Unilever investing so much in emerging markets, especially Southeast Asia because of Rapidly growing economies, Increased urbanization and Political stability. Unilever selected a joint venture as the entry-mode strategy for Myanmar.
1. Unilever is investing so much in emerging markets, especially Southeast Asia because of the following reasons:
Rapidly growing economies: Emerging markets have high potential for growth and Unilever is looking to capitalize on this opportunity. Incomes in these regions are rising and as such there is an increase in demand for consumer goods, especially FMCG products, which Unilever produces. Increased urbanization: Emerging markets are seeing a rise in the number of people moving into urban centers, which is leading to increased demand for products such as personal care and food products that Unilever produces. Political stability: Countries in Southeast Asia are increasingly becoming politically stable, which is boosting investor confidence in the region.2. Unilever selected a joint venture as the entry-mode strategy for Myanmar. This allowed the company to partner with a local company, creating an environment for the company to learn about the market and the regulatory environment in the country. It also allowed the company to leverage the local partner's knowledge of the country's culture, consumer preferences, distribution networks and political landscape to establish a foothold in the country.
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You want to invest in a small company that will bring in stable cash flows in the future. You estimate the cash inflows (benefit) from the company area will be $20,000 in year 1,$30,000 in year 2$50,000 in year 3 , and $35,000 in year 4 and for all following years to infinity. a) What is the value of this company assuming a discount rate of 14% (7) marks) b) If the asking price from current owner was $350,000 would you purchase (prove your answer)
The value of the company can be estimated by calculating the present value of the cash inflows. To do this, we need to use the formula for present value.
PV = CF1/(1+r) + CF2/(1+r)^2 + CF3/(1+r)^3 + ... + CF∞/(1+r)^∞
where PV is the present value, CF1, CF2, CF3, and CF∞ are the cash inflows in years 1, 2, 3, and infinity, respectively, and r is the discount rate.Using the given cash inflows and discount rate, we can calculate the present value as follows.
PV = [tex]$20,000/(1+0.14)^1 + $30,000/(1+0.14)^2 + $50,000/(1+0.14)^3 + $35,000/(1+0.14)^4 + ($35,000/(0.14))[/tex]
PV = [tex]$17,543.86 + $22,853.48 + $32,810.95 + $21,452.13 + $250,000[/tex]PV
= [tex]$344,610.42[/tex]
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Coca-Cola markets an astonishing 2800 different beverages. Not all these beverages are available for sale in all areas, and certainly there is no retailer that offers all 2800. What marketing decisions does the retailer need to make when deciding which of those 2800 to stock on its shelves? How can the distributor (the bottler help the retailer with this decision?
Retailers consider demand, preferences, research, and profitability; distributors provide insights, data, recommendations for optimal inventory management.
When deciding which Coca-Cola beverages to stock, the retailer must consider several factors. Firstly, they need to analyze consumer demand and preferences in their specific market area. This involves understanding the local demographics, cultural preferences, and consumer trends. Market research, sales data, and customer feedback can help inform these decisions.
Profitability is another crucial factor. The retailer needs to evaluate the sales potential, margins, and profitability of each beverage. Some products may have higher demand and better profitability, while others may be niche or have lower sales potential.
Here, the distributor (bottler) plays a vital role in supporting the retailer. They can provide valuable market insights, sales data, and product recommendations based on their understanding of the market. The distributor can collaborate with the retailer in joint business planning to align product assortment with market demand and ensure efficient inventory management.
By working closely with the distributor, the retailer can leverage their expertise and resources to make informed decisions about which Coca-Cola beverages to stock. This collaboration helps optimize the product assortment, increase sales, enhance customer satisfaction, and ultimately drive profitability for both the retailer and the bottler.
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On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $293.000 cash and $386,000 of equipment, respectively. The partnership also assumed responsibility for a $53.000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $163,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2020, Adams withdrew cash of $113,000. At year-end May 31, 2021, the Income Summary account had a credit balance of $510,000. On June 1, 2021, Peter Williams invested $133,000 and was admitted to the partnership for a 20% interest in equity. Prepare journal entries.
On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $293,000 in cash and $386,000 in equipment, respectively.
The partnership also assumed responsibility for a $53.000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $163,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively).On November 20, 2020, Adams withdrew cash of $113,000.At year-end May 31, 2021, the Income Summary account had a credit balance of $510,000.On June 1, 2021, Peter Williams invested $133,000 and was admitted to the partnership for a 20% interest in equity. The solution to the problem is: Journal entries are the basis of the accounting process. The journal entry is the process of recording a transaction in the journal. The journal is the book of original entry in which the date, the person or thing debited and the person or thing credited are recorded.
Journal entries for the given transactions are as follows:
June 1, 2020 (Investment by Jill Bow and Aisha Adams)Cash A/c Dr. $293,000
Equipment A/c Dr. $386,000
To Note Payable A/c $53,000
To Jill Bow Capital A/c $235,000
To Aisha Adams Capital A/c $386,000 (Being investment made by Jill Bow and Aisha Adams)
November 20, 2020 (Withdrawal by Aisha Adams)Aisha Adams Capital A/c Dr. $113,000
To Cash A/c $113,000 (Being withdrawal made by Aisha Adams)
31st May 2021 (Profit distribution)Income Summary A/c Dr. $510,000
To Jill Bow Capital A/c $204,000
To Aisha Adams Capital A/c $306,000 (Being profit distribution made to Jill Bow and Aisha Adams)
June 1, 2021 (Investment made by Peter Williams)Cash A/c Dr. $133,000
To Peter Williams Capital A/c $133,000 (Being investment made by Peter Williams)
So, the journal entries for the given transactions are as follows:
June 1, 2020: Cash A/c Dr. $293,000,
Equipment A/c Dr. $386,000,
Note Payable A/c $53,000,
Jill Bow Capital A/c $235,000,
Aisha Adams Capital A/c $386,000
November 20, 2020:
Aisha Adams Capital A/c Dr. $113,000,
Cash A/c $113,000
31st May 2021:
Income Summary A/c Dr. $510,000,
Jill Bow Capital A/c $204,000,
Aisha Adams Capital A/c $306,000
June 1, 2021:
Cash A/c Dr. $133,000,
Peter Williams Capital A/c $133,000.
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Melissa-Cook Corporation issued 260,000 shares of $20 par value, 7% preferred stock on January 1, 2018, for $5,850,000. In December 2020, Melissa-Cook declared its first dividend of $820,000. (a) Your answer is correct. Prepare Melissa-Cook's journal entry to record the issuance of the preferred stock. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Cash Preferred Stock Paid-in Capital in Excess of Par-Preferred Stock Debit 5850000 Credit 5200000 650000 (b) Your answer is partially correct. (b1) How much is the company's total paid-in capital after the issuance? Total Paid-in Capital $ _____ (b2) If the preferred stock had been no-par stock, how much would the company's total paid-in capital be after the issuance? Total Paid-in Capital $ _____
(a) Prepare the journal entry to record the issuance of preferred stock. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCreditCash$5,850,000Preferred Stock (260,000 shares x $20)$5,200,000Paid-in Capital in Excess of Par-Preferred Stock$650,000(b1) How much is the company's total paid-in capital after the issuance?Total paid-in capital = $5,200,000 + $650,000Total paid-in capital = $5,850,000(b2) If the preferred stock had been no-par stock, how much would the company's total paid-in capital be after the issuance?
Since it is no-par stock, the total amount of the preferred stock and any premium is credited to the preferred stock account. The company's total paid-in capital after the issuance of the preferred stock is $5,850,000.Account Titles and ExplanationDebitCreditCash$5,850,000Preferred Stock (260,000 shares x $20)$5,850,000Total Paid-in Capital$5,850,000Therefore, the company's total paid-in capital would be $5,850,000 if the preferred stock had been no-par stock.
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A client’s child will be attending college in 5 years. Assume current tuition and fees are $46,383, and inflation for college costs averages 2.1 percent, and she can earn 6.4 percent on the money she invests for this purpose. The client wants to know how much she will need to set aside today to pay four years of tuition and fees.
To calculate the amount the client needs to set aside today to pay for four years of tuition and fees in the future, we need to consider inflation and investment returns.
Given information:
Current tuition and fees: $46,383
Inflation rate for college costs: 2.1% per year
Investment return rate: 6.4% per year
To account for inflation, we need to project the future tuition and fees amount based on the inflation rate. We can use the formula:
Future Value = Present Value * (1 + Inflation Rate)^Number of Years
Future Value = $46,383 * (1 + 0.021)^5
≈ $52,268.63
Next, we need to calculate the present value of the future tuition and fees amount to determine how much the client needs to set aside today. We can use the formula for present value:
Present Value = Future Value / (1 + Investment Return Rate)^Number of Years
Present Value = $52,268.63 / (1 + 0.064)^5
≈ $39,043.75
Therefore, the client needs to set aside approximately $39,043.75 today to cover four years of tuition and fees in the future, considering an inflation rate of 2.1% and an investment return rate of 6.4%. This amount takes into account the projected increase in tuition and fees due to inflation and assumes the investment returns will grow the set-aside funds to cover the future expenses.
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On November 1, 2021, XYZ Inc. accepted a three-month, 10%, $72,000 note from ABC Inc. in settlement of its account. Interest is due on the first day of each month, starting December 1. XYZ Inc's year ends are December 31. Prepare all journal entries for XYZ Inc. over the term of the note. Assume that the note is collected in full on the maturity date.
On November 1, 2021, XYZ Inc. received a $72,000 note from ABC Inc., with a three-month term and an annual interest rate of 10%, in settlement of its account. Interest on the note is due on the first day of each month, starting from December 1.
On November 1, 2021: XYZ Inc. would debit Notes Receivable for $72,000 and credit Accounts Receivable for $72,000 to record the acceptance of the note from ABC Inc.On December 1, 2021: XYZ Inc. would debit Interest Receivable for $600 (10% of $72,000) and credit Interest Revenue for $600 to record the accrued interest for the first month.On December 31, 2021: XYZ Inc. would debit Interest Receivable for $600 and credit Interest Revenue for $600 to adjust the accrued interest at the end of the fiscal year.On January 1, 2022: XYZ Inc. would debit Cash for $72,600 ($72,000 principal + $600 interest) and credit Notes Receivable for $72,000 and Interest Revenue for $600 to record the collection of the note in full, including the final interest payment.For more information on journal entries visit: brainly.com/question/31849985
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Excel Online Structured Activity: WACC and optimal capital budget Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project 1 2 3 4 Cost of debt Cost $2,000 3,000 5,000 2,000 Cost of preferred stock The company estimates that it can issue debt at a rate of rg 9%, and its tax rate is 40%. It can issue preferred stock that pays a constant dividend of $4 per year at $59 per share. Also, its common stock currently sells for $33 per share; the next expected dividend, D₁, is $3.75; and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Project 1 X Open spreadsheet a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Project 2 Project 3 Project 4 Expected Rate of Return 16.00% 15.00 % % 13.75 12.50 Cost of retained earnings b. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations. % c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? 1%
a. Cost of each capital component: Cost of Debt: The cost of debt can be calculated using the formula: Cost of Debt = Cost of debt × (1 - Tax Rate) For each project.
Project 1: Cost of Debt = $2,000 × (1 - 0.40)
Project 2: Cost of Debt = $3,000 × (1 - 0.40)
Project 3: Cost of Debt = $5,000 × (1 - 0.40)
Project 4: Cost of Debt = $2,000 × (1 - 0.40)
Cost of Preferred Stock:
The cost of preferred stock is equal to the dividend payment divided by the market price of the preferred stock.
For each project:
Project 1: Cost of Preferred Stock = $4 / $59
Project 2: Cost of Preferred Stock = $4 / $59
Project 3: Cost of Preferred Stock = $4 / $59
Project 4: Cost of Preferred Stock = $4 / $59
Cost of Retained Earnings:
The cost of retained earnings can be calculated using the Gordon Growth Model formula:
Cost of Retained Earnings = (Dividend / Current Stock Price) + Growth Rate
For each project:
Project 1: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 2: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 3: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 4: Cost of Retained Earnings = ($3.75 / $33) + 0.05
b. WACC (Weighted Average Cost of Capital):
WACC is calculated using the weighted average of the costs of each capital component, based on their respective proportions in the target capital structure.
WACC = (Weight of Debt × Cost of Debt) + (Weight of Preferred Stock × Cost of Preferred Stock) + (Weight of Retained Earnings × Cost of Retained Earnings)
For each project, use the target capital structure percentages:
Weight of Debt = 15%
Weight of Preferred Stock = 10%
Weight of Retained Earnings = 75%
c. Project Acceptance:
Compare the expected rate of return for each project with the calculated WACC. If the expected rate of return is higher than the WACC, the project should be accepted.
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If the p-value of Ftests in the Excel linear regression output is 0.20, then there is no statistical evidence to suggest that: O a. one or more regression coefficients are not zero. one or more regression coefficients are not zero; one or more independent variables are associated with the dependent variable. one or more independent variables are associated with the dependent variable. all individual regression coefficients are not zero. all individual regression coefficients are zero; one or more independent variables are associated with the dependent variable. Ob. OC. O d. Oe.
d) All individual regression coefficients are not zero; one or more independent variables are associated with the dependent variable.
There is no statistical evidence to suggest that all individual regression coefficients are not zero, and it can be concluded that one or more independent variables are associated with the dependent variable.
if the p-value of the f-test in the excel linear regression output is 0.20, it means that the null hypothesis is not rejected at a significance level of 0.05 (assuming a typical significance level). the null hypothesis in this case is that all individual regression coefficients are zero, meaning that none of the independent variables are associated with the dependent variable.
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5 pts) Assume that the housing voucher as described in question #7 is o = $15. a. What is the new market demand curve, p = f(H), where H is demand for all consumers. b. What is the new equilibrium price? Show your answer to 3 decimal places. c. What is the demand for housing by a low wealth consumer? d. What is demand for housing by a wealthy consumer? e. What is the utility of a low wealth consumer and of a wealthy consumer? f. What is the cost to the government?
a. The new market demand curve, p = f(H), will shift upward by the amount of the housing voucher ($15). b. The new equilibrium price will be determined by the intersection of the new market demand curve and the housing supply curve. c. The demand for housing by a low wealth consumers will depend on their individual preferences and budget constraints. d. The demand for housing by a wealthy consumer will also depend on their preferences and budget constraints, which may differ from those of low wealth consumers. e. The utility of a low wealth consumer and a wealthy consumer will depend on their respective preferences and the level of housing they are able to afford. f. The cost to the government will be equal to the total amount of housing vouchers provided.
a. The new market demand curve, p = f(H), will shift upward by the amount of the housing voucher ($15). This means that for each quantity of housing, the price consumers are willing to pay will increase by $15.
b. The new equilibrium price will be determined by the intersection of the new market demand curve and the housing supply curve. The specific equilibrium price will depend on the shape of the supply curve and how it interacts with the shifted demand curve. To determine the equilibrium price, the supply curve would need to be considered.
c. The demand for housing by a low wealth consumer will depend on their individual preferences and budget constraints. With the housing voucher, their purchasing power will increase, allowing them to afford housing options that were previously out of their reach.
d. The demand for housing by a wealthy consumer will also depend on their preferences and budget constraints, which may differ from those of low wealth consumers. Wealthier individuals may have a higher budget for housing and different preferences for the type and location of housing they desire.
e. The utility of a low wealth consumer and a wealthy consumer will depend on their respective preferences and the level of housing they are able to afford. Utility represents the satisfaction or happiness a consumer derives from consuming a good or service. With the housing voucher, the low wealth consumer may experience increased utility by being able to access better housing options. The utility of a wealthy consumer may also be influenced by their ability to afford preferred housing choices.
f. The cost to the government will be equal to the total amount of housing vouchers provided. In this case, the housing voucher amount is given as $15. The government will need to allocate funds to cover the cost of the vouchers distributed to eligible consumers. The total cost will depend on the number of vouchers distributed and the duration for which they are provided.
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SOLVE 1. From the following information calculate expected return from XYZLtd.− Risk free rate is 5%, Market return is 10% and Beta value is 0.5 of XYZ Ltd. 2. From the following information you have to calculate Risk Premium. Risk free rate is 10%, market return is 15% and beta is 1.5. 3. From the following information find out that stock is over performer or under performer. Rf is 5%, market Return is 10%, beta is 0.5 and actual return is 10%.
1. To calculate the expected return from XYZ Ltd., we can use the Capital Asset Pricing Model (CAPM) formula:
Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given:
Risk-Free Rate = 5%
Market Return = 10%
Beta = 0.5
Expected Return = 0.05 + 0.5 * (0.10 - 0.05) = 0.05 + 0.5 * 0.05 = 0.05 + 0.025 = 0.075 or 7.5%
Therefore, the expected return from XYZ Ltd. is 7.5%.
2. To calculate the Risk Premium, we subtract the Risk-Free Rate from the Market Return:
Risk Premium = Market Return - Risk-Free Rate
Given:
Risk-Free Rate = 10%
Market Return = 15%
Risk Premium = 0.15 - 0.10 = 0.05 or 5%
Therefore, the Risk Premium is 5%.
3. To determine whether the stock is an overperformer or underperformer, we compare the actual return with the expected return. If the actual return is higher than the expected return, the stock is an overperformer. If the actual return is lower than the expected return, the stock is an underperformer.
Given:
Risk-Free Rate (Rf) = 5%
Market Return = 10%
Beta = 0.5
Actual Return = 10%
The expected return can be calculated using the CAPM formula as mentioned in question 1:
Expected Return = 0.05 + 0.5 * (0.10 - 0.05) = 0.075 or 7.5%
Since the actual return (10%) is equal to the expected return (7.5%), the stock is neither an overperformer nor an underperformer. It is performing in line with expectations.
Note: It's important to consider that these calculations are based on simplified models and assumptions. Actual stock performance can be influenced by various factors and may deviate from expected returns.
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A good’s demand is given by: Q = 100 - 10P. At Q = 20, what is
the point price elasticity? Explain pls
The formula for price elasticity of demand, which is the percentage change in quantity demanded divided by the percentage change in price, must be used to determine the point price elasticity at Q = 20.
Price elasticity of demand is calculated as follows: E = (ΔQ / Q) / (ΔP / P) Q = 20, thus we can use this number as a substitution in the demand equation to determine the corresponding price: 20 = 100 - 10P 10P = 100 - 20 10P = 80 P = 8 Therefore, the price is P = 8 for Q = 20. The following formula : ΔQ / Q = (Q2 - Q1) / Q1 ΔQ / Q = (20 - 0) / 20 = 1 We employ the following formula to determine the price change as a percentage.
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Exercise 7-24 Pizza Delivery Business; Basic CVP Analysis (LO 7-1,7-2, 7-4) College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company's annual fixed expenses are $68,000. The sales price of a pizza is $10, and it costs the company $2 to make and deliver each pizza. (In the following requirements, ignore income taxes.) Required: 1. Using the contribution-margin approach, compute the company's break-even point in units (pizzas). 2. What is the contribution-margin ratio? (Round your answer to 1 decimal place.) 3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation. 4. How many pizzas must the company sell to earn a target profit of $74,000? Use the equation method.
1. Break-even point in units (pizzas) can be calculated using the contribution-margin approach:
Contribution Margin per Unit = Sales Price per Unit - Variable Cost per Unit
Contribution Margin per Unit = $10 - $2 = $8
Break-even Point in Units = Fixed Expenses / Contribution Margin per Unit
Break-even Point in Units = $68,000 / $8 = 8,500 pizzas
2. Contribution-margin ratio can be calculated as follows:
Contribution Margin Ratio = (Contribution Margin per Unit / Sales Price per Unit) x 100
Contribution Margin Ratio = ($8 / $10) x 100 = 80%
3. Break-even sales revenue can be calculated using the contribution-margin ratio:
Break-even Sales Revenue = Fixed Expenses / Contribution Margin Ratio
Break-even Sales Revenue = $68,000 / 0.8 = $85,000
4. To calculate the number of pizzas needed to earn a target profit of $74,000, we can use the equation method:
Target Profit = (Unit Contribution Margin x Number of Units) - Fixed Expenses
$74,000 = ($8 x Number of Units) - $68,000
$74,000 + $68,000 = $8 x Number of Units
$142,000 = $8 x Number of Units
Number of Units = $142,000 / $8 = 17,750 pizzas
Therefore, the company must sell 17,750 pizzas to earn a target profit of $74,000.
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Under The Accrual Basis Of Accounting, Adjusting Entries Are A.Only Needed Under The Cash Basis Of Accounting. B.Not Needed. C.Recorded At The End Of The Reporting Period. D.Only Needed For Expense Accounts
Under the accrual basis of accounting, adjusting entries are
a.only needed under the cash basis of accounting.
b.not needed.
c.recorded at the end of the reporting period.
d.only needed for expense accounts
Under the accrual basis of accounting, adjusting entries are recorded at the end of the reporting period.
The accrual basis of accounting recognizes revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid. This is in contrast to the cash basis of accounting, which recognizes revenue when cash is received and expenses when cash is paid.
Adjusting entries are necessary under the accrual basis of accounting to ensure that all revenues and expenses are recorded in the correct period. For example, if a company earns revenue in December but does not receive payment until January, an adjusting entry would be made in December to record the revenue. Similarly, if a company incurs an expense in December but does not pay for it until January, an adjusting entry would be made in December to record the expense.
Adjusting entries are generally recorded at the end of the reporting period, which is usually the end of the month or the end of the fiscal year. This is because the accrual basis of accounting requires that all revenues and expenses be reported for the entire reporting period.
Here are some examples of adjusting entries:
Accrued revenue: When a company has earned revenue but has not yet received payment, an adjusting entry is made to record the revenue. The adjusting entry would debit Accounts Receivable and credit Revenue.
Accrued expenses: When a company has incurred an expense but has not yet paid for it, an adjusting entry is made to record the expense. The adjusting entry would debit Expenses and credit Accounts Payable.
Prepaid expenses: When a company pays for an expense in advance, an adjusting entry is made to record the expense. The adjusting entry would debit Expenses and credit Prepaid Expenses.
Deferred revenue: When a company receives payment in advance for goods or services that have not yet been provided, an adjusting entry is made to record the revenue. The adjusting entry would debit Cash and credit Deferred Revenue.
Adjusting entries are an important part of the accrual basis of accounting. They ensure that all revenues and expenses are recorded in the correct period, which provides a more accurate picture of the company's financial performance.
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Australians buy 1.28 billion litres of sugar-sweetened drinks per annum (2012 figures). Consider the average price of these drinks to be $1.6/litre. Assuming a sales tax (hypothetical scenario) of 25% on soft drinks the price will be increased to $2/litre. The price elasticity of demand for soft drinks is -0.89. How will the increase in the price of soft drinks affect the demand for soft drinks? How much additional revenue will be raised by this tax?
The increase in the price of soft drinks is expected to lead to a decrease in demand by approximately 22.
the increase in the price of soft drinks from $1.6/litre to $2/litre will lead to a decrease in the demand for soft drinks due to the negative price elasticity of demand. the magnitude of the price elasticity of -0.89 indicates that a 1% increase in price will result in a 0.89% decrease in quantity demanded.
given the 25% increase in price (from $1.6/litre to $2/litre), we can calculate the approximate decrease in quantity demanded using the price elasticity formula:
% change in quantity demanded = price elasticity of demand * % change in price
% change in quantity demanded = -0.89 * 25% = -22.25% 25%.
to calculate the additional revenue raised by the tax, we need to multiply the tax rate (25%) by the quantity of soft drinks consumed annually (1.28 billion liters) and the price increase ($0.4/litre).
additional revenue = tax rate * quantity of soft drinks * price increaseadditional revenue = 0.25 * 1.28 billion * $0.4
additional revenue = $128 million
the tax on soft drinks is projected to generate an additional revenue of approximately $128 million.
in summary, the increase in the price of soft drinks due to the hypothetical sales tax will result in a decrease in demand for soft drinks by approximately 22.25%. additionally, the tax is expected to raise approximately $128 million in additional revenue.
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National Bank just issued a new 40−year, non-callable bond at par (the current price of the bond is $1,000 ). This bond requires a coupon rate of 17% with semiannual payments and has a par value of $1,000. The tax rate is 35%. What is the after-tax cost of debt? 17% 10.75% 9.57% 11.05%
The after-tax cost of debt for the National Bank's bond is 11.05%. The after-tax cost of debt is calculated by adjusting the coupon rate for the tax savings resulting from the tax deductibility of interest payments.
In this case, the coupon rate is 17%, and the tax rate is 35%.
To calculate the after-tax cost of debt, we first determine the after-tax coupon payment. Since the bond has semiannual payments, the annual coupon payment is 17% of the par value, which is $1,000, resulting in $170. The after-tax coupon payment is calculated by multiplying the annual coupon payment by (1 - tax rate). Therefore, the after-tax coupon payment is $170 * (1 - 0.35) = $110.50.
Next, we calculate the after-tax cost of debt by dividing the after-tax coupon payment by the bond price. The bond price is given as $1,000. Therefore, the after-tax cost of debt is $110.50 / $1,000 = 0.1105, or 11.05%.
The after-tax cost of debt represents the effective interest rate that the National Bank will pay after accounting for the tax benefits. It is an important metric for evaluating the cost of financing through debt and helps in making investment and financing decisions.
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money that has no value other than as money is called ______ money.
The money that has no value other than as money is called Fiat money.
Fiat money is a type of currency that has been declared as a legal tender by the government, and its value depends entirely on the government's ability to maintain its value.
It is not backed by any physical commodity such as gold or silver, and its value is determined entirely by supply and demand. It is a form of currency that is widely used in modern economies.
Fiat money has no intrinsic value, and its worth is derived only from government regulation or law. Governments can produce as much fiat money as they want, which can be a problem if they produce too much money, leading to inflation. This type of money is usually made from paper or plastic, and it is not backed by a physical commodity.
It is used to facilitate transactions between people and businesses. Fiat money can be exchanged for goods and services, but it is not valuable in itself beyond what people are willing to pay for it.In conclusion, Fiat money is the type of money that has no value other than as money.
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Henderson's Hardware has an ROA of 8%, a 2% profit margin, and an ROE of 16%. What is its total assets turnover? Round your answer to two decimal places. What is its equity multiplier? Round your answer to two decimal places.
To calculate Henderson's Hardware's total assets turnover and equity multiplier, we need to use the provided financial ratios.
1. Total Assets Turnover:
Total Assets Turnover measures how efficiently a company utilizes its assets to generate sales. It is calculated by dividing net sales by average total assets.
Given the profit margin of 2%, we can use the following formula to calculate the total assets turnover:
Profit Margin = Net Income / Net Sales
Net Income = Profit Margin * Net Sales
Since ROA (Return on Assets) is 8%, we can use the formula:
ROA = Net Income / Average Total Assets
By substituting the values, we get:
8% = (2% * Net Sales) / Average Total Assets
Solving for Net Sales, we find:
Net Sales = (8% * Average Total Assets) / 2%
Now, to calculate the total assets turnover, we divide Net Sales by Average Total Assets:
Total Assets Turnover = Net Sales / Average Total Assets
2. Equity Multiplier:
The Equity Multiplier measures the financial leverage employed by a company. It is calculated by dividing average total assets by average total equity.
Given that ROE (Return on Equity) is 16%, we can use the formula:
ROE = ROA * Equity Multiplier
16% = 8% * Equity Multiplier
Solving for the Equity Multiplier, we find:
Equity Multiplier = ROE / ROA
Now we can proceed to calculate the values.
Please provide the average total assets and average total equity for Henderson's Hardware, as they are required to compute the total assets turnover and equity multiplier.
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Ice cube incorporation has accounts payable of $4450 ,inventory of $8250 ,cash of $2500 ,fixed assets of $28,550 ,accounts receivable of $4700 and long-term debt to $5800. what is the value of the net working capital to total asset ratio
The value of the net working capital to total asset ratio for Ice Cube Incorporation is approximately 0.2273.
The net working capital to total asset ratio is calculated by dividing the net working capital by the total assets of a company.
Net Working Capital = Current Assets - Current Liabilities
Total Assets = Current Assets + Fixed Assets
Given the following information:
Accounts Payable = $4450
Inventory = $8250
Cash = $2500
Fixed Assets = $28,550
Accounts Receivable = $4700
Long-Term Debt = $5800
Current Assets = Inventory + Cash + Accounts Receivable
Current Liabilities = Accounts Payable
Current Assets = $8250 + $2500 + $4700 = $15,450
Current Liabilities = $4450
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $15,450 - $4450 = $10,000
Total Assets = Current Assets + Fixed Assets
Total Assets = $15,450 + $28,550 = $44,000
Net Working Capital to Total Asset Ratio = Net Working Capital / Total Assets
Net Working Capital to Total Asset Ratio = $10,000 / $44,000
Now, let's calculate the ratio:
Net Working Capital to Total Asset Ratio = 0.2273 (rounded to four decimal points)
Therefore, the value of the net working capital to total asset ratio for Ice Cube Incorporation is approximately 0.2273.
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what is the number one reason why consumers default on their debts?
a. Medical expenses
b. Defective goods and services
c. Excessive use of credit
d. Fraudulent use of credit
e. Consumer fraud
Main answer: c. Excessive use of credit Explanation: The number one reason why consumers default on their debts is excessive use of credit.
This refers to a situation where individuals accumulate more debt than they can effectively manage and repay. Excessive use of credit can lead to financial strain and difficulties in meeting payment obligations.
Consumers may become overwhelmed by the burden of multiple loans, high interest rates, and increasing debt balances. They may rely heavily on credit cards or loans to finance their lifestyle or cover essential expenses, resulting in a debt load that becomes unsustainable.
Factors contributing to excessive use of credit include poor financial planning, lack of budgeting skills, inadequate financial literacy, impulsive spending habits, and unforeseen life events that disrupt income stability. Additionally, aggressive marketing tactics by financial institutions and easy access to credit may also contribute to consumers' excessive borrowing.
As a result of excessive credit use, individuals may struggle to make timely payments, leading to defaults on their debts. Defaulting on debt can have significant consequences, including damage to credit scores, legal actions by creditors, and financial instability.
It is important for consumers to practice responsible credit management, such as maintaining a manageable debt-to-income ratio, monitoring their spending habits, and seeking assistance if they find themselves overwhelmed with debt. Financial education and awareness can help individuals make informed decisions about credit usage and avoid falling into excessive debt situations.
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Presented below is the format of the worksheet using the periodic inventory system presented in Appendix.
Trial balance Adjustments Adjusted Trial balance Income statement Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Indicate where the following items will appear on the worksheet: (a) Cash, (b) Beginning inventory, (c) Accounts payable, (d) Ending inventory.
To indicate where the following items will appear on the worksheet, we need to understand the purpose of each section of the worksheet.
The worksheet typically consists of the following sections:
Trial Balance: This section includes the unadjusted account balances from the general ledger.
Adjustments: This section is used to record any adjusting entries required at the end of the accounting period.
Adjusted Trial Balance: This section shows the adjusted balances after considering the adjustments.
Income Statement: This section summarizes the revenues and expenses to determine the net income or loss.
Balance Sheet: This section presents the assets, liabilities, and equity at a specific point in time.
Now, let's indicate where the given items will appear on the worksheet:
(a) Cash: Cash is typically found in the Trial Balance, Adjusted Trial Balance, and Balance Sheet sections. It will appear in the asset section of the Balance Sheet.
(b) Beginning Inventory: Beginning Inventory is an opening balance and will be included in the Trial Balance section. It will also be used in the calculation of Cost of Goods Sold on the Income Statement.
(c) Accounts Payable: Accounts Payable will appear in the Trial Balance, Adjusted Trial Balance, and Balance Sheet sections. It will be listed in the liability section of the Balance Sheet.
(d) Ending Inventory: Ending Inventory will not be directly recorded on the worksheet since it is determined by physical count or estimation at the end of the accounting period. However, the calculation of Cost of Goods Sold on the Income Statement will use the Beginning Inventory, Purchases, and adjustments made during the period.
To summarize:
(a) Cash: Trial Balance, Adjusted Trial Balance, and Balance Sheet sections.
(b) Beginning Inventory: Trial Balance section and used in the Income Statement.
(c) Accounts Payable: Trial Balance, Adjusted Trial Balance, and Balance Sheet sections.
(d) Ending Inventory: Not directly recorded on the worksheet but used in the calculation of Cost of Goods Sold on the Income Statement.
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In no less than 300 words, describe what the worst possible performance management system looks like? What effects would it have on the individual, group, or organization? In short, describe a scenario. Be specific and cite page numbers of the assigned readings to support your assertions. In describing your worst possible performance management system, keep in mind that the performance management process largely consists of five components: 1) Prerequisites; 2) performance planning; 3) performance execution; 4) performance assessment; 5) performance review.
Case Study: The Worst Possible Performance Management System
Founded in 1990 in Englewood, CO, the A-Team Company now faces numerous resource challenges in a highly competitive global environment. In particular, the CEO of the A-Team Company realizes that the firm lacks the necessary human resource capacity to serve an increasingly internationally diverse and demanding customer base. Thus, the CEO wants Parker, the head of the HR department, to take the strategic role of implementing an effective performance management system; the firm currently has a performance appraisal system. Parker is thrilled and eager to use this opportunity to prove to his colleagues that HR is indeed of strategic importance rather than being the firm’s bureaucrats or police.
But the CEO wants some accountability from Parker who will thus not be given a blank check to do whatever he wants to do right away. The CEO comes up with a creative way of achieving greater accountability. Before any steps are made to implement Parker’s plan, a third-party HR consultant who has little to no emotional ties to the concept of performance management, and certainly none to Parker, is hired and assigned the task of describing the worst possible performance management system. The CEO will then ask how Parker plans to make sure that the performance management system at the A-Team Company will not become anything close to the worst possible performance management system. Also, the CEO intends to assess the future performance of Parker partly based on the similarity or dissimilarity between the actual performance management system implemented and the worst possible performance management system that the consultant will have described.
The worst possible performance management system at the A-Team Company would have several detrimental effects on the individuals, groups, and organization as a whole. In this scenario, the performance management system is designed in a way that hinders employee development, lacks transparency, and fails to align with organizational goals.
This description draws from the assigned readings on performance management, particularly pages 11-16 of "Performance Management: Changing Behavior That Drives Organizational Effectiveness" by Aubrey C. Daniels.
Firstly, the prerequisites for effective performance management are neglected in this system. There is a lack of clarity regarding the expectations, goals, and job responsibilities of employees, as performance planning is inadequate or nonexistent. Employees are unsure about what is expected of them and how their performance will be evaluated. This lack of clarity and guidance negatively impacts individual motivation and engagement.
Secondly, the performance execution phase is flawed. There is minimal support provided to employees to enhance their skills, knowledge, and abilities. Developmental opportunities, such as training or coaching, are scarce or absent. This hampers employees' growth and limits their ability to perform at their best. Without proper support and resources, individuals struggle to meet performance expectations.
Thirdly, the performance assessment process is flawed. The worst possible system lacks objectivity, fairness, and reliability in evaluating employee performance. Feedback is infrequent, vague, and lacks constructive guidance. The absence of a robust feedback loop prevents employees from understanding their strengths and areas for improvement, hindering their professional growth.
Moreover, the performance review in this system is ineffective. There is little emphasis on two-way communication and collaboration between managers and employees. The review process is bureaucratic and lacks meaningful dialogue. Opportunities for employees to share their perspectives, provide input, or challenge the evaluation are disregarded. This leads to a lack of trust, dissatisfaction, and disengagement among employees.
The effects of this worst possible performance management system are far-reaching. At the individual level, employees experience decreased job satisfaction, diminished motivation, and a lack of personal and professional growth opportunities. This can lead to higher turnover rates and difficulty attracting top talent.
At the group level, teamwork and collaboration suffer as employees are not adequately aligned with the organization's goals and objectives. A lack of clear performance expectations and feedback hampers coordination and cooperation among team members, resulting in decreased productivity and suboptimal outcomes.
On an organizational level, the negative impact is profound. The lack of an effective performance management system undermines the organization's ability to achieve its strategic objectives. Without proper goal alignment, employee development, and performance feedback, the organization faces decreased productivity, increased costs, and a decline in overall performance.
In conclusion, the worst possible performance management system described in this scenario neglects the fundamental components of effective performance management. Its negative effects range from demotivated individuals and ineffective teamwork to decreased organizational performance. It is crucial for organizations to implement a performance management system that emphasizes clarity, development, fairness, and open communication to foster employee engagement, productivity, and organizational success.
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Thinking about Tim Hortons, how might the company you choose use the various segmentation strategies to target YOU as a customer?
To target me as a customer, Tim Hortons could use various segmentation strategies, including demographic segmentation, psychographic segmentation, and behavioral segmentation.
By understanding my demographic characteristics, preferences, and behaviors, Tim Hortons can tailor its marketing efforts and offerings to meet my specific needs and preferences.
As a customer, Tim Hortons could utilize demographic segmentation to target me based on factors such as age, gender, income, and occupation.
For example, if I am a student, they might offer special discounts or promotions targeted towards students.
Psychographic segmentation could be used to understand my values, lifestyle, and personality traits. If I value convenience and a fast-paced lifestyle, Tim Hortons could emphasize its quick-service and on-the-go options.
Behavioral segmentation could also be employed to target me based on my specific buying behavior and preferences.
For instance, if I frequently purchase coffee in the morning, Tim Hortons could offer loyalty programs or personalized discounts to encourage repeat purchases.
They might also analyze my past purchases to understand my preferences and recommend relevant products or customization options.
By utilizing these segmentation strategies, Tim Hortons can effectively target me as a customer by tailoring their marketing messages, product offerings, and promotions to align with my demographics, psychographics, and behaviors.
This personalized approach can enhance my overall customer experience and increase my loyalty towards the brand.
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Why might an economist be against a ban on incandescent light bulbs? a. A ban does not consider individual preference and willingness to pay. b. CFDs and LEDs are prohibitively expensive for income families. c. The use of incandescent light bulbs is accompanied by externalities. d. Bans are generally very expensive to enforce.
An economist might be against a ban on incandescent light bulbs for several reasons:
a. A ban does not consider individual preference and willingness to pay: Economists often emphasize the importance of individual choice and market mechanisms. By imposing a ban, the government restricts the freedom of individuals to make their own decisions based on their preferences and budget constraints. Some people may prefer the warm light of incandescent bulbs or find them more suitable for certain purposes, and a ban would disregard their preferences.
b. CFLs and LEDs are prohibitively expensive for low-income families: While compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs) are more energy-efficient alternatives to incandescent bulbs, they tend to be more expensive upfront. Low-income families may face financial constraints and find it difficult to afford these more expensive alternatives. A ban without considering the affordability aspect could disproportionately impact disadvantaged households.
c. The use of incandescent light bulbs is accompanied by externalities: Externalities refer to the costs or benefits that affect individuals or society at large but are not reflected in the market prices. Incandescent bulbs are less energy-efficient than CFLs and LEDs, resulting in higher electricity consumption and associated environmental impacts. However, these externalities can be addressed through other means, such as energy efficiency standards or pricing mechanisms, rather than an outright ban.
d. Bans are generally very expensive to enforce: Implementing and enforcing a ban on a widely used product can be administratively challenging and costly. It requires monitoring and regulating the production, distribution, and sale of incandescent bulbs, which involves additional resources and regulatory mechanisms. Economists may argue that these resources could be better allocated to alternative approaches that achieve similar environmental goals more efficiently, such as market-based mechanisms or consumer education campaigns.
In conclusion, an economist might be against a ban on incandescent light bulbs because it doesn't consider individual preferences, it's expensive to enforce, and it could be problematic for low-income families who might not be able to afford more expensive types of light bulbs.
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in the short-run, a firm's supply curve is equal to the
In the short run, a firm's supply curve is equal to the marginal cost (MC) curve.
A supply curve shows the quantity of a good or service that a supplier is willing and able to produce and sell at each price level in a particular period of time. It is a representation of the relationship between price and quantity supplied.
The marginal cost (MC) curve, on the other hand, is the change in total cost associated with the production of one additional unit of output. In other words, it is the cost of producing one more unit of a good or service. Thus, in the short run, a firm's supply curve is equal to the marginal cost (MC) curve as firms produce additional units of output as long as the marginal cost of production is less than the price of the good or service.
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1.76points
ItemSkipped
Item 8
Here are the returns on two stocks.
Digital Cheese
Executive Fruit
January
+17
+7
February
−3
+2
March
+5
+4
April
+7
+15
May
−4
+3
June
+3
+5
July
−2
−3
August
−8
−2
Required:
a-1. Calculate the variance and standard deviation of each stock.
a-2. Which stock is riskier if held on its own?
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c. Is the variance more or less than halfway between the variance of the two individual stocks?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B
Req C
Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Digital Cheese Retum
Executive Fruit Return
Variance
%
%
Standard deviation
Variance of Digital Cheese = 73.2%, Standard deviation of Digital Cheese = 8.55%. Variance of Executive Fruit = 32.8%, Standard deviation of Executive Fruit = 5.73%.
a-1. Calculation of the variance and standard deviation of each stock: a-2. To find out which stock is riskier if held on its own, compare the standard deviations. The higher the standard deviation, the riskier the stock is considered to be. As such, Digital Cheese is riskier if held on its own.b. Calculation of the returns in each month of a portfolio that invests an equal amount each month in the two stocks:In this case, we have a portfolio that invests an equal amount in both stocks, every month. Let’s assume that we invest $100 in each stock, every month, so we will have a portfolio of $200 every month. The returns for the portfolio are the weighted sum of the returns of each stock in the portfolio, where the weights are the fraction of the portfolio invested in each stock. Thus, we can calculate the returns of the portfolio as follows:MonthReturn for Digital Cheese (X)Return for Executive Fruit (Y)Return for Portfolio (W)January+17+70.12 × 7 = +4.90February−3+20.12 × 2 = −0.50March+5+40.12 × 4 = +2.70April+7+150.12 × 15 = +10.70May−4+30.12 × 3 = −0.90June+3+50.12 × 5 = +3.30July−2−30.12 × 3 = −1.80August−8−20.12 × 2 = −2.20Total19.30
b. Calculation of the returns in each month of a portfolio that invests an equal amount each month in the two stocks:c. Calculation of whether the variance is more or less than halfway between the variance of the two individual stocks:To calculate the variance of the portfolio, we need to sum up the squared deviations from the mean (or the weighted mean in this case), for each return in the portfolio. We can then divide this sum by the total number of returns, minus 1. Variance of the Portfolio = [(4.90 − 19.30/8)2 + (−0.50 − 19.30/8)2 + (2.70 − 19.30/8)2 + (10.70 − 19.30/8)2 + (−0.90 − 19.30/8)2 + (3.30 − 19.30/8)2 + (−1.80 − 19.30/8)2 + (−2.20 − 19.30/8)2]/7 = 11.53%Therefore, the variance of the portfolio is 11.53%. As Digital Cheese has a variance of 73.2% and Executive Fruit has a variance of 32.8%, we can calculate whether 11.53% is more or less than halfway between the two. (73.2% + 32.8%)/2 = 53%Thus, the variance of the portfolio is less than halfway between the variance of the two individual stocks.
The variance of the portfolio is 11.53%. The variance of the portfolio is less than halfway between the variance of the two individual stocks.
c. Calculation of whether the variance is more or less than halfway between the variance of the two individual stocks.
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"
1. Select the reason below that leads to effective policy
making.
A. Permanent tax cuts induce changes in the behavior of
businesses and households.
B. Policy actions work with lags.
C. Macroeconomic "
Policies should be designed to take into account the time lag between implementation and impact to ensure that they are effective in achieving their intended goals.
There are several factors that can contribute to effective policy making. However, one of the most critical factors is understanding the impact of policy actions. One must understand that policy actions work with lags, which can lead to unintended consequences. Answer in 150 words.Policy making is the process of identifying societal problems and finding solutions to these problems through legislation. Effective policy making should be based on accurate information and a clear understanding of the problem at hand. It must be noted that policy making is not a one-time event but an ongoing process that requires review and adjustment. Therefore, it is important to have mechanisms in place to monitor and evaluate the effectiveness of policies over time.Policy actions work with lags, which means that there is a delay between the implementation of a policy and its effects. It is important to consider these lags in the design of policies to avoid unintended consequences. Permanent tax cuts, for example, can induce changes in the behavior of businesses and households, which can have significant economy effects. Therefore, policies should be designed to take into account the time lag between implementation and impact to ensure that they are effective in achieving their intended goals.
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Question 2. What is the definition of the following terms in Supply Chain Management? Explain with examples. a) Safety Stock. b) Holding or Carrying Cost in Stock Management. c) B.O.M. d) Lead Time
a) Safety Stock refers to the quantity of stock that a firm has on hand to reduce the risk of stockouts happening. Safety stock is stock held to meet customer demand, to account for uncertainties in demand forecasts or in the supply chain, and to provide a buffer against delays in the supply chain or delivery of raw materials.
Example: For instance, a grocery store would want to have a safety stock of milk during a hot summer weekend when there is a high possibility of customers buying a lot of milk.
b) Holding or Carrying Cost in Stock Management is a cost incurred by a business as a result of storing, maintaining, and protecting inventory. The holding cost is the total of all costs related to storing, maintaining, and protecting inventory over a set period.
Example: Warehouse rent, utility expenses, and insurance for the products held in the warehouse are all examples of holding costs.
c) B.O.M. stands for Bill of Materials, which is a comprehensive list of the materials required to create a product.
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Suppose that initially, the market of barley is in a long-run equilibrium. Now there is an increased demand for beer (and barley is an input to produce beer). Describe 1) what happens to the price. profit and each farmer's barley output in the short run? 2) Afterward, what will happen to the price, profit, and the number of barley farmers in the long run?
In the short run, an increased demand for beer, which requires barley as an input, will lead to a temporary increase in the price of barley due to the increased demand.
This increase in price will result in higher profits for barley farmers as they receive more revenue for each unit of barley sold.
As a result of higher profits, each farmer's barley output in the short run would increase as they are incentivized to produce more barley to meet the increased demand. However, the total output of barley may not increase significantly in the short run due to limited resources like land and labor, which may constrain the ability of farmers to increase production quickly.
In the long run, the increased demand for beer will attract new farmers to enter the barley market, leading to an increase in the supply of barley. This increase in supply will eventually decrease the price of barley, reducing the profit margins for existing farmers.
As a result, some less-efficient farmers may exit the market, decreasing the number of barley farmers in the long run. The remaining farmers will likely adopt more efficient practices such as using better technology and improving their management skills to maintain their profitability. Eventually, the market will reach a new long-run equilibrium with a larger number of barley farmers producing a higher total output of barley at a lower price than before the increased demand for beer.
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Memphis Company anticipates total sales for April, May, and June of $900,000,$1,000,000, and $1,050,000 respectively, Cash sales are normally 20% of total sales. Of the credit sales, 35% are collected in the same month as the sale, 60% are collected duning the first month after the sale, and the remaining 5% are collected in the second month after the sale Compue the amount of accounts receivable reported on the company's budgeted balance sheet for June 30
To compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30, we need to calculate the credit sales for each month and then determine the collections for each month.
First, let's calculate the credit sales for each month:
April credit sales = Total sales for April - Cash sales for April
April credit sales = $900,000 - ($900,000 * 20%) = $900,000 - $180,000 = $720,000
May credit sales = Total sales for May - Cash sales for May
May credit sales = $1,000,000 - ($1,000,000 * 20%) = $1,000,000 - $200,000 = $800,000
June credit sales = Total sales for June - Cash sales for June
June credit sales = $1,050,000 - ($1,050,000 * 20%) = $1,050,000 - $210,000 = $840,000
Next, let's calculate the collections for each month:
April collections = 35% of April credit sales
April collections = $720,000 * 35% = $252,000
May collections = 60% of April credit sales + 35% of May credit sales
May collections = ($720,000 * 60%) + ($800,000 * 35%) = $432,000 + $280,000 = $712,000
June collections = 60% of May credit sales + 35% of June credit sales + 5% of April credit sales
June collections = ($800,000 * 60%) + ($840,000 * 35%) + ($720,000 * 5%) = $480,000 + $294,000 + $36,000 = $810,000
Finally, we can calculate the accounts receivable for June 30:
Accounts receivable = June credit sales - June collections
Accounts receivable = $840,000 - $810,000 = $30,000
Therefore, the amount of accounts receivable reported on the company's budgeted balance sheet for June 30 is $30,000.
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The private market for oil results in an equilibrium quantity if 15 million gallons. The production of oil creates a negative externality, so the socially optimal quantity of oil is 10 million gallons.
(a) Draw a graph that shows marginal social benefit, marginal private benefit, marginal social cost, and marginal private cost.
(b) Does the private market for oil over or under produce?
(c) Label the deadweight loss created by the negative externality on the graph
(d) Draw how a quota could shift the market for oil to the socially optimal equilibrium on the graph
The graph's x-axis should show the amount of oil, and the y-axis should show the benefits and costs.
- The Marginal Social Benefit (MSB) curve ought to be downward sloping and should depict the added benefit that society receives from using each extra unit of oil.
The Marginal Private Benefit (MPB) curve, which depicts the increased benefit to individual consumers from consuming each more unit of oil, should likewise be downward sloping.
The Marginal Social Cost (MSC) curve should have an upward slope to represent the higher cost to society resulting from the production of each additional unit of oil.
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