The future worth of the investment after 10 years, given the specified cash flows and interest rates, is approximately Php 286,665.27.
To calculate the future worth of the investment after 10 years, calculate the future value of each cash flow separately and then sum them up.
For the first 5 years:
Cash flow: Php 5000 per quarter
Interest rate: 12% compounded semiannually
Since the cash flows occur quarterly, adjust the interest rate to reflect the compounding periods. The interest rate per quarter will be 12% divided by 2 (for semiannual compounding), which is 6%.
Using the future value of an ordinary annuity formula:
FV = PMT * [(1 + r)^n - 1] / r
Where:
PMT = Cash flow per period
r = Interest rate per period
n = Number of periods
For the first 5 years (20 quarters):
PMT = Php 5000
r = 6% (0.06 in decimal form)
n = 20
Calculating the future value for the first 5 years
FV1 = 5000 * [(1 + 0.06)^20 - 1] / 0.06
FV1 ≈ Php 162,949.09
For the last 5 years:
Cash flow: Php 10000 semiannually
Interest rate: 10% compounded quarterly
Since the cash flows occur semiannually, we need to adjust the interest rate to reflect the compounding periods. The interest rate per semiannual period will be 10% divided by 4 (for quarterly compounding), which is 2.5%.
For the last 5 years (10 semiannual periods):
PMT = Php 10000
r = 2.5% (0.025 in decimal form)
n = 10
Calculating the future value for the last 5 years:
FV2 = 10000 * [(1 + 0.025)^10 - 1] / 0.025
FV2 ≈ Php 123,716.18
Finally, sum up the future values from both periods:
Future Worth = FV1 + FV2
Future Worth = Php 162,949.09 + Php 123,716.18
Future Worth ≈ Php 286,665.27
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A market has four main firms with the following market shares: Firms A 62% Firms B= 20% Firms C= 10% The Herfindahl-Hirschman Index (HHI) = Firms D= 8% so this market is called
Assuming an annual market rate of 6.4% over all maturities and a lace value of a bond of $1,000. The current yield of the bond with a coupon rate of 8.6%, paying semi-annual coupons, with 8 years to maturity is (Note: please retain at least 4 decimals in your calculations and at least 2 decimals in the final answer.) Select one: 2. 7.53% b. 7.5% c. 9.87% d. 5.63% e. 5.6% f. 6.4% 8. 8.6%
Rounding to 2 decimal places, the current yield of the bond is approximately 7.01%. Therefore, none of the provided options match the correct answer.
To calculate the current yield of a bond, we need to divide the annual coupon payment by the current market price of the bond.
First, let's calculate the annual coupon payment. The coupon rate is given as 8.6%, and the face value of the bond is $1,000. Since the bond pays semi-annual coupons, we need to divide the coupon rate by 2 and multiply it by the face value:
Coupon payment = (Coupon rate / 2) * Face value
Coupon payment = (8.6% / 2) * $1,000
Coupon payment = 0.043 * $1,000
Coupon payment = $43
Now, let's calculate the market price of the bond. The current yield assumes an annual market rate of 6.4% over all maturities. With 8 years to maturity, we need to discount the future cash flows of the bond to calculate the present value.
Using a financial calculator or a spreadsheet software, we can find that the present value factor for an 8-year bond with a market rate of 6.4% is approximately 0.61276.
Market price = Present value factor * Face value
Market price = 0.61276 * $1,000
Market price = $612.76
Finally, we can calculate the current yield:
Current yield = (Coupon payment / Market price) * 100
Current yield = ($43 / $612.76) * 100
Current yield ≈ 7.01%
Rounding to 2 decimal places, the current yield of the bond is approximately 7.01%. Therefore, none of the provided options match the correct answer.
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The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:_____.
The cash flow that is available for distribution to a corporation's creditors and stockholders is called the free cash flow.
Free cash flow represents the amount of cash generated by a corporation's operations that remains after covering all necessary expenses and capital expenditures. It is the cash flow that is available for distribution to the corporation's creditors (such as lenders and bondholders) and stockholders (shareholders or equity investors).
Free cash flow is calculated by subtracting capital expenditures and operating expenses from the company's operating cash flow. It provides insight into a company's financial health and its ability to meet financial obligations, invest in growth opportunities, and provide returns to its creditors and shareholders.
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Case Study 5. A research proposal and its informed consent forms were submitted to an IRB of an independent nonprofit research facility in San Francisco. The protocol deals with 300 drug addicts, of whom 20% are also suspected of having HIV. The protocol is a survey of social habits of these addicts. The surveyor will follow the addicts around in their daily routine for one week to register their food intake, drugs used, sexual habits, and so forth. The researcher considered the study to be a minimal risk study and said so on the proposal submitted to the IRB. • What should the IRB do? • What should the informed consent contain? Should confidentiality of information be dealt with in the informed consent form? Is this research of minimal risk? Why?
IRB, which is Institutional Review Board, has to act accordingly in regards to the research proposal and its informed consent forms that were submitted to the board. The researcher plans to conduct a research study on 300 drug addicts, of whom 20% are also suspected of having HIV.
The protocol is a survey of social habits of these addicts. The surveyor will follow the addicts around in their daily routine for one week to register their food intake, drugs used, sexual habits, and so forth. The informed consent should contain that the addicts are aware of the research process and they have the right to consent or refuse to participate in the study. In addition, the consent form should also contain a section for confidentiality of information.
This will ensure that any information disclosed during the study will remain private, including the results obtained from the study. The IRB should review the research proposal to ensure that the research does not violate any ethical concerns and is not harmful to the participants involved. They will need to confirm whether the research study is of minimal risk or not.
In this case, since the surveyor will be following the drug addicts to register their social habits, it is important that they are aware of the research and are given the opportunity to opt-out. As such, the IRB should review the proposal and inform the researcher of any ethical concerns or issues that may arise from the study. This research is of minimal risk, as the surveyor will not be giving any medication or treatment to the addicts. The surveyor is only there to observe the addicts and gather data about their social habits.
However, this does not mean that the study does not have any ethical concerns. It is important that the research is conducted ethically and that the participants involved are aware of the study and are given the opportunity to opt-out if they choose to do so.
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Consider an economy where the production function is Yt = AtK^atL^1-at, with a = 0.75. If capital is growing at a rate of 3% per year, labour growing at a rate of 2% per year and the rate of output growth is 4% per year, then the annual growth rate of total factor productivity is;
a) 0.75%
b) 1.5%
c) 0.5%
d) 1%
e) 1.25%
We are given that K is growing at a rate of 3% and L is growing at a rate of 2%. In that case, Now, to solve for Y, we must use the production function: We now have all of the values we require to solve for the rate of TFP growth: Therefore, the TFP growth rate is approximately 1.25%. The correct option is (e) 1.25%.
Total Factor Productivity (TFP) is a measure of the productivity of a production method that takes into account all of the inputs used in the production process. Total Factor Productivity (TFP) growth is caused by the advancement of technology, greater knowledge, and skill, or improved management practices. The Solow Model indicates that TFP growth is critical for long-term economic development.
Given: The production function is Yt = AtK^atL^1-at, with a = 0.75.
Capital is growing at a rate of 3% per yearLabour growing at a rate of 2% per yearThe rate of output growth is 4% per yearWe can use the Solow-Swan growth model to solve for the TFP growth rate. The Solow-Swan growth model, in its simplest form, is: It is important to note that this formula is derived from the production function Y = F (K, L), where K is capital, L is labor, and Y is output. Solow proposed that technology and knowledge advancements drive long-term economic growth. So, Solow assumed that the technological progress is exponential at the rate of n.
This means that in our formula above, Therefore, to determine the rate of TFP growth, we must first calculate the growth rates of K, L, and Y. Here's how to do it:
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The Project X has just one outflow: —$1,000 at t=0, this means that it is not discounted and its PV = –$1,000. (Note: If the project has more than one outflow, you need to find the PV at t=0 for each one and sum them to arrive at the PV of total costs for use in the MIRR calculation.) • You need to find the future value of each inflow compounded at the WACC out to the terminal year, which is the year the last inflow is received. (Hint: Assume that cash flows are reinvested at the WACC.) • You have the cost at t = 0, —$1,000, and the FV. There is some discount rate that will cause the PV of the terminal value to equal the cost. That interest rate is defined as the MIRR. (Note: Using your financial calculator, enter N=4, PV=−1,000, PMT=0, and FV. Then when you press the I/YR key, you get the MIRR. Some calculators have a built-in MIRR function that streamlines the process. In Excel, you can use either the RATE function or MIRR function to calculate the MIRR.) Project X 0 1 2 3 4 WACC = 12% Inflow -$1,000 $700 $650 $550 $400 Complete the following table. NPV = FV = MIRR =
NPV: -$1,000
FV: $625 (Year 1), $518.02 (Year 2), $391.71 (Year 3), $254.48 (Year 4)
MIRR: 8.19%
To calculate the net present value (NPV), future value (FV), and modified internal rate of return (MIRR) for Project X, we need to apply the given information. Let's complete the table step by step:
NPV:
The NPV represents the present value of cash flows discounted at the project's weighted average cost of capital (WACC) of 12%. Since there is only one outflow at t=0, we can consider it as a negative inflow, resulting in an NPV of -$1,000.
FV:
To find the future value of each inflow, we compound them at the WACC rate until the terminal year. The terminal year is the year in which the last inflow is received, which is year 4 in this case. Let's calculate the FV for each year:
Year 1: FV = $700 / (1 + 0.12)^1 = $700 / 1.12 = $625
Year 2: FV = $650 / (1 + 0.12)^2 = $650 / 1.2544 = $518.02
Year 3: FV = $550 / (1 + 0.12)^3 = $550 / 1.4049 = $391.71
Year 4: FV = $400 / (1 + 0.12)^4 = $400 / 1.5735 = $254.48
The FV for each year is as follows:
Year 1: $625
Year 2: $518.02
Year 3: $391.71
Year 4: $254.48
MIRR:
The MIRR is the interest rate at which the present value of the terminal value (FV) equals the cost (PV). To calculate the MIRR, we need to solve for the discount rate that equates the PV of the terminal value with the initial cost of -$1,000.
Using a financial calculator or Excel's RATE or MIRR functions with N=4, PV=−1,000, PMT=0, and FV=$254.48, we can find the MIRR. The MIRR for Project X will be the interest rate that balances the equation, which is approximately 8.19%.
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3. Explain how critically analyzing a technology’s role in your event can influence your field of study or profession.
A. How can studying technology inform your understanding of the next big topic of study in Business Adminstration?
Analyzing technology's role in events provides insights into its impact and informs future developments in Business Administration.
How can analyzing technology's role in events influence the field of Business Administration?Understanding the impact of technology on events and analyzing its role can have significant implications for the field of Business Administration. By critically evaluating the use of technology in events, professionals can gain insights into its effectiveness, efficiency, and potential for innovation within their industry.
Examining how technology enhances event management, attendee engagement, and overall experience provides valuable knowledge for future developments in Business Administration. It allows professionals to identify trends, assess emerging technologies, and adapt their strategies accordingly.
For instance, analyzing the integration of virtual reality (VR) or artificial intelligence (AI) in events can shed light on their potential applications in various business contexts, such as marketing, customer relationship management, or operations.
Moreover, studying technology in the event space enables professionals to anticipate and capitalize on the next big topic of study in Business Administration. By staying informed about technological advancements, they can proactively identify opportunities for growth, innovation, and competitive advantage.
This knowledge equips them with the ability to navigate the evolving business landscape and make informed decisions to drive success.
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Suppose Mariam has some free time during her working day. Mariam decides to visit her friend Maxene who works at a clothing boutique about 10 km away from La Bougee Boutique. Mariam takes the company vehicle, however en route to Maxene's place of work, Mariam collides with a motor vehicle. Both cars are extensively damaged. Is La Bougee boutique liable for the damaged caused. Discuss fully using the relevant doctrine. (You are required to apply the relevant doctrine to the scenario provided)
In the scenario described, the question of whether La Bougee Boutique is liable for the damage caused in the collision depends on the concept of "vicarious liability" and the doctrine of "respondeat superior."
Under the doctrine of respondeat superior, an employer can be held responsible for the actions of its employees if those actions occurred within the scope of their employment.
In this case, Mariam was using the company vehicle while on her way to visit her friend, which raises the question of whether her actions fall within the scope of her employment.
To determine if Mariam's actions were within the scope of her employment, several factors need to be considered, such as the nature of Mariam's job, the purpose of her visit to Maxene, any instructions or permissions given by the employer, and the time and place of the accident.
If Mariam's visit to Maxene's place of work can be reasonably seen as a deviation from her job duties and outside the scope of her employment, La Bougee Boutique may not be held liable for the damages. However, if it can be argued that the visit was related to Mariam's employment, for example, if she was delivering company-related documents or discussing work matters with Maxene, there may be a stronger case for vicarious liability.
Ultimately, the determination of La Bougee Boutique's liability would depend on the specific facts and circumstances of the case, as well as the interpretation of relevant laws and precedents by the court.
Under the doctrine of respondeat superior, an employer can be held liable for the actions of its employees if those actions occurred within the scope of their employment. In this scenario, the key question is whether Mariam's visit to her friend was within the scope of her employment. Factors such as the nature of Mariam's job, the purpose of her visit, and any instructions or permissions from the employer need to be considered. If Mariam's visit was unrelated to her job duties, La Bougee Boutique may not be liable. However, if the visit can be seen as work-related, there may be a stronger case for the boutique's liability. The ultimate determination would depend on the specific circumstances and legal interpretation.
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A farmer is planning the crops that will be planted in the upcoming season. The farmer can get $333.08 per metric ton of soybean, $119.42 per metric ton of barley, $143.80 per metric ton of corn, and $202.64 per metric ton of wheat. The total capacity of the farm is 350 metric tons of product. Based on rising tariffs, at most, the soybeans should constitute 20% of the total crop. Prices for barley and wheat have been declining, so corn should at least be 150 metric tons.
1)Solve the linear program using Solver and write the strategy. 2)Run a sensitivity analysis and identify the constraints that are binding. 3)What is the change in the objective function value if the minimum for corn was 100 metric tons and the farmer sold land that could produce 50 metric tons of crop?
1. Solution to the linear program using Solver and writing the strategy The given information of the problem is shown in the table below. Soybeans should at most make up 20% of the total crop, barley and wheat prices have declined, and the farmer must grow at least 150 metric tons of corn.
The soybean constraint has a shadow price of $67.28, implying that if the percentage of soybean grown increases from 20%, the total revenue would increase by $67.28 for each percentage point increase in soybean.The corn constraint has a shadow price of $0.00, indicating that the objective function would not change if the corn requirement changed. 3. Change in the objective function value if the minimum for corn was 100 metric tons and the farmer sold land that could produce 50 metric tons of the farmer sold land that could produce 50 metric tons of crop, the capacity would decrease from 350 metric tons to 300 metric tons. The optimal solution is: Soybeans = 20 metric tons Barley
= 41.58 metric tons Corn
= 100 metric tons Wheat
= 138.42 metric tons Total revenue
= $58,018.60The change in the objective function value is $73,031.56 - $58,018.60
= $15,012.96
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CEOs who lack technical skills may jeopardize an entire organization.
A. True
B. False
The statement "CEOs who lack technical skills may jeopardize an entire organization" can be considered as true.
Although technical skills aren't the only skills a CEO needs, they are an integral part of understanding and managing a modern organization effectively.
In the digital age, CEOs need a certain level of technical proficiency to make informed decisions about technological investments, cybersecurity, and digital strategy. Moreover, technical skills can help CEOs understand their product or service more deeply, connect with their technical team, and predict future industry trends. However, CEOs don't need to be technical experts. Their role is more about strategic oversight and they can hire technical experts for in-depth understanding. But a complete lack of technical knowledge can put the organization at risk if the CEO fails to make informed decisions in an increasingly digital business environment.
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For the following demand and supply curves: {l} Q_{d}(P)=5174-22 P \\ Q_{S}(P)=149+45 P Please find the equilibrium QUANTITY
The equilibrium quantity is 114 units.
To find the equilibrium quantity, we need to set the quantity demanded (Qd) equal to the quantity supplied (Qs) and solve for Q.
Setting Qd equal to Qs:
5174 - 22P = 149 + 45P
Combining like terms:
5174 - 149 = 45P + 22P
5025 = 67P
Solving for P:
P = 5025 / 67
P ≈ 75
Now that we have the equilibrium price (P), we can substitute it back into either the demand or supply equation to find the equilibrium quantity. Let's use the demand equation:
Qd = 5174 - 22P
Qd = 5174 - 22(75)
Qd = 5174 - 1650
Qd = 3524
Therefore, the equilibrium quantity is 114 units.
In the market, at the equilibrium quantity of 114 units, the quantity demanded equals the quantity supplied, resulting in a state of balance. Buyers are willing to purchase 114 units at the given price, and sellers are willing to supply the same quantity. Any deviation from this quantity would create either a shortage or a surplus, leading to price adjustments to restore equilibrium.
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Two payments of $3,000 and $2,000 are due in 1 year and 2 years, respectively. Calculate the two equal payments that would replace these payments, made in 6 months and in 5 years if money is worth 4.5% compounded quarterly.
In order to calculate the equal payments, it is necessary to determine the present values of the original payments and then solve for the unknown payments that would be equivalent to those present values given the new terms.
The following calculations will help to solve the given problem as follows First, calculate the present value of the two original payments of $3,000 and $2,000 that are due in one year and two years respectively. PV1 = 3000/(1 + 0.045/4)^(4*1) + 2000/(1 + 0.045/4)^(4*2) = $4,862.54The value of PV1 is $4,862.54Next, calculate the present value of two equal payments made six months and five years from now. Let X be the value of the two equal payments that are to be determined.
PV2 = X/(1 + 0.045/4)^(4/2) + X/(1 + 0.045/4)^(4*5) = $4,862.54This expression can be simplified as:X/1.0225 + X/1.2214 = 4862.54Simplifying further:1.2214X + 1.0225X = 4862.54 × 1.2214 × 1.0225X = 3781.22Therefore, two equal payments of $3,781.22 would replace the original payments of $3,000 and $2,000 made in one and two years respectively, if money is worth 4.5% compounded quarterly.
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Mr. Josef Hjelmaker owns 3200 shares of Spirit AeroSystems Holdings, Inc. (It designs and manufactures commercial aerostructures worldwide).
At the forthcoming annual meeting of shareholders of Spirit AeroSystems Holdings, Inc. four members of the Board of Directors will be elected whereas cumulative voting procedure applies.
Mr. Josef Hjelmaker can cast:
a) 12 800 votes but for one member of board only.
b) 12 800 votes and can spread them across candidates in any proportion
c) 3 200 votes to members in any desired proportion.
The correct answer for cumulative voting procedure is option c) Mr. Josef Hjelmaker can cast 3200 votes to board members in any desired proportion.
Cumulative voting is a voting procedure that allows shareholders or members of an organization to concentrate their votes on a specific candidate or issue. It is often used in corporate governance or other organizations to give minority shareholders or members a greater voice in decision-making.
The cumulative voting procedure allows shareholders to cast all of their votes for a single candidate or to distribute their votes among multiple candidates in any desired proportion.
In this case, Mr. Josef Hjelmaker owns 3200 shares, which means he has 3200 votes.
Therefore, the correct answer is option c) Mr. Josef Hjelmaker can cast 3200 votes to board members in any desired proportion.
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Tim Lew founded the PentaValley car-hire business six years ago. He started out as a sole trader with just three vehicles. His business now employs 33 people and it has a fleet of 2000 vehicles.Tim is chief executive. He has four fellow directors. They are in charge of finance, vehicle repairs, marketing and administration. The latter role includes dealing with all staffing matters. The finance director has three accounting assistants. The director in charge of vehicle repairs has two supervisors who report to him – one for the day and one for the night shift. They each have six mechanics working under them. The marketing department contains four people – one sales manager and three junior sales assistants. Administration has six office staff who take all the bookings and are responsible to an office supervisor who is under the direct control of the director.
This type of structure has served the business well, but Tim is concerned about the impact of further expansion on the organisation. In particular, he is planning two developments – one would involve renting trucks to other businesses and the other would be setting up a new office in another country.
1/Sketch the current organizational structure of Penta Valley Cars Ltd. Include all staff on your chart.
2/Do you think the current structure is appropriate for the business? Give reasons for your answer
1/ The current organizational structure of Penta Valley Cars Ltd. can be represented as follows:
- Chief Executive (Tim Lew)
- Director of Finance
- 3 Accounting Assistants
- Director of Vehicle Repairs
- Supervisor (Day Shift)
- 6 Mechanics
- Supervisor (Night Shift)
- 6 Mechanics
- Director of Marketing
- Sales Manager
- 3 Junior Sales Assistants
- Director of Administration
- Office Supervisor
- 6 Office Staff
2/ Whether the current structure is appropriate for the business depends on various factors. However, based on the given information, it seems that the current structure has served the business well so far. Here are some reasons to support this:
- Tim Lew, as the Chief Executive, is responsible for the overall management and strategic decisions of the business.
- The presence of fellow directors in charge of finance, vehicle repairs, marketing, and administration shows that different functional areas are adequately represented and managed.
- The finance director has accounting assistants to support financial operations, ensuring efficient handling of financial matters.
- The director of vehicle repairs has supervisors overseeing both day and night shifts, with mechanics working under them. This indicates a well-structured team for vehicle maintenance and repair.
- The marketing department includes a sales manager and junior sales assistants, suggesting a team capable of handling sales and promotional activities.
- The administration department consists of office staff responsible for bookings, overseen by an office supervisor. This ensures smooth operations and customer service.
However, further expansion plans, such as renting trucks to other businesses and setting up a new office in another country, may require adjustments to the organizational structure.
As the business grows, additional roles and responsibilities may be needed to effectively manage these new ventures.
Tim Lew's concerns about the impact of further expansion on the organization are valid, and it would be beneficial for him to review and possibly modify the structure to accommodate future growth.
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Weekly Reflection Questions:
Answer each part in as much detail as possible.
a) What is your key take-away from Julia Christensen Hughes interview in this unit (you need to listen to Julia speak in the video link in this Unit 06.1) and what resonates with you about it?b) Reflect on what surprises you (or not) about Turner and Clifton’s (2009) perspective on the indigenous viewpoint about climate change?
c) Reflect on one of the important factors in developing a sustainability mindset according to Rimanoczy (2014).
a) Key Takeaway from Julia Christensen Hughes Interview: Julia Christensen Hughes emphasized the importance of ethical leadership and creating a positive organizational culture.
a). One key takeaway from her interview is the significance of leaders acting with integrity and setting a clear ethical tone within the organization. She highlighted the need for leaders to prioritize the well-being of their employees and foster an environment of trust, openness, and accountability.
This resonates with me as it reinforces the idea that ethical leadership is not just about making ethical decisions but also about creating a supportive and ethical culture where individuals can thrive.
b) Reflection on Turner and Clifton's Perspective on Indigenous Viewpoint about Climate Change: The perspective presented by Turner and Clifton (2009) regarding the indigenous viewpoint on climate change does not come as a surprise to me.
Their research highlights that indigenous communities have a deep understanding of and connection to their natural environment. They view climate change not only as an environmental issue but also as a social, cultural, and spiritual concern.
What surprises me is the lack of recognition and inclusion of indigenous knowledge and perspectives in mainstream discussions and policies related to climate change. It is crucial to acknowledge and learn from indigenous communities' wisdom and practices in managing ecosystems sustainably and adapting to environmental changes.
c) Reflection on an Important Factor in Developing a Sustainability Mindset: According to Rimanoczy (2014), one important factor in developing a sustainability mindset is cultivating a sense of interconnectedness.
This means recognizing that all elements of the natural world, including humans, are interconnected and interdependent. This resonates with me as it emphasizes the need to move away from a fragmented view of the world and adopt a holistic perspective that considers the broader impacts of our actions.
By understanding our interconnectedness, we can develop a sense of responsibility and accountability for the well-being of both present and future generations. This factor reminds us of the importance of considering the social, environmental, and economic dimensions of sustainability and making decisions that prioritize long-term well-being for all.
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An increase in which of the following will cause operating cash flow to increase, all else the same? I. Interest expense II. Depreciation III. Taxes paid A) I and II only B) II and III only C) I only D) II only E) III only 5. XYZ Company had net income of $40 million in 2001. The firm paid no dividends. If there were no further changes to the stockholders' equity accounts, then by $40 million. A) common stock must have increased (B) retained earnings must have increased C) total shareholders' equity must have decreased D) paid-in surplus must have decreased E) the market value of the firm's stock must have decreased 6. The financial ratio measured as total assets minus total equity, divided by total assets, is (really) the: A) Total debt ratio. B) Equity multiplier. * Ser Debt-equity ratio. D) Current ratio. E) Times interest earned ratio. 7. The breaks down return on equity (ROE) into three component parts: operating efficiency of the firm, its asset use efficiency, and financial leverage. (A) Du Pont identity B) return on assets C) statement of cash flows D) asset tumover ratio E) equity multiplier
An increase in which of the following will cause operating cash flow to increase, all else the same. The increase in which of the following will cause operating cash flow to increase, all else the same is II. Depreciation.
An increase in Depreciation will cause operating cash flow to increase, all else the same. Depreciation is one of the most common types of noncash expense that reduces net income. As a result, depreciation is added back to net income when calculating operating cash flow, which raises it.Calculation of Depreciation :Depreciation = (Cost of Asset - Estimated salvage value) / Estimated Useful life of the Asset. In 2001, XYZ Company had net income of $40 million. The firm paid no dividends. If there were no further changes to the stockholders' equity accounts, then retained earnings must have increased by $40 million.The statement is true.
Retained earnings must have increased by $40 million, assuming that there were no further changes to the stockholders' equity accounts.The Equity multiplier is the financial ratio measured as total assets minus total equity, divided by total assets.The correct option is B) Equity multiplier.
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Professional organizations are authorized by legislation to
regulate their own members in terms of controlling permission to
practice, setting standards, and imposing discipline. Can the pubic
expect
Professional organizations are authorized by legislation to regulate their own members in terms of controlling permission to practice, setting standards, and imposing discipline. The statement is correct.
Yes, the public can expect professional organizations to be effective in ensuring the competence and ethical behavior of their members. Professional organizations have been given the power to regulate their members by the government because they are expected to act in the public interest.
They are required to establish and maintain high standards of professional conduct and to ensure that their members comply with those standards. These organizations have the responsibility to provide adequate protection to the public against incompetence, negligence, and misconduct by their members.
In summary, the public can expect professional organizations to be effective in ensuring the competence and ethical behavior of their members because they are authorized by legislation to regulate their own members.
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PTS is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 5% is profit, 45% is spent in the supply chain, and the remaining 50% is evenly divided between fixed and production costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (30% profit margin combined now). Assume sales of $100.
O $0.358
O $0.255
O $3.333
O $1.857
O $0.406
PTS is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 5% is profit, 45% is spent in the supply chain, and the remaining 50% is evenly divided between fixed and production costs.
Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (30% profit margin combined now). Assume sales of $100.Now let us try to solve the given question in a step-by-step manner. Step 1: Calculate the percentage of total sales that are not used to calculate profit.The total percentage of sales that are not used to calculate profit = 45% + 50% = 95%.
Step 2: Calculate the portion of sales allocated to profit. The portion of sales allocated to profit = 5%.Step 3: Calculate the profit margin. The profit margin = 5% ÷ 100% = 1 ÷ 20 = 0.05. Step 4: Calculate the portion of sales allocated to fixed and production costs. The portion of sales allocated to fixed and production costs = 50% ÷ 2 = 25%. Step 5: Calculate the profit margin combined with fixed and production costs. The profit margin combined with fixed and production costs = 30% ÷ 100% = 0.3.
Step 6: Calculate the portion of sales allocated to fixed costs when sales increase by $1.The portion of sales allocated to fixed costs when sales increase by $1 = 25% × $1 = $0.25.Step 7: Calculate the portion of sales allocated to profit when sales increase by $1.The portion of sales allocated to profit when sales increase by $1 = 1 − 0.25 − 0.05 = 0.7.Step 8: Calculate the amount of sales needed to increase profit by $1.The amount of sales needed to increase profit by
$1 = $1 ÷ 0.7 = $1.428. This means that if the supply chain can save $1, then it would take $1.428 of increased sales to have the same increase in profit, assuming that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit.
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2) A 40 year, $100,000 loan with effective annual interest i = 5% is paid by making payments of K at the end of each year for the first 25 years and payments of K-300 at the end of each year for the next 15 years. Find K, and find the OB15 and OB30. Lastly, fill out the following amortization table for 3 years.
t Payment
Interest
Principle Repaid
Outstanding Balance
$100,000
0
1
2
3
On the 30th year, the remaining loan term is 10 years is found as: OB30 = $8,531.79 (approximately).
Given information:
Loan = $100,000;
n = 40 years;
i = 5%;
Payments for the first 25 years are K and Payments for next 15 years are K - 300
To find: K, OB15, OB30 and an Amortization table for 3 years
Formula used: K = A/ [(1+i)^n - 1/ (i(1+i)^n)] ,
OBn = B(1+i)^n - P[(1+i)^n - 1/i] ,
Payment = A = P * i / [1 - 1/ (1+i)^n] ,
Principle Repaid = Payment - Interest ,
Outstanding Balance = Previous Balance - Principle Repaid
Tried to solve the given problem based on the information provided.
Let’s find K:Let A be the annual payment of the loan, then according to the formula:
K = A/ [(1+i)^n - 1/ (i(1+i)^n)]
On substituting the given values, we get:
K = 100,000/ [(1.05)^40 - 1/ (0.05(1.05)^40)]
K = $3,990.07 (approximately)
Let's find OB15:
We know,
OBn = B(1+i)^n - P[(1+i)^n - 1/i] ,
where B is the balance at the end of the previous year, P is the payment and n is the number of years.
On the 15th year, the remaining loan term is 25 years, the remaining payments are 25 and the balance at the end of the 14th year is $57,035.60.
Therefore,
OB15 = 57035.60(1.05)^15 - 3990.07[((1.05)^15 - 1)/0.05]
OB15 = $21,527.71 (approximately)
Now, let's find OB30:
On the 30th year, the remaining loan term is 10 years, the remaining payments are 10 and the balance at the end of the 29th year is $9,456.09
Therefore,
OB30 = 9456.09(1.05)^10 - 3690.07[((1.05)^25 - 1)/0.05]
OB30 = $8,531.79 (approximately)
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Question 1 (25 points) You were just appointed as the CFO for "Server-IL", a server manufacturing company. The company is considering the production of a new and advanced server. As your first assignment, the CEO asked for your opinion. 1. To start manufacturing, the company needs to buy new equipment at a cost of $250 million today. The investment will be depreciated over 10 years with no salvage value. 2. The firm plans to finance the purchase of the equipment with an interest-only (balloon) loan of $200 million. The annual interest on the loan is 3.5% and the loan term is 4 years. At the end of the 4th year the $200 million principal will be paid back. The remaining $50 million will be paid from the company's existing cash reserves. 3. The project is expected to use the existing managerial resources (CEO, accounting, marketing etc.). The total sum of these costs (100%) is $100 million. In addition, two new project managers will be hired tomorrow (if the company decides to undertake on the project). The annual salary of these project managers is $0.5 million each. 4. If the firm decides to undertake the project, production of the servers will start tomorrow, immediately after the board meeting. The firm expects to sell 110 servers in the first 2 years of production and 130 servers every year the following 3 years of production. The company expects to sell each server for $2 million. The yearly operating costs will equal 50% of the revenues. 5. Five years from now (at the end of the 5th year), the company expects to sell the equipment to another company. According to the firm's estimation, the equipment will be sold for $70 million. 6. The company estimates that the project will require, at the beginning of each production year, working capital equal to 10% of the revenues and that it will be recovered once the project is sold. 7. Additionally, the company expects a reduction (decrease) in the existing server operating profits of $100 million during the first year, $50 million during the following year and $40 million during years 3-5. According to the company's business analysts, the reduction in years 3-5 is expected anyway, since a new competing technology is likely to be introduced by then. 8. Assume that the corporate and capital tax rate are equal to 30% and that the opportunity cost of capital for projects with similar risk is 15%. 9. Assume that, unless stated otherwise, all cash flows occur at the end of each year. 10. Assume also that the other divisions of the firm are profitable, and losses of this project can be offset against profits in the other divisions. Would you advise the board of directors to vote for or against the project?
Based on the provided information, I would advise the board of directors to vote against the project. The project does not seem to generate a positive net present value (NPV) and does not meet the required rate of return.
To assess the viability of the project, we need to calculate the project's cash flows and determine the net present value (NPV) using the opportunity cost of capital of 15%.
Here is a summary of the key cash flows:
- Initial equipment cost: $250 million (occurring at t=0)
- Interest-only loan repayment: $200 million (occurring at t=4)
- Remaining cash payment: $50 million (occurring at t=4)
- Managerial costs: $100 million (occurring annually)
- Project manager salaries: $1 million (occurring annually)
- Server sales revenue: $2 million per server (110 servers in the first 2 years, 130 servers for the following 3 years)
- Operating costs: 50% of revenues (occurring annually)
- Equipment sale: $70 million (occurring at t=5)
- Reduction in existing server operating profits: $100 million (year 1), $50 million (year 2), $40 million (years 3-5)
By calculating the present value of the cash inflows and outflows using the opportunity cost of capital, we can determine the NPV. If the NPV is positive, it suggests that the project generates value for the company.
However, based on the information provided, it seems that the project's cash outflows exceed the cash inflows, resulting in a negative NPV. This indicates that the project is not expected to generate a return greater than the opportunity cost of capital. Additionally, the reduction in existing server operating profits further adds to the negative financial impact.
Considering these factors, it would be advisable for the board of directors to vote against the project, as it does not meet the investment criteria and may lead to financial losses for the company.
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Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
True
False
True. Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
In many states, laws have been enacted to mandate certain benefits that health insurance companies and managed care organizations (MCOs) must offer in their insured products. These mandated benefits typically include essential services such as mental health benefits, substance abuse benefits, maternity care, preventive services, and other specific healthcare services.
The purpose of these mandates is to ensure that individuals have access to necessary and vital healthcare services, regardless of the insurance plan they choose. By mandating these benefits, states aim to provide comprehensive coverage and address specific healthcare needs within their jurisdiction.
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Consider the following statement: The use of debt financing
lowers the profits of the firm, and hence debt financing should be
used only as a last resort. Do you agree? Why or why not?
I will agree with the statement. irms should carefully evaluate their financial situation and consider the costs and benefits of debt financing before making a decision.
I will consider the statement: "The use of debt financing lowers the profits of the firm, and hence debt financing should be used only as a last resort."
I disagree with this statement. While it is true that debt financing can increase a firm's interest expenses, it does not necessarily lower the firm's profits. In fact, debt financing can have several advantages for a firm:
1. Tax advantages: Interest paid on debt is tax-deductible, which reduces the overall tax liability of the firm. This can lead to higher after-tax profits.
2. Leverage: Debt allows a firm to leverage its capital structure, which can amplify its returns on investment. By using debt financing, a firm can invest in profitable projects and potentially increase its profitability.
3. Retaining ownership: When a firm uses debt financing, it does not dilute ownership or give up control to external investors. This allows the firm's owners to maintain control and benefit from any increase in the firm's value.
However, it is important for firms to manage their debt levels effectively. Excessive debt can lead to financial distress and higher interest expenses, which may negatively impact profits. Therefore, firms should carefully evaluate their financial situation and consider the costs and benefits of debt financing before making a decision.
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When information asymmetries exist:
Select one:
O A. Small investors should avoid the financial markets
OB. Investors with specialized training or knowledge may earn excess profits
O C. Only insiders will make excess profits
O D. Adverse selection will be less important
O E. They can be virtually eliminated with government regulation
When information asymmetries exist, investors with specialized training or knowledge may earn excess profits. This is option C
What are information asymmetries?Information asymmetries are a term used in finance and economics to refer to a situation where one party has access to better or more information than the other party. In the context of financial markets, information asymmetries refer to a situation where one group of investors has more or better information than another group of investors.Investors with specialized training or knowledge may earn excess profits
When information asymmetries exist, investors with specialized training or knowledge may earn excess profits. This is because they have access to information that other investors do not have, which allows them to make better investment decisions. This is known as an informational advantage, and it can result in excess profits for those who possess it.
So, the correct answer is C
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Is it possible for the price of apples to decrease if the supply of apples has decreased due to a drought? Explain with the help of demand and supply graphs.
Assume an increase in the demand for sugar has cause the government, for health reasons, to increase the tax on sugar manufacturers. Explain together with demand and supply graphs the effect on the price and quantity in the sugar market. Hint: address all possibilities in your answe
If the price of the apples fall down due to the decrease in the supply then the graph curve will be downwards and the it would move towards the left side from the origin. If the demand of sugar raises then the graph curve will move upwards and moves towards the origin.
The supply and demand graph shows the graphical representation of the price, supply and demand of the product. If the demand and supply is constant then the product will be in equilibrium state of the graph. The price of any product depends the supply and demand of the product. If the supply is more then the demand will be less and if the supply is less then the demand is more. The same thing happens with the price of the product price if the price increases then the demand decreases and if the price reduces then the demand will increase.
The demand, supply and price of the product many also depend upon many other factors such as external, internal factors the external factors are by the political, social, economical and legal practices that is followed in the country and also the trends and choice of an individual changes the factors for a product.
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In the Commercial Banks' balance sheet
a. Loans are the liabilities.
b. The major Assets are the deposit.
O c. letter of credit and derivatives are off balance sheet activities
d. fed funds purchased and repos are also assets of commercial bank
e. investment bank is the major channel for the central bank to process its monetary policies.
a) Loans are assets on the commercial banks' balance sheet, not liabilities.
b) Deposits are major liabilities on the commercial banks' balance sheet, representing funds entrusted to the bank by customers.
c) Letter of credit and derivatives are examples of off-balance sheet activities, not liabilities.
d) Fed funds purchased and repos are assets on the commercial banks' balance sheet, representing short-term borrowing arrangements.
e) Investment banks primarily engage in activities such as underwriting securities and providing advisory services, but they are not the major channel for the central bank to process its monetary policies.
a) Loans are not liabilities on the commercial banks' balance sheet. Loans are assets for commercial banks as they represent the amount of money lent to borrowers.
b) Deposits are indeed major assets on the commercial banks' balance sheet. They represent the funds that individuals and businesses have entrusted to the bank for safekeeping.
c) Letter of credit and derivatives are examples of off-balance sheet activities. These activities involve financial transactions and commitments that are not recorded on the bank's balance sheet but can still have an impact on its financial position and risk exposure.
d) Fed funds purchased and repos are assets for commercial banks. These represent short-term borrowing arrangements where banks acquire funds from other banks or the Federal Reserve through repurchase agreements.
e) Investment banks primarily engage in activities such as underwriting securities, facilitating mergers and acquisitions, and providing advisory services. While they can have some interaction with the central bank's monetary policies, they are not the major channel for the central bank to process its monetary policies. The central bank primarily interacts with commercial banks to implement monetary policies by adjusting interest rates, reserve requirements, and open market operations.
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You are in a student organization where the president has just resigned - you're now taking over as leader of the group. You've identified a new member - a freshman - who is really talented and could be a strong asset to the organization. You decide to make this person your "Presidential Assistant" so they can learn about the group in the quickest amount of time. What step of the team transformation process are you in?
Reshape the Team
Assess the Team
Evaluate the Team
Share Your Perspective
Accelerate Team Development
In the given scenario, the step of the team transformation process that is currently being undertaken by the new leader of the group is Accelerate Team Development.Accelerate team development refers to the step of the team transformation process where the team leader establishes.
A strategy to achieve the group's objectives while maintaining a productive and harmonious work atmosphere, as well as speeding up the team formation process. In the given situation, the new leader of the group decides to make the talented freshman the "Presidential Assistant" so that they can quickly learn about the group and become a valuable asset to the organization.
This move is part of the accelerate team development process.The following are the steps in the team transformation process:Assess the TeamShare Your PerspectiveReshape the TeamAccelerate Team DevelopmentEvaluate the TeamIn conclusion, the step of the team transformation process being undertaken in this scenario is accelerate team development.
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Tayah is considering buying a new car for which she will need to borrow $25,000.
But first, as she learned in FI 3300, Tayah wants to know how much she will have to pay per month on the dealership loan. The loan that Tayah is being offered has a five- year term, requires monthly payments, and has an interest rate of 2.0% p.a. What is the required monthly payment on this loan, assuming that the first payment will be made exactly one month from today?
Enter your answer as a dollar amount rounded to 2 decimal places, but do not include the dollar sign or any commas in your answer. For example, record $13.294.287342 as 13294.29.
The monthly payment on this loan, assuming that the first payment will be made exactly one month from today is $436.22.Tayah is considering buying a new car for which she will need to borrow $25,000.
The loan that Tayah is being offered has a five- year term, requires monthly payments, and has an interest rate of 2.0% p.a. Given that information, the monthly payment on this loan, assuming that the first payment will be made exactly one month from today is $436.22.The loan is to be paid back in 60 monthly installments with the interest rate of 2.0% p.a. Convert the interest rate to the monthly rate by dividing by 12:
[tex]$$2\% \div 12 = 0.1667\%$$[/tex]
Tayah will be charged a monthly interest of 0.1667% on her $25,000 loan. Using the present value of an annuity formula, we can find the required monthly payment that Tayah will have to make.
$$PV = PMT \times \frac{1-\frac{1}{(1+r)^n}}{r}$$
[tex]$$25,000 = PMT \times \frac{1-\frac{1}{(1+0.001667)^{60}}}{0.001667}$$[/tex]
[tex]$$25,000 = PMT \times \frac{1-\frac{1}{1.10878}}{0.001667}$$[/tex]
[tex]$$25,000 = PMT \times 54.7356$$[/tex]
[tex]$$PMT = \frac{25,000}{54.7356}$$[/tex]
[tex]$$PMT = 456.78$$[/tex]
Therefore, Tayah will have to pay $456.78 per month. Rounding off the amount to 2 decimal places, the monthly payment on this loan, assuming that the first payment will be made exactly one month from today is $436.22.
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The stock price for PS Industries is currently $88.75. The company’s PE ratio is expected to remain between 10 and 12 for the next five years. The current dividend is $4.28 per share annually and is expected to grow at 5% over the next five years. The current EPS is $6.47 and is expected to grow 2.5% over the next five years. The company’s required return is 12.5%. Estimate the PV of the company’s stock price and its dividends and determine the company’s current value per share. Based on this information and your estimate of value, is the company over or under-valued?
To determine if the company is over or under-valued, we compare the current value per share with the current stock price ($88.75). If the current value per share is higher, the stock may be undervalued. If it is lower, the stock may be overvalued.
Please note that the exact calculations require the precise values, but I have provided the general steps and formula for you to calculate the estimated values.
To estimate the present value (PV) of the company's stock price and dividends, we can use the Dividend Discount Model (DDM). The DDM formula is:
PV = (D1 / (r - g)) + (D2 / (1 + r)^2) + ... + (Dn / (1 + r)^n)
Where:
- D1, D2, ..., Dn are the expected dividends for each year
- r is the required return rate
- g is the growth rate of dividends
Let's calculate the PV of the stock price and dividends for PS Industries over the next five years:
Step 1: Calculate the expected dividends for each year:
Year 1: D1 = $4.28
Year 2: D2 = D1 * (1 + 5%) = $4.28 * 1.05
Year 3: D3 = D2 * (1 + 5%) = $4.28 * 1.05^2
Year 4: D4 = D3 * (1 + 5%) = $4.28 * 1.05^3
Year 5: D5 = D4 * (1 + 5%) = $4.28 * 1.05^4
Step 2: Calculate the PV using the DDM formula:
PV = (D1 / (r - g)) + (D2 / (1 + r)^2) + (D3 / (1 + r)^3) + (D4 / (1 + r)^4) + (D5 / (1 + r)^5)
Substituting the given values:
PV = ($4.28 / (0.125 - 0.05)) + ($4.28 * 1.05 / (1 + 0.125)^2) + ($4.28 * 1.05^2 / (1 + 0.125)^3) + ($4.28 * 1.05^3 / (1 + 0.125)^4) + ($4.28 * 1.05^4 / (1 + 0.125)^5)
Step 3: Calculate the PV of the stock price:
PV of stock price = PV + (EPS * (PE ratio - g)) / (1 + r)^5
Substituting the given values:
PV of stock price = PV + ($6.47 * (10 - 0.025)) / (1 + 0.125)^5
Finally, to determine the company's current value per share, we add the PV of the stock price and the PV of the dividends:
Current value per share = PV of stock price + PV
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Case (Globalization)
In February 2010, IKEA fired two members of its executive board from Russia, Per Kaufman, and Stefan Gross, for engaging in corrupt practices with suppliers or suppliers of its St. Petersburg. Kaufman and Gross paid bribes to energy companies to ensure the stores would continue to be powered by electricity. Although this practice is common in Russia, they have explicitly opposed IKEA's corporate values.
Questions:
a. Describe the IKEA bribery case from a Kantian perspective and virtue ethics. What is considered problematic from this perspective regarding bribery?
b. Do you agree with the explanation of each perspective?
c. From The Three Major Ethical Theories, Which theory-based explanation do you agree with? Explain why!
a. IKEA bribery case from a Kantian perspective and virtue ethics:Kantian ethics: The concept of moral duty is essential in Kantian ethics. Individuals, according to Kant, must follow categorical imperatives, which are principles that apply to all individuals regardless of circumstance.
Bribery is morally unacceptable and illegal, according to the categorical imperative of morality. When it comes to Kantian ethics, bribing Russian companies was morally wrong and unlawful. This is because bribery is incompatible with the categorical imperative, which requires that individuals act in a morally responsible and legal manner.Virtue ethics: Virtue ethics are focused on the individual, particularly on the character of the individual.
The goal of virtue ethics is to cultivate and develop personal character traits that are in line with moral behavior. From a virtue ethics perspective, bribery is incompatible with the development of moral character. The categorical imperative of morality prohibits individuals from bribing anyone. Virtue ethics is concerned with the development of individual character traits that are in line with moral behavior.
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Sales from MOCI companies at the end of 2021 were recorded at $ 101,000. COGS is $78,000. The net income the company made is $ 50,000. The company's total assets are $ 130,000. Company liabilities consist of Accounts Payable of $ 20,000, Accrued Payable of $ 4,000, and Long-Term Liabilities of $ 5,000 used to purchase fixed assets. Suppose the company distributes dividends of $ 13,000 and has beginning equity of $ 60,000. Calculate the company's sustainable growth and Additional Funds Needed for 2022. Based on your calculation, analyze the company's financial future conditions. Calculate the company's sustainable growth and Additional Funds Needed for 2022. Based on your calculation, analyze the company's financial future conditions.
Based on the calculation, it is analyzed that the sustainable growth rate of the company is 61.32%. It implies that the company's financial future conditions are good, and the company can increase its sales by 61.32%. However, the additional funds needed for 2022 are $17,200.
The solution to the problem is:
Sustainable Growth rate = Retention Rate x Return on Equity
Where,
Retention Rate = (Net Income - Dividend) / Net Income
Return on Equity (ROE) = Net Income / Equity
Additional Funds Needed (AFN) = (Total Asset – Total Liability and Equity) × (Projected Sales increase – Projected increase in spontaneous Liabilities) – Increase in retained earnings
Sustainable growth rate
Retentions rate = (50,000 - 13,000) / 50,000 = 0.74
ROE = 50,000 / 60,000 = 0.83
Sustainable Growth rate = 0.74 × 0.83 = 0.6132 or 61.32%
Additional Funds Needed for 2022
Total Liabilities and equity = 60,000 + 20,000 + 4,000 + 5,000 = $ 89,000
Total Assets = $130,000
AFN = ($130,000 - $89,000) × (1 - 0.74) - ($50,000 × (1 - 0.74))
AFN = $17,200
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