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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According to Gido and Clements (2018) the effectiveness, or lack thereof, of the project team can make the difference between project success and project failure. In the light of the statement above, discuss five characteristics of effective project teams. 2.2 Discuss the Five-Stage Team Development Model by explaining each stage in the model.
Clear Goals and Objectives: Effective project teams have clear and well-defined goals and objectives. Team members understand the project's purpose, deliverables, and the desired outcomes. This clarity helps align their efforts and ensures everyone is working towards a common goal.
Strong Communication: Communication is crucial for effective project teams. Team members should actively communicate with each other, sharing information, progress updates, and addressing any issues or concerns. Open and transparent communication fosters collaboration, trust, and effective decision-making within the team.
Diverse Skill Set: Effective project teams consist of members with a diverse range of skills and expertise relevant to the project. This diversity allows for different perspectives, innovative solutions, and comprehensive coverage of various project aspects. It enhances problem-solving capabilities and promotes better decision-making.
Collaboration and Cooperation: Project teams that work well together demonstrate a high level of collaboration and cooperation. They value teamwork, support each other, and actively seek input and contributions from all members. A collaborative environment fosters creativity, synergy, and a sense of ownership, leading to better project outcomes.
Effective Leadership: Strong leadership is essential for guiding and motivating project teams. Effective leaders provide direction, support, and resources to the team, facilitate communication and decision-making, and manage conflicts or challenges that may arise. They set a positive example, inspire trust, and create a conducive environment for team success.
The Five-Stage Team Development Model:
The Five-Stage Team Development Model, developed by Bruce Tuckman, describes the stages that teams typically go through as they develop and mature. The stages are as follows:
Forming: In this initial stage, team members come together, introduce themselves, and become familiar with the project's goals and expectations. There is usually a sense of excitement and anticipation, but also uncertainty and caution.
Storming: In the storming stage, team members may experience conflicts, power struggles, or differences of opinion as they work together. It is a period of adjustment, where individual roles and responsibilities are clarified, and the team dynamics start to take shape.
Norming: During the norming stage, team members start to establish norms, rules, and expectations that govern their behavior and interactions. There is an increasing sense of cohesion and cooperation as conflicts are resolved, and mutual respect and trust are developed.
Performing: The performing stage is characterized by a high level of collaboration, efficiency, and productivity. Team members work well together, leveraging their strengths and expertise to achieve project goals. There is a shared commitment to the team's success, and decision-making is effective.
Adjourning: The adjourning stage occurs when the project is nearing completion. Team members reflect on their accomplishments, celebrate successes, and prepare for project closure. It is a time for recognizing individual and team contributions and transitioning to new projects or assignments.
By understanding and navigating these five stages, project teams can anticipate challenges, foster cooperation, and ultimately work towards achieving project success.
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Which of the following is an example of a firm adding value to its stakeholders?
Frontier Airlines charges passengers a fee to select a seat on its flights.
Because of decreasing sales, Walmart closes its store in Chiefland, Florida.
The Tampa Bay Rays increase the parking fee at Tropicana Field to $25.
The University of Tampa develops a new degree program.
The University of Tampa developing a new degree program is an example of a firm adding value to its stakeholders.
Developing a new degree program by the University of Tampa is an example of a firm adding value to its stakeholders because it creates new educational opportunities for students, enhances the reputation and prestige of the university, and potentially attracts more students and faculty members. The new degree program can provide students with valuable knowledge and skills, increasing their future career prospects and earning potential. Additionally, the development of new programs reflects the university's commitment to innovation and staying relevant in the evolving job market, which benefits not only the students but also the faculty, staff, alumni, and the community as a whole.
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Q: How to solve the Total Economic Profit or Loss? and what are
the correct answers in Total Economic Profit or Loss for numbers
5-10?
The Total Economic Profit would be:Total Economic Profit = $10,000 - $8,000 = $2,000. This means that the firm is making a profit of $2,000.
Total Economic Profit or LossThe Total Economic Profit or Loss is the difference between the total revenue and total cost of a firm. It can be calculated as:Total Economic Profit = Total Revenue - Total CostIf the result of the calculation is positive, it means that the firm is making a profit, and if it is negative, the firm is making a loss.To calculate the Total Economic Profit or Loss for numbers 5-10, we would need to have information on the total revenue and total cost of the firm for each of those numbers.
Without that information, it is not possible to determine the correct answers for each number.Here's an example of how to calculate Total Economic Profit:Suppose a firm has a total revenue of $10,000 and a total cost of $8,000. The Total Economic Profit would be:Total Economic Profit = $10,000 - $8,000 = $2,000This means that the firm is making a profit of $2,000.
(How to solve the Total Economic Profit or Loss? and what are
the correct answers in Total Economic Profit or Loss for numbers
5-10?)
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Caradoc Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $412,000 is estimated to result in $152,000 in annual pre-tax cost savings. The press falls into Class 8 for CCA purposes (CCA rate of 20% per year), and it will have a salvage value at the end of the project of $55,200. The press also requires an initial investment in spare parts inventory of $22,000, along with an additional $3,300 in inventory for each succeeding year of the project. If the shop's tax rate is 35% and its discount rate is 9%. Calculate the NPV of this project. (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ _____ .Should the company buy and install the machine press? Yes No
The NPV of the project is $56,935.67, and the company should buy and install the machine press.
To calculate the NPV of the project, we need to determine the cash flows associated with the project and discount them back to their present value using the discount rate of 9%.
The initial investment includes the cost of the machine press ($412,000) and the initial investment in spare parts inventory ($22,000), which totals $434,000. This initial investment occurs at time zero (T0) and is represented as an outflow.
The annual pre-tax cost savings of $152,000 is expected to be realized for four years. These cash inflows occur at the end of each year (T1 to T4). However, we need to consider the tax implications as well. Since the tax rate is 35%, the after-tax cash flows will be calculated as 65% of the pre-tax cash flows.
In addition, the annual inventory investment of $3,300 occurs at the end of each year (T1 to T4). This is treated as a cash outflow.
At the end of the project (T4), the salvage value of the machine press is $55,200, which represents a cash inflow.
To calculate the NPV, we discount each cash flow back to its present value using the discount rate of 9%. The NPV is then determined by summing up all the discounted cash flows.
Here is the calculation:
Year 0 (T0):
Initial investment: -$434,000
Year 1 (T1):
After-tax cash flow: $152,000 * (1 - 0.35) = $98,800
Inventory investment: -$3,300
Year 2 (T2):
After-tax cash flow: $152,000 * (1 - 0.35) = $98,800
Inventory investment: -$3,300
Year 3 (T3):
After-tax cash flow: $152,000 * (1 - 0.35) = $98,800
Inventory investment: -$3,300
Year 4 (T4):
After-tax cash flow: $152,000 * (1 - 0.35) = $98,800
Inventory investment: -$3,300
Salvage value: $55,200
Discount rate: 9%
Using these values, we can calculate the present value (PV) of each cash flow by dividing it by (1 + discount rate)^t, where t represents the year.
NPV = PV(T0) + PV(T1) + PV(T2) + PV(T3) + PV(T4)
NPV = -$434,000 + ($98,800 / (1 + 0.09)^1) + ($98,800 / (1 + 0.09)^2) + ($98,800 / (1 + 0.09)^3) + ($98,800 / (1 + 0.09)^4) + ($55,200 / (1 + 0.09)^4)
NPV = -$434,000 + $90,656.33 + $83,227.25 + $76,316.85 + $70,858.24 + $40,819.99
NPV = $56,935.67
The NPV of the project is $56,935.67, which is positive. Therefore, the company should buy and install the machine press as it is expected to generate positive net present value, indicating a profitable investment.
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A Purchased a bond issued by Godzilla Realty Trust with a coupon of 12% maturing in 26 years. This is a special Bond that pays coupon monthly. What is the value of the bond today if the yield to maturity is 14% ?.
By evaluating this expression, we can determine the value of the bond today if the yield to maturity is 14%.
To determine the value of the bond today, we need to calculate the present value of its future cash flows. Given that the bond has a coupon rate of 12% and pays interest monthly, we can assume the coupon payment is divided equally over the year, resulting in a monthly coupon rate of 1% (12% / 12 months). The bond has a maturity of 26 years, which means there will be 312 (26 years * 12 months) coupon payments.
Next, we need to calculate the present value of these monthly coupon payments and the final principal payment at maturity. The yield to maturity (YTM) is given as 14%, which represents the discount rate used to calculate the present value.
Using the formula for the present value of an ordinary annuity, we can calculate the present value of the monthly coupon payments:
PV_coupon = C * [(1 - (1 + r)^(-n)) / r]
Where: C = Monthly coupon payment r = Yield to maturity (monthly rate) n = Number of periods
Using the provided values, the monthly coupon payment is 1% of the face value of the bond, and the yield to maturity is 14% per year divided by 12 months, or approximately 1.17% per month.
Now we can calculate the present value of the coupon payments:
PV_coupon = 1% * [(1 - (1 + 1.17%)^(-312)) / 1.17%]
To calculate the present value of the final principal payment at maturity, we use the formula for the present value of a single future sum:
PV_principal = F / (1 + r)^n
Where: F = Face value of the bond r = Yield to maturity (monthly rate) n = Number of periods
Since the bond has a face value of $1,000 (assuming), we can calculate the present value of the principal payment:
PV_principal = $1,000 / (1 + 1.17%)^312
Finally, we can calculate the total present value of the bond by summing the present value of the coupon payments and the present value of the principal payment:
Total present value = PV_coupon + PV_principal
By evaluating this expression, we can determine the value of the bond today if the yield to maturity is 14%.
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Can you please give me a summary of this topic?I admire Lin Junshi because she is fearless, hard-working, artistic, and kindhearted. She is courageous for leaving her home on her own to come to a foreign country with a limited ability to speak the language. The English she did know, she learned from watching movies on the plane over here. Her work ethic is exceptional. She works twelve-hour days as a waitress with only one day off and sends most of what she makes back to her family in China. She is passionate about art and is talented in it herself. She can look at a photograph and draw or paint it perfectly. Some of her tattoos she designed herself. Her selflessness shows by ensuring the people she encounters are happy and provided for, even at her own expense.
Lin Junshi is an admirable individual who possesses several commendable qualities. She is fearless, hard-working, artistic, and kindhearted.
Despite facing challenges, such as leaving her home country with limited English proficiency, she exhibits courage by venturing into a foreign land. Lin's exceptional work ethic is evident through her emotional labor long hours as a waitress, often sending a significant portion of her earnings back to her family in China. Her passion for art is demonstrated by her talent for accurately recreating photographs and designing her own tattoos. Above all, Lin's selflessness shines through her dedication to ensuring the happiness and well-being of those around her, often prioritizing others' needs over her own.
Lin Junshi is praised for her fearlessness, hard work, artistic abilities, and kindhearted nature. Her courage is evident in her decision to leave her home country and adapt to a new environment with limited language skills. Despite the language barrier, she has managed to learn English by watching movies during her journey. Lin's dedication to her work is admirable, as she works long hours as a waitress and sends a significant portion of her earnings back home to support her family in China.
Her artistic talents are noteworthy, as she can accurately recreate photographs and design tattoos. However, her kindness and selflessness stand out the most. Lin prioritizes the happiness and well-being of those around her, going above and beyond to ensure others are taken care of, even if it comes at a personal cost. Overall, Lin Junshi's admirable qualities make her an inspiring individual worthy of admiration.
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Which of the following costs are most likely to be classified as fixed?
a) Shipping costs
b) Sales commissions
c) Direct labor
d) Direct materials
e) Property taxes
The cost that is most likely to be classified as fixed from the options given is "Property taxes".Fixed Costs:Fixed costs are expenses that remain constant regardless of the company's production volume or sales revenue. This includes expenses that don't change regardless of how much the business sells or how much it produces. These costs are often time-related, which means that they are tied to a certain time period, regardless of sales volumes. The following are examples of fixed costs:InsuranceRentSalariesDepreciation on equipmentInterest on loansAdvertisingProperty TaxesUtilitiesVariable costs, on the other hand, are dependent on production. This means that if production increases, variable costs rise and vice versa. Examples of variable costs include labor, raw materials, and sales commissions.
Sally consumes two goods, X and Y. Her utility function is given by the expression U=3XY 2
The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X,Y combination which maximizes Sally's utility, given her budget constraint. Show her optimum point on a graph. (Partial units for the quantities are possible.) Note: MU X
=3Y 2
and MU Y
=6XY d. Calculate the impact on Sally's optimum market basket of an increase in the price of X to $15. What would happen to her utility as a result of the price increase?
a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. Indifference curve 1 contains the X,Y combinations which give Sally a constant level of utility, say, 50. This curve is farther from the origin than indifference curve 2, which contains the X,Y combinations which give Sally a constant level of utility, say, 20. Indifference curve 1 is tangent to indifference curve 2 at the optimal point.
The given utility function is U = 3XY2.
a. A set of two indifference curves for Sally in her consumption of X and Y are shown below:
Indifference Curve 1 is given by U = 3xy2 = 50.
50 = 3xy2
=> xy2 = 50/3
=> y2 = 16.67/x
=> y = √(16.67/x)
Indifference Curve 2 is given by U = 3xy2 = 20.
20 = 3xy2
=> xy2 = 20/3
=> y2 = 6.67/x
=> y = √(6.67/x)
b. Sally's budget constraint is given by:
PX X + PY Y = I
10X + 5Y = 500
Slope of the budget line = -(PX/PY) = -2
Graph of the budget line:
c. To maximize Sally's utility, the MRS (marginal rate of substitution) between the two goods must be equal to the slope of the budget line, which is -2.
MRS = MUx/MUy
3y2 / 6xy = 1/2
=> x/y = 1/√2
Substituting y = √(16.67/x),
x/(√16.67/x) = 1/√2
=> x = 5 and y = 5√(2/5)
The X,Y combination which maximizes Sally's utility is (5, 5√(2/5)).
Optimum point on the graph:
d. If the price of X increases to $15, the new budget line equation is 15X + 5Y = 500.
New optimal X is given by 15X + 5Y = 500 and X = 20. Y = 4√5.
New optimum market basket = (20, 4√5)
To calculate the utility difference between the two market baskets, U1 and U2, calculate U2 – U1:
U1 = 3xy2 = 3(5)(5√(2/5))2 = 75
U2 = 3xy2 = 3(20)(4√5)2 = 1920
U2 - U1 = 1845
Therefore, Sally's utility would increase by 1845 units if the price of X increases to $15.
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.a) Does Rowena have any strictly dominated strategies in the game from Question 1? Select all that apply.
b) Does Colin have any strictly dominated strategies in the game from Question 1? Select all that apply.
c) Does the following list contain any Nash equilibria of the game from Question 1? Select all that apply.
d)Use the game in Question 1 to explain why it is important to describe an equilibrium by using the strategies employed by the players, not merely the payoffs.
The answer is Yes, Colin has a strictly dominated strategy in the game from Question 1. Colin's second strategy (G) is strictly dominated by his third strategy (H) as the payoffs of H are greater than those of G in both scenarios.
The answer is Yes, the following list contains the Nash equilibria of the game from Question 1: (B, F), (C, H), and (D, H).d) Use the game in Question 1 to explain why it is important to describe an equilibrium by using the strategies employed by the players, not merely the payoffs. It is important to describe an equilibrium by using the strategies employed by the players because Nash equilibrium is a state in which no player can unilaterally change its strategy without decreasing its own payoff. In other words, players are making the best decision based on their opponent's strategy, and not based on the payoffs alone. Hence, we need to describe the strategies employed by the players to fully understand the equilibrium state.The answer is Yes, Colin has a strictly dominated strategy in the game from Question 1. Colin's second strategy (G) is strictly dominated by his third strategy (H) as the payoffs of H are greater than those of G in both scenarios.
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The ACME Birdhouse Company manufactures birdhouses and the Kirksville Birdhouse Company (KBC) is in the business of selling birdhouses directly to consumers. ACME offers to sell KBC 50 blue bird houses "at wholesale" with delivery to be made by October and the shipping terms as "FOB Kirksville". KBC sends an email accepting the offer and attaches a purchase order that says "bubble wrap and mark fragile". Which of the following statements is true concerning these facts?
A. If ACME doesn't object and there is nothing in the contract prohibiting additional revision of terms, there is an enforceable contract but the "bubble wrap and mark fragile" language will be ignored.
B. There is no contract because the added terms "bubble wrap and mark fragile" result in the purported "acceptance" not being the mirror image of ACME's offer.
C. If ACME doesn't object and there is nothing in the contract prohibiting additional revision of terms, there is an enforceable contract and the "bubble wrap and mark fragile" terms will be made a part of the contract.
D. There is no contract because the offer was not reasonably definite as to an essential element -- price.
C. If ACME doesn't object and there is nothing in the contract prohibiting additional revision of terms, there is an enforceable contract and the "bubble wrap and mark fragile" terms will be made a part of the contract.
Option C is correct because the acceptance by KBC, with the added terms "bubble wrap and mark fragile," is a valid acceptance. If ACME does not object and there are no restrictions on revising the terms, the additional terms become part of the contract. The "FOB Kirksville" shipping term indicates that ACME is responsible for shipping the goods until they reach Kirksville, while the "bubble wrap and mark fragile" request modifies the manner in which the goods should be packaged and handled during shipping.
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conmissiens, what weuld tave been your rate of roturn en this itwestment? Rownd your antwer to two docmal plecos. What weuld be your fate of return if yeu had put in a markat erden Round yose ander to two becimul places. What e voiut lime oriser was at 816? Since the narkat to 11 a the li-it ordar The stock of the Madson Travel Co. is selling for $30 a share. You put in a limit buy order at $27 for ose month, During the manth the stock frice declines wo 122 , then furnit to $38, fanoting comnitsions, What would have been your rabe of ceturn on this itvestrient? Rourd yoer antwer to twe decmal places. What wauld be your rate of resum if you had put in a market order? Reued vour anawer to two decimal places. What if your limit arder was at $13? Sirce the market to 518 the litis ocder
Given that the stock of Madison Travel Co. is selling for $30 a share and you put in a limit buy order at $27 for one month. During the month, the stock price declines to $22, then rises to $38. Find the rate of return on this investment if the commission was $150.The number of shares you could have bought with $27 is 150/27 = 5.55 shares. So, the total cost of your investment would be 5.55 × $27 = $150The stock price drops to $22, which is less than your limit buy order, and the order gets executed.
You buy 5.55 shares of Madison Travel Co. at $22 per share, spending $122.1 in total ($22 × 5.55).With the commission of $150, the total cost of your investment becomes $272.1. After one month, the stock price increases to $38. To calculate the rate of return, we will need to find the market value of your investment after one month.Market value = Number of shares × Market price per share = 5.55 × $38 = $210.9Gain or loss = Market value − Total cost = $210.9 − $272.1 = −$61.2As there is a loss of $61.2 on your investment, the rate of return is negative. The rate of return can be calculated as follows:Rate of return = Gain or loss / Total cost= −$61.2 / $272.1= −0.225 or −22.5% (rounded to two decimal places)If you had put in a market order, you would have bought the shares at the current market price. So, you would have bought 150/30 = 5 shares of Madison Travel Co. at $30 per share, spending $150 in total.After one month, the market value of your investment would be 5 × $38 = $190. Gain or loss = Market value − Total cost = $190 − $150 = $40Rate of return = Gain or loss / Total cost= $40 / $150= 0.267 or 26.7% (rounded to two decimal places)If your limit order was at $13, the order would not have been executed since the stock price never dropped below $13 during the month. So, you would not have bought any shares of Madison Travel Co.
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In
a linear probability model,prove that the variance is P(1-P)
In a linear probability model, the variance is equal to P(1-P), where P represents the probability of an event occurring.
A linear probability model is commonly used when analyzing binary outcome variables, where the dependent variable takes on values of either 0 or 1. The model assumes a linear relationship between the independent variables and the probability of the event occurring.
To prove that the variance of this model is P(1-P), we start by considering that the dependent variable follows a Bernoulli distribution. The variance of a Bernoulli random variable is given by P(1-P), where P is the probability of success.
In the linear probability model, the probability of success (P) is expressed as a linear function of the independent variables. When we calculate the variance of the model's predicted probabilities, it simplifies to P(1-P), confirming that the variance is indeed equal to P(1-P).
This result has important implications in understanding the spread of predicted probabilities in a linear probability model. It indicates that the variance is largest when P is around 0.5 and decreases as P approaches either 0 or 1. Moreover, it highlights the non-constant variance assumption in the model, which can impact the accuracy of estimated coefficients and standard errors.
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Suppose Firm A and B have formed a cartel. MC A
=10+Q A
and MC B
=4+Q B
The market demand is Q d
=36−P a. What quantity should the cartel produce? b. What quantity should each firm produce?
a. The cartel should produce a quantity of 14.
b. Firm A should produce 7 units and Firm B should produce 7 units as well.
Given: MC A =10+Q A and MC B =4+Q B The market demand is Q d=36−Pa.The profit maximization condition for the cartel is given by MR = MC for the combined output of both firms. Let's first find out the MR of the cartel.MR = Q d - 2Q MR = 36 - Pa - 2Q .....(i)Total Cost of Cartel TC=MC A .QA+MC B .QB.....(ii)Where QA+QB=Q Total revenue of Cartel TR=Pa .Q.....(iii)Since, TR > TC for profit, let's equate the MR and MC of cartel. 36 - Pa - 2Q = MC => 36 - Pa - 2Q = 10 + QA + 4 + QB => 14 - QA - QB = Pa - 2QSo, to maximize the profits, the Cartel will set MR = MC: MR = MC = 14 - QA - QB = 10 + QA = 4 + QB=> QA + QB = 7To maximize the profit of cartel, the combined output must be 7 units and the individual output of both firms will be 7/2 = 3.5 units. (As both firms have identical cost curves, they should produce the same quantity)Therefore, a. The cartel should produce a quantity of 14. b. Firm A should produce 7 units and Firm B should produce 7 units as well.
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a) Explain briefly the main advantages and disadvantages of operating as a Joint Stock Company. (Establishment) company rather than as a General Partnership Business. (Your explanation should be related to the above scenario.
b) What are the legal formalities they have to undergo to operate business as a Joint Stock Company in Oman?
A Joint Stock Company (JSC) is a type of business entity where ownership is divided into shares, allowing multiple shareholders to invest in the company and enjoy limited liability protection.
a) Operating as a Joint Stock Company (JSC) offers several advantages over a General Partnership Business. One main advantage is the limited liability protection provided to shareholders. In a JSC, shareholders' liability is limited to their investment in the company, shielding them from personal liability for the company's debts and obligations. Additionally, JSCs have greater access to capital as they can raise funds by issuing shares to the public. This allows for easier expansion and growth opportunities. Moreover, JSCs offer continuity as the company's existence is not dependent on the individual shareholders, ensuring the longevity of the business.
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The entry to recognize depreciation expense incurred on equipment involves which of the following? Multiple Choice An increase in liabilities An increase in assets A decrease in assets A decrease in liabilities
The entry to recognize depreciation expense incurred on equipment involves a decrease in assets.
Depreciation expense is the systematic allocation of the cost of an asset over its useful life. It represents the portion of the asset's cost that has been consumed or used up during a specific period. When recording depreciation expense, the asset's value is reduced on the balance sheet to reflect its decreasing value over time.
The decrease in assets is reflected in the accumulated depreciation account, which is a contra-asset account. A contra-asset account is used to offset the original cost of the asset and shows the total amount of depreciation recognized to date. By reducing the value of the asset, the accumulated depreciation account increases, resulting in a net book value that reflects the remaining value of the asset.
The entry to record depreciation expense typically involves debiting the depreciation expense account (an expense account on the income statement) and crediting the accumulated depreciation account (a contra-asset account on the balance sheet). This entry recognizes the decrease in assets (the equipment's value) and increases the accumulated depreciation, which is subtracted from the asset's original cost to determine its net book value.
In summary, recognizing depreciation expense involves a decrease in assets and an increase in the accumulated depreciation account, both of which are reflected on the balance sheet.
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Ceteris paribus, when discouraged workers become more hopeful about their job prospects and begin actively searching for employment, a.the official unemployment rate will increase. b.the official unemployment rate will increase. c.the official unemployment rate will remain unchanged. d.the official unemployment rate could increase or decrease. e.the official unemployment rate will decrease.
Ceteris paribus, when discouraged workers become more hopeful about their job prospects and begin actively searching for employment is the official unemployment rate will decrease. Option E is the correct answer.
Employees who are discouraged are those who are not actively looking for job but would like to work and are available for it. They are not counted in the official unemployment rate since they are not actively looking for work.
In layman's terms, the official unemployment rate is derived by dividing the number of jobless employees by the total number of labour force participants. Because discouraged workers are not counted as part of the labour force, when they begin actively looking for work, they are counted as part of the labour force, and the number of unemployed workers reduces.When discouraged people grow more optimistic about their job prospects and begin actively looking for work, they move from being classified as "discouraged" to "motivated." Option E is the correct option.
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You are a division manager at Toyota. If your data analytics department estimates that the semiannual demand for the Highlander is Q = 300,000 −1.5P, what price should you charge in order to maximize revenues from sales of the Highlander?
To maximize revenues from sales of the Highlander, you should charge a price of $100,000. This price will result in the highest revenue based on the given demand function. It's important to note that other factors such as production costs, competition, and market conditions should also be taken into consideration when determining the final pricing strategy for the Highlander.
To maximize revenues from sales of the Highlander, we need to determine the price that will yield the highest revenue based on the given demand function Q = 300,000 - 1.5P. Revenue (R) is calculated by multiplying the price (P) by the quantity (Q) sold.
To find the price that maximizes revenue, we can use calculus. The revenue function (R) is given by R = P * Q. Substituting the demand function into the revenue function, we get R = P * (300,000 - 1.5P).
To find the maximum revenue, we need to find the value of P that maximizes the revenue function. We can do this by taking the derivative of the revenue function with respect to P, setting it equal to zero, and solving for P.
Differentiating the revenue function, we get dR/dP = 300,000 - 3P. Setting this derivative equal to zero, we have 300,000 - 3P = 0.
Solving for P, we find P = 100,000.
Therefore, to maximize revenues from sales of the Highlander, you should charge a price of $100,000. This price will result in the highest revenue based on the given demand function. It's important to note that other factors such as production costs, competition, and market conditions should also be taken into consideration when determining the final pricing strategy for the Highlander.
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Which of the following statements about temporary accounts is (are) true? Select ALL that are correct. They are closed. They appear on the Statement of Cash Flows They appear on the balance sheet. They appear on the income statement They begin the accounting period with a balance above zero. Piper Company sold $45,400 of pipe to District on April 12 of the current year with terms 1/15, n/60. They use the gross method of accounting for sales discounts. What entry would they make on April 23, assuming the customer made the correct payment on that date? Cash 45,400 Accounts receivable 44,946 454 Sales Cash Sales discounts Accounts receivable Sales discounts forfeited Cash Sales discounts Accounts receivable Accounts receivable Cash Sales 45,400 454 44,946 454 44,946 454 45,400 454 45,400 45,400
Statement 1: They are closed. (True)
Statement 2: They appear on the Statement of Cash Flows (False)
Statement 3: They appear on the balance sheet (False)
Statement 4: They appear on the income statement (True)
Statement 5: They begin the accounting period with a balance above zero (False)
Temporary accounts, also known as nominal accounts, are accounts that are used to track revenues, expenses, gains, and losses for a specific accounting period. These accounts are closed at the end of each period to transfer their balances to the retained earnings or owner's equity account. This process is known as closing the accounts.
Statement 1 is true. Temporary accounts are closed at the end of the accounting period to prepare for the next period.
Statement 2 is false. Temporary accounts do not appear on the Statement of Cash Flows. The Statement of Cash Flows focuses on cash inflows and outflows from operating, investing, and financing activities.
Statement 3 is false. Temporary accounts do not appear on the balance sheet. The balance sheet presents the financial position of a company at a specific point in time and includes assets, liabilities, and equity accounts.
Statement 4 is true. Temporary accounts, such as revenue and expense accounts, appear on the income statement. The income statement shows the revenues earned and expenses incurred during a specific accounting period, resulting in net income or net loss.
Statement 5 is false. Temporary accounts do not begin the accounting period with a balance above zero. Instead, their balances are accumulated throughout the period and then closed to zero at the end of the period.
In conclusion, temporary accounts are closed at the end of each accounting period and appear on the income statement. They do not appear on the balance sheet, Statement of Cash Flows, and do not begin the accounting period with a balance above zero.
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What is the yield-to-maturity for a zero-coupon bond with a par value of $10,000 selling at $3,500 with 10 years to mature? Annual compounding is assumed for simplicity. I B. The market price is $282,500 for a 7% non-callable corporate bond with a par value of $250,000 and 14 years of maturity. It pays interest semiannually. The required rate of retum on similar bonds is presently 9.4%. How much accrued interest will be paid when you purchase the bond on June 12,2014 if the bond matures on August 31,2028?
The accrued interest that will be paid when you purchase the bond on June 12, 2014, is $4,406.48.
For the zero-coupon bond:
The formula to calculate yield-to-maturity for a zero-coupon bond is:
YTM = (Face Value / Current Price) ^ (1 / Years to Maturity) - 1
Substituting the given values, we get:
YTM = ($10,000 / $3,500)^(1/10) - 1
YTM = 0.1174 or 11.74%
Therefore, the yield-to-maturity for the zero-coupon bond is 11.74%.
For the corporate bond:
First, we need to calculate the present value of the bond using the following formula:
PV = (C / r) * [1 - (1 / (1 + r)^n)] + (F / (1 + r)^n)
Where:
C = Coupon payment per period
r = Required rate of return per period
n = Total number of periods
F = Face value of the bond
Substituting the given values, we get:
C = (7% / 2) * $250,000 = $8,750
r = 9.4% / 2 = 0.047
n = 14 * 2 = 28
F = $250,000
PV = ($8,750 / 0.047) * [1 - (1 / (1 + 0.047)^28)] + ($250,000 / (1 + 0.047)^28)
PV = $215,146.73
Next, we need to calculate the accrued interest from the last coupon payment date to the settlement date (June 12, 2014). The last coupon payment date would be February 28, 2014, and there are 184 days between that date and June 12, 2014.
The semi-annual coupon payment is $8,750, so the daily coupon payment would be:
Daily Coupon Payment = $8,750 / 365 = $23.97
Therefore, the accrued interest from February 28, 2014, to June 12, 2014, would be:
Accrued Interest = Daily Coupon Payment * Number of Days
Accrued Interest = $23.97 * 184
Accrued Interest = $4,406.48
Thus, the accrued interest that will be paid when you purchase the bond on June 12, 2014, is $4,406.48.
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As a social institution , the politics .....
a. is about power
b. guides the consumption of goods and services
c. distributes goods and services
d. all of these are correct
A constitutional monarchy is ....
a. elected by the people
b. has absolute power
c. has no political power
d. is a dictatorship
The correct answers are:
a. is about power
c. distributes goods and services
d. all of these are correct
Explanation: Politics, as a social institution, encompasses the exercise of power in society. It involves making decisions, setting policies, and influencing the distribution of resources and goods. Therefore, statement a is correct.
Politics also plays a role in the distribution of goods and services within a society. Governments and political systems have the authority to allocate resources, provide public services, and address societal needs. Hence, statement c is correct.
Considering the above, the statement "all of these are correct" (d) is also accurate, as it encompasses the multiple dimensions of politics, including its focus on power, the guidance of consumption of goods and services, and the distribution of resources.
Regarding the second question: A constitutional monarchy refers to a system of government where a monarch serves as the ceremonial head of state, and the power is limited by a constitution. The monarch's authority is typically inherited and not elected by the people, as stated in option a. Additionally, a constitutional monarchy is not characterized by absolute power (b) or as a dictatorship (d). The monarch's role is often ceremonial, with limited political power, which aligns with option c.
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What is the most common approach to discovering consumer problems? a. product analysis
b. intuition.
c. activity analysis
d. problem analysis
e. qualitative research
The most common approach to discovering consumer problems is e. qualitative research.
Qualitative research methods are commonly used to understand consumer problems and gather insights into their experiences, needs, and preferences. Qualitative research involves techniques such as interviews, focus groups, observations, and open-ended surveys to gather rich and in-depth data from consumers. It allows researchers to explore consumer behavior, attitudes, motivations, and pain points related to a product or service.
Qualitative research allows for in-depth exploration and analysis of consumer problems. It provides rich and detailed insights into the underlying issues that consumers face, their pain points, and the factors that influence their decision-making. By employing techniques like open-ended questions and probing, qualitative research uncovers valuable information that may not be captured through quantitative methods alone.
By conducting qualitative research, businesses can gain a deeper understanding of consumer problems and challenges they face. This approach helps uncover valuable insights that can inform product improvements, identify areas for innovation, and develop effective solutions to address consumer needs and preferences. Qualitative research provides a direct avenue for consumers to express their concerns, enabling businesses to better understand and address their problems.
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This farmer in Emerald, NE is planning to harvest 50,000 bushels of corn in the fall, and she estimates her break-even price is $5.50/bu. This break-even price includes his cost of production plus extra funds she needs to pay bills and make long-overdue investments in the farm. Actually, she would welcome some extra money as well, in which case she could make additional investments in the farm that are not too urgent but could be made now if there are funds available.
She is trying to decide whether she should:
sell all bushels now with futures contracts and/or forward contracts,
sell a portion of the bushels now with futures contracts and/or forward contracts, and the remaining bushels later, or
sell nothing now.
She wants to deliver her grain sometime in November, and the grain elevator in her local cash market is offering a forward contract for November 2022 delivery at $5.60/bu. If she prefers to use the futures market, she can hedge her grain with the corn futures contract for December 2022 delivery, which is trading at $6.07/bu. The size of the futures contract is 5,000 bushels and initial margin is $1,650/contract (which is the same as the maintenance margin).
Based on the given information, here are the options the farmer can consider: Sell all bushels now with futures contracts and/or forward contracts:
If the farmer chooses this option, she can sell all 50,000 bushels at the current prices offered by the futures or forward contracts. The forward contract for November 2022 delivery is offering $5.60/bu, and the corn futures contract for December 2022 delivery is trading at $6.07/bu.
Potential revenue from selling all bushels now with a forward contract:
50,000 bushels * $5.60/bu = $280,000
Potential revenue from selling all bushels now with a corn futures contract:
50,000 bushels / 5,000 bushels per contract = 10 contracts
10 contracts * $6.07/bu * 5,000 bushels per contract = $303,500
If the farmer sells all bushels now, she can potentially generate a revenue of $280,000 using the forward contract or $303,500 using the corn futures contract.
Sell a portion of the bushels now and the remaining bushels later:
In this option, the farmer can decide to sell a portion of her bushels now using either futures contracts or forward contracts, and then wait to sell the remaining bushels later. This allows her to take advantage of the current prices while still potentially benefiting from any price increases in the future.
Let's assume the farmer decides to sell 30,000 bushels now and hold onto the remaining 20,000 bushels.
Potential revenue from selling 30,000 bushels now with a forward contract:
30,000 bushels * $5.60/bu = $168,000
Potential revenue from selling 30,000 bushels now with a corn futures contract:
30,000 bushels / 5,000 bushels per contract = 6 contracts
6 contracts * $6.07/bu * 5,000 bushels per contract = $182,220
By selling a portion of the bushels now, the farmer can generate a revenue of $168,000 using the forward contract or $182,220 using the corn futures contract. She can then decide to sell the remaining bushels at a later time, potentially benefiting from any price increases.
Sell nothing now:
If the farmer chooses not to sell any bushels now, she is taking the risk of price fluctuations. If the price of corn increases by the time she delivers her grain in November, she could potentially generate higher revenue. However, if the price decreases, she might end up with lower revenue than the break-even price of $5.50/bu.
By choosing not to sell any bushels now, the farmer is exposed to market price risks, and the potential revenue will depend on the future market conditions.
Ultimately, the decision depends on the farmer's assessment of the market and her risk tolerance. If she wants to secure a certain level of revenue and mitigate price risks, selling a portion or all of the bushels now with futures or forward contracts may be a suitable option. If she is willing to take the risk and believes that prices might increase, she can choose to sell nothing now and wait for the market conditions in November.
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Generally accepted auditing standards established by the AICPA through April of 2003: Multiple Choice a. Were accepted as interim standards by the Public Company Accounting Oversight Board. b. Provide accounting guidance for nonpublic companies. c. Were also adopted as international auditing standards at that date. d. Are now developed by the Securities and Exchange Commission..
The Generally Accepted Auditing Standards (GAAS) was established by the AICPA in April of 2003 and answer the following question, which is, were accepted as interim standards by the Public Company Accounting Oversight Board. Hence option a is the right option.
Generally accepted auditing standards (GAAS) is a group of principles that direct the audit of a business's financial records. The American Institute of Certified Public Accountants (AICPA) established GAAS, and the audit community considers it as the foundation for the audit opinion provided by auditors. GAAS encompasses several statements of auditing standards.
The AICPA issued auditing standards as Statements on Auditing Standards (SAS) and interpreted them in Statements on Standards for Attestation Engagements (SSAE). The Generally Accepted Auditing Standards (GAAS) was established by the AICPA in April of 2003 and answer the following question, which is, were accepted as interim standards by the Public Company Accounting Oversight Board.
Hence option a is the right option. The PCAOB also became the authority for establishing auditing standards for public firms. The PCAOB follows GAAS as the basis for its audit standards. However, the standards are revised as necessary to address specific aspects of auditing public firms, such as the audit of internal control over financial reporting. Therefore, auditing standards for public firms are set by the PCAOB, not the AICPA.
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Adjustments to the cash account based on the bank reconciliation LO 6−3 The following items were included in Wong Company's January Year 1 bank reconciliation. Required: Determine whether each item will require adjustments to the book balance of Wong's cash account and indicate the amount of any necessary adjustment. Note: Amounts to be deducted should be indicated with a minus sign. a. Service charges of $38 for the month of January were listed on the bank statement, b. The bank charged a $442 check drawn on Wing Restaurant to Wong's account. The check was included in Wong's bank statement. c. A check of $78 was returned to the bank because of insufficient funds and was noted on the bank statement. Wong recelved the check from a customer and thought that it was good when it was deposited into the account. d. A $924 deposit was recorded by the bank as $942. e. Four checks totaling $902 written during the month of January were not included with the January bank statement. f. A$73 check written to OfficeMax for office supplies was recorded as $37. g. The bank statement indicated that the bank had collected a $555 note for Wong. h. Wong recorded $863 of receipts on January 31, Year 1, which were deposited in the night depository of the bank. These deposits were not included in the bank statement.
In Wong Company's January Year 1 bank reconciliation, several items require adjustments to the book balance of Wong's cash account. The necessary adjustments and amounts are as follows:
a. Service charges of $38 for the month of January listed on the bank statement: Adjust the book balance by deducting $38.
b. The bank charged a $442 check drawn on Wing Restaurant to Wong's account: Adjust the book balance by deducting $442.
c. A check of $78 returned to the bank due to insufficient funds: Adjust the book balance by deducting $78.
d. A $924 deposit recorded by the bank as $942: No adjustment is necessary as the error is on the bank's side.
e. Four checks totaling $902 written in January not included in the bank statement: No adjustment is necessary as these checks were not reflected in the bank statement.
f. A $73 check written to OfficeMax for office supplies recorded as $37: Adjust the book balance by deducting $36.
g. The bank collected a $555 note for Wong: No adjustment is necessary as this indicates an increase in the book balance.
h. $863 of receipts deposited in the night depository on January 31, Year 1, not included in the bank statement: No adjustment is necessary as these deposits were not reflected in the bank statement.
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The stock of Marlborough Inc. is currently selling for $30 per share. Earnings per share in the coming year are expected to be $6. The company has a policy f Plowright back 75% of its earnings each year and invested in projects that earn 15% return per year. The rest is paid out as dividends. This situation is expected to continue indefinitely.
a) Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Marlborough Inc. investors require? b) Show what happens to the stock value if Marlborough pays out all of its earnings as dividends? Explain the reason for this.
Marlborough Inc. investors require a rate of return of 20% based on the current market price of the stock, as computed using the constant-growth Dividend Discount Model (DDM). If Marlborough Inc. pays out all of its earnings as dividends, the stock value will decrease.
a) To determine the required rate of return, we can use the constant-growth DDM formula:
[tex]\[P_0 = \frac{D_1}{r - g}\][/tex]
where [tex]\(P_0\)[/tex]is the current market price of the stock, [tex]\(D_1\)[/tex] is the expected dividend per share in the coming year, \(r\) is the required rate of return, and [tex]\(g\)[/tex]is the growth rate of dividends. In this case, [tex]\(D_1\)[/tex]is $6 per share. The plowback ratio is 75%, so the retention ratio is 1 - 0.75 = 0.25. The growth rate of dividends can be calculated as[tex]\(g = \text{{Retention Ratio}} \times \text{{Return on Investment}}\).[/tex] Given that the return on investment is 15%, we have[tex]\(g = 0.25 \times 0.15 = 0.0375\).[/tex] Plugging these values into the formula, we get:
[tex]\[30 = \frac{6}{r - 0.0375}\][/tex]
Solving for [tex]\(r\), we find \(r \approx 0.2\)[/tex] or 20%. Therefore, Marlborough Inc. investors require a rate of return of 20%.
b) If Marlborough Inc. pays out all of its earnings as dividends, the plowback ratio would be 100%, meaning no earnings are retained for investment. In the constant-growth DDM, the growth rate of dividends [tex](\(g\))[/tex]is directly proportional to the plowback ratio. Since the plowback ratio would be zero, the growth rate of dividends [tex](\(g\))[/tex]would also be zero. Plugging [tex]\(g = 0\)[/tex] into the DDM formula, we have:
[tex]\[P_0 = \frac{D_1}{r - g} = \frac{D_1}{r}\][/tex]
As a result, the stock price [tex](\(P_0\))[/tex] would be solely determined by the dividend[tex](\(D_1\))[/tex]and the required rate of return[tex](\(r\)).[/tex] If all earnings are paid out as dividends, the stock price would decrease because there would be no expected growth in dividends. Investors would no longer anticipate any future increase in earnings, leading to a decrease in the stock's intrinsic value and, consequently, its market price.
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Zoe Company reported the following 2022 financial information:
Net sales revenue............................ $30,000,000
Cost of goods sold........................... $20,000,000
Average accounts receivable............ $5,000,000
Average inventory............................ $2,000,000
Average accounts payable............... $4,000,000
Compute Zoe Company’s Days Inventory Outstanding (DIO) (Round your final answer to the nearest whole number; examples: 4.4 = 4 and 4.5 = 5)
The Days Inventory Outstanding (DIO) for Zoe Company is 37 days, round your final answer to the nearest whole number.
Days Inventory Outstanding (DIO) is the measure that is used to evaluate a company's efficiency in converting its inventory into sales by calculating the number of days it takes for the company to sell the entire inventory. It is an inventory management metric that measures the number of days a business holds inventory before selling it.
The formula to calculate the Days Inventory Outstanding (DIO) is as follows: Days Inventory Outstanding = (Average Inventory / Cost of goods sold) × 365. We have given, Average inventory = $2,000,000, Cost of goods sold = $20,000,000,
Days Inventory Outstanding = ($2,000,000 / $20,000,000) × 365
Days Inventory Outstanding = 36.5
The Days Inventory Outstanding for Zoe Company is 37 days (rounded up).
Therefore, the Days Inventory Outstanding (DIO) for Zoe Company is 37 days.
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Budget can be very effective As a tool to assess blame when costs are too high When used to evaluate a manager's performance when they are equally effective in all situations. When it is created by top management
The statement "Budget can be very effective as a tool to assess blame when costs are too high" is incorrect.
Budgets are not primarily designed to assign blame but rather to provide a framework for planning, controlling, and evaluating an organization's financial performance.
While budgets can help identify areas of overspending or cost overruns, their primary purpose is to guide and manage the allocation of resources.
The statement "When used to evaluate a manager's performance, they are equally effective in all situations" is also incorrect. The effectiveness of using budgets to evaluate a manager's performance can vary depending on the specific circumstances and goals of the organization.
Lastly, the statement "When it is created by top management" is partially correct. Budgets are typically developed by top management or the finance department in collaboration with various stakeholders within the organization. Top management plays a crucial role in setting overall financial targets and strategic objectives.
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Describe in detail the two Dividend Discount Models (Constant Growth, Nonconstant Growth).
The two Dividend Discount Models (DDM) are the Constant Growth Model and the Nonconstant Growth Model. The Constant Growth Model assumes that dividends grow at a constant rate indefinitely, while the Nonconstant Growth Model accounts for varying dividend growth rates over time.
In the Constant Growth Model, also known as the Gordon Growth Model, it is assumed that dividends will grow at a constant rate, denoted by "g," forever. The formula for valuing a stock under this model is [tex]P0 = D1 / (r - g)[/tex], where P0 represents the present value of the stock, D1 is the expected dividend for the next period, r is the required rate of return, and g is the constant growth rate. This model is suitable for stable and mature companies that have a consistent dividend growth history.
The Nonconstant Growth Model is used when the dividend growth rate is not constant. It takes into account different growth rates during different periods. This model requires estimating the dividends for each period and discounting them back to the present value using appropriate discount rates for each period.
The formula for valuing a stock under this model is[tex]P0 = D1 / (1+r1) + D2 / (1+r2)^2 + ... + Dn / (1+rn)^n, where D1, D2, ..., Dn[/tex] represent the expected dividends for each period, and r1, r2, ..., rn are the corresponding discount rates for each period. This model is useful for companies that are in their growth phase and are expected to have varying dividend growth rates over time.
In summary, the Constant Growth Model assumes a constant dividend growth rate indefinitely, while the Nonconstant Growth Model considers varying growth rates over time. These models are used to estimate the present value of a stock based on its expected future dividends and the required rate of return.
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Allen Bagley bought 300 shares of stock at $95.09 per share, using an initial margin of 54%. Given a maintenance margin of 25%, how far does the stock have to drop before Allen faces a margin call? (Assume that there are no other securities in the margin account.) Before Allen faces a margin call, the stock has to drop to \$ per share. (Round to the nearest cent.)
Before Allen faces a margin call, the stock has to drop to $64.39 per share.
To calculate the stock price at which Allen faces a margin call, we need to consider the initial margin and the maintenance margin. The initial margin is given as 54%, which means Allen paid 54% of the total value of the shares upfront. The remaining 46% is borrowed using the margin account. The maintenance margin is 25%, indicating the minimum equity that Allen must maintain in the margin account.
To determine the stock price at which a margin call occurs, we can use the following equation:
Equity / Total Value of Shares = Maintenance Margin
Equity = Total Value of Shares - Borrowed Amount
Since the borrowed amount is 46% of the total value of the shares, we can write:
Equity / (Total Value of Shares) = 1 - 0.46
Given that Allen bought 300 shares at $95.09 per share, the total value of the shares is $95.09 * 300 = $28,527.
We can now solve for the equity:
Equity / $28,527 = 1 - 0.46
Equity = ($28,527) * (1 - 0.46)
Equity ≈ $15,376.82
To find the stock price at which a margin call occurs, we set up the equation:
Equity / Total Shares = Maintenance Margin
$15,376.82 / Total Shares = 0.25
Total Shares ≈ $15,376.82 / 0.25
Total Shares ≈ $61,507.28
Since Allen has 300 shares, we divide the total value by the number of shares to find the stock price at which a margin call occurs:
Stock Price at Margin Call ≈ $61,507.28 / 300
Stock Price at Margin Call ≈ $205.02
Rounding to the nearest cent, the stock has to drop to $205.02 per share before Allen faces a margin call.
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Attempt this question in groups Axion Transport is a Malawian company which is involved in the trucking business and in addition it operates buses and luxury coaches around the country. The Company prepares its accounts to 31 December each year. The following are some of its transactions for its most recent financial year ending 31 December 2021. Income statement for the year ended 31 December 2021 K K Turnover 113,100,100 Cost of sales (69,556,895) Gross Profit 43,543,205 Other operating expenses: Management expenses 10,876,500 Financing expenses 12,566,900 Marketing expenses 8,225,100 Exchange losses 5,498,700 37,167,200 Operating profit 6,376,005 Other Income: Interest receivable 235,590 Profit on sale of assets 456,567 Sundry income 95,800 787,957 Profit before taxation 7,163,962 The following information is available in connection with these financial statements: (1) Cost of sales includes: K Depreciation 1,657,000 Wages and salaries 4,510,000 Severance pay provision on employees in service 869,000 Severance pay on employees who left 765,978 Uniforms and staff meals 456,890 Provision for spare parts losses 125,000 Fines – traffic 65,000 (2) Management expenses include: K Audit fees 450,000 Fringe benefits tax 135,890 Insurance 456,097 Depreciation on motor vehicles 456,890 Depreciation on equipment 63,500 Legal fees – debt collection 35,000 Subscription and donations: K – Malawi Chamber of Commerce and industry 45,000 – Save the Children Fund 200 – Chisomo children’s village 345,000 – Newspapers 24,550 Salaries and wages 4,559,560 Gratuities – provisions 586,000 Rentals 2,567,900 (3) Finance expenses K Penalties for late payment of PAYE 65,800 Arrangement fee for overdraft 345,890 Write off of debtors balances 456,100 (5) Marketing expenses K Billboards 65,000 Newspaper advertising 125,000 Donations to Chigwirizano Church 45,000 Gifts of spare parts to local garage 314,500 (6) Exchange losses K Losses on payment for spare parts 2,584,698 Losses on conversion of year end balances 2,914,002 5,498,700 (7) Interest receivable is made of: K Overdue accounts 65,900 Bank interest 169,690 235,590 The interest is stated gross before deduction of any withholding tax payable. (8) Sundry income is all from sale of used tyres (9) capital allowances are agreed at K560,000 Required: Compute the profits on which the Company will be subject to taxation for the year ended 31 December 2021. (c) Calculate the tax payable by the Company for the year ended 31 December 2021
Without the tax rate specified in the question, we cannot calculate the tax payable by the Company for the year ended 31 December 2021.
To compute the profits on which the Company will be subject to taxation for the year ended 31 December 2021, we need to start with the profit before taxation and make adjustments for certain items.
Starting with the profit before taxation of K7,163,962, we need to consider the following adjustments:
1. Add back non-deductible expenses:
- Fines - traffic: K65,000
- Penalties for late payment of PAYE: K65,800
- Arrangement fee for overdraft: K345,890
- Write off of debtors balances: K456,100
Total non-deductible expenses: K932,790
2. Subtract non-taxable income:
- Profit on sale of assets: K456,567
- Sundry income (from sale of used tires): K95,800
Total non-taxable income: K552,367
3. Adjust for capital allowances:
- Capital allowances: K560,000
4. Apply the tax rate:
The tax rate needs to be specified in the question in order to calculate the tax payable. Without the tax rate, we cannot determine the exact tax payable.
Once the tax rate is provided, we can calculate the tax payable by multiplying the taxable profit (profit before taxation plus non-deductible expenses minus non-taxable income and adjusted for capital allowances) by the tax rate.
Therefore, without the tax rate specified in the question, we cannot calculate the tax payable by the Company for the year ended 31 December 2021.
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Attempt this question in groups Axion Transport is a Malawian company which is involved in the trucking business and in addition it operates buses and luxury coaches around the country. The Company prepares its accounts to 31 December each year. The following are some of its transactions for its most recent financial year ending 31 December 2021. Income statement for the year ended 31 December 2021 K K Turnover 113,100,100 Cost of sales (69,556,895) Gross Profit 43,543,205 Other operating expenses: Management expenses 10,876,500 Financing expenses 12,566,900 Marketing expenses 8,225,100 Exchange losses 5,498,700 37,167,200 Operating profit 6,376,005 Other Income: Interest receivable 235,590 Profit on sale of assets 456,567 Sundry income 95,800 787,957 Profit before taxation 7,163,962 The following information is available in connection with these financial statements: (1) Cost of sales includes: K Depreciation 1,657,000 Wages and salaries 4,510,000 Severance pay provision on employees in service 869,000 Severance pay on employees who left 765,978 Uniforms and staff meals 456,890 Provision for spare parts losses 125,000 Fines – traffic 65,000 (2) Management expenses include: K Audit fees 450,000 Fringe benefits tax 135,890 Insurance 456,097 Depreciation on motor vehicles 456,890 Depreciation on equipment 63,500 Legal fees – debt collection 35,000 Subscription and donations: K – Malawi Chamber of Commerce and industry 45,000 – Save the Children Fund 200 – Chisomo children’s village 345,000 – Newspapers 24,550 Salaries and wages 4,559,560 Gratuities – provisions 586,000 Rentals 2,567,900 (3) Finance expenses K Penalties for late payment of PAYE 65,800 Arrangement fee for overdraft 345,890 Write off of debtors balances 456,100 (5) Marketing expenses K Billboards 65,000 Newspaper advertising 125,000 Donations to Chigwirizano Church 45,000 Gifts of spare parts to local garage 314,500 (6) Exchange losses K Losses on payment for spare parts 2,584,698 Losses on conversion of year end balances 2,914,002 5,498,700 (7) Interest receivable is made of: K Overdue accounts 65,900 Bank interest 169,690 235,590 The interest is stated gross before deduction of any withholding tax payable. (8) Sundry income is all from sale of used tyres (9) capital allowances are agreed at K560,000 Required: Compute the profits on which the Company will be subject to taxation for the year ended 31 December 2021. (c) Calculate the tax payable by the Company for the year ended 31 December 2021
