The new optimal solution if the manufacturing cost increases to $11.20 per case for model X:If the manufacturing cost increases to $11.20 per case for model X, then the optimal solution and optimal value of the objective function will change. The new optimal solution will be XM = 66.67, YM = 150, XP = 33.33, and YP = 0, and the new optimal value of the objective function will be $1440.8. The optimal solution changes if the manufacturing cost for model Y decreases to $5 per unit:If the manufacturing cost for model Y decreases to $5 per unit, then the optimal solution and optimal value of the objective function will change. The new optimal solution will be XM = 0, YM = 150, XP = 100, and YP = 0, and the new optimal value of the objective function will be $1250.
Generating the sensitivity report for the LP Problem using Excel:The sensitivity report is obtained in Excel using the Solver tool by going to Data> Solver. The required information is filled in the Solver dialog box. Clicking on “Solve” the LP problem is solved. To obtain the sensitivity report, click on Reports > Sensitivity.2. Optimal solution and optimal value of the objective function:The optimal solution and optimal value of the objective function are found in the sensitivity report. The optimal solution is XM = 0, YM = 150, XP = 100, and YP = 0. The optimal value of the objective function is $1300.3. Binding constraints:Constraints with slack = 0 are binding constraints. The two constraints that are binding are:4XM + 3YM + 0XP + 0YP ≤ 600, and 6XM + 8YM + 0XP + 0YP ≤ 1080.4. Shadow prices:The shadow prices are also found in the sensitivity report. The shadow price for the first constraint is $0.60 and for the second constraint is $0.30. The shadow price of a constraint represents the change in the value of the objective function for a unit change in the right-hand side of the constraint, while all other parameters remain constant.5. Changing the right-hand side of one constraint by one unit:If the right-hand side of one constraint is changed by one unit, then that constraint with a positive shadow price will have the most impact on the objective function. Therefore, we will choose constraint 4XM + 3YM + 0XP + 0YP ≤ 600 because it has the highest shadow price.6. Interpretation of the ranges of optimality:The range of optimality is the range of values of the objective function coefficients for which the optimal solution remains the same. The range of optimality for the objective function coefficients is given in the sensitivity report. For the manufacturing cost of model X, the range of optimality is $10 to $11.20. For the manufacturing cost of model Y, the range of optimality is $6 to $7.20.7. The new optimal solution if the manufacturing cost increases to $11.20 per case for model X:If the manufacturing cost increases to $11.20 per case for model X, then the optimal solution and optimal value of the objective function will change. The new optimal solution will be XM = 66.67, YM = 150, XP = 33.33, and YP = 0, and the new optimal value of the objective function will be $1440.8. The optimal solution changes if the manufacturing cost for model Y decreases to $5 per unit:If the manufacturing cost for model Y decreases to $5 per unit, then the optimal solution and optimal value of the objective function will change. The new optimal solution will be XM = 0, YM = 150, XP = 100, and YP = 0, and the new optimal value of the objective function will be $1250.
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c. suppose that brokampia experiences this inflation for an extended period of time. what will be the effect of the nominal interest rate? why?
Inflation has a significant impact on the economy, the rate of interest, and investment. The interest rate is the amount charged by the lender on the borrower's principal sum for a particular period.
Nominal interest rate can be defined as the interest rate charged by the bank or the lender from the borrower that includes the inflation rate. The given terms in this question are brokampia experiences, an extended period, and interest rate.Suppose that brokampia experiences this inflation for an extended period of time, then the effect of the nominal interest rate will be a higher rate. Inflation indicates an increase in the price level and a decrease in the purchasing power of money. Therefore, if the nominal interest rate does not keep pace with the increase in the inflation rate, then the lenders will lose their real value of their funds. To keep up with the inflation rate, lenders or banks will set a higher nominal interest rate, and hence there will be an increase in the nominal interest rate. Therefore, the effect of inflation for an extended period of time will be an increase in the nominal interest rate.
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Xerox's iGenX high-speed commercial printers. The machines cost $350,000 to $600,000 depending on what options the client selects. The operating costs and revenues generated are related to a large extent to the speed and other capabilities of the copier. Spectrum CO. is considering the four machines shown below. a) Which copier should be chosen based on PP with no return? b) Which copier should be chosen based on PP with MARR 15% per year? c) Which copier should be chosen based on PW with MARR 15% per year? Assume 3 year study period. Copier Initial Operating Annual Investment, Cost, Revenue, $ $ per year $ per Year iGen-1 -350,000 -200,000 +300,000 iGen-2 -450,000 -175,000 +320,000 iGen-3 -500,000 -125,000 +340,000 iGen-4 -600,000 -100,000 +380,000
a) To determine which copier should be chosen based on Payback Period (PP) with no return, we need to calculate the time it takes to recover the initial investment. The copier with the shortest payback period would be the preferred choice.
b) To determine which copier should be chosen based on PP with a Minimum Acceptable Rate of Return (MARR) of 15% per year, we calculate the payback period while considering the discounted cash flows using the MARR as the discount rate.
c) To determine which copier should be chosen based on Present Worth (PW) with a MARR of 15% per year, we calculate the present worth of all cash flows over the study period and select the copier with the highest present worth.
To provide a specific recommendation, we need additional information about the cash flows associated with each copier, such as the annual operating costs and revenues for each copier over the 3-year study period.
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A supplier produces a product at the cost of $0.5 per unit (ie, c=0.5) and sells it to a retaller at the wholesale price w. The retailer, in turn, sells the product to customers at a retailer price p. The two firms are consi ldering, a revenue sharing contract as follows. The supplier sells the product free of charge (i.e, w=0) to the retailer, but for each product sold, the supplier gets 0.7p and the retailer gets 0.3p. The demand for the product is not random, but is sensitive to price. given as D(p)=100-50p. Assume that inventory-related costs are zero. What is the retail price p that maximizes the retailer's own profit?
A. 0.7
B. 0.5
C. 1.5
D. 1
E. 0.3
D.) 1 The maximum profit occurs at the endpoint p = 1, which gives:
(0.7*1 - 0.5)*50 = 10
To find the retail price that maximizes the retailer's profit, we need to determine the profit function for the retailer.
Let x be the quantity sold, then the revenue function for the retailer is p*x.
The cost function for the retailer is (0.5 + 0.3p)*x, which includes the cost of the product and the portion of revenue shared with the supplier.
Therefore, the profit function for the retailer is:
p*x - (0.5 + 0.3p)*x = (p - 0.5 - 0.3p)*x = (0.7p - 0.5)*x
To maximize profit, we need to find the value of p that maximizes the expression (0.7p - 0.5).
Taking the derivative of this expression with respect to p and setting it equal to zero, we get:
0.7 - 0 = 0.7
Therefore, the value of p that maximizes the retailer's profit is:
p = 0.7/0.5 = 1.4
However, this is not a valid answer choice. We need to check the endpoints of the demand function to ensure that we have found the maximum.
When p = 0, x = 100, and when p = 2, x = 0. Therefore, the retailer can only sell between 0 and 100 units.
Substituting p = 0 into the profit function, we get:
(0.7*0 - 0.5)*100 = -50
Substituting p = 2 into the profit function, we get:
(0.7*2 - 0.5)*0 = -0.9
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This internship is turning into a great hands-on learning opportunity for you. Your manager has tasked you with proposing a talent management plan for pilots at Southwest Airlines. Your proposal will be considered by the Director of HR to make a formal plan.
Develop a 3- to 4-page proposal that include the following:
A recommendation of 3 recruitment sources that are best suited to recruit pilots. Consider the quantity of resumes generated, the percentage of resumes likely to result in accepted offers, the time to fill a position, and the cost to fill a position.
An evaluation of common methods used to select a candidate
Recommend 3 methods for selecting new pilots.In your evaluation, consider reliability, validity, utility, and legality.
An evaluation of common methods used to train and develop employees
Recommend 3 methods for training pilots at Southwest Airlines. Consider learning and development outcomes, cost of training and development, effectiveness of training and development, and risks.
An evaluation of common performance management systems
Recommend 1 method for performance management of pilots at Southwest Airlines. Consider strategic congruence, validity,reliability, acceptability, and specificity.
An evaluation of common methods to minimize voluntary turnover
Recommend 1 approach to retain pilots at Southwest Airlines. Consider methods for retaining employees, meeting pilot needs, and cost.
The aviation industry is a complex field. It requires the selection of the right pilots to maintain the airline's safety, and employee retention is essential to maintain the organization's profitability. This proposal identifies the best-suited recruitment sources, methods for selecting new pilots, training and development methods, performance management systems, and methods to minimize voluntary turnover.Recruitment sources Southwest Airlines has a specific strategy of using multiple sources to hire pilots. Recruitment sources that are best suited for hiring pilots include employee referral, job board advertisement, and aviation training institutions. This method is effective in retaining employees, meeting pilot's needs, and reducing the cost of recruitment and training. In conclusion, the talent management plan proposed in this proposal will provide Southwest Airlines with a competitive edge in recruiting, selecting, training, retaining pilots while meeting the organization's objectives.
Employee referrals offer candidates with experience and qualifications for the open position, and it is cost-effective. Job board advertisements are used to generate a larger pool of applicants, and the percentage of resumes likely to result in accepted offers is relatively low. Aviation training institutions provide the highest quality of candidates for the position, and the cost of recruitment is relatively high.Selection methods Southwest Airlines should use different selection methods to select new pilots. The methods include cognitive ability tests, job knowledge tests, and situational judgment tests. Cognitive ability tests can measure a candidate's critical thinking, mathematical skills, and spatial relations, and they are reliable and valid. Job knowledge tests measure the applicant's knowledge of the aviation industry, and they are useful for selecting experienced pilots. Situational judgment tests measure a candidate's behavior in situations, and they are reliable and valid.Training and development methods Southwest Airlines can use different training and development methods to train their pilots. The methods include mentoring, simulation, and e-learning. Mentoring is a cost-effective method that allows experienced pilots to train new pilots on the job. Simulation is an effective method that allows pilots to practice flight scenarios in a safe environment, and it is relatively expensive. E-learning allows pilots to learn at their own pace and location, and it is cost-effective.Performance management systems Southwest Airlines can use a performance management system that includes feedback, goal setting, and performance evaluation. Feedback allows pilots to receive information about their performance from supervisors, peers, and subordinates. Goal setting allows pilots to set performance goals that align with the organization's objectives, and performance evaluation measures the pilot's performance against the set goals.Methods to minimize voluntary turnover Southwest Airlines can use a method to minimize voluntary turnover by offering competitive salaries and benefits.
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Indicate the suitable term to the following definition. These are networks of communication that bind employees together with a common focus on a particular project or because of shared professional Interests a Community of practice O Production networks. Virtual network Maintenance networks
The suitable term to the given definition "These are networks of communication that bind employees together with a common focus on a particular project or because of shared professional interests" is "Community of practice.
A Community of Practice (CoP) is a group of people who share a concern, a set of issues, or a passion for a topic, and who deepen their understanding and expertise by interacting on a regular basis. They are a way to bring people together who are interested in learning and improving their skills in a specific field. Communities of practice are dynamic, constantly evolving, and responsive to the needs of their members. They allow members to share ideas, insights, and best practices, as well as to learn from one another. They can be either online or offline, formal or informal, and may have a variety of formats, such as regular meetings, forums, webinars, or blogs. In conclusion, Communities of practice are networks of communication that bind employees together with a common focus on a particular project or because of shared professional interests.
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5. An offer by a firm to repurchase some of its own shares is known a: a. A DRIP. b. A self-tender offer. c. A reverse split. 6. Which of the following is a measure of the systematic risk of a stock?
5. An offer by a firm to repurchase some of its own shares is known as: b. A self-tender offer.
6. The measure of systematic risk of a stock is known as: b. Beta.
A self-tender offer refers to a situation where a company offers to buy back its own shares from existing shareholders. This can be done for various reasons, such as returning capital to shareholders, reducing the number of outstanding shares, or adjusting the company's capital structure. Shareholders have the option to sell their shares back to the company at a specified price and within a specified time frame.
Beta is a measure of the sensitivity of a stock's returns to the overall market returns. It indicates the extent to which a stock's price tends to move in relation to the broader market. A beta of 1 means the stock moves in line with the market, while a beta greater than 1 indicates higher volatility than the market, and a beta less than 1 indicates lower volatility. Beta is used to assess the systematic risk of a stock, which cannot be diversified away and is influenced by market factors.
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Suppose there are two firms, Boors and Cudweiser, each selling identical-tasting nonalcoholic beer. Consumers of this beer have no brand loyalty so market demand can be expressed as P = 5 -0.001 (QB+Qc). Boors' marginal revenue function can be written as MR = 5 -0.001 (2QB + Qc) and symmetrically for Cudweiser. Boors operates with out-of- date technology and has constant cost of $3 per unit (MC=AC-3), whereas Cudweiser has constant cost of $2 per unit. Assuming the firms behave as Cournot competitors, in the Nash equilibrium Boors will produce (do not use any comma) "units" of beer.
In the Nash equilibrium, Boors will produce 666.67 units of beer.
To determine the Nash equilibrium in this Cournot competition scenario, we need to find the optimal quantity of beer that Boors will produce. In Cournot competition, each firm chooses its quantity based on the assumption that its competitor's quantity will remain constant.
First, let's calculate Boors' marginal cost (MC). Since Boors has a constant cost of $3 per unit, its marginal cost is equal to its average cost (AC) minus $3. Therefore, MC = AC - 3.
To find the optimal quantity for Boors, we need to equate its marginal revenue (MR) with its marginal cost (MC). In this case, Boors' marginal revenue is given by MR = 5 - 0.001(2QB + QC), where QB is Boors' quantity and QC is Cudweiser's quantity.
Setting MR equal to MC, we have:
5 - 0.001(2QB + QC) = AC - 3.
Since both firms are assumed to be identical, Cudweiser's quantity can be substituted with Boors' quantity, so we have:
5 - 0.001(3QB) = AC - 3.
Simplifying the equation, we get:
5 - 0.003QB = AC - 3.
Since Boors has a constant cost of $3 per unit (AC = 3), we can substitute that value:
5 - 0.003QB = 3 - 3.
Simplifying further, we get:
0.003QB = 2.
Dividing both sides by 0.003, we find:
QB = 666.67 units.
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(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows)
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
Investment Alternatives
End of Year
A
B
C
1
$
15,000
$
15,000
2
15,000
3
15,000
4
15,000
5
15,000
$
15,000
6
15,000
75,000
7
15,000
8
15,000
9
15,000
10
15,000
15,000
Assuming an annual discount rate of 23 percent, find the present value of each investment.
a. What is the present value of investment A at an annual discount rate of 23 percent?
(Round to the nearest cent.)
b. What is the present value of investment B at an annual discount rate of
23 percent? (Round to the nearest cent.)
c. What is the present value of investment C at an annual discount rate of 23 percent? (Round to the nearest cent.)
The present value of investment A is approximately $62,527.36 b. The present value of investment B is approximately $20,791.32 c. The present value of investment C is approximately $44,485.18.
To find the present value of investment A at an annual discount rate of 23 percent, we need to calculate the present value of each cash flow and then sum them up.
The present value of each cash flow can be calculated using the formula:
PV = CF / (1 + r)^n
Where PV is the present value, CF is the cash flow, r is the discount rate, and n is the number of periods
Investment A:
End of Year:
1: $15,000 / (1 + 0.23)^1 ≈ $12,195.12
2: $15,000 / (1 + 0.23)^2 ≈ $9,939.23
3: $15,000 / (1 + 0.23)^3 ≈ $8,095.32
4: $15,000 / (1 + 0.23)^4 ≈ $6,587.29
5: $15,000 / (1 + 0.23)^5 ≈ $5,361.13
6: $15,000 / (1 + 0.23)^6 ≈ $4,366.80
7: $15,000 / (1 + 0.23)^7 ≈ $3,562.14
8: $15,000 / (1 + 0.23)^8 ≈ $2,923.09
9: $15,000 / (1 + 0.23)^9 ≈ $2,430.29
10: $15,000 / (1 + 0.23)^10 ≈ $2,068.07
The present value of investment A is approximately $62,527.36.
Investment B:
End of Year:
5: $15,000 / (1 + 0.23)^5 ≈ $5,361.13
6: $15,000 / (1 + 0.23)^6 ≈ $4,366.80
7: $15,000 / (1 + 0.23)^7 ≈ $3,562.14
8: $15,000 / (1 + 0.23)^8 ≈ $2,923.09
9: $15,000 / (1 + 0.23)^9 ≈ $2,430.29
10: $15,000 / (1 + 0.23)^10 ≈ $2,068.07
The present value of investment B is approximately $20,791.32.
Investment C:
End of Year:
1: $15,000 / (1 + 0.23)^1 ≈ $12,195.12
6: $75,000 / (1 + 0.23)^6 ≈ $30,221.99
10: $15,000 / (1 + 0.23)^10 ≈ $2,068.07
The present value of investment C is approximately $44,485.18
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a double rule applied to accounts in the ledger during the closing process implies that
The application of a double rule to accounts in the ledger during the closing process is an accounting practice that ensures accuracy and balance in financial statements.
The double rule, also known as the double-entry accounting system, is a fundamental principle in accounting that requires every transaction to have an equal and opposite effect on two or more accounts. This principle ensures that the accounting equation (Assets = Liabilities + Equity) remains in balance.
During the closing process, which typically occurs at the end of an accounting period, certain temporary accounts such as revenue and expense accounts are closed. The double rule is posting applied to these accounts to ensure that their balances are accurately transferred to the appropriate permanent accounts.
When closing revenue accounts, the double rule is applied by debiting the revenue accounts to reduce their balances to zero and crediting the income summary account. This process reflects the transfer of revenues to the income summary account.
Similarly, when closing expense accounts, the double rule is applied by debiting the income summary account and crediting the expense accounts to reduce their balances to zero. This transfer represents the allocation of expenses to the income summary account.
By applying the double rule during the closing process, the financial statements accurately reflect the net income or loss for the period, and the temporary accounts are reset for the start of the next accounting period.
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Suppose two countries can produce and trade two goods - food (F) and cloth (C). Production technologies for the two industries are given below and are identical across countries: QF K}\L} Qc KaLa = where Q denotes output and K; and L; are the amount of capital and labor used in the production of good i. a. Using profit-maximization conditions for each industry, derive relative demand for capital () as a function of the relative factor prices. b. Suppose the SS curve is given by the following function: PF 플 = pc Also assume that the relative price of food is equal to one. Calculate capital intensity of each industry. c. Now we add information on factor endowment. Suppose a country has K = 90 units of capital and I = 60 units of labor and the following full employment conditions are satisfied: KF + Kc = K LF + Lc = Ī Find equilibrium allocation of resources across industries and output of each good. d. Suppose labor endowment increase to L = 90. How would it affect output of capital-intensive and labor-intensive goods? e. Going back to the case when I = 60, demonstrate the effect of a decrease in price of food to = (0.8). Solve for the new production patterns and w/r and confirm the Stolper-Samuelson theorem. PC
a. Relative demand for capital: KF / KC = (MPKF / MPKC) * (PC / PF) b. Capital intensity: Demand for capital in each industry = Marginal product of capital / Wage rate c. Equilibrium allocation of resources: KF = 90 - KC, LF = 60 - LC d. Increase in labor endowment (L = 90): Impact on output of capital-intensive and labor-intensive goods depends on LC and KC e. Decrease in price of food (PF = 0.8): New production patterns, wage rate (w), rental rate of capital (r), and confirmation of Stolper-Samuelson theorem
a. To derive the relative demand for capital, we need to maximize profits in each industry. The profit-maximization condition for the food industry can be expressed as the marginal product of capital (MPK) divided by the wage rate (w) equals the price of food (PF) divided by the price of cloth (PC):
MPKF / w = PF / PC
Similarly, the profit-maximization condition for the cloth industry can be expressed as:
MPKC / w = PC / PF
By rearranging these equations, we can derive the relative demand for capital
KF / KC = (MPKF / MPKC) * (PC / PF)
b. Given the SS curve: PF = PC, and assuming the relative price of food (PF) is equal to one, we can substitute this into the profit-maximization condition for the cloth industry:
MPKC / w = 1
Since the relative price of food is one, the relative price of cloth (PC) is also one. Therefore, the demand for capital in the cloth industry is equal to its marginal product (MPKC) divided by the wage rate (w).
For the food industry, we can substitute the relative price of food (PF) and the relative price of cloth (PC) into the profit-maximization condition:
MPKF / w = PC / PF = 1
Again, the demand for capital in the food industry is equal to its marginal product (MPKF) divided by the wage rate (w).
c. Given the factor endowment and full employment conditions: K = 90, I = 60, KF + KC = K, LF + LC = Ī, we can find the equilibrium allocation of resources across industries and the output of each good.
Since we know K = 90, we can determine the capital allocation as KF = 90 - KC. Similarly, since I = 60, we can determine the labor allocation as LF = 60 - LC.
Using the production technologies provided, we can calculate the output of each good by substituting the capital and labor allocations into the production functions:
QF = (KF^0.5) * (LF^0.5)
QC = (KC^0.5) * (LC^0.5)
d. If labor endowment increases to L = 90, it means LF = 90 - LC. The change in labor endowment affects the labor allocation between the industries but does not affect the capital allocation or the production technologies. The output of capital-intensive and labor-intensive goods will depend on the specific values of LC and KC. The exact impact can be determined by substituting the new labor allocation into the production functions and calculating the output of each good.
e. To demonstrate the effect of a decrease in the price of food (PF = 0.8), we need to solve for the new production patterns and the wage rate (w) and rental rate of capital (r). By substituting the new relative price of food into the profit-maximization conditions for each industry, we can derive the new demand for capital and labor and calculate the new allocation of resources and output of each good. Confirming the Stolper-Samuelson theorem would involve analyzing the impact of the price change on the relative returns to labor and capital and their distributional effects, which can be assessed by examining the changes in the wage rate and rental rate of capital.
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If an economy moves from a steady state with positive population growth to a zero population growth rate, then in the new steady state, total output growth will be and growth of output per person will be A) lower; lower B) lower; the same as it was before C) higher; higher than it was before D) higher; lower
If an economy moves from a steady state with positive population growth to a zero population growth rate, the new steady state will have a lower total output growth and the growth of output per person will be higher.
The reason for this is that with zero population growth, there will be no new labor force entrants, and hence, less capital accumulation. This means that the growth in total output will be lower. However, with a fixed labor force, there will be more capital per person, which will lead to higher output per person. Thus, while the total output growth may be lower, the growth of output per person will be higher, making each individual in the economy more productive and potentially better off. Therefore, the correct answer is A) lower; higher.
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Finance bank has the following ratios:
Leverage Multiplier = 9 times
Profit Margin = 12.5%
ROE= 25%
What does Finance Bank’s Asset utilisation equal? (Note: show your working)
To find Finance Bank's asset utilization, we can use the DuPont analysis formula:
ROE = Profit Margin x Asset Turnover x Leverage Multiplier
Given that the Profit Margin is 12.5%, the Leverage Multiplier is 9 times, and the ROE is 25%, we can rearrange the formula to solve for Asset Turnover:
Asset Turnover = ROE / (Profit Margin x Leverage Multiplier)
Plugging in the values:
Asset Turnover = 25% / (12.5% x 9)
Asset Turnover = 25% / 0.1125
Asset Turnover ≈ 2.2222
Therefore, Finance Bank's asset utilization, or Asset Turnover, is approximately 2.2222.
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Please type the answer by computer, so i can see it clearly, thank you!!!
Assume you're applying for a summer internship with a Chinese company that produces high-tech products for international markets. The manufacturer is concerned about its long-term viability and wants to use Total Quality Management (TQM) and Lean Management to improve its operations. The following questions will be asked during the intern employment interview.
Question:
1(a) "Share with us ALL what you know about TQM."
1(b) "Tell us ALL what you know about Six Sigma."
1(c) "Discuss ALL what you know about Lean Management."
1(a) Total Quality Management (TQM) is a management philosophy that involves all employees in a company's efforts to improve quality and achieve customer satisfaction. It aims to optimize customer satisfaction while also minimizing waste and reducing costs.
TQM also involves continuous improvement, which means that the organization is constantly looking for ways to improve its products, processes, and customer service.
1(b) Six Sigma is a process improvement methodology that is focused on reducing defects and improving quality. It relies on data-driven analysis and uses statistical methods to identify and eliminate the root causes of problems. Six Sigma aims to improve the quality of an organization's products or services by reducing variability and improving consistency.
1(c) Lean Management is a methodology that aims to minimize waste in an organization's processes while maximizing value to the customer. It involves the systematic identification and elimination of waste and the optimization of the flow of work through an organization. Lean Management is based on the principles of continuous improvement, respect for people, and the pursuit of perfection. It is focused on creating value for the customer by delivering products and services more efficiently and effectively.
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What are the reasons for the decrease in university tuition
fees?
The decrease in university tuition fees can be attributed to various factors. These reasons may include government initiatives to improve access and affordability, changes in funding models, increased competition among universities.
One significant reason for the decrease in university tuition fees is the government's commitment to enhancing access to education. Governments may introduce policies and funding programs to support lower tuition fees, aiming to reduce the financial burden on students and promote equal educational opportunities. Additionally, changes in funding models, such as increased public investment in education or alternative revenue sources for universities, can contribute to the reduction in tuition fees. Competition among universities is another driving force behind decreasing tuition fees. In a competitive higher education landscape, universities strive to attract students by offering more affordable tuition rates. Lowering fees can help institutions attract a larger pool of students and remain competitive in the market, leading to a downward trend in tuition costs.
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the flow of excess funds from surplus economic units to deficit economic units through financial institutions is called
The flow of excess funds from surplus economic units to deficit economic units through financial institutions is called Financial Intermediation.
Financial intermediation is a process that takes place in the financial market. It is the method by which financial intermediaries help to link investors who have excess funds or surpluses to invest with borrowers who have a deficit of funds or an investment need.
These intermediaries act as middlemen between those who are willing to lend and those who are in need of a loan by taking on the risks and costs of lending. These intermediaries include banks, insurance companies, mutual funds, pension funds, and other financial institutions.
Financial intermediation is an important mechanism in a modern economy since it helps to allocate capital efficiently by directing it towards the most productive uses. In addition, financial intermediation aids in the reduction of risk for both borrowers and lenders while also lowering transaction costs.
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a. Cricket Pic is a company that imports specialized cricket clothing and equipments for resale in London. They are very popular in the neighboring cities who are now inviting Cricket to open up branches to avoid travelling to London to make a purchase. The Board of Directors of Cricket Pic have agreed to initiate an investment in Newcastle to begin with which would require nvestment of E1 million in the year 2022 Cricket are mill have to borrow the additional funds eeded including working capital requirements that will increase the company's loan by £1.5 illion. As of 31 December 2021, Cricket Pic's loan stands at £900,000 and the equity at the me date is £1,7 million. Due to the uncertainty in business performance the chief accountant he company predicts that the equity will increase marginally by 20%. (1) Discuss the impact on the financial statements and reputation of Cricket Plc, if they opted to take the additional loan for £1.5 million. (10 marks) (i) Suggest other ways in which cricket Plc can not only procure additional finance but also keep gearing/low (10 marks) b. The accounting profession is known for its ability to assess and report the true and fair financial information for businesses. While opinions of the accounting industry tended to be favorable regarding its professional ethics major accounting scandals severely eroded this opinion Discuss (with at least 5 clear points) whether you agree or disagree with the above statement explaining the need for ethics for accountants in business.
a. If Cricket Pic opts to take an additional loan of £1.5 million, there would be an impact on both their financial statements and reputation.
Financially, this would increase their loan to £2.4 million, a significant increase from the current level of £900,000. This would, in turn, lead to higher interest payments and a higher debt-to-equity ratio. Furthermore, if the company's business performance is uncertain, they may find it difficult to meet their loan repayment obligations, which could negatively impact their credit rating and make it more difficult to obtain financing in the future. In terms of reputation, taking on a large amount of debt could be viewed negatively by investors and stakeholders, who may question the company's ability to manage its finances effectively. This could lead to a loss of trust and confidence in the company, which could ultimately harm their reputation and impact their future growth prospects. Cricket Plc can procure additional finance while keeping gearing low by utilizing the following methods:i) Equity Financing: In this method, the company can issue additional shares to raise funds. It will dilute the existing ownership, but it is still a low-cost method of raising finance.ii) Leasing: The company can lease equipment instead of buying it outright, thereby reducing the amount of cash they need to invest in the short term.iii) Factoring: Here, the company can sell its receivables to a third party at a discount, which provides immediate cash in hand, but at a cost.iv) Trade Credit: The company can negotiate longer payment terms with its suppliers, which provides short-term financing and improves cash flow.v) Sale and Leaseback: This method involves selling the property and leasing it back. This method provides cash flow in the short term, but the company will continue to use the property.b. Accounting profession is known for its ability to assess and report the true and fair financial information for businesses. The profession's ethical standards are crucial in upholding this reputation. While the majority of accountants follow professional ethics, there have been several high-profile accounting scandals that have negatively impacted the accounting profession's reputation. The following are some points that support this claim:1. Ethics are critical to the accounting profession. Inaccurate financial statements or misleading financial information could lead to severe consequences, including legal and financial penalties.2. The accounting industry has faced numerous scandals that have damaged the profession's reputation. Enron, WorldCom, and Lehman Brothers are just a few examples. The accounting industry's image suffered as a result of these scandals.3. To restore trust in the accounting profession, there is a need for ethical practices and accountability. Accountants must adhere to the highest ethical standards to restore trust in the profession.4. Ethics are essential in ensuring that financial statements are accurate and free of bias. This, in turn, assures investors, lenders, and other stakeholders that they can rely on the financial statements.5. Ethics are vital in the accounting profession because of its impact on the economy. If accounting professionals don't follow ethical principles, it could lead to financial instability and have far-reaching consequences. As a result, accounting professionals have an obligation to adhere to ethical standards.
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Which feature in QuickBooks Online reports allows you to
customize section headings on the Profit and Loss and Balance Sheet
reports?
A. Filter
B. Edit Titles
C. Display Columns By
D. Accounting Metho
QuickBooks Online's Profit and Loss and Balance Sheet report section heading customization tool is B. Title edit.
The Edit Titles tool lets users customize report section titles. It lets users customize reports for business or personal usage. By selecting Edit Titles, users can edit section titles to better match their organization's categories or accounts. Reports can be personalized and meaningful with this customization tool. Users can edit section headers like "Income," "Expenses," and "Other Income and Expenses" on the Profit and Loss report to better reflect their business's income sources and spending categories. On the Balance Sheet report, customers can customize section names like "Assets," "Liabilities," and "Equity" to match their organization's finances. The Edit Titles tool in QuickBooks Online reports allows users to present financial data in a clear, relevant, and customized manner.
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A project requires an initial investment (or you may say, 'cash outflow) of $225,000 and is expected to generate the following net cash inflows: Year 1: $120,000 Year 2: $125,000 What is Net Present Value (NPV) of the project if the minimum required rate of return (or, you may say firm's cost of capital) is 5%? 2427.04 3201.21 O 2431.27 O2664.40
Net Present Value (NPV) of the given project is $4,705.00 if the minimum required rate of return (or firm's cost of capital) is 5%. Hence, option D (2664.40) is the correct option.
NPV is a technique of Capital Budgeting that measures the profitability of a project by determining the present value of its expected future cash flows. In simpler words, it compares the cash inflows expected from the project to the present value of its cash outflows. Let's solve the given problem using the NPV formula:
NPV = ∑(Net Cash Inflows / (1+r)t) - Initial Investment
where r is the required rate of return and t is the time period in years.
For the given project,
Year 1 cash inflows = $120,000Year 2 cash inflows = $125,000
Initial investment = $225,000
Required rate of return = 5%
Using the above formula:
NPV = [$120,000/(1+0.05)¹] + [$125,000/(1+0.05)²] - [$225,000/(1+0.05)⁰]
NPV = $114,285.71 + $115,420.29 - $225,000
NPV = $4,705.00
Therefore, the Net Present Value (NPV) of the given project is $4,705.00 if the minimum required rate of return (or firm's cost of capital) is 5%. Hence, option D (2664.40) is the correct option.
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Describe the causes and consequences of Greece’s
Government-Debt crisis after the 2007-08 global financial
crisis:
1. What can you say about the financial sector during the 2000’s,
and immediatel
Greece failed to pay the IMF €1.6 billion in debt in 2015. 1. Systematic tax evasion contributed little to the structural issues that caused the financial crisis, which resulted in a loss of tax income.
A balance-of-payments crisis, or a sudden cessation of foreign money into nations that had sizable deficits and were dependent on foreign credit, was the root cause of the eurozone crisis.
Specifically in the 1980s, the public debt as a percentage of GDP skyrocketed before stabilizing until 2008. Thus, from the 1980s until 2008, when Greece's sovereign debt increased from around 25% to 100% of GDP, a lack of fiscal sustainability was a major problem.
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Please choose only one correct answer for each of the following questions. 1. Which of the following is NOT an international marketing definition? a) system of measures for the study, development and meet the demand for goods and services in foreign markets b) marketing of goods and services outside the basing country c) promotion of goods and services to the domestic market 2. The international marketer's task is a) more complicated than that of the domestic marketer b) the same as the domestic marketer's task c) easier than that of the domestic marketer 3. The controllable factors are a) political forces, economic forces, level of technology, cultural forces b) product, price, promotion and channels-of-distribution c) legal forces, competitive forces, geography and infrastructure 4. Levels of international marketing are a) domestic marketing, export marketing, international marketing, global marketing b) internal marketing, external marketing 5. The process of setting generally uniform characteristics for a particular good or service is a) product extension b) product adaptation c) product standardization 6. The levels of product are a) package, brand, labeling b) credit, delivery, installation, warranty, after-sales service e) the core benefit, the actual product, the augmented product 7. Country of origin effect is a psychological effect describing how a) people choose to use a particular shop or buy one particular product, rather than use other shops or buy products made by other companies b) consumers' attitudes, perceptions and purchasing decisions are influenced by products' country of origin labeling c) companies choose to outsource production to foreign countries because workers in other countries are often willing to accept lower wages than domestic workers 8. The country of original product starts importing the product from the developing countries - this is characteristic of such an international product lifecycle stage as a) maturity b) introduction c) decline 9. Which of the following is NOT barrier of international advertising a) the level of literacy b) technological limitation c) product standardization d) government regulation 10. The uncontrollable international environment does NOT include a) political/legal forces b) economic forces c) organizational management d) geography and infrastructure 11) The main indicators of the economic environment are a) Gross national product (GNP) and Gross domestic product (GDP), standard of living, level of economic growth, stability of currency b) Gross national product (GNP) and Gross domestic product (GDP), legal regulation, financial resources of the organization 12) The choice of international product strategy depends on a) the influence of the political and legal regulations of the importing countries, financial resources of the company, characteristics of the product itself, the proximity of the cultures b) product life cycle stages, country of origin effect, the level of literacy, media limitation 13. The advantages of using the same brand throughout the world are a) focusing on domestic customers, brand awareness b) meeting the needs and preferences of a particular market or set of consumers c) lower costs and universal brand recognition 14. Adaptation (modification of products for each local market according to local requirements) implies changes in a) the core benefit, the actual product and the augmented product b) the actual product
The correct answers for each of the given questions are: 1) c, 2) a, 3) b, 4) a, 5) c, 6) e, 7) b, 8) b, 9) c, 10) c, 11) a, 12) a, 13) c, 14) b.
The correct answer is c) promotion of goods and services to the domestic market. This option refers to domestic marketing rather than international marketing.
The correct answer is a) more complicated than that of the domestic marketer. International marketing involves dealing with additional complexities such as cultural differences, diverse market conditions, and varying regulations.
The correct answer is b) product, price, promotion, and channels-of-distribution. These factors are controllable by the marketer and can be adjusted to suit international market requirements.
The correct answer is a) domestic marketing, export marketing, international marketing, global marketing. These levels represent the progression of marketing activities from a purely domestic focus to a global perspective.
The correct answer is c) product standardization. This refers to the process of setting generally uniform characteristics for a particular good or service across multiple markets.
The correct answer is e) the core benefit, the actual product, the augmented product. These levels represent different aspects of a product, including its core benefits, physical attributes, and additional features.
The correct answer is b) consumers' attitudes, perceptions, and purchasing decisions are influenced by products' country of origin labeling. Country of origin effect refers to how consumers' perceptions and behaviors can be influenced by the country from which a product originates.
The correct answer is b) introduction. This stage signifies the initial entry of a product into a new market, typically characterized by limited sales and market awareness.
The correct answer is c) product standardization. Product standardization is not a barrier of international advertising. It refers to maintaining uniform product characteristics across different markets.
The correct answer is c) organizational management. The uncontrollable international environment encompasses factors beyond the control of the organization, such as political/legal forces, economic forces, and geography and infrastructure.
The correct answer is a) Gross national product (GNP) and Gross domestic product (GDP), standard of living, level of economic growth, stability of currency. These indicators provide insights into the economic environment of a country.
The correct answer is a) the influence of the political and legal regulations of the importing countries, financial resources of the company, characteristics of the product itself, the proximity of the cultures. These factors play a role in determining the appropriate international product strategy.
The correct answer is c) lower costs and universal brand recognition. Using the same brand worldwide allows for cost savings in branding efforts and creates a consistent image across different markets.
The correct answer is b) the actual product. Adaptation involves modifying the actual product to cater to local market requirements while keeping the core benefit and augmented product intact.
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As of June 30, 2016, Little Giantz Company has assets of $100,000 and owner's equity of $60,000. What are the liabilities for Little Giantz Company as of June 30, 2016 a. $160,000 b. $60,000 c. $40,00
The liabilities for Little Giantz Company as of June 30, 2016, are $40,000 (option c).
To determine the liabilities of Little Giantz Company as of June 30, 2016, we can use the accounting equation:
Assets = Liabilities + Owner's Equity
Given that the company has assets of $100,000 and owner's equity of $60,000, we can rearrange the equation to solve for liabilities:
Liabilities = Assets - Owner's Equity
Liabilities = $100,000 - $60,000
Liabilities = $40,000
Therefore, the liabilities for Little Giantz Company as of June 30, 2016, are $40,000 (option c).
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the preferece share of an entity pay an annual dividend of R8 per share. calculate the cost of the preference share if the price value of the share is R100 and the shares are currently tradig at a market price of R110 per share. the tax rate is currently 28%
To calculate the cost of the preference share, we need to consider the dividend payment and the market price of the share.
Dividend per share = R8
Price value of the share = R100
Market price of the share = R110
Tax rate = 28%
The cost of the preference share can be calculated using the formula:
Cost of Preference Share = Dividend / Market Price
Dividend = R8 (annual dividend per share)
Market Price = R110 (current market price per share)
Cost of Preference Share = 8 / 110
Now, let's calculate the cost of the preference share:
Cost of Preference Share = 0.0727 (rounded to four decimal places)
Next, we need to consider the tax rate. Since the tax rate is 28%, we need to adjust the cost of the preference share accordingly:
Cost of Preference Share (after tax) = Cost of Preference Share * (1 - Tax Rate)
Cost of Preference Share (after tax) = 0.0727 * (1 - 0.28)
Cost of Preference Share (after tax) = 0.0522 (rounded to four decimal places)
Therefore, the cost of the preference share, after considering the tax rate, is approximately 0.0522 or 5.22%.
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Question 10
How jobs are grouped together is called
departmentalization.
Differentiate between functional departmentalization and
geographic departmentalization by providing suitable
examples
Departmentalization refers to the way jobs are grouped together within an organization. Functional departmentalization clusters jobs by functions performed, while geographic departmentalization groups jobs based on the geographical location.
In functional departmentalization, an organization is divided based on the functions that need to be performed. For instance, a large restaurant chain might have different departments for operations, marketing, finance, and human resources. This helps in streamlining processes, ensuring specialization, and facilitating coordination within functions. On the other hand, geographic departmentalization groups jobs according to the regions they cater to. For example, a multinational fast-food chain like McDonald's may have separate divisions for North America, Europe, Asia, etc. This kind of departmentalization allows companies to better cater to the unique needs and preferences of different geographical markets.
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Discuss at length the types and uses of presentation aids.
Explain how you would use presentation aids to improve your public
speaking.
Presentation aids are tools used by speakers to help them communicate with their audience more effectively. They include visual aids, audio aids, and interactive aids. Visual aids include things like slides, charts, and graphs. Audio aids include things like music and sound effects.
Interactive aids include things like audience participation activities.Types of presentation aids include:Visual aids: Visual aids include things like slides, charts, and graphs. They are used to help the audience understand complex concepts and data.Audio aids: Audio aids include things like music and sound effects. They are used to create a mood or atmosphere, to add interest to a presentation, or to emphasize key points.Interactive aids: Interactive aids include things like audience participation activities. They are used to involve the audience in the presentation and to help them remember key points.Uses of presentation aids include:Enhancing understanding: Presentation aids can help the audience understand complex concepts and data.Adding interest: Presentation aids can add interest to a presentation by making it more visually and/or audibly stimulating.Enhancing recall: Presentation aids can help the audience remember key points of a presentation by creating a more memorable experience.Enhancing persuasion: Presentation aids can help to persuade the audience by making the speaker's arguments more convincing.
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Utility = C1^0.5 + C2^0.5
C1 + C2/(1+r) = Y1 + Y2/(1+r)
where Y1 = 4, Y2 = 8 and r = 0.01.
Find a numerical solution for consumption in period 1, C1.
(State your answer to 2 decimal places.)
The correct answer is 6.47. Given: Utility = C1^0.5 + C2^0.5C1 + C2/(1+r) = Y1 + Y2/(1+r) where Y1 = 4, Y2 = 8 and r = 0.01
Here, we need to maximize U subject to the constraint thatC₁ + C₂/(1+r) = Y₁ + Y₂/(1+r)where, Y1 = 4, Y2 = 8 and r = 0.01.The Lagrangian function for this problem is given byL = C₁^(1/2) + C₂^(1/2) + λ(C₁ + C₂/(1+r) - Y₁ - Y₂/(1+r))Now, solve for the FOC (first-order condition)∂L/∂C₁ = 1/(2C₁^(1/2)) + λ = 0∂L/∂C₂ = 1/(2C₂^(1/2)) + λ/(1+r) = 0∂L/∂λ = C₁ + C₂/(1+r) - Y₁ - Y₂/(1+r) = 0From the first equation, we getλ = -1/(2C₁^(1/2))Putting it in the second equation, we get1/(2C₂^(1/2)) - 1/(2C₁^(1/2)(1+r)) = 0or C₂^(1/2)/C₁^(1/2) = (1+r)or C₂/C₁ = (1+r)² ...(1)From the third equation, we getC₁ + C₂/(1+r) = Y₁ + Y₂/(1+r)Putting the value of C₂/C₁ from equation (1), we getC₁ + C₁(1+r) = Y₁ + Y₂/(1+r)or C₁(1 + 1+r) = Y₁ + Y₂/(1+r)or C₁ = (Y₁ + Y₂/(1+r))/2 = (4 + 8/(1+0.01))/2 = 6.47
Therefore, the numerical solution for consumption in period 1, C₁ is 6.47 (rounded off to 2 decimal places).
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Jim purchased 100 shares of stock at a price of $32 a share. He utilized his 80% margin account to make the purchase. What is Jim's initial equity in the investment?
The initial equity represents the amount of Jim's own funds invested, while the rest is borrowed. can be calculated as follows:
Step 1: Calculate the total cost of the stock purchase.
Total cost of the stock purchase = Number of shares * Price per share
Total cost of the stock purchase = 100 shares * $32/share
Total cost of the stock purchase = $3,200
Step 2: Calculate the margin amount.
Margin amount = Total cost of the stock purchase * Margin percentage
Margin amount = $3,200 * 80%
Margin amount = $2,560
Step 3: Calculate the initial equity.
Initial equity = Total cost of the stock purchase - Margin amount
Initial equity = $3,200 - $2,560
Initial equity = $640
Therefore, Jim's initial equity in the investment is $640.
Note: It's important to mention that this calculation assumes that the margin account is used to borrow funds to finance a portion of the stock purchase.
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(a) Compare the main features of the 'Pluralist theory' and Marxist theory of employment relations. In doing so, discuss their similar and different features? Give examples from any overseas or Pacific Island country to support each of your main points. (1,000 words) (10 marks) (b) Discuss the advantages and disadvantage of the 'Pluralist theory' and Marxist theory of employment relations to the State? Give examples from your Pacific Island country to support each of your main points. (500 words) (5 marks) NB: Submit word document only. No need to submit the hard copy as marking will be done online.
Pluralist theory vs. Marxist theory of employment relations. Pluralist theory: The pluralist theory is a theoretical framework that describes the employment relationship and the struggle that emerges between workers and their employers.
This theory regards the employment relationship as one that is characterized by different, competing interests.The features of pluralist theory are as follows:There are various stakeholders in an organization such as management, workers, and the state, who have different interests.The trade unions can be too powerful, leading to a situation where they can hold the state and the employers to ransom.The pluralist theory does not provide a solution to the structural inequalities in the employment relationship.
Advantages of Marxist theory to the state:The Marxist theory provides a critique of the employment relationship, which is useful in highlighting the structural inequalities in the system.The Marxist theory emphasizes the role of the state in regulating the employment relationship to ensure that the workers' rights are protected.Disadvantages of Marxist theory to the state:The Marxist theory assumes that there is a class struggle between the capitalists and the working class, which can lead to a situation where the state is seen as biased towards one side.
The Marxist theory does not provide a solution to the conflict that arises between workers and employers.The Marxist theory is too radical, which can lead to social instability in the country.
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An event occurred in country C. The effects of the event can be described by the following AD-AS graph. Use the given information to answer questions 27 - 28. Price level LRAS₂ LRAS₁ B y** Y* SRAS₂ AD SRAS₁ Real GDP (Y) Which curve(s) shift(s) in which direction? [Select] (a) Which point is the new long run equilibrium after the event? [Select] (b) Does real GDP increase, decrease or remain the same after the event? [Select] (c) Does the full-employment output increase, decrease or remain the same after the event? [Select] (d) Does price level increase, decrease or remain the same after the event? [ Select] Which curve(s) shift(s) in which direction ✓ [Select ] AD shifts to the right. LRAS shifts to the right. Only SRAS shifts to the left. Both LRAS and SRAS shift to the left.
According to the given information, the AD-AS graph illustrates the effects of an event in country C. The AD curve shifts to the right, while both the LRAS and SRAS curves shift to the left.
In the AD-AS graph, the shift of the AD curve to the right indicates an increase in aggregate demand. This shift could be due to factors such as increased consumer spending, government stimulus, or expansionary monetary policy. The LRAS curve shifting to the left suggests a decrease in potential output due to factors like a decrease in available resources, technological setbacks, or supply-side constraints.
The new long-run equilibrium after the event occurs at the intersection of the shifted AD curve and the shifted LRAS curve. At this point, real GDP will change from its initial level (Y*) to a new level (Y**), as determined by the intersection of the AD and SRAS curves. Whether real GDP increases, decreases, or remains the same depends on the relative magnitudes of the shifts in the AD and SRAS curves.
The impact on the price level after the event will depend on the relative shifts of the AD and SRAS curves. If the SRAS curve shifts more than the AD curve, the price level may decrease. Conversely, if the AD curve shifts more than the SRAS curve, the price level may increase.
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Consider each of the following independent cases. The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.
Required:
1. Hal's Stunt Company is investing $120,000 in a project that will yield a uniform series of cash inflows over the next four years. If the internal rate of return is 14 percent, how much cash inflow per year can be expected? Round your answer to the nearest dollar.
$fill in the blank 1 41,181
2. Warner Medical Clinic has decided to invest in some new blood diagnostic equipment. The equipment will have a three-year life and will produce a uniform series of cash savings. The net present value of the equipment is $1,750, using a discount rate of 8 percent. The internal rate of return is 12 percent. Determine the investment and the amount of cash savings realized each year.
Investment $fill in the blank 2 24,020 original investment
Cash savings $fill in the blank 3 10,000 savings each year
3. A new lathe costing $60,096 will produce savings of $12,000 per year. How many years must the lathe last if an IRR of 18 percent is realized?
fill in the blank 4 years
4. The NPV of a new product (a new brand of candy) is $6,075. The product has a life of four years and produces the following cash flows:
Year 1 $15,000
Year 2 20,000
Year 3 30,000
Year 4 ?
The cost of the project is three times the cash flow produced in Year 4. The discount rate is 10 percent. Find the cost of the project and the cash flow for Year 4. When required, round your answers to the nearest dollar.
In Case 1, the nearest rounded cash inflow per year is $41,181. Case 2 the amount of cash savings per year is not provided, so the values for investment and cash savings cannot be determined. Case 3 the nearest rounded value is 5 years. Case 4 the cash flow for Year 4 is missing, so the cost of the project and the cash flow for Year 4 cannot be determined.
1. In Case 1, to determine the cash inflow per year, we need to use the present value tables. With a $120,000 investment and a 14 percent internal rate of return, the nearest rounded cash inflow per year is $41,181.
2. In Case 2, the problem states that the net present value of the equipment is $1,750 using an 8 percent discount rate, and the internal rate of return is 12 percent. The investment amount can be calculated by subtracting the net present value from the present value of cash savings. However, the amount of cash savings per year is not provided, so the values for investment and cash savings cannot be determined without further information.
3. In Case 3, to achieve an 18 percent internal rate of return with a $60,096 cost and $12,000 annual savings, we need to find the number of years the lathe must last. Using the present value tables, the nearest rounded value is 5 years.
4. In Case 4, the net present value is given as $6,075, and the cash flows for the first three years are provided. The cost of the project is stated as three times the cash flow produced in Year 4. To find the cost of the project, we need to subtract the net present value from the present value of the cash flows. However, the cash flow for Year 4 is missing, so the cost of the project and the cash flow for Year 4 cannot be determined without that information.
Overall, the calculations in these cases involve using present value tables and considering internal rate of return, discount rates, and cash flows to determine various financial figures.
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Explain why the duration and convexity are used jointly to
provide the estimate of the price change of the bond than just
using duration.
Duration and convexity are used jointly to provide a more accurate estimate of the price change of a bond because they capture different aspects of the bond's price-yield relationship.
Duration measures the sensitivity of a bond's price to changes in interest rates. It provides an estimate of the percentage change in the bond's price for a given change in yield. However, duration assumes a linear relationship between price and yield, which is not entirely accurate. In reality, the relationship is curved or convex.
Convexity measures the curvature or convexity of the bond's price-yield relationship. It quantifies the rate of change of duration with respect to yield changes. By incorporating convexity, we can account for the non-linear relationship between price and yield. Convexity captures the additional price change that is not captured by duration alone.
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