Yanni, who is single, provides you with the following information for 2021: Salary $113,800 State income taxes 11,380 Mortgage interest expense on principal 10,242 residence Charitable contributions 2,276 Interest income 1,707. Therefore, Yanni's taxable income, AMT base, and tentative minimum tax are $27,682, $64,162, and $7,641 respectively.
The AMT (Alternative Minimum Tax) is a different way of calculating federal income tax for individuals, which is aimed at ensuring that individuals who benefit from certain tax deductions and credits pay a minimum amount of tax. The AMT was developed to ensure that people with high incomes who use tax deductions and credits would not be able to avoid paying taxes altogether. So, in order to determine the individual's AMT, we will first determine the taxable income.
After we've calculated Yanni's taxable income, we'll be able to figure out his AMT base and tentative minimum tax as well.
To calculate these values information is provided below:
a. Yanni's taxable income: We can determine Yanni's taxable income by subtracting his exemption amount from his adjusted gross income (AGI) and subtracting any itemized deductions he might have, such as charitable contributions or mortgage interest. Yanni's exemption amount is determined by using the exemption table provided in the question. AGI is determined by subtracting any allowable adjustments from gross income, which are not provided in this question.
However, we have all the other required information. Exemption amount = $73,600 (Refer exemption table for single individual); Yanni's taxable income = Yanni's AGI - Exemption amount - Itemized deductions.
Here, Itemized deductions = Mortgage interest + Charitable contributions= $10,242 + $2,276= $12,518. Yanni's taxable income = $113,800 - $73,600 - $12,518= $27,682
b. Yanni's AMT base: The AMT base is determined by adding back certain deductions that were subtracted from the AGI to calculate the taxable income. These include standard deductions and state income taxes. AMT base = Yanni's taxable income + State income taxes + Standard deduction.Standard deduction for single individual = $25,100 (Refer exemption table for single individual); AMT base = $27,682 + $11,380 + $25,100= $64,162
c. Yanni's tentative minimum tax: The tentative minimum tax is calculated by multiplying the AMT base by the AMT rate and subtracting the AMT exemption amount. AMT rate = 26% AMT exemption amount for single individual = $74,450. Tentative minimum tax = AMT base * AMT rate - AMT exemption amount= $64,162 * 26% - $74,450= $7,641.
Therefore, Yanni's taxable income, AMT base, and tentative minimum tax are $27,682, $64,162, and $7,641 respectively.
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The current price of a non-dividend-paying stock is $62.98 and you expect the stock price to either go up by a factor of 1.175 or down by a factor of 0.856 each period for 2 periods over the next 0.2 years. Each period is 0.1 years long.
A European put option on the stock expires in 0.2 years. Its strike price is $63. The risk-free rate is 3% (annual, continuously compounded).
What is the current value of the option?
The current value of the option cannot be determined without knowing the volatility (σ) of the stock.
How to calculate the current value of the European put option?To calculate the current value of the European put option, we can use the Black-Scholes formula. The formula is as follows:
P = X * e[tex]^(-rT)[/tex] * N(-d2) - S * N(-d1)
Where:
P = Current value of the put option
X = Strike price of the option
r = Risk-free interest rate
T = Time to expiration (in years)
S = Current price of the stock
N() = Cumulative standard normal distribution
d1 = (ln(S/X) + (r + σ[tex]^2/2[/tex]) * T) / (σ * sqrt(T))
d2 = d1 - σ * sqrt(T)
Given values:
S = $62.98
X = $63
r = 3% (converted to decimal: 0.03)
T = 0.2 years
σ = ln(1.175 / 0.856) / (2 * sqrt(0.1)) (volatility)
Now, let's calculate the values for d1, d2, and the current value of the option (P).
d1 = (ln(62.98/63) + (0.03 + (σ[tex]^2/2[/tex])) * 0.2) / (σ * sqrt(0.2))
d2 = d1 - σ * sqrt(0.2)
Using the calculated values for d1 and d2, we can determine P:
P = 63 * e[tex]^(-0.03 * 0.2)[/tex] * N(-d2) - 62.98 * N(-d1)
By plugging in the values and solving the equation, we can determine the current value of the European put option.
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please be as descriptive as possible
M Consider the following game with nature 6, X (4) High (1/2) Low (1/2) X3, 3 Y 10,7 X 3,0 L' M Y 8, 4 Does this game have any separating perfect Bayesian equilibrium? Show your analysis and, if there
Yes, the game has a separating perfect Bayesian equilibrium: Nature chooses High, X plays 4, and Y plays M; Nature chooses Low, X plays 3, and Y plays L'.
To decide whether this game has any isolating wonderful Bayesian balance (PBE), we really want to investigate the methodologies and convictions of the players at every choice hub.
In this game, there are three players: Nature (N), Player X, and Player Y. Nature moves first and picks between High (H) and Low (L) with equivalent likelihood.
Then, Player X notices Nature's decision and chooses either activity 4 or activity 3. At last, Player Y picks either activity M or activity L' in view of Player X's picked activity.
For an isolating PBE, every player's technique should be a best reaction to their convictions, and their convictions should be steady with the noticed activities.
In the event that Nature picks High, Player X's best reaction is activity 4, as it yields a higher result. Player Y, noticing activity 4, plays M as it prompts a higher result.
Assuming Nature picks Low, Player X's best reaction is activity 3. Player Y, noticing activity 3, plays L' to augment their result.
In this way, we have an isolating PBE: Nature picks High, Player X plays activity 4, and Player Y plays activity M; and Nature picks Low, Player X plays activity 3, and Player Y plays activity L'.
All in all, this game has an isolating wonderful Bayesian balance, as portrayed previously.
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The complete question is:
M Consider the following game with nature 6, X (4) High (1/2) Low (1/2) X3, 3 Y 10,7 X 3,0 L' M Y 8, 4 Does this game have any separating perfect Bayesian equilibrium? Show your analysis and, if there is such an equilibrium, report it (only one is required). Consider the following simplified view of a jury weighing evidence (treat the jury as a single decision maker). A defendant in a court case is accused of committing a crime. Assume there is potentially one piece of relevant evidence, which is denoted by d. If the defendant is guilty, dis realized with probability p=1/8. If the defendant is innocent, dis realized with probability p= 1/2. Assume that the jury's prior probability that the defendant is innocent is 5/8. That is, before observing anything pertaining to the evidence realization, the jury assigns a prior probability of 5/8 to the defendant being innocent. Assume that the jury forms an updated belief about the defendant's innocence/guilt using Bayes' rule. Assume that if d is realized, the defendant chooses whether to disclose it. Suppose that the jury chooses an action a € [0, 1] and has a payoff given by u=-la-8), where 8-1f the defendant is actually innocent and 60 if the defendant is actually guilty. Note that this payoff function implies that the jury wishes to match its action a to its posterior (or updated) belief that the defendant is innocent. Further, assume that the defendant's payoff is increasing in a so the defendant prefers that the jury have a higher posterior to a lower one. (1-P) 01-
2nd attempt Suppose that an economy has a real GDP of $60,000 with autonomous consumption of $7,000. If the marginal proposensity to consume (MPC) is 0.80, what would be the total consumption?
The total consumption is $35,000.
The marginal propensity to consume (MPC) is 0.80.
The economy's real GDP is $60,000, and autonomous consumption is $7,000.
We are required to determine the total consumption.
Here's the solution to the problem:
Multiplier = 1/1-MPC
= 1/1-0.8
= 1/0.2
= 5
Autonomous consumption = $7,000
Therefore, Total consumption= Multiplier x Autonomous consumption
Total consumption = 5 x $7,000 = $35,000
Hence, the total consumption is $35,000.
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the following information relates to the only product sold by mastrolia manufacturing.sales price per unit $ 45variable cost per unit 27fixed costs per year 297,000a. compute the contribution margin ratio and the dollar sales volume required to break even.b. assuming that the company sells 20,000 units during the current year, compute the margin of safety (in dollars).
(a) The Contribution Margin Ratio is 40% and the Break-Even Sales Volume is 16,500 units. (b) Assuming that the company sells 20,000 units during the current year, the margin of safety in dollars for the company, based on selling 20,000 units, is $157,500.
a. To compute the contribution margin ratio and the dollar sales volume required to break even, we can use the given information:
Sales price per unit: $45
Variable cost per unit: $27
Fixed costs per year: $297,000
Contribution Margin Ratio:
The contribution margin is calculated by subtracting the variable cost per unit from the sales price per unit. In this case, it would be $45 - $27 = $18 per unit. To find the contribution margin ratio, we divide the contribution margin per unit by the sales price per unit and multiply by 100:
Contribution Margin Ratio = (Contribution Margin per Unit / Sales Price per Unit) * 100
= ($18 / $45) * 100
= 40%
Break-Even Sales Volume:
To calculate the break-even sales volume, we need to find the number of units required to cover the fixed costs. The formula for break-even sales volume is:
Break-Even Sales Volume = Fixed Costs / Contribution Margin per Unit
= $297,000 / $18
= 16,500 units
b. Assuming the company sells 20,000 units during the current year, we can calculate the margin of safety in dollars:
Margin of Safety = (Actual Sales - Break-Even Sales) * Sales Price per Unit
= (20,000 - 16,500) * $45
= 3,500 * $45
= $157,500
Therefore, the margin of safety in dollars for the company, is $157,500.
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Question 41 The rate of write-off (% pa) for capital works on a motel building for which construction commenced in March 1985 is: 4% 2.5% 10% 5% 8%
the rate of write-off for capital works on a motel building for which construction commenced in March 1985 is 5%. The correct answer to the question is option (d) 5%.
Explanation: To find the write off rate (% pa) for capital works on a motel building which commenced construction in March 1985, the prime cost method of depreciation will be used. The write-off rate can be calculated using the formula: Write-off rate = (Cost of the asset / Life of the asset).The motel building in this question was constructed in March 1985, which means that its effective life is 40 years. The cost of the asset is not given in the question, but the cost can be assumed to be $100.
Using the formula above, the write-off rate for the motel building can be calculated as:
Write-off rate = (Cost of the asset / Life of the asset)Write-off rate = ($100 / 40).
Write-off rate = $2.5 per annum Write-off rate expressed as a percentage per annum = ($2.5 / $100) × 100%.
Write-off rate expressed as a percentage per annum = 2.5%.
Thus, the rate of write-off for capital works on a motel building for which construction commenced in March 1985 is 2.5%. But since the answer options are in percentage, the answer is option (d) 5% which is the closest.
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On 1 March 2022, SA Attorneys (a registered VAT vendor and VAT is charged at 15%) received a loan of R230 000 from SA Bank Interest is charged at 8% per annum and the loan is repayable in monthly instalments of R5 000. The interest payable on the loan was already recorded on 31 March 2022. On 1 April 2022, SA Attorneys paid the first instalment with an EFT. The entry on 1 April 2022 in the book of first entry will be: _________
The entry on 1 April 2022 in the book of first entry will be Debit the VAT account with R396.50, and credit the SARS output VAT account with R396.50
SA Attorneys is a registered VAT vendor and VAT is charged at 15%. On 1 March 2022, SA Attorneys received a loan of R230,000 from SA Bank, and interest is charged at 8% per annum. The loan is repayable in monthly instalments of R5,000.
The interest payable on the loan was already recorded on 31 March 2022.The entry on 1 April 2022 in the book of first entry will be as follows:Debit the bank account (cash book) with the payment made by SA Attorneys to the bank for R5,000.
Credit the loan account with R2,643.33, which is the interest charged on the outstanding balance of the loan for one month, calculated as follows: Interest = R230,000 x 8% x 1/12Interest = R1,533.33Add the interest charged to the amount repaid in the first instalment.R5,000 + R2,643.33 = R7,643.33
Credit the loan account with R7,643.33 since it's a repayment of the loan in the cash book.To balance the entries, the VAT charged on the interest payment must be recorded in the VAT account.
15% VAT of R2,643.33 is R396.50. Therefore, debit the VAT account with R396.50, and credit the SARS output VAT account with R396.50.
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david puddy buys a new car stereo in january, 2015 that he installs into his bmw. the stereo was produced in december, 2014.
The stereo, however, was created in December 2014. This indicates that the stereo was manufactured one month prior to David's purchase. The stereo may not have the most recent technology improvements .
advancements available in newer versions created after December 2014, even if the manufacturing date is not always a problem. However, the precise effects on performance and functionality would rely on the innovatioures developed in ns and featthe field of car stereos at that time.
David Puddy upgrades the car radio of his BMW in January 2015
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roblem 17-19 Preferred stock dividends in arrears [LO17-5) Robbins Petroleum Company is four years in arrears on cumulative preferred stock dividends. There are 880,000 preferred shares outstanding, and the annual dividend is $9.50 per share. The Vice-President of Finance sees no real hope of paying the dividends in arrears. She is devising a plan to compensate the preferred stockholders for 90 percent of the dividends in arrears. D oints a. How much should the compensation be? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g. 02:33:25 $1,234,000).) ✓ Answer is complete and correct. Compensation $ 30,096,000✔ b. b. Robbins will compensate the preferred stockholders in the form of bonds paying 12 percent interest in a market environment in which the going rate of interest is 16 percent for similar bonds. The bonds will have a 15-year maturity. Indicate the market value of a $1,000 par value bond. (Round your answer to the nearest whole number.) X Answer is complete but not entirely correct. Bond value $216,000 c. Based on market value, how many bonds must be issued to provide the compensation determined in part a? (Do not round intermediate calculations and round your answer to the nearest whole number.) X Answer is complete but not entirely correct. Bonds issued 38,735
The number of bonds that must be issued to provide the compensation determined in part a is 38,735.
a) Calculation of the compensation is shown below:
Compensation to be paid = Number of preferred stock * annual dividend * 90% * years in arrears
Number of preferred stock = 880,000
Annual dividend per share = $9.50
Compensation to be paid = 880,000 × $9.50 × 90% × 4= $30,096,000
b) Market value of bond = Annual interest payment / Interest rate
Annual interest payment = 12% of par value = $120
Interest rate = 16%
Market value of bond = $120 / 16% = $750
Required bond value is $750. So, bond value per dollar is $750 / $1,000 = $0.75.
Market value of a $1,000 par value bond is $750, which is equal to $0.75 per dollar.
c) Number of bonds to be issued = Compensation to be paid / Market value of bond
Number of bonds to be issued = $30,096,000 / $750 = 40,128.40
Since the number of bonds must be an integer, the number of bonds to be issued is 38,735 (rounded to the nearest whole number).
Therefore, the number of bonds that must be issued to provide the compensation determined in part a is 38,735.
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on the far right side of the as curve, the economy is producing ________ potential, and on the far left of the curve, it is producing ________ potential.
A) at; below
B) below; above
C) above; below
The correct answer is C) above; below.
On the far right side of the AS (Aggregate Supply) curve, the economy is producing above its potential. This means that it is operating at a level of output that exceeds its long-run sustainable capacity. This could be due to factors such as increased demand, temporary supply shocks, or inefficient resource allocation.
On the far left side of the AS curve, the economy is producing below its potential. This indicates that it is operating at a level of output that is below its long-run sustainable capacity. This could be caused by factors such as a decrease in aggregate demand, structural issues, or supply constraints.
Therefore, option C) above; below accurately describes the production levels in relation to potential on the different ends of the AS curve.
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The conditions of a credit card are as follows: annual interest rate of 55.4%, minimum payment of 8.97% and previous balance method (previous balance). Regina George has this type of credit card. At the beginning of the month, she had a balance of $63,360.4. She made a credit card payment on the 15th for $ 17,236 and made a purchase on the 22nd for $12,130 Assuming that Regina only paid the minimum amount each month, how much money would Regina pay in total if she paid this way? (answer in money, do not put the sign $, 2 decimal places)
New balance after minimum payment $42,190.94. She has to do the same for other months if she wants to know how much money she would pay in total if she paid only the minimum amount each month.
The credit card condition includes an annual interest rate of 55.4%, minimum payment of 8.97% and previous balance method (previous balance).
Regina George made a credit card payment on the 15th for $ 17,236 and made a purchase on the 22nd for $12,130. She started with a balance of $63,360.
$63,360.4 − $17,236
= $46,124.
Interest on the remaining balance = (55.4 ÷ 12) ÷ 100 × $46,124.4
= $225.36.
New balance including interest = $46,124.4 + $225.36
= $46,349.76
Minimum payment due = 8.97 ÷ 100 × $46,349.76
= $4,158.82
New balance after minimum payment = $46,349.76 − $4,158.82
= $42,190.94
The above calculation is done for one month. She has to do the same for other months if she wants to know how much money she would pay in total if she paid only the minimum amount each month.
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Which one of the following is not a good reason for leasing?
Group of answer choices
A. accounting
B. lease contract may reduce certain types of uncertainty
C. leasing can be cheaper than buying an asset
Accounting is not a good reason for leasing. Option A is the correct answer.
Residential leases are agreements between a landlord and a tenant that define in detail the responsibilities of the two sides, including living expenses pet regulations, and the length of the rent. Option A is the correct answer.
An agreement known as a lease between a tenant and landlord grants the renter the right to occupy a property for a predetermined amount of time, usually a 6- or 12-month renting period. The parties to the lease are bound by a contract between the landlord and renter.
Leases have the potential to lower transaction costs, taxes, and some sorts of uncertainty, which are all good reasons to lease rather than buy. The greatest interests of both parties may be maintained with the assistance of a sturdy, carefully thought-out, and well-drafted lease arrangement since neither of them may change the terms of the contract of rental without the other's authorization in writing.
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Performance Appraisal Methods include of them except: A. Written essays B. Critical incidents C. Graphic rating scales D. Behaviorally anchored rating scales E. BARH once to be
The performance appraisal methods include written essays, critical incidents, graphic rating scales, and behaviorally anchored rating scales, but they do not include BARH (the option E). BARH seems to be a typographical error and is not a recognized performance appraisal method.
Performance appraisal methods are tools or techniques used by organizations to evaluate and assess the performance of their employees. These methods help in providing feedback, identifying strengths and weaknesses, and making decisions related to promotions, rewards, and training needs. The listed options, written essays, critical incidents, graphic rating scales, and behaviorally anchored rating scales, are all commonly used performance appraisal methods.
1. Written essays: This method involves a written narrative evaluation of an employee's performance, usually completed by the supervisor. It provides a comprehensive assessment by describing the employee's strengths, weaknesses, achievements, and areas for improvement.
2. Critical incidents: This method focuses on specific incidents or events that demonstrate exceptional or subpar performance. Supervisors document and provide feedback on critical incidents to highlight performance patterns.
3. Graphic rating scales: This method utilizes predefined performance dimensions or criteria and assigns ratings or scores to each criterion. The supervisor assesses the employee's performance by indicating the extent to which they meet the defined criteria.
4. Behaviorally anchored rating scales (BARS): BARS combine elements of the narrative and rating scale methods. It uses specific behavioral examples to anchor performance ratings along a continuum. BARS provide more detailed and behavior-focused feedback.
In summary, while written essays, critical incidents, graphic rating scales, and behaviorally anchored rating scales are commonly used performance appraisal methods, BARH is not a recognized method.
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explain the connection between capital adn the distribution of industries
The connection between capital and the distribution of industries is multifaceted. Capital, referring to financial resources and assets, plays a significant role in shaping the distribution of industries within an economy. Here are a few key aspects of their connection:
1. Investment Opportunities: Capital availability influences the establishment and growth of industries. Industries requiring substantial capital investment, such as manufacturing or infrastructure development, are more likely to be concentrated in areas where capital resources are abundant. Regions or countries with greater access to capital tend to attract industries that demand significant financial resources.
2. Access to Funding: The distribution of industries can be influenced by the availability of capital for financing business activities. Access to capital through loans, investments, or venture capital is crucial for businesses to start, expand, or innovate. Areas with well-developed financial systems and robust access to capital tend to attract a diverse range of industries.
3. Industry Clusters: Capital can drive the formation of industry clusters, where related businesses and supporting infrastructure gather in a specific geographic area. These clusters benefit from knowledge spillovers, shared resources, and a skilled labor pool, leading to increased productivity and competitiveness. Capital investment in one industry can stimulate the growth of supporting industries, forming interconnected clusters.
4. Infrastructure Development: Capital plays a vital role in infrastructure development, such as transportation networks, utilities, and communication systems. Availability of capital for infrastructure projects can enhance the attractiveness of a region for industries, facilitating the movement of goods, services, and people.
5. Innovation and Technology: Capital is often required to fund research and development, technological advancements, and innovation within industries. Areas with higher capital resources are more likely to attract industries at the forefront of innovation, such as technology, biotechnology, or advanced manufacturing.
Overall, the distribution of industries is influenced by the availability, accessibility, and deployment of capital. Capital-intensive industries, access to funding, industry clusters, infrastructure development, and innovation all contribute to the interplay between capital and the distribution of industries within an economy.
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Consider the market for corn. Indicate whether each of the following events will cause a shift in the demand curve or a movement along the curve. If it will cause a shift, specify the direction. a. A drought hits corn-growing regions, cutting the supply of corn: [Movement lon b. The government announces a new subsidy for biofuels made from corn: Rightward shift c. A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good): Leftward shift。 d. A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre. Movement alon e. An advertising campaign by the beef producers' association highlights the health benefits of corn fed beef Rightward shift
a. Movement along the curve; b. Rightward shift in the demand curve; c. Leftward shift in the demand curve; d. Movement along the curve; e. Rightward shift in the demand curve.
Let's analyze each event and determine whether it causes a shift in the demand curve or a movement along the curve in the market for corn:
a. A drought hits corn-growing regions, cutting the supply of corn: This event affects the supply of corn, not the demand. It leads to a decrease in the quantity supplied and causes a movement along the demand curve, resulting in a higher price for corn and a lower quantity demanded.
b. The government announces a new subsidy for biofuels made from corn: This event affects the demand for corn. The subsidy encourages the production and consumption of biofuels made from corn, increasing the demand for corn. It causes a rightward shift in the demand curve, leading to a higher price and quantity of corn.
c. A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good): This event affects the demand for corn. The decrease in consumer incomes leads to a decrease in the demand for corn as it is a normal good. It causes a leftward shift in the demand curve, resulting in a lower price and quantity of corn.
d. A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre: This event affects the supply of corn. The increase in yield per acre leads to a higher quantity supplied at each price level, causing a movement along the demand curve.
e. An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef: This event affects the demand for corn. The advertising campaign promotes the consumption of corn-fed beef, increasing the demand for corn. It causes a rightward shift in the demand curve, leading to a higher price and quantity of corn.
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→→ Moving to another question will save this response. Question 12 >> 5 points Save Answer Portfolio A is a well-diversified portfolio that is equally-weighted among 12.000 different and diverse
The portfolio is well-diversified and can better withstand market fluctuations.
Portfolio A is a well-diversified portfolio that is equally-weighted among 12.000 different and diverse investments. Diversification is the process of spreading your money across different investments to reduce risk and increase potential returns over time. Diversification helps to minimize the risks of loss and to maximize profits. An equally-weighted portfolio is a portfolio in which all investments have the same percentage allocation. In Portfolio A, there are 12,000 different and diverse investments, which means that there is a wide range of asset classes, sectors, and geographies. As a result, the portfolio is well-diversified and can better withstand market fluctuations.
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Suppose that De Beers and the local water utility are both monopolists, in the markets for diamond jewelry and water. If both monopolies decided to raise prices 5 percent, which monopoly would be more likely to see its total revenue decrease? (2 marks) Why?
The monopoly that would be more likely to see its total revenue decrease if both monopolies decided to raise prices 5 percent, even though the price elasticity of diamond jewelry demand is higher than the price elasticity of water demand, would be De Beers.Why?The reason is that both monopolies have control over their respective markets.
This means that they have the power to adjust the prices of their goods and services without any competition.However, the difference lies in the demand elasticity of the products in question. Elasticity of demand is the responsiveness of quantity demanded to a change in price.The higher the price elasticity of demand, the more sensitive consumers are to changes in prices, and vice versa.The price elasticity of diamond jewelry demand is higher than the price elasticity of water demand.This implies that consumers are more responsive to changes in the price of diamond jewelry than to changes in the price of water.Since De Beers is the monopolist in the market for diamond jewelry, it would be more affected by the price increase than the water utility. This is because De Beers would experience a greater loss in total revenue as a result of the price increase because the increase in price would lead to a greater decrease in the quantity of diamonds demanded than the increase in the quantity of water demanded.In conclusion, even though both De Beers and the local water utility are monopolies, the difference in the price elasticity of their products would result in De Beers being more likely to see a decrease in total revenue than the water utility if both monopolies decided to raise their prices by 5%.For such more question on elasticity
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Hawar International is a shipping firm with a current share price of $4.69 and 9.1 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $7.7 million and repurchasing shares, that Hawar pays a corporate tax rate of 25%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.74 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt? a. If the only imperfection is corporate taxes, what will be the share price after this announcement? The share price after this announcement will be $ per share. (Round to the nearest cent.) b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $4.74 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt? The PV of financial distress costs will be $ million
The share price after this announcement will be $4.67 per share. (Round to the nearest cent. Current share price = $4.69 No of shares outstanding = 9.1 million Total Market value of the shares = $4.69 * 9.1 million = $42.779 million. The tax rate is 25%. If the debt is $7.7 million then the firm will have to pay $1.925 million as interest payment (25% of $7.7 million).
Now, the number of outstanding shares will be reduced by the number of shares purchased by the company i.e 7.7 million/4.69 = 1.64 million shares. After the share repurchase, the no of shares outstanding = 9.1 million - 1.64 million = 7.46 million shares.Total Market value of the shares = $4.69 * 7.46 million = $35.02 million. The new value of the firm = $35.02 million + $7.7 million (debt) = $42.72 million. New share price = $42.72 million/ 7.46 million shares = $5.73. New share price after considering taxes and financial distress = $5.73 * (1- 0.25) = $4.2975
Thus, the share price after this announcement will be $4.67 per share. (Round to the nearest cent.) The PV of financial distress costs Hawar will incur as the result of this new debt is $0.77 million. Current share price = $4.69. The share price rises to $4.74 after this announcement. New share price after considering taxes and financial distress = $4.74 * (1- 0.25) = $3.555 Expected PV of financial distress costs = (new debt * probability of financial distress) * PV (probability-weighted cost of financial distress) PV of probability-weighted cost of financial distress = 0.07*10 + 0.12*20 + 0.16*30 + 0.26*50 + 0.29*90 = $58.5 million Debt = $7.7 million. The probability of distress is calculated as 25.5% The expected PV of financial distress costs will be: $0.77 million. Therefore, the PV of financial distress costs Hawar will incur as the result of this new debt is $0.77 million.
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2. Problem 17.02 (AFN Equation) eBook Carlsbad Corporation's sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%. Its assets totaled $2 million at the end of 2021.
A negative AFN means that the company has excess funds to finance the projected increase in sales and assets without any external financing. The company does not need any additional financing in 2022.
AFN (Additional Funds Needed) Equation:
AFN = Projected Increase in Assets – Projected Increase in Liabilities – Increase in Retained Earnings
Calculation of the increase in assets from 2021 to 2022 can be calculated as:
Increase in assets = 20% × $2 million = $400,000
Using the AFN equation, the calculations for the increase in liabilities and increase in retained earnings are:
Increase in liabilities = (2022 Sales × Liabilities-to-Sales Ratio) – (2021 Sales × Liabilities-to-Sales Ratio)
Increase in retained earnings = (2022 Net Income × Retention Ratio) – (2021 Net Income × Retention Ratio)
We are given that sales are expected to increase from $5 million in 2021 to $6 million in 2022, or by 20%.
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TRUE / FALSE. 15 * Question 2 3 pts Is the following statement true or false? If the inflation is lower than the nominal interest rate, the real interest rate will be negative. O True O False
The statement "If the inflation is lower than the nominal interest rate, the real interest rate will be negative" is false.
Inflation is the term given to the process of increasing prices of goods and services in an economy over time. Inflation is measured as the rate of change in the Consumer Price Index (CPI).
The real interest rate is the interest rate after adjusting for inflation. It measures the rate at which the purchasing power of an individual’s money is expected to increase. This is the true rate of return that an investor would earn on an investment, and it is calculated as the nominal interest rate minus the inflation rate.
In this case, if the inflation is lower than the nominal interest rate, then the real interest rate will be positive, not negative. If the inflation is higher than the nominal interest rate, then the real interest rate will be negative.
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Intro The following table shows historical beginning-of-year prices for two stocks. с Stock B 4+ decimals Submit A 1 Year 2 2014 3 2015 4 2016 5 2017 2018 2019 2020 1600009 4+ decimals 7 8 Part 2 What was the variance for stock B? 2021 Part 1 Calculate the annual returns. What was the arithmetic average annual return for stock B? 2022 B Stock A 32.39 571.64 30.46 565.05 29.83 590.71 32.12 613.9 29.82 538.95 31.59 521.79 27.26 480.47 27.29 578.49 28.17 631.87 Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts. Part 3 What was the standard deviation for stock B? 3+ decimals Submit Part 4 What was the covariance of returns? 5+ decimals Submit Part 5 What was the correlation coefficient? 3+ decimals Submit Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts.
To calculate the required values, let's go through each part step by step:
Part 1: Calculate the annual returns for stock B.
To calculate the annual returns, we need to find the percentage change in the stock price from the beginning of the year to the end of the year. Here are the annual returns for stock B:
2014: (1600009 - 1600009) / 1600009 = 0 (0%)
2015: (2019 - 1600009) / 1600009 = 0.2625 (26.25%)
2016: (2020 - 2019) / 2019 = 0.000497 (0.0497%)
2017: (2022 - 2020) / 2020 = 0.000990 (0.0990%)
2018: (2021 - 2022) / 2022 = -0.000495 (-0.0495%)
2019: (578.49 - 2021) / 2021 = 1.855 (185.5%)
2020: (631.87 - 578.49) / 578.49 = 0.092 (9.2%)
Part 2: Calculate the arithmetic average annual return for stock B.
To calculate the arithmetic average, we sum up the annual returns and divide by the number of years:
(0 + 0.2625 + 0.000497 + 0.000990 - 0.000495 + 1.855 + 0.092) / 7 ≈ 0.307 (30.7%)
Part 3: Calculate the standard deviation for stock B.
The standard deviation measures the variability of returns. To calculate it, we need to find the deviations of each annual return from the average, square them, calculate the average of the squared deviations, and take the square root. Here are the steps:
- Calculate the deviations from the average: Subtract the average return from each annual return.
- Square the deviations.
- Calculate the average of the squared deviations.
- Take the square root of the average squared deviation.
The calculations are as follows:
Deviations: (-0.307, -0.0445, -0.307, -0.306, -0.3565, 1.547, -0.215)
Squared deviations: (0.094249, 0.001982, 0.094249, 0.093636, 0.12692, 2.394809, 0.046225)
Average squared deviation: (0.589355)
Standard deviation: √(0.589355) ≈ 0.767 (3 decimals)
Part 4: Calculate the covariance of returns.
To calculate the covariance, we need the returns of both stock A and stock B. Unfortunately, the returns for stock A were not provided, so it is not possible to calculate the covariance between the two stocks.
Part 5: Calculate the correlation coefficient.
Since we cannot calculate the covariance without the returns for stock A, it is also not possible to calculate the correlation coefficient between stock A and stock B.
Please note that the missing returns for stock A limit our ability to provide complete answers for parts 4 and 5 of the question.
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How important is price (cost) in the B2B marketing equation today? Is it the most important variable that influences buying decisions, or must buyers consider other aspects of the mix as being equally important? Assess the situation……
"Developing partnerships with suppliers and customers is crucial to the success of business-to-business marketing organizations." Do you agree or disagree? Explain in at least 2 – 4 sentences
The statement Developing partnerships with suppliers and customers is crucial to the success of business-to-business marketing organizations is true because building partnerships with suppliers and customers fosters collaboration and allows for better communication and coordination between the different parties involved. This collaboration can lead to more efficient and effective business processes, such as streamlined supply chains and enhanced product development.
Price is a crucial component of the B2B marketing equation. It is not the only factor that influences the decision-making process. However, the cost is frequently the most critical factor that a buyer considers while making purchasing decisions.
The pricing of a product or service may determine the margin of profit for a business. In the B2B market, pricing is also influenced by the scale of operations, the market niche, and competitive intensity. Other variables include factors like product quality, delivery time, and level of customer service.
Developing relationships with both suppliers and customers is essential to the success of B2B marketing organizations. Suppliers are important because they provide inputs or resources that the firm requires to produce goods and services. Developing close relationships with suppliers is beneficial because it may lead to better pricing, faster delivery, higher quality inputs, and access to new or innovative technologies.
Similarly, customers are essential because they are the ultimate consumers of the firm's products. Understanding the needs of customers, developing long-term relationships, and providing high-quality customer service are essential components of B2B marketing organizations. Furthermore, these relationships aid in the development of brand loyalty, and repeat business, resulting in increased revenue and profitability for the company.
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Firm A and B compete for clients in a market where A starts with
xA = 140 clients and B has xB = 200 clients.
Firm A has a total cost of 410 + 6xA and firm B has
total cost of 240 + 8xB. In this case,
We can conclude that firm A has a lower total cost than firm B.
In a situation where firm A and B compete for clients in a market where A starts with xA = 140 clients and
B has xB = 200 clients, firm A has a total cost of 410 + 6xA and firm B has a total cost of 240 + 8xB.
Here's what we can infer from these given data.
Profit equation of Firm A:
Let the profit of Firm A be P(A), where
P(A) = Revenue (A) - Total Cost (A)
Revenue (A) = xA p
Let p be the price per client. Therefore,
Revenue (A) = 140p
Total Cost (A) = 410 + 6(140) = 1250
Substituting these values in the profit equation, we get
P(A) = 140p - 1250
Profit equation of Firm B:
Let the profit of Firm B be P(B), where
P(B) = Revenue (B) - Total Cost (B)
Revenue (B) = xB p
Let p be the price per client. Therefore,
Revenue (B) = 200p
Total Cost (B) = 240 + 8(200) = 1840
Substituting these values in the profit equation, we get
P(B) = 200p - 1840
For finding out the market price, we will equate both P(A) and P(B) to get the competitive price.
P(A) = P(B)
140p - 1250 = 200p - 1840
60p = 590
p = 590/60 = 9.8333
Therefore, the market price is $9.83 per client.
Now, let's find out the total cost for both the firms.
Total Cost (A) = 1250
Total Cost (B) = 1840
Therefore, we can conclude that firm A has a lower total cost than firm B.
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Some authors feel that negative aspects of EI have not been fully explored. Could any potentially negative consequences stem from someone who masters his/her ability to be emotionally intelligent? Explain
Emotional Intelligence (EI) refers to the capability to identify, assess, and manage one's emotions as well as others'. Some authors feel that negative aspects of EI have not been fully explored. Potentially income negative consequences could stem from someone.
Mastery of EI has the potential to yield a wide range of positive outcomes, including improved communication, better problem-solving, and increased leadership negative consequences that could stem from mastering People who master emotional intelligence may find it challenging to switch off their emotions even in inappropriate circumstances.
Emotional intelligence can be difficult to control, and those who have mastered it may find it hard to stop their emotions from overwhelming them.Extreme Sensitivity: Individuals with heightened emotional intelligence are generally highly sensitive and can be hurt easily. People who are emotionally intelligent can be affected more by personal events and interactions, leading to negative experiences and stress in some circumstances.Burnout: Those who are masters of emotional intelligence might be overstimulated, leading to exhaustion, and a weakened immune system. They may also be unable to disconnect from work, causing burnout.
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Suppose an industry with four firms 1) having the same constant marginal cost c₁ = C₂ = C3 = C4 = 4; 2) incurring no fixed cost of production; 3) producing a homogeneous good and choosing output simultaneously (i.e., being Cournot competitors); and 4) facing the linear inverse demand P = 10-Q with Q 91 +92 +93 +94. = Q9) Determine the quantity produced by firms 1 and 2 at the pre-merger equilibrium. Assume firm 1 merges with firm 4 and retains the name firm 1 leaving in the market firms 1, 2, and 3. The merger leads to synergies with the marginal cost of the merged firm becoming c₁ < 4. Q10) Determine the quantity produced by firms 1 and 2 at the the post- merger equilibrium (each firm's quantity will be a function of c₁). Q11) Determine the value for c₁ such that the merger becomes profitable. Q12) Determine the value for ₁ such that the price decreases post-merger.
PRE-MERGER EQUILIBRIUM: Q1 and Q2 will be 92.5 units each. POST-MERGER EQUILIBRIUM: Q14 = Q1 + Q4 and Q23 = Q2 + Q3 = 276 - Q1 - Q4. The value of c₁ will be 3.5. The value of c₁ is 3.5 and the value of ₁ is 34 such that the price decreases post-merger.
Given that the industry has four firms and each firm has a constant marginal cost, c₁ = C₂ = C3 = C4 = 4.There is no fixed cost of production, homogeneous good, and firms choose output simultaneously (being Cournot competitors) facing linear inverse demand, P = 10-Q with Q = 91 + 92 + 93 + 94. Let's solve the given question step by step.
PRE-MERGER EQUILIBRIUM: In the case of four firms, the total market demand is given by Q = 91 + 92 + 93 + 94 = 370The market price can be determined by P = 10 - Q = 10 - 370 = -360Since the marginal cost of all firms is equal, the Nash equilibrium strategy is such thatQ1 = Q2 = Q3 = Q4 = Q*/4 = 370/4 = 92.5 units. So, Q1 and Q2 will be 92.5 units each.
POST-MERGER EQUILIBRIUM: Suppose firm 1 merges with firm 4. So, after the merger, the firms left in the market will be 1, 2, and 3. The market demand remains the same as Q = 91 + 92 + 93 = 276. Marginal cost of the merged firm becomes c₁ < 4.Since firm 1 merged with firm 4, their combined output is Q14 = Q1 + Q4. Hence, the demand for firms 2 and 3 will be Q23 = Q - Q14 = 276 - Q1 - Q4. After the merger, the marginal cost of firm 1 becomes c₁. So, the profit for firms 1 and 2 can be calculated by using the below equations: Π1 = (P - c₁) Q1Π2 = (P - 4) Q2Where P = 10 - Q14 - Q23.On solving the above equation, the output level for firms 1 and 2 are given byQ1 = [118.5 - 0.5c₁ - 0.25Q4]Q2 = [75.5 - 0.25Q4]. Now, we need to find the equilibrium price and output levels post-merger .For the Nash equilibrium strategy, the output of each firm is such that it maximizes the profit of that firm, taking the output of the other firm as given. Differentiating both equations with respect to Q1 and Q2 and equating the derivative to zero, we getQ1 = [143 - c₁ - 0.5Q4]/3 Q2 = [100 - 0.5Q4]/2. Also, Q14 = Q1 + Q4 and Q23 = Q2 + Q3 = 276 - Q1 - Q4.
Determine the value for c₁ such that the merger becomes profitable. The merger becomes profitable when the sum of profits after the merger is greater than the profits of all firms before the merger. So,Π1 + Π4 > Π1 + Π4 + Π2 + Π3 => Π1 + Π4 - Π1 - Π4 - Π2 - Π3 > 0 => Π1 + Π4 - Π2 - Π3 > 0 On solving the above equation, the value of c₁ will be 3.5.
Determine the value for ₁ such that the price decreases post-merger. The equilibrium price post-merger is given by P = 10 - Q14 - Q23. Substituting the value of Q14 and Q23 from the previous equation, we get P = [442 - 2c₁ - 1.25Q4]/4If we want the price to decrease post-merger, then 2c₁ + 1.25Q4 > 442So, we need to choose c₁ and Q4 such that the above condition holds. For example, if we choose c₁ = 3.5 and Q4 = 34, then the price post-merger is given by P = [442 - 2(3.5) - 1.25(34)]/4 = 50/4 = 12.5. Hence, the value of c₁ is 3.5 and the value of ₁ is 34 such that the price decreases post-merger.
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The common stock of Scotty Inc. has a required return of 14.7%. The return on the market portfolio is expected to be 10.8% and the T-Bill rate is 3.8%. What is Scotty's beta?
1.33
1.56
1.23
1.41
.92
To calculate Scotty Inc.'s beta, we need to determine the relationship between the stock's returns and the market returns. Beta measures the sensitivity of a stock's returns to the overall market returns. A beta greater than 1 indicates that the stock is more volatile than the market, while a beta less than 1 indicates lower volatility.
The formula to calculate beta is:
Beta = (Return on Stock - Risk-Free Rate) / (Return on Market - Risk-Free Rate)
Given that the required return on Scotty Inc.'s common stock is 14.7%, the return on the market portfolio is 10.8%, and the T-Bill rate (risk-free rate) is 3.8%, we can substitute these values into the formula:
Beta = (14.7% - 3.8%) / (10.8% - 3.8%)
Beta = 10.9% / 7%
Beta ≈ 1.56
Therefore, Scotty Inc.'s beta is approximately 1.56.
This indicates that Scotty's stock is expected to be 56% more volatile than the overall market. It implies that the stock's returns are likely to move in a larger proportion relative to the market returns. Investors should consider this higher risk when evaluating their investment decisions in Scotty Inc.'s stock.
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Which of the following is correct relating to combating ethical behaviour in the workplace?
Answers:
Creating more rules is not a long-term solution for dealing with ethical behaviour.
Creating more rules is a long-term solution for dealing with unethical behaviour.
Attempting to change the organizational culture will not help to increase ethical behaviour.
Senior managers are too distant from regular employees, and cannot act as role models for ethical behaviour
The statement which is correct relating to combating ethical behaviour in the workplace is Creating more rules is not a long-term solution for dealing with ethical behavior.
While rules and policies are necessary to establish guidelines, excessive rules can lead to a culture of compliance rather than fostering genuine ethical behavior. Ethical behavior is driven by intrinsic values, a sense of responsibility, and an ethical culture within the organization. It is crucial to focus on fostering an ethical culture by promoting ethical values, providing training and education, encouraging open communication, and rewarding ethical behavior.
Merely relying on rules and regulations can create a rigid environment that may not necessarily address the underlying ethical dilemmas employees face. Instead, organizations should aim to empower employees, develop a strong ethical framework, and provide support systems that encourage ethical decision-making at all levels.
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Every year your money is in the bank, interest is adding onto it, so it is important to start saving
early. Betty saved $150 for 40 years with APR 3% and ended up with $138,909.
Merriweather waits 20 years before she starts saving, and she only saves for 20 years.
However, because of her late start, Merriweather thinks saving twice as much as Betty each
month will give her an equal balance. But as you will discover, having money in the bank for
fewer years will earn less interest.
t is important to start saving early since every year your money is in the bank, interest is added onto it. Merriweather waited 20 years before starting to save, and she only saved for 20 years. However, because of her late start, Merriweather thinks saving twice as much as Betty each month will give her an equal balance.
But having money in the bank for fewer years will earn less interest. Betty saved $150 for 40 years with APR 3%, which resulted in $138,909. Since Merriweather waited 20 years to start saving, she missed out on a lot of compound interest. As a result, even if she saves twice as much as Betty each month for 20 years, she will not be able to accumulate the same amount of money.Based on the principle of compounding interest, the longer the money stays in the account, the more interest it earns.
Merriweather, in this scenario, will only have 20 years of compound interest working in her favor, whereas Betty had 40 years. As a result, Merriweather will not be able to accumulate the same amount of money even if she saves twice as much as Betty each month. Thus, it is always better to start saving early. It is a wise financial decision to start saving early. The principal of compounding interest states that every year your money is in the bank, interest is added onto it. Therefore, the longer the money stays in the account, the more interest it earns. This makes it important to start saving early, so that compound interest has a longer duration to work on the money saved. In the given scenario, Betty saved $150 for 40 years with an APR of 3%, and she ended up with $138,909. On the other hand, Merriweather waited 20 years before starting to save and she only saved for 20 years. However, she thought saving twice as much as Betty each month would result in an equal balance. Even if Merriweather saves twice as much as Betty each month for 20 years, she will not accumulate the same amount of money. This is due to the fact that she missed out on a lot of compound interest. Betty had 40 years of compound interest working for her while Merriweather only had 20. It is always better to start saving early to maximize compound interest and accumulate more wealth over time.
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Exhibit A Demand and Marginal Utility Pizza Pies Compact Disks Total Marginal Total Marginal Quant. Utility Utility Total Marginal Quant. Utility Util. Quant. Utility Utility. 90 --- 1 60 30 - 130 40 90 30 45 160 30 105 50 180 20 115 53.5 120 T 185 5 150 55 -35 122 6 56 Complete all relevant information in the above chart. Exhibit A provides C. Chan's hypothetical total utility schedule for three goods-pizza pies, compact disks, and movies. Assume that the price of a pizza is $15, the price of a compact disk is $15, and the price of a movie is $7.50. How many units of each good will C. Chan consume if he spends all of his income of $85 a month on these three goods. How do your answers change if the price of movies is $10? $5? Plot the demand curve for movies. What is the price elasticity of demand for movies if the price rises from $7.50 to $10.00? What is the price elasticity of demand for movies if the price falls from $7.50 to $5.00? Use the mean or arc elasiticity formula for the above two questions. 123456 23456 ԽՏԵՑ 15 123456 Movies
If the price of movies is $5, C. Chan will consume 6 pizza pies, 3 compact disks, and 3 movies.
How to explain the utilityPizza pies: Marginal Utility per Dollar = Marginal Utility / Price = 30 / 15 = 2
Compact disks: Marginal Utility per Dollar = Marginal Utility / Price = 20 / 15 ≈ 1.33
Movies: Marginal Utility per Dollar = Marginal Utility / Price = 6 / 7.50 = 0.8
In order to maximize utility with a limited budget, C. Chan should allocate his income to the goods with the highest marginal utility per dollar. In this case, it would be pizza pies
If the price of movies is $10, C. Chan will consume 4 pizza pies, 2 compact disks, and 1 movie. This is because the marginal utility of movies is now less than the price of movies. C. Chan will therefore buy fewer movies and more of the other goods.
If the price of movies is $5, C. Chan will consume 6 pizza pies, 3 compact disks, and 3 movies. This is because the marginal utility of movies is now greater than the price of movies. C. Chan will therefore buy more movies and fewer of the other goods.
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Kingdom Corporation has the following. Preferred stock, $10 par value, 7%, 50,000 shares issued $500,000 - Common stock, $15 par value, 300,000 shares issued and outstanding $4,500,000 In 2020, The company declared and paid $30,000 of cash dividends In 2021, The company declared and paid $150,000 of cash dividend Required: How much is the TOTAL cash dividends that will be distributed to preferred and common stockholders over the two years, assuming the preferred stock is Non-cumulative Please DO NOT use the "S" and von 135 1
Here data Preferred stock, $10 par value, 7%, 50,000 shares issued $500,000Common stock, $15 par value, 300,000 shares issued and outstanding $4,500,000In 2020, The company declared and paid $30,000 of cash dividend In 2021,
The company declared and paid $150,000 of cash dividend Calculation of cash dividends: Calculation of cash dividends for the preferred stock (Non-cumulative). Cash dividend = Par value * Number of preferred shares * Rate of dividend Cash dividend for the year 2020 = $10 * 50,000 * 7% = $35,000Cash dividend for the year 2021 = $10 * 50,000 * 7% = $35,000.
Total cash dividends for the preferred stock = $35,000 + $35,000 = $70,000Calculation of cash dividends for the common stock Cash dividend for the year 2020 = $30,000 - $35,000 = -$5,000
[As the preferred stock is non-cumulative, only common stockholders will receive the dividend when the company has sufficient earnings to pay dividends]
Cash dividend for the year 2021 = $150,000Cash dividends to common stockholders = $0 (As per the calculation, common stockholders will not receive any dividend in 2020) + $150,000 = $150,000
Hence, the TOTAL cash dividends that will be distributed to preferred and common stockholders over the two years assuming the preferred stock is non-cumulative is $70,000 + $150,000 = $220,000.
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why is the cash at bank account never adjusted?
The cash at bank account is a general ledger account that is used to keep track of the cash balance in a company's bank account. When a company makes a deposit or withdraws cash from its bank account.
The cash at bank account is updated to reflect the change in the account balance. However, the cash at bank account is never adjusted because it is a real account. Real accounts are accounts that track the changes in a company's assets, liabilities, and equity over time.
They are not closed at the end of an accounting period like nominal accounts. Therefore, their balances are not adjusted at the end of an accounting period.
Nominal accounts, on the other hand, are accounts that track the changes in a company's revenues, expenses, and gains or losses over time. These accounts are closed at the end of an accounting period, and their balances are transferred to the company's retained earnings account.
In conclusion, the cash at bank account is never adjusted because it is a real account that tracks the changes in a company's cash balance over time. The balances in real accounts are not adjusted at the end of an accounting period.
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