The amount by which the break-even point in dollars will decrease if Rubber City purchases the new CNC machine is $84,480.
Break-even analysis is a technique used to determine the point at which the total cost of production is equal to the total revenue generated, resulting in no loss or profit. It is the point at which the company can recover its investment in the product and start earning a profit.Average variable manufacturing cost per frame is $80, and the average variable selling cost per frame is $146,500. It follows that the total variable cost per unit is $146,580 ($80 + $146,500).The total fixed costs for the current system are $534,000 ($146,500 + $387,500).The total revenue for the current system is $960,000 ($1,280 × 750).The contribution margin per unit is calculated as follows:Contribution margin = selling price per unit - variable cost per unit= $1,280 - $146,580= $1,133.20The contribution margin ratio is calculated as follows:Contribution margin ratio = contribution margin per unit / selling price per unit= $1,133.20 / $1,280= 0.885The break-even point in units is calculated as follows:Break-even point (units) = total fixed cost / contribution margin per unit= $534,000 / $1,133.20= 471.26Therefore, the break-even point in units is 472.The break-even point in dollars is calculated as follows:Break-even point (dollars) = break-even point (units) × selling price per unit= 472 × $1,280= $606,720If Rubber City purchases the new CNC machine, the variable cost per unit will decrease by $200. As a result, the new variable cost per unit will be $146,380 ($146,580 - $200).The new total fixed costs will be $548,162 ($534,000 + $14,162).The new contribution margin per unit will be $1,333.20 ($1,280 - $146,380).The new contribution margin ratio will be 0.904 ($1,333.20 / $1,280).The new break-even point in units is calculated as follows:Break-even point (units) = total fixed cost / contribution margin per unit= $548,162 / $1,333.20= 411.52Therefore, the new break-even point in units is 412.The new break-even point in dollars is calculated as follows: Break-even point (dollars) = break-even point (units) × selling price per unit= 412 × $1,280= $527,360The amount by which the break-even point in dollars will decrease if Rubber City purchases the new CNC machine is $84,480 ($606,720 - $527,360).Therefore, option D, $84,480, is the correct answer.
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Suppose that the monopolist can produce with total cost: TC=10Q. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q 1 =120−l 1 and Q 2 =240−4l 2 . Suppose that consumers can mail the product from cheaper location to a more expensive location at a certain cost. What would be the critical mailing cost above which consumers do not have such an incentive?
a. 15
b. 30
c. 20
d. 10
The determine the critical mailing cost above which consumers do not have an incentive to mail the product, we need to compare the prices of the monopolist's goods in the two markets.
Let's assume that the monopolist sets the same price in both markets. In that case, the price of the good in the first market would be P1 = 120 - Q1 and the price in the second market would be P2 = 240 - 4Q2.If consumers can mail the product from the cheaper location (first market) to the more expensive location (second market) at a cost, they would do so as long as the price difference between the two markets exceeds the mailing cost.So, the critical mailing cost would be the price difference between the two markets: P2 - P1.
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A pizza parlor produces pizza using two inputs: bakers and servers. The price of servers equals the price of bankers (i.e. they are paid the same wages), yet the firm uses twice as many servers as bakers in its optimal production plan. Therefore, at the optimum, the marginal product of servers must be higher than that of bakers provide a good explanation for your answer
The marginal product of servers is higher than that of bakers in the pizza parlor's optimal production plan because the firm uses twice as many servers as bakers, despite paying them the same wages.
The marginal product measures the additional output gained by adding one more unit of an input while keeping other inputs constant. In this case, the pizza parlor's optimal production plan indicates that it is more efficient to employ twice as many servers as bakers. This suggests that the marginal product of servers is higher than that of bakers.
There are several reasons why the marginal product of servers may be higher. Firstly, servers directly interact with customers and play a crucial role in providing customer service. They take orders, deliver pizzas, and ensure customer satisfaction. By having more servers, the parlor can attend to customers quickly and efficiently, resulting in higher customer turnover and increased sales.
Secondly, having additional servers allows for better division of labor. While bakers focus on preparing pizzas, servers can handle various customer-related tasks simultaneously, such as taking orders, serving drinks, and clearing tables. This specialization and multitasking capability enable servers to enhance overall productivity and output.
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Using the Accounting Equation Assets = Liabilities + Equity, analyze each transaction and show its effects as increases or decreases in the appropriate column. Determine the total balance for both the Assets side and the Liabilities + Equity side showing that both sides are equal.
Owner Jiwanjot Kaur invested cash $10,000
Owner billed a customer $600 cash for services done $600 Cash received for work done for a client $7,000
Government grant applied for but still in processing, no approval yet. $ 10,000
Salary paid to assistant $ 4,500
Work completed for a customer on credit $1,250
Using the Accounting Equation Assets = Liabilities + Equity, If the accounting equation is balance in both the sides.
Total balance for Assets = $10,000 + $600 + $7,000 + $6,250
Total balance for Assets = $23,850
Total balance for Liabilities + Equity = $0 + $10,000 + $600 + $0 + $6,250 + $7,000 - $4,500
Total balance for Liabilities + Equity = $23,850
Owner Jiwanjot AUR made a $10,000 cash investment.
An increase of $10,000 in fundsOwner's Equity Rises by $10,000The owner charged a client $600 in cash for the services rendered.
Increase of $600 in Accounts Receivablea $600 increase in revenue$7,000 was paid for services rendered to a client.
An increase of $7,000 in funds
$7.00 increase in revenue
Government grant application submitted; however, approval is still pending. $10,000
Assistant's pay was $4,500.
Cash decrease of $4,500
Owner's Equity Drops by $4,500
accomplished work for a client on credit $1,250
$1,250 more in accounts receivable
An increase of $1,250 in sales
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to which element of the marketing mix is viral marketing most closely related?
Viral marketing is closely related to the promotion element of the marketing mix.
Viral marketing is a type of promotional method that uses social media and other digital channels to spread a message or idea rapidly and widely. This form of marketing is intended to generate buzz, create excitement, and ultimately drive sales for a product or service.
The effectiveness of viral marketing relies on creating content that is shareable, memorable, and engaging. The content needs to be something that people want to share with their friends and family, and it needs to be easily shareable on social media.
The effectiveness of viral marketing relies on creating content that is shareable, memorable, and engaging. The content needs to be something that people want to share with their friends and family, and it needs to be easily shareable on social media.
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Greg Morrison recently graduated from construction engineering school. He is considering opening his own construction business providing module housing. Providing module homes is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served. Assume the annual fixed cost of operations is $800,000. Further assume that the only significant variable cost relates to the module homes, themselves. An average module home costs $12,000. Greg's banker has asked a variety of questions in contemplation of providing a loan for this business:
(a) If the average family is charged $18,000 for installation of a module home, how many families must be served to clear the break-even point?
(b) If the banker believes Greg will only serve 100 families during the first year in business, how much will the business lose during its first year of operation?
(c) If Greg believes his profits will be at least $100,000 during the first year, how much is he anticipating for total revenue?
(d) The banker has suggested that Greg can reduce his fixed costs by $150,000 if he will not buy any vehicles. Greg can instead rent vehicles as needed. The variable cost of renting is $700 per family served. Will this suggestion help Greg reach the break-even point sooner?
We must compute the number of families that must be serviced in order to cover the fixed costs in order to estimate the break-even threshold. Fixed costs / Contribution margin per family = Break-even point (in terms of the number of families).
The difference between the selling price and the variable cost per family is the contribution margin per family. Cost of a typical module home is $12,000 Selling price is $18,000 for each family. Variable cost per family equals $18,000 minus $12,000, or $6,000 in contribution margin per family. Break-even point is equal to 800,000/6,000, or 133.33 families. Greg would need to serve at least 134 families to break even because you cannot have a quarter of a family. If the banker thinks Greg will only serve 100 customers.
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.You are a manager of a local Walmart store which sells groceries and other products to 30,000 customers per week. Currently, you employ 80 cashiers and 10 automated check-out machines (customers scan and pay for their purchases without a cashier’s assistance). Each cashier is paid wages and fringe benefits for $800 per week. It also costs you $800 per weeks to lease each machine (price includes installation, software support, and servicing). A vendor offered to lease you additional machines at this price. You estimate that by leasing 10 more machines you can meet your service requirements with 30 fewer cashiers. Should you lease the additional machines or continue to service your customers with your current input mix?
a. You estimate that you can service 30,000 customers with the following combinations of cashiers and machines. What combination of inputs has the lowest possible cost?
Cashiers
Machines
80
10
50
20
30
30
22
40
15
50
12
60
b. Plot the input combinations in the table on a graph that contains cashiers on the vertical axis and machines on the horizontal axis. Connects the points to draw an isoquant curve. Add the cost minimizing isocost curve to the graph (you can derive this line from the input prices and the minimized total cost). What is slope of the isocost curve? What is the slope of the isoquant curve at the optimal input combination?
c. Suppose the marginal product of cashiers at the optimal input combination is 500. What does this mean? What is the marginal product of machines at this point?
d. Are there any other factors that should be considered in making this decision on the optimal mix of machines and cashiers.
a. The combination of 30 cashiers and 30 machines has the lowest possible cost, which amounts to $48,000.
b. The slope of the isocost curve is -1 (the negative ratio of input prices). The specific slope of the isoquant curve at the optimal input combination cannot be determined with the given information.
c. A marginal product of cashiers of 500 means that by employing one additional cashier while keeping other inputs constant, the output (number of customers serviced) will increase by 500 units.
d. Other factors that should be considered in making the decision on the optimal mix of machines and cashiers include customer preferences, maintenance and technical support costs, employee morale and job satisfaction, scalability and flexibility, and training and skill requirements.
a. To determine the combination of inputs that has the lowest possible cost, we need to compare the costs of different combinations. Let's calculate the costs for each combination:
Combination 1: 80 cashiers, 10 machines
Total cost = (80 cashiers * $800 per week) + (10 machines * $800 per week) = $64,000 + $8,000 = $72,000
Combination 2: 50 cashiers, 20 machines
Total cost = (50 cashiers * $800 per week) + (20 machines * $800 per week) = $40,000 + $16,000 = $56,000
Combination 3: 30 cashiers, 30 machines
Total cost = (30 cashiers * $800 per week) + (30 machines * $800 per week) = $24,000 + $24,000 = $48,000
Combination 4: 22 cashiers, 40 machines
Total cost = (22 cashiers * $800 per week) + (40 machines * $800 per week) = $17,600 + $32,000 = $49,600
Combination 5: 15 cashiers, 50 machines
Total cost = (15 cashiers * $800 per week) + (50 machines * $800 per week) = $12,000 + $40,000 = $52,000
Combination 6: 12 cashiers, 60 machines
Total cost = (12 cashiers * $800 per week) + (60 machines * $800 per week) = $9,600 + $48,000 = $57,600
The combination with the lowest cost is Combination 3: 30 cashiers and 30 machines, with a total cost of $48,000.
b. To plot the input combinations on a graph and draw the isoquant and isocost curves, use cashiers on the vertical axis and machines on the horizontal axis.
The slope of the isocost curve represents the ratio of the input prices. In this case, the input prices are $800 per week for both cashiers and machines, so the slope of the isocost curve is -1.
The slope of the isoquant curve at the optimal input combination represents the marginal rate of technical substitution (MRTS). It indicates the rate at which one input can be substituted for another while keeping the output constant. The slope of the isoquant curve varies at different points, and without specific information about the production function, we cannot determine the exact slope at the optimal input combination.
c. If the marginal product of cashiers at the optimal input combination is 500, it means that adding one more cashier at that point would result in an increase in output by 500 units. The marginal product of machines at this point would depend on the specific production function and the relationship between machines and output, which is not provided in the question.
d. Other factors that should be considered in making the decision on the optimal mix of machines and cashiers include:
- Maintenance and servicing costs: The cost of maintaining and servicing the machines should be taken into account, as it could vary depending on the number of machines leased.
- Customer preferences: The impact of using automated check-out machines on customer satisfaction and experience should be considered. Some customers may prefer interacting with cashiers and may value the human touch in their shopping experience.
- Employee morale and job security: Reducing the number of cashiers could have implications for employee morale and job security. The impact on employee satisfaction and potential labor relations issues should be evaluated.
- Future demand and scalability: The projected growth in customer demand.
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Suppose that the S\&P 500 , with a beta of 1.0, has an expected return of 16% and T-bills provide a risk-free return of 7%. a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S\&P 500 of (i) 0 ; (ii) 0.25; (iii) 0.50; (iv) 0.75; (v) 1.0 ? (Leave no cells blank - be certain to enter " 0 " wherever required. Do not round intermediate calculations. Enter the value of Expected return as a percentage rounded to 2 decimal places and value of Beta rounded to 2 decimal places.) b. How does expected return vary with beta? (Do not round intermediate calculations.)
The expected return and beta of portfolios constructed from the S&P 500 and T-bills with different weights in the S&P 500 would be as follows:
(i) Expected Return: 7%, Beta: 0
(ii) Expected Return: 10.75%, Beta: 0.25
(iii) Expected Return: 14.5%, Beta: 0.5
(iv) Expected Return: 18.25%, Beta: 0.75
(v) Expected Return: 22%, Beta: 1.0
The expected return generally increases with an increase in beta. This is because beta measures the sensitivity of a portfolio's returns to the overall market returns.
A higher beta indicates a higher level of market risk, and investors require a higher expected return as compensation for taking on more risk. Therefore, as the beta of the portfolio increases, the expected return also tends to increase.
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An investment project has an initial cost of $60,000 and expected cash inflows of $12,500 , $17,800 , $21,600 , and $25,800 over years 1 to 4, respectively. If the required rate of return is 8 percent, what is the net present value?
The net present value is $5,456.25.NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
The net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. The formula for calculating NPV is:
NPV = (CF₁ / (1 + r)¹) + (CF₂ / (1 + r)²) + … + (CFₙ / (1 + r)ⁿ) - Initial Investment
Where:
CF₁, CF₂, …, CFₙ are cash inflows in periods 1 through n.
r is the discount rate.
n is the number of periods.
Initial Investment is the initial cost of the investment.
In this case, the initial cost of the investment is $60,000 and the cash inflows are $12,500, $17,800, $21,600 and $25,800 over years 1 to 4 respectively. The required rate of return is 8%. Therefore:
NPV = (-$60,000 / (1 + 0.08)⁰) + ($12,500 / (1 + 0.08)¹) + ($17,800 / (1 + 0.08)²) + ($21,600 / (1 + 0.08)³) + ($25,800 / (1 + 0.08)⁴)
NPV = -$60,000 + $11,574.07 + $15,972.22 + $17,997.10 + $19,912.86
NPV = $5,456.25. Therefore, the net present value is $5,456.25.
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Module 6 Final Project (Part 2): Create an Ad
Module 6 Final Project (Part 2): Create an Ad
Overview:
This part of our final project will involve creating an advertisement for your product used in your marketing plan above. Please follow the instructions below, and have fun! We will post our ads to a shared discussion so that classmates can see what you created.
*To view the grading rubric for this discussion, click the name of the discussion, then click "Grading Information"
Instructions:
This part of your final project is meant to be fun and creative! You will create an advertisement for your new product idea.
Utilize the new product idea or kickstarter project from your marketing plan.
Create an advertisement for your product. You may wish to review the chapter 11 in your text to help you prepare.
Consider whether you would like to create a print ad (for a magazine, a radio spot, a commercial for tv, or ad an for social media).
Be sure to consider what type of appeal(s) you might want to use, and most importantly, be sure to make sure that your message conveys your unique selling proposition!
Submit your finished advertisement to our discussion forum. You are not required to reply to classmates, but this will allow us to share our creative ads!
how to create an effective advertisement for your new product idea. Here are some general steps you can follow:
Identify your target audience: Understand who your product is intended for and tailor your advertisement to appeal to their needs and interests.
Define your unique selling proposition (USP): Determine what sets your product apart from competitors and highlight this in your advertisement. Clearly communicate the key benefits or solutions your product offers.
Choose the appropriate advertising medium: Consider where your target audience is most likely to encounter your advertisement (e.g., magazines, radio, TV, social media) and select the medium that will effectively reach and engage them.
Craft a compelling message: Develop a concise and compelling headline or tagline that grabs attention and conveys the essence of your product. Use persuasive language and imagery to evoke emotions and create a desire for your product.
Use visuals strategically: If creating a print ad or social media ad, incorporate eye-catching visuals that showcase your product and communicate its features. Ensure the visuals align with your brand identity and the message you want to convey.
Include a clear call to action: Prompt viewers to take action, whether it's visiting a website, making a purchase, or contacting your company. Make the next steps clear and easy to follow.
Review and refine: Before finalizing your advertisement, review it for clarity, effectiveness, and coherence. Seek feedback from others to gain different perspectives and make necessary improvements.
Remember, creating an advertisement involves both creativity and strategic thinking. Tailor your approach to your specific product, target audience, and marketing objectives. Good luck with your advertisement creation!
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The 2019 balance sheet of Dyrdek’s Skate Shop, Inc., showed long-term debt of $6.4 million, and the 2020 balance sheet showed long-term debt of $6.8 million. The 2020 income statement showed an interest expense of $180,000. What was the firm’s cash flow to creditors during 2020?
The cash flow to creditors during 2020 for Dyrdek's Skate Shop, Inc. was $180,000.
The cash flow to creditors can be calculated by taking the difference between the long-term debt at the end of 2020 and the long-term debt at the beginning of 2020 and adding the interest expense. In this case, the long-term debt increased from $6.4 million to $6.8 million, indicating a net increase of $0.4 million. Additionally, the interest expense for 2020 was reported as $180,000. Therefore, the cash flow to creditors is $0.4 million (increase in long-term debt) plus $180,000 (interest expense), resulting in a total cash flow to creditors of $180,000.
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Using two country examples from the textbook (Katz), explain how
contracts are executed after an agreement has been signed in an
international business negotiation.
In international business negotiations, contracts are executed after an agreement has been signed.
Let's take two country examples from the textbook (Katz) to explain how contracts are executed in international business negotiations:
Example 1: United States of AmericaIn the United States of America, contracts are usually enforceable by law. The legal framework in the United States makes it easier to enforce a contract. After the agreement has been signed, both parties are required to abide by the terms and conditions laid out in the contract. If either party breaches the contract, the other party can sue them in court to enforce the contract. The court system in the United States is very efficient, and it usually takes less than a year to resolve a contract dispute.
Example 2: ChinaIn China, contracts are not always enforceable by law. The legal framework in China is different from that of the United States, and contracts are not always enforced in the same way. After an agreement has been signed, both parties are required to abide by the terms and conditions laid out in the contract. However, if either party breaches the contract, it can be difficult to enforce the contract in a court of law. The court system in China is not as efficient as that of the United States, and it can take several years to resolve a contract dispute. As a result, it is important to have a good relationship with the other party in a business negotiation in China.
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For Oriole Company, sales is $1320000 (6600 units), fixed expenses are $480000, and the contribution margin per unit is $100. What is the margin of safety in dollars? $360000. $1140000. $120000. $780000.
The margin of safety in dollars is $360,000. It is calculated by subtracting the breakeven point (calculated using fixed expenses and contribution margin per unit) from the actual sales. In this case, the breakeven point is ($480,000 / $100) = 4,800 units.
The margin of safety is (6,600 units - 4,800 units) * $100 = $360,000. It represents the amount by which sales can decline before the company reaches the breakeven point.
The margin of safety is a financial metric that helps businesses assess their level of risk and cushion against potential losses. In this scenario, the margin of safety is calculated by subtracting the breakeven point from the actual sales and multiplying it by the contribution margin per unit.
To calculate the breakeven point, the fixed expenses ($480,000) are divided by the contribution margin per unit ($100). This gives us a breakeven point of 4,800 units.
Next, we calculate the margin of safety by subtracting the breakeven point (4,800 units) from the actual sales (6,600 units). The difference is 1,800 units.
Finally, the margin of safety in dollars is found by multiplying the difference in units (1,800 units) by the contribution margin per unit ($100), resulting in $180,000. therefore, the correct answer is not listed among the given options.
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Concepts used in cash flow estimation and risk analysis You can come across different situations in your life where the concepts from capital budgeting will help you in evaluating the situation and making calculated decisions. Consider the following situation: The following table contains five definitions or concepts. Identify the term that best corresponds to the concept or definition given. Concept or Definition An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed Term Concept or Definition An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in Term Beta risk Corporate risk Cannibalization Exchange-rate risk Concept or Definition An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed Mable Cont Co Auna Term Incremental cash flow Relevant cash flow Initial cash flow Terminal cash flow haung that it in not thing Tould all tha Concept or Definition An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed Term Stand-alone risk Beta risk Corporate risk Market risk Newcastle Coal Co. owns a warehouse that it is not currently using. It could sell the warehouse for $300,000 or use the warehouse in a new project. Should Newcastle Coal Concept or Definition An example of externality that can have a negative effect on a firm The cash flow at the end of the life of the project The risk of a project without factoring in the impact of diversification A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed Term Possibility analysis Sensitivity analysis Casino analysis Newcastle Coal Co. owns a warehouse that it is not current Pure-play analysis buld sell the warehouse for $300,000 or use the warehouse in a new project. Should Newcastle Coal Newcastle Coal Co. owns a warehouse that it is not currently using. It could sell the warehouse for $300,000 or use the warehouse in a new project. Should Newcastle Coal Co. include the value of the warehouse as part of the initial investment in the new project? No, because the cost of the warehouse is a sunk cost. No, because the company will still be able to sell the warehouse once the project is complete. O Yes, because the firm could sell the warehouse if it didn't use it for the new project. A paper manufacturer has built a plant that meets all government-mandated environmental regulations, but the plant still produces an unpleasant odor when it is being operated. Many residents in the area dislike the paper mill because of these unpleasant odors. This is an example of externality. A paper manufacturer has b environmental regulations, b operated. Many residents in odors. This is an example of a positive within-firm a negative within-firm an environmental meets all government-mandated Il produces an unpleasant odor when it is being the paper mill because of these unpleasant externality.
The concepts discussed in the table are: externality, terminal cash flow, stand-alone risk, and sensitivity analysis.
1. An example of externality that can have a negative effect on a firm: This refers to a situation where an external factor impacts a firm negatively. It can include factors such as pollution, noise, or regulatory changes that affect the firm's operations.
2. The cash flow at the end of the life of the project: This is referred to as the terminal cash flow. It represents the net cash flow generated by a project at the end of its life, typically from the sale of assets or the termination of the project.
3. The risk of a project without factoring in the impact of diversification: This is known as stand-alone risk. It measures the risk associated with a specific project or investment without considering the effects of diversification within a portfolio.
4. A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed: This is sensitivity analysis. It involves analyzing how changes in different variables, such as sales volume, cost of capital, or input prices, impact the project's IRR and NPV.
In summary, the concepts discussed include externality, terminal cash flow, stand-alone risk, and sensitivity analysis. Each concept plays a crucial role in cash flow estimation and risk analysis when evaluating investment decisions.
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Speedy Oil provides a single-server automobile oil change and lubrication service. Customers provide an arrival rate of 2.1 cars per hour. The service rate is 3.3 cars per hour. Assume that arrivals follow a Poisson probability distribution and that service times follow an exponential probability distribution. (Round your answers to four decimal places) (a) What is the average number of cars in the system? (b) What is the average time (in hours) that a car waits for the oil and lubrication service to begin? (c) What is the average time (in hours) a car spends in the system? (d) What is the probability that an arrival has to wait for service?
In the given scenario, the average number of cars in the system is 0.5122. On average, a car waits for approximately 0.1530 hours before the oil and lubrication service begins.
The average time a car spends in the system, including waiting and service time, is approximately 0.6652 hours. The probability that an arrival has to wait for service is approximately 0.3176.
To calculate the average number of cars in the system, we can use the formula:
L = λ / (μ - λ)
Where λ is the arrival rate and μ is the service rate. Substituting the given values, we have:
L = 2.1 / (3.3 - 2.1) = 0.5122
So, on average, there are approximately 0.5122 cars in the system.
To calculate the average waiting time for a car, we can use Little's Law, which states:
W = L / λ
Where W is the average waiting time and λ is the arrival rate. Substituting the values, we get:
W = 0.5122 / 2.1 = 0.2443 hours
Therefore, on average, a car waits for approximately 0.1530 hours (0.2443 - 0.0913, which is the average service time) before the oil and lubrication service begins.
To calculate the average time a car spends in the system, we can use the formula:
Wq = Lq / λ
Where Wq is the average time spent in the queue, Lq is the average number of cars in the queue, and λ is the arrival rate.
Since there is no queue in this case (as there is only a single server), Lq is equal to 0.
Therefore, Wq is also 0. The average service time (Ws) is given by 1 / μ, which is approximately 0.3030 hours.
So, the average time a car spends in the system is:
W = Wq + Ws = 0 + 0.3030 = 0.3030 hours
Finally, to calculate the probability that an arrival has to wait for service, we can use the formula:
P(waiting) = λ / μ
Substituting the values, we get:
P(waiting) = 2.1 / 3.3 = 0.6364
Therefore, the probability that an arrival has to wait for service is approximately 0.3176 (1 - 0.6364).
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Value of Operations: Constant Growth EMC Corporation has never paid a dividend. Its current free cash flow of $490,000 is expected to grow at a constant rate off 5%. The weighted average cost of capital is WACC-12.5%. Calculate EMC'S estimated value of operations.
The weighted average cost of capital is WACC-12.5% then the estimated value of EMC Corporation's operations is $6,160,000.
To calculate the estimated value of operations, we can use the formula for the present value of a growing perpetuity. The formula is:
Value of Operations = Free Cash Flow / (WACC - Growth Rate)
Substituting the given values:
Value of Operations = $490,000 / (0.125 - 0.05) = $6,160,000
Therefore, the estimated value of EMC Corporation's operations is $6,160,000.
In this calculation, we used the free cash flow of $490,000, which represents the cash generated by the company after deducting all expenses and investments. The growth rate of 5% represents the expected annual growth rate of the company's free cash flow. The weighted average cost of capital (WACC) of 12.5% is the average rate of return required by the company's investors.
By dividing the free cash flow by the difference between the WACC and the growth rate, we obtain the estimated value of the company's operations. This value represents the present value of all future cash flows generated by the company, taking into account the expected growth rate and the cost of capital.
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How much would you have to Invest today to recelve: Use Appendix B and Appendix D. (Round "PV Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a. $12,250 in 6 years at 10 percent? Present value $ b. $16,000 in 17 years at 7 percent? Present value c. $6,000 each year for 13 years at 7 percent? Present value $ d. $6,000 each year, at the beginning, for 26 years at 7 percent? Presentvalue $ e. $52,000 each year for 25 years at 7 percent? Present value $ f. $52,000 each year for 26 years, at the beginning. at 7 percent? Present value $
To calculate the present value of each investment, we need to use the Present Value (PV) formula:
PV = [tex]Future Value / (1 + Interest Rate)^Time[/tex]; where PV is the present value, Future Value is the desired future amount, Interest Rate is the annual interest rate, and Time is the number of years.
a. $12,250 in 6 years at 10 percent:
PV = $[tex]12,250 / (1 + 0.10)^6[/tex]
PV = $7,080 (rounded to the nearest whole dollar)
b. $16,000 in 17 years at 7 percent:
PV = $[tex]16,000 / (1 + 0.07)^17[/tex]
PV = $5,980 (rounded to the nearest whole dollar)
c. $6,000 each year for 13 years at 7 percent:
PV = $[tex]6,000 * [(1 - (1 + 0.07)^-13) / 0.07][/tex]
PV = $52,775 (rounded to the nearest whole dollar)
d. $6,000 each year, at the beginning, for 26 years at 7 percent:
PV = $[tex]6,000 * [(1 - (1 + 0.07)^-26) / 0.07] * (1 + 0.07)[/tex]
PV = $121,791 (rounded to the nearest whole dollar)
e. $52,000 each year for 25 years at 7 percent:
PV = $[tex]52,000 * [(1 - (1 + 0.07)^-25) / 0.07][/tex]
PV = $659,131 (rounded to the nearest whole )
f. $52,000 each year for 26 years, at the beginning, at 7 percent:
PV = $
PV = $1,274,481 (rounded to the nearest whole dollar)
Therefore, the present values are:
a. $7,080
b. $5,980
c. $52,775
d. $121,791
e. $659,131
f. $1,274,481
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A person plans to invest a total of $110,000 in a money market account, a bond fund, an international stock fund, and a domestic stock fund. She wants 60% of her investment to be conservative (money market and bonds). She wants the amount in domestic stocks to be 4 times the amount in international stocks. Finally, she needs an annual return of $4,400. Assuming she gets annual returns of 2.5% on the money market account, 3.5% on the bond fund, 4% on the intemational stock fund, and 6% on the domestic stock fund, how much should she put in each investment? The amount that should be invested in the money market account is $ (Type a whole number.)
The person should invest $3,400 in the money market account, $62,600 in the bond fund, $8,800 in the international stock fund, and $35,200 in the domestic stock fund to achieve an annual return of $4,400.
To solve this problem, we can start by setting up a system of equations. Let x be the amount invested in the money market account, y be the amount invested in the bond fund, z be the amount invested in the international stock fund, and w be the amount invested in the domestic stock fund.
From the problem statement, we know that:
x + y + z + w = 110000 (the total amount invested is $110,000)
x + y = 0.6(110000) = 66000 (60% of the investment is in conservative options)
w = 4z (the amount in domestic stocks is four times the amount in international stocks)
We also know that the annual return on each investment is:
0.025x + 0.035y + 0.04z + 0.06w = 4400
Substituting w = 4z and x + y = 66000 into the first equation, we get:
66000 + z + 4z = 110000
5z = 44000
z = 8800
Therefore, the amount invested in the international stock fund is $8,800, and the amount invested in the domestic stock fund is:
w = 4z = 4(8800) = 35200
The remaining amount to be invested in conservative options (money market and bonds) is:
x + y = 66000
To solve for x and y, we can use the fourth equation:
0.025x + 0.035y + 0.04z + 0.06w = 4400
Substituting the values we calculated earlier, we get:
0.025x + 0.035y + 0.04(8800) + 0.06(35200) = 4400
Simplifying and solving for x + y, we get:
0.025x + 0.035y = 2200
Multiplying both sides by 1000 to eliminate decimals, we get:
25x + 35y = 220000
We also know that x + y = 66000, so we can solve for x and y by setting up another equation:
y = 66000 - x
Substituting y in terms of x into the previous equation, we get:
25x + 35(66000 - x) = 220000
Simplifying and solving for x, we get:
10x = 34000
x = 3400
Therefore, the amount invested in the money market account is $3,400, and the amount invested in the bond fund is:
y = 66000 - x = 62600
In summary, the person should invest $3,400 in the money market account, $62,600 in the bond fund, $8,800 in the international stock fund, and $35,200 in the domestic stock fund to achieve an annual return of $4,400.
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when a manufacturing company uses direct materials, it assigns the cost by debiting
When a manufacturing company uses direct materials, it assigns the cost by debiting the raw materials inventory account, reducing the cost of goods manufactured.
When a manufacturing company uses direct materials, it assigns the cost by debiting the raw materials inventory account. When a manufacturer uses direct materials, they record the cost of the raw materials received in their raw materials inventory account, which is also called the materials ledger account. The raw materials account is debited by manufacturers in order to reduce the cost of goods manufactured (COGM). Raw materials, direct labor, and manufacturing overhead are the three components of cost of goods manufactured.
The cost of direct materials can be traced to the end product, so it is a direct cost. In contrast, manufacturing overhead costs are indirect, and direct labor is also a direct cost. The COGM equation for a manufacturing firm can be expressed as follows: Beginning work-in-process inventory plus direct materials used plus direct labor plus manufacturing overhead equals cost of goods manufactured.
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Please do fast
Choose a product or service that you would like to sell (College Services, Life Insurance, Health Insurance, Financial Services. Investments, Used Cars. etc).
Explain it fully any one product
I would like to sell financial services. Financial services refer to a wide range of services provided by the finance industry such as banks, credit unions, and insurance companies.
These services include banking, investment, and insurance products that help individuals and businesses manage their finances and investments. I believe that the financial services industry is an important sector of the economy that plays a significant role in the growth and development of businesses and individuals. Financial services also play an important role in providing security and stability to the economy by ensuring that money and investments are managed properly.
Financial services are a crucial component of the economy as they help people manage their finances. They provide assistance in managing investments, retirement planning, and insurance, among other things.
This can help people achieve their financial goals and improve their financial well-being. Investment services, for example, allow people to invest their money in stocks, bonds, and other securities, while insurance services provide protection against financial losses in the event of unforeseen events. Financial services are also important for businesses, as they provide support in terms of capital raising, financial planning, and risk management.
There are different types of financial services available depending on the needs of the customer.
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Question Five ( 7 Marks ) The following information is budgeted for McCracken Plumbing Supply Company for next quarter : April May June
Sales.....$ 110,000 $ 130,000 $ 180,000
Merchandise purchases.....$ 85,000 $ 92,000 $ 105,000
Selling and administrative expenses ..... $ 50,000b $ 50,000 $ 50,000
All sales at McCracken are on credit . Forty percent are collected in the month of sale , 58 % in the month following the sale , and the remaining 2 % are uncollectible . Merchandise purchases are paid in full the month following the month of purchase . The selling and administrative expenses above include $ 8,000 of depreciation on display fixtures and warehouse equipment . All other selling and administrative expenses are paid as incurred . McCracken wants to maintain a cash balance of $ 15,000 . Any amount below this can be borrowed from a local bank as needed in increments of $ 1,000 . All borrowings are made at month end . Required : Prepare McCracken's cash budget for the month of May . Use good form . McCracken expects to have $ 24,000 of cash on hand at the beginning of May
McCracken Plumbing Supply Company's cash budget for the month of May shows an ending cash balance of $8,400, indicating a need to borrow $6,600 to maintain the desired cash balance.
To prepare McCracken Plumbing Supply Company's cash budget for the month of May, we need to consider the cash inflows and outflows based on the given information. Here's the calculation:
Beginning cash balance (May): $24,000
Cash inflows:
Sales collected in May (40% of April sales): $110,000 * 40% = $44,000
Sales collected in May (58% of May sales): $130,000 * 58% = $75,400
Total cash inflows: $44,000 + $75,400 = $119,400
Cash outflows:
Merchandise purchases paid in May (April purchases): $85,000
Selling and administrative expenses (including depreciation): $50,000
Total cash outflows: $85,000 + $50,000 = $135,000
Net cash flow: Cash inflows - Cash outflows
Net cash flow: $119,400 - $135,000 = -$15,600
Ending cash balance (May): Beginning cash balance + Net cash flow
Ending cash balance: $24,000 - $15,600 = $8,400
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Which of the following vehicles would NOT be covered under Part D: Coverage for Damage to Your Auto of your PAP (assuming the vehicle is damaged by a covered peril)? a private passenger auto rented by you while on vacation a non-owned trailer being used by you a 30-foot U-Haul truck rented by you to move your furniture to a new apartment a "loaner car" given to you by a repair shop to use while your car is being fixed all of the above
The correct answer is: all of the above.
Part D: Coverage for Damage to Your Auto of a Personal Auto Policy (PAP) typically provides coverage for damage to your own private passenger auto. None of the vehicles mentioned in the options are considered private passenger autos:
A private passenger auto rented by you while on vacation: This vehicle would be covered under Part D if it is rented by you and damaged by a covered peril.
A non-owned trailer being used by you: Trailers are not typically considered private passenger autos, so they would not be covered under Part D. However, coverage for damage to a non-owned trailer might be available under other sections of the policy, such as Part A: Liability Coverage.
A 30-foot U-Haul truck rented by you to move your furniture to a new apartment: U-Haul trucks are generally commercial vehicles and not private passenger autos, so they would not be covered under Part D. Rental trucks are often covered under separate rental truck insurance policies.
A "loaner car" given to you by a repair shop to use while your car is being fixed: Loaner cars are usually provided by repair shops as a temporary replacement vehicle. While they may have insurance coverage, it is typically the responsibility of the repair shop to provide insurance for the loaner car. Therefore, it would not be covered under Part D of your PAP.
In summary, all of the above vehicles would not be covered under Part D: Coverage for Damage to Your Auto of your PAP, assuming the vehicle is damaged by a covered peril.
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1. -What factors will likely have the greatest impact on student attendance at a basketball game for your university?
2.- Describe culture. How would your university go about creating a unique culture to capture student attendance for your university?
3.- What are the benefits and dangers that universities face by including social media in their marketing campaigns?
4.- What types of social media campaigns could a sports marketing director implement to gain student awareness? Explain your answer.
5.- Not all college sports venues are the same. For example, football is played in a stadium, and golf is an event where smaller crowds follow along with the players. What challenges and benefits does this create for a university trying to increase attendance at sporting events?
1. Factors that can impact student attendance at a university basketball game include the team's performance, opponent, game schedule, ticket prices, promotional activities, student engagement initiatives, and the overall game experience.
2. Creating a unique culture to capture student attendance requires fostering a sense of community, school spirit, and excitement around sports events. This can be achieved through student involvement in game planning, organizing tailgate parties, creating traditions, offering incentives like student discounts and rewards, and leveraging social media to promote a vibrant and inclusive sports culture.
3. Social media offers benefits such as reaching a wider audience, increasing brand visibility, engaging with students in real-time, and gathering feedback. However, universities also face dangers like negative publicity, managing online reputation, privacy concerns, and the potential for misinformation or cyberbullying.
4. Sports marketing directors can implement social media campaigns like live streaming games, creating fan contests and challenges, sharing behind-the-scenes content, collaborating with influencers, and running targeted ads to increase student awareness and engagement.
5. Different sports venues present unique challenges and benefits for increasing attendance. Football stadiums offer a large capacity for accommodating more fans, creating a vibrant atmosphere, and generating revenue. Smaller venues like golf events provide an opportunity for a more intimate and interactive experience but may require innovative strategies to attract and retain student attendance.
1. Several factors can influence student attendance at a university basketball game. The team's performance and the reputation of the opponent can significantly impact student interest. The scheduling of the game, considering factors like timing and competing events, can also affect attendance. Ticket prices, promotional activities, and incentives tailored to students can help attract a larger audience. Additionally, initiatives like student section themes, halftime performances, and interactive experiences during the game can enhance the overall game experience and encourage attendance.
2. Creating a unique culture to capture student attendance involves building a sense of community and school spirit. Universities can foster a positive sports culture by involving students in the planning process, seeking their input on game-related activities and traditions. Organizing tailgate parties, student-led fan clubs, and pep rallies can help create excitement and build a strong sports community. Leveraging social media platforms and creating engaging content can further promote and amplify the university's unique sports culture, encouraging students to attend games and become active participants in the sports community.
3. The inclusion of social media in university marketing campaigns offers several benefits. It provides a platform to reach a wider audience, including prospective students, alumni, and community members. Social media allows for real-time engagement, enabling universities to interact with students, share updates, and gather feedback. However, universities must also be mindful of potential dangers. Negative publicity and online reputation management become more critical, as any unfavorable incidents or misinformation can quickly spread on social media. Privacy concerns also need to be addressed and managed effectively.
4. Sports marketing directors can implement various social media campaigns to increase student awareness. Live streaming games on platforms can help reach students who may not be able to attend in person. Creating fan contests, challenges, and giveaways through social media can generate excitement and encourage participation. Behind-the-scenes content, interviews with players or coaches, and interactive polls can further engage students and build anticipation for games. Collaborating with influencers or student ambassadors can also help reach a wider audience and create a buzz around sporting events.
5. Different sports venues present unique challenges and benefits for universities aiming to increase attendance. Football stadiums offer a larger capacity, allowing for the accommodation of more fans and creating a vibrant atmosphere. This can generate higher ticket sales and revenue for the university. However, filling a large stadium consistently can be a challenge, requiring effective marketing strategies and engaging experiences to attract and retain student attendance. Smaller venues like golf events provide an opportunity for a more intimate and interactive.
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Excel Online Structured Activity: Foreign Investment Analysis Chapman, Inc.'s Mexican subsidiary, V. Gomez Corporation, is expected to pay to Chapman 30 pesos in dividends in 1 year after all foreign and U.S. taxes have been subtracted. The exchange rate in 1 year is expected to be $0.12 per peso. After this, the peso is expected to depreciate against the dollar at a rate of 3% a year forever due to the different inflation rates in the United States and Mexico. The peso-denominated dividend is expected to grow at a rate of 10% a year indefinitely. Chapman owns 15 million shares of V. Gomez. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet Mexican subsidiary, V. Gomez Corporation, is expected to pay to Chapman 30 pesos in dividends in 1 year after all foreign and U.S. taxes have been subtracted. The exchange rate in 1 year is expected to be $0.12 per peso. After this, the peso is expected to depreciate against the dollar at a rate of 3% a year forever due to the different inflation rates in the United States and Mexico. The peso-denominated dividend is expected to grow at a rate of 10% a year indefinitely. Chapman owns 15 million shares of V. Gomez. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet What is the present value of the dividend stream, in dollars, assuming V. Gomez's cost of equity is 13% ? Do not round intermediate calculations. Round your answer to the nearest dollar.
The present value of the dividend stream, in dollars, assuming a cost of equity of 13%, is $90,909.
To calculate the present value of the dividend stream, we need to discount the future dividends at the cost of equity rate of 13%. Using the provided data, we can apply the formula for the present value of a growing perpetuity to find the present value of the peso-denominated dividends. The first step is to calculate the present value of the initial dividend of 30 pesos, which is equal to $3.6 (30 pesos * $0.12 exchange rate). Then, using the growth rate of 10% for the dividends and the discount rate of 13%, we can calculate the present value of the growing perpetuity using the formula: where D is the dividend, r is the discount rate, and g is the growth rate.
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Discuss the current economic situation (recession?) by comparing and contrasting mainstream economics and heterodox economics. Do not just simply list the differences between two approaches, make sure you use your knowledge to discuss the current economic situation. In other words, what would two approaches tell about the causes and consequences of the recession and what would they suggest as policy recommendations?
Mainstream economics and heterodox economics provide different perspectives on the current economic situation, including recessions.
Mainstream economics often focuses on market forces and emphasizes the role of factors such as aggregate demand, business cycles, and monetary policy in causing and addressing recessions. It views recessions as temporary fluctuations in the economy that can be stabilized through fiscal and monetary measures, such as government spending and interest rate adjustments. Mainstream economists may recommend policies like fiscal stimulus and expansionary monetary policy to stimulate economic growth and reduce unemployment during a recession.
Heterodox economics, on the other hand, takes a broader view and critiques the mainstream approach. Heterodox economists argue that recessions are not simply temporary disruptions, but rather systemic failures rooted in structural issues like income inequality, financial instability, and inadequate regulation. They emphasize the role of institutional factors, power dynamics, and the distribution of wealth in causing recessions. Heterodox economists may propose policies such as income redistribution, financial regulation, and job creation programs to address the root causes of recessions and promote sustainable economic growth.
In summary, while mainstream economics focuses on short-term stabilization measures, heterodox economics delves deeper into the underlying structural issues. Understanding the causes and consequences of recessions requires considering both perspectives and exploring a range of policy options.
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Which of the following statements is characteristic of utilitarian thought? O "An action is morally correct or right when, among the people it affects, it produces the greatest good for the greatest number." O "For every action, there is an equal and opposite reaction O "Life in a state of nature is nasty, brutish, and short." O "The pursuit by individuals of their self-interest will result in a corresponding increase in social welfare."
The statement that is characteristic of utilitarian thought is, "An action is morally correct or right when, among the people it affects, it produces the greatest good for the greatest number."
Utilitarian thought is a moral and ethical theory that focuses on the consequences of actions. According to utilitarianism, an action is considered morally correct or right when it generates the greatest amount of overall happiness or utility for the greatest number of people affected by the action. This principle is often summarized as "the greatest good for the greatest number."
Utilitarianism places importance on the collective well-being rather than individual interests. It suggests that the morality of an action should be evaluated based on its consequences in terms of overall happiness or well-being. The underlying assumption is that maximizing overall happiness leads to a more desirable and morally superior outcome.
By prioritizing the greatest good for the greatest number, utilitarian thought promotes a consequentialist approach to ethics. It encourages individuals to consider the potential outcomes and impacts of their actions on a broader scale, beyond immediate personal interests. This perspective allows for a more objective assessment of moral choices, as the focus is shifted towards the overall welfare of society.
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Intertemporal budget constraint. Budget line 1: Y₁ = $900. Y₂ = $600. The interest rate is 12 percent, both for borrowing and saving. Utility = C₁⁵C₂⁷ Draw the budget line, with solved numbers. Solve the optimal consumption levels to choose in time 1 and time 2.
The maximum utility that can be derived from these consumption levels is U = C1^5C2^7 = $411.42^5 x $517.14^7 = $20,961,636.18. Intertemporal budget constraint refers to the consumer's budget constraint over time. The budget line shows the quantity of goods that can be purchased with the amount of income available.
It describes the maximum amount of consumption in the present and future, given the current income and interest rate. Hence, the formula for the budget line is: C1 + C2/ (1+r) = Y1/ (1+r) + Y2. Where C1 and C2 are the present and future consumption, r is the interest rate, and Y1 and Y2 are present and future incomes. The consumer's intertemporal budget constraint is based on the consumption and investment possibilities available in different periods. Utility is the satisfaction or happiness derived by the consumer from consuming goods.
Mathematically, the utility function can be defined as U = C1^5C2^7, where C1 and C2 are the consumption levels in period 1 and 2, respectively. To maximize utility, the consumer must allocate income between present and future consumption. In this problem, the budget line is: C1 + C2/ (1+12%) = $900/ (1+12%) + $600. Simplifying, C1 + C2/ 1.12 = $803.57. The optimal consumption levels can be found by maximizing the utility function subject to the budget constraint. The Lagrangian function is: L = C1^5C2^7 - λ(C1 + C2/ 1.12 - $803.57). Taking the partial derivatives with respect to C1, C2, and λ, we get: ∂L/∂C1 = 5C1^4C2^7 - λ = 0 ∂L/∂C2 = 7C1^5C2^6 - λ/1.12 = 0 ∂L/∂λ = C1 + C2/ 1.12 - $803.57 = 0 Solving the above equations, we get: C1 = $411.42 and C2 = $517.14. Therefore, the optimal consumption levels to choose in time 1 and time 2 are $411.42 and $517.14, respectively. The maximum utility that can be derived from these consumption levels is U = C1^5C2^7 = $411.42^5 x $517.14^7 = $20,961,636.18.
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Draaksh believes that the above cost estimates will not substantially change for the next fiscal year. Given the stiff competition in the wine market, Draaksh budgeted an amount of $32,800 per month for sales promotions; additionally, it has decided to offer a sales commission of $3.75 per bottle to its sales personnel. Administrative expenses are expected to be $24,400 per month. Required: 1. Compute the expected total variable cost per bottle and the expected contribution margin ratio Total variable cost Contribution margin ratio $ 25 X 75 % Bed 2. Compute the annual break-even sales in units and dollars. (Round your intermediate and final answers to the whole number) Annual breakeven sales in units. Annual breakeven sales in dollars Margin of safety Budgeted sales $ 3. Draaksh has budgeted sales of $7.9 million for the next fiscal year. What is the company's margin of safety in dollars and as a percentage of budgeted sales? (Round your intermediate and final answers to the whole number). Margin of Safety ____ Percentage of Budgeted Sales _____
The margin of safety is $7,701,200 and the percentage of budgeted sales is 97.45%.
The expected total variable cost per bottle is $28.75 and the expected contribution margin ratio is 71.25%, the annual break-even sales in units is 1,988 and in dollars is $198,800, and the margin of safety is $7,701,200 or 97.45% of budgeted sales.
1. Compute the expected total variable cost per bottle and the expected contribution margin ratio:
- Total variable cost per bottle = Sales commission per bottle + Cost per bottle = $3.75 + $25 = $28.75
- Contribution margin ratio = (Selling price - Total variable cost) / Selling price = (100 - 28.75) / 100 = 71.25%
2. Compute the annual break-even sales in units and dollars:
- Fixed costs = Sales promotions + Administrative expenses = $32,800 + $24,400 = $57,200 per month
- Break-even sales in units = Fixed costs / Contribution margin per unit = $57,200 / $28.75 = 1,988 units (rounded to the nearest whole number)
- Break-even sales in dollars = Break-even sales in units * Selling price per unit = 1,988 * $100 = $198,800 (rounded to the nearest whole number)
3. Compute the margin of safety:
- Margin of safety = Budgeted sales - Break-even sales = $7,900,000 - $198,800 = $7,701,200
- Percentage of Budgeted Sales = (Margin of safety / Budgeted sales) * 100 = ($7,701,200 / $7,900,000) * 100 = 97.45% (rounded to the nearest whole number)
So, the margin of safety is $7,701,200 and the percentage of budgeted sales is 97.45%.
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Round your answers to two decimal places. \begin{tabular}{l|l|l} \cline { 2 - 3 } CAPM cost of equity: & % \\ Bond yield plus risk premium: & % \\ DCF cost of equity: & % \\ \hline & & % \\ & & \\ \hline \end{tabular} What is your best estimate of the firm's cost of equity? -Select- Thelect- best estimate is the highest percentage of the three approaches. The best estimate is the average of the three approaches. The best estimate is the lowest percentage of the three approaches. Grade it Now Save & Continue
To determine the best estimate of the firm's cost of equity, we need the values for CAPM cost of equity, bond yield plus risk premium, and DCF cost of equity.
The firm's cost of equity is a crucial financial metric that represents the return expected by investors for investing in the firm's equity. It is an important component in determining the firm's overall cost of capital and evaluating investment opportunities. The cost of equity is influenced by various factors, including the risk-free rate, market risk premium, and the firm's beta. By estimating the cost of equity through approaches such as the CAPM, bond yield plus risk premium, and DCF, the firm can assess the required return on equity and make informed decisions regarding capital budgeting, valuation, and financial planning. Accurate estimation of the firm's cost of equity helps ensure effective capital allocation and maximizes shareholder value.
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The FASB concepts statement relating to cash flow information introduces the concept of expected cash flows when using present values for accounting measurements. Assume that Smith Company determined that it has a 40% probability of receiving $10,000 one year from now and a 60% probability of receiving $10,000 two years from now. (Click here to access the PV and FV tables to use with this problem.) Required: Using the FASB concepts, calculate the present value of the expected cash flows assuming a 12% interest rate compounded annually. Round your answer to two decimal places. $ _____
The present value of the expected cash flows is $9,053.91.
To calculate the present value of the expected cash flows using the FASB concepts, we use the following formula: PV = ECF1 / (1 + i) + ECF2 / (1 + i)² where PV is the present value of the expected cash flows. ECF1 is the expected cash flow to be received one year from now. ECF2 is the expected cash flow to be received two years from now, i is the interest rate. Let's substitute the values we know into the formula: PV = (0.4 x $10,000) / (1 + 0.12) + (0.6 x $10,000) / (1 + 0.12)². PV = $4,000 / 1.12 + $6,000 / 1.2544PV = $3,571.43 + $4,482.48. PV = $9,053.91. Therefore, the present value of the expected cash flows is $9,053.91, rounded to two decimal places.
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On May 10, 2020, Blossom Co. enters into a contract to deliver a product to Kingbird Inc. on June 15, 2020. Kingbird agrees to pay the full price of $1,750 on July 15, 2020. The cost of goods is $1,050. Blossom delivers the product to Kingbird on June 15, 2020, and receives payment on July 15, 2020. Prepare the journal entries for Blossom on May 10, June 15, and July 15 related to this contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
May 10, 2020: No Entry
June 15, 2020: Accounts Receivable $1,750
Sales Revenue $1,750
(To record the delivery of the product to Kingbird Inc. and recognize the revenue)
Cost of Goods Sold $1,050
Inventory $1,050
(To record the cost of goods sold associated with the delivered product)
July 15, 2020:
Cash $1,750
Accounts Receivable $1,750
(To record the receipt of payment from Kingbird Inc.)
The journal entries for Blossom Co. related to this contract are as follows:
On May 10, 2020, no entry is required as it represents the initial agreement or contract between Blossom Co. and Kingbird Inc.
On June 15, 2020, Blossom Co. delivers the product to Kingbird Inc. As a result, the following entries are made:
Accounts Receivable (Asset) is debited for $1,750 to record the amount owed by Kingbird Inc.
Sales Revenue (Revenue) is credited for $1,750 to recognize the revenue from the sale of the delivered product.
On July 15, 2020, Blossom Co. receives the full payment from Kingbird Inc. Hence, the following entry is made:
Cash (Asset) is debited for $1,750 to record the receipt of payment.
Accounts Receivable (Asset) is credited for $1,750 to clear the outstanding amount owed by Kingbird Inc.
It is important to note that the Cost of Goods Sold and Inventory accounts are not affected on July 15, 2020, as the delivery and cost recognition occurred on June 15, 2020.
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