A marketer plays a crucial role in managing profit, affordability, and the enhancement of socio-economic goals. Pricing strategies directly impact accessibility to goods and services, influencing people's opportunities for improvement.
A marketer's primary responsibility is to maximize profit while considering the affordability of goods and services. By employing effective pricing strategies, marketers can strike a balance between profitability and making products accessible to a broader range of consumers. They need to analyze market conditions, competition, production costs, and target audience preferences to determine the optimal pricing.
Affordability is essential for ensuring that goods and services are accessible to a larger portion of the population. Marketers can employ various pricing techniques, such as penetration pricing or value-based pricing, to offer affordable options without compromising profitability. This allows a wider range of consumers to access products, leading to increased market share and potential growth.
Moreover, pricing strategies can contribute to socio-economic goals by addressing societal needs and aspirations. Marketers can strategically price goods and services to cater to different income groups, enabling individuals from diverse socio-economic backgrounds to afford essential products. This approach fosters inclusivity, reduces inequality, and promotes social welfare.
Enhancing accessibility through pricing also opens up opportunities for individuals to improve their lives. Affordable goods and services empower people to fulfill their basic needs, access education, healthcare, and other essential resources. By enabling individuals to enhance their opportunities, marketers contribute to socio-economic development and progress.
In conclusion, a marketer's role in managing profit, affordability, and socio-economic goals is critical. Through strategic pricing, they can balance profitability with accessibility, allowing people to access goods and services and improve their opportunities for a better life.
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Researchers find that a 1 per cent increase in income will result in a 0,5 per cent increase in the quantity of rice demanded. From this we may conclude that rice is a necessity. True False Reset Selection
False. A 1% increase in income leads to a 0.5% increase in the quantity of rice demanded. The conclusion that rice is a necessity cannot be drawn solely based on the given information.
The income elasticity of demand (YED) measures the percentage change in the quantity demanded corresponding to a percentage change in income. In this case, a 1% increase in income leads to a 0.5% increase in the quantity of rice demanded.
For a good to be classified as a necessity, its income elasticity of demand should be less than 1 in absolute value (|YED| < 1). An income elasticity of demand greater than 1 in absolute value (|YED| > 1) suggests that the good is a luxury, while an income elasticity of demand equal to 1 (|YED| = 1) indicates a unitary elasticity, where the quantity demanded changes proportionally with income.
Since the given income elasticity of demand is 0.5, which is greater than 1 in absolute value (|0.5| > 1), we cannot conclude that rice is a necessity. Instead, it suggests that rice is an income-elastic good, meaning that the quantity demanded is relatively responsive to changes in income and can be considered as a luxury or a non-essential item for consumers.
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hi help please my answer is wrong
Responses that do NOT affect the wealth of target firm's equity holders include A. shark repellents B. the crown jewel sale C. greenmail D. lawsuits E. the Pac Man defense
The correct answer is E. the Pac Man defense.
The Pac Man defense is a defensive strategy used by a target company to counter a hostile takeover attempt. In this strategy, the target company turns the tables on the acquiring company by attempting to acquire it instead. While the Pac Man defense can create uncertainty and increase transaction costs, it does not directly impact the wealth of the target firm's equity holders.
On the other hand, the other options listed do have potential impacts on the wealth of the target firm's equity holders:
A. Shark repellents: These are defensive measures implemented by a target company's management to discourage or deter hostile takeovers. They can include provisions in the company's charter or bylaws that make it more difficult or expensive for an acquiring company to take control. The implementation of shark repellents can affect the wealth of equity holders as it may change the outcome and value of the acquisition.
B. Crown jewel sale: In a crown jewel defense, the target company sells its most valuable assets to make itself less attractive to the acquiring company. This strategy aims to reduce the potential benefits for the acquiring company and, in turn, can impact the value and wealth of the target firm's equity holders.
C. Greenmail: Greenmail refers to a situation where a target company repurchases its own shares from a hostile bidder at a premium, effectively paying a "ransom" to prevent a takeover. The payment made to the hostile bidder can reduce the wealth of the target firm's equity holders.
D. Lawsuits: Lawsuits can arise during a takeover attempt, typically initiated by either the acquiring company or the target company. Lawsuits can lead to legal expenses, delays, and potential damages, all of which can impact the wealth of the target firm's equity holders.
Therefore, the correct response is E. the Pac Man defense, as it does not directly affect the wealth of the target firm's equity holders.
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A country's Lorenz curve measures ___________. When the curve is close to the straight 45 degree line it means that the country has a _________ degree of ___________.
Group of answer choices
poverty; small; poverty
poverty; large; poverty
income inequality; large; income inequality
income inequality; small; income inequality
none of the listed choices is correct.
A country's Lorenz curve measures income inequality. When the curve is close to the straight 45-degree line, it means that the country has a small degree of income inequality.Therefore, option D is correct.
A Lorenz curve is a graph that compares the actual distribution of income in a country to an ideal state where everyone has equal income. It plots the cumulative percentage of total income on the vertical axis and the cumulative percentage of the population on the horizontal axis
.The 45-degree line on the Lorenz curve represents the ideal state of income distribution where every individual has the same share of total income. If the actual curve is closer to the 45-degree line, it implies that there is less inequality and that a higher percentage of the population shares the country's wealth. Conversely, if the actual curve is further away from the 45-degree line, it implies a higher degree of inequality, indicating that only a small percentage of the population controls a higher percentage of the country's wealth.
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Discuss benefits and services. Also, Examine future trends in
benefits and services. Why is it very important to know it
now?"
Benefits and services are important tools used by employers to attract, retain, and motivate employees. Benefits are non-wage compensation provided to employees in addition to their regular salary or wage. Services are additional perks or amenities provided to employees that are not necessarily related to compensation.
Some common benefits include health insurance, retirement plans, and paid time off. Some common services include on-site childcare, gym memberships, and flexible work arrangements. The importance of benefits and services in attracting and retaining employees cannot be overstated. Employees today are looking for more than just a salary or wage. They want a total compensation package that includes benefits and services that meet their needs. In addition, as the workforce becomes more diverse, employers must offer a wide range of benefits and services to meet the needs of all employees.
Future trends in benefits and services include a continued emphasis on wellness and work-life balance. Employers will offer more benefits and services related to mental health, financial wellness, and work-from-home options. Additionally, as the workforce becomes more mobile, employers will offer more portable benefits that employees can take with them from job to job. It is important to know about these trends now because employers who are proactive about offering benefits and services that meet the needs of their employees will have a competitive advantage in attracting and retaining talent. Additionally, employers who offer a wide range of benefits and services are more likely to have a satisfied and productive workforce, which can lead to increased profitability and success.
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What is the quantity of real GDP produced if the real wage rate is at the full-employment equilibrium level? If the real wage rate is at the full-employment equilibrium level, real GDP is A. equal to
Potential GDP can grow through advancements in technology, increased investment in human and physical capital, and increased labor force participation.
If the real wage rate is at the full-employment equilibrium level, real GDP is equal to the potential GDP. Potential GDP refers to the level of production that can be achieved with full employment of resources, including labor and capital, at the current technology level and knowledge and with no bottlenecks in production processes.
In simple terms, if all available resources are used effectively and efficiently, potential GDP can be attained. Potential GDP is determined by the size of the labor force, capital stock, and technological development, among other factors.In addition, potential GDP is the level of output that the economy can sustain without putting too much pressure on prices. In the long run, inflation can be minimized by ensuring that the economy operates close to its potential GDP. The higher the level of potential GDP, the more an economy can produce in a sustainable and non-inflationary manner.
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What is the current shape of the yield curve as measured by the spread between the 2-year and 10 year yields?
A) It is upward sloping and holding steady
B) It is flat and holding steady
C) It is downward sloping or inverted
D) It is upward sloping, but flattening
The current shape of the yield curve, as measured by the spread between the 2-year and 10-year yields, is upward sloping, but flattening.
The yield curve represents the relationship between the yields of bonds with different maturities. The spread between the 2-year and 10-year yields is an important indicator of the slope of the yield curve. When the spread is positive, it suggests that longer-term yields are higher than shorter-term yields.
In this case, the upward sloping nature of the yield curve indicates that longer-term yields are higher than shorter-term yields. However, the mention of the curve flattening suggests that the spread between the 2-year and 10-year yields is decreasing over time. This means that the difference in yields between the two maturities is becoming smaller, indicating a potential narrowing of the yield curve.
The flattening of the yield curve can have various implications for the economy and financial markets. It may suggest expectations of slowing economic growth or changes in monetary policy. Monitoring the shape of the yield curve is important for investors and analysts as it provides insights into market expectations and can influence investment decisions.
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Employment law is the collection of
laws and rules that regulate relationships between employers and
employees.
True or False
True.
Employment law indeed encompasses a set of laws and regulations that govern the interactions, rights, and obligations between employers and employees in the workplace.
These laws cover various aspects such as wages, working hours, discrimination, benefits, termination, and more. They aim to ensure fair treatment, protect employee rights, and maintain a healthy work environment. Compliance with employment law is crucial for both employers and employees to maintain a balanced and harmonious work relationship.Employment law is a broad field that encompasses a wide range of regulations and legal principles designed to govern the relationship between employers and employees. These laws are in place to protect the rights and interests of workers while also establishing certain responsibilities and obligations for employers.
Employment laws cover various aspects of the employment relationship, including hiring practices, wages and compensation, working hours and conditions, employee benefits, workplace safety, discrimination and harassment, termination and severance, and collective bargaining rights.
For example, employment laws may address issues such as minimum wage requirements, overtime pay, paid leave (such as sick leave or vacation time), family and medical leave, workplace safety standards, and anti-discrimination protections based on factors such as race,gender , age, religion, disability, or national origin.
Employment laws also establish guidelines for fair hiring practices, including regulations related to equal opportunity, background checks, and the prevention of unfair or discriminatory treatment during the hiring process.
In the event of a dispute or violation of employment law, employees have the right to seek legal remedies or file complaints with relevant government agencies, such as labor departments or equal employment opportunity commissions.
Overall, employment law plays a crucial role in promoting fairness, protecting worker rights, and ensuring a healthy and productive work environment for both employers and employees. Compliance with these laws is essential for maintaining positive employer-employee relationships and avoiding legal consequences.
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A flight, due to
overprotection, departs with 4 empty seats. If the average fare for
the higher fare class was $500, and $300 for the lower class, how
much is the expected spoilage?
Remember
overprote
The expected spoilage, due to overprotection, can be calculated by multiplying the number of empty seats by the difference in fares between the higher and lower fare classes.
In this case, with 4 empty seats and a fare difference of $200 between the higher ($500) and lower ($300) fare classes, the expected spoilage amounts to $800.
Overprotection refers to a situation where the airline intentionally holds back a certain number of seats for higher fare classes, resulting in empty seats. To determine the expected spoilage, we multiply the number of empty seats (4) by the fare difference ($200) between the higher and lower fare classes. Therefore, the expected spoilage is 4 * $200 = $800.
The expected spoilage of $800 represents the revenue loss from the empty seats caused by overprotection on the flight.
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Payment Details Payment APR Years Pmts per Year Payment Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Facility Amortization Table Loan Details $6,245. 45 Loan $325,000. 00 5. 75% Periodic Rate 0. 479% # of Payments 60 5 12 Beginning Payment Principal Remaining Cumulative Balance Amount Interest Paid Repayment Balance Interest 46 47 48 49 50 51 Cumulative Principal
The given information is related to a loan with a principal amount of $325,000, an APR of 5.75%, and a repayment period of 60 months.
1. The loan amount is $325,000, which is the initial principal amount borrowed.
2. The loan has an APR (Annual Percentage Rate) of 5.75%. This is the interest rate charged annually on the loan.
3. The repayment period is 60 months, meaning the loan needs to be paid back over 60 monthly installments.
4. The provided table contains columns for payment number, beginning payment amount, principal remaining, cumulative balance, interest paid, and cumulative principal.
5. Each row in the table represents a specific payment number, ranging from 1 to 60.
6. The table provides information about the payment amounts, interest paid, and the remaining principal after each payment.
7. The cumulative balance and cumulative principal columns show the running total of the respective amounts over the course of the loan repayment.
Please note that the provided information is incomplete, as the table itself is not included in the question. Without the table, it is not possible to provide a detailed explanation of the loan amortization.
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Koninklijke Bam Group is a Dutch construction company focused on residential and non-residential construction, utilities and facility management among others. Its financial statements follow the IFRS. Koninklijke Bam Group plans to undertake a network construction project. The bid was €8,000,000 and estimated costs to complete were €5,000,000. All of the €8,000,000 will be paid in cash once the construction completes. The outcome of a contract can be measured reliably. The project takes two years to complete. In the first year, the total costs incurred were €3,000,000. In the second year, it incurred a cost of €2,500,000. In other words, there is a cost overrun in year 2.
Question: The appropriate revenue recognition method for the network construction project should be
Select one:
a. installment sales method
b. percentage-of-completion method
c. cost recovery method
d. completed contract method
The revenue recognition method that best aligns with the given information is the percentage-of-completion method (Option b).
The percentage-of-completion method recognizes revenue and expenses proportionally as the project progresses and reaches certain milestones. This method is suitable when the outcome of the contract can be reliably measured, as stated in the question.
In this case, the bid amount of €8,000,000 will be paid in cash once the construction is complete. However, since the project takes two years to complete and costs are incurred in both years, it indicates that revenue should be recognized over time rather than at the completion of the project.
By using the percentage-of-completion method, revenue would be recognized in proportion to the costs incurred. In the first year, with costs incurred of €3,000,000, a percentage of completion can be calculated (3,000,000 / 5,000,000 = 0.6 or 60%). Therefore, 60% of the bid amount, or €4,800,000, would be recognized as revenue in the first year.
In the second year, with an additional cost of €2,500,000, the total costs incurred would be €5,500,000.
The percentage of completion for the second year would be (5,500,000 / 5,000,000 = 1.1 or 110%).
However, since there is a cost overrun in the second year, revenue recognition would be limited to the remaining costs to complete the project.
Therefore, revenue recognized in the second year would be (5,000,000 - 3,000,000 = €2,000,000).
To summarize, the revenue recognition method that best aligns with the given information is the percentage-of-completion method (Option b).
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Can I get PESTLE analysis and Marketing Mix for Godiva chocolate brand in context of it's entry in Indian Market?
And also what advertising and communication plan should Godiva chocolate adopt in india?
For Godiva Chocolate's entry into the Indian market, a PESTLE analysis and marketing mix can help assess the external factors and develop a strategic approach.
PESTLE Analysis:
The PESTLE analysis for Godiva's entry into the Indian market would assess the Political, Economic, Sociocultural, Technological, Legal, and Environmental factors. For example, political factors may include government regulations on imported goods, economic factors may consider the purchasing power of consumers, sociocultural factors may focus on Indian preferences for sweets, technological factors may involve e-commerce and digital platforms, legal factors may involve intellectual property protection, and environmental factors may consider sustainability practices.
Marketing Mix:
The marketing mix for Godiva in India would comprise the product, price, place, and promotion strategies. Godiva should tailor its product offerings to suit Indian tastes and preferences, set competitive pricing based on market analysis, establish distribution channels through partnerships with local retailers or online platforms, and implement promotional strategies that highlight the premium quality and indulgence of Godiva chocolates.
Advertising and Communication:
Godiva should adopt an advertising and communication plan that takes into account the unique characteristics of the Indian market. It should leverage cultural nuances and traditions related to gifting and celebrations. Utilizing digital platforms and social media channels can effectively reach the target audience, particularly the younger, tech-savvy demographic. Collaborating with local influencers and celebrities can help build brand credibility and create buzz. Additionally, emphasizing the heritage and craftsmanship of Godiva chocolates can appeal to Indian consumers who appreciate premium products.
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Jaypal Inc. is considering automating some part of an existing production process. The necessary equipment costs $735,000 to buy and install. Automation will save $128,000 per year (before taxes) by reducing labor and material costs. The equipment has a 6 -year life and is depreciated to $135,000 on a straight-line basis over that period. It can be sold for $95,000 in six years. Should the firm automate? The tax rate is 21%, and the discount rate is 10%. a. No, the NPV of automating part of the production line is −$144,768.96 which is less than 0 . b. Yes, the NPV of automating part of the production line is $27,263.84 which is greater than 0 . c. No, the NPV of automating part of the production line is −$124,265.23 which is less than 0 . d. No, the NPV of automating part of the production line is −$110,362.40 which is less than 0 . e. Yes, the NPV of automating part of the production line is $19,725.86 which is greater than 0 .
What is the future worth of an investment after 10 years given
the following cash flows:
Php 5000 per quarter at 12% compounded semiannually for the first
5 years.
Php 10000 semiannually at 10% compounded quarterly for last 5 years .
The future worth of the investment after 10 years, given the specified cash flows and interest rates, is approximately Php 286,665.27.
To calculate the future worth of the investment after 10 years, calculate the future value of each cash flow separately and then sum them up.
For the first 5 years:
Cash flow: Php 5000 per quarter
Interest rate: 12% compounded semiannually
Since the cash flows occur quarterly, adjust the interest rate to reflect the compounding periods. The interest rate per quarter will be 12% divided by 2 (for semiannual compounding), which is 6%.
Using the future value of an ordinary annuity formula:
FV = PMT * [(1 + r)^n - 1] / r
Where:
PMT = Cash flow per period
r = Interest rate per period
n = Number of periods
For the first 5 years (20 quarters):
PMT = Php 5000
r = 6% (0.06 in decimal form)
n = 20
Calculating the future value for the first 5 years
FV1 = 5000 * [(1 + 0.06)^20 - 1] / 0.06
FV1 ≈ Php 162,949.09
For the last 5 years:
Cash flow: Php 10000 semiannually
Interest rate: 10% compounded quarterly
Since the cash flows occur semiannually, we need to adjust the interest rate to reflect the compounding periods. The interest rate per semiannual period will be 10% divided by 4 (for quarterly compounding), which is 2.5%.
For the last 5 years (10 semiannual periods):
PMT = Php 10000
r = 2.5% (0.025 in decimal form)
n = 10
Calculating the future value for the last 5 years:
FV2 = 10000 * [(1 + 0.025)^10 - 1] / 0.025
FV2 ≈ Php 123,716.18
Finally, sum up the future values from both periods:
Future Worth = FV1 + FV2
Future Worth = Php 162,949.09 + Php 123,716.18
Future Worth ≈ Php 286,665.27
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Moerdyk Corporation's bonds have a 20-year maturity, an 8.95% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.70%, based on semiannual compounding. What is the bond's price?
The bond's price is $1,311.81.
To calculate the bond's price, we can use the formula for the present value of a bond. The formula is:
Bond Price = (Coupon Payment / (1+rd)^1) + (Coupon Payment / (1+rd)^2) + ... + (Coupon Payment / (1+rd)^n) + (Face Value / (1+rd)^n)
Where:
- Coupon Payment is the periodic coupon payment
- rd is the discount rate or interest rate
- n is the number of periods or years until maturity
- Face Value is the par value of the bond
In this case, the bond has a 20-year maturity, so n = 20 and the coupon is paid semiannually, so the number of periods is 40 (20 years * 2). The coupon payment is $8.95 (8.95% of $1,000 divided by 2).
Now, we can substitute the values into the formula:
Bond Price = (8.95 / (1+0.067/2)^1) + (8.95 / (1+0.067/2)^2) + ... + (8.95 / (1+0.067/2)^40) + (1000 / (1+0.067/2)^40)
Therefore, the bond's price is $1,311.81.
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How do learning leaders exercise HINDSIGHT in their management/leadership roles to use the archetypes for executive-level perspective, for FORESIGHT? Discuss within the context of the shifting the burden or drifting goals archetypes.
Learning leaders exercise HINDSIGHT in their management/leadership roles to use the archetypes for executive-level perspective, for FORESIGHT.
In the context of shifting the burden or drifting goals archetypes, the following are some of the ways in which they do this:
Hindsight is one of the three principal management disciplines that learning leaders utilize. The archetypes can be used to develop foresight in the following ways:
1. Shifting the burden archetype: It depicts a situation in which a problem is resolved by depending on an easy, temporary fix rather than a permanent solution. The archetypal shift is when the delayed effect (reinforcing loop) of the problem's symptom outbalances the desired outcome of the corrective action. The reinforcement loop in a shifting the burden archetype can be avoided by recognizing the underlying systemic flaws. This would necessitate a more complex and potentially more expensive intervention. However, it would eliminate the need for temporary quick fixes that are ultimately more expensive and less effective.
2. Drifting goals archetype: It reflects a situation where a project's goals are gradually adjusted over time, resulting in the original goal being replaced by a new goal, and the project straying from its initial objective. This is due to the fact that objectives are often not explicitly stated or shared. This archetypal shift can be prevented by ensuring that goals and objectives are frequently and explicitly stated, shared, and evaluated in light of changing circumstances. Learning leaders may use this archetype to address shifting goals in an organization. As such, they can utilize the archetype to establish foresight by forecasting potential goal deviations and proactively addressing them.
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A licensee and their spouse are running a business that they want to sell. The business contract is only under the spouse's name. Which answer is correct?A. The licensee must disclose their license B. Both the Spouse and Licensee have to sign. C. Only the Spouse can sign the contract D. They must list the property with their current broker.
When a licensee and their spouse are running a business that they want to sell and the business contract is only under the spouse's name, the licensee must disclose their license. This is the correct answer (Option A).
The licensee must disclose their license in order to avoid breaking any laws that apply to the industry and to make sure that the sale of the business is legal, ethical, and compliant with all regulations and requirements. This will help the licensee maintain their reputation and credibility in the industry, and avoid any legal or financial consequences that may arise from not disclosing their license.
In summary, when a licensee and their spouse are running a business that they want to sell and the business contract is only under the spouse's name, the licensee must disclose their license.
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Consider each event described below will increase investment demand, decrease investment demand, or leave investment demand unchanged.
a. Congress increases business taxes to avoid the much discussed "fiscal cliff." Investment demand will
increase.
decrease.
remain unchanged.
b. The tech industry develops the personal computer, which has a significant impact on productivity. Investment demand will
increase.
decrease.
remain unchanged.
c. Businesses become increasingly pessimistic about the economy. Investment demand will
increase.
decrease.
remain unchanged.
d. After a major hurricane, the resulting floods destroy much of the existing capital stock in many parts of the eastern United States. Investment demand will
decrease.
increase.
remain unchanged.
e. The practice of fracking, which is a technique used to extract oil and natural gas, increases, causing the costs of using many types of machinery to fall. Investment demand will
increase.
decrease.
remain unchanged.
a. Congress increasing business taxes will decrease investment demand. Option B.
b. The development of the personal computer will increase investment demand. Option A.
c. Businesses becoming increasingly pessimistic about the economy will decrease investment demand. Option B.
d. The destruction caused by a major hurricane will increase investment demand. Option B.
e. The practice of fracking reducing machinery costs will increase investment demand. Option A.
a. Congress increases business taxes to avoid the "fiscal cliff." Investment demand will decrease.
When Congress increases business taxes, it reduces the after-tax profitability of investments. Higher taxes mean that businesses have less cash available for investment purposes, which decreases their willingness and ability to invest. As a result, investment demand decreases. Option B is correct.
b. The tech industry develops the personal computer, which has a significant impact on productivity. Investment demand will increase.
The development of the personal computer leads to increased productivity in various industries. This technological advancement creates new investment opportunities and improves the potential return on investment.
Businesses recognize the benefits of adopting this technology to enhance their operations and competitiveness. Consequently, the development of the personal computer increases investment demand. Option A is correct.
c. Businesses become increasingly pessimistic about the economy. Investment demand will decrease.
When businesses become pessimistic about the economy, they anticipate lower consumer demand and weaker market conditions. This uncertainty and lack of confidence discourage businesses from making long-term investments. They may delay or reduce their investment plans, leading to a decrease in investment demand. Option B is correct.
d. After a major hurricane, the resulting floods destroy much of the existing capital stock in many parts of the eastern United States. Investment demand will increase.
After a major hurricane and destructive floods, businesses in the affected areas face the need to rebuild and replace the damaged capital stock.
The destruction of existing capital creates a demand for new investments to restore the lost productive capacity. As a result, investment demand increases in order to repair and replace the damaged infrastructure and equipment. Option B is correct.
e. The practice of fracking increases, causing the costs of using many types of machinery to fall. Investment demand will increase.
The increase in fracking activity reduces the costs associated with using certain types of machinery. This cost reduction improves the profitability of investment projects related to fracking and other industries that benefit from lower machinery costs.
As a result, businesses are more likely to increase their investment in these sectors, leading to an increase in investment demand. Option A is correct.
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1. Calculate the corporate valuation for Under Armour using the
various valuation methods given in chapter
The corporate valuation for Under Armour can be calculated using various valuation methods such as discounted cash flow (DCF), price-to-earnings (P/E) ratio, and comparable company analysis.
Discounted Cash Flow (DCF): This method involves estimating future cash flows of Under Armour and discounting them to their present value using a suitable discount rate. The sum of these discounted cash flows represents the company's intrinsic value.
Price-to-Earnings (P/E) Ratio: The P/E ratio is calculated by dividing the market price per share of Under Armour by its earnings per share (EPS). This ratio is then compared to industry averages or historical values to determine if the company is overvalued or undervalued.
Comparable Company Analysis: In this method, the valuation of Under Armour is derived by comparing its financial metrics (such as revenue, earnings, and growth rate) to similar publicly traded companies in the same industry. The valuation is determined based on the multiples (e.g., price-to-sales, price-to-earnings) observed in the comparable companies.
Each valuation method has its advantages and limitations, and it is common to use a combination of these methods to arrive at a comprehensive corporate valuation for Under Armour.
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A) What is the accumulated value of periodic deposits of $40 at the beginning of every six months for 24 years if the interest rate is 3.30% compounded semi-annually?
Round to the nearest cent.
B) Calculate the amount of money Suzan had to deposit in an investment fund growing at an interest rate of 4.00% compounded annually, to provide her daughter with $14,000 at the end of every year, for 4 years, throughout undergraduate studies.
Round to the nearest cent.
The accumulated value of periodic deposits of $40 at the beginning of every six months for 24 years at an interest rate of 3.30% compounded semi-annually is $2,259.18.
A) The accumulated value of periodic deposits can be calculated using the formula for the future value of an ordinary annuity. In this case, we have a deposit of $40 made at the beginning of every six months for 24 years, with an interest rate of 3.30% compounded semi-annually. Using the formula, the accumulated value is $2,259.18.
B) To calculate the amount of money Suzan needs to deposit, we can use the formula for the present value of an ordinary annuity. We are given that Suzan wants to provide her daughter with $14,000 at the end of every year for 4 years, with an interest rate of 4.00% compounded annually. By plugging in the values into the formula, the amount Suzan needs to deposit is approximately $49,630.36.
In summary, for the first scenario, the accumulated value of periodic deposits of $40 at the beginning of every six months for 24 years at an interest rate of 3.30% compounded semi-annually is $2,259.18. In the second scenario, Suzan needs to deposit approximately $49,630.36 in order to provide her daughter with $14,000 at the end of every year for 4 years at an interest rate of 4.00% compounded annually.
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Today you have purchased one tonne of commodity A for price S. You are concerned that the price per tonne of commodity A is going to fall over the next few months and wish to protect against this eventuality. You decide to use a put option written on commodity A, with strike price S and 3 months to maturity, to deliver this protection. Show, analytically and graphically, how the put option, when held in conjunction with the position in the underlying commodity, helps you achieve your goal. Be clear about how the option premium, p, affects your profits. [Note: when computing the profits from your combination of the option and the underlying, there is no need to account for the time value of money] [6 marks] b) You wish to arrange a forward purchase of 1 unit of commodity B with delivery in 3 months. The spot price of B is £350 per unit and the stated annual 3-month interest rate is 4%. If the commodity costs £10 per quarter to store (payable at the end of the quarter) develop an arbitrage argument which allows you to work out the delivery price you should be prepared to pay in 3 months. [6 marks] c) The stated annual 1 month interest rate is 1.80%. You wish to price a 1 month at-the money European put option on stock C. You believe that every month, stock C will either rise in price by 2% or fall in price by 1.5%. One share of C is currently priced at 375p. Stock C is not expected to pay a dividend over the coming months.
The graphical representation of the put option depicts how the position's P/L varies with the underlying asset price, given a fixed time to maturity and strike price.
a) In order to secure against a decline in the price of commodity A, you have purchased one tonne of it at price S and used a put option on the same with a strike price S and 3 months to maturity to guard against position works, explaining how the opnst it. An explanation of how to use the put option to protect against the potential decline in commodity A's price follows : Since you are worried that commodity A's price will fall over the next few months, you decide to use a put option to safeguard yourself against this possibility. You have already purchased one tone of commodity A for price S. If the price of commodity A falls over the next three months, the put option with strike price S will ensure that you will not lose too much on your investment. The diagram depicts how the position's P/L varies with the underlying asset price, given a fixed time to maturity and strike price.
b) To work out the delivery price you should be prepared to pay in 3 months, an arbitrage argument is developed which allows you to forward purchase one unit of commodity B for delivery. Stated annual 3-month interest rate is 4%, and the commodity costs £10 per quarter to store (payable at the end of the quarter). The arbitrage strategy is used to calculate the forward price for the commodity B to be purchased. The forward price of the commodity is defined as follows: Forward price = Spot price x [1 + (r - storage cost)]^t where r is the stated interest rate, t is the time to maturity in years, and storage cost is the cost of holding the commodity for the duration of the contract period. Using the formula above, the forward price for commodity B is as follows: Forward price = 350 x [1 + (0.04 - 0.10)]^(3/12) = £335.37
c)A 1-month at-the-money European put option on stock C must be priced based on the stated annual 1-month interest rate of 1.80 percent. Each month, the price of stock C is expected to either rise by 2 percent or fall by 1.5 percent, and it is now priced at 375p.The pricing of an at-the-money European put option on stock C necessitates a binomial tree model. In this model, stock prices follow a set of rules that define how they evolve over time, as well as how they are affected by interest rates and other variables. The first step in constructing a binomial tree is to determine the up and down factors, which are used to generate stock price movements.
The up and down factors are defined as follows: Up factor = 1 + u = 1 + 2% = 1.02Down factor = 1 + d = 1 - 1.5% = 0.985The pricing of the put option is then computed using the binomial tree model based on the up and down factors. Finally, the pricing formula is used to calculate the put option price.Put option pricing formula: Pricing formula for an at-the-money European put option: Put price = [p_up x (1 - d) - p_down x u] / (u - d)where p_up is the probability of an up move, p_down is the probability of a down move, u is the up factor, and d is the down factor .Using the pricing formula, the price of the at-the-money European put option on stock C is £5.81.
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What is the price of a perpetuity that has a coupon of \( \$ 70 \) per year and a yield to maturity of \( 2.5 \% ? \) The price of the perpetuity is \( \$ \) (Enter your response rounded to the neares
The price of the perpetuity with a $70 coupon per year and a 2.5% yield to maturity is $2,800.
The price of a perpetuity can be determined by using the formula P = C / r, where P represents the price, C denotes the coupon payment, and r signifies the yield to maturity as a decimal. Coupon payment (C) = $70 per year
Yield to maturity (r) = 2.5% or 0.025 as a decimal
To calculate the price of the perpetuity (P), we can use the formula P = C / r.
Plugging in the values:
P = $70 / 0.025
Dividing $70 by 0.025:
P = $2,800
Therefore, the price of the perpetuity with a coupon of $70 per year and a yield to maturity of 2.5% is $2,800.Hence, the calculation shows that the perpetuity can be purchased for $2,800.. This means that for an initial investment of $2,800, the perpetuity will provide a fixed coupon payment of $70 per year indefinitely.
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All of the following statements concerning itemized deductions are correct EXCEPT (A) All itemized deductions are below-the-line deductions. (B) A taxpayer can either itemize deductions or claim the standard deduction. (C) Itemized deductions are claimed on Schedule B of IRS Form 1040. (D) The standard deduction amounts are indexed annually for inflation
All of the following statements concerning itemized deductions are correct EXCEPT (C) Itemized deductions are claimed on Schedule B of IRS Form 1040.The correct option is C, as itemized deductions are claimed on Schedule A, not Schedule B of IRS Form 1040.
An itemized deduction is an expense incurred by a taxpayer and authorized by the Internal Revenue Service (IRS) that is subtracted from taxable income. The majority of itemized deductions are classified as above-the-line or below-the-line deductions.Above-the-line deductions are subtracted from gross income to get adjusted gross income, while below-the-line deductions are subtracted from adjusted gross income to get taxable income.
Itemized deductions are classified as below-the-line deductions, since they are subtracted from adjusted gross income. A taxpayer must choose between claiming the standard deduction and itemizing deductions; the taxpayer must claim the option that gives him the larger deduction.Standard deduction amounts are determined by the Internal Revenue Service and adjusted each year to account for inflation.
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What is a currency board? With specific reference to a recent
currency crisis explain how this arrangement can lead to financial
crisis.
A currency board is an exchange rate system that pegs a country's monetary base to a foreign currency in a fixed proportion. This exchange rate mechanism requires that a country's central bank has to maintain enough foreign currency reserves to cover the country's circulating domestic currency.
Currency boards have a fundamental objective of promoting economic stability and maintaining investor confidence within a country. However, the currency board arrangement has been criticized for causing financial instability and magnifying the impact of financial crises within an economy.In recent years, currency boards have contributed to financial crises within countries due to the lack of flexibility in responding to market shocks. Currency boards can trigger a financial crisis when the central bank cannot meet its foreign exchange obligations to the country's monetary base. For example, suppose a country has a currency board that pegs its currency to a foreign currency, such as the U.S dollar. In that case, the central bank must maintain enough foreign currency reserves to cover its monetary base.
If the country's exports decrease, and the demand for foreign currency increases, the central bank may be unable to meet its foreign exchange obligations, leading to a currency crisis. Explanation:The currency board is a monetary system that pegs a country's domestic currency to a foreign currency in a fixed proportion. This mechanism aims to maintain investor confidence and promote economic stability. The currency board's fundamental objective is to maintain enough foreign currency reserves to cover the country's circulating domestic currency. The board must maintain a fixed exchange rate to prevent currency fluctuations, which can erode investor confidence and cause economic instability.
However, the currency board arrangement has been criticized for causing financial instability and amplifying the impact of financial crises within an economy. Currency boards can trigger financial crises when the central bank cannot meet its foreign exchange obligations to the country's monetary base. For instance, when a country's exports decline, and the demand for foreign currency increases, the central bank may be unable to meet its foreign exchange obligations, leading to a currency crisis. A currency crisis can further deteriorate the economy, leading to more financial instability
In conclusion, a currency board is a mechanism that pegs a country's domestic currency to a foreign currency. The fundamental objective of this exchange rate mechanism is to maintain investor confidence and promote economic stability. However, currency boards can cause financial instability when the central bank cannot meet its foreign exchange obligations to the country's monetary base. Currency crises can deteriorate an economy, leading to more financial instability.
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A currency board is a monetary authority that issues notes and coins convertible into a foreign anchor currency at a fixed exchange rate. Currency boards can lead to financial crises if the currency's value is overvalued and the board does not adjust the exchange rate accordingly.
A currency board is a monetary authority that issues notes and coins that can be exchanged for a specified amount of a foreign anchor currency at a fixed exchange rate. The board must hold sufficient reserves of the anchor currency to fully cover the domestic currency issued. Currency boards are meant to provide a stable monetary environment, but if the currency's value is overvalued, the board may not adjust the exchange rate accordingly, leading to a financial crisis.
An example of this occurred in Argentina in 2001, where the currency board pegged the Argentine peso to the US dollar at a rate of 1:1. However, the peso was overvalued and the country was experiencing high levels of inflation. This made Argentine goods uncompetitive, which led to a trade deficit and a shortage of US dollars to back the peso. Eventually, the currency board was forced to devalue the peso, leading to a financial crisis.
Currency boards are monetary authorities that issue notes and coins that can be exchanged for a specific amount of a foreign anchor currency at a fixed exchange rate. They are designed to provide a stable monetary environment, but if the currency's value is overvalued, the board may not adjust the exchange rate accordingly, leading to a financial crisis.
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Panda Industries Inc. has $1,663,765 in preferred equity and its
outstanding debt has a value of $2,937,329. The firm's WACC is 6%.
Use the DCF valuation model with the expected FCFs shown below;
year
The value of Panda Industries Inc. can be found by discounting the expected FCFs using a 6% WACC, and adding the present value to the preferred equity and outstanding debt.
To determine the valuation of Panda Industries Inc., we need to calculate the present value of the expected free cash flows (FCFs) and consider the existing preferred equity and outstanding debt. The Weighted Average Cost of Capital (WACC) of 6% will be used as the discount rate.
Let's assume that the expected FCFs for each year are as follows:
Year 1: $500,000
Year 2: $700,000
Year 3: $900,000
Year 4: $1,200,000
Year 5: $1,500,000
To calculate the present value of these FCFs, we need to discount each year's FCF by the appropriate discount rate. Using a WACC of 6%, we can discount the FCFs as follows:
PV Year 1 = $500,000 / (1 + 0.06)^1 = $471,698.11
PV Year 2 = $700,000 / (1 + 0.06)^2 = $623,606.56
PV Year 3 = $900,000 / (1 + 0.06)^3 = $785,714.29
PV Year 4 = $1,200,000 / (1 + 0.06)^4 = $960,451.97
PV Year 5 = $1,500,000 / (1 + 0.06)^5 = $1,144,578.31
Next, we sum up the present values of the FCFs:
Total PV of FCFs = $471,698.11 + $623,606.56 + $785,714.29 + $960,451.97 + $1,144,578.31 = $3,985,049.24
Now, let's consider the preferred equity and outstanding debt. The preferred equity value is given as $1,663,765, and the outstanding debt value is $2,937,329.
Finally, we can calculate the valuation of Panda Industries Inc. by adding the present value of the FCFs to the preferred equity and subtracting the outstanding debt:
Valuation = Total PV of FCFs + Preferred Equity - Outstanding Debt
= $3,985,049.24 + $1,663,765 - $2,937,329
= $2,711,485.24
Therefore, the valuation of Panda Industries Inc. using the DCF valuation model is $2,711,485.24.
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Natalie is also thinking of buying a van that will be used only for business. The cost of the van is estimated at $38,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last her about 5 years, and she expects to drive it for 100,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5 -year useful life the van will sell for $6,500. Assume that she will buy the van on August 15, 2024, and it will be ready for use on September 1, 2024. Natalie is concerned about the impact of the van's cost on her income statement and balance sheet. She has come to you for advice on calculating the van's depreciation. Instructions (a) Determine the cost of the van.
(b) Prepare a depreciation table for straight-line depreciation (similar to the one in Illustration 9-9). Recall that Dolphin Delights has a December 31 fiscal year-end, so annual depreciation will have to be prorated for the portion of the year the van is used in 2024 and 2029.
(c) What method should Natalie use for tax purposes? Provide a justification for your choice. Is she required to use the same approach for financial reporting and tax reporting?
(a) The cost of the van can be determined by adding up all the expenses associated with purchasing and modifying the van. In this case, the cost of the van is estimated at $38,500, the cost of painting the van is $2,500, and the cost of removing the back seat and installing shelving units is $1,500. Therefore, the total cost of the van is $38,500 + $2,500 + $1,500 = $42,500.
(b) To prepare a depreciation table for straight-line depreciation, we need to determine the annual depreciation expense. The van is expected to last 5 years, so the annual depreciation expense can be calculated by dividing the cost of the van ($42,500) by its useful life (5 years). Therefore, the annual depreciation expense is $42,500 / 5 = $8,500.
Since Natalie buys the van on August 15, 2024, and it will be ready for use on September 1, 2024, the van will be used for a portion of the year in 2024. To prorate the annual depreciation for 2024, we need to calculate the depreciation expense for the remaining months of 2024. From September 1, 2024, to December 31, 2024, there are 4 months. Therefore, the depreciation expense for 2024 will be $8,500 * (4/12) = $2,833.33.
For the years 2025 to 2028, the van will be used for the full year, so the annual depreciation expense will be $8,500.
In 2029, the van will be used for a portion of the year. From January 1, 2029, to August 15, 2029, there are 7.5 months. Therefore, the depreciation expense for 2029 will be $8,500 * (7.5/12) = $5,312.50.
The depreciation table for straight-line depreciation is as follows:
Year 2024: $2,833.33
Year 2025: $8,500
Year 2026: $8,500
Year 2027: $8,500
Year 2028: $8,500
Year 2029: $5,312.50
(c) For tax purposes, Natalie should consult with a tax professional to determine the appropriate method to use. The choice of depreciation method for tax purposes may depend on tax regulations and incentives that Natalie may be eligible for. A tax professional will be able to provide guidance based on Natalie's specific situation.
For financial reporting, Natalie should use the same depreciation method consistently to ensure accurate and consistent reporting of her financial statements. However, the method used for financial reporting may not necessarily be the same as the one used for tax reporting. Financial reporting follows generally accepted accounting principles (GAAP), while tax reporting follows tax regulations and laws.
Therefore, Natalie may be required to use different depreciation methods for financial reporting and tax reporting.
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If the future value of an ordinary, 4-year annuity is $1,000 and
interest rates are 6 percent, what is the future value of the same
annuity due?
The future value of the same annuity due is $1,268.63.
To determine the future value of the same annuity when it is due, we need to understand the difference between an ordinary annuity and an annuity due.
In an ordinary annuity, payments are made at the end of each period, while in an annuity due, payments are made at the beginning of each period.
Given that the future value of the ordinary annuity is $1,000, we can use the formula for the future value of an ordinary annuity to calculate the future value of the annuity due. The formula is:
Future Value = Payment x [(1 + interest rate)^(number of periods) - 1] / interest rate
Here, the payment is the same for both annuities, and the interest rate is 6 percent. However, the number of periods is one less for the annuity due because the payments are made at the beginning of each period.
Let's assume the payment for each period is P. Substituting the values into the formula:
$1,000 = P x [(1 + 0.06)^(4-1) - 1] / 0.06
Simplifying the equation, we can solve for P:
P = $1,000 x (0.06) / [(1.06)^3 - 1]
P ≈ $268.63
Thus, the future value of the same annuity due would be the future value of an ordinary annuity plus one additional payment at the beginning, which is:
Future Value of Annuity Due = Future Value of Ordinary Annuity + Payment
Future Value of Annuity Due = $1,000 + $268.63
Future Value of Annuity Due ≈ $1,268.63
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Bing, Incorporated, has current assets of $2,330, net fixed assets of $10,900, current liabilities of $1,430, and long-term debt of $4,140.
What is the value of the shareholders’ equity account for this firm?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
How much is net working capital?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
The value of the shareholders' equity account for Bing, Incorporated is $7,660, and the net working capital is $900.
To calculate the value of the shareholders' equity account, we need to subtract the total liabilities from the total assets. The formula for shareholders' equity is:
Shareholders' Equity = Total Assets - Total Liabilities
Given:
Current Assets = $2,330
Net Fixed Assets = $10,900
Current Liabilities = $1,430
Long-Term Debt = $4,140
Total Assets = Current Assets + Net Fixed Assets
Total Assets = $2,330 + $10,900 = $13,230
Total Liabilities = Current Liabilities + Long-Term Debt
Total Liabilities = $1,430 + $4,140 = $5,570
Shareholders' Equity = Total Assets - Total Liabilities
Shareholders' Equity = $13,230 - $5,570 = $7,660
Therefore, the value of the shareholders' equity account for Bing, Incorporated is $7,660.
To calculate the net working capital, we subtract the current liabilities from the current assets:
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $2,330 - $1,430 = $900
Therefore, the net working capital for Bing, Incorporated is $900.
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Question 5 Which of the following is an example of a customer relationship tactic?
Supplier evaluations.
Buy one get one free offer.
Competitive tendering.
Personal gifts and presents to decision-takers.
Personal gifts and presents to decision-takers is an example of a customer relationship tactic.
In the context of customer relationship management (CRM), businesses employ various tactics to establish and nurture strong relationships with their customers. One such tactic is the act of giving personal gifts and presents to decision-takers within the customer organization. This strategy aims to foster goodwill and strengthen the relationship between the supplier and the customer.
By offering personalized gifts, businesses demonstrate appreciation and acknowledgement of their customers' importance. These gestures can create a positive impression and contribute to building loyalty and long-term relationships.
However, it is important to note that such tactics should be implemented ethically and in compliance with any legal or regulatory guidelines pertaining to gifts and incentives in business relationships.
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PTS is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 5% is profit, 45% is spent in the supply chain, and the remaining 50% is evenly divided between fixed and production costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (30% profit margin combined now). Assume sales of $100.
O $0.358
O $0.255
O $3.333
O $1.857
O $0.406
PTS is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 5% is profit, 45% is spent in the supply chain, and the remaining 50% is evenly divided between fixed and production costs.
Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (30% profit margin combined now). Assume sales of $100.Now let us try to solve the given question in a step-by-step manner. Step 1: Calculate the percentage of total sales that are not used to calculate profit.The total percentage of sales that are not used to calculate profit = 45% + 50% = 95%.
Step 2: Calculate the portion of sales allocated to profit. The portion of sales allocated to profit = 5%.Step 3: Calculate the profit margin. The profit margin = 5% ÷ 100% = 1 ÷ 20 = 0.05. Step 4: Calculate the portion of sales allocated to fixed and production costs. The portion of sales allocated to fixed and production costs = 50% ÷ 2 = 25%. Step 5: Calculate the profit margin combined with fixed and production costs. The profit margin combined with fixed and production costs = 30% ÷ 100% = 0.3.
Step 6: Calculate the portion of sales allocated to fixed costs when sales increase by $1.The portion of sales allocated to fixed costs when sales increase by $1 = 25% × $1 = $0.25.Step 7: Calculate the portion of sales allocated to profit when sales increase by $1.The portion of sales allocated to profit when sales increase by $1 = 1 − 0.25 − 0.05 = 0.7.Step 8: Calculate the amount of sales needed to increase profit by $1.The amount of sales needed to increase profit by
$1 = $1 ÷ 0.7 = $1.428. This means that if the supply chain can save $1, then it would take $1.428 of increased sales to have the same increase in profit, assuming that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit.
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You figure that the total cost of college will be $101,000 per year 18 years from today. If your discount rate is 4% compounded annually, what is the present value of four years of college starting 18 years ago from today?
Total cost of college will be $101,000 per year 18 years from today.Discount rate is 4% compounded annuallyWe need to find the present value of four years of college starting 18 years ago from today.The present value of four years of college starting 18 years ago from today is $48,767.29.
We have to find out how much it will cost for four years of college at $101,000 per year 18 years from today.Using the formula;FV = PV (1+r)^(n). FV = Future Value = $101,000r = Discount Rate = 4%n = number of years = 18-4 = 14 years (because we have to find the value for four years of college starting 18 years ago from today)So,101000 = PV (1+0.04)^(14)PV = 101000/(1+0.04)^(14)PV = $48,767.29Therefore, the present value of four years of college starting 18 years ago from today is $48,767.29.
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