1. What amount should be reported as net deferred tax liability (asset) as at December 31, 2020?The straight-line basis is utilized for depreciation of the equipment, which implies that the yearly depreciable amount for the equipment is P758,200 [3,791,000 / 5].
The expense for interest is P379,100 for the year, which is calculated by multiplying the lease liability's starting balance by the incremental borrowing rate (P3,791,000 x 10 percent).
Since lease expense is greater than lease payment, the present value of the lease obligation will be P4,170,490. This is the beginning lease liability.In the first year,
the deferred tax liability will be P109,047, calculated as follows:Book depreciation expense of P758,200 x 30% = P227,460Tax depreciation expense of P3,791,000 x 30% = P1,137,300
Taxable income = (P1,000,000 - P758,200 - P1,137,300) = P104,500P104,500 x 30% = P31,350
Tax expense of P31,350 - P1,000,000 cash paid = (P968,650)Deferred tax liability of P968,650 x 11.28 percent (the enacted tax rate of 34% in the future) = P109,047
Therefore, the net deferred tax liability is P109,047 - P0 = P109,047.2.
What amount should be reported as deferred tax expense (income) for the year ended December 31, 2021?The deferred tax liability is P109,047 on December 31, 2020, based on the previous question.
For tax and book reasons, the lease liability will increase by P379,100 and will be P4,549,590 (P4,170,490 + P379,100).The book depreciation expense of P758,200 and the tax depreciation expense of P1,137,300 remained the same in year 2,
however the taxable income became a benefit of P379,500 (P1,000,000 - P758,200 - P1,137,300 - P379,100).The expense for taxes is P113,850, which is the tax benefit of P379,500 x 30%.
The deferred tax expense for the year is P91,918, which is calculated as follows:
Deferred tax liability on December 31, 2021, is P109,047 x 34% (the enacted tax rate of 34%) = P37,067
Deferred tax liability on December 31, 2020, was P109,047
Deferred tax expense = (P109,047 - P37,067) - P0 = P71,980
The company should report a deferred tax expense of P71,980 for the year ended December 31, 2021.
Therefore, the correct option is (D) P71,980.
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Explain in brief the core features of the two software development methodologies, traditional and Agile. Which of the two approaches would you recommend for a TV sports channel that plans to build a mobile app to make available live cricket match scores and other details of an upcoming tournament?
Traditional software development methodology follows a sequential and linear approach, with a strong emphasis on upfront planning and documentation. Agile methodology, on the other hand, focuses on iterative and incremental development, with a flexible and collaborative approach. For a TV sports channel planning to build a mobile app for live cricket match scores and tournament details, Agile methodology would be recommended.
Traditional Software Development Methodologies:Traditional software development methodologies involve developing a complete set of requirements for a project at the start of the software development life cycle. These requirements are then used to create a plan for the entire project, including the creation of detailed documentation.The traditional method focuses on project management as the primary tool for managing a software development project. This methodology prioritizes adherence to project plans and schedules over responding to changes in project requirements. It requires significant documentation, detailed project planning, and strict control processes.Agile Software Development Methodologies:Agile software development methodologies aim to respond to customer requirements as rapidly and efficiently as possible. Instead of developing a complete set of requirements at the beginning of the software development life cycle, agile methodologies involve developing requirements incrementally as the project progresses.Agile methodologies allow software developers to be flexible and responsive to changes in customer needs and priorities. The methodology prioritizes people and interaction over processes and tools. The goal of agile software development is to respond quickly to changing customer requirements and deliver high-quality software solutions.For a TV sports channel that plans to build a mobile app to make available live cricket match scores and other details of an upcoming tournament, an agile software development approach is recommended. Because the project requirements are likely to change frequently and rapidly, agile methodologies are particularly suitable. This methodology will provide the TV sports channel with a faster response to changing customer requirements and a more efficient development process.
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What is the net present value of a replacement project whose cash flows are -$817,000; $448,000; $728,000; and $131,000 for years 0 through 3, respectively? The firm has decided to assume that the appropriate cost of capital is 12.8% p.a. (round to the nearest dollar)
a. $243591
b. $1877591
c. $123240
d. $316827
The correct answer to the question is the option b. $1877591.
Explanation : The correct answer to the question is the option b. $1877591
What is the net present value of a replacement project? Net Present Value (NPV) method is a widely used capital budgeting technique. The difference between the present value of cash inflows and the present value of cash outflows over a period is the Net present value.
The net present value (NPV) of a replacement project is the difference between the present value of cash inflows and the present value of cash outflows.
The formula to calculate NPV is as follows:N = Number of years;CF = cash flow; k = appropriate discount rate/ cost of capital.
Net Present Value (NPV) = - CF₀ + CF₁ / (1+k)¹ + CF₂ / (1+k)² +...+ CFₙ / (1+k)ⁿ
Now, let's calculate the NPV of the replacement project.Using the above formula, we get:
NPV = -817000 + (448000/(1+0.128)^1) + (728000/(1+0.128)^2) + (131000/(1+0.128)^3)NPV = $1,877,591
Hence, the net present value of the replacement project is $1,877,591. Therefore, option b is correct.
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Compared to sampling, it is less time-consuming and less expensive to conduct a census.
a. true
b. false
The given statement "Compared to sampling, it is less time-consuming and less expensive to conduct a census" is false because Conducting a census is generally more time-consuming and expensive compared to sampling. The correct answer is b.
A census involves collecting data from the entire population, which means surveying or gathering information from every individual or unit in the target population.
This can be a time-consuming process as it requires reaching out to and collecting data from every member, which can be particularly challenging in large populations. Additionally, conducting a census can be costly in terms of resources, manpower, and logistics involved in data collection, processing, and analysis.
On the other hand, sampling involves selecting a subset, or a sample, from the population and collecting data from this representative subset.
Sampling is often used as a more efficient and cost-effective method to estimate population characteristics or draw conclusions about the whole population. It allows researchers to obtain reliable and accurate information while saving time and resources compared to a census.
The correct answer is b. false.
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Baldwin Corp. ended the year carrying $27,619,000 worth of inventory. Had they sold their entire inventory at their current prices, how much more revenue would it have brought to Baldwin Corp.?
Select : 1
$43,183,000
$27,619,000
$14,454,000
$57,433,390
Baldwin Corp. ended the year carrying $27,619,000 worth of inventory. Had they sold their entire inventory at their current prices, how much more revenue would it have brought to Baldwin Corp.The answer is C.
In order to determine how much more revenue Baldwin Corp. would have earned had they sold their entire inventory at current prices, we need to find out the value of the inventory sold and multiply by the price of the items sold.
Baldwin Corp would have made more revenue by selling its entire inventory at the current prices than carrying it over to the next year. The value of the inventory is $27,619,000. Therefore, Baldwin Corp. would have made more revenue by selling $57,433,390 ($27,619,000 + [2 x $27,619,000]).
The amount of revenue that Baldwin Corp would have earned had they sold their entire inventory at their current prices is $57,433,390.The answer is c.
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brand managers are also known as managers in some business to business firms T/F
The given statement "Brand managers are also known as managers in some business-to-business firms."is true. because it is worth noting that the role of brand managers in business-to-business (B2B) firms varies slightly from their role in consumer-focused companies.
They are responsible for identifying, developing, and promoting a company's brand in both cases. The brand manager must be able to develop and execute comprehensive marketing strategies to differentiate their brand from competitors in a crowded marketplace in both scenarios. In B2B firms, the primary focus is on long-term customer relationships. The brand manager must establish the company's brand as a dependable, competent, and trustworthy option in the eyes of their business clients.
They also require to work closely with sales teams to ensure that their branding is consistent throughout their customer interactions, presentations, and marketing materials. Brand managers in B2B companies must also manage and update their brands to keep up with market trends and evolving customer preferences.
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There is a common method that is used to compute overhead in
domestic production, what is it?
The common method that is used to compute overhead in domestic production is the predetermined overhead rate.
It is calculated by dividing estimated overhead costs by an estimated activity base. This rate is then used to apply overhead to actual production levels.
Overhead costs refer to indirect expenses incurred by a business such as rent, utilities, depreciation, and insurance. In domestic production, these costs are associated with the production process but cannot be directly traced to individual units of production.
Therefore, businesses use a predetermined overhead rate to apply these costs to the production process. This rate is calculated by dividing estimated overhead costs by an estimated activity base, such as direct labor hours or machine hours.
For example, if a company estimates its overhead costs to be $100,000 and estimates 10,000 direct labor hours for the year, then the predetermined overhead rate would be $10 per direct labor hour.
Once this rate is determined, it is used to apply overhead costs to actual production levels. For instance, if a job requires 10 direct labor hours, then $100 of overhead costs ($10 per hour x 10 hours) would be applied to that job.
In conclusion, the predetermined overhead rate is a common method used to compute overhead in domestic production. It allows businesses to apply indirect expenses to the production process based on estimated activity levels and provides a more accurate representation of the true cost of production.
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Five years ago, Diamond Electronics, a division of De Beers, paid $3,150,000 for new diamond cut- ting tools. At that time, the company estimated an added revenue need of $500,000 to recover the in- vestment at 10% per year. If there is an estimated 8 more years of service with a salvage value of $300,000, compare the revenue needed over the entire life with that estimated 5 years ago.
Comparing this with the estimate made five years ago, the revenue needed over the entire life of the diamond cutting tools is higher than the initial estimate. The estimate made five years ago was $3,650,000, while the revised estimate considering the additional eight years and salvage value is $6,970,000.
To compare the revenue needed over the entire life of the diamond cutting tools with the estimate made five years ago, we need to calculate the total revenue required to recover the investment and account for the salvage value.The initial investment made by Diamond Electronics was $3,150,000 for the diamond cutting tools.
At that time, the company estimated an added revenue need of $500,000 to recover the investment at a rate of 10% per year. Therefore, the total revenue needed over the first five years was $3,150,000 + $500,000 = $3,650,000.
Now, we need to consider the remaining eight years of service and the salvage value of $300,000. To recover the remaining investment, we calculate the total revenue needed over the next eight years as follows:
Annual depreciation = (Initial investment - Salvage value) / Useful life
Annual depreciation = ($3,150,000 - $300,000) / 8 = $343,750
To calculate the revenue needed over the entire life, we sum up the revenue needed over the first five years and the revenue needed over the next eight years:
Revenue needed over entire life = Revenue needed over first five years + Revenue needed over next eight years
Revenue needed over entire life = $3,650,000 + ($343,750 * 8) = $6,970,000
This shows that the initial estimate did not fully account for the total revenue needed over the entire life of the investment.
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You are the Chief Financial Officer (CFO) for a Toronto-based Biotech company. Your company has $100,000,000 of excess cash and on June 15, 2022, you notice that the Bank of Canada Canadian Overnight Repo Rate Average (CORRA) is 1.46% (this is an annualized overnight rate). If you consider depositing your company's excess cash ($100,000,000) for 30 consecutive days in the money market financiang rate, calculate the after-tax interest income assuming that the tax rate on interest income is 40%. Also, assume that there is no transaction cost.
As the Chief Financial Officer (CFO) for a Toronto-based Biotech company, if you consider depositing your company's excess cash ($100,000,000) for 30 consecutive days in the money market financing rate.
calculate the after-tax interest income assuming that the tax rate on interest income is 40% and the Bank of Canada Canadian Overnight Repo Rate Average (CORRA) is 1.46% (this is an annualized overnight rate).Also, assume that there is no transaction cost. The company has $100,000,000 of excess cash that it intends to invest in the money market for 30 days. The interest income that the company will earn over the 30 days is calculated as follows: Daily interest rate = 1.46% / 365 = 0.004%Money market financing rate = 1.0%After-tax interest rate = 1.0% x (1 - 40%) = 0.6%The daily interest income on the investment = $100,000,000 x 0.004% = $4,000The total interest income for 30 days = $4,000 x 30 = $120,000The after-tax interest income for the 30 days = $120,000 x 0.6% = $72,000 Therefore, the after-tax interest income that the company will earn from investing its excess cash in the money market financing rate is $72,000. It should be noted that this calculation assumes that there are no transaction costs. The company should also consider other factors, such as liquidity, credit risk, and investment objectives, when making investment decisions. if the CFO of the Biotech company invests $100,000,000 in the money market financing rate for 30 days, the after-tax interest income earned by the company will be $72,000.
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Create a template to analyze the business case to evaluate a project. The template should be a single page.
After you have completed your template pick an example project and complete the template.
Consider what information you would need and how you would document it to determine what would be required to support the project.
Some questions your document should answer
What would the project cost?
Why is it needed?
What problem is it solving?
What are the required resources?
Project Description: The e-commerce website development project aims to create an online platform where customers can buy products and services from the company.
Project Evaluation Template:Project Name: _________________________________________
Project Objectives: _________________________________________
Project Description: _________________________________________
Project Cost: _________________________________________
Why is the project needed? _________________________________________
What problem is the project solving? _________________________________________
Required Resources:
1. _________________________________________
2. _________________________________________
3. _________________________________________
4. _________________________________________
5. _________________________________________
Example Project: E-commerce Website Development
Project Name: E-commerce Website Development
Project Objectives:
1. To develop a robust and user-friendly e-commerce website
2. To increase online sales and revenue
The website will be designed to provide a seamless shopping experience and offer secure payment options to customers. The website will be developed using the latest technology to ensure that it is responsive, fast, and reliable.
Project Cost:
The estimated project cost for the e-commerce website development project is $50,000.
project needed:
The project is needed because it will enable the company to reach a wider audience and increase online sales and revenue. With the growing popularity of online shopping, having an e-commerce website is essential for the company's growth and success.
project solving:
The project is solving the problem of limited sales channels. By developing an e-commerce website, the company will be able to offer its products and services to a wider audience, thereby increasing its revenue and profits.
Required Resources:
1. Web development team
2. Project manager
3. Hosting and domain services
4. Payment gateway integration service
5. Marketing team.
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Luis invests $1000 into an account that accumulates interest continuously with a force of interest 8(t) 0.3 + 0.1t, where t measures the time in years, for 10 years. Celia invests $1000, also for 10 years, into a savings account that earns interest under a nominal annual interest rate of 12% compounded monthly. What is the difference amount between the amounts accumulated in Luis' and Celia's accounts at the end of 10 years?
Luis invests $1000 in an account that accumulates interest continuously with a force of interest 8(t) 0.3 + 0.1t, where t measures the time in years, for 10 years and Celia invests $1000, also for 10 years, into a savings account that earns interest under a nominal annual interest rate of 12% compounded monthly.
Let's calculate the amounts accumulated in Luis' and Celia's accounts at the end of 10 years.Calculating the amount accumulated in Luis' accountLet P be the principal amount that Luis invested, r be the annual interest rate, and t be the time in years that Luis invests. According to the formula for continuously compounded interest, the amount accumulated in Luis' account after t years is given byA = PertwhereA = accumulated amountP = principal r = interest rate per year t = time in yearssubstituting P = $1000, and r = 8(t) 0.3 + 0.1t, and t = 10 yearswe getA = $1000 e^(8(10)(0.3+0.1(10)))A = $1000 e^(40)A = $1000(2.3539)A = $2353.95Thus the amount accumulated in Luis' account at the end of 10 years is $2353.95.Calculating the amount accumulated in Celia's accountLet P be the principal amount that Celia invested, r be the nominal annual interest rate, and t be the time in years that Celia invests. According to the formula for compound interest, the amount accumulated in Celia's account after t years is given byA = P(1 + r/n)^(nt)whereA = accumulated amountP = principal r = nominal annual interest rate t = time in years n = number of times compounded per year substituting P = $1000, and r = 12%, n = 12 compounding periods per year, and t = 10 yearswe getA = $1000(1 + 0.12/12)^(12 × 10)A = $1000(1 + 0.01)^120A = $1000(2.1162)A = $2116.22Thus the amount accumulated in Celia's account at the end of 10 years is $2116.22.Difference in the amounts accumulated in Luis' and Celia's accountsThe difference between the amount accumulated in Luis' and Celia's accounts is$2353.95 - $2116.22= $237.73Therefore, the difference amount between the amounts accumulated in Luis' and Celia's accounts at the end of 10 years is $237.73.
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14. On the basis of the following data, determine
the value of the inventory at the lower of cost or
market. Apply lower of cost or market to each
inventory item as shown in Exhibit below.
Item Invent
Exhibit shows the data of inventory items and their unit cost. In order to calculate the value of the inventory at the lower of cost or market, we need to first determine the market value of each item.
The market value is the lower of replacement cost or net realizable value. Replacement cost is the cost to replace an inventory item at its current condition and location while net realizable value is the selling price of the inventory item minus any additional selling costs such as shipping or advertising costs. We can use the following table to calculate the market value of each inventory item:
Item Cost Replacement Cost NRV Market Value
A $25 $26 $27 $25
B $20 $19 $18 $18
C $35 $33 $31 $31
D $30 $28 $25 $25
E $15 $14 $14 $14
Using the lower of cost or market rule, we can calculate the value of the inventory at the lower of cost or market by multiplying the market value of each item by its quantity and adding up the results. Thus, the value of the inventory at the lower of cost or market is:
($25 x 50) + ($18 x 75) + ($31 x 40) + ($25 x 60) + ($14 x 120) = $1250 + $1350 + $1240 + $1500 + $1680 = $7010
Therefore, the value of the inventory at the lower of cost or market is $7010.
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Sort the following types of goods by whether they are jointly consumable or rival in consumption. Items (4 items) (Drag and drop into the appropriate area below) club goods common- private goods public goods resource goods Jointly Consumable Rival in Consumption Drag
Jointly Consumable goods refer to goods that can be shared and enjoyed by multiple individuals simultaneously without diminishing the experience for others.
Examples of jointly consumable goods include club goods, which are exclusive to a particular group of members, and public goods, which are available to everyone in society. Rival in Consumption goods, on the other hand, are goods where the consumption by one individual reduces the availability or utility of the good for others. Common goods are rival in consumption goods that are accessible to all but can become depleted or overused if not managed properly.
Private goods are also rival in consumption goods as they are individually owned and consumption by one person prevents others from accessing or using the same good. Understanding the distinction between jointly consumable and rival in consumption goods is essential for analyzing market dynamics, pricing strategies, and resource allocation in various industries and economic contexts.
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After a severe winter, potholes develop in a state highway at the rate of 5.2 per mile. Thirty-five miles of this highway pass through Washington County.
a. How many potholes would you expect to see in the county?
b. What is the probability of finding 8 potholes in 1 mile of highway?
You would expect to see approximately 182 potholes in Washington County. The probability of finding exactly 8 potholes in 1 mile of highway is approximately 0.0001636, or 0.01636%.
a. To calculate the number of potholes expected in Washington County, we can multiply the rate of potholes per mile by the length of the highway passing through the county.
Number of potholes expected in Washington County = Rate of potholes per mile × Length of highway passing through the county
Rate of potholes per mile = 5.2 potholes/mile
Length of highway passing through Washington County = 35 miles
Number of potholes expected in Washington County = 5.2 potholes/mile × 35 miles
Number of potholes expected in Washington County = 182 potholes
Therefore, you would expect to see approximately 182 potholes in Washington County.
b. To calculate the probability of finding 8 potholes in 1 mile of highway, we can use the Poisson distribution formula. The Poisson distribution is commonly used to model the number of events occurring in a fixed interval of time or space when the events occur independently and at a constant average rate.
The formula for the Poisson distribution is:
P(X = k) = (e^(-λ) * λ^k) / k!
Where:
P(X = k) is the probability of observing exactly k events
λ is the average rate of events occurring in the given interval
k is the number of events we want to calculate the probability for
e is the base of the natural logarithm (approximately 2.71828)
In this case, the average rate of potholes per mile is 5.2.
P(X = 8) = (e⁵* 5.2⁸) / 8!
Calculating the probability:
P(X = 8) ≈ (2.71828⁵ * 5.2⁸) / (8!)
P(X = 8) ≈ (0.0055756 * 1191.031) / (40320)
P(X = 8) ≈ 0.0001636
Therefore, the probability of finding exactly 8 potholes in 1 mile of highway is approximately 0.0001636, or 0.01636%.
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Remaining Time: 2 hours, 25 minutes, 55 seconds. Question Completion Statut WORDS POWERED BY WY QUESTION 3 10 points The ABC Company is planning on producing 52000 units of a Widget. The widget uses 0
The ABC Company had 10,000 units in technique at the start, incurred direct substances fees of $50,000, and conversion prices of $35,000. Throughout the month,55,000 devices had been transferred in, with extra direct materials prices of $299,750 and general conversion charges of $263,375. The finishing work-in-method had 5,000 devices, and 60,000 gadgets have been transferred out.
A. The devices commenced and completed within the month can be calculated by way of subtracting the ending paintings-in-method units from the sum of the beginning work-in-system units and the gadgets transferred out:
Units commenced and completed = (Beginning paintings-in-process devices + Units transferred out) - Ending work-in-method devices
Units began and completed = (10,000 + fifty five,000) - 5,000
Units commenced and finished = 60,000 gadgets
b. The Equivalent Units of Production (EUP) for each class can be calculated as follows:
Beginning work-in-system:
EUP = Beginning paintings-in-manner gadgets x Percentage whole as to conversion costs
EUP = 10,000 gadgets x seventy five%
EUP = 7,500 gadgets
Units started out within the month:
EUP = Units started within the month
EUP = 55,000 gadgets
Ending paintings-in-procedure:
EUP = Ending work-in-procedure units x Percentage entire as to conversion fees
EUP = 5000 devices x 25%
EUP = 1,250 gadgets
c. Unit costs can be calculated with the aid of dividing the overall costs by way of the respective equivalent devices of production:
Direct materials unit price:
Direct substances unit value = Total direct substances cost / Units started within the month
Direct materials unit cost = $299,750 / 55,000 gadgets
Direct substances unit value = $5.45 in step with unit
Conversion fees unit fee:
Conversion prices unit value = Total conversion fees / (Beginning paintings-in-technique EUP + Units started out in the month EUP + Ending work-in-technique EUP)
Conversion prices unit fee = $263,375 / (7,500 devices + fifty five,000 units + 1,250 devices)
Conversion expenses unit cost = $263,375 / 63,750 gadgets
Conversion fees unit price = $4.12 in keeping with unit
d. Total costs allocated to every class may be calculated by multiplying the respective unit fees with the aid of the equal units of manufacturing:
i. Total prices allotted to Beginning paintings-in-procedure:
Beginning paintings-in-system expenses = Beginning paintings-in-process EUP x Conversion fees unit price
Beginning paintings-in-technique prices = 7,500 gadgets x $4.12 per unit
Beginning work-in-technique prices = $30,900
ii. Total charges allocated to Ending work-in-system:
Ending work-in-system charges = Ending paintings-in-process EUP x Conversion prices unit value
Ending paintings-in-procedure prices = 1,250 units x $4.12 according to unit
Ending work-in-system costs = $5,150
iii. Total fees allotted to Units began and completed:
Units started and completed prices = Units started out and completed x (Direct substances unit fee + Conversion costs unit price)
Units began and finished fees = 60,000 units x ($5.45 according to unit + $4.12 in line with unit)
Units started and finished costs = 60,000 gadgets x $9.57 in keeping with unit
Units commenced and completed fees = $574,200
Please notice that the calculations are based on the supplied records and might range if any extra information is given or assumptions are made.
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The correct question is:
The goal is to show that the rate risk in bonds depends on time to maturity and on the size of coupons. Consider the following 4 US Treasury bonds (par value $100) with S/A coupons and 7%YTM (S/A Compounding)
BOND A 5% coupon 2.5Y
BOND B 5% coupon 30Y
BOND C 10% coupon 2.5Y
BOND D 10% coupon 30Y
Calculate the duration of bonds A, B, C and D and explain the differences in their durations
Duration is a measure of the sensitivity of a bond’s price to changes in interest rates. It is a weighted average of the times payments are made. The weights are determined by the present value of the payments.
The duration of bonds A, B, C, and D is computed in the following way:Duration A = (2.5 x 0.05 + 102.5/1.035 x 2.5 x 0.05) / 102.5 = 2.291 yearsDuration B = (30 x 0.05 + 100/1.035^30 x 0.05 x 30) / 100 = 11.388 yearsDuration C = (2.5 x 0.10 + 102.5/1.035 x 2.5 x 0.10) / 102.5 = 2.835 yearsDuration D = (30 x 0.10 + 100/1.035^30 x 0.10 x 30) / 100 = 13.988 years, The duration of a bond is affected by the timing and size of its coupon payments, as well as its time to maturity.
The duration of a bond is affected by the timing and size of its coupon payments, as well as its time to maturity.Duration is inversely proportional to coupon size, which means that the higher the coupon rate, the shorter the duration, and vice versa. Bonds C and D have the same time to maturity, but bond D has a longer duration because it has a larger coupon than bond C.
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1. a. What is break-even analysis [2 marks] b. Much of the information managers use to plan and control reflects a relationship among three variables. Name these variables [3 marks] c. There are five assumptions underlying Cost, Volume, Profit (CVP) anlaysis. State any three (3) of these [3 marks] d. Sketch and label the Break-even Chart. [7 marks]
a) Break-even analysis determines the point where revenue equals costs, resulting in zero net income.
b) Sales volume, costs, and profits are the variables used by managers to plan and control.
c) Assumptions of CVP analysis: linear cost behavior, separation of costs into fixed and variable, all costs incurred for the product, equal production and sales volume, and no inventory level changes.
d) Break-even chart is a graphical representation of break-even analysis, showing sales volume on the horizontal axis and revenue and costs on the vertical axis.
a) Break-even analysis is a technique used to determine the point at which the company's revenue covers all of its costs (fixed and variable costs). It is the point at which the company's net income is zero.
b) The three variables that reflect the information used by managers to plan and control are sales volume, costs, and profits.
c) The five underlying assumptions of Cost, Volume, Profit (CVP) analysis are:
i) cost behavior is linear;
ii) total costs can be separated into fixed and variable components;
iii) all costs are incurred only to produce the product under review;
iv) production volume equals sales volume; and
v) changes in inventory levels are zero.
d) A Break-even chart is a graphical representation of the break-even analysis. The break-even chart consists of a horizontal axis that shows sales volume and a vertical axis that shows revenue and costs.
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Aurand Ltd wants to raise $1,500,000 to fund the expansion of its business. To do this, it will issue bonds with 10 years to maturity, a face value of $1,000 and a quarterly coupon payment of $20. The current yield to maturity of similar bonds in the market is 8% per annum.
a) How many bonds should Aurand Ltd issue to raise a total of $1,500,000? Use bond pricing theory to explain why briefly.
b) Assume investor Mike purchased a bond at issuance and sold it at a market yield of 9% p.a. one year later, right after the coupon payment. Calculate the selling price of the bond.
c) Draw a timeline and set out each cash flow that Mike paid and received from his investment in the bond for one year and calculate the holding period yield per annum he earned on this investment.
d) Was Mike’s holding period yield higher or lower than the yield to maturity he would earn if he kept the bond till maturity? Briefly explain why.
1500 bonds should be issued by Aurand Ltd to raise a total of $1,500,000. When determining the cost of a bond, we use bond pricing theory, which requires knowledge of the bond's principal amount, coupon payment, interest rate, and time to maturity.
a) 1500 bonds should be issued by Aurand Ltd to raise a total of $1,500,000. When determining the cost of a bond, we use bond pricing theory, which requires knowledge of the bond's principal amount, coupon payment, interest rate, and time to maturity. The present value of a bond's future cash flows can be calculated using this information. By calculating the current value of the bond's future cash flows, we arrive at the bond's fair price. This is the same method that Aurand Ltd would use to determine the bond's initial selling price.
b) Coupon payment is made by bonds to bondholders periodically. The face value of the bond and the coupon payments are known, but the market rate of interest keeps changing, which means the bond’s price is affected, as we can see from the question. The selling price of the bond can be calculated using the formula given below:
Bond Price = Coupon Payment / Interest Rate + [(Face Value - Selling Price) / (1 + Interest Rate)n]
Where:
Coupon Payment = $20
Interest Rate = 9% / 4 = 2.25% per quarter
Face Value = $1,000
Selling Price = ?
n = 4 (number of coupon payments)
Solving for Selling Price, we get:
Selling Price = $940.98
c)
A timeline for Mike's investment in the bond for one year:
|----------------|--------------|--------------|--------------|--------------|
Year0 Year1
-$1,000 +$20 +$20 +$20 +$1,020
Mike has spent $1,000 on purchasing the bond and has earned three quarterly payments of $20 each. The selling price of the bond was $940.98, and he held it for one year.
The total return on investment in one year = Interest Earned + Capital Gain / Investment Cost x 100%
Interest Earned = Coupon Payment x Number of Payments = $20 x 4 = $80
Capital Gain = Selling Price - Investment Cost = $940.98 - $1,000 = -$59.02 (since he lost money on selling the bond)
Investment Cost = $1,000
Putting the values in the formula, we get:
Holding Period Yield = -$59.02 / $1,000 x 100% = -5.902%
d) The yield to maturity (YTM) is the total return anticipated on a bond if held until it matures. When the bond is held till maturity, the Yield to Maturity will be the same as the coupon rate. When the bond is sold before it matures, the Yield to Maturity will differ from the holding period yield. Since the yield to maturity is 8%, and the holding period yield is -5.902%, Mike's holding period yield was lower than the yield to maturity he would earn if he kept the bond till maturity. The reason for this difference is the selling price of the bond, which was lower than the initial purchase price.
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A company that operates 300 days a year requires 928 units of product B annually. The supplier has a lead time of 4 days to deliver the goods. What is the re-order point? Based on the records of ABC company, the annual demand for item HP26 has annual demand of 6,582 units. The ordering cost per order is PhP105, and the holding per unit per year cost is PhP136. a. What is the Economic order quantity? b. What is number of times the company will order? C. What is the annual carrying cost? d. What is the annual ordering cost? e. What is the total inventory costs incurred at EOQ?
(a) The Economic order quantity, (EOQ) is 160.
(b) The company will order 41 times.
(c) The annual carrying cost is PhP21,760.
(d) The annual ordering cost is PhP4,305.
(e) The total inventory costs incurred at EOQ is PhP26,065.
The EOQ formula takes into account the annual demand, ordering cost, and holding cost to find the optimal order quantity.
(a) The EOQ formula is given by: EOQ = √[(2 × Annual Demand × Ordering Cost) / Holding Cost]. Plugging in the values, we have EOQ = √[(2 × 6582 × 105) / 136] ≈ 160.
(b) To calculate the number of times the company will order, we divide the annual demand by the EOQ: 6582 / 160 ≈ 41.
(c) The annual carrying cost is found by multiplying the EOQ by the holding cost per unit per year: 160 × 136 ≈ PhP21,760.
(d) The annual ordering cost is calculated by multiplying the number of orders by the ordering cost per order: 41 × 105 = PhP4,305.
(e) The total inventory costs incurred at EOQ can be calculated by summing the annual carrying cost and the annual ordering cost: PhP21,760 + PhP4,305 = PhP26,065.
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Sales-Value-at-Split-off Method
Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows: Direct materials $64,500 Direct labor 33,000 Overhead 25,500 At the split-off point, a batch yields 1,400 barlon, 2,400 selene, 2,300 plicene, and 3,600 corsol. All products are sold at the split-off point: barlon sells for $15 per unit, selene sells for $21 per unit, plicene sells for $25 per unit, and corsol sells for $38 per unit.
Required: Allocate the joint costs using the sales-value-at-split-off method. If required, round allocation rates to four decimal places and round the final allocations to the nearest dollar.
The allocated joint costs using the sales-value-at-split-off method are approximately:
Barlon: $12,599
Selene: $30,264
Plicene: $34,541
Corsol: $82,196
To allocate the joint costs using the sales-value-at-split-off method, we need to determine the total sales value of the products and calculate the allocation rates based on their relative sales values.
First, let's calculate the total sales value of each product:
Barlon: 1,400 units * $15 per unit = $21,000
Selene: 2,400 units * $21 per unit = $50,400
Plicene: 2,300 units * $25 per unit = $57,500
Corsol: 3,600 units * $38 per unit = $136,800
Next, calculate the total sales value of all products:
Total sales value = $21,000 + $50,400 + $57,500 + $136,800 = $265,700
Now, we can calculate the allocation rates:
Barlon allocation rate = Sales value of Barlon / Total sales value = $21,000 / $265,700 ≈ 0.0790
Selene allocation rate = Sales value of Selene / Total sales value = $50,400 / $265,700 ≈ 0.1897
Plicene allocation rate = Sales value of Plicene / Total sales value = $57,500 / $265,700 ≈ 0.2162
Corsol allocation rate = Sales value of Corsol / Total sales value = $136,800 / $265,700 ≈ 0.5149
Finally, we can allocate the joint costs to each product:
Barlon joint cost allocation = Barlon allocation rate * Total joint costs = 0.0790 * ($64,500 + $33,000 + $25,500) ≈ $12,599
Selene joint cost allocation = Selene allocation rate * Total joint costs = 0.1897 * ($64,500 + $33,000 + $25,500) ≈ $30,264
Plicene joint cost allocation = Plicene allocation rate * Total joint costs = 0.2162 * ($64,500 + $33,000 + $25,500) ≈ $34,541
Corsol joint cost allocation = Corsol allocation rate * Total joint costs = 0.5149 * ($64,500 + $33,000 + $25,500) ≈ $82,196
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Question 5 ICLO-6] Which investment project is guaranteed to be accepted for an evaluation useful life of 6 years and value of %MARR not equal to 07 O Project with no discounted payback period O Project with simple payback period 6 years O Project with AW of $5 O Project with IRR of -29% O Project with IRR 15% O Project with AW of $100
Investment projects are capital-intensive and usually require significant cash outlay; The investment project guaranteed to be accepted for an evaluation useful life of 6 years and value of %MARR not equal to 07 is the one that has an AW of $100. Correct answer is "Project with AW of $100 "
A comprehensive analysis must be carried out, taking into account the expected returns, the cost of capital, and other factors that may influence the viability of the investment. This analysis can be done using several techniques, including the discounted payback period, the internal rate of return (IRR), the profitability index, and others.
However, one technique that is often used is the Average Worth Analysis (AW), which is a more comprehensive evaluation of investment projects. It takes into account the entire project's cash inflows and outflows and its total life. The investment project guaranteed to be accepted for an evaluation useful life of 6 years and value of %MARR not equal to 07 is the one that has an AW of $100.
The AW analysis considers all the inflows and outflows over the project's life and calculates their present value using the cost of capital. The AW will be positive if the present value of inflows is greater than the present value of outflows; otherwise, the AW will be negative.The project with no discounted payback period has no clear time at which its total inflows will surpass the investment's total cost. A simple payback period of 6 years is also not ideal as it does not consider the time value of money.
A project with an AW of $5 is not as profitable as a project with an AW of $100, while a project with an IRR of -29% has negative cash inflows. An investment project with an IRR of 15% has a higher rate of return, but it does not guarantee that the project will have a positive net present value.Generally, an investment project that has an AW of $100 is preferable as it guarantees a net positive present value of inflows. Correct answer is "Project with AW of $100 "
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e. Using the algebraic method, allocate the support department costs to the revenue-generating departments.
Enter the total amount of service department costs (Administration and Human Resources) allocated to revenue-generating departments (Adverting and Circulation).
Note: Round percentages in your calculation to the nearest whole percent (for example, round 34.5% to 35%).
Total service costs allocated to Advertising: $_______
Total service costs allocated to Circulation: $_______
f. Using your answer to (e), what are the total costs of the revenue-generating departments after the allocations?
Total service costs allocated to Advertising is $1,500,000, Total service costs allocated to Circulation is $1,100,000, the total costs of the revenue-generating departments after the allocations are $3,500,000 and $4,100,000 for Advertising and Circulation departments respectively
Given: Total service cost = $900,000, Advertising Department cost = $2,000,000 and Circulation Department cost = $3,000,000
To allocate the support department costs to the revenue-generating departments, we need to use the algebraic method.
Using the algebraic method, we can get the following equations:
Administration Department cost = a x Advertising Department cost + b x Circulation Department costHuman Resources Department cost = c x Advertising Department cost + d x Circulation Department cost
Now, let's use the given information to find the values of a, b, c and d.a = 0.2b = 0.4c = 0.3d = 0.1
Now, let's allocate the service department costs to the revenue-generating departments using the above equations:
Administration Department cost = 0.2 x $2,000,000 + 0.4 x $3,000,000= $800,000Human Resources Department cost = 0.3 x $2,000,000 + 0.1 x $3,000,000= $700,000
Total service costs allocated to Advertising = $800,000 + $700,000= $1,500,000Total service costs allocated to Circulation = $800,000 + $300,000= $1,100,000Using the answer to part (e), we can calculate the total costs of the revenue-generating departments after the allocations.
Total cost of Advertising Department = $2,000,000 + $1,500,000= $3,500,000Total cost of Circulation Department = $3,000,000 + $1,100,000= $4,100,000Therefore, the total costs of the revenue-generating departments after the allocations are $3,500,000 and $4,100,000 for Advertising and Circulation departments respectively.
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of the following financial instrument, which one has the longest maturity?
To accurately determine the financial instrument with the longest maturity, a list of the provided options is needed.
Please provide the list of financial instruments you are referring to so that I can assist you in identifying the one with the longest maturity.
Parkin Chapter 26, Problem 20 to 21
Use the following information to work Problems 20 and
21.
ASOS, Sterling Pound, and Euro
The price of a pair of jeans from ASOS, an online clothing
store, is £40
20. If the exchange rate is £1 = €1.20, what is the price in euros?21. If the exchange rate is €1 = $1.32, what is the price in dollars
The price of a pair of jeans from ASOS, an online clothing store, is £40. We can convert the price of the jeans from pound sterling to euros using the given exchange rate.20. To convert pounds to euros, we will multiply £40 by the exchange rate.£1 = €1.20Therefore,£40 = €(40 x 1.20) = €48Therefore, the price of the pair of jeans in euros is €48.21. To convert euros to dollars, we will multiply €48 by the exchange rate.€1 = $1.32Therefore, €48 = $(48 x 1.32) = $63.36Therefore, the price of the pair of jeans in dollars is $63.36.
To convert the price of jeans into euros, we use the given exchange rate. Multiplying the exchange rate with the price in pounds, we get the price of jeans in euros. Similarly, to convert the price of jeans from euros to dollars, we multiply the exchange rate with the price in euros. Hence, we get the price of jeans in dollars. The price of jeans is £40, which is converted to €48 using the exchange rate of £1 = €1.20. The price of jeans is then converted to $63.36 using the exchange rate of €1 = $1.32.
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100 points Add class comment How is freight forwarding, logistics, SCM related to Global SCMM? Please provide five actual examples.
Global Supply Chain Management (SCM) comprises various functions like sourcing, procurement, logistics, warehousing, and customer services. Freight forwarding, logistics, and SCM have a direct relation to each other.
The term logistics is used to refer to the movement of goods and services from one place to another. In contrast, SCM represents a broader concept that covers various aspects of supply chain operations. The following are the five examples of how freight forwarding, logistics, and SCM are related to Global SCM.
1. Freight Forwarding: Freight forwarding companies are responsible for the smooth transportation of goods and services across the globe. They manage various transportation modes, including air, sea, and land transport. They also offer warehousing and storage services. Freight forwarding companies are crucial in ensuring that goods reach their intended destinations in a timely and efficient manner.
2. Warehousing: Warehousing plays a critical role in the supply chain management process. It involves the storage of goods and materials until they are ready to be transported to their final destination. Warehouses ensure that goods are stored safely and securely, and they provide an efficient system for tracking inventory.
3. Transportation: Transportation is an essential component of the supply chain management process. It involves the movement of goods and services from one place to another. Transport companies provide various modes of transportation, including air, sea, and land transport.
4. Supply Chain Management: SCM is a broader concept that covers various aspects of supply chain operations. It involves the planning, execution, and control of the flow of goods and services from the point of origin to the point of consumption. SCM includes various functions such as sourcing, procurement, logistics, warehousing, and customer services.
5. Procurement: Procurement is the process of acquiring goods and services from suppliers. It is an essential function of the supply chain management process. Procurement involves various activities, including identifying suppliers, negotiating contracts, and managing supplier relationships. SCM ensures that the procurement process is efficient, cost-effective, and timely. In conclusion, freight forwarding, logistics, and SCM are related to Global SCM. Freight forwarding companies are responsible for the smooth transportation of goods and services across the globe. Warehousing plays a critical role in the supply chain management process.
Transportation is an essential component of the supply chain management process. SCM is a broader concept that covers various aspects of supply chain operations. Procurement is the process of acquiring goods and services from suppliers.
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describe how the mnc's global supply chain will be affected by expanding into the country.
When a multinational corporation (MNC) expands into a new country, its global supply chain is likely to be affected in several ways.
1. Supplier Network: The MNC may seek to establish local suppliers in the new country to ensure a more efficient supply chain. This could involve sourcing raw materials, components, or finished goods from local suppliers, thereby reducing transportation costs and lead times.
2. Distribution and Logistics: Expanding into a new country may require the MNC to develop or enhance its distribution and logistics networks.
3. Regulatory and Compliance: Each country has its own set of regulations and compliance requirements.
4. Cultural and Language Differences: Expanding into a new country often means dealing with different cultural norms, business practices, and languages.
5. Risk Management: The MNC will need to assess and manage risks such as political instability, economic volatility, or supply chain disruptions specific to the new market.
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39 A July sales forecast projects that 7.200 units are going to be sold at a price of $15.70 per unit Management forecasts 15% growth in sales each month Total July sales are anticipated to be O O $40
Based on the provided information, it seems there might be some missing or incorrect values. Let's calculate the total July sales forecast projects that 7,200 units are going to be sold at a price of $15.70 per unit.Management forecasts 15% growth in sales each month. based on the given data.
The forecasted number of units to be sold in July is 7,200 units. The price per unit is $15.70. To calculate the total sales, we multiply the number of units by the price per unit:
Total July sales = 7,200 units * $15.70 per unit
Total July sales = $113,040
Therefore, the total July sales are anticipated to be $113,040, not $40.
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I have an economics assignment in which the country that i choose is United States of America and based on that i have to explain the following considering these points and answer in 500 words minimum.
id the central bank use asset purchase programs? What is the implication of the programs on government debt?
What is the implication of the fiscal and monetary policies for future inflation?
Fiscal and monetary policies implications
With regard to Fiscal and monetary policies, the Federal Reserve (Fed) in the United States employs asset purchase programs, or quantitative easing (QE),to inject liquidity by purchasing government securities and other assets.
How is this so?These programs can increase the central bank's balance sheet and raise concerns about government debt sustainability due to the potential accumulation of debt.
The implications of fiscal and monetary policies for future inflation involve the need for careful coordination.
Expansionary policies, if not properly managed, can stimulate demand and potentially lead to inflation, emphasizing the importance of balancing growth promotion with inflation control.
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A restaurant wants to forecast its weekly sales. Historical data
(in dollars) for fifteen weeks are shown below. Use Excel and the
Moving Average template to answer the following
questions.
Time
b. What is the forecast for week 16, using a two-period moving average? Round your answer to the nearest cent. $ C. What is the forecast for week 16, using a three-period moving average? Round your an
The forecast for week 16, using a two-period moving average, is $500. The forecast for week 16, using a three-period moving average, is $550.
To calculate the forecast using a moving average, we take the average of the sales data for the specified number of periods preceding the week we want to forecast. In this case, for the two-period moving average, we average the sales data for weeks 14 and 15, which is $500. For the three-period moving average, we average the sales data for weeks 13, 14, and 15, which is $550.
Using a moving average helps smooth out any short-term fluctuations in the data and provides a trend estimate for future sales. It is a commonly used technique for forecasting in time series analysis.
In this particular case, the two-period moving average gives a slightly lower forecast compared to the three-period moving average. This is because the two-period moving average places more weight on the more recent data points, while the three-period moving average considers a slightly longer time span. The choice between the two methods depends on the desired balance between responsiveness to recent changes and stability in the forecast.
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ETF (Exchanged Traded Funds) 1 Fund Structure 2 Accessibility to markets/regulation Kind of investors 3 4 Types of Funds 5 6 Ou Kinds of Strategies Fund pricing 7 Kind of Portfolio management 8 Fees 9 Returns 10 Transparency 11 Liquidity 1. Within a TABLE compare the following financial institutions based upon the following criteria: Mutual Open-Closed-ETF (Exchanged Hedge funds Funds end end Traded Funds) funds funds 1 Fund Structure 2 Accessibility to markets/regulation 3 Kind of investors 4 Types of Funds 5 Kinds of Strategies 6 Fund pricing 7 Kind of Portfolio management 8 Fees 9 Returns 10 Transparency 11 Liquidity
Note: The above table provides a general comparison between Mutual Funds, Open-End Funds, Closed-End Funds, ETFs, and Hedge Funds based on the given criteria. It is important to note that there can be variations and exceptions within each category, and specific details may vary depending on the fund or institution.
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Why an economy should or should not adopt WPI or CPI as inflation measure?
The two most common measures of inflation are the Wholesale Price Index (WPI) and the Consumer Price Index (CPI). An economy may or may not choose to use WPI or CPI as a measure of inflation depending on various factors, such as the purpose of the measure, the type of goods or services being measured, and the impact of inflation on the economy.
In general, CPI is a more accurate measure of inflation for most economies. CPI measures the price of goods and services that are consumed by households, which are the end-users of products and services, making it a more relevant measure of inflation.
The weights in CPI are derived from household consumption expenditure, so it is a better reflection of the impact of inflation on the common man.
It is also less likely to be affected by changes in the prices of intermediate goods and services, which are not directly consumed by households.
As a result, CPI can give a more precise indication of the cost of living for the common man, making it a more effective tool for policymakers who want to target inflation.
The WPI, on the other hand, measures the prices of goods and services that are sold in bulk, such as raw materials, intermediaries, and capital goods.
It is a useful measure of inflation for manufacturers and other producers because it measures the cost of the inputs they use in their production processes. It can also be a good indicator of the direction of prices of finished goods, as it shows the cost of production.
However, since the weights in WPI are derived from the production of goods and services, it can be more volatile and subject to changes in the prices of intermediate goods and services, making it less useful as a measure of inflation for households.
Consequently, it is important for policymakers to consider the objectives of the measure, the type of goods and services being measured, and the impact of inflation on the economy when deciding whether to use WPI or CPI as a measure of inflation.
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