Explanation:
If an economy moves from a point on a production possibility frontier line to a point to the right of that production possibility frontier, there must have been a discovery of new technology that might expand production possibilities.
Moving to a point to the right of the production possibility frontier indicates an improvement in the economy's productive capacity.
Explanation:When an economy moves from a point on the production possibility frontier line to a point to the right of that frontier, it indicates an improvement in the economy's productive capacity or resources. This could be due to factors such as technological advancements, an increase in the quantity and quality of resources, or improvements in production efficiency.
For example, if a country invests in research and development to develop new technologies, it may be able to produce more goods and services with the same amount of resources, causing the production possibility frontier to shift to the right.
This event illustrates economic growth and the ability to produce more goods and services than before, which is generally a positive development for an economy.
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An investment that you are considering promises to pay $2000 semiannually for the next two years, beginning six months from now. You have determined that the appropriate opportunity cost (discount rate is 8%, compounded quarterly. What is the value of this investment?
Answer:
The present value is = $7325.48
Explanation:
Step 1: Know the formula for the Present Value of the investment
PV formula = PMT x [1- (1/(1+ r)^n)] /r
Where PMT = Annuity Amount
r = Discount Rate
n= number of years or period
Step 2: fill in the necessary figures for the formula
PMT= $2000
Semi-annually = 2000/2 = 1000
r= 8%, however, compounded quarterly = 8/4 (quarter) = 2% per quarter
n= 2 years... however since it is to be compounded quarterly, 2 x 4(quarterly compounding) = 8
Therefore, Present Value =
The semi- annual PMT, the 2% quarterly rate, the 8 for number of years will be used
PV= 1000 x [1- (1/(1+ 0.02)^8] /0.02
= 1000 x 7.32548
The present value of the investment is = $7325.48
The value of the investment is $3549.28.
Explanation:To calculate the value of the investment, we need to find the present value of each cash flow and sum them up. In this case, the investment promises to pay $2000 semiannually for the next two years, beginning six months from now. The appropriate discount rate is 8%, compounded quarterly.
To find the present value of each cash flow, we can use the formula:
PV = CF / (1 + r/n)^(nt)
Where:
PV = Present Value
CF = Cash Flow
r = Discount Rate
n = Number of times the interest is compounded per year
t = Number of years
Using this formula, the present value of each cash flow can be calculated as follows:
First cash flow: PV = $2000 / (1 + 0.08/4)^(4*0.5) = $1847.91Second cash flow: PV = $2000 / (1 + 0.08/4)^(4*1) = $1701.37The value of the investment, which is the sum of the present values of the cash flows, is $1847.91 + $1701.37 = $3549.28.
Selected data for Lemonâ Grass, Inc. for the year are providedâ below: Factory Utilities $ 2 comma 800 Indirect Materials Used 36 comma 500 Direct Materials Used 303 comma 000 Property Taxes on Factory Building 6 comma 900 Sales Commissions 81 comma 000 Indirect Labor Incurred 20 comma 000 Direct Labor Incurred 149 comma 000 Depreciation on Factory Equipment 5 comma 100 What is the total manufacturingâ overhead?
Answer:
Manufacturing overhead= $152,300
Explanation:
Giving the following information:
Factory Utilities $ 2,800
Indirect Materials Used $36,500
Direct Materials Used $303,000
Property Taxes on Factory Building $6,900
Sales Commissions $81,000
Indirect Labor Incurred $20,000
Direct Labor Incurred $149,000
Depreciation on Factory Equipment $5,100
Manufacturing overhead includes all costs that are involved in the production in general and need to be allocated to each product line.
Manufacturing overhead= Factory Utilities +Indirect Materials Used + Property Taxes on Factory Building + Sales Commissions + Indirect Labor Incurred + Depreciation on Factory Equipment
Manufacturing overhead= 2,800 + 36,500 + 6,900 + 81,000 + 20,000 + 5,100= $152,300
Craig borrowed $700,000 on October 1, 2017 and is required to pay $720,000 on March 1, 2018. What amount is the note payable recorded at on October 1, 2017 and how much interest is recognized from October 1 to December 31, 2017? A) $700,000 and S0. B) $700,000 and $12,000. C) $720,000 and SO. D) $700,000 and $20,000.
Answer:
B) $700,000 and $ 12,000
Explanation:
The note payable is recorded on the borrowing date of October 01 2017 at its face value $ 700,000. The amount due on the maturity of the note on March 01 2018 is 720,000, thus the interest on the note is $ 20,000 for the 5 month period of the borrowing. (October 1 to March 1).
The recognition of the interest for the 3 month period October to December is calculated as under:
Total interest for 5 months $ 20,000
Interest for 3 months $20,000/5*3 = $ 12,000
So the answer is $ 700,000 and $ 12,000
Answer:
B lol have a good day
Explanation:
Borghia Pharmaceuticals has $1 million allocated for capital expenditures. a. Which of the following projects should the company accept to stay within the $1 million budget? b. How much does the budget limit cost the company in terms of its market value? The opportunity cost of capital for each project is 11%. Borghia Pharmaceuticals Investment NPV IRRProject ($ Thousands) ($ Thousands) (%)1 300 66 17.22 200 -4 10.73 250 43 16.64 100 14 12.15 100 7 11.86 350 63 187 400 48 13.5
Answer:
Please refer below the answer in detail
Explanation:
a)
With a limited budget, the firm will first pursue projects with the highest return, and the allocate the remaining capital to the project with the second highest return, and so on until all capital is fully allocated. Based on the information, Project 6 has the highest return, followed by 1 and 3. These three projects together will cost:
350,000 + 300,000 + 250,000 = $900,000
After those three projects, the firm will have $100,000 left. The best out of remaining project is 7, but it costs 400,000, which the firm cannot afford. The best affordable project is 4, which offers a return of 12.1%. Hence, the firm should spend the remaining 100,000 on project 4.
b)
The budget limit constraints the firm to give up project 7, which offers a NPV of $48,000. The firm is forced to choose project 4, which has a NPV of $14,000.
Thus the lost in market value of the firm = 48,000 - 14,000 = $34,000.
The projects that should be accepted are 1, 3, 4, and 6. The budget limit costs the company a loss of $34,000.
What is an investing decision?Investing decision refers to the rational decision regarding an investment based on its profitability and returns.
The investing decisions if taken on the basis of NPV, the project with higher NPV are selected. And on the other hand, if IRR is taken as the base for investing decisions, the projects with higher IRR are preferred.
Based on the above statement, the projects 1,3,6, and 7 give the highest NPV. But the budget is up to $1 million, the decision should be taken rationally.
Hence the projects 1,3, and 6 will be chosen. The total investment in these projects will be $9 million.
The company can invest remaining 1 million in either 4 or 5. The NPV of project 4 is higher therefore it should be taken.
Hence the projects invested are 1,3,4, and 6.
The cost company incurred on investing in project 4 rather in 7 is the opportunity cost.
The loss will be difference in NPV of both the projects that is $34,000.
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The declaration of a cash dividend causes stockholders' equity to decrease but has no immediate effect upon corporate assets.
True/False
Answer:
False
Explanation:
Dividend is the amount of money paid out of a corporation's profit to the shareholders, which serves as return on investment.
Dividends are always paid out of current asset which is cash and such payment decreases the corporation's asset. Since it is paid out of earnings, it also decreases stockholders' equity.
Prepare a balance sheet from the following information. What is the net working capital and debt ratio?
Cash$ 50,000
Accounts receivable 42,700
Accounts payable 23,000
Short-term notes payable 10,500
Inventories 40,000
Gross fixed assets 1,280,000
Other current assets 5,000
Long-term debt 200,000
Common stock 490,000
Other assets 15,000
Accumulated depreciation 312,000
Retained earning ?
Answer:
Net working capital = $104,200
Debt ratio = 0.21
Retained earning = $397,200
Explanation:
The preparation of the balance sheet is presented below:
Assets
Current Assets
Cash$ 50,000
Accounts receivable $42,700
Inventories $40,000
Other current assets $5,000
Total current assets $137,700
Gross fixed assets 1,280,000
Less: Accumulated depreciation -$312,000
Net fixed assets $968,000
Other assets $15,000
Total assets $1,120,700
Liabilities
Current liabilities
Accounts payable $23,000
Short-term notes payable $10,500
Total current liabilities $33,500
Long-term debt 200,000
Total liabilities $233,500
Equity
Common stock 490,000
Retained earning $397,200 (Balancing figure)
Total equity $887,200
Total liabilities and owners equity $1,120,700
The computation is shown below:
Net working capital = Current assets - current liabilities
= $137,700 - $33,500
= $104,200
And, the debt ratio would be
= Total liabilities ÷ Total assets
= $233,500 ÷ $1,120,700
= 0.21
The balance sheet has been prepared with total assets amounting to $1,105,700 and total liabilities amounting to $233,500. The net working capital is calculated as $104,200 and the debt ratio stands at approximately 21.12%.
Explanation:First, we need to prepare the balance sheet. The Current Assets section is composed of Cash ($50,000), Accounts Receivable ($42,700), Inventories ($40,000) and Other Current Assets ($5,000). Adding these values, the total Current Assets is $137,700.
For the Non-Current Assets section, we have Gross Fixed Assets ($1,280,000) and Other Assets ($15,000), which makes the total Non-Current Assets equal to $1,295,000. Deducting Accumulated Depreciation of $312,000 from Gross Fixed Assets yields a Net Fixed Asset of $968,000. Non-Current Assets and Current Assets together add up to $1,105,700 in Total Assets.
The liabilities part consists of Accounts Payable ($23,000) and Short-Term Notes Payable ($10,500) which make up Current Liabilities equal to $33,500. There is also Long-Term Debt of $200,000. Current Liabilities and Long-Term Debt together make up Total Liabilities equal to $233,500.
Net Working Capital (NWC) is calculated by subtracting Current Liabilities from Current Assets, therefore NWC equals $137,700 - $33,500, which is $104,200 in this case.
Debt Ratio is calculated by Total Liabilities divided by Total Assets. Therefore, Debt Ratio equals $233,500 / $1,105,700 which is approximately 21.12%.
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Carlton has ordered a digital watch from an e-commerce Web site. He wants to track the shipment details to estimate the delivery of the product. In the context of procurement management, identify the process that helps Carlton to track his watch shipped by the provider.
Answer:
Control
Explanation:
Procurement management refers to the way in which a company buys products or services from suppliers. This involves establishing the specifications for the items that need to be purchased, the selection of the supplier that can provide it, negotiate the conditions with the supplier, control the process of delivery and define measures for evaluating the whole process. According to this, the process that helps Carlton to track his watch shipped by the provider is the control process as it refers to how the procurement department does the follow up with the supplier to make sure that the items are delivered according to the terms that were established which is what Carlton needs to do.
Washington Company's employees earn $220 per day and are paid every Friday for a five-day work week. This year, December 31 is a Wednesday.
Required: Journalize the adjusting entry on December 31.
Answer:
Explanation:
The adjusting entry is shown below:
Wages and salaries Expense A/c Dr $660
To Wages and salary payable A/c $660
(Being the wages are adjusted)
The computation is shown below:
= Per day salary × number of days
= $220 per day × 3 days
= $660
So, the wages and salaries expense is debited for $660 and wages and salaries payable is credited for $660
To record the adjusting entry on December 31, the daily wage ($220) is multiplied by the number of unpaid days (2), which equals $440. The journal entry includes a debit to Salary Expense and a credit to Salary Payable by $440.
The subject matter of this question is related to accounting, specifically related to how to journalize an adjusting entry. In this scenario, Washington Company's employees earn $220 per day and they are paid on every Friday for a five-day work week. This year, December 31st is falling on Wednesday.
Since the payment is made on Friday, the company will have due salary for two days (December 31 & January 1st of next year). So, an adjusting entry needs to be made to account for these two days. This is essential to confirm with the accrual basis of accounting.
To calculate the value of the adjusting entry, multiply the daily wages by the number of unpaid days. Here, that would be $220 (daily wage) * 2 days = $440.
Now, we can proceed with the journal entry:
Debit: Salary Expense $440 (to record the cost of employee services)
Credit: Salary Payable $440 (to record the obligation to pay employees in the future)
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When resources are scarce, power differences across subunits are _________; when resources are plentiful, subunit power differences are ___________.
A.magnified, reducedB.reduced, magnifiedC.reduced, not affectedD.magnified, not affected
Answer:
The correct answer is letter "A": magnified, reduced.
Explanation:
Scarcity does not only represent individuals having to sacrifice some of their needs to fulfill others because resources are limited. Scarcity can also represent the reason for dispute between social levels. When resources are scarce and one social stratum has more access to it, differences will increase. The opposite happens when the resources are allocated properly between them: differences are likely to be reduced.
Small Company was liquidated in the current year by Parent Company, its sole shareholder. Parent received the following assets on June 15 pursuant to the liquidation: Basis to Fair Small Market Value Cash $100,00o$100,000 Accounts receivable 40,000 40,000 Plant assets (net) 70,000 90,000 Land (mortgage on land $40,000)90,000 110.000 Total $300,00o$340,000 Also pursuant to the liquidation, Parent assumed the mortgage of $40,000 on the land. Parent Corporation's basis in Small common stock is $205,00O. What are the amount and the character of the gain or loss Parent must recognize from the liquidation? $95.000 capital gain. KE $135.000 capital gain. IN $340.000 dividend
Answer:
$95,000 Capital Gain
Explanation:
First, note that during liquidation, the fair market value should be used for the valuation of assets
Step 1: Calculate the Net Assets taken over at Fair Market Value
Total Assets at the Market Value = $340,000
Subtact: Liabilities (land Mortgage) = ($40,000)
The Net Asset at Fair market value = $300,000
Step 2: Calculate the Capital Gain or loss from the Liquidation
fair Value of Net Assets Taken Over = $300,000 (from step 1)
Subtract: The Common stock of Small Com. = ($205,000)
The Capital Gain = $95,000
The following transactions occurred during 2014. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 A building that cost $132,000 in 1997 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged. Mar. 10 Machinery that was purchased in 2007 for $16,000 is sold for $2,900 cash, f.o.b. purchaser's plant. Freight of $300 is paid on the sale of this machinery. Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend the useful life of the machine but does make the machine more efficient May 18 A special base installed for a machine in 2008 when the machine was purchased has to be replaced at a cost of $5,500 because of defective workmanship on the original base. The cost of the machinery was $14,200 in 2008. The cost of the base was $3,500, and this amount was charged to the Machinery account in 2008. June 23 One of the buildings is repainted at a cost of $6,900. It had not been painted since it was constructed in 2010. Instructions Round to the nearest dollar.) Prepare general journal entries for the transactions.
Answer:
Here are your general entries:)
Profit and loss account $19,800
Accumulated depreciation $112,200
To Building $132,000
( Building torn down recorded)
Building torn down expense $5,100
To cash $5,100
(paid to contractor)
Cash $2,100
Accumulated depreciation $11,200
Profit and loss account $1,900
To machinery $16,000
(disposal of machine recorded)
Freight expense $300
To cash $300
(freight paid recorded)
Repairs of machinery $2,000
To cash $2,000
(New gear brake added to machinery)
Profit and loss account $1,400
Accumulated depreciation $2,100
To old base $3,500
(old base expensed out)
Machinery account $5,500
To cash $5,500
(New base constructed)
Depreciation of base $550
To accumulated depreciation $550
Paint of building expense $6,900
To cash $6,900
Explanation:
Addition of gear brake not added to cost of machinery because it does not extend the useful life of machine.
One result of globalization is that countries, businesses, and people become increasingly interdependent. a. True b. False
Answer:
The Given Statement is True
Explanation:
It is true that globalization causes the businesses, countries and people to become increasingly interdependent. Globalization means operating internationally which causes the people, businesses and the countries to depend on each other. Globalization is also used to describe the increasing interdependence of countries, people and businesses.
how is the current huge volume of structured and unstructured data sets impacting organizations
Answer and explanation:
Structured and unstructured data are part of the concept of Big Data that describes huge amounts of information being handled by companies in regards to their operations. Even if they are opposite, structured and unstructured data can help firms to gather information from different departments of the company methodically or without a certain order that can lead managers to make better decisions.
Hitzu Co. sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $130 for materials taken from the repair parts inventory. These are the only repairs required in Year 2 for this copier.
1. How much warranty expense does the company report for this copier in Year 1?
2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?
3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
4. Prepare journal entries to record (a) the copier’s sale; (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2.
Answer:
Answer 1. Warranty expense to be recognized is ($11,000*0.04)=$440
Answer 2. Warranty liability at end of year one is $440
Answer 3. Warranty liability at the end of year two is ($440-$130)=$310
Answer 4.
Cash $11,000
To sales $11,000
(sale of copier recorded)
Warranty expense $440
To Warranty liability $440
(Warranty recorded at the end of year 1)
Warranty liability $130
To inventory $130
(Repairs done to copier)
________ company emphasizes its home country culture throughout its operations, and it tends to staff key positions abroad with expatriates from its home country operations.
A. A polycentric
B. A geocentric
C. An ethnocentric
Answer:
The correct answer is letter "C": An ethnocentric.
Explanation:
An ethnocentric company is the type of organization that promotes the culture of its own culture among employees and focuses on providing local workers with the best opportunities possible so they can be competitive. These firms have a nationalistic approach and have the main goal of contributing to their country's development.
Which two key considerations should be made to make sure the performance of the report is not degraded due to large data volume? Universal Containers (UC) has over 10 million accounts with an average of 20 opportunities with each account. A Sales Executive at UC needs to generate a daily report for all opportunities in a specific opportunity stage.
A. A number of queries running at a time.
B. A number of joins used in report query.
C. A number of records returned by report query.
D. Number of characters in report query.
B. A number of joins used in report query.
C. A number of records returned by report query.
Explanation:
A report on the results of something is a survey. These are generated annually by government bodies that have to prove that the money was spent correctly and accurately, funded by public money.
Such reports should include metrics of success that assess the organization's accomplishments and its services. The statistics that, for instance, show the number of arrests, number of convictions by category of crime and the increase in crime rates for a police department.
a. Britton String Corp. manufactures specialty strings for musical instruments and tennis racquets. Its most recent sales were $880 million; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $300 million; depreciation amounted to 10% of net fixed assets; interest expenses were $22 million; the state-plus-federal corporate tax rate was 25%; and it paid 40% of its net income out in dividends. Given this information, construct its income statement. Also calculate total dividends and the addition to retained earnings. Report all dollar figures in millions.
Answer:
Britton String Corp reported Net Income of $60 Million, out of which $24 Million were paid paid out in dividends and $36 Million were taken as addition to Retained Earnings.
Income Statement of the company is presented below. Please note that:
All figures are reported in dollar in millionsFigures in brackets represent negative figureExcel solution is attached for your referenceExplanation:
Britton String Corp.
Income Statement
Sales $880
Less: Operating Costs (Sales × 85%) ($748)
Earning before Interest, Tax,
Depreciation & Amortization (EBITDA) $132
Less: Depreciation (Net Fixed Assets × 10%) $(30)
Earnings before Interest and Tax (EBIT) $102
Less: Interest Expense $(22)
Earnings before Tax (EBT) $80
Corporate Tax (EBT × 25%) $(20)
Net Income $60
Payment of Dividends (Net Income × 40%) $24
Addition to Retained Earnings
(Net Income – Dividends paid) $36
Final answer:
The income statement for Britton String Corp. would show net income of $60 million after accounting for sales, operating costs, depreciation, interest expenses, and taxes, with total dividends of $24 million and $36 million retained earnings.
Explanation:
To construct the income statement for Britton String Corp., start by identifying the total sales and subtract operating costs excluding depreciation. Operating costs are 85% of sales. Depreciation is 10% of net fixed assets, which equates to 10% of $300 million.
Income Statement:
Sales: $880 millionOperating Costs (excluding depreciation): $748 million (85% of $880 million)Depreciation: $30 million (10% of $300 million)Earnings Before Interest and Taxes (EBIT): $102 million ($880 million - $748 million - $30 million)Interest Expenses: $22 millionEarnings Before Taxes (EBT): $80 million ($102 million - $22 million)Taxes (25%): $20 million (25% of $80 million)Net Income: $60 million ($80 million - $20 million)After calculating the net income, we can determine the total dividends and the addition to retained earnings by applying the dividend payout and retention ratios.
Total Dividends: $24 million (40% of $60 million)Addition to Retained Earnings: $36 million (60% of $60 million)Present and future value tables of 1 at 9% are presented below. PV of $1 FV of $1 PVA of $1 FVAD of $1 FVA of $1 1 0.91743 1.09000 0.91743 1.0900 1.0000 2 0.84168 1.18810 1.75911 2.2781 2.0900 3 0.77218 1.29503 2.53129 3.5731 3.2781 4 0.70843 1.41158 3.23972 4.9847 4.5731 5 0.64993 1.53862 3.88965 6.5233 5.9847 6 0.59627 1.67710 4.48592 8.2004 7.5233 How much must be invested now at 9% interest to accumulate to $19,000 in two years?
Multiple Choice
$15,992.
$11,329.
$11,062.
$15,725.
Answer:
$15,992
Explanation:
The computation of the present value is shown below:
Amount or Future value = Present value × (1 + rate)^number of years
$19,000 = Present value × (1 + 0.09)^2
$19,000 = Present value × (1.09)^2
$19,000 = Present value × 1.1881
So, the present value would be $15,992
We simply applied the above formula so that the accurate value could come.
A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price-demand relationship for this product is P= -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. Use the data (and helpful hints) that follow to work out answers.
- Total cost = Fixed cost + Variable Cost
- Revenue = Demand X Price
- Profit = Revenue - Total Cost
Set up your graph with dollars on the y axis (between 0 and $70,000) and, on the x axis, demand D: (units produced or sold), between 0 and 1000 units.
a) Develop the equations for total cost and total revenue.
b) Find the breakeven quantity (in terms of profit and loss) for the product.
c) Find the profit that the company would obtain by maximizing it's total revenue and neatly graph the solutions
The equations for total cost and total revenue can be developed. The breakeven quantity can be found by setting the profit equation to zero. The profit that the company would obtain by maximizing its total revenue can also be calculated.
Explanation:a) The equation for total cost is TC = FC + (VC * D), where TC is the total cost, FC is the fixed cost, VC is the variable cost per unit, and D is the demand.
b) The breakeven quantity can be found by setting the profit equation to zero and solving for D. In this case, the breakeven quantity is the value of D for which Profit = 0.
c) To find the profit that the company would obtain by maximizing its total revenue, we can find the value of D that maximizes the revenue equation: Revenue = D * (P * D). This can be done by finding the maximum point of the revenue function.
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Disney relied on licensing agreements with the Oriental Land Company to open its first foreign theme park, Tokyo Disneyland, which resulted in
A. Disney's meeting the challenge of localizing its product offerings in Japan, leading to a low-cost advantage.
B. Disney's taking advantage of the Japanese consumer buying habits and demographics that no longer posed a challenge.
C. Disney's reduced concerns over fluctuating exchange rates and country-to-country variations in host government restrictions and requirements.
D. Disney's licensing partner, the Oriental Land Company, reaping the windfall, since the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
E. Disney's reaping the windfall from the agreement because of learning curve effects.
Answer:
D. Disney's licensing partner, the Oriental Land Company, reaping the windfall, since the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
Explanation:
The Japanese Disneyland is the first in the world to be opened under a licensing agreement. All other Disneylands are fully or partially owned by Disney. However, for the Tokyo one, Disney only receives a royalty fee, which is common for licensing agreements.
On the other hand, the Oriental Land Company reaps the benefits of the already stable Disneyland business model. Disney does control the creative part, but the operating is under the Oriental Land Company, meaning they would largely benefit from this licensing agreement.
Disney's licensing agreement with the Oriental Land Company for Tokyo Disneyland meant that Disney had reduced concerns over exchange rates and government regulations, as these risks were managed by the Oriental Land Company. This allowed Disney to enjoy the benefits of expanding into the Japanese market with fewer direct investment risks.
Explanation:The opening of Tokyo Disneyland as a result of Disney's licensing agreements with the Oriental Land Company resulted in C. Disney's reduced concerns over fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. This partnership allowed Disney to enter the Japanese market while minimizing financial and regulatory risks that are commonly associated with foreign direct investments. The Oriental Land Company, being the licensee, took on significant investment and operational responsibilities, which in exchange gave it potential for considerable gains from the park's success.
Through such a licensing agreement, Disney benefited from access to local market knowledge and could circumvent challenges associated with direct investment, such as navigating foreign regulations and adapting to local consumer habits. The Oriental Land Company essentially took on the risk of the capital investment and day-to-day operations, which might have involved adapting Disney's products to better fit the Japanese market. Therefore, the financial and operational risks were shouldered substantially by Disney's Japanese partner.
Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area, and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO, and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions.
a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.
b. If you expanded and hired additional people to help you, might that give rise to agency problems?
c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?
d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
Answer:
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) No
b) YES
c) Creditor Agency Problem
d) Agency Cost of Debt
Explanation:
a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.
Answer
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? NO, because based on the definition above, there will be no stakeholders, hence no possibility of conflict of interest if there is just one person.
b. If you expanded and hired additional people to help you, might that give rise to agency problems?
ANSWER
YES, because based on the definition, conflict of interest will become possible when agents are recruited and expected to act on behalf of the owner of the company; they might just start doing their own thing by pursuing their own interest against that of the owner.
c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?
ANSWER
This will give rise to a Creditor Agency Problem which is different from Management Agency problem. In the Creditor Agency Problem, Creditors are the principal and the shareholders are the agent because they get the money from outside investors on a promise that they will use it in projects that are low in risk and sure in returns BUT after getting the funds, shareholders might approve that the money be used in High Risk High Return projects which is not in the best interest of the outside investors who do have a controlling interest.
d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
ANSWER
Agency cost of debt will occur, this refers to an increase in the cost of debt in the event that the interests of shareholders differs from that of management.
How might lenders mitigate the agency costs?
Lenders are aware that management is in full control of their money and they can mitigate the agency costs by imposing certain restrictions on the companies called bond indentures, to reduce the agency-cost issue. Indentures are legally binding agreements surrounding the use of the money and what happens in the case of bankruptcy.
Agency relationship arises when one party acts on behalf of another. At the start of your business, conflicts are unlikely but as the firm expands and more employees or investors are involved, agency problems and conflicts might appear. Employing external lenders could result in agency costs, which can be mitigated with loan agreement constraints.
Explanation:An agency relationship exists when one party (the agent) acts on behalf of another party (the principal). At the initial stages of your business, if you're the only employee and solely invested in the business, there would be no agency conflicts because your interests (as both the owner and worker) align perfectly.
If you expanded and hired additional people, you might indeed face agency problems. These occur when the interests of employees (agents) do not necessarily align with the interests of the business owner (principal) or when they have more information than the principals; this is known as information asymmetry.
If you raise further capital to expand by selling stock to outside investors yet maintain enough shares to control the company, you could experience another type of agency conflict. This happens when the interests of the shareholders differ from those of the controlling owner. Shareholders might prefer safer investments and higher dividends, while you might prefer riskier strategies that you believe would boost the company's value and growth.
If you gather funds from lenders (external), some agency costs might occur. These costs include the interest payable on the loan and the monitoring expense incurred by lenders to ensure that the borrowed funds are used as intended. Lenders can mitigate agency costs by devising constraints in loan agreements, like requiring regular audit reports or restricting what the borrowed funds can be used for.
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During the year just ended, Shering Distributors, Inc., had pretax earnings from operations of $490,000. In addition, during the year it received $20,000 in income from interest on bonds it help in Zig Manufacturing and received $20,000 in income from dividends on its 5% common stock holding in Tank Industries, Inc. Shering is in the 40% tax bracket and is eligible for a 70% dividend exclusion on its Tank Industries stock.
A. Calculate the firm's tax on its operating earnings only.
B. Find the tax and after-tax amount attributable to dividend and interest income.
b. Interest c. Dividend
Before-tax income $0 $0
Less exclusion 0 $0 Use the exclusion 70%
Taxable income $0 $0
Tax 40% $0 $0
After-tax amount $0
$0
â Compare, contrast, and discuss theâ after-tax amounts resulting from the interest income and dividend income calculated in parts b. and c. â(Select all the choices thatâ apply.) A. Theâ after-tax amount of dividendsâ received, $ 24 comma 165â, exceeds theâ after-tax amount ofâ interest, $ 21 comma 330â, due to the 50 % corporate dividend exclusion. B. Theâ after-tax amount of dividendsâ received, $ 21 comma 330â, exceeds theâ after-tax amount ofâ interest, $ 24 comma 165â, due to the 50 % corporate dividend exclusion. C. Since theâ after-tax amount of interest exceeds theâ after-tax amount ofâ dividends, this increases the attractiveness of stock investments by one corporation in another relative to bond investments. D. Since theâ after-tax amount of dividends exceeds theâ after-tax amount ofâ interest, this increases the attractiveness of stock investments by one corporation in another relative to bond investments.
Answer:
(D).
Explanation:
Shering's taxable income = Earnings before interest and tax(EBIT) + Interest income + Taxable Dividend Income
A. Tax on operating income only = $490000 × 40% = $196,000
Tax attributable to dividend and interest income = $516,000 × 40% less 490,000 × 40%
Tax attributable to dividend and interest income= $10,400
B. Interest $20,000
Dividend $20,000
Before tax income $490,000 + 20,000 + 20,000= $530,000
Taxable Income = $530,000 - Dividend excluded from taxation
Taxable Income= $530,000 - 70% of 20,000= $516,000
Tax at 40% on above = $516,000 × 40% = $206,400
After tax income= $516,000- 206,400= $ 309,600
In case of dividend, due to 70% exemption from taxation, only 30% of dividend is subject to tax i.e out of $20,000 receipts, only $6,000 is taxable, the tax on which is $2,400
Whereas in case of income from interest, the whole $20,000 is taxable at 40%. Tax on such income being $8,000
The net receipts in case of dividend thus would be, $20,000 - $2,400 = $17,600
Whereas in case of Interest, the after tax receipts would be, $20,000 - $8,000= $12,000
As can be seen, the correct option is (d) since the after tax amounts of dividends exceeds the after tax amount of interest, this increases the attractiveness of stock investments by one corporation in another relative to bond investments.
What needs to be noted though being, investment in stocks might appear favourable here, but such investment is also more riskier than investment in bonds which carry a fixed rate of interest and fixed term of principal repayment.
The tax on Shering's operating earnings is $196,000. The after-tax interest income is $12,000, and the after-tax dividend income is $17,600. Higher after-tax dividends make stock investments more attractive than bonds.
To address the question, we need to calculate the tax and after-tax amounts for Shering Distributors, Inc.
A. Tax on Operating Earnings:
The firm's tax on its operating earnings can be calculated as follows:
Pretax earnings from operations: $490,000Tax Rate: 40%Tax on operating earnings = 40% × $490,000 = $196,000
B. Tax and After-Tax Amount for Dividend and Interest Income:
b. Interest Income
Interest Income: $20,000Tax Rate: 40%Tax on interest income = 40% × $20,000 = $8,000
After-tax interest income = $20,000 - $8,000 = $12,000
c. Dividend Income
Dividend Income: $20,000Dividend Exclusion: 70%Exclusion Amount = 70% × $20,000 = $14,000
Taxable Dividend Income = $20,000 - $14,000 = $6,000Tax Rate: 40%Tax on taxable dividend income = 40% × $6,000 = $2,400
After-tax dividend income = $20,000 - $2,400 = $17,600
Comparison and Contrast
Since the after-tax amount of dividends ($17,600) exceeds the after-tax amount of interest ($12,000), this increases the attractiveness of stock investments by one corporation in another relative to bond investments due to the 70% corporate dividend exclusion.
Which of these is an example of "serving the bottom of the pyramid"? a. Car-a-Go-Go Inc. is an MNC that specializes in luxury cars. To penetrate into new markets, they offered incentives to wealthy citizens of other countries to buy their vehicles and expand their footprint. b. Radical Computer Corp. is a multinational computer company that acquires resources from all over the world. They found that in many of the countries they get their materials, the citizens have little to no internet access and cannot afford computers. They decided to build highly affordable computers and install a wireless infrastructure to assist the poorest in these countries in getting online. c. HappyTime Silicon provides much needed silicon to the technology industry. They are continually finding new sources of silicon and expanding their business globally. d. Righteous Burgers is a fast food organization that is opening stores all over the world with their big expansion push. They have meticulously studied the countries where they will open new restaurants and have catered to the culture of each country individually to assist in brand recognition and sales.
Answer:
Option B is Correct.
Explanation:
Serving the bottom of the pyramid means carrying in goods that are inexpensive by that class of the budget where individuals cannot afford luxuries like several advanced countries. They cannot afford high charges and would exploration for something affordable. Among the given examples Radical computer corp. which definite to build reasonable computers and install wireless arrangement to assist the humblest in getting these amenities which they generally cannot afford serves as an example of attending the bottom of the pyramid. Hence the answer is B
Which of the following results in higher inflation and higher unemployment in the short run? a. a more expansionary monetary policy.
Answer:
d. an adverse supply shock such as an increase in the price of oil
Explanation:
Supply shock is the occurrence of an unexpected event in the economy which impacted negatively on the cost of production and which also causes the short-run aggregate supply curve to shift inward or to the left.
The type of disturbance that shifts the short-run aggregate supply curve inward will give rise to inflation and unemployment because of fall in out and rise in the cost of production..
In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory.
What are these rules called?
Answer:
Uniform cost capitalization rules
Explanation:
In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory. These rules are called Uniform cost capitalization rules
Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciation. (Round your answers to the nearest whole dollar.)
Calculate annual depreciation expenses using double-declining-balance method.
To calculate annual depreciation expenses using the double-declining-balance method, we first need to determine the straight-line depreciation per year, and then apply the double-declining-balance method to calculate annual depreciation for each year. The annual depreciation expenses using the double-declining-balance method are $95,360 for Year 1, $57,216 for Year 2, $34,329.60 for Year 3, $20,597.76 for Year 4, and $12,358.66 for Year 5.
Explanation:To calculate annual depreciation expenses using the double-declining-balance method, we first need to determine the straight-line depreciation per year. The formula for straight-line depreciation is (Cost - Salvage Value) / Useful Life. In this case, the cost of the equipment is $238,400 and the salvage value is $43,600. Since the equipment will last for 5 years, the useful life is 5 years.
Calculating the straight-line depreciation, ($238,400 - $43,600) / 5 = $39,560 per year.
The double-declining-balance method uses a depreciation rate that is twice the straight-line rate. Therefore, the depreciation rate is 2 * (1 / 5) = 0.4, or 40% per year.
To calculate the annual depreciation using the double-declining-balance method, multiply the book value at the beginning of each year by the depreciation rate. The book value at the beginning of the first year is $238,400.
Year 1: $238,400 * 0.4 = $95,360
Year 2: ($238,400 - $95,360) * 0.4 = $57,216
Year 3: ($238,400 - $95,360 - $57,216) * 0.4 = $34,329.6
Year 4: ($238,400 - $95,360 - $57,216 - $34,329.6) * 0.4 = $20,597.76
Year 5: ($238,400 - $95,360 - $57,216 - $34,329.6 - $20,597.76) * 0.4 = $12,358.66
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The annual depreciation for Tory Enterprises can be calculated by doubling the straight-line depreciation rate and applying it annually to the remaining book value of the equipment.
Explanation:To compute the annual depreciation expense using the double-declining-balance method, we first calculate the straight-line depreciation rate. Given that the equipment will last five years, the straight-line rate is 1 divided by 5, which gives us 0.2 or 20%. In the double-declining-balance method, we double this rate, giving us 40%. The book value of the equipment at the beginning is the initial cost, which is $238,400.
So for the first year, the depreciation expense is 40% of $238,400, which equals $95,360. In the second year, we subtract the first year's depreciation from the book value ($238,400 - $95,360 = $143,040) and the depreciation expense is 40% of $143,040, giving us $57,216. We repeat this process for each subsequent year.
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Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her $170 for this service. Over a period of 15 years, how much does Elaine gain from preparing her own tax return? Assume she can earn 6 percent on her savings.
Answer:
$3,956.91
Explanation:
The future value of an annuity is determined by the following expression:
[tex]FV = P*(\frac{(1+r)^n-1}{r} )[/tex]
For annualdeposits of $170, at a 6 percent rate for 15 years, the future value is:
[tex]FV = 170*(\frac{(1+0.06)^{15}-1}{0.06})\\FV =\$3,956.91[/tex]
Elaine gains $3,956.91 from preparing her own tax return.
Elaine gains $455.94 by preparing her own tax return over a period of 15 years.
Explanation:To calculate how much Elaine gains from preparing her own tax return, we need to calculate the savings she makes each year by not hiring a tax preparer and then calculate the future value of those savings over 15 years. The amount she saves each year is $170. Assuming she can earn 6% on her savings, we can use the future value formula to calculate the total savings over 15 years.
The future value formula is:
FV = PV * (1 + r) ^ n
Where FV is the future value, PV is the present value (in this case the annual savings), r is the interest rate per period (6% or 0.06 in decimal form), and n is the number of periods (15 years). Plugging in the values, we get:
FV = $170 * (1 + 0.06) ^ 15 = $170 * 1.06^15 = $455.94.
So, Elaine gains $455.94 by preparing her own tax return over a period of 15 years.
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Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired, Star bills the game manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000. a. What was the cost of materials used for repair work during the month of February? b. What was the prime cost for February? c. What was the conversion cost for February? d. What was the total repair cost for February?
Answer:
a. What was the cost of materials used for repair work during the month of February?
To find this figure, we add the purchased replacement parts value with the beginning inventory parts value, and substract the ending inventory parts.
Cost of materials = $97,000 + $38,500 - $15,250
= $120,250
b. What was the prime cost for February?
The prime cost is the sum of cost of materials and cost of labor.
Prime cost = $120,250 + $52,500
= $172,750
c. What was the conversion cost for February?
Conversion cost is the sum of the cost of labor and overhead.
Conversion cost = $52,500 + $121,000
= $173,500
d. What was the total repair cost for February?
The total repair cost is the sum of parts cost, labor costs, and overhead.
Total repair cost = $120,250 + $52,500 + $121,000
= $293,750
A Fixed-Price Incentive (Firm Target) (FPIF) contract is awarded for $25 million to design acomputer based training course for the Air Force with a period of performance of 18 months. Whatreports, if any, must the Air Force Program Manager (PM) require the contractor provide regardingtheir cost, schedule, and technical performance?
Answer:
Air Force Program Manager (PM) would require submission of an Integrated Program Management Report (IPMR) with formats 1 through7.
Explanation:
A Fixed-Price Incentive (Firm Target) (FPIF) contract is awarded for $25 million to design a computer based training course for the Air Force with a period of performance of 18 months. Whatreports, if any, must the Air Force Program Manager (PM) require the contractor provide regarding their cost, schedule, and technical performance?
Answer
Air Force Program Manager (PM) would require submission of an Integrated Program Management Report (IPMR) with formats 1 through7.
Projects is an event(starting and finishing time) with date and purpose. A project has stake holders who are responsible for its actualization or not
Integrated project management is the compilation of processes that ensure various aspects of projects are properly coordinated. All relevant stakeholders and resources are been managed and establishes in the documents. Processes must be followed due to organization standards.
Reports are required for cost, schedule, and technical performance.
Explanation:For a Fixed-Price Incentive (Firm Target) (FPIF) contract, the Air Force Program Manager (PM) would require the contractor to provide reports regarding their cost, schedule, and technical performance. In terms of cost, the contractor would need to provide regular updates on their spending and budget. For schedule, the contractor would need to provide updates on their progress and any delays or changes to the project timeline. And for technical performance, the contractor would need to provide information on the quality and effectiveness of the computer-based training course they are designing.
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You have found an asset with 12.60 percent arithmetic average return and a 10.24 percent geometric return. Your observation period is 40 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years?
Solution:
In years Best estimate of return Working note
5 12.36% ((5-1)/(40-1)*0.1024)+((40-5)/(40-1)*0.126)
10 12.06% ((10-1)/(40-1)*0.1024)+((40-10)/(40-1)*0.126)
20 11.45% ((20-1)/(40-1)*0.1024)+((40-20)/(40-1)*0.126)
The formula for the return on assets is calculated by dividing the net income by the total average assets. The profit margin and total asset sales can also be represented as a consequence of this ratio. For the calculation of the total asset return, either formula may be used.