The present value of an annual payment of $10,000 that is received in perpetuity if the discount rate is 13% is $76,923.08.
Present value is the current value of future payments. It's calculated by reducing the future payment amounts by an appropriate discount rate.
Given the annual payment of $10,000 that is received in perpetuity, and the discount rate of 13%, the present value is given by the formula:
P = PMT / r
where P is the present value,
PMT is the annual payment, and
r is the discount rate.
Substituting the given values in the formula, we get:
P = $10,000 / 0.13
P = $76,923.08
Therefore, the present value of an annual payment of $10,000 that is received in perpetuity if the discount rate is 13% is $76,923.08.
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In layman's term, what does GAAP aim to achieve?
What does the phrase efficient allocation of resources mean?
What mechansim fosters the efficient allocation of resources in the
united states?
GAAP is a set of financial accounting standards that ensure consistent and transparent presentation of financial information, aiming to provide accurate and relevant information to aid informed decision-making, while the efficient allocation of resources in a market economy maximizes productivity and rewards efficiency.
GAAP is an acronym for Generally Accepted Accounting Principles. GAAP refers to a set of financial accounting standards that public corporations in the United States follow.
The aim of GAAP is to ensure that businesses present their financial information in a consistent and transparent manner that can be easily understood by investors, creditors, and other stakeholders. It also aims to provide users of financial statements with accurate, timely, and relevant information that can assist them in making informed decisions.
In simple terms, GAAP aims to ensure that businesses prepare their financial statements in a way that is easy to understand and compare.
The efficient allocation of resources means that resources such as land, labor, and capital are allocated in such a way as to maximize productivity and output while minimizing waste.
In the United States, the mechanism that fosters the efficient allocation of resources is the market economy. Under the market economy, prices are determined by supply and demand forces. This means that resources will be allocated to the highest bidder, which tends to be those who can produce goods and services at the lowest cost.
This system creates incentives for businesses to be efficient and productive and rewards them for doing so.
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suppose a homeowner has an existing mortgage loan with these terms remaining balance of 150,000 interest rate of 8% in remaining term of 10 years with monthly payments this loan can be replaced by loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount what should be the monthly payment on the new loan
Suppose a homeowner has an existing mortgage loan with the following terms:Remaining balance of 150,000.Interest rate of 8%.Remaining term of 10 years.Monthly payments.This loan can be replaced by a loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount.
We need to find out what should be the monthly payment on the new loan.Let's calculate the cost of the outstanding loan amount:
Cost of outstanding loan amount = 8% of remaining balance on the
loan= 8% of 150,000= 12,000
This means the homeowner will have to pay a 12,000 penalty to replace the existing loan.Let's calculate the new loan amount:
New loan amount = outstanding balance + penalty
New loan amount= 150,000 + 12,000
New loan amount= 162,000
Now let's calculate the monthly payment for the new loan using the loan calculator and the following values:Loan amount = 162,000
Interest rate = 6%
Loan term = 10 years (120 months)
Monthly payment for the new loan = 1,804.69
Therefore, the monthly payment on the new loan should be 1,804.69.
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A postal worker counts the number of complaint letters received by the New Zealand Postal Service in a given day. Identify the type of data collected. Select one: a. quantitative b. categorical
The type of data collected, in this case, would be categorical data. Categorical data consists of distinct categories or groups that represent different qualities or characteristics.
In this scenario, the postal worker is counting the number of complaint letters received, which falls into specific categories (e.g., 0 complaints, 1 complaint, 2 complaints, etc.). The data is not measured on a numerical scale, but rather grouped into discrete categories, making it categorical in nature.
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Entry of Notes Payable in Installments
On the first of January 2022, Empresas Buenapaga took out a loan of $100,000 in cash by signing an installment note payable that requires four annual payments that include payment to the principal and interest at 7% payable every December 31, 2022 to 2025.
Required:
Compute the amount of the annual loan payment assuming that the applicable present value of annuity factor is 3.3872
Make the journal entry to recognize the loan taken on the first of January 2022.
Make the journal entry to recognize the payment of the first term of the loan on December 31 , 2022.
The entry of notes payable in installments refers to the acquisition of a loan by a company that is paid in periodic installments. The loan amount is paid back in small amounts over time with interest. The journal entry is made to record the acquisition of the loan and its payments.
Annual loan payment = Loan amount / Present value of annuity factor
Given that Empresas Buenapaga took out a loan of $100,000 and the present value of annuity factor is 3.3872, we can calculate the annual loan payment as follows:
Annual loan payment = $100,000 / 3.3872 = $29,513.17 (rounded to the nearest cent)
The journal entry to recognize the loan taken on the first of January 2022 is as follows:
Date Account Title and Explanation Debit Credit
Jan. 1, 2022Cash100,000
Notes Payable100,000
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Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $52,500.00 seven years ago. The old equipment currently has no market value. The new equipment costs $51,800.00. The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project, the equipment is expected to have a salvage value of $14,000.00. The new equipment is expected to save the firm $30,000.00 annually by increasing efficiency and cost savings. The corporation has a tax rate of 32% and a required return on capital of 10.2%. Question 1 What is the total initial cash outflow? (Round to the nearest dollar, and show your answer as a negative number.) Question 2 What are the estimated annual operating cash flows? (Calculate your answer to the nearest dollar amount.) Question 3 What is the terminal cash flow? (Calculate your answer to the nearest dollar.) Question 4 What is the NPV for this project? (Calculate your answer to the nearest dollar.)
Question 1: What is the total initial cash outflow?
Initial cash outflow is the amount of cash that needs to be paid at the start of the project. It is also referred to as the initial investment required to undertake the project. The cash outflows for the purchase of the new equipment are as follows:
Cash outflow = Cost of new equipment – Tax savings on the purchase of new equipment
Cash outflow = $51,800.00 - ($51,800.00 × 32%)
Cash outflow = $51,800.00 - $16,576.00
Cash outflow = $35,224.00
Hence, the total initial cash outflow is $35,224.00.
What are the estimated annual operating cash flows?
The estimated annual operating cash flows can be calculated as follows:
Annual operating cash flows = Savings in operating cost + Depreciation tax shield
Annual operating cash flows = $30,000.00 + (Depreciation per year × Tax rate)
Depreciation per year = (Purchase price – Salvage value) / Life of project
Depreciation per year = ($51,800.00 - $14,000.00) / 4
Depreciation per year = $9,450.00
Annual operating cash flows = $30,000.00 + ($9,450.00 × 0.32)
Annual operating cash flows = $33,044.00
Hence, the estimated annual operating cash flows are $33,044.00
In this case, r is 10.2% and n is 4. NPV can be calculated as follows:
NPV = -$35,224.00 + ($33,044.00 / 1.102) + ($9,520.00 / 1.1024)
NPV = -$35,224.00 + $24,444.00 + $7,617.00
NPV = -$3,163.00
Hence, the NPV for this project is -$3,163.00.
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A black swan event has which of the following characteristics?
a It has little impact on society.
b It is an everyday occurrence.
c It is something that is planned.
d It is viewed as a negative event.
A black swan event has which of the following characteristics by (d). It is viewed as a negative event.
A black swan event is characterized by being an unpredictable and rare event that has a significant impact and is typically viewed as a negative occurrence. It is an event that deviates from normal expectations, is difficult to anticipate, and often has far-reaching consequences.
Black swan events are typically associated with extreme events or shocks that disrupt traditional models or beliefs. They are often retrospectively analyzed and considered obvious in hindsight but are challenging to predict or prepare for beforehand.
These events can have significant implications for society, economies, financial markets, or other systems.
Therefore, option d, "It is viewed as a negative event," accurately describes the characteristic of a black swan event.
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in a revenue management and six sigma context, an unrented hotel room or empty airline seat is considered to be a(n)?
In a revenue management and Six Sigma context, an unrented hotel room or empty airline seat is considered to be a revenue loss or a wasted opportunity. When a hotel room or airline seat is left unoccupied, it means that the business has not generated any revenue from that particular resource.
Revenue management involves maximizing revenue by selling the right product to the right customer at the right time and price. This practice aims to optimize the utilization of resources, such as hotel rooms or airline seats, to generate maximum revenue. However, when a room or seat remains unrented or empty, it represents a missed opportunity to generate revenue.
From a Six Sigma perspective, the concept of waste or "muda" is relevant. In this context, an unrented hotel room or empty airline seat can be considered as a form of waste. Six Sigma aims to minimize waste and improve efficiency by identifying and eliminating defects, errors, or inefficiencies in processes. Thus, an unrented room or empty seat would be seen as waste in the revenue management and Six Sigma context.
To summarize, an unrented hotel room or empty airline seat is considered a revenue loss or a wasted opportunity in revenue management and Six Sigma contexts. It represents a missed chance to generate revenue and is seen as a form of waste in the pursuit of efficiency and optimization.
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women in the workforce
1. why do organisation advocate for increasing women's participating in the work force
2. what are the issues or barriers for greater participation of women in the workforce
3. how do organisation address these issues or barriers
Women in the workforce:1. Organizations advocate for increasing women's participation in the workforce because of several reasons. For instance, women can bring diverse perspectives and ideas into the company.
When women participate in the workforce, it leads to higher productivity levels, and it also increases the talent pool. Increasing women's participation in the workforce also helps to promote gender equality and reduce the gender pay gap.2. There are several issues or barriers for greater participation of women in the workforce, such as cultural beliefs, lack of education, and workplace discrimination.
Other barriers include workplace harassment, long working hours, and lack of family-friendly policies.3. To address these issues or barriers, organizations must provide education and training opportunities to empower women.Organizations can also tackle workplace discrimination by providing equal opportunities to all employees regardless of gender. Additionally, they can create a safe and supportive working environment that values diversity and promotes respect for all employees.Conclusively, it is essential for organizations to increase women's participation in the workforce by identifying the issues and barriers that women face and implementing strategies to address them.
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Listening 2.3 - Libby Larson: "Kyrie" from Missa Gaia
No unread replies.55 replies.
After listening to Listening 2.3, respond to the following questions:
1. How does Larsen's use of consonance and dissonance impact your experience listening to this setting of a "Kyrie"? Be specific.
2. How does your experience listening to Larsen's "Kyrie" differ from your experience listening to Hildegard von Bingen's "Kyrie"?
1. The way in which Libby Larson utilizes consonance and dissonance influences the listener's experience of her Kyrie setting in a variety of ways. Consonance generates a sense of stability and calm, while dissonance produces a sense of tension and disharmony.
In "Kyrie," there is a great deal of dissonance, which contributes to the music's contemporary style. The dissonance causes a sense of restlessness, as if the music is constantly struggling to break free of its established structure. It is a very anxious, modern composition that differs from the traditional Kyrie settings that we have become accustomed to.
2. Hildegard von Bingen's "Kyrie" is written in a Gregorian Chant style, which is drastically different from Libby Larson's. Bingen's Kyrie has a more stable structure, and the repetition of the chant creates a serene and contemplative mood. This contrasts significantly from Larson's Kyrie, which is full of tense energy and dissonance. While listening to Bingen's "Kyrie," you may feel a sense of calm and peace, while listening to Larson's "Kyrie," you may feel anxious and apprehensive.
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The person who is elected by stockholders to determine and carry out the goals and policies of a corporation is legally called:
1.The board advisor
2.The director
3.The chief operating officer
4.The corporate agent
The person who is elected by stockholders to determine and carry out the goals and policies of a corporation is legally called the director. Option 2 is the right answer.
What is a director?A director is an individual elected by the shareholders of a corporation to run the corporation on their behalf.
The director's duties include setting the corporation's strategy, making critical business judgments, and overseeing corporate operations to meet the corporation's objectives.
A director's liability is imposed under both state and federal law, and it can be both civil and criminal liability.
Being a director is a serious responsibility, and it is critical that individuals who accept director positions comprehend the level of responsibility and liability that comes with the position.
Directors have a fiduciary duty to the corporation and the shareholders, meaning they must act in good faith and with the corporation's best interests at heart.
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the purpose of stare decisis is to create less predictability for businesses and individuals a) true b ) false
b) False. Stare decisis, which means "to stand by things decided," is a legal doctrine that promotes predictability and consistency in the application of law.
The purpose of stare decisis is to create more predictability for businesses and individuals by adhering to established legal precedents. It means that courts should generally follow decisions made in similar cases, providing a level of certainty in how the law is interpreted and applied. This principle ensures that similar cases are treated consistently, preventing arbitrary or erratic judgments. By relying on past decisions, businesses and individuals can better understand and anticipate the legal consequences of their actions, promoting stability and fairness in the legal system.
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what do you ask bree? can your customers resell your products to one another? what is your current profit? are your profits greater than your costs? what are your fixed costs?
If you were to ask Bree, the following are the potential questions:What is the status of the products of your customers?Can your customers resell your products to one another?
What is your current profit?Are your profits greater than your costs? What are your fixed costs?It is necessary to provide a little background to the questions and then add their answers for more clarity. Bree is most likely a seller who sells products to her customers, and therefore, these questions will be about her business.The first question, "What is the status of the products of your customers?" is an open-ended question that will allow Bree to explain if she knows whether her customers have received the products.
Moreover, she will clarify if there have been any issues with the product that the customers have received.Secondly, "Can your customers resell your products to one another?" is a question that will give Bree the opportunity to elaborate on her policy on reselling of products. It is an essential question because it will determine if there are any restrictions on reselling.
The third question, "What is your current profit?" is a direct question that will help Bree to explain how much she makes from her sales. It is an important question because it will help to establish the success of her business.
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Talk about (Revised) IAS No. 1: Presentation of
Financial Statements in term of assets
classification.
(Revised) Guidelines for the presentation and disclosure of financial statements are outlined in IAS No. 1: Presentation of Financial Statements.
The updated standard offers a structure for the reporting of assets in a balance sheet in terms of asset classification. According to whether their estimated realisation would occur within the regular operating cycle or 12 months from the reporting date, it requires companies to categorise assets as either current or non-current. Non-current assets are those that are planned for usage outside of the operating cycle while current assets are those that are anticipated to be turned into cash or consumed inside the operating cycle. This classification aids readers of financial accounts in comprehending the assets of an entity's liquidity and long-term survival.
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Consider FASB standards for reporting revenues from government grants received by a not-for-profit organization. Answer the following questions:
a. What features of government grants indicate they are conditional contributions?
b. When should revenue be recognized under a cost-reimbursement grant?
Please do not use an answer that was already posted
FASB (Financial Accounting Standards Board) standards have specific guidelines for reporting revenues from government grants for not-for-profit organizations.
These standards must be followed by such organizations in order to comply with the rules. Below are the answers to the given questions:
a. Features of government grants that indicate they are conditional contributions The following features indicate that a government grant is a conditional contribution:
If the grant requires the organization to undertake specific activities or carry out certain tasks or provide services, then it is a conditional contribution.
The government may require an organization to achieve a specific outcome or objective within a stipulated time frame. This means that the government has set specific conditions that the organization must meet to be eligible for the grant. Thus, it is a conditional contribution.
The grant agreement may also specify the conditions of eligibility. This means that the organization must meet certain criteria or comply with certain regulations to be eligible for the grant. The government may require that the funds be used for research, training, or other specific purposes. In such cases, the government is setting a condition that the funds must be used for a specific purpose.
b. Recognition of revenue under a cost-reimbursement grant Revenue should be recognized under a cost-reimbursement grant only when the costs have been incurred. This means that the revenue should be recognized when the expenses have been recorded in the books of accounts.
Cost-reimbursement grants are granted to reimburse the organization for the costs incurred in undertaking a project or providing services. This will ensure that the revenue is recognized in the same period as the expenses.
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The AJL Fund has a front-end load of 5%, a back-end load of 3% and an expense ratio of 1%. NAV of the fund at the beginning of the year (t=0) is $20.
During the year, the fund paid out dividend distributions of $0.60 to investors. Assume the stocks in the AJL Fund went up by 10% during the year.
What is the NAV at year end (at t=1)?
1. $21.33
2. $21.78
3. $22.00
4. $22.38
5. None of the above
A front-end load is a fee paid to purchase a mutual fund. It is a percentage of the investment and is deducted from the invested amount. A back-end load is a fee paid to exit a mutual fund before a specified time limit. In this case, the AJL Fund has a front-end load of 5%, a back-end load of 3%, and an expense ratio of 1%.
NAV of the fund at the beginning of the year (t=0) is $20.The calculation of the NAV at year-end (at t=1) is shown below: Starting NAV (at t=0) = $20Front-end load =[tex]5% of $20 = 5% × $20 = $1.00[/tex] Invested amount =[tex]$20 - $1.00 = $19.00[/tex] Dividend distribution to investors = $0.60Invested amount after dividend distribution = $19.00 - $0.60 = $18.40The fund's stock went up by 10%.
Therefore, the increase in the fund's NAV is calculated as follows:Increase in NAV [tex]= 10% of $18.40 = 10% × $18.40 = $1.84[/tex]Back-end load = 3% of the invested amount = 3% × $18.40 = $0.55Expense ratio = 1% of the invested amount = 1% × $18.40 = $0.18Total deductions = [tex]$1.00 + $0.55 + $0.18 = $1.73NAV[/tex] at year-end (at t=1) = Starting NAV - Front-end load - Back-end load - Expense ratio + Increase in [tex]NAV= $20.00 - $1.00 - $0.55 - $0.18 + $1.84= $20.11[/tex]Therefore, the NAV at year-end (at t=1) is $20.11. Option 5 (None of the above) is the correct answer.
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1. How do airlines practice price discrimination?
2. Does price discrimination increase revenue for airlines?
Airlines often practice price discrimination by offering different prices for the same seat based on factors such as time of purchase, length of stay, and class of service.
This enables airlines to charge a higher price to customers who are willing to pay more while filling seats that would otherwise go unsold. Price discrimination can also be used to increase revenue for airlines. By charging different prices to different customers, airlines can increase their revenue by capturing more of the consumer surplus.
There are risks associated with price discrimination, including the possibility of alienating customers who feel they are being unfairly charged and the potential for reduced consumer welfare. In conclusion, airlines use price discrimination by offering different prices for the same seat based on different factors.
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A firm started the year with retained earnings of $8,700 and ended the year with retained earnings of $8,250. During the year, the firm earned a net income of $3,100. How much did the firm pay in dividends?
Multiple Choice
$3,550
$2,650
$550
$2,550
$3,650
The firm paid in $3,550 dividends.
The correct answer to the given question is option a.
A firm began the year with retained earnings of $8,700 and ended the year with retained earnings of $8,250.
In other words, the firm had a reduction in its retained earnings account of $450 (i.e. $8,700 - $8,250). The firm's net income for the year is $3,100, which means that the total amount of dividends paid by the firm during the year is equal to:
Dividends = Beginning Retained Earnings - Ending Retained Earnings + Net Income
Dividends = $8,700 - $8,250 + $3,100Dividends = $3,550
However, if the firm's dividends paid during the year were more than its net income, then the value calculated would be negative, which is not the case here. As a result, the amount of dividends paid by the firm during the year is $550.
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Take me to the text Jessica White recently started her own shoe repair business. Transactions for the first month of operations (September 2019) are as follows. 1) Jessica invested $19,700 cash in the business. 2) Paid two months of rent in advance, in the amount of $1,000. 3) Purchased store equipment worth $3,800 with cash. 4) Incurred business registration expenses, paid with $710 cash. 5) Paid travel expenses with $1,320 cash. 6) Received $2,660 cash from customers for shoe repair services performed during the month. 7) Provided shoe repair services worth $2,370 on account. 8) Paid $1,390 to an assistant. 9) Borrowed $1,390 cash from the bank. 10) Received $860 in bills for electricity, water and telephone, to be paid next month. 11) Jessica withdrew $780 cash for personal purposes. 12) Received $320 owing from a customer for service provided earlier this month. Required Record the above transactions on the T-Account worksheet. Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values, The T-Account fields are labeled by transaction number. Record each transaction by entering the value into the
Jessica invested $19,700 cash in the business. Debit Cash account: $19,700 Credit Jessica's Capital account: $19,700 Paid two months of rent in advance, in the amount of $1,000.
Debit Prepaid Rent account: $1,000
Credit Cash account: $1,000
Purchased store equipment worth $3,800 with cash.
Debit Store Equipment account: $3,800
Credit Cash account: $3,800
Incurred business registration expenses, paid with $710 cash.
Debit Business Registration Expenses account: $710
Credit Cash account: $710
Paid travel expenses with $1,320 cash.
Debit Travel Expenses account: $1,320
Credit Cash account: $1,320
Received $2,660 cash from customers for shoe repair services performed during the month.
Debit Cash account: $2,660
Credit Accounts Receivable account: $2,660
Provided shoe repair services worth $2,370 on account.
Debit Accounts Receivable account: $2,370
Credit Service Revenue account: $2,370
Paid $1,390 to an assistant.
Debit Salary Expense account: $1,390
Credit Cash account: $1,390
Borrowed $1,390 cash from the bank.
Debit Cash account: $1,390
Credit Notes Payable account: $1,390
Received $860 in bills for electricity, water, and telephone, to be paid next month.
No journal entry is needed at this time. It will be recorded when the payment is made next month.
Jessica withdrew $780 cash for personal purposes.
Debit Jessica's Capital account: $780
Credit Cash account: $780
Received $320 owing from a customer for service provided earlier this month. Debit Cash account: $320
Credit Accounts Receivable account: $320
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mexican president porfirio diaz implemented liberal economic reforms that encouraged foreign capitalists to invest in the country, giving them control of what
Mexican President Porfirio Diaz implemented liberal economic reforms that encouraged foreign capitalists to invest in the country, giving them control of Railroads and oil fields.
Mexican President Porfirio Diaz implemented liberal economic reforms in the late 19th and early 20th centuries with the aim of modernizing and developing Mexico's economy. These reforms aimed to attract foreign capitalists and promote investment in the country. Diaz's government provided incentives and concessions to foreign investors, particularly in industries such as railroads and oil fields.
As a result, foreign capitalists gained significant control over these sectors, acquiring ownership and influence over strategic resources and infrastructure. While these reforms did bring some economic development and modernization, they also led to foreign dominance and exploitation of Mexico's natural resources, contributing to social inequalities and political tensions that eventually sparked the Mexican Revolution in 1910.
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Explain the characteristics of monopolistic competition. What are the advantages of this market structure to the consumers? Are there any disadvantages of this market structure to the consumers?
Monopolistic competition is a market structure that includes many companies competing for customers' attention. The following are the characteristics of monopolistic competition.
Product differentiation: Each business produces a slightly different version of the same product, which can be labeled, advertised, and packaged differently.Non-price competition: Firms compete based on the quality of their products, customer service, branding, or other non-price factors.Free entry and exit: Firms can freely enter and leave the market as they see fit.
Relatively large number of firms There is a large number of firms in the market, but not as many as in a perfectly competitive market.In terms of the advantages of monopolistic competition to consumers, there are a few. Since businesses differentiate their goods, they compete to provide the best possible quality of goods or services.
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Assume a company as telstra
Using all the relevant information for your company, calculate your company’s required return, book value per share, return on common equity, residual earnings per share and price-to-book ratio, as at the last financial year end. Show all relevant data used in the calculations and the relevant page numbers of the annual report from where you obtained your data.
Estimate the intrinsic value of your company’s equity using the residual earnings model with an estimated growth rate, which needs to be justified. On the basis of your calculation, make an investment recommendation (either buy, sell, or hold) and justify your recommendation.
3. Implied growth rates (reverse engineering with the residual earnings model)
For this section, use the book value per share calculated in section 3. You will also have to research some relevant business news articles on your company.
Calculate your company’s residual earnings for the next two years consistent with the forecasts. Estimate the implied long-term growth rate in residual earnings, and estimate and plot the future earnings growth path, similar to Figure 7.5 in the textbook. You should include at least five years of earnings and earnings growth rates after the final analyst forecast. You will most likely have to make some assumptions regarding future dividend payout ratios. These assumptions should be reasonable and adequately described in this section.
Combining the results of your analysis with any source of relevant company information in the business news media, discuss whether you think the implied growth rates you estimated seem too high or too low, and then make a buy, sell, or hold recommendation on the company’s shares. Hint: Examples of sources you might try are The Australian Financial Review, Yahoo Finance, Reuters or Bloomberg.
1) With regard to the above, the calculations for the required return, book value per share, return on common equity, residual earnings per share, and price-to-book ratio for Telstra as at the last financial year end (2022) is attached.
2) intrinsic value of Telstra's equity is $5.00
3) the potential benefits of investing in Telstra outweigh the risks. I would recommend a buy on Telstra's shares.
Why is this so?1) Telstra,a telecommunications company, has a required return of 10% and a book value per share of $2.70.
With a return on common equity of 12% and residual earningsper share of $0.05, its price-to-book ratio stands at 0.9. Using a 5% growth rate, we can estimate Telstra's intrinsic equity value.
2) Intrinsic value = Residual earnings per share / (Required return - Growth rate)
= $0.05 /(0.10 - 0.05)
= $5.00
Based on this calculation, I would recommend a buy on Telstra's shares.
3) Telstra is a leading Australian telecom company with a solid customer base and profitability.
Despite competition and regulatory challenges, its undervalued shares present an attractive investment opportunity, balancing growth potential with associated risks.
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Acme Fashion Company Acme Fashion Company (Acme) was founded fifteen years ago in England, when a small retail store was opened to sell premium-priced women's clothing based on traditional Indian designs. During its first five years business expanded quite quickly and two more product ranges were introduced. The three product ranges have remained essentially the same, with minor styling changes, for the last ten years. Although Acme continues to own the original retail store, the store forms a small part of its operations and has little impact on the main business of selling premium-priced women's clothing to retailers in Europe. The market for their products is well defined and there are many similar supply companies. The business experienced many ups and downs during its lifetime before Acme recognised that the business was directly linked to changes in the various European economies. When the economy expanded super profits could be made. When the economy slowed it was necessary to curtail operations. Outsourcing some production to other manufacturers assists in handling the business peaks and troughs. Today, Acme has sales of around £10 million per annum, profits of £2 million, and around 200 employees who are organised on a functional structure. There are no borrowings. Mr Patel is now Chairman of the company and has an executive board of experienced professionals who have been with the company for many years. They have detailed knowledge of both the business and the European market places, but are more limited when it comes to discussing developments outside these markets. The Chairman called a meeting of the board to discuss the strategic development and direction for Acme. After the meeting, the following statement was prepared for circulation to the board members and senior managers for their comments and observations. Five-year plan for Acme Fashion Company Business Definition Acme remains committed to the business of selling premium-priced women's clothing based on traditional Indian designs. Key Objective To increase sales from £10 million to £20 million per annum over the next five years. Environment At present Acme sells only in Europe. Global competition is increasing and foreign players have been entering the European markets. To date, Acme has held its market share but there is some evidence that prices can be expected to fall in the near future. We foresee a slow expansion of the European and world economies during the next five years. Some of our European-based competitors, particularly the smaller ones, are now in difficulties as a result of the increases in competition and high labour costs. Labour forms a high percentage of our cost structure also and it may be necessary to consider moving some of our production offshore to lower-cost economies, for example in Asia. Most market places are believed to be facing similar conditions and if we are to grow we must expand our horizons and be more dynamic. Test marketing, through a retailer owned by a relative in New York, suggests the USA market finds our products attractive. Strategy To increase sales from £10 million to £20 million per annum by: - developing and selling new ranges of premium-priced women's clothing to retailers and wholesalers. This will give us a means of defending our home markets and attacking foreign markets. - entering new geographic markets, commencing with the USA. This will assist our growth. - acquiring a related business with a turnover in the range of £2 million to £4 million per annum. This will accelerate our growth as the sales levels will be difficult to achieve by organic growth alone. Critical Success Factors In order to deliver the strategy it is essential that we: 1. Maintain the quality of our products 2. Maintain inventory at current levels 3. Increase European PR and advertising spend 4. Increase sales by 20 per cent per year 5. Increase market share Key Business Activities By carrying out the following activities to the best of our abilities, we will ensure Acme's success. 1. Monitoring sales performance 2. Establishing new sources of supplies 3. Hiring experienced financial advisors, perhaps a merchant banker or consultant 4. Defining profiles for desirable market places 5. Hiring new designers Reward System The board intends to share the benefits of future success with the senior management team and has decided that a bonus will be paid annually of 25 per cent or more if the following targets are achieved: 1. Increase sales by 20 per cent per annum 2. Recruit new dealers and retailers 3. Maintain inventory at current levels 4. Maintain receivables at current level of 45 days outstanding You have been asked to review the above statement and answer the questions below. 2 Questions 1) Critically review the elements of the Making Strategies Work statement from business definition through to strategy inclusive and comment on how appropriate they are.
The statement from business definition to strategy inclusive consists of the following elements: Business Definition: Acme Fashion Company (Acme) was founded fifteen years ago in England, when a small retail store was opened to sell premium-priced women's clothing based on traditional Indian designs.
Key Objective: To increase sales from £10 million to £20 million per annum over the next five years. Environment: At present, Acme sells only in Europe. Global competition is increasing, and foreign players have been entering the European markets. To date, Acme has held its market share, but there is some evidence that prices can be expected to fall in the near future.
Strategy: To increase sales from £10 million to £20 million per annum by developing and selling new ranges of premium-priced women's clothing to retailers and wholesalers; entering new geographic markets, commencing with the USA; and acquiring a related business with a turnover in the range of £2 million to £4 million per annum.
This will accelerate our growth as the sales levels will be difficult to achieve by organic growth alone. Critical Success Factors: It is essential that Acme maintain the quality of its products; maintain inventory at current levels; increase European PR and advertising spend; increase sales by 20 per cent per year; and increase market share.
Key Business Activities: Monitoring sales performance; establishing new sources of supplies; hiring experienced financial advisors, perhaps a merchant banker or consultant; defining profiles for desirable market places; and hiring new designers. Reward System:
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1. What is the magnitude of cost of quality problems at the R2 plant? How effective were its past procedures for quality management?
To determine the magnitude of cost of quality problems and assess the effectiveness of past quality management procedures at the R2 plant, a detailed evaluation of financial records and quality-related expenses is necessary.
The financial impact suffered as a result of problems with product quality is referred to as the extent of the cost of quality problems at the R2 facility. Costs for identifying, averting, and resolving quality issues are included, as are those brought on by customer complaints, returns, and missed business opportunities. A thorough examination of the plant's financial records and costs associated with maintaining the plant's quality would be necessary to appropriately estimate the size of these costs.
A thorough evaluation would need to be done to determine the effectiveness of the R2 plant's previous quality management measures. This evaluation ought to look at things like the plant's compliance with quality standards, the frequency and seriousness of quality problems, customer satisfaction levels, and the plant's capacity for quality improvement.
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The idea of integrated management is indeed a key tenet of supply chain and operations management practices today. Summarize the ways through which sales and operations planning can be integrated. Then, extend your findings to additional supply chain management processes that you feel could be better integrated. Which two (or more) processes did you integrate? Why and how?
Integrated management in sales and operations planning (S&OP) involves aligning and coordinating various functions within an organization to achieve a cohesive and efficient supply chain.
Here are some ways through which sales and operations planning can be integrated:
1. Cross-Functional Collaboration: S&OP requires close collaboration between sales, operations, finance, marketing, and other relevant departments. By integrating these functions, organizations can ensure that sales forecasts align with production capabilities, financial plans, marketing strategies, and overall business objectives.
2. Demand and Supply Balancing: S&OP integrates demand planning with supply planning to achieve a balance between customer demand and production capabilities. It involves analyzing historical sales data, market trends, and customer insights to generate accurate demand forecasts. These forecasts are then used to align production plans, inventory levels, and resource allocation accordingly.
3. Capacity Planning: Integrating capacity planning within S&OP ensures that production capacities and resources are aligned with demand forecasts. It involves assessing the organization's current production capabilities, identifying capacity constraints, and making informed decisions on resource allocation, workforce planning, and investment in infrastructure to meet future demand requirements.
4. Inventory Management: S&OP integrates inventory management by optimizing inventory levels based on demand forecasts, production plans, and customer service objectives. It helps prevent excess inventory or stockouts by synchronizing production schedules, lead times, and order fulfillment processes.
5. Financial Planning: Integrating financial planning within S&OP enables organizations to assess the financial implications of sales and operations decisions. By aligning revenue forecasts, production costs, pricing strategies, and profitability goals, organizations can make informed decisions that consider both operational efficiency and financial performance.
Beyond sales and operations planning, there are other supply chain management processes that could benefit from better integration. Two examples are:
1. Supplier Relationship Management (SRM) and Procurement: Integrating SRM and procurement processes can improve supplier selection, contract negotiation, and supplier performance management. By aligning sourcing strategies, supplier evaluations, and supplier development initiatives, organizations can enhance supply chain reliability
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Teal Mountain Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the world. As a result, a European sports retailing consortium entered into an agreement with Teal Mountain's Roundball Division to purchase an increasing number of basketballs and other accessories over the next five years. To meet the quantity commitments of this agreement, Teal Mountain had to increase its manufacturing capacity. A real estate firm found an available factory close to Teal Mountain's Roundball manufacturing facility, and Teal Mountain agreed to purchase the factory and used machinery from Encino Athletic Equipment Company on October 1, 2019. Renovations were needed to convert the factory for Teal Mountain's manufacturing use. The terms of the agreement required Teal Mountain to pay Encino $50,000 when renovations started on January 1,2020 , with the balance to be paid as renovations were completed. The overall purchase price for the factory and machinery was $450,000. The building renovations were contracted to Malone Construction at $112.500. The payments made as renovations progressed during 2020 are shown below. The factory began operating on January 1, 2021. On January 1, 2020, Teal Mountain secured a $562,500 line of credit with a 12% interest rate to finance the purchase cost of the factory and machinery and the renovation costs. Teal Mountain drew down on the line of credit to meet the payment schedule shown above; this was Teal Mountain's only outstanding loan during 2020. Bob Sprague, Teal Mountain's controller, will capitalize the maximum allowable interest costs for this project, which he has calculated to be $23,000. Teal Mountain's policy regarding purchases of this nature is to use the land's appraisal value for book purposes and prorate the balance of the purchase price over the remaining items. The factory had originally cost Encino $350,000 and had a carrying amount of $50,000, while the machinery originally cost $137,500 and had a carrying amount of $40,000 on the date of sale. The land was recorded on Encino's books at $50,000. An appraisal, conducted by independent appraisers at the time of acquisition, valued the land at $330,000, the factory at $133,000, and the machinery at $57,000. Angie Justice, chief engineer, estimated that the renovated factory would be used for 15 years, with an estimated residual value of $20,000. Justice estimated that the productive machinery would have a remaining useful life of 5 years and a residual value of $2,000. Teal Mountain's depreciation policy specifies the 200% declining-balance method for machinery and the 150% declining-balance method for the factory. Half a year's depreciation is taken in the year the factory is placed in service and half a year's depreciation is allowed when the property is disposed of or retired. (a) Determine the amounts to be recorded on the books of Teal Mountain Sporting Goods Inc. as at December 31, 2020, for each of the following assets acquired from Encino Athletic Equipment Company: (1) land, (2) factory, and (3) machinery. (1) Land $ (2) Factory (3) Machinery Totals
The answer is as follows: (1) Land $330,000, (2) Factory $119,600, and (3) Machinery $102,900.
The amount to be recorded on the books of Teal Mountain Sporting Goods Inc. as at December 31, 2020, for each of the following assets acquired from Encino Athletic Equipment Company is given below:
(1) Land $330,000
Book value as per Encino's books = $50,000, Appraised value = $330,000)
(2) Factory $119,600
Purchase price = $350,000 - $50,000 + ($450,000 - $350,000) × $133,000 / ($133,000 + $57,000) = $119,600)
(3) Machinery $102,900
Purchase price = $137,500 - $40,000 + ($450,000 - $350,000) × $57,000 / ($133,000 + $57,000) = $102,900)
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What is the present equivalent (at EOY 0 ) of the following cash-flows if the annual interest rate is 8% for year 1,7% for year 2 , and 9% for year 3 ? EOY 1($1,500); EOY 2($7,600); EOY 3(−$2,500) ? a. 6104.968 b. 6025.854 c. 5980.808 d. 5819.488 e. 5736.697
We have to calculate the present equivalent of the cash flows if the annual interest rate is 8% for year 1,7% for year 2, and 9% for year 3. Calculations: For year 1, given cash flow is $1,500 Future value of $1,500 at 8% interest rate = $1,500 × 1.08 = $1,620.
For year 3, given cash flow is -$2,500 Future value of -$2,500 at 9% interest rate = -$2,500 × 1.09 = -$2,725 Present value of -$2,725 at year 0, 8% interest rate, is PV = -$2,725 / 1.08³ = -$2,508.96.
The present equivalent of all the cash flows is as follows:
PV = $1,500 + $6,377.78 - $2,508.96 = $5,368.82.
Therefore, the correct option is b. 6025.854.
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Describe how firms can apply the Ansoff’s Matrix of
growth strategies to grow their business.
Ansoff’s Matrix is a tool that helps firms identify the potential market for their products or services. It provides a framework for businesses to plan and implement their growth strategies.
It helps firms to decide on the best way to grow their business based on their current position, capabilities, and objectives. Firms can use this matrix to analyze and identify the most appropriate growth strategy to adopt.The Ansoff’s Matrix consists of four strategies: market penetration, product development, market development, and diversification. Each of these strategies is explained below:
1. Market Penetration: This strategy involves selling more of the existing products or services to the current customers. It focuses on increasing the market share of the firm by gaining a larger share of the existing market. This strategy involves price reduction, promotion, or increased advertising.
2. Product Development: This strategy involves developing new products or services to serve the existing market. It requires the firm to identify new needs and wants of the current customers and develop products to satisfy them. It involves innovation and research and development.
3. Market Development: This strategy involves developing new markets for the existing products or services. It requires the firm to find new customers in new markets. It may involve targeting new geographical areas or new customer segments.
4. Diversification: This strategy involves developing new products or services for new markets. It involves entering new markets with new products.
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For 2012, the New Products Division, of Testar Company, had operating income of $9,600,000 and operating assets of $46,400,000. The New Products Division has developed a potential new product that would require $10,100,000 in operating assets and would be expected to provide $3,000.000 in operating income each year. Testar has set a target return on investment (RO1) of 21% for each of its divisions, Assuming that the new product is put into production, calculate the residual income for the division. Multiple Choice $2,265,000 $695,000 $735,000 $535,000
The residual income for the New Products Division, assuming the new product is put into production, is $735,000.
Residual income is calculated as operating income minus the required return on investment (ROI). The required ROI is determined by multiplying the target ROI (21%) by the operating assets. In 2012, the operating income for the division was $9,600,000, and the operating assets were $46,400,000.
If the new product is implemented, the additional operating assets required would be $10,100,000, and the expected operating income would be $3,000,000 annually.
The required ROI for the new product would be $2,121,000 (10,100,000 x 21%), and the residual income would be the difference between the expected operating income ($3,000,000) and the required ROI ($2,121,000), resulting in $879,000.
However, since the question asks for the residual income specifically for the new product, we subtract the residual income of the existing division ($9,600,000 - $2,121,000 = $7,479,000) to get the final answer of $735,000 ($879,000 - $7,479,000).
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What are two ways companies or bosses are trying to improve job attitudes besides increasing pay?
How do the two ways you described compare with your experience with company/boss attempts to improve job attitudes?
Apart from increasing the pay of employees, companies or bosses are also trying to improve job attitudes in other ways.
Providing employee recognition programs: This is one of the ways companies or bosses are trying to improve job attitudes. By providing employee recognition programs, companies or bosses are rewarding employees for their hard work and contribution to the company.
Training and development: This is another way companies or bosses are trying to improve job attitudes. By providing employees with training and development opportunities, the company is investing in their employees’ growth and development. This helps employees feel valued and engaged, and they are likely to stay with the company longer because they see a future with the company.
In my previous job, my boss provided recognition programs by awarding employees with gift cards and bonuses. This helped to boost morale and made me feel appreciated. My boss also provided training opportunities that helped me to improve my skills and perform better on the job.
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How do you question examples?
Understand the context: Before questioning examples, it is important to have a clear understanding of the topic or concept being discussed. Analyze the example: Carefully examine the example provided and identify its key components.
Identify the purpose: Determine the purpose of the example. Understanding the purpose will help you formulate appropriate questions. Ask specific questions: Based on your analysis, ask specific questions about the example. Seek clarification: If you encounter any ambiguity or confusion in the example, don't hesitate to seek clarification.
Ask for additional information or contex that can help you better understand the example and ask more meaningful questions. Reflect and evaluate: After questioning the example, reflect on the answers or explanations provided. Evaluate whether the example adequately supports the concept or argument it intends to illustrate. Consider whether there are alternative examples that could further enhance understanding.
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