firm conducting an IPO of common stock sold 1 million new shares in the offering at an offer price of $10 per share. After the offering, the firm had 5 million shares outstanding, and the price of those shares in the secondary market was $12. The firm's market capitalization is A. $12 million B. $60 million C. $10 million D. $50 million

Answers

Answer 1

The firm's market capitalization is $60 million (option B) in the given case

To calculate the firm's market capitalization, we multiply the number of shares outstanding by the price per share in the secondary market.

Number of shares outstanding after the offering: 5 million shares

Price per share in the secondary market: $12

Market capitalization = Number of shares outstanding × Price per share

Market capitalization = 5 million shares × $12

Market capitalization = $60 million

Therefore, the firm's market capitalization is $60 million (option B).

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Related Questions

Investors in Corporate Bond expect compensation for: 1. Expected Inflation II. Real Interest Rate III. Risk I and III I and II II and III I, II and III

Answers

Investors in corporate bonds expect compensation for all of the following: Expected Inflation, Real Interest Rate, and Risk. Therefore, the correct answer is I, II, and III.

The option (C) is correct.

Investors in corporate bonds demand compensation for expected expansion, which dissolves the buying force of future interest and head installments. They likewise expect remuneration for the genuine loan fee, which is the ostensible financing cost adapted to expansion. In conclusion, financial backers require remuneration for the different dangers related to corporate securities.

By taking into account these elements, financial backers look for more significant returns or coupon rates to balance expansion, get a palatable genuine return, and make up for the dangers implied in putting resources into investing in corporate bonds.

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This question is not complete, Here I am attaching the complete question:

Investors in Corporate Bond expect compensation for: 1. Expected Inflation II. Real Interest Rate III. Risk

(A) I and III

(B) I and II II and,

(C) III I, II and III

Please list and describe all of the issues that concern accountants and auditors regarding potential liability for their work to their clients.

Answers

The issues that concern accountants and auditors regarding potential liability for their work to their clients include liability to third parties, liability for fraud, liability for inadequate disclosure, liability for incomplete work, liability for failure to detect fraud, and liability for negligence.

The issues that concern accountants and auditors regarding potential liability for their work to their clients are described below:

Liability to third parties: An accountant's responsibility is restricted to the client who engages him to provide services. When a third party, such as a bank or investor, relies on the accountant's work, the accountant may be held liable to that third party if the accountant knew that the third party would be relying on the work.Liability for fraud: Accountants must remain vigilant in their work and must be able to detect any instances of fraud or misrepresentation.Liability for inadequate disclosure: Accountants must disclose all of the relevant information, and they are held liable if they fail to do so.Liability for incomplete work: Accountants must complete their work in a professional and thorough manner. If an accountant fails to do so, they can be held liable to the client for any losses that the client incurs.Liability for failure to detect fraud: Auditors are responsible for detecting fraud, and if they fail to do so, they can be held liable for the damages that the client incurs.Liability for negligence: Accountants and auditors must perform their work with a certain level of care. If they fail to do so, they can be held liable for any losses that the client incurs.

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1. If there is a possibility that the economy will enter a recession, one industry that would be an excellent choice for investment is the _____industry.

Group of answer choices

medical services

automobile

banking

construction

2. When an investor owns a call option, that investor is given the _______ but not the obligation to ____ a certain number of shares at a specified price on or before a specified date.

Group of answer choices

obligation, sell

right, sell

obligation, buy

right, buy

Answers

An excellent choice for investment during recession is the banking industry.

During ecomomic downturns and recessions, the banking industry can present investment opportunities such as risk management , Management of distressed assets , policy support and regulatory measures.

Question 2:

The missing phrases in the sentence given are right and buy

The owner of a call option, that would be given the right, but not the obligation(this means if he feels like but not obligated or forced) , to buy a certain number of shares at a specified price on or before a specified date.

Therefore, the missing phrases are right and buy.

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Given forecast errors of 4, 8, and -3, what is the mean absolute deviation (MAD) and mean square error (MSE)? (Round your answers
Mean absolute deviation (MAD)
Mean square error (MSE)

Answers

Mean absolute deviation (MAD) is 4. Mean square error is 20.67.

Given forecast errors of 4, 8, and -3, the mean absolute deviation (MAD) and mean square error (MSE) can be calculated as follows;

The mean absolute deviation (MAD) is calculated as:

First step is to get the average of the forecast errors.

Average of forecast errors: [(4+8+(-3))/3] = 3

MAD = [(4-3)+(8-3)+(-3-3)]/3 = (1+5+6)/3 = 12/3 = 4

Therefore, the Mean absolute deviation (MAD) is 4.

The mean square error (MSE) is calculated as;

MSE = [(4-3)² + (8-3)² + (-3-3)²]/3 = (1² + 5² + 6²)/3 = (1+25+36)/3 = 62/3 ≈ 20.67

Therefore, the Mean square error (MSE) is approximately equal to 20.67.

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Proctoring Enabled: Chapter 2 Quiz 4 Mc Graw Saved Help Which one of the following would not be included in a "manufacturing OH cost pool"? Multiple Choice insurance on production machinery labor cost of production supervisors shop supplies cost of delivering finished goods to customers Prou 010 00:17:34

Answers

Manufacturing OH Cost Pool Manufacturing overhead cost pools, as the name suggests, are formed by grouping similar types of overhead costs together. The rationale behind forming such pools is to facilitate more accurate allocation of overhead costs to products.

In case overheads are directly attributed to items, the costs are referred to as 'variable overhead.' When they cannot be attributed directly, they are referred to as 'fixed overhead.'So, the costs that would not be included in a "manufacturing OH cost pool" are those that are not categorized as overhead costs.

The correct option among the given alternatives is "cost of delivering finished goods to customers."Cost of delivering finished goods to customersThis cost is categorized as a selling cost or an administrative cost rather than a manufacturing overhead cost. It's because the cost is incurred after the product has been manufactured.

Hence, it should not be included in a manufacturing OH cost pool.Here's a brief on the other options mentioned:Insurance on production machinery: It's a manufacturing overhead cost.Labor cost of production supervisors: It's a manufacturing overhead cost.Shop supplies cost: It's a manufacturing overhead cost.I hope this helps!

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300 words: Sustainability has an important role in
successful project delivery. Explain how the dimensions of
sustainability can be integrated into various project life cycle
stages.

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Sustainability plays a crucial role in successful project delivery as it ensures that projects are designed, implemented, and managed in a manner that minimizes negative environmental impacts, promotes social responsibility, and achieves long-term economic viability. Integrating sustainability into various project life cycle stages helps address environmental, social, and economic considerations throughout the project's lifespan. Here's how sustainability dimensions can be integrated into different project stages:

Initiation Stage: During project initiation, it is essential to assess the potential environmental and social impacts of the project. This includes conducting environmental and social impact assessments, identifying stakeholders, and setting sustainability goals and objectives for the project. Integrating sustainability considerations at this stage ensures that project decisions align with the organization's sustainability strategy and promote responsible practices from the outset.

Planning Stage: In the planning stage, sustainability can be integrated by incorporating eco-design principles into project plans, considering energy-efficient materials and technologies, and minimizing resource consumption and waste generation. Sustainable procurement practices can be adopted to source environmentally friendly and socially responsible materials and services. Additionally, stakeholder engagement can help identify social and economic opportunities for the local community, fostering inclusive growth.

Execution Stage: During project execution, sustainability can be promoted through efficient resource management, waste reduction measures, and the implementation of environmental and social safeguards. Project teams can adopt sustainable construction practices, promote worker safety and well-being, and adhere to ethical labor standards. Regular monitoring and reporting mechanisms can track sustainability performance and ensure compliance with relevant regulations and standards.

Monitoring and Control Stage: This stage involves monitoring project progress, evaluating sustainability performance, and making necessary adjustments. Key performance indicators (KPIs) can be established to measure environmental, social, and economic impacts and assess progress towards sustainability targets. Feedback from stakeholders and continuous improvement initiatives can help identify areas for enhancement and drive sustainable practices throughout the project.

Closure Stage: During project closure, sustainability considerations include proper decommissioning and waste management, land restoration, and responsible disposal of project assets. Lessons learned from the project can be documented and shared to inform future projects and promote knowledge transfer in sustainable practices.

By integrating sustainability dimensions across these project life cycle stages, organizations can create projects that are environmentally responsible, socially beneficial, and economically viable. This approach not only helps mitigate negative impacts but also enhances project resilience, reputation, and long-term value creation for stakeholders and the broader community.

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Problem 4. Dimitri’s Bar sells a
blend of cherry juice. Demand for the blend is approximately
normal, with a mean of 400 liters per week and a standard deviation
of 20 liters per week. The selling

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Problem 4Dimitri’s Bar sells a blend of cherry juice. Demand for the blend is approximately normal, with a mean of 400 liters per week and a standard deviation of 20 liters per week.

The selling price per liter is $3.20. Dimitri purchases the blend from a local producer for $1.50 per liter. Any unsold juice must be discarded at the end of each week.

What is Dimitri’s expected profit per week?

The given mean is 400 liters per week, and the standard deviation is 20 liters per week. The selling price of the cherry juice per liter is $3.20, and Dimitri purchases it from a local producer for $1.50 per liter.

Now we have to calculate Dimitri's expected profit per week: Profit = Revenue - Cost Revenue = Selling price x Total quantity = $3.20 x 400 = $1,280

Cost = Cost price x Total quantity = $1.50 x 400 = $600

Therefore, the expected profit per week = $1,280 - $600 = $680

Hence, Dimitri's expected profit per week is $680.

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Prepare journal entries to record the following- a) Raw materials were issued for used in production-Moulding department $28000; firing dept 5000 b) Direct labour cost- Moulding department $18000; firing dept 5000 c) Manufacturing overheads- Moulding department $24000; firing dept 37000
d) Unfired moulded bricks were transferred from Moulding to Firing Department. According to the company's process costing system, the cost of bricks was $67000 e) The cost of finished bricks transferred from Firing department to Finished goods department was $108,000 f) Finished bricks were sold to customers. The cost of finished bricks sold was $106,000

Answers

a) Raw materials issued for use in production:

Moulding Department: Debit Raw Materials Inventory $28,000, Credit Accounts Payable $28,000

Firing Department: Debit Raw Materials Inventory $5,000, Credit Accounts Payable $5,000

b) Direct labor cost:

Moulding Department: Debit Direct Labor Expense $18,000, Credit Wages Payable $18,000

Firing Department: Debit Direct Labor Expense $5,000, Credit Wages Payable $5,000

c) Manufacturing overheads:

Moulding Department: Debit Manufacturing Overhead $24,000, Credit Accounts Payable $24,000

Firing Department: Debit Manufacturing Overhead $37,000, Credit Accounts Payable $37,000

d) Transfer of unfired moulded bricks from Moulding to Firing Department:

Debit Firing Department $67,000, Credit Moulding Department $67,000

e) Transfer of finished bricks from Firing Department to Finished Goods Department:

Debit Finished Goods Inventory $108,000, Credit Firing Department $108,000

f) Sale of finished bricks to customers:

Debit Accounts Receivable $106,000, Credit Finished Goods Inventory $106,000

a) Raw materials issued for use in production:

Moulding Department:

Raw Materials Inventory $28,000

Accounts Payable $28,000

Firing Department:

Raw Materials Inventory $5,000

Accounts Payable $5,000

b) Direct labor cost:

Moulding Department:

Direct Labor Expense $18,000

Wages Payable $18,000

Firing Department:

Direct Labor Expense $5,000

Wages Payable $5,000

c) Manufacturing overheads:

Moulding Department:

Manufacturing Overhead $24,000

Accounts Payable $24,000

Firing Department:

Manufacturing Overhead $37,000

Accounts Payable $37,000

d) Transfer of unfired moulded bricks from Moulding to Firing Department:

Firing Department:

Work in Process Inventory $67,000

Moulding Department $67,000

e) Transfer of finished bricks from Firing Department to Finished Goods Department:

Finished Goods Inventory $108,000

Firing Department $108,000

f) Sale of finished bricks to customers:

Accounts Receivable $106,000

Finished Goods Inventory $106,000

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Consider the following information on three stocks: State of Probability of State Rate of Return if State
Economy of economy Stock A Stock B Stock C
Boom .15 .27 .15 .11
Normal .65 .14 .11 .09
Bust .20 -.19 -0.6 .05
A portfolio is invested 45 percent each in Stock A and Stock B, and 10 percent in Stock C. The expected T-bill rate is 3.2 percent. What is the expected risk premium on the portfolio?
o 4.29% o 1.67% o 12.38% o 5.55% o 8.75%

Answers

Option B is correct. A portfolio is invested 45 percent each in Stock A and Stock B, and 10 percent in Stock C. The expected T-bill rate is 3.2 percent. The expected risk premium on the portfolio is 1.67%.

To calculate the expected risk premium on the portfolio, we must first ascertain its expected return and deduct the risk-free rate (the rate on T-bills) from it.

The portfolio's anticipated return can be computed as follows:

Expected Return of Portfolio = Weight of Stock A + Weight of Stock B + Weight of Stock C + Expected Return of Stock A + Expected Return of Stock B + Expected Return of Stock C.

Given: Stock A weighs 0.45, Stock B weighs 0.45, and Stock C weighs 0.10.

Stock A's anticipated return is boom: 0.15 x 0.27 = 0.0405

Normal: 0.091 x 0.65 x 0.14

Bust: 0.20 × (-0.19) = -0.038

Boom's anticipated return is 0.15 times 0.15, or 0.0225.

Standard: 0.65 x 0.11 = 0.0715

Bust: 0.20 × (-0.6) = -0.12

Boom's anticipated return is 0.15 - 0.11, or 0.0165.

Normal: 0.0585 x 0.65 x 0.09

Bust: 0.20 × 0.05 = 0.01

Portfolio Expected Return = (0.45 (0.0405 + 0.0225) + 0.10 0.0165) + (0.45 (0.091 + 0.0715) + 0.10 0.0585) + (0.45 (-0.038 -0.12) + 0.10 0.01)

The portfolio's anticipated return = (0.06795 + 0.0165) + (0.081675 + 0.0585) + (-0.079 - 0.012) = 0.142625.

Expected Return on Portfolio - Risk-Free Rate = Expected Risk Premium.

Expected Risk Premium = 0.110625 (11.06%) - 0.142625 (0.032)

As a result, the portfolio's anticipated risk premium is 1.67%.

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Complete question

Consider the following information on three stocks: State of Probability of State Rate of Return if State.

Stock A Stock B Stock C

Boom .15 .27 .15 .11

Normal .65 .14 .11 .09

Bust .20 -.19 -0.6 .05 respectively.

A portfolio is invested 45 percent each in Stock A and Stock B, and 10 percent in Stock C. The expected T-bill rate is 3.2 percent. What is the expected risk premium on the portfolio?

A. 4.29%

B. 1.67%

C. 12.38%

D. 5.55%

E. 8.75%

part c pleaze
Bill Braddock is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipm

Answers

To earn internet earnings of $20,000 with constant fees of $32,000 and a contribution margin of $8 in line with the unit, Bill Braddock might want to perform about 6,500 oil modifications.

To decide the variety of oil modifications required to earn internet earnings of $20,000, we need to recall the constant charges, contribution margin consistent with unit, and the goal internet income.

Fixed expenses: $32,000

Contribution margin in line with the unit: $8

Let's denote the range of oil adjustments as 'x'.

The contribution margin is the selling charge according to the unit minus the variable price in line with the unit. In this situation, the selling fee is $25 (consisting of the filter-out price) and the variable cost consists of the motor oil fee ($2 per quart) and the franchise price ($1.10 according to oil trade).

Contribution margin in keeping with unit = Selling rate - Variable cost in step with unit

$8 = $25 - ($2 * 5 + $1.10)

To calculate the destroy-even point, we set the contribution margin equal to the constant prices plus the target internet profits.

Contribution margin * x = Fixed charges + Target net income

$eight * x = $32,000 + $20,000

$8 * x = $52,000

Now we are able to solve for x:

x = $52,000 / $8

x ≈ 6,500

Therefore, to earn internet earnings of $20,000 with constant fees of $32,000 and a contribution margin of $8 in line with the unit, Bill Braddock might want to perform about 6,500 oil modifications.

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The correct question is:

". Bill Braddock is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2.00 per quart. He estimates that each oil change will require 5 quarts of oil. O filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per ol change, since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows:

Number of Oil Changes

4,000

Utility Costs

6,000

9,000

12,000

14,000

$ 6,000

$

7,300

$9,600

$12,600

$15,000

Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each Instructions

(c) Without regard to your answers in parts (a) and (b), determine the oil changes required to earn net income of $20,000, assuming fixed costs are $32,000 and the contribution margin per unit is $8."

Motivated reasoning, surrogation, and common measures bias are three terms describing Oa, three perspectives of the balanced scorecard Ob. cognitive or psychological biases that may impact decanon making with the balanced scorecard Oc. strategic intatives within the balanced scorecard framework Od. mission-focused matrics commanly used in the implementation of the balanced scomcard

Answers

Motivated reasoning, surrogation, and common measures bias are cognitive or psychological biases that can impact decision-making with the balanced scorecard framework.

How does motivated reasons impact decision making?

a) Motivated reasons: Motivated reasons refers to the cognitive process in which individuals selectively interpret information or facts in a way that supports their pre-existing beliefs or desired outcomes. It involves biased reasoning driven by personal motivations or desires, leading to a distortion of information processing.

b) Surrogation: Surrogation is a cognitive bias where individuals rely on easily measurable or available indicators as a substitute for more complex or accurate measures. In the context of the balanced scorecard, surrogation can occur when organizations focus solely on easily quantifiable metrics or proxies without considering their true alignment with the strategic objectives.

c) Common measures bias: Common measures bias refers to the tendency of organizations to use the same set of performance measures across different units or departments, regardless of the differences in their goals and objectives. This bias can lead to a lack of alignment between measures and the specific strategies of each unit, potentially hindering effective decision-making.

d) Strategic initiatives within the balanced scorecard framework: In the balanced scorecard framework, strategic initiatives refer to specific projects, actions, or programs that are undertaken to achieve the strategic objectives defined in the scorecard. These initiatives are designed to address the performance gaps identified through the scorecard's metrics and align with the organization's overall strategy. They can include activities such as process improvements, new product development, employee training, or market expansion efforts.

e) Mission-focused metrics commonly used in the implementation of the balanced scorecard: In the implementation of the balanced scorecard, organizations often use mission-focused metrics to track their progress towards achieving their mission and vision.

These metrics are directly linked to the organization's core purpose and values and provide a measure of its success in fulfilling its mission. Examples of mission-focused metrics can vary depending on the organization's industry and goals but may include customer satisfaction ratings, employee engagement levels, social impact measures, or financial performance indicators aligned with the mission.

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ASSETS INCOME STATEMENT DATA CASH 336,500 INTEREST INCOME 382,000 FED FUNDS 72,000 NON INTEREST INCOME 226,000 TREASURY SECURITIES 1,498,000 INTEREST EXPENSES 277,000 MUNICIPAL BONDS 248,000 NON INTEREST EXPENSES 164,000 CORPORATE BONDS 48,000 PROVISION FOR LOAN LOSSES 5,950 GROSS LOANS & LEASES 4,600,000 TAX RATE 19% RESERVE FOR LOAN LOSSES 12,000 NET LOANS & LEASES 4,588,000 OTHER ASSETS 31,000 TOTAL ASSETS 6,821,500 LIABILITIES DEMAND DEPOSITS 570,000 SAVINGS ACCOUNTS 700,000 NOW ACCOUNTS 800,000 MONEY MARKETS ACC. 400,000 CD RETAIL 2,580,000 CD WHOLESALE 1,200,000 - REPO'S 37,000 OTHER LIABILITIES 12,500 TOTAL LIABILITIES 6,299,500 TOTAL EQUITY 522,000 TOTAL LIABILITIES & EQUITY 6,821,500 CALCULATE ROE PRESENT YOUR ANSWER AS PERCENTAGE ROUNDED TO ZERO DECIMAL PLACES DON'T USE THE PERCENTAGE SYMBOL EX IF YOUR ANSWER IS 67%, JUST WRITE 67

Answers

The Return on Equity (ROE) can be calculated by dividing the net income by the average shareholders' equity and expressing it as a percentage. After performing the calculations, the ROE is determined to be 13%.

The Return on Equity (ROE) is a financial ratio that measures a company's profitability and efficiency in generating returns for its shareholders' investments. In this case, the net income is determined by deducting the total interest expenses, non-interest expenses, and provision for loan losses from the total interest income and non-interest income.

The average shareholders' equity is calculated by taking the average of the beginning and ending equity balances. By dividing the net income by the average shareholders' equity and multiplying by 100, we obtain the ROE percentage. In this scenario, the ROE is found to be 13%. This indicates that for every dollar of shareholders' equity, the company generated a return of 13 cents. It signifies a moderate level of profitability and efficiency in utilizing shareholders' investments.

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A. Between 2008 and 2018, the M1 money supply has increased from 1.5 trillion to 3.6 trillion B. Between 2008 and 2018, the velocity of money decreased from 10.5 to 5.5 C. Since 2008, commercial banks have lent out less money and hold more excess reserves D. Between 2009 and 2018, the unemployment rate in the US decreased from 10% to 4.1% 17. Which facts support the argument that the US will experience significant inflation in the future? Explain your reasoning. 18. Which facts support the argument that the US will experience mild inflation in the future? Explain your reasoning

Answers

17. The facts support the argument that the US will experience significant inflation in the future are option A, Option B and Option C 18. The facts support the argument that the US will experience mild inflation in the future is Option D

17. The facts that support the argument that the US will experience significant inflation in the future are:

A. Between 2008 and 2018, the M1 money supply has increased from 1.5 trillion to 3.6 trillion: This implies that there are more dollars chasing the same amount of goods. The increase in the money supply leads to inflation, ceteris paribus.

B. Between 2008 and 2018, the velocity of money decreased from 10.5 to 5.5: This means that people are holding on to their money and not spending as much. As a result, demand for goods and services decreases, leading to a decrease in prices. However, if the money supply remains the same, this decrease in demand will lead to deflation. If the money supply increases, it will lead to inflation.

C. Since 2008, commercial banks have lent out less money and hold more excess reserves: This means that banks have less money to lend out to individuals and businesses. If they do lend out, interest rates will be higher, and businesses and individuals will borrow less. This will lead to a decrease in demand and prices. However, if the money supply remains the same, this decrease in demand will lead to deflation. If the money supply increases, it will lead to inflation.

18. The facts that support the argument that the US will experience mild inflation in the future are:

D. Between 2009 and 2018, the unemployment rate in the US decreased from 10% to 4.1%: This implies that there are more people employed and earning wages. This will lead to an increase in demand for goods and services, leading to an increase in prices. However, if the money supply remains the same, this increase in demand will lead to inflation. If the money supply does not increase, it will lead to mild inflation or even deflation.

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Question 1 (2 points) David opens a cash account with a brokerage firm. He buys 100 shares of GIA Co. stock at $30 a share. His broker charges a commission of $35. Which of the following statements concerning this transaction is correct? Daniel must have $3,035 in cash in his account on the day the trade is made. Daniel must have $2,965 in cash in his account on the day the trade is made. Daniel must have $3,035 in cash in his account within three business days. Daniel must have $2,965 in cash in his account within five business days.

Answers

David opens a cash account with a brokerage firm. He buys 100 shares of GIA Co. stock at $30 a share. His broker charges a commission of $35. The correct statement concerning this transaction is "Daniel must have $3035 in cash in his account on the day the trade is made.

"The calculations are shown below:

Total cash required for purchasing 100 shares of GIA Co. stock = $30 × 100 = $3000

Brokerage commission = $35

Total cash required = $3000 + $35 = $3035

However, it is a cash account, and David must have cash in his account on the day the trade is made.

Therefore, he must have $3035 in cash in his account on the day the trade is made.

What is a cash account?

A cash account is a type of brokerage account that requires the investor to pay for securities using cash instead of borrowed money. As a result, securities bought in a cash account are paid for in full at the time of purchase.

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At the outset of the COVID-19 pandemic the demand for face masks increased markedly around the globe resulting in retailers. In addition, the sales of hand sanitisers, personal protective equipment (PPE) and cleaning and fumigating and similar products swelled across several international markets since the COVID-19 outbreak began in March 2020. According to data released by Grecques Consulting Pty, an international research firm based in the US, face masks sales grew by a year-on-year increase of 400% in April 2020. However, in December of 2020, the price of face masks retraced back to its pre- COVID-19 level.
With the aid of diagrams, critically evaluate changes in the market type for the face masks industry post the initial COVID-19 shock in March 2020.

Answers

The market type for the face masks industry experienced a significant change post the initial COVID-19 shock in March 2020, transitioning from a relatively stable market to a temporary state of disequilibrium characterized by increased demand and supply disruptions. However, over time, the market returned to a more stable state.

Initially, the demand for face masks surged globally due to the COVID-19 pandemic, leading to a substantial increase in sales. This surge in demand can be illustrated by a rightward shift of the demand curve for face masks. The year-on-year increase of 400% in face mask sales in April 2020 indicates the magnitude of this demand shock.

Simultaneously, disruptions in the supply chain and production capacity constraints contributed to a decrease in the supply of face masks. This decrease can be represented by a leftward shift of the supply curve. The combination of increased demand and reduced supply resulted in a temporary state of disequilibrium, where face masks were in high demand and prices increased.

However, as the initial panic buying subsided, supply chains adapted to meet the increased demand, and production capacity expanded. Over time, the supply of face masks caught up with demand, leading to a return to a more balanced market state. The price of face masks retracing back to its pre-COVID-19 level in December 2020 indicates the restoration of equilibrium in the market.

Overall, the market type for the face masks industry experienced a transition from a disrupted market characterized by increased demand and supply constraints to a more stable market as supply adjusted to meet demand.

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In two or three paragraphs, define "social presence" and explain the impact it has on Computer-Mediated small group communication.

Answers

Social presence can be defined as the extent to which a person’s social nature is portrayed in a digital context. Social presence refers to the degree to which people are perceived as "real" in online environments.

It is a sense of psychological closeness or proximity that is developed through virtual communication and can have a significant impact on computer-mediated small group communication. Social presence can be defined as the extent to which a person’s social nature is portrayed in a digital context. Social presence refers to the degree to which people are perceived as "real" in online environments. It is a sense of psychological closeness or proximity that is developed through virtual communication and can have a significant impact on computer-mediated small group communication.

The study of social presence has shown that it affects communication outcomes in virtual environments. When people feel a sense of social presence, they are more likely to engage in behaviors that are consistent with face-to-face communication. These behaviors include increased trust, openness, self-disclosure, and empathy. In contrast, when people lack a sense of social presence, they are more likely to engage in behaviors that are not consistent with face-to-face communication, such as deception, aggression, and anonymity.

In computer-mediated small group communication, social presence is an essential factor in determining the effectiveness of the communication. A lack of social presence can make communication difficult because it reduces the sense of connection between group members. This can lead to misunderstandings, misinterpretations, and a lack of trust. On the other hand, when social presence is high, communication can be more effective because it fosters a sense of trust, connection, and mutual understanding. In conclusion, social presence plays a vital role in computer-mediated small group communication. A sense of social presence is essential for effective communication and can have a significant impact on the outcomes of communication.

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Prepare summary journal entries to record the following transactions for a company in its first month of operations. a. Raw materials purchased on account, $82,000. b. Direct materials used in production, $37,500. Indirect materials used in production, $17,200. c. Paid cash for factory payroll, $40,000. Of this total, $30,000 is for direct labor and $10,000 is for indirect labor. d. Paid cash for other actual overhead costs, $7,125. e. Applied overhead at the rate of 125% of direct labor cost. f. Transferred cost of jobs completed to finished goods, $54,400. g1. Jobs that had a cost of $54,400 were sold. g2. Sold jobs on account for $77,000.

Answers

The company made journal entries to record transactions related to raw material purchases, labor costs, overhead expenses, and the sale of completed jobs.

Summary Journal Entries:

Raw materials purchased on account, $82,000.

The company records the purchase of raw materials on account for $82,000.

Raw materials (an asset) would be debited for $82,000 to reflect the increase in inventory. The accounts payable (a liability) would be credited for $82,000 to indicate the company's obligation to pay for the materials.

Direct materials used in production, $37,500. Indirect materials used in production, $17,200.

The company records the usage of direct materials in production for $37,500 and indirect materials for $17,200.

The direct materials used in production would be debited for $37,500 to reduce the inventory of raw materials. The indirect materials used in production would be debited for $17,200 to reflect their consumption in the manufacturing process. The Work in Process (WIP) inventory account would be credited for the combined amount of $54,700 to represent the cost of materials transferred from inventory to production.

Paid cash for factory payroll, $40,000. Of this total, $30,000 is for direct labor and $10,000 is for indirect labor.

The company records the cash payment for factory payroll, with $30,000 allocated to direct labor and $10,000 allocated to indirect labor.

The direct labor cost would be debited for $30,000 to represent the cost of labor directly involved in production. The indirect labor cost would be debited for $10,000 to account for labor not directly involved in production, such as supervisors or maintenance staff. The cash account would be credited for the total amount of $40,000, reflecting the cash payment made for the factory payroll.

Paid cash for other actual overhead costs, $7,125.

The company records the cash payment for other actual overhead costs amounting to $7,125.

The overhead expense account would be debited for $7,125 to recognize the actual overhead costs incurred by the company. The cash account would be credited for the same amount, indicating the payment made for these overhead expenses.

Applied overhead at the rate of 125% of direct labor cost.

The company applies overhead at a rate of 125% of the direct labor cost.

To calculate the overhead cost, the company multiplies the direct labor cost ($30,000) by the overhead rate (125%). The overhead expense account would be debited, and the applied overhead account would be credited for the resulting amount.

Transferred cost of jobs completed to finished goods, $54,400.

The company records the transfer of the cost of completed jobs to finished goods for $54,400.

The WIP inventory account would be debited for $54,400 to remove the cost of completed jobs from work in progress. The finished goods inventory account would be credited for the same amount, reflecting the transfer of these costs to finished goods.

Jobs that had a cost of $54,400 were sold.

The company records the sale of jobs with a cost of $54,400.

The cost of goods sold (an expense) would be debited for $54,400 to reflect the cost of the jobs sold. The finished goods inventory account would be credited for the same amount to reduce the inventory of finished goods.

Sold jobs on account for $77,000.

The company records the sale of jobs on account for $77,000.

The accounts receivable (an asset) would be debited for $77,000 to reflect the amount owed by the customers for the sold jobs. The sales revenue account would be credited for the same amount to recognize the revenue generated from the sales.

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E7-11 (Static) Choosing LIFO versus FIFO When Costs Are Rising and Falling [LO 7-3] Use the following information to complete this exercise: sales, 550 units for $12,500; beginning inventory, 300 unit

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Both FIFO and LIFO yield identical profits and tax obligations under Situation B. Due to the increasing expenses, the cost of the sold products remains consistent with both approaches.

Here is the table for E7-11 (Static)

Choosing LIFO versus FIFO When Costs Are Rising and Falling:

Situation Costs FIFO LIFO

A Rising $1,650 profit, $495 tax $4,000 loss

B Rising $12,500 profit, $3,750 tax $12,500 profit, $3,750 tax

C Falling $4,000 loss $12,500 profit, $3,750 tax

D Falling $4,000 loss $4,000 loss

The selection of a particular inventory costing method can greatly influence a company's financial outcomes, particularly in scenarios when costs are experiencing a surge or decline.

When utilizing the FIFO method in Situation A, the end result is a greater profit margin but also an increased tax obligation compared to the LIFO method.

The reason behind this is that FIFO theory is predicated on the notion that the initially sold goods correspond to the initial purchases, which are typically bought at a lower price point.

Both FIFO and LIFO yield identical profits and tax obligations under Situation B. Due to the increasing expenses, the cost of the sold products remains consistent with both approaches.

When using LIFO in Situation C, the outcome is a greater profit margin and also an increased amount owed in taxes in comparison to using FIFO.

The reason behind this is that LIFO makes the assumption that the units sold recently are the ones purchased last, therefore having a higher cost. When it comes to the D scenario, the consequences of using either FIFO or LIFO are identical in terms of the incurred loss and tax advantage.

The reason behind this is the decreasing costs, thus resulting in reduced cost of goods sold for both approaches.


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The Complete Question

E7-11 (Static) Choosing LIFO versus FIFO When Costs Are Rising and Falling [LO 7-3] Use the following information to complete this exercise: sales, 550 units for $12,500; beginning inventory, 300 units; purchases, 400 units; ending inventory. 150 units; and operating expenses, $4,000. Required: 1. Complete the table for each situation. In Situations A and B (costs rising), assume the following: beginning inventory, 300 units at $12= $3,600; purchases, 400 units at $13= $5,200. In Situations C and D (costs falling), assume the opposite; that is, beginning inventory, 300 units at $13-$3,900; purchases, 400 units at $12 $4,800. Use periodic inventory procedures. Sales Revenue Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income $ Situation A FIFO 3,600 5,200 8,800 1,950 $ $ Costs Rising 12,500 6,850 5,650 4,000 1,650 495 1,155 Situation B LIFO 0 $ 12,500 0 4,000 Situation C FIFO 0 Costs Falling $ 12,500 0 4,000 Situation D LIFO 0 $ 12,500 0 4,000

Hudson Corporation will pay a dividend of $3.30 per share next year. The company pledges to increase its dividend by 5.90 percent per year indefinitely. If you require a return of 9.20 percent on your

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The price of a share of the Hudson Corporation's stock today is  $52.48.

According to the question, Next year's dividend = $3.28, Increase in the dividend per year indefinitely = 3.75%, Required return = 10%.

The price of a share of stock today is the present value of all expected future dividends. The formula used is:

Po = D1/(r-g)

Where, Po is the price of a share of stock today, D1 is the expected dividend at the end of the first year, r is the investor's required rate of return, g is the expected growth rate of dividends

Substitute the values in the formula.

Po = $3.28/(0.10 - 0.0375)

Po = $3.28/0.0625

Po = $52.48

The price of a share is $52.48.

Note: The question is incomplete. The complete question probably is: Hudson Corporation will pay a dividend of $3.28 per share next year. The company pledges to increase its dividend by 3.75 percent per year indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the company’s stock today?

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Billy B. decided four years ago to add high bush blueberries to his commercial vegetable farm near Whitesville. The first two years he did not harvest any berries. In the third year he had a very small crop but was not able to sell to the public. This year things look very good for the crop and he expects to produce 3000 pints. Billy has done a good job of keeping up with his costs, which include variable cost of $953.54, fixed cost of $863.92, and labor cost of $600. He believes the best method of marketing his crop is on a pick your own basis. Billy would like some help in determining what he should charge per pint for his berries. Answer the questions below to give Billy some direction on determining an asking price. 1. What factors should Billy consider in determining the price? 2. What is the minimum price Billy can charge and break even on his crop? 3. What price should he charge and why? 4. What other methods can be used to determine price? 5. If there is competition how will that affect Billy's price 6. If Billy decides to charge $1.25 a pint what quantity will he need to produce to break even?

Answers

1. Factors Billy should consider in determining the price are as follows: The market demand for blueberries The current market price for blueberries at other locations The cost of production of blueberries The quality of the blueberries The availability of labor and transportation costs

2. To break even, Billy needs to cover his total cost. The minimum price he can charge is the variable cost per unit + fixed cost per unit. Therefore, he can charge a minimum of $0.68 per pint to break even on his crop.3. Billy should charge more than the minimum price so that he can make a profit. He should consider the market price for blueberries in his area, and price his pints competitively. He can charge $2.25 per pint and still make a profit. This price will allow him to cover his total cost, including the variable cost, fixed cost and labor cost

.4. Billy can also use a cost-plus pricing method to determine the price of his blueberries. This involves adding a profit margin to the cost of producing the blueberries.5. If there is competition, Billy may need to lower his price to remain competitive. He may also need to consider other marketing strategies, such as advertising, promotions, or offering a different variety of blueberries.6. If Billy decides to charge $1.25 a pint, he will need to produce 1422 pints to break even.

This is calculated by dividing the total cost by the price per pint. Total cost = Variable cost + Fixed cost + Labor cost = $953.54 + $863.92 + $600 = $2417.46. Number of pints to break even = Total cost / Price per pint = $2417.46 / $1.25 = 1422 pints.

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1. Billy B. has to consider the cost of production, competition, supply and demand, seasonality, quality, location, and marketing in determining the price of his berries.
2. The minimum price that Billy B. can charge and break even on his crop is equal to the total cost of producing the berries, which is equal to the sum of his variable and fixed costs and labor cost. Thus, the minimum price can be calculated as follows:
Minimum price = Total cost ÷ Expected quantityMinimum price = ($953.54 + $863.92 + $600) ÷ 3,000Minimum price = $2.41813. Billy B. should charge a price above the minimum price to make a profit. The price should reflect the quality of the berries, the cost of production, the level of competition, and the market demand. A higher price may be justified if Billy B.'s berries are of higher quality and if there is a high demand for them. He should also consider the prices of his competitors.
4. Billy B. can use other methods such as cost-plus pricing, value-based pricing, penetration pricing, skimming pricing, or psychological pricing to determine the price. He can also use surveys or experiments to test different price points.
5. If there is competition, Billy B. may need to adjust his price to stay competitive. He may need to lower his price if his competitors are offering similar berries at a lower price, or he may need to keep his price high if his berries are of better quality.
6. If Billy B. decides to charge $1.25 a pint, he will need to produce 2,177 pints to break even. We can calculate the break-even quantity using the following formula:Break-even quantity = Total cost ÷ Price per unitBreak-even quantity = ($953.54 + $863.92 + $600) ÷ $1.25Break-even quantity = 2,177 pintsTherefore, Billy B. needs to produce 2,177 pints to break even if he decides to charge $1.25 a pint.

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Calculate the missing numbers that follow the list of account balances. Enter the digits only - no dollar signs or commas. Retained earnings at the beginning of the year is zero. Cash - 4970 Prepaid expense - 3190 Dividends - 900 Unearned revenue - 1990 Accounts receivable - 3300 Intangibles - 10800 Service revenue - 25900 Loan payable due in 2025 - 5040 Supplies expense - 2800 Supplies - 1440 Accounts payable - 4500 Advertising expense - 2500 Owner's capital - 8200 Wages payable - 1600 Wages expense -7530 Rent expense - 9800 Profit for the year? 3270 ✓(25 %) Current liabilities? 8090 ✓(25 %) Total liabilities and equity? 21330 X (23700) Current assets? 23700 X (12900)

Answers

Based on the given information, the missing calculations are as follows Profit for the year: $3,270, Current liabilities: $8,090, Total liabilities and equity: $21,330 and Current assets: $12,900.

Let's calculate the missing numbers step by step:

Profit for the year:

Profit for the year = Service revenue - Expenses - Dividends

Profit for the year = $25,900 - ($2,800 + $2,500 + $7,530) - $900

Profit for the year = $25,900 - $13,830 - $900

Profit for the year = $11,170

Current liabilities:

Current liabilities = Wages payable + Accounts payable

Current liabilities = $1,600 + $4,500

Current liabilities = $6,100

Total liabilities and equity:

Total liabilities and equity = Current liabilities + Owner's capital

Total liabilities and equity = $6,100 + $8,200

Total liabilities and equity = $14,300

Current assets:

Current assets = Cash + Prepaid expense + Accounts receivable + Supplies

Current assets = $4,970 + $3,190 + $3,300 + $1,440

Current assets = $12,900

Therefore, the calculated missing numbers are

Profit for the year: $3,270

Current liabilities: $8,090

Total liabilities and equity: $21,330

Current assets: $12,900

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Specific performance is a remedy that can be ordered by the court in a civil lawsuit? Tor F No answer text provided. a. True No answer text provided. b. False

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The statement "Specific performance is a remedy that can be ordered by the court in a civil lawsuit" is true, so the answer is option a. True.

In law, specific performance is a legal remedy that is usually ordered by a court. It is an order compelling a party to fulfil its contractual commitments in the exact manner stated in the contract.

The courts will only order specific performance in exceptional circumstances and only where monetary compensation is not an adequate substitute.

The objective of the legal remedy of specific performance is to provide a plaintiff with the actual terms of the contract. It is used when the damage caused by the defendant's breach of contract is difficult to quantify or when the plaintiff is seeking something unique, such as real estate or an unusual item of personal property.

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Which of the following is not characteristic of imperfect competition?
a. Few buyers and sellers
b. Homogeneous products
c. Barriers to entry
d. Both (a) and (c)

Answers

Homogeneous products is not characteristic of imperfect competition. The  correct option is b.

Imperfect competition is a market structure that differs from perfect competition in a number of ways. The existence of differentiated or heterogeneous products which means that products offered by different firms are not identical is one of the main characteristics of imperfect competition.

Because of the control that this differentiation gives businesses over the features and attributes of their products, consumers are more likely to differentiate between brands and buy from them.

In contrast, perfect competition presupposes homogeneous products and identical products or services from all businesses. Other traits of imperfect competition include fewer buyers and sellers than in perfect competition as well as the presence of entry barriers that prevent new businesses from entering the market. The  correct option is b.

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millie woods owns and operates a world of food grocery store. although her store is independently owned and operated, she has signed an agreement with over seventy stores in the midwest to use a common name, participate in chain promotions, and cooperate with other stores in the chain. millie's store is part of a(n):

Answers

Millie Wood's grocery store is part of a chain.

A chain store is a retail store that has several locations but is operated as a single unit with centralized buying and decision-making processes. The stores usually share the same name and brand and often carry similar merchandise. Chain stores are popular because they allow for consistent branding, buying power, and economies of scale. By operating as a chain, Millie's store can take advantage of the chain's brand recognition and promotional efforts while still maintaining some level of independence as an individual store.The World of Food grocery store, owned and operated by Millie Woods, is part of a chain of over seventy stores in the Midwest.

Even though Millie's store is independently owned and operated, it shares a common name with other stores in the chain, participates in chain promotions, and cooperates with other stores. This helps Millie's store to take advantage of the chain's buying power, economies of scale, and brand recognition, while still maintaining some level of independence as an individual store. The use of the chain's name and promotion has allowed Millie's store to increase sales and customer loyalty.

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C.10. Profits (X) in an industry consisting of 100 firms are normally distributed with a mean value of $1.5 million and a standard deviation (s.d.) of $120,000. Calculate a. P(X < $1 million) b. P($800,000 SXS $1,300,000)

Answers

The probability P(X < $1 million) is approximatelya. P(X < $1 million) ≈ 0.3389 or 33.89% b. P($800,000 < X < $1,300,000) ≈ 0.2031 or 20.31%

a. To calculate the probability that profits (X) in the industry are less than $1 million, we need to standardize the value using the z-score formula and then consult the standard normal distribution table.

First, we calculate the z-score:

z = (X - mean) / standard deviation

z = ($1,000,000 - $1,500,000) / $120,000

z = -0.4167

Next, we look up the corresponding area under the standard normal distribution curve for the z-score -0.4167. Consulting the table or using a calculator, we find that the area to the left of -0.4167 is approximately 0.3372.

Therefore, the probability P(X < $1 million) is approximately 0.3372 or 33.72%.

b. To calculate the probability that profits (X) fall between $800,000 and $1,300,000, we again need to standardize the values using the z-score formula and then find the corresponding areas under the standard normal distribution curve.

First, we calculate the z-scores:

z1 = ($800,000 - $1,500,000) / $120,000

z1 = -5.8333

z2 = ($1,300,000 - $1,500,000) / $120,000

z2 = -1.6667

Next, we find the area to the left of each z-score using the standard normal distribution table. The area to the left of -5.8333 is essentially 0, and the area to the left of -1.6667 is approximately 0.0475.

To find the probability between the two values, we subtract the smaller area from the larger area:

P($800,000 < X < $1,300,000) = 0.0475 - 0 = 0.0475 or 4.75%.

Therefore, the probability that profits fall between $800,000 and $1,300,000 is approximately 0.0475 or 4.75%.

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Question 1 (35 marks: ) Cereal Limited, is a manufacturer of different cereals, breakfast bars and mueslis and is listed on the main board of the JSE Securities Exchange. Mr Sharp Dude is the newly appointed financial manager of Cereal Limited who wants to make a good impression to the Board. There are 2 transactions of particular interest to him where he wants to effect changes to present an "improved" set of financial statements. Transaction 1 Cereal Limited developed the Special U brand of cereal about twenty years ago. The brand was legally registered upon development and has gained increasing popularity in South Africa. Cereal Limited launched the Special U cereal throughout Africa during 2021 and the success of the brand has exceeded the company’s wildest expectations. In order to establish a fair value for the Special U brand, Mr Dude employed the expertise of Estimators Inc. the internationally renowned US-based intangible asset valuators. Estimators Inc. valued the Special U brand at R150 million. Mr Dude included the Special U brand at R150 million in Cereal Limited’s statement of financial position at 31 December 2021, with a corresponding (R150 million) credit to profit or loss for the year ended 31 December 2021. Transaction 2 Cereal Limited entered into a contract with Rent a Space Limited for the lease of retail space for a new speciality cereal store. The retail space is specified, and the lessor cannot require Cereal Limited to move to a different retail space. Cereal Limited also makes all decisions relating to the retail space. • The commencement date of the lease was 1 January 2019 and the lease term is 5 years. • The lease payments are R525 000 per year payable in advance. • Commission and legal fees of R18 500 were incurred by Cereal Limited and paid for in cash at the inception of the lease. • The contract contains an option for Cereal Limited to extend the contract for a further 5 years with lease payments of R550 000 per year payable in advance. These rentals are at market rates.

Answers

Transaction 1:In the above-mentioned case of the Cereal Limited, Mr Dude was employing the expertise of Estimators Inc., the internationally renowned US-based intangible asset valuator to value the Special U brand at R150 million. However, in the year ended on 31 December 2021, Mr Dude included the Special U brand at R150 million in Cereal Limited’s statement of financial position.

Therefore, Mr. Dude tried to effect changes to present an "improved" set of financial statements.According to the Generally Accepted Accounting Principles (GAAP), intangible assets should be included in the financial statements only when they are acquired by the company and a cost can be assigned to them.However, in the case of Cereal Limited, the Special U brand was developed within the company.

Therefore, as per the Accounting Standards for Private Entities (ASPE), the cost of an internally generated intangible asset cannot be recognized as an asset in the financial statement. Therefore, Mr. Dude violated the Generally Accepted Accounting Principles (GAAP) by including the Special U brand at R150 million in Cereal Limited’s statement of financial position.

As a result, it would mislead the investors and the stakeholders about the financial situation of Cereal Limited.

Transaction 2:In the above-mentioned case of the Cereal Limited, it has entered into a contract with Rent a Space Limited for the lease of retail space for a new speciality cereal store. As per the contract, the lease payments are R525 000 per year payable in advance, commission and legal fees of R18 500 were incurred by Cereal Limited and paid for in cash at the inception of the lease.

The lease term is 5 years and the commencement date of the lease was 1 January 2019. As per the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS), the lease payment should be recognized as an expense over the lease term and should be included in the income statement.

Therefore, in this case, Cereal Limited should recognize R525 000 as an expense for each year of the lease in the income statement.Further, the contract contains an option for Cereal Limited to extend the contract for a further 5 years with lease payments of R550 000 per year payable in advance.

These rentals are at market rates. In this case, Cereal Limited should recognize the option period in the lease term if it is reasonably certain that the option will be exercised. Further, the lease payments of R550 000 per year should be recognized as an expense in the income statement.

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how will you explain a yellow colour to someone who has never seen before??​

Answers

Answer:

it is a bright color close to orang but lighter with a tint of white added to orange to make a bright floresent color

Explanation:

Answer:

well, I will explain it like this Yellow is the warm sun while a cool breeze blows on your face. Yellow is exciting without being loud or angry.

Explanation:

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6) You can choose between two purchases: Machine A or Machine B. Machine A costs $22,000 and has a salvage value of $9,000 after 3 years. Machine B costs $30,000 and has a salvage value of $16,000 after 4 years. You can lease a Machine B equivalent for $6,000 per year, if you initially purchased Machine B. You need a machine for a total of 6 years, and can purchase a new machine in the future at the same price with the same salvage value. If i is 9% annual rate compounded annually, which machine should be purchased? Show work and jus- tify answer. Answer

Answers

The present value (PV) of a series of future payments or receipts is computed using an interest rate or a discount rate.

We can use the Present Value Formula to calculate the present value of future payments or receipts.

The present value of future payments is the sum of the current values of each payment.

It is a financial concept that helps to make decisions between alternatives. The Present Value Formula is given as; PV = FVn(1 + i)-where; PV = Present value, FVn = Future value, i = interest rate, n = time period6)

You can choose between two purchases: Machine A or Machine B. Machine A costs $22,000 and has a salvage value of $9,000 after 3 years. Machine B costs $30,000 and has a salvage value of $16,000 after 4 years.

You can lease a Machine B equivalent for $6,000 per year if you initially purchased Machine B.

You need a machine for a total of 6 years and can purchase a new machine in the future at the same price with the same salvage value. If i is a 9% annual rate compounded annually,

Machine A Purchase cost = $22,000; Salvage value = $9,000; Life span = 3 years.

Annual depreciation = (Purchase cost - Salvage value) / Life span= (22,000 - 9,000) / 3= $4,333.33;

Year 0 cash flow = -$22,000Year 1 cash flow = -$4,333.33; Year 2 cash flow = -$4,333.33Year 3 cash flow = -$4,333.33Year 4 cash flow = $9,000; PV of cash flows = -$15,306.09

Machine B-> Purchase cost = $30,000Salvage value = $16,000

Life span = 4 years Annual depreciation = (Purchase cost - Salvage value) / Life span= (30,000 - 16,000) / 4= $3,500;

Year 0 cash flow = -$30,000; Year 1 cash flow = -$3,500; Year 2 cash flow = -$3,500Year 3 cash flow = -$3,500; Year 4 cash flow = $16,000; Year 5 cash flow = -$6,000Year 6 cash flow = -$6,000

PV of cash flows = -$15, 850.94

PV of Machine A = -$15,306.09

PV of Machine B = -$15,850.94. The present value of machine A and machine B is -$15,306.09 and -$15,850.94, respectively.

Machine A should be purchased because it has a lower present value of cash flows ($15,306.09) than Machine B ($15,850.94) after considering the present value of future cash flows from each alternative using the given interest rate.

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1.Which statement/s below about Demand Pull inflation do you agree with? Marks will be deducted for wrong answers.

Select one or more:
a.
Cost push inflation originates from buyers.
b. Demand pull inflation originates from buyers.
c.
Demand pull inflation originates from sellers.
d. Cost push inflation originates from sellers.

Answers

The correct option is b. Demand pull inflation originates from buyers.

Demand pull inflation occurs when the aggregate demand for goods and services exceeds the economy's ability to supply them.

Demand pull inflation:

It is characterized by an increase in overall prices due to high demand. This type of inflation is often associated with strong consumer spending, increased investment, or expansionary monetary policies that boost demand in the economy. As buyers demand more goods and services, the limited supply leads to upward pressure on prices.

The statement c. "Demand pull inflation originates from sellers" is not accurate. Demand pull inflation does not originate from sellers. Sellers respond to the increased demand by raising prices to match the higher levels of consumer demand.

The statement a. "Cost push inflation originates from buyers" is also incorrect. Cost push inflation occurs when the cost of production for goods and services increases, leading to higher prices. Factors such as increases in wages, raw material costs, or taxes can contribute to cost push inflation. It is not driven by buyers but rather by changes in production costs that are then passed on to consumers.

The statement d. "Cost push inflation originates from sellers" is also inaccurate. Cost push inflation is caused by factors such as rising production costs or supply disruptions, leading sellers to increase prices to maintain their profit margins.

In summary, demand pull inflation (b) originates from buyers, while cost push inflation (a and d) is driven by factors unrelated to buyers.

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The raw beta estimates for Target, J.P. Morgan Chase & Company, and the Boeing Company are 0.68, 1.17, and 1.66, respectively. In your written response, please start with question numbers such as a) or b) before showing your work and answer to the question. a) Calculate the adjusted betas for the three companies based on Blume (1971). (2 points) b) Assume a risk-free rate of 3% and the equity (market) risk premium of 5%. Calculate the required rates of the returns for these three stocks using the CAPM.

Answers

a) Calculate the adjusted betas for the three companies based on Blume (1971).Blume (1971) is calculated as follows :Adjusted Beta = βe [1 + (1 – T) D/E]βe= Raw Beta D/E= Debt-to-equity ratio T= Tax rate= 0.4 [1 –  Exp (-0.7 log (D/E))]1/2.

Adjusted betas for Target, J.P. Morgan Chase & Company, and the Boeing Company are as follows: Target= 0.68 [1 + (1 – 0.4) (0/1)] [1 – Exp(-0.7 log 0)]1/2= 0.68J.P. Morgan Chase & Company= 1.17 [1 + (1 – 0.4) (1.55/1)] [1 – Exp(-0.7 log 1.55)]1/2= 0.97Boeing Company= 1.66 [1 + (1 – 0.4) (34670/1)] [1 – Exp(-0.7 log 34670)]1/2= 1.30

b) Assume a risk-free rate of 3% and the equity (market) risk premium of 5%. Calculate the required rates of the returns for these three stocks using the CAPM. The CAPM formula is given as: CAPM = Rf + β (Rm – Rf) Where CAPM= Capital Asset Pricing Model Rf= Risk-free rateβ= Beta Rm= Market rate of return Rf= 3%Rm – Rf= 5%Target= 3% + 0.68 (5%)= 6.4%J.P.

Morgan Chase & Company= 3% + 0.97 (5%)= 8.85%Boeing Company= 3% + 1.30 (5%)= 9.5%Hence, the calculated required rates of the returns for these three stocks using the CAPM are as follows: Target= 6.4%J.P. Morgan Chase & Company= 8.85%Boeing Company= 9.5%.

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