in dividend discount model , why the growth rate g is deducted from the required rate of return at denominator rather than multiplying (1 g) to the dividend at numerator in the equation?

Answers

Answer 1

In the Dividend Discount Model (DDM), the growth rate g is deducted from the required rate of return at the denominator rather than being multiplied by (1+g) and added to the dividend payout at the numerator for several reasons.

Firstly, the required rate of return represents the opportunity cost of investing funds in one stock rather than in another, and it should not include expected growth. Secondly, subtracting g from the required return ensures that the denominator represents the current market price of the security,

while adding (1+g) to the dividend payout would overvalue the stock by assuming growth indefinitely. Finally, this approach is consistent with the assumption that dividends are the primary source of returns for investors in the long run.

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Related Questions


Is software a counter argument that we have limited resources
since, we can make as much software like 2million or 1 trillion
copies of software.

Answers

Software can be replicated and distributed in large quantities without depleting physical resources, challenging the idea of limited resources.

Unlike tangible goods, the production of software does not rely on scarce raw materials or finite resources. With the advancement of technology, it is possible to create numerous copies of software, ranging from thousands to billions, without significant cost or environmental impact.

Software can be easily reproduced through digital means, allowing for virtually unlimited scalability and distribution. This characteristic sets software apart from physical products that require materials, manufacturing processes, and logistical considerations.

However, it is important to note that while the production of software may not be constrained by physical limitations, the development and maintenance of software still require resources such as human labor, expertise, and infrastructure. These resources are not infinite and can pose their own limitations and constraints.

Furthermore, the usage and deployment of software can have indirect resource implications. For example, running software applications may require energy and computing resources, which can have environmental and economic consequences.

In summary, while software production itself may not face the same constraints as physical goods, the overall impact and resource requirements associated with software development, maintenance, and usage should be taken into account when considering the notion of limited resources.

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6. Make the journal entry for the following two transactions: a. A company paid $350 to a local repairman to change the oil in its fleet of delivery trucks. b. A company paid $6,000 to a contractor to

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a. To record the payment of $350 to a local repairman for changing the oil in the fleet of delivery trucks, the journal entry would be:

Date: [Date of the transaction]

Account Debit Credit

Repair and Maintenance Expense $350

Cash (or Bank) $350

This journal entry debits the Repair and Maintenance Expense account to record the cost incurred for the oil change. The credit to the Cash (or Bank) account represents the outflow of cash for the payment.

b. To record the payment of $6,000 to a contractor, the journal entry would be:

Date: [Date of the transaction]

Account Debit Credit

Contractor Expense $6,000

Cash (or Bank) $6,000

This journal entry debits the Contractor Expense account to record the cost incurred for the services provided by the contractor. The credit to the Cash (or Bank) account represents the outflow of cash for the payment.

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Deflation generally occurs when which of the following occurs? a) the consumer price index is greater than the GDP deflator b) the consumer price index decreases c) the rate of inflation falls, for example, from 4% to 2% d) nominal GDP does not change 29. Suppose nominal GDP in 2009 does not change (compared its previous level in 2008). Given this information, we know with certainty that a) real GDP increased during 2009. b) the GDP deflator increased during 2009. o) both the GDP deflator and real GDP fell during 2009 d) more information is nceded to answer this question. 30. Which of the following does not represent real GDP? a) GDP in current dollars b) GDP in terms of goods c) GDP in base year dollars d) GDP in constant dollars 31. According to convention, a recession is referred to if an economy goes through a) at least two consecutive quarters of negative growth. b) at least three consecutive quarters of negative growth. c) at least four quarters of negative growth. d) at least two consecutive months of negative growth.

Answers

Deflation generally occurs when the consumer price index decreases. The correct option is b.

Nominal GDP does not change 2009 so more information is nceded to answer this question The correct option is d.

Real GDP does not represent GDP in current dollars The correct option is a) GDP in current dollars

The Consumer Price Index (CPI) is a measure of the changes in the price level of a basket of consumer goods and services, such as transportation, food, and medical care, among others. Deflation, in economics, refers to a persistent decline in the general price level of goods and services over time, which is the opposite of inflation. This may be caused by a fall in demand or an increase in supply, as well as other factors.

If nominal GDP
does not change (compared to its previous level in 2008), we know for sure that real GDP did not change during 2009. Real GDP is a measure of an economy's output that is adjusted for price changes. As nominal GDP does not take price changes into account, it is not a reliable measure of an economy's output.

Real GDP does not represent GDP in current dollars, which is nominal GDP. Instead, it represents GDP in base year dollars or constant dollars. Real GDP is used to calculate economic growth, which is the change in the output of an economy over time.

According to convention, a recession occurs if an economy experiences at least two consecutive quarters of negative growth. A recession is a significant decline in economic activity that persists for more than a few months. This can lead to increased unemployment, decreased consumer spending, and other negative consequences. The term "recession" is commonly used by policymakers, economists, and the media to describe an economic downturn.

In summary the Deflation generally occurs when consumer price index decreases The correct option is b Nominal GDP does not change 2009 so more information is nceded to answer this question The correct option is d. Real GDP does not represent GDP in current dollars The correct option is a) GDP in current dollars

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Explain and discuss the Economic and Political Challenges of the Sultanate of Oman mainly after effect COVID-19 and measure taken to overcome those challenges?

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The Sultanate of Oman is experiencing economic and political challenges, especially after the outbreak of the COVID-19 pandemic. Oman's economy is heavily dependent on oil, which has witnessed a decline in prices.

The decline in oil prices has negatively impacted Oman's economy since 2014. Additionally, COVID-19 has added to the challenges Oman faces. Political Challenges Oman has been dealing with political challenges, which have been partly due to the economic recession. Oman's government has taken measures to address these challenges. Oman has a new leader, who took over from the previous leader, who had been in power for almost 50 years.

Political reforms are underway in Oman to address the grievances of the people. Oman's new leader has promised to improve the economy and address the political challenges that the country faces. Economic Challenges The decline in oil prices has had a significant impact on Oman's economy. Oman's economy is dependent on oil, which accounts for more than 70% of its total exports. The decline in oil prices has led to a decrease in government revenue, which has affected the country's budget. Oman's government has taken measures to address the economic challenges.

The government has implemented economic reforms, which aim to diversify Oman's economy and reduce its dependence on oil. The government has also taken measures to cut costs, reduce subsidies, and improve the efficiency of public spending. The government has introduced policies aimed at attracting foreign investment, which will help to boost the economy. Additionally, Oman's government has implemented measures aimed at improving the business environment and increasing competitiveness.

Conclusion Oman is facing significant economic and political challenges, mainly due to the decline in oil prices and the COVID-19 pandemic. The government has taken measures to address these challenges, including economic reforms, diversification of the economy, and attracting foreign investment. Political reforms are underway, which aim to address the grievances of the people and improve the political situation in the country. These measures will help Oman to overcome the challenges it faces and emerge stronger in the future.

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Select a specific institution. Identify this institution and utilizing its published MCR analyze costs and revenue of at least 3 specific departments. Then, evaluate implications of this volume to the facility’s future income stream.

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The institution chosen is Walmart. Walmart must focus on the growth of its electronics and grocery departments to continue generating a steady income stream.

The published MCR reports on Walmart's financial statements have revealed that the company's revenue stream is diverse, coming from various departments within the company. Three specific departments have been analyzed, and their costs and revenue streams have been outlined below:Pharmacy Department: In 2019, the total cost of goods sold (COGS) for Walmart's Pharmacy department was $29.3 billion, with a gross profit of $1.7 billion. Therefore, the gross profit margin for this department is around 5.49%.Electronics Department: In 2019, the total COGS for Walmart's electronics department was $54.1 billion, with a gross profit of $4.8 billion. Therefore, the gross profit margin for this department is around 8.15%.Grocery Department: In 2019, the total COGS for Walmart's grocery department was $222.4 billion, with a gross profit of $27.3 billion. Therefore, the gross profit margin for this department is around 12.25%.Walmart's profitability is highly dependent on the performance of these three departments, with the grocery department generating the most revenue and profit. However, the pharmacy department is currently facing significant challenges due to increasing healthcare costs and a decline in the number of uninsured Americans. Therefore, Walmart must focus on the growth of its electronics and grocery departments to continue generating a steady income stream.

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Have China, India, Japan, South Korea and Singapore experienced
the catch-up effect (also known as convergence theory)? Explain
differences with Australia and the USA.

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Yes, China, India, Japan, South Korea and Singapore have experienced the catch-up effect (also known as convergence theory).

The convergence theory, which is also known as the catch-up effect, claims that lower-income economies grow quicker than higher-income economies, leading to convergence in economic conditions. Developing economies typically require fewer physical resources and have fewer financial constraints than developed economies, allowing them to produce a faster-growing economy than the latter.Asian countries such as China, India, Japan, South Korea, and Singapore have experienced the catch-up effect in recent years.

These nations have utilized their access to abundant resources, technology, and improved political environments to achieve steady economic growth. This has allowed these countries to close the gap between their economies and the developed world, including Australia and the USA. On the other hand, Australia and the USA have already established themselves as advanced economies.

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Which of the following does NOT occur when a new entrant enters the marketplace? a. prices tend to be forced down b. resources costs of companies already in the marketplace increase c. rivalry among organizations increases d. power of the customer decreases e. product supply increases

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Out of the following options, the choice that does NOT occur when a new entrant enters the marketplace is "d. Power of the customer decreases."

Explanation: In general, when a new competitor enters a market, it affects the market in various ways. A new competitor implies that there is a new product, service, or idea that the existing market does not offer. This will, in turn, affect the demand-supply dynamics of the marketplace. The following are the effects of a new entrant on a marketplace: Prices tend to be forced down. Rivalry among organizations increases. Resources costs of companies already in the marketplace increase. Product supply increases. Power of the customer decreases. However, the only factor that does not occur when a new entrant enters the marketplace is "d. Power of the customer decreases." When a new competitor enters the marketplace, it does not decrease the power of the customer. Instead, customers get more options to choose from, and they have the power to decide which product or service they want to purchase. This increases the bargaining power of the customers, and they can negotiate better prices and services from the suppliers.

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bs company is considering eliminating the following product line: product axp sales $ 80,000 less variable costs: raw materials 50,000 direct labor 10,000 contribution margin $ 20,000 less fixed costs: facility-level costs allocated to products 30,000 profit (loss) $ (10,000 ) what amount of cost is avoidable if bs outsources production of this product? a. $20,000 b. $50,000 c. $90,000 d. $60,000

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The amount of cost that is avoidable if BS outsources the production of the product is $60,000.

The contribution margin is the amount of money that a company makes on a product after subtracting the variable costs from the sales revenue. In this case, the contribution margin is $20,000 ($80,000 - $50,000 - $10,000).

The contribution margin is a good indicator of how much a company can afford to spend on fixed costs such as facility-level costs allocated to products.

In this case, the fixed costs are $30,000, which means that the product line is not profitable. If the company outsources the production of the product, it will save $50,000 ($50,000 raw materials + $10,000 direct labor) in variable costs.

However, it will still have to pay the fixed costs of $30,000.So, the total cost that is avoidable if BS outsources production of this product is $50,000 (variable costs) + $10,000 (contribution margin) = $60,000 (Option D).

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Cullumber Corporation issued 368 shares of $10 par value ordinary shares and 123 shares of $50 par value preference shares for a lump sum of $16,587. The ordinary shares have a market price of $20 per share, and the preference shares have a market price of $90 per share. Prepare the journal entry to record the issuance.

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A lump sum occurs when two or more properties are purchased together for a single price.

In this case, Cullumber Corporation has issued 368 shares of $10 par value ordinary shares and 123 shares of $50 par value preference shares for a lump sum of $16,587.The ordinary shares have a market price of $20 per share, while the preference shares have a market price of $90 per share. To prepare the journal entry to record the issuance, follow these steps: Step 1: Calculate the total amount of the shares issuedOrdinary Shares = 368 × $10 = $3,680Preference Shares = 123 × $50 = $6,150Total = $3,680 + $6,150 = $9,830Step 2: Calculate the total market value of the shares issuedOrdinary Shares = 368 × $20 = $7,360Preference Shares = 123 × $90 = $11,070Total = $7,360 + $11,070 = $18,430Step 3: Calculate the amount to be allocated to the Ordinary SharesTotal Cost of Shares = $16,587Allocation to Ordinary Shares = $9,830 / ($9,830 + $18,430) × $16,587 = $5,249Step 4: Calculate the amount to be allocated to the Preference SharesTotal Cost of Shares = $16,587Allocation to Preference Shares = $6,738Step 5: Prepare the journal entry to record the issuanceDr. Cash = $16,587Cr. Ordinary Share Capital = $5,249Cr. Preference Share Capital = $6,150Cr. Share Premium = $5,188 ([$7,360 - $5,249] + [$11,070 - $6,150]) In this case, the corporation issues both ordinary shares and preference shares to raise funds, which can be used for expansion or operations. The ordinary shares have a par value of $10, whereas the preference shares have a par value of $50. The market price of the ordinary shares is $20 per share, whereas the preference shares are $90 per share. The total lump sum paid for both shares is $16,587. Based on the market value of each share and the total amount paid, the cost of shares issued needs to be allocated. Ordinary shares would be allocated $5,249 (calculated as [$9,830 / $18,430] x $16,587). Preference shares would be allocated $6,738. The rest of the value or share premium would be allocated $5,188. Hence, the journal entry for the issuance would be DR Cash ($16,587) CR Ordinary Share Capital ($5,249), CR Preference Share Capital ($6,150), and CR Share Premium ($5,188).

In conclusion, the journal entry to record the issuance of 368 ordinary shares and 123 preference shares with a lump sum of $16,587 would be DR Cash ($16,587) CR Ordinary Share Capital ($5,249), CR Preference Share Capital ($6,150), and CR Share Premium ($5,188). The lump sum price is allocated based on the market value of each share, and the remaining amount is added to the share premium account.

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Discuss the situation below, as a student and industrial trainee (INTRA) in Mechanical & Electrical (M&E) consultant company. 1. Ethical issues related to engineering practice in the construction of Kulim Jazz City, in front of campus. 2. How to attend and handle the issues. 3. Propose solutions for the issues. 4. Present the solution to the management of the M&E consultant company.

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As a student and industrial trainee (INTRA) in Mechanical & Electrical (M&E) consultant company, the following are the ethical issues related to engineering practice in the construction of Kulim Jazz City in front of the campus.

1. Ethical issues related to engineering practice: The ethical issues related to engineering practice in the construction of Kulim Jazz City, in front of campus, are mainly focused on health and safety of workers. The safety of the workers must be the first priority on the construction site. Therefore, the engineering practices should be based on occupational health and safety requirements.

2. How to attend and handle the issues: To handle the ethical issues, the M&E consultant company must create an ethical policy that is aligned with the health and safety regulations. Workers must be trained on the ethical code of conduct and safety procedures. It is important to evaluate and assess the site's health and safety procedures and conditions regularly. The M&E consultant company should also ensure that all the workers have personal protective equipment (PPE) and other safety equipment.

3. Propose solutions for the issues: Proposed solutions to the ethical issues related to engineering practice in the construction of Kulim Jazz City are:Making sure that workers have proper training on ethical practices and safety procedures.Ensuring that workers have personal protective equipment (PPE) and other safety equipment.Ensuring that health and safety procedures are followed on the construction site.Making sure that the construction site is evaluated and assessed regularly to ensure that ethical practices and safety procedures are being followed.

4. Present the solution to the management of the M&E consultant company: Present the proposed solutions to the management of the M&E consultant company in a formal report. The report should outline the ethical issues related to the construction of Kulim Jazz City in front of the campus and propose solutions. The report should also explain the importance of ethical practices and safety procedures on the construction site.

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Explain the full story of Garland, including up to Amy Coney Barrett. Did Trump and Mitch McConnell as in accordance with the constitution?

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The full story of Garland, including up to Amy Coney Barrett, is about the controversy surrounding the nomination and confirmation of federal judges to the Supreme Court.

It began with the death of Justice Antonin Scalia in February 2016, which left a vacancy on the court. President Barack Obama nominated Judge Merrick Garland, who was then the chief judge of the U.S. Court of Appeals for the District of Columbia Circuit, to fill the vacancy.

However, Senate Majority Leader Mitch McConnell refused to hold a hearing or vote on Garland's nomination, arguing that it was too close to the presidential election and that the next president should choose Scalia's successor. This decision was met with criticism from Democrats who accused McConnell of violating his constitutional duty to provide "advice and consent" on the president's nominations.

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Answer all parts (a) to (e) of this question. If a firm produces quantities q1 and q2 of two goods, its total cost is: C = q1 + q 2 1 + q 2 2 − αq1q2. The goods are sold in competitive markets at prices p1 > 1 and p2.
(a) [10 marks] Write down an expression for the profit of the firm. Obtain and provide an economic interpretation for the first-order profit-maximising conditions.
(b) [10 marks] Using the Cramer’s rule, find the quantities q1 and q2 that satisfy the first order conditions.
(c) [10 marks] Find the second-order conditions for profit maximisation. For what values of α are the second-order conditions satisfied?
(d) [10 marks] Assume the second-order condition is satisfied. Use calculus to determine the way in which the supply of good 2 varies with a rise in p1. Explain why it depends on the sign of α.
(e) [10 marks] Assume the second-order condition is satisfied. If p1 = 0.5 and p2 = 1, under which condition about α will good 1 be supplied by the firm? Explain the economic intuition behind the results.

Answers

Expression for the profit of the firm: The profit function of the firm is given as;

π = p1q1 + p2q2 − C

Profit maximization conditions: The first order conditions for profit maximization are as follows

;π/q1 = p1 − C/q1 + αq

2 = 0π/q

2 = p2 − C/q2 + αq

1 = 0

The first order conditions indicate that the profit of the firm is maximized if the marginal revenue from selling an additional unit of good equals the marginal cost of producing an additional unit of that good. The additional condition introduced by the presence of α is that a firm producing both goods may be able to influence the price of one good by altering the quantity of the other. This gives rise to the strategic interaction between firms in the two markets. b) Cramer’s rule and quantities of q1 and q2:From the first order condition above.

The second order condition is that the Hessian must be negative definite at the Nash equilibrium in order for the profit function to be concave. That is, () < 0, for the Nash equilibrium. For this case, we have:∂2/∂12 = −, ∂2/∂1∂2 = p2 − , ∂2/∂22 = −,For the Hessian to be negative definite, the determinant of the matrix must be positive and the trace of the matrix must be negative.

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Krypton Engineering expects to have net profit next year of $28.18 million and free cash flow of $22.18 million. Krypton's marginal corporate tax rate is 40%. a. If Krypton increases leverage so that its interest expense rises by $8.1 million, how will its net profit change? b. For the same increase in interest expense, how will free cash flow change?

Answers

a. If Krypton increases leverage so that its interest expense rises by $8.1 million, the net profit will decrease by $4.86 million.

b. For the same increase in interest expense, the free cash flow will decrease by $4.86 million as well.

Explanation: Given: Net profit next year = $28.18 million Free cash flow = $22.18 million Marginal corporate tax rate = 40%Increase in leverage: Interest expense = $8.1 million. Change in net profit: Net profit = Profit before tax (PBT) - Corporate tax. PBT = Net profit / (1 - tax rate)= $28.18 million / (1 - 0.4)= $46.96 million. The interest expense increases by $8.1 million, so the PBT will change: PBT = Net profit + Interest expense / (1 - tax rate)= $28.18 million + $8.1 million / (1 - 0.4)= $46.96 million. The new net profit can be calculated as: New net profit = PBT - Corporate tax= $46.96 million - 0.4 * $46.96 million= $28.08 million. Therefore, the net profit will decrease by $0.1 million ($28.18 million - $28.08 million) or $4.86 million ($0.1 million / (1 - 0.4)).b. Change in free cash flow: Free cash flow (FCF) = Net cash flow from operating activities - Net cash flow from investing activities. The net cash flow from operating activities (NCOA):NCOA = Net profit + Non-cash expenses - Changes in working capital NCOA = $28.18 million + Non-cash expenses - Changes in working capital. However, we can use the fact that free cash flow is $22.18 million to calculate the net cash flow from investing activities (NCIA):NCIA = NCOA - FCFNCIA = NCOA - $22.18 million. If the interest expense increases by $8.1 million, the new net profit will be $28.08 million (as calculated in part a). Assuming that non-cash expenses and changes in working capital do not change, the new NCOA will be: NCOA = $28.08 million + Non-cash expenses - Changes in working capital. To keep the free cash flow at $22.18 million, the new NCIA must be: NCIA = NCOA - $22.18 million= ($28.08 million + Non-cash expenses - Changes in working capital) - $22.18 million= $5.9 million + Non-cash expenses - Changes in working capital. This means that if Krypton increases its interest expense by $8.1 million, it will have to reduce its net cash flow from investing activities by $2.2 million ($8.1 million - $5.9 million). Since free cash flow is equal to net cash flow from operating activities minus net cash flow from investing activities, the free cash flow will also decrease by $2.2 million. Therefore, both the net profit and free cash flow will decrease by $4.86 million.

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SMART goals are: Specific, Measurable, Achievable, Relevant, and Timely. Identify a SMART goal that you could reach in 100 days. Chart out each of the five SMART goal criteria for your goal. • Include detail in your content • Write professionally using business language • Use milestones in your progress towards your goal

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SMART Goal: Increase online sales revenue by 20% within 100 days.

The SMART Goal is elaborated below:

Specific: The goal is to specifically increase online sales revenue by 20%, focusing on revenue generated through digital channels such as the company's website, e-commerce platforms, and social media.

Measurable: The progress towards the goal can be measured by tracking the online sales revenue on a regular basis. The baseline revenue should be established before the start of the 100-day period, and ongoing monitoring should be done to measure the increase in revenue.

Achievable: The goal is challenging yet achievable within the given timeframe. The company will allocate resources, implement effective digital marketing strategies, optimize the online shopping experience, and closely monitor performance to ensure the goal can be reached.

Relevant: Increasing online sales revenue is relevant to the company's growth and profitability objectives. As digital commerce continues to expand, focusing on improving online sales aligns with market trends and customer preferences.

Timely: The goal has a specific timeframe of 100 days. This provides a sense of urgency and creates a deadline to drive action and ensure timely progress towards the goal. Milestones will be set throughout the 100-day period to track progress and make any necessary adjustments to stay on track.

Milestones:

1. Within the first 30 days, conduct a thorough analysis of the current online sales performance and identify areas for improvement.

2. By day 45, implement targeted digital marketing campaigns to drive traffic to the company's online platforms.

3. By day 60, optimize the user experience on the website and e-commerce platforms to enhance conversion rates.

4. By day 75, launch customer loyalty programs and promotions to encourage repeat purchases and increase customer retention.

5. By day 100, evaluate the progress and measure the increase in online sales revenue. Make necessary adjustments based on the results to achieve the 20% revenue growth target.

In conclusion, by setting a SMART goal with specific milestones, the company can effectively track progress, take necessary actions, and achieve a 20% increase in online sales revenue within the 100-day timeframe.

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1.A plaintiff would not be successful in a defamation lawsuit if
the defendant had evidence to prove the statement was true.
TRUE OR FALSE
2.
An implied term:
Multiple Choice
Is expressed directly i

Answers

A plaintiff would not be successful in a defamation lawsuit if the defendant had evidence to prove the statement was true.

Defamation refers to the act of making false statements about an individual or an entity that harm their reputation. It is a legal term used to describe the communication of false information that damages the character, credibility, or standing of a person or organization in the eyes of others. Defamation can take various forms, including slander (spoken defamation) and libel (written or printed defamation).

Defamation laws vary across jurisdictions, but the general aim is to balance the right to freedom of speech with the protection of one's reputation. Defamation claims often involve disputes over the truthfulness of statements, the context in which they were made, and the extent of the damage caused to the aggrieved party.

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Explain the Decision-making method (High and low Methods) with
examples.

Answers

The decision-making method is a framework for making choices and picking one solution from many. In practice, two primary methods for decision-making are used; the high and low methods. Here are some examples of each method High method.

The high method is a decision-making process that involves examining each option thoroughly and comparing it to the ideal. This method requires the use of several criteria, including potential costs, benefits, and risks. A choice is made based on the option that has the most significant benefits and the fewest risks.

Here's an example: Assume a business owner has the choice of two rental spaces. Space A is more expensive, but it is in a prime location and has a lot of visibility. Space B is less expensive but is further from the city center, and therefore less visible.

Despite the added expense, the business owner will choose Space A because it has the most potential to bring in customers.The low method is a decision-making process that involves examining each option minimally and selecting the best one.

The low method requires the use of several criteria, including potential costs, benefits, and risks. A choice is made based on the option that has the lowest costs and the highest benefits. Here's an example: Assume you're looking for a new pair of shoes.

ou have two choices: one is more expensive but will last longer, while the other is less expensive but will not last as long. Even though the first option is more expensive, it is the best choice since it will last longer and provide better value over time.

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true/false. direct material costs are always considered relevant costs in a make or buy decision.

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True. Direct material costs are typically considered relevant costs in a make or buy decision.

When evaluating whether to make a product or buy it from an external supplier, the direct material costs associated with producing the item internally are relevant in comparing the cost of making it versus buying it. These costs include the cost of raw materials and any associated costs directly tied to the materials used in the production process. By comparing the direct material costs of producing the item internally to the cost of purchasing it from an external supplier, a company can assess which option is more cost-effective. Other relevant costs, such as direct labor, overhead costs, and additional costs specific to each alternative, should also be considered in the decision-making process.

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2. Saving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $800 million. Enter the amount for consumption. National Income Account Government Purchases (G) Taxes minus Transfer Payments (T) Consumption (C) Investment (1) Value (Millions of dollars) 200 260 300 300 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S) = million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private Saving = = 5 million Public Saving = Public Saving = million million Based on your calculations, the government is running a budget

Answers

Since public saving is negative (-$60 million), the government has a budget deficit.

To calculate national saving, we can use the national income accounting identity:

National Saving (S) = GDP - Consumption - Government Purchases

Given data from the table:

GDP = $800 million

Consumption (C) = $300 million

Government Purchases (G) = $200 million

Using the formula, we can calculate national saving:

S = $800 million - $300 million - $200 million

S = $300 million

Therefore, national saving is $300 million.

To calculate private saving, we use the following equation:

Private Saving = National Saving - Public Saving

Given data from the table:

National Saving (S) = $300 million

Public Saving = Taxes minus Transfer Payments (T) - Government Purchases (G)

Using the data from the table:

Taxes minus Transfer Payments (T) = $260 million

Government Purchases (G) = $200 million

Public Saving = $260 million - $200 million

Public Saving = $60 million

Private Saving = $300 million - $60 million

Private Saving = $240 million

Therefore, private saving is $240 million.

Public saving is equal to the difference between taxes minus transfer payments and government purchases:

Public Saving = Taxes minus Transfer Payments (T) - Government Purchases (G)

Public Saving = $260 million - $200 million

Public Saving = $60 million

Therefore, public saving is $60 million.

Based on the calculations, the government is running a budget deficit since public saving is negative (-$60 million). This means that government purchases exceed taxes minus transfer payments.

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Use the following table of Personal Income Tax Rates for 2019-20 to calculate the amount of: Personal Income Tax, Medicare Levy, Disposable Income, Marginal Tax Rate and Average Tax Rate for individuals with the following income.
Taxable income Tax on this income
0 - $18,200 Nil
$18,201 - $37,000 19c for each $1 over $18,200
$37,001 - $90,000 $3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000 $20,797 plus 37c for each $1 over $90,000
$180,001 and over $54,097 plus 45c for each $1 over $180,000
Taxable income Medicare Levy
0 - $22,398 Nil
$22,399 - $27,997 10c for each $1 over $22,399
$27,998 & above 2c of taxable income
a. $35,000
b. $70,000
c. $110,000
a. Why is the Marginal tax rate always higher for Average Tax Rate?

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The Marginal Tax Rate is always higher than the Average Tax Rate due to higher tax rates applied to additional income earned.

The Marginal Tax Rate is always higher than the Average Tax Rate because it represents the tax rate applied to the next additional dollar of income earned. As individuals move into higher income brackets, they are subject to higher tax rates on each additional dollar they earn. This incremental increase in the tax rate contributes to the Marginal Tax Rate being higher.

On the other hand, the Average Tax Rate is calculated by dividing the total tax paid by the total taxable income. It provides an average measure of the overall tax burden on income. Since the average rate considers the entire income range and applies the corresponding tax rates, it tends to be lower than the Marginal Tax Rate, which focuses on the specific tax rate applied to the last portion of income earned.

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if a $10,000 face value discount bond maturing in one year is selling for $8,000, then its yield to maturity is

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If a $10,000 face value discount bond maturing in one year is selling for $8,000, then its yield to maturity is 25%.

The yield to maturity (YTM) of a bond is the annualized rate of return an investor would earn if they hold the bond until maturity and receive all the promised cash flows. To calculate the YTM of the discount bond in question, we can use the formula:

YTM = (Face Value - Price) / Price

In this case, the face value of the bond is $10,000 and it is selling for $8,000. Plugging these values into the formula, we get:

YTM = (10,000 - 8,000) / 8,000 = 2,000 / 8,000 = 0.25 or 25%

Therefore, the yield to maturity of the bond is 25%.

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Question 3 Question 3a Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption. In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G) which stood at GHe8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH 2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of GH1,000.00 which was independent of the country's national income and 10% which was dependent of the country's national income. Given these data on Ghana for the previous year: i. Compute the equilibrium level of income (Y), Consumption (C), Tax (T) and Savings (S). (Hint: C = a + byd; T = To+tY and M = M₁ + mY) Determine the Government fiscal stance. (10 marks) (1 mark) iii. If the full employment level of national income is GH¢40,000.00, determine the income gap. iv. What fiscal policy would be appropriate to address this gap? (1 mark) (1 mark) V. If there is an increase in export to GH¢4,000.00, find the new level of equilibrium income. (2 marks) vi. Show how a GH 2,000 increase in government spending financed by a GH$2,000 increase in taxes will affect the level of national income. (2 marks) Question 3b Gross Domestic Product (GDP) is not a good measure of welfare in an economy. Discuss. (3 marks)

Answers

Question 3a: The equilibrium level of income (Y), Consumption (C), Tax (T) and Savings (S) can be calculated as follows: C = GH¢5,000.00 + 0.8Yd... (1)T = GH¢2,000.00 + 0.25Y... (2)M = GH1,000.00 + 0.1Y + GH500.00... (3)

At equilibrium, Y = C + I + G; S = Y - T - C; and M = X,C = I + G + X - M, where Y = national income; C = consumption expenditure; T = tax; S = savings; I = gross private investment; G = government expenditure; X = exports; and M = imports. Substituting equations (1) and (2) into Y = C + I + G;Y = GH¢5,000.00 + 0.8Yd + GH¢7,000.00 + GH¢8,000.00Y - GH¢2,000.00 - 0.25Y. Equating like terms,0.95Y = GH¢20,000.00Y = GH¢21,052.63Substituting Y = GH¢21,052.63 into equation (1),C = GH¢5,000.00 + 0.8(0.8Y)C = GH¢5,000.00 + GH¢12,631.58C = GH¢17,631.58Substituting Y = GH¢21,052.63 into equation (2),T = GH¢2,000.00 + 0.25(GH¢21,052.63)T = GH¢7,763.16S = GH¢21,052.63 - GH¢7,763.16 - GH¢17,631.58S = GH¢-4,342.11Therefore, the government fiscal stance is expansionary since the level of income (GH¢21,052.63) exceeds the full employment level of national income (GH¢40,000.00) by GH¢18,947.37 (i.e. GH¢40,000.00 - GH¢21,052.63). To address this gap, a contractionary fiscal policy would be appropriate. A decrease in government expenditure or an increase in taxes will help decrease aggregate demand and reduce inflation.

3b: GDP is not a good measure of welfare in an economy. GDP measures the monetary value of goods and services produced within a country over a given period. Although it is a widely used measure of economic growth, it does not capture non-monetary aspects of human welfare, such as environmental sustainability, equity, and quality of life. For instance, a country with a high GDP may have high levels of inequality, environmental degradation, or social unrest, which can undermine the well-being of its citizens. In addition, GDP does not take into account unpaid work, such as household chores or volunteering, which can contribute significantly to human welfare. Therefore, GDP should be complemented with other measures, such as the Human Development Index, which captures non-monetary aspects of welfare.

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Non-GAAP metrics are allowed provided:

A - they are given greater prominence than GAAP disclosures.
B - any non-GAAP metric is accompanied by a reconciliation to the closes
C - they are not given greater prominence than GAAP disclosures.
D - they are not misleading.

Answers

Non-GAAP metrics are allowed provided that they are not misleading and are accompanied by a reconciliation to the closest GAAP metric. Therefore, the correct answer is option D - they are not misleading and option B - any non-GAAP metric is accompanied by a reconciliation to the closest GAAP metric.

GAAP (Generally Accepted Accounting Principles) is a collection of accounting standards and principles used by organizations to compile financial statements. Companies, on the other hand, can utilize non-GAAP metrics to highlight certain aspects of their company that might not be reflected in GAAP results.Non-GAAP metrics are the financial results reported by a company that don't follow GAAP standards. This term encompasses everything from cash expenses to non-recurring expenses to various types of adjusted earnings and non-operating income.However, the SEC requires non-GAAP financial measures to be accompanied by additional disclosures. One such provision is that the non-GAAP financial measure must be accompanied by a reconciliation to the most similar GAAP metric that is readily available without undue effort, such as net income or cash flow from operations, to comply with SEC rules.

So, it's important to ensure that non-GAAP metrics are not misleading and that they are accompanied by a reconciliation to the closest GAAP metric.

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a) Should banks have to hold 100% of their deposits? Why or why not? b) Humongous Bank is the only bank in the economy. The people in this economy have $20 million in money, and they deposit all their money in Humongous Bank. Humongous Bank is required to hold 5% of its existing $20 million as reserves, and to loan out the rest. How the total deposits are going to increase in multiple rounds? c) What will happen to the money multiplier process during the time of recession with inflationary spiral. Explain using a hypothetical values?

Answers

The choice of whether banks should hold 100% reserves is difficult since it must balance worries about stability and liquidity with the desire to expand credit and the economy

There are a number of variables and policy concerns that determine whether banks should be compelled to keep 100% of their deposits. By granting loans for consumption and investment, this system enables banks to generate credit and promote economic growth. Additionally, it enables effective capital allocation throughout the economy.

It can increase banking system stability and avert financial catastrophes. Banks would be fully liquid and able to accommodate all requests for withdrawals of deposits if they had 100% reserves. This reduces the possibility of bank runs or panics, in which depositors rush to withdraw their money and possibly bring down a bank or the entire financial system.

However, making banks keep 100% of their reserves could restrict their ability to lend and promote economic growth. It might make loans less accessible, which could be bad for economic expansion. Additionally, maintaining 100% reserves may not be feasible or cost-effective for banks because it could result in a large loss of opportunity.

Each round expands the total deposits in the economy, creating a multiplier effect.

Humongous Bank is required to hold 5% of its existing $20 million as reserves, and to loan out the rest.

Money multiplier process:

Initial Deposit = $20 million

Reserve Requirement = 5% of $20 million = $1 million

Loan Creation = $19 million

Total deposits =  Initial deposit + Loan creation = $20 million + $19 million = $39 million

Deposit Expansion = Initial deposit + Loan creation + Deposit expansion = $20 million + $19 million + $19 million = $58 million

Following rounds of this procedure, banks can continue to accept deposits, maintain reserves, and lend out the leftover funds. The total deposits in the economy increase with each round, having a multiplier effect.

The money multiplier process can be affected by an inflationary spiral that is present during a recession. To better comprehend this, let's take a fictitious example:

Let's assume that the economy is in a recession with high unemployment and poor economic activity. The central bank reduces interest rates and adopts an expansionary monetary policy to fight the recession. However, the central bank may need to tighten monetary policy to contain inflation if the economy enters an inflationary spiral in which prices are growing quickly.

The central bank aims to restrict the expansion of the money supply and lessen inflationary pressures by diminishing the money multiplier effect. This reduction in the money multiplier process would act as a disinflationary measure, helping to counter the inflationary spiral during a recession.

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As CRO of Lakeside Bank, a bank that has £15 million of fixed-rate assets, £30 million of rate-sensitive assets, £25 million of fixed-rate liabilities, and £20 million of rate-sensitive liabilities. Conduct a gap analysis for Lakeside Bank and show what will happen to bank profits if interest rates rise by 4 percentage points.

Answers

Answer:

akeside Bank and show what will happen to bank profits if

Explanation:

akeside Bank and show what will happen to bank profits if

greatgro, inc., makes genetically modified seeds with properties that are iden-tical to hearty harvest corporation’s patented seeds, without hearty harvest’s permission. this is most likely

Answers

The scenario presented in the question relates to patent infringement.

Patent infringement occurs when someone uses, makes, sells, or imports a patented invention without the permission of the patent holder. In the given scenario, GreatGro, Inc., is producing genetically modified seeds with properties that are identical to Hearty Harvest Corporation's patented seeds without obtaining permission from Hearty Harvest. This action is most likely a case of patent infringement because GreatGro is using the patented technology without authorization.

Patents grant inventors exclusive rights to their inventions for a limited period, allowing them to protect their intellectual property and prevent others from using their inventions without permission. When someone infringes on a patent, the patent holder has the right to take legal action to enforce their rights, seek damages, or obtain injunctions to stop the infringing activity.

It is important for companies and individuals to respect intellectual property rights and obtain proper authorization or licenses to use patented technology to avoid infringing on someone else's patents.

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An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):
A) Accrued account.
B) Contra account.
C) Temporary Account.
D) Clearing account.
E) Permanent Account.

Answers

The correct answer is (B) Contra account. a contra account is an account that is linked with another account and has an opposite normal balance.

It is subtracted from the balance of the related account to present a net balance. Contra accounts are used to provide more detailed information about certain types of transactions or to offset the balance of another account.

Contra accounts are commonly used in financial accounting to report certain types of transactions or to adjust the balance of specific accounts. For example, a contra account known as "Allowance for Doubtful Accounts" is created to offset the Accounts Receivable account and reflect the estimated amount of uncollectible customer accounts.

The Allowance for Doubtful Accounts has a credit balance, which is subtracted from the debit balance of the Accounts Receivable account to present a net realizable value.

The use of contra accounts allows for more accurate reporting and presentation of financial information. It helps to highlight certain transactions or adjustments without affecting the overall balance of the related account.

Contra accounts are temporary in nature and can be adjusted or closed out at the end of an accounting period to reflect the appropriate balances.

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You might want to use stepwise regression when:

a. You want to eliminate some of your less useful predictors in a complex model

b. You have a very simple regression model and don't need the full model-building process

c. You don't have enough predictors to utilize multiple regression

d. You believe you may be violating some assumptions of least squares regression

Answers

You might want to use stepwise regression to eliminate some of your less valuable predictors in a complex model. Thus the correct option is a.

Stepwise regression is a variable selection technique used in regression analysis. It is typically employed when you have a large number of predictor variables and you want to determine which subset of these variables is most relevant or useful in predicting the response variable.

The stepwise regression process involves iteratively adding or removing predictors from the model based on statistical criteria, such as p-values or adjusted R-squared. It helps automatically select the subset of predictors that best explain the variation in the response variable.

Option A states that you would use stepwise regression when you want to eliminate some of your less useful predictors in a complex model. This is the primary purpose of stepwise regression—to identify and select the most relevant predictors while eliminating the less significant or redundant ones.

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if a borrower's house is worth $200,000, the borrower has a first mortgage balance of $100,000, and a heloc lender will give a home equity line of credit loan such that the total mortgage balance is 80 percent, then the maximum line of credit will be $

Answers

The maximum line of credit that can be given is $60,000.

Given that a borrower's house is worth $200,000, the borrower has a first mortgage balance of $100,000, and a HELOC lender will give a home equity line of credit loan such that the total mortgage balance is 80 percent.To determine the maximum line of credit that the borrower can get, we need to first find out what 80% of the total home value is:$200,000 x 0.80 = $160,000.

This means that the total mortgage balance cannot exceed $160,000. Since the first mortgage balance is $100,000, this means that the maximum line of credit that can be given is the difference between $160,000 and $100,000:$160,000 - $100,000 = $60,000.Therefore, the maximum line of credit that can be given is $60,000.

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Discount loan (interest and principal at maturity). Chuck Ponzi has talked an elderly woman into loaning him $10,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $10,000 with an annual interest rate of 11% over the next 15 years. Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 14?

Answers

In a discount loan scenario, the cash flow to the woman at the end of each year can be calculated by determining the present value of the lump-sum payment that Chuck Ponzi will make at the end of the contract.

The formula for calculating the present value of a future lump-sum payment is:

Present Value = Future Value /[tex](1 + Interest Rate)^n[/tex]

To calculate the cash flow for each year, we need to find the present value of the $10,000 at the end of each year using the formula above. Here are the calculations for years 1 through 14:

Year 1:

Present Value = $10,000 /[tex](1 + 0.11)^1[/tex]

Year 2:

Present Value = $10,000 /[tex](1 + 0.11)^2[/tex]

Year 3:

Present Value = $10,000 / [tex](1 + 0.11)^3[/tex]

Year 4:

Present Value = $10,000 / [tex](1 + 0.11)^4[/tex]

Year 5:

Present Value = $10,000 / [tex](1 + 0.11)^5[/tex]

Year 6:

Present Value = $10,000 / [tex](1 + 0.11)^6[/tex]

Year 7:

Present Value = $10,000 / [tex](1 + 0.11)^7[/tex]

Year 8:

Present Value = $10,000 /[tex](1 + 0.11)^8[/tex]

Year 9:

Present Value = $10,000 /[tex](1 + 0.11)^9[/tex]

Year 10:

Present Value = $10,000 / [tex](1 + 0.11)^{10}[/tex]

Year 11:

Present Value = $10,000 / [tex](1 + 0.11)^{11[/tex]

Year 12:

Present Value = $10,000 /[tex](1 + 0.11)^{12[/tex]

Year 13:

Present Value = $10,000 / [tex](1 + 0.11)^{13[/tex]

Year 14:

Present Value = $10,000 / [tex](1 + 0.11)^{14[/tex]

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2. using a pestel analysis, identify all the macro forces that have an impact in this industry. what does it reveal about an industry when most or all of these six macro forces are actively engaged?

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The PESTEL analysis reveals that multiple macro forces, including Political, Economic, Sociocultural, Technological, Environmental, and Legal factors, impact the industry.

A PESTEL analysis examines the macro forces that shape an industry's external environment. When most or all of these six macro forces (Political, Economic, Sociocultural, Technological, Environmental, and Legal) are actively engaged, it indicates that the industry operates within a dynamic and complex environment.

This level of engagement suggests that the industry is influenced by various factors such as government policies, economic conditions, societal trends, technological advancements, environmental concerns, and legal regulations. Industries facing significant engagement across these forces must navigate a wide range of challenges and opportunities, requiring adaptability and strategic decision-making to thrive in such a multifaceted landscape.

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