Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing, or no wing at all. If the population of Lowell continues to grow, a large wing could return $150,000 to the hospital each year. If a small wing were built, it would return $100,000 to the hospital each year if the population continues to grow. If the population of Lowell remains the same, the hospital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. Unfortunately, Suit does not have any information about the future population of Lowell.
a. Assuming that each state of nature has the same likelihood, determine the best alternative? What is the EMV?
b. If the likelihood of growth is .4 and that of remaining the same is .6 and the decision criterion is expected monetary value, which decision should Suit make? What is the EMV?
c. Based on the answer in letter b, what is the EVPI?
Answers
Answer:
A: The best alternative = Build Large Wing with $32500 EMV
B: The best alternative = Build small wing with $13000 EMV
C: EVPI = $47000
Note: Solutions are provided in the pictures.
Explanation:
What is EMV? In simple words, EMV calculations let you know that how much money you will got from different decisions you have on table.Formula to calculate EMV = (Payoff of 1st state of nature) * (Probability of 1st state of nature) + (Payoff of 2nd state of nature) * (Probability of 2nd state of nature)
EVPI is calculated when you have perfect information about any outcome, it also provides the value of the perfect information i-e how much you should pay to findout the perfect information.Formula to calculate EVPI = EVwPI - Max EMV
Formula to calculate EVwPi = (Best outcome or consequence for 1st state of nature) * (Probability of 1st state of nature) + (Best outcome for 2nd state of nature) * (Probability of 2nd state of nature)A) Solution is in the attached image with (Table 1) mentioned on it.
B) Solution is in the attached image with (Table 2) mentioned on it.
C) Solution is in the attached image with (Table 3) mentioned on it.
The best alternative for Lowell Hospital is to build a large wing, as it has the highest expected monetary value (EMV). Even when considering the likelihood of growth and remaining the same, the decision remains to build a large wing. The expected value of perfect information (EVPI) is $24,000.
Explanation:The decision on whether to build a large wing, small wing, or no wing at all at Lowell Hospital depends on the future population growth of Lowell. Assuming each state of nature has the same likelihood, we can calculate the expected monetary value (EMV) for each decision. If the population continues to grow, the EMV for a large wing is $150,000 and for a small wing is $100,000. If the population remains the same, the EMV for a large wing is a loss of $85,000 and for a small wing is a loss of $45,000. Based on these calculations, the best alternative is to build a large wing, as it has the highest EMV.
If we consider the likelihood of growth being 0.4 and remaining the same being 0.6, and the decision criterion is expected monetary value, the decision would still be to build a large wing. The EMV for a large wing in this case is calculated as (0.4 * $150,000) + (0.6 * -$85,000) = $46,000. The EMV for a small wing is (0.4 * $100,000) + (0.6 * -$45,000) = $22,000. Therefore, the decision should still be to build a large wing.
The expected value of perfect information (EVPI) is the maximum EMV minus the EMV without perfect information. In this case, the maximum EMV is $46,000 (for building a large wing assuming the growth likelihood is 0.4). Without perfect information, the EMV for a large wing is $46,000 and the EMV for a small wing is $22,000. Therefore, the EVPI is $46,000 - $22,000 = $24,000.
Related Questions
Your client doesn’t want to pay a monthly fee for their QuickBooks Payments merchant account. What other option is available to them, and where in QuickBooks Online can they sign up for QuickBooks Payments?
Answers
Answer:
If my client doesn’t want to pay a monthly fee for their QuickBooks Payments merchant account, another available option for them is to select a plan in which they would not have to pay monthly fees that have a higher rate per transaction; this option is available in the accounts and setting payment tab.
Answer:
1. The other options available are:
(a) QuickBooks Online Pricing - PAY AS YOU GO
(b) QuickBooks Desktop Pricing - PAY AS YOU GO
2. Through the "Settings" tab, then "Account and Settings " tab or link
Explanation:
Given that my clients doesn’t want to pay a monthly fee for their QuickBooks Payments merchant account, the other options available are:
(a) QuickBooks Online Pricing - PAY AS YOU GO: here the pay-as-you-go plan charges no monthly fee 2.40% plus $0.25 per swipe transaction and 3.40% plus $0.25 per keyed-in card transaction.
(b) QuickBooks Desktop Pricing - PAY AS YOU GO: this plan also charges no monthly fee of 2.40% plus $0.30 per swipe transaction and 3.50% plus $0.30 per keyed-in card transactions and invoices.
2. Through the "Settings" tab, then "Account and Settings " tab or link.
To do this one will have to follow this process:
(a). Sign in to QuickBooks Online as an admin.
(b). Select Settings
(c) Select Account and Settings.
(d). Select Payments.
(e). In the QuickBooks Payment section, select Learn more.
This shows a sign up window with three sections:
i. Business section: where one will fill the form presented
ii. Owner or Proprietor's Section: this section will be filled as well.
iii. Bank Section: it will be filled appropriately.
Benson, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. The tax rate is 21 percent. What is the operating cash flow, or OCF?
Answers
Answer:
Operating Cash flow is $19,440
Explanation:
Operating Cash flow
Sales = $38,530
-Costs = $12,750
-Depreciation = $2,550
Operating Income = $23,230
-Interest Expense = $1,850
Income before Tax = $21,380
-Tax = $4,490
Net Income = $16,890
Operating Cash Flow = Net Income + Non-Cash Expenses – Increase in Working Capital
Operating Cash flow = $16,890 + $2,550 - 0
Operating Cash flow = $19,440
The Operating Cash Flow (OCF) of Benson, Inc. is calculated by subtracting costs and taxes from sales. It equals $20,901.7.
Explanation:The question is asking for the Operating Cash Flow (OCF) of a business, which is a measure of the amount of cash generated by a company's normal business operations. OCF is important because it indicates whether a company is able to generate sufficient positive cash flow to maintain and grow its operations, or it may require external financing.
In this case, the formula to calculate OCF is: OCF = Sales - Costs - Taxes. First, we need to find the taxable income, which is: Sales - Costs - Depreciation. We substitute the numbers: 38,530 - 12,750 - 2,550 = 23,230. Then, we have to calculate the taxes, which are the taxable income multiplied by the tax rate (23,230 * 21%). The tax amounts to 4,878.3. Now we can calculate the OCF: Sales (38,530) - Costs (12,750) - Taxes (4,878.3) = 20,901.7.
The Operating Cash Flow for Benson, Inc., is therefore $20,901.7.
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Tesla, a vehicle manufacturer, incurs the following costs. (1) Classify each cost as either a product or a period cost. If a product cost, identify it as direct materials, direct labor, or factory overhead, and then as a prime and/or conversion cost. (2) Classify each product cost as either a direct cost or an indirect cost using the product as the cost object.
Answers
Answer:
Product cost refers to the costs incurred to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Product cost can also be considered the cost of the labor required to deliver a service to a customer.
Examples of product costs are direct materials, direct labor, and allocated factory overhead which are directly attributable to the product.
period cost is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A period cost is more closely associated with the passage of time than with a transnational event. ... Instead, it is typically included within the selling and administrative expenses section of the income statement.
Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities. Period costs are sometimes broken out into additional subcategories for selling activities and administrative activities
A preferred stock is expected to pay a constant quarterly dividend of $1.25 per quarter into the future. The required rate of return, Rs, on the preferred stock is 13.5 percent. What is the fair value (or price) of this stock?
Answers
Answer:
The share will cost $37.04
Explanation:
We divide the quarterly dividend by the quarterly rate to get the present intrinsic value of the stock:
13.5% = 13.5/100 = 0.135
now we divide by 4:
0.135 / 4 = 0,03375 quarterly rate
1.25 / 0.03375 = 37,037037 = $37.04 value of the share according to the present value of their future cash dividends.
Final answer:
The fair value of the preferred stock that pays a constant quarterly dividend of $1.25 per quarter with a 13.5 percent annual required rate of return is calculated using the present value of a perpetuity formula and is found to be $37.037 per share.
Explanation:
To calculate the fair value (or price) of the preferred stock that is expected to pay a constant quarterly dividend of $1.25 per quarter into the future with a required rate of return, Rs, of 13.5 percent, the formula for the present value of a perpetuity is used. This formula is Price = Dividend per period / Required Rate of Return. In this case, since dividends are quarterly and the rate is annual, we should adjust the rate to a quarterly basis.
First, convert the annual required rate of return to a quarterly rate by dividing by 4, so 13.5% / 4 = 3.375% per quarter. Then, we calculate the price of the share today using the present value of a perpetuity formula:
Price = $1.25 / (0.03375) = $37.037
Therefore, the fair value of the preferred stock is $37.037 per share.
The marginal productivity theory states that if a firm operates in a perfectly competitive factor market, it pays each factor of production its marginal revenue product. However, this theory may fail to hold if factor markets are not competitive.
One means by which factor markets may fail to be competitive is if there is imperfect information. Which of the following are ways in which firms seek to overcome information problems? Select all that apply.
a) Only hiring workers who have earned good grades in college.
b) Always hiring from the outside to avoid being accused of discrimination.
c) Promoting workers from within the company who have shown themselves to be productive, rather than hiring from outside.
Answers
Answer:
a) Only hiring workers who have earned good grades in college.
Explanation:
The Marginal Productivity theory defines as change in revenue of a business resulting due to employment of one additional labor.
This theory has many assumptions that perfect competition prevails in the market. All workers have same abilities and skills. Productivity of labors can be measured accurately. Every unit is homogeneous etc.
To overcome this information problem a firm should hire only workers who have earn good grades in college. It assumes that these workers will have greater skills and will contribute in revenue contribution to the organization.
Sales salaries and commissions are $10,000 when80,000 units are sold, and $14,000 when 120,000units are sold. Using the high-low method, whatis thevariableportion of sales salaries andcommission?
Answers
Answer:
the cost function will be as follows:
[tex]C_u = 0.1 u + 2,000[/tex]
Explanation:
We subtract high from low to sovle for the variable part:
[tex]\left[\begin{array}{ccc}High&120000&14000\\Low&80000&10000\\Diference&40000&4000\\\end{array}\right][/tex]
We get hat 40,00.0 units generate cost for $4,000
we divide and get that 1 units generates $0.1 of cost
Now, we solve for the fixed component
variable cost 0.1
Total Cost 14,000
14,000 = 0.1 x 120,000 + B
14,000 = 12000 + B
Fixed Cost 2000
Final answer:
The variable portion of sales salaries and commissions, calculated using the high-low method, is $0.10 per unit sold.
Explanation:
To calculate the variable portion of sales salaries and commissions using the high-low method, we need to find the difference in costs between the high and low points and divide it by the difference in units sold between those points. In this case, the high point is when 120,000 units are sold and the cost is $14,000, and the low point is when 80,000 units are sold and the cost is $10,000. Therefore, the variable portion of sales salaries and commissions is:
Variable portion = ($14,000 - $10,000) / (120,000 - 80,000) = $4,000 / 40,000 = $0.10 per unit sold
You have just purchased a share of preferred stock for $50.00. The preferred stock pays an annual dividend of $5.00 per share forever. What is the rate of return on your investment?
Answers
Answer:
rate = 5.50/50 = 0.11 = 11%
I believe it is..
The rate of return is 10 percent.
What is rate of return ?The net gain or loss of an investment is regarded as a rate of return (RoR), over a specified time period expressed as a proportion of the investment's initial cost. You choose the percentage that changed from the start of the term to the end when figuring out the rate of return. A rate of return can be used to any kind of financial instrument, including stocks, bonds, shares, real estate, and fine art.
Any asset can be used with the rate of return as long as it is purchased once and generates cash flow at any point in the future. Comparing previous rates of return to those of comparable assets is one way to gauge how appealing particular investments are. A needed rate of return is frequently chosen by investors before making an investment decision.
The fundamental growth rate or return on investment are other names for this straightforward rate of return (ROI). The net amount of discounted cash flows (DCF) received on an investment after accounting for inflation is another way to describe the real rate of return if time value of inflation and money is considered.
To solve the question :
Price = $50
Dividend = $5
Determine the rate of return:
Rate of return = Dividend / Price
Rate of return = $5 / $50
Rate of return = 10%
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XYZ Movers, a professional relocation company, has 3-person teams for their moving services. The company asks customers to complete a satisfaction survey regarding their recent move. For an employee's performance appraisal, customer satisfaction surveys are also considered in addition to supervisor and team member ratings.
Which of the following appraisal methods best describes this situation?
A. similar to me error
B. positive halo effect
C. 360-degree performance appraisals
D. behaviorally anchored rating scale
Answers
Answer:
C. 360-degree performance appraisals
Explanation:
360 degree appraisal is also known as multi-rater feedback or multisource assessment. This is an appraisal systbthat uses multiple sources to rate performance. The sources used include customer feedback, subordinates, supervisors, and colleagues.
XYZ movers employs customer feedback, supervisor ratings, and team member ratings to conducts it's 360 degree performance appraisal.
Answer:
C
Explanation:
. 360-degree performance appraisals
The 360 degree performance appraisal system is advanced kind of appraisal which is used by many organizations to judge the performance of employees using the review of about a range of 7 to 12 people. These people are working with the employee or the employees is rendering services to te people. The appraisal is collected in the form of reviews in terms of competencies of the employee. The employee himself or herself also takes part in this appraisal with the help of self assessment. The 360 degree performance appraisal system is a way to improve the understanding of strength and weaknesses of employee and areas that need development
This field of study has helped us understand differences in fundamental values, attitudes, andbehavior between people in different countries and within different organizations. a. Anthropology b. Corporate strategyc. Political science d. Operations research e. Psycholinguistics
Answers
Answer:
The correct answer is letter "A": Anthropology.
Explanation:
Anthropology is a social science in which the main objective of the study is the individual as a whole. It means, anthropology studies the human being through many focuses offered by disciplines such as natural, social, and science. Anthropology allows us to know men in his society and the culture where he belongs.
Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:
Actual manufacturing overhead $80,000
Estimated manufacturing overhead $75,000
Direct labor hours incurred 4,800
Direct labor hours estimated 5,000
a. Compute the predetermined overhead rate.
b. Calculate the amount of applied manufacturing overhead.
Answers
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Estimated manufacturing overhead $75,000
Direct labor hours incurred 4,800
Direct labor hours estimated 5,000
A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 75,000/5,000= $15 per direct labor hour
B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 15*4,800= $72,000
Teri takes her new puppy to the veterinarian. After he examines the puppy, the vet tells Teri that her puppy needs a series of shots. Teri agrees to the shots since the veterinarian knows way more about animal health than she does. This is an example of
a. a public good.
b. moral hazard
c. the free-rider problem.
d. adverse selection.
e. asymmetric information.
Answers
Answer:
E. asymmetric information
Explanation:
This is an example of asymmetric information. As Teri agrees to the shots since the veterinarian knows way more about animal health than she does. Hence, option E is correct.
What is asymmetric information?A common example of asymmetric information is the used car dealer. Any issues with the car, such as broken electrics, are unknown to the buyer, but the salesperson is aware of them.
Because of this, the customer is willing to pay more money than they otherwise would have, had they been aware of all the shortcomings in the car. Information asymmetry is a discrepancy in the two negotiating parties' comprehension of crucial details and facts.
Due to this imbalance, the side with more knowledge usually has a competitive advantage over the opposition. Adverse selection or moral hazard are both possible outcomes of asymmetric information.
Thus, option E is correct.
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How would a reduction in the temperature from 80 degrees to 50 degrees affect one’s decision to go swimming?
Answers
Answer: The person may not want to swim again, because the water in the pool will be colder.
Explanation: This decision is influenced this way because, the initiation of a reduction in temperature has prompt a decision process. That means that the swimmer is willing to swim before, but when the temperature has been reduced, the swimmer is likely to consider factors that the change in temperature has caused.
For any decisions to be reconsidered, that means they is likely to be an initiation of an opposing factors to such decision. In this case, the decrease in temperature from 80°C to 50°C is the opposing factor, that has made the swimmer to reconsider if he will swim.
An analysis of the accounts shows the following. 1. The equipment depreciates $248 per month. 2. One-third of the unearned rent was recognized as revenue during the quarter. 3. Interest of $550 is accrued on the notes payable. 4. Supplies on hand total $637. 5. Insurance expires at the rate of $324 per month. Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expenses. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answers
Adjusting entries in this scenario involve calculations related to equipment depreciation, rent revenue recognition, accrued interest on payables, supplies expense recognition, and insurance expense calculation with the intent to reflect the most accurate financial position at the end of a quarter.
Explanation:The task at hand is to make quarterly adjusting entries from the provided account information. The process involves the calculation of accrued and prepaid expenses, and income. Let's go through each point:
Depreciation Expense: For equipment depreciation, multiply $248 by 3 months to get the quarterly depreciation of $744. So, debit Depreciation Expense $744 and credit Equipment $744.Rent Revenue: One-third of the unearned rent was recognized as revenue during the quarter. Thus, debit Unearned Rent for the determined one-third amount and credit Rent Revenue for the same amount.Interest Payable: Interests accruing on the notes are represented by a debit to Interest Expense $550 and a credit to Interest Payable $550.Supplies Expenses: Supplies on hand will be credited while Supplies Expenses will be debited by the total amount of $637.Insurance Expense: For expired insurance, multiply $324 by 3 for the quarter to get insurance expense of $972. So, debit Insurance Expense $972 and credit Prepaid Insurance $972.Learn more about Adjusting Entries here:https://brainly.com/question/33175618
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Which of the following is a reason that single sourcing is considered risky/bad?a. Larger orders make quantity discounts more likelyb. There could be supplier interruptions due to political instabilityc. Decreases the item to item quality variability of items purchasedd. It could establish close relationships with the supplier
Answers
Answer:
The correct answer is letter "B": There could be supplier interruptions due to political instability.
Explanation:
Single sourcing refers to a company deciding to choose one particular supplier -even if there are many options from where to select- because of a specific reason. The greater disadvantage of this situation is relying on one supplier for the manufacturing process which at a certain point could bring instability in front of different issues inherent or not to the supplier.
Single sourcing is considered risky/bad primarily due to the possibility of supplier interruptions caused by political instability.
Explanation:The reason that single sourcing is considered risky/bad is option b: There could be supplier interruptions due to political instability. Single sourcing involves relying on a single supplier for a particular product or service. If that supplier experiences any interruptions, such as political instability in their country, it could disrupt the supply chain and impact the availability of the product or service.
For example, if a business single sources a critical component from a supplier in a politically unstable region and there is a sudden change in government or social unrest, it could lead to factory closures or transportation disruptions. This would ultimately affect the business's ability to receive the necessary supplies.
By diversifying suppliers and using multiple sources, businesses can mitigate the risk of supplier interruptions and ensure a more stable supply chain.
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On January 1, Payson Inc. had a retained earnings balance of $20,000. During the year, Payson reported net income of $30,000 and paid cash dividends of $17,000. Calculate the retained earnings balance at its December 31 year-end.
Answers
Answer:
=$33,000
Explanation:
Retained earnings will be the total income minus the dividend paid. For Payson inc. The retained earning as at 31st Dec 2104 will be
net income - divided paid out
=$30,000-$17,000
=$13,000
Total retained earnings as of 31st Dec will be
$13,000 + $20,000
=$33,000
To calculate the retained earnings balance at its December 31 year-end, add the beginning retained earnings, net income, and subtract cash dividends.
Explanation:To calculate the retained earnings balance at its December 31 year-end, we need to consider the net income and cash dividends for the year. Retained earnings is the sum of the beginning retained earnings balance, net income, and any adjustments for dividends. In this case, the beginning retained earnings balance is $20,000, net income is $30,000, and cash dividends are $17,000. Therefore, the retained earnings balance at December 31 would be:
Retained Earnings = Beginning Retained Earnings + Net Income - Cash Dividends
Retained Earnings = $20,000 + $30,000 - $17,000 = $33,000
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Codes of conduct are becoming more prevalent in industry are proving to be more meaningful, more comprehensive and easier to implement in terms of the administrative procedures used to enforce them.
a. True
b. False
Answers
Answer:
TRUE
Explanation:
Adopting a code of conduct in the workforce includes enforcing rules and procedures to all employees, and offering the instruction necessary to ensure that they follow the policy.
The code should be put into practice and encouraged by administration to lead the way for workers.
The administrative procedures are more difficult to implant,because they need proper knowledge to use it , where code of conduct need moral and socialistic knowledge.
When a firm produces one unit, the variable cost is $3. When the firm produces two units, the variable cost is $6. What is the marginal cost associated with two units of production? A) $0.5 B) $2 C) $6 D) $3
Answers
Answer:
Option (D) is correct.
Explanation:
Given that,
Variable cost of one unit = $3
Variable cost of two units = $6
Marginal cost refers to the cost of producing an additional unit of an output and it is added to the total cost of production.
Therefore,
Marginal cost:
= Variable cost of two units - Variable cost of one unit
= $6 - $3
= $3
Hence, the marginal cost associated with two units of production is $3.
Every Friday night, Gustavo pays $39.99 to eat nothing but crab legs at the all-you-can-eat seafood buffet at the M Resort in Las Vegas. On average, he consumes 28 crab legs each Friday. What is the average cost of each crab leg to Gustavo? What is the marginal cost of an additional crab leg?
Answers
Answer:
Average price for crab leg= $1.428
Marginal cost for extra crab leg= $0
Explanation:
Gustavo pays $39.99 for crab legs
Eats 28 crab legs on Fridays
To get the average price of crab legs divide the total price by the number of crab legs.
Average price= Total price/Number of legs
Average price = 39.99/28
Average price= $1.428
The marginal cost of an extra crab legs is the cost of producing an extra crab leg for Gustavo.
Since Gustavo only eats 28 crab legs and no more
Marginal cost for extra crab leg= $0
You’ve recently learned that the company where you work is being sold for $300,000. The company’s income statement indicates current profits of $11,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and that the interest rate will remain constant at 9 percent, at what constant rate does the owner believe that profits will grow? nstruction: Enter your response rounded to one decimal place.
Growth rate of: ___ percent.
Answers
Answer:
5%
Explanation:
Data provided in the question:
Present value of the company, PV = $300,000
Current Profits, π₀ = $11,000
Interest rate, i = 9% = 0.09
Now,
we know,
[tex]PV = \pi_0(\frac{1+i}{1-g})[/tex]
here,
g is the growth rate
on rearranging, we get
g = [tex]i - \frac{(1+i)\pi_0}{PV}[/tex]
on substituting the respective values, we get
g = [tex]0.09 - \frac{(1+0.09)\times11,000}{300,000}[/tex]
or
g = 0.05
or
g = 0.05 × 100%
= 5%
Pyro Electronics was the only supplier of Torin Auto, and both companies wanted to do more business together. Pyro Electronics worked on its total quality management system and acquired more business, while Torin developed a just-in-time inventory management system to deliver goods timely to Pyro Electronics. Pyro Electronics and Torin have developed a _____.
Answers
Answer:
Strategic Partnership.
Explanation:
Strategic Partnership is a kind of alliance in which two companies agree to help each other by their expertise. This can be formed with one or more business. Here also Pyro Electronics and Torin Auto both Companies agree to do more business together to help each other expand their businesses. Pyro Electronics is a sole supplier of Torin Auto, Pyro has worked on total quality management and Torin has developed just-in-time inventory management which means the goods will be ordered when needed. This reflects that both companies are ready to help each other and expand their business.
Pyro Electronics and Torin Auto have collaborated and created a strategic partnership where both companies improved their systems for mutual benefit.
Explanation:Pyro Electronics and Torin Auto have developed a Strategic Partnership. This type of collaboration involves two businesses coming together to create a mutually beneficial agreement. This arrangement works towards a common goal, in this case, they wanted to do more business together. Pyro Electronics improved its efficiency by developing its Total Quality Management system, and Torin optimized its inventory management with a Just-In-Time system to ensure timely supply of goods to Pyro Electronics.
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Assume that you invest $1250 at the end of each of the next 15 years in a mutual fund. You currently have $10,000 in the mutual fund. The annual rate of interest that you expect to earn in this account is 4.35%. The amount in the account at the end of 15 years is
Answers
The amount in the account at the end of 15 years is $24,236.69. Hence, option B is correct.
What is mutual fund?A mutual fund is a collection of investments that a fund manager properly manages. a trust that invests money it receives from several participants with comparable investing goals in stocks, bonds, money market instruments, and/or other securities.
Money market funds, bond funds, stock funds, and target date funds are the four primary categories that the majority of mutual funds belong to. Each variant has unique characteristics, dangers, and benefits.
Mutual funds are frequently seen as risk-free, secure investments that offer excellent diversification opportunities for investors. A mutual fund might not always be the best option for a market participant in terms of expenses.
Thus, option B is correct.
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Final answer:
The amount in the mutual fund at the end of 15 years, with an initial investment of $10,000 and $1250 invested annually at a 4.35% interest rate, is $45,534.50, calculated by summing the future values of periodic investments and the initial lump sum investment, each compounded appropriately.
Explanation:
The question involves calculating the future value of an investment in a mutual fund over a period of 15 years, considering a series of periodic contributions and an initial lump sum already invested. The calculation must account for the power of compound interest and additional annual investments. To find the amount in the mutual fund at the end of 15 years, we must use the future value formula for an ordinary annuity and combine it with the compounded amount of the initial investment.
Calculating the Future Value of Periodic Investments
To calculate the future value of the $1250 annual investments, we use the formula:
FV = Pmt \[((1 + r)ⁿ - 1) / r]
FV = $1250 \[((1 + 0.0435)¹⁵ - 1) / 0.0435]
FV = $1250 \[((1.0435)¹⁵ - 1) / 0.0435]
FV = $1250 * 21.2436
FV = $26,554.50 from periodic investments
Calculating the Future Value of the Initial Lump Sum
The initial $10,000 investment will grow due to compound interest alone. The future value of this lump sum is calculated using the compound interest formula:
FV = PV (1 + r)ⁿ
FV = $10,000 (1 + 0.0435)¹⁵
FV = $10,000 * 1.8980
FV = $18,980.00 from initial investment
Total Future Value
To find the total amount in the account after 15 years, we add the future values from periodic investments and the initial investment:
Total FV = $26,554.50 + $18,980.00
Total FV = $45,534.50
The amount in the mutual fund at the end of 15 years, with an initial investment of $10,000 and $1250 invested at the end of each year at a 4.35% interest rate, is $45,534.50.
Many companies say that their goal is to provide quality products and services. What actions might you expect from a company that intends quality to be more than a slogan or buzzword?
Answers
Explanation:
Ideal for a company that wants quality to be more than a slogan or slogan, it is necessary to implement actions that lead to quality management.
From the development of the business strategic plan, actions and procedures included in the company's mission, vision and values must be clearly defined to ensure the expected quality principles.
However, it is important to have an effective implementation and analysis to review the plan and resolve possible conflicts during the execution of activities, in order to establish continuous improvement as an organizational culture, which avoids waste, reduces costs, motivates employees, improves the production process and improves business activities in the internal and external environment, to make total quality a basic principle of the organization.
Companies that view quality as more than a slogan would invest in quality control, offer warranties or money-back guarantees, and aim to establish a good reputation to attract repeat customers. These actions demonstrate their commitment to providing high-quality products and services.
Explanation:A company that treats quality as more than just a buzzword would take several actions to ensure their products and services meet or exceed customer expectations. Firstly, such companies would invest in thorough quality control measures where products are rigorously tested for any flaws before they hit the market.
Secondly, they would offer assurances such as warranties or money-back guarantees which not only convey a promise of quality but also help build consumer trust. This kind of strategy is particularly important for online or mail-order businesses where customers can't physically examine the products before purchasing.
Lastly, they would seek to establish a good reputation, aiming for repeat customers who will recommend the business to others. A good reputation signifies a company's commitment to delivering high-quality products and services, thus allowing the company to even charge a premium for their offerings. For instance, a well-established grocery store can charge a higher price than a temporary stall at a local farmer's market due to its established reputation for quality.
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One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds pay interest annually, have 10-year maturities, and sell at a yield to maturity of 10%.a. If their yields to maturity next year are still 10%, what is the rate of return on each bond?b. Does the higher-coupon bond give a higher rate of return?
Answers
Answer:
Explanation:
The price of 8% bond must be lower than its face value to make the yield to maturity equal to 10%
Similarly , the price of 12 % bond must be higher than its face value to make the yield to maturity equal to 10%
Rate of return is always equal to yield to maturity .
So even if we do not know the face value of bond , we can infer that rate of return must be equal to yield to maturity .
b ) Higher coupon rate does not guarantee higher rate of return because higher coupon than the prevailing rate of return in the market pulls down the market price of the bond .
The rate of return for both bonds would be 10% if their yield to maturity remains constant at 10%. The bond with a higher coupon rate does not offer a higher rate of return if the yield to maturity remains the same.
Explanation:The rate of return for both bonds, assuming the yield to maturity (YTM) remains at 10%, would be 10%. The rate of return on a bond is essentially its YTM, which is the total anticipated return on a bond if it is held until maturity. This includes both interest payments and the capital gain or loss due to changes in the bond's price.
In a situation where a bond's YTM remains the same from one year to the next, the rate of return would also remain the same (in this case, 10%). Thus, the coupon rate does not affect the rate of return if the YTM remains constant.
So, while the bond with a 12% coupon rate would pay more interest annually than the bond with an 8% coupon rate, it does not offer a higher rate of return in terms of YTM. In this case, the bond with the higher coupon rate does not give a higher rate of return.
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Exercise 10-07 a1-b2 Bramble Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an expected salvage value of $1,160, and is expected to be driven 108,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,500 in 2020 and 14,700 in 2021. Calculate depreciation expense per mile under units-of-activity method.
Answers
To calculate the depreciation expense per mile for Bramble Company's truck using the units-of-activity method, subtract the salvage value from the purchase price and divide by the estimated total miles. The depreciation expense comes to $0.23 per mile.
The student's question deals with calculating the depreciation expense per mile using the units-of-activity method for a delivery truck purchased by Bramble Company. To find the depreciation expense per mile, we first need to subtract the salvage value from the purchase price and then divide by the total number of miles the truck is expected to be driven over its useful life.
The calculations are as follows:
Purchase Price: $26,000Salvage Value: $1,160Estimated Useful Life in Miles: 108,000 milesDepreciation Expense Per Mile = (Purchase Price - Salvage Value) / Estimated Total Miles
Depreciation Expense Per Mile = ($26,000 - $1,160) / 108,000 miles
Depreciation Expense Per Mile = $24,840 / 108,000 miles
Depreciation Expense Per Mile = $0.23 per mile
A firm is considering investing in a new project with an upfront cost of $400 million. The project will generate an incremental free cash flow of $50 million in the first year and this cash flow is expected to grow at an annual rate of 3% forever. If the firm's WACC is 12%, what is the value of this project
Answers
Answer:
$156 million
Explanation:
The computation of the value of the project is shown below:
Value of the Project = Present Value of Incremental cash Inflows - Upfront Cost
where,
Present Value of Incremental cash Inflows equals to
= (Incremental Cash inflows) ÷ (Discount rate - Growth rate)
= ($50 million) ÷ (12% - 3%)
= ($50 million) ÷ (9%)
= $556 million
Now the value of the project is
= $556 million - $400 million
= $156 million
The value of the project, when considering the initial investment, annual cash flows, growth rate, and firm's WACC, is roughly $155.56 million.
Explanation:The subject question is about calculating the present value of a project's cash flows, taking into account the company's weighted average cost of capital (WACC) and the growth rate of its future cash flows. This is a common calculation in finance, specifically in the field of investment analysis.
To find the value of this project, we need to determine the present value of its permeating cash flows, which is often referred to as a Perpetuity. The formula for calculating the value of a growing perpetuity is given by:
Present Value = CashFlow / (WACC - growth rate)
Here, the cash flow is the incremental free cash flow of $50 million. The WACC is 12% (or 0.12 in decimal form), and the growth rate is 3% (or 0.03 in decimal form).
So, to calculate:
Present Value = $50 million / (0.12 - 0.03)
This simplifies to:
Present Value = $50 million / 0.09
So, the present value of the project's cash flows is approximately $555.56 million. This is not the project value though, since we need to take into account the upfront cost of $400 million. Subtracting this initial investment from the present value gives us the Net Present Value (NPV) of the project:
NPV = Present Value - Initial Investment = $555.56 million - $400 million = $155.56 million
Therefore, the value of the project, when considering the investment, annual cash flows, growth rate and the firm's WACC, is approximately $155.56 million.
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Phillips Company acquires all of the outstanding stock of Sylvania Company by issuing 20,000 shares of its own $5 par value stock. The market value of its stock at the date of issuance was $50 a share. Also in conjunction with the acquisition Phillips incurred the following costs: $8,000 in finders fees, $12,000 in legal fees and $10,000 in stock issuance fees. What is the purchase price for this acquisition used to determine whether goodwill is present or not?
Answers
Answer:
purchasing price will be based on par value = $1,00,000
Explanation:
Given data:
number of shares = 20,000
par value of stock = $5
Market value of stock is $50
Finders fees = $8000
legal fees = $12,000
stock issuance fees =$10,000
Paid capital is calculated at par value i.e. 20,000 * $5 = $ 1,00,000
Expenses like finders fees, legal fess and stock issuance fees will not be included in purchasing price. it is considered in miscellaneous expense
Hence purchasing price will be based on par value = $1,00,000
The purchase price for the acquisition is $1,030,000, which includes the fair market value of the stock issued and the costs incurred by Phillips Company.
Explanation:The purchase price for this acquisition is determined by adding the fair market value of the stock issued and the costs incurred by Phillips Company. The fair market value of the stock issued is calculated by multiplying the number of shares issued (20,000) by the market price per share ($50). Therefore, the fair market value of the stock issued is $1,000,000 (20,000 shares x $50).
In addition to the fair market value of the stock, the costs incurred by Phillips Company are also included in the purchase price. These costs include finders fees ($8,000), legal fees ($12,000), and stock issuance fees ($10,000). Therefore, the total costs incurred by Phillips Company are $30,000 ($8,000 + $12,000 + $10,000).
The purchase price for this acquisition is the sum of the fair market value of the stock issued and the costs incurred by Phillips Company. Therefore, the purchase price is $1,030,000 ($1,000,000 + $30,000).
Western Transit Bank has 150 automated teller machines (ATMs) across the country. Customers can use these machines to withdraw money, deposit money in their bank accounts, check their account balance, and transfer money to other accounts. These machines enable Western Transit Bank to carry out some of its operations smoothly.
In the given scenario, the ATMs of Western Transit Bank can be classified as ___________.
Answers
Answer:
In the given scenario, the ATMs of Western Transit Bank can be classified as "capital or financial assets".
Explanation:
Automated teller machines (ATMs) are electronic system for money withdrawal. This system act as capital or financial assets for individuals who saved money in their respective bank accounts, otherwise its just a machine.
Generally people keep only limited cash with themselves due to security or saving purpose. Thus on sudden needs or for regular requirements too it act as asset. This facility has been activated 24*7 for citizens and prevent them from long waiting ques of bank, added with paper work which use to eat huge time of customers, thus it manages their time too.
In the mentioned scenario, the ATMs of Western Transit Bank can be classified as physical distribution channels.
Explanation:The Automated Teller Machines (ATMs) of Western Transit Bank are considered physical distribution channels as they allow customers to access a variety of banking services. A distribution channel refers to the methods or routes through which a company provides its products or services to customers.
In the context of a bank, ATMs operate as a distribution channel because they allow customers to access banking services such as withdrawing and depositing money, checking their account balances, and transferring money. Essentially, they distribute the bank's services to its customers.
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At January 1, 2017, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2017, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were $25,000, contributions were $20,000, and benefits paid were $17,500. Prepare a pension worksheet for Hennein Company for 2017.
Answers
Answer:
The Pension schedule is prepared in the workings as requested.
Explanation:
The question is to Prepare a Pension Worksheet for Hennein Company for 2017
HENNEIN COMPANY
PENSION WORKSHEET FOR 2017
General Journal Entry Memo Record
Item Pension Cash Pension Defined Plan
Expenses Asset/Liab Benefit Assets
Obligation
Jan 1, 2017 280,000 CR 280,000 Dr
Service Cost 27,500 DR 27,500 CR
interest Cost 28,000 DR 28,000 CR
Actual return 25,000 CR 25,000 DR
Contributions 20,000 CR 20,000 DR
Benefits 17,500 DR 17,500 CR
Journal Entry 30,500 DR 20,000 CR 10,500 CR
Dec. 31, 2017 10,500 CR 318,000 CR 307,500 DR
Note that the interest cost is as follows
280,000 x 10% = $28,000
The question requires preparation of a pension worksheet for Hennein Company for 2017, including details on their plan assets, projected benefit obligation, service cost, return on assets, contributions, and benefits paid. However, without information on actuarial gains/losses or other changes, a complete worksheet can't be accurately provided.
Explanation:Pension Worksheet Preparation
The student is asking for assistance in preparing a pension worksheet for Hennein Company for the year 2017. At the beginning of the year, both the plan assets and projected benefit obligation were $280,000. During the year, the service cost amounted to $27,500; the settlement rate used was 10%; the actual and expected return on plan assets was $25,000; contributions made were $20,000, and the benefits paid out totaled $17,500.
A pension worksheet typically tracks the changes in the pension fund over the course of a year and helps to reconcile the plan's funding status. The service cost will increase the projected benefit obligation, while the return on plan assets will increase the value of plan assets. Contributions also increase plan assets, while benefits paid decrease them.
Unfortunately, to answer this question accurately, additional information about actuarial gains or losses, changes in pension estimates, or prior service costs would be necessary. Without this information, a complete pension worksheet cannot be provided.
Zappos employees are "driven" to participate in charitable activities and feel that giving back to the community is something that they "must do." This demonstrates what about Zappos employees?a. Zappos employees follow the specific Zappos code of ethics. b. Zappos employees have morals that match Zappos values and norms. c. Zappos employees operate at the preconventional level of morality. d. Zappos employees focus on the ethical responsibilities of their jobs.
Answers
Answer:
The correct answer is letter "B": Zappos employees have morals that match Zappos values and norms.
Explanation:
In case employees of a company enjoy doing charitable activities and believe it is an obligation to contribute with their surrounding community, the situation implies that those workers have a high sense of social responsibility and moral values. Every company tends to have a code of ethics that outlines the expected behavior the firm expects from workers within the organization but firms also have goals on social responsibility to minimize the impact of their operations in society an if possible to improve it.
Thus, the moral values of Zappos's employees are likely aligned to the norms the company is looking for in its workers.
The participation of Zappos employees in charitable activities is a reflection of the alignment between their personal morals and the values and norms of Zappos, hence option B is correct.
When Zappos employees are 'driven' to participate in charitable activities and feel that giving back to the community is something that they 'must do,' this demonstrates that Zappos employees have morals that match Zappos values and norms. hence option b.
The company culture at Zappos is built on a corporate culture of caring, addressing the self-actualization needs of its employees, and integrating happiness and motivation into the company's core values. This culture encourages employees to align their personal values with those of the company.
As a result, the charitable activities are not just seen as an ethical responsibility but are integrated into the way Zappos operates, reflecting the employees' intrinsic motivation to give back to the community in alignment with Zappos' values.
Hailey, Inc., has sales of $19,740, costs of $9,290, depreciation expense of $1,960, and interest expense of $1,450. Assume the tax rate is 40 percent. What is the operating cash flow, or OCF?
Answers
Answer:
$7,634
Explanation:
The computation of the operating cash flow is shown below:
= EBIT + Depreciation - Income tax expense
where,
EBIT = Sales - cost of good sold - depreciation expense
= $19,740 - $9,290 - $1,960
= $8,490
The income tax expense equal to
= (Sales - cost of good sold - depreciation expense - interest expense) × tax rate
= ($19,740 - $9,290 - $1,960 - $1,450) × 40%
= $2,816
So, the operating cash flow is
= $8,490 + $1,960 - $2,816
= $7,634