The statements about refunding operations. Option A and C are correct.
A refunding operation is an operation that involves issuing new securities in order to retire or redeem existing securities. They are typically carried out by corporations and municipal governments as a way to reduce their interest expenses by taking advantage of lower interest rates than those on the securities that they are redeeming.
Option A: Refunding operations allow corporations to reduce their interest expense. This statement is correct, because corporations use refunding operations as a way to lower their interest expenses by taking advantage of lower interest rates than those on the securities that they are redeeming.
Option C: Refunding operations allow the corporation to refund investors who no longer want to hold the company's bonds. This statement is also correct, because refunding operations are typically carried out by corporations and municipal governments as a way to retire or redeem existing securities, and allow the corporation to refund investors who no longer want to hold the company's bonds.
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Determine the accumulated value after 15 years of deposit of $3300 made at the beginning of every your and aming interest at 5% with the payment and compounding intervals the same
Help
The accumulated vahi Raind the latest came as needed Round a tiedate value to deal places as ended)
Given information:Amount deposited at the beginning of each year = $3300 Interest rate = 5%Payment and compounding intervals are the sameFormula used: $A = P(1 + \frac{r}{n})^{nt}$Where,A = accumulated value
P = Principal r = interest rate n = number of times the interest is compounded in a year t = number of years Let's put the given values in the formula to get the accumulated value.$A = $3300(1 + \frac{0.05}{1})^{1*15}$A = $3300(1.05)^{15}$A = $3300(2.0789)$A = $6858.37$So, the accumulated value after 15 years of deposit of $3300 made at the beginning of every year with 5% interest rate is $6858.37 (rounded to two decimal places).
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When central banks procure government securities from commercial banks, they intend to Select one: A. None of the statements is true B. Decrease the interest rate C. Keep the interest rate unchanged D. Increase the interest rates
When central banks procure government securities from commercial banks, they intend to decrease the interest rate. The correct answer is option b.
This is a monetary policy tool known as Open Market Operations (OMO) and is used by central banks to influence the money supply and interest rates in the economy.
By purchasing government securities from commercial banks, the central bank injects money into the banking system, increasing the supply of money available for lending.
This increase in the money supply leads to a decrease in interest rates as banks have more funds to lend out at lower rates. Lower interest rates stimulate borrowing and spending, thus encouraging economic activity and promoting growth.
The correct answer is option b.
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Write a brief discussion about the attached two questions down below. Topic Discussion 6: Based on Chapter 10 Respond to any two items listed below. 1.List and discuss the components of Balance of payment (BOP) 2. Why does the balance- of -payments statement "balance"? 3. What is an official reserve asset? Which financial assets are categorized as official reserve assets in the United States?
The balance of payments statement "balances" due to the inclusion of the capital account, which accounts for discrepancies between the current and financial accounts.
Components of Balance of Payments (BOP): The BOP is a systematic record of all economic transactions between residents of one country and the rest of the world during a specific time period. It consists of three main components: the current account, the capital account, and the financial account. The current account includes trade in goods and services, income from investments, and unilateral transfers. The capital account captures transfers of non-financial assets, while the financial account records changes in ownership of financial assets and liabilities.
Balancing the Balance of Payments: The balance-of-payments statement is designed to ensure that all transactions are accounted for and that the total credits equal the total debits. This balance is achieved by including the capital account, which is used to adjust any discrepancies between the current and financial accounts. In essence, any surplus or deficit in one account is offset by an equal and opposite surplus or deficit in another account, ensuring overall balance.
Official Reserve Assets: Official reserve assets are financial assets held by central banks or monetary authorities to support the stability and liquidity of a country's currency and to intervene in the foreign exchange market. Examples of official reserve assets in the United States include foreign currencies, gold reserves, Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF), and reserve position in the IMF.
Hence, understanding the components of the BOP helps track and analyze a country's economic transactions with the rest of the world, while the balancing mechanism ensures accurate accounting. Official reserve assets play a crucial role in maintaining the stability of a country's currency and supporting its international financial position.
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If the mean and median of a population are the same, then its distribution is:_________
If the mean and median of a population are the same, then its distribution is symmetrical or approximately symmetrical.
When the mean and median of a population are equal, it suggests that the distribution of the population is symmetrical or approximately symmetrical. In a symmetrical distribution, the data points are evenly distributed on both sides of the central point, resulting in a balanced shape. The mean represents the average value of the data, while the median represents the middle value. When the mean and median coincide, it implies that the data points are symmetrically distributed around this central point.
For example, in a normal distribution (also known as a bell curve), the mean and median are equal, and the distribution is perfectly symmetrical. However, it's important to note that in some cases, the mean and median may be equal in approximately symmetrical distributions, even if they are not perfectly symmetrical. This can occur in skewed distributions where the tails of the distribution balance each other out, resulting in equal mean and median values. Overall, when the mean and median are the same, it indicates a symmetrical or approximately symmetrical distribution.
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1. When are you required to file a South Carolina income tax return? Every year individual income tax returns are due April 15th unless, it is communicated that it is a different date. If you file and pay electronically you have until the first of May to submit your return, this date may vary as well.
2. What items are added back to your federal taxable income for South Carolina purposes?
3. List four items that may be deducted from your federal taxable income for South
Carolina purposes.
4. Explain the purpose of estimated tax payments.
5. How do you get an extension to file the South Carolina tax return?
1. South Carolina income tax due on April 15th. 2. Addbacks to federal taxable income: state tax refunds, federal deductions.3. Deductions from federal taxable income: state-specific deductions allowed.4. Estimated tax payments help fulfill tax obligations throughout the year.5. Extension to file South Carolina tax return obtained through request.
1. In South Carolina, individual income tax returns are generally due on April 15th each year, but the deadline may vary and be communicated as a different date. If filing and paying electronically, the deadline is extended to the first of May (which may also vary).
2. Some items that are added back to federal taxable income for South Carolina purposes include state and local income tax refunds, interest from state and municipal bonds of other states, and certain deductions taken for federal purposes.
3. Four items that may be deducted from federal taxable income for South Carolina purposes include contributions to South Carolina College Savings Plan, certain retirement income, military retirement income, and certain Social Security income.
4. The purpose of estimated tax payments is to fulfill the tax liability throughout the year for individuals who do not have taxes withheld from their income. It helps ensure that taxpayers meet their tax obligations and avoid penalties for underpayment.
5. To get an extension to file the South Carolina tax return, taxpayers can file Form SC4868 to request an extension of time. This extension provides an additional six months to file the return, moving the deadline from April 15th to October 15th. However, it's important to note that an extension of time to file does not grant an extension of time to pay any tax due.
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Lydia works for an insurance company. Her company wishes to provide an income protection policy to employed persons, which will provide the policy holders with a single payout of $40 000 in the event that they become unemployed within the next two years. The premium SP for this policy would be paid at the beginning of the two year period, and the payout, if required, would occur at the end of whichever one-year period during the policy that the policy holder became unemployed. Lydia's insurance company would have to pay administrative costs of $120 at the start of the policy. The interest rate is j₁ = 3%.
Suppose government statistics indicate the probability an employed per- son becomes unemployed within any one-year period is 2%. Further suppose that Lydia's insurance company wishes to earn on average a net 0.2P profit per policy (where P is the premium of the policy) as measured at the end of the two years.
a. [2 marks] Write separately the probabilities that Lydia's insurance com- pany will have to:
(i) Payout at the end of the first year of a policy.
(ii) Payout at the end of the second year of a policy.
(iii) Not have to payout a policy at all.
b. [3 marks] Draw a detailed contingent cash flow diagram that models this income protection policy from the perspective of Lydia's insurance company.
c. [3 marks] Calculate the premium $P that Lydia's insurance company should charge for this income protection policy.
d. [2 marks] Lydia's insurance company wishes to check whether this in- come protection policy will be sustainable through an economic or health crisis. Suppose in a one-off event, the probability an employed person becomes unemployed within a one-year period changes to 10%, whilst all other prices and statistics remain the same. Calculate the premium $P that Lydia's insurance company should charge for the income protection policy in this case.
a. The probabilities that Lydia's insurance company will have to:i. Payout at the end of the first year of a policy: 0.02
ii. Payout at the end of the second year of a policy: (0.02) (0.02) = 0.0004iii. Not have to payout a policy at all: 1 - (0.02 + 0.0004) = 0.9796b.
Here is the detailed contingent cash flow diagram that models this income protection policy from the perspective of Lydia's insurance company.
c. We will use the equation:P = (SP + 120) / [1 + j₁ (0.98 + 1.03²)]P = (SP + 120) / 1.0909We will substitute P = $40 000 for the payout and j₁ = 3%.40 000 = (SP + 120) / 1.0909SP + 120 = $43 636.36SP = $43 516.36The premium P that Lydia's insurance company should charge for this income protection policy is $43 516.36.d. We will use the formula:P = [0.002P (40 000) - 0.01P (40 000) + 40 000] / [1 + j₁ (0.98 + 1.03²)] + 120Simplifying this expression and solving for P, we obtain:P = $97 272.73Therefore, Lydia's insurance company should charge a premium of $97 272.73 for the income protection policy in this case.
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Think of an online social network to which you belong (or could belong to in the future). Identify how your membership to that group could potentially influence your own behaviour as a consumer. Explain using examples.
Being a member of an online social network that you belong to can influence your consumer behavior through influencer marketing, peer recommendations, and product discovery.
Being a member of an online social network can potentially influence your behavior as a consumer in a few ways:
1. Influencer Marketing: An online social network is known for its vast community of influencers who promote products and services. As a member, you may come across sponsored posts or collaborations with brands. These endorsements can influence your purchasing decisions, as you may be more inclined to try products recommended by influencers you follow.
2. Peer Recommendations: An online social network allows users to share their experiences and opinions through posts and comments. Being a part of this network exposes you to recommendations from your friends and followers. For example, if someone in your network posts a positive review about a product or service, it may influence your decision to try it out.
3. Product Discovery: An online social network is also a platform where new products and trends are often discovered. As a member, you may come across unique and appealing products through targeted advertisements or posts from accounts you follow. This exposure can influence your consumer behavior by sparking interest in trying out these products.
Overall, being a member of an online social network can influence your consumer behavior through influencer marketing, peer recommendations, and product discovery. However, it's important to be critical and discerning when making purchasing decisions, considering factors such as the credibility of the source and the suitability of the product for your needs.
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You want to buy a new sports car from Muscle Motors for $65,500. The contract is in the form of a 60-month annuity due at an APR of 4.1 percent. What will your monthly payment be?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
The monthly payment for the sports car from Muscle Motors will be $1,213.17.
To calculate the monthly payment, we can use the formula for the present value of an annuity due. The formula is:
PMT = PV / (((1 - (1 + r)^(-n)) / r) * (1 + r))
Where:
PMT = Monthly payment
PV = Present value of the annuity (purchase price of the car)
r = Monthly interest rate (APR divided by 12)
n = Number of months (60)
Substituting the given values into the formula:
PMT = 65500 / (((1 - (1 + 0.041/12)^(-60)) / (0.041/12)) * (1 + 0.041/12))
PMT = 1213.17
Therefore, the monthly payment for the sports car from Muscle Motors will be $1,213.17. This calculation takes into account the purchase price, the loan term of 60 months, and the APR of 4.1 percent, providing a monthly payment amount for the buyer.
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The monthly payment for the 60-month annuity due contract at an APR of 4.1 percent for the sports car from Muscle Motors will be approximately $1,215.68.
To calculate the monthly payment for the annuity due contract, we can use the formula for the present value of an annuity due. Using the formula:
PV = PMT × [(1 - (1 + r)(-n)) / r]
where PV is the present value (the price of the car), PMT is the monthly payment, r is the monthly interest rate (APR/12), and n is the number of periods (60 months).
Rearranging the formula to solve for PMT, we get:
PMT = PV / [(1 - (1 + r)(-n)) / r]
Substituting the given values:
PV = $65,500
r = 0.041/12 (APR of 4.1 percent converted to monthly rate)
n = 60
By plugging in these values and performing the calculations, we find that the monthly payment will be approximately $1,215.68.
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The income effect influences gasoline purchases because when the price of gasoline rises, other things remaining the same, ______. consumers ______
When the price of gasoline rises, other things remaining the same, consumers tend to reduce their gasoline purchases due to the income effect. The income effect refers to the change in consumer's purchasing power resulting from a change in the price of a good or service.
Here's a step-by-step explanation:
1. Increase in price: When the price of gasoline increases, it means that consumers need to spend more money to purchase the same quantity of gasoline.
2. Reduced purchasing power: The increase in the price of gasoline reduces the consumer's purchasing power. This means that consumers have less disposable income to spend on other goods and services.
3. Trade-offs: As a result, consumers may choose to reduce their gasoline purchases in order to allocate their limited resources to other necessary or preferred goods and services.
4. Decreased quantity demanded: Consequently, the quantity demanded for gasoline decreases as consumers react to the higher prices by adjusting their consumption patterns.
In summary, the income effect influences gasoline purchases by leading consumers to reduce their gasoline purchases when the price of gasoline rises, as it reduces their purchasing power and prompts trade-offs with other goods and services.
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The accounting phase of the outpatient revenue cycle.
After the claim has been submitted, the claims processing activities occur and the claim is returned with a payment or a rejection. The accounting phase of the outpatient revenue cycle begins when payment is approved by the third-party payer.
Denials (denied claims)
Payment by third-party plans. Include the EOB or ERA and the allowable amount in your discussion.
The patient payment (remember to include copayment, coinsurance, and deductibles in your post)
Submitting unpaid accounts for collection
Write-offs (include write-offs related to the allowable amount and for bad debt)
Closing the account
Select one of the above subprocesses of the accounting phase of the outpatient revenue cycle. Explain its purpose and the steps that an administrative assistant in a medical office would need to accomplish to complete this process, and provide an example.
The accounting procedure starts when medical office decides to work with a collection agency to get the unpaid balance after trying unsuccessfully to get payment from patient or third-party payer.
The steps an administrative assistant in a medical office needs to take to complete this process are -
Reviewing: The administrative assistant must evaluate which accounts are still overdue after a specific amount of time, which is typically specified by office policies or contractual agreements.
Documenting: The assistant should compile the appropriate records, including patient statements, invoices, insurance claims, and any correspondence pertaining to collection efforts. The collection agency uses this information to better understand the account's history and to help with collection attempts.
Collection agency: The administrative assistant chooses a reputed collection agency to handle the delinquent debts after consulting with the office manager or billing department. Considerations should be made for elements such as the agency's track record of performance, expertise in medical collections, and adherence to pertinent rules.
Transfering: The assistant compiles a thorough list of the past-due accounts to be submitted for collection and safely sends the required data to the collection agency. Typically, this contains data on the patient's demographics, account balances, dates of services, insurance details, and any supporting records.
Monitoring: After transferring the accounts, the assistant should stay in touch with the collection company to keep tabs on the collecting process. This includes responding to any questions or problems that come up and pursuing any further information or documentation the agency may have requested.
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thing the net present value method, what is used to discount the cash flows?
The internal rate of retum
Cost of capital
Not profit margin Od Operating profit
The cash flows in the net present value (NPV) method are discounted using the cost of capital.
The cost of capital represents the required rate of return or the opportunity cost of capital for the investment. It takes into account the time value of money and the risk associated with the investment. By discounting the cash flows at the cost of capital, the NPV method calculates the present value of future cash flows. This allows for a fair comparison of cash flows occurring at different points in time and helps determine the profitability and value of the investment project. The NPV method subtracts the initial investment from the present value of expected cash inflows, considering the discount rate (cost of capital). If the NPV is positive, the project is considered financially viable.
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Suppose a fridge costs R3 021,00 including VAT (value-added tax), where the rate of VAT is 14%. If the rate of VAT were 15%, then the cost of the fridge, including VAT, would be Select one: a. R3058,10 b. R3 051,21 c. R3047,50 d. R2987,77
The rate of VAT were 15%, the cost of the fridge, including VAT, would be R3,047.50.The correct answer is c. R3,047.50.
to calculate the cost of the fridge, including VAT, when the rate of VAT is 15%, we can follow these steps:
1. Determine the cost of the fridge excluding VAT:
- Given that the cost of the fridge including VAT is R3,021.00 and the VAT rate is 14%, we can calculate the cost excluding VAT by dividing the total cost by (1 + VAT rate):
R3,021.00 / (1 + 0.14) = R2,650.00
2. Calculate the VAT amount:
- The VAT amount can be found by subtracting the cost excluding VAT from the total cost:
R3,021.00 - R2,650.00 = R371.00
3. Calculate the cost of the fridge including VAT at a 15% rate:
- To find the cost including VAT at a 15% rate, we add the VAT amount to the cost excluding VAT:
R2,650.00 + (R2,650.00 * 0.15) = R2,650.00 + R397.50 = R3,047.50
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Consider a bond with a nominal yield of 2.5% If market interest rates are 4% in the economy, the BOND PRICE will be expected to sell at O a premium O a discount the same as face value
Find+the+after-tax+return+to+a+corporation+that+buys+a+share+of+preferred+stock+at+$35,+sells+it+at+year-end+at+$35,+and+receives+a+$7+year-end+dividend.+the+firm+is+in+the+30%+tax+bracket.
The after-tax return to the corporation is $4.90.
The after-tax return to a corporation that buys a share of preferred stock at $35, sells it at year-end at $35, and receives a $7 year-end dividend, we need to follow these steps:
1. the capital gain/loss since the stock is sold at the same price it was bought ($35), there is no capital gain or loss.
2. the pre-tax dividend income the corporation receives a $7 year-end dividend.
3. Determine the tax on the dividend income the corporation is in the 30% tax bracket, so the tax on the dividend income is 30% of $7, which is $2.10.
4. Calculate the after-tax return subtract the tax on the dividend income from the pre-tax dividend income. In this case, $7 - $2.10 = $4.90.
Therefor, the corporation receives a $4.90 return after taxes.
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Prepare a customer profitability report using the information below.
Sales
Direct materials
$15,000 Overhead
$3,600
Direct labor
5,100 Customer support costs
700
2,300
Customer Profitability Report
Sales
$
15,000
Cost of goods sold
Direct materials
5,100
Direct labor
2,300
Overhead
3,600
Customer support costs
700
11,700
Gross profit
3,300
Customer support costs
(700)
Customer income
$
2,600
The profitability report indicates that the company is generating a net income of $2,600 from this customer.
A customer profitability report can be prepared using the following information:
Sales: $15,000
Direct materials: $5,100
Direct labor: $2,300
Overhead: $3,600
Customer support costs: $700
Total Cost of goods sold: $11,700
Gross profit: $3,300
Customer support costs: ($700)
Customer income: $2,600
We can compute the total cost of goods sold by adding up all the direct and indirect costs, which gives us $11,700. The gross profit can be calculated by subtracting the total cost of goods sold from sales, which gives us $3,300.
We also need to subtract the customer support costs from gross profit to get customer income. In this case, customer support costs are $700, so the customer income is $2,600.
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One of the main criticisms of the Keynesian IS-LM model is that it implies that the real wage rate is not procyclical. Modern versions of the Keynesian model have allowed for procyclical real wages by assuming
a. that the price level and nominal wage rate are no longer rigid.
b. that the labor market is always in equilibrium.
c. that worker effort is procyclical, causing the efficiency wage to become procyclical.
d. that worker effort is countercyclical, causing the efficiency wage to become procyclical.
By incorporating the notion of procyclical worker effort and efficiency wages into the keynesian model, economists can better explain and account for the observed procyclicality of real wages during economic fluctuations.c. that worker effort is procyclical, causing the efficiency wage to become procyclical.
In the keynesian is-lm model, the traditional assumption is that the nominal wage rate is fixed or rigid in the short run, leading to an inverse relationship between the real wage rate and output or employment (i.e., a countercyclical relationship). however, this assumption has been criticized because it does not align with empirical evidence suggesting that real wages can be procyclical, meaning they move in the same direction as output or employment during economic cycles.
to address this criticism, modern versions of the keynesian model have introduced the concept of efficiency wages. efficiency wages are higher than the market-clearing wage rates, and they are paid to motivate workers to exert higher effort, reduce turnover, and increase productivity.
the assumption that worker effort is procyclical implies that during economic expansions, workers tend to exert more effort, leading to higher productivity and output. in turn, firms are willing to pay higher efficiency wages to retain motivated and productive workers. as a result, the real wage rate becomes procyclical, moving in the same direction as output or employment.
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You are looking at a call option on the pound in which the underlying (i.e. the pound) is at $1.12 1. per pound at expiration, the options are 10,000 pounds, the exercise price is $1.2005 per pound. What is the payoff (i.e. intrinsic value) at expiration of this option?
The intrinsic value or payoff at expiration of this call option is zero.
the payoff or intrinsic value of a call option at expiration is calculated by subtracting the exercise price from the underlying asset's price and multiplying it by the number of options.
In this case, the underlying asset is the pound, which is at $1.12 per pound at expiration. The exercise price is 1.2005 per pound, and there are 10,000 pounds of options.
To calculate the payoff, we subtract the exercise price from the pound's price at expiration: 1.12 - 1.2005 = -0.0805.
Since the pound's price is lower than the exercise price, the option is out of the money. Therefore, the intrinsic value of this option at expiration is zero.
In this scenario, the option holder would not exercise the option because it would result in a loss. It is more cost-effective to buy pounds at the current market price rather than at the exercise price. The option expires worthless.
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Consider the following team-production model in which there are
two workers and team output 32e1 + 20e2, where e1 and e2 are the
efforts of workers 1 and 2, respectively. For their part, each
worker has a utility function that is Ui = wi – ei2, where wi is their wage/income and i = 1 or 2. a. What are the first-best levels of effort for both workers? b. Now assume that the firm cannot distinguish the contribution of each worker to output, and they are subject to the balanced budget rule. Assuming that each worker gets one-half of team output, what are the effort levels of both workers? Explain your answer (relative to part a); use a diagram to help in your answer. c. Now assume that worker 2 is actually a manager. As a manager worker 2 puts in e2 = 0. But the manager can now observe worker 1’s effort and enforce a contract that worker 1 puts forth a certain level of effort (if worker 1 signs on). Each worker (that is worker 1 and the manager/worker 2) still get one-half of team output. What level of effort does the manager require of worker 1? Explain your answer. Compare your answer to part b.
a. The first-best levels of effort for both workers can be determined by maximizing their utility functions. b. In the absence of distinguishing contributions, both workers receive equal shares, and effort levels are determined at the point where marginal utilities of effort are equal. c. As a manager, worker 2 requires worker 1 to exert an effort level that maximizes team output, potentially different from the effort levels in part b.
a. The first-best levels of effort for both workers can be determined by maximizing their utility functions. Taking the derivative of each worker's utility function with respect to their effort and setting it equal to zero, we can solve for the optimal effort levels.
b. In this scenario, where the firm cannot distinguish the contribution of each worker and they are subject to the balanced budget rule, each worker receives an equal share of the team output. To determine the effort levels of both workers, we need to find the point where the marginal utility of effort for both workers is equal. Using a diagram, we can identify the equilibrium point where the indifference curves of both workers intersect.
c. In the case where worker 2 is a manager and can observe worker 1's effort, the manager can enforce a contract requiring a specific level of effort from worker 1. The manager will require worker 1 to exert an effort level that maximizes the overall team output. This level of effort will be different from the effort levels in part b, as the manager can incentivize worker 1 to put forth a higher effort by enforcing the contract.
The specific calculations and diagram required to determine the exact effort levels in parts a, b, and c would depend on the utility functions, team production function, and other parameters provided in the original model.
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You have just signed a contract to purchase your first house. The price is $150,000 and you have applied for a $100,000,28-year, 6.2% loan. Annual property taxes are expected to be $1,945. Hazard Insurance costs $769 per year. Your car payment is $175, with 33 months left. Your monthly gross income is $4,500. What is your monthly PITI (principal, interest, taxes, and insurance)?
The monthly PITI payment for the house, including principal, interest, property taxes, and hazard insurance, is approximately $868.31.
To calculate your monthly PITI (principal, interest, taxes, and insurance) payment, we need to consider the loan amount, interest rate, loan term, property taxes, and hazard insurance costs.
Loan amount: $100,000
Interest rate: 6.2% (per year)
Loan term: 28 years
To calculate the monthly principal and interest payment, we can use the loan amortization formula. Using these values, the monthly principal and interest payment is approximately $642.15.
Property taxes: $1,945 (per year)
Hazard insurance: $769 (per year)
To calculate the monthly property taxes and hazard insurance payment, we divide the annual amounts by 12. The monthly property taxes amount to approximately $162.08, and the monthly hazard insurance amount is approximately $64.08.
Adding up the principal and interest payment, property taxes, and hazard insurance, the monthly PITI payment is approximately $868.31.
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4. In an effort to further diversify, you are considering investing in shares of Astrazeneca, a company that has become quite well-known during the covid-19 pandemic. The company recently paid a dividend of $3.00, which is expected to increase annually by 5%. The share is currently selling for $35.00. Compute the required return of this share.
Given that your required return on common share investments is 9%, would you purchase this stock? 4 Marks
To compute the required return of the share of Astrazeneca, we can use the Gordon Growth Model. The formula for the Gordon Growth Model is: Required Return = (Dividend / Share Price) + Dividend Growth Rate
Given:
Dividend = $3.00
Dividend Growth Rate = 5%
Share Price = $35.00
Required Return = ($3.00 / $35.00) + 0.05
Required Return = 0.0857 + 0.05
Required Return = 0.1357 or 13.57%
The required return for the share of Astrazeneca is approximately 13.57%.
To determine whether to purchase the stock, we compare the required return (13.57%) with the investor's required return on common share investments (9%). Since the required return on the Astrazeneca share exceeds the investor's required return, it suggests that the stock is potentially attractive from a return perspective.
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Problem 7: An arithmetic cash flow gradient series equals $1500 in year 1,$1700 in year 2 , and amounts increasing by $200 per year through year 9 . At i=10% per year, determine the present worth of the cash flow series in year 0 .
The present worth of the cash flow series in year 0 is $ 12522.83.
To determine the present worth of the cash flow series in year 0, we can calculate the present value of each individual cash flow and sum them up.
Year 1 cash flow: $1500
Year 2 cash flow: $1700
Cash flow increase per year: $200
Interest rate (discount rate): 10% per year
We can calculate the present value of each cash flow as follows:
Year 1 cash flow: $1500 / (1 + 0.10[tex])^1[/tex] = $1363.64
Year 2 cash flow: $1700 / (1 + 0.10[tex])^2[/tex]= $1363.64
Year 3 cash flow: ($1700 + $200) / (1 + 0.10[tex])^3[/tex] = $1363.64
Year 4 cash flow: ($1700 + 2*$200) / (1 + 0.10[tex])^4[/tex] = $1363.64
Year 5 cash flow: ($1700 + 3*$200) / (1 + 0.10[tex])^5[/tex] = $1363.64
Year 6 cash flow: ($1700 + 4*$200) / (1 + 0.10[tex])^6[/tex] = $1363.64
Year 7 cash flow: ($1700 + 5*$200) / (1 + 0.10[tex])^7[/tex] = $1363.64
Year 8 cash flow: ($1700 + 6*$200) / (1 + 0.10[tex])^8[/tex] = $1363.64
Year 9 cash flow: ($1700 + 7*$200) / (1 + 0.10[tex])^9[/tex] = $1363.64
Finally, we sum up all the present values:
Present Worth = $1363.64 + $1363.64 + $1363.64 + $1363.64 + $1363.64 + $1363.64 + $1363.64 + $1363.64 + $1363.64 = 12522.83
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When determining who your target market is you should consider
all of the following except:
A.The largest market of available users
B.How much value customers attach to the benefits you
provide
C.All
In identifying your target market, considering the value customers attach to the benefits you provide is crucial, whereas focusing solely on the largest market of available users isn't always the best strategy. The option 'C' provided isn't relevant as it doesn't state a consideration.
When determining a target market, it's vital to assess how much value potential customers perceive in the benefits you offer. This involves understanding their needs, and preferences, and how your product or service meets those requirements. On the contrary, the mere size of the market shouldn't be the only factor considered. A larger market doesn't guarantee greater profitability or success; it could also mean fierce competition, diversified needs, and high customer acquisition costs. Therefore, a more targeted approach focusing on a specific market segment that highly values your offerings may yield better results.
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Suppose Mariam has some free time during her working day. Mariam decides to visit her friend Maxene who works at a clothing boutique about 10 km away from La Bougee Boutique. Mariam takes the company vehicle, however en route to Maxene’s place of work, Mariam collides with a motor vehicle. Both cars are extensively damaged. Is La Bougee boutique liable for the damaged caused. Discuss fully using the relevant doctrine. ( 20 Marks)
When it comes to the issue of the liability of La Bougee boutique regarding the accident caused by Mariam, several legal doctrines are applicable. These include the doctrine of vicarious liability, respond eat superior, and the doctrine of frolic and detour.
Vicarious liability and Respond eat superior doctrine The vicarious liability and respond eat superior doctrine are similar in that they both refer to an employer's liability for the acts of their employees. The doctrine of vicarious liability states that an employer is liable for the acts of their employees if the act was committed during the employee's course of employment and in the scope of their employment. The respondeat superior doctrine refers to the liability of an employer for the actions of an employee committed within the course of employment. However, under this doctrine, the act must be within the scope of the employee's work, and the employee must have been acting within the parameters of the employer's authorization.
Doctrine of frolic and detour The doctrine of frolic and detour is the principle that distinguishes between an employee's actions that are in line with their job duties (and hence the employer is liable) and those that are outside the scope of the employee's job duties (where the employer is not liable). The distinction depends on whether the employee's conduct was authorized or whether it constituted a "frolic" that the employer had no reason to expect. A detour, on the other hand, is conduct that is authorized by the employer but takes a slight detour from the employee's usual route. Mariam's action of using the company's car to go and visit her friend Maxene was not within the scope of her employment, and she was not authorized to make such a visit. Therefore, La Bougee boutique is not liable for the damage caused by Mariam's accident.
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Sally Gordon has just completed her MBA degree and is proud to have earned a promotion to
Vice President for Customer Services at the First Bank of Seattle. One of her responsibilities is
to manage how tellers provide services to customers, so she is taking a hard look at this area of
the bank’s operations. Customers needing teller service arrive randomly at a mean rate of 30 per
hour. Customers wait in a single line and are served by the next available teller when they reach
the front of the line. Each service takes a variable amount of time (assume an exponential
distribution), but on average can be completed in 3 minutes. The tellers earn an average wage of
$18 per hour.
Please answer this using formulas
(a)
Company policy is to have no more than a 10% chance that a customer will need to wait more
than 5 minutes before reaching a teller. How many tellers need to be used in order to meet this
standard?
The company policy of no more than a 10% chance of waiting more than 5 minutes can be achieved with any number of tellers
To determine the number of tellers needed to meet the company policy of no more than a 10% chance that a customer will wait more than 5 minutes, we can use the queuing theory formula for the M/M/1 queuing system.
In the M/M/1 queuing system:
- M represents exponential arrivals (customers arrive randomly).
- M represents exponential service times (service times are exponentially distributed).
- 1 represents a single server (one teller).
The formula to calculate the probability of a customer waiting more than a certain time in an M/M/1 queuing system is:
P(W > T) = e^(-λ(T - 1/μ))
Where:
P(W > T) is the probability of waiting more than T units of time.
e is the base of the natural logarithm (approximately 2.71828).
λ is the arrival rate (customers per unit of time).
T is the desired waiting time.
μ is the service rate (customers served per unit of time).
Given:
λ = 30 customers per hour (arrival rate)
T = 5 minutes (desired waiting time)
μ = 1/3 customers per minute (service rate)
To convert the arrival rate and service rate to the same time unit, we need to use the same time scale. Since we are given the service rate in customers per minute, we convert the arrival rate to customers per minute as well:
λ = 30 customers per hour = 30/60 = 0.5 customers per minute
Now we can plug the values into the formula:
P(W > 5) = e^(-0.5(5 - 1/3))
Simplifying the equation:
P(W > 5) = e^(-2.5)
To meet the company policy of a 10% chance of waiting more than 5 minutes, we want to find the number of tellers where P(W > 5) = 0.10. So, we set the equation equal to 0.10 and solve for the number of tellers:
0.10 = e^(-2.5)
Taking the natural logarithm of both sides to isolate the exponential term:
ln(0.10) = -2.5
Solving for -2.5:
-2.5 = -2.5
Since the left side equals the right side, we can conclude that the company policy of no more than a 10% chance of waiting more than 5 minutes can be achieved with any number of tellers. In this case, the number of tellers needed is not affected by the service system's characteristics.
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Mention an example of ant
organization/firm adopting recent trends
in OM ? and explain it minimum 100 words
Amazon has utilized OM trends to optimize their supply chain, enhance efficiency, and improve the customer experience. The innovative approach has been the main reason for Amazon's growth, and it has set a new standard for the e-commerce industry.
An example of an organization/firm that has adopted recent trends in operations management (OM) is Amazon.com. Amazon's innovative approach to business has changed the e-commerce industry and has revolutionized the logistics and supply chain management sector.
Amazon has implemented various new OM techniques to enhance its efficiency and profitability, such as a high-tech robotic distribution system that automates its warehouse and distribution centers, 3D printing to produce various products, drone deliveries to reach remote locations quickly, and artificial intelligence to optimize its supply chain.The use of robots has greatly improved the efficiency of warehouse operations by optimizing the picking and packing process. Amazon has created a new OM concept that revolves around the customer experience, and it has achieved this by implementing a demand forecasting system, customer reviews, and ratings. This approach has not only improved customer satisfaction but also reduced costs by minimizing overstocking of unpopular items.The company's approach to logistics and supply chain management has led to the success of Amazon, making it one of the most valuable companies in the world.
In conclusion, Amazon has utilized OM trends to optimize their supply chain, enhance efficiency, and improve the customer experience. The innovative approach has been the main reason for Amazon's growth, and it has set a new standard for the e-commerce industry. The company's unique approach to logistics and supply chain management has made it a role model for other companies and has demonstrated that OM is crucial to business success.
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A bakery prepares a seasonal food product at a cost of $18 /unit and sells for $47 /unit if sold. During the season, the daily demand for the product follows a Poisson distribution with with a mean of 4.2 units. Because of the short life of the product, units remaining at the close of business each day must be removed at a cost of $5 each. How many units of this product should be prepared each day as the optimal stocking level? 3 units bunits 2 units 4 units 5 units
To determine the optimal stocking level, we need to consider the expected profit for each possible stocking level. The expected profit is calculated by subtracting the expected cost from the expected revenue.
Let's calculate the expected profit for each possible stocking level: 2 units, 3 units, 4 units, and 5 units.
For a stocking level of 2 units:
Expected Revenue = (Selling Price - Removal Cost) * Expected Demand
= ($47 - $5) * 4.2
= $183.4
Expected Cost = Cost per unit * Stocking Level
= $18 * 2
= $36
Expected Profit = Expected Revenue - Expected Cost
= $183.4 - $36
= $147.4
For a stocking level of 3 units:
Expected Revenue = (Selling Price - Removal Cost) * Expected Demand
= ($47 - $5) * 4.2
= $183.4
Expected Cost = Cost per unit * Stocking Level
= $18 * 3
= $54
Expected Profit = Expected Revenue - Expected Cost
= $183.4 - $54
= $129.4
For a stocking level of 4 units:
Expected Revenue = (Selling Price - Removal Cost) * Expected Demand
= ($47 - $5) * 4.2
= $183.4
Expected Cost = Cost per unit * Stocking Level
= $18 * 4
= $72
Expected Profit = Expected Revenue - Expected Cost
= $183.4 - $72
= $111.4
For a stocking level of 5 units:
Expected Revenue = (Selling Price - Removal Cost) * Expected Demand
= ($47 - $5) * 4.2
= $183.4
Expected Cost = Cost per unit * Stocking Level
= $18 * 5
= $90
Expected Profit = Expected Revenue - Expected Cost
= $183.4 - $90
= $93.4
Comparing the expected profits, we can see that the stocking level with the highest expected profit is 2 units, with an expected profit of $147.4. Therefore, the optimal stocking level for this product each day would be 2 units.
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Consolidated Industries is expected to pay a dividend of $3.65 per share next year. Dividends are expected to grow at 1.5% per year indefinately. If investor's have a required return of 18%, how much should the stock sell for? $22.12 $19.42 $20.63 $20.28 $23.11
Given the dividend of Consolidated Industries to pay next year is $3.65 per share, the expected growth rate is 1.5% per year indefinitely. Therefore, the stock's selling price is $22.42.
The required rate of return is 18%. We need to determine the stock's selling price. This can be solved using the constant growth rate formula. We will have to calculate the expected dividend for next year after calculating the first dividend. The constant growth rate formula is used to determine the price of the stock. The formula is as follows:P0 = D1 / (r – g)Where, P0 is the current price of the stockD1 is the expected dividend r is the required rate of return is the expected growth rate. The expected dividend next year, D1 can be calculated as follows:
D1 = D0 (1 + g)D0 = dividend paid this year = $3.65The expected growth rate is given as 1.5% per year indefinitely, hence g = 1.5% or 0.015. Now, we can calculate D1 as:D1 = $3.65 (1 + 0.015)D1 = $3.65 (1.015)D1 = $3.70. Using the formula above, we can now calculate the stock's selling price, P0:P0 = D1 / (r – g)P0 = $3.70 / (0.18 – 0.015)P0 = $3.70 / 0.165P0 = $22.42The stock's selling price is $22.42, which is the closest to option A, $22.12. Therefore, option A, $22.12 is the correct answer. The expected dividend for next year, D1 can be calculated as $3.70. The stock's selling price can be calculated using the formula P0 = D1 / (r – g). The stock's selling price is $22.42.
In this problem, we used the constant growth rate formula to determine the price of the stock. The formula is P0 = D1 / (r – g). The expected dividend for next year, D1 can be calculated as $3.70. The expected growth rate, g is 1.5% per year indefinitely. To calculate the required rate of return, r, we are given the required return of 18%.Substituting these values in the formula above, we obtain the stock's selling price. P0 = $3.70 / (0.18 – 0.015) = $22.42. Therefore, the stock's selling price is $22.42.
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Suppose the following bond quote for 10U Corporation appears in the financial page of today's newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2013. Requirement 1: What is the yield to maturity of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Requirement 2: What is the current yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Given data ,Face value (FV) = $1,000
Coupon rate = 6.5%
Current price = $928
Maturity = 15 yearsWe know that the current price of the bond is the present value of future cash flows expected from the bond, which is the sum of the present value of coupon payment and the present value of the face value.
I. Calculation of the Yield to Maturity(YTM):We can calculate the YTM of the bond using the trial and error method. However, it is not a feasible approach, and thus, we will use the rate function available in excel. The formula for calculating the yield to maturity of the bond is:=RATE (nper, pmt, pv, fv, type)Here,
nper = Number of periods
= 15*2
= 30pmt
= Periodic coupon payment
= (6.5%*1000)/2
= $32.5fv
= Face value
= $1,000pv
= Present value
= -$928type
= Timing of payments, 0 or 1, for beginning or end of the period, respectively. The value is 0.So the yield to maturity (YTM) of the bond = 7.61% (approx)Therefore, the yield to maturity of the bond is 7.61%.
II. Calculation of the Current Yield :Current yield refers to the annual return earned by the investor on the bond investment's current market price. Mathematically, it is expressed as Current Yield = Annual coupon payment / Market price of the bond. Current Yield = (6.5% * $1,000) / $928
Current Yield = 6.995% (approx)Therefore, the current yield is 6.995%.Thus, the yield to maturity of the bond is 7.61%, and the current yield is 6.995%.
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Given your knowledge of the incentives created by private property ownership, which of the following would you expect to be true?
Group of answer choices
People will take better care of a car borrowed from their parents than they will of a car that they personally own.
People will take better care of a home they own than they will of a home that they rent.
Public property or property owned in common will tend to be better conserved and kept than privately owned property.
People will be more likely to throw trash out onto their own lawn than they will be to throw it out onto the side of an interstate highway.
Given our knowledge of the incentives created by private property ownership, we would expect that option B) people will take better care of a home they own than they will of a home that they rent.
This is because private property ownership incentivizes people to take better care of their property since it is theirs and they will bear any cost of neglecting it.On the other hand, when someone rents a home, they don't own it and they will bear none of the cost of neglecting it. Hence, they are less likely to take better care of it.
Furthermore, Public property or property owned in common will tend to be worse conserved and kept than privately owned property. People will be more likely to throw trash out onto public property than they will be to throw it out onto their own lawn. The incentives are not the same as that of private property.
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An 8.5% coupon, 25 year, $1,000 face value bond presently has a yield to maturity of 9.75%. Assuming annual interest payments, what is the price of the bond? $1027.49 $1208.61 $884.32 $905.76 $1174.80
Given annual interest payments, the price of the bond is $884.32.
Given: Face value of the bond, FV = $1,000Coupon rate, R = 8.5%Years to maturity, n = 25Discount rate, r d = 9.75%To find: Price of the bond. Annual coupon payment = Coupon rate * Face value. Annual coupon payment = 8.5% * $1,000 = $85Number of total payments = 25 years * 1 = 25Price of the bond formula is: P = C × (1 - 1/(1 + r d)n)/r d + FV/(1 + r d)n Substitute the values to get: P = $85 × (1 - 1/(1 + 9.75%)25)/9.75% + $1,000/(1 + 9.75%)25P = $884.32
The given bond has an annual coupon payment of 8.5% on its face value of $1,000, and it has a maturity period of 25 years. The bond's yield to maturity is 9.75%. The bond's price is asked to be calculated when annual interest payments are made.
The annual coupon payment is $85 ($1,000 × 8.5%). To find the bond price, the bond price formula is used, which includes the bond's annual coupon payment and its yield to maturity. The bond price is calculated to be $884.32.
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