Wonder should report a pension liability of $1,700,000 at December 31,2022 balance sheet.
Explanation:
The accumulated benefit obligation at December 31,2020 is $3,000,000 and projected benefit obligation is $3,700,000.
The difference between the two amounts is the unrecognized net actuarial loss of $700,000. In addition, there is prior service cost of $1,600,000 that has not been amortized yet.
This gives us a total of $2,300,000. Since the company has a net pension asset of $1,000,000, this reduces the total pension liability to $1,300,000.
However, the company also has an accumulated other comprehensive loss of $1,000,000. This means that the total pension liability that Wonder should report on its balance sheet at December 31,2022 is $1,700,000 (i.e. $1,300,000 + $1,000,000).
The correct option is C) $1,700,000.
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Leaders and managers who have high EQ, high employee engagement, and tend to lead cohesive teams have one key thing in common; they are usually good at developing (fill in the blank).
High EQ leaders foster strong relationships, trust, and effective communication, leading to engaged teams and a positive work environment.
One crucial characteristic of high EQ, high employee engagement, and a tendency to lead cohesive teams is that these managers and leaders are frequently adept at forging solid interpersonal bonds. For the purpose of fostering a healthy and stimulating work environment, individuals must develop and maintain strong relationships with their team members and coworkers. These leaders are exceptional at building relationships based on empathy, trust, and clear communication, which increases teamwork and employee engagement. They provide a sense of belonging and motivation by taking the time to get to know and connect with their team members on a personal level, which eventually results in cohesive teams that work towards shared objectives with zeal and dedication.
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On January 1, 2022, Liberty Bank issues 5500,000,6%, five-year bonds, with interest payable on July 1 and January 1.5 Since the market interest rate is 5%, the bonds seli for 5521,830 . Requirement 1: This bond will sell at a Recuirement 2: For the issue date and first semi-annual period, complete the table below and show your calculations in the workspace provided.
Requirement 1: This bond will sell at a premium. This is because the market interest rate is lower than the coupon rate on the bonds (6%). Requirement 2:
Calculation of bond price:
Calculation of Present value of principal:
FV = $500,000,
r = 2.5% (5%/2),
n = 10 (5 x 2)
Semi-annual coupon = 6%/2 = 3%
PMT = $15,000
PV = $500,000/(1+0.025)10
= $379,179.33
Calculation of Present value of annuity:
PMT = $15,000,
r = 2.5%,
n = 10PV
=[tex]$15,000 x [(1-1/(1+0.025)10)/0.025][/tex]
PV = $132,650.92
Calculation of bond price:
Price = PV of annuity + PV of principal
Price = $132,650.92 + $379,179.33
Price = $511,830.25
On the first interest payment date, the interest will be calculated on the face value of the bond.
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The distribution strategy is key for successful market penetration of any product. Companies seldom hire external agencies to work in collaboration to develop distribution strategies. One such agency has asked for your help with four of its projects. Your role is to conduct primary and secondary research and record your observations.
Do a survey locally and understand the distribution of each of these channels. Also, explain the challenges in each case:
Q1. Distribution of milk products
Q2. Distribution of heavy-duty capital equipment
Q3. Distribution of textbooks to schools
Q4. Distribution of antivirus through a reseller
Note: You are expected to analyse problem scenarios from various industries; so, please approach each scenario with a holistic view and record all industry and problem-relevant data.
Distribution strategy plays a pivotal role in the successful market penetration of any product. Companies generally don't involve external agencies in collaboration to develop distribution strategies.
Here, a company has approached for help in developing distribution strategies for four of its projects. Let's analyse each project individually along with the distribution channels.
Q1. Distribution of milk products: The most common distribution channel for milk products is through grocery stores, supermarkets, and convenience stores. Sometimes, there are also direct sales to consumers. It is critical to maintain the cold chain and adhere to the necessary regulations. The primary challenge here is to reach the end customer in the shortest time possible while preserving the quality of the milk products.
Q2. Distribution of heavy-duty capital equipment: The distribution channel for heavy-duty capital equipment differs depending on the size of the product and the market segment targeted. The most common channels for distribution include leasing and direct sales.
Q3. Distribution of textbooks to schools: This distribution channel for textbooks is through a distribution network that includes regional offices, local depots, and distributors. Direct sales are also common for large institutions like schools.
Q4. Distribution of antivirus through a reseller: The distribution of antivirus through a reseller involves multi-level marketing, where the reseller earns a commission for each sale. Another approach is to partner with e-commerce platforms for online distribution. The major challenge here is the highly competitive nature of the antivirus market, coupled with the constant emergence of new viruses.
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Sharon Inc., a manufacturer of snowmobiles has detected asbestos, a hazardous material, in the insulation of its factory. A complete strip and repair job will have to be done at a considerable cost. Two bids for the job have been obtained. Doust Construction Inc. will do the work for $120,000. With a $20,000 down payment, Doust Construction will finance the balance over six years at 10 percent, requiring Sharon to make six equal annual payments. Chamberlain Inc. will do the job for $122,500 and will finance the entire amount at 6 percent, requiring Sharon to make six annual payments. Sharon's best available use of money to do the strip and repair job is 8 percent. Which contractor should Sharon's use?
Sharon Inc., a manufacturer of calculation has detected asbestos, a hazardous material, in the insulation of its factory. Two bids for the job have been obtained.
Doust Construction Inc. will do the work for $120,000. With a $20,000 down payment, Doust Construction will finance the balance over six years at 10 percent, requiring Sharon to make six equal annual payments. Chamberlain Inc. will do the job for $122,500 and will finance the entire amount at 6 percent.
The question asks you to calculate the net present value The calculation of NPV is as follows: he NPV of Doust Construction is calculated as follows:
(1 + 8%)5) + ($21,047.60 / (1 + 8%)6) - ($20,000 + $100,000) = $2,255.32
($22,558.80 / (1 + 8%)3) + ($22,558.80 / (1 + 8%)4) + ($22,558.80 / (1 + 8%)5) +
($22,558.80 / (1 + 8%)6) - $122,500 = -$4,319.78
The NPV of Doust Construction is $2,255.32, while the NPV of Chamberlain is -$4,319.78.
Sharon should use Doust Construction.
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The price of rice is 0.2 cents per calorie and the price of fish is 20 cents per calorie. The minimum daily caloric intake for survival is 1,200 calories. The global poverty rate is $1.90. There are 100 cents in a dollar. a. With a $1.90 budget, what is the maximum number of calories someone can purchase if they only buy rice. b. With the same budget and the additional constraint that eating the equivalent of 10 calories of fish per day, how much rice can be purchased and what is the total caloric intake per day?
a) For a $1.90 budget, it is possible to purchase: $1.90 x 100 cents / $1 = 190 cents. If rice is being bought with this budget and the price of rice is 0.2 cents per calorie, then the maximum number of calories that can be purchased is:
190 cents ÷ 0.2 cents per calorie = 950 calories.b) When eating the equivalent of 10 calories of fish per day, the caloric requirement that needs to be met is: 1,200 - 10 = 1,190 calories.Using the budget of $1.90 with the price of rice at 0.2 cents per calorie, the maximum amount of calories one can purchase is: 190 cents ÷ 0.2 cents per calorie = 950 calories.
Since the caloric requirement is 1,190 calories and 10 calories is already being consumed from fish, the total amount of calories needed from rice is: 1,190 - 10 = 1,180 calories.
Using the price of rice at 0.2 cents per calorie and the total amount of calories needed from rice at 1,180 calories, the cost of rice is: 1,180 calories x 0.2 cents per calorie = 236 cents. The total amount of cents left from the budget of $1.90 after buying the rice is: 190 cents - 236 cents = -46 cents. This means the budget is not sufficient to purchase the amount of rice needed for the daily caloric requirement. Thus, it is not possible to calculate the total caloric intake per day.
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You have a project where the Cost Performance Indicator (CPI) of .80 which means we are spending more money than we should spend. And we have a Schedule Performance Indicator (SPI) of 1.20, which means we are ahead of schedule. Do you think we should be worried because we are spending more than the budgeted money? Explain your answer
Yes, we should be worried because we are spending more money than the budgeted amount. The Cost Performance Indicator (CPI) of .80 implies that we are over budget by 20%. A project's success is evaluated not only by completing the project on schedule but also by achieving the project's objectives within the budgeted amount. When a project surpasses the budgeted amount,
it is considered a cost overrun, which is a significant concern.The Schedule Performance Indicator (SPI) of 1.20 shows that we are ahead of schedule, which is an excellent indicator of the project's progress. However, it does not imply that the project is completed within the budgeted amount or that it will continue to be within the budget in the future.Therefore, even though we are ahead of schedule, we should be concerned about the project's cost overrun since it may jeopardize the project's viability. The project manager should re-evaluate the project's budget, make necessary adjustments, and set up a plan to bring the project back on track.
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Please read the Case Study: Foreign Companies in China Under Attack (textbook page 250). In a one-page paper (not including the Title or Reference pages) address the case questions: What factors do you think are behind these events? Do some research to find out whether there have been more such problems since this writing. Is it just American companies that are being targeted? What can firms currently operating in China, or considering investment there, do to lessen the likelihood of these problems for their managers? Please ensure you "discuss" and "describe" as required, providing a clear understanding of the material! You are graded on your critical thinking skills and understanding of the concepts.
Foreign Companies in China Under Attack China has been experiencing a surge in violent protests directed towards foreign firms. Some of the factors that are behind these events include the following.
Perceived threats to Chinese national security – The Chinese government perceives some foreign firms as threats to national security due to their activities, products, or services. This has led to protests and attacks against these companies. Perceived threats to the Chinese economy – China has the largest population in the world, and it is considered a critical market by many companies.
However, some foreign firms are perceived as threatening to the Chinese economy, either through their business models or their dominance in certain industries. This has also led to protests and attacks against such firms.Political tensions – China has a unique political system that is often at odds with those of Western countries. Political tensions between China and foreign countries have sometimes led to attacks on foreign companies in China.
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william owns a hardware store in louisville. he has decided to expand his business interests and is considering opening a jewelry store in a neighboring town. he has incurred $16,000 of expenses investigating whether to open the new jewelry store. in july of the current year he finds the perfect location and opens the jewelry store on october 1. what amount of the investigation expenses can he deduct in the current year?\
William can deduct $5,000 of the investigation expenses in the current year. To deduct the investigation expenses for opening a new business, the expenses must be incurred before the decision to open the business is made.
In this case, William incurred $16,000 of expenses investigating whether to open the jewelry store.However, the deduction for these expenses is limited to $5,000 in the year the decision is made. This means that William can deduct up to $5,000 of the investigation expenses in the current year. The remaining $11,000 cannot be deducted in the current year.
It's important to note that the deduction for the remaining $11,000 can be amortized (deducted) over a 180-month period, starting from the month the business opens. This means that William can deduct a portion of the remaining $11,000 each month for the next 180 months.In summary, William can deduct $5,000 of the investigation expenses in the current year, and the remaining $11,000 can be amortized over a 180-month period.
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What is the equation for the budget line? b). What is the equation for MRS? c). Interpret your MRS equation. d). What is the equation for the income consumption curve? e). What is the equilibrium level of X,Y and U? f). What is the equilibrium level of MUx, MUy and MRS? Let Px change to $2. g). What is the equation for the new income consumption curve? h). Why do we need a new ICC? 3). What is the new equilibrium level of X : Y ∗
and U'? j). What is intermediate point for both X and Y ? k). What are the S.E. and IE.? Is X a normal good? Explain. 1). In a diagram, show the old and new equibrium points, the ICCs, budget lines, the utility curves, intermediate point, S.E. and I E.
a). Equation for Budget LineBudget Line shows the alternative combinations of two goods that can be purchased with a consumer's given income and given prices. The equation for the budget line is given below:
PxX + PyY = IWhere,Px and Py are the respective prices of goods X and YX and Y are the quantities of the goods I is the income of the consumerb). MRSXY is the marginal rate of substitution of good X for good YMUx is the marginal utility of good XMUy is the marginal utility of good Yc).
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7
Exercise 2-22 (Algo) Reversing entries [Appendix 2B]
10 points
The following transactions occurred during December 31, 2021, for the Microchip Company.
1. On October 1, 2021, Microchip lent $115,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022.
2. On November 1, 2021, the company paid its landlord $5,400 representing rent for the months of November through January.
eBook
Print
Prepaid rent was debited. 3. On August 1, 2021, collected $10,800 in advance rent from another company that is renting a portion of Microchip's factory. The $10,800 represents one year's rent and the entire amount was credited to deferred rent revenue.
References
4. Depreciation on office equipment is $4,050 for the year.
5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $7,550. The company records
vacation pay as salaries expense.
6. Microchip began the year with $1,850 in its asset account, supplies. During the year, $6,200 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,100 remain on hand.
Required:
1. & 2. If Microchip's accountant employed reversing entries for accruals, prepare the adjusting entries at the end of 2021 for only those entries that would be reversed.
3. Prepare the appropriate reversing entries at the beginning of 2022.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3
Reversing Entry at the beginning of 2022 Interest Payable $2,300, Interest Expense $2,300 at Loan Transaction. Reversing Entry at the beginning of 2022 Prepaid Rent $1,800 and Rent Expense $1,800 at Prepaid Rent. Reversing Entry at the beginning of 2022 Rent Revenue $10,800 and Deferred Rent Revenue $10,800 at Deferred Rent Revenue.
To prepare the required adjusting and reversing entries, let's go through each transaction:
Loan Transaction:
The loan transaction involves the accrual of interest on the note. Since reversing entries are employed, we need to reverse the accrued interest at the end of the year and then adjust it at the beginning of the next year.
Adjusting Entry at the end of 2021:
Interest Expense $2,300
Interest Payable $2,300
Reversing Entry at the beginning of 2022:
Interest Payable $2,300
Interest Expense $2,300
Prepaid Rent:
The prepaid rent transaction involves the recognition of rent expense over the months of November through January. Since reversing entries are employed, we need to reverse the prepaid rent at the end of the year and then adjust it at the beginning of the next year.
Adjusting Entry at the end of 2021:
Rent Expense $1,800
Prepaid Rent $1,800
Reversing Entry at the beginning of 2022:
Prepaid Rent $1,800
Rent Expense $1,800
Deferred Rent Revenue:
The deferred rent revenue transaction involves the recognition of earned rent revenue over the year. Since reversing entries are employed, we need to reverse the deferred rent revenue at the end of the year and then adjust it at the beginning of the next year.
Adjusting Entry at the end of 2021:
Deferred Rent Revenue $10,800
Rent Revenue $10,800
Reversing Entry at the beginning of 2022:
Rent Revenue $10,800
Deferred Rent Revenue $10,800
Note: The remaining transactions (depreciation, vacation pay, and supplies) do not require reversing entries.
Please note that reversing entries are optional and are typically used to simplify the accounting process in the subsequent period. The decision to use reversing entries depends on the company's accounting policies and practices.
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. In February 2020, the U.S. economy fell into a recession due to the COVID-19 pandemic. a. (10 p) Use the AD \& AS framework (graph) to explain and illustrate the underlying reasons for the recession. b. (20 p) What fiscal policy measures were taken to help the economy recover? Use the AD \& AS framework to illustrate the effects of these policies on the price and output levels. c. (20 p) What monetary policies were employed? Use the DM \& S M
(demand for and supply of money) and the AD \& AS framework to illustrate the effects of these policies on the price and output levels. Show showing how interest rate, investment, price level and equilibrium output in the economy may be affected by the policy.
The AD and AS framework can explain the U.S. economy's fall into recession in February 2020 due to the COVID-19 pandemic.
The AS (aggregate supply) curve will shift to the left as companies reduce production or close down due to the pandemic. Also, there is a reduction in the demand for products and services. This results in reduced GDP, which is a determinant of the AS curve.
The AD (aggregate demand) curve shifts to the left due to the uncertainty and fear created by the pandemic. As a result, the purchasing power of consumers falls, and consumption and investment decreases. The decrease in consumption also reduces the multiplier effect. As a result, the AD curve will shift leftward.
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Which of the following is true regarding intangible assets?
A) They can have infinite or finite lives
B) Their costs are always amortized
C) Their costs must be expensed immediately
D) They are easier to value than tangible assets
Intangible assets are assets that do not have a physical existence and are not financial instruments.
They include patents, trademarks, copyrights, goodwill, and proprietary technology.
Intangible assets can have either finite or infinite lives, making option A true regarding intangible assets.
They also need to be accounted for and evaluated periodically to ensure that they remain valuable for their useful life.
intangible assets' costs are not always amortized, making option B false regarding intangible assets.
They can also not be expensed immediately since they offer long-term benefits,
making option C false regarding intangible assets.
Intangible assets can also be difficult to value compared to tangible assets, making option D false regarding intangible assets.
In conclusion, option A is true regarding intangible assets.
They can have infinite or finite lives, while option B, C, and D are false regarding intangible assets.
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A corporate-level company team is exempt from intemet filtering and from monitoring who has access to their accounts. Additionally, the team has unrestricted access to all of the company's files. Whose responsibility is it to find and report these IT vulnerabilities? Systems auditors Data owners Data custodians Department managers
The responsibility of finding and reporting IT vulnerabilities of a corporate-level company team that has unrestricted access to all of the company's files lies with the systems auditors.
What is a system auditor?A system auditor is responsible for investigating and verifying an organization's management of and access to networked computer systems. Auditors ensure that system security and data integrity standards are followed and that the system's operation is adequate and in line with the organization's overall objectives. They may also look for the existence of malicious software and determine if users have access to resources that they should not have, such as sensitive data or network privileges.
What is Data Custodian?A data custodian is a person or group of people who are responsible for the safekeeping of a company's data. They're in charge of ensuring that data is secured and accessed only by authorized persons. This role may be managed by IT administrators, data center staff, and other employees who are responsible for securing an organization's data.
What is a Data Owner?A data owner is a person who is in charge of a specific data set within an organization. They make decisions about what data can be accessed and by whom. They also decide how long to keep the data and how to dispose of it when it is no longer needed. Finally, they establish data standards and guidelines for data usage in their organization.
What is Department Managers?Department managers are accountable for the day-to-day operations of a particular division or team within a company. They have supervisory responsibilities over personnel, project management, financial management, and risk management, among other things. They're also in charge of maintaining an environment that fosters productivity, collaboration, and high morale among team members. However, it is the system auditors' responsibility to find and report these IT vulnerabilities. This is because they are specialized in assessing the overall IT risk environment and have the technical expertise and training necessary to recognize and report IT vulnerabilities.
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Define Kyoroku kai (Supplier Associations) and then discuss the
benefits and disadvantages of such alliances.
Kyoroku kai or supplier associations are organizations made up of suppliers who are responsible for supplying raw materials, products, and services to specific industries.
They work together to establish quality and delivery standards, as well as to address common concerns and problems. The main aim of these alliances is to improve the relationship between suppliers and their customers and increase the competitiveness of both parties.
The benefits of Kyoroku kai include the following:
1. Better Communication: The association helps in promoting better communication between suppliers and their customers. This is achieved by sharing information about products, services, and new technologies.
2. Pooling Resources: Members of the alliance can pool their resources, knowledge, and experience to achieve better results. For instance, they can purchase materials in bulk, which would lower the cost of production.
3. Improved Productivity: Through sharing best practices, members can improve their productivity and reduce waste.
4. Reduced Costs: Working together can also result in cost savings through shared marketing, research and development, and other activities.
5. Better Quality Control: The association can establish quality control standards that all members must adhere to, which will improve the quality of products and services.
The disadvantages of Kyoroku kai include the following:
1. Limited Competition: Collaboration between suppliers could limit competition, resulting in higher prices for consumers.
2. Overdependence: Members may become too reliant on the alliance for their success, and this could be a disadvantage if the association fails.
3. Unequal Contributions: Members may not contribute equally to the alliance, which could lead to resentment and a lack of cooperation.
4. Power Imbalances: Larger suppliers may dominate the alliance, leaving smaller ones with less influence.
5. Conflicts of Interest: Members may have conflicting interests, which could lead to disputes and a breakdown of the alliance.
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In presence of external economies of scale, a country's industry with cumulative output to date will experience a unit cost. lower; lower higher; constant higher; higher higher; lower
External economies of scale are the external advantages that result from an increase in industry size beyond the boundaries of an individual firm.
These advantages include lower average costs, which result from factors such as easier access to skilled labor and technology, as well as lower transaction costs. As a result, an industry with external economies of scale can experience unit cost reductions, which can improve its profitability and competitiveness.
A country's industry with cumulative output to date will experience a lower unit cost in the presence of external economies of scale. This is because external economies of scale result in lower average costs, which are passed on to firms operating in the industry. In turn, firms can reduce their prices, improve their profits, and expand their operations.
Overall, external economies of scale are critical to the growth and competitiveness of an industry. By creating an environment that fosters innovation, improves access to resources, and reduces transaction costs, external economies of scale help firms to reduce their unit costs and improve their bottom lines. This, in turn, drives growth and increases competition, leading to improved economic outcomes for the country as a whole.
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In 200-250 words, explain what the intent of the federal truth in
lending disclosure was? What other disclosures would you suggest,
if any, that may help to improve the mortgage market?
The Federal Truth in Lending Disclosure was created with the aim of providing customers with a clear and complete understanding of the costs involved with borrowing funds.
The Act necessitates that all creditors reveal the terms of loans, including any fees that will be assessed, and the annual percentage rate (APR) that will be charged. This allows borrowers to understand the actual expense of borrowing funds from a lender.
The Act also requires creditors to include a repayment plan, which can be especially helpful for those who are considering various lending possibilities. Other disclosures that would aid in improving the mortgage market could include those that highlight risks and fees associated with particular loan types.
These might include a description of the types of loans that may lead to a decrease in property value, or a list of fees that may be levied on borrowers who default on their loans.
Additionally, disclosures that help customers understand the lending process as a whole may be beneficial, such as those that clarify the roles of mortgage brokers, appraisers, and other professionals involved in the lending process.
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Which of the following is used to record the summary of effects on one particular item?
a. An account
b. A trial balance
c. A general journal
d. A general ledger
The correct answer is: An account is used to record the summary of effects on one particular item.
It is a basic element of the accounting system that tracks the increases, decreases, and balances of specific assets, liabilities, equity, revenues, or expenses. Each account represents a unique item or category within the financial records of a business.
When transactions occur, they are recorded in accounts using the double-entry bookkeeping system. The account serves as a repository for all related transactions and provides a comprehensive record of the activity and balance associated with that specific item.
On the other hand, a trial balance is a list of all the general ledger accounts and their balances, used to ensure that debits and credits are equal. A general journal is a chronological record of all financial transactions, while a general ledger is a master accounting document that contains all the accounts used by a business.
Therefore, the summary of effects on one particular item is recorded in an account.
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You bought one bitcoin in January 2018 for $15700 and sold it two years later for $10000. What was your holding period return and your annualized rate of return? −57.0% holding period return and −28.5% annualized return −36.3% holding period return and −18.2% annualized return −18.2% holding period return and −36.3% annualized return −36.3% holding period return and −20.2% annualized return
The holding period return is the percentage loss of 57.0% over the two-year period. The annualized rate of return is the average yearly loss of 28.5% based on the holding period return.
To calculate the holding period return, we use the formula:
Holding Period Return = (Ending Value - Beginning Value) / Beginning Value * 100
Holding Period Return = ($10000 - $15700) / $15700 * 100 = -57.0%
To calculate the annualized rate of return, we use the formula:
[tex]Annualized Return = (1 + Holding Period Return)^(1 / Number of Years) - 1[/tex]
Number of Years = 2
[tex]Annualized Return = (1 + (-0.57))^(1 / 2) - 1 = -28.5%[/tex]
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Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past year is shown as follows. Divisional investment is as of the beginning of the year. Colonial Pharmaceuticals uses a 8 percent cost of capital and uses beginning-of-the-year investment when computing ROI and residual income. Ignore income taxes. R&D is assumed to have a two-year life in the AC Division and a nine-year life in the SO division. All R&D expenditures are spent at the beginning of the year. Assume there are no current liabilities and (unrealistically) that no R&D investments had taken place before this year. Required: a. Compute EVA for the two divisions. (Do not round intermediate calculations.) The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45 million and having a four-year expected life, after which the assets can be salvaged for $9 million. In addition, the division has $45 million in assets that are not depreciable. After four years, the division will have $45 million available from these nondepreciable assets. This means that the division has invested $90 million in assets with a salvage value of $54 million. Annual depreciation is $9 million. Annual operating cash flows are $20 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $145 million and having a four-year expected life, after which the assets can be salvaged for $29 million. In addition, the division has $145 million in assets that are not depreciable. After four years, the division will have $145 million available from these nondepreciable assets. This means that the division has invested $290 million in assets with a salvage value of $174 million. Annual depreciation is $29 million. Annual operating cash flows are $80 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the company uses a 12 percent cost of capital. Required: a. Compute residual income, using net book value for each year. b. Compute residual income, using gross book value for each year. (Enter your answers in thousands of dollars.)
The AC Division has a higher EVA than the SO Division. This is because the AC Division has a shorter product life cycle, which means that its R&D expenses are lower.
How to explain the informationHere are the EVA calculations for the two divisions of Colonial Pharmaceuticals:
AC Division
Beginning-of-year investment = $100,000
Operating income = $40,000
Depreciation = $20,000
R&D expense = $10,000
EVA = $50,000
SO Division
Beginning-of-year investment = $200,000
Operating income = $80,000
Depreciation = $40,000
R&D expense = $20,000
EVA = $20,000
Ste. Marie Division
Net book value = $90 million
Gross book value = $135 million
Operating cash flow = $20 million
Cost of capital = 8%
ROI (net book value) = 22.2%
ROI (gross book value) = 15%
Residual income (net book value)
Year 1: $1.8 million
Year 2: $1.6 million
Year 3: $1.4 million
Year 4: $1.2 million
Residual income (gross book value)
Year 1: $7.0 million
Year 2: $6.4 million
Year 3: $5.8 million
Year 4: $5.2 million
As you can see, the AC Division has a higher EVA than the SO Division. This is because the AC Division has a shorter product life cycle, which means that its R&D expenses are lower.
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suppose a company has the chance to make a risky investment. If the new product is successful, the price of the stock will jump from $50 to $100 but the value of bond remains $1000 per bond. The company will be worthles and go bankrupt if the investment is unsuccessful. The probability of succees is 60% and the probability of failure is 40%. what is the expected percentage gain on bond and stock?
Expected percentage gain on bond and stockIn this scenario, suppose that a company has the opportunity to make a risky investment.
The following are the details of this investment opportunity:
If the investment is successful, the company's stock price will rise from $50 to $100,
while the bond's worth will remain at $1000 per bond.
On the other hand, the company would be worthless and go bankrupt if the investment fails.
The likelihood of success is 60%, while the probability of failure is 40%.
We need to determine the expected percentage gain on bond and stock:
For stock:
Expected percentage gain on stock = probability of success * percent gain + probability of failure * percent loss
Expected percentage gain on stock = 0.60 * (100% - 50%) + 0.40 * (- 100%)
Expected percentage gain on stock = 10%For bond:
Expected percentage gain on bond = probability of success * percent gain + probability of failure * percent loss
Expected percentage gain on bond = 0.60 * (0%) + 0.40 * (0%)
Expected percentage gain on bond = 0%
the expected percentage gain on stock is 10%,
while the expected percentage gain on bond is 0%.
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2.2 Starbucks intends opening up a string of coffee shops in
Africa. Identify the factors that would affect their location
decisions.
When Starbucks decides to open up a new chain of coffee shops in Africa, several factors may affect their location decisions. Among the factors that could influence their decision, here are some that stand out:
The coffee shop's location should be convenient for its target customers. Starbucks would prefer a location where there is a high volume of foot traffic. The shop should be in a highly visible location that is easy to find. Starbucks would prefer a location where there are similar stores nearby, such as restaurants and other coffee shops. Starbucks would prefer a location that is easy to access for both pedestrians and drivers. The availability of utilities such as electricity and water should also be a consideration. Furthermore, Starbucks would want to locate their coffee shops in places where the people can afford their services and goods. They will analyze the economic status of a region before opening a new coffee shop. Additionally, Starbucks will take into account the competition in the area, the business environment, and government policies that may influence the coffee shop's operation and profitability.
Starbucks should also consider the local customs, culture, and people's preferences. They must comply with the local laws and regulations, including employment laws and taxation. In summary, Starbucks would take into account a range of factors before making their location decisions.
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Stella's endowment for the current period is R100000, and she expects to receive R140000 in the next period. If she can invest her money and borrow from the bank at an interest rate of 10%, answer the following questions. a) What is the most she can consume in the current period? [ b) What is the most she can consume in the next period? [y] c) Graph her feasibility frontier for the set interest rate. [1] d) If she would like to smooth her consumption perfectly across both periods, how much can she consume in each period? e) Suppose the economy in which Stella lives is currently facing excess demand-deficient unemployment. The reserve bank approaches you for advice on what they could do to combat this issue. With your knowledge of unit 10 of the Core textbook, what would you recommend they do to stimulate employment? f) Graph the impact of this change on Stella's feasibility frontier
For the current period, Stella has an endowment of R100000. However, she can also borrow from the bank at an interest rate of 10%.
The amount she can consume is determined by the sum of her endowment plus the amount she can borrow, minus the interest she must pay on the loan. If the amount Stella borrows from the bank is x, In the next period, Stella expects to receive R140000. Her consumption will be determined by the sum of the endowment plus the interest earned on her investment, minus the amount she must repay to the bank.
The blue line represents her budget constraint for the current period, while the green line represents her budget constraint for the next period. The red line represents her new budget constraint after the interest rate has been reduced. With a lower interest rate, Stella can borrow more money from the bank and invest more in the next period, which allows her to consume more in both periods.
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. A logistics manager of an organization is concerned about inconsistency of the quality of incoming supplies. He wants to monitor the process capability of vendors for incoming supplies to ensure the quality of material supplies meet the specifications required. Explain with an example, how he can begin to implement the concept
The logistics manager of an organization wants to monitor the process capability of vendors for incoming supplies to ensure the quality of material supplies meet the specifications required. Here’s an example of how he can begin to implement the concept of monitoring process capability of vendors:
One way to monitor the process capability of vendors for incoming supplies is to use statistical process control (SPC). The goal of SPC is to ensure that a process is consistent and meets a set of specifications by controlling it.
SPC uses statistical tools to analyze and measure the variation in a process and identify any sources of variation that need to be eliminated. The first step the logistics manager can take is to identify the key characteristics of the supplies that need to be monitored.
For example, if the organization needs a certain type of metal with specific dimensions, the logistics manager can set up a control chart to monitor the length, width, and thickness of the metal. The next step is to collect data on the incoming supplies and plot them on the control chart.
The control chart will show whether the supplies are within the set specifications or not. If the supplies are within the specifications, the logistics manager can continue to monitor them.
If the supplies are outside the specifications, the logistics manager can work with the vendor to improve the quality of the supplies.
Finally, the logistics manager should continue to monitor the process capability of the vendors by collecting data regularly and updating the control chart. By doing so, the logistics manager can ensure that the incoming supplies meet the required specifications and reduce the inconsistency in quality.
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Discuss the benefits and shortcomings of The Mckinsey 7-S model.
The McKinsey 7-S Model is a management framework that helps businesses evaluate the effectiveness of their organizational design. This model is very useful for analyzing a company's strengths and weaknesses.
Benefits of The Mckinsey 7-S model are: Assessment of the internal environment The McKinsey 7-S model helps firms assess the internal environment by examining seven interconnected variables: structure, system, shared values, strategy, skills, staff, and style. The model is also ideal for evaluating the compatibility of these variables, highlighting possible causes of inconsistency, and recommending how to address these issues. A focus on organizational design
Organizational design is one of the most important aspects of any business operation, and the McKinsey 7-S model focuses specifically on this area. Managers can use the model to identify areas where change is necessary to improve performance. This framework helps companies align their objectives with their organizational structure and internal culture, ensuring that everyone is working towards a common goal.
Shortcomings of The Mckinsey 7-S model are: The model is not comprehensive enough The McKinsey 7-S model examines seven key areas of a business, but there are other variables that are not included. A comprehensive model should take into account other factors such as market conditions, customer expectations, and external trends. The McKinsey 7-S model is not a complete solution for organizational change and improvement. It is important to supplement the model with other approaches to ensure that all relevant factors are considered.
The model is not easy to applyThe McKinsey 7-S model requires a lot of data collection and analysis, which can be time-consuming and difficult. Not all managers have the necessary skills to apply this model effectively. In addition, the model requires input from different stakeholders, which can be difficult to obtain in practice.
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Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $487,000 cost with an expected four-year life and a $10,000 saivage value. Additional annual information for this riew product line follows. (PV of \$1. FV of \$1. PVA of S1, and FVA of \$1) (Use appropriate foctor(s) from the tables provided.) Required: 1. Determine income and net cash flow for each year of this machine's ife 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7% Complete this question by entering your answers in the tabs below. Determine income and net cash flow for each year of this machine's life. Factor Company is planning to add a new product to its line. To manufacture this product. the company needs to buy a new mac a $487,000 cost with an expected four-year life and a $10,000 salvage value-Additional annual information for this new product follows. (PV of \$1. FV of S1. PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine income and het cash flow for each year of this machine's life, 2. Compute this machine's payback period. assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. Complete this question by entering your answers in the tabs below. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a a $487,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new follows. (PV of \$1. EV of \$1. PVA of \$1, and FVA of \$1) (Use oppropriate factor(s) from the tables provided.) Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback perlod, assuming that cash flows occur evenly throughout each year 3. Compute net present yalue for this machine using a discount rate of 7\%. Complete this question by entering your answers in the tabs below. Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign, Round your present value factor to 4 decimals and final answers to the nearest whicle dollar.)
The new machine that Factor Company plans to purchase has a cost of $487,000, a four-year expected life, and a salvage value of $10,000.
In order to determine the income and net cash flow for each year of the machine's life, we need to consider the annual cash inflows and outflows associated with the machine. Assuming the cash flows occur evenly throughout each year, the annual income will be calculated by subtracting the annual depreciation expense from the annual cash inflow.
The depreciation expense can be calculated by dividing the cost of the machine minus the salvage value by the expected life of the machine. The net cash flow for each year will be the difference between the cash inflow and the depreciation expense.
To compute the payback period, we need to determine the year in which the cumulative cash inflows equal or exceed the initial investment cost of $487,000. By dividing the initial investment cost by the annual net cash flow, we can find out how many years it takes to recover the investment.
To compute the net present value (NPV) of the machine, we use a discount rate of 7%. NPV represents the present value of all future cash flows discounted at the given rate. The NPV is calculated by summing the present value of each year's net cash flow, which is obtained by multiplying the net cash flow by the present value factor at a 7% discount rate.
To determine the income and net cash flow for each year of the machine's life, we calculate the annual cash inflow, depreciation expense, and net cash flow. The payback period is computed by dividing the initial investment cost by the annual net cash flow.
Lastly, the net present value is obtained by discounting and summing the present value of each year's net cash flow at a 7% discount rate.
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The new machine that Factor Company plans to purchase has a cost of $487,000, a four-year expected life, and a salvage value of $10,000.
In order to determine the income and net cash flow for each year of the machine's life, we need to consider the annual cash inflows and outflows associated with the machine. Assuming the cash flows occur evenly throughout each year, the annual income will be calculated by subtracting the annual depreciation expense from the annual cash inflow.
The depreciation expense can be calculated by dividing the cost of the machine minus the salvage value by the expected life of the machine. The net cash flow for each year will be the difference between the cash inflow and the depreciation expense.
To compute the payback period, we need to determine the year in which the cumulative cash inflows equal or exceed the initial investment cost of $487,000. By dividing the initial investment cost by the annual net cash flow, we can find out how many years it takes to recover the investment.
To compute the net present value (NPV) of the machine, we use a discount rate of 7%. NPV represents the present value of all future cash flows discounted at the given rate. The NPV is calculated by summing the present value of each year's net cash flow, which is obtained by multiplying the net cash flow by the present value factor at a 7% discount rate.
To determine the income and net cash flow for each year of the machine's life, we calculate the annual cash inflow, depreciation expense, and net cash flow. The payback period is computed by dividing the initial investment cost by the annual net cash flow.
Lastly, the net present value is obtained by discounting and summing the present value of each year's net cash flow at a 7% discount rate.
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Identify at least two different Types of sale promotions tactics Lululemon should consider for use Globally and provide execution details
i.e. Gift with Purchase. Loyalty Program Incentive related, Storewide Seasonal Sales, Sweepstakes and Contests
Lululemon is a company that sells athletic apparel and accessories, and it operates globally. To reach its sales target, Lululemon should consider using different types of sale promotion tactics. Two types of sale promotions tactics that Lululemon should consider for use globally are storewide seasonal sales and loyalty program incentives. Storewide Seasonal SalesSeasonal sales are important because they help to clear out the inventory for upcoming merchandise.
Storewide seasonal sales should be scheduled when Lululemon wants to move out old stock or bring in a new product line. Lululemon should advertise the sale heavily to attract more customers to its stores. For example, Lululemon could offer customers a discount of up to 50% off on seasonal clothing and accessories, like yoga mats, gym bags, and headbands.
Lululemon should also offer free shipping to its customers who cannot visit the stores.Loyalty Program IncentivesLoyalty programs are used to reward repeat customers, and Lululemon should consider using this type of sale promotion.
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We know a car can be had for 60 monthly payments of
$399. The dealer has set us a nominal interest rate of 4.5%
compounded daily. What is the purchase price?
We know that a car can be had for 60 monthly payments of $399 and that the dealer has set us a nominal interest rate of 4.5% compounded daily. We can find the purchase price by using the present value formula.Present value formulaP = (A/i) * [1 - (1 + i)^(-n)]Where, P is the present value.
A is the annuity payment, i is the periodic interest rate, and n is the number of periods.Since we have monthly payments, we need to use the monthly interest rate and the number of periods in months.4.5% nominal annual rate compounded daily = 0.045 / 365 = 0.00012328767123 monthly rate60 months = 60 * 12 = 720 periodsP = ($399 / 0.00012328767123) * [1 - (1 + 0.00012328767123)^(-720)]P = $31,415.39 (rounded to the nearest cent)Therefore, the purchase price of the car is $31,415.39.
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Carla Lopez deposits $1,800 a year into her retirement account. If these funds have average earnings of 7 percent over the 40 years until her retirement, what will be the value of her retirement account? Use Exhibit 1-B. (Round your discount factor to 3 decimal places and final answer to the nearest whole dollar.)
The value of Carla's retirement account will be $35,245 after 40 years of making annual deposits of $1,800 with an average earnings rate of 7 percent.
Carla Lopez deposits $1,800 into her retirement account annually. Assuming an average earnings rate of 7 percent over a period of 40 years until her retirement, we can calculate the value of her retirement account using the future value of an annuity formula.
First, we need to calculate the discount factor, which is given by the formula:
Discount factor = [1 - (1 + r)^(-n)] / r
Here, the annual payment is $1,800, the rate of return is 7 percent, and the time period is 40 years. Plugging in these values, we have:
Discount factor = [1 - (1 + 7%)^(-40)] / 7% = 19.5807
Now, we can calculate the future value of the annuity by multiplying the annuity payment ($1,800) by the discount factor:
Future value of annuity = Annuity payment x Discount factor = $1,800 x 19.5807 = $35,245
Therefore, the value of Carla's retirement account will be $35,245 after 40 years of making annual deposits of $1,800 with an average earnings rate of 7 percent.
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Keynesian economics emphasized that economic downturns could be due to:
Select one:
a. a decline in business confidence.
b. inflation.
c. technological shocks.
d. deflation.
Keynesian economics emphasizes that economic downturns could be due to a decline in business confidence.
According to John Maynard Keynes, an economic slowdown can happen due to a decrease in aggregate demand,
which leads to unemployment, low economic growth, and, in extreme cases, depression. Keynesian economics encourages
the government to be involved in the economy through monetary and fiscal policies to stabilize the economy when it is facing economic difficulties.
The theory was developed in response to the Great Depression and the view that the economy can self-correct to full employment is no longer appropriate.
Keynesian economics argues that government intervention can be beneficial in a variety of ways,
including the creation of jobs, the stimulation of aggregate demand, and the encouragement of investment.
The Keynesian view is that economic downturns can occur for a variety of reasons, including technological shocks, deflation, and inflation.
However, Keynesians believe that the root cause of economic problems is the decline in business confidence.
When businesses become uncertain about the future, they cut back on their investments, which leads to a decline in demand for goods and services.
Consequently, unemployment increases, and the economy contracts.
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Households and firms
According to the circular flow, which two groups interact with each other in the product market
According to the circular flow, the two groups that interact with each other in the product market are households and firms.
What is the Circular Flow Model?The circular flow model is a visual representation of the economy that shows the connection between different sectors of the economy. It explains how cash, goods, and services flow between households, companies, and governments.
What are Households and Firms?Households refer to the consumers of goods and services, while firms refer to the producers of goods and services. Households, which are made up of people who buy goods and services, provide labor to firms and consume goods and services from firms. Firms, on the other hand, employ individuals to produce and distribute goods and services, which are then sold to households in return for cash.
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