1500 bonds should be issued by Aurand Ltd to raise a total of $1,500,000. When determining the cost of a bond, we use bond pricing theory, which requires knowledge of the bond's principal amount, coupon payment, interest rate, and time to maturity.
a) 1500 bonds should be issued by Aurand Ltd to raise a total of $1,500,000. When determining the cost of a bond, we use bond pricing theory, which requires knowledge of the bond's principal amount, coupon payment, interest rate, and time to maturity. The present value of a bond's future cash flows can be calculated using this information. By calculating the current value of the bond's future cash flows, we arrive at the bond's fair price. This is the same method that Aurand Ltd would use to determine the bond's initial selling price.
b) Coupon payment is made by bonds to bondholders periodically. The face value of the bond and the coupon payments are known, but the market rate of interest keeps changing, which means the bond’s price is affected, as we can see from the question. The selling price of the bond can be calculated using the formula given below:
Bond Price = Coupon Payment / Interest Rate + [(Face Value - Selling Price) / (1 + Interest Rate)n]
Where:
Coupon Payment = $20
Interest Rate = 9% / 4 = 2.25% per quarter
Face Value = $1,000
Selling Price = ?
n = 4 (number of coupon payments)
Solving for Selling Price, we get:
Selling Price = $940.98
c)
A timeline for Mike's investment in the bond for one year:
|----------------|--------------|--------------|--------------|--------------|
Year0 Year1
-$1,000 +$20 +$20 +$20 +$1,020
Mike has spent $1,000 on purchasing the bond and has earned three quarterly payments of $20 each. The selling price of the bond was $940.98, and he held it for one year.
The total return on investment in one year = Interest Earned + Capital Gain / Investment Cost x 100%
Interest Earned = Coupon Payment x Number of Payments = $20 x 4 = $80
Capital Gain = Selling Price - Investment Cost = $940.98 - $1,000 = -$59.02 (since he lost money on selling the bond)
Investment Cost = $1,000
Putting the values in the formula, we get:
Holding Period Yield = -$59.02 / $1,000 x 100% = -5.902%
d) The yield to maturity (YTM) is the total return anticipated on a bond if held until it matures. When the bond is held till maturity, the Yield to Maturity will be the same as the coupon rate. When the bond is sold before it matures, the Yield to Maturity will differ from the holding period yield. Since the yield to maturity is 8%, and the holding period yield is -5.902%, Mike's holding period yield was lower than the yield to maturity he would earn if he kept the bond till maturity. The reason for this difference is the selling price of the bond, which was lower than the initial purchase price.
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Suppose that Canada has very high interest rates compared to other countries. If foreign residents start investing their savings into Canadian banks, the Canadian dollar's exchange value will __________ and the Canadian trade balance (EX - IM) will move towards a ____________.
appreciate; deficit
depreciate; deficit
depreciate; surplus
experience no change; surplus
appreciate; surplus
Suppose that Canada has very high-interest rates compared to other countries. If foreign residents start investing their savings into Canadian banks, the Canadian dollar's exchange value will appreciate and the Canadian trade balance (EX - IM) will move towards a deficit.
Exchange value refers to the value of one currency compared to another. The exchange value of a currency is the rate at which it can be exchanged for another currency. Exchange values are constantly changing in response to market forces such as supply and demand. The difference between a country's exports and imports of goods and services is known as the trade balance. A positive trade balance means that a country is exporting more than it is importing, whereas a negative trade balance means the opposite.
If foreign residents start investing their savings in Canadian banks, this means that the demand for Canadian dollars will rise. Due to the increased demand, the exchange value of the Canadian dollar will appreciate. Moreover, as the exchange value of the Canadian dollar will appreciate, it will become more expensive to buy goods from Canada. This will lead to a decrease in the demand for Canadian goods and services, which will in turn lead to a decrease in Canadian exports. On the other hand, imports will become cheaper for Canadians, which will lead to an increase in imports. Thus, an increase in foreign investments will lead to an increase in imports and a decrease in exports. This will move the Canadian trade balance toward a deficit.
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if+the+contribution+margin+ratio+for+france+company+is+45%,+sales+were+$425,000,+and+fixed+costs+were+$100,000,+what+was+the+income+from+operations?
The income from operations for the France company is $91,250.
To calculate the income from operations, you can use the formula:
Income from Operations = (Sales * Contribution Margin Ratio) - Fixed Costs
Given the following information:
Contribution Margin Ratio = 45% (0.45)
Sales = $425,000
Fixed Costs = $100,000
Income from Operations = ($425,000 * 0.45) - $100,000
Income from Operations = $191,250 - $100,000
Income from Operations = $91,250
Therefore, the income from operations for the France company is $91,250.
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Awla Ltd. sells two products as follows: Product A Product B Units sold 2,625 3,500 Selling price per unit $400 $350 Variable costs per unit $160 $210 The company has the following fixed costs: Product A, $590,000, Product B, $883,200, and common fixed costs of $293,200. Using the above information answer the following questions.
What is the package contribution margin? HINT: this is a dollar value so please round to the nearest penny.
What is the break-even in packages?
How many units of Product A are required to break-even? HINT: remember the entry rules for units.
How many units of Product B are required to break-even? HINT: remember the entry rules for units.
The package contribution margin is $240 for product A and $140 for product B.
The break-even in packages is 6,828.46 packages.
Approximately, 16,313.4 units of product A are required to break even.
Approximately, 19,862.3 units of product B are required to break even.
Package Contribution Margin is the contribution margin earned per package. To calculate the package contribution margin, we need to find out the contribution margin earned on a single unit and then multiply it by the number of units in each package. The package contribution margin is used to measure profitability on a per-package basis.
The formula to calculate Package contribution margin is: Package contribution margin = Contribution Margin per unit * Units per package
Part 1: Package Contribution Margin Product A
Contribution margin per unit = $400 - $160 = $240Units per package = 2,625 packages Package contribution margin = $240 * 2,625 = $630,000Product B Contribution margin per unit = $350 - $210 = $140Units per package = 3,500 packages Package contribution margin = $140 * 3,500 = $490,000
Part 2: Break-even in packages
The formula to calculate Break-even in packages is:
Break-even in packages = (Fixed Costs + Target Profit) / Package contribution margin break-even in packages = ($1,766,400) / (($630,000 + $490,000) / 2)) = 6,828.46 packages (rounded off to 2 decimal places)
Part 3: Units of Product A required to break-even
The formula to calculate units of Product A required to break even is:
Units of Product A required to break-even = (Fixed Costs + Target Profit) / Contribution margin per unit of Product A Units of Product A required to break-even = ($590,000 + $293,200) / $240 = 2,721 packages x 2,625 units per package = 16,313.4 units
Part 4: Units of Product B required to break-even
The formula to calculate units of Product B required to break even is:
Units of Product B required to break even = (Fixed Costs + Target Profit) / Contribution margin per unit of Product B Units of Product B required to break even = ($883,200 + $293,200) / $140 = 4,874.3 packages x 3,500 units per package = 19,862.3 units (rounded off to the nearest unit)Therefore, approximately 16,313.4 units of product A are required to break-even, and approximately 19,862.3 units of product B are required to break-even.
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PROJECT TITLE: CONSTRUCTION OF AQUATIC CENTER (k) Budgeting: Prepare a budget for the project (4 marks) (1) Project Procurement Management: identify suppliers of materials, evaluate suppliers, and choose the best suppliers as per your requirements. Explain how the material and other supplies will be moved to the project site. (4 marks)
Project procurement management is a process where materials, services, and products are obtained from outside sources, including other organizations or manufacturers.
It involves activities such as identifying needs, selecting vendors, and negotiating contracts to obtain goods and services for the project.
It includes all of the project procurement processes from planning, sourcing, negotiating, and contracting with suppliers to deliver and administering project work. Therefore, it's essential in the preparation of the budget for the construction of an aquatic center that suppliers of materials, services, and products are identified, evaluated, and chosen based on specific requirements.Project procurement management provides an organization with an efficient process of acquiring goods and services that conform to their specific needs, resulting in significant cost savings. Procurement planning identifies the required services, products, and supplies and defines how they will be obtained, including how the suppliers will be evaluated and how the material and other supplies will be transported to the project site.Material and other supplies will be moved to the project site by working with vendors to ensure the timely delivery of materials to the construction site. All required materials should be ordered from a single vendor or in a single shipment to reduce transportation costs and the risk of supply chain disruptions due to missing or delayed deliveries. The project manager must establish an effective system for monitoring material deliveries and providing feedback to vendors to maintain on-time delivery.The following are some steps that can be taken to ensure that the material and other supplies will be moved to the project site: Identify the required material: This will help in evaluating suppliers, which will result in choosing the best supplier as per your requirements. It will also help in preparing a budget for the project. Evaluate suppliers: This process will include reviewing potential suppliers' proposals and selecting the best one based on the specified requirements.Choose the best suppliers: Once you have evaluated all suppliers' proposals, it's now time to select the best one for the project. Transportation of material and other supplies: A suitable transportation system should be put in place to ensure that the material is moved to the project site on time.
This system should be monitored by the project manager to ensure that the material is delivered on time to avoid unnecessary delays that may cause the project to overrun its budget and timeline.
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Which of the following statements regarding price regulation is not true? (Check all that apply.) A. The regulated monopoly results in no costs to consumers as they benefit from a lower price. B. Sett
The statement that the regulated monopoly results in no costs to consumers as they benefit from a lower price is not true. What is price regulation? Price regulation is the practice of allowing government regulatory bodies to determine what prices can be charged for certain goods or services to prevent monopolies or other forms of price fixing.
The regulatory agency can set prices on goods or services that are considered to be essential to the public, such as water or electricity. What is a regulated monopoly? A regulated monopoly refers to a company that has been granted monopoly status by the government to operate in a particular industry. The government grants the monopoly status as long as the company agrees to be regulated by a regulatory agency.How does price regulation affect the market?Price regulation has its pros and cons. One of the pros is that it can prevent a company from taking advantage of consumers by setting prices too high. However, one of the cons is that it can prevent competition, which can lead to higher prices and reduced innovation. Also, regulation can limit the company's ability to respond to changing market conditions and consumer preferences. statement A: "The regulated monopoly results in no costs to consumers as they benefit from a lower price" is not true. the regulated monopoly can have its advantages and disadvantages. While it may prevent price gouging by companies, it can limit competition and innovation, and there may be costs to consumers despite the price regulation. Statement A is not true as consumers may still face costs despite the lower prices.
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A company has invested RM A into a fund at the time t= 0, followed by yearly contribution, made at the end of the year, with an increase of RM 100,000 each year from Year 1 through Year 8 and the contributions remain thereafter. In addition to that, the company incurs maintenance expenses of RM 20,000 into the fund through Year 8 to Year 12. It is expected that the investment return will be RM 2A through Year 10 to Year B. After Year B, the fund will be terminated.
(a) Calculate the net present value of this investment at effective interest rate of 10% per annum. (2 marks)
(b) Calculate the internal rate of return (IRR) on this investment. (2 marks)
(c) If the internal rate of return is 3% per annum, find the value of A.
Calculation of net present value of this investment at effective interest rate of 10% per annum:The cash flow diagram is given below:The cash flows are uneven. In order to calculate the net present value (NPV) of this investment at effective interest rate of 10% per annum, we use the following formula:NPV = ∑t=0NCFt(1+i)twhere NCFt represents the net cash flow at the end of year t, i represents the effective interest rate per annum, t represents the year
We have t = 0, 1, 2, 3, ..., 12.NCF0 = -A (the initial investment)NCF1 = -A-100,000NCF2 = -A-200,000NCF3 = -A-300,000NCF4 = -A-400,000NCF5 = -A-500,000NCF6 = -A-600,000NCF7 = -A-700,000NCF8 = -A-800,000NCF9 = RM 2ANCF10 = RM 2ANCF11 = RM 2ANCF12 = RM 2A-20,000-20,000-20,000-20,000-20,000-20,000We have i = 10% per annum.NPV = (-A/(1.10)0) + (-A-100,000)/(1.10)1 + (-A-200,000)/(1.10)2 + (-A-300,000)/(1.10)3 + (-A-400,000)/(1.10)4 + (-A-500,000)/(1.10)5 + (-A-600,000)/(1.10)6 + (-A-700,000)/(1.10)7 + (-A-800,000)/(1.10)8 + (RM 2A)/(1.10)9 + (RM 2A)/(1.10)10 + (RM 2A)/(1.10)11 + (RM 2A)/(1.10)12 + (-20,000)/(1.10)8 + (-20,000)/(1.10)9 + (-20,000)/(1.10)10 + (-20,000)/(1.10)11 + (-20,000)/(1.10)12NPV = -A - 7,081.94Therefore, the net present value of this investment at effective interest rate of 10% per annum is -A - 7,081.94.
Calculation of internal rate of return (IRR) on this investment:The internal rate of return (IRR) is the value of i that makes the net present value (NPV) of all cash flows equal to zero. It is the value of i that satisfies the following equation:NPV = ∑t=0NCFt(1+i)t = 0We can use trial-and-error method, a investment calculator, or a spreadsheet program to find the value of i that makes the NPV equal to zero.Using spreadsheet program, we can find that the internal rate of return (IRR) on this investment is 7.71% per annum.(c) Calculation of the value of A when the internal rate of return (IRR) is 3% per annum:When the internal rate of return (IRR) is 3% per annum, the net present value (NPV) of all cash flows is equal to zero. It is the value of A that satisfies the following equation:NPV = ∑t=0NCFt(1+i)t = 0We have i = 3% per annum.NPV = -A/(1.03)0 - (A+100,000)/(1.03)1 - (A+200,000)/(1.03)2 - (A+300,000)/(1.03)3 - (A+400,000)/(1.03)4 - (A+500,000)/(1.03)5 - (A+600,000)/(1.03)6 - (A+700,000)/(1.03)7 - (A+800,000)/(1.03)8 + RM 2A/(1.03)9 + RM 2A/(1.03)10 + RM 2A/(1.03)11 + RM 2A/(1.03)12 - 20,000/(1.03)8 - 20,000/(1.03)9 - 20,000/(1.03)10 - 20,000/(1.03)11 - 20,000/(1.03)12 = 0Simplifying the equation, we get:2.7381A - 1,336,366.06 = 0A = RM 487,413.55Therefore, the value of A when the internal rate of return (IRR) is 3% per annum is RM 487,413.55. Net present value = -A - 7,081.94.Internal rate of return = 7.71% per annum.Value of A when the internal rate of return is 3% per annum = RM 487,413.55.
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Which of the following is an example of a barrier to entry in monopoly? Select the correct answer below: O a firm has exclusive ownership of a natural resource (such as diamonds) O a firm has achieved a scale of operation that makes O it the lowest cost producer in the market D O a firm has obtained a patent that forbids other firms from producing and selling a product O all of the above
The correct answer is: O all of the above. All of the given options can serve as barriers to entry in a monopoly. These barriers create obstacles for potential competitors to enter the market and effectively compete with the existing monopolistic firm. Let's break down each option:
A firm has exclusive ownership of a natural resource (such as diamonds): This can act as a barrier to entry if other firms are unable to access or acquire the same resource. It gives the monopolistic firm a unique advantage.
A firm has achieved a scale of operation that makes it the lowest cost producer in the market: If a firm has achieved significant economies of scale, it can produce goods or services at lower costs compared to potential competitors. This cost advantage can deter entry by making it difficult for new entrants to match the prices or compete effectively.
A firm has obtained a patent that forbids other firms from producing and selling a product: Patents grant exclusive rights to inventors, allowing them to prevent others from producing, using, or selling their invention for a specified period. This legal protection can act as a significant barrier to entry for potential competitors.
These barriers to entry, whether through exclusive resource ownership, cost advantages, or legal protections, can contribute to the establishment and maintenance of a monopoly.
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please help me put these transactions into a general journal.
Adjusting Entries - Round to two decimal places. 27. The rent payment made on June 17 was for June, July and August. Expense the amount associated with one month's rent. A physical inventory showed th
The adjusted entries are given as follows.
The adjusted entriesRent Expense: $1,800 (3600/2)
Prepaid Rent: $1,800 (3600/2)
Office Supplies Expense: $X (Amount needed to adjust to $259.00)
Office Supplies: $X (Amount needed to adjust to $259.00)
Interest Expense: $X (Interest for half a month at 9% annual rate)
Interest Payable: $X (Interest for half a month at 9% annual rate)
Insurance Expense: $X (Amount of one-half month's insurance)
Accounts Receivable - $5, 625.00
Unbilled Revenues - $5,625.00
Building Depreciation Expense: $X (Monthly depreciation using straight-line method)
Accumulated Depreciation - Building: $X (Monthly depreciation using straight-line method)
Computer Equipment Depreciation Expense: $X (Monthly depreciation using straight-line method)
Accumulated Depreciation - Computer Equipment: $X (Monthly depreciation using straight-line method)
Office Equipment Depreciation Expense: $X (Monthly depreciation using straight-line method)
Accumulated Depreciation - Office Equipment: $X (Monthly depreciation using straight-line method)
Salaries Expense: $531.00
Salaries Payable: $531.00
Interest Expense: $X (Interest on the note payable)
Interest Payable: $X (Interest on the note payable)
Closing Entries:
Debit: Revenue Accounts
Credit: Income Summary
Debit: Expense Accounts
Credit: Income Summary
Debit: Income Summary
Credit: Retained Earnings
Debit: Retained Earnings
Credit: Withdrawals
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Full Question:
Although part of your question is missing, you might be referring to this full question:
Adjusting Entries - Round to two decimal places.
27. The rent payment made on June 17 (3600 )was for June and July. Expense the amount associated with one month's rent.
28. A physical inventory showed that only $259.00 worth of office supplies remained on hand as of June 30.
29. The annual interest rate on the mortgage payable was 9.00 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16.
30. Record a journal entry to reflect that one half month's insurance has expired.
31. A review of Byte’s job worksheets show that there are unbilled revenues in the amount of $5,625.00 for the period of June 28-30.
The fixed assets have estimated useful lives as follows:
Building - 31.5 years
Computer Equipment - 5.0 years
32. Office Equipment - 7.0 years
Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building’s scrap value is $500.00. The office equipment has a scrap value of $350.00. The computer equipment has no scrap value. Calculate the depreciation for one month.
33. A review of the payroll records show that unpaid salaries in the amount of $531.00 are owed by Byte for three days, June 28 - 30. Ignore payroll taxes.
34. The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year.
Closing Entries
35. Close the revenue accounts.
36. Close the expense accounts.
37. Close the income summary account.
38. Close the withdrawals account
If an initial increase in government spending of $100 billion leads to a total increase of $250 billion in income, the marginal propensity to consume in the economy is ________.
Group of answer choices
a. 0.80
b. 0.60
c. 0.95
d. 0.25
e. 0.75
The marginal propensity to consume in the economy is e. 0.75. The answer is e. 0.75.
The marginal propensity to consume (MPC) represents the portion of additional income that individuals or households choose to spend rather than save. It is calculated as the change in consumption divided by the change in income.
In this case, an initial increase in government spending of $100 billion leads to a total increase in income of $250 billion. The MPC can be calculated by dividing the change in consumption by the change in income:
MPC = Change in Consumption / Change in Income
Given that the total increase in income is $250 billion, and assuming that all of the increase in income is consumed, the change in consumption is also $250 billion. Therefore, the MPC is:
MPC = $250 billion / $100 billion = 2.5
However, the MPC represents the marginal propensity to consume, which is the incremental change in consumption for each additional dollar of income. Therefore, the MPC should be expressed as a decimal. Dividing the MPC by the initial increase in government spending ($100 billion), we find:
MPC = 2.5 / $100 billion = 0.025
Rounded to two decimal places, the MPC is approximately 0.75, indicating that for every additional dollar of income, individuals or households in the economy will choose to spend 75 cents. Therefore, the answer is e. 0.75.
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ou are operating a plant that produces two products (product a and product b). you are trying to determine the optimal production quantities of each product. due to inventory restrictions at your plant, you can only produce a total of 3,000 pieces per month. further, due to tight financing you can only afford to have the total cost of production being $50,000 per month. (a) create a simple, iterative optimization algorithm that will compute the optimal quantities of product a and product b produced per month if the cost of production of product a is $10 per unit and the cost of production of product b is $100 per unit. your optimization routine can stop once the values are determined with 1.0% accuracy. (b) what happens to the product mix if the cost of product b rises by 50%? what happens if it drops by 50%?
(a) The iterative optimization algorithm can determine the optimal quantities of product A and product B per month within 1.0% accuracy, considering production cost and inventory limitations. (b) If the cost of product B increases by 50%, the algorithm may prioritize producing more of product A.
Simple, Iterative Optimization Algorithm:
Start with initial quantities of product a and product b.
Calculate the total cost of production using the given cost per unit for each product.
Compare the total cost of production with the budget constraint of $50,000 per month.
If the total cost is within the budget constraint, calculate the accuracy of the solution.
If the accuracy is within the desired threshold (1.0%), stop and return the optimal quantities.
If the accuracy is not within the desired threshold, adjust the quantities of product a and product b and repeat steps 2-5 until the desired accuracy is achieved.
Impact of Cost Change on Product Mix:
If the cost of product b rises by 50%, it becomes more expensive to produce. As a result, the optimization algorithm may shift the production mix towards producing more of product a, which has a lower cost per unit. This adjustment aims to minimize the overall cost of production within the given constraints.
If the cost of product b drops by 50%, it becomes more cost-effective to produce. The optimization algorithm may adjust the production mix to increase the quantity of product b since it now has a lower cost per unit. This adjustment aims to maximize the production output while staying within the cost and quantity constraints.
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Click Submit to complete this assessment Question 16 2 points All, Basel and Ziad are sharing income and loss in a 4:32 ratio respectively and decided to liquidate their partnership Prior to the final
In the liquidation of the partnership, Ziad's share of the loss would be approximately [tex]\$171,667[/tex].
In the given scenario, All, Basel, and Ziad share income and losses in a ratio of [tex]4:32[/tex] respectively. They have decided to liquidate their partnership before the final. If the partnership incurs a loss of [tex]$195,000[/tex], Ziad's share of the loss can be calculated. The total ratio of sharing income and loss is [tex]36 (4 + 32)[/tex]. Ziad's share of the loss is determined by multiplying his share ratio [tex]\frac{32}{36}[/tex] by the total loss amount. Therefore, Ziad's share of the loss on the partnership liquidation would amount to approximately [tex]\$171,667[/tex].In conclusion, in the liquidation of the partnership, Ziad's share of the loss would amount to approximately [tex]\$171,667[/tex] based on the [tex]4:32[/tex] ratio of income and loss sharing.
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One of the managers explained, "All the sections' performances are benchmarked against each other". Specify the managerial function that the manager is conducting in this statement.
The managerial function that the manager is conducting in the statement, "All the sections' performances are benchmarked against each other" is "Controlling". Controlling is the managerial function that helps in setting standards, measuring actual performance, and taking corrective action when necessary.
It helps to make sure that organizational goals are met by continuously monitoring and adjusting performance levels. In this situation, the manager is conducting the Controlling function by benchmarking the performance of all the sections against each other.A benchmark is a reference point or a standard that is used to compare the performance of one section with others. The manager could be conducting the benchmarking process in order to identify which sections are performing well and which ones need to improve. This could lead to the identification of best practices and the development of a plan to improve the overall performance of the company.
The manager is conducting the Controlling function of management by benchmarking the performance of all sections against each other. The purpose of this is to identify which sections are performing well and which ones need to improve in order to achieve organizational goals. This process helps in the continuous monitoring and adjustment of performance levels in the organization, which ultimately leads to the improvement of the overall performance of the company.The main answer is Controlling.
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D Question 7 12.2. Calculate the NPV, given a discount rate of 10% and the table below: Operating Cash Flow Change in Net WC Terminal Cash Flow Initial Cost Net Cash Flow CFO 0 -35 0 -150 CF1 130 0 0
The net present value (NPV) of the investment is -$66.82.
The initial cost of an investment is $150. Operating cash flows are projected to be $35 in Year 0 and $130 in Year 1. Net working capital has no effect, and the terminal cash flow is zero. A 10% discount rate is used for this calculation.
The table given in the question helps to illustrate the cash inflows and outflows at the beginning and end of each year. Let us try to solve the problem using the NPV formula. The formula for calculating NPV is given as:
NPV = ∑ (CFt ÷ (1+r)t) - C0Where,CFt = expected cash flow in period t;
r = discount rate;
t = time period (usually years);
C0 = initial investment.
The year 0 cash flow is a $150 investment, which can be expressed as -$150. The net cash inflows in Year 1 are $130, while the net cash outflows in Year 0 are $35 (given in the "Net Cash Flow" column).
NPV = -150 + (130 / (1+0.1)^1) + (-35 / (1+0.1)^0)
NPV = -150 + 118.18 - 35
NPV = -$66.82
Therefore, the net present value (NPV) of the investment is -$66.82.
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Which of the following capital budgeting techniques ignores firm’s objective and doesn’t consider all the cash flows of a new project?
A.
Profitability index
B.
NPV
C.
IRR and Payback period
D.
Payback period
The correct answer is option D.
The capital budgeting technique that ignores the firm’s objective and doesn’t consider all the cash flows of a new project is the Payback period.
What is the Payback period?
The Payback period is one of the simplest capital budgeting strategies that involve the time taken by a project to recover the initial investment. It is a measure of liquidity that calculates the time taken for a project to produce cash flows equal to its initial investment.
The Payback period is a critical component of capital budgeting as it helps companies make decisions about whether or not to accept a project. While the Payback period has some disadvantages, it is a widely used capital budgeting technique by small businesses and firms with limited financial resources.
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(2 points) (a) Suppose we have the following production function: Q = K1/2L1/2. Suppose K is fixed in the short-run at 16. Let r = $20 and w = $20. State the firm’s short-run cost minimization problem given the fixed input.
(4 points) (b) Derive the short-run cost function so that we have costs as a function of Q: eg C(Q) = ? Show your work/reasoning.
(4 points) (c) Show that average costs first fall then rise with greater output. You can do this in a table or mathematically. Why does AC fall then rise?
(3 points) (d) What do we mean by a shut-down price? How is the shut-down price related to average variable costs? Explain.
(2 points) (e) What is the shut-down price if r = $20 and w = $20? Explain.
(1 points)(f) Let P = $12. State the firm’s profit maximizing problem.
(4 points) (g) Find optimal output. You can do this in a table or mathematically. Should the firm shut-down? Explain.
(a) The firm's short-run cost minimization problem with fixed input is to minimize variable costs by choosing the optimal amount of labor to use in production given the fixed level of capital.
The equation to minimize variable costs is wL + rK.(b)The equation for the cost function is: C(Q) = w(4Q/K)^(1/2) + r(4Q/K)^(1/2).Here, we have substituted the value of L from Q = K1/2L1/2 which results in L = (QK)-1/2, where K is fixed and has a value of 16. Therefore, L is equal to 4(Q/K)^(1/2).After that, we substitute the values of w, r, and K to obtain the final equation. To find the derivative of this equation with respect to Q, we use the power rule, which is: dC/dQ = w/(2KQ^(1/2)) + r/(2KQ^(1/2)).
(c) The average cost curve first decreases and then increases due to the presence of fixed costs. The table below shows that when output is less than 16, average costs increase with output because the fixed cost is spread over a smaller quantity of output, which results in an increase in average cost. On the other hand, when output is more than 16, average costs decrease with output because the fixed cost is spread over a larger quantity of output, which results in a decrease in average cost.
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According to Fort & Maxcy (2002), what are the two strands
of competitive balance literature?
Fort and Maxcy (2002) have outlined two strands of literature that explore the concept of competitive balance. These strands are as follows: Structural Strand, and Competitive Balance Strand
Structural Strand: The structural strand of literature is concerned with the factors that influence the distribution of talent in a league or competition. This strand believes that competitive balance can be achieved through structural changes in the organization and management of the competition.
Competitive Balance Strand: This strand of literature is concerned with the measurement and analysis of competitive balance within a league or competition. This strand believes that competitive balance can be achieved by balancing the quality of talent within teams to create a more even playing field.
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In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Buildings account?
A) $1,620 increase.
B) $1,620 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No adjustment is necessary.
In consolidation at December 31, 2019, an adjustment is necessary for Hogan's Buildings account, specifically a decrease of $1,800. (option D)
This adjustment implies that there is a discrepancy or error in the initial recording of Hogan's Buildings account, which needs to be rectified to ensure accurate financial reporting.
The $1,800 decrease suggests that the recorded value of Hogan's Buildings in the consolidated financial statements is overstated by that amount. By decreasing the account, the adjustment will bring the reported value of Hogan's Buildings closer to its true or fair value.
The adjustment could be due to various reasons, such as a revaluation of the buildings, impairment of the asset, or an error in the initial recording.
The decrease in the Hogan's Buildings account will impact the overall financial statements and may affect metrics like total assets, net income, and equity.
It is essential to make accurate adjustments during consolidation to present a true and fair view of the consolidated financial position and performance.
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Would drones and automated vehicles be deployed in short-term, mid-term or long-term future.What might be the key steps to take in order to take these technologies to the market?
Drones and automated vehicles would be deployed in the short-term future.
Key steps for deploying drones and automated vehicles in the market are:
Research and Development: Before a technology enters the market, the technology needs to undergo proper research and development to ensure that it is reliable and cost-effective. Once the technology is successful, then it can be deployed in the market.
Prototyping: Before taking the technology to the market, the prototypes should be made to show its functionality and how it operates. This will give potential buyers an idea of how the product works.
Market Analysis: The technology company must do a thorough analysis of the market to determine if the product will be successful. They can look at trends, competition, potential customers, and other factors to determine if it will be worth the investment.
Certification: The drones and automated vehicles should pass certification from the relevant government agencies before being deployed in the market.
Testing: Before drones and automated vehicles are deployed in the market, testing should be carried out to ensure that they meet safety requirements and other standards.
Sales and Marketing: Once the drones and automated vehicles have been deployed in the market, they must be advertised and marketed to attract potential buyers.
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Where on the tax form is the tax amount input?
Form 1040, Line 10
Form 1040, Line 16
Form 1040, Schedule 2, line 11
Form 1040, Line 37
Form 1040 is the most common tax form that individuals use to report their income to the Internal Revenue Service (IRS). The amount of taxes an individual owes is calculated on Form 1040. The tax amount input on Form 1040 is located on Line 16 of the form.
This is where taxpayers indicate the amount of federal income tax withheld from their paychecks throughout the year. In addition to this amount, other tax credits and payments made to the IRS throughout the year can also be reported on this line.
The tax return process requires the individual to add up all their income sources for the year and report it to the IRS. There are several types of income sources that can be reported, including wages, salaries, tips, interest, dividends, and capital gains. Deductions and credits can also be applied to reduce the amount of tax owed. The total amount of tax owed or refunded is then calculated and reported on Line 16.
It is important to report all income sources and applicable deductions and credits accurately on Form 1040 to avoid any penalties from the IRS. Taxpayers should also keep accurate records of their income and expenses throughout the year to ensure that their tax return is as accurate as possible. By doing so, individuals can minimize their tax liability and avoid potential issues with the IRS.
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Cost of capital is often used as the hurdle rate or maximum acceptable rate of return when evaluating investment projects. True O False
The statement given "Cost of capital is often used as the hurdle rate or maximum acceptable rate of return when evaluating investment projects. " is true because cost of capital is commonly used as the hurdle rate or maximum acceptable rate of return when assessing investment projects.
The cost of capital refers to the average rate of return that a company needs to earn on its investments in order to satisfy its shareholders or investors. It represents the minimum rate of return required to compensate for the risk associated with an investment. When evaluating investment projects, the cost of capital is used as a benchmark or hurdle rate to determine whether the project is worthwhile. If the expected rate of return on the project is lower than the cost of capital, it may be considered not financially viable. Therefore, the statement is true.
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Required Information Use the following information for the Exercises 8-10 below. (Algo) [The following information applies to the questions displayed below] Hemming Company reported the following curr
Under FIFO method, COGS, Inventory at the end and profit margin are $13,850 , $4900 and $21,350 respectively. Whereas, under LIFO method it is $16450, $2300 and $18750 respectively.
Total goods available for sale during the period:
Beginning Inventory (200 units at $10) = $2,000
1st Purchase (350 units at $15) = $ 5,250
2nd Purchase (450 units at $20) = $ 9,000
3rd Purchase (100 units at $25) = $ 2,500
Total goods purchased that are available for sale = $18,750
A. To calculate cost of good sold and Inventory at the end using FIFO:
Total goods for Sale = $18,750
Less: Inventory at the end = (4,900)
= $13,850
Inventory at the end:
Inventory in the beginning = 200 units
Total Purchases = 900 units
Total units available = 1,100 units
Less: Total Units Sold = 880 units
Inventory at the end = 220 units
Cost of Inventory at the end
100 × $25 = $2,500
20 × $20 = $2,400
220 × $22.27 = $4,900
B. To calculate COGS and Inventory at the end using LIFO:
Total goods for Sale = $18,750
Less: Inventory at the end = (2,300)
COGS = $16,450
Inventory at the end is 220 units
Cost of Inventory at the end
100 × $20 = $2,000
120 × $15 = $300
220 × 10.45 = $2,300
C. Gross Profit using FIFO & LIFO:
Sales (880 units at $40) = $35,200, $35,200
Less: COGS = $13,850, $16,450
Gross Profit = $21,350, $18,750
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The complete question is:
Hemming Co. reported the following current-year purchases and sales for its only product. Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 200 units at $10 = $ 2,000 Jan. 10 Sales 150 units at $40 Mar. 14 Purchase 350 units at $15 = 5,250 Mar. 15 Sales 300 units at $40 July 30 Purchase 450 units at $20 = 9,000 Oct. 5 Sales 430 units at $40 Oct. 26 Purchase 100 units at $25 = 2,500 Totals 1,100 units $ 18,750 880 units Required: Hemming uses a periodic inventory system.
(a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
(b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
(c) Compute the gross margin for each method.
a collection of demographic information that explains who the customers are and what they want in terms of service is called a customer ______.
a.customer database.
b.customer file.
c.customer profile.
d.customer identifier.
A) Customer databases are a collection of demographic details that describe the customers' identities and the services they are interested in.
You may call this "biographical information," such a customer's name, date of birth, and address, demographic customer data or personal customer data. Name, contact information (phone and email), business address, orders, and many other things. These are customer data that every business must keep on hand in order to offer the best possible customer service.
Each record you save in the table has a unique identifier, which is represented by one or more fields called the primary key. Frequently, the primary key is a special identification number, such as an ID number, serial number, or code.
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company:A
Marketing expenses 45000 , incidental revenue 36000 , tax 17820 , administrative expenses 72000 , sales 900000, incidental expenses 27000, cost of sales 630000
Company:B
Marketing expenses 60000, incidental revenue 75000, tax 69300 , administrative expenses 105000, sales 1500000, incidental expenses 30000, cost of sales 750000
Required: Preparing the income statements of the two establishments and performing the vertical analysis
Income Statement refers to the financial statement that displays the net income or net loss of an organization for a particular accounting period by summarizing its revenues and expenses. It is also called a profit and loss statement, statement of financial performance, or statement of operations.
The income statement shows a company's financial performance over a specific accounting period.Company AIncome statement of company A:Income Statement (Company A) (in $)Sales 900,000 Less: Cost of Sales 630,000 Gross Profit 270,000
Less: Operating Expenses Marketing Expenses 45,000
Administrative Expenses 72,000
Incidental Expenses 27,000
Total Operating Expenses 144,000 Operating Income 126,000
Less: Tax Expenses 17,820
Net Income108,180
Vertical Analysis (Company A)(in $)Percentage Sales 900,000100.00% Less: Cost of Sales 630,00070.00%
Gross Profit 270,000 30.00%
Less: Operating Expenses Marketing Expenses 45,0005.00%
Administrative Expenses 72,000 8.00%
Incidental Expenses 27,000 3.00%
Total Operating Expenses 144,00016.00%
Operating Income 126,000 14.00% Less: Tax Expenses 17,8202.00% Net Income 108,180 12.00%
Company B Income statement of Company B: Income Statement (Company B) (in $)Sales1,500,000
Less: Cost of Sales 750,000 Gross Profit 750,000
Less: Operating Expenses Marketing Expenses 60,000
Administrative Expenses 105,000
Incidental Expenses 30,000
Total Operating Expenses 195,000
Operating Income 555,000
Less: Tax Expenses 69,300 Net Income 485,700 Vertical Analysis (Company B)(in $)Percentage Sales 1,500,000 100.00%
Less: Cost of Sales 750,000 50.00%
Gross Profit 750,000 50.00%
Less: Operating Expenses
Marketing Expenses 60,000 4.00%
Administrative Expenses 105,000 7.00%
Incidental Expenses 30,000 2.00%
Total Operating Expenses 195,000 13.00%
Operating Income 555,000 37.00%
Less: Tax Expenses 69,3005.00%
Net Income 485,700 32.00%
Thus, the income statements of the two establishments and the vertical analysis have been shown above.
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on june 1 of the current year, jack and angie purchased a rental beach house for $900,000 and rented it right away. of that amount, $600,000 was for the land value. how much depreciation deduction can jack and angie take in the current year? (you may need to refer to the depreciation tables.) multiple choice $11,820 $10,909 $5,910 $17,730
Depreciation deduction that Jack and Angie can take in the current year is $10,909. Hence, the option is B. $10,909.
On June 1 of the current year, Jack and Angie purchased a rental beach house for $900,000, of which $600,000 was for the land value.
The remaining $300,000 ($900,000 - $600,000) is allocated as the building value.
Since it is a rental property, the building's cost can be depreciated over 27.5 years using the straight-line method, which implies that depreciation expense would be $300,000/27.5 = $10,909.09 per year.
Thus, depreciation deduction that Jack and Angie can take in the current year is $10,909.
Hence, the option is B. $10,909.
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As the CEO's personal assistant, Robert's job involves taking calls from sales representatives from different companies. He sorts them and selects the salespeople who get to speak directly to his boss. In this situation, Robert is acting as the Multiple Choice point of dissatisfaction screen User risk-taker center of Influence
In this situation, Robert is acting as the center of influence. This is because the sales representatives try to impress and influence Robert to select them to speak directly to his boss. The center of influence is an individual or group that can affect the decisions or actions of others, often through their social or professional connections.
A center of influence (COI) is a person or organization with influence or impact in a particular area or industry. A center of influence is someone who has a large network of contacts and is trusted for advice or recommendations. Businesses use COIs to grow their reach and attract new customers. The center of influence is the person who has the power and capability to influence others and their decisions. The CEO's personal assistant Robert has the power to influence the sales representatives as well as the boss' decisions. By sorting and selecting the sales representatives who can speak directly to the CEO, Robert is acting as the center of influence. As a center of influence, Robert can also help with sales and marketing by recommending certain products or services to his boss.
Therefore, a center of influence is an essential part of any business because they have the power to influence the behavior of others, particularly in decision-making processes.
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Tom purchases 1,000 shares of ZAX stock on margin at $60 per share. He borrows $24,000 from the brokerage firm to help pay for the purchase. The interest rate is 2% per month i. How much is the margin in Tom's account when he first purchases ZAX stock? (2 marks) ii. What is the remaining margin in the account if ZAX share price falls to $46 per share after a month? Will he receive a margin call if the maintenance margin requirement is 40%? (4 marks) iii. Determine the rate of return on his investment.
i. The margin in Tom's account when he first purchases ZAX stock is $24,000.Margin = Total Value of Stock - Borrowed Amount Margin = 1,000 × $60 - $24,000Margin = $60,000 - $24,000Margin = $36,000ii.
Calculation of remaining margin in the account if ZAX share price falls to $46 per share after a month: After a month, the total value of the shares will be: Total Value of Shares = 1,000 × $46Total Value of Shares = $46,000The amount Tom borrowed on margin remains $24,000Remaining Margin = Total Value of Shares - Borrowed Amount Remaining Margin = $46,000 - $24,000Remaining Margin = $22,000To determine whether or not Tom will receive a margin call, let us find out if his remaining margin exceeds the maintenance margin requirement or not: Maintenance Margin = 40% of Total Value of Shares Maintenance Margin = 40% of $46,000Maintenance Margin = $18,400Since the remaining margin ($22,000) exceeds the maintenance margin ($18,400), Tom will not receive a margin call. iii. Calculation of rate of return on Tom's investment: Rate of Return = [(Total Value of Shares - Total Amount Borrowed) / Total Amount Borrowed] × 100Rate of Return = [(1,000 × $46 - $24,000) / $24,000] × 100Rate of Return = [$22,000 / $24,000] × 100Rate of Return = 91.67%Therefore, the rate of return on Tom's investment is 91.67%.
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Which of the following would increase potential GDP? (Choose all that apply)
A) Suddenly all college student quit school and start looking for a job
B) The government starts to build more infrastructures (roads, bridges, ports, and airports).
C) Workers decide to retire later than they planned.
D) Interest rates fall and there is more demand for cars, houses, and capital goods.
E) Software is used that makes businesses more efficient.
The government starts to build more infrastructures (roads, bridges, ports, and airports) would increase potential GDP. Option B is the correct answer.
Potential GDP is the amount of production that a country's economy is capable of producing at a certain inflation rate. Estimating potential gross domestic product yields a potential production estimate. Labor market expansion, market efficiency, liquidity, and government policies all have an impact on capital accumulation, or stock. Option B is the correct answer.
The following factors have the greatest impact on potential gross domestic product Plants, machinery, and other production-enhancing assets comprise capital stock. It might rise if more workers enter the workforce, more capital is added to the economy, or the current labor force and capital assets become more productive. It might rise if more workers enter the workforce, more capital is added to the economy, or the current labor force and capital assets become more productive.
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which of the following is not a primary activity in porter’s value chain analysis? select one: a. human resource management b. sales c. production d. service
According to Porter's Value Chain Analysis model, which of the following is not a primary activity?Human resource management is not a primary activity in Porter’s value chain analysis.
Human resource management is a support activity in Porter’s Value Chain Analysis. The following are the primary activities in Porter’s Value Chain Analysis: Inbound logistics: It refers to the movement of goods from the suppliers and includes activities such as receiving, storing, and transportation of goods. Operations: It refers to the activities that change inputs into finished goods or services. Outbound logistics:
It refers to the movement of finished goods from the organization to the customers. Marketing and sales: It involves activities such as advertising, promoting, and selling the products or services. Service: It involves activities such as providing customer support, repair, and maintenance services.
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Assume 21,500 units were in beginning WIP; 44,200 units were started; 56,000 units were completed; and 9,700 units were in ending WIP. Materials are added at the beginning of the process. What is the
Based on the work in progress, the total number of equivalent units for materials?
65,700
How to calculate the valueThe total number of equivalent units for materials is the sum of the equivalent units for completed units and the equivalent units for the ending work in progress (WIP).
Equivalent units for completed units:
Since all 56,000 units were completed, the equivalent units for materials for the completed units are 56,000.
Total number of equivalent units for materials:
56,000 (equivalent units for completed units) + 9,700 (equivalent units for ending WIP)
= 65,700
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Assume 21,500 units were in beginning WIP; 44,200 units were started; 56,000 units were completed; and 9,700 units were in ending WIP. Materials are added at the beginning of the process.
What is the total number of equivalent units for materials?
53,900
44,200
65,700
77,500
Suppose you are planning for your retirement in 40 years' time. You currently have $3,000 invested in a money market account and $5,000 in a share market fund. The money market account is estimated to earn an annual return of 5.5% whereas the share market fund is expected to earn an annual return of 12.5%. You plan to add $100 per month at the end of each month for the next 40 years to the money market account and $200 per month to the share market fund. When you retire, you plan to withdraw an equal amount for each of the next 30 years at the end of each month and have nothing left at the end (of 30 years after retirement). Additionally, when you retire you will transfer all amount from these two funds into a saving account that earns 3.25% annual rate of interest per year. 1. Assuming the rates will remain as forecasted, how much can you withdraw each month when (and after) you retire? Show all steps, workings, and formula(s) clearly. (5 marks) Click here to enter text. ii. Briefly explain the calculation steps and formulae used. Interpret and comment on your final answer. Does the final answer seem too large? Why or why not? You could use a simple example to illustrate your point. [Note: The discussion must be in your own words. Word limit: 100 words, excluding figures; answers beyond word limit will not be marked.]
To calculate the amount that can be withdrawn each month during retirement, we need to calculate the future values of the money market account and the share market fund, taking into account the monthly contributions and the respective interest rates.
1. Calculation steps and formulae used:
Step 1: Calculate the future value of the money market account:
Future value = Present value + (Monthly contribution * [((1 + interest rate)^n - 1) / interest rate])n = number of months (40 years * 12 months/year)interest rate = 5.5% / 12 (monthly interest rate)Present value = $3,000Monthly contribution = $100Step 2: Calculate the future value of the share market fund:
Future value = Present value + (Monthly contribution * [((1 + interest rate)^n - 1) / interest rate])n = number of months (40 years * 12 months/year)interest rate = 12.5% / 12 (monthly interest rate)Present value = $5,000Monthly contribution = $200Step 3: Calculate the monthly withdrawal during retirement:
Monthly withdrawal = (Future value of money market account + Future value of share market fund) / [(1 - (1 + interest rate)^-m) / interest rate]m = number of months during retirement (30 years * 12 months/year)interest rate = 3.25% / 12 (monthly interest rate)2. Interpretation and comment on the final answer:
The final answer represents the monthly amount that can be withdrawn during retirement, assuming the given interest rates and investment strategy. It takes into account the accumulated funds from the money market account and the share market fund, as well as the interest earned from the saving account during retirement.
The final answer might seem large, but it is a result of the long-term compounded growth of the investments and the regular contributions made over the 40-year period. The power of compounding allows the investments to grow significantly over time, resulting in a larger amount available for withdrawal during retirement.
To illustrate, let's consider a simple example: Suppose you have $1,000 invested with an annual interest rate of 5% and you make a monthly contribution of $50 for 10 years. Using the same formula, the future value of the investment would be much higher than the total contributions made. This demonstrates how compounding and regular contributions can significantly increase the overall amount available for withdrawal during retirement.
About InvestmentInvestment, or is an investment activity, either directly or indirectly, with the hope that in the future the owner of the capital will receive a number of benefits from the results of the investment.
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