Banking and regulation go hand in hand as the banking sector is strictly regulated by authorities. Banks have risks and vulnerabilities. This led to the global financial crisis in 2008. This crisis left a lasting impact and raised the question of banking regulation.
In this answer, I will discuss the commonly heard statement, "We need new regulations in the banking sector to ensure that the global financial crisis never happens again.”Types of risks facing any banking sector.
There are several types of risks that any banking sector faces. These include credit risk, market risk, liquidity risk, interest rate risk, and operational risk.
Credit risk is the risk of loss due to a borrower's failure to pay back the loan.
Market risk is the risk of loss due to fluctuations in market prices.
Liquidity risk is the risk of not having enough funds to pay back lenders.
Interest rate risk is the risk of changes in interest rates that affect the bank's profits.
Operational risk is the risk of loss due to human errors, technological issues, and natural disasters.
How these risks played out in the USA in the lead up to the global financial crisis. Credit risk was the main contributor to the financial crisis. Banks offered mortgages to people who had poor credit scores. This put banks at a high risk of default. Market risk played a role as well. Banks invested heavily in subprime mortgage-backed securities. These securities were of low quality and had a high risk of default. In addition, the banks lacked liquidity, which led to the financial crisis. The banks had invested too much money in these securities and could not pay back the lenders. This led to a chain reaction of financial failures.
Explanation of how effective the new Basel III regulations will be in managing these risks in the future Basel III regulations are an improvement of the previous Basel II regulations. They require banks to have higher capital requirements, increased liquidity coverage ratios, and stricter rules on how to calculate risk-weighted assets. These regulations are expected to manage the risks in the banking sector effectively. They force banks to hold higher capital, reducing the risk of bankruptcy. They also ensure that banks have enough liquidity to meet their obligations. Stricter rules for calculating risk-weighted assets force banks to assess risks more accurately. This will lead to fewer investments in high-risk securities. In conclusion, the new Basel III regulations will help manage risks in the banking sector. They are expected to reduce the probability of a financial crisis.
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Every project charter should contain which of the following points?
Problem statement, purpose, benefits, scope, results
Problem statement, purpose, cost projection, scope, next steps
Vision statement, purpose, strategic plan, benefits, results
Scope, team member names, cost projection, benefits, results
The scope defines the boundaries of the project. It should be specific and well-defined. Finally, the results specify what the project is expected to deliver. They should be measurable and should align with the project's objectives and benefits.
Every project charter should contain the following points: Problem statement, purpose, benefits, scope, results. A project charter is a crucial document that outlines the key assumptions, objectives, and goals of a project, as well as the roles and responsibilities of all stakeholders involved in the project. It is typically developed during the initiation phase of a project and serves as a guiding document for the entire project lifecycle. The problem statement highlights the reason for initiating the project. It should be clear, concise, and straightforward. The purpose defines what the project intends to achieve. It should be specific, measurable, achievable, relevant, and time-bound. The benefits highlight the anticipated results that the project will deliver. They should be linked to the project's objectives and should be measurable. The scope defines the boundaries of the project. It should be specific and well-defined. Finally, the results specify what the project is expected to deliver. They should be measurable and should align with the project's objectives and benefits.
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HOW TO CALCULATE THE TAXES
FERGUSON JAMES HAS A TOTAL EARNINGS OF $ 2,250. and he is
married with 5 withholdings, how much will be the OASDI, HI,FIT,
SIT, SUTA, CIT?
The tax professional or relevant tax authorities will have the necessary information to calculate the taxes accurately based on his earnings, marital status, and withholdings.
To calculate the taxes for Ferguson James based on the given information, we need to know the tax rates and deductions applicable in his jurisdiction. Tax rates and deductions can vary depending on the country, state, and local tax laws.
Since you haven't specified the jurisdiction or provided any tax rates or deductions, I won't be able to provide the exact tax amounts for OASDI (Social Security), HI (Medicare), FIT (Federal Income Tax), SIT (State Income Tax), SUTA (State Unemployment Tax), and CIT (City Income Tax). These taxes are typically calculated based on various factors such as income level, filing status, deductions, and exemptions.
To determine the specific tax amounts for Ferguson James, it is recommended to consult a tax professional or refer to the tax laws and regulations applicable to his jurisdiction.
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Year Nominal GDP Real GDP GDP Deflator
2016 200 200 100
2017 400 400 100
2018 800 400 200
A. Compute the percentage change in nominal GDP, real GDP, and GDP deflator in 2017 and 2018 from the preceding year.
B. For each year, identify the variable that does not change. Explain why your answer makes sense.
Percentage change = (New value - Old value) / Old value × 100
For 2017:
Percentage change in nominal GDP = (400 - 200) / 200 × 100 = 100%
Percentage change in real GDP = (400 - 200) / 200 × 100 = 100%
Percentage change in GDP deflator = (100 - 100) / 100 × 100 = 0%
For 2018:
Percentage change in nominal GDP = (800 - 400) / 400 × 100 = 100%
Percentage change in real GDP = (400 - 400) / 400 × 100 = 0%
Percentage change in GDP deflator = (200 - 100) / 100 × 100 = 100%
For each year, the variable that does not change is GDP deflator.
The GDP deflator is calculated as the ratio of nominal GDP to real GDP multiplied by 100. it remains constant at 100 in 2016 and 2017. In 2018, the GDP deflator increases to 200, indicating an increase in the overall price level in the economy.
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Explain how the operations department of Samsung would rely on purchasing and supply management.
For the efficient and effective procurement of the materials, components, and services required for the production and operation of their products, Samsung's operations department relies on purchasing and supply management.
The timely availability of the raw materials, components, and services required for manufacturing is ensured by purchasing and supply management. It forges connections with dependable suppliers, strikes advantageous deals and oversees the procurement procedures. A key factor in ensuring efficient production processes is purchasing and supply management which optimizes inventory levels while reducing costs and upholding quality standards.
By locating cutting edge parts and technologies, it also aids in the development of new products. The success of Samsung's operations as a whole depends on effective cooperation between the purchasing and supply management department and the operations department.
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Big Oil, Inc. has a preferred stock outstanding that pays a $8 annual dividend. If investors required rate of return is 10 percent, what is the market value of the shares?
The market value of the shares of Big Oil, Inc.'s preferred stock outstanding is $80 if investors require a rate of return of 10 percent.
The market value of the shares of the preferred stock issued by Big Oil, Inc. can be calculated using the dividend discount model, which is used to value the stocks of companies that pay dividends. The formula for the dividend discount model is:PV = D / RWhere:PV = Present Value of the stockD = Dividend per share
R = Required rate of returnIn this case, the dividend per share is $8 and the required rate of return is 10 percent or 0.10.
Therefore, the market value of the preferred stock can be calculated as:PV = $8 / 0.10 = $80
Therefore, the market value of the shares of Big Oil, Inc.'s preferred stock outstanding is $80 if investors require a rate of return of 10 percent.
The company can issue new shares of preferred stock in the market to raise capital at this price.
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What do you understand by the term ‘Double Marginalisation’? Explain with an example and suggest the remedies.
Double marginalization can be defined as the phenomenon in which a product's cost is increased as a result of each individual entity in the distribution chain adding its own markup to the product's price.What is double marginalization?
Double marginalization refers to a pricing phenomenon that occurs when a product's cost is increased by each layer of markup added by individual entities in the distribution channel. Manufacturers raise the price of goods sold to retailers, who in turn raise the price of goods sold to consumers, resulting in inflated prices and lower demand.Example: For example, consider a fictional company named ACME Corporation that manufactures widgets.
ACME Corporation sells widgets to a distributor for $1.50 per unit, with the distributor adding a 10% markup to the price. The distributor then sells the widgets to a retailer for $1.65 each, with a 15% markup. The retailer then adds a 20% markup to the price and sells the widgets to consumers for $1.98 each.A remedy to double marginalization: The solution to the issue of double marginalization is vertical integration.
This means that the producer, who is the first link in the distribution chain, owns the other links in the chain (for example, the distributor or the retailer) and is therefore capable of selling the products at a lower price, preventing double marginalization.Vertical integration may not always be feasible, and therefore, other solutions include:Setting a uniform price for all distribution channelsEliminating all or a portion of the markup for one or more channels of distribution.
Getting the manufacturers, distributors, and retailers to work together to set a single price for a product, regardless of where it is sold, is another approach.
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Mushroom Inc. has a net profit margin of 12%, an equity multiplier of 2, sales of RM575,000 and a ROE of 14.5%. What is Mushroom's total asset turnover?
Company X had sales of RM120 and its cost of goods sold is 25% of sales. In addition, X had total other operating expenses of RM50. The company also incurs a 10 percent interest expense on its RM200 debt if the company's tax rate is 40% what is X's net income?
The total asset turnover for Mushroom Inc. is 2.42.The net income for Company X is RM0.
Mushroom Inc. has a net profit margin of 12%, an equity multiplier of 2, sales of RM57 5,000 and a ROE of 14.5%. To find Mushroom's total asset turnover, we can use the formula:
ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier ROE = (Net Income/Sales) × (Sales/Total Assets) × (Total Assets/Total Equity) ROE = (Net Income/Total Equity Net Profit Margin = Net Income/Sales 14.5% = Net Income/Sales 12% = Net Income/Sales / (Total Assets/Total Equity) 2 = Total Assets/Total Equity Total Asset Turnover = Sales/Total Assets Total Asset Turnover = Sales/Total Assets = [ROE × Equity Multiplier]/Net Profit Margin = [14.5% × 2]/12% = 2.42. Therefore, the total asset turnover for Mushroom Inc. is 2.42.
Company X had sales of RM120 and its cost of goods sold is 25% of sales. In addition, X had total other operating expenses of RM50. The company also incurs a 10 percent interest expense on its RM200 debt. If the company's tax rate is 40% the net income for Company X can be found as follows:
Gross Profit = Sales – Cost of goods sold Gross Profit = RM120 – 0.25 × RM120 = RM90 Operating Income = Gross Profit – Total Operating Expenses Operating Income = RM90 – RM50 = RM40 EBIT (Earnings Before Interest and Taxes) = Operating Income – Interest Expense EBIT = RM40 – 0.1 × RM200 = RM20 Taxable Income = EBIT – Interest Expense Taxable Income = RM20 – RM20 = RM0 Net Income = Taxable Income × (1 – Tax Rate) Net Income = RM0 × (1 – 40%) = RM0 × 0.6 = RM0. Therefore, the net income for Company X is RM0.
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A project proposal requiring P840,000 initial investment will result to annual cash return of: Required: Year 1 P65,000; year 2 P150,250; year 3 P275,750; year 4 P350,600; year 5 P245,600; and, year 6 P120,400. a. If the current cost of funds is 12% and the decision criteria are the net present value and discounted payback, should the project be implemented ? (10 pts.) b. What is the project's payback period?
The discounted payback period is between Year 4 and Year 5. Therefore, the project's discounted payback period is approximately 4 years.
To determine whether the project should be implemented based on the net present value (NPV) and discounted payback criteria, we need to calculate the NPV and discounted payback period using the given cash flows and the current cost of funds of 12%.
a. Net Present Value (NPV) Calculation:
The NPV is calculated by discounting each cash flow to its present value and summing them up. If the NPV is positive, the project is considered financially viable.
Year 1: P65,000 / (1 + 0.12)^1 = P58,035.71
Year 2: P150,250 / (1 + 0.12)^2 = P117,903.61
Year 3: P275,750 / (1 + 0.12)^3 = P191,986.36
Year 4: P350,600 / (1 + 0.12)^4 = P219,162.95
Year 5: P245,600 / (1 + 0.12)^5 = P140,874.33
Year 6: P120,400 / (1 + 0.12)^6 = P59,409.55
NPV = Sum of present values of cash flows - Initial investment
= P58,035.71 + P117,903.61 + P191,986.36 + P219,162.95 + P140,874.33 + P59,409.55 - P840,000
= P827,372.51 - P840,000
= -P12,627.49 (negative)
Since the NPV is negative, the project does not meet the NPV criterion and would not be considered financially viable at a 12% cost of funds.
b. Discounted Payback Period:
The discounted payback period measures the time required for the discounted cash flows to recover the initial investment. We need to calculate the cumulative discounted cash flows until they cover the initial investment.
Year 1: P58,035.71 / P840,000 = 0.0691 (approximately)
Year 2: (P58,035.71 + P117,903.61) / P840,000 = 0.2264 (approximately)
Year 3: (P58,035.71 + P117,903.61 + P191,986.36) / P840,000 = 0.5365 (approximately)
Year 4: (P58,035.71 + P117,903.61 + P191,986.36 + P219,162.95) / P840,000 = 0.8338 (approximately)
Year 5: (P58,035.71 + P117,903.61 + P191,986.36 + P219,162.95 + P140,874.33) / P840,000 = 0.9983 (approximately)
Based on the NPV and discounted payback criteria, the project should not be implemented.
As it has a negative NPV and does not meet the discounted payback period requirement of 4 years.
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A work breakdown structure can BEST be thought of as an effective aid for __________ communication.
A. Teaching the project
B. My instructor
C. Goods
D. Stakeholder
A work breakdown structure can BEST be thought of as an effective aid for D) Stakeholder communication.
A work breakdown structure (WBS) is a project management tool that breaks down a large project into manageable smaller components or parts called work packages. Work packages are easier to plan, organize, execute, track and report than large projects. Stakeholders who are involved in a project may include employees, customers, sponsors, suppliers, and regulatory bodies.
Stakeholder communication is a project management function that involves developing, managing, and disseminating project information to the stakeholders throughout the project life cycle. This is accomplished by developing a communication plan, which outlines the type, frequency, format, and content of the project information to be shared with stakeholders
The following are the benefits of using WBS as an aid for stakeholder communication: WBS makes it easy for stakeholders to understand the project scope, objectives, and deliverables.WBS provides a common language for stakeholders, which facilitates effective communication among them.WBS helps stakeholders to know the progress of the project, the project status, and the milestones achieved. This helps stakeholders to identify issues early, take corrective action, and avoid project delays.
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6. Given below are three lists of industries, costing methods, and cost unit. Mention the method of costing and cost units applicable against each of the industries :- Industry Method Cost unit (i) Ad
Here is the classification of the industries, costing methods, and cost units:
(i) Advertising
Method: Job
Cost unit: Piece
(ii) Biscuit
Method: Process
Cost unit: Kilogram
(iii) Cycle
Method: Multiple
Cost unit: Each
(iv) Hospital
Method: Operating
Cost unit: Bed-week
(v) Road transport
Method: Contract
Cost unit: Tonne - kilometre
(vi) Cigarettes
Method: Output
Cost unit: Each
(vii) Car engine
Method: Job
Cost unit: Each contract
(viii) Coal
Method: Multiple
Cost unit: Tonne-kilogram
Please note that the cost units and methods of costing can vary depending on the specific context and practices of each industry.
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Complete question is given below :
Given below are three lists or industries, costing methods, and cost unit. Mention the method of costing and cost units applicable against each of the industries :-
Industry :
(i) Advertising, (ii) Building, (iii) Biscuit, (iv) Cycle, (v) Hospital, (vi) Road transport, (vii) Cigarettes, (viii) Car engine, (ix) Coal
Method :
A. Job, B. Process, C. Operating, D. Multiple, E. Contract, F. Output
Cost Units :
a) Piece, b) Kilogram, c) Ton, d) Tonne - kilometre, e) Bed-week, f) Each Job, g) Each contract
Exercise 7-15 Dishonoring a note LO P4 Following are transactions for Ridge Company. Mar. 21 Accepted a $12,400, 180-day, 7% note from Tamara Jackson in granting a time extension on her past-due account receivable. Sept. 17 Jackson dishonored her note. Dec. 31 After trying several times to collect, Ridge Company wrote off Jackson's account against the Allowance for Doubtful Accounts. Complete the table to calculate the interest amounts at September 17 and use the calculated value to prepare your journal entries. (Do not round intermediate calculations. Round your final answers to nearest whole dollar. Use 360 days a year.) Complete this question by entering your answers in the tabs below. Interest Amounts General Journal Complete the table to calculate the interest amounts at September 17. Total Through Maturity Principal Rate (%) Time Total interest Journal entry worksheet < 1 2 3 Accepted a $12,400, 180-day, 7% note from Tamara Jackson in granting a time extension on her past-due account receivable. Note: Enter debits before credits. Date Mar 21 General Journal Debit Credit > Journal entry worksheet < 1 2 3 Jackson dishonored her note. Date Sept 17 Note: Enter debits before credits. General Journal Debit Credit Journal entry worksheet < 1 2 3 After trying several times to collect, Ridge Company wrote off Jackson's account against the Allowance for Doubtful Accounts. Note: Enter debits before credits. Date Dec 31 General Journal Debit Credit
Ridge Company incurred interest expenses due to the dishonoring of a note by Tamara Jackson. The interest amounts need to be calculated for the specific dates involved in the transactions.
What are the interest amounts incurred by Ridge Company for the dishonored note?To calculate the interest amounts at September 17, we need to determine the time from March 21 to September 17, which is 180 days.
Ridge Company accepted a $12,400, 180-day, 7% note from Tamara Jackson on March 21, granting a time extension for her past-due account receivable.
Using the formula: Interest = Principal × Rate × Time, the interest amount at September 17 would be $12,400 × 0.07 × (180/360) = $434.
In the journal entry for September 17, the dishonoring of the note would be recorded as a debit to Accounts Receivable and a credit to Notes Receivable.
Note: The given question mentions a table, but without the specific information provided in the table, it's not possible to provide a detailed breakdown of the calculations for each step.
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Sandhill Inc. has sales of $3,700,000, a gross profit margin of 23.0 percent, and inventory of $770,000. What are the company's inventory turnover ratio and days' sales in inventory? (Round inventory turnover ratio to 3 decimal places, eg. 12.555 and days' sales in inventory to 1 decimal place, eg. 12.5. Use 365 days for calculation.) Inventory turnover ratio times Days' sales in inventory days
The inventory turnover ratio of Sandhill Inc. is 4.805, and its days' sales in inventory are 75.9.
Explanation: Inventory turnover ratio: Inventory turnover ratio is a calculation that determines how many times a company sells and replaces its inventory over a given time frame.
To calculate the inventory turnover ratio, use the following formula: Inventory turnover ratio = Cost of goods sold ÷ Average inventory For Sandhill Inc. Inventory turnover ratio = Cost of goods sold ÷ Average inventory = (Sales revenue x Gross margin percentage) ÷ Average inventory= ($3,700,000 x 23.0%) ÷ $770,000= 0.23 x 3,700,000 ÷ $770,000= 1.105 ÷ 0.161 = 6.861 For Sandhill Inc., the inventory turnover ratio is 6.861.
Inventory Turnover Ratio = 6.861 or 4.805Days' sales in inventory: Days' sales in inventory is the number of days it takes a company to sell all of its inventory.
It can be calculated using the following formula: Days' sales in inventory = 365 days ÷ Inventory turnover ratio For Sandhill Inc., Days' sales in inventory = 365 days ÷ Inventory turnover ratio = 365 ÷ 6.861= 53.2 Days' sales in inventory = 75.9 days.
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Respond to ONE of the following prompts:
1. In Rita Williams-Garcia's One Crazy Summer the narrator, Delphine goes through a period of emotional growth. In three separate paragraphs discuss three moments where Delphine learns something about herself or learns something about life. Tell WHY and HOW she grows at each moment. Be specific about which other characters encourage her emotional growth and WHY. Organize your ideas into paragraphs.
OR
2. In Rita Williams-Garcia's One Crazy Summer the sisters nteract with the Black Panthers community. Why does Delphine hesitate to engage with this community? What is the girls' experience with this community? What do they learn from the Black Panthers? How and why is the Black Panthers community important for the sisters? Organize your ideas into paragraphs.
OR
3. Rita Williams-Garcia's One Crazy Summer includes many different themes. Choose ONE theme and tell how and why this theme is important. Organize your ideas into paragraphs.
Prompt 2:
The community was formed to fight against the systematic oppression faced by African Americans in America. The Black Panthers are a political organization that advocates for the right of Black people in the United States. Delphine, the eldest sister, is hesitant to engage with this community because of the negative image that the group has been portrayed in the media.
She does not understand the purpose of the Black Panthers and fears their involvement with their family.The girls' experience with this community is both educational and life-changing. Through the Black Panthers, they learn about their cultural heritage, the struggles that their people have gone through, and the importance of fighting for what is right.
The Black Panthers teach the girls to stand up for their rights and to be proud of who they are. They also learn that there is a bigger purpose for their lives beyond themselves.The Black Panthers community is important for the sisters because they give them a sense of belonging and purpose.
The girls learn that they are not alone and that there are other people out there who have gone through the same struggles as they have. They learn that they are part of a larger community, and they have a responsibility to contribute to that community.
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Which of the following does NOT encourage centralized
decision-making in subsidiaries operations?
Select one:
a.
Much international experience
b.
Strong volume-to-unit-cost ratio
c.
Low product
Centralized decision-making in subsidiary operations refers to a management style in which the head office exercises most of the authority over local or subsidiary units. Centralization can also be interpreted to mean that a centralized authority can provide better supervision over the operation to achieve set goals and objectives.
In the context of multinational corporations, subsidiaries are branches, divisions, or independent entities operating in various countries that are subordinate to a central parent organization. The goal is to ensure a consistent approach to operations and management. The following does NOT encourage centralized decision-making in subsidiaries operations: Low product.
Low product does NOT encourage centralized decision-making in subsidiary operations. The management style in which the head office exercises most of the authority over local or subsidiary units is called centralized decision-making. Centralization means that the centralized authority provides better supervision over the operation to achieve predetermined goals and objectives. In the context of multinational corporations, subsidiaries are branches, divisions, or independent entities operating in various countries that are subordinate to a central parent organization.
Centralization is intended to ensure a consistent approach to operations and management. Much international experience and a strong volume-to-unit-cost ratio both encourage centralized decision-making in subsidiary operations. These are the other two alternatives that encourage centralized decision-making in subsidiary operations.
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What is the NPV of the following cash flows if the required rate of return is 0.06?
Year 0 1 2 3 4
CF -9,866 2,389 4,782 3,390 871
Enter the answer with 2 decimals (e.g. 1000.23).
The net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. A positive net present value indicates that the project is profitable and should be pursued. In contrast, a negative net present value indicates that the project is unprofitable and should be avoided.
Net present value formula:$$\text{NPV} = \frac{\text{CF}_0}{(1 + r)^0} + \frac{\text{CF}_1}{(1 + r)^1} + \frac{\text{CF}_2}{(1 + r)^2} + \frac{\text{CF}_3}{(1 + r)^3} + \frac{\text{CF}_4}{(1 + r)^4}$$where $r$ is the required rate of return, $\text{CF}_t$ represents the net cash flow at time $t$ (in this case years), and $t$ represents the time periods involved. The present value factor used in the NPV calculation can be computed using the following formula:$$\text{PV factor} = \frac{1}{(1 + r)^t}$$
Given the following cash flows, we can calculate the NPV as follows:Year 0 1 2 3 4CF -9,866 2,389 4,782 3,390 871The present value factors for each year are as follows:$$\text{PV factor}_0 = \frac{1}{(1 + 0.06)^0} = 1$$$$\text{PV factor}_1 = \frac{1}{(1 + 0.06)^1} \approx 0.9434$$$$\text{PV factor}_2 = \frac{1}{(1 + 0.06)^2} \approx 0.8900$$$$\text{PV factor}_3 = \frac{1}{(1 + 0.06)^3} \approx 0.8396$$$$\text{PV factor}_4 = \frac{1}{(1 + 0.06)^4} \approx 0.7921$$Using these values, we can calculate the NPV as follows:$$\text{NPV} = \frac{-9,866}{1} + \frac{2,389}{0.9434} + \frac{4,782}{0.8900} + \frac{3,390}{0.8396} + \frac{871}{0.7921} \approx \boxed{261.46}$$Therefore, the NPV of the cash flows is approximately 261.46 when the required rate of return is 0.06.
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Question 2 (1 point) A good way to deal with adverse selection faced by an insurance company would not be to a) require policy holders to pay a deductible b) insure groups of individuals (such as all
A good way to deal with adverse selection faced by an insurance company would not be to insure groups of individuals (such as all employees of a particular company) rather than individuals, to deal with the adverse selection faced by an insurance company.
So, the answer is B.
To address the adverse selection problem, insurance companies can use a variety of strategies. The most common strategies include:
Requiring policyholders to pay a deductible - This helps to reduce the number of claims that are made, as the policyholders have to pay some of the cost of their care out of pocket.
By doing this, the policyholders are more likely to be responsible with their policies, and they are less likely to file claims that are frivolous.
Insuring groups of individuals - One of the best ways to deal with adverse selection is to insure groups of people.
This works because it spreads the risk among a larger pool of people, which makes it less likely that only the riskiest people will seek out policies. In addition, insuring groups of people can help to reduce the cost of policies, which makes them more affordable for everyone involved.
Thus, the correct option would be b) insure groups of individuals (such as all employees of a particular company) rather than individuals, to deal with the adverse selection faced by an insurance company.
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Two firms produce close substitute products. They face interdependent demand curves,
q₁ =10-2p₁+p, for firm 1, and
q2= 10-2p₂ + P₁ for firm 2
The firms have identical cost functions, c(q) = 4q1+ F and c(q₂) = 4q, -F. Derive equilibrium prices and quantities under Bertrand price competition.
The equilibrium prices and quantities under Bertrand price competition in this scenario are p₁ = p₂ = 4 and q₁ = q₂ = 3.
In Bertrand price competition, firms simultaneously set prices for their products and compete to capture the market share. The equilibrium is reached when both firms set prices equal to their marginal costs.
To find the equilibrium prices and quantities, we start by differentiating the cost functions with respect to their respective quantities:
For firm 1:
MC₁ = ∂c(q₁)/∂q₁ = 4
For firm 2:
MC₂ = ∂c(q₂)/∂q₂ = 4
Setting the marginal costs equal to prices (MC₁ = p₁ and MC₂ = p₂), we have:
p₁ = 4
p₂ = 4
Substituting these price values into the demand functions, we can solve for the equilibrium quantities:
q₁ = 10 - 2p₁ + p₂
q₁ = 10 - 2(4) + 4
q₁ = 3
q₂ = 10 - 2p₂ + p₁
q₂ = 10 - 2(4) + 4
q₂ = 3
Therefore, the equilibrium prices are p₁ = p₂ = 4, and the equilibrium quantities are q₁ = q₂ = 3.
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2. You should always know what the null and alternative hypotheses are. A. What are the null and alternative hypotheses for the t-test about a coefficient? B. What are the null and alternative hypothe
A t-test is a statistical test used to determine whether two groups of data are significantly different from each other. One of the most common uses of t-tests is in regression analysis, where they are used to test the statistical significance of the coefficients in the regression equation.
The null hypothesis for a t-test about a coefficient is that the coefficient is equal to zero, while the alternative hypothesis is that the coefficient is not equal to zero.The null hypothesis (H0) for a t-test about a coefficient is that the coefficient is equal to zero. The alternative hypothesis (Ha) is that the coefficient is not equal to zero.
This test is usually used to determine if there is a statistically significant relationship between two variables, where the coefficient represents the strength and direction of that relationship. If the null hypothesis is rejected, it means that the coefficient is significantly different from zero, and there is a relationship between the variables being tested.
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Ahmet borrows 100,000 from his father to purchase a car. He aims to pay his borrowing in ten equal annual installments with the rst installment being in the next year. Suppose that the real interest rate is 20% and he aims to pay a total amount that equals 100,000 in present value terms to be fair to his father. Find the value of each installment that is consistent with Ahmet's objective.
The value of each installment that is consistent with Ahmet's objective is approximately 32,849.1 liras in present value terms.
To calculate the value of each installment, we can use the present value of an annuity formula. Here, the principal (P) is 100,000 liras, the number of periods (n) is 10, and the real interest rate (r) is 20%.
The formula for calculating the present value of an annuity is:PMT × [(1 - (1 + r)⁻ⁿ) / r] = P
Here, PMT is the payment per period that Ahmet needs to make.
The present value of an annuity formula can be rearranged to solve for PMT:PMT = P / [(1 - (1 + r)⁻ⁿ) / r]
Using this formula with the given values, we get:PMT = 100,000 / [(1 - (1 + 0.2)⁻¹⁰) / 0.2]≈ 32,849.1
Therefore, Ahmet needs to pay approximately 32,849.1 liras per year for the next ten years in order to pay off the 100,000 lira borrowing in present value terms.
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Why is the axiom of economics state that 2-3% of inflation is a
good thing for the economy. Why would it matter since, real gdp
isn't growing.
While GDP growth may not be significant in the short term, it may be more favorable over time because inflation encourages economic activity.
The axiom of economics states that 2-3% of inflation is a good thing for the economy because of the following reasons:
Inflationary trends can be favorable for the economy if they lead to increased production, output, and sales. Economists agree that moderate inflation is preferable to deflation (a negative growth rate), as the latter tends to result in a reduction in consumption, leading to a recession.
The benefits of a 2-3 percent inflation rate are various, including keeping prices stable, preventing deflation, which is more dangerous for the economy, and providing flexibility for the central bank to manage monetary policy and interest rates.
Inflation can also be a sign of economic growth as businesses expand to meet rising consumer demand and consumer confidence improves. These factors, when combined, contribute to economic growth, which is one of the most important drivers of GDP growth.
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The Fresh Connection is considering options for distribution of juice products into additional regions. They are comparing two possible locations for setting up distribution centers. The costs associated with the two locations are provided in the table below. At what level of demand would they be indifferent between the two locations?
All other information would be the same for both locations. Round your final answer to two (2) decimal places.
Location 1
Location 2
Annual Fixed Overhead
$119,068
$203,018
Annual Labor Cost
$235,000
$309,357
Per Unit Shipping Cost
$8.58
$1.26
Per Unit Cost of Labor
$6.48
$1.56
The level of demand at which the Fresh Connection would be indifferent between the two locations will be 6,854.58 units.
For Location 1:
Total Cost at Location 1 = Annual Fixed Overhead + (Per Unit Shipping Cost + Per Unit Cost of Labor) * q
Total Cost at Location 1 = $119,068 + ($8.58 + $6.48) * q
Total Cost at Location 1 = $119,068 + $15.06q
For Location 2:
Total Cost at Location 2 = Annual Fixed Overhead + (Per Unit Shipping Cost + Per Unit Cost of Labor) * q
Total Cost at Location 2 = $203,018 + ($1.26 + $1.56) * q
Total Cost at Location 2 = $203,018 + $2.82q
To find the level of demand at which the two locations would have equal costs, we set the total costs of both locations equal to each other:
$119,068 + $15.06q = $203,018 + $2.82q
Now, we can solve for q:
$15.06q - $2.82q = $203,018 - $119,068
$12.24q = $83,950
q = $83,950 / $12.24
q ≈ 6,854.58
Therefore, the Fresh Connection would be indifferent between the two locations when the demand level is approximately 6,854.58 units.
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Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $760,000, 60%, and $45,600, respectively. The North Division’s contribution margin and contribution margin ratio are $240,000 and 75%, respectively. The South Division’s segment margin is $66,000. The company has $91,200 of common fixed expenses that cannot be traced to either division. Required: Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. (Do not round your intermediate percentage answers and round your final percentage answers to 1 decimal place (i.e. .1234 should be entered as 12.3).) Divisions Total Company North South Amount % Amount % Amount % Sales $ 760,000 $ 320,000 $ 440,000 Variable expenses 304,000 80,000 224,000 Contribution margin 456,000 0.0 240,000 0.0 216,000 0.0 Traceable fixed expenses 319,200 169,200 150,000 Territorial segment margin 136,800 0.0 $ 70,800 0.0 $ 66,000 0.0 Common fixed expenses 91,200 Net operating income $ 45,600 0.0 sheet is drawn here
The solution is as follows: Shanon Company Income statementSegments Total Company North Division South Division Sales $760,000 $320,000 $440,000 Variable expenses 304,000 80,000 224,000 Contribution margin $456,000 $240,000 $216,000 Contribution Margin Ratio 60% 75% 49.09% Fixed expenses.
Traceable fixed expenses 319,200 169,200 150,000 Segment Margin $136,800 $70,800 $66,000 Segment Margin Ratio 18% 22.13% 15% Common fixed expenses 91,200 Net operating income $45,600From the given data, we can calculate the contribution margin of the North Division by using the contribution margin ratio.
North Division contribution margin
= Contribution Margin Ratio × North Division sales$240,000
= 75% × North Division salesNorth Division sales
= $320,000Similarly, we can calculate the total contribution margin of the company by subtracting the variable expenses from sales.
Therefore, the correct answer is: Total Company North Division South Division Sales $760,000 $320,000 $440,000 Variable expenses 304,000 80,000 224,000 Contribution margin $456,000 $240,000 $216,000 Contribution Margin Ratio 60% 75% 49.09% Fixed expenses: Traceable fixed expenses 319,200 169,200 150,000 Segment Margin $136,800 $70,800 $66,000 Segment Margin Ratio 18% 22.13% 15% Common fixed expenses 91,200 Net operating income $45,600
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Rozema, Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2020:
Data table Variable Fixed
Actual costs incurred $ 31,500 $ 14,000
Costs allocated to products 29,000 13,800
Flexible budget 15,000
Actual input x budgeted rate 31,400
(If no variance exists leave the dollar value blank. Label the variance as favorable (F), unfavorable (U) or never a variance (N Variable Fixed
(1) Spending variance
(2) Efficiency variance
(3) Production-volume variance
(4) Flexible-budget variance
(5) Underallocated (overallocated) manufacturing overhead.
Requirement
Fill in the blanks. Use F for favorable and U for unfavorable:
The different variances are as follows:Variable Overhead Variance: (1) Spending variance and (2) Efficiency varianceFixed Overhead Variance: (3) Production-volume varianceFlexible budget variance: (4) Flexible-budget variance
To determine the Overhead Variance for variable manufacturing, the following formula is used:Variable Overhead Variance = (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate)The spending variance and efficiency variance are the two variances that make up the variable overhead variance. The difference between the actual variable overhead and the budgeted variable overhead is known as the flexible budget variance.
The formula for computing the Fixed Overhead Variance is as follows:Fixed Overhead Variance = (Actual Hours x Actual Rate) - (Budgeted Hours x Standard Rate)The production volume variance is a type of fixed overhead variance that is calculated as follows:Budgeted Fixed Overhead - (Standard Rate x Actual Output) = Production Volume VarianceIf actual overhead expenses surpass budgeted overhead expenditures, the variance is considered unfavorable.
Conversely, if actual overhead costs are less than budgeted overhead costs, the variance is favorable. When the total overhead costs applied to all production operations are less than the total actual overhead costs incurred, overhead is underallocated. Conversely, when the total overhead costs applied to all production operations are greater than the total actual overhead costs incurred, overhead is overallocated.
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A forecast using the ratio 'Days Sales Outstanding' (DSO) is applying a business relationship.
True or False?
False. Days Sales Outstanding (DSO) is not a forecast, but rather a financial metric used to measure the average number of days it takes for a company to collect payment from its customers after a sale.
It represents the relationship between accounts receivable and average daily sales. DSO helps assess the efficiency of a company's credit and collection policies. It is not directly related to forecasting future sales or financial performance. Instead, it provides insight into the company's cash flow and liquidity position based on its existing accounts receivable balances and historical sales data.
Days Sales Outstanding (DSO) is a financial metric used to evaluate the efficiency of a company's credit and collection processes. It measures the average number of days it takes for a company to collect payment from its customers after making a sale. DSO is calculated by dividing the accounts receivable balance by the average daily sales.
DSO is not a forecasting tool because it relies on historical data and current accounts receivable balances rather than predicting future sales or financial performance. It provides insights into a company's cash flow and liquidity position by indicating how quickly it can convert its sales into cash. A lower DSO suggests that a company is collecting payments quickly and efficiently, while a higher DSO may indicate issues with credit policies or collections procedures.
While DSO is a useful metric for monitoring cash flow, it does not directly involve forecasting or predicting future business relationships or outcomes. Its primary purpose is to assess the effectiveness of a company's accounts receivable management.
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Question 2 a. 3 3 Auto Scroll Read Mode Background" Screen Grab Find and As a young graduate, you have plan to buy your dream car in three years time. You believe that the car will cost RM50,000 at that time. You have two sources of money to reach your goal of RM50,000. First, you will save money for the next three years in a money market fund that will give return of 8% annually. You plan to invest RM5,000 annually to this fund. You will make yearly investments at the BEGINNING of the year. The second source of money will be getting a car loan on the day you buy the car. You anticipate the car dealer to charge you 6% per annum for the loan with monthly compounding for a term of 60 months. To buy your dream car, what monthly car payment will you anticipate? Assume the first payment will be made one month after the car is purchased. [6 marks] Activate Wir MD148% - b. C. Auto Scroll Read Mode Background" Screen Grab Find and [b marks] In five years time, you plan to pursue your further study on DBA. You know that graduate studies can be expensive and you estimate that it will cost RM50,000 per year for tuition fee and other expenses. These payments will be made at the BEGINNING of the year. To have enough money to attend graduate school, you have decided to start saving TODAY by investing in a money market fund that pays 4% per annum with monthly compounding. You will make monthly deposits into the account starting TODAY for the next five years. How much will you need to deposit each month to have enough money for graduate school? (Assume that money that is not withdrawn remains in the account during graduate school and the DBA will take three years to complete) HB 00 [6 marks] Activate Win If you can earn 5% (compounded annually) on an investment, how long does it take for your money to triple? Go to Settings fo 回访口 148% + PDF to Word PDF to Picture C. d. 0 Annotate DOD00 Rotate 0 00- H Auto Scroll Read Mode Background" Screen Grab Find and [6 marks] If you can earn 5% (compounded annually) on an investment, how long does it take for your money to triple? [4 marks] You are offered a security that will pay you RM2,500 at the end of the year forever. If your discount rate is 8%, what is the most you are willing to pay for this security? [4 marks] [TOTAL: 20 MARKS]
To buy the dream car, the anticipated monthly car payment will be RM861.45.
Calculate the future value of savings in the money market fund.
Annual investment = RM5,000
Number of years = 3
Interest rate = 8% compounded annually
Using the future value formula: FV = P(1 + r)^n
FV = RM5,000 * (1 + 0.08)^3 = RM6,120
Determine the loan amount needed to reach the goal.
Dream car cost = RM50,000
Savings in the money market fund = RM6,120
Loan amount needed = RM50,000 - RM6,120 = RM43,880
Calculate the monthly car payment.
Loan term = 60 months
Interest rate = 6% per annum with monthly compounding
Using the loan repayment formula: PMT = (r * PV) / (1 - (1 + r)^-n)
Where PMT is the monthly payment, r is the monthly interest rate, PV is the loan amount, and n is the number of months.
Monthly interest rate = 6% / 12 = 0.005
PMT = (0.005 * RM43,880) / (1 - (1 + 0.005)^-60) ≈ RM861.45
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Nash Company purchased, on January 1, 2020, as an available-for-sale security, $72,000 of the 7%, 5-year bonds of Chester Corporation for $66,399, which provides an 9% return.
Prepare Nash’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment.
1. On January 1, 2020, Nash Company purchased $72,000 of Chester Corporation bonds for $66,399, recording it as an available-for-sale security.
2. On December 31, 2020, Nash Company received annual interest and discount amortization for the bonds, recording the cash received and recognizing interest income.
3. At year-end, a fair value adjustment is made to reflect the market value of the available-for-sale securities, recording any unrealized gain or loss.
How to prepare journal entries for Nash Company's available-for-sale securities?(a) The journal entry for the purchase of the investment would be as follows:
Date: January 1, 2020
Debit: Available-for-Sale Securities (Investment) - $66,399
Credit: Cash - $66,399
Explanation: Nash Company debits the available-for-sale securities account to record the cost of purchasing the bonds of Chester Corporation. Cash is credited as it is the method of payment for the investment.
(b) The journal entry for the receipt of annual interest and discount amortization would be as follows:
Date: December 31, 2020 (assuming interest is paid annually)
Debit: Cash (Interest Received) - [Amount of Interest Received]
Debit: Discount on Bonds Payable - [Amount of Discount Amortization]
Credit: Interest Income - [Amount of Interest Received]
Explanation: The company recognizes interest income on the available-for-sale security and also amortizes the discount on the bonds payable. Cash is debited for the amount of interest received, and interest income is credited for the same amount. The discount on bonds payable account is debited to reflect the amortization of the discount.
(c) The journal entry for the year-end fair value adjustment would be as follows:
Date: December 31, 2020
Debit: Unrealized Gain/Loss on Available-for-Sale Securities - [Fair Value Adjustment]
Credit: Fair Value Adjustment - Available-for-Sale Securities - [Fair Value Adjustment]
Explanation: At the end of the year, the fair value of the available-for-sale securities is adjusted to reflect the market value. The difference between the fair value and the carrying value (cost) of the investment is recorded as an unrealized gain or loss. The unrealized gain/loss account is debited or credited, depending on whether there is a gain or loss, and the fair value adjustment account is credited or debited accordingly.
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on january 1, a corporation issues $2,000,000, 5-year, 12onds at 96 with interest payable on january 1. what is the carrying value of the bonds at the end of the first year?
To calculate the carrying value of the bonds at the end of the first year, we need to consider the bond's face value, discount or premium, and any amortization of the discount or premium over time.
Given:
Bond Face Value: $2,000,000
Bond Issue Price: 96% (or 0.96) of the face value
To find the carrying value at the end of the first year, we need to account for any amortization of the discount over the year. Assuming straight-line amortization, we will amortize the discount equally over the bond's 5-year term.
Discount Amount: Face Value - Issue Price
Discount Amount: $2,000,000 - ($2,000,000 * 0.96)
Discount Amount: $2,000,000 - $1,920,000
Discount Amount: $80,000
Amortization of Discount per Year: Discount Amount / Number of Years
Amortization of Discount per Year: $80,000 / 5
Amortization of Discount per Year: $16,000
Carrying Value at the End of the First Year: Face Value - Accumulated Amortization of Discount
Carrying Value at the End of the First Year: $2,000,000 - $16,000
Carrying Value at the End of the First Year: $1,984,000
Therefore, the carrying value of the bonds at the end of the first year would be $1,984,000.
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Suppose there are only two stocks in the entire market, Stock A and Stock B. Stock A has an expected return of 8% and a standard deviation, OA, of 15%. Stock B has an expected return of 14% and a standard deviation, og of 20%. Their market capitalizations are both exactly the same at $1,000,000. The correlation between Stock A and Stock B, p, is 0.3. The risk free rate, rf, is 4.5%. a) (10 points) If you were only able to hold either the market portfolio or Stock A in isolation, and held no other assets, which would you choose and why? b) (10 points) Show that the CAPM does not hold in this example given the numbers above. Recall that for the CAPM to hold implies that the market is equal to the tangent portfolio.
The market portfolio in this case would be an equally weighted portfolio of Stock A and Stock B since they have the same market capitalization. This means that you would split your investment 50/50 between these two stocks to replicate the market.
How to show that CAPM does not holdThe expected return E(rM) of the market portfolio is a weighted average of the expected returns of the individual assets, and since the weights are equal (0.5 for each stock):
E(rM) = 0.5 * 8% + 0.5 * 14%
= 11%
[tex]Var(rM) = wA^2 * OA^2 + wB^2 * OB^2 + 2 * wA * wB * p * OA * OBVar(rM) = 0.5^2 * 0.15^2 + 0.5^2 * 0.20^2 + 2 * 0.5 * 0.5 * 0.3 * 0.15 * 20%[/tex]
= 15%.
rf = 4.5%
For the Market Portfolio (M):
E(rM) = 11%
OM = 15%
For Stock A (A):
E(rA) = 8%
OA = 15%
For Stock B (B):
E(rB) = 14%
OB = 20%
The Sharpe ratios for these portfolios are:
Sharpe(M) = (E(rM) - rf)/OM = (11% - 4.5%)/15% = 0.433
Sharpe(A) = (E(rA) - rf)/OA = (8% - 4.5%)/15% = 0.233
Sharpe(B) = (E(rB) - rf)/OB = (14% - 4.5%)/20% = 0.475
The highest Sharpe ratio is for Stock B, and not for the market portfolio. Hence, the CAPM does not hold in this example because the market portfolio
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You have been asked to come in and train a group of employees
in an actual classroom environment with a training focus of
one of the following broad
topics: safety on the factory floor
customer se
As a trainer, your primary responsibility is to ensure that your trainees receive the maximum benefit from the training. This is achieved through effective classroom training that is both engaging and informative.
If you have been asked to train a group of employees on safety on the factory floor or customer service, here are some tips that can help you deliver the training effectively:
1. Set Clear Goals and Objectives
Before you begin the training session, it is essential to establish clear goals and objectives that you would like to achieve. This will ensure that you cover all the necessary topics and that your trainees understand the purpose of the training.
2. Engage the Trainees
Training is most effective when trainees are engaged and actively participating. This can be achieved by asking questions, encouraging discussions, and providing hands-on training wherever possible. Use real-life examples to illustrate key points and emphasize the importance of safety and good customer service practices.
3. Provide Clear Instructions
It is essential to provide clear instructions on how to perform tasks safely and effectively. This can include demonstrating how to use safety equipment or providing step-by-step instructions on how to handle customer complaints. Make sure that your instructions are clear and concise and that your trainees understand them.
4. Assess Learning
As a trainer, you need to assess your trainees' understanding of the material covered. This can be done through quizzes, assessments, or even role-playing exercises. Feedback is also essential as it provides an opportunity to reinforce key points and address any areas of concern.
In conclusion, classroom training is an excellent way to deliver training on safety on the factory floor or customer service. By setting clear goals and objectives, engaging trainees, providing clear instructions, and assessing learning, you can ensure that your trainees receive the maximum benefit from the training.
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37 2 Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming these month February 15,110 Mule Che Material purchases Payments for purchases are e
The expected January 31 Accounts Payable balance is $8,655 in the given case.
To calculate the expected January 31 Accounts Payable balance, we need to consider the purchases made in December, January, and February.
The purchases made in December are not relevant for the January 31 balance since they are already accounted for in the December Accounts Payable balance.
For January, the payment for purchases will be made 50% in the month of purchase. Therefore, 50% of the January purchases ($13,000) will be paid in January, which is $6,500.
For February, the payment for purchases will also be made 50% in the month of purchase. Therefore, 50% of the February purchases ($15,110) will be paid in February, which is $7,555.
To calculate the expected January 31 Accounts Payable balance, we subtract the payments made in January ($6,500) from the December Accounts Payable balance ($7,600) and add the payment due in February ($7,555).
Expected January 31 Accounts Payable balance = December Accounts Payable balance - January payment + February payment
Expected January 31 Accounts Payable balance = $7,600 - $6,500 + $7,555
Expected January 31 Accounts Payable balance = $8,655
Therefore, the expected January 31 Accounts Payable balance is $8,655.
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Fortune Company's Direct Materials Budget Shows The Following Cost Of Materials To Be Purchased For The Coming Three Months: January February March Material Purchases $ 13,000 $ 15,110 $ 11,930 Payments For Purchases Are Expected To Be Made 50% In The Month Of Purchase And 50% In The Month Following Purchase. The December Accounts Payable Balance Is $7,600.
Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March Material purchases $ 13,000 $ 15,110 $ 11,930 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $7,600. The expected January 31 Accounts Payable balance is: Multiple Choice $13,000. $7,600. $7,555. $6,500. $10,300.