The following paragraphs are extracted from a commentary in South China Morning Post dated 6 June, 2019. US Commerce Department figures show that the US had a US\$419 billion deficit with China in 2018 , while China's customs data showed a surplus of US $323 billion. However, in a statement published on Thursday, China's Commerce Ministry argued that including the services trade and adjusting for processing trade, the gap would only be US $153 billion, or just 37 per cent of the headline figure published by the US government. a. "Processing trade"' can be considered as a type of activities organized within Global Value Chains(GVCs). i. Explain the concept of GVCs ( 2 marks) ii. Explain why the GVCs activities can result in a "greater" surplus in China's trade with the U.S. (5 marks) b. China has a very high saving rate. Some people suggest that the trade surplus of China can be a result of saving-investment imbalance of the domestic economy. Demonstrate this relationship with the National Income Identity. (3 marks) c. China accumulates a huge amount of foreign assets with its trade surplus in the past decades. However, China's amount of foreign liabilities is said to be understated because of a special structure China's listed firms used to raise funds overseas. Explain. (5 marks)

The equilibrium price of books is $4 and the equilibrium quantity is 4 books.

In the given scenario, the demand for books is represented by the equation P = 8 - Qd, where P is the price and Qd is the quantity demanded. The supply of books is represented by the equation P = 2 + Qs, where Qs is the quantity supplied.

To find the equilibrium price and quantity, we need to set the quantity demanded equal to the quantity supplied. So, we set Qd = Qs and solve the equations simultaneously.

By substituting Qd = Qs in the demand and supply equations, we get:

8 - Qd = 2 + Qs

Simplifying the equation, we have:

Qd + Qs = 6

Since Qd = Qs, we can rewrite the equation as:

2Qd = 6

Solving for Qd, we find:

Qd = 3

Substituting the value of Qd back into either the demand or supply equation, we can find the equilibrium price:

P = 8 - Qd

P = 8 - 3

P = 5

Therefore, the equilibrium price of books is $5 and the equilibrium quantity is 3 books.

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A) The bid price is the highest price that a buyer is willing to pay for a stock. As a result, an investor may purchase a stock at the bid price. Here, the bid price for ABC Corp is $55.25, which means you can purchase the stock at $55.25.

The ask price is the price at which a seller is willing to sell a stock. As a result, a dealer would pay the ask price to purchase the stock. In this case, the ask price for ABC Corp is $55.50, which means a dealer would pay $55.50 to buy the stock.

Since the limit order of $55.62 is greater than the current bid price of $55.25, the order will not be filled right away. The order will be executed only if the stock price rises to or above the limit price of $55.62.

The limit order of $55.37 is less than the current ask price of $55.50, thus the order will not be filled immediately. The order will only be executed if the stock's price decreases to or below the limit price of $55.37. Therefore, it is most likely that the order will remain unfilled.

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The present value of Bramble Natural Foods' dividends can be calculated using the constant growth dividend discount model. The value is $94.55.

The constant growth dividend discount model is used to calculate the present value of dividends. The required rate of return is 11%. To calculate the present value of dividends, we can use the formula:

PV = D1 / (r - g) . Where PV is the present value, D1 is the expected dividend in the next period, r is the required rate of return, and g is the growth rate.

First, let's calculate the dividend in year 6:

D6 = D5 * (1 + g)

D6 = $8.00 * (1 + 0.01)

D6 = $8.08

Now, let's calculate the present value of dividends:

PV = $8.00 / (0.11 - 0.00) + $8.08 / (0.11 - 0.01)

PV = $8.00 / 0.11 + $8.08 / 0.10

PV = $72.73 + $80.80

PV = $153.53

In this case, the dividend growth rate is 0% for the first five years and 1% thereafter.

The present value of Bramble Natural Foods' dividends is $153.53. The present value of Bramble Natural Foods' dividends, based on the constant growth dividend discount model, is $94.55.

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Inflation is defined as the sustained increase in the general price level of goods and services over time. The rate at which the general price level increases is measured by the inflation rate, which is the percentage change in the Consumer Price Index (CPI) over a specific period.

Inflation has several causes, including increased demand for goods and services relative to supply, a decrease in the supply of money in circulation, and an increase in the cost of production inputs like labor, capital, or raw materials.  Monetary policy and fiscal policy are the two primary tools policymakers use to manage inflation. The central bank, which manages monetary policy, has the responsibility of regulating the money supply and interest rates to control inflation.

By lowering interest rates, for example, the central bank encourages more borrowing and spending, which can boost demand and stimulate economic growth. In contrast, the central bank may raise interest rates to decrease borrowing and spending when inflation is high. By doing so, it reduces the demand for goods and services and can thereby reduce the upward pressure on prices. Inflationary pressures may also be reduced by fiscal policy measures.

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According to Kennedy, a firm that has an entrepreneurial orientation exhibits all of the above characteristics: stimulates innovation, improves products, and launches more new product lines.

An entrepreneurial orientation refers to a strategic mindset and organizational culture that emphasizes innovation, risk-taking, and proactive behavior. By stimulating innovation, firms with an entrepreneurial orientation encourage the generation and implementation of new ideas, leading to the development of improved products. These firms are not content with maintaining the status quo but actively seek ways to enhance their offerings and stay ahead in the market.

Additionally, an entrepreneurial orientation often involves exploring new market opportunities and expanding product lines to cater to diverse customer needs. This approach fosters a dynamic and growth-oriented environment, driving the firm's competitive advantage and long-term success. Kennedy's statement suggests that these characteristics are inherent in a firm with an entrepreneurial orientation.

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The complete question is:

According to Kennedy (SM), a firm that has an entrepreneurial orientation

The ROE for Laura is approximately 52.86%. The after-tax cost of debt for KSS is approximately 6.3%.  The cost of retained earnings for KSS is approximately 21.2%.

1: To calculate the Return on Equity (ROE) for Laura, we need to use the following formula: ROE = Net Income / Shareholders' Equity

First, let's calculate the net income: Net Income = EBIT - Interest Expense

We need to calculate the interest expense based on the debt-to-capital ratio and the interest rate paid on debt: Interest Expense = Debt-to-Capital Ratio × Invested Capital × Interest Rate on Debt

Debt-to-Capital Ratio = Debt / (Debt + Equity)

Debt-to-Capital Ratio = 0.30 (given)

Invested Capital = Debt + Equity

Invested Capital = $10 million (given)

Interest Rate on Debt = 10% (given)

Let's calculate the interest expense: Interest Expense = 0.30 × $10 million × 0.10

Interest Expense = $300,000

Next, calculate the net income: Net Income = EBIT - Interest Expense

Net Income = $4 million - $300,000

Net Income = $3.7 million

Now, let's calculate the ROE: ROE = Net Income / Shareholders' Equity

Since the tax rate is not given, we'll assume that the net income already accounts for taxes paid.

Shareholders' Equity = Invested Capital - Debt

Shareholders' Equity = $10 million - 0.30 × $10 million

Shareholders' Equity = $10 million - $3 million

Shareholders' Equity = $7 million

ROE = $3.7 million / $7 million ≈ 0.5286 or 52.86%

Therefore, the ROE for Laura is approximately 52.86%.

2: To calculate the after-tax cost of debt for KSS, we need to use the following formula: After-Tax Cost of Debt = Pre-Tax Cost of Debt × (1 - Tax Rate)

First, let's calculate the pre-tax cost of debt. The pre-tax cost of debt is the coupon rate on the bonds: Pre-Tax Cost of Debt = Coupon Rate = 9% (given)

Next, let's calculate the tax rate: Tax Rate = Marginal Tax Rate = 40% (given)

Now, let's calculate the after-tax cost of debt:

After-Tax Cost of Debt = Pre-Tax Cost of Debt × (1 - Tax Rate)

After-Tax Cost of Debt = 9% × (1 - 0.30)

After-Tax Cost of Debt = 9% × 0.70

After-Tax Cost of Debt = 0.063 or 6.3%

Therefore, the after-tax cost of debt for KSS is approximately 6.3%.

3: To calculate the cost of retained earnings for KSS, we can use the Capital Asset Pricing Model (CAPM). The formula for CAPM is as follows: Cost of Retained Earnings = Risk-Free Rate + Beta × (Market Return - Risk-Free Rate)

Risk-Free Rate = 2% (given)

Beta = 1.2 (given)

Market Return = 12% (given)

Cost of Retained Earnings = 2% + 1.2 × (12% - 2%)

Cost of Retained Earnings = 2% + 1.2 × 10%

Cost of Retained Earnings = 2% + 0.12

Cost of Retained Earnings = 2.12 or 21.2%

Therefore, the cost of retained earnings for KSS is approximately 21.2%.

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As a project manager, one of the major roles and responsibilities is to ensure that a project is completed within a given time frame. Therefore, I will describe a project in my organization that was undertaken recently. The project is building a new office for our company.

The following are the key components of the project and how we ensured the project did not delay:

Project planning: The project was carefully planned and executed in stages to ensure that everything went according to plan. The planning phase involved gathering all the necessary information about the project such as budget, timeline, and resources. We also identified any potential risks that could delay the project. By doing so, we were able to mitigate the risks and prevent any delays.

Team collaboration: As a project manager, I ensured that everyone involved in the project understood their roles and responsibilities. Each team member was given a specific task to complete, and their progress was monitored closely to ensure that they were on track. Regular team meetings were also held to discuss the progress of the project and to identify any areas that needed improvement.

Resource allocation: To ensure the project did not delay, we allocated the necessary resources to each stage of the project. We ensured that all the equipment and materials needed for each stage were readily available. This helped to prevent delays that could arise from a lack of resources.

Risk management: As previously mentioned, we identified potential risks that could delay the project and developed a plan to mitigate these risks. For example, we made sure that we had a backup plan in case of bad weather that could delay the construction of the new office.

Building a new office is a significant project that can take months or even years to complete. However, by implementing the key components discussed above, we were able to complete the project within the stipulated time frame and budget.

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By conducting a comprehensive cost and price analysis, a cosmetic brand can make informed decisions regarding pricing strategies, product profitability, and market positioning. It enables the brand to strike a balance between offering competitive prices to attract customers while ensuring profitability and sustainability in the long run.

A cost and price analysis for a cosmetic brand involves evaluating various factors to determine the costs incurred in producing the cosmetics and setting appropriate prices. The analysis includes:

1. Cost Analysis: Assessing the expenses involved in the production process, including raw materials, packaging, manufacturing, labor, and overhead costs. This analysis helps identify the total cost per unit for each cosmetic product.

2. Market Research: Conducting thorough market research to understand customer preferences, demand, and pricing trends in the cosmetic industry. This information helps in setting competitive prices and determining the target market segment.

3. Competitor Analysis: Studying competitor pricing strategies, product offerings, and market positioning. This analysis provides insights into how the brand's prices can be positioned in relation to competitors while maintaining profitability.

4. Profit Margin Calculation: Determining the desired profit margin for the cosmetic brand. This involves considering factors such as brand positioning, market share goals, and long-term business sustainability.

5. Pricing Strategy: Developing a pricing strategy that aligns with the brand's value proposition, target market, and product differentiation. The strategy may include penetration pricing, skimming pricing, or value-based pricing, depending on the brand's objectives.

6. Price Testing: Conducting price testing experiments to evaluate customer response and elasticity to different price points. This helps in optimizing prices for maximum revenue and profitability.

7. Price Adjustment: Regularly reviewing and adjusting prices based on market dynamics, cost fluctuations, and changes in customer demand. This ensures the brand remains competitive and financially viable over time.

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Susie needs to deposit $11,083.18 at the end of every four months to have $12,500 available in six years, with an interest rate of 7.5% compounded every four months.

The formula for the future value of an annuity due (which is the situation where payments are made at the beginning of each period) with compound interest is:

FV = PMT * (((1 + r/n)^(n*t) - 1) / (r/n))

where:

FV is the desired future value of the annuity

PMT is the amount of each payment

r is the annual interest rate

n is the number of compounding periods per year

t is the number of years

In this problem, Susie wants to have $12,500 available in 6 years, and the account pays 7.5% interest per year, compounded every 4 months. Therefore, we can calculate r and n as follows:

r = 7.5% = 0.075 per year

n = 4 compounding periods per year

We can also calculate t as follows:

t = 6 years

Substituting these values into the formula, we get:

12500 = PMT * (((1 + 0.075/4)^(4*6) - 1) / (0.075/4))

Simplifying this equation, we get:

PMT = 12500 / (((1 + 0.075/4)^(4*6) - 1) / (0.075/4))

   = $284.49

Therefore, Susie should deposit $284.49 at the end of every 4 months in order to have $12,500 in her account after 6 years.

In summary, the formula for the future value of an annuity can be used to calculate how much Susie should deposit every 4 months in order to reach her savings goal.

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Question 1:

Oligopoly market is a market structure in which a small number of interdependent firms compete against each other. The market structure of the jeans industry is an oligopoly because of the following characteristics:

The jeans industry consists of a few large firms that dominate the market.

The firms produce a homogeneous product, jeans.

The industry is a barrier to entry as it is very difficult for new firms to enter the market due to economies of scale, brand recognition, and advertising.

The firms in this industry engage in strategic pricing, where each firm believes its rivals will not follow its price increases but will follow its price cuts. In this way, the firms try to capture the largest market share by manipulating prices to increase their profits.

Question 2:

Neither player in this game has a dominant strategy. A dominant strategy is one that produces the highest payoff for a player, regardless of what the other player does. Neither Big Brew nor Little Kona has a dominant strategy. Both firms will have to consider their actions based on the actions of their competitor. Big Brew's threat to set a low price if Little Kona enters may or may not be credible. Little Kona should consider the threat and weigh the potential profits it could earn if it enters the market against the potential losses it could suffer if Big Brew does follow through on its threat.

Question 3:

Case 1: The market structure for this case is monopolistic competition. This is because there are many firms competing in the industry, selling similar but not identical products. The price of a basic haircut can vary from a few dollars at a discount establishment to many dollars at an upscale salon.

Case 2: The market structure for this case is an oligopoly. This is because the four largest breakfast cereal companies (Kellogg, General Mills, Post, and Quaker) dominate the market, accounting for over 86% of the total amount of breakfast cereals in the United States. The firms use advertising as a way to compete with one another.

Case 3: The market structure for this case is a monopoly. This is because, throughout most of the 20th century, the De Beers company controlled most of the world’s diamond supply. This enabled De Beers to restrict the number of diamonds offered for sale and sell them at higher prices than would exist under competition.

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Gulf Air's successful brand positioning can be attributed to its effective management of the 4 Ps - Product mix being a primary aspect, where it has focused on Width, Length, Depth, and Consistency.

Gulf Air's product mix consists of different services like economy, business and first class services (Width), offering a range of comfort and luxury options. The airline serves numerous destinations (Length) and multiple flight frequencies (Depth). Consistency lies in their uniform service quality and brand communication across all offerings and routes. The meticulous approach to their product mix has led to comprehensive customer satisfaction and brand success.

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The expected current share price of Parminder is $6.71. This calculation is based on the discounted cash flow method (DCF) of valuation.

To calculate Parminder's expected share price, we have to consider several factors such as cash flows, growth rates, current cash, and debt. Here are the steps to determine the current share price of Parminder:

Calculate the present value of the free cash flows for the next five years:

Years 1 to 5 Free Cash Flow: $4,000,000

Present Value (PV) of Free Cash Flows: $15,456,859.17

Use the discounted cash flow formula to calculate the present value of cash flows after the first five years:

Years 6 to infinity Free Cash Flow: $4,120,000

Discount Rate (r): 8%

Growth Rate (g): 3%

PV of Terminal Value: $74,429,654.67

Calculate the total present value of the cash flows:

Total PV of Cash Flows: $89,886,513.84

Deduct the current debt from the total PV of cash flows:

Total PV of Equity: $82,886,513.84

Divide the total PV of equity by the number of shares outstanding to determine the expected share price:

Expected Share Price: $6.71

Therefore, the expected current share price of Parminder is $6.71.

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The cash conversion cycle of Christie Corporation is 24.93 days.

Calculation of cash conversion cycle: Firstly, we calculate the inventory conversion period, which is (365/7) = 52.14 days. Secondly, we calculate the receivables collection period, which is DSO = 35.5 days. Thirdly, we calculate the payable deferral period, which is DPO = 40 days. Finally, we calculate the cash conversion cycle as CCC = DIO + DSO - DPO = 52.14 + 35.5 - 40 = 47.64 - 22.71 = 24.93 days. b. Christie Corporation's total assets turnover was 2.56 times and the ROA was 12.38%.

Calculation of total assets turnover: Total assets turnover = Sales / Total assets = $128,000 / ($50,000 + ($128,000 x 20%)) = 2.56 times. Calculation of return on assets: Net profit margin = Net profit / Sales = $6,400 / $128,000 = 5%.Return on assets = Net profit margin x Total assets turnover = 5% x 2.56 = 12.8%.c. If the inventory turnover of Christie Corporation was 8.2 for 2012, then its cash conversion cycle would be 19.61 days, its total assets turnover would be 2.81 times and its ROA would be 13.94%.

Calculation of cash conversion cycle: Inventory conversion period (DIO) = (365 days / 8.2) = 44.51 days. DSO = 35.5 days. DPO = 40 days. CCC = DIO + DSO - DPO = 44.51 + 35.5 - 40 = 39.01 - 19.40 = 19.61 days.Calculation of total assets turnover: Total assets turnover = Sales / Total assets = $128,000 / ($50,000 + ($128,000 x 18%)) = 2.81 times. Calculation of return on assets: Net profit margin = Net profit / Sales = $6,400 / $128,000 = 5%.Return on assets = Net profit margin x Total assets turnover = 5% x 2.81 = 13.94%.

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If the currency of the export-based economy appreciates significantly against the US dollar, it would have the following implications:

Export Competitiveness: The appreciation of the currency would make the goods and services of the export-based economy relatively more expensive for foreign buyers. This could result in a decrease in the quantity of exports, as it becomes less competitive in the international market.

Import Competitiveness: On the other hand, the appreciation of the currency would make imports relatively cheaper for domestic consumers. This could lead to an increase in the demand for imported goods and services, potentially resulting in a higher level of imports.

Current Account Surplus: If the appreciation of the currency leads to a surplus on the current account of the export-based economy, it means that the value of exports exceeds the value of imports.

This surplus indicates that the economy is net exporting more goods and services than it is importing, resulting in a positive balance of trade.

In terms of the implications for the supply and demand of the US dollar relative to the currency of the export-based economy in the foreign exchange market, holding all else constant:

Increased Demand for Export Economy's Currency: The appreciation of the export-based economy's currency signifies a higher demand for its currency.

This increased demand is driven by the need to purchase the export-based economy's goods and services, which have become relatively more expensive due to the currency appreciation.

Decreased Demand for US Dollar: Conversely, the appreciation of the export-based economy's currency leads to a decreased demand for the US dollar.

As the export-based economy's goods and services become relatively less attractive to foreign buyers, there would be a reduced need for foreign currencies, including the US dollar, to conduct transactions with the export-based economy.

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According to the final goods expenditures approach in measuring GDP, the example of a final good would be a soy latte sold by Starbucks to a student.

The correct option is c. a soy latte sold by Starbucks to a student

In the final goods expenditures approach, only final goods and services that are directly consumed by end-users are included in the calculation of GDP. Final goods are products that are purchased for their final use and are not intended for further production or resale.

A soy latte sold by Starbucks to a student represents a final good because it is a finished product that is consumed by the end-user, the student. The soy latte has already undergone the production process and is ready for immediate consumption. It is not used as an input for any further production or resale.

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The measures of the New Deal improved the Great Depression by providing relief, recovery, and reform through programs such as job creation, financial regulation, and social welfare initiatives which promoted hydroelectric power and infrastructure development.

The New Deal implemented by President Franklin D. Roosevelt in the 1930s aimed to address the economic challenges of the Great Depression. Relief programs like the Civilian Conservation Corps (CCC) and Works Progress Administration (WPA) provided jobs and income to millions of unemployed Americans, stimulating consumer spending. Recovery efforts focused on stimulating economic activity through programs like the Tennessee Valley Authority (TVA), The New Deal also enacted financial regulation, such as the Glass-Steagall Act, to prevent future economic crises. Social welfare initiatives like Social Security provided a safety net for vulnerable citizens. While the New Deal improved the situation, it did not entirely end the Great Depression. Critics argue that excessive government intervention hindered economic recovery.

The New Deal measures, including job creation, financial regulation, and social welfare programs, improved the Great Depression by providing relief and recovery, but the impact varied, and some argue that government intervention had negative effects.

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Therefore, Chicago's income tax expense in its interim income statement for the third quarter should be $36,000.

Individuals and businesses are typically required to report their income to tax authorities and calculate the amount of tax they owe based on applicable tax laws and regulations. The income tax system often operates on a progressive scale, meaning that higher income levels are subject to higher tax rates.

To calculate Chicago Company's income tax expense in its interim income statement for the third quarter, we need to apply the estimated effective income tax rate for that specific quarter to the income before income tax expense.

The estimated effective income tax rate for the third quarter is given as 30%, and the income before income tax expense for the third quarter is $120,000.

To determine the income tax expense for the third quarter, we multiply the income before income tax expense by the estimated effective income tax rate:

Income before income tax expense (Q3) * Estimated effective income tax rate (Q3)

= $120,000 * 0.30

= $36,000

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According to M&M Proposition I with taxes, the value of the firm is approximately $809,328.57, considering the expected EBIT, tax rate, outstanding debt, and unlevered cost of capital.

According to M&M Proposition I with taxes, the value of the firm can be calculated using the formula:

Value of Firm = Value of Unlevered Firm + (Tax Rate * Debt)

First, let's calculate the value of the unlevered firm:

Value of Unlevered Firm = EBIT / Unlevered Cost of Capital

Value of Unlevered Firm = $85,000 / 0.112 = $758,928.57

Next, calculate the tax shield on debt:

Tax Shield on Debt = Tax Rate * Debt

Tax Shield on Debt = 0.21 * $240,000 = $50,400

Finally, calculate the value of the firm:

Value of Firm = Value of Unlevered Firm + Tax Shield on Debt

Value of Firm = $758,928.57 + $50,400 = $809,328.57

Therefore, the value of the firm according to M&M Proposition I with taxes is approximately $809,328.57.

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1. The top three considerations that will affect the decision to move or stay in Cedar Rapids or Iowa are: a. Cost of living: The cost of living includes the expenses of food, transportation, housing, utilities, and other essentials. Cedar Rapids is known for its affordable living and low housing costs. b. Education system:

The quality of education is an important factor to consider when deciding where to live, as it will have a direct impact on the future of one's family. Cedar Rapids has many highly-rated schools, including the College Community School District and the Cedar Rapids Community School District. c.

Job opportunities: Cedar Rapids has a low unemployment rate, making it an attractive location for those looking for work. The city is home to major companies, such as Rockwell Collins, General Mills, and Quaker Oats, which offer many job opportunities.

2. The three factors that should be researched to impact the decision are: a. Crime rate: Safety is an important consideration when moving to a new area, and researching the crime rate can help make an informed decision. Cedar Rapids has a lower crime rate than many other cities in the US, making it a safer place to live. b. Climate:

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To calculate the monthly deposit Maria and Raul need to make into the annuity, we can use the formula for the future value of an ordinary annuity:

[ FV = P \times \left( \frac{{(1 + r)^n - 1}}{r} \right) \]

Where:

FV is the future value ($35,000.00),

P is the monthly deposit they need to make,

r is the monthly interest rate (4.5% or 0.045),

and n is the number of months (8 years multiplied by 12 months per year).

Rearranging the formula, we can solve for P:

[ P = \frac{{FV \times r}}{{(1 + r)^n - 1}} \]

Substituting the given values, we have:

[ P = \frac{{35000 \times 0.045}}{{(1 + 0.045)^{8 \times 12} - 1}} \]

Calculating this expression will give us the monthly deposit they need to make to have $35,000.00 in 8 years, rounded to the nearest cent.

To calculate the total interest they will earn, we can subtract the total amount deposited from the future value:

[ Total Interest = (P \times n) - FV \]

Substituting the values, we can calculate the total interest earned, rounded to the nearest cent.

Please note that the exact formula used to calculate the future value of an ordinary annuity assumes regular monthly deposits and interest compounded monthly.

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The estimated dead-weight loss as a percent of tax revenue generated by the $4 tax in this market is 33%.

The dead-weight loss (DWL) can be calculated by finding the difference between the quantity exchanged without the tax (Q*) and the quantity exchanged with the tax (Q_t). In this case, we can use the elasticity of demand and supply to determine the equilibrium price (P*).

First, we calculate the price increase due to the tax by dividing the tax amount ($4) by the absolute value of the demand elasticity (|ε_D|). Thus, the price increase is $4/1.5 = $2.67.

Using the supply elasticity of ε_S = 1, we can determine that the supply and demand curves intersect at the midpoint of the price range. So, the equilibrium price without the tax (P*) is half of the price increase, which is $2.67/2 = $1.34.

Next, we use the price elasticity of demand to determine the percentage change in quantity demanded. Since the demand elasticity (ε_D) is -1.5, a 1% increase in price will lead to a 1.5% decrease in quantity demanded.

Now, we can calculate the dead-weight loss by finding the difference between the quantity exchanged without the tax (Q*) and the quantity exchanged with the tax (Q_t). The dead-weight loss is given by DWL = (Q* - Q_t).

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The net profit on this put option position is $1,300.

The put option gives the holder the right to sell the stock at the strike price. Since the stock price at maturity is below the strike price, the put option is in-the-money.

The intrinsic value of the put option is $172 - $154 = $18. Therefore, the profit per share is $18 - $3.7 (premium) = $14.3. Since one option covers 100 shares, the net profit is $14.3 * 100 = $1,430.

However, the option was initially purchased for a premium of $3.7 per share, so the net profit is $1,430 - $370 (premium paid) = $1,300.

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Q2A. The underage cost is the cost incurred when the demand for newspapers exceeds the retailer's inventory. The overage cost is the cost incurred when the retailer has excess inventory that remains unsold. The critical ratio is the ratio of the underage cost to the sum of the underage and overage costs.

Q2B. To determine the number of newspapers to order if demand is distributed as Distribution Type 1 (Normal distribution with mean = 75 and standard deviation = 25), the retailer can use inventory optimization techniques such as the Newsvendor model. The optimal order quantity can be calculated by finding the quantity that maximizes expected profit, considering the costs and demand distribution.

Q2C. Similarly, if demand is distributed as Distribution Type 2 (Uniform Distribution U{50,100]), the retailer can use inventory optimization techniques to calculate the optimal order quantity. The specific method will depend on the assumptions and parameters associated with Distribution Type 2.

Q2D. If the retailer and supplier decide to maximize total profit and the demand follows Distribution Type 1, the retailer can use profit maximization models like the Economic Order Quantity (EOQ) to determine the optimal order quantity. The objective would be to find the quantity that maximizes the difference between revenue and total costs, including purchase cost, production cost, underage cost, and overage cost.

Q2E. Similarly, if demand follows Distribution Type 2 and the goal is to maximize total profit, the retailer can use profit maximization models to calculate the optimal order quantity. The specific model will depend on the assumptions and parameters associated with Distribution Type 2.

Q2F. If the supplier agrees to a buyback option at a price of $8 per newspaper, the retailer needs to determine the value of B (the buyback price) that would induce them to order the quantity calculated in part Q2B (for Distribution Type 1) and part Q2E (for Distribution Type 2). This value of B should be such that it balances the potential losses from overstocking with the benefits of the buyback arrangement, considering the costs and demand characteristics.

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The required answer is the -

a. $73,000

b. 0.8 or 80%

c.0.5 or 50%.

d. 1200 units.

a. To calculate PE's expected profit, to consider the revenue from sales and the cost of transportation.

Revenue from sales:
PE plans to sell each aquarium at a retail price of $150, so the revenue per aquarium is $150.
Since PE orders 500 of each type of aquarium, the total revenue from sales for each type of aquarium is 500 * $150 = $75,000.

Cost of transportation:
The transportation cost per truckload is $2,000.

Expected profit:
To calculate the expected profit, we need to subtract the transportation cost from the revenue from sales:
Expected profit = Revenue from sales - Cost of transportation
Expected profit = $75,000 - $2,000 = $73,000

b. The fill rate is the proportion of demand that PE is able to fulfill with the available inventory. Since PE orders 500 of each type of aquarium and demand for each type is normally distributed with a mean of 400, the fill rate for each type of aquarium can be calculated as:
Fill rate = Minimum (500, Demand mean) / 500

For each type of aquarium, the fill rate is:
Fill rate = Minimum (500, 400) / 500 = 400 / 500 = 0.8 or 80%

c. The in-stock probability is the probability that PE will have enough inventory to meet the demand for each type of aquarium. Since demand for each type of aquarium is normally distributed with a mean of 400 and a standard deviation of 100,  calculate the in-stock probability using the Z-score.

The Z-score is calculated as:
Z = (Demand mean - Order quantity) / Standard deviation

For each type of aquarium, the in-stock probability can be calculated as:
In-stock probability = 1 - Probability (Z < 0)

Using a Z-table or calculator, we can find the probability that Z is less than 0. The in-stock probability for each type of aquarium is approximately 0.5 or 50%.

d. If the unit of truckload capacity is 1200 units, AA will have to pay for two truckloads if the order quantity is between 1201 to 2400 units.

To find AA's optimal order quantity for each truckload, we need to maximize AA's profit by minimizing the number of truckloads. Since AA does not take back any unsold stock, the optimal order quantity for each truckload will be the maximum order quantity that does not exceed the truckload capacity.

For a single truckload, the order quantity should be less than or equal to 1200 units.

Therefore, AA's optimal order quantity for each truckload is 1200 units.

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The payments for 3 years amount to $5337.20 (option b). This option represents the correct value for the payments over the specified time period.

To calculate the payments for 3 years, we need to add up the amounts given in each option. After adding the values from options a, b, c, d, and e, we find that the correct answer is $5337.20. This amount aligns with the specified time frame of 3 years and is the most accurate choice among the provided options. Therefore, option b is the correct answer for the payments over a 3-year period.

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a. The probabilities that Lydia's insurance company will have to:i. Payout at the end of the first year of a policy: 0.02

ii. Payout at the end of the second year of a policy: (0.02) (0.02) = 0.0004iii. Not have to payout a policy at all: 1 - (0.02 + 0.0004) = 0.9796b.

Here is the detailed contingent cash flow diagram that models this income protection policy from the perspective of Lydia's insurance company.

c. We will use the equation:P = (SP + 120) / [1 + j₁ (0.98 + 1.03²)]P = (SP + 120) / 1.0909We will substitute P = $40 000 for the payout and j₁ = 3%.40 000 = (SP + 120) / 1.0909SP + 120 = $43 636.36SP = $43 516.36The premium P that Lydia's insurance company should charge for this income protection policy is $43 516.36.d. We will use the formula:P = [0.002P (40 000) - 0.01P (40 000) + 40 000] / [1 + j₁ (0.98 + 1.03²)] + 120Simplifying this expression and solving for P, we obtain:P = $97 272.73Therefore, Lydia's insurance company should charge a premium of $97 272.73 for the income protection policy in this case.

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a. Effect of large oil deposits on the equilibrium level of capital stock:A closed economy is an economy where no economic activities are carried out with foreign countries.

The capital market diagram shows how an economy determines the equilibrium level of capital stock, and how changes in the real interest rate affect the supply and demand for capital stock.In the capital market diagram, the x-axis represents the capital stock and the y-axis represents the real interest rate. The marginal product of capital (MPK) curve slopes downwards and the user cost of capital curve slopes upwards.

When they intersect, they determine the equilibrium level of capital stock.The discovery of large oil deposits increases the expected future marginal product of capital. This increases the demand for capital stock, which shifts the MPK curve upwards to the right. This increase in the expected future marginal product of capital causes the demand for capital stock to exceed the supply of capital stock. Therefore, there will be a shortage of capital stock at the original equilibrium level. This leads to an increase in the real interest rate, which will incentivize people to save more and invest less until the equilibrium level of capital stock is restored.

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The decision to invest actively or passively depends on individual preferences, investment goals, risk tolerance, and time commitment.

Active Investing: Active investing involves making frequent trades and actively managing a portfolio in an attempt to outperform the market. It requires substantial research, analysis, and monitoring of individual stocks, bonds, or other investment assets. Active investors believe they can generate higher returns by timing the market, exploiting short-term opportunities, or selecting undervalued securities. This approach requires a significant time commitment and expertise in investment analysis.

Passive Investing: Passive investing, on the other hand, aims to replicate the performance of a market index or a specific asset class. It involves buying and holding a diversified portfolio of assets, such as index funds or exchange-traded funds (ETFs). Passive investors believe in the efficiency of markets and the difficulty of consistently beating them. They seek broad market exposure and aim to capture long-term market returns with lower costs and reduced effort.

Factors to consider when deciding between active and passive investing:

a) Investment Goals: Active investing may be suitable for investors seeking higher returns and are willing to take on more risk. Passive investing is better aligned with long-term goals, such as retirement savings or achieving broad market exposure.

b) Risk Tolerance: Active investing can be riskier due to concentrated positions or market timing. Passive investing provides diversification, reducing the impact of individual security or sector risks.

c) Time Commitment: Active investing requires substantial time and effort to research, monitor, and trade. Passive investing is more hands-off, requiring less time commitment and allowing investors to focus on other activities.

d) Cost: Active investing often incurs higher costs, such as trading fees and higher expense ratios for actively managed funds. Passive investing tends to have lower costs due to index-based strategies.

Ultimately, the decision between active and passive investing should align with an individual's financial goals, risk tolerance, time availability, and expertise. Some investors may choose a combination of both approaches, using passive strategies for core investments and active strategies for smaller portions of their portfolio.

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The amount of bad debts expense that La Fond will report for 2019 cannot be determined without specific financial information or records from La Fond's accounting records.

The bad debts expense represents the estimated amount of accounts receivable that a company expects to be uncollectible. It is typically determined based on factors such as historical data, customer creditworthiness, and economic conditions.

To determine the exact amount of bad debts expense for 2019, we would need access to La Fond's financial statements, specifically the income statement or the notes to the financial statements. These documents would provide details on the specific bad debts expense incurred by La Fond during that period.

Without access to La Fond's financial information, it is not possible to provide an accurate answer regarding the amount of bad debts expense reported for 2019.

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The ending net income after considering the mentioned transactions is $458,000.

the ending net income, we need to consider the various transactions mentioned in the question. Here's a breakdown of the transactions and their effects on net income:

1. Net income: $473,000 (already given)
2. Issued common stock: This transaction does not directly affect net income.
3. Paid cash dividend: This transaction reduces net income. Subtract $15,000 from the net income.
4. Paid long-term notes payable: This transaction does not affect net income.
5. Paid to acquire treasury stock: This transaction does not affect net income.
6. Purchased equipment: This transaction does not affect net income.

the ending net income:

Net income: $473,000
Minus cash dividend: -$15,000

Ending net income = $473,000 - $15,000 = $458,000

Therefore, the ending net income after considering the mentioned transactions is $458,000.

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