Discuss how a company such as Bomaid should respond to the
digital age that is currently affecting all organisations

The interest rate that Nik earned on his account is 8.76%.

To calculate the interest rate on Nik's bank account, we need to use the simple interest formula: I = Prt, where I is the interest, P is the principal amount, r is the interest rate, and t is the time period. We know that Nik deposited $2,000 in the account five years ago, so P = $2,000 and t = 5 years. We also know that Nik withdrew $2,876, so the interest earned is I = $2,876 - $2,000 = $876. Now we can plug in the values and solve for r: 876 = 2000 × r × 5. Solving for r gives us r = 8.76%.

Explanation:
We can calculate the interest rate earned by Nik on his bank account by using the simple interest formula, which is given as I = Prt. Here, P is the principal amount, r is the interest rate, and t is the time period. We know that Nik deposited $2,000 in the account five years ago, so P = $2,000 and t = 5 years. We also know that he withdrew $2,876 from the account, so the interest earned is I = $2,876 - $2,000 = $876.

Now, we can plug in the values and solve for r, which is the interest rate. The formula becomes:

I = Prt
876 = 2000 × r × 5
r = 876 / (2000 × 5)
r = 0.0876 or 8.76%

Therefore, the interest rate that Nik earned on his bank account is 8.76%.

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a) On June 1, when Sheridan Company Ltd. borrows $162,000 from Acme Bank, the following entry is made:

June 1:

Cash     162,000

Notes Payable     162,000

This entry records the increase in cash from the loan and the corresponding increase in notes payable.

b) On June 30, an adjusting entry is made to record the accrued interest expense for the month. Assuming a 30-day month, the interest expense can be calculated as follows:

Interest Expense = Principal Amount × Interest Rate × Time

                  = $162,000 × 4% × (30/360)

                  = $540

The adjusting entry on June 30 is:

June 30:

Interest Expense     540

Interest Payable     540

This entry recognizes the accrued interest expense and creates a liability for the interest payable.

c) On December 1, at maturity, assuming monthly adjusting entries have been made through November 30, the following entry is made:

December 1:

Notes Payable     162,000

Interest Payable     540

Interest Expense     540

Cash     162,540

This entry records the repayment of the note payable and the payment of the accrued interest expense.

d) The total financing cost (interest expense) can be calculated by summing up the monthly interest expenses. Assuming a 6-month period, the total financing cost would be:

Total Financing Cost = Interest Expense per month × Number of months

                              = $540 × 6

                              = $3,240

Therefore, the total financing cost (interest expense) for Sheridan Company Ltd. is $3,240.

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The statement made by Richard Whately, that "…pearls are not valuable because men have dived for them, but rather is determined by the subjective valuations of buyers and sellers in the market.

would have been responded to differently by J.S. Mills, Jevons, and Alfred Marshall. Let's take a look at each of their potential responses: J.S. Mills was a philosopher, political economist, and civil servant who advocated for individual freedom and economic liberalism. In response to Whately's statement, Mills would likely argue that the value of pearls is not simply an objective, intrinsic property of the pearls themselves, but rather is created by the subjective preferences and choices of individual people. According to Jevons, people will only continue to dive for pearls so long as the marginal utility of each additional pearl exceeds the cost of obtaining it. Alfred Marshall :Alfred Marshall was a British economist who is widely regarded as one of the founders of neoclassical economics. In response to Whately's statement, Marshall would likely argue that the value of pearls is determined by the interplay of supply and demand.

According to Marshall, people dive for pearls because there is a demand for them in the market, and the price of pearls is determined by the relative scarcity of pearls and the extent to which people are willing to pay for them. The value of pearls is not an objective or intrinsic property of the pearls themselves.

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According to this, any change in the money supply has an effect on total expenditure as well as other factors like unemployment, income, production, and output. It is significantly influenced by changes in interest rates.

According to the research, there are four distinct ways that monetary policy changes can affect economic outcomes, as was indicated in the Introduction: the interest rate channel, the credit channel, the exchange rate channel, and the asset price channel (Mishkin, 1995). The main goal of monetarism is to manage the money supply in order to manage the economy. Keynesianism emphasises the use of public spending to manage the economy.

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The electoral system is a vital factor in determining the level of redistribution. The reason behind this is that the electoral system serves as the interface between the voters and the policymakers.

Through the electoral system, policymakers have a better understanding of the preferences of the voters, which could inform their policy decisions. Different electoral systems might impact the behavior of political parties, who could decide to adopt policies that appeal to their supporters. One theoretical argument suggests that the two electoral systems are based on the majority voting system and the proportional representation system.

Under the majority voting system, the winning political party often enjoys an advantage in implementing its preferred policies. This could increase the likelihood of a policy being implemented. In contrast, under the proportional representation system, it is less likely that a single party will win the majority vote. As a result, political parties must be more responsive to a broader range of voters, which could limit the extent of redistributive policies.

These theoretical arguments are plausible to a certain extent. However, there are a variety of other factors to consider, such as the economic conditions, institutional arrangements, and the role of interest groups in influencing policy. As a result, it is difficult to determine the extent to which the electoral system is responsible for the observed variations in redistributive policies across different countries.

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From the data given about Motherson Sumi Systems, we can conclude that the business has a positive cash flow

In Motherson Sumi Systems, the records for three days showed that the business recorded more of positive cash flows. For instance, on March 17, 19 and 20, the business recorded a total of $5268 at the end of sales.

Also, on March 18, the business recorded a negative cash flow of -2151. Since the positive cash flow is greater than the negative one, we can conclude that the business is doing quite well.

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Possible criteria for fitting a regression line:Here are some of the possible criteria for fitting a regression line:Least-squares: It is used to minimize the sum of the squared distances between the regression line and each data point.

Ordinary least squares (OLS): This is the most common type of least-squares regression.OLS is considered the best criteria for fitting a regression line due to the following reasons:It provides estimates that have minimum variance.The estimates are unbiased.OLS provides the maximum likelihood estimates, assuming normal errors.OLS estimation is computationally efficient and easily implementable.

OLS estimation is the most widely used and considered the best criteria for fitting a regression line. This estimation is used to minimize the sum of squared differences between the actual and predicted values in a dataset.OLS is preferred because it provides estimates that have minimum variance, and the estimates are unbiased.OLS is the most common type of least-squares regression. It provides maximum likelihood estimates, assuming normal errors. This is because OLS estimation is computationally efficient and easily implementable.Another advantage of OLS is that the regression model's coefficients are estimated in such a way that the sum of the squared residuals is minimized. This is accomplished by taking the partial derivative of the residual sum of squares with respect to each coefficient and equating it to zero.

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Under the expense approach to recognizing product warranty liabilities, actual costs incurred in the future are offset against the liability that was recognized at the time of the sale.  Option C

A product warranty is a company's promise to fix or replace its product if it breaks or fails to meet the consumer's expectations. If a business offers warranties, it must acknowledge them as obligations in its financial statements. As a result, companies must account for estimated warranty expenses when they sell goods and services that come with warranties.

The expense approach is one of the two methods for accounting for warranty expenses. The expense approach records the expected cost of future warranty claims in the period in which the product is sold. As a result, the expense is recorded as a liability on the balance sheet and as an expense on the income statement.

In the future, when a customer makes a warranty claim, the firm would record a reduction in the liability account and an increase in the expense account. Therefore, actual costs incurred in the future are offset against the liability that was recognized at the time of the sale.

This approach makes it easy to match the expenses of warranty repairs with the revenue generated by the goods sold. Option C

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Corporate diversification is a growth strategy that involves expanding a company's operations into a new industry or market. These are the main types  of corporate diversification, including single business, dominant business, related, unrelated, and double business diversification. The correct answer is all of the above.

Below are the main types of corporate diversification:

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Abigail has a duty to disclose the information to the seller. The duty to disclose refers to the agent's duty to reveal information to a client or to a third party in a transaction.

Abigail has a duty to disclose the information to the seller when working with Jeanette as a customer to buy a home listed by Abigail's brokerage firm. The fact that she represents the seller's firm means that she knows information about Jeanette's financial condition that may impact the seller's decision to accept Jeanette's offer.

It is essential for a sales agent to maintain a high level of professionalism when dealing with the sale or purchase of a property. It is the duty of the sales agent to ensure that the client's interests are protected. If the sales agent has any confidential information that could affect the sale or purchase, then it is their responsibility to disclose it to the relevant parties.

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Wang wants to purchase a new computer from Best Buy. After he purchases the computer, the local Best Buy store notifies the buyer at corporate headquarters through point-of-sale terminal. Option C is the correct answer.

Wherever your consumer makes a payment for goods or services at your business is known as the point of sale, or POS. Simply simply, every time a client makes a purchase, a point of sale transaction is completed. Option C is the correct answer.

The most recent point-of-sale systems go beyond credit card processing to assist merchants and eateries in integrating mobile POS features, contactless payment alternatives, e-commerce integration capabilities, and more. Every POS system is made up of hardware and software elements that simplify and speed up how your business runs every day. Understanding the many POS software solutions and what they each have to offer is crucial.

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The complete question is, "Wang wants to purchase a new computer from Best Buy. After he purchases the computer, the local Best Buy store notifies the buyer at corporate headquarters through the

A. weekly reporting update.

B. fulfillment center.

C. point-of-sale (POS) terminal.

D. advanced shipping notification.

E. distribution center"

Answer:A

Explanation:The policy’s cash value

Diversity can positively or negatively affect a business owner and their business. A business owner who promotes and values diversity can create a more inclusive and innovative workplace, whereas a business owner who neglects diversity may hinder productivity and lose potential customers.

Leadership is crucial to the success of a business because it sets the tone for the rest of the employees. A business owner who provides strong and effective leadership can motivate employees to work towards the goals of the business and improve overall performance. A leader who is ineffective or inconsistent may lead to a lack of motivation among employees and a lack of direction for the business.

Diversity can be a major contributor to motivation in the workplace. Employees who feel valued and respected are more likely to be motivated to work hard and stay with the company. A lack of diversity or negative attitudes towards certain groups can lead to a toxic work environment and a decrease in motivation.

In order to promote effective leadership, diversity, and motivation in the workplace, business owners can implement various strategies. This can include offering training and development programs to help employees learn new skills and improve their job performance, creating a diverse and inclusive workplace culture, and recognizing and rewarding employees for their hard work and contributions to the business.

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The four goal categories for NSLS-1 are: (1) Advanced Energy Systems, (2) Material Design and Discovery, (3) Structural Biology, and (4) Nanoscience and Nanotechnology.

These categories represent the primary areas of scientific research and innovation that NSLS-1 aims to support.

NSLS-1's first goal category, Advanced Energy Systems, focuses on developing new materials and techniques for energy storage, conversion, and utilization. This includes research on batteries, fuel cells, and renewable energy technologies.

The second category, Material Design and Discovery, aims to understand and engineer materials with desirable properties. This research contributes to fields such as electronics, catalysis, and environmental science.

The third category, Structural Biology, explores the structure and function of biological molecules to deepen our understanding of diseases and develop new therapies. It involves techniques like protein crystallography and X-ray imaging.

Lastly, the Nanoscience and Nanotechnology category investigates the properties and applications of materials at the nanoscale. It involves research in areas such as nanoelectronics, nanomaterials, and nanomedicine, with the potential for groundbreaking advancements.

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The correct answer is d. rent-seeking behavior. Rent-seeking behavior refers to the activities of people and organizations who try to obtain benefits by manipulating the economic and political environment instead of earning benefits through trade and productive enterprise.

The private health insurance companies that have made above normal profits and spent large sums of money trying to prevent the legislature from passing this bill into law are indulging in rent-seeking behavior.The bill pending before the NY state legislature would prohibit private companies from selling health insurance and make the state the single payer of health care bills. This policy would be enacted if the bill passes into law. The private health insurance companies are using their influence to prevent this law from coming into force so that they can continue to earn abnormal profits by selling health insurance.

Since they are trying to manipulate the political environment to earn benefits without engaging in trade or productive enterprise, they are engaging in rent-seeking behavior.

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Statement of earnings for the month ended June 30, 20X1 will be calculated as follows Revenue Consulting fees earned$8,400Less :Rent expense$1,300Salary expense 1,000Supplies expense 100Telephone expense 500Depreciation expense 500Total expenses

3,400Net earnings before dividends 5,000Less: Dividends declared 2,100Net earnings after dividends $2,900 In the first month of its operations, Global Services, Inc earned $8,400 in consulting fees and incurred expenses totaling $3,400 which were rent expense ($1,300), salary expense ($1,000), supplies expense ($100), and telephone expense ($500).In addition, Global Services, Inc also incurred a depreciation expense of $500 as its office equipment has been used during the month.

The net earnings before dividends can be calculated by deducting total expenses of $3,400 from the revenue of $8,400, which results in a net earnings before dividends of $5,000.The company declared a dividend of $2,100 during the month of June. As a result, the net earnings after dividends will be $2,900 Yes, the company was successful in its first month of operations. The net earnings after dividends declared during the month of June was $2,900. As we know that the company earned more than it spent during the month of June. So, we can say that Global Services, Inc was successful in its first month of operations.

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The statement "Red Bull has made significant efforts to establish integrated marketing communications" is true.

Red Bull has been known for its successful implementation of integrated marketing communications strategies. The company has consistently employed various marketing channels and communication tools to create a cohesive and unified brand message. Red Bull's approach includes combining traditional advertising methods, such as television and print, with digital marketing, social media campaigns, event sponsorships, and content marketing. They have also developed a strong presence in sports and extreme activities, aligning their brand image with high-energy and adventurous lifestyles. By integrating their marketing efforts across multiple channels and platforms, Red Bull has been able to reach and engage their target audience effectively.

Red Bull's efforts in establishing integrated marketing communications have played a significant role in building and maintaining their brand presence and connecting with their target market. By employing a diverse range of marketing channels and tactics, they have been able to create a consistent and powerful brand message that resonates with their audience. This approach has contributed to Red Bull's success as a global leader in the energy drink industry.

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using funds set aside for debt service.The Debt Service Fund is made available to pay for the receipts, additional funding sources, additional uses of finance, and related expenses for long-term debt. This includes keeping track of bond principal, interest, and other debt-related expenses.

The best way to keep a journal

1. Determine the accounts that will be impacted by the transaction. Making a journal entry involves first determining which general ledger accounts the transaction is likely to affect.

2. Choose between crediting and debiting the account.

3. Write a journal entry and after that

4. Complete the accounting entries.

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All the answers to the above questions are as follows:

a. GDP stands for Gross Domestic Product. It is the total monetary value of all goods and services produced within a country's borders in a specified time period.
b. The two arrows that go from firms to households are the product market arrow and the factor market arrow. In the product market arrow, firms supply goods and services to households in exchange for money payments. In the factor market arrow, households supply factors of production such as labor, land, and capital to firms in exchange for income.
c. The arrow that represents total spending on products is the product market arrow. This arrow shows the flow of money from households to firms in exchange for goods and services, which represents total spending on products.
d. The two other ways to measure GDP that can be shown in the circular flow model are government spending and net exports. In the circular flow model, government spending is represented by an arrow that goes from the government sector to the product market. Net exports are represented by an arrow that goes from the foreign sector to the product market.
e. A trade surplus does not necessarily increase GDP. GDP only measures the value of goods and services produced within a country's borders. A trade surplus occurs when a country exports more goods and services than it imports. While a trade surplus can boost economic growth, it does not necessarily increase GDP, as GDP only measures the value of goods and services produced within a country's borders.

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For a venture capitalist with 10 investments, the number of returns 10x their investment, 1x to 10x their investment, nothing, Because the return on investment made on venture capital is uncertain. It may lead to huge profits or may cause lose of investment.

Return on investment is a financial measure that indicates how much profit or loss a venture capitalist has made on an investment in a particular business or venture. Venture capitalists evaluate investments by looking at their potential to make money and the risks associated with them. The percentage of returns is determined by dividing the profit or loss by the amount of money invested.

1. For a venture capitalist with 10 investments: Out of 10 investments, the number of investments that can return 10x their investment, 1x to 10x their investment, nothing would depend on the type of investment made by the venture capitalist. Venture capitalists invest in start-up businesses or in companies with new products, technologies, or services. These investments tend to be risky but can lead to huge profits. Some of the investments may be successful, some may fail to make money, while others may simply break even. Thus, it is difficult to predict the exact number of returns for each investment.

2. Venture capitalists are interested in investments in their own geographic areas because of several reasons: Venture capitalists invest in local businesses as it is easier to manage and monitor these businesses as they are geographically closer. Investing in local businesses means more opportunities to help shape their communities, which can lead to a positive reputation and help attract more investors. Venture capitalists may have an established network in their local community that can help connect them to promising start-ups. Venture capitalists may have a better understanding of the local market trends and consumer behavior in their geographic area.

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The decision for a company to stay or exit a particular market is complex and depends on various factors such as market conditions, business opportunities, regulatory environment, competitive landscape, and strategic objectives of the company.

Cypark Operation is an integrated environmental engineering company located in Malaysia. It's engaged in the provision of environmental-related engineering services and investing in environmental-related businesses. The company was founded in 2000 and operates mainly in Malaysia, but it also has operations in other countries.

Cypark Operation should stay in Malaysia if it continues to receive support from the Malaysian government and the Malaysian public. The Malaysian government has been supporting Cypark Operation's environmental initiatives by providing funding and policy support for renewable energy projects.

The company has also been receiving support from the Malaysian public, which has been increasingly concerned about the impact of climate change on the environment. As a result, there has been a growing demand for renewable energy and other environmental solutions in Malaysia.

Cypark Operation's presence in Malaysia has also helped to create jobs and contribute to the Malaysian economy. The company has been involved in a number of high-profile environmental projects in Malaysia, including the development of the first integrated solid waste management facility in the country.

Overall, whether Cypark Operation should stay in Malaysia or not depends on various factors such as government support, public support, economic conditions, and business opportunities.

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If capital markets are semi-strong form efficient, then the correct statement from the given multiple-choice options would be: B. Stock analysts have a trading advantage because of their access to vast amounts of public information.

In semi-strong form efficient markets, all publicly available information is already reflected in the current stock prices. Therefore, traders cannot earn exceptional profits using publicly available information, company insiders cannot profit based on inside information, and individuals cannot consistently identify mispriced stocks using publicly available information.

However, stock analysts who have access to vast amounts of public information may have an advantage in analyzing and interpreting the available information to make informed investment decisions.

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Three business ideas that people need and that can be found in online news articles are the need for home cleaning services, the need for logistics persons to move goods to customers, and the need for dairies.

There are many business opportunities that we can point out from online news articles. For instance, we might read about malnourished children and immediately sense the need for dairy services that will help the growth of children.

We can also see some online retailers who might need the help of logistics personnel to make home deliveries.

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The opportunity cost for Pablo to produce 1 bat is 36 baseballs in factory, and for Micah, it is 1/36 of a bat.

Based on the given information, Pablo and Micah can switch between producing baseballs and producing bats at a constant rate. We are provided with the labor hours needed and the quantity produced in 36 hours to make one bat or one baseball.

To analyze their production possibilities, let's consider the labor hours required for each product:

Making 1 bat requires 36 labor hours.

Making 1 baseball requires 1 labor hour.

Since the labor hours required to produce 1 bat and 1 baseball are different, we can calculate the opportunity cost of producing each item.

For Pablo, if he chooses to produce 1 bat, it would require 36 labor hours. Therefore, the opportunity cost of producing 1 bat for Pablo would be equivalent to the number of baseballs he could have produced in those 36 hours.

Since it takes 1 labor hour to produce 1 baseball, Pablo's opportunity cost of producing 1 bat is 36 baseballs.

Similarly, for Micah, if he chooses to produce 1 baseball, it would require 1 labor hour. Thus, the opportunity cost of producing 1 baseball for Micah would be the number of bats he could have produced in that 1 hour. As it takes 36 labor hours to produce 1 bat, Micah's opportunity cost of producing 1 baseball is 1/36 of a bat.

In summary, the opportunity cost for Pablo to produce 1 bat is 36 baseballs, while the opportunity cost for Micah to produce 1 baseball is 1/36 of a bat.

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The complete question is:

Assume that Pablo and Micah can switch between producing baseballs and producing bats at a constant rate. Labor Hours Needed Quantity Produced to Make 1. in 36 Hours baseball bat baseballs bats Pablo 1 3 36 12 Micah 1 2 36 18 Refer to Table 3-8. Micah has an absolute advantage in the production of O a bats and a comparative advantage in the production of baseballs. Ob neither good and a comparative advantage in the production of baseballs. O baseballs and a comparative advantage in the production of bats. Od bats and a comparative advantage in the production of bats.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on the asset's usage, hence calculating the total expense of the asset.

This method is ideal for businesses that rely on assets to generate revenue. The main advantage of this method is that it aligns depreciation expense with the actual usage of the asset. This means that when the asset is used more, the business will charge more expense to reflect that level of usage.

The formula for units-of-production method of depreciation is as follows: Depreciation expense = (Cost of asset - Salvage value) / Total units of production Expected total units of production is the estimated life of the asset in units of usage. In the units-of-production method of depreciation, depreciation expense is determined by multiplying the cost of the asset (less its salvage value) by a fraction representing the units of production expected from the asset in the current year divided by its total expected units of production.

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The approximate value of the annuity is negative 148,647.33 Philippine Pesos (P).

To calculate the value of the annuity, we can use the present value of an annuity formula.

Given:

Payment amount = P 42,114

Interest rate = 3.6%

Number of periods = 2

Using the present value of an annuity formula:

Value of Annuity = Payment amount * (1 - (1 + interest rate)^(-number of periods)) / interest rate

Plugging in the values:

Value of Annuity = P 42,114 * (1 - (1 + 0.036)^(-2)) / 0.036

Calculating the expression inside the brackets:

(1 + 0.036)^(-2) = 1.073216

Calculating the value of the annuity:

Value of Annuity = P 42,114 * (1 - 1.073216) / 0.036

Value of Annuity ≈ P 42,114 * (-0.073216) / 0.036

Value of Annuity ≈ P -148,647.33

Therefore, the value of the annuity is approximately -P 148,647.33.

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Chris paid Richard $5,551.12 to buy the contract from him is the answer.

The given situation is solved by using the present worth formula. The present worth of a contract is the price that is paid to purchase the contract after a specific duration of time has passed. It represents the current value of all future payments that are yet to be received.

Present worth formula: PV= FV / (1+i) n

Here, PV = Present Value of the contract FV = Future Value of the contract n = the duration of the contract i = interest rate

To find the present value that Chris paid to Richard, we have to first calculate the future value of the contract at the end of 10 months. FV = $5,420 + ($5,420 × 5.45% × 10/12)FV = $5,732.25

Using the present worth formula:PV = $5,732.25 / (1+5.00% × 5/12)PV = $5,551.12

Hence, Chris paid Richard $5,551.12 to buy the contract from him.

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i)the total Free Cash Flows for each of the three years from the Smart light’s new project are: Year 1: £5m, Year 2: £5m, Year 3: £5.5m

ii) the value of the NPV of this project is £11.94m.

PART (i)

a) Calculation of Depreciation

Straight-line depreciation: Initial cost - Residual value/Useful life= (£6.5m - £0.5m)/3= £2m per year

b) Calculation of Cost of goods sold

Cost of goods sold: 60% x Annual sales= 60% x £10m= £6m per year

c) Calculation of Operating cash flow

Operating cash flow: EBIT(1 - Tax rate) + Depreciation= EBIT(1 - 0.25) + £2m= (Revenue - Cost of goods sold)(1 - 0.25) + £2m= (£10m - £6m)(1 - 0.25) + £2m= £4m x 0.75 + £2m= £5m per year

d) Calculation of Free cash flow

Free cash flow: Operating cash flow - Capital expenditures= £5m - £6.5m= -£1.5m

PART (ii)

Calculation of Net present value

NPV = (CF1/(1 + r)^1) + (CF2/(1 + r)^2) + (CF3/(1 + r)^3) + (CFn/(1 + r)^n)

where

CF = cash flow in the respective period

n = the last year of the project

CF1 = operating cash flow at the end of the year 1 = £5m

CF2 = operating cash flow at the end of the year 2 = £5m

CF3 = operating cash flow at the end of the year 3 + salvage value = £5m + (£1.5m - (£6.5m - £0.5m)/3 x 2) x 0.75 = £5m + £0.5m = £5.5m

r = cost of capital = 12%

NPV = (£5m/(1 + 12%)^1) + (£5m/(1 + 12%)^2) + (£5.5m/(1 + 12%)^3)= £4.46m + £3.97m + £3.51m= £11.94m

Therefore, the answers are:

i. Year 1: £5m, Year 2: £5m, Year 3: £5.5m

ii. The NPV of this project is £11.94m.

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The given statement "flotation costs need to be taken into account while calculating the cost of issuing new common stock, but need not be taken into account when raising capital from retained earnings" is false as it needs to be considered even when raising capital from retained earnings.  

A publicly traded firm incurs flotation costs as it issues new securities and pays costs such underwriting fees, legal expenses, and registration fees. Businesses must take into account how these fees may affect the amount of cash they can collect via a new offering.

The cost of additional equity for a company is determined by factoring in floatation expenses, estimated return on equity, dividend payments, and the percentage of earnings the company expects to keep. With the issuance of new equity, or freshly issued common stock, there are flotation charges. The flotation cost is the difference between the price of fresh shares and the price of existing equity.

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The reserve-deposit ratio is the fraction of bank deposits that a bank holds in reserve. Currency-deposit ratio is the fraction of deposits that is held in cash by depositors. The value of C = $640 billion, R = $88 billion, M = $1,440 billion, D = $728 billion, and m = 7.27.

Let the monetary base be B = $800 billion, Reserve-Deposit Ratio is rd = 0.1,

Where D is deposits.C = cd × D = 0.8 × DR = $88 billion M = B + C = $800 + $640 billion M = $1,440 billion. D = C + R = $640 + $88 billion D = $728 billion. Money multiplier, m = C/ R = $640 billion/ $88 billion m = 7.27

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