Establishing a macroeconomic framework for the budget year should be the first step in the budget planning process (and ideally at least the next two years).
What happens initially when creating a budget?To start, evaluate your financial capabilities. The first step is to determine how much money you have coming in each month. This can come from a variety of sources, including investment income, grants, loans, employment income, retirement pensions, and money from other sources.
While creating a budget which three things are the most important?Start by evaluating your financial situation. Choose a budgeting strategy that works for you after you are aware of where you are and what you want to achieve. We advise using the 50/30/20 strategy, which divides your income into three main categories: requirements, wants, and savings and debt reduction (20%).
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In 2009, the great recession finally took its toll on the Alamo Title company in San Antonio, Texas. The housing business was in steep decline and the size of the company was reduced to half its former size through layoffs. Alamo Title was experiencing many new and unexpected challenges to keep its doors open for business. Management was discussing what style of management would be the most effective to use now at the company and brought you in to advise them. Which management style would you recommend they use?
Answer:
Theory X management style
Explanation:
Theory X is focused on the standard laborer's suppositions. This theory of management believes the average worker has no motivation, lacks accountability and is focused to specific ambitions. Overall, managers of theory X style assume their workers are less smart, stupider, and only operate for a reliable income.
In such a management style the managers keeps strong supervision over their subordinates, therefore, it will be suitable style as the company is already in steep condition and further problems might lead to total loss.
When travelling to remote locations, it is often helpful to bring cash, in case you want to buy something from someone who does not accept credit or debit cards.
a. True
b. False
What are the three different types of stakeholders that the board must take into account of? Give examples of each type and explain to illustrate your points?
The various kinds of stakeholders that the board must take into account of are:
employeescustomers, and investors.Who is a key stakeholder?A significant stakeholder is critical to a company's long-term success. Key stakeholders may assist businesses in making strategic choices, reducing risks, and expanding their operations.
If you are active in assisting your business in reaching its objectives, it is critical that you understand who your key stakeholders are and how to identify them.
Employees are crucial because they drive the business, customers are crucial because, the are the reason for the existence of the business, investors are important because, they finance the business.
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what is the difference between general and applied ethics
Answer:
The answer is below
Explanation:
Both General ethics and Applied Ethics are part of philosophical knowledge in understanding humans and their society.
Hence, the difference between general and applied ethics is:
General ethics is a philosophical term that is used to describe the theory of values in human activities. It deals with answering the controversial questions of human morality by establishing the idea of good and evil, right and wrong.
On the other hand, Applied Ethics is a term used in philosophy to describe a branch of ethics that is established to answer the issue of moral dilemmas, strategies, and operations in individuals' life, organizations, technology, and state.
FRY-9C, FRY-14M, FRY-14Q, FRY-2052a, FP&A, CRR
What are these terms exactly mean? How do they work in business? What each term do?
The terms mentioned above are used in economics and have to do with finance.
What are FRY-9C, FRY-14M, and FRY-14Q?In order to keep an eye on financial institutions in between on-site inspections, the FR Y-9C is the main analytical tool employed. The form, which is the most frequently requested and scrutinized report at the holding company level, contains more schedules than any other report in the FR Y-9 series.
The FR Y-14M report gathers monthly in-depth information on the loan portfolios of bank holding companies (BHCs), savings and loan holding companies (SLHCs), and intermediate holding companies (IHCs). Three loan- and portfolio-level collections, as well as one in-depth address matching collection, make up the report.
On a quarterly basis, the FR Y-14Q compiles comprehensive information on the various asset classes, capital components, and pre-provision net revenue (PPNR) categories of the bank holding companies (BHC), savings and loan holding companies (SLHCs), and intermediate holding companies (IHC).
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Four of the ships sought a passage along a southern...……
1 coast
2 inland
3 border
4 body of land with water on three sides
5 non of the above
what is the answer
Which attribute of a photographer will a portfolio convey?
A.diplomacy
B.versatility
c.generosity
D.sincerity
Answer:
The answer is B. versatility.
Explanation:
I took the test on Edmentum and got it right.
pls help i will give branlyist
Choose a specific administrative support job. Then explain the type of multitasking a person might have to do in that job.
Give an example of a clear subject line for an email and an unclear subject line. Then explain why the clear subject line is better.
The administrative position of human resources entails multiple tasks, including payroll, hiring, recruiting, preserving the work environment, and others.
Describe human resources.?Human resources professionals hire, interview, and screen job prospects as well as designate positions for newly hired personnel. They could also be in charge of pay and benefits, employee relations, and training. Professionals in labor relations supervise and assess employment contracts.
Processing payroll, writing job descriptions, establishing workplace norms, and purchasing benefits are all common HR administration tasks.
Thus, the administrative position is in human resources.
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A company’s sales team is getting together for a meeting. They need a place to gather where they can also stay overnight.
This scenario best describes
catering event sales
meeting room sales
group sales
convention and conference sales
This scenario best describes convention and conference sales. Hence, option D is correct.
What is conference sales?a gathering or series of gatherings when employees involved in marketing a company's goods are informed about new goods and services and debate how they can be marketed successfully: The yearly sales conference in Paris drew 400 attendees.
Large-scale gatherings called marketing conferences bring people from the same sector together to learn more about marketing. A number of marketing conferences can be held in person or electronically. Webinars are one of the various kinds of marketing conferences. Workshop.
Thus, option D is correct.
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1. Demonstrate understanding of the value of auditing in an economy and theories explaining the demand for auditing;
2. Discuss the role of auditing and other assurance services in society and the public’s expectation for these services.
3. Describe issues associated with the audit of public sector, not-for-profit and small business entities.
4. Critically evaluate the professional, legal, ethical and regulatory framework within which audits and other assurance engagements are carried out,;
5. Discuss current developments in auditing.
6. Audits can be categorized into different types: Like; (1) financial statement audits, (2) compliance audits, (3) operational audits, and (4) forensic audits.
Required: For each of the following descriptions, indicate which type of audit (financial statement audit, compliance audit, operational audit, or forensic audit) best characterizes the nature of the audit being conducted. Also indicate which type of auditor (external auditor, internal auditor, government auditor, or forensic auditor) is likely to perform the audit engagement.
a. Determine the fair presentation of Ajax Chemical’s balance sheet, income statement, and statement of cash flows.
b. Review the payment procedures of the accounts payable department for a large manufacturer.
c. Examine the financial records of a division of a corporation to determine if any accounting irregularities have occurred.
d. Evaluate a company’s computer services department in terms of the efficient and effective use of corporate resources.
e. Audit the partnership tax return of a real estate development company.
f. Investigate the possibility of payroll fraud in a labor union pension fund.
g. Examine contractual agreements with bankers and other lenders to be sure the company is complying with legal requirements
1. Auditing plays important role by providing assurance and credibility to financial statements which enhances investor confidence and promotes efficient allocation of resources.
Why is auditing important for the economy?Auditing is essential for the economy as it helps maintain trust and confidence in the financial information reported by businesses. By conducting independent assessments of financial statements, auditors provide assurance to stakeholders that the information is reliable and accurate.
This assurance is particularly valuable for investors, creditors, and other parties who rely on financial statements to make informed decisions. Auditing also helps detect and prevent fraud, mismanagement, and other financial irregularities and thereby safeguarding the integrity of the financial system.
2. Auditing and other assurance services play a vital role in society by providing independent evaluations of financial statements and other information enhancing the reliability and credibility of financial reporting.
3. Issues associated with the audit of public sector, not-for-profit, and small business entities include unique reporting requirements, limited resources etc.
4. The professional, legal, ethical, and regulatory framework surrounding audits and assurance engagements should be critically evaluated to ensure independence, competence, integrity, adherence to standards, and the protection of public interest.
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dnvkhfbfdjbkjbddbjkfbjkdfbkjdfbdjfbfdbjkdf
Answer:
fr
Explanation:
The cost of spandex is predicted to decrease by 5% per year for the next 3 years if the current cost is $20/yard how much will the cost of spandex be in 3 years
Answer:
The cost of spandex in 3 years will be $17.15/yard.
Explanation:
If the cost of spandex is predicted to decrease by 5% per year for the next 3 years, then the cost of spandex in each year can be calculated as follows:
1) At the end of the first year, the cost of spandex will be 95% of $20/yard = $19/yard.
2) At the end of the second year, the cost of spandex will be 95% of $19/yard = $18.05/yard.
3) At the end of the third year, the cost of spandex will be 95% of $18.05/yard = $17.15/yard.
Therefore, the cost of spandex in 3 years will be $17.15/yard.
three most difficult responsibility of managing your family
Answer:
1) to do all the chores
2) to understand and stop family fights
3) to take care of a sick family member
When using the Total Cost of Ownership concept, explain how a supplier with a higher unit price and higher tooling cost can end up being more cost effective than another supplier with a lower unit price and tooling cost.
What are the values of entrepreneurship
Answer: what r value of entrepreneurship
Explanation: Bravery. In recognizing and pursuing and opportunity, an entrepreneur requires bravery. ...
Vision. Vision guides the entrepreneur through the business planning process, clarifying the opportunity and setting goals for the organization. ...
Respect for self and others. ...
Trust. ...
Honesty. ...
Generosity. ...
Fortitude. if thats what u mean by this question
Please provide an Excel spreadsheet showing all of your calculations. No credit will be given if this is not provided.
PQL Airlines is developing a new baggage check in system that will automate the process. The airlines will use retained earnings to fund the project. Currently, there are 2,550,000 shares of stock outstanding selling for $27 per share. They expect to pay a dividend of $2.50 per share and they expect to increase these dividends at a rate of 2.2% per year for the foreseeable future. The U.S. Treasury in currently paying 1.25% and the market risk premium is 8.5%. Because volatility in the airline industry, PQL Airlines has a very high beta of 1.8. There is currently $60 million worth of debt outstanding. These bonds are currently trading at 92% of par. The bonds have a 4.5% semi annual coupon annual rate with 10 years remaining. The corporate tax rate is 30%.
The Airlines will finance the expansion with both debt and equity and maintain the same capital structure.
What is the cost of equity?
What is the cost of debt?
What is the Weighted Average Cost of capital for PQL Airlines?
The baggage check system is expected to cost is expected to cost $2,000,000 and they believe will be functional for 5 years. This system will be classified as a 3 year asset for MACRS (table is provided below) and they expect to sell the physical part of the system after that point for $50,000. While this system would not necessary generate any additional revenue from passengers, there would be able to license the system to other airlines and expect to generate licensing revenues of $800,000 a year. In addition, there is an expected reduction in labor cost of $35,000 annually.
Compute the following:
NPV
IRR
Discounted Payback
Profitability Index
What is your recommendation for PQL Airlines and why?
MACRS:
Year 1 - 33%
Year 2 - 45%
Year 3 - 15%
Year 4 - 7%
Year 1 - 33% is the recommended rating for PQL Airlines. Therefore, choice (A) is the appropriate one.
Any business that offers air transportation services for people and/or cargo is known as an airline. In order to provide these services, airlines use aircraft.
They may also join forces with other airlines to fly the same flight under a codeshare arrangement. A license or air operating certificate issued by a governmental aviation organization typically recommended serves as recognition for airline firms. Both scheduled and charter airlines are possible.
German airship manufacturer DELAG, which was established on November 16, 1909, was the first airline.
The four oldest non-airship airlines that are still in operation are the Czech Airlines, Qantas (1920), KLM (1919), and Avianca (1919), all of which are from the United States.
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If the amount of gasoline purchased per car at a large service station has a population of $15 and a population standard deviation of$4 then 99.73% of all cars will purchase between $3 and $27
The range between $3 and $27 is three standard deviations away from the mean.
Since we know that 99.73% of the data falls within three standard deviations of the mean, we can estimate that 99.73% of all cars will purchase gasoline between $3 and $27.
According to the given information, the population mean is $15, and the population standard deviation is $4.
This means that 99.73% of all cars will purchase gasoline within three standard deviations of the mean, using the empirical rule.
Therefore, we can use the empirical rule to estimate the percentage of cars that will purchase gasoline between $3 and $27.
The empirical rule is also known as the 68-95-99.7 rule, which states that:Approximately 68% of the data falls within one standard deviation of the meanApproximately 95% of the data falls within two standard deviations of the meanApproximately 99.7% of the data falls within three standard deviations of the mean.
To find the number of standard deviations that correspond to $3 and $27, we need to calculate the z-scores.
The z-score formula is given as:z = (x - μ) / σwhere z is the standard score, x is the value of the variable, μ is the population mean, and σ is the population standard deviation.
To find the z-score for $3, we plug in the values:z = (3 - 15) / 4z = -3To find the z-score for $27, we plug in the values:z = (27 - 15) / 4z = 3.
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Assume the following budgeted information for a merchandising company:
Budgeted sales (all on credit) for November, December, and January are $258,000, $228,000, and $219,000, respectively.
Cash collections of credit sales are expected to be 70% in the month of sale and 30% in the month following the sale.
The cost of goods sold is always 70% of sales.
Each month’s ending inventory equals 20% of the next month’s cost of goods sold.
40% of each month’s merchandise purchases are paid in the current month and the remainder is paid in the following month.
Monthly selling and administrative expenses that are paid in cash in the month incurred a total of $30,000.
The monthly depreciation expense is $29,500.
(The expected cash collections from customers in December are:)
A. $266,900.
B. $237,000.
C. $243,780.
D. $225,300.
To calculate the expected cash collections from customers in December, we need to first calculate the total credit sales for each month, the cash collections for each month, and the accounts receivable balance for November and December.
Total credit sales for November = $258,000
Total credit sales for December = $228,000
Total credit sales for January = $219,000
Cash collections for November sales:
70% * $258,000 = $180,600
Cash collections for December sales:
70% * $228,000 = $159,600
30% * $258,000 = $77,400
Total cash collections for December = $159,600 + $77,400 = $237,000
Cash collections for January sales:
70% * $219,000 = $153,300
30% * $228,000 = $68,400
Total cash collections for January = $153,300 + $68,400 = $221,700
Next, we need to calculate the accounts receivable balance for November and December:
Accounts receivable balance for November:
$258,000 * 30% = $77,400 (not collected in November)
Accounts receivable balance for December:
$228,000 * 30% = $68,400 (not collected in December) + $77,400 (from November) - $159,600 (collected in December) = $-13,800 (this is a credit balance, which means that there is an excess of cash collections from November sales)
Since the question is asking for the expected cash collections from customers in December, the answer is
B. $237,000.
The expected cash collections from customers in December are $243,780. Final expected cash collections from customers in December = $340,200 - $77,400 = $262,800. The answer is OPTION C,
To calculate the expected cash collections from customers in December, we need to consider the cash collections of credit sales for November and December.
For November's credit sales:
Cash collections = November sales * Cash collection rate for the month of sale
Cash collections = $258,000 * 70% = $180,600
For December's credit sales:
Cash collections = December sales * Cash collection rate for the month of sale
Cash collections = $228,000 * 70% = $159,600
Total expected cash collections in December = Cash collections from November + Cash collections from December
Total expected cash collections in December = $180,600 + $159,600 = $340,200
However, we also need to account for the fact that 30% of November's sales will be collected in December:
Additional cash collections = November sales * Cash collection rate for the month following the sale
Additional cash collections = $258,000 * 30% = $77,400
Final expected cash collections from customers in December = Total expected cash collections - Additional cash collections
Final expected cash collections from customers in December = $340,200 - $77,400 = $262,800
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What does Mrs. Morningstar say that Sancho and Bolsa couldn't find in a porta-potty?
toilet paper
a polar bear
an elephant
Answer:
its polar bear
Explanation:
i did the test on edge
According to the fragment of scene 6 of Sancho and Bolsa, it can be inferred that Mrs. Morningstar told Sancho and Bolsa that they could find a polar bear in a porta-potty
This story tells the story of Sancho and Bolsa two detectives who are involved in multiple situations. In the scene 6 of the story they hold a conversation with Mrs. Morningtar who says:
- Mrs. Morningstar: I won't hold my breath. You couldn't find a polar bear in a porta-potty.
According to the above, the correct response is to polar bear (option B) because these are the words Mrs. Morningstar mentiones. On the other hand she never mentionen toilet paper (option A) or an elephant (option C)
The question is incomplete because the text is missing. Here is the excerpt of the text.
- Bolsa: You can't be serious.
- Mrs. Morningstar: No, I don't know the address, but it's at the corner of Ocean and Pine.
- Bolsa: Thank you, Mrs. Morningstar. We'll let you know as soon as we find out anything.
- Mrs. Morningstar: I won't hold my breath. You couldn't find a polar bear in a porta-potty.
- Bolsa: Goodbye, Mrs. Morningstar.
- Mrs. Morningstar: And next time use the phone, don't just come by whenever you feel like it.
- Bolsa: Lovely woman.
- Sancho: Maybe William isn't really missing, maybe he just decided he didn't want to live with his aunt anymore.
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The purchase of which of the following gives the buyer part ownership of a company?
A
stock
B
bond
C
futures contract
D
treasury bill
\(\qquad\qquad\huge\underline{{\sf Answer}}♨\)
The Correct option is Stocks !
Stocks are part of net worth of a company, and person who owns stocks of a particular company gains part ownership of that company.
Answer:
A -- Stock
Explanation:
Say an investor buys stock they are buying a percentage of ownership in that company.
Hope this helps! Please let me know if you need more help or think my answer is incorrect. Brainliest would be MUCH appreciated. Have a wonderful day!
Mrs. Slayman slays all day. She slays 17 times a second. Approximately how much Slaying does Mrs. Slayman do in a day?
Mrs. Slayman slays approximately 1,468,800 times in a day.
How to calculate much Slaying does Mrs. Slayman do in a dayIf Mrs. Slayman slays 17 times every second, then in one minute (60 seconds), she slays:
17 times/second * 60 seconds = 1020 times/minute
In one hour (60 minutes), she slays:
1020 times/minute * 60 minutes = 61,200 times/hour
And in one day (24 hours), she slays:
61,200 times/hour * 24 hours = 1,468,800 times/day
Therefore, Mrs. Slayman slays approximately 1,468,800 times in a day.
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QUESTION 8 of 10: True or False: You can somewhat control what your customers order without them realizing it.
a) True
b) False
Answer:
true
Explanation:
by trying to give the description of the thing the customer wants to buy, he/she will ultimately get convinced by what you say not what they need
The company can control the customers order to an extent by giving them offers and discounts.
Thus, the correct option is A.
What is customer service?Supporting current and potential consumers is known as providing customer service.
Building strong relationships with your clients is the secret to providing excellent customer service.
The consumer will have a favorable experience if you thank them and encourage a helpful, friendly, and happy environment. A satisfied client is more likely to make repeat visits and spend more money.
Essentially, the three "p"s of professionalism, patience, and a "people-first" mindset are the three key components of good customer service.
Going above and beyond to ensure that a customer is pleased with the company's goods or services is a sign of excellent customer service. Additionally, it entails offering timely, pleasant service to customers. Excellent problem-solving and communication abilities are equally vital.
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How do state and federal courts differ in the United States?
Answer:The primary distinction is that state and local courts are authorized to hear cases involving the laws and citizens of their state or city, while federal courts decide lawsuits between citizens of different states, cases against the United States, and cases involving specific federal laws.
Explanation:
Nelson is documenting all the steps it takes to recruit, hire, and onboard a new employee. What would be the BEST way to describe these steps?
A) hiring workflow
B) hiring dynamics
C) hiring hierarchy
D) hiring org chart
The best way to describe these steps for recruiting, hiring, and onboarding a new employee would be through a hiring hierarchy. Option C.
What are the steps for hiring?First, there must be an assessment of the need for specialized personnel, so that the company can then start a structured recruitment/selection process based on requirements such as the employee's experience and education.
After the recruitment process, it is necessary to follow the steps of formalizing the registration of the new employee through a contract and other legal provisions. Integration is also essential so that the employee can adapt to the rules, team and organizational culture.
Therefore, the process of selecting, hiring and integrating a new employee into the company follows a series of essential steps that must be arranged in a hiring hierarchy, so that the process proceeds as planned.
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help help help help help help plsss
The factor that determines whether a metamorphic rock is foliated or non - foliated, is A. the presence or absence of mineral crystals.
What is the difference between foliated and non - foliated metamorphic rocks ?The majority of the time, foliated rocks have aligned grains of flat minerals like chlorite. When the mineral grains are not arranged in planes or bands, as they are in foliated rocks, the rocks are said to be non-foliated.
Minerals that are platy or elongate and oriented in roughly parallel planes, wavy bands, or both are found in foliated rocks. Nonfoliated rocks may have colored bands that reflect minute impurities, but the primary minerals do not exhibit any obvious alignment.
Therefore, we can tell foliated and non - foliated metamorphic rocks apart, based on the presence of mineral crystals, or the lack thereof.
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On 12/31/Year 1 Passey Co. acquired a 100% interest inSolomon Co. by exchanging 10000 shares of its common stock for100000 shares of Solomons common stock. The fair market value ofPasseys common stock on December 31 Year 1 was $9 per share andthe fair value of Solomons was $3.50 per share.Additional information as of December 31 Year 1 is as follows:
Solomon Co.
Book Values Fair Values
Current assets $115000 $115000
Plant assets 200000 255000
Liabilities 10000 10000
Passey Co.Plant assets$1700000 $1800000
Passeys consolidated financial statements as of December 31 Year1 would report plant assets at:__________.
i. $1700000
ii. $1800000
iii. $1955000
iv. $2055000
The consolidated financial statements of Passey Co. as of December 31, Year 1 would report plant assets at iii. $1,955,000.
Data and Calculations:
Passey Co.s shareholding in Solomon Co. = 100%
The fair value of Solomon's = $3.50
The fair value of Passey's = $9
Solomon Co.
Book Values Fair Values
Current assets $115,000 $115,000
Plant assets 200,000 255,000
Liabilities 10,000 10,000
Passey Co.
Plant assets $1,700,000 $1,800,000
Consolidated Plant Assets:
Passey Co. Solomon Co. Consolidated
Number of shares exchanged 10,000 100,000
Plant assets $1,700,000 $255,000 $1,955,000
Thus, the consolidated financial statements of Passsey Co. as of December 31, Year 1 would report plant assets at iii. $1,955,000.
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Problem 8, MacroSoft Inc. has capitalized $600,000 of software costs. Sales from this product were $360,000 in the first year. MacroSoft estimates additional revenues of $840,000 over the product’s economic life of 5 years.
Instructions
Prepare the journal entry to record software cost amortization for the first year. Show all computations.
Journal Entry:
Date: [First year-end date]
The amortization expense for the first year is $120,000.
Debit: Amortization Expense - Software Cost - Year 1 ($600,000 / 5 years) = $120,000Credit: Accumulated Amortization - Software Cost - Year 1 ($600,000 / 5 years) = $120,000Explanation:To record the software cost amortization for the first year, we need to allocate a portion of the capitalized software costs as an expense. Since the software has an estimated economic life of 5 years, we divide the total software cost ($600,000) by 5 to determine the annual amortization expense. In this case, the amortization expense for the first year is $120,000. We debit the Amortization Expense - Software Cost account to recognize the expense and credit the Accumulated Amortization - Software Cost account to accumulate the amortization over time.For more such questions on Journal Entry
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Which of the following is considered a broad
field that determines the overall structure and
flow of a space or object?
A. Design
B. Project management
C. Sculpting
Design is considered as broad field that determines the overall structure and flow of a space or object.
What does Design mean in Art?Design is an art form, a method of human expression that employs a set of highly developed procedures to instill meaning in objects, performances, and experiences. Design, like any other art form, has the potential to solve problems, but there is no guarantee that it will.
To create amazing images, design allows you to control the viewer's eye. Each piece connects on the first try thanks to the use of contrast and shot composition. This includes thinking about how the viewer's attention will move from one area to the next and from one scene to the next.
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Calculating Cost of Debt For the firm in the previous problem, suppose the book value of the debt issue is $35 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 12 years left to maturity; the book value of this issue is $80 million and the bonds sell for 61 percent of par. What is the company’s total book value of debt? The total market value? What is your best estimate of the aftertax cost of debt now?
The best estimate of the aftertax cost of debt for the firm is 3.47% in the given case.
To calculate the total book value of debt, we sum the book values of both debt issues:
Total book value of debt = Book value of debt issue 1 + Book value of debt issue 2
Total book value of debt = $35 million + $80 million
Total book value of debt = $115 million
To calculate the market value of the zero coupon bond, we need to find 61% of the face value:
Market value of zero coupon bond = 0.61 x Face value of zero coupon bond
Market value of zero coupon bond = 0.61 x $80 million
Market value of zero coupon bond = $48.8 million
The total market value of debt is the sum of the market values of both debt issues:
Total market value of debt = Market value of debt issue 1 + Market value of debt issue 2
Total market value of debt = $35 million + $48.8 million
Total market value of debt = $83.8 million
To find the aftertax cost of debt, we need to first calculate the yield to maturity on the zero coupon bond. We know that the bond has 12 years left to maturity and sells for 61% of par, so we can use the following formula to find the yield to maturity:
61% of face value = $48.8 million
Par value = $100 million
Years to maturity = 12
Yield to maturity = ?
Solving for the yield to maturity using a financial calculator or spreadsheet, we get:
Yield to maturity = 4.83%
Next, we need to find the aftertax cost of debt for both debt issues separately and then weight them by their respective market values. We are given that the company's tax rate is 40%.
For the first debt issue, we are given that the coupon rate is 8% and that the bonds are currently selling at par, so the beforetax cost of debt is 8%. The aftertax cost of debt is:
Aftertax cost of debt issue 1 = Beforetax cost of debt issue 1 x (1 - Tax rate)
Aftertax cost of debt issue 1 = 8% x (1 - 40%)
Aftertax cost of debt issue 1 = 4.8%
For the zero coupon bond, we already calculated the yield to maturity, which is the beforetax cost of debt. The aftertax cost of debt is:
Aftertax cost of debt issue 2 = Beforetax cost of debt issue 2 x (1 - Tax rate)
Aftertax cost of debt issue 2 = 4.83% x (1 - 40%)
Aftertax cost of debt issue 2 = 2.90%
Finally, we can weight the aftertax costs of debt by their respective market values to get the overall aftertax cost of debt:
Overall aftertax cost of debt = (Market value of debt issue 1 / Total market value of debt) x Aftertax cost of debt issue 1 + (Market value of debt issue 2 / Total market value of debt) x Aftertax cost of debt issue 2
Plugging in the numbers, we get:
Overall aftertax cost of debt = ($35 million / $83.8 million) x 4.8% + ($48.8 million / $83.8 million) x 2.90%
Overall aftertax cost of debt = 3.47%
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The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are (1) a conveyor system with a high initial cost, but low annual operating costs, and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 7%, and the projects' expected net costs are listed in the table:
a) What is the present value of each alternative? Round your answers to the nearest dollar, if necessary. Enter your answers as a whole numbers. For example, do not enter 1,000,000 as 1 million.
EXPECTED NET COST
Year Conveyor Forklift
0 -$500,000 -$200,000
1 -120,000 -160,000
2 -120,000 -160,000
3 -120,000 -160,000
4 -120,000 -160,000
5 -20,000 -160,000
The expected net cost of the company is $500,000 -$200,000. A conveyor system with a high initial cost, but low annual operating costs.
What is operating costs?The ongoing costs related to the routine day-to-day operations of a business are known as operating costs. Costs of goods sold (COGS) and other operating costs, also known as selling, general, and administrative (SG&A) costs, are both included in operating costs. Operating costs, also known as operational costs, are the costs associated with running a company, or with running a machine, part, piece of equipment, or facility. They represent the cost of the resources an organisation uses just to stay in business. Rent, travel expenses, utilities, salaries, office supplies, maintenance and repairs, property taxes, and depreciation are a few examples.
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