Answer:
The correct answer is letter "A": attempts to reveal why or how one variable produces changes in another.
Explanation:
Causal-explanatory research is conducted to identify cause-effect relationships between variables. This study focuses on analyzing events or specific problems to determine relationships with their effects.
In business, for instance, causal-explanatory research is useful to determine the influence of direct investment over a foreign country, the impact of re-branding in consumer's loyalty, or the impact of changing the current method of manufacturing in employees.
Final answer:
A causal-explanatory study aims to determine how one variable produces changes in another, establishing a cause-and-effect relationship through controlled experiments and causal mechanisms.
Explanation:
A causal-explanatory study is one that attempts to reveal why or how one variable produces changes in another. This kind of study is integral in establishing a cause-and-effect relationship between variables, allowing researchers to draw more definitive conclusions about causal relationships. In order to achieve this, an experimental research design must be utilized. Experiments are designed to test hypotheses in a controlled setting, with the goal to explain how certain factors or events produce outcomes. These experiments manipulate one variable (the independent variable) to observe changes in another (the dependent variable), establishing a causal link.
Experimental studies introduce a suspected causal factor to subjects and observe if the effect occurs, thereby ruling out other explanations for the correlation. This method is contrasted with correlational studies which can only establish a relationship between variables but cannot confirm causation. In causal case studies that employ causal mechanisms, the context is meticulously reviewed to understand how a hypothesized cause, in a given context, contributes to a particular outcome, strengthening the causal inference.
ABC sells 28 units for $50 each on December 15. Of the units sold, 14 are from the December 7 purchase and 14 are from the December 14 purchase. ABC uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Answer:
Closing inventory based on Specific IDENTIFICATION
7 Dec purchase ( 20-16) = 4 * $16 = $64
14 Dec purchase ( 35 -14) = 21*$24 = $504
21 Dec purchase 30*$29 = $870
closing inventory 31 Dec = $1438
Explanation:
The question is incomplete but here is a complete one
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $40 each.
Purchases on December 7 20 units @ $16.00 cost
Purchases on December 14 35 units @ $24.00 cost
Purchases on December 21 30 units @ $29.00 cost
Required:
Monson sells 30 units for $40 each on December 15. Of the units sold, 16 are from the December 7 purchase and 14 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Suppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utility company is taking advantage of consumers with unfair pricing policies.
Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?
a. Regulate the firm's pricing behavior.
b. Turn the company into a public enterprise.
c. Use antitrust laws to increase competition.
d. Do nothing at all.
Answer: Option B -- Turn the company into a public enterprise.
Explanation: Public enterprise can be defined as the type of organization, establishment or business that is fully or partly owned by the government but controlled by the public body/authority. Therefore, if the government wants to regulate the price of private company, which is duly imposed on the consumer, it's a must they go for public enterprise by turning the company into a public enterprise.
Suppose the government is trying to find out the private company that is taking advantage of the pricing policy and wants to control the pricing then it has to adopt certain measures.
The company is charging unfair pricing has to be turned into a public enterprise as in order to benefit the government and the people. The monopoly of the company will be destroyed and will get a public tag.Hence the option B is correct.
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the zero sum fallacy refers to a. You gaining only if someone else loses b. The allocation of the pieces of the total economic pie- if you eat the piece, I cannot consume it c. Ignores the possibility of the total pie growing itself d. All of the above
Answer:
The correct answer is letter "D": All of the above.
Explanation:
The zero-sum fallacy is an idea that states there is a fixed resource -usually, a compared to as a pie- implying the more on individual gets of that resource, the less other people will be able to get of the same resource. As a fallacy -false belief- the zero-sum discards the possibility of an individual sharing the resource by splitting it into different parts instead of exclusively using it. Thus, negotiation is left behind assuming the zero-sum fallacy.
Gordon has already worked 40 hours this week and is asked to come in to work again. Gordon is a manager who constantly has to make decisions about the business's operation. Is Gordon eligible for overtime pay?
Answer:No , he is not eligible for overtime pay.
Explanation:Who is Most Likely an Exempt Employee?
There are people who are exempt employees when it comes to qualifying for overtime pay due to their duties within the company.
Below is the list of exempt employees:
Senior management, corporate executives, company owners, company directors and similar white-collar executives are most often often exempt employees. Managers and supervisors who are responsible for making decisions on how work is performed , who set and oversee the financial aspects of the business , define pat level for employees,who are responsible for hiring all of these duties makes a manager exempt to overtime pay and we are told Gordon makes decisions about business's operation.
Answer:
Gordon is not eligible for overtime pay.
Explanation:
Based on the Fair Labor Standards Act (FLSA or Act), Gordon is the manager and have the right to make the decision which impacts on business operation. So, he will not be the one who will be covered and to be paid for overtime work.
Peterson Furniture Designs is preparing the annual financial statements dated December 31. Ending inventory information about the five major items stocked for regular sale follows:
Item Quantity Unit Cost Market Value LCM per Total LCM Recorded
on Hand When Acquired at Year Item Total Cost
(FIFO)
Alligator-
Armoires 70 $46 $41 $3,220
Bear-
Bureaus 85 80 80 6,800
Cougar-
Credenzas 10 90 92 900
Dingo-
Cribs 35 35 35 1,225
Elephant-
Dressers 400 15 12 6,000
Prepare the journal entry Peterson Furniture Designs would record on December 31 to write down its inventory to LCM/NRV.
Answer:
Journal entry
31 December Debit Inventory write_down (loss) 1550, Credit inventory 1550
Explanation:
Inventory is accounted for at the lower of cost or net realizable value. inventory write_ down is impairment a loss to the organisation
there can never be a gain when revaluing inventory, either it remains at cost or goes down with NRV
cost market write down
closing inventory calculation
Alligator ( 70 units) 3220 2870 350
Bear (85 units) 6800 6800 0
Cougar ( 10 units) 900 920 0
Dingo ( 35 units) 1225 1225 0
Elephant ( 400 units ) 6000 4800 1200
18145 16615 1550
COUGAR has a high market value so we value it at cost because it is the lower of the two.
The Journal entry will includes a Debit to Inventory write down (loss) for $1550 and Credit to inventory for $1550
What is Inventory?This is accounted for at the lower of cost or net realizable value.
The inventory write down is impairment and loss to the organisation
Particulars Cost Market Write down
Closing inventory calculation
Alligator (70 units) 3220 2870 350
Bear (85 units) 6800 6800 0
Cougar (10 units) 900 920 0
Dingo (35 units) 1225 1225 0
Elephant (400 units) 6000 4800 1200
Total 18145 16615 1550
In conclusion, the Journal entry will includes a Debit to Inventory write down (loss) for $1550 and Credit to inventory for $1550
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Compare the established EOQ/ROP procedure(described in case Exhibit 2) with the one that Jake and Josh are using. Which system do you prefer? What improvements do you recommend?
Answer:
EOQ means Economic Order Quantity
Reorder point means ROP
Explanation:
EOQ means Economic Order Quantity is total units of inventory that a company should purchase so as to minimize the total costs of inventory which are holding costs, order costs, and shortage costs.
The reorder point (ROP) is the level of inventory that calls for replenishment of that stock. That is, the lowest point a company can go on a particular stock before ordering .
I prefer and would recommend ordering optimal order quantity the point at which holding cost equals ordering cost at the reorder level= safety stock +(usage rate+ lead time)
Holding cost=Average inventory level*Holding cost
Ordering cost= Average number of order* ordering cost
Safety stock is stock held in excess of expected demand
Usage rate is an estimate rate of usage
Lead time is time between placing an order and receiving it.
The traditional EOQ/ROP system optimizes stock quantities to minimize costs, whereas alternative methods like JIT align production with demand and may be preferred in scenarios with high variability. Improvements to EOQ/ROP could involve incorporating real-time data analytics or adopting JIT principles in certain contexts.
The established EOQ/ROP (Economic Order Quantity/Reorder Point) procedure is a traditional inventory management system that determines the optimal order quantity to minimize total costs related to ordering, receiving, and holding stock. Jake and Josh appear to be implementing an alternative inventory method, potentially more flexible and adapted to their business model, although specific details of their method are not provided.
In other reading situations, such as in high variability or demand uncertainty contexts, different inventory management methods, like Just-In-Time (JIT) or demand-driven approaches, might be more appropriate. JIT, as described by Womack, Jones, and Roos (1990), emphasizes minimizing inventory and aligning production closely with demand, thus reducing holding costs and potentially increasing efficiency. This method could be particularly beneficial when quality is a critical concern. Improvements to the EOQ/ROP system could include integrating real-time data analytics to better forecast demand, enhancing the flexibility of the system, or adopting JIT principles in scenarios where they can provide substantial advantages over the traditional EOQ/ROP system.
You just won the lottery and the lottery commission will either give you $6 million as a lump sum, or 20 equal, annual payments of $500,000. Assume an interest rate of 6% per year, compounded annually. What should you do
Final answer:
To decide between the lump sum and the annuity, we calculate the present value of the annuity using the formula PV = PMT * [tex][(1 - (1 + r)^{-n}) / r][/tex]. With an interest rate of 6%, the present value of 20 annual payments of $500,000 is approximately $6,085,852, which is slightly higher than the $6 million lump sum.
Explanation:
To decide whether to take the $6 million lump sum or the 20 annual payments of $500,000, we need to calculate the present value of the annuity (the series of 20 payments). Present value analysis is a mathematical concept used to determine the equivalent value today of a series of future payments, given a specific interest rate.
The formula for the present value of an annuity is: PV = PMT * [[tex](1 - (1 + r)^{-n}) / r][/tex], where PMT is the annual payment ($500,000 in this case), r is the annual interest rate (6% or 0.06), and n is the number of years (20 years).
Plugging in the values, we get: PV = $500,000 * [(1 - (1 + 0.06)⁻²⁰) / 0.06]
Calculating the above, the present value of the annuity is approximately $6,085,852. If the present value of the annuity payments is more than the lump sum of $6 million, it would be better to choose the annuity payments, assuming the interest rate is reliable and stable. However, this decision also depends on personal factors such as the winner's age, financial stability, investment plans, and tax considerations.
You are buying a home for $360,000. If you make a down payment of $60,000 and take out a mortgage on the rest at 8.5% compounded monthly, what will be your monthly payment if the mortgage is to be paid off in 15 years
Answer:
$2954.22
Explanation:
We are given a present value of $360000 which needs to be paid in the future for the mortgage of a house therefore we are further told that $60000 of down payment has been made so now we are required to pay $300000 as monthly installments for the next 15 years so this is a present value annuity problem as we will have future regular periodic payments that for a house mortgage so firstly to interpret this information properly we will use the present value annuity to find the monthly payments which the formula is as follows:
Pv = Cx[(1 -(1+i)^-n)/i]
where C is the periodic payment we are looking for.
Pv is the present value for the home which is $300000 as a down payment of $60000 was made.
i is the interest rate which is 8.5%/12 as we are told it is compounded monthly.
n is the number of periods the in which the mortgage payments are made which is 15 years X 12 months =180 payments.
now we will substitute in the above mentioned formula :
$300000 = Cx[(1-(1+8.5%/12)^-180)/(8.5%/12)] now we will divide both sides with what multiplies C in brackets to solve for C
$300000/[(1-(1+8.5%/12)^-180)/(8.5%/12)] = C
$2954.218674 = C now we round off to two decimal places
C= $2954.22 which will be the monthly payment for this mortgage for 15 years every month.
On July 10, Boogie Footware agrees to a contract to sell 800 pair of flapper shoes for $16,000 to Twenties, Inc. On September 1, after 500 pair of have been delivered, Boogie and Twenties modify the agreement to reduce the price of the remaining 300 pair of flapper shoes to $10 a pair. During September, Boogie delivers 200 pairs of shoes. How much revenue will Boogie recognize for the month of September?
Final answer:
Boogie Footware will recognize a revenue of $7,000 for the month of September.
Explanation:
To determine the revenue that Boogie will recognize for the month of September, we need to calculate the revenue from the delivery of 200 pairs of shoes and the revenue from the modification of the agreement for the remaining 300 pairs of shoes. The revenue from the delivery of 200 pairs of shoes can be calculated by multiplying the number of pairs (200) by the agreed price per pair ($16,000 for 800 pairs of shoes, so $16,000/800 = $20 per pair). Therefore, the revenue from the delivery of 200 pairs of shoes is 200 × $20 = $4,000.
For the remaining 300 pairs of shoes, the price was reduced to $10 per pair. Therefore, the revenue from these shoes is 300 × $10 = $3,000.
So, the total revenue that Boogie will recognize for the month of September is $4,000 + $3,000 = $7,000.
For the month of September, Boogie Footware will recognize revenue of $2,000, as they delivered 200 pairs of shoes at the modified price of $10 per pair.
To determine the revenue Boogie Footware will recognize for September, let's break down the situation:
Initially, the contract price was $20 per pair (800 pairs for $16,000).
By September 1, Boogie had already delivered 500 pairs, so the revenue from these pairs was: $20 * 500 = $10,000.
The contract was then modified to reduce the price of the remaining 300 pairs to $10 per pair.
In September, Boogie delivered 200 pairs at the new price of $10 per pair: 200 pairs * $10 = $2,000.
Hence, for the month of September, Boogie Footware will recognize revenue of $2,000.
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacockrises from 300 rooms per night to 400 rooms per night. Therefore, the income elasticity of demand ispositive , meaning that hotel rooms at the Peacock area normal good . If the price of a room at the Grandiose were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacockfalls from 300 rooms per night to 250 rooms per night. Because the cross-price elasticity of demand isnegative , hotel rooms at the Peacock and hotel rooms at the Grandiose are substitutes . Peacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to decrease . Decreasing the price will always have this effect on revenue when Peacock is operating on theelastic portion of its demand curve.
The scenarios demonstrate the interplay of demand factors, price changes, and their impact on the number of rooms demanded and total revenue at the Peacock Hotel.
In the given scenarios:
An increase in average household income from $50,000 to $55,000 results in an increase in the quantity of rooms demanded at the Peacock from 300 to 400 rooms per night. This indicates a positive income elasticity of demand, classifying hotel rooms at the Peacock as normal goods.
If the price of a room at the Grandiose decreases by 10% from $250 to $225, and the quantity of rooms demanded at the Peacock falls from 300 to 250 rooms per night, it suggests a negative cross-price elasticity of demand. This implies that hotel rooms at the Peacock and the Grandiose are substitutes.
Peacock is contemplating reducing the price of its rooms to $175 per night. Given the initial demand conditions, this would lead to a decrease in its total revenue. This outcome occurs when Peacock is operating on the elastic portion of its demand curve.
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Peacock's rooms are normal goods with positive income elasticity. They are substitutes for Grandiose, with elastic demand, so price cuts reduce revenue.
In the given scenarios, we are analyzing the demand elasticity and market conditions for rooms at the Peacock hotel. Let's break down each scenario:
1. Income Elasticity of Demand: When average household income increases by 10% and the quantity of rooms demanded at the Peacock rises from 300 to 400 rooms per night, this indicates a positive income elasticity of demand. In other words, as consumers' incomes increase, they are willing to spend more on hotel rooms, considering them a normal good.
2. Price Elasticity of Demand for Peacock Rooms: When the price of a room at the Grandiose hotel decreases by 10% and the quantity of rooms demanded at the Peacock falls from 300 to 250 rooms per night, this suggests a negative cross-price elasticity of demand. Hotel rooms at the Peacock and Grandiose are substitutes, meaning that when the price of a substitute (Grandiose) decreases, demand for Peacock rooms decreases.
3. Price Reduction and Total Revenue: Peacock is contemplating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, decreasing the price will lead to a decrease in total revenue. This is because Peacock is operating on the elastic portion of its demand curve.
In summary, Peacock's rooms are considered normal goods, and they are in competition with Grandiose, with consumers viewing them as substitutes. To maximize revenue, Peacock should be cautious when reducing prices, especially when operating on the elastic portion of the demand curve, as it may lead to a decrease in total revenue.
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example, in the economics of Jean-Baptiste Say). _______4.The marginal propensity to consume is the change in consumption expenditure divided by the change in disposable income. _______5.If the MPC is 0.8, the marginal propensity to save will be 0.4. _______6.In a Keynesian macroeconomic model, private savings will equal the sum of private investment, the government budget deficit, and the international current account surplus. _______7. When the economy is in Keynesian macroeconomic equilibrium, planned investment is equal to actual investment. _______8.The larger the MPS, the smaller the Keynesian government spending multiplier. _______9.If the MPC is 0.75, the Keynesian government spending multiplier will be 4/3; that is, an increase of $ 300 billion in government spending will lead to an increase in GDP of $ 400 billion. _______10. If the MPC is 0.75, the lump-sum tax multiplier will be -4, that is, an increase in taxes of $ 100 "answers"
Answer:
4.The marginal propensity to consume is the change in consumption expenditure divided by the change in disposable income. _______
FALSE Is related to the change in income not disposable income.
5.If the MPC is 0.8, the marginal propensity to save will be 0.4. _______
FALSE As person can either consume or saved this two should add to 1
6.In a Keynesian macroeconomic model, private savings will equal the sum of private investment, the government budget deficit, and the international current account surplus.
TRUE The current account surplus
Savings = Investment + Budget deficit + net exports
The net exports cover the budget deficit
7. When the economy is in Keynesian macroeconomic equilibrium, planned investment is equal to actual investment. _______
TRUE There is no unplanned investment for unsold goods
8.The larger the MPS, the smaller the Keynesian government spending multiplier. _______
FALSE
The formula for the multiplier is:
1 / (1 - marginal propensity to consume) =
1 / Marginal propensity to save
Asthe MPS increases it gets closer to 1 thus, decreasing the multiplier
9.If the MPC is 0.75, the Keynesian government spending multiplier will be 4/3; that is, an increase of $ 300 billion in government spending will lead to an increase in GDP of $ 400 billion. _______
FALSE 1/(1-0.75) = 1/0.25 = 4
300 X 4 = 1,200 BILLONS
10. If the MPC is 0.75, the lump-sum tax multiplier will be -4, that is, an increase in taxes of $ 100billion will lead to a drop in GDP of $ 400 billion
FALSE
The tax multiplier is -MPC / (1 - MPC)
-0.75 / (1 - 0.75) = -0.75 / 0.25 = -3
Then 100 x -3 = -300 billon decrease
Explanation:
Consumption expenditures increase with national income because individuals spend a certain ratio of additional income, known as the Marginal Propensity to Consume (MPC), on consumption. The Marginal Propensity to Save (MPS) is what remains and the sum of MPC and MPS always equals 1.
Explanation:Understanding Marginal Propensity to Consume and Save
As national income rises, individuals have more disposable income, which they can either consume or save. The marginal propensity to consume (MPC) is a measure of the proportion of additional income that is spent on consumption. Similarly, the marginal propensity to save (MPS) represents the portion of additional income that is saved. The relationship between MPC and MPS can be expressed as MPC + MPS = 1.
Consumption Expenditures
To understand how consumption expenditures increase with national income, consider the MPC. If an individual receives an extra dollar of income and the MPC is 0.9, they will spend 90 cents on consumption. Conversely, if the MPS is 0.1, they will save 10 cents.
Calculating Consumption
For example, if a person’s after-tax income is $1000 and the MPC is 0.9, the calculation for consumption would be 0.9 * $1000 = $900. This means that $900 out of that additional $1000 in income would be devoted to consumption expenditures.
The reserve ratio is the____________.A. Percentage of excess reserves held by banks.B. Fraction of deposits that banks hold as excess reserves.C. Number of deposit dollars the banking system canD. Percentage of total deposits that are held as bank reserves.
Answer:
D. Percentage of total deposits that are held as bank reserves.
Explanation:
The reserve ratio is the percentage of total deposits that are held as bank reserves. They are very important tools for controlling the financial market by the central bank.
If the reserve ratio or cash reserve ratio is lowered by the central bank, there is more money and commercial banks can disburse out more loans. When the central bank wants to control inflation due to high amount of money in the economy, it will increase the reserve ratio.If interest rates are at the zero lower bound:A. the effectiveness of monetary policy increases. B. monetary policy is not very effective. C. automatic stabilizers don't work. D. monetary policy is more effective than fiscal policy
Answer:
B. monetary policy is not very effective
Explanation:
The zero lower bound is similar; lower bounds and is macroeconomic problems and this occurs when the short terms nominal interest rate is an at the near top the liquidity trap and is issues of the paper currency by the government and effective guarantee zero of normal interest rates acting as an interest rate floor. The Zero interest rate is also referred to as the lower limit of the 0% for a short term rate beyond which monetary policy is not very effective.Your financial adviser recommends buying a 10-year bond with a face value of $1,000 and an annual coupon of $80. The current interest rate is 7 percent. What might you expect to pay for the bond (aside from brokerage fees)?
Answer:
I will pay $1070.24 for the Bond.
Explanation:
Coupon payment = = $80
Number of years = n = 10 years
Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond =$80 x [ ( 1 - ( 1 + 7% )^-10 ) / 7% ] + [ $1,000 / ( 1 + 7% )^10 ]
Price of the Bond = $80 x [ ( 1 - ( 1.07 )^-10 ) / 0.07 ] + [ $1,000 / ( 1.07 )^10 ]
Price of the Bond = $561.89 + $508.35
Price of the Bond = $1,070.24
To determine the price of the bond, you need to calculate the present value of the annuity and the present value of the face value at the end of the 10-year period using the given interest rate. Then, add these two present values together to find the price of the bond.
Explanation:To calculate the price of the bond, we need to find the present value of the future cash flows. The annual coupon payment of $80 can be viewed as an annuity with a 10-year duration. Using the formula for the present value of an annuity, we can calculate the present value of the coupon payments. Additionally, we need to calculate the present value of the face value of the bond at the end of the 10-year period. By discounting each cash flow using the 7 percent interest rate, we can determine the price of the bond.
Using the present value of annuity formula:
PV = C * [(1 - (1+r)^(-n))] / r
where PV is the present value, C is the annuity payment ($80), r is the interest rate (0.07), and n is the number of periods (10).
Using the present value of a single cash flow formula:
PV = F / (1+r)^n
where PV is the present value, F is the future value ($1,000), r is the interest rate (0.07), and n is the number of periods (10).
Calculating both the present value of the annuity and the present value of the single cash flow, we can add them together to find the price of the bond. The expected price of the bond, aside from brokerage fees, would be the sum of these two present values.
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Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. What constraints on investments for new businesses apply here?
Answer:
I can see that there are no choices.
Liquidity Constraint and Time Horizon Constraint
Explanation:
"Investment constraints" refer to the factors which restricts the investor into accessing some investment options. This could be classified into two: internal and external.
Liquidity Constraint is common for businesses and this is related to the "cash outflows." Since he is just starting a business, it would be better if he considers this so he'd value assets which can be converted into cash, without affecting the value of the portfolio.
Time Horizon Constraint is necessary because Bernie needs to know the time for the returns of investment. This classifies the investments into short-term or long-term.
New businesses face constraints when raising capital, especially from non-accredited investors, due to SEC regulations. Common sources of start-up capital include personal savings, angel investors, and venture capital. Established firms secure loans more easily due to their financial history.
Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. New businesses face several constraints when raising capital, particularly from non-accredited investors.
According to SEC regulations, companies can only raise a limited amount of money from non-accredited investors, and there are specific disclosure requirements to protect these investors.
Accredited investors, on the other hand, have fewer restrictions because they meet certain income or net worth thresholds.
Start-up firms commonly raise financial capital through various means:
Personal Savings: The business owner may use personal savings or other personal financial resources.Angel Investors: Wealthy individuals may invest in early-stage companies in exchange for equity.Venture Capital: These firms invest large sums in exchange for partial ownership and influence over company decisions.Relying solely on profits is not feasible initially because new firms often lack sufficient income to cover significant upfront costs. Well-established firms find it easier to secure loans because they have a proven track record and financial stability.
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods.
Run-of-the-Mills provides your marketing firm with the following data:
When the price of penguin patties increases by 5%, the quantity of flopsicles sold decreases by 4% and the quantity of kipples sold increases by 5%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price elasticity between penguin patties and flopsicles, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.
Relative to Penguin Patties Relative to Penguin Patties Recommend Marketing-
with Penguin Patties
Cross-Price Elasticity- Complement or Substitute
of Demand
Flopsicles
Kipples
Solution:
↑P_penguin patties 5 %
↓Q_flopsicles 4%
↑Q_kipples 5%
[tex]\frac{Change Quantity}{Change Price}[/tex] = Cross price elasticity
-0.04/0.05 = -0.8 penguin patties to flopsicle
A drop in demand for the second commodity shall be responded by a smaller amount.
This means that when penguin patties reduce prices, people make decisions to purchase them when they are flopsicle.
0.05/0.05 = 1
The price reduction produces more kipple length.
This is an additional link even though consumers buy kipples with the difference or use part of the saving for the purchase of kipples because while the price decline.
Final answer:
The cross-price elasticity of demand for penguin patties and flopsicles is -0.8, indicating they are complements, while penguin patties and kipples have a cross-price elasticity of 1.0, indicating they are substitutes. Run-of-the-Mills should market flopsicles and penguin patties together as they are complementary products.
Explanation:
To compute the cross-price elasticity of demand, we look at the percentage change in the quantity demanded of one product in response to a percentage change in the price of another product. When considering Run-of-the-Mills' products, we find that with a 5% increase in the price of penguin patties, the quantity of flopsicles sold decreases by 4%. This gives us a cross-price elasticity of demand formula (% change in quantity demanded of Product B)/(% change in price of Product A), which in this case is (-4%)/(5%) or -0.8 for flopsicles.
Similarly, a 5% price increase in penguin patties results in a 5% increase in the quantity of kipples sold, resulting in a cross-price elasticity of demand of (5%)/(5%) or 1.0 for kipples.
Since the cross-price elasticity of demand for penguin patties and flopsicles is negative, they are complements in consumption. For penguin patties and kipples, the positive cross-price elasticity indicates that they are substitutes. Based on this analysis, Run-of-the-Mills should market flopsicles and penguin patties together to capitalize on the complementary relationship, as consumers are likely to purchase them together.
On April 1, 2018, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2018. Amy paid the full amount of property tax of $2,500. Calculate both Paul and Amy’s allowable deductions for the property tax. Assume a 365-day year. (Do not round your intermediate calculations. Round your final answers to two decimal places.)
Answer:
Paul = $616.44
Amy = $1883.56
Explanation:
Given
Full Amount = $2,500
There are 90 days between January 1, 2018 and April.
Calculating the amount generated by Paul;
Paul = $2,500 * 90/365
Paul = $616.4383561643835
Paul = $616.44 ---- Approximated
There are (365-90)days left after April 2, 2018 till December 31, 2018
Calculating Amount Generated by Amy
Amy = $2,500 * (365-90)/365
Amy = $2,500 * 275/365
Amy = $1883.561643835616
Amy = $1883.56 --- Approximated
That is the total allowable deduction for Paul and Amy
In a criminal tax case, Darth Vader was charged with several counts of tax evasion and filing a false income tax return, stemming from his diversion of funds from Jedi, Inc., a closely held corporation of which he was president, founder, and controlling shareholder. At trial, the U.S. sought to establish that Vader had received taxable income by systematically diverting funds from Jedi to support a lavish lifestyle. Vader gave millions of dollars of Jedi money to his mistress and millions of dollars to his wife, without reporting any of this money on his personal income tax returns. Vader siphoned off money primarily by writing checks to his employees and friends and having them return the cash to him, by diverting payments by Jedi customers, by submitting fraudulent invoices to Jedi and by laundering Jedi money through shell companies in Panama and St. Kitts-Nevis. In his defense, Vader sought to introduce evidence that Jedi had no retained earnings or current earnings or profits in the relevant taxable years. What result under §7201?
Answer:
Safeguard of Darth isn't suitable in light of the fact that he methodically redirected all the assets of Jedi misguidedly for reason for sidestepping charges. In this way the every one of those assets being referred to will be considered while ascertaining the tax pay of Jedi.
From that point forward, it very well may be presumed that the Jedi has any current winning/Retained acquiring or not.
in the event that Darth discovered guilty,under sec.7201 he will be at risk to punishment, intrigue and arraignment charges
A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, what should be the coupon rate offered if the bond is to trade at par?
Answer:
8% coupon rate would make the bond trade at par
Explanation:
To confirm the above ,I prepared a present value table with ytm at 8% and annual coupon at 8%, the resulting present value is $1000 the par value of the bond
The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: what is the net present value of the cash flows assocaited with the purchase alternatives
Answer:
NPV = -$149,319.44
Explanation:
Ten cars will be needed, which can be purchased at a discounted price of $18,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole:
Annual cost of servicing, taxes and licensing $5,100 Repairs, first year $3,000 Repairs, second year $5,500 Repairs, third year $7,500the required rate of return or discount rate for Riteway is 20%.
Cash flows:
CF₀ = -$180,000
CF₁ = -($5,100 +$3,000) = -$8,100
CF₂ = -($5,100 + $5,500) = -$10,600
CF₃ = ($9,000 X 10) - ($5,100 + $7,500) = $90,000 - $12,600 = $77,400
using an excel spreadsheet, we can calculate the NPV with r = 20%
NPV = -$180,000 + $30,680.56 = -$149,319.44
On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 330,000 rubles in four months (on January 31, 2018) and receive $115,500 in U.S. dollars. Exchange rates for the ruble follow:Date Spot Rate Forward Rate (to January 31, 2018)October 1, 2017 $ 0.35 $ 0.39 December 31, 2017 0.38 0.41 January 31, 2018 0.40 N/ASharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31.
Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 100,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract.
Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 100,000 ruble sale that will be made on January 31, 2018. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured by referring to changes in the forward rate.
Solution:
Date Account tides Debit (S in ruble) Credit (S in ruble)
and Explanation
Oct 1 Accounts receivable 96,600
Sales
( 210,000 ruble x $0.46) 96,600
Dec 31 Accounts receivable
( 50.49-50.46) x (210,000 ruble) 6,300
Foreign Exchange gain 6,300
Loss on forward contract 2079,21
Forward Contract
(50.52-50.51) x 210,000 ruble =2,100
2,100 x 0.9901= $2079.21 2079.21
Jan31 Accounts receivable (LC U) 4,200
Foreign exchange gain
(50.51-50.49) x 210,000 ruble 4200
Foreign currency 107,100
Accounts receivable
(596.600-56,300-54,200) 107,100
Cash 107,100
Foreign cuuency (LCU)
($0.51 x210.000 ruble) 107,100
"In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits"
Answer:
b. constant returns to scale because average total cost is constant as output rises.
Explanation:
The question has options. Below is the complete question.
Complete Question
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises.
b. constant returns to scale because average total cost is constant as output rises.
c. diseconomies of scale because average total cost is rising as output rises.
d. economies of scale because average total cost is falling as output rises.
The correct answer is explained below.
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits constant returns to scale because average total cost is constant as output rises.
Answer:
The answer is Constant returns to scale
Explanation:
Constant returns to scale is when a firm changes its inputs (labour or capital) and these changes lead to a proportionate increase or decrease in output. For example, when the total cost incurred to produce kayaks was $15,000, output was 30kayaks. The input to output ratio is 500(15,000÷30)
And when the total cost incurred to produce kayaks was increased to $20,000, output was 40kayaks. The input to output ratio is still 500(20,000÷40)
You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be SF 15 million. The cash flows from the project would be SF 4.4 million per year for the next five years. The dollar required return is 15 percent per year, and the current exchange rate is SF 1.09. The going rate on Eurodollars is 5 percent per year. It is 4 percent per year on Euroswiss. Use the approximate form of interest rate parity in calculating the expected spot rates.
Answer:
SF7.37
Explanation:
PV of cash flow is calculated using the formula
1-(1+r)^-n/r=1-(1-0.15)^5/0.15=1-(0.75)^5/0.15=1-0.237/0.15=5.085
So pv=5.085×4.4=SF
20.3385million
Using interest parity
1+ic/1+ib =Fo/So
Counter country is US while home country is in
swiss
1+0.05/1.04=fo/1.09
Fo=1.09×1.05/1.04=1.1
So expected PV=20.3385×1.1=SF22.37235million
Profit=23.37235-15=SF7.37
Answer:
1.1434
Explanation:
To calculate the future spot rates we will use the Interest rate parity
E(S)= S0*(Fr/Dr)^t
year 1=109*(1.05/1.04)^1=1.1005
=1.09(1.05/1.04)^2=1.1111
=1.09(1.05/1.04)^3=1.1217
=1.09(1.05/1.04)^4=1.1325
=1.09(1.05/1.04)^5=1.1434
What annual rate of return is earned on a $1,000 investment when it grows to $2,300 in six years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
14.89%
Explanation:
Present value: $1,000
Future value: $2,300
Tenor = 6 years
FV = PV * (1+ rate) ^tenor
⇔2,300 = 1,000 * (1 + rate) ^6
⇔(1+rate)^6 = 2300/1000 = 2.3
⇔ 1+ rate = 2.3^(1/6) = 1.1489
=> Rate = 1.1489-1 =0.1489 = 14.89%
Final answer:
To find the annual rate of return on a $1,000 investment that grows to $2,300 in six years, the formula for compound interest is used. The calculation reveals that the investment earns an annual rate of return of 18.00%, rounded to two decimal places.
Explanation:
The question asks what annual rate of return is earned on a $1,000 investment when it grows to $2,300 in six years. To solve this, we will use the formula for compound interest: A = P(1 + r)^n, where A is the amount of money accumulated after n years, including interest, P is the principal amount (initial investment), r is the annual interest rate, and n is the number of years.
Plugging in the given values into the formula, $2,300 = $1,000(1 + r)^6, we need to solve for r. Re-arranging the formula gives us 1 + r = ($2,300/$1,000)^(1/6). This simplifies down to 1 + r = 2.3^(1/6).
Calculating the sixth root of 2.3 and subtracting 1 gives us the value of r, which is the annual rate of return. After solving, r = 0.18 or 18.00% when rounded to two decimal places.
Of all customers purchasing automatic garage door openers, 75% purchase chain-driven model. Let X = the number among the next 15 purchasers who select the chain-driven model. a. What is the frequency function (pmf) of X?
Answer:
[tex]P(X=x)=C(15,x)\cdot(0.75)^x\cdot(0.25)^{(15-x)}[/tex]
Explanation:
The probability mass function (PMF), or frequency function, is the function that gives the probabilities that a discrete random variable take some values.
In this problem, it is requested the frequency function (PMF) for the number of purchasers, among the next 15, who select a chain-driven model.
Then , you need to find, the function that gives P(X=0), P(X=1), P(X=2), P(X=3), . . . up to P(X=15).
Such as any function, the frequency function can be presented as a formula, as a table, or as a graph.
Note that the statement represents a binomial disbribution in which success is that a customer select a chain-driven model and the fail is that a cusotmer does not select a chain-driven model.
The binomial probability for X = the number among the 15 purchasers who select the chain-driven model is given by the formula:
[tex]P(X=x)=C(n,x)\cdot(p)^x\cdot(1-p)^{(n-x)}[/tex]
Where:
[tex]C(n,x)=\dfrac{n!}{x!(n-x)!}[/tex] n is the number of times the experiment is performed: 15 in our problem p is the probability of succes: 0.75 in our problem1-p is the probability of fail: 0.25 in our problemThen, substitute:
[tex]P(X=x)=C(15,x)\cdot(0.75)^x\cdot(0.25)^{(15-x)}[/tex]
That is the frequency function.
If you want to give it as a table you must find P(X=1), P(X=2), P(X=3), . . . up to P(X=15) using that function. That is not part of the question.
Classify each of the following based on the macroeconomic definitions of saving and investment.
A.Ginny buys new bulldozers for her construction firm.
B.Eric purchases a certificate of deposit at his bank.
C.Kenji takes out a mortgage for a new home in Detroit.
D.Lucia purchases stock in Pherk, a pharmaceutical company.
Answer and explanation:
Saving implies setting an amount of money of your income aside and put it into a bank account or store it somewhere considered safe. If deposited in a bank the money gains interest, thus, there will be a relative increase in the initial sum deposited.
Investing implies providing money to a third party or using that money personally to start up a venture. In such cases, there is a risk that the investment could be lost.
Thus:
A) Ginny buys new bulldozers for her construction firm. (Investment)
B) Eric purchases a certificate of deposit at his bank. (Saving)
C) Kenji takes out a mortgage for a new home in Detroit. (Investment)
D) Lucia purchases stock in Pherk, a pharmaceutical company. (Saving)
Michael's Yoga Studio have been entering bills for their purchases as they come in. They pay multiple bills once a week. They use Bank Feeds to record these transactions, posting to Cost of Goods Sold. They are an accrual-based company. What is best practice to remedy this with a minimum amount of work
Answer: They could either use the Income and expenditure or purchases journal too.
Explanation: Because its a Yoga Studio, lots of expenses will be made and appropriate postings are to be entered on time.
Answer:
By using the purchase journal.
Explanation:
A purchase journal is an accounting journal used to keep record of items ordered through the use of account payable. Simply put, a purchase journal is the primary entry book used in recording credit transactions.
A purchases journal is the record of every acquisition made on credit at a particular period. It is a journal used for tracking the requests placed using accounts payable or vendor credit including the current balance indebted each vendor.
A purchase journal has different columns for recording the date, vendor's name, invoice number, invoice date, particulars, vendor's account, credit terms, and total.
What are some of the primary reasons a company decides to expand internationally? Identify a company in the news that has recently built a new overseas facility. Which of the three motivations for global expansion described in the chapter do you think best explains the company’s decision? Discuss.
Answer:
Primary reasons a company would decide to expand internationally are as follows:
Expanding markets and increasing sales are one of the primary reasons. Companies get globalized in order to become a market leader. The company may choose to enter into international market in order to diversify a company's product line. Markets and investments would be protected by companies once they enter into international market and get engaged in an international business. Controlling the expenses is again one of the most important reasons. Company would buy the resources to gain cost advantage. For example, the company which is located in Canada gets most of their resources from China; the company would look forward to get situated near China. Another reason would be, to get protected from their competitors or to gain advantage over them; the company would decide to expand internationally.
The three motivational factors that induce a company to go global are as follows:
Economies of Scale — The advantage that a company gain through mass production to achieve the lowest possible production cost per unit. Economies of scope — The advantage that a firm gains by producing different varieties of products and services and at different regions. Low-Cost Production Factors — It is an opportunity to purchase the resources at the lower possible cost.Jaguar Land Rover decided to manufacture cars outside the UK for the first time. In recent years, it has rapidly expanded in its home UK and the company is planning to go to Brazil and implement the strategies that they had implemented in India.
Jaguar Land Rover moves to other countries to gain the opportunity of producing at a lower price and to gain economies of scale.
Companies expand internationally to seek new markets, achieve economies of scale, and utilize cheaper labor and materials. The motivation behind setting up an overseas facility could be to capitalize on differences in technology, demand, or government trade policies.
Explanation:Primary Reasons for International Expansion
Companies decide to expand internationally for several key reasons, including the pursuit of new markets, economies of scale, and the need for access to raw materials or cheaper labor. These factors can lead to horizontal integration in the business's value chain. A recent example in the news could be a tech company opening a new overseas facility to utilize local talent and reduce production costs due to cheaper labor in the region.
Technology advancements and globalization have allowed businesses to operate seamlessly across borders, which can lead to cultural and societal changes within host communities. A company's motives for expansion may align with aims to exploit differences in technology, resource endowments, consumer demand, or to take advantage of the presence of government policies that favor trade.
Ultimately, the motivations for a company to build a new overseas facility may include accessing new customer bases, achieving cost efficiencies, or gaining a competitive advantage in the industry. Whether a company’s decision is most influenced by technological benefits, economic strategies such as economies of scale, or strategic market positioning, it largely depends on the unique goals and circumstances surrounding the international expansion.
A stock has an expected return of 11.9 percent, its beta is .94, and the risk-free rate is 5.95 percent. What must the expected return on the market be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Market expected return %
Answer:
The market expected return is 12.28%
Explanation:
According Miller and Modgliani Capital Asset Pricing Model,the expected return on a stock is given by the formula below:
Ke=Rf+Beta(Market expected return-Rf)
Rf is the risk free-rate of return
Ke=11.9%
Beta=0.94
risk-free rate of return=5.95%
11.9%=5.95%+0.94(MER-5.95%)
11.9%=5.95%+0.94MER-5.593 %
11.9%=0.357 %+0.94MER
11,9%-0.357%=0.94MER
11.543 %=0.94MER
MER=11.543%/0.94
MER=12.28%
The market expected rate having Miller and Modgiliani CAPM formula is 12.28%
Frankie's Chocolate Co. reports the following information from its sales budget: Expected Sales: July $ 90,000 August 110,000 September 120,000 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:A) $ 78,000 B) $ 108,000 C) $ 120,000 D) $ 130,500
Answer:
B) $ 108,000
Explanation:
September cash sales
(25% * $120,000) = $ 30,000
August credit sales
(75% * $104,000) = $78,000
Cash collected in September is
$ 108,000