To create a spreadsheet modeling trajectories of geometric Brownian motion, follow these steps Step 1: Create a new Excel spreadsheet and enter the following headings in cells A1, B1, C1, D1, E1, F1, and G1: “Trajectory”, “Time Step”, “Price”, “Drift”, “Shock”, “Drift+Shock”, “Log Returns”. Step 2: In cell A2, enter the starting value of the stock, i.e., 100. This is the first value in the first trajectory.
Step 3: In cell B2, enter the value 0.004. This is the time increment for the first trajectory, which will simulate daily changes in the stock price. Step 4: In cell C2, enter the formula “=A2*EXP((0.02-0.5* ))This formula calculates the new price of the stock after one time increment. Step 5: In cell D2, enter the formula “=0.02*A2*B2”. This formula calculates the drift of the stock. Step 6: In cell E2, enter the formula “=0.28*A2*SQRT(B2)*NORMINV(RAND(),0,1)”. This formula calculates the shock to the stock price. Step 7: In cell F2, enter the formula “=D2+E2”.
This formula calculates the drift plus shock. Step 8: In cell G2, enter the formula “=LN(C2/A2)”. This formula calculates the log returns of the stock. Step 9: Highlight cells A2 to G2 and drag down to fill the formulas down to cell G251, which is the final value in the first trajectory. Step 10: Copy the first trajectory by highlighting cells A2 to G251 and pasting them into cells A252 to G501. This is the second trajectory. Step 11: Repeat step 10 to create 20,000 trajectories. The final value in each trajectory is the simulated stock price after one year. Step 12: Calculate the price of a European call option maturing in one year with a strike price of 100 using the Monte Carlo method. In cell H1, enter the formula “=AVERAGE(MAX(0,E2-100))”. This formula calculates the average of the maximum of zero and the difference between the final simulated stock price and the strike price of 100 for all 20,000 trajectories. The result is the Monte Carlo estimate of the call option price.
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Which of the following items are usually reported as current liabilities in the statement of financial position (Select all that apply) Trade and other payables. Current portion of long-term note. Non-current portion of long-term nobe. Income tax payable. Short-term borrowings. Deferred tax liability expected to moverse next year.
The items that are usually reported as current liabilities in the statement of financial position are Trade and other payables, Income tax payable, and Short-term borrowings.
Current liabilities are obligations that are expected to be settled within the normal operating cycle of a business, typically within one year. Trade and other payables refer to amounts owed to suppliers and vendors for goods and services received. These are short-term obligations that need to be paid within the operating cycle.
Income tax payable represents the taxes owed to the government based on the taxable income generated by the company. It is a current liability because it is expected to be paid within the next year.
Short-term borrowings refer to any loans or credit facilities that are due for repayment within one year. These can include bank loans, lines of credit, or other forms of short-term financing.
On the other hand, the Current portion of long-term note, Non-current portion of long-term note, and Deferred tax liability expected to reverse next year are not reported as current liabilities. The current portion of long-term notes represents the portion of a long-term loan that is due within the next year, and it is reported separately from current liabilities. The non-current portion of long-term notes is reported as long-term liabilities. The deferred tax liability expected to reverse next year is also classified as a long-term liability, as it represents tax obligations that will be realized beyond the next year.
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a. Any employee who works more than 8 hours per day must be paid overtime. 1. True 2.False b. A corporation is a legal entity created and recognized by federal law. 1.True 2.False c. A law that has any impact on religion is unconstitutional. 1.True 2.False
a. True, according to federal law, employees who work more than 8 hours per day must be paid overtime.
b. True, a corporation is a legal entity created and recognized by federal law, separate from its owners or members.
c. False, laws can have an impact on religion as long as they do not violate the First Amendment's protections of freedom of religion.
a. Any employee who works more than 8 hours per day must be paid overtime. Answer: TrueExplanation: According to the federal law, if an employee works more than 8 hours per day, he or she should be paid overtime. The overtime pay is 1.5 times their normal rate of pay.b. A corporation is a legal entity created and recognized by federal law. Answer: TrueExplanation: A corporation is a legal entity created and recognized by federal law. It has its own rights, powers, and obligations separate from those of its owners or members. The process of incorporating a company involves filing the necessary paperwork with the state government in which the company wishes to incorporate.c. A law that has any impact on religion is unconstitutional. Answer: FalseExplanation: A law that has any impact on religion is not necessarily unconstitutional. The First Amendment to the US Constitution protects freedom of religion, but it does not mean that laws cannot impact religion at all. Laws can impact religion in various ways as long as they do not prohibit the free exercise of religion or establish a religion.
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write a compound interest function to model the following situation. then, find the balance after the given number of years. $16,100 invested at a rate of 1.2ompounded monthly; 7 years
To model the situation of compound interest, we can use the formula:
A = P(1 + r/n)^(n*t)
Where:
A = Final balance
P = Principal amount (initial investment)
r = Annual interest rate (in decimal form)
n = Number of compounding periods per year
t = Number of years
In this case, we have:
P = $16,100
r = 1.2% (or 0.012 in decimal form)
n = 12 (compounded monthly)
t = 7 years
Substituting the values into the formula, we can calculate the final balance:
A = $16,100 * (1 + 0.012/12)^(12*7)
A = $16,100 * (1 + 0.001)^84
A = $16,100 * (1.001)^84
A ≈ $16,100 * 1.1054
A ≈ $17,818.54
Therefore, the balance after 7 years would be approximately $17,818.54.
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1- Which of the following types of interviews allows candidates to practice and perfect their responses?
a) Sequential
b) Screening
c) Recorded video
d) Two-way video
c) Recorded video. Recorded video interviews allow candidates to practice and perfect their responses because they provide an opportunity for candidates to record their options to pre-set questions at their own convenience.
Candidates can review their recorded responses, analyze their performance, and make necessary adjustments to improve their s before submitting them to the hiring Company. This type of interview also eliminates the pressure of ing in real-time, giving candidates the flexibility to present their best version.
Sequential interviews refer to a series of interviews with different interviewers, typically conducted one after another. Screening interviews are typically the initial stage of the interview process, where candidates are evaluated based on basic qualifications. Two-way video interviews involve live video interactions between the candidate and interviewer, allowing for real-time communication. While these interview types are valuable in their own ways, they may not provide the same level of practice and refinement opportunity as recorded video interviews.
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efer to the following fact situation (repeated for each question): Shawn agrees to paint Clifford's house for $700. Clifford pays him with a $700 promissory note which requires Clifford to pay Shawn on January 1. To insure repayment of the loan Shawn requires Clifford to sign a security agreement which pledges Clifford's computer as collateral for the note. Later in the month, Clifford borrows $500 from his Aunt Bea to be repaid on January 1. Aware of Clifford's poor credit history, Aunt Bea has Clifford sign a written security agreement which pledges Clifford's computer as collateral for the loan. Aunt Bea then requires Clifford to bring the computer to her house and put it in her bedroom closet. Clifford then enrolls in a welding class at Mitch's Trade School. He pays his tuition by giving Mitch a promissory note for $800 to be paid in full in 60 days. Mitch requires Clifford to sign a security agreement which pledges his computer as collateral for the note. As soon as Clifford sign the agreement Mitch files a financing statement at the courthouse. Clifford defaults on all his obligations.
Question: 1.Which creditor's security interest was the first to attach to the computer?
a. Mitch
b. Aunt Bea
c. Shawn
d. No security interests have attached to the computer.
2. In the above fact situation, how many security interests have been perfected?
a. None
b. One
c. Two
d. Three
In this scenario, three parties have claimed security interests in Clifford's computer: Shawn, Aunt Bea, and Mitch. However, the question asks about the first security interest to attach to the computer.
Shawn's security interest is created when Clifford signs the security agreement, but it does not attach until the promissory note comes due on January 1. Therefore, Shawn's security interest has not yet attached to the computer.
Aunt Bea's security interest arises when Clifford borrows $500 from her and signs a written security agreement, pledging his computer as collateral. Furthermore, Aunt Bea takes possession of the computer by having Clifford bring it to her house and placing it in her bedroom closet. This act of taking possession establishes priority over other claimants. Thus, Aunt Bea's security interest is the first to attach to the computer.
Mitch's security interest is created when Clifford signs the security agreement, and Mitch promptly files a financing statement at the courthouse. However, since Aunt Bea's security interest attached first by taking possession, Mitch's security interest is subordinate to Aunt Bea's.
In conclusion, the first security interest to attach to the computer is that of Aunt Bea.
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Why do you think this managerial accounting dedicates so much time to allocating costs appropriately and not nearly as much towards revenue recognition or trying to allocate revenue to different products or processes?
Managerial accounting dedicates so much time to allocating costs appropriately and not nearly as much towards revenue recognition or trying to allocate revenue to different products or processes because the former is more critical in helping managers in decision making and cost control.
Proper allocation of costs is crucial in determining the profitability of a product or service since it helps in determining the cost of production.
Managers need to know how much it costs to produce a product or provide a service, and cost allocation helps them to achieve this. This is important because managers need to determine which product or service generates profits and which one generates losses so that they can take appropriate actions.
A company that does not accurately allocate costs may underprice products that are costly to produce and overprice products that are less expensive to produce which can lead to losses.
Additionally, allocating costs accurately helps in pricing strategies and ensures that prices are based on production costs. On the other hand, revenue recognition and allocation are important but less critical since they do not provide direct information for cost management and decision-making.
Revenue allocation and recognition are more important for financial accounting and external financial reporting. In conclusion, the allocation of costs is critical for internal decision-making and cost control, whereas revenue allocation is crucial for financial reporting and compliance.
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Better Restaurant Supply sells various equipment and supplies to restaurants in Hong Kong. The company’s accountant, Jenny, has request your help in preparing a cash budget for the month of June. Jenny provided the following information for you: The cash balance on 1 June was estimated to be $10,000. ActualsalesforAprilandMay,andbudgetedsalesforJune,areasfollows: Cash sales Sales on credit Total sales April $16,500 30,000 46,500 May $15,500 40,000 55,500 June $17,500 50,000 67,500 Sales on credit are collected over a two-month period, with 70 percent being collected in the month of sales and the remainder being collected in the following month. Inventory purchases are expected to be $35,000 in June. The company pays for inventory purchases in the month following purchase. The balance of May’s purchases is $22,000. Selling and administrative expenses are budgeted to be $14,000 for June. Of that amount, 50 percent is depreciation. Equipment costing $14,000 will be purchased in June for cash. Dividends in the amount of $3,140 will be paid. The company wants to maintain a minimum cash balance of $10,000 and has set up a line of credit at the local bank that can be used to cover any shortage. If the company must borrow, the loan will be made at the beginning of the month and any repayment will be made at the end of the month of repayment. The interest rate on these loans is 6% per quarter and is not compound. Partial payment is allowed but must be in an increment of $1,000. The company has borrowed $33,000 in May.
Required: Prepare a cash budget in proper format for Better Restaurant Supply for the month of June.
Cash budget for the month of June Cash balance on 1 June =$10,000Cash collection of Sales on CreditApril sales: 30,000 × 70% =$21,000May sales: 40,000 × 70% =$28,000June sales: 50,000 × 70% =$35,000Total cash sales: April sales: $16,500May sales: $15,500June sales: $17,500Total sales: April sales: $46,500May sales: $55,500June sales: $67,500Therefore, credit sales are as follows:
April sales: $16,500 × 30% =$4,950May sales: $40,000 × 30% =$12,000June sales: $50,000 × 30% =$15,000Hence, total collection from sales on credit: June credit sales $15,000April credit sales collected in June: $21,000 × 30% =$6,300May credit sales collected in June:
$28,000 × 100% =$28,000Total collection from sales on credit =$49,300Inventory purchases $35,000May balance $22,000Total inventory purchase =$57,000Selling and administrative expenses $14,000 (of which 50% is depreciation)Therefore, depreciation expense =$7,000Equipment purchase for cash $14,000Dividend paid =$3,140Minimum cash balance =$10,000Bank loan =$0Cash receipts:Total sales: $67,500Add:
Collection from credit sales: $49,300Total cash receipts =$116,800Cash disbursements:Total inventory purchases: $57,000Selling and administrative expenses: $7,000 + $14,000 (excluding depreciation) = $21,000Equipment purchase: $14,000Dividend paid: $3,140Total cash disbursements: $95,140Estimated excess of receipts over disbursements: $116,800 - $95,140 = $21,660This is the amount available for loan repayment or investment.
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28. Depending on the size and other characteristics of an emplover, certain benefits for employees are
required by law. Which of the following is not mandatory on private sector employers?
A. Social security
B. Worker's compensation
C. Holidays off
D. Leave for an immediate family member's illness
29.Pension is an example of defined benefit retirement plans
A.True
B.False
30.
According to the Affordable Care Act (ACA), all employers regardless of size must offer affordable
health coverage to those employees and their dependent children up to age 26 or pay a penalty.
A. true
B. False
31.
Which of the following regarding Worker's Compensation is incorrect?
A. It is a type of social insurance covers job-related injuries and death.
B. It is paid entirely by the employer.
C. Injured worker cannot receive benefits if the accident was his/her fault.
D. Workers' compensation benefits are the only benefits injured workers may receive from the
employer to compensate for work-related injuries.
32. OSH Act requires employers to do all of the following except_____.
To display OSHA posters in the workplace.
To report all workplace injuries to OSHA.
To maintain a detailed annual record of the injuries and accidents for OSHA inspection.
To inform employees of OSHA safety standards.
33. The idea that employees are free to quit a company any time they choose and employers can
discharge employces for any reason, or no reason, as long as not illegal is called employment at will.
A. true
b.False
34. Stating in the employee handbook that employees can only be terminated for performance-related
reasons is an example of which of the following exceptions to the employment-at-will doctrine?
A. The public policy exception
b.The implied contract exception
C. The good faith principle exception
D. The concerted activity exception
35. In general, employees of private-sector employers can be monitored, observed, and searched at work
by their employer.
A. True
b.False
28)C Holidays off and 29)A True and 30)A True and 31)B It is paid entirely by the employer and 32)B To report all workplace injuries to OSHA and 33)A True and 34)B The implied contract exception and 35)A True
28. Holidays off is not mandatory on private sector employers.
29. True, Pension is an example of defined benefit retirement plans.
30. True, according to the Affordable Care Act (ACA), all employers regardless of size must offer affordable health coverage to those employees and their dependent children up to age 26 or pay a penalty.
31. It is paid entirely by the employer is incorrect regarding Worker's Compensation.
32. To report all workplace injuries to OSHA is an exception to what OSH Act requires employers to do.
33. True, the idea that employees are free to quit a company any time they choose and employers can discharge employees for any reason, or no reason, as long as not illegal is called employment at will.
34. The implied contract exception is an example of stating in the employee handbook that employees can only be terminated for performance-related reasons.
35. True, in general, employees of private-sector employers can be monitored, observed, and searched at work by their employer.
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3. In an organization with an inert culture, a style of
leadership is most likely used to motivate and control behavior of
employees? transformational
participative
adaptive
directive
supportive
In an organization with an inert culture, a directive style of leadership is most likely used to motivate and control behavior of employees. The term “inert culture” refers to an organizational culture where employees are resistant to change and maintain the status quo.
The organization is generally slow to innovate, and employees are less likely to take initiative to make improvements or implement new ideas.In this type of culture, a directive style of leadership is often used because it provides clear guidance and instructions to employees. The directive leader tells employees what they need to do, how they should do it, and what the outcome should be. This style of leadership is useful when the organization is going through a period of change, such as when new processes or systems are being implemented.During such times, employees may feel uncertain about their roles and responsibilities, and a directive leader can help to provide clarity and direction. The downside to this style of leadership is that it can stifle creativity and innovation among employees. Employees may become overly reliant on their leader for guidance and not feel empowered to make decisions on their own.Another leadership style that may be effective in an inert culture is transformational leadership. Transformational leaders inspire and motivate employees to embrace change and take risks. They help employees see the big picture and how their individual contributions can help the organization achieve its goals. However, this style of leadership requires a high level of trust between the leader and the employees, and may not be effective in an organization where trust is low.
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The two main qualitative characteristics that financial information should possess have beenidentified a relevance and representational faithfulness. Is one more important than the other orare they equally important
Both relevance and representational faithfulness are essential qualitative characteristics of financial information, and they are equally important. Let's understand each characteristic:
Relevance: Financial information is considered relevant if it is capable of influencing the economic decisions of users. Relevant information helps users assess past, present, and future events or confirm or correct their previous evaluations. To be relevant, information should have predictive value, confirmatory value, or both. It should provide useful insights and assist users in making informed decisions.
Representational Faithfulness: Representational faithfulness refers to the extent to which financial information faithfully represents the economic phenomena it purports to represent. It means that the information should accurately reflect the underlying economic reality. Financial statements should faithfully represent the financial position, performance, and cash flows of an entity.
Both relevance and representational faithfulness are crucial because they serve different purposes:
Relevance focuses on the usefulness of information for decision-making. It ensures that the information provided is pertinent, timely, and has the potential to impact users' decisions. Relevant information helps users make better-informed judgments and choices.
Representational faithfulness ensures that the information accurately represents the economic reality of the entity. It promotes transparency, reliability, and comparability of financial information. Faithful representation helps users understand the true financial position and performance of the entity.
These two characteristics work together to provide meaningful financial information. Without relevance, even the most faithfully represented information may not be useful to users. Conversely, without representational faithfulness, relevant information may be misleading or inaccurate. Therefore, both characteristics are equally important in the preparation and presentation of financial information to meet the needs of users effectively.
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Both relevance and representational faithfulness are essential qualitative characteristics of financial information, and they are equally important. Let's understand each characteristic:
Relevance: Financial information is considered relevant if it is capable of influencing the economic decisions of users. Relevant information helps users assess past, present, and future events or confirm or correct their previous evaluations. To be relevant, information should have predictive value, confirmatory value, or both. It should provide useful insights and assist users in making informed decisions.
Representational Faithfulness: Representational faithfulness refers to the extent to which financial information faithfully represents the economic phenomena it purports to represent. It means that the information should accurately reflect the underlying economic reality. Financial statements should faithfully represent the financial position, performance, and cash flows of an entity.
Both relevance and representational faithfulness are crucial because they serve different purposes:
Relevance focuses on the usefulness of information for decision-making. It ensures that the information provided is pertinent, timely, and has the potential to impact users' decisions. Relevant information helps users make better-informed judgments and choices.
Representational faithfulness ensures that the information accurately represents the economic reality of the entity. It promotes transparency, reliability, and comparability of financial information. Faithful representation helps users understand the true financial position and performance of the entity.
These two characteristics work together to provide meaningful financial information. Without relevance, even the most faithfully represented information may not be useful to users. Conversely, without representational faithfulness, relevant information may be misleading or inaccurate. Therefore, both characteristics are equally important in the preparation and presentation of financial information to meet the needs of users effectively.
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Your coworker wants to know if she is eligible for overtime pay. You could tell her that multiple factors determine whether or not an employee is exempt from overtime pay. Which of the following is NOT one of the factors that determines exempt status? O job responsibilities. O date of hire. 0 salary basis being paid a salary). O salary level
A coworker is asking about eligibility for overtime pay, and it depends on various factors that determine exemption from it. The date of hire is not one of the factors that determine exempt status for overtime pay. The correct answer is B.
The determination of exempt status for overtime pay is based on several factors, but the date of hire is not one of them. The main factors that determine exempt status include job responsibilities, salary basis, and salary level.
A. Job responsibilities: The nature of the job duties is an essential factor in determining exempt status. Certain job positions, such as executive, administrative, professional, or outside sales roles, may be exempt from overtime pay based on the nature of their responsibilities.
C. Salary basis: Employees who are paid on a salary basis, rather than an hourly wage, may be exempt from overtime pay. This means they receive a fixed salary regardless of the number of hours worked.
D. Salary level: To qualify for exempt status, employees must meet certain minimum salary thresholds set by law. If an employee's salary falls below the specified threshold, they may be eligible for overtime pay.
In conclusion, the date of hire is not a factor that determines exempt status for overtime pay. The main factors include job responsibilities, salary basis, and salary level. It's important for employees and employers to understand these factors to determine whether overtime pay applies to a particular employee. The correct answer is B.
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Among the costs Maleshwane Company incurred during the month of February were the following:
R
Property rates on the factory building 5 000
Coolant used head office air conditioning system 15 000
Salary paid to a factory quality control inspector 2 000
Depreciation on trucks used to deliver products to customers 10 000
The period costs from the above list amount to:
A. R7 000
B. R32 000
C. R30 000
D. R25 000
The period costs from the list amount to R30,000. The period costs are expenses that are not directly associated with the production of goods.
In this case, the property rates on the factory building (R5,000), the coolant used for the head office air conditioning system (R15,000), and the salary paid to a factory quality control inspector (R2,000) are all period costs. The depreciation on trucks used for delivering products to customers (R10,000) is not considered a period cost since it is related to the production and delivery of goods. When we add up the period costs, the total is R5,000 + R15,000 + R2,000 = R22,000. Therefore, the correct answer is C. R30,000.
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GE is selling locomotives to China. If GE requires China to pay USD instead of RMB, O GE is shifting its FX exposure to China China is better-off in this case O this is hedging exposure through invoice currency from the perspective of GE O A and C O B and C
If GE requires China to pay in USD instead of RMB for locomotives, it is shifting its foreign exchange (FX) exposure to China. Thus, the correct answer is option C: A and C.
When GE requires China to pay in USD instead of RMB, GE is effectively shifting its FX exposure to China. By invoicing in USD, GE is transferring the currency risk to China, as China will need to convert its RMB into USD to make the payment. This means that any fluctuations in the exchange rate between RMB and USD will impact China, rather than GE.
From China's perspective, this arrangement can be seen as advantageous. If the RMB depreciates against the USD, China will have to pay more RMB to acquire the necessary USD for payment. Conversely, if the RMB appreciates, China will benefit by paying fewer RMB. Therefore, this practice can be considered as hedging exposure through the invoice currency, as GE is using the USD invoice to mitigate its foreign exchange risk, while China bears the risk associated with currency fluctuations.
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Determine the covariance between the expected returns of Asset A and Asset B if the standard deviation of a portfolio invested 60% in Asset A and 40% in Asset B is 16.8%. Asset A and Asset B returns have standard deviations of 16% and 24%, respectively.
The covariance between the expected returns of Asset A and Asset B is 0.036864, or 3.6864%.
To determine the covariance between the expected returns of Asset A and Asset B, we need the following information:
Standard deviation of the portfolio: σ_portfolio = 16.8%
Weight of Asset A in the portfolio: w_A = 60%
Weight of Asset B in the portfolio: w_B = 40%
Standard deviation of Asset A: σ_A = 16%
Standard deviation of Asset B: σ_B = 24%
The covariance (Cov) between the expected returns of Asset A and Asset B can be calculated using the formula:
Cov(A, B) = w_A * w_B * σ_A * σ_B
Substituting the given values into the formula, we have:
Cov(A, B) = 0.6 * 0.4 * 16% * 24%
Cov(A, B) = 0.096 * 0.384
Cov(A, B) = 0.036864
Therefore, the covariance between the expected returns of Asset A and Asset B is 0.036864, or 3.6864%.
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Ludington Corporation provides the following data from a recent period for its manufacture of shoes: direct material costs, $24,000; direct labor costs, $12,000; and total fixed costs, $40,000. Sales were $60,000 based on 12,000 units sold during the period.
Calculate the contribution margin and the contribution margin ratio.
The Ludington Corporation provided the following data from a recent period for its manufacture of shoes: the contribution margin is $24,000 and the contribution margin ratio is 40%.
irect material costs, $24,000; direct labor costs, $12,000; and total fixed costs, $40,000. Sales were $60,000 based on 12,000 units sold during the period.The contribution margin is $24,000 as calculated below:Contribution margin = Sales - Variable cost= $60,000 - ($24,000 + $12,000)= $60,000 - $36,000= $24,000
The contribution margin ratio is 40% as calculated below:Contribution margin ratio = (Contribution margin ÷ Sales) x 100= ($24,000 ÷ $60,000) x 100= 0.4 x 100= 40%Therefore, the contribution margin is $24,000 and the contribution margin ratio is 40%.
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.please please answer all the questions incomplete answers will receive thumb down
1. Match each voluntary deduction with its description.
- Union dues
- Retirement plan
- Flexible spending account
- Medical plans
a. Owed by an employee belonging to a formalized employees' association
b. Monies to benefit the employee later in life
c. Funds withheld specifically for medical expenses
d. Reimbursement for qualified benefits, such as dependent care
- Union dues: a. Owed by an employee belonging to a formalized employees' association
- Retirement plan: b. Monies to benefit the employee later in life
- Flexible spending account: d. Reimbursement for qualified benefits, such as dependent care
- Medical plans: c. Funds withheld specifically for medical expenses
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1 points Save Answer Question 13 CASE: Cheese manufacturing results in a concomitant, called brine (water+ salt). Instead of throwing it away, Canadian cheese factories sell brine to municipalities to use it in melting snow on the roads. This helps offset their cheese production cost, which allows them to sell their cheese at a competitively lower price. QUESTION: Which Product Mix Pricing strategy is being used in this example? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Previous question
The product mix pricing strategy that is being used in this example is product bundle pricing.
Product bundle pricing is a pricing strategy in which companies combine several of their products and offer them at a reduced price. Customers get a discount when they purchase a product bundle. In the given case, cheese manufacturing results in a concomitant called brine. Instead of throwing it away, Canadian cheese factories sell brine to municipalities to use it in melting snow on the roads.
As a result, the cheese factories can lower their cheese production costs and offer their cheese at a more affordable price. Therefore, the factories are offering a bundle of products, the cheese, and the brine, at a lower price. This illustrates the product bundle pricing strategy.
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Can someone check if these question below is correct please? I'm unsure about the choices i made and it would be a great help if someone could review and help me understand why the answer i chose is wrong or re-ensure me that my understanding of the concept of the question was right.
1. The UCC governs which of the following contracts:
a. A contract for the purchase of a house.
b. A contract for computer components.
c. A contract for a no-load mutual fund.
d. All of the above.
2. Al contracts for a ton of bricks at a set price. The brick manufacturer calls and says he is very sick and can’t deliver any bricks. If Al wants to exercise his right of ‘cover’ Al will do which of the following:
a. Purchase the bricks from someone else.
b. Initiate a suit for specific performance.
c. Reject the bricks as non-conforming.
d. Rescind the contract based on commercial impracticability.
3. Billy agrees in writing to sell Judy’s Spaghetti Sauce Company fifty (50) bushels of tomatoes per month for six months at 10 dollars per bushel. Two weeks later, a nation-wide "tomato-blight" destroys at least half the tomatoes being grown in the United States. This triples the price of tomatoes overnight. Billy explains to Judy what happened and he will go bankrupt if he agrees to the "old Judy insists that Billy MUST deliver the tomatoes at the original price or she will "sue him for every dime he has and also seek punitive damages to boot!." As Billy’s lawyer, you tell Billy:
a. "Suck-it-up Dude, life’s tough."
b. Try and work out a compromise with Judy.
c. "This is a contract for specially grown goods, you must deliver the tomatoes."
d. "Commercial impracticability applies, tell Judy to pound sand."
e. None of the above.
4. Which of the following writings will satisfy the Statute of Frauds under the UCC.
a. A formal written contract signed by both parties.
b. An invoice which describes the goods contracted for.
c. A faxed latter acknowledging an order for goods.
d. Any or all of the above.
e. None of the above.
Let's review the questions and choices:
The UCC governs which of the following contracts:
a. A contract for the purchase of a house.
b. A contract for computer components.
c. A contract for a no-load mutual fund.
d. All of the above.
The correct answer is (b) A contract for computer components. The UCC, or the Uniform Commercial Code, primarily governs contracts for the sale of goods. Contracts for the purchase of a house and contracts for a no-load mutual fund are not governed by the UCC.
Al contracts for a ton of bricks at a set price. The brick manufacturer calls and says he is very sick and can't deliver any bricks. If Al wants to exercise his right of 'cover' Al will do which of the following:
a. Purchase the bricks from someone else.
b. Initiate a suit for specific performance.
c. Reject the bricks as non-conforming.
d. Rescind the contract based on commercial impracticability.
The correct answer is (a) Purchase the bricks from someone else. In the case of a seller's breach, the buyer has the right to "cover," which means they can purchase substitute goods in the marketplace to fulfill the contract.
Billy agrees in writing to sell Judy's Spaghetti Sauce Company fifty (50) bushels of tomatoes per month for six months at $10 per bushel. Two weeks later, a nation-wide "tomato-blight" destroys at least half the tomatoes being grown in the United States. This triples the price of tomatoes overnight. Billy explains to Judy what happened, and he will go bankrupt if he agrees to the "old" price. Judy insists that Billy MUST deliver the tomatoes at the original price or she will "sue him for every dime he has and also seek punitive damages to boot!" As Billy's lawyer, you tell Billy:
a. "Suck-it-up Dude, life's tough."
b. Try and work out a compromise with Judy.
c. "This is a contract for specially grown goods; you must deliver the tomatoes."
d. "Commercial impracticability applies; tell Judy to pound sand."
e. None of the above.
The correct answer is (d) "Commercial impracticability applies; tell Judy to pound sand." The concept of commercial impracticability allows a party to be excused from performance when an unforeseen event makes performance commercially impracticable or impossible.
Which of the following writings will satisfy the Statute of Frauds under the UCC.
a. A formal written contract signed by both parties.
b. An invoice which describes the goods contracted for.
c. A faxed letter acknowledging an order for goods.
d. Any or all of the above.
e. None of the above.
The correct answer is (d) Any or all of the above. The UCC recognizes that various types of writings can satisfy the Statute of Frauds requirement, including formal written contracts, invoices, and even electronic communications such as a faxed letter.
Please note that the explanations provided are based on general understanding and may vary depending on specific legal jurisdictions.
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A mechanical engineer who is planning for his daughter's college education plans to start depositing money now (year 0) and continue through year 17. If he deposits RM 5,000 each year, (i) Determine how much will his daughter be able to withdraw each year starting in year 18 and continuing through year 22? Assume the account earns interest at 10% per year. (ii) Draw the cash flow diagram for the problem in Q2 (b) (i)
Given that, a mechanical engineer is planning for his daughter's college education plans to start depositing money now (year 0) and continue through year 17.
If he deposits RM 5,000 each year. The account earns interest at 10% per year. The questions are(i) Determine how much will his daughter be able to withdraw each year starting in year 18 and continuing through year 22?
Given,Annual payment = A = RM5000
Interest rate = i = 10% = 0.1
Total number of years = N = 17
Number of years for withdrawal = n = 5
Total amount deposited = RM 5000 x 17 = RM 85,000
Using the formula to find the Future value of Annuity,FV of annuity = (A*((1+i)^n-1)/i)*(1+i) = (5000*(((1+0.1)^5-1)/0.1))*(1+0.1) = RM 31,216.10
The daughter will be able to withdraw RM 31,216.
10 each year starting in year 18 and continuing through year 22.(ii) Draw the cash flow diagram for the problem in Q2 (b) (i)The cash flow diagram for the problem is shown below:
Answer: The daughter will be able to withdraw RM 31,216.10 each year starting in year 18 and continuing through year 22.
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Explain the effect of an appreciation of dollar on AD and
AS.
Require about 200 words. DO NOT COPY AND PASTE. please be
precise to the question and answer in OWN WORDS.
An appreciation of the dollar can have significant effects on both aggregate demand (AD) and aggregate supply (AS) in an economy.
When the dollar appreciates, it becomes stronger relative to other currencies, making imported goods and services cheaper for domestic consumers. As a result, the price of imported goods decreases, leading to an increase in consumers' purchasing power. This, in turn, can stimulate aggregate demand. Cheaper imports may also lead to a decrease in domestic demand for domestically produced goods if consumers switch to cheaper imported alternatives. Therefore, the net effect on aggregate demand depends on the country's trade balance and the responsiveness of consumers to changes in relative prices.
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Compute Activity Rates [LO4-2] [The following information applies to the questions displayed below) Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging Ceneral factory Exercise 4-2 Part 1 (Algo) Activity Cost Pool Labor-related Machine-related Estimated Overhead Coat $ 16,800 $ 16,000 $ 30,400 $ 6,600 Machine setups Production orders Product testing Packaging General factory $ 12,000 $ 51,000 $ 55,600 Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate. per DLH per MH per setup per order Expected Activity 2,000 direct labor-hours 8,000 machine-hours per test per package per DLH 800 setups 200 orders 500 tests 3,400 packages 2,000 direct labor-hour
The activity rates for each activity cost pool are as follows Activity Rate per DLH: $8.40, Activity Rate per MH: $2.00, Activity Rate per setup: $38.00, Activity Rate per order: $33.00, Activity Rate per test: $24.00, Activity Rate per package: $15.00, Activity Rate per DLH for General Factory: $27.80.
To compute the activity rate for each activity cost pool, we divide the estimated overhead cost by the expected activity. Here are the calculations:
Activity Rate per DLH (Direct Labor Hour) = Estimated Overhead Cost / Expected Activity (Direct Labor Hours)
= $16,800 / 2,000 DLH
= $8.40 per DLH
Activity Rate per MH (Machine Hour) = Estimated Overhead Cost / Expected Activity (Machine Hours)
= $16,000 / 8,000 MH
= $2.00 per MH
Activity Rate per setup = Estimated Overhead Cost / Expected Activity (Setups)
= $30,400 / 800 setups
= $38.00 per setup
Activity Rate per order = Estimated Overhead Cost / Expected Activity (Production Orders)
= $6,600 / 200 orders
= $33.00 per order
Activity Rate per test = Estimated Overhead Cost / Expected Activity (Product Testing)
= $12,000 / 500 tests
= $24.00 per test
Activity Rate per package = Estimated Overhead Cost / Expected Activity (Packaging)
= $51,000 / 3,400 packages
= $15.00 per package
Activity Rate per DLH (Direct Labor Hour) for General Factory = Estimated Overhead Cost / Expected Activity (Direct Labor Hours)
= $55,600 / 2,000 DLH
= $27.80 per DLH
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are output based measures of welfare flawed? what are
the alternatives
Output-based measures of welfare are not inherently flawed, but they have limitations. Alternative measures, such as well-being indicators and composite indices, provide a more comprehensive assessment of welfare.
Output-based measures of welfare, such as GDP (Gross Domestic Product), focus primarily on economic production and the value of goods and services produced within a country's borders. While GDP provides valuable information about economic activity, it has limitations when it comes to capturing the overall well-being and quality of life of individuals in a society. Some of the flaws with output-based measures include:
Neglecting non-market activities: GDP primarily measures market transactions, neglecting non-market activities like household work, volunteer work, and informal sector activities. These activities can significantly contribute to well-being but are not reflected in GDP.
Ignoring income distribution: GDP does not account for income distribution and inequality. It is possible for GDP to increase while a significant portion of the population experiences stagnant or declining incomes, leading to disparities in well-being.
Excluding environmental externalities: Output-based measures do not consider the negative environmental impacts associated with economic activities, such as pollution and resource depletion. These externalities can affect long-term well-being and sustainability.
Alternative measures that address these limitations and provide a more comprehensive assessment of welfare include:
Well-being indicators: These indicators consider a broader range of dimensions that impact people's well-being, such as health, education, social connections, and subjective happiness. Examples of well-being indicators include the Human Development Index (HDI) and the Genuine Progress Indicator (GPI).
Composite indices: Composite indices combine multiple indicators to provide a more holistic view of welfare. The United Nations' Human Development Index (HDI) is a composite measure that incorporates indicators of health, education, and income.
Sustainable Development Goals (SDGs): The SDGs provide a framework for measuring and addressing various dimensions of welfare, including poverty, health, education, gender equality, environmental sustainability, and more.
While output-based measures like GDP are useful for assessing economic production, they have limitations in capturing overall welfare. Alternative measures, such as well-being indicators, composite indices, and frameworks like the SDGs, offer a more comprehensive assessment of welfare by considering a broader range of factors beyond economic output.
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Ker & Nick Consulting's partners equity accounts reflected the following balances on August 31, 2020: $ 84,000 203,000 Lee and Kalpakan share profit/losses in a 23 ratio, respectively. On September 1, 2020, Liam Court is admitted to the partnership with a cash investment of $123.000 Required Prepare the journal entry to record the admission of Liam under each of the following unrelated assumptions, where he is given: a. A 30% interest in equity Vw transaction list Journal entry worksheet 1 Record the admission of new partner Date Debit Credit Sep 01, 2020 View general j General Journal Clear entry 4 b. A 20% interest in equity View transaction list Journal entry worksheet < 1 Record the admission of new partner. te Exter debits before credits Date General Journal Sep 01, 2020 Recont entry CA 50% interest in equity Clear entry Debit Credit View general journal
The journal entry to record the admission of Liam to Ker & Nick Consulting under the assumption of a 30% interest in equity would be to debit Liam's Capital account for $36,900 and credit Lee's Capital account for $27,300 and Kalpakan's Capital account for $9,600. The journal entry to record the admission of Liam under the assumption of a 20% interest in equity would be to debit Liam's Capital account for $24,600 and credit Lee's Capital account for $18,200 and Kalpakan's Capital account for $6,400.
a. Assuming Liam is given a 30% interest in equity, we need to adjust the partners' capital accounts. The existing partners, Lee and Kalpakan, share profits and losses in a 23:77 ratio. The total profit sharing ratio is 100, so Liam's share will be 30%. To record Liam's admission, we debit Liam's Capital account for $36,900 (30% of $123,000) and credit Lee's Capital account for $27,300 (23% of $123,000) and Kalpakan's Capital account for $9,600 (77% of $123,000).
b. Assuming Liam is given a 20% interest in equity, we follow the same procedure as above, but adjust the percentages. Liam's share will be 20%. To record Liam's admission, we debit Liam's Capital account for $24,600 (20% of $123,000) and credit Lee's Capital account for $18,200 (23% of $123,000) and Kalpakan's Capital account for $6,400 (77% of $123,000). These journal entries reflect the adjustments made to the partners' capital accounts to include Liam's investment and distribute the ownership percentages among the partners.
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QUESTION 5 ______is the process of developing a roadmap for the replacement of important employees in an organization. Capabilities isolating. Environmental synthesizing. Contextual scanning. Succession planning. Position targeting. QUESTION 5 A(n) approach to international staffing ensures that managers from headquarters staff key positions in a subsidiary. Oregiocentric policy. polycentric policy. ethnocentric policy. integrated policy. contingency policy.
Succession planning is the process of developing a roadmap for the replacement of important employees in an organization.
Succession planning is the most essential process for an organization to assure its sustainability. It involves identifying the position that needs to be replaced or filled, identifying the skills required, and preparing the successor for that position.
The ethnocentric policy is an approach to international staffing ensures that managers from headquarters staff key positions in a subsidiary. It involves the transfer of managers from headquarters to overseas subsidiaries to manage foreign operations. In this policy, the headquarters of a multinational company hires and sends employees from the home country to foreign subsidiaries for key positions. In this approach, parent company's policies and practices are followed, and the headquarters retain a considerable degree of control over the subsidiary's operations.
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Which of the following is True about GDP? (a) It reflects the average citizen spending (b) It reflects the national income (c) It reflects the average change in costs (d) It reflects the Exports and imports of goods in the country
The correct answer is (b) It reflects the national income is True about GDP
Gross Domestic Product (GDP) is a measure of the total value of goods and services produced within a country's borders during a specific period. It represents the monetary value of all final goods and services produced by the factors of production (labor and capital) within a country's economy.
GDP is commonly used as an indicator of a country's economic performance and is often used to measure the size and growth of an economy. It reflects the total income generated by all individuals, businesses, and institutions within a country, including wages, profits, and taxes.
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A. Think about the ideal job you would like to obtain upon graduation from this program. Describe this job, the kind of manager you would like to report to, and the kind of organization you would be working in. Then answer the following questions (LM 5).
Describe you levels of expectancy and instrumentality for this job. Which outcomes would have high valence for you on this job? What steps would your manager take to influence your levels of expectancy, instrumentality, and valence?
Whom would you choose as a referent on this job? What steps should your manager take to make you feel that you were being equitably treated? What would you do if, after a year on the job, you experience underpayment inequity?
What goals would you strive to achieve on this job? Why? What role would your manager play in determining your goals?
What needs would you strive to satisfy on this job? Why? What role would your manager play in helping you satisfy these needs?
What behaviors would your manager positively reinforce on this job? Why? What positive reinforcers would your manager use?
Would there be any vicarious learning on this job? Why or why not?
What would be your level of self-efficacy on this job? Why would your self-efficacy be at this level? Should your manager take steps to boost your self-efficacy? If not, why not? If yes, what would these steps be?
The above prompt has to do with Job and or Career expectations. See Reponses below.
Job/Organizational ExpectationsThe level of expectations are described as follows
Ideal Job - Data Scientist in a tech company
Manager - Supportive and knowledgeable, promotes growth and learning
Organization - Innovative and collaborative tech company
Levels of Expectancy - High, as I have the necessary skills and knowledge
Levels of Instrumentality - High, as I believe my efforts will lead to desired outcomes
High Valence Outcomes - Challenging projects, opportunities for growth, recognition, competitive salary
Manager's Influence - Provide clear goals, feedback, and resources; offer growth opportunities and recognition; align rewards with performance
Referent - A senior data scientist or a successful colleague
Equitable Treatment - Fair compensation and benefits; transparent decision-making; regular communication and feedback
Underpayment Inequity - Discuss the issue with the manager and explore potential solutions, such as a salary adjustment or additional benefits
Goals - Develop advanced analytical skills, contribute to innovative projects, and achieve career advancement
Manager's Role - Set challenging yet attainable goals, provide guidance and support, offer feedback and recognition
Needs - Intellectual stimulation, growth opportunities, work-life balance, social connection
Manager's Role - Provide challenging projects, training and development opportunities, promote work-life balance, foster a positive work environment
Positive Reinforcement - Recognition for exceptional performance, opportunities for advancement and skill development
Positive Reinforcers - Praise, promotions, bonuses, increased responsibilities
Vicarious Learning - Yes, through collaboration, sharing best practices, and knowledge transfer among colleagues
Level of Self-Efficacy - Moderate to high, based on my skills, knowledge, and past successes
Manager's Role - Provide constructive feedback, assign appropriate tasks, offer support and mentorship
Boosting Self-Efficacy - Provide challenging yet achievable tasks, offer encouragement and support, provide opportunities for skill-building and growth
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In preparing its bank reconciliation at December 31, 2022, Granville Company had available the following data:
Balance per bank statement, 31/12/22 $40,035
Deposit in transit, 31/12/22 6,300
Outstanding cheques, 31/12/22 7,450
Amount erroneously credited by the bank to company's account, 28/12/22 200
Bank service charges for December 120
Granville Company's adjusted cash balance at December 31, 2022, is
A. $38,685.
B. $39,085.
C. $26,085.
D. $38,565.
Granville Company's adjusted cash balance on December 31, 2022, is $38,565.
Start with the balance per the bank statement, which is $40,035, then consider the following items:
1. Deposit in transit: This amount represents deposits made by Granville Company but not yet recorded by the bank. It should be added to the balance bank statement. The deposit in transit is $6,300.
2. Outstanding cheques: These are cheques issued by Granville Company but not yet cleared by the bank. We need to subtract the number of outstanding cheques from the balance bank statement. The outstanding cheques amount to $7,450.
3. Amount erroneously credited by the bank: This represents an error made by the bank, resulting in an overstatement of the company's account. We need to subtract this amount from the balance bank statement. The amount erroneously credited is $200.
4. Bank service charges: These charges are deducted from the balance bank statement. The bank service charges for December are $120.
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e Phoenix area, where it is Dadly needed. because the nirm nas received a permit, the piant Would DE ut it would cause some air pollution. The company could spend an additional $40 million at Year 0 to he environmental problem, but it would not be required to do so. The plant without mitigation would nitial outlay of $240.41 million, and the expected cash inflows would be $80 million per year for 5 yea rm does invest in mitigation, the annual inflows would be $84.33 million. Unemployment in the area lant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC . Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus s not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR: % Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minu not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR: % b. How should the environmental effects be dealt with when evaluating this project? I. The environmental effects if not mitigated would result in additional cash flows. Therefore, sinc- is legal without mitigation, there are no benefits to performing a "no mitigation" analysis. II. The environmental effects should be ignored since the plant is legal without mitigation. III. The environmental effects should be treated as a sunk cost and therefore ignored. IV. If the utility mitigates for the environmental effects, the project is not acceptable. However, be company chooses to do the project without mitigation, it needs to make sure that any costs of not mitigating for the environmental effects have been considered in the original analysis. V. The environmental effects should be treated as a remote possibility and should only be conside time in which they actually occur
The Net Present Value with mitigation is $26.19 million, and the Internal Rate of Return is 12.16%. The NPV without mitigation is $18.78 million, and the IRR is 10.55%.
When evaluating this project, the environmental effects should not be ignored. The environmental effects should be treated as a relevant factor that can impact the project's financial outcomes and long-term sustainability. Ignoring the environmental effects may lead to potential risks, reputational damage, and regulatory issues in the future. Therefore, it is important to consider the costs and benefits associated with mitigating the environmental effects in the analysis.
Treating the environmental effects as a sunk cost or a remote possibility would not be appropriate because they have a direct impact on the project's viability and financial performance. It is crucial to weigh the environmental consequences, assess the associated costs, and incorporate them into the decision-making process to ensure a comprehensive evaluation.
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(Saving for retirement—future value of an annuity) Selma and Patty Bouvier are twins and both work at the Springfield DMV. Selma and Patty Bouvier decide to save for retirement, which is 35 years away. They'll both receive an annual return of 11 percent on their investment over the next 35 years. Selma invests $1,900 per year at the end of each year only for the first 10 years of the 35-year period—for a total of $19,000 saved. Patty doesn't start saving for 10 years and then saves $1,900 per year at the end of each year for the remaining 25 years—for a total of $47,500 saved. How much will each of them have when they retire?
Selma invests $1,900 per year for 10 years at the end of each year. She invests at the end of each year which means the amount will be the ordinary annuity. We can use the future value of ordinary annuity formula for the calculation of Selma’s investment.
Given data;
Annual interest rate (r) = 11%
Selma’s investment = $1,900 per year for 10 years
Paty’s investment = $1,900 per year for the remaining 25 years
FVoa= PMT x [(1 + r)n – 1] / r
Where, PMT = Periodic Payment = $1,900
r = Annual interest rate = 11%
n = Number of years = 10 years
FVoa = $1,900 x [(1 + 0.11)¹⁰ – 1] / 0.11 = $43,937.07
Now, Patty invests $1,900 per year for the remaining 25 years at the end of each year. She invests at the end of each year which means the amount will be the ordinary annuity. We can use the future value of ordinary annuity formula for the calculation of Patty’s investment.
FVoa= PMT x [(1 + r)n – 1] / r
Where, PMT = Periodic Payment = $1,900
r = Annual interest rate = 11%
n = Number of years = 25 years
FVoa = $1,900 x [(1 + 0.11)²⁵ – 1] / 0.11 = $268,153.16
Therefore, Selma will have $43,937.07 and Patty will have $268,153.16 when they retire.
The future value of an annuity is calculated by multiplying the annuity payments by the interest factor. Selma invests $1,900 per year for 10 years, and Patty invests $1,900 per year for the remaining 25 years at the end of each year. Selma and Patty are twins and work at the Springfield DMV. Selma and Patty Bouvier decided to save for retirement, which is 35 years away. They will both receive an annual return of 11 percent on their investment over the next 35 years. Selma invests $1,900 per year at the end of each year only for the first 10 years of the 35-year period. In total, Selma saved $19,000. On the other hand, Patty did not start saving for ten years, and then saved $1,900 per year at the end of each year for the remaining 25 years. In total, Patty saved $47,500. The amount that Selma will have when she retires is $43,937.07, and the amount that Patty will have when she retires is $268,153.16. It shows that Selma has saved less than Patty and will have less money when she retires.
Thus, we can say that the calculation of future value of an annuity is very important for retirement planning. The future value of an annuity formula is an important part of retirement planning, and it is used to calculate the amount of money that will be available for retirement. The future value of an annuity formula is based on several factors, including the amount of the annuity payments, the length of the annuity, and the interest rate.
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.Lea’s outside basis is 100. She receives a liquidating distribution of multiple assets other than cash, inventory, and receivables. The combined inside basis of the distributed assets is 60. How will the 100 of basis be allocated to these assets?
Select one:
a. Pro-rata based on inside basis
b. Pro-rata based on outside basis
c. Pro-rata based on fair market value
The correct answer is: **b. Pro-rata based on outside basis**. When Lea receives a liquidating distribution of multiple assets other than cash, inventory, and receivables, the allocation of her outside basis of 100 to these assets will be done pro-rata based on the outside basis.
This means that the basis will be divided among the assets in proportion to their fair market values relative to the total fair market value of all the distributed assets.
In this case, since the inside basis of the distributed assets is 60, the allocation will be based on Lea's outside basis of 100. Each asset will receive a portion of the basis based on its fair market value relative to the total fair market value of all the assets being distributed.
Therefore, the basis of 100 will be allocated pro-rata based on the outside basis.
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