The LM curve represents the combinations of interest rates and real national incomes at which the demand for money equals the money supply.
It is derived by the relationship between the interest rate and national income. It can be derived from the equations;M = P * YL (P stands for price level, YL stands for liquidity, M stands for the supply of real money, real money supply)Md / P = kY - hr (Md is the demand for real money balances, k is the sensitivity of the real money demand with respect to income, h is the sensitivity of real money demand with respect to)The LM curve equation is Y = h / (1 / k) r where r is the interest rate and Y is the real national income.In the given q interest ratesuestion, the equation that represents the LM curve is OY=15r-400.
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The current price of a stock is $49 38. If dividends are expected to be $1.00 per share for the next five years, and the required retum is 9%, then what should the price of the stock be in 5 years when you plan to sell it? The price 5 years from now will be ____$ (Round your response to the nearest dollar) If the dividend and required return remain the jame, and the stock price is expected to increase by $1 five years from now does the current stock price also increase by $17 A. Yes, the current stock price will increase by $1 because the current stock price should not be discounted by the required return B. No, the current stock price will not increase by $1 because the future stock price is discounted by the required return. C. The answer is uncertain as stock prices can be very unpredictable
The price 5 years from now will be $45. If the dividend and required return remain the jame, and the stock price is expected to increase by $1 five years from now does the current stock price also increase by $17 B. No, the current stock price will not increase by $1 because the future stock price is discounted by the required return.
Present value (PV) of the stock can be calculated as follows:
P0 = D1 / (1 + r)1 + D2 / (1 + r)2 + ... D5 / (1 + r)5 + P5 / (1 + r)5
Where, D1 = Dividend in year 1
D2 = Dividend in year 2
D5 = Dividend in year 5
P5 = Price of stock in year 5
Substituting the values in the above formula we get,
P0 = 1 / (1 + 0.09)1 + 1 / (1 + 0.09)2 + ... + 1 / (1 + 0.09)5 + P5 / (1 + 0.09)5P0 = [1 / (1 - 1 / (1 + 0.09)5)] + P5 / (1 + 0.09)5P0 = $4.07 + P5 / (1.09)5
Substituting the given values, we get: $49.38 = $4.07 + P5 / (1.09)5$45.31 = P5
Therefore, the price of the stock in 5 years will be $45 (rounded to the nearest dollar).
Now, we need to check if the current stock price will also increase by $1 because the future stock price is expected to increase by $1. No, the current stock price will not increase by $1 because the future stock price is discounted by the required return, which is 9%.
So, option (B) No, the current stock price will not increase by $1 because the future stock price is discounted by the required return is the correct answer.
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PHAUCH insurance aims to achieve market leadership in the insurance industry by providing
excellent service delivery and superior customer experience for
its customers and generating profits by means of customer satisfaction. Demonstrate in your
report to Management how PHAUCH insurance can formulate a set of marketing tools to
pursue its marketing objectives in the target market.
These marketing tools can include segmentation, targeting, positioning, product development, pricing strategies, promotion, and customer relationship management.
To achieve market leadership, PHAUCH Insurance can employ various marketing tools. Firstly, they can utilize segmentation to identify specific target markets based on demographics, psychographics, or other relevant factors. This allows them to tailor their marketing efforts and services to the needs and preferences of different customer groups.
After segmentation, PHAUCH Insurance can then focus on targeting and selecting the most attractive market segments where they can effectively compete and capture a significant market share. This involves identifying potential customers who are likely to benefit from their services and align with their marketing objectives.
Positioning is another crucial marketing tool for PHAUCH Insurance. They can position themselves as a provider of excellent service delivery and superior customer experience by highlighting their unique selling bids, such as personalized insurance solutions, prompt claims processing, and efficient customer support.
In terms of pricing strategies, PHAUCH Insurance can adopt competitive pricing, offering affordable premiums while ensuring profitability. They can also consider value-based pricing, where they emphasize the quality of their services and superior customer experience to justify premium pricing.
Promotion plays a vital role in building awareness and generating customer interest. PHAUCH Insurance can utilize various promotional tools such as advertising, digital marketing, social media campaigns, and public relations to create a strong brand presence, communicate its value proposition, and attract potential customers.
Finally, customer relationship management (CRM) is crucial for fostering long-term customer loyalty and satisfaction. PHAUCH Insurance can implement CRM strategies by maintaining regular communication with customers, providing personalized service, and promptly addressing their queries or concerns.
By effectively employing these marketing tools, PHAUCH Insurance can enhance its market position, attract and retain customers, and achieve its marketing objectives of market leadership, excellent service delivery, superior customer experience, and profitability through customer satisfaction.
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If you deposit money today in an account that pays 4.5% annual interest, how long will it take to double your money? Round your answer to two decimal places.
It will take approximately 15.92 years to double your money in an account with a 4.5% annual interest rate.
To calculate the time it takes to double your money, we can use the rule of 72, which states that the approximate time to double your investment can be found by dividing 72 by the annual interest rate.
Using this rule, we can calculate the time as follows:
Time to double = 72 / interest rate
In this case, the interest rate is 4.5%. Substituting the value into the formula, we get:
Time to double = 72 / 4.5
Time to double ≈ 15.92 years
Therefore, it will take approximately 15.92 years to double your money in an account with a 4.5% annual interest rate. It's important to note that this is an approximation, and the actual time may vary depending on compounding frequency and other factors.
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Current Attempt in Progress Sunland Company has invested $3,480,000 in assets to produce 11,600 units of its finished product, Sunland's budget for the year is as follows: net income, 5522,000; variable costs, $2,784,000: fixed costs, $116,000. Compute each of the following: (Round answers to 1 decimal place, es 15.2%) 1. Budgeted ROI % 2. Markup percentage using the total cost approach % Save for Later Attempts: 0 of 1 used
Sunland Company has invested $3,480,000 in assets to produce 11,600 units of its finished product. Sunland's budget for the year includes the following: net income of $552,000, variable costs of $2,784,000, and fixed costs of $116,000. To compute for each of the following, refer to the solution below:Budgeted ROI%:Budgeted ROI% is calculated as (Net Income / Total Investment) x 100.
Sunland Company has invested $3,480,000 in assets to produce 11,600 units of its finished product. Sunland's budget for the year includes the following: net income of $552,000, variable costs of $2,784,000, and fixed costs of $116,000. To compute for each of the following, refer to the solution below:Budgeted ROI%:Budgeted ROI% is calculated as (Net Income / Total Investment) x 100.To calculate the total investment, we add the total fixed cost and total variable cost. Total variable cost is calculated as the product of the number of units produced and the cost of producing each unit.Using the above formula, the budgeted ROI% is:Total Variable Cost = Number of Units Produced x Cost per unit = 11,600 x $240 = $2,784,000Total Investment = Total Fixed Cost + Total Variable Cost = $116,000 + $2,784,000 = $2,900,000Budgeted ROI% = (Net Income / Total Investment) x 100 = ($552,000 / $2,900,000) x 100 = 19.0%Markup percentage using the total cost approach%:The markup percentage using the total cost approach is calculated as (Total Cost / Cost of Goods Sold) x 100.Using the above formula, the markup percentage using the total cost approach% is:Total Cost = Total Variable Cost + Total Fixed Cost = $2,784,000 + $116,000 = $2,900,000Cost of Goods Sold = Total Variable CostMarkup percentage using the total cost approach% = (Total Cost / Cost of Goods Sold) x 100= ($2,900,000 / $2,784,000) x 100= 104.2%Therefore, the Budgeted ROI % is 19.0% and the Markup percentage using the total cost approach % is 104.2%.
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A 20-year bond was issued 5 years ago for RM900, and coupon rate is 5% annually. The current market price of the bond is RM850. Question: - Determine cost of debt at the time of issuance. ___% - Determine the current cost of debt. ___%
A 20-year bond was issued 5 years ago for RM900, and coupon rate is 5% annually. The current market price of the bond is RM850. Question: - Determine cost of debt at the time of issuance. 4.44 % - Determine the current cost of debt. 6.35%
Determine cost of debt at the time of issuance and current cost of debt.At the time of issuance, the cost of debt can be calculated using the following formula:
Cost of Debt = (Coupon Payment + ((Face Value - Current Market Price) / Years to Maturity)) / ((Face Value + Current Market Price) / 2)
Where,Coupon Payment = 5% of RM900 = RM45
Face Value = RM900
Current Market Price = RM900
Years to Maturity = 20 - 5 = 15
Cost of Debt = (45 + ((900 - 900) / 15)) / ((900 + 900) / 2)= 4.44%
Therefore, the cost of debt at the time of issuance is 4.44%.
The current cost of debt can be calculated using the following formula:
Current Cost of Debt = (Coupon Payment + ((Face Value - Current Market Price) / Years to Maturity)) / ((Face Value + Current Market Price) / 2)
Where,Coupon Payment = 5% of RM900 = RM45
Face Value = RM900Current Market Price = RM850
Years to Maturity = 20 - 5 = 15
Current Cost of Debt = (45 + ((900 - 850) / 15)) / ((900 + 850) / 2)= 6.35%
Therefore, the current cost of debt is 6.35%.
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Answer With Proper Explanation.-
Which of the following is not a characteristic of an efficient market?
Select one:
a) information is rapidly reflected in market prices
b) prices vary for a single asset or commodity as a result of differences in people's willingness to pay c) markets that function with a minimum of waste or excessive trading costs
d) the market has a large number of buyers and sellers
e) prices reflect the intrinsic value of an asset
Prices vary for a single asset or commodity as a result of differences in people's willingness to pay is not a characteristic of an efficient market. The correct answer is option b.
An efficient market is a market where all available information is rapidly reflected in market prices, meaning that it is impossible for anyone to make a profit by using information that is already available to the public. This means that there are no undervalued or overvalued securities, as prices always reflect the intrinsic value of an asset.
Furthermore, an efficient market is characterized by low transaction costs and a large number of buyers and sellers, which ensures that market prices are set by the forces of supply and demand. This eliminates the possibility of market manipulation or insider trading, as all market participants have equal access to information.
Finally, it is important to note that in an efficient market, prices are not determined by differences in people's willingness to pay. Rather, they are determined solely by the forces of supply and demand. This means that a good or service that is in high demand will be priced higher than one that is not, regardless of how much an individual is willing to pay.
Therefore, prices that vary for a single asset or commodity as a result of differences in people's willingness to pay is not a characteristic of an efficient market. The correct answer is option b.
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DON During a meeting we had at your department, you we had to add to your project's scope of work. You remember that the project on the Portal Management tanti aperty and see previous ming. What do you do? Request further guidance from the Portfolio Management Board El the contend time the change will make O Add the worst can be accommodated within the listing budget Tell your dead that the work can be
The Portfolio Management Board will review the change request, assess its impact on the project, and approve or reject it based on their review. This will enable you to move forward with the change while ensuring that it is in line with the organization's overall goals and objectives.
You can also request a review of the change by your project sponsor or stakeholders to ensure that they are fully aware of the proposed changes. The next step is to evaluate the change's time requirements. You can add the worst-case time required to the project's timeline, ensuring that it can be accommodated within the given budget. If the time or budget constraints do not allow the change to be implemented, it will need to be re-evaluated.Finally, you should communicate the change to your team and explain the impact it will have on the project. This will allow them to adjust their plans and workloads accordingly.
If there are any concerns or questions about the change, you should be available to answer them and address any concerns they may have.In summary, when adding to the project's scope of work, you must follow a change request process that includes seeking guidance from the Portfolio Management Board, assessing the change's impact on the project, evaluating the time requirements, and communicating the change to your team.
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To complete this report, you will need to prepare the following project planning information:
Project Summary which is the first and most important part of your project proposal, capture the attention of your readers and make a compelling point. Think of it as the elevator pitch for your project and focus on describing what success would look like. Here are some guiding questions to help you get started:
What problem does your project aim to solve?
Why is it important to solve it?
How will it help solve it?
Project Background in which you explain more detail about the problem you are solving and elaborating why the internal and external stakeholders should care about this project and back your claims with relevant references and statistics. Here are some guiding questions to help you get sorted out the project background:
What is the history of the problem? How long has it existed?
How is solving it related to the business goals of your organization?
Who my project stakeholder are like and what are their interests?
Explain your project’s Scope in which you explain more detail about the project goals and SMART objectives and elaborating what the project outcome, outputs and main activities and back your claims with relevant references and statistics. Here are some guiding questions to help you get started:
How will you solve the problem you described?
Why will the proposed solution be effective?
Why is the proposed solution better than alternatives?
What would it take to make it happen?
Project Plan also known as a project management plan that outlines the process you will use to manage the project according to scope to meet its stated SMART objectives. The purpose of a project plan is to map out the steps and resources it will take to complete a project on time and budget and back your claims with relevant references and statistics. Here are some guiding questions to help you get started:
How will you ensure that you do not have overly optimistic notions of what the project can accomplish in one, two, or three years, or of its effects on the world, will only detract from the proposal's chances of being approved?
How can I include my Project Team Organisational Chart?
How can I create my Project Network Diagram (Tasks, Critical Path, and Resources)?
How can I create my Project Gantt Chart?
How do I prepare my Project Cost Summary?
How do I conduct my Project Risk Analysis (Including external factors and assumptions)?
What sort of Implementation Arrangements are in place for my project?
How do I conduct my Project Tracking and Progress Reporting?
Conclusion where you tie it all together, share your experience of the project success and make some recommendations for future improvements
The topic of the report is to help the people that were hit by the floods. So, the goveronment helps in helping those people. I made up with the proposal of building a library in Lismore. I need guidelines to accomplish my report according to the project management. Thank a lot, in advance!
The proposed project aims to address the issue of people affected by floods in Lismore by constructing a library. This report will provide project planning information, including a project summary, project background, project scope, project plan, and conclusion.
The project summary will highlight the problem the project aims to solve, its importance, and how it will help solve it. The project background will provide details on the history of the problem, its relation to the organization's goals, and the stakeholders involved.
The project scope will outline the goals, objectives, and proposed solution, along with its advantages. The project plan will detail the management process, resources, timeline, cost, risk analysis, and implementation arrangements.
Finally, the conclusion will summarize the report, share project success experiences, and offer recommendations for future improvements.
In the project summary section, you will need to capture the attention of readers by describing the problem your project aims to solve, which in this case is helping people affected by floods in Lismore. Explain why it is important to address this problem, emphasizing the impact it has on the affected individuals and the community as a whole. Elaborate on how the proposed library will contribute to solving this problem, such as providing a safe space, educational resources, and community support.
Moving on to the project background, provide a more detailed account of the problem and its historical context. Highlight how long this issue has persisted in the area and the challenges faced by the affected population.
Additionally, explain how addressing this problem aligns with the business goals of the organization, emphasizing the social responsibility and positive community impact. Identify the stakeholders involved in the project, such as local residents, community leaders, government officials, and organizations with a vested interest in the well-being of Lismore. Discuss their interests and how their support is crucial for the success of the project.
The project scope section should outline the specific goals and objectives of the proposed library project. Describe the expected outcomes and outputs, such as increased access to educational resources, enhanced community engagement, and improved resilience against future floods.
Emphasize the advantages of the proposed solution over alternatives, showcasing the long-term benefits it offers to the affected population and the community at large. Support your claims with relevant references and statistics, such as studies on the positive impact of libraries in similar situations or testimonials from communities that have benefited from similar initiatives. Discuss the resources, both human and material, required to bring the project to fruition and make it sustainable.
The project plan is a crucial part of project management and should detail the steps, processes, and resources necessary to complete the project on time and within the budget. Address the question of ensuring realistic expectations by acknowledging potential challenges and limitations, while also highlighting the project's feasibility and viability. Include a Project Team Organizational Chart to illustrate the roles and responsibilities of team members.
Create a Project Network Diagram that outlines the tasks, critical path, and required resources for each phase of the project. Additionally, develop a Project Gantt Chart that provides a visual representation of the project timeline, milestones, and dependencies. Prepare a Project Cost Summary, detailing the estimated budget, funding sources, and cost management strategies. Conduct a thorough Project Risk Analysis, considering both internal and external factors that may impact the project's success, and outline contingency plans.
Finally, describe the implementation arrangements, including coordination with relevant stakeholders, community engagement strategies, and any necessary permits or approvals.
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Suppose that legalizing the use of marijuana would decrease its price by 76 percent. If the price elasticity marijuana? percent Enter a numeric response using unded to two decimal places) would be the percentage is in 1 quarsity of majuana demanded thom iegang Suppose instead that the price elasticity of demand for majuana is 0.34 What would be the percentage increase in the quantity of marijuana demanded from legating mana? percent enter your response munded to deal place The higher the absolute value of demand for the increase in majuana u would result from legation se its price by 76 percent. If the price elasticity of demand for mar a real number rounded to two decimal places.) rijuana is -0.34. What would be the percentage increase in the qua and for marijuana, the the increase in marijuana use that less greater
The percentage increase in the quantity of marijuana demanded from legalizing its use would depend on the price elasticity of demand for marijuana.
If the price elasticity of demand for marijuana is known, it can be used to determine the percentage increase in the quantity of marijuana demanded after legalizing its use. A higher absolute value of the price elasticity of demand indicates a more responsive demand to price changes. For example, if the price elasticity of demand is -0.34, it suggests that a 1% decrease in price would result in a 0.34% increase in the quantity of marijuana demanded.
To accurately determine the percentage increase in the quantity of marijuana demanded from legalizing its use, the specific price elasticity of demand value is required. The price elasticity of demand reflects the responsiveness of consumers to price changes, and a higher absolute value suggests a greater impact on the quantity demanded.
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Question No. 2 [3+8+4] a) Explain the differences in information and task processing across culture. How do these differences affect companies in managing international environment? Are there any basic differences between Japanese and American work cultures particularly in relation to human resources management practices? Explain what Bangladesh can learn from such culture and practices. P/Ethno/Crea centrism Discuss the three types of cultural orientations of home country companies and managers that determine the degree of adaptability in foreign culture?
a) Information and task processing across cultures can differ in terms of how information is perceived, processed, and used.
For example, some cultures may place a greater emphasis on intuition and experience when making decisions, while others may place a greater emphasis on rational analysis and data.
These differences in information processing can affect companies in managing an international environment by requiring them to adapt their decision-making processes and communication strategies to different cultural contexts. For example, a company that is used to relying heavily on data and analysis may need to be more flexible and open to intuition and experience in a culture that places less emphasis on data.
There are also basic differences between Japanese and American work cultures, particularly in relation to human resources management practices. For example, Japanese culture tends to prioritize harmony and consensus-building, while American culture tends to prioritize individualism and competition. This can lead to differences in practices such as performance evaluations, compensation, and training and development.
Bangladesh can learn from both Japanese and American work cultures and practices in terms of human resources management. For example, it can learn from Japan's emphasis on employee training and development, as well as its focus on building strong relationships between employees and management. It can also learn from America's emphasis on individualism and merit-based compensation, as well as its focus on continuous learning and development.
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A put option on a stock with a current price of $36 has an exercise price of $38. The price of the corresponding call option is $2.70. According to put-call parity, if the effective annual risk-free rate of interest is 6% and there are four months until expiration, what should be the value of the put? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Value of the put $ =
The value of the put option is $3.24. Put-call parity defines the relationship between the put option and call option prices on the same underlying asset.
This concept is based on the idea of arbitrage, where traders will attempt to profit from any discrepancies in the market that can be exploited. By buying a put option and selling a call option at the same time, investors can potentially profit from this arbitrage opportunity.Put-call parity formula is given as:Put price + PV(exercise price) = Call price + Stock priceLet us now compute the present value (PV) of the exercise price.PV(exercise price) = Exercise price x e^(-r x T)
Where, r = annual risk-free rate of interest = 6% T = time to expiration in years = 4/12=1/3 yearsPV(exercise price) = 38 x e^(-0.06 x 1/3) = $36.573Now, we can apply the put-call parity formula to find the value of the put price.Put price + PV(exercise price) = Call price + Stock pricePut price + $36.573 = $2.70 + $36Put price = $2.70 + $36 - $36.573Put price = $2.126Now, we will compute the value of the put option using the formula given below:Value of the put option = Put price x Number of shares per option contract x MultiplierValue of the put option = $2.126 x 100 x 1 = $212.6 ≈ $3.24Therefore, the value of the put option is $3.24.
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Choose the best answer. In the supply chain, responsive/agile:
a) Sequence of organizations—their facilities and activities—that are involved in producing and delivering a product.
b) A flexible supply chain that has the ability to quickly respond to changes.
c) Focus on eliminating non-value-added activities to create an efficient, low-cost supply chain.
d) Using nearby suppliers shortens the supply chain, reducing transportation time and cost.
e) Collaboration of supply chain companies and coordination of their activities so that market demand is met as efficiently and effectively as possible.
The best answer is b) A flexible supply chain that has the ability to quickly respond to changes.
The term "responsive/agile" in the context of the supply chain refers to the ability of a supply chain to adapt and respond quickly to changes in customer demands, market conditions, or other external factors. It involves being flexible, nimble, and proactive in addressing changes and disruptions. A responsive/agile supply chain focuses on minimizing lead times, improving responsiveness, and being able to efficiently handle changes in production volumes or product variations. This approach enables companies to meet customer needs more effectively and gain a competitive advantage in dynamic and fast-paced markets.
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The current SOFRs for 3-month, 6-month and 9-month are 10.96%,
11.25% and 11.45%, respectively. What is annualized swap rate for
the 9-month interest rate
swap? %
The current SOFRs for 3 months, 6 months, and 9 months are 10.96%, 11.25%, and 11.45%, respectively. The annualized swap rate for the 9-month interest rate swap is 14.96%.
The annualized swap rate is the interest rate used to calculate the fixed payments in an interest rate swap. It represents the average annual rate over the duration of the swap contract.
To find the annualized swap rate for the 9-month interest rate swap, we need to first calculate the average rate for the 9-month period.
Average rate = (10.96% + 11.25% + 11.45%) / 3= 33.66% / 3= 11.22%
Now, we have to annualize the average rate of the 9-month period.
Annualized swap rate for the 9-month interest rate swap= Average rate x (12 / number of months in the rating period)
= 11.22% x (12 / 9) = 14.96%
Therefore, the annualized swap rate for the 9-month interest rate swap is 14.96%. Thus, the required percentage is 14.96%.
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Evaluate the implementation and control.
Implementation and control involves the process of ensuring that the strategy is executed according to the plan. Control is the management activity that involves the measurement of performance and taking corrective action if required.
Implementation is the process of putting into action the organization’s strategies that are formulated at different levels of management. Implementation of strategy involves the entire organization and its functional areas including operations, marketing, finance, accounting, and human resources.
Control, on the other hand, involves activities that ensure that the performance of the organization is as per the established standards. Control is a feedback mechanism that helps in determining the progress of the organization. It ensures that the plans and strategies are being implemented as per the design.
In conclusion, implementation and control play an essential role in the strategic management process. Successful implementation and control help in achieving the organization’s goals and objectives and ultimately help the company attain a competitive advantage.
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Which of the following is true of strategic planning in a firm? Strategic planning deals with adapting the firm to take advantage of opportunities in its changing environment.
The following statement is true of strategic planning in a firm a strategic planning deals with adapting the firm to take advantage of opportunities in its changing environment.
Strategic planning is a methodical approach to defining what a business does, determining where it is heading, and developing an effective action plan to achieve its goals. Strategic planning is crucial because it directs and guides the entire firm's direction and decision-making. By developing a strategy, a firm defines its course, providing a framework for decision-making, and helping to optimize resources to achieve its objectives.
A strategic plan's key focus is on how the firm will attain its objectives, not on what it will do. The strategic plan identifies the firm's top priorities and aligns it with achievable objectives. The strategy defines how a company can create a unique value proposition for its customers by optimizing its operations, creating a competitive edge, and developing a long-term sustainable business model.
Strategic planning is vital to a firm for several reasons, some of which include:Helps in identifying what the firm does well and where there is room for improvementAssists in prioritizing initiatives and ensuring that resources are allocated efficiently and effectivelyHelps in preparing for potential disruptions and challenges and opportunities in the business environmentActs as a communication tool for the firm to its stakeholders, including customers, employees, and investorsProvide a long-term roadmap to achieving the firm's vision and goals, making it easier to track performance and progress over time.
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Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 103 percent of face value (Face value =$100). The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company’s pretax cost of debt? If the tax rate is 21 percent, what is the after tax cost of debt?
The pretax cost of debt for Viserion, Inc. is approximately 8.913%, and the after-tax cost of debt for Viserion, Inc. is approximately 7.015%.
To calculate pretax cost of debt, we will use the following formula;
Pretax Cost of Debt = (Coupon Payment / Bond Price) + Embedded Cost
Given;
Face value of the bond = $100
Quoted bond price = 103% of face value = $103
Embedded cost = 6% annually
Bond maturity = 23 years
Since the bond makes semiannual payments, the coupon payment can be calculated as half of the embedded cost;
Coupon Payment = (Embedded Cost / 2)
Now let's calculate the pretax cost of debt:
Coupon Payment = (6% / 2) = 3%
Pretax Cost of Debt = (3% / $103) + 6% = 0.02913 + 0.06 = 0.08913 or 8.913%
The pretax cost of debt for Viserion, Inc. is approximately 8.913%.
To calculate the after-tax cost of debt, we need to multiply the pretax cost of debt by (1 - Tax Rate):
Tax Rate = 21%
After-tax Cost of Debt = Pretax Cost of Debt × (1 - Tax Rate)
After-tax Cost of Debt = 8.913% × (1 - 0.21) = 8.913% × 0.79 = 0.07015 or 7.015%
The after-tax cost of debt for Viserion, Inc. will be 7.015%.
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More than half of the research of technology created is paid for by
a) corporations.
b) state and local governments.
c) the federal government.
d) large universities.
e) private investors.
More than half of the research of technology created is paid for by the federal government. The correct answer is option (c).
The federal government plays a significant role in funding technology research and development (R&D) through various agencies and programs. This is driven by the government's interest in advancing scientific knowledge, promoting innovation, and addressing societal challenges. The federal government allocates substantial funds to research grants, contracts, and cooperative agreements, supporting both basic and applied research across various fields, including technology.
While corporations, state and local governments, large universities, and private investors also contribute to technology research funding, the scale and magnitude of investment from the federal government tend to be the largest. Federal funding provides a crucial foundation for technological advancements and breakthroughs, fostering collaboration between academia, industry, and government agencies. Hence, option (c) is the correct answer.
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Frigo-Trans AG would like to take out an annuity loan with its house bank with the fol- lowing conditions: Nominal amount of the loan: 40,000,000 euros Term: 8 years Nominal interest rate: 5% p.a. a) From the point of view of Frigo-Trans AG, determine the annuity to be paid annu- ally as well as the accruing interest and redemption obligations for the first two years. b) Alternatively, Frigo-Trans AG could also take out an amortizing loans loan. Explain its advantages and disadvantages in comparison with an annuity loan c) Describe the collateral transfer by way of security. What is the problem with this type of collateral and what is suitable as collateral?
Collateral transfer by way of security involves providing assets or guarantees to secure the loan. The problem with collateral transfer is that if the borrower defaults on the loan, the lender can seize and sell the collateral to recover their funds.
However, not all assets are suitable as collateral. Suitable collateral should have sufficient value, be easily transferable, and have a stable market. a) To determine the annuity payment and the interest and principal obligations for the first two years, we can use the annuity loan formula:
Annuity Payment = Loan Amount / Present Value Factor
The present value factor can be calculated using the formula: Present Value Factor = (1 - (1 + interest rate)^(-term)) / interest rate
For Frigo-Trans AG, the nominal loan amount is 40,000,000 euros, the term is 8 years, and the nominal interest rate is 5% per year.
Using the formulas, we can calculate the annuity payment for the first two years and the interest and principal obligations: Year 1:
Present Value Factor = (1 - (1 + 0.05)^(-8)) / 0.05 ≈ 6.71008
Annuity Payment = 40,000,000 / 6.71008 ≈ 5,967,447 euros
Interest Obligation (Year 1) = Loan Amount * Interest Rate ≈ 40,000,000 * 0.05 = 2,000,000 euros
Principal Obligation (Year 1) = Annuity Payment - Interest Obligation ≈ 5,967,447 - 2,000,000 = 3,967,447 euros Year 2:
Present Value Factor = (1 - (1 + 0.05)^(-8+1)) / 0.05 ≈ 13.54560
Annuity Payment = 40,000,000 / 13.54560 ≈ 2,951,736 euros
Interest Obligation (Year 2) = Loan Amount * Interest Rate ≈ 40,000,000 * 0.05 = 2,000,000 euros
Principal Obligation (Year 2) = Annuity Payment - Interest Obligation ≈ 2,951,736 - 2,000,000 = 951,736 euros
b) An amortizing loan is a loan in which the principal is gradually paid off over the loan term, resulting in a decreasing loan balance. The advantages of an amortizing loan compared to an annuity loan are:
Equity Building: With each payment, a portion goes towards reducing the principal, resulting in equity accumulation over time.
Total Interest Paid: Generally, the total interest paid over the loan term is lower compared to an annuity loan since the outstanding principal decreases. The disadvantages of an amortizing loan include:
Higher Initial Payments: The initial loan payments are usually higher compared to an annuity loan since both interest and principal are being paid. Cash Flow Impact: The higher initial payments may put more strain on cash flow, particularly in the early years of the loan.
c) Collateral transfer by way of security involves providing assets or guarantees to secure the loan. The problem with collateral transfer is that if the borrower defaults on the loan, the lender can seize and sell the collateral to recover their funds. However, not all assets are suitable as collateral. Suitable collateral should have sufficient value, be easily transferable, and have a stable market.
Examples of suitable collateral may include real estate, machinery, inventory, or financial assets like stocks or bonds. These assets can be sold to recover the outstanding loan balance in case of default. However, it's important to evaluate the specific requirements and preferences of the lender regarding collateral.
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William Blackstone believed a person has a moral right to a thing that permits him to live a human life. This would include nature and the environment. 1. Discuss how pollution violates the justice or fairness that characterizes a competitive free market?
2. Summarised the three pillars of sustainability?
1. Pollution violates the justice or fairness that characterizes a competitive free market because it disrupts the balance between the demand and supply. According to Blackstone's principle of fairness, every person has an equal moral right to use natural resources.
However, when one person or company pollutes a natural resource, it diminishes its value and deprives others of the right to use it. This imbalance violates the principles of competitive free market because the polluter gets an undue advantage over other stakeholders who have to pay for the damages caused by pollution. Moreover, pollution creates negative externalities that impose a cost on society. Since the polluters do not bear the full cost of their actions, it creates an unfair advantage in the market. Therefore, pollution violates the justice or fairness that characterizes a competitive free market. 2. The three pillars of sustainability are economic, social, and environmental sustainability. Economic sustainability is concerned with ensuring that economic growth is sustainable and does not negatively impact the environment or future generations. It focuses on promoting responsible resource use and preventing wasteful practices. Social sustainability is concerned with ensuring that people can live fulfilling and meaningful lives. It focuses on promoting social equality, human rights, and social justice. Environmental sustainability is concerned with protecting the natural environment and ensuring that it can support life for future generations. It focuses on reducing pollution, conserving natural resources, and promoting renewable energy. Together, these three pillars form a framework for sustainable development that can help us achieve a more equitable and sustainable world.
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In ________, employees who are evaluated more highly receive larger or more rapid increments than average or poor performers.
A) a two-tier pay plan
B) automatic progression
C) a union spillover
D) merit progression
The best option that completes the statement "In merit progression, employees who are evaluated more highly receive larger or more rapid increments than average or poor performers.
"The performance evaluation method is used to determine merit pay in the workplace. The determination of merit pay is made through the merit progression method.
Merit progression is defined as a salary structure that rewards performance, abilities, and skills. Merit progression programs are designed to identify and reward high-performing employees by providing them with larger or faster pay raises than low-performing employees.
In the merit progression system, merit increases are awarded based on individual performance evaluations that are conducted annually or biannually. This is why it's said that in merit progression, employees who are evaluated more highly receive larger or more rapid increments than average or poor performers.
The merit progression system's primary goal is to reward employees who perform well by providing them with larger pay increases, which encourages them to continue performing well.
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What is the responsibility of Western countries toward the
economic development of developing countries?
The responsibility of Western countries towards the economic development of developing countries is to help the developing countries to have better economic development by providing them with various types of support.
Developing countries refer to the nations with a low standard of living, low levels of income, high poverty rates, and minimal industrialization. Western countries, on the other hand, are the developed countries of the world that have high industrialization levels and are economically stable.
Aid and support from Western countries can play a critical role in the development of developing countries. They are responsible for providing financial assistance, food, medical aid, education, technical expertise, and business opportunities. Additionally, the West is also responsible for eradicating the debt of developing nations in order to offer them a fair chance of developing.
Thus, Western countries have a significant role to play in ensuring the economic development of developing countries. Western countries have recognized the importance of assisting developing countries to achieve economic growth. Therefore, they have established various organizations and agreements that help them to provide support to these nations.
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Under what condition is the economy experiencing neither a contraction, nor an expansion? a output = expenditure b leakages = injections c both a and b
d none of the above
The condition under which the economy is experiencing neither a contraction nor an expansion is option c) both a) output = expenditure and b) leakages = injections.
In macroeconomics, the equilibrium level of output in an economy is determined by the equality of total output (production) and total expenditure (spending). When output equals expenditure, it indicates that the economy is in a state of equilibrium and experiencing neither a contraction (output below potential) nor an expansion (output above potential).
Additionally, leakages and injections refer to the flow of income in the economy. Leakages are savings, taxes, and imports that reduce the flow of income, while injections are investments, government spending, and exports that increase the flow of income. When leakages equal injections, it ensures that the economy is in equilibrium without contraction or expansion.
Therefore, both conditions a) output = expenditure and b) leakages = injections are necessary for the economy to be in a state of neither contraction nor expansion.
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"
1) Bonnie and Clyde have a partnership agreement which includes the following provisions regarding sharing net income or net loss: 1. A salary allowance of $45,000 to Bonnie and $25,000 to Clyde. 2). An interest allowance of 10% 3)the remainder to be divided 50% to bonnie and 50% to clyde a)calculate the net income B)enter them journal
"
To calculate net income consider the formula, Total revenue less total expenses equals net income. The steps are broken down as follows:
Calculate the total revenue by adding up all the money the company has made over a certain time period. This can include income from sales, service charges, interest, rentals, or any other kinds of income.
Calculate Total Expenses: List all of the costs the company incurred in the same time period and add them all up. payments of goods supplied, salaries and wages, rent, utilities, advertising, taxes, interest payments, depreciation, and any other expenditures associated with running a business are examples of expenses.
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Janice Carlson had always seen herself as an ethical person. She took pride in always telling the truth, even when doing so was uncomfortable. She also insisted that those she supervised at Comstock Engineering Company (CEC) do the same. Carlson frequently admonished her employees to be "straight" with her. She was fond of saying, "I can accept mistakes. They happen. I can even overlook an occasional bad day. But I will not put up with lying." Close friends knew that Carlson’s distaste for lying grew out of an unhappy marriage she had endured for years with a husband who lied to her as a matter of course. When she could take her husband’s dishonesty no more, Carlson had filed for divorce.
Janice Carlson, an ethical person, always told the truth, even when it was uncomfortable. She encouraged her employees at Comstock Engineering Company (CEC) to do the same.
Her refusal to tolerate lying stemmed from her experience in an unhappy marriage where her husband lied to her regularly. Carlson filed for divorce when she could no longer tolerate her husband's dishonesty.Janice Carlson was an ethical person who held the truth in high regard.
She prided herself on always being honest and encouraging others to do the same. She was very strict with her employees at the Comstock Engineering Company (CEC), admonishing them to be honest and not to lie to her under any circumstances.
Carlson’s view on truth and honesty grew out of a difficult marriage, where she had a husband who regularly lied to her. Carlson filed for divorce when she could no longer put up with her husband’s dishonesty.
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4i) Baseline: If nominal GDP is 1500 and the money
supply is 400, what is velocity?
• 4i) Scenario 1: If nominal GDP now rises to 1600, but
the money supply does not change, how has velocity
changed?
• 4ili) Scenario 2: If nominal GDP now falls back to 1500
and the money supply falls to 350, what is velocity?
• Note: Nominal GDP = P × Y, & Money Supply = M
• QTM Equation M x V = P x Y F
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Q.-02 A company is considering an investment proposal to install new milling machine. The project will cost Rs.50,000. The facility has a life expectancy of 5 years and no salvage value. The company tax rate is 40%. Firm uses straight-line method for depreciation. The estimated earning before tax from the proposed investment plan are as under. Year Earning before tax 1 Rs. 22,000 2 18,000 3 14,000 4 15,000 5 25,000
Compute cash flow for 5 years. Calculate: 1. Payback period 2. Profitability Index 3. IRR 4. NPV( discount rate is 15%)
To compute the cash flows for the 5 years, we need to consider the earnings before tax (EBT) and the tax rate. The cash flow is calculated as EBT minus the tax amount.
Year 1:
Cash flow = EBT - (EBT * tax rate)
Cash flow = Rs. 22,000 - (Rs. 22,000 * 0.4) = Rs. 13,200
Year 2:
Cash flow = EBT - (EBT * tax rate)
Cash flow = Rs. 18,000 - (Rs. 18,000 * 0.4) = Rs. 10,800
Year 3:
Cash flow = EBT - (EBT * tax rate)
Cash flow = Rs. 14,000 - (Rs. 14,000 * 0.4) = Rs. 8,400
Year 4:
Cash flow = EBT - (EBT * tax rate)
Cash flow = Rs. 15,000 - (Rs. 15,000 * 0.4) = Rs. 9,000
Year 5:
Cash flow = EBT - (EBT * tax rate)
Cash flow = Rs. 25,000 - (Rs. 25,000 * 0.4) = Rs. 15,000
Now let's calculate the requested financial metrics:
Payback period:
The payback period is the time it takes for the initial investment to be recovered. We sum the cash flows until the cumulative cash flow becomes equal to or greater than the initial investment of Rs. 50,000.
Payback period = 3 years (Rs. 13,200 + Rs. 10,800 + Rs. 8,400 = Rs. 32,400)
Profitability Index:
The profitability index is calculated by dividing the present value of the cash inflows by the initial investment.
Profitability Index = Present value of cash inflows / Initial investment
IRR:
IRR (Internal Rate of Return) is the discount rate that makes the present value of cash inflows equal to the initial investment. We calculate it using trial and error or financial software.
NPV (Net Present Value):
NPV is calculated by discounting the cash flows at a specified discount rate and subtracting the initial investment.
NPV = Sum of (Cash flow / (1 + discount rate)^n) - Initial investment
For this case, the discount rate is 15%, and we need to calculate the NPV using the cash flows.
Please provide the discount rate for calculating the profitability index, IRR, and NPV.
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The individualisation of the employment contract and employee desire for improved work-life balance has driven the need for HR to become increasingly creative in terms of the development of pay and rewards packages. Discuss this statement with reference to theory and practice. Use examples to support your answer
The individualization of employment contracts and the growing demand for work-life balance have compelled HR departments to adopt more innovative approaches in designing pay and rewards packages.
The traditional "one size fits all" approach to pay and rewards packages is becoming outdated as employees seek greater flexibility and a better work-life balance. This shift can be attributed to several factors, including demographic changes, evolving societal expectations, and the recognition of the importance of employee well-being.
In response to this trend, HR departments have been driven to develop more creative strategies in pay and rewards package design. This entails considering individualized components such as flexible working arrangements, remote work options, and personalized benefits packages that cater to the unique needs of employees.
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Cooling Tools, Inc. is currently producing 782 of small refrigerators per month but the company’s CEO plans to increase production at a rate of 6.64 percent per month until the firm is producing 5,379 of refrigerators per month. How many months will this take?
Round the answer to two decimal places.
It will take about 32.94 months for Cooling Tools, Inc. to achieve its target production of 5,379 refrigerators per month.
The given data in the problem is :The current production of small refrigerators per month = 782.The planned production rate increase per month = 6.64%. The target production of small refrigerators per month = 5,379.
We can use the formula for exponential growth which is given below: y = a(1 + r)^t wherey = the target amounta = the initial amountr = the rate of growth/decayt = the time (in months, years, etc.)First, we need to determine the rate of growth in decimal form.r = 6.64% = 6.64/100 = 0.0664.
Now, we can substitute the given data into the formula and solve for t.5379 = 782(1 + 0.0664)^tt = log(5379/782) / log(1.0664)t = 32.94.The answer is rounded off to two decimal places. Hence, it will take about 32.94 months for Cooling Tools, Inc. to achieve its target production of 5,379 refrigerators per month.
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Andy contracts with Yvonne to produce an advertisement for a Fourth-of-July fundraising party. Yvonne does not produce the advertisement until July 6. Here, Yvonne's breach of the contract is a __________ breach.
Please choose the best answer
isolated
irrevocable
material
minor
Yvonne's breach of the contract by producing the advertisement after July 4 is likely considered a material breach.
A material breach refers to a substantial violation of the terms of the contract that goes to the core of the agreement. In this case, the Fourth-of-July fundraising party had a specific date, and Yvonne's failure to produce the advertisement until July 6 undermines the purpose and essence of the contract. It can be seen as a significant deviation from the agreed-upon terms and can have a substantial impact on the party's success and the value of the contract.
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Chapter 12
Financial Planning Exercise 1
Ranking investments by expected returns
What makes for a good investment? Use the approximate yield formula or a financial calculator to rank the following investments according to their expected returns. Round the answers to two decimal places. Do not round intermediate calculations.
Buy a stock for $50 a share, hold it for 3 years, then sell it for $80 a share (the stock pays annual dividends of $3 a share).
______%
Buy a security for $25, hold it for 2 years, then sell it for $65 (current income on this security is zero). Do not round intermediate calculations.
______ %
Buy a 1-year, 10 percent note for $940 (assume that the note has a $1,000 par value and that it will be held to maturity). Do not round intermediate calculations.
______%
The expected returns of the three investments as per their ranks are as follows:
1. Buy a security for $25, hold it for 2 years, then sell it for $65 (current income on this security is zero): 160%
2. Buy a stock for $50 a share, hold it for 3 years, then sell it for $80 a share (the stock pays annual dividends of $3 a share): 78%
3. Buy a 1-year, 10 percent note for $940 (assume that the note has a $1,000 par value and that it will be held to maturity): 16.38%.
The calculations of the expected returns of investments have been shown below using the given approximate yield formula.
Approximate yield formula: [(Ending price - Beginning price + Income) ÷ Beginning price] × 100
Ranking the investments according to their expected returns:
Buy a stock for $50 a share, hold it for 3 years, then sell it for $80 a share (the stock pays annual dividends of $3 a share).Let's calculate the approximate yield of this stock:
Beginning price = $50 Ending price = $80
Income = $3 x 3 = $9
Approximate yield = [(80 - 50 + 9) / 50] x 100 = 78%
Expected returns of this stock is 78%.
Buy a security for $25, hold it for 2 years, then sell it for $65 (current income on this security is zero).Let's calculate the approximate yield of this security:
Beginning price = $25 Ending price = $65
Income = 0
Approximate yield = [(65 - 25 + 0) / 25] x 100 = 160%
Expected returns of this security is 160%.
Buy a 1-year, 10 percent note for $940 (assume that the note has a $1,000 par value and that it will be held to maturity).Let's calculate the approximate yield of this note:
Beginning price = $940 Ending price = $1,000
Income = $1,000 x 10% x 1 year = $100
Approximate yield = [(1,000 - 940 + 100) / 940] x 100 = 16.38%
Expected returns of this note is 16.38%.
Thus, the ranking will go as:
1. Buy a security for $25, hold it for 2 years, then sell it for $65 (current income on this security is zero): 160%
2. Buy a stock for $50 a share, hold it for 3 years, then sell it for $80 a share (the stock pays annual dividends of $3 a share): 78%
3. Buy a 1-year, 10 percent note for $940 (assume that the note has a $1,000 par value and that it will be held to maturity): 16.38%.
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