk associated with insuring the driver.
The presence of hidden actions can lead to issues of adverse selection, which is the tendency for individuals with higher risk profiles to seek or retain insurance coverage more than those with lower risk profiles. Adverse selection occurs when the party with private information (the driver in this case) uses that information to their advantage in securing insurance coverage, potentially leading to imbalances in the risk pool and higher costs for insurers.
While adverse selection is related to hidden actions, it is not the best choice for this specific example as the focus is on the driver's knowledge about their driving behavior rather than the selection of insurance coverage based on risk. Therefore, the most appropriate answer is c. a hidden action.
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The readings for chapter 7 (Leadership Processes) recommend moving away from the ever-changing, symptoms-based, leader ‘styles’ preoccupation. Instead, they advocate a focus on creating meaningful organizational ‘processes’; that companies require to effectively manage the complexity they face. To this end, Alvesson & Blom (2019) suggest horizontal people processes should complement the vertical operations that most organizations currently operate by. The other two readings refer to notions of ‘agnostic governance’ and ‘negative capability’. In what ways do these models introduce fluid types of communication processes that shift attention away from individualism?
The models, such as 'agnostic governance' and 'negative capability,' introduce fluid types of communication processes that shift attention away from individualism. By this, the models help leaders create meaningful organizational processes instead of the ever-changing, symptoms-based, leader 'styles' preoccupation.
Agnostic governance and negative capability models have introduced communication processes that have shifted attention away from individualism. These models emphasize that for a company to effectively manage complexity, they need to focus on creating meaningful organizational processes. The aim of Alvesson & Blom (2019) horizontal people processes is to complement the vertical operations that most organizations currently operate by.
Horizontal processes address the challenges brought by a changing environment, which creates a need for an integrated, fluid, and flexible way of conducting communication in organizations. These horizontal processes, unlike vertical processes, rely on individuals’ knowledge and abilities, promoting communication that involves cooperation, collaboration, and sharing of responsibilities.
herefore, negative capability models encourage the creation of an atmosphere that promotes interaction, exchange, and dialogue, allowing for a culture that values every individual's contributions.
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BMMB has recently been approached by John Smart and Lydia Job. They are seeking advice with regards to operating a new catering business to trade as Ultimate Catering. They both have over 10 years’ experience in this industry and now want to set up their own business. They intend to rent the premises and employ 3 chefs and 3 kitchen hands.
john would manage the kitchen and Lydia would take care of the administration and bookkeeping duties.
They anticipate that the set-up cost for each shop would be $50,000. They have already won a contract to provide catering services to the local TV station. As seasoned chefs who have made headlines in the industry, they expect the business to be very successful.
John has personal investments worth $500,000 and Lydia has personal investments of $200,000 and a property trust. They want a business structure that is not expensive to set up and that which would enable them to minimise their tax liability whilst protecting their personal assets and investments.
They have a general idea about Trusts, Corporations and Joint Ventures. They want you to research and analyse these options and advise on the best business structure for them.
John and Lydia and other local businesses in the area which to run a soup kitchen once a month at their local community Centre. They want to formalise this and keep it separate from their personal and business activities. Advise them on the best structure to use.
Explain the following business structures and suggest the best structure for your client based on their needs. In your answer, analyse the impact of legal principles and risk implications involved in the suggested business structure.
Trusts
Corporations
Joint Ventures
Suggest the best structure for your client based on their needs and analyse the impact of legal principles and risk implications involved in the suggested business structure.
It's important to note that the choice of business structure involves legal and risk implications. Establishing a corporation requires compliance with corporate laws, taxation regulations, and ongoing reporting.
Rusts: A trust is a legal entity created to hold and manage assets on behalf of beneficiaries. It involves transferring assets to a trustee who has a fiduciary duty to manage and distribute them according to the terms of the trust. Trusts can provide asset protection, flexibility in tax planning, and privacy. However, they require formal establishment, administration, and ongoing compliance.
Corporations: A corporation is a separate legal entity from its owners, known as shareholders. It offers limited liability protection, meaning that the shareholders' personal assets are generally protected from business liabilities.
Corporations have a more complex structure, requiring formal incorporation, adherence to corporate governance rules, and compliance with various regulations. They can raise capital through the issuance of shares and have perpetual existence.
Joint Ventures: A joint venture involves two or more parties coming together to pursue a specific business opportunity or project. Each party contributes resources, shares profits, and bears risks. Joint ventures can be structured through a contractual agreement or by establishing a separate legal entity. They allow for collaboration and risk-sharing but require clear agreements and management of the relationship between the parties.
Based on John and Lydia's needs, the best business structure for them would likely be a corporation. As they seek to protect their personal assets and investments, a corporation offers limited liability, separating their personal finances from the business. With their anticipation of success and potential expansion, a corporate structure provides a more scalable and enduring framework. They can issue shares to raise capital, establish clear roles and responsibilities, and ensure compliance with legal and regulatory requirements.
However, it's important to note that the choice of business structure involves legal and risk implications. Establishing a corporation requires compliance with corporate laws, taxation regulations, and ongoing reporting.
They would need to consider factors such as taxation, governance, shareholder agreements, and liability exposure. Consulting with legal and financial professionals would be crucial to ensure a thorough analysis of the legal principles and risk implications associated with the chosen business structure.
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Find an article that was published this year that provides an in-depth discussion about a firm that is operating in a monopolistic, oligopolistic, or monopolistically competitive market structure. The article must contain substantial evidence to identify the market structure which the firm operates. Thoroughly address the following questions using course concepts: 1. Describe the market structure apparent in your article. Thoroughly explain how you came to your conclusion by examining all the determining factors as presented in the course. 2. Compare the firm in your article with a hypothetical firm that exists in a perfectly competitive market. a. How does each firm make its short-run, profit-maximization decisions? Use two graphs to illustrate your comparison. b. Is there a difference in each firm's ability to earn long-term, economic profits? Explain why or why not. 3. Contrast the social advantages and social disadvantages of each market structure. a. Use a table(s) to simplify your response. b. Explain which market structure produces a more efficient result. Use 2 graphs that support your answer by highlighting the presence or absence of a dead weight loss.
The article which is published in the year 2021 is based on the monopolistic competition market structure. The firm discussed in the article is Nike. Nike's market structure is characterized by product differentiation and advertising. Nike's strategy in this market structure is to differentiate its products to appeal to the specific preferences of customers.
Article Name: Nike’s successful monopolistic competition market structure analysisThe article is based on Nike, which is operating in the monopolistic competition market structure. It discusses the various features that make Nike a monopolistically competitive firm, including product differentiation, advertising, and pricing strategies. By examining these features, the article concludes that Nike's market structure is best characterized as monopolistic competition.
Nike is a firm that operates in the monopolistic competition market structure. Nike's strategy in this market structure is to differentiate its products to appeal to the specific preferences of customers.
Nike does this through extensive advertising and product design, which allows the firm to charge a higher price for its products than its competitors.In a perfectly competitive market, firms are price-takers, meaning they must accept the market price for their products. In contrast, monopolistically competitive firms are price-makers, meaning they have some control over the price of their products.
Nike is a price-maker because it can differentiate its products and charge a higher price than its competitors.In the short-run, both firms will maximize profits by producing the quantity of goods where marginal cost equals marginal revenue. In the long run, the perfectly competitive firm will earn zero economic profits, while the monopolistically competitive firm will earn positive economic profits due to product differentiation and advertising.
Social advantages of a perfectly competitive market structure include allocative efficiency and consumer surplus. Social disadvantages of monopolistic competition include the potential for deadweight loss due to the higher price charged by firms.In contrast, monopolistic competition produces less efficient results because of the deadweight loss associated with price differentiation.
The graph of a perfectly competitive market shows the absence of deadweight loss, while the graph of a monopolistically competitive market shows the presence of deadweight loss.
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Vaughn TVs uses a perpetual inventory system. For its flat-screen television sets, the January 1 inventory was 3 sets at €648.00 each. On January 10, Vaughn purchased 6 units at €700 each. The company sold 2 units on January 8 and 4 units on January 15. Part 1 Your answer is incorrect. Compute the ending inventory under FIFO. (Round answers to 0 decimal places, e.g. 2,120.) Compute the ending inventory under moving-average cost. (Round average unit cost to 2 decimal places, e.g. 25.16 and final answer to O decimal places, e.g. 2,120.)
Vaughn TVs uses a perpetual inventory system. The inventory of flat-screen television sets on January 1 was 3 sets at €648.00 each. On January 10, 6 units were purchased for €700 each. The company sold 2 units on January 8 and 4 units on January 15.
FIFO is a method of inventory costing where the earliest inventory purchased is assumed to be the first inventory sold. It is commonly used to value inventory as it provides the closest approximation of the cost of goods sold.
The calculation of ending inventory under FIFO is done as follows:
For the 3 units from January 1 Inventory:
Total Cost = €1,944 (3 units × €648 each)For the 6 units from January 10 Purchases:
Total Cost = €4,200 (6 units × €700 each)The cost of the 2 units sold on January 8 is the cost of the 2 units from the January 1 inventory, which is €1,296. The remaining cost of the 2 units sold is €1,296 from the January 10 purchase. For the 4 units sold on January 15, the cost is €2,592 from the January 10 purchase. The calculation of the ending inventory under FIFO is:
Cost of goods sold = €5,184 (€1,296 + €1,296 + €2,592)
Ending inventory = €1,956 (€6,300 - €5,184)
The moving-average cost is a method of inventory costing that recalculates the average cost of inventory after each purchase. It is calculated by dividing the total cost of the inventory by the number of units in the inventory.
The calculation of the moving-average cost and ending inventory is as follows:
For the 3 units from January 1 Inventory:
Total Cost = €1,944 (3 units × €648 each)For the 6 units from January 10 Purchases:
Total Cost = €4,200 (6 units × €700 each)Total Units = 9Average Cost = €2,144 (€6,144 ÷ 9)
For the 2 units sold on January 8, the cost is €2,144 from the moving-average cost. For the 4 units sold on January 15, the cost is €2,144 from the moving-average cost.
The calculation of the ending inventory under the moving-average cost is:
Total Units = 3 (January 1 Inventory) + 6 (January 10 Purchase) - 2 (January 8 Sales) - 4 (January 15 Sales) = 3Average Cost = €2,144Ending inventory = €6,432 (€2,144 × 3 units)
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what approach supports applying business practices within the public sector
New Public Management (NPM) promotes the adoption of business practices in the public sector to improve efficiency and accountability. It emphasizes results-oriented approaches, customer focus, and performance measurement for better service delivery.
The approach that supports applying business practices within the public sector is known as "New Public Management" (NPM). NPM emphasizes the use of management techniques and principles derived from the private sector to improve the efficiency, effectiveness, and accountability of public sector organizations. It advocates for results-oriented approaches, performance measurement, decentralization, market mechanisms, and customer focus.
By adopting business practices such as strategic planning, performance evaluation, outcome measurement, and customer satisfaction assessment, the public sector aims to enhance service delivery, streamline processes, and increase overall organizational effectiveness. NPM encourages public sector organizations to operate in a more business-like manner, embracing concepts such as cost-efficiency, performance-based funding, and competition.
While the application of business practices in the public sector can bring benefits in terms of effectiveness and accountability, it is important to strike a balance between efficiency and the unique objectives and values of the public sector, such as equitable service provision and social welfare. Therefore, careful consideration and adaptation of business practices to the specific context of the public sector are necessary for successful implementation.
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which of the following is not one of the three types of contingent valuation surveys?
The correct answer is "Stated preference survey" as it is not one of the three types of contingent valuation surveys.
Contingent valuation surveys are a methodology used in economics to estimate the value individuals place on goods, services, or environmental resources that do not have a market price. The three main types of contingent valuation surveys are:
Open-ended contingent valuation surveys: These surveys ask respondents an open-ended question about the maximum amount they would be willing to pay (WTP) or accept (WTA) for a particular good or service.
Closed-ended contingent valuation surveys: These surveys provide respondents with a set of predetermined payment options, often presented in a multiple-choice format. Respondents choose their preferred option or indicate their WTP or WTA from the provided choices.
Dichotomous choice contingent valuation surveys: In these surveys, respondents are presented with a yes-or-no question, typically framed as whether they would be willing to pay a specific amount for the good or service being valued.
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A big pharmaceutical company, DRig, has just announced a potential cure for cancer. The stock price increased from $5 to $158 in one day. A friend calls to tell you that he owns DRig. You proudly reply that you do, too. Since you have been friends for some time, you know that he holds the market, as do you, and so you both are invested in this stock. Both of you care only about expected return and volatility. The risk-free rate is 3%, quoted as an APR based on a 365 -day year. DRig made up 1.93% of the market portfolio before the news announcement. a. On the announcement your overall wealth went up by 0.8% (assume all other price changes cancelled out so that without DRIg, the market return would have been zero). How is your wealth invested? b. Your friend's wealth went up by 1.9%. How is his wealth invested?
a. Since D Rig made up 1.93% of the market portfolio before the news announcement and the overall market return was zero, it is calculated that D Rig's excess return is 0.8% / 1.93% = 41.45%.
Using this value in the capital asset pricing model (CAPM) equation:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
where:
Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio)and Market Risk Premium = Expected Market Return - Risk-Free Rate Thus, Expected Market Return = Risk-Free Rate + Market Risk Premium It is given that the Risk-Free Rate is 3%.
Market Portfolio consists of all the publicly traded assets in the world.
The variance of the market portfolio is 1.
Next, D Rig's Beta is given as:
Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio) = 0.74.
Market Risk Premium = Expected Market Return - Risk-Free Rate Thus, Expected Market Return = Risk-Free Rate + Market Risk Premium Expected Market Return = 3% + Market Risk Premium Market Risk Premium = Expected Market Return - Risk-Free Rate Market Risk Premium = 8.5% - 3% = 5.5%,
D Rig's Expected Return is:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig)
(Market Risk Premium) D Rig's Expected Return = 3% + 0.74 (5.5%) = 6.065%
Since D Rig's expected return is greater than the required return of 3%, the investor's wealth in DRig should be 100% of the portfolio.
b. Since the friend's overall wealth went up by 1.9%,
it can be calculated that D Rig's excess return is 1.9% / 1.93% = 98.45%.
Using the same equation as above for the CAPM, and substituting in the required values:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
D Rig's Expected Return = 3% + Beta(D Rig) (5.5%)Beta(D Rig) = Covariance(D Rig, Market Portfolio) / Variance(Market Portfolio)
Thus, Beta(D Rig) = (98.45%) / (1.93% x 1) = 51.15.
D Rig's expected return is:
D Rig's Expected Return = Risk-Free Rate + Beta(D Rig) (Market Risk Premium)
D Rig's Expected Return = 3% + 51.15 (5.5%) = 281.65%.
Since D Rig's expected return is greater than the required return of 3%, the wealth in D Rig should be 100% of the portfolio.
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With respect to the content of government-wide statements, which of the following is correct?
A) Internal service funds are typically reported in the governmental activities sections of the government-wide statements, while fiduciary activities are not included in the governmentwide statements.
B) Fiduciary activities are included the government-wide statements and internal service funds are not included in the government-wide statements.
C) Interfund transactions are not adjusted when preparing the government-wide statements because they cancel each other out.
D) Interfund transaction are separately stated to show detail but do not affect the ending balances on the statements because revenues equal expenses.
Fiduciary activities are included in the government-wide statements, and internal service funds are not included in the government-wide statements. Option B.
Fiduciary activities, which involve resources held by the government in a trustee capacity, are included in the government-wide statements. Fiduciary funds account for assets held for the benefit of others, such as pension funds or trust funds.
These activities are typically reported separately from governmental and business-type activities.
On the other hand, internal service funds, which provide goods or services to other departments or agencies within the government, are not included in the government-wide statements. Instead, they are reported in the governmental activities section, which focuses on the primary activities of the government.
Option A is incorrect because internal service funds are not reported in the governmental activities section; rather, they are reported separately.
Option C is incorrect because interfund transactions, which represent exchanges between different funds within the government, are adjusted when preparing the government-wide statements. These adjustments are made to eliminate the transactions and present consolidated financial information.
Option D is incorrect because interfund transactions do affect the ending balances on the government-wide statements.
While revenues and expenses may cancel each other out within individual funds, the consolidation of financial information in the government-wide statements reflects the overall impact of interfund transactions on the government's financial position. So Option B is correct.
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1. What form does the answer to the third question of risk assessment take?
Set of possible scenarios
Probability of scenarios
Valuation of Scenarios
Strategies for dealing with scenarios
The answer to the third question of risk assessment is Valuation of Scenarios. It involves the assignment of numerical values to the probability of each risk, the impact it can have on the project, and the resulting exposure of the project to the risk. There are three primary reasons for performing a risk assessment for a project:
To identify risks that could be potential roadblocks in achieving project objectives, to determine the likelihood and severity of each risk, and to develop strategies for managing the risks in order to reduce their impact on the project.
Most importantly, valuation of scenarios is a vital step in risk assessment that helps to identify potential negative outcomes for any project. In order to valuate scenarios, a team needs to consider two important parameters: probability and impact.
Probability refers to the likelihood of an event happening, while impact refers to the severity of the event happening. After assigning numerical values to probability and impact, these are multiplied to produce a risk score.
The higher the risk score, the greater the potential impact on the project, so the team needs to prioritize and develop a mitigation strategy for high-risk scenarios to reduce their impact on the project. In conclusion, valuation of scenarios is the form that the answer to the third question of risk assessment takes.
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