The statement "depending on the capacity of the plant, a company may best be served by further processing some of the product and leaving the rest as is, with no further processing" is true.
What is the reason?This is because the capacity of a plant can impact the cost and efficiency of processing a product. If the plant has a high capacity, it may be more cost-effective to further process some of the product to increase its value and profitability.
However, if the plant has limited capacity, it may be more practical to leave some of the product as is without further processing to avoid overloading the plant and reducing efficiency.
Ultimately, the decision on whether to further process a product or not depends on the plant's capacity and the potential impact on profitability and efficiency.
Hence the statement is true.
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the bill of resources (bor) is a record of parent-component relationships and all the required materials, equipment time, staff, and other resources needed, including the usage quantities.
False.
The bill of materials (BOM) is a record of parent-component relationships and all the required materials, equipment time, staff, and other resources needed, including the usage quantities.
The Bill of Resources (BOR) is an essential document that outlines the necessary materials, equipment, time, staff, and other resources required for a particular project or product. Bill of Resources serves as a comprehensive record of parent-component relationships, indicating how different elements are interconnected within the system.
By detailing usage quantities, the BOR helps project managers and teams effectively plan, allocate, and manage resources, ensuring the project progresses efficiently and within budget constraints. The BOR functions as a vital tool for effective resource management and project planning, contributing to the overall success of the project or product development process.
Therefore, instead of the bill of resources (bor), the bill of materials (bom) is a record of parent-component relationships and all the required materials, equipment time, staff, and other resources needed, including the usage quantities.
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Daley Company prepared the following aging of receivables analysis at December 31.
Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 580,000 $ 398,000 $ 92,000 $ 38,000 $ 20,000 $ 32,000 Percent uncollectible 3 % 4 % 7 % 9 % 12 % a. Complete a table to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,800 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300 debit.
a) The estimated balance of Allowance for Doubtful Accounts, which is
$41,560.
b) The adjusting entry is:
Debit: Bad Debts Expense $37,760
Credit: Allowance for Doubtful Accounts $37,760
c) The Adjusting entry:
Debit: Bad Debts Expense $41,260
Credit: Allowance for Doubtful Accounts $41,260
Calculating allowance for Doubtful Accounts using aging of accounts receivable is an important concept in accounting, as it helps businesses estimate the amount of uncollectible accounts they may have and make adjustments to their financial statements accordingly.
Let's look at the table provided in the problem, which shows the Days Past Due and Percent Uncollectible for various categories of accounts receivable. Using this information, we can estimate the balance of Allowance for Doubtful Accounts by multiplying the balance of each category by its corresponding percent uncollectible and then summing the results.
a. Here is a table showing the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable:
Days Past Due Total
0 1 to 30 31 to 60 61 to 90 Over 90
Accounts receivable $580,000 $398,000 $92,000 $38,000 $20,000 $32,000
Percent uncollectible 3% 4% 7% 9% 12%
Estimated uncollectible amount $11,940 $15,920 $6,440 $3,420 $3,840
Estimated balance of Allowance for Doubtful Accounts $41,560
To get the estimated uncollectible amount for each category, we simply multiply the balance of that category by its corresponding percent uncollectible.
For example, the estimated uncollectible amount for accounts receivable that are 1 to 30 days past due is $398,000 x 4% = $15,920. We repeat this process for each category and then sum the results to get the estimated balance of Allowance for Doubtful Accounts, which is $41,560.
b. Now that we have the estimated balance of Allowance for Doubtful Accounts, we can use it to prepare the adjusting entry to record Bad Debts Expense. The entry will debit Bad Debts Expense and credit Allowance for Doubtful Accounts for the estimated balance we just calculated. We also need to take into account the unadjusted balance in the Allowance for Doubtful Accounts, which is given as a $3,800 credit. The adjusting entry is:
Debit: Bad Debts Expense $37,760
Credit: Allowance for Doubtful Accounts $37,760
c. In part c, we are given a different unadjusted balance in the Allowance for Doubtful Accounts, which is a $300 debit. This means that the company has previously overestimated its bad debt expense and needs to adjust for it in the current period. Using the same estimated balance of Allowance for Doubtful Accounts from part a, we can prepare the adjusting entry:
Debit: Bad Debts Expense $41,260
Credit: Allowance for Doubtful Accounts $41,260
In this case, we are debiting a higher amount of Bad Debts Expense because we need to adjust for the previous overestimation. We credit Allowance for Doubtful Accounts for the full estimated balance, which will result in a net balance of zero for the account after the adjustment.
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According to the IGM poll, most economists think that the crowding out effects were stronger than the stimulative effects of ARRA.
True
False
'The given statement is false because the increase in government spending resulting from ARRA may have decreased private investment and overall economic growth, rather than boosting it.'
This belief is based on the theory of crowding out, which suggests that increased government spending can lead to higher interest rates and decreased private investment. This can occur because the government may compete with private investors for the same resources, such as borrowing from the same pool of savings.
However, it is important to note that there is still debate among economists regarding the effectiveness of ARRA and the extent of crowding out effects. Some argue that the increased government spending provided a necessary boost to the economy during a time of recession, and that the crowding out effects may have been limited.
Overall, while most economists surveyed in the IGM poll believe that the crowding out effects were stronger than the stimulative effects of ARRA, it is still a topic of ongoing discussion and analysis in the field of economics.
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Verizon has a market value based capital structure of 32% debt and 68% common equity financing. Verizon has 30-year semi-annual coupon bonds outstanding selling at 112% of their $1000 par value with an annual coupon rate of 6.2% Verizon’s beta is 0.70 according to ValueLine. The 10-year T-bond rate is 2.8% and investors demand an 11.2% market return. The company’s marginal tax rate is 40%. What is Verizon’s WACC based on this information??
The value of Verizon's WACC is 5.26%.
The semi-annual coupon rate of 6.2% translates to a semi-annual payment of $31 per bond. With a current selling price of 112% of par, the yield to maturity is calculated as follows:
YTM = [($31 x 2) / $1,120] + [($1,120 - $1,000) / (30 x $1,000 + $1,120)]
= 5.11%
Therefore, the after-tax cost of debt is:
After-tax cost of debt = YTM x (1 - Tax rate)
= 5.11% x (1 - 0.40)
= 3.07%
Next, we need to determine the cost of equity. Using the beta of 0.70 and the 10-year T-bond rate of 2.8%, we can calculate the cost of equity using the Capital Asset Pricing Model (CAPM):
Cost of equity = Risk-free rate + Beta x Market risk premium
= 2.8% + 0.70 x (11.2% - 2.8%)
= 8.96%
Finally, we can calculate the WACC:
WACC = (Market value of debt / Total market value) x After-tax cost of debt +
(Market value of equity / Total market value) x Cost of equity
= (0.32 x $1,120 million / ($1,120 million + $2,088 million)) x 3.07% +
(0.68 x $2,088 million / ($1,120 million + $2,088 million)) x 8.96%
= 5.26%
Therefore, based on the given information, Verizon's WACC is 5.26%.
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the opportunity cost of income is typically termed: a) leisure time. b) avocation time. c) time at home. d) time away from work.
The opportunity cost of income refers to the benefits that you give up in order to earn more money. In other words, it's the value of the next best thing that you could have done with your time instead of working. Therefore, the correct answer to this question is a) leisure time.
When you choose to work longer hours or take on an additional job, you're sacrificing time that you could have spent doing something else, such as pursuing a hobby or spending time with loved ones. This is why it's important to weigh the opportunity cost of income against the potential benefits of earning more money. While increasing your income may be tempting, it's essential to consider how it will impact your overall quality of life and whether it's worth sacrificing other aspects of your life, such as your avocation time or leisure time. In conclusion, making informed decisions about how you spend your time is crucial for achieving a healthy work-life balance.
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The SKC Corporation plans to borrow $1,000 for a 90-day period. At maturity the firm will repay the $1,000 principal amount plus $35 interest. What is the effective annual rate of interest (APR) for the loan?
To calculate the effective annual rate of interest (APR) for the loan, we need to first find the interest rate for the 90-day period. The interest paid is $35, and the principal amount is $1,000, so we can use the formula:
Interest rate = (Interest paid / Principal amount) x (360 / Number of days)
Substituting the values, we get:
Interest rate = ($35 / $1,000) x (360 / 90) = 0.14 or 14%
Now, we can use the formula to calculate the effective annual rate of interest:
Effective annual rate = (1 + Interest rate / Number of periods)^Number of periods - 1
Substituting the values, we get:
Effective annual rate = (1 + 0.14 / 4)^4 - 1 = 0.152 or 15.2%
Therefore, the effective annual rate of interest (APR) for the loan is 15.2%. it's important for businesses to calculate the effective annual rate of interest when taking out loans to determine the true cost of borrowing. In this case, the SKC Corporation is borrowing $1,000 for a 90-day period and will repay the principal amount plus $35 interest. By using the formulas above, we calculated the interest rate for the 90-day period to be 14%. However, this doesn't reflect the true cost of borrowing over a year. To account for this, we used the effective annual rate formula to calculate the true interest rate, which is 15.2%. By knowing this rate, the SKC Corporation can make better-informed decisions about their borrowing options and ensure they're getting the best deal possible.
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At his last performance evaluation, Elliott agreed to earn 20 continuing education credits before his next annual review. Ten months later, he still has not earned any. From this lack of action, we can infer that ________
From Elliott's lack of action in earning continuing education credits, we can infer that he may be lacking motivation or commitment to fulfill the agreed-upon requirement.
It suggests a possible lack of initiative or prioritization on his part to fulfill his professional development obligations.
It could indicate a lack of interest in personal growth or a disregard for the importance of continuing education in advancing his career. Additionally, it may imply a lack of accountability or follow-through on his commitments. Ultimately, the lack of action suggests a potential disengagement or complacency on Elliott's part regarding his professional development.
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Marketing analytics is becoming an important subject, and its demand is growing rapidly in many industries. ONE of the following statements about marketing analytics IS INCORRECT. Which one?
A. The marketing analytics cannot analyze the human communication data, because voice communication cannot be converted to the digitized data, thus not suitable for quantitative marketing analysis
B. Explosive growth and availability of the big data call for the experts with analytical skills
C. The data generated by the social media of the peer to peer communication present the opportunity for the marketing analytics to study the word of mouth communication.
D. The growing opportunities for the marketing analytics are not limited to the emergence of the marketing big data but also the data collected from the surveillance footage and medical devices.
The incorrect statement about marketing analytics is A. While it is true that voice communication cannot be easily converted into digitized data, there are still ways to analyze human communication data.
For example, sentiment analysis tools can analyze the tone and emotional cues in voice communication to derive insights about customer preferences and behaviors. Additionally, there are other forms of data, such as customer feedback surveys or call transcripts, that can be used to understand customer communication patterns. The explosive growth of big data, as mentioned in statement B, is indeed calling for more analytical skills in the field of marketing. Statements C and D are also correct, as social media and various other sources of data provide ample opportunities for marketing analytics to study and analyze customer behavior and preferences.
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economists argue that most professional athletes___
Economists argue that most professional athletes are overpaid.
This is because the salaries of professional athletes are often significantly higher than those of other professions with similar levels of education and training. Furthermore, the demand for professional sports is relatively inelastic, meaning that even if the price of attending a game or purchasing merchandise increases, fans will still pay for it.
his creates a situation where owners of sports teams can afford to pay their athletes extremely high salaries because they know that fans will continue to pay for tickets and merchandise.
Additionally, the salaries of professional athletes are often based on their market value, which is determined by the demand for their skills and the scarcity of similar talent. As a result, some economists argue that the high salaries of professional athletes reflect the distorted incentives and values of a society that places a premium on entertainment and spectacle rather than more productive and socially valuable pursuits.
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would you recommend the securities and exchange commission require the use of sparklines on the face of the financial statements? why or why not?
While sparklines could potentially make financial statements more accessible, there are concerns about oversimplification and increased costs.
The Securities and Exchange Commission (SEC) consider allowing the use of sparklines on the face of financial statements, but not necessarily require them. Sparklines are small, simple line graphs that provide a visual representation of data trends over time. They can help investors quickly grasp the performance of a company without having to dive deep into the numbers.
One reason to support the inclusion of sparklines is that they can make financial statements more user-friendly, particularly for non-expert investors. The visual nature of sparklines can help users quickly identify trends and patterns in financial performance. This could lead to better-informed investment decisions.
However, there are also reasons not to require sparklines. One concern is that they might oversimplify complex financial data and potentially lead to misinterpretation. Financial statements contain a wealth of information, and while sparklines can provide a quick snapshot, they may not capture the nuances and details needed for a thorough analysis.
Additionally, the implementation of sparklines could result in increased costs for companies as they would need to develop and maintain systems to create and update these visualizations. This could be particularly burdensome for smaller companies with limited resources.
In conclusion, while sparklines could potentially make financial statements more accessible, there are concerns about oversimplification and increased costs. The SEC should consider allowing their use, but not require them, giving companies the flexibility to choose the best way to present their financial information.
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An extensive study by Karolyi (1996) reportsi) the share price reacts favorably to cross-border listings.
ii) the total postlisting trading volume increases on average, and, for many issues, home-market trading volume also increases
iii) liquidity of trading in shares improves overall
iv) the stock's exposure to domestic market risk is significantly reduced and is associated with only a small increase
in global market risk
v) cross-border listings resulted in a net reduction in the cost of equity capital of 114 basis points on average
vi) stringent disclosure requirements are the greatest impediment to cross-border listingsO a. i), ii), and iii)
O b. i), ii), iii), iv), v), and vi)
O c. iii), iv), and v)
O d. iv), v), and vi)
The study by Karolyi (1996) suggests that cross-border listings have several positive effects on a company's share price, trading volume, liquidity, and cost of equity capital.
Firstly, the study found that the share price of a company reacts favorably to cross-border listings. This indicates that investors perceive cross-border listings as a positive signal of the company's value and growth potential. Secondly, the total post-listing trading volume increases on average, and for many issues, home-market trading volume also increases. This suggests that cross-border listings attract more investors and increase the overall demand for the company's shares. Thirdly, the liquidity of trading in shares improves overall. This means that the market becomes more efficient and it is easier for investors to buy and sell the company's shares.
Fourthly, the study found that the stock's exposure to domestic market risk is significantly reduced and is associated with only a small increase in global market risk. This means that cross-border listings help to diversify the company's risk and make it less dependent on the domestic market. Fifthly, cross-border listings resulted in a net reduction in the cost of equity capital of 114 basis points on average. This means that companies can raise capital more cheaply by listing their shares on foreign exchanges. Finally, the study found that stringent disclosure requirements are the greatest impediment to cross-border listings. This suggests that companies may face regulatory barriers when trying to list their shares on foreign exchanges. Therefore, the correct answer to the question is option b) i), ii), iii), iv), v), and vi).
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What are weak form, semi-strong form, and strong form efficiency? Does one form of efficiency imply another?
It is important to note that the three forms of efficiency do not necessarily imply each other.
The three forms of market efficiency are weak form, semi-strong form, and strong form efficiency. The weak form efficiency suggests that all past market data, such as stock prices, trading volume, etc., is already reflected in the current stock prices. The semi-strong form efficiency means that all publicly available information, such as financial reports, news, and press releases, is already incorporated into stock prices. The strong form efficiency proposes that all public and private information, including insider trading, is already reflected in the stock prices. It is important to note that the three forms of efficiency do not necessarily imply each other. For instance, if the market is weak form efficient, it does not imply that it is semi-strong or strong form efficient. Similarly, if the market is semi-strong form efficient, it does not imply that it is strong form efficient. In a nutshell, market efficiency is crucial for investors to make informed decisions and earn profits. Weak form efficiency implies that technical analysis may not lead to abnormal returns, whereas semi-strong and strong form efficiency suggests that fundamental analysis may not lead to abnormal returns. Investors need to be aware of the type of market efficiency to make informed investment decisions and earn returns that are commensurate with the risks involved.
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Weak form, semi-strong form, and strong form efficiency are levels of market efficiency, which indicate how well a market reflects all available information in its prices.
1. Weak form efficiency implies that current prices fully incorporate all historical market data, such as past prices and trading volumes. In this form, technical analysis cannot consistently produce excess returns since the market has already accounted for past trends.
2. Semi-strong form efficiency states that current prices not only reflect past market data but also include all publicly available information, such as financial statements and economic indicators. In this form, neither technical nor fundamental analysis can consistently produce excess returns, as public information is already integrated into market prices.
3. Strong form efficiency suggests that market prices fully incorporate all information, including both public and private (insider) information. In this form, no one can consistently achieve excess returns, as all information is already reflected in market prices.
Regarding the implication of one form over another, a higher level of efficiency (semi-strong or strong) would inherently imply the lower level (weak) efficiency. However, weak form efficiency does not necessarily imply semi-strong or strong form efficiency, as there may still be unexploited public or private information not reflected in market prices.
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Refer to Exhibit 20.1. A shift of the demand curve from D' to D will O a. decrease the exchange rate from E' to E. O b. cause the foreign currency to appreciate. O c. cause the supply curve to shift. O d. increase the exchange rate from E to E. O e. cause the domestic currency to depreciate.
There will be a change in the demand curve from D to D. From E to E should be the new exchange rate. Consequently, option (D) is the proper one.
In the world of finance, an exchange rate is the cost at which one currency will be exchanged for another. Currency can occasionally be supra-national (like the euro) or sub-national (like Hong Kong), despite the fact that they are typically national currencies.
The exchange rate is also thought to indicate the relative value of one nation's currency to another.
For example, the 131 Japanese yen to the US dollar demand curve interbank rate predicts that 131 will be traded for US$1 or that US$1 will be exchanged for 131.
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An increase in tax rate will decrease the budget balance
The relationship between tax rate and budget balance can be attributed to the fact that higher tax rates typically result in increased revenue for the government.
When tax rates are increased, individuals and businesses are required to pay a higher percentage of their income or profits to the government. This results in increased tax revenue for the government, which can positively impact the budget balance by reducing the deficit or increasing the surplus. However, the effect on the budget balance is not solely determined by the increase in tax rates.
Higher tax rates can also have unintended consequences. They can discourage individuals and businesses from working, investing, or spending, leading to reduced economic activity. This can have a negative impact on overall tax collections and potentially offset the initial increase in revenue from higher tax rates. Additionally, higher tax rates can reduce disposable income for individuals, which can affect consumer spending and further impact economic growth.
Therefore, while an increase in tax rates can initially contribute to a decrease in the budget balance through increased revenue, the overall impact on the budget balance will depend on the interplay of various factors, including the elasticity of taxable income, the overall state of the economy, and individual behavioral responses to higher tax rates.
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discuss the pros and cons of having the directors formally announce a firm’s future divi- dend policy.
The decision of whether or not to formally announce a firm's future dividend policy can have both advantages and disadvantages.
Pros:
1. Improved transparency: Formal announcements of the future dividend policy can help improve transparency. This can be helpful for shareholders who want to understand the company's plans for distributing profits and who may use this information to make investment decisions.
2. Stability and predictability: When a company formally announces its dividend policy, it can provide stability and predictability to the shareholders. This can increase the confidence of shareholders and help maintain a stable stock price.
3. Credibility: Formal announcements of a company's dividend policy can enhance the credibility of the firm, as it shows the company is committed to maintaining a long-term relationship with its shareholders.
Cons:
1. Reduced flexibility: Once a dividend policy is formally announced, it can become difficult for a company to change it. This can limit the flexibility of a company to adapt to changes in the business environment.
2. Market expectations: Formal announcements of dividend policy can create certain expectations among the market and shareholders, which can put pressure on the company to meet those expectations even if it is not in the best interest of the company.
3. Competitive disadvantage: Formal announcements of a dividend policy can create a competitive disadvantage for the company. Competitors may be able to use this information to their advantage, especially if they choose not to disclose their own dividend policies.
In conclusion, while formal announcements of dividend policies have advantages, they also have disadvantages. Companies must carefully consider their unique circumstances before making a decision.
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.1. What criteria would you use to determine how to award this money? 2. How would you divide up the $35,000? Provide explanation to support your answer. 3. Based on your allocation, what would be the potential positive and negative effects on their behavior and productivity, as individuals and as team members? How might it impact their future performance and cooperation with one another? 4. Would it be advisable to bring the team members into your decision-making process? Why/why not? If so, how would you do this? 5. How would you distribute the money (e.g. in their paycheck? to each person or group?) and why?
To determine how to award the money, I would consider several criteria, including performance, teamwork, innovation, and leadership. 2. I would divide up the $35,000 based on individual and team contributions.
I would allocate a portion of the money to individuals who demonstrated exceptional performance, leadership, and innovation.
1. To determine how to award the money, I would consider several criteria, including performance, teamwork, innovation, and leadership. I would also consider any specific goals or objectives that were met or exceeded during the evaluation period. Additionally, I would take into account the level of effort and dedication each individual or team displayed. Finally, I would consider any feedback from supervisors or colleagues who work closely with the team.
2. I would divide up the $35,000 based on individual and team contributions. I would allocate a portion of the money to individuals who demonstrated exceptional performance, leadership, and innovation. I would also allocate a portion of the money to teams who collaborated effectively and achieved specific goals or objectives. This approach recognizes and rewards both individual and team contributions, which can motivate employees to work harder and improve their performance.
3. The potential positive effects of this allocation on behavior and productivity would be improved motivation and morale, as well as increased cooperation and teamwork. The recognition and reward for their hard work and achievements would encourage employees to continue performing at a high level and strive for future success. However, there is also a risk of negative effects if the allocation is perceived as unfair or if it creates conflicts among employees or teams.
4. It would be advisable to bring team members into the decision-making process to ensure transparency and fairness. To do this, I would invite employees to provide feedback on the criteria used for the allocation, as well as the amount and distribution of the money. This would give employees a voice in the process and increase their buy-in to the final decision.
5. I would distribute the money through their paychecks, as this is the most efficient and equitable method. I would distribute the money to individuals who meet the criteria, and I would also allocate a portion to teams who worked collaboratively. This approach ensures that each individual and team receives recognition for their contributions, and it also provides an opportunity for employees to celebrate their achievements as a group.
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You are purchasing a 20-year, zero-coupon bond. The yield to maturity is 8.68 percent and the face value is $1,000. The interest rate is compounded semi-annually. What is the current market price? a. $106.67 b. $108.18 c. $182.80 d. $221.50 e. $228.47
The current market price of the bond is approximately $108.18, which corresponds to option (b).
The correct answer is option b.
To calculate the current market price of a 20-year, zero-coupon bond with a yield to maturity of 8.68% and a face value of $1,000, we can use the present value formula. Since the interest rate is compounded semi-annually, we'll need to adjust the yield to maturity and the number of periods accordingly.
First, divide the yield to maturity (8.68%) by 2 to account for semi-annual compounding: 8.68% / 2 = 4.34%. Convert this to a decimal by dividing by 100: 4.34% / 100 = 0.0434
Next, double the number of years to account for semi-annual compounding: 20 years * 2 = 40 periods.
Now, we can use the present value formula:
PV = FV / (1 + r)^n
Where PV is the current market price, FV is the face value ($1,000), r is the semi-annual interest rate (0.0434), and n is the number of periods (40).
PV = $1,000 / (1 + 0.0434)^40
PV ≈ $108.18
Therefore, the correct answer is option b.
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To calculate the current market price of the 20-year, zero-coupon bond, we need to use the formula: P = F / (1 + y/2)^(2n)
where P is the current market price, F is the face value, y is the yield to maturity, and n is the number of periods (in this case, 2 periods per year for 20 years, or 40 periods).Plugging in the given values, we get:
P = 1000 / (1 + 0.0868/2)^(2*20)
P = $182.80
Therefore, the current market price of the bond is $182.80 (option c).
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QUESTION 40 "If the exchange rate is 25 Korean won per US$, a jar of kimchi costs 150 won in South Korea, and a jar of kimchi costs $8 in New York, then a. the real exchange rate is greater than one and there is an arbitrage opportunity to buy kimchi in South Korea and sell in New York b. the real exchange rate is greater than one and there is an arbitrage opportunity to buy Kimchi in New York and sell in South Korea c. the real exchange rate is less than one and there is an arbitrage opportunity to buy kimchi in South Korea and sell in New York d. the real exchange rate is less than one and there is an arbitrage opportunity to buy kimchi in Newpork and sell in South Korea
The correct answer is c. The exchange rate tells us the price of one currency in terms of another currency. In this case, 25 Korean won can be exchanged for 1 US dollar. If a jar of kimchi costs 150 won in South Korea and $8 in New York, we can calculate the cost of kimchi in terms of US dollars by dividing 150 by 25 (the exchange rate): 150/25 = $6.
Therefore, kimchi is cheaper in South Korea than in New York. This creates an opportunity for arbitrage, which is the practice of buying an asset in one market and immediately selling it in another market at a higher price to make a profit. In this case, one can buy kimchi in South Korea for 150 won, exchange it for $6 in the US (using the exchange rate of 25 won per dollar), and sell it for $8, making a profit of $2 per jar. Therefore, the real exchange rate is less than one and there is an arbitrage opportunity to buy kimchi in South Korea and sell in New York.
The exchange rate is 25 Korean won per US$. To find the cost of a jar of kimchi in South Korea in US dollars, we can divide the price in won by the exchange rate: 150 won / 25 won per US$ = $6. The real exchange rate can be calculated as the price in South Korea divided by the price in New York: $6 / $8 = 0.75.
Since the real exchange rate is less than one (0.75), there is an arbitrage opportunity to buy kimchi in South Korea and sell it in New York. Therefore, the correct answer is c. the real exchange rate is less than one and there is an arbitrage opportunity to buy kimchi in South Korea and sell in New York.
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discuss whether unreimbursed employee business expenses can create an nol for an individual taxpayer.
As per current tax laws, Net Operating Loss (NOL) cannot be created for an individual taxpayer if there are unreimbursed employee business expenses. However, this may be affected by some limitations.
An "unreimbursed" expense refers to an expense that the employee incurs for business purposes but is not reimbursed by the employer. A "taxpayer" is an individual or entity that pays taxes to the government based on their income or other taxable transactions.
Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, unreimbursed employee business expenses could be deducted as miscellaneous itemized deductions on Schedule A of an individual's tax return, subject to a 2% floor. This means that the deduction was limited to the portion of expenses that exceeded 2% of the taxpayer's adjusted gross income (AGI). In some cases, this could lead to an NOL if the deductions were significant enough to reduce the taxpayer's taxable income below zero.
However, after the TCJA, unreimbursed employee business expenses are no longer deductible for tax years 2018-2025, except for specific categories of employees such as armed forces reservists, qualified performing artists, and certain government officials. As a result, it is now less likely for an individual taxpayer to generate an NOL due to unreimbursed employee business expenses during this period.
In conclusion, unreimbursed employee business expenses can no longer create an NOL for most individual taxpayers after the TCJA. The ability to generate an NOL due to such expenses is now limited to specific categories of employees as mentioned above.
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The compensation associated with executive stock option plans is: Multiple Choice The book value of a share of the company's shares times the number of options. The estimated fair value of the options. Recorded as compensation expense on the date of grant. Allocated to expense over the number of years until expiration
Executive stock option plans provide executives with an opportunity to purchase the company's stock at a predetermined price and within a specified period.
This compensation can have both financial and non-financial effects on the company. Financially, the compensation is typically recorded as an expense on the company's financial statements.In the context of financial accounting, the compensation associated with executive stock option plans is recorded as an expense on the date of grant and is allocated to expense over the number of years until expiration. This allocation can be done using various methods such as the straight-line method or the accelerated method.
The estimated fair value of the options is used to calculate the expense associated with the compensation. The fair value is calculated using various financial models such as the Black-Scholes model or the binomial model.The compensation associated with executive stock option plans is not the book value of a share of the company's shares times the number of options. The book value is the value of the company's assets minus the value of its liabilities, divided by the number of outstanding shares. The compensation is also not allocated based on the book value of the shares.
The compensation is also not the value of the options when they are exercised. The value of the options when they are exercised is the difference between the fair market value of the shares and the strike price of the options. The compensation expense is recorded when the options are granted, not when they are exercised.
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The rent for apartments in New York City has been rising sharply. The demand for apartments in New York City has been rising sharply as well. This is hard to explain because the law of demand says that higher prices should lead to lower demand. Do you agree or disagree? Explain your answer
There seems to be a contradiction between the rising prices of apartments in New York City and the increasing demand for them, which goes against the conventional law of demand.
In this case, the rising prices of apartments in New York City alongside the increasing demand appear to defy the law of demand, which states that higher prices generally lead to lower demand.
Firstly, it's important to consider the concept of a "normal" or "inferior" good. Apartments in a highly desirable city like New York can be considered normal goods, where individuals are willing to pay more for the convenience, amenities, and location. As people's income increases, they may be more willing to spend a larger portion of their income on housing, leading to an upward shift in demand.
Secondly, the demand for apartments in New York City can also be influenced by external factors such as population growth, immigration, job opportunities, and urbanization. If the city experiences an influx of people seeking employment or other opportunities, the demand for housing will naturally increase, driving prices up.
Additionally, supply constraints and limited availability of land in densely populated areas like New York City can contribute to the rise in prices. Insufficient housing supply relative to the growing demand can result in a situation where prices continue to increase despite the expected decrease in demand based on the law of demand.
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c. suppose you deposited the $1,000 in 4 payments of $250 each at the end of years 1, 2, 3, and 4. how much would you have in your account at the end of year 4, based on 8 nnual compounding?
If the $1,000 was deposited in four payments of $250 each at the end of years 1, 2, 3, and 4, the total future value of the investment at the end of year 4, based on 8 annual compounding, would be $1,115.72.
Assuming an annual interest rate of 8% compounded annually, the future value of a lump-sum investment of $1,000 made at the beginning of year 1 would be:
[tex]FV = PV \times (1 + r)^n = $1,000 \times (1 + 0.08)^4 = $1,360.49[/tex]
Now, suppose that the $1,000 was deposited in four payments of $250 each at the end of years 1, 2, 3, and 4. In this case, we can calculate the future value of each payment individually and add them up to get the total future value of the investment at the end of year 4.
The future value of the first payment of $250 made at the end of year 1 would be:
[tex]FV1 = PV \times (1 + r)^n = $250\times (1 + 0.08)^3 = $310.13[/tex]
The future value of the second payment of $250 made at the end of year 2 would be:
[tex]FV2 = PV \times (1 + r)^n = $250 \times (1 + 0.08)^2 = $285.22[/tex]
The future value of the third payment of $250 made at the end of year 3 would be:
[tex]FV3 = PV \times(1 + r)^n = $250\times (1 + 0.08)^1 = $270.37[/tex]
The future value of the fourth payment of $250 made at the end of year 4 would be:
[tex]FV4 = PV \times (1 + r)^n = $250 \times (1 + 0.08)^0 = $250[/tex]
Adding up the future values of all four payments, we get:
Total FV = FV1 + FV2 + FV3 + FV4 = $310.13 + $285.22 + $270.37 + $250 = $1,115.72
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You would have $1,126.95 in your account at the end of year 4. If you deposited $1,000 in 4 payments of $250 each at the end of years 1, 2, 3, and 4, and assuming an annual interest rate of 8% compounded annually.
The calculation would be as follows:
At the end of year 1, you would have $250 in the account.
At the end of year 2, the $250 deposit from year 1 would have grown to:
$250 * (1 + 0.08) = $270
You would also have an additional $250 deposit from year 2, giving you a total of $520 in the account.
At the end of year 3, the $520 in the account would grow to:
$520 * (1 + 0.08) = $561.60
You would also have an additional $250 deposit from year 3, giving you a total of $811.60 in the account.
At the end of year 4, the $811.60 in the account would grow to:
$811.60 * (1 + 0.08) = $876.95
You would also have an additional $250 deposit from year 4, giving you a total of $1,126.95 in the account.
Therefore, you would have $1,126.95 in your account at the end of year 4.
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The internal rate of return (IRR) for an investment Would tend to be reduced if a company used an accelerated method of depreciation for tax purposes. May produce different results than the net present value method (NPV) in evaluating projects with different useful lives Frequently results in positive net present values on attractive projects. Ignores the time value of money Generally is greater than the company's desired rate of return.
The internal rate of return (IRR) for an investment would tend to be reduced if a company used an accelerated method of depreciation for tax purposes.
The internal rate of return (IRR) may produce different results than the net present value method (NPV) in evaluating results in positive net present values on attractive projects, ignores the time value of money, generally is equal to or less than the company's desired rate of return.
a. The accelerated method of depreciation for tax purposes tends to reduce the taxable income, which in turn reduces the amount of cash flows that are available for the investor. This reduction in cash flows can lead to a lower internal rate of return.
b. The internal rate of return (IRR) and the net present value (NPV) methods are both capital budgeting techniques used to evaluate the profitability of investment projects. However, they may produce different results when evaluating projects with different useful lives because the timing and amount of cash flows are different for each project.
c. The internal rate of return (IRR) is a measure of the profitability of an investment, and it is frequently used to evaluate the attractiveness of projects. A positive internal rate of return indicates that the investment generates a return that is greater than the required rate of return.
d. The internal rate of return (IRR) is based on the concept of discounting the future cash flows to their present value, but it ignores the timing of the cash flows. Therefore, the IRR does not take into account the time value of money.
e. The internal rate of return (IRR) is a measure of the profitability of an investment and is compared to the company's desired rate of return to determine if the investment is attractive. If the IRR is greater than the company's desired rate of return, then the investment is attractive. However, if the IRR is equal to or less than the company's desired rate of return, then the investment is not attractive.
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If a domestic market begins to export goods to and import goods from a foreign market, we can assume that: A) producers in the exporting industry may be worse off. B) consumers of the imported good may be worse off. C) consumers of the exported good may be better off D) consumers in the importing industry are better off.
C) consumers of the exported good may be better off. When a domestic market begins to export goods to a foreign market, it means that there is an increase in demand for the goods being produced in the domestic market.
This could lead to an increase in production and economies of scale, which can ultimately lead to lower prices for the consumers of the exported good. However, it is important to note that the impact on producers and consumers of the importing industry will depend on various factors such as competition, tariffs, and exchange rates.
If a domestic market begins to export goods to and import goods from a foreign market, we can assume that C) consumers of the exported good may be better off. This is because exporting goods can lead to increased production and potentially lower prices or higher quality goods for domestic consumers.
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Shim Interiors has a target debt-equity ratio of .40. Its cost of equity is 13.5 percent and its pretax cost of debt is 5.5 percent. Its tax rate is 21 percent. What is the company's WACC? Multiple Choice 9.97% 5.10% 10.88% 6.96% 11.21%
To calculate the company's weighted average cost of capital (WACC), we need to use the following formula:
WACC = (E/V x Re) + (D/V x Rd x (1 - T))
where:
E = market value of the company's equity
D = market value of the company's debt
V = E + D
Re = cost of equity
Rd = pretax cost of debt
T = tax rate
First, we need to calculate the market value of the company's equity and debt:
Assuming the total value of the company is $1,000, we can calculate the market value of equity and debt as:
Market value of equity = $1,000 x (1 - 0.40) = $600
Market value of debt = $1,000 x 0.40 = $400
Next, we can plug in the given values into the WACC formula:
WACC = ($600/$1,000 x 0.135) + ($400/$1,000 x 0.055 x (1 - 0.21))
WACC = (0.6 x 0.135) + (0.4 x 0.04355)
WACC = 0.081 + 0.01742
WACC = 0.09842 or 9.84%
Therefore, the company's WACC is approximately 9.84%, which is closest to option A, 9.97%.
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cost of goodsl sold was 5345 accoutns payable increased 11281 and inventroy increased by18838 what was cash paid to suppliers
So, when considering the cost of goods sold ($5,345), the increase in accounts payable ($11,281), and the increase in inventory ($18,838), the cash paid to suppliers was $12,902.
Based on the information provided, we need to determine the cash paid to suppliers, taking into account the cost of goods sold, the increase in accounts payable, and the increase in inventory.
1. Start with the cost of goods sold (COGS), which is $5,345.
2. Add the increase in inventory, which is $18,838. This represents the additional inventory purchased during the period.
3. The sum of COGS and the increase in inventory is $5,345 + $18,838 = $24,183. This represents the total cost of inventory purchased during the period.
4. Subtract the increase in accounts payable, which is $11,281. This represents the amount of inventory purchased on credit and not yet paid for.
5. The cash paid to suppliers is therefore $24,183 - $11,281 = $12,902.
So, the cash paid to suppliers was $12,902.
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XYZ declared a $1 per share dividend on August 15. The date of record for the dividend was September 1 (the stock began selling ex-dividend on September 2). The dividend was paid on September 10. Ellis is a cash-method taxpayer. Determine if he must include the dividends in gross income under the following independent circumstances.
a) Ellis bought 100 shares of XYZ stock on August 1 for $21 per share. Ellis received a $100 dividend on September 10. Ellis still owns the shares at year-end.
b) Ellis bought 100 shares of XYZ stock on August 1 for $21 per share. Ellis sold his XYZ shares on September 5 for $23 per share. Ellis received the $100 dividend on September 10 (note that even though Ellis didn’t own the stock on September 10, he still received the dividend because he was the shareholder on the record date).
c) Ellis bought 100 shares of XYZ stock for $22 per share on August 20. Ellis received the $100 dividend on September 10. Ellis still owns the shares at year-end
The situation in which Ellis is involved as a cash-method taxpayer, and whether or not he must include dividends in his gross income is as follows:a) Ellis received a dividend of $100 on September 10.
Ellis purchased 100 shares of XYZ stock on August 1 for $21 per share. Ellis continues to own the stock at the end of the year. Dividend income must be reported by Ellis, and the cost basis of his 100 shares of XYZ stock will be raised by $1 per share to $22.b) Ellis received a dividend of $100 on September 10. Ellis purchased 100 shares of XYZ stock on August 1 for $21 per share. Ellis sold his XYZ shares on September 5 for $23 per share. Ellis, like most shareholders who hold shares for more than 60 days during the 121-day period starting 60 days before the stock's ex-dividend date, is entitled to the preferred dividend tax rate.
As a result, Ellis's dividend will be subject to the favorable tax rates that apply to "qualified dividends." Ellis has a $2 per share capital gain ($23 selling price - $21 cost basis). Dividend income and capital gains must be reported separately by Ellis. Ellis must add $100 to his dividend income, and the cost basis of his 100 shares of XYZ stock will be raised by $1 per share to $22. Ellis also has a $200 long-term capital gain.c) Ellis received a dividend of $100 on September 10. Ellis purchased 100 shares of XYZ stock on August 20 for $22 per share. Ellis continues to own the stock at the end of the year. Because Ellis bought the shares on August 20, he was not the shareholder of record on September 1, and therefore not entitled to the dividend.
Therefore, Ellis must return the $100 to XYZ as a return of capital, reducing his basis in his 100 shares of XYZ stock to $21 per share. The stock's fair market value on August 20 has no bearing on this result.What are shares?Shares, also known as equities, are stocks that represent ownership in a corporation or financial asset. Shareholders can own shares of mutual funds, exchange-traded funds, and other investment products in addition to common and preferred shares of individual firms.What is a taxpayer?A taxpayer is a person or corporation who pays taxes to a country or local government. Taxpayers pay income taxes on their earnings, as well as property taxes on the value of their homes and other properties they own, in many situations.
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You have just been appointed as the County Commissioner of Hazard County. Your first day on the job you have the followingconversations:
Ludwig mentions that Frank, the local rancher, is inflating land prices by buying too much land. This is an example of _______.
(a negative externality
a pecuniary externality
a positive externality
not an externality)
This is an example of a pecuniary externality.
Pecuniary externalities occur when an action of one person affects the price of a good or service and therefore affects the well-being of others in the market. In this case, Frank's buying of too much land is driving up land prices, which affects the well-being of others in the market who want to buy land. This is different from a negative or positive externality, which refers to the spillover effects of an action on third parties that are not involved in the market transaction.
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an increase in u.s. imports from japan will cause the demand for yen in the foreign exchange market to and the supply of dollars in the foreign exchange market to . (Increase / Decrease) and the supply of dollars in the foreign exchange market to (Decrease / Increase).
An increase in U.S. imports from Japan means that U.S. consumers are buying more Japanese goods, which in turn requires more yen to be exchanged for dollars to pay for these goods.
How does this happen?This increase in demand for yen in the foreign exchange market will cause the value of the yen to appreciate relative to the dollar.
As a result, the supply of dollars in the foreign exchange market will increase, as U.S. exporters will have to exchange their dollars for yen to sell their goods to Japanese consumers.
This increase in supply of dollars will cause the value of the dollar to depreciate relative to the yen.
Therefore, an increase in U.S. imports from Japan will cause the demand for yen in the foreign exchange market to increase and the supply of dollars in the foreign exchange market to increase.
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Payne Corporation has the following accounts as of December 31, 2018: Total Assets $ 60,000 Total Liabilities 20,000 Total Equity 40,000 Compute the debt to equity ratio at December 31, 2018.
This means that Payne Corporation has 50 cents in debt for every dollar it has in equity. An essential measure of a company's financial leverage and solvency is its debt to equity ratio. An organisation with a higher debt to equity ratio has more debt than equity, which could be riskier for investors. A lower debt to equity ratio, on the other hand, denotes a company's better financial standing and decreased reliance on debt funding.
The debt to equity ratio is a financial ratio that measures the proportion of a company's total liabilities to its equity. It is calculated by dividing total liabilities by total equity. In the case of Payne Corporation, the debt to equity ratio at December 31, 2018 can be calculated as follows:
Debt to Equity Ratio = Total Liabilities / Total Equity
Debt to Equity Ratio = $20,000 / $40,000
Debt to Equity Ratio = 0.5 or 50%
This means that for every dollar of equity that Payne Corporation has, it also has 50 cents of debt. The debt to equity ratio is an important indicator of a company's financial leverage and solvency. A higher debt to equity ratio indicates that a company has more debt relative to its equity, which may make it riskier for investors. Conversely, a lower debt to equity ratio suggests that a company has a stronger financial position and is less reliant on debt financing.
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