Business High School
Answers
Answer 1
The correct answer is option A, which states that the adjusted cost of goods sold balance if overhead is close to the cost of goods sold, is $310,000.
The adjusted cost of goods sold balance if overhead is close to the cost of goods sold, given that the unadjusted cost of goods sold is $325,000 and manufacturing overhead is $15,000 overapplied is $310,000. The adjustment needed in this situation is to close the manufacturing overhead account with an amount equal to the overapplied amount by crediting manufacturing overhead and debiting the cost of goods sold. The calculation of the adjusted cost of goods sold is done by subtracting the adjusted cost of goods manufactured from the unadjusted cost of goods sold.
This is the formula for adjusted cost of goods sold: Adjusted cost of goods sold = Unadjusted cost of goods sold - Adjusted cost of goods manufactured To find the adjusted cost of goods sold, we need to determine the adjusted cost of goods manufactured. The adjusted cost of goods manufactured is calculated by subtracting the underapplied or adding the overapplied manufacturing overhead to the cost of goods manufactured. In this case, the manufacturing overhead is overapplied by $15,000. Thus, the adjusted cost of goods manufactured is $310,000 (cost of goods manufactured of $325,000 - $15,000 overapplied overhead). So, the adjusted cost of goods sold is calculated by substituting the values as follows:
Adjusted cost of goods sold = $325,000 - $310,000 = $15,000Therefore, the correct answer is option A, which states that the adjusted cost of goods sold balance, if overhead is close to the cost of goods sold, is $310,000.
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Related Questions
Sylvia is a single mother living in Argentina with her 5-year-old daughter. Sylvia earns $28,000 a year. Can she receive an earned income credit?
a) Yes if she does not exclude her foreign income
b) Yes, if the child has a U.S. social security number
c) No because her income is too high
D. No, because Sylvia and her daughter live outside the U.S
Answers
Sylvia is a single mother residing in Argentina with her 5-year-old daughter. Sylvia earns $28,000 per year. Earned income is payment received for work or services performed.
Earned income encompasses wages, salaries, tips, and professional charges. Sylvia's earnings for the year amount to $28,000, which is considered earned income. She is eligible for an Earned Income Credit (EIC) if she meets the eligibility requirements. Sylvia can qualify for an Earned Income Credit if her child has a valid Social Security number and if her income does not exceed the thresholds. The amount of the credit she receives is determined by her earned income and the number of children she has living with her.
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A Big Mac costs 400 yen in Japan and 50 pesos in Mexico. The
purchasing power parity theory would predict that the exchange rate
in the long run is
Answers
according to the PPP theory, the implied exchange rate in the long run would be approximately 5.33 yen per peso.
To determine the exchange rate predicted by the purchasing power parity (PPP) theory, we can compare the prices of the same good (in this case, a Big Mac) in different countries and calculate the implied exchange rate.
The PPP theory suggests that in the long run, the exchange rate between two currencies should adjust to equalize the prices of identical goods in different countries. In this case, we'll compare the price of a Big Mac in Japan (400 yen) and Mexico (50 pesos).
To calculate the implied exchange rate, we divide the price of a Big Mac in one country by the price in the other country:
Implied exchange rate = Price in one country / Price in the other country
Implied exchange rate = 400 yen / 50 pesos
To compare these two currencies, we need to convert one of the prices to the other currency. Let's convert the yen price to pesos using the current exchange rate:
Exchange rate (yen to pesos) = Price in pesos / Price in yen
Assuming the current exchange rate is 1 yen = 1.5 pesos (this is just an example), we can calculate the implied exchange rate:
Implied exchange rate = (400 yen / 1.5 pesos) / 50 pesos
Implied exchange rate = 5.33 yen / peso
Therefore, according to the PPP theory, the implied exchange rate in the long run would be approximately 5.33 yen per peso.
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Your firm has 9 million shares outstanding, and you are about to issue 4 million new shares in an IPO. The IPO price has been set at $18 per share, and the underwriting spread is 8%. The IPO is a big success with investors, and the share price rises to $52 the first day of trading.
a. How much did your firm raise from the IPO?
b. What is the market value of the firm after the IPO?
c. Assume that the post IPO value of the firm is the fair market value. Suppose your firm could have issued shares directly to investors at their fair market value, in a perfect market with no underwriting spread and no underpricing. What would the share price have been in this case, if you raise the same amount as in part (a)?
d. Comparing part (b) and part (c), what is the total cost to the firm's original investors due to market imperfections from the IPO?
Answers
a. To calculate how much the firm raised from the IPO, we need to multiply the number of new shares issued by the IPO price.
Number of new shares issued = 4 million shares
IPO price = $18 per share
Amount raised from the IPO = Number of new shares issued × IPO price
Amount raised from the IPO = 4 million shares × $18 per share
Amount raised from the IPO = $72 million
Therefore, the firm raised $72 million from the IPO.
b. To calculate the market value of the firm after the IPO, we need to consider the total number of shares outstanding after the IPO and multiply it by the share price.
Number of shares outstanding after the IPO = Number of existing shares + Number of new shares issued
Number of existing shares = 9 million shares
Number of new shares issued = 4 million shares
Total number of shares outstanding after the IPO = 9 million shares + 4 million shares
Total number of shares outstanding after the IPO = 13 million shares
Share price after the IPO = $52 per share
Market value of the firm after the IPO = Total number of shares outstanding after the IPO × Share price after the IPO
Market value of the firm after the IPO = 13 million shares × $52 per share
Market value of the firm after the IPO = $676 million
Therefore, the market value of the firm after the IPO is $676 million.
c. In a perfect market with no under writing spread and no under pricing, if the firm raises the same amount as in part (a), the number of shares issued would depend on the fair market value per share. We can calculate the number of shares issued using the following formula:
Number of shares issued = Amount raised from the IPO / Fair market value per share
Amount raised from the IPO = $72 million (as calculated in part a)
To calculate the fair market value per share, we rearrange the formula:
Fair market value per share = Amount raised from the IPO / Number of shares issued
Using the values from part a:
Fair market value per share = $72 million / 4 million shares
Fair market value per share = $18 per share
Therefore, in this case, the share price would have been $18 per share if the firm had issued shares directly to investors at their fair market value.
d. The total cost to the firm's original investors due to market imperfections from the IPO can be calculated by comparing the market value of the firm after the IPO (part b) with the value that would have been achieved in a perfect market (part c).
Cost to the firm's original investors = Market value of the firm after the IPO - Value in a perfect market
Market value of the firm after the IPO = $676 million (from part b)
Value in a perfect market = Number of shares issued in a perfect market × Fair market value per share
Using the values from part c:
Number of shares issued in a perfect market = 4 million shares
Fair market value per share = $18 per share
Value in a perfect market = 4 million shares × $18 per share
Value in a perfect market = $72 million
Cost to the firm's original investors = $676 million - $72 million
Cost to the firm's original investors = $604 million
Therefore, the total cost to the firm's original investors due to market imperfections from the IPO is $604 million.
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A LARGE RETAILER OBTAINS MERCHANDISE UNDER THE CREDIT TERMS 1/15, NET 45, BUT ROUTINELY TAKES 60 DAYS TO PAY ITS BILLS. WHAT IS THE RETAILERS'S EFFECTIVE COST OF TRADE CREDIT
Answers
The effective cost of trade credit refers to the interest rate an organization pays to delay payment for goods and services it has received. In this situation, the large retailer has a credit term of 1/15, net 45, which implies that the retailer may take a 1% discount if payment is made within 15 days, or they may pay the full amount within 45 days.
However, the retailer pays the invoice after 60 days, which is later than the terms given by the supplier. As a result, the retailer is giving up the 1% discount and paying the full amount. The effective cost of trade credit can be calculated as follows:
Effective cost of trade credit = (Discount % / (100 - Discount %) x (360 / (Payment days - Discount days))
= (1 / (100 - 1) x (360 / (45 - 15))
= 24.69%
The retailer's effective cost of trade credit is 24.69 percent, which means that by delaying payment, the retailer is effectively paying an annual interest rate of 24.69 percent on the amount owed. The effective cost of trade credit is considerably high, which may have a significant financial impact on the retailer's profitability.
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. MY NOTES PRACTICE ANOTHER Suppose a company has fixed costs of $48.000 and variable cost per unit of +222 dollars, where x is the total number of units produced, Suppose further that the selling price of its produt 1852- dollars per unit. (a) Find the break-even points. (Enter your answers as a comma-separated list.) (b) Find the maximum revenue. (Round your answer to the nearest cent.) $ (c) Form the profit function P(x) from the cost and revenue functions. P(X)= Find maximum profit. S (d) What price will maximize the profit? (Round your answer to the nearest cent.) $ Need Help? [-/0.07 Points] DETAILS HARMATHAP12 2.3.017. MY NOTES PRACTICE ANOTHE Suppose a company has fixed costs of $48,000 and variable cost per unit of +222 dollars, where x is the total number of units produced. Suppose further that the selling price of its product is 1852- 9 dollars per unit. (a) Find the break-even points. (Enter your answers as a comma-separated list.) X- (b) Find the maximum revenue. (Round your answer to the nearest cent.) $ (c) Form the profit function P(x) from the cost and revenue functions. PD)- Find maximum profit. $ (d) What price will maximize the profit? (Round your answer to the nearest cent.). $ Need Help? Read
Answers
The price that maximizes the profit is $1852. So, the answers are: a) 29 units b) $48,014.28 c) P(x)= 1630X - 48000 d) $1852.
a) Calculation of Break-even Point: Break-even point is the point where total cost and total revenue intersect. It can be calculated by equating total cost to total revenue.TC= TR48,000+ 222X = 1852 X
=> 222X = 1852 X - 48,000
=> 222X - 1852X = -48000
=> -1630X = -48000
=> X = 29.45...So, the break-even points are 29 units.
b) Calculation of Maximum Revenue: Maximum revenue can be obtained by selling the maximum number of units. Maximum revenue will be obtained at x = the number of units that can be produced with all of the available resources available. The maximum number of units that can be produced= Fixed cost / Selling price of one unit
= $48,000 / $1852/unit= 25.89 units Maximum revenue
= Selling price of one unit * Maximum number of units that can be produced
= $1852/unit * 25.89 units
= $48,014.28
Maximum revenue is $48,014.28 (nearest cent).
c) Calculation of Profit Function: Profit can be calculated by deducting the total cost from total revenue.
P(x)= Revenue - Cost
P(x)= TR - TC Substituting TR and TC in the above equation we get,
P(x)= 1852X - (48000 + 222X)
P(x)= 1630X - 48000
Maximum profit can be calculated by finding the maximum point of the profit function using the second derivative test.
d) Calculation of the Price that maximizes the profit: To find the price that maximizes the profit, we need to find the value of X that gives the maximum value of P(X).For maximum profit,
P′(x) = 0 and
P″(x) < 0. Therefore, we need to find the point at which the slope of P(x) changes from positive to negative.
P(x)= 1630X - 48000
P′(x)= 1630At X = 29.4518 (rounded off),
P′(x) = 0. This means that the slope of P(x) changes from positive to negative.
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Discuss the entire streaming industry from the perspective of Porter’s Five forces. For each of the five forces, describe whether the force is weak/strong and justify your answers
Answers
From the perspective of Porter’s Five forces, for the streaming industry Threat of New Entrants is strong, Bargaining Power of Suppliers is strong, Bargaining Power of Buyers is weak, Threat of Substitute Products or Services is strong, and Competitive Rivalry is strong.
The streaming industry from the perspective of Porter’s Five forces is as follows:
1. Threat of New Entrants - Strong
The streaming industry has a high threat of new entrants because it is easy to enter the market with minimum resources. Video streaming requires less capital investment compared to traditional television and broadcasting, thus encouraging many companies to enter the market. New entrants can easily create a niche market for themselves by providing content that is not available on existing platforms.
2. Bargaining Power of Suppliers - Strong
The bargaining power of suppliers is strong because content owners and producers are limited. They have the upper hand and can choose which platforms to distribute their content on. This forces streaming platforms to pay high licensing fees for exclusive content. However, due to the high number of streaming services, some suppliers are losing their bargaining power, which is good for consumers.
3. Bargaining Power of Buyers - Weak
Consumers have a weak bargaining power because there are only a few major streaming platforms. These platforms have significant market share, making it difficult for consumers to find cheaper alternatives. Consumers also face a high switching cost, which is the cost of moving from one platform to another. However, with the increasing competition in the market, consumers are gaining some bargaining power.
4. Threat of Substitute Products or Services - Strong
The threat of substitute products or services is strong because there are many alternatives to streaming, such as traditional television, DVDs, and cinemas. However, the convenience of streaming services and the ability to watch content anytime and anywhere has made it difficult for substitutes to replace streaming.
5. Competitive Rivalry - Strong
The streaming industry has a strong competitive rivalry due to the high number of streaming platforms available in the market. Each platform is trying to capture a larger market share by providing unique content, competitive pricing, and user-friendly interfaces. The high competition has resulted in lower prices and more value for consumers.
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Assuming the United States is the "domestic" country, if the real exchange rate between the United States and Russia decreases from 28 to 23,
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If the real exchange rate between the United States and Russia decreases from 28 to 23, assuming the United States is the "domestic" country, it means that the U.S. dollar has appreciated relative to the Russian ruble.
The exchange rate is the value of one currency expressed in terms of another currency. The exchange rate tells you how much of one currency you can get for another currency. For example, an exchange rate of 1 US dollar (USD) to 5 Mexican pesos (MXN) means that 1 USD is worth 5 MXN.A real exchange rate compares the relative purchasing power of two currencies.
It measures how much of a country's goods and services can be bought with a unit of another country's currency. The formula for the real exchange rate is:Real exchange rate = (Nominal exchange rate x Domestic price) / Foreign priceAssuming the United States is the domestic country, the real exchange rate decreases from 28 to 23, it means that the value of the U.S. dollar has increased relative to the Russian ruble.
So, it takes fewer dollars to buy the same amount of Russian goods as before. Therefore, the U.S. dollar has appreciated and the Russian ruble has depreciated.
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In the HBR Case study called Innovation Teams at the
Walt Disney Company.
What factors do you think enabled Disney to bring team dynamics
among the employees? Explain their impact on the company’s
Answers
The factors that enabled Disney to bring team dynamics among the employees are as follows. The answer is a very cooperative atmosphere that Disney created.
Another factor that enabled Disney to bring team dynamics among the employees is their innovation teams, which served as the backbone for the company's innovation strategies. The teams were very diverse, with members from all departments of the company.3. Disney's Innovation teams was very successful, as it enabled employees from various departments to work together, share their ideas, and build on each other's ideas.
This allowed the company to develop innovative products that were not possible before.4. The company's culture also played a vital role in bringing team dynamics among the employees. Disney promoted creativity and innovation, and employees were encouraged to share their ideas and opinions without any fear of retribution.5. The impact of these factors on the company's success was massive.
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Consider the following: Rate of Return if State Occurs
State of Economy Probability of state Stock A Stock B Stock C
Boom .6 .18 ,04 .31
Bust .4 .03 .16 -.11
What is the expected return on an equally weighted portfolio of theses stocks? What is the variance of a portfolio invested 20% each in A and B and 60% in C?
Answers
The expected return on an equally weighted portfolio of these stocks can be calculated by multiplying the probability of each state of the economy by the corresponding return for each stock, and then summing up the results.
Expected return = (Probability of Boom * Return of Stock A in Boom) + (Probability of Bust * Return of Stock A in Bust)
= (0.6 * 0.18) + (0.4 * 0.03)
= 0.108 + 0.012
= 0.12
So, the expected return on an equally weighted portfolio is 0.12, or 12%.
The variance of a portfolio invested 20% each in Stock A and Stock B, and 60% in Stock C can be calculated using the formula for portfolio variance.
Variance of portfolio = (Weight of Stock A)^2 * Variance of Stock A + (Weight of Stock B)^2 * Variance of Stock B + (Weight of Stock C)^2 * Variance of Stock C + 2 * (Weight of Stock A) * (Weight of Stock B) * Covariance of Stock A and Stock B + 2 * (Weight of Stock A) * (Weight of Stock C) * Covariance of Stock A and Stock C + 2 * (Weight of Stock B) * (Weight of Stock C) * Covariance of Stock B and Stock C
Variance of portfolio = (0.2)^2 * 0.04 + (0.2)^2 * 0.16 + (0.6)^2 * (-0.11) + 2 * 0.2 * 0.2 * 0.03 + 2 * 0.2 * 0.6 * 0 + 2 * 0.2 * 0.6 * 0
Variance of portfolio = 0.008 + 0.032 + (-0.0396) + 0.012 + 0 + 0
Variance of portfolio = 0.0124
Therefore, the variance of the portfolio invested 20% each in Stock A and Stock B, and 60% in Stock C is 0.0124.
In conclusion, the expected return on an equally weighted portfolio is 12%, while the variance of a portfolio invested with 20% each in Stock A and Stock B, and 60% in Stock C is 0.0124
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The following information is available from Gray Co.'s accounting records for the year ended December 31, 2013 (amounts in millions):
Cash dividends declared and paid$77
Retirement of bonds payable at maturity31
Interest and taxes paid22
Proceeds of common stock issued108
Proceeds from the sale of land41
Collections from customers660
Cash paid to suppliers and employees?
Purchase of buildings and equipment?
Required:
a.The net cash provided by operating activities for Gray Co. for the year ended December 31, 2013, is $251 million. Calculate the cash paid to suppliers and employees. (Enter your answer in millions. (i.e., 5,000,000 should be entered as 5))
b.The increase in cash for the year was $59 million. Calculate the amount of cash used to purchase buildings and equipment. Your answer to part a should be considered in your calculation. (Hint: Set up a model of the statement of cash flows to determine the net cash provided [used] by operating and investing activities, and then solve for the missing amounts.) (Enter your answer in millions. (i.e., 5,000,000 should be entered as 5))
Answers
The amount of cash used to purchase buildings and equipment is $610 million.
a. Cash paid to suppliers and employees can be calculated as follows:
Cash paid to suppliers and employees = Collections from customers - Net cash provided by operating activities.
Cash paid to suppliers and employees = 660 - 251
Cash paid to suppliers and employees = 409 million.
Therefore, the cash paid to suppliers and employees is $409 million.
b. The statement of cash flows is used to determine the net cash provided (used) by operating and investing activities, and then solve for the missing amounts.
The statement of cash flows is as follows:
Gray Co.'s Statement of Cash Flows for the Year Ended December 31, 2013(millions)
Cash Flows from Operating Activities
Collections from customers$660
Cash paid to suppliers and employees (409)
Interest and taxes paid(22)
Net cash provided by operating activities
$229 Cash Flows from Investing Activities
Proceeds from the sale of land $41
Purchase of buildings and equipment(x)
Net cash used by investing activities(90)
Net increase in cash $59
Cash at beginning of year 91
Cash at end of year $150
Therefore, net cash used by investing activities = net increase in cash - net cash provided by operating activitiesNet cash used by investing activities = $59 - $229
Net cash used by investing activities = -$170 million (negative sign represents cash used)
Now, we can calculate the amount of cash used to purchase buildings and equipment as follows:
Cash used to purchase buildings and equipment = Retirement of bonds payable at maturity + Cash paid to suppliers and employees + Purchase of buildings and equipment
Cash used to purchase buildings and equipment = 31 + 409 + x
Cash used to purchase buildings and equipment = 440 + x
Cash used to purchase buildings and equipment = -$170 (from above)
Therefore, x = -$610 million (negative sign represents cash used)
Therefore, the amount of cash used to purchase buildings and equipment is $610 million.
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Intro Goodyear Service installs 27,000 tires per year. The carrying cost per tire is $0.55 per year and the fixed order cost is $800. What is the optimal order size?How many times per year should the company order new inventory? What are the total carrying costs per year? What is the restocking cost per year?
Answers
The optimal order size for Goodyear Service is 650 tires. The company should order new inventory 42 times per year.
To determine the optimal order size, we can use the economic order quantity (EOQ) formula. The EOQ formula is given by the square root of [(2 × annual demand × fixed order cost) / carrying cost per unit]. In this case, the annual demand is 27,000 tires, the fixed order cost is $800, and the carrying cost per tire is $0.55 per year. Plugging these values into the formula, we find that the optimal order size is approximately 650 tires.
To calculate how many times per year the company should order new inventory, we divide the annual demand by the optimal order size. Therefore, 27,000 tires divided by 650 tires per order gives us approximately 42 orders per year.
The total carrying costs per year can be calculated by multiplying the carrying cost per tire by the average inventory level. The average inventory level can be obtained by dividing the optimal order size by 2. So, the carrying cost per year is $0.55 per tire × (650 tires / 2) = $14,850.
The restocking cost per year can be calculated by multiplying the fixed order cost by the number of orders per year. Hence, $800 × 42 orders = $33,600.
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PLEASE HELP. DO NOT copy and paste from other posts that is similar to this question The purpose of this assignment is to critique a peer-reviewed article regarding consumer behavior.During this assignment assume the role of a peer reviewer who is reviewing the article for a journal.Select an article from a peer-reviewed journalwithin electronic database search.The article must be published within the last5 years.Write an article review of 750-1,000 words that addresses the following: 1. A general overview of the article.Include an opening paragraph stating the full APA formatted reference for the article you chose. Give a brief overview of the following: thesis of the article, hypothesis, research design methods, conclusions, and recommendations. 2. Relationship to course.How does this article relate to the knowledge within this course? How does it relate to the textbook? 3. A critical analysis. Did the process make sense? Was enough information given to determine if results were valid? Were the statistics clear and did they support the results? Were the results generalizable to a wider population than the sample subjects? 4. A value assessment. Based on the conclusions, what value exists in the article for a future manager in the real world? Prepare this assignment according to the guidelines found in the APA Style Guide,located in the Student Success Center.An abstract is notr
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Writing an article review involves providing an overview of a peer-reviewed article, discussing its relationship to the course and textbook, conducting a critical analysis of the research methods and findings, and assessing its value for future managers.
When writing an article review, the first step is to provide a general overview of the chosen article. This includes stating the full APA formatted reference for the article and briefly summarizing its thesis, hypothesis, research design methods, conclusions, and recommendations. The overview should give the reader a clear understanding of the main points and findings of the article.
The next step is to establish the relationship between the article and the knowledge within the course. This involves discussing how the article aligns with the topics covered in the course and how it relates to the concepts and theories discussed in the textbook. Exploring these connections helps demonstrate the relevance and significance of the article in the context of the course material.
Following that, a critical analysis of the article is necessary. This involves evaluating the research process, assessing the adequacy of information provided to determine the validity of the results, examining the clarity and support of the statistical analysis, and considering the generalizability of the findings to a wider population beyond the sample subjects. Providing a critical analysis helps identify strengths and weaknesses in the article's methodology and findings.
Lastly, a value assessment is conducted to determine the practical implications of the article for future managers in the real world. Based on the conclusions drawn in the article, the reviewer should discuss the potential value and insights that the findings offer to managers in their decision-making processes and understanding of consumer behavior.
In conclusion, an article review encompasses providing an overview of the article, establishing its relationship to the course and textbook, conducting a critical analysis of the research methods and findings, and assessing its value for future managers. Following these steps allows for a comprehensive evaluation of the article's contribution to the field of study and its practical relevance.
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The mortgage on your house is five years old. It required monthly payments of $1,402, had an original term of 30 years, and had an interest rate of 10% (APR). In the intervening five years, interest rates have fallen and so you have decided to refinance-that is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 30 -year term, requires monthly payments, and has an interest rate of 6.625% (APR). a. What monthly repayments will be required with the new loan? b. If you still want to pay off the mortgage in 25 years, what monthly payment should you make after you refinance? c. Suppose you are willing to continue making monthly payments of $1,402. How long will it take you to pay off the mortgage after refinancing? d. Suppose you are willing to continue making monthly payments of $1,402, and want to pay off the mortgage in 25 years. How much additional cash can you borrow today as part of the refinancing? (Note: Be careful not to round any intermediate steps less than six decimal places.) a. What monthly repayments will be required with the new loan? The monthly repayments with the new loan will be ? (Round to the nearest cent.) b. If you still want to pay off the mortgage in 25 years, what monthly payment should you make after you refinance? If you still want to pay off the mortgage in 25 years, the monthly repayments will be $ (Round to the nearest cent.)
Answers
a. Calculation of monthly payments required with the new loan:
Given, Interest rate on the new loan = 6.625% (APR)
Monthly payments required on the original loan = $1,402
New loan term = 30 years
Using the formula to calculate monthly payments on the new loan: PV = (PMT / r)(1 - (1 + r)-n) Where, PV = present value of the loan (outstanding balance) PMT = monthly payments require dr = interest rate on the loan = number of payments.
Using the above formula we get, Present value of the loan = (1402 / (6.625%/12))(1 - (1 + (6.625%/12))-360)
Present value of the loan = $231,409.80
Therefore, the monthly repayments required with the new loan will be $1,445.63 (Round to the nearest cent).
b. Calculation of monthly payment required to pay off mortgage in 25 years after refinancing:
To calculate the monthly payment required to pay off mortgage in 25 years after refinancing, we can use the PMT function in excel. PMT. Where, rate = Interest rate on the new loann per = Number of payments pv = present value of the loan (outstanding balance) fv = [Optional] Future value remaining after the last payment.
When payments are due. 0 = end of period, 1 = beginning of period. rate = 6.625%/12 = 0.0055216667nper = 25 * 12 = 300pv = $231,409.80fv = 0type = 0PMT(0.0055216667, 300, 231409.80, 0, 0)The monthly repayments required with the new loan to pay off the mortgage in 25 years will be $1,519.54 (Round to the nearest cent).
c. Calculation of time taken to pay off the mortgage after refinancing:
To calculate the time taken to pay off the mortgage after refinancing, we can use the NPER function in excel. NPER. Where, rate = Interest rate on the new loan per = Number of payments pv = present value of the loan (outstanding balance) fv = [Optional] Future value remaining after the last payment. (default is 0)type = [Optional]
When payments are due. 0 = end of period, 1 = beginning of period rate = 6.625%/12 = 0.0055216667pmt = $1,402pv = $231,409.80fv = 0type = 0NPER(0.0055216667, 1402, 231409.80, 0, 0). The time taken to pay off the mortgage after refinancing will be 367.29 months or 30 years and 7.29 months.
d. Calculation of additional cash that can be borrowed today as part of the refinancing:
To calculate the additional cash that can be borrowed today as part of the refinancing, we can use the PV function in excel. Where, rate = Interest rate on the new loan per = Number of payments pv = [Optional] present value of the loan (outstanding balance). (default is 0) fv = [Optional] Future value remaining after the last payment. (default is 0)type = [Optional]
When payments are due. 0 = end of period, 1 = beginning of period rate = 6.625%/12 = 0.0055216667nper = (30-25) * 12 = 60pmt = $1,519.54pv = [Optional] present value of the loan (outstanding balance). (default is 0)fv = 0type = 0PV(0.0055216667, 60, 1519.54, 0, 0)The additional cash that can be borrowed today as part of the refinancing is $54,490.81 (Round to the nearest cent).
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Which of the following circurnstances is true if Interest Rates increase in Financial Markets ? A. Ornat is likely to deposit more money into a Savings Account, Increasing the Quantity Supplied of Money. B. Guldo Puzeria is Likely to borrow more money to renovate, Increasing the Quantity Demanded of Money. C. Kim is Helly to save less, Increasing the Supply of Money. D. Eirn trucking company is tikely to borrow more money than planned. Decreasing the Supply of Money E. None of the Above
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If interest rates increase in financial markets, the most likely circ*mstance among the given options is that individuals and businesses will be inclined to borrow less money, reducing the quantity demanded of money. Therefore, the correct answer is D. None of the Above.
When interest rates rise, borrowing becomes more expensive. As a result, individuals and businesses are discouraged from taking on additional debt or borrowing more money than initially planned. Higher interest rates increase the cost of borrowing, making it less attractive to undertake new projects, investments, or renovations that require financing. Thus, option D correctly states that Eirn Trucking Company is likely to borrow less money than planned, which decreases the supply of money.
The other options are not accurate in the context of increasing interest rates. Option A suggests that Ornat is likely to deposit more money into a savings account, which is inconsistent with the typical response to rising interest rates. Option B states that Guldo Puzeria is likely to borrow more money for renovation, which contradicts the notion that borrowing becomes less appealing as interest rates rise. Option C suggests that Kim is likely to save less, which does not directly address the impact of interest rate changes on the supply or demand of money.
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The Happy Life Insurance Company is a stock insurer licensed in a large western state. Its loss reserves are estimated at $9.5 million and its unearned premium reserves at $1.7 million. Other liabilities are valued at $1.3 million. It is a mono-line insurer that has been operating in the state for over twenty years.
What concern might the commissioner have if most of Happy Life Insurance Company’s assets are stocks? How might regulation address this concern?
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If most of Happy Life Insurance Company's assets are stocks, the commissioner's concern might be that they might be volatile, and hence the insurance company may not have the funds required to pay the claims.
Regulation may address this concern by enforcing solvency margin requirements.
Solvency margin refers to the amount of an insurance company's capital that must be kept in reserve to safeguard against any financial difficulties.
Regulators might set minimum levels of solvency margins to ensure that companies maintain a minimum level of capital at all times.
Regulators may also require insurance companies to invest in more stable assets, such as bonds or cash equivalents, to reduce volatility and safeguard the company's financial stability during times of market uncertainty.
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DEF Ltd. is looking at ways to improve its cash flow and has decided to extend the timing of its disbursem*nts by one day. In addition, it is negotiating with its bank for the establishment of a lockbox system that will reduce the remittance time of deposits by 3 days. The bank will also provide the company with a detailed analysis of the receipts which saves the company $37,000 in wages. The company’s daily remittances amount to $2 million and the going rate in the market is 3% per annum for money market funds. For this service the bank charges a monthly fee of $8,000 and would require the company to maintain a $900,000 compensating balance.
Advise DEF Ltd. whether or not they should put these changes in place.
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DEF Ltd. should put these changes in place which will lead to enhance DEF Ltd.'s cash flow efficiency and potentially lead to increased profitability.
DEF Ltd. should put these changes in place. By extending the timing of disbursem*nts by one day and implementing the lockbox system, the company can benefit from faster deposit remittance and reduced wage costs.
Although there is a monthly fee and a requirement to maintain a compensating balance, the overall financial advantages outweigh these costs.
The time saved in deposit remittance and the $37,000 savings in wages contribute to improved cash flow.
Additionally, the opportunity cost of funds held in the compensating balance can be partially offset by the 3% per annum interest earned in the money market funds.
Therefore, implementing these changes can enhance DEF Ltd.'s cash flow efficiency and potentially lead to increased profitability.
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A corporate bond has 19 years to maturity, a face value of $1,000, a coupon rate of 4.7% and pays interest semiannually. The annual market interest rate for similar bonds is 3.4%. Attempt 1/5 for 10 pts.
Part 1 What is the value of the bond?
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The value of the bond is $1,139.51. This is calculated by discounting the bond's future cash flows (semiannual interest payments and the face value) at the market interest rate.
To calculate the value of the bond, we need to discount the future cash flows generated by the bond at the market interest rate. In this case, the bond has a coupon rate of 4.7%, which means it pays an annual interest of $47 (4.7% of $1,000) in two semiannual payments of $23.50 each.
The bond will make a total of 38 semiannual payments (19 years multiplied by 2 payments per year). The future cash flows are discounted using the market interest rate of 3.4% per year, which is equivalent to 1.7% per semiannual period.
To calculate the present value of the bond, we discount each semiannual cash flow using the formula for present value of an annuity:
[tex]PV = C * (1 - (1 + r)^-n) / r[/tex]
Where PV is the present value, C is the cash flow, r is the discount rate, and n is the number of periods.
By calculating the present value of each cash flow and summing them up, we find that the value of the bond is $1,139.51.
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The following table shows the prices of chilled chickens and live chickens in economy A.
Year Chilled chickens (S per kilogram) Live chickens ($ per kilogram) 5 20X0 5 12
20X5 8 24
Suppose the demand for chilled chickens and live chickens in 20X5 is the same as 20X0 in economy A. Using the law of demand, explain whether people would consume relatively more chilled chickens or live chickens in 20X5 compared to 20X0.
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In 20X5, people would consume relatively more chilled chickens compared to live chickens compared to 20X0, as the price of chilled chickens increased while the price of live chickens decreased.
In 20X5, people would consume relatively more chilled chickens compared to live chickens compared to 20X0, according to the law of demand. This is because the price of chilled chickens increased from 5 to 8, while the price of live chickens decreased from 12 to 24. As the price of chilled chickens increased, it became relatively more expensive compared to live chickens. Consequently, consumers are likely to shift their consumption towards the relatively cheaper option, which is live chickens. The law of demand states that as the price of a good increase, the quantity demanded decreases, and vice versa. Therefore, in 20X5, consumers would consume relatively more of the lower-priced alternative, which is live chickens, compared to chilled chickens.
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Included in Waterway Company's December 31,2020 , trial balance are the following accounts: Accounts Payable $244,800, Pension Liability $380,600, Discount on Bonds Payable $29,500, Unearned Rent Revenue $49,300, Bonds Payable $405,100, Salaries and Wages Payable $31,000, Interest Payable $15,750, and Income Taxes Payable $35,900. Prepare the long-term liabilities section of the balance sheet. .
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The long-term liabilities section of Waterway Company's balance sheet would include Bonds Payable and Pension Liability.
To prepare the long-term liabilities section of the balance sheet, we identify the accounts that represent long-term obligations. In this case, the relevant accounts are Bonds Payable and Pension Liability.
Bonds Payable refers to the amount of long-term debt issued by the company through the issuance of bonds. The balance in the Bonds Payable account, which is $405,100, represents the outstanding amount of bonds that the company is obligated to repay over an extended period.
Pension Liability represents the long-term obligation of the company to its employees for future pension benefits. The balance in the Pension Liability account, which is $380,600, reflects the estimated liability the company has for the pensions it owes to its employees.
These two accounts, Bonds Payable and Pension Liability, are considered long-term liabilities because they represent obligations that are not expected to be settled within the current operating cycle or fiscal year.
Therefore, when preparing the long-term liabilities section of the balance sheet for Waterway Company, we would include Bonds Payable and Pension Liability with their respective balances.
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3) Practice with Identifying Assumptions For each of the following research designs, state the identifying assumption and provide one reason for why the assumption might not be valid. a) Regression: To study the effect of school spending on test scores, I run the following regression: TS, = a +B(Spending), +y(FamilyIncome), +€s where FamilyIncome controls for the average family income at school s. b) Fixed Effects: To study the effect of years of schooling on wages, I run a regression while adding family fixed effects. That is, I compare future wages between siblings with different levels of educational attainment (this controls for omitted ability bias because siblings are assumed to have similar levels of innate ability on average). c) Differences-in-differences: To study the effect of teacher pay on achievement within a school district, I analyze a group of 20 school districts that increased teacher pay in 2009. I analyze how district performance trended before and after the pay change in 2009, and compare against the trends of school districts that did not increase teacher pay in 2009.
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a) Regression: Assumption - Family income controls for factors affecting test scores. Potential invalidation - Unobserved factors related to family income.
b) Fixed Effects: Assumption - Siblings' educational attainment controls for ability bias. Potential invalidation - Unobserved within-family factors.
c) Differences-in-differences: Assumption - Trends in achievement would be similar without pay change. Potential invalidation - Confounding factors between districts.
a) Identifying Assumption: The identifying assumption in the regression design is that the average family income at school s (FamilyIncome) adequately captures the relevant factors affecting test scores (TS) other than school spending.
Reason for Potential Invalidation: The assumption might not be valid if there are unobserved factors related to family income that are also associated with test scores. For example, if there are differences in parental involvement or educational resources within families of different income levels, these factors may affect test scores independently of school spending.
b) Identifying Assumption: The identifying assumption in the fixed effects design is that the variation in educational attainment within siblings is primarily driven by differences in years of schooling and not by other unobserved factors that affect both educational attainment and wages (such as innate ability).
Reason for Potential Invalidation: The assumption might not be valid if there are other unobserved factors that vary systematically within families and affect both educational attainment and wages. For instance, if there are differences in parenting styles or resource allocation within families that influence both educational attainment and future wages, the fixed effects approach may not fully account for these factors.
c) Identifying Assumption: The identifying assumption in the differences-in-differences design is that the trends in achievement within the school districts that increased teacher pay in 2009 would have followed a similar trajectory to those that did not increase teacher pay in the absence of the pay change.
Reason for Potential Invalidation: The assumption might not be valid if there are other factors, besides teacher pay, that systematically differ between the school districts that increased pay and those that did not. These factors could affect achievement trends independently of teacher pay. For example, if the school districts that increased pay had additional resources or specific policies implemented alongside the pay change, these factors could confound the observed effects on achievement.
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Larry’s Machine Shop applies overhead based on direct labor hours. Larry has determined that the predetermined overhead rate for this year is $28.40 per direct labor hour. For the most recent month, Larry worked 140 hours and incurred $4,120 of manufacturing overhead. Which of the following correctly describes how Larry will apply overhead this month?
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Larry’s Machine Shop applies overhead based on direct labor hours. The predetermined overhead rate for this year is $28.40 per direct labor hour. For the most recent month, Larry worked 140 hours and incurred $4,120 of manufacturing overhead.
In this case, Larry will apply overhead to the jobs that were completed in the current month, based on the direct labor hours incurred in those jobs. The formula to calculate the applied overhead is as follows: Applied Overhead = Actual Direct Labor Hours Worked * Predetermined Overhead Rate Applied Overhead = 140 Hours * $28.40 per Direct Labor Hour Applied Overhead = $3,976
The amount of overhead applied to jobs is $3,976. This amount is calculated using the formula mentioned above. This is because the overhead incurred by Larry is for the most recent month, and it needs to be applied to the jobs completed in the current month.
The predetermined overhead rate for this year is $28.40 per direct labor hour, which is used to calculate the overhead applied to jobs.The process of applying overhead helps in determining the cost of the products produced by Larry’s Machine Shop.
This cost includes direct labor, direct materials, and overhead costs, which are required to produce the product. The applied overhead is added to the direct materials and direct labor cost to determine the total cost of production.
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What version of the WRF model has the NAM been using since 2006? Further, in a sentence or two, please tell me about this version.
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The NAM (North American Mesoscale) has been utilizing the Weather Research and Forecasting (WRF) model since 2006. The NAM was initially created in 1995 and it was the first continental-scale mesoscale model. The model covers a region of 50 km around the contiguous United States and offers output data hourly to support the National Weather Service forecasters and private sector meteorologists. It is an assimilation of complex physical and chemical equations that produce highly accurate forecasts for wind, temperature, humidity, precipitation, and cloud cover, among other parameters.
WRF also assists in providing early warnings for a variety of hazardous weather phenomena, such as hurricanes, snowstorms, and thunderstorms, with a high level of confidence. This version of WRF also incorporates high-resolution data assimilation and is used as a source model for shorter-term forecasts by many national weather forecasting agencies. Therefore, since 2006, the NAM has been utilizing this version of the WRF model, which offers a high degree of forecast accuracy. The assimilation of observations with the use of this model helps to refine the initial fields and produce highly accurate forecasts.
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The legislation passed in Australia in 2009, which has the power to vary awards, make minimum wage orders, approve agreements, and help employees and employers resolve disputes at the workplace is called the:
a. Fair Work Act, b. Workplace Relations Amendment.c. Forward with Fairness Act (FWFA), d. Fair Pay and Conditions Standard, e. Workplace Relations Act
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The legislation passed in Australia in 2009, which has the power to vary awards, make minimum wage orders, approve agreements, and help resolve workplace disputes is called the Fair Work Act.
The Fair Work Act, passed in 2009, is a significant legislation in Australia that governs workplace relations. It grants various powers to the Fair Work Commission, enabling them to make decisions and take actions that impact the employment landscape.
The Act empowers the Fair Work Commission to vary awards, which are legally binding documents that outline minimum employment conditions. It also allows them to make minimum wage orders, setting the minimum pay rates for workers. Additionally, the Act enables the approval of agreements between employers and employees, known as enterprise agreements.
These agreements establish terms and conditions of employment that are tailored to specific workplaces. Furthermore, the Fair Work Act plays a vital role in assisting employees and employers in resolving workplace disputes through mediation, arbitration, and conciliation processes.
Overall, the Fair Work Act is a comprehensive legislation that aims to regulate employment relations and promote fair and balanced outcomes for both employees and employers.
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The Smiths have decided to invest in a college fund for their young son. They invested $40,000 in a deferred annuity that will pay their son at the beginning of every month for 4 years, while he goes to college. If the account earns 3.50% compounded monthly and the annuity payments are deferred for 14 years, what will be the size of the monthly payments?
Answers
The size of the monthly payments will be $698.96.
The present value of a deferred annuity can be computed using the formula shown below: PV= CF × (1 + r)^(−n)Where,PV is the present value of the annuity,CF is the cash flow,r is the interest rate per period andn is the number of periods
The formula for the payment on a deferred annuity is: PMT= PV / ((1 − (1 + r)^(−n)) / r)
Where,PMT is the periodic payment, PV is the present value of the annuity,r is the interest rate per period andn is the number of periods.
Applying the above formulae to the question above, we have;PV = 40000CF =?R= 3.5% / 12 months = 0.29167%N= 14 years × 12 months = 168 monthsPV = CF × (1 + r)^(−n)40000 = CF × (1 + 0.0029167)^(−168)40000 = CF × 0.376192514CF = 106262.2210PMT = PV / ((1 − (1 + r)^(−n)) / r)PMT = 106262.2210 / ((1 − (1 + 0.0029167)^(−168)) / 0.0029167)PMT = $698.96 (rounded to 2 decimal places)
Therefore, the size of the monthly payments will be $698.96.
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During the year, Dan Davis, a single taxpayer, pays $2,200 of interest on a qualified student loan. Assume that Dan has adjusted gross income of $65,000. What student loan interest deduction may Dan claim on his Form 1040 for the year? a $ 2,500 b $ 2,200 c $ 1,100
d $ 0 e None of the above
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Dan Davis, a single taxpayer with an adjusted gross income of $65,000, paid $2,200 of interest on a qualified student loan. He may claim a student loan interest deduction on his Form 1040 for the year. The correct option is option b.
The maximum student loan interest deduction for the year is $2,500. However, the deduction is phased out for taxpayers with adjusted gross income above certain limits.
For single taxpayers like Dan Davis, the phase-out range begins at $70,000 of adjusted gross income.
Since Dan's adjusted gross income of $65,000 falls below the phase-out range, he is eligible to claim the full amount of student loan interest paid, which is $2,200.
Therefore, the correct answer is option b, $2,200. Dan can claim this amount as a deduction on his Form 1040 for the year.
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The firm paid interest expenses of 200.00
Answer: Cash + Noncash assets = Liab + CC + RE + AOCI
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We can see that the liabilities have increased by $200.00 and the cash has decreased by $200.00, which is the impact of the interest expenses paid by the firm.
To answer the given question, we can use the basic accounting equation:
Cash + Noncash assets = Liabilities + Common stock + Retained earnings + Accumulated other comprehensive income (AOCI)Given that the firm paid interest expenses of $200.00, this transaction will affect the accounting equation. Since the firm paid cash, we can decrease the cash account.
On the other hand, interest expense is a noncash expense because it does not involve the outflow of cash. Instead, it is recorded as a liability on the balance sheet as accrued interest payable.
Therefore, we can increase the interest payable account. Using the basic accounting equation, the impact of the transaction is as follows:
Cash - $200Interest payable + $200So the updated accounting equation would be: Cash + Noncash assets = Liabilities + Common stock + Retained earnings + AOCI Cash - $200 = Liabilities + Common stock + Retained earnings + AOC I Interest payable + $200 = Liabilities + Common stock + Retained earnings + AOCI
From the above equation, we can see that the liabilities have increased by $200.00 and the cash has decreased by $200.00, which is the impact of the interest expenses paid by the firm.
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Week 8 Discussion Forum Listed below are several topics I would like for each of you to discuss throughout the week. Refer to the weekly materials, your textbook, and/or the GMC library when researching the topics for this Discussion Forum. Put your writing into your own words, do not copy directly from the source. After reading Chapter 16, (1) Discuss ways you would prepare for a phone interview. (2) Discuss ways you would prepare for a face-to-face interview.
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As per the given question, here are the answers:Week 8 Discussion Forum Listed below are several topics I would like for each of you to discuss throughout the week. Refer to the weekly materials, your textbook, and/or the GMC library when researching the topics for this Discussion Forum. Put your writing into your own words, do not copy directly from the source. After reading Chapter 16, (1) Discuss ways you would prepare for a phone interview. (2) Discuss ways you would prepare for a face-to-face interview.When it comes to a job interview, preparation is key. A phone interview is usually the first step in the hiring process. To prepare for a phone interview, you should do the following:Make sure you're in a quiet environment where you can talk without interruptions. If you have children or pets, make arrangements for them to be taken care of during the interview. Your interviewer should have your full attention.Prepare yourself for the interview by practicing answers to common questions and reviewing the job description and the company's website. Keep a copy of your resume, the job posting, and other important information nearby so you can refer to them during the interview.Make sure your phone is charged and you have good reception. Test the connection by making a call to a friend before the interview.Set aside enough time for the interview. It's better to have too much time than too little. Remember that the interviewer's time is valuable, so be respectful of their time.After the phone interview is over, send a thank-you email or note to your interviewer. Express your gratitude for the opportunity to interview for the position and reiterate your interest in the job.For a face-to-face interview, preparation is just as important. Here are some things to consider:Research the company and the position. Know what the company does, who their competitors are, and what makes them unique. Review the job description and make a list of your skills and experiences that match the requirements of the job. Be prepared to give specific examples of how your skills and experiences make you the best candidate for the job.Practice your answers to common interview questions. Be prepared to answer questions about your strengths and weaknesses, your experience, and why you're interested in the job.Dress appropriately. Dress in professional attire that is appropriate for the company and the job. Make sure your clothes are clean, pressed, and fit well.Arrive early. Plan to arrive at least 10-15 minutes early. This will give you time to find the interview location, check in with the receptionist, and relax before the interview.Be polite and professional. Be respectful of everyone you meet during the interview process, from the receptionist to the interviewer. Use good manners and be polite and courteous at all times.In conclusion, preparation is the key to a successful job interview. Whether it's a phone interview or a face-to-face interview, taking the time to prepare will help you feel more confident and make a positive impression on your interviewer.
Your mother has $550,000 in her account and he needs to receive monthly payments of $5,000. If she receives the payments at the end of the month, and the current interest rate is 7 percent, compounded quarterly, how many months will her investment account last for?
120 months
175 months
98 months
206 months
Answers
Her investment account last for 175 months. The correct answer is 175 months.
To find out how long your mother's account will last, you can use the formula for the future value of an annuity:
FV = (PMT x ((1+r)^n - 1))/r where PMT is the monthly payment, r is the quarterly interest rate, and n is the number of quarters.
Here's how to use this formula to solve the problem:
First, convert the annual interest rate of 7 percent to a quarterly interest rate by dividing it by 4:
r = 0.07/4 = 0.0175. Next, use the formula for the future value of an annuity to solve for n:
[tex]FV = (PMT x ((1+r)^n - 1))/rn = ln((FV x r)/(PMT + r x FV))/ln(1+r)[/tex]
Substitute the given values into the formula:
FV = $550,000, PMT = $5,000, and r = 0.0175.n = ln((550000 x 0.0175)/(5000 + 0.0175 x 550000))/ln(1+0.0175)
Simplify and solve for n: n = 174.88...Round this answer up to the nearest whole number to get the final answer: n ≈ 175.
Therefore, your mother's investment account will last for 175 months, which is approximately equal to 14 years and 8 months. The correct answer is 175 months.
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a. Identify and discuss the characteristics of ethical problems in management. Give your opinion on the way to solve the problem.
b. Discuss the concept of stakeholders of an organisation. Why is the concept important for a leader of an organisation?
Give examples of market stakeholders and non-market stakeholders in your chosen organisation.
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a. Characteristics of ethical problems in management:Complexity: Ethical problems in management often involve complex situations with multiple dimensions, stakeholders, and potential consequences.
They may require careful analysis and consideration of various ethical frameworks to identify the most appropriate course of action.Subjectivity: Ethical problems can be subjective, as they involve different perspectives, values, and beliefs. What is ethical for one person or organization may not be the same for another. This subjectivity can lead to debates and challenges in finding consensus on ethical solutions.
Dilemmas: Ethical problems often present dilemmas, where there is a conflict between different ethical principles or responsibilities. Managers may face difficult choices where there is no clear "right" answer, and they need to weigh the potential impacts and make decisions based on ethical reasoning.
Consequences: Ethical problems can have significant consequences, both for individuals and organizations. They may impact the reputation, trust, and long-term viability of the organization. Ethical lapses can lead to legal issues, damage relationships with stakeholders, and affect employee morale.
Solving ethical problems requires a comprehensive approach:
Establish ethical values and standards: Organizations should define their ethical values and standards explicitly, promoting a culture of integrity and ethical behavior. This includes developing a code of conduct and providing ethical training to employees.
Encourage open communication: Creating an environment where employees feel comfortable raising ethical concerns is essential. Encourage open dialogue and establish channels for reporting unethical behavior without fear of retaliation.
Implement ethical decision-making processes: Provide managers and employees with frameworks or decision-making models that help them assess ethical problems systematically. This includes considering the potential consequences, ethical principles, and stakeholder perspectives.
Lead by example: Leaders should demonstrate ethical behavior themselves, serving as role models for the organization. Their actions and decisions should align with the organization's ethical values, fostering a culture of integrity throughout the organization.
b. Stakeholders of an organization:
Stakeholders are individuals, groups, or entities that have an interest or stake in the operations and outcomes of an organization. They can significantly influence or be influenced by the organization's decisions and actions.
The concept of stakeholders is important for a leader of an organization because:
Decision-making: Leaders need to consider the interests and perspectives of different stakeholders when making strategic decisions. This includes balancing the needs of shareholders, employees, customers, suppliers, local communities, and other relevant groups.
Reputation and trust: Stakeholders can impact the reputation and trust of an organization. By understanding and meeting their expectations, leaders can maintain positive relationships and build trust, which is crucial for long-term success.
Risk management: Stakeholders may have varying levels of risk associated with the function .
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You purchased a zero-coupon bond that has a face value of R1 000, six years to maturity, and a yield to maturity of 7%. It is one year later and similar bonds are offering a yield to maturity of 7.75%. You will sell the bond now. You have a tax rate of 28% on regular income and 20% on capital gains. Calculate the following for this bond. 1.1 The purchase price of the bond 1.2 The current price of the bond 1.3 The imputed interest income 1.4 The capital gain (or loss) on the bond 1.5 The before-tax rate of return on this investment 1.6 The after-tax rate of return on this investment Assume that a 1-year zero-coupon bond with face value R1 000 currently sells at R890.00, while a 2-year zero sells at R736.50. You are considering the purchase of a 2year maturity bond making annual coupon payments. The face value of the bond is R1 000 and the coupon rate is 6.5% per year. Calculat Calculat Calcula Calculat If the bond If the coupon If you or lower
3. You have purchased a bond for R957.90. The bond has a coupon rate of 6%, pays interest annually, has a face value of R1000,4 years to maturity, and a yield to maturity of 7.25%. The bond's duration is 3.6481 years. You expect that interest rates will increase by 0.25% later today. 3.1 Calculate the approximate percentage change in the bond's price using the modified duration. 3.2 Find the new price of the bond from this calculation. 3.3 Use your calculator to do the regular present-value calculations to find the bond's new price at its new yield to maturity. 3.4 What is the amount of the difference between the two answers? Why are your answers different? 2. Assume that a 1-year zero-coupon bond with face value R1 000 currently sells at R890.00, while a 2-year zero sells at R736.50. You are considering the purchase of a 2 year maturity bond making annual coupon payments. The face value of the bond is R1 000 and the coupon rate is 6.5% per year. 2.1 Caiculate the yield to maturity (YTM) of the 1-year zero. 2.2 Calculate the yield to maturity (YTM) of the 2-year zero. 2.3 Calculate the yield to maturity (YTM) of the 2-year coupon bond. 2.4 Calculate the forward rate for the second year. (2) (5) 2.5 If the expectations hypothesis is accepted, determine the expected price of the coupon bond at the end of the first year. (2) 2.6 If the expectations hypothesis is accepted, determine the holding period return on the coupon bond over the first year. 2.7 If you accept the liquidity preference hypothesis, will the expected rate of return by higher or lower?
Answers
The bond was purchased for R1,000, but its current price is R742.61, resulting in a capital loss. The before-tax rate of return on this investment is -25.74%, and the after-tax rate of return is -20.59%.
The purchase price of the bond: The purchase price of the bond is the face value of R1,000.1.2 The current price of the bond: The current price of the bond can be calculated using the formula for the present value of a zero-coupon bond. The current price is the face value divided by (1 + yield to maturity)^n, where n is the remaining years to maturity. In this case, the current price is R1,000 / (1 + 7%)^5 = R742.61.1.3 The imputed interest income: Since it is a zero-coupon bond, there is no periodic interest payment. Therefore, the imputed interest income is zero.
1.4 The capital gain (or loss) on the bond: The capital gain on the bond is the difference between the current price and the purchase price. In this case, it is R742.61 - R1,000 = -R257.39, indicating a capital loss.1.5 The before-tax rate of return on this investment: The before-tax rate of return is the capital gain (or loss) divided by the purchase price, expressed as a percentage. In this case, it is (-R257.39 / R1,000) * 100 = -25.74%.
1.6 The after-tax rate of return on this investment: To calculate the after-tax rate of return, we need to consider the tax rate on capital gains. Assuming a capital gains tax rate of 20%, the after-tax rate of return is the before-tax rate of return multiplied by (1 - capital gains tax rate). In this case, it is -25.74% * (1 - 20%) = -20.59%.
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