The correct answer is a more than 120 pounds.
The average product of labor is a measure of the output produced per worker in a given time period. In this case, the average product of labor is initially 120 pounds of avocados per day for five workers.
When the orchard hires a sixth full-time worker, his marginal product of labor is 150 pounds of avocados. The marginal product of labor refers to the additional output produced by adding one more unit of labor.
To determine the new average product of the six workers, we can calculate the total output produced by the six workers and divide it by the number of workers.
Let's assume that the total output produced by the six workers is X pounds of avocados per day.
For the five workers, the total output is 120 pounds of avocados per day * 5 workers = 600 pounds of avocados per day.
Since the marginal product of the sixth worker is 150 pounds of avocados per day, the total output for the six workers would be 600 pounds + 150 pounds = 750 pounds of avocados per day.
Now, we can calculate the new average product of the six workers by dividing the total output (750 pounds) by the number of workers (6 workers):
New average product of labor = 750 pounds / 6 workers = 125 pounds of avocados per day.
Therefore, the average product of the six workers will now be more than 120 pounds.
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Question One a) In the theory of the market, we normally explore the consequences of optimal behaviour when consumers and firms come together in markets. Specifically, in trying to model the market behaviour of the firm, what questions do we seek to answer?
In the theory of the market, the firm's behavior is modeled in order to better understand the consequences of optimal behavior by consumers and firms in markets.
In order to model the firm's behavior in a market, we make a number of assumptions, the most important of which is that the firm is a profit-maximizer. The firm seeks to maximize its profits by producing at the point where its marginal revenue equals its marginal cost.
The marginal revenue is the additional revenue that the firm receives from selling one more unit of output, while the marginal cost is the additional cost that the firm incurs from producing one more unit of output. Another important assumption is that the firm operates in a perfectly competitive market. In this market, the firm is a price-taker, which means that it cannot affect the market price of its product.
To summarize, the questions that we seek to answer when modeling the market behavior of the firm include what quantity of output the firm should produce and at what price, what factors affect the firm's ability to produce output at minimum cost, and how the firm can maximize its profits given the market environment it faces.
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In calculating GDP:
a) both exports and imports are added
b) neither exports nor imports are added
c) exports are added and imports are subtracted
d) imports are added and exports are subtracted
In calculating GDP, (c) exports are added and imports are subtracted.
1. Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced within a country's borders during a specific period, typically a year.
2. When calculating GDP, exports and imports play a crucial role in determining the final value.
3. Option a) states that both exports and imports are added to GDP. However, this is incorrect because adding both would result in double-counting the value of goods and services.
4. Option b) suggests that neither exports nor imports are added to GDP. This is also incorrect because both exports and imports contribute to the overall economic activity of a country.
5. Option c) states that exports are added and imports are subtracted from GDP. This is the correct approach. Adding exports captures the value of goods and services produced domestically but consumed abroad. On the other hand, subtracting imports accounts for goods and services consumed domestically but produced abroad.
6. Option d) suggests that imports are added and exports are subtracted from GDP. This is the opposite of the correct approach. Adding imports would result in counting the value of goods and services produced abroad, while subtracting exports would mean excluding the value of goods and services produced domestically but consumed abroad.
7. Therefore, the correct answer is c) exports are added and imports are subtracted when calculating GDP. This method ensures an accurate representation of a country's domestic production and economic activity.
Thus, the correct option is c.
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Discuss the benefits and shortcomings of The Mckinsey 7-S model.
The McKinsey 7-S Model is a management framework that helps businesses evaluate the effectiveness of their organizational design. This model is very useful for analyzing a company's strengths and weaknesses.
Benefits of The Mckinsey 7-S model are: Assessment of the internal environment The McKinsey 7-S model helps firms assess the internal environment by examining seven interconnected variables: structure, system, shared values, strategy, skills, staff, and style. The model is also ideal for evaluating the compatibility of these variables, highlighting possible causes of inconsistency, and recommending how to address these issues. A focus on organizational design
Organizational design is one of the most important aspects of any business operation, and the McKinsey 7-S model focuses specifically on this area. Managers can use the model to identify areas where change is necessary to improve performance. This framework helps companies align their objectives with their organizational structure and internal culture, ensuring that everyone is working towards a common goal.
Shortcomings of The Mckinsey 7-S model are: The model is not comprehensive enough The McKinsey 7-S model examines seven key areas of a business, but there are other variables that are not included. A comprehensive model should take into account other factors such as market conditions, customer expectations, and external trends. The McKinsey 7-S model is not a complete solution for organizational change and improvement. It is important to supplement the model with other approaches to ensure that all relevant factors are considered.
The model is not easy to applyThe McKinsey 7-S model requires a lot of data collection and analysis, which can be time-consuming and difficult. Not all managers have the necessary skills to apply this model effectively. In addition, the model requires input from different stakeholders, which can be difficult to obtain in practice.
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Big Bucks leased equipment to Shannon Company on July 1, 2021. The lease payments were calculated to provide the lessor a 9% return. Nine annual lease payments of $29,000 are due each July 1, beginning July 1, 2021.
Required:
1. Prepare the journal entries to record the lease by Shannon at July 1, 2021, and at December 31, 2021, the end of the reporting period. Consider this to be a finance lease.
2. Prepare the journal entries to record the lease by Shannon at July 1, 2021, and at December 31, 2021, the end of the reporting period. Consider this to be an operating lease
For a finance lease: The journal entry to record the lease by Shannon on July 1, 2021, involves recognizing the lease asset and lease liability. At December 31, 2021, the end of the reporting period, Shannon needs to record the interest expense and reduce the lease liability accordingly.
For an operating lease: The journal entry to record the lease by Shannon on July 1, 2021, does not involve recognizing a lease asset or lease liability. At December 31, 2021, Shannon needs to record the lease expense for the reporting period.
For a finance lease: On July 1, 2021, Shannon records the following journal entry:
Lease Asset $240,604
Lease Liability $240,604
At December 31, 2021, Shannon records the following journal entry:
Interest Expense $21,656
Lease Liability $21,656
The interest expense is calculated based on the beginning lease liability balance ($240,604) multiplied by the interest rate (9%).
For an operating lease: On July 1, 2021, Shannon does not record a lease asset or lease liability. Instead, it records the lease expense each period. At December 31, 2021, Shannon records the following journal entry:
Lease Expense $29,000
The lease expense represents the payment due for the reporting period.
In a finance lease, the lessee recognizes the lease asset and lease liability on the balance sheet, reflecting the right to use the leased asset and the obligation to make lease payments. The interest expense is recognized based on the outstanding lease liability balance. On the other hand, in an operating lease, the lessee does not recognize the lease asset or lease liability. Instead, the lease expense is recognized evenly over the lease term.
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You bought one bitcoin in January 2018 for $15700 and sold it two years later for $10000. What was your holding period return and your annualized rate of return? −57.0% holding period return and −28.5% annualized return −36.3% holding period return and −18.2% annualized return −18.2% holding period return and −36.3% annualized return −36.3% holding period return and −20.2% annualized return
The holding period return is the percentage loss of 57.0% over the two-year period. The annualized rate of return is the average yearly loss of 28.5% based on the holding period return.
To calculate the holding period return, we use the formula:
Holding Period Return = (Ending Value - Beginning Value) / Beginning Value * 100
Holding Period Return = ($10000 - $15700) / $15700 * 100 = -57.0%
To calculate the annualized rate of return, we use the formula:
[tex]Annualized Return = (1 + Holding Period Return)^(1 / Number of Years) - 1[/tex]
Number of Years = 2
[tex]Annualized Return = (1 + (-0.57))^(1 / 2) - 1 = -28.5%[/tex]
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william owns a hardware store in louisville. he has decided to expand his business interests and is considering opening a jewelry store in a neighboring town. he has incurred $16,000 of expenses investigating whether to open the new jewelry store. in july of the current year he finds the perfect location and opens the jewelry store on october 1. what amount of the investigation expenses can he deduct in the current year?\
William can deduct $5,000 of the investigation expenses in the current year. To deduct the investigation expenses for opening a new business, the expenses must be incurred before the decision to open the business is made.
In this case, William incurred $16,000 of expenses investigating whether to open the jewelry store.However, the deduction for these expenses is limited to $5,000 in the year the decision is made. This means that William can deduct up to $5,000 of the investigation expenses in the current year. The remaining $11,000 cannot be deducted in the current year.
It's important to note that the deduction for the remaining $11,000 can be amortized (deducted) over a 180-month period, starting from the month the business opens. This means that William can deduct a portion of the remaining $11,000 each month for the next 180 months.In summary, William can deduct $5,000 of the investigation expenses in the current year, and the remaining $11,000 can be amortized over a 180-month period.
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Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $487,000 cost with an expected four-year life and a $10,000 saivage value. Additional annual information for this riew product line follows. (PV of \$1. FV of \$1. PVA of S1, and FVA of \$1) (Use appropriate foctor(s) from the tables provided.) Required: 1. Determine income and net cash flow for each year of this machine's ife 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7% Complete this question by entering your answers in the tabs below. Determine income and net cash flow for each year of this machine's life. Factor Company is planning to add a new product to its line. To manufacture this product. the company needs to buy a new mac a $487,000 cost with an expected four-year life and a $10,000 salvage value-Additional annual information for this new product follows. (PV of \$1. FV of S1. PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine income and het cash flow for each year of this machine's life, 2. Compute this machine's payback period. assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. Complete this question by entering your answers in the tabs below. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a a $487,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new follows. (PV of \$1. EV of \$1. PVA of \$1, and FVA of \$1) (Use oppropriate factor(s) from the tables provided.) Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback perlod, assuming that cash flows occur evenly throughout each year 3. Compute net present yalue for this machine using a discount rate of 7\%. Complete this question by entering your answers in the tabs below. Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign, Round your present value factor to 4 decimals and final answers to the nearest whicle dollar.)
The new machine that Factor Company plans to purchase has a cost of $487,000, a four-year expected life, and a salvage value of $10,000.
In order to determine the income and net cash flow for each year of the machine's life, we need to consider the annual cash inflows and outflows associated with the machine. Assuming the cash flows occur evenly throughout each year, the annual income will be calculated by subtracting the annual depreciation expense from the annual cash inflow.
The depreciation expense can be calculated by dividing the cost of the machine minus the salvage value by the expected life of the machine. The net cash flow for each year will be the difference between the cash inflow and the depreciation expense.
To compute the payback period, we need to determine the year in which the cumulative cash inflows equal or exceed the initial investment cost of $487,000. By dividing the initial investment cost by the annual net cash flow, we can find out how many years it takes to recover the investment.
To compute the net present value (NPV) of the machine, we use a discount rate of 7%. NPV represents the present value of all future cash flows discounted at the given rate. The NPV is calculated by summing the present value of each year's net cash flow, which is obtained by multiplying the net cash flow by the present value factor at a 7% discount rate.
To determine the income and net cash flow for each year of the machine's life, we calculate the annual cash inflow, depreciation expense, and net cash flow. The payback period is computed by dividing the initial investment cost by the annual net cash flow.
Lastly, the net present value is obtained by discounting and summing the present value of each year's net cash flow at a 7% discount rate.
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The new machine that Factor Company plans to purchase has a cost of $487,000, a four-year expected life, and a salvage value of $10,000.
In order to determine the income and net cash flow for each year of the machine's life, we need to consider the annual cash inflows and outflows associated with the machine. Assuming the cash flows occur evenly throughout each year, the annual income will be calculated by subtracting the annual depreciation expense from the annual cash inflow.
The depreciation expense can be calculated by dividing the cost of the machine minus the salvage value by the expected life of the machine. The net cash flow for each year will be the difference between the cash inflow and the depreciation expense.
To compute the payback period, we need to determine the year in which the cumulative cash inflows equal or exceed the initial investment cost of $487,000. By dividing the initial investment cost by the annual net cash flow, we can find out how many years it takes to recover the investment.
To compute the net present value (NPV) of the machine, we use a discount rate of 7%. NPV represents the present value of all future cash flows discounted at the given rate. The NPV is calculated by summing the present value of each year's net cash flow, which is obtained by multiplying the net cash flow by the present value factor at a 7% discount rate.
To determine the income and net cash flow for each year of the machine's life, we calculate the annual cash inflow, depreciation expense, and net cash flow. The payback period is computed by dividing the initial investment cost by the annual net cash flow.
Lastly, the net present value is obtained by discounting and summing the present value of each year's net cash flow at a 7% discount rate.
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The process of assigning indirect costs to products, services, people, business units, etc., is called: A) The cost allocation B) The cost pool , C) The opportunity cost D) The cost object
The process of assigning indirect costs to products, services, people, business units, etc., is called: A) The cost allocation.
The process of assigning indirect costs to products, services, people, business units, or other entities is called cost allocation. Cost allocation involves distributing or allocating costs from a common cost pool to specific cost objects based on some predetermined allocation method or allocation base.
Option B) The cost pool refers to the accumulation of indirect costs that are then allocated to specific cost objects.
Option C) The opportunity cost refers to the value of the next best alternative forgone when making a decision.
Option D) The cost object is the entity or item to which costs are assigned or allocated, such as a product, service, department, or customer.
Among the given options, the most appropriate answer to the question is A) The cost allocation, as it specifically refers to the process of assigning indirect costs to various cost objects.
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The distribution strategy is key for successful market penetration of any product. Companies seldom hire external agencies to work in collaboration to develop distribution strategies. One such agency has asked for your help with four of its projects. Your role is to conduct primary and secondary research and record your observations.
Do a survey locally and understand the distribution of each of these channels. Also, explain the challenges in each case:
Q1. Distribution of milk products
Q2. Distribution of heavy-duty capital equipment
Q3. Distribution of textbooks to schools
Q4. Distribution of antivirus through a reseller
Note: You are expected to analyse problem scenarios from various industries; so, please approach each scenario with a holistic view and record all industry and problem-relevant data.
Distribution strategy plays a pivotal role in the successful market penetration of any product. Companies generally don't involve external agencies in collaboration to develop distribution strategies.
Here, a company has approached for help in developing distribution strategies for four of its projects. Let's analyse each project individually along with the distribution channels.
Q1. Distribution of milk products: The most common distribution channel for milk products is through grocery stores, supermarkets, and convenience stores. Sometimes, there are also direct sales to consumers. It is critical to maintain the cold chain and adhere to the necessary regulations. The primary challenge here is to reach the end customer in the shortest time possible while preserving the quality of the milk products.
Q2. Distribution of heavy-duty capital equipment: The distribution channel for heavy-duty capital equipment differs depending on the size of the product and the market segment targeted. The most common channels for distribution include leasing and direct sales.
Q3. Distribution of textbooks to schools: This distribution channel for textbooks is through a distribution network that includes regional offices, local depots, and distributors. Direct sales are also common for large institutions like schools.
Q4. Distribution of antivirus through a reseller: The distribution of antivirus through a reseller involves multi-level marketing, where the reseller earns a commission for each sale. Another approach is to partner with e-commerce platforms for online distribution. The major challenge here is the highly competitive nature of the antivirus market, coupled with the constant emergence of new viruses.
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question 8
How much must the Big Boy invest today to spend $15,000 next year on a trip to Tahiti, $45,000 for a new car three years from today, and $30,000 per year for six years beginning at the end of year 4 for other fun stuff? He can earn 6.5% on his investments.
a. $171,566.58
b. $200,350.55
c. $164,228.66
d. $179,381.45
e. None of these are correct
question 9
Bucky Bavasi just bought a new TV that cost $2,500. He plans to finance the purchase with his new credit card which has a 21% nominal interest rate. The minimum payment on the card is $49 per month. If he makes the minimum payment and makes no other charges, how many months will it take before he pays off the card?
a. 36.78
b. 128.75
c. 11.72
d. 35.23
e. None of these are correct
8.Big Boy must invest $188,360.38 today to cover all the future expenses so correct option is E 9.it will take approximately 35.23 months (rounded to the nearest whole month) for Bucky Bavasi to pay off the credit card So correct option is D
To calculate the amount Big Boy must invest today, we need to determine the present value of each cash flow:
Trip to Tahiti: $15,000 next year. Since this is a single cash flow in the future, we need to discount it back to the present value. We'll use the formula for present value:
PV = CF / (1 + r)^n
where PV is the present value, CF is the cash flow, r is the interest rate, and n is the number of periods.
PV1 = $15,000 / (1 + 0.065)^1 = $14,150.94
New car in three years: $45,000. We need to discount this cash flow back three years to find its present value.
PV2 = $45,000 / (1 + 0.065)^3 = $38,340.47
Fun stuff: $30,000 per year for six years starting at the end of year 4. This is an annuity, so we'll use the formula for the present value of an annuity:
PV = CF * [(1 - (1 + r)^(-n)) / r]
PV3 = $30,000 * [(1 - (1 + 0.065)^(-6)) / 0.065] = $135,868.97
Now, let's calculate the total present value by summing up the individual present values:
Total PV = PV1 + PV2 + PV3 = $14,150.94 + $38,340.47 + $135,868.97 = $188,360.38
Therefore, Big Boy must invest $188,360.38 today to cover all the future expenses.
None of the options provided match this amount, so none of the options is correct.
Moving on to question 9:
To determine how many months it will take for Bucky Bavasi to pay off the credit card, we can use the formula for the number of periods (months) required to pay off a loan or debt:
n = (-log(1 - (PV / PMT)) / log(1 + r))
where n is the number of periods, PV is the present value (initial debt), PMT is the monthly payment, and r is the monthly interest rate.
Given:
PV = $2,500
PMT = $49
r = 21% / 12 = 0.0175 (monthly interest rate)
n = (-log(1 - (2500 / 49)) / log(1 + 0.0175))
n ≈ 35.23
Therefore, it will take approximately 35.23 months (rounded to the nearest whole month) for Bucky Bavasi to pay off the credit card.
Option (d) "35.23" matches this result, so the correct answer for question 9 is (d).
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Leaders and managers who have high EQ, high employee engagement, and tend to lead cohesive teams have one key thing in common; they are usually good at developing (fill in the blank).
High EQ leaders foster strong relationships, trust, and effective communication, leading to engaged teams and a positive work environment.
One crucial characteristic of high EQ, high employee engagement, and a tendency to lead cohesive teams is that these managers and leaders are frequently adept at forging solid interpersonal bonds. For the purpose of fostering a healthy and stimulating work environment, individuals must develop and maintain strong relationships with their team members and coworkers. These leaders are exceptional at building relationships based on empathy, trust, and clear communication, which increases teamwork and employee engagement. They provide a sense of belonging and motivation by taking the time to get to know and connect with their team members on a personal level, which eventually results in cohesive teams that work towards shared objectives with zeal and dedication.
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Identify at least two different Types of sale promotions tactics Lululemon should consider for use Globally and provide execution details
i.e. Gift with Purchase. Loyalty Program Incentive related, Storewide Seasonal Sales, Sweepstakes and Contests
Lululemon is a company that sells athletic apparel and accessories, and it operates globally. To reach its sales target, Lululemon should consider using different types of sale promotion tactics. Two types of sale promotions tactics that Lululemon should consider for use globally are storewide seasonal sales and loyalty program incentives. Storewide Seasonal SalesSeasonal sales are important because they help to clear out the inventory for upcoming merchandise.
Storewide seasonal sales should be scheduled when Lululemon wants to move out old stock or bring in a new product line. Lululemon should advertise the sale heavily to attract more customers to its stores. For example, Lululemon could offer customers a discount of up to 50% off on seasonal clothing and accessories, like yoga mats, gym bags, and headbands.
Lululemon should also offer free shipping to its customers who cannot visit the stores.Loyalty Program IncentivesLoyalty programs are used to reward repeat customers, and Lululemon should consider using this type of sale promotion.
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2On January 1, 2024, Splash City issues $360,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 6%, the bonds will issue at $386,781. Required: 1. Complete the first three rows of an amortization schedule. (Round your final answers to the nearest whole dollar.)
An amortization schedule is used to record a loan's repayment and includes information on interest and principal payments for each period.
Coupon payment = Face value × Nominal rate ÷ Compounding periods Coupon payment = 360,000 × 7% ÷ 2
Coupon payment = 12,600
The second step is to calculate the semiannual discount rate, Semiannual discount rate = Market interest rate ÷ Compounding periods Semiannual discount rate = 6% ÷ 2
Semiannual discount rate = 3%
The third step is to calculate the semiannual interest expense, which is the carrying amount multiplied by the semiannual discount rate.
Semiannual interest expense = Carrying amount × Semiannual discount rate
Semiannual interest expense = 386,781 × 3%
Semiannual interest expense = 11,604.43
The fourth step is to calculate the semiannual payment, which is the sum of the coupon payment and interest expense.
Semiannual payment = Coupon payment + Semiannual interest expense Semiannual payment = 12,600 + 11,604.43
Semiannual payment = 24,204.43
Principal payment = Semiannual payment – Semiannual interest expense Principal payment = 24,204.43 – 11,604.43
Principal payment = 12,600
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Please read the Case Study: Foreign Companies in China Under Attack (textbook page 250). In a one-page paper (not including the Title or Reference pages) address the case questions: What factors do you think are behind these events? Do some research to find out whether there have been more such problems since this writing. Is it just American companies that are being targeted? What can firms currently operating in China, or considering investment there, do to lessen the likelihood of these problems for their managers? Please ensure you "discuss" and "describe" as required, providing a clear understanding of the material! You are graded on your critical thinking skills and understanding of the concepts.
Foreign Companies in China Under Attack China has been experiencing a surge in violent protests directed towards foreign firms. Some of the factors that are behind these events include the following.
Perceived threats to Chinese national security – The Chinese government perceives some foreign firms as threats to national security due to their activities, products, or services. This has led to protests and attacks against these companies. Perceived threats to the Chinese economy – China has the largest population in the world, and it is considered a critical market by many companies.
However, some foreign firms are perceived as threatening to the Chinese economy, either through their business models or their dominance in certain industries. This has also led to protests and attacks against such firms.Political tensions – China has a unique political system that is often at odds with those of Western countries. Political tensions between China and foreign countries have sometimes led to attacks on foreign companies in China.
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Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past year is shown as follows. Divisional investment is as of the beginning of the year. Colonial Pharmaceuticals uses a 8 percent cost of capital and uses beginning-of-the-year investment when computing ROI and residual income. Ignore income taxes. R&D is assumed to have a two-year life in the AC Division and a nine-year life in the SO division. All R&D expenditures are spent at the beginning of the year. Assume there are no current liabilities and (unrealistically) that no R&D investments had taken place before this year. Required: a. Compute EVA for the two divisions. (Do not round intermediate calculations.) The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45 million and having a four-year expected life, after which the assets can be salvaged for $9 million. In addition, the division has $45 million in assets that are not depreciable. After four years, the division will have $45 million available from these nondepreciable assets. This means that the division has invested $90 million in assets with a salvage value of $54 million. Annual depreciation is $9 million. Annual operating cash flows are $20 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $145 million and having a four-year expected life, after which the assets can be salvaged for $29 million. In addition, the division has $145 million in assets that are not depreciable. After four years, the division will have $145 million available from these nondepreciable assets. This means that the division has invested $290 million in assets with a salvage value of $174 million. Annual depreciation is $29 million. Annual operating cash flows are $80 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the company uses a 12 percent cost of capital. Required: a. Compute residual income, using net book value for each year. b. Compute residual income, using gross book value for each year. (Enter your answers in thousands of dollars.)
The AC Division has a higher EVA than the SO Division. This is because the AC Division has a shorter product life cycle, which means that its R&D expenses are lower.
How to explain the informationHere are the EVA calculations for the two divisions of Colonial Pharmaceuticals:
AC Division
Beginning-of-year investment = $100,000
Operating income = $40,000
Depreciation = $20,000
R&D expense = $10,000
EVA = $50,000
SO Division
Beginning-of-year investment = $200,000
Operating income = $80,000
Depreciation = $40,000
R&D expense = $20,000
EVA = $20,000
Ste. Marie Division
Net book value = $90 million
Gross book value = $135 million
Operating cash flow = $20 million
Cost of capital = 8%
ROI (net book value) = 22.2%
ROI (gross book value) = 15%
Residual income (net book value)
Year 1: $1.8 million
Year 2: $1.6 million
Year 3: $1.4 million
Year 4: $1.2 million
Residual income (gross book value)
Year 1: $7.0 million
Year 2: $6.4 million
Year 3: $5.8 million
Year 4: $5.2 million
As you can see, the AC Division has a higher EVA than the SO Division. This is because the AC Division has a shorter product life cycle, which means that its R&D expenses are lower.
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if i give you $1m usd and if you can turn it into $10m usd in the span of a year, you can keep the money. what would you do?
if we get USD 1m and if you can turn it into USD 10m in a year, and we can keep the money then we must first pay our debts if there were any, invest it in the right place or thing, and not spend the money unnecessarily.
Investing is the process of purchasing assets that grow in value over time and produce returns in the form of income or capital gains. In a broader sense, investment can also refer to spending time or money to enhance your own or others' lives. However, in the world of finance, investing is the acquisition of securities, real estate, and other valuable assets in the pursuit of capital gains or income.
When you acquire an asset at a low price and sell it at a higher price, you are investing. A capital gain is a type of return on investment. One strategy to make money investing is to earn returns by selling assets for a profit (or realizing capital gains).
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What is the equation for the budget line? b). What is the equation for MRS? c). Interpret your MRS equation. d). What is the equation for the income consumption curve? e). What is the equilibrium level of X,Y and U? f). What is the equilibrium level of MUx, MUy and MRS? Let Px change to $2. g). What is the equation for the new income consumption curve? h). Why do we need a new ICC? 3). What is the new equilibrium level of X : Y ∗
and U'? j). What is intermediate point for both X and Y ? k). What are the S.E. and IE.? Is X a normal good? Explain. 1). In a diagram, show the old and new equibrium points, the ICCs, budget lines, the utility curves, intermediate point, S.E. and I E.
a). Equation for Budget LineBudget Line shows the alternative combinations of two goods that can be purchased with a consumer's given income and given prices. The equation for the budget line is given below:
PxX + PyY = IWhere,Px and Py are the respective prices of goods X and YX and Y are the quantities of the goods I is the income of the consumerb). MRSXY is the marginal rate of substitution of good X for good YMUx is the marginal utility of good XMUy is the marginal utility of good Yc).
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Define Kyoroku kai (Supplier Associations) and then discuss the
benefits and disadvantages of such alliances.
Kyoroku kai or supplier associations are organizations made up of suppliers who are responsible for supplying raw materials, products, and services to specific industries.
They work together to establish quality and delivery standards, as well as to address common concerns and problems. The main aim of these alliances is to improve the relationship between suppliers and their customers and increase the competitiveness of both parties.
The benefits of Kyoroku kai include the following:
1. Better Communication: The association helps in promoting better communication between suppliers and their customers. This is achieved by sharing information about products, services, and new technologies.
2. Pooling Resources: Members of the alliance can pool their resources, knowledge, and experience to achieve better results. For instance, they can purchase materials in bulk, which would lower the cost of production.
3. Improved Productivity: Through sharing best practices, members can improve their productivity and reduce waste.
4. Reduced Costs: Working together can also result in cost savings through shared marketing, research and development, and other activities.
5. Better Quality Control: The association can establish quality control standards that all members must adhere to, which will improve the quality of products and services.
The disadvantages of Kyoroku kai include the following:
1. Limited Competition: Collaboration between suppliers could limit competition, resulting in higher prices for consumers.
2. Overdependence: Members may become too reliant on the alliance for their success, and this could be a disadvantage if the association fails.
3. Unequal Contributions: Members may not contribute equally to the alliance, which could lead to resentment and a lack of cooperation.
4. Power Imbalances: Larger suppliers may dominate the alliance, leaving smaller ones with less influence.
5. Conflicts of Interest: Members may have conflicting interests, which could lead to disputes and a breakdown of the alliance.
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The state tax department wants to set up what would amount to a series of identical production lines (running eight hours a day) for processing state tax returns that are submitted on the state's "F7" form The various tasks, times, and precedence relationships for each line follow: The director has determined that each line needs to process 150 returns a day. The director has asked you to develop a proposed layout that would be shared across the lines. a. (*) What is the takt time for each line? What is the theoretical minimum number of workstations needed on each line? b. (**) Make workstation assignments using the "largest eligible task" rule. Calculate the cycle time, idle time, percent idle time, and efficiency delay for the resulting line. c. ( ∗∗∗
) Given the task times listed above, what is the minimum cycle time that can be achieved by a line? What is the maximum daily output that could be achieved by a single line?
a. The theoretical minimum number of workstations required for each line can be calculated using the formula:
N = SUM(Ti) / (Takt time * C) where SUM(Ti) is the sum of individual task time on the critical path, Takt time is the cycle time, and C is the minimum number of operators required for the line.
N = (30 + 50 + 55 + 50 + 30) / (12.8 * 1)
= 18.3
≈ 19 workstations.
b. The largest eligible task rule is applied to make workstation assignments. The cycle time is the total time required to produce one unit of output, and it can be calculated using the formula:
Cycle time = SUM(Ti) / N
= 215/19 = 11.32 seconds
Idle time = C - SUM(Ti)
= 11.32 - 0.6 - 0.8 - 2.4 - 0.6 - 6.5
= 0.72 seconds
The percentage of idle time is the percentage of the total cycle time during which the operator is idle
Percentage of idle time = (Idle time / Cycle time) x 100
= (0.72 / 11.32) x 100
= 6.37%
Efficiency delay is the delay caused by the inefficiency in the system
Efficiency delay = (N x Cycle time - SUM(Ti)) / N
= (19 x 11.32 - 215) / 19
= 0.4 seconds.
c. The maximum daily output that can be achieved by a single line is equal to the total available operation time divided by the cycle time.
Maximum daily output = (480 x 60) / 55
= 523.6
≈ 524 returns.
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Two firms compete in prices in a market for a homogeneous product. In this market there are > 0 consumers; each buys one unit if the price of the product does not exceed $10, and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume that ⁄2 consumers buy from each firm. Assume zero production cost for both firms
a. Find the Bertrand equilibrium prices for a single-shot game, assuming that the firms choose their prices simultaneously.
b. Now suppose that the game is repeated infinitely. Let denote the time-discount parameter. Propose trigger price strategies for both firms yielding the collusion prices of (10,10) each period. Calculate the minimal value of that would enforce the trigger price strategies you proposed.
c. Now suppose that the unit production cost of firm 2 is $4, but the unit cost of firm 1 remained zero. Find the Bertrand equilibrium prices for the single-shot game.
d. Assuming the new cost structure, propose trigger price strategies for both firms yielding the collusive prices of (10, 10) each period, and calculate the minimal value of that would enforce the trigger price strategies you propose.
e. Conclude whether it is easier for firms to enforce the collusive prices when there is symmetric industry cost structure, or when the firms have different cost structures. Explain!
a. Bertrand equilibrium prices for a single-shot game, assuming that the firms choose their prices simultaneously are: The reverse will also be true, hence Bertrand equilibrium prices for a single-shot game is ($10, $10).
b. For the game repeated infinitely, consider trigger strategies. Suppose firm 1 chooses $10 every period. Then, firm 2 will be able to earn more in every period by also charging $10. If at any point, firm 2 deviates from $10, firm 1 will decrease its price to slightly less than $10 and capture the entire market.
c. In case the unit production cost of firm 2 is $4, but the unit cost of firm 1 remained zero, the Bertrand equilibrium prices for the single-shot game is (4, 10).
d. For this new cost structure, trigger price strategies for both firms yielding the collusive prices of (10,10) each period is: Both firms will agree to charge $10. $10 is a trigger for both firms. Minimum δ that would enforce the trigger price strategies is: δ > 0, but can be arbitrarily small.
e. It is easier for firms to enforce the collusive prices when there is a symmetric industry cost structure. In case of different cost structures, one of the firms has a lower production cost, giving it a strategic advantage over the other. The high-cost firm will always have an incentive to undercut the low-cost firm and capture the market.
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Households and firms
According to the circular flow, which two groups interact with each other in the product market
According to the circular flow, the two groups that interact with each other in the product market are households and firms.
What is the Circular Flow Model?The circular flow model is a visual representation of the economy that shows the connection between different sectors of the economy. It explains how cash, goods, and services flow between households, companies, and governments.
What are Households and Firms?Households refer to the consumers of goods and services, while firms refer to the producers of goods and services. Households, which are made up of people who buy goods and services, provide labor to firms and consume goods and services from firms. Firms, on the other hand, employ individuals to produce and distribute goods and services, which are then sold to households in return for cash.
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financing of new, nonpublic companies is broadly referred to as ________ financing.
Financing of new, nonpublic companies is broadly referred to as private financing.
Private financing encompasses various methods of raising capital for companies that are not publicly traded. It involves obtaining funding from private investors, venture capital firms, angel investors, or private equity firms. Unlike public financing, where companies raise funds by issuing stocks or bonds to the general public through the stock market, private financing involves a more limited pool of investors.
Private financing options can include equity investments, where investors provide capital in exchange for an ownership stake in the company, or debt financing, where companies borrow money and repay it with interest over a specified period. Other forms of private financing may involve convertible notes, mezzanine financing, or strategic partnerships with larger companies.
Private financing is often sought by startups or early-stage companies that may not yet meet the requirements for public offerings or prefer to maintain greater control over their operations. It allows these companies to secure the necessary capital to fund their growth, research and development, marketing efforts, and operational expenses.
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Fill in the missing words. (Seroll through the dropdown to see all potential answers) For a bicycle manufacturer, a vendor who provides three models of padded seats would be a providing a Another company providing rubber to the wendor that makes wheels for the bicycle mancifacturer would be a 2nd tier suppliet Other parts of the bicycle supply chain include the distribution cenfer and a retail stere. both providing a If a customer can pick the seat model, frame color. and handlebar style, the design is and
The bicycle supply chain encompasses a variety of different elements, including manufacturers, vendors, distributors, and retail outlets. The relationship between each of these entities is crucial for ensuring that bicycles are produced and delivered efficiently.
For a bicycle manufacturer, a vendor who provides three models of padded seats would be providing a component. This is because padded seats are one of many individual parts that are used to build a complete bicycle. Other common components include wheels, handlebars, and frames.
Another company providing rubber to the vendor that makes wheels for the bicycle manufacturer would be a second-tier supplier. This is because the company is not directly involved in the production of the bicycle, but rather provides materials that are used to create one of its components.
Other parts of the bicycle supply chain include the distribution center and a retail store. Both of these entities play a crucial role in getting the bicycle from the manufacturer to the end consumer.
The distribution center is responsible for storing and transporting bicycles and components, while the retail store is responsible for selling the bicycles to customers. If a customer can pick the seat model, frame color, and handlebar style, the design is customizable.
This means that the customer has the ability to choose from a variety of different options to create a bike that meets their specific needs and preferences.
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Which of the following is true regarding intangible assets?
A) They can have infinite or finite lives
B) Their costs are always amortized
C) Their costs must be expensed immediately
D) They are easier to value than tangible assets
Intangible assets are assets that do not have a physical existence and are not financial instruments.
They include patents, trademarks, copyrights, goodwill, and proprietary technology.
Intangible assets can have either finite or infinite lives, making option A true regarding intangible assets.
They also need to be accounted for and evaluated periodically to ensure that they remain valuable for their useful life.
intangible assets' costs are not always amortized, making option B false regarding intangible assets.
They can also not be expensed immediately since they offer long-term benefits,
making option C false regarding intangible assets.
Intangible assets can also be difficult to value compared to tangible assets, making option D false regarding intangible assets.
In conclusion, option A is true regarding intangible assets.
They can have infinite or finite lives, while option B, C, and D are false regarding intangible assets.
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gdi industries produces three types of plates: ceramic, glass, and plastic. a condensed segmented income statement for a recent period follows: segmented income statement ceramic glass plastic total sales $100,000 $125,000 $40,000 $265,000 variable expenses $50,000 $65,000 $29,000 $144,000 contribution margin $50,000 $60,000 $11,000 $121,000 fixed expenses $15,000 $20,000 $12,000 $47,000 net income (loss) $35,000 $40,000 ($1,000) $74,000 assume none of the fixed expenses for the plastic line is avoidable. what will be total net income if the plastic line is dropped?
If the plastic line is dropped, the total net income will be affected. To calculate the new total net income, we need to subtract the fixed expenses for the plastic line from the previous total net income.
In the given segmented income statement, the fixed expenses for the plastic line are $12,000. The previous total net income is $74,000. To find the new total net income, we subtract the fixed expenses for the plastic line from the previous total net income.
Therefore, if the plastic line is dropped, the new total net income will be $62,000. In the given segmented income statement, the fixed expenses for the plastic line are $12,000. The previous total net income is $74,000.
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he expected costs for the maintenance department of stazler, inc., for the coming year include: fixed costs (salaries, tools): $61,845 per year variable costs (supplies): $1.45 per maintenance hour estimated usage by: assembly department 4,800 fabricating department 6,100 packaging department 10,800 total maintenance hours 21,700 actual usage by: assembly department 3,875 fabricating department 6,200 packaging department 10,000 total maintenance hours 20,075
1) The single charging rate for the Maintenance Department is $4.30 per maintenance hour.
2) The Allocation of Maintenance based on the Single Rate is as follows:
Assembly department = $16,663
Fabricating department = $26,600
Packaging department = $43,000.
How the maintenance costs are allocated:The first step is the computation of the single charging rate, which is the total costs (fixed and variable) divided by the total maintenance hours.
The next step is the allocation of the overhead to the user departments based on the defined criterion.
Expected Costs for the Maintenance Department:
Fixed costs per year = $61,845
Variable cost per maintenance hour = $1.45
Estimated usage:Assembly department = 4,800
Fabricating department = 6,100
Packaging department = 10,800
Total maintenance hours = 21,700
Total estimated variable cost = $31,465 (1.45 x 21,700)
Total costs = $93,310 ($61,845 + $31,465)
Estimated maintenance cost per hour = $4.30 ($93,310 ÷ 21,700)
Actual usage:
Assembly department = 3,875
Fabricating department = 6,200
Packaging department = 10,000
Allocation of Maintenance based on the Single Rate:
Assembly department = $16,663 (3,875 x $4.30)
Fabricating department = $26,600 (6,200 x $4.30)
Packaging department = $43,000 (10,000 x $4.30)
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Question Completion:1. Calculate a single charging rate for the Maintenance Department.
2. Use the the rate to assign the costs of the Maintenance Department to the user departments based on actual usage.
The price of rice is 0.2 cents per calorie and the price of fish is 20 cents per calorie. The minimum daily caloric intake for survival is 1,200 calories. The global poverty rate is $1.90. There are 100 cents in a dollar. a. With a $1.90 budget, what is the maximum number of calories someone can purchase if they only buy rice. b. With the same budget and the additional constraint that eating the equivalent of 10 calories of fish per day, how much rice can be purchased and what is the total caloric intake per day?
a) For a $1.90 budget, it is possible to purchase: $1.90 x 100 cents / $1 = 190 cents. If rice is being bought with this budget and the price of rice is 0.2 cents per calorie, then the maximum number of calories that can be purchased is:
190 cents ÷ 0.2 cents per calorie = 950 calories.b) When eating the equivalent of 10 calories of fish per day, the caloric requirement that needs to be met is: 1,200 - 10 = 1,190 calories.Using the budget of $1.90 with the price of rice at 0.2 cents per calorie, the maximum amount of calories one can purchase is: 190 cents ÷ 0.2 cents per calorie = 950 calories.
Since the caloric requirement is 1,190 calories and 10 calories is already being consumed from fish, the total amount of calories needed from rice is: 1,190 - 10 = 1,180 calories.
Using the price of rice at 0.2 cents per calorie and the total amount of calories needed from rice at 1,180 calories, the cost of rice is: 1,180 calories x 0.2 cents per calorie = 236 cents. The total amount of cents left from the budget of $1.90 after buying the rice is: 190 cents - 236 cents = -46 cents. This means the budget is not sufficient to purchase the amount of rice needed for the daily caloric requirement. Thus, it is not possible to calculate the total caloric intake per day.
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In presence of external economies of scale, a country's industry with cumulative output to date will experience a unit cost. lower; lower higher; constant higher; higher higher; lower
External economies of scale are the external advantages that result from an increase in industry size beyond the boundaries of an individual firm.
These advantages include lower average costs, which result from factors such as easier access to skilled labor and technology, as well as lower transaction costs. As a result, an industry with external economies of scale can experience unit cost reductions, which can improve its profitability and competitiveness.
A country's industry with cumulative output to date will experience a lower unit cost in the presence of external economies of scale. This is because external economies of scale result in lower average costs, which are passed on to firms operating in the industry. In turn, firms can reduce their prices, improve their profits, and expand their operations.
Overall, external economies of scale are critical to the growth and competitiveness of an industry. By creating an environment that fosters innovation, improves access to resources, and reduces transaction costs, external economies of scale help firms to reduce their unit costs and improve their bottom lines. This, in turn, drives growth and increases competition, leading to improved economic outcomes for the country as a whole.
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On January 1, 2022, Liberty Bank issues 5500,000,6%, five-year bonds, with interest payable on July 1 and January 1.5 Since the market interest rate is 5%, the bonds seli for 5521,830 . Requirement 1: This bond will sell at a Recuirement 2: For the issue date and first semi-annual period, complete the table below and show your calculations in the workspace provided.
Requirement 1: This bond will sell at a premium. This is because the market interest rate is lower than the coupon rate on the bonds (6%). Requirement 2:
Calculation of bond price:
Calculation of Present value of principal:
FV = $500,000,
r = 2.5% (5%/2),
n = 10 (5 x 2)
Semi-annual coupon = 6%/2 = 3%
PMT = $15,000
PV = $500,000/(1+0.025)10
= $379,179.33
Calculation of Present value of annuity:
PMT = $15,000,
r = 2.5%,
n = 10PV
=[tex]$15,000 x [(1-1/(1+0.025)10)/0.025][/tex]
PV = $132,650.92
Calculation of bond price:
Price = PV of annuity + PV of principal
Price = $132,650.92 + $379,179.33
Price = $511,830.25
On the first interest payment date, the interest will be calculated on the face value of the bond.
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Carla Lopez deposits $1,800 a year into her retirement account. If these funds have average earnings of 7 percent over the 40 years until her retirement, what will be the value of her retirement account? Use Exhibit 1-B. (Round your discount factor to 3 decimal places and final answer to the nearest whole dollar.)
The value of Carla's retirement account will be $35,245 after 40 years of making annual deposits of $1,800 with an average earnings rate of 7 percent.
Carla Lopez deposits $1,800 into her retirement account annually. Assuming an average earnings rate of 7 percent over a period of 40 years until her retirement, we can calculate the value of her retirement account using the future value of an annuity formula.
First, we need to calculate the discount factor, which is given by the formula:
Discount factor = [1 - (1 + r)^(-n)] / r
Here, the annual payment is $1,800, the rate of return is 7 percent, and the time period is 40 years. Plugging in these values, we have:
Discount factor = [1 - (1 + 7%)^(-40)] / 7% = 19.5807
Now, we can calculate the future value of the annuity by multiplying the annuity payment ($1,800) by the discount factor:
Future value of annuity = Annuity payment x Discount factor = $1,800 x 19.5807 = $35,245
Therefore, the value of Carla's retirement account will be $35,245 after 40 years of making annual deposits of $1,800 with an average earnings rate of 7 percent.
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