The correct statement about the Purchasing Power Parity (PPP) theory is option A) It predicts that exchange rates are determined by relative prices.
There are several types of prices commonly used in business and economics.
1. Market Price: The price determined by the interaction of supply and demand in a competitive market.
2. Cost-based Price: The price set based on the production or manufacturing costs, including materials, labor, and overhead expenses, with a desired profit margin added.
3. Dynamic Pricing: The price that changes based on factors like demand, time, or customer segment.
4. Penetration Price: Setting a low initial price to enter a market and gain market share.
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Crane Company is planning to produce 2.800 units of product in 2022 . Each unit requires 1.2 pounds of materials at $5.6 per pound and a half-hour of labor at $12 per hour. The overhead rate is 70% of direct labor.
(a) Compute the budgeted amounts for 2022 for direct materials to be used, direct labor, and applied overhead,
Direct materials $___
Direct labor $___
Overhead $___
(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.) Standard cost $___PerUnit
a) The budgeted amounts for 2022 can be computed as follows:
Direct materials:
Number of units: 2,800
Materials required per unit: 1.2 pounds
Cost per pound of materials: $5.6
Total direct materials = Number of units × Materials required per unit × Cost per pound
Total direct materials = 2,800 × 1.2 × $5.6 = $18,816
Direct labor:
Number of units: 2,800
Labor required per unit: 0.5 hours
Hourly rate: $12
Total direct labor = Number of units × Labor required per unit × Hourly rate
Total direct labor = 2,800 × 0.5 × $12 = $8,400
Overhead:
Overhead rate: 70% of direct labor cost
Total overhead = Overhead rate × Total direct labor
Total overhead = 0.70 × $8,400 = $5,880
Therefore, the budgeted amounts for 2022 are as follows:
Direct materials: $18,816
Direct labor: $8,400
Overhead: $5,880
(b) The standard cost of one unit of product can be computed by adding the standard costs of direct materials, direct labor, and overhead.
Standard cost per unit = Direct materials cost per unit + Direct labor cost per unit + Overhead cost per unit
Direct materials cost per unit = Total direct materials cost / Number of units
Direct materials cost per unit = $18,816 / 2,800 = $6.72
Direct labor cost per unit = Total direct labor cost / Number of units
Direct labor cost per unit = $8,400 / 2,800 = $3.00
Overhead cost per unit = Total overhead cost / Number of units
Overhead cost per unit = $5,880 / 2,800 = $2.10
Standard cost per unit = $6.72 + $3.00 + $2.10 = $11.82
Therefore, the standard cost of one unit of product is $11.82.
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Discuss the strategic nature of International Human Resource
Management and the steps involved.
International Business Management
International human resource management is considered to be strategic in nature because of the importance of the human element in the management of organizations.
In managing the human resources in international business management, several steps are involved.
Discussing the strategic nature of International Human Resource Management
International human resource management is considered strategic because of the following reasons:
1. International human resource management is concerned with ensuring that the organization has the right personnel in the right roles and locations to achieve its goals and objectives.
2. International human resource management is also responsible for ensuring that the personnel are adequately compensated and motivated to perform to their maximum potential.
3. International human resource management is responsible for managing the cultural differences that exist among the personnel in the organization.
This is important because it ensures that the personnel work in a conducive environment that fosters productivity and efficiency.
The steps involved in International Human Resource Management
The following are the steps involved in international human resource management:
1. International human resource planning:
This is the first step in managing the human resources in international business management.
It involves identifying the human resource requirements of the organization and developing plans to meet those requirements.
2. Recruitment and selection:
Once the human resource requirements have been identified, the next step is to recruit and select the personnel who meet those requirements.
3. Training and development:
After the recruitment and selection process, the personnel need to be trained and developed to ensure that they have the necessary skills to perform their roles effectively.
4. Performance management:
The performance of the personnel needs to be monitored to ensure that they are meeting the expectations of the organization.
This involves setting performance targets and providing feedback to the personnel.
5. Compensation and benefits:
The personnel need to be adequately compensated and motivated to perform to their maximum potential.
This involves developing compensation and benefit packages that are attractive to the personnel.
6. Employee relations:
The relationships between the personnel and the organization need to be managed effectively.
This involves ensuring that the personnel work in a conducive environment that fosters productivity and efficiency.
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At May 31, 2020, the accounts of Lopez Company show the following. May I inventories - finished goods $12,600, work in process $14,700 and raw
materials $8.200. May 31 inventories - finished goods $9.500, work in process, SIS,900, and raw
materials $7,100. Debit postings to work in process were direct materials, $62.400, direct labor $50,000,
and manufacturing overhead applied $40,000.
Sales revenue totalco745.000. Prepare a condensed cost of goods manufactured schodule
(b)
Prepare an income statement for May through gross profit.
(c) Indicate the balance sheet presentation of the manufacturing inventories at May 31, 2020.
a) Cost of Goods Manufactured Schedule:
Work in Process Inventory:
Beginning Balance (May 1) + Direct Materials + Direct Labor + Manufacturing Overhead Applied = Total Cost in Work in Process
$14,700 + $62,400 + $50,000 + $40,000 = $167,100
Cost of Goods Manufactured:
Beginning Work in Process Inventory + Total Cost in Work in Process - Ending Work in Process Inventory = Cost of Goods Manufactured
$14,700 + $167,100 - $51,900 = $130,900
b) Income Statement for May through Gross Profit:
Sales Revenue
- Cost of Goods Sold (calculated using the Cost of Goods Manufactured)
= Gross Profit
c) Balance Sheet Presentation of Manufacturing Inventories at May 31, 2020:
- Finished Goods Inventory: $9,500
- Work in Process Inventory: $51,900
- Raw Materials Inventory: $7,100
a) To prepare the condensed Cost of Goods Manufactured Schedule, we calculate the total cost in the Work in Process (WIP) inventory by adding the beginning balance of WIP to the direct materials, direct labor, and manufacturing overhead applied. Then, we determine the Cost of Goods Manufactured by subtracting the ending WIP inventory from the total cost in WIP.
b) The Income Statement for May through Gross Profit is prepared by subtracting the Cost of Goods Sold from the Sales Revenue. The Cost of Goods Sold is obtained from the Cost of Goods Manufactured.
c) The balance sheet presentation of manufacturing inventories at May 31, 2020, includes the values of the Finished Goods Inventory, Work in Process Inventory, and Raw Materials Inventory.
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On game days, homeowners near Middletown University's stadium used to rent parking spaces in their driveways to fans at a going rate of $11. A new town regulation now sets the maximum parking fee of $7. Using a supply and demand analysis, explain how each of the following correspond to a price-ceiling concept. (a) Some homeowners now think it is not worth the hassle to rent out spaces.
This situation of homeowners corresponds to the concept of a price ceiling, which is a government-imposed limit on the price that can be charged for a good or service.
The introduction of a maximum parking fee of $7 acts as a price ceiling in this scenario. A price ceiling is a form of government intervention that restricts the price of a good or service from exceeding a certain level. It is designed to make the good or service more affordable for consumers.
In this case, the price ceiling of $7 on parking spaces affects the homeowners who used to rent out their driveways for $11. The price ceiling creates a situation where the market price (the equilibrium price determined by supply and demand) is higher than the maximum allowable price set by the regulation
As a result, some homeowners may find it not worth the hassle to rent out their parking spaces anymore. This is because they are now unable to charge the higher price they used to receive, which may not sufficiently compensate them for the inconvenience of renting out their driveways. Consequently, they may choose to withdraw from the market and not offer parking spaces anymore, leading to a reduction in the overall supply of parking spaces available for game days.
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project L requires an initial outlay at t=0 or $75,000, its expected cash inflows are $15,000 per yeer for 9 yeers, and its WACC is 11%. What is the project's NPV? Do not round litermediate caiculations. Round your answer to the nearest cent.
Therefore, the NPV of the project L is -$912.16. Since the NPV is negative, it indicates that the project is not financially viable and should not be pursued.
NPV (Net Present Value) is used in capital budgeting to analyze the profitability of a project or investment.
It is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used to determine whether or not a particular project is financially viable.
Formula used to calculate NPV
NPV = PV of cash inflows - PV of cash outflows
Where,
PV = Present Value
Calculation of PV
PV = FV / (1 + r)^n
Where,
FV = Future Value
r = Rate of return
n = Time
Calculation of NPV
To calculate NPV, we need to calculate the present value of cash inflows and the present value of cash outflows.
The present value of cash outflows is the initial investment required for the project, which is $75,000.
Now, we can calculate the present value of cash inflows using the following formula:
PV = FV / (1 + r)^n
Where,
FV = $15,000
r = 11%
n = 1, 2, 3, ..., 9 years
PV of cash inflows for each year can be calculated as follows:
PV of cash inflow in year 1 = $15,000 / (1 + 11%)^1 = $13,513.51
PV of cash inflow in year 2 = $15,000 / (1 + 11%)^2 = $12,169.30
PV of cash inflow in year 3 = $15,000 / (1 + 11%)^3 = $10,999.01
PV of cash inflow in year 4 = $15,000 / (1 + 11%)^4 = $9,976.76
PV of cash inflow in year 5 = $15,000 / (1 + 11%)^5 = $9,080.67
PV of cash inflow in year 6 = $15,000 / (1 + 11%)^6 = $8,292.15
PV of cash inflow in year 7 = $15,000 / (1 + 11%)^7 = $7,594.75
PV of cash inflow in year 8 = $15,000 / (1 + 11%)^8 = $6,974.08
PV of cash inflow in year 9 = $15,000 / (1 + 11%)^9 = $6,420.71
Now, we can calculate the NPV using the formula:
NPV = PV of cash inflows - PV of cash outflows
NPV = $13,513.51 + $12,169.30 + $10,999.01 + $9,976.76 + $9,080.67 + $8,292.15 + $7,594.75 + $6,974.08 + $6,420.71 - $75,000
NPV = -$912.16
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A company that makes self-clinching fasteners expects to purchase new production-line equipment in 3 years. If the new units will cost $350,000, how much should the company set aside each year, if the account earns 10% per year? a. $105,739 b. $95,720 c. $100,730 d. $110,540
The company should set aside approximately $105,739 each year. Thus, the correct option is a. $105,739. We can use the concept of present value (PV) and annuities.
To determine how much the company should set aside each year, we can use the concept of present value (PV) and annuities. The formula for calculating the amount to be set aside each year is:
PV = A * (1 - (1 + r)^(-n)) / r
Where:
PV = Present value (the cost of the equipment)
A = Annual amount to be set aside
r = Interest rate per period
n = Number of periods (years)
In this case, the cost of the equipment (PV) is $350,000, the interest rate (r) is 10% per year, and the number of periods (n) is 3 years.
Plugging the values into the formula, we can solve for A:
$350,000 = A * (1 - (1 + 0.10)^(-3)) / 0.10
Simplifying the equation:
$350,000 = A * (1 - 1.331) / 0.10
$350,000 = A * (-0.331) / 0.10
A * (-0.331) = $350,000 * 0.10
A = ($350,000 * 0.10) / (-0.331)
A ≈ $105,739
Therefore, the company should set aside approximately $105,739 each year. Thus, the correct option is a. $105,739.
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(2) Test Bank 11.12 How are the cash inflows for a particular project determined? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a by adding capital cost allowance to profit for the year b by deducting administrative expenses from revenue c by deducting depreciation from profit before taxes d by adding capital cost allowance to the profit before taxes What capital budgeting technique is NOT considered to be a time-value-of-money yardstick? Selected answer will be automatically saved. For keyboard navigation, press upidown arrow keys to select an answer. a ROA b PI c NPV d IRR What do accounting methods use to determine the financial return of a proposed capital project? Selected answer will be automatically saved. For keyboard navigation, press upidown arrow keys to sclect an answer. a projected income tax returns b projected operating budgets c. cash flow forecasts d projected financial statements What does the payback method measure? Selected answer will be automatically saved. For keyboand navigation, press up;down arrow keys to select an answer, a the time needed for the cash outflow of a project to be totally recovered by profit for the year b the time needed for the cash outflow of a project to be totally recovered by revenue c the time needed for the cash outflow of a project to be totally recovered by cash inflows d the time needed for the cash outflow of a project to be totally recovered by profit before taxes
The cash inflows for a particular project are determined by adding the capital cost allowance to the profit before taxes.
In order to determine the cash inflows for a specific project, it is necessary to consider the impact of capital cost allowance on the profit before taxes. Capital cost allowance refers to the depreciation expense that is deducted from the initial cost of an asset over its useful life.
By adding the capital cost allowance to the profit before taxes, we are essentially accounting for the non-cash expense of depreciation and including it as part of the cash inflows.
Depreciation is a crucial factor in determining the profitability and cash flow of a project. Although it does not involve actual cash outflows, it represents a decrease in the value of an asset over time. By considering the capital cost allowance, we are effectively recognizing this decrease and factoring it into the project's cash inflows.
This provides a more accurate picture of the actual cash that will be generated by the project.
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X can borrow money at either a fixed rate of 7.5% or a variable rate set at prime plus 0.5%; Y can borrow money at either a variable rate of prime plus 1% or a fixed rate of 7.25%. X prefers a fixed rate and Y prefers a variable rate. Given this information, which one of the following statements is correct?
a) X and Y cannot swap interest rates in a manner that will be profitable for both firms.
b) After a swap with X, Y should end up paying a fixed rate of about 7.125%.
c) Both firms will profit if they swap a 7.35% fixed rate for a prime plus 0.75% variable rate.
d) Y should end up paying the prime rate if they do an interest rate swap with X.
e) X will end up paying no more than 7% as a fixed rate after a swap with Y.
the correct answer is a) X and Y cannot swap interest rates in a manner that will be profitable for both firms.
X prefers a fixed rate and Y prefers a variable rate. Therefore, X would prefer to borrow at a fixed rate of 7.5% and Y would prefer to borrow at a variable rate of prime plus 1%.
If X borrows at a fixed rate of 7.5% and Y borrows at a variable rate of prime plus 1%, then they can swap interest rates so that X pays a variable rate of prime plus 1% and Y pays a fixed rate of 7.5%.
Since X prefers a fixed rate, they would be willing to pay a fixed rate of 7.5%. Since Y prefers a variable rate, they would be willing to pay a variable rate of prime plus 1%. Therefore, both firms can swap interest rates in a manner that will be profitable for both firms.
Therefore the correct answer is a) X and Y cannot swap interest rates in a manner that will be profitable for both firms.
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companies are most likely to use data mining results identifying unprofitable customers for ________.
Companies are most likely to use data mining results identifying unprofitable customers for "customer retention or customer relationship management (CRM)" purposes.
Data mining is a process of analyzing large sets of data to uncover patterns, relationships, and insights that can be used to make informed business decisions. When data mining results identify unprofitable customers, it means that certain customers are not generating significant value or contributing to the company's profitability.
In such cases, companies can use these data mining results for customer retention or CRM purposes. The goal is to understand why certain customers are unprofitable and develop strategies to improve their profitability or, if not feasible, manage the customer relationship effectively.
By leveraging data mining insights, companies can implement targeted marketing efforts, personalized communication, loyalty programs, or other initiatives to enhance the value and profitability of unprofitable customers. This approach can help retain customers who may have the potential to become profitable in the future, maintain positive customer relationships, and optimize overall business performance.
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While applying economic intuition and examples write brief notes on the following concepts in trade policy and development. i) GATT i) The Safeguard Agreement
The General Agreement on Tariffs and Trade aimed to promote international trade and reduce trade barriers. The Safeguard Agreement allows member countries to impose temporary import restrictions on specific products to protect domestic industries from sudden import surges.
The General Agreement on Tariffs and Trade (GATT), established in 1947, aimed to promote international trade and reduce trade barriers. It served as the foundation for the World Trade Organization (WTO) and facilitated economic cooperation among member countries. By negotiating trade agreements, reducing tariffs, and addressing non-tariff barriers, the GATT fostered economic growth and development by promoting trade liberalization and nondiscrimination.
The Safeguard Agreement, an important component of the WTO's legal framework, allows member countries to impose temporary import restrictions or tariffs on specific products to protect domestic industries from sudden import surges. These measures provide domestic industries with time to adjust and become more competitive, helping to mitigate job losses and economic instability. However, the Safeguard Agreement sets predefined conditions to prevent protectionism and unfair trade practices, ensuring that such measures are used sparingly and in accordance with international trade rules.
Trade policy and development are closely intertwined. By participating in agreements like GATT and utilizing mechanisms such as the Safeguard Agreement, countries can create an environment conducive to trade and economic growth. These agreements promote fair and predictable trade practices while allowing countries to protect vulnerable domestic industries. Finding the right balance between open trade and safeguarding domestic industries is crucial for sustainable economic development. With thoughtful trade policy formulation and implementation, countries can harness the potential of international trade to drive economic progress, create employment opportunities, and improve living standards.
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Preventing projects from falling into a distressed state is clearly where the project manager's efforts should be placed. This translates to simply paying attention to every phase of the PMLC model. How do you avoid the escalation of a potentially distressed project from becoming intractable and what intervention strategies would you apply?
To avoid the escalation of a potentially distressed project from becoming intractable and to implement effective intervention strategies, project managers can take the following steps:
Early Detection and Proactive Monitoring: Project managers should establish robust project monitoring and control mechanisms from the start. Regularly review project performance metrics, such as budget, schedule, and quality, to identify any signs of deviation or potential risks. Early detection allows for timely intervention before issues become critical.Root Cause Analysis: When issues arise, project managers should conduct a thorough root cause analysis to identify the underlying factors contributing to the project's distress. This analysis helps determine the primary drivers of project stakeholders, whether they are related to scope, resources, communication, or other factors.Stakeholder Communication and Engagement: Maintain open and transparent communication with all project stakeholders, including the project team, clients, sponsors, and relevant external parties. Regularly update stakeholders on project status, issues, and mitigation strategies. Engage stakeholders in problem-solving and decision-making processes to foster collaboration and support.To learn more about project stakeholders, visit here
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How is diversification achieved in fixed-income portfolios? 1. By investing in domestic and foreign bonds. II. By investing in bonds with a range of maturities. III. By investing in bonds with different credit ratings. IV. By investing in bonds of issuers in different industries. a) II and III only. b) II only. c) I and IV only. d) I, II, III, and IV.
Fixed-income portfolio diversification can be achieved by combining various strategies. The choices are as follows:I. By purchasing both domestic and international bonds. II. By purchasing bonds with various maturities. III. Buying bonds with various credit ratings.IV.
By purchasing bonds from companies in various industries. By spreading the risk among a variety of investments, diversification serves to minimise the possible effects of any one bond or issuer on the portfolio as a whole. The most thorough response that takes into account several diversification techniques is: d) I, II, III, and IV. Option I: Investing in both domestic and foreign bonds; Option II: Investing in bonds with various maturities; Option III: Investing in bonds with various credit ratings; Option IV: Investors can build a fixed-income portfolio with a well-diversified mix of industries (option IV). This method aids in the management of risks related to credit risk, interest rate risk, and sector-specific hazards.
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Hoppings Ltd own and operate an amusement park. A prominent notice is displayed at the entrance to the park, which states: ‘Hoppings Ltd and Thrills Ltd can accept no liability for any injury suffered’. Thrills Ltd has leased one of the main attractions, a ride called the ‘Raptor’, from Hoppings Ltd. The lease provides for Thrills Ltd to maintain the ride. The Raptor is a notoriously frightening rollercoaster that for part of its route travels underground. At the entrance to the ride is a notice, which states: ‘In the interests of safety all possible precautions are taken. The tunnel for this ride has a low ceiling. Riders must be shorter than 1.91m tall. Anyone taller than this is not permitted on this ride.’ Jack, aged 21, is 1.93m tall but decides that an extra couple of centimetres cannot really matter. He bends his knees under the height-checking device provided by Thrills Ltd. During the ride, the Raptor dips sharply into an underground tunnel and Jack, who is sitting high up in his seat, suffers a glancing blow to his head from a low emergency light, which has come free from its support. Sitting directly behind Jack is Beatrice. The light also strikes her. Beatrice is 1.60m tall. Osram, an independent contractor, has recently repaired the light. Both Jack and Beatrice are seriously injured.
Required: Examine the potential liabilities here.
The main potential liabilities in this scenario involve Thrills Ltd (the leaseholder) for negligence in maintaining the ride and ensuring rider safety, and potentially Hoppings Ltd (the amusement park) if the displayed notice attempting to waive liability is deemed ineffective under relevant laws and regulations.
In this scenario, there are several potential liabilities that need to be examined. Let's break them down:
1. Hoppings Ltd (the amusement park):
Hoppings Ltd owns and operates the amusement park where the incident occurred. They have displayed a prominent notice at the entrance to the park stating that they accept no liability for any injuries suffered. However, the effectiveness of such a notice can depend on various legal factors, such as local laws and regulations governing liability waivers. It would be important to consider the specific jurisdiction in which the park is located to determine the validity and enforceability of this notice.
2. Thrills Ltd (the leaseholder):
Thrills Ltd has leased the 'Raptor' ride from Hoppings Ltd and is responsible for maintaining it. They have placed a notice at the entrance to the ride, stating that riders must be shorter than 1.91m tall due to a low ceiling in the tunnel. This notice indicates that Thrills Ltd has taken precautions for safety. However, if the incident occurred due to negligence in maintaining the ride or ensuring the safety of the passengers, Thrills Ltd may be held liable for any resulting injuries.
3. Jack (the injured rider):
Jack, who is 1.93m tall, knowingly ignored the height restriction and decided to ride the 'Raptor' despite being taller than the specified limit. By doing so, Jack assumed the risk associated with not meeting the safety requirements. However, this may not absolve the amusement park or the leaseholder from their duty to ensure the safety of all riders, regardless of their compliance with the rules. Jack's decision to ride despite being too tall might be considered as contributory negligence, potentially reducing any compensation he may be entitled to.
4. Beatrice (the injured rider):
Beatrice, who is 1.60m tall, was sitting directly behind Jack and was also struck by the loose emergency light. As a rider who met the height requirement, Beatrice can argue that she relied on the park's and the leaseholder's duty to maintain a safe environment and was injured due to their negligence. Beatrice's injuries may be the result of the same negligence that caused Jack's injuries, potentially holding the amusement park or the leaseholder liable.
5. Osram (the independent contractor):
Osram, the independent contractor who recently repaired the light, may be held liable if the light came loose due to their negligence or improper repair work. Their responsibility would depend on the terms of the contract they had with Thrills Ltd or Hoppings Ltd, as well as the applicable standards and regulations for maintenance and repair work.
In summary, potential liabilities in this scenario could involve Hoppings Ltd, Thrills Ltd, and Osram, depending on their respective duties, responsibilities, and any negligence that led to the injuries of Jack and Beatrice. The specific legal jurisdiction will play a crucial role in determining the liability and the extent of potential compensation for the injured parties. It's essential to consult with a legal professional experienced in personal injury law for a thorough evaluation of the circumstances and applicable laws.
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Consider the IS-LM AD-AS model of a closed economy with upward-sloping SRAS (due to sticky nominal wages) in the short run. Assume also that expected inflation is unchanged.
Assume originally the economy is operating at its LR natural rate of output . (Show the LRAS curve in the AD-AS analysis below as well.)
Consider an increase in autonomous investment I0. Show the short run effects of such an increase in I0 on the real output and real interest rate and general price level in the IS-LM and AD-AS diagrams and explain how you obtain your answers. How will consumption and investment be affected? Explain.
The long-run equilibrium will occur when the AD curve intersects the vertical LRAS curve, where the real output is equal to the natural rate of output level (Yn) and the general price level is determined by the LRAS curve. The interest rate will be the natural rate of interest level (r*) in the long run.
In an IS-LM AD-AS model, autonomous investment refers to changes in investment that occur without changes in interest rates or income levels. The model is used to study the effects of changes in economic policies or events on the economy and how they affect output and prices.
Here, we consider a closed economy with upward-sloping SRAS (due to sticky nominal wages) in the short run and assume that expected inflation is unchanged.
Initially, the economy is operating at its LR natural rate of output. (Show the LRAS curve in the AD-AS analysis below as well.)
Consider an increase in autonomous investment I0. This will cause the IS curve to shift rightward (from IS to IS') as shown in the figure below. In the short run, this will lead to an increase in real output (Y) and an increase in the interest rate (r). However, the general price level (P) will remain unchanged (since expected inflation is unchanged). Thus, the short-run AD curve will shift rightward from AD to AD', as shown in the figure below. The intersection of AD' with the upward-sloping SRAS curve will determine the new equilibrium in the short run, where the real output is higher (Y') and the price level is unchanged. Consumption and investment will both increase in the short run because of the increase in output and the interest rate. The LRAS curve is vertical at the natural rate of output level, and it is not affected by changes in the interest rate or the general price level.
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refers to the process of using organizational resources to achieving collective goals is called____
The process of using organizational resources to achieve collective goals is called "management." Management involves planning,
organizing, coordinating, directing, and controlling resources within an organization to effectively and efficiently accomplish objectives. It encompasses various functions and activities aimed at guiding and directing individuals, teams, and departments towards the achievement of common goals. Through management, resources such as human capital, financial assets, technology, and materials are allocated and utilized in a strategic and coordinated manner. Managers utilize their skills, knowledge, and leadership abilities to align the efforts of employees and resources towards the desired outcomes. Management plays a crucial role in ensuring the smooth operation and success of an organization by setting goals, making decisions, assigning tasks, monitoring progress, and adapting to changes in the internal and external environments.
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Emil Manufacturing incurs unit costs of $8.20 (\$5.20 variable and $3.00 foxed) in making a sub-assembly tart for its finished product. A supplier offers to make 19,400 of the parts for $5.70 per unit. If it accepts the offer. Emil will save all variable costs and $1 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Emil will realize by buying the part. (Round per unit answers to 2 decimet placrs, es. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, es, - 15.000 or parenthesis, es (15.000)
Here is the analysis: Emil Manufacturing will save $48,500 by buying the parts from the supplier.
The unit cost to make the part is $8.20, of which $5.20 is variable and $3.00 is fixed.
offering to make the part for $5.70 per unit. If Emil accepts the offer, they will save all variable costs ($5.20) and $1 of fixed costs, for a total savings of $6.20 per unit.
The supplier is offering to make 19,400 parts, so Emil's total cost savings will be $6.20 per unit * 19,400 units = $48,500.
Here is a table showing the cost savings:
| Cost | Make | Buy | Savings |
|---|---|---|---|
| Unit cost | $8.20 | $5.70 | $2.50 |
| Number of units | 19,400 | 19,400 | |
| Total cost | $159,680 | $112,100 | $48,500 |
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In a cash flow calculation spreadsheet what is the sign (positive or negative) of each of the following: a) Net sales b) Fixed costs c) Depreciation d) Salvage value
a) Net sales: Net sales are typically represented as a positive value. Net sales represent the revenue generated from the sale of goods or services and contribute to the cash inflows of a business.
b) Fixed costs: Fixed costs are generally represented as negative values. Fixed costs are expenses that do not vary with the level of production or sales and are deducted from the revenue. They represent cash outflows for the business. c) Depreciation: Depreciation is typically represented as a negative value. Depreciation is an accounting method used to allocate the cost of an asset over its useful life. It is a non-cash expense but is subtracted from the revenue to reflect the decrease in the value of the asset. d) Salvage value: Salvage value is usually represented as a positive value.
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Bank reserves are not affected by
A. currency in circulation.
B. changes in reserve requirements.
C open market operation.
D. changes in the level of deposits of foreign banks at the Federal Reserve banks.
Bank reserves are not affected by currency in circulation. Therefore, the option A is the right answer.
Bank reserves are deposits kept by a commercial bank at the central bank that can be withdrawn only by the central bank. It implies that banks are required to hold a certain percentage of their deposits in reserve. It is a monetary policy tool that central banks use to keep liquidity in the market.
When the central bank purchases government bonds from commercial banks, it injects reserves into the banking system, expanding it. When it sells bonds to banks, it withdraws reserves from the banking system, causing it to contract.
Currency in circulation has nothing to do with the central bank's reserves. It is currency that is in the hands of the public rather than banks. Therefore, bank reserves are not affected by currency in circulation.
Therefore, a is correct.
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Samantha receives a starting salary offer of $105,000 for Year 1 . If inflation is 5% each year, what must her salary to be to have the same purchasing power in Year 5, Year 10 , Year 15, Year 20?
Considering an inflation rate of 5% annually, the adjusted salary amounts of Samantha for Year 5, Year 10, Year 15, and Year 20 are $134009.56, $171033.93, $218287.45, and $278596.25 respectively.
To calculate the adjusted salaries, we need to account for the cumulative effect of inflation over the years. The formula for calculating the adjusted salary based on inflation is:
Adjusted Salary = Starting Salary × (1 + Inflation Rate)ⁿ
Where n represents the number of years. Using this formula, we can calculate the adjusted salaries for each specified year:
Year 5:Performing the calculations, we can determine the specific adjusted salary amounts for each year, ensuring that Samantha's salary keeps pace with the inflation rate and maintains the same purchasing power over time.
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Jorge and Anita, married taxpayers, earn $168,400 in taxable income and $44,600 in interest from an investment in City of Heflin bonds. Using the U.S. tax rafe schedule for married filing jointly. how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Federal tax
Average tax rate
Effective tax rate
Marginal tax rate
Jorge and Anita, with a taxable income of $168,400 and interest income of $44,600, will owe a certain amount of federal tax. Their average tax rate, effective tax rate, and current marginal tax rate can also be determined.
The federal tax owed by Jorge and Anita can be calculated by applying the U.S. tax rate schedule for married filing jointly to their taxable income. The tax rates progressively increase as income rises. The calculation involves determining the tax owed for each bracket and summing them up.
To calculate the average tax rate, divide the total federal tax owed by their taxable income. It represents the average tax burden they face on their total income.
The effective tax rate is calculated by dividing the total federal tax owed by their total income, which includes both taxable income and interest income. It measures the overall tax burden as a percentage of total income.
The current marginal tax rate refers to the tax rate applied to the next dollar earned. It can be found by identifying the tax bracket that their taxable income falls into and determining the corresponding tax rate.
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Outline the OLI view of multinational firms. In these terms,
why is Nike not a "true" multinational?
Nike's reliance on outsourcing and lack of substantial ownership of physical assets in various countries limits its ownership and location advantages, making it less aligned with the characteristics of a "true" multinational according to the OLI framework.
The OLI (Ownership, Location, and Internalization) view of multinational firms, developed by John Dunning, explains the motives and strategies behind a company's decision to expand internationally.
According to this view, a multinational firm possesses three key advantages: ownership advantages, location advantages, and internalization advantages.
In the case of Nike, while it is a global brand with operations in multiple countries, it may not be considered a "true" multinational from the perspective of the OLI framework.
Nike's primary ownership advantage lies in its strong brand, innovative design capabilities, and extensive marketing expertise. However, it does not have substantial ownership of physical assets, such as manufacturing facilities, in most countries where its products are produced.
Nike relies heavily on outsourcing and offshoring manufacturing to third-party contractors, mainly located in developing countries with lower labor costs.
This implies that Nike lacks significant location advantages, as it does not directly control or own the resources or infrastructure in those countries. Instead, it leverages the location advantages of other firms.
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Which of the following is least likely to be considered a role of financial statement analysis?
A) To make economic decisions.
B) Assessing the management skill of the company's executives.
C) Determining whether to invest in the company's securities.
The option that is least likely to be considered a role of financial statement analysis is: B) Assessing the management skill of the company's executives.
While financial statement analysis can provide insights into the financial performance and position of a company, assessing the management skill of the company's executives is not its primary objective. Financial statement analysis focuses on evaluating the financial health, profitability, liquidity, and overall stability of a company based on its financial statements.
The primary roles of financial statement analysis are:
A) To make economic decisions: Financial statement analysis helps investors, creditors, and other stakeholders in making informed economic decisions. By analyzing financial statements, one can assess the company's financial health and potential risks, aiding in investment and lending decisions.
C) Determining whether to invest in the company's securities: Financial statement analysis is widely used to evaluate the attractiveness of investing in a company's securities, such as stocks or bonds. It helps investors gauge the company's financial performance, growth prospects, and overall value, assisting in the decision-making process.
While financial statement analysis may indirectly provide some insights into the management skill of the company's executives, it is not the primary focus of this analysis. Evaluating management skills typically involves a broader assessment that incorporates factors beyond financial statements, such as leadership, strategic decision-making, operational efficiency, and industry knowledge.
Therefore, assessing the management skill of the company's executives is least likely to be considered a direct role of financial statement analysis.
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The Bahraini government sold a plot of land to XYZ company. The
land was then leased to the government by XYZ company for a 5-year
period, which corresponded to the duration of the trust
certificates.
The transaction described indicates a sale and leaseback arrangement between the Bahraini government and XYZ company. Here's a breakdown of the process:
The Bahraini government sold a plot of land to XYZ company: In this step, the Bahraini government transferred ownership of the land to XYZ company through a sale transaction. XYZ company became the new owner of the land.
The land was leased to the government by XYZ company: After acquiring the land, XYZ company entered into a lease agreement with the Bahraini government. The government became the lessee, meaning they obtained the right to use the land for a specified period of time by making regular lease payments to XYZ company.
The lease duration corresponds to the duration of the trust certificates: The lease agreement between XYZ company and the government has a duration of 5 years, which aligns with the duration of the trust certificates. Trust certificates are financial instruments representing an ownership interest in the leased land, often used in Islamic finance.
This sale and leaseback arrangement allows the Bahraini government to continue using the land while transferring the ownership to XYZ company. It provides XYZ company with an income stream from lease payments, and the government gains the benefit of using the land without bearing the ownership responsibilities.
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Johnson & Johnson issues $1,000,000 6%, 10-year bonds on January 1, 2014 when the market rate is 5%. Interest is paid annually on December 31. What are the proceeds from issuing the bonds (the debit to cash at issuance)?
Johnson & Johnson issued $1,000,000 6% bonds for 10 years when the market rate was 5%, resulting in proceeds of approximately $1,115,337. The calculation considered the present value of interest payments and the face value of the bonds at the market rate.
To calculate the proceeds from issuing the bonds, we need to consider the face value of the bonds, the interest rate, and the market rate at the time of issuance.
In this case, Johnson & Johnson issued $1,000,000 worth of 6% bonds with a 10-year maturity on January 1, 2014, when the market rate was 5%. The interest is paid annually on December 31.
To determine the debit to cash at issuance (the proceeds), we need to calculate the present value of the future cash flows from the bonds. The future cash flows consist of both the periodic interest payments and the principal repayment at maturity.
Using the market rate of 5%, we can calculate the present value of the interest payments and the face value of the bond. Since the interest is paid annually, the interest payment each year is $1,000,000 * 6% = $60,000.
We can use the present value of an ordinary annuity formula to calculate the present value of these cash flows.
Using a financial calculator or spreadsheet, with an interest rate of 5%, a 10-year period, and a $60,000 annuity, the present value of the interest payments is approximately $501,424.
Next, we need to calculate the present value of the face value ($1,000,000) at the market rate of 5% for 10 years. Using the present value formula, we find that the present value of the face value is approximately $613,913.
Finally, we sum up the present value of the interest payments and the present value of the face value to get the total proceeds from issuing the bonds: $501,424 + $613,913 = $1,115,337.
Therefore, the debit to cash at issuance, or the proceeds from issuing the bonds, is approximately $1,115,337.
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A company has two potential Products to bring to the market. You estimate that First one will cost $55,608 up front to set up, whereas Second one will cost $48,767 up front. The expected cash flows from those two boot designs over the life of the boots can be found in the table below. Both projects have similar risks to current projects at the company therefore the appropriate discount rate for both projects should be our current WACC of 8.49%. Calculate the net present value of both projects, and enter in the box below, that is how much will the firms value increase if they are independant projects. (please enter the amount to the nearest penny). First one Second one Year 1 $18,402 $20,708 Year 2 $17,068 $15,154 Year 3 $12,947 $11,374 Year 4 $12,351 $8,504 Year 5 $10,774 $5,195
To calculate the net present value (NPV) of each project, we need to discount the expected cash flows using the appropriate discount rate and then sum them up. The NPV represents the increase in the firm's value if the projects are independent.
Using the provided cash flows and a discount rate of 8.49%, let's calculate the NPV for each project:
First project:
Initial cost = -$55,608
Year 1 cash flow = $18,402
Year 2 cash flow = $17,068
Year 3 cash flow = $12,947
Year 4 cash flow = $12,351
Year 5 cash flow = $10,774
Calculate the NPV for the first project using the provided cash flows and a discount rate of 8.49%.
Second project:
Initial cost = -$48,767
Year 1 cash flow = $20,708
Year 2 cash flow = $15,154
Year 3 cash flow = $11,374
Year 4 cash flow = $8,504
Year 5 cash flow = $5,195
Calculate the NPV for the second project using the provided cash flows and a discount rate of 8.49%.
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Which of the following statement is correct?
(A Prices of substitutes have no impact on the demand curve.
(B A change in population size can shift the demand curve.
C The Edgeworth-Bowley analysis assumes all market participants are irrational.
(D According to the Edgeworth hypothesis, at the exchange of commodities, each party will be better off.
(B) A change in population size can shift the demand curve. The correct statement is (B) - A change in population size can shift the demand curve.
Changes in population size can have a significant impact on the demand for goods and services. When the population increases, there is a larger consumer base, which can lead to an increase in demand for various products. As a result, the demand curve may shift to the right, indicating higher quantities demanded at each price level.
Option (A) is incorrect because prices of substitutes do have an impact on the demand curve. Substitutes are alternative goods that can be used in place of each other. When the price of a substitute increases, consumers may switch to the cheaper alternative, resulting in a decrease in the demand for the original good. This would lead to a leftward shift in the demand curve. Option (C) is incorrect because the Edgeworth-Bowley analysis does not assume that all market participants are irrational. The Edgeworth-Bowley box is a graphical representation used to analyze the potential gains from trade in a two-person, two-commodity exchange. It does not make assumptions about the rationality or irrationality of market participants.
Option (D) is incorrect because the Edgeworth hypothesis states that at the exchange of commodities, both parties can be made better off without making the other worse off. It focuses on the potential for mutually beneficial exchange and efficiency gains through voluntary trade. In summary, the correct statement is (B) - A change in population size can shift the demand curve. Changes in population can have a significant impact on the demand for goods and services, leading to shifts in the demand curve. The other options are incorrect based on the explanations provided.
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The multi-step income statement was learned in Chapter 5 . Which of the following items was not factored into calculating net operating income?
a. interest expense
b. total operating expenses
c. sales revenue
d. cost of goods sold
e. All of the revenue and expense items listed are factored into calculating net operating income on the multi-step income statement.
All of the revenue and expense items listed, including interest expense, total operating expenses, sales revenue, and cost of goods sold, are factored into calculating net operating income on the multi-step income statement.
The multi-step income statement is a financial statement that provides a detailed breakdown of the various components of a company's operating income. It includes multiple steps to calculate net operating income by considering different revenue and expense items.
The revenue items included in the multi-step income statement are sales revenue, which represents the total revenue generated from the sale of goods or services. This revenue is a significant factor in calculating net operating income.
The expense items included in the multi-step income statement are total operating expenses, which consist of various costs incurred in the normal operations of the business. These expenses include cost of goods sold, which represents the direct costs associated with producing the goods sold. It also includes other operating expenses such as salaries, rent, utilities, and marketing expenses.
Additionally, the multi-step income statement may include interest expense, which represents the cost of borrowing funds. While interest expense is not directly related to operating activities, it is still considered in determining net operating income.
Therefore, all of the revenue and expense items listed (interest expense, total operating expenses, sales revenue, and cost of goods sold) are factored into calculating net operating income on the multi-step income statement.
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Which of the following activities might you consider adding a time buffer to?
A. Activities with severe risks
B. Merge activities that are prone to delays
C. Activities with scarce resources
D. Noncritical activities with very little slack
E. You might consider adding a time buffer to any of these activities
While certain activities may have more apparent reasons for adding a time buffer, it is prudent to consider adding buffers to any activity within a project. Option E.
Adding a time buffer to activities is a common practice in project management to account for uncertainties, mitigate risks, and ensure the project stays on schedule. While specific activities can vary in terms of their characteristics and potential risks, any of the listed activities can benefit from the inclusion of a time buffer. Let's explore each option:
A. Activities with severe risks: Activities that involve high-risk factors, such as complex technical requirements, external dependencies, or regulatory compliance, can greatly benefit from a time buffer. The buffer provides additional time to address unexpected challenges, resolve issues, and minimize the impact of risks.
B. Merge activities that are prone to delays: Activities that have a history of delays or are dependent on other activities that are prone to delays should be considered for a time buffer. By allowing extra time, the project can accommodate potential delays and prevent downstream disruptions.
C. Activities with scarce resources: Activities that require scarce resources, such as specialized equipment, skilled personnel, or limited availability of materials, can benefit from a time buffer. A buffer allows for contingencies in case of resource unavailability or delays in obtaining necessary resources.
D. Noncritical activities with very little slack: Even noncritical activities that have little slack or flexibility can benefit from a time buffer. Unexpected events or delays in these activities can have a cascading effect on critical path activities, potentially impacting the overall project timeline. A buffer provides a cushion to absorb any unforeseen delays. Option E is correct.
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Describe three situations in which a purchaser might select a
supplier that is having financial difficulties. Explain your answer
with examples from real-world situations, your experience, or
examples
A purchaser might select a supplier that is having financial difficulties if they offer significantly lower prices, provide unique products or services, or if there are limited alternatives available in the market.
There are situations in which a purchaser might consider selecting a supplier that is experiencing financial difficulties. Although it is generally preferred to work with financially stable suppliers, there can be exceptions based on certain circumstances. Here are three situations where selecting a financially troubled supplier might be considered:
1. Unique Product or Expertise: If the supplier offers a unique product or possesses specialized expertise that is not readily available from other suppliers, a purchaser may choose to work with them despite their financial difficulties. In such cases, the value of the product or expertise outweighs the risks associated with the supplier's financial situation. For example, a company in the technology industry may rely on a financially struggling supplier for a critical component that no other supplier can provide. By doing so, they accept the risk to ensure they can continue delivering their product to the market.
2. Existing Relationship and Loyalty: In some cases, a purchaser may have an established relationship and loyalty with a supplier that is facing financial challenges. This relationship could be based on a long history of successful collaborations, shared values, or a mutual understanding of each other's business operations. Despite the financial difficulties, the purchaser may choose to support the struggling supplier to maintain the relationship and provide assistance during a difficult period. This can be seen in industries where long-term partnerships and trust play a significant role, such as the automotive industry, where manufacturers often support their suppliers during challenging times to ensure the continuity of the supply chain.
3. Bargaining Power and Negotiating Leverage: If a purchaser has strong bargaining power and negotiating leverage, they may see an opportunity to negotiate favorable terms and pricing with a financially troubled supplier. The supplier, in need of business and cash flow, may be more willing to offer discounts, extended payment terms, or other concessions to secure the purchaser's business. This situation can arise in industries where there are multiple suppliers competing for contracts and the purchaser can leverage the supplier's financial difficulties to their advantage.
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The next two questions apply to the information provided below: Yoyos and Us Ltd is analysing the performance of its cash management department. The store has an inventory turnover of 7.2, an average payment period of 40 days and an average collection period of 60 days. The store's annual outlay is R2 500000 (assume a 365-day year). The firm's cash conversion cycle is... 1. 50.69 days. 2. 60.31 days. 3. 70.69 days. 4. 110.69 days.
The firm's cash conversion cycle is 70.69 days.
The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and receivables back into cash. It provides insights into the efficiency of a firm's cash management and working capital practices. The CCC can be calculated by adding the average collection period (ACP) to the average payment period (APP) and subtracting the inventory turnover period (ITP).
In this case, the given information states that the inventory turnover is 7.2 times, the average payment period is 40 days, and the average collection period is 60 days. To calculate the CCC, we use the formula CCC = ITP + ACP - APP.
The inventory turnover period (ITP) is calculated as 365 days divided by the inventory turnover ratio. In this case, ITP = 365 / 7.2 = 50.69 days.
Substituting the given values into the formula, we have CCC = 50.69 + 60 - 40 = 70.69 days.
Therefore, the firm's cash conversion cycle is 70.69 days.
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