Plastics Ontario Plastics Ontario (PO) has recently been incorporated under federal legislation. All the shares are owned by one man, Jimmy Arbuckle. PO will be active in the molded plastics industry, making everything from custom lettered signs to consumer products (e.g., toys) and industrial products (e.g. car dashboards). They will also supply chemicals to other, smaller plastic molding operations. Arbuckle has 20 years’ experience in both production and sales with a large Canadian plastics firm. He took advantage of several recent bankruptcy sales to acquire the manufacturing and molding equipment necessary to start his own firm. He has obtained a 10-year, fixed interest loan from the Federal Business Development Bank, a line of credit from a chartered bank for working capital and has invested $400,000 of his own money. Both banks required audited financial statements. The major pieces of equipment acquired cost $700,000. Another $60,000 will be spent transferring them to PO’s new leased facility. Arbuckle estimates another $80,000 will be spent "debugging" the equipment. Sales are expected to be made on three bases: 1. Custom signs on a prepaid basis. Signs would normally be completed within five business days but could take up to a month for a large order or if volume was high. 2. Direct sales to distributors and manufacturers on terms of 2/10, n/30. Interest on overdue accounts will be 1.4 percent per month. Customers can return defective goods for full credit, and, in common with the industry, goods carry a six-month warranty. 3. Customer goods to retail outlets on a consignment basis. Arbuckle does not expect to be able to run his molding equipment at full capacity from "outsider" orders for at least two years. Therefore, he plans to design and market a few consumer products (e.g., doll houses) to keep his operation busy. Several large retail chains have expressed interest in carrying these items but only on a consignment basis. Arbuckle estimates that it will cost him $40,000 to design and develop these items. Arbuckle hopes to break even in the second year of operation and show a profit in the third year. Losses are anticipated for the first year. He has planned to take an extremely low salary for the first three years until he is satisfied that the company can prove its viability. Arbuckle has established relatively low salary levels for his management team but has promised them generous bonus based on net income. Arbuckle has approached you, CPA, to act as financial advisor. He has requested advice on accounting policies and other relevant issues.

Required: Adopt the role of adviser to Mr. Arbuckle and draft a report responding to his request.

a) Jaleel understands that futures contracts are created to manage risk exposures. The purpose of a futures contract is to provide a means of reducing risk by allowing parties to lock in a price for an underlying asset

. A futures contract involves a contract between two parties to buy or sell an asset at a predetermined price on a future date. The contract can be settled in cash or by delivery of the underlying asset.Qantas Airlines is a good example to use to explain how futures contracts work.

Qantas Airlines is vulnerable to fluctuations in fuel prices.

As a result, Qantas Airlines may use futures contracts to hedge against rising fuel costs. Qantas Airlines may enter into a futures contract with a fuel company to lock in the price of fuel for a future delivery date. The futures contract allows Qantas Airlines to protect itself from a sudden increase in fuel costs by agreeing on a price for fuel in advance.

Even if fuel prices rise between the time the futures contract is signed and the date of delivery, Qantas Airlines will still pay the agreed-upon price for fuel. As a result, the airline is able to reduce its exposure to the risk of rising fuel prices.

b) Jaleel wishes to use option contracts to protect his investments in Tesla shares, which are currently trading at $985 on the Nasdaq. Option contracts are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a specified date

. They offer a means of hedging against potential losses while also allowing for the possibility of gains. Jaleel should consider purchasing a put option to hedge against a potential decline in the value of his Tesla shares.

A put option gives the holder the right to sell the underlying asset at a predetermined price on or before a specified date. If the value of the Tesla shares falls below the predetermined price, Jaleel can exercise the option to sell the shares at the higher price, thereby protecting the value of his investment

. The following options can be used:

Option 1: A put option with a strike price of $900

Option 2: A put option with a strike price of $950

Option 3: A put option with a strike price of $1000

Option 4: A put option with a strike price of $1050

If Jaleel expects a significant drop in the price of Tesla shares, he should choose option 4.

If he expects a small drop, he should choose option 2. If he expects a moderate drop, he should choose option 3. Option 1 is not recommended since it has a lower strike price than the current market price of $985.

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To calculate the equal installment payment c on a self-liquidating installment loan, can use the installment method. The loan amount is $985,000 with an interest rate of 12.7% and a life of 60 years. The loan was taken out on January 1, 2021.

Using the installment method, we need to determine the annual payment that includes both principal and interest. The formula to calculate the equal installment payment is:

Annual Payment = Loan Amount / Present Value of Annuity Factor

The Present Value of the Annuity Factor can be calculated using the formula:

Present Value of Annuity Factor = (1 - (1 + interest rate)^(-number of years)) / interest rate

By plugging in the values, we can calculate the Present Value of the Annuity Factor and then determine the annual payment. Since the problem specifies not to round any intermediate numbers, the final answer may contain decimal places.

In conclusion, using the installment method, we can calculate the equal annual installment payment for the self-liquidating installment loan of $985,000 with an interest rate of 12.7% and a life of 60 years.

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The apparel industry's complex supply chains, fast fashion culture, and the need for substantial investments make sustainability a difficult issue to address effectively.

The impact of blue jeans on sustainability is significant. The production of denim material requires large amounts of water and contributes to chemical runoff, which can have adverse effects on the environment, particularly water sources.

Additionally, the apparel industry, including denim production, is known to produce a substantial amount of carbon dioxide emissions. In this case, Levi Strauss aims to reduce greenhouse gas emissions by 40% in its supply chain, recognizing the need to address the environmental impact of its factories worldwide.

By implementing energy-efficiency programs and committing to renewable energy, Levi's seeks to mitigate its carbon footprint and set an example for other retailers.

Sustainability is a challenging issue in the apparel industry for several reasons. First, the industry operates on a global scale, with complex and fragmented supply chains involving multiple tiers of suppliers.

It can be difficult for companies to trace the origins of raw materials and ensure sustainable practices throughout the entire supply chain. Lack of transparency and visibility into lower tiers of suppliers poses challenges in addressing sustainability effectively.

Second, fast fashion and the demand for quick turnover of trendy clothing exacerbate the sustainability issue. Fast fashion promotes a culture of disposable clothing, leading to increased production, waste generation, and environmental degradation. Balancing consumer demands for affordability, variety, and speed with sustainable practices is a constant challenge for the industry.

Lastly, implementing sustainable practices often requires significant investments in technology, infrastructure, and supplier partnerships. These investments may not yield immediate financial returns, making it challenging for companies to justify the costs in the short term.

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Case 11: Levi's Move to Sustainability Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal(Aug. 1, 2018). By 2025, the denim brand wants to cut greenhouse gas emissions by 40% in its supply chain, a sprawling set of 580 third- party factories and mills in 39 countries. The company will start by implementing energy- efficiency programs at 60 of the factories and mills that represent the biggest share of both production volume and carbon footprint. Many of those factories also produce apparel for other retailers, and Levi's wants to set an example for its peers. "We want to have an outsize impact beyond our own footprint," says Levi's VP-Sustainability. Across many industries, support has been growing for broader, collective efforts to address sustainability in supply chains. Common standards across supplier networks are more likely to stick than varying targets for different vendors. (The British research journal Nature says apparel production is "one of the world's most polluting industries," producing about 1.2 billion metric tons of carbon dioxide annually). As part of the new sustainability push, Levi is also committing to use 100% renewable energy and reduce emissions by 90% in its own facilities. But changing practices at its supplier factories will have more of an impact. Stand.earth, an environmental group that launched a campaign against the denim-maker last year called "Too Dirty to Wear," applauded the Levi's move. But it said it also wants to see the company commit to reduce its greenhouse gas emissions by 60% to 70% by 2050. It can be extremely difficult for companies to calculate their total carbon emissions because the true impact stretches beyond the factories to raw materials providers and transport operations. The basic production of denim material also uses large amounts of water and produces chemical runoff. "When they say supply chain," says an MIT prof, I'd ask, 'How deep? If it's tier 1, do you even know your tier 2, 3, 4, or 5 suppliers?" Self thought provoking questions: 1. Discuss the impact of blue jeans on sustainability. 2. Why is sustainability such a difficult issue in the apparel industry?

12. The carbon emissions (or CO₂  equivalents) from transport services (messenger and armored truck) are  is 32.1 metric tons.

13. According to the Dauncey conversion factors, the carbon emissions (or CO₂ equivalents) from the Bank's paper use are 31.6 metric tons.

14. According to the EDF conversion factors, the carbon emissions (or CO₂  equivalents) from the Bank's paper use are 23.3 metric tons.

15. The emissions numbers from paper based on the EDF conversion factors should be used, and double counting is a potential problem because it can result in overstated emission figures.

Double counting is when carbon emissions are counted more than once due to a failure to account for upstream emissions.

This can happen when a company includes emissions from its supply chain or transport in its own inventory without considering whether those emissions have already been included in another company's inventory.

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Veronica's § 197 amortization deduction for 2021 is $16,333. It is determined by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period.

The § 197 intangible assets are amortized ratably over a 15-year period starting in the month when the intangible asset is acquired or the month when the intangible asset is used, in the case of an existing § 197 intangible asset. As a result, Veronica's § 197 amortization deduction for 2021 is determined as follows:

Amortization Deduction = [(Allocated Goodwill Cost / 15-year amortization period)] x [(Number of months in 2021) / 12] + [(Allocated Patent Cost / 15-year amortization period)] x [(Number of months in 2021) / 12]. First, let's calculate the goodwill amortization for 2021: Goodwill Amortization for 2021 = ($420,000 / 15) x (3/12) = $14,000. Now, let's calculate the patent amortization for 2021: Patent Amortization for 2021 = ($70,000 / 15) x (3/12) = $2,333. So, Veronica's § 197 amortization deduction for 2021 is $14,000 + $2,333 = $16,333.

When a company buys an intangible asset, such as a patent or goodwill, it must follow Internal Revenue Service (IRS) rules for amortization. When a § 197 intangible asset is acquired, its cost is amortized ratably over a 15-year period, beginning in the month it is acquired or the month it is used if it is an existing § 197 intangible asset. Therefore, Verónica's § 197 amortization deduction for 2021 was calculated by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period. The resulting figure is then multiplied by the number of months in 2021 and divided by 12. The allocated cost of the patent is $70,000, while the allocated cost of the goodwill is $420,000. Therefore, her § 197 amortization deduction for 2021 is the sum of the patent and goodwill amortizations, which is $2,333 + $14,000 = $16,333. The final answer is rounded to the nearest dollar. So, Veronica can claim $16,333 as a § 197 amortization deduction for 2021.

The § 197 intangible assets are amortized ratably over a 15-year period starting in the month when the intangible asset is acquired or the month when the intangible asset is used, in the case of an existing § 197 intangible asset. Veronica's § 197 amortization deduction for 2021 is determined by dividing the allocated cost of the patent and goodwill by 15, which is the amortization period. The resulting figure is then multiplied by the number of months in 2021 and divided by 12. Her § 197 amortization deduction for 2021 is $16,333.

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Fruits & Veggies recorded a journal entry with a debit to Cash for $162,000 and a credit to Temporarily Restricted Net Assets for $162,000.

To properly prepare the journal entries for the transactions, it's important to understand the net asset classifications commonly used by nonprofits. These classifications include unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

Based on the information provided, the transaction can be recorded as follows,

When pledges are received, it is initially recorded as an increase in temporarily restricted net assets since the funds are subject to donor-imposed restrictions. Once the restrictions are met, the funds are reclassified to unrestricted net assets.

Account Debit Credit

Cash $162,000

Temporarily Restricted Net Assets $162,000

The nonprofit received pledges amounting to $180,000, but it normally collects 90 percent of the amount pledged. Therefore, the amount collected is 90% of $180,000, which is $162,000. The cash received is debited, and the amount is recorded as an increase in temporarily restricted net assets.

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The absolute value of the price elasticity of demand is 1.5. The absolute value of the price elasticity of demand can be calculated using the following formula:

Price Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)

Given that the price of tennis balls rises by 8% and the quantity demanded decreases by 12%, we can substitute these values into the formula:

Percentage Change in Quantity Demanded = -12%

Percentage Change in Price = 8%

Price Elasticity of Demand = (-12%) / (8%) = -1.5

Since we are interested in the absolute value of the price elasticity of demand, the answer is 1.5.

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The total amount of product costs incurred to make 4,000 units is closest to option  $59,400.The correct answer is option (C).

The product's cost would be Direct Material + Direct Labor + Overhead costs (indirect costs) incurred to make the product. The formula for calculating the total amount of product costs incurred is:
Total product cost = Direct materials cost + Direct labor cost + Manufacturing overhead costs

The estimated overhead costs can be calculated by multiplying the predetermined overhead rate with the actual amount of activity. The predetermined overhead rate is the estimated overhead costs divided by the estimated activity level. Using the information, the total cost of producing 4,000 units is:
Total cost = ($15.50 × 4,000) + ($8.50 × 4,000) + [$28,000 + ($3.50 × 4,000)]
= $62,000 + $34,000 + $28,000 + $14,000
= $138,000
Therefore, the total amount of product costs incurred to make 4,000 units is closest to option C) $59,400.

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Among the following given options, the following is NOT a risk for a firm pursuing a first-mover advantage; It will cost your company more capital to develop and market the product than the costs rivals will face to compete later on.

The correct answer to the given question is option 3.

Here, we will discuss the reasons as to why this is not considered as a risk. Explanation: First mover advantage is a strategy that is used by firms when they aim to enter a new market or develop a new product or technology. In this case, the first firm to develop such new products or technologies gains an advantage over its competitors, as it can create a large customer base and brand name before others enter the market.

The benefits of first-mover advantages are;Building brand recognition Building customer loyalty Higher profits than the industry average However, there are some risks involved with a firm pursuing a first-mover advantage, they are;The firm may not have a dominant position in this new market sector Consumers may not like the firm's new product line/technology Other companies can evaluate the firm's strategy and learn from its success and failures.

The firm will need to commit to injecting enough resources to fully develop its technology and product line.Out of the above-mentioned risks, the cost of development and marketing is not considered as a risk. This is because, for a first mover, the capital invested will be used to develop new products or technology.

This, in turn, will give the firm the first-mover advantage, and the investment can be earned back in the future in the form of higher profits than the industry average. Thus, the cost of development and marketing is not considered a risk for a firm pursuing a first-mover advantage.

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The least effective closing for the refusal of a request would be option D) "Again, I regret that we must refuse."

Option D) does not offer a substitute or any plausible answers to the request. It does nothing more than reiterate the refusal; it makes no recommendations or offers any further advice. Effective closings for refusal frequently include expressing sympathy, providing alternatives, or sending good vibes.

The choices in options A), B), C), and E) all show a more considerate attitude by either acknowledging the requester's interest or offering substitute options that would better meet their needs. Option D) is less effective than the other options in preserving a positive atmosphere and posing the possibility of future collaboration or alternative exploration because it lacks these extra components.

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The stock shares of Coffeemania should sell for approximately $65.91 in today's market.

To determine the fair market value of Coffeemania's stock shares, we need to calculate the present value of the future dividends and the perpetuity growth. The dividends for the first three years are known: $2 in 1 year, $6 in 2 years, and $7 in 3 years. After that, the dividends are expected to grow at a rate of 6% per year indefinitely. We discount each dividend back to present value using the company's annual rate of return of 8%.

Then, we calculate the present value of the infinite stream of dividends using the perpetuity formula. Summing up the present values of the known dividends and the perpetuity value gives us the fair market value of the stock shares, which is approximately $65.91.

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The following is the best illustration of a monopolistic competitor a non-slip yoga mat manufacturer.

The option (A) is correct.

A monopolistic competitor alludes to a business that offers a comparative yet special item or administration. They offer separation while as yet serving a more modest market specialty. The business might charge a superior value due to the uniqueness of its item or administration.

For this situation, a nonslip yoga mat maker delivers a specific item that contrasts with those of its rivals. The clients of this market specialty might follow through on the top-notch cost given the additional worth of the separated item or administration.

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In the given consumption function equation, C represents consumption, C0 represents autonomous consumption, MPC represents the marginal propensity to consume, and Yd represents disposable income.

We are given:

C = $4,312.5

MPC = 0.75

Yd = $5,350

Substituting these values into the consumption function equation, we have:

$4,312.5 = C0 + 0.75($5,350)

To find the value of autonomous consumption (C0), we need to isolate it on one side of the equation. Let's solve for C0:

$4,312.5 - 0.75($5,350) = C0

$4,312.5 - $4,012.5 = C0

$300 = C0

Therefore, autonomous consumption (C0) equals $300.00.

So, the correct answer is option C: $300.00.

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The reason why cartels often break down is that each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the agreement.

The correct answer is d. Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement. This is known as the "cheating incentive" or the "prisoner's dilemma" in game theory.

In a cartel, firms agree to restrict their output and raise prices collectively, leading to higher profits for all members. However, individual firms have an incentive to deviate from the agreement and increase their production levels in order to capture a larger market share and gain a competitive advantage. By doing so, they can sell more and potentially earn higher profits than if they adhered to the agreed-upon output levels.

The problem arises because each firm faces the temptation to cheat, knowing that if all other firms stick to the agreement, it can increase its profits by producing more. However, if all firms succumb to this temptation and increase their production, the market becomes oversupplied, prices decrease, and profits decline for all cartel members.

This inherent conflict of interest between individual gain and collective cooperation makes it difficult for cartels to maintain stability over the long term. The self-interest of each member often undermines the effectiveness of the collusive agreement, leading to breakdowns and the erosion of cartel power.

Additionally, external factors such as changes in market conditions, new entrants, or regulatory actions can also disrupt cartel operations. When a cartel becomes profitable, it attracts the attention of other firms seeking to capture a share of the market. This increased competition can undermine the cartel's control over prices and output, further destabilizing the collusive agreement.

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To answer the questions, we need to go through each transaction and calculate the relevant values. Here are the answers to each question:

1. Journal entry to record raw materials used in production:

  Work in Process        $598,000

    Raw Materials                $598,000

2. Ending balance in Raw Materials:

  Beginning balance   $ 72,500

  Add: Raw materials purchased   $628,000

  Less: Raw materials used   $598,000

  Ending balance   $102,500

3. Journal entry to record labor costs incurred during the year:

  Work in Process        $570,000

    Salaries Payable                $570,000

4. Total amount of manufacturing overhead applied to production during the year:

  Overhead applied per direct labor-hour: $15.50

  Direct labor-hours worked: 41,000

  Manufacturing overhead applied = $15.50 x 41,000 = $635,500

5. Total manufacturing cost added to Work in Process during the year:

  Direct materials used: $598,000

  Direct labor: $570,000

  Applied manufacturing overhead: $635,500

  Total manufacturing cost added: $1,803,500

6. Journal entry to record the transfer of completed jobs:

  Work in Process        $1,717,900

    Finished Goods               $1,717,900

7. Ending balance in Work in Process:

  Beginning balance   $ 18,200

  Add: Total manufacturing cost added   $1,803,500

  Less: Cost of completed jobs   $1,717,900

  Ending balance   $103,800

8. Total amount of actual manufacturing overhead cost incurred during the year:

  Actual manufacturing overhead cost incurred: $470,000

9. Manufacturing overhead underapplied or overapplied for the year:

  Actual manufacturing overhead cost incurred: $470,000

  Applied manufacturing overhead: $635,500

  Underapplied manufacturing overhead: $165,500

10. Cost of goods available for sale during the year:

   Cost of completed jobs: $1,727,900

   Ending balance in Finished Goods: $0

   Cost of goods available for sale: $1,727,900

11. Journal entry to record the cost of goods sold:

   Cost of Goods Sold   $1,727,900

     Finished Goods             $1,727,900

12. Ending balance in Finished Goods:

   Beginning balance   $ 46,500

   Less: Cost of goods sold   $1,727,900

   Ending balance   $0

13. Adjusted cost of goods sold for the year:

   Cost of goods sold: $1,727,900

   Underapplied manufacturing overhead: $165,500

   Adjusted cost of goods sold: $1,893,400

14. Gross margin for the year:

   Sales: $3,225,000

   Cost of goods sold: $1,893,400

   Gross margin: $1,331,600

15. Net operating income for the year:

   Gross margin: $1,331,600

   Operating expenses: $418,000 + $266,000 = $684,000

   Net operating income: $1,331,600 - $684,000 = $647,600

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As a bank loan officer, you are considering a loan application by peak performance sporting goods. the company has provided you with the following information from its balance sheet: peak performance's current ratio is A. 3.0

Current Ratio is one of the essential financial ratios used by banks and investors to assess the liquidity of the business. It is an indication of a company's ability to pay its current obligations or liabilities using its current assets. Current Ratio is calculated by dividing the total current assets by the total current liabilities. The Current Ratio of 3.0 means that the company has three times more current assets than its current liabilities. As a bank loan officer, a higher Current Ratio of 3.0 is an indication that the business is capable of paying back its short-term liabilities.

The company has enough current assets to cover its current liabilities, including accounts payable, short-term loans, and taxes payable.The bank loan officer should be able to use this ratio in making the decision of approving the loan. A ratio of 3.0 shows a high degree of liquidity, which means that the company can easily turn its assets into cash to pay its bills. If a company has a low Current Ratio, it implies that it might face difficulty paying off its short-term obligations, and this could make it difficult for it to access additional credit. So therefore the company has provided you with the following information from its balance sheet: peak performance's current ratio is A. 3.0.

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1a. Journal entry to record the partners' initial capital investments: Partnership Capital Account Debit Credit Cash $81,000Land $64,800Building $94,800Long-term note payable $71,000Eckert, Capital Account $81,000Kelley, Capital Account $159,600.Explanation:Both partners contributed assets and liabilities to the partnership. Eckert contributed cash while Kelley contributed land and a building valued at $159,600 ($64,800 + $94,800).

The partnership also assumed Kelley's $71,000 long-term note payable associated with the land and building. Kelley's capital account was therefore credited for the total of her contributed assets and liabilities. Eckert's capital account was credited for the cash contributed.1b. Journal entry to record the partners' subsequent cash withdrawals :Cash Withdrawals Account Debit Credit Eckert, Capital Account $31,000Kelley,

Capital Account $24,000Explanation:

Since both partners have agreed to an annual salary allowance, cash withdrawals made during the year are not considered as a salary. As a result, the withdrawals reduce their capital balances in the partnership.1c. Journal entries to close Income Summary and the partners' withdrawals accounts : Income Summary Account Debit Credit Partnership Income $78,000Eckert, Capital Account $35,100Kelley, Capital Account $42,900Cash Withdrawals Account Debit Credit Eckert, Capital Account $31,000Kelley, Capital Account $24,000Explanation:The income or loss of a partnership is allocated based on the terms of the partnership agreement.

In this case, Eckert gets an annual salary allowance of $31,500, and both partners get an annual interest allowance of 10% of their initial capital investment. The remaining income or loss is shared equally. Using the information provided in the problem, the partners' share of income is computed as follows: Initial capital investment: Eckert = $81,000; Kelley = $159,600Total initial capital investment = $240,600Eckert's annual salary allowance = $31,500Eckert's annual interest allowance = ($81,000 × 0.10) = $8,100

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The equilibrium level of national income for this economy is approximately 282.14.

To determine the equilibrium level of national income in this economy, we can use the Keynesian cross diagram. The equilibrium occurs when aggregate expenditures (AE) equal real GDP (Y).

The formula for aggregate expenditures is:

AE = C + I + G + (X - M)

Where:

C = Consumption

I = Investment

G = Government spending

X = Exports

M = Imports

Given the information provided, we can calculate the components of aggregate expenditures as follows:

Tax rate = 0.4

MPC out of after-tax income = 0.9

Investment (I) = 58

Government spending (G) = 60

Exports (X) = 40

Imports (M) = 0.1 of after-tax income

Consumption (C) can be calculated using the formula:

C = (1 - Tax rate) * (MPC out of after-tax income) * Y

Substituting the given values:

C = (1 - 0.4) * 0.9 * Y = 0.54Y

Now, we can substitute the values into the aggregate expenditure formula:

AE = 0.54Y + 58 + 60 + (40 - 0.1Y)

Setting AE equal to Y to find the equilibrium level, we have:

Y = 0.54Y + 58 + 60 + (40 - 0.1Y)

Simplifying the equation:

Y = 0.54Y + 158 - 0.1Y

Combining like terms:

Y - 0.54Y + 0.1Y = 158

Simplifying further:

0.56Y = 158

Dividing both sides by 0.56:

Y = 158 / 0.56 ≈ 282.14

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EPS = $2ROE

= 0.1777

Growth rate (g) = Retention rate * ROE80% * 0.1777

= 0.14216

Intrinsic value can be calculated using the Gordon growth model which is given as, Intrinsic value

(P) = D1 / (k - g)

Where,

D1 = Expected dividend per share

= EPS *

Payout ratio= $2 * (1 - 0.8)

= $0.4k

= Required rate of return

= 11%

= 0.11g

= Growth rate

= 0.14216

By substituting these values in the above formula, we get, Intrinsic value

(P) = 0.4 / (0.11 - 0.14216)

= $16.10

Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%. Intrinsic value of a stock is the actual value of a stock which can be estimated by using the fundamental analysis. The Gordon growth model is one of the models that can be used to estimate the intrinsic value of the stock. The Gordon growth model is based on the assumption of constant dividend growth rate. The intrinsic value of the stock can be calculated as the present value of all future cash flows.

The formula for the Gordon growth model is as follows, Intrinsic value

(P) = D1 / (k - g)

Where,

D1 = Expected dividend per share

k = Required rate of return

g = Growth rate

Given,

Expected EPS = $2RO

E = 0.1777

Growth rate (g) = Retention rate *

ROE80% * 0.1777 = 0.14216

The payout ratio can be calculated as follows,

Payout ratio = 1  

Retention rate= 1 - 0.8 = 0.2

The expected dividend per share (D1) can be calculated as follows,

D1 = EPS *

Payout ratio= $2 *

(1 - 0.8) = $0.4

The required rate of return (k) is 11% or 0.11.The intrinsic value of the stock (P) can be calculated as follows, Intrinsic value

(P) = D1 / (

k - g) = 0.4

(0.11 - 0.14216) = $16.10

Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%.

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According to the mean-variance criterion, investment C (E(r) = 0.25; Variance = 0.20) dominates the others. The correct answer is option (C).According to Markowitz portfolio theory, the optimal risky portfolio refers to all portfolios that lie on the efficient frontier. The correct answer is option (D).

According to the mean-variance criterion in portfolio theory, an investor seeks to maximize expected return while minimizing portfolio variance. In this case, we can determine the investment that dominates the others by comparing the combinations of expected return (E(r)) and variance.

Looking at the given options:

A. E(r) = 0.15; Variance = 0.20

B. E(r) = 0.10; Variance = 0.20

C. E(r) = 0.25; Variance = 0.20

D. E(r) = 0.10; Variance = 0.25

E. E(r) = 0.15; Variance = 0.25

Among these options, investment C (E(r) = 0.25; Variance = 0.20) dominates the others. It offers the highest expected return with the same level of variance as the other options. Hence , the right answer is option (C).

Regarding the optimal risky portfolio according to Markowitz portfolio theory, it refers to the efficient portfolio that lies on the efficient frontier. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk (variance). Therefore, option (D) states that the optimal risky portfolio refers to all portfolios that lie on the efficient frontier.

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A Japanese company opening a factory in Singapore is an example of Foreign direct investment that would directly benefit the citizens of Singapore. The company's actions would increase cross-country interdependence.

Foreign Direct Investment is referred to as FDI. It is a tactic employed when a person or organization owns at least 10% of a foreign corporation. For market nations to grow and prosper, FDI is essential.

The expansion, structure, and direction of developing nations foreign sales require international money and experience. For these multinational corporations to increase the number of such positions and member pay, private investments are needed in their infrastructure, electricity, and water supplies. Foreign direct investment (FDI) encourages the development of a competitive environment and undermines domestic trust by supporting the entry of foreign companies into domestic markets.

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Based on the cash budget, Superstar Berhad is projected to have a negative cash balance of -RM65,500 in July, -RM133,000 in August, and -RM225,000 in September.

To prepare the cash budget for the months of July, August, and September for Superstar Berhad, we need to calculate the cash inflows and outflows for each month based on the given information.

Cash inflows:

May sales (20% collected in cash in May): RM70,000 * 20% = RM14,000 (received in May)

May sales (60% collected in June): RM70,000 * 60% = RM42,000 (received in June)

June sales (20% collected in June): RM80,000 * 20% = RM16,000 (received in June)

June sales (60% collected in July): RM80,000 * 60% = RM48,000 (received in July)

July sales (20% collected in July): RM90,000 * 20% = RM18,000 (received in July)

July sales (60% collected in August): RM90,000 * 60% = RM54,000 (received in August)

August sales (20% collected in August): RM100,000 * 20% = RM20,000 (received in August)

August sales (60% collected in September): RM100,000 * 60% = RM60,000 (received in September)

September sales (20% collected in September): RM110,000 * 20% = RM22,000 (received in September)

Cash outflows:

Purchases:

July: RM65,000

August: RM70,000

September: RM85,000

Rent: RM5,500 per month

Wages and salaries (10% of previous month's sales):

July: RM80,000 * 10% = RM8,000

August: RM90,000 * 10% = RM9,000

September: RM100,000 * 10% = RM10,000

Cash dividends (20% of net income) paid in August: RM30,000 * 20% = RM6,000

Payment of principal and interest of long-term liabilities (20% of total long-term liabilities) due in August: RM25,000 * 20% = RM5,000

Cash purchase of equipment in September: RM15,500

Other income: RM2,000 per month

Now, let's prepare the cash budget:

Month July August September

Cash inflows  

Sales RM18,000 RM20,000 RM22,000

Other income RM2,000 RM2,000 RM2,000

Total RM20,000 RM22,000 RM24,000

Cash outflows  

Purchases RM65,000 RM70,000 RM85,000

Rent RM5,500 RM5,500 RM5,500

Wages and salaries RM8,000 RM9,000 RM10,000

Dividends  RM6,000

Principal and interest payment RM5,000  

Equipment purchase   RM15,500

Total RM83,500 RM90,500 RM115,000

Net cash flow -RM63,500 -RM68,500 -RM91,000

Cash balance (beginning) RM3,000 -RM60,500 -RM129,000

Minimum cash balance -RM5,000 -RM5,000 -RM5,000

Cash surplus/deficit -RM68,500 -RM73,500 -RM96,000

Cash balance (end) -RM65,500 -RM133,000 -RM225,000

Based on the cash budget, the ending cash balance for July is -RM65,500, for August is -RM133,000, and for September is -RM225,000.

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a. The cost of not taking a cash discount is 24.69%.

b. The effective rate of interest on the bank loan is 26.67%.

Cost of not taking a cash discount = d / 100 * 360 / (f - d)

Where:

d = cash discount percentage

f = number of days to pay the bill without taking the discount

d = number of days to pay the bill with the discount

In this case, d = 2%, f = 60 days, and d = 19 days. Plugging these values into the formula, we get:

Cost of not taking a cash discount = 2 / 100 * 360 / (60 - 19) = 24.69%

The effective rate of interest on the bank loan, we use the following formula:

Effective rate of interest = (i + (1 - r) * C) * 360 / 365

Where:

i = stated interest rate

r = compensating balance percentage

C = compensating balance requirement

In this case, i = 24%, r = 11%, and C = 11%.

Plugging these values into the formula, we get:

Effective rate of interest = (24 + (1 - 11) * 11) * 360 / 365 = 26.67%

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The marginal propensity to spend on national income, z, is 0.78.

In economics, the marginal propensity to spend (MPS) refers to the amount by which a change in disposable income causes a change in household spending, while the marginal propensity to save (MPS) refers to the amount by which a change in disposable income causes a change in household savings.

The MPS is given by the change in consumption resulting from a unit change in income. The formula to calculate the MPS is:

MPS = ΔC/ΔY

Where:

C = Consumption

Y = Income

The equations of the given macro model are:

C=150+0.78YI=400G=750T=0X=120IM=0.07Y

The consumption equation in the model is C=150+0.78Y

Therefore, the marginal propensity to spend (MPS) is given by the formula

:MPS = ΔC/ΔY

The derivative of the consumption function with respect to income is:

MPS = dC/dY

Taking the derivative of C=150+0.78Y with respect to Y results in:

MPS = 0.78

Hence, the marginal propensity to spend on national income, z, is 0.78.

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(a). The relationship is shown in the attached image below.

(b). The cycle time for the production of the new train set is 0.5 minutes or 30 seconds.

Production refers to the process of transforming inputs or resources into finished goods or services. It involves various activities such as manufacturing, assembling, processing, and packaging, depending on the nature of the product or service. Production can take place in different sectors, including manufacturing, agriculture, construction, and services.

(c). The theoretical minimum number of workstations are 4 stations.

(d). The relationship is shown in the attached image below.

(e). The total idle time per cycle for the process is 30 seconds.

(f). The efficiency of the assembly line with 5 workstations is 80%.

If one used 6 workstations instead of 5, the efficiency of the assembly line would be 66.67%.

The whole calculation is shown in the attached image below..

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The statements that indicate a disadvantage of using the regular payback period for capital budgeting decisions are: The payback period is calculated using net income instead of cash flows, and The payback period does not take the time value of money into account.

The regular payback period is a simple capital budgeting technique that measures the time it takes for a project to recoup its initial investment based on the expected future cash inflows.

However, it has several disadvantages compared to the discounted payback period, which considers the time value of money.

Firstly, the regular payback period is calculated using net income instead of cash flows.

This can be a disadvantage as net income includes non-cash items such as depreciation and may not accurately reflect the actual cash inflows and outflows of the project.

Cash flows are more important in assessing a project's liquidity and ability to generate cash.

Secondly, the regular payback period does not take the project's entire life into account. It only considers the time it takes to recover the initial investment, ignoring the cash flows beyond that point.

This can be a drawback as it fails to provide a comprehensive analysis of the project's profitability and financial performance throughout its entire duration.

Lastly, the regular payback period does not consider the time value of money.

It does not account for the fact that money received in the future is less valuable than money received in the present due to inflation and the opportunity cost of capital.

By ignoring the time value of money, the regular payback period fails to provide an accurate measure of the project's true profitability and investment attractiveness.

In summary, the regular payback period has disadvantages in that it uses net income instead of cash flows, does not consider the project's entire life, and does not account for the time value of money.

These limitations make it less suitable for making informed capital budgeting decisions compared to the discounted payback period or other techniques that incorporate these factors.

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Total revenue from oil will decrease by 2%.

Given that OPEC countries supply 40% of the world's crude oil and they increase their production by 5%, it implies that their market share would increase to 42% (40% + 5% of 40%). However, due to the price elasticity of demand for crude oil being -0.2, a 1% increase in quantity supplied would result in a 0.2% decrease in price.

As a result, the total revenue from oil would decrease by 0.2% for each 1% increase in quantity supplied. Therefore, with a 5% increase in production, the total revenue from oil would decrease by 2% (5% * 0.2%).

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1. The following information systems factors should be considered when building a policy framework: System's functionality. It is necessary to ensure that the system can meet the organization's requirements. This includes the system's performance, reliability, scalability, and security.

Furthermore, the system should have the necessary features and functionality to meet the organization's requirements. This includes the ability to interface with other systems and the ability to adapt to changing business requirements. The system's architecture. It is important to consider the system's architecture when developing a policy framework. The system's architecture should be designed in such a way that it can meet the organization's requirements. This includes the system's scalability, security, and reliability. The system's data. It is important to consider the system's data when developing a policy framework. This includes the system's data structure, data storage, and data retrieval capabilities.

The system's user interface. It is important to consider the system's user interface when developing a policy framework. The system's user interface should be designed in such a way that it can be easily used by the organization's staff. This includes the system's ease of use, flexibility, and customization capabilities. The system's support. It is important to consider the system's support when developing a policy framework. The system's support should be designed in such a way that it can be easily used by the organization's staff. This includes the system's technical support, training, and documentation capabilities. The above-mentioned factors are important because they affect the performance, security, and reliability of the system. They ensure that the system can meet the organization's requirements and can be easily used by the organization's staff.

2. Risk appetite and risk tolerance are two different concepts. Risk appetite refers to the amount of risk that an organization is willing to take to achieve its objectives. Risk tolerance refers to the amount of risk that an organization can tolerate before it begins to suffer adverse effects.

3. Risk appetite varies among different types of organizations. Large organizations, for example, may have a higher risk appetite than small organizations. This is because they have more resources to manage risks and can absorb larger losses. On the other hand, small organizations may have a lower risk appetite because they have fewer resources to manage risks and cannot absorb large losses. There are also differences in risk appetite based on the industry in which the organization operates. For example, organizations in high-risk industries such as mining and oil and gas may have a higher risk appetite than organizations in low-risk industries such as retail and healthcare. This is because high-risk industries have a higher potential for loss and require more significant investment to mitigate risks.

4. Flat organizations have a decentralized structure with fewer levels of management, while hierarchical organizations have a centralized structure with many levels of management. In flat organizations, decision-making is decentralized, and authority is distributed among employees. This allows for greater flexibility and faster decision-making. Hierarchical organizations have a more rigid structure with well-defined roles and responsibilities. Decision-making is centralized, and authority is concentrated at the top of the organization. This allows for greater control over organizational activities and ensures that decisions are made in line with the organization's objectives. In flat organizations, communication is more informal and often occurs through direct contact between employees.

In hierarchical organizations, communication is more formal and often occurs through established channels such as memos and meetings. Flat organizations are often more adaptable to change and can respond quickly to new challenges. Hierarchical organizations may be slower to respond to change but can maintain stability over time.

Therefore, the above-mentioned factors should be considered when building a policy framework because they affect the performance, security, and reliability of the system. Risk appetite varies among different types of organizations, based on size and industry. Finally, flat organizations have a decentralized structure with fewer levels of management, while hierarchical organizations have a centralized structure with many levels of management.

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The optimum crashing plan is to crash activity B, resulting in a total crashing cost of $120 and a project duration of 24 days.

To construct an activity-on-node (AON) precedence diagram, we can represent the activities as nodes and the dependencies as arrows between the nodes. The table provides the necessary information for constructing the diagram:

Activity A: Duration = 10 days, Immediate Predecessor = None.

Activity B: Duration = 4 days, Immediate Predecessor = None.

Activity C: Duration = 7 days, Immediate Predecessor = B.

Activity D: Duration = 2 days, Immediate Predecessor = A, C.

Activity E: Duration = 3 days, Immediate Predecessor = A, C.

Activity F: Duration = 8 days, Immediate Predecessor = B.

Activity G: Duration = 5 days, Immediate Predecessor = D.

Activity H: Duration = 6 days, Immediate Predecessor = E, F.

Based on the information, the AON diagram would look like this:

scss

Copy code

  A (10)

 /        \

B (4)     C (7)

|          |

F (8)     D (2)

|          |

 \        /

   G (5)

    |

   H (6)

b) To determine the optimum crashing plan, we need to find the activities that, when crashed, result in the least additional cost to achieve the target project duration.

Using the crash times provided in the table, we can identify the critical path by selecting the longest duration path in the network, which is A-C-D-G-H with a total duration of 25 days. The normal project duration is 25 days.

To further optimize the project duration, we can identify the non-critical activities with the lowest crash cost per day. In this case, activities B and F have the lowest crash costs per day.

We can choose to crash either activity B or F. Let's say we choose to crash activity B. By crashing activity B from 4 days to 2 days, the total project duration would be reduced to 24 days. The additional cost for crashing activity B is 2 days * $60/day = $120.

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The total number of miles driven daily by the truck is 230 miles. The annual cost of the truck delivery system is $25,167.50.

The distance between different neighbor sites is given in the table below: [tex]\\\begin{matrix}&0&1&2&3&4\\0&&20&30&40&50\\1&20&&15&25&35\\2&30&15&&30&20\\3&40&25&30&&50\\4&50&35&20&50&\\\end{matrix}[/tex]

The current delivery route of the truck is 0-1-0-2-0-3-0-4-0.

The truck picks up the required number of pallets from the factory, delivers them, and then returns to the factory to get the papers for the next customer.

 We can solve this problem using the Chinese Postman Problem (CPP) algorithm. We can begin by constructing the complete graph of all the neighbors using the given distances. The current route of the truck is 0-1-0-2-0-3-0-4-0. This route visits each neighbor only once. Hence, it is already a CPP solution.

Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.

The total number of miles driven daily by the truck is 20 + 20 + 30 + 30 + 40 + 40 + 50 = 230 miles.

The cost of diesel fuel per gallon is $3.00.

The truck gets 10 miles per gallon. Hence, the cost of diesel fuel per mile is $3.00 / 10 = $0.3. The truck operates 365 days per year.

Hence, the annual cost of the truck delivery system is $0.3 * 230 * 365 = $25,167.50.

Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.

The total number of miles driven daily by the truck is 230 miles.

The annual cost of the truck delivery system is $25,167.50.

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