(i) Tax on suppliers of cigarettes: The tax increases the cost of production for suppliers, leading to a higher price and lower quantity of cigarettes consumed.
(ii) Public health campaign initiatives: The initiatives decrease consumer demand for cigarettes, resulting in a lower price and lower quantity of cigarettes consumed.
(a) Illustration of the Implications of Policies on Cigarette Smoking:
(i) Tax on the suppliers of cigarettes:
A tax on the suppliers of cigarettes shifts the supply curve upward, as the tax increases the cost of production for cigarette suppliers. The diagram will show the initial supply curve (S1) shifting to a new supply curve (S2). The extent of the shift depends on the magnitude of the tax.
Demand remains relatively unchanged, as the demand for cigarettes is relatively inelastic due to addictive properties. Thus, the demand curve (D) remains the same.
The new equilibrium point (E2) occurs at a higher price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The tax causes the price paid by consumers to increase, reducing their purchasing power. As a result, the quantity demanded decreases, leading to a decrease in legal cigarette consumption.
(ii) Public health campaign initiatives:
Public health campaign initiatives, such as plain packaging, health warnings, and advertising bans, aim to decrease the demand for cigarettes by influencing consumer behavior. The demand curve (D) shifts to the left due to reduced consumer desire and increased awareness of health risks.
Supply remains relatively unchanged, as the initiatives do not directly affect the cost of production or supply-side factors.
The new equilibrium point (E2) occurs at a lower price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The decrease in demand leads to a reduction in legal cigarette consumption.
In both cases, the combined impact of the policies leads to a decrease in legal cigarette consumption. The tax on suppliers directly affects the price paid by consumers, while the public health initiatives affect consumer behavior and preferences.
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Kena, Limo and Mara had been orphaned when both their parents died in a bus accident in
April 1992. Their uncle Barua, a stockbroker on the Nairobi stock exchange organized a
harambee for them in June 1992 and raised sh, 1980,000. He invested this amount as follows:
Shs.
9,600 sh. 10 Ordinary Shares in KAB Ltd 432,000
12,600 sh. 10 Ordinary Shares in BBB Ltd 756,000
13,200 sh. Ordinary shares in TEA Ltd 792,000
1,980,000
He established an accumulation and maintenance trust to hold these investments on behalf of
the children. The trust had a wide investment clause. He ruled that accounts be made up to 31st
may each year. When each child reached the age of 21, the trustees were to transfer to him his
share of the fund at that date. Kena turned 21 years on 31st may 1996.
The balances on the accumulation Accounts Kena, Limo and Mali at 1st June 1995 were sh.
207,900, sh. 103,950 and sh. 34,650. To this date, the trustees had used accumulated income to
purchase 5,775 sh. 10 Ordinary shares in TEA Ltd. on 1st June 1995, thee was no cash in the
income account in the bank.
In the year to 31st May 1996 sh, 227,750 was received from capital investment and sh 62,370 from
Accumulation investments and maintenance payments made on behalf of Kena, Limo and Mali
were sh 77,000,sh 81,000 and sh,94,000 respectively. On 31st may 1996, the market values of the
shares in KAB Ltd, BBB Ltd, and TEA Ltd were sh 60,sh80 and sh 70 respectively.
Kena was to receive 10,000 sh. Ordinary shares in BBB Ltd and the balance due to him on
capital would be made up of shares in KAB Ltd. Out of the accumulation assets, Kena was to
receive sh.32, 222 in cash and the balance in shares in TEA Ltd.
Required:
The beneficiaries’ accumulation accounts for the year ended 31st may 1996 and distribution
statements for the capital and accumulation assets as at 31st May 1996
Kena, Limo and Mara had been orphaned when both their parents died in a bus accident in April 1992. Their uncle Barua, a stockbroker on the Nairobi stock exchange organized a harambee for them in June 1992 and raised sh, 1980,000. He invested this amount as follows:
Kena's Accumulation Account for the year ended 31st May 1996:Sh. Sh. Balance b/d 207,900Capital Investment 50,250Dividend Received 4,050Accumulated Income 62,370 116,670Less: Maintenance Payments 77,000Balance c/d 39,670 116,670Beneficiaries' distribution statements as at 31st May 1996:Kena's Capital Asset Distribution Statement: Sh. Sh. Balance b/d -Shares in KAB Ltd 432,000Shares in BBB Ltd 8,000(10,000 x 80)Total 440,000Less: Share of Capital used for maintenance 50,250Total Distribution 389,750Kena's Accumulation Asset Distribution Statement: Sh. Sh. Balance b/d -Shares in TEA Ltd 24,570(32,222 - 7,652)Shares purchased from accumulated income 7,652Total 32,222Less: Share of Accumulated Income used for maintenance 14,370Total Distribution 17,852Kena is entitled to receive 10,000 sh. Ordinary shares in BBB Ltd, which is worth sh.80 per share or sh.8,000.
The balance due to Kena on would be made up of shares in KAB Ltd, which he is entitled to retain. The beneficiaries’ accumulation accounts for the year ended 31st May 1996 and distribution statements for the capital and accumulation assets as at 31st May 1996 have been provided above.
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The beneficiaries’ accumulation accounts for the year ended 31st May 1996
:Calculation of Accumulation income accounts for the year ended 31 May 1996Shs.Shs.Original Accumulated income at 1 June 1995Kena207,900Limo103,950Mali34,650
Add: Income received on the trust fundKena77,000Limo81,000Mali94,000Total Accumulated income314,900179,950128,650
Less: Payments made on behalf of the beneficiariesKena(77,000)Net Accumulated income after payments received during the year134,900Limo(81,000)Mali(94,000)Accumulation fundsKenaLimoMaliTotalSh.Sh.Sh.Sh.Original capital1980,000
Less: Cost of shares disposed of (432,000+756,000)1,212,000New capital768,000Shares purchased in the year – Kena’s share10,000Market value of shares at 31 May 1996:KAB Ltd (10*sh60)600BBB Ltd (12,600*sh80)1,008,000TEA Ltd (13,200+5,775)*sh70)1,100,750Total market value of shares
held2,109,350Distribution statements for the capital and accumulation assets as at 31 May 1996:KenaLimoMaliSh.Sh.Sh.Sh.Sh.Sh.Sh.Sh.Accumulated income account at 1 June 1996Cash32,22210,9089,956Shares-TEA Ltd566,233364,947192,850Total598,455375,855202,806Capital account at 1 June 1996Shares-KAB Ltd432,000336,000216,000BBB Ltd756,000529,200302,400TEA Ltd792,000507,600270,150Total1,980,0001,373,800788,550Shares purchased during the yearShares-KAB Ltd-72,000-46,800-25,200BBB Ltd-1,008,000-700,560-399,840TEA Ltd-735,750-473,850-251,100Total-1,743,750-1,221,210-676,140Total capital investment236,250152,790112,410
Less: Shares transferred to Kena-KAB Ltd(236,250)
Less: Shares transferred to Kena-BBB Ltd(806,400)236,250
Less: Cash paid to beneficiaries(32,222)(10,908)(9,956)Net capital investment at 31 May 1996Shares-KAB Ltd196,800152,640190,800BBB Ltd(252,000)(171,360)(96,560)TEA Ltd1,556,2501,000,750532,050Cash0.00(8,880)1,494Net distributionKAB Ltd163,800152,640190,800BBB Ltd(252,000)(171,360)(96,560)TEA Ltd1,556,2501,000,750532,050Cash(32,222)(19,788)(8,462)Total distribution1,436,828962,242618,828
Notes:The balance in the accumulated income accounts carried forward to the next accounting period is sh.598, 455, sh.375, 855 and sh.202, 806 for Kena, Limo and Mali respectively.Kena will receive a total of sh. 236, 250 comprising sh.163, 800 in shares of KAB Ltd and sh.72, 450 in cash. The balance of his investment will be transferred to the next accounting period.Limo will receive a total of sh.152, 790 comprising sh.152, 640 in shares of KAB Ltd and sh.150 in cash. The balance of his investment will be transferred to the next accounting period.Mali will receive a total of sh.112, 410 comprising sh.190, 800 in shares of KAB Ltd, sh.96, 560 in shares of BBB Ltd, sh.532, 050 in shares of TEA Ltd and sh.8, 880 in cash. The difference of sh.605, 250 will be transferred to the next accounting period.
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1. The daily demand for a popular CD in a music store is approximately M200, 20). The cost of keeping the CD on the shelves is 5.04 per disc per day. It costs the store $100 to place a new order. There is a 7-day lead time for delivery. Determine the store's optimal inventory policy given that the store wishes to limit the probability of shortage to at most.02. 2. The daily demand for camera films at a gift shop is N300, 5). The cost of holding a roll in the shop is 5.02 per day, and the fixed cost of placing a replenishment order is $30. The shop's inventory policy is to order 150 rolls whenever the inventory level drops to 80 units. It simultaneously maintains a buffer of 20 rolls at all times. a. (a) Determine the probability of running out of stock. b. (b) Given the data of the situation, recommend an inventory policy for the shop given that the shortage probability cannot exceed
To determine the store's optimal inventory policy, we can use the Economic Order Quantity (EOQ) model. The store's optimal inventory policy would be to order approximately 3,162 CDs when the inventory level reaches 1,400 CDs, with no additional safety stock.
To determine the store's optimal inventory policy, we can use the Economic Order Quantity (EOQ) model, taking into account the demand, holding cost, ordering cost, and lead time.
Given information:
Daily demand (D) = 200 CDs
Holding cost (H) = $0.04 per disc per day
Ordering cost (S) = $100
Lead time (L) = 7 days
Maximum probability of shortage (P) = 0.02
First, let's calculate the EOQ using the following formula:
EOQ = √((2DS) / H)
EOQ = √((2 x 200 x 100) / 0.04)
= √(400,000 / 0.04)
= √10,000,000
= 3,162.28 (approximately)
The optimal order quantity would be approximately 3,162 CDs.
Next, let's calculate the reorder point (ROP) to determine when to place a new order:
ROP = D x L
ROP = 200 x 7
= 1,400 CDs
The reorder point would be 1,400 CDs.
To limit the probability of shortage to at most 0.02, we need to determine the safety stock. The safety stock is the buffer stock held to account for uncertainties in demand and lead time. It is calculated using the formula:
Safety stock = z x √(D x (σL)² + (σD)² x L)
Here, z is the Z-value corresponding to the desired service level. Since the maximum probability of shortage is 0.02, the desired service level would be (1 - 0.02) = 0.98. The corresponding Z-value can be obtained from a standard normal distribution table.
Assuming the standard deviation of demand (σD) is 20 CDs and the standard deviation of lead time (σL) is 0 (since it is not provided in the question), we can calculate the safety stock:
Safety stock = Z x √(200 x (0²) + (20²) x 7)
Since σL = 0, the safety stock would be 0.
In summary, the store's optimal inventory policy would be to order approximately 3,162 CDs when the inventory level reaches 1,400 CDs, with no additional safety stock. This policy aims to limit the probability of shortage to at most 0.02.
The correct question is:
The daily demand for a popular CD in a music store is approximately M200, 20). The cost of keeping the CD on the shelves is $.04 per disc per day. It costs the store $100 to place a new order. There is a 7-day lead time for delivery. Determine the store's optimal inventory policy given that the store wishes to limit the probability of shortage to at most.02.
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When relative income (that is, the income of relevant others) is included in a SWB equation, we tipically find that (A) average SWB increases with relative income B the effect is non-significant the higher the relative income, the higher the aspiration level and thus, the higher the SWB D average SWB decreases with relative income
The correct answer is (C) the higher the relative income, the higher the aspiration level and thus, the higher the SWB (Subjective Well-Being).
When relative income is included in a SWB equation, research has shown that individuals' SWB tends to be influenced by their relative income compared to others. This is known as the relative income hypothesis. According to this hypothesis, people's SWB is not solely determined by their absolute income or wealth but also by their income or wealth relative to others in their reference group or society.
The effect of relative income on SWB is typically positive, indicating that as individuals' relative income increases, their SWB tends to be higher. This suggests that people compare their income or wealth to others and form aspirations or expectations based on the income levels of relevant others. Higher relative income leads to higher aspiration levels, and when individuals meet or exceed these aspirations, it positively affects their SWB.
Therefore, the higher the relative income, the higher the aspiration level, and subsequently, the higher the SWB. This pattern suggests that individuals' SWB is influenced by social comparisons and the relative standing in terms of income within their social context.
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Prepare a TOWS Matrix sheet by selecting 1 strategy and 1 business.
Needed ASAP. Please help me doing this. Upvote will be
provided.
Select ONE strategy and ONE business and develop a TOWS matrix: Strategy: Business/Company Chocolate Manufacturer Supermarket Local Bank College Mobile investment app Restaurant Growth Expansion Marke
A TOWS matrix is a strategic management tool that can be used to identify and evaluate different internal and external factors that influence an organization's current situation. It is an acronym for Threats, Opportunities, Weaknesses, and Strengths.
The strategy selected for this particular TOWS matrix is "Expansion."The business chosen for this particular TOWS matrix is "Chocolate Manufacturer."The TOWS matrix for this particular scenario is illustrated below:Strengths:Chocolates produced by the company have a unique taste, which sets them apart from the competition.A huge supply of raw materials, like cocoa beans and other ingredients, ensures that the company can meet the increasing demand for their product.High-quality packaging and promotional campaigns for chocolates are in place.Weaknesses:The chocolate manufacturing process is labor-intensive and time-consuming, resulting in higher production costs.The company does not have a wide distribution network.Opportunities:International expansion of the business to markets where the demand for chocolates is high.Diversification of products and the introduction of new chocolate flavors in the market.Development of an online platform to increase sales and target a younger audience.Threats:Intense competition from other manufacturers, both big and small.Fluctuations in the price of raw materials that the company relies on, like cocoa beans.Governmental regulations on the production and marketing of chocolates.For such more questions on TOWS
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TOWS Matrix: Strategy - Growth, Business - Supermarket
How can a supermarket leverage growth opportunities?In order to leverage growth opportunities, a supermarket can utilize various strategies identified through a TOWS matrix analysis. By analyzing the external opportunities and threats, and internal strengths and weaknesses, a comprehensive strategy can be developed to maximize growth potential.
One of the key strengths of a supermarket is its wide product range and established customer base. With a growing market and increasing consumer demand for convenience, the supermarket can capitalize on these strengths to expand its presence and increase market share.
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If the primary deficit is zero then the ratio of the debt to GDP is a. falling over time b. increasing over time c. constant over time d. increasing and then decreasing e. We do not have enough information
The debt-to-GDP ratio is stable over time. Hence, the answer to the question is option c) constant over time.
If the primary deficit is zero then the ratio of the debt to GDP is constant over time. The statement is true and it can be proved in the following way;
Explanation: Debt-to-GDP ratio measures the proportion of a country's debt to its total income. GDP is used as a reference to measure debt because it is the most comprehensive measure of economic output. This ratio is a critical measure of the country's ability to pay off its debt. The debt-to-GDP ratio varies with time, based on the economic growth of a nation. If the primary deficit is zero, it implies that the government's budgetary revenues are equal to its expenses before interest payments. Therefore, there will be no accumulation of debt. Hence, the debt-to-GDP ratio is stable over time. Hence, the answer to the question is option c) constant over time.
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what is evidence that value or size effects are based on rational pricing? 1. small stocks perform badly during recessions but perform well after recessions 2. the size and value anomaly returns positively predict next year's gdp growth. 3. small stocks are illquid. their transaction costs are higher. so people discount its current price.
The evidence that value or size effects are based on rational pricing can be supported by the following points: Small stocks performing badly during recessions but well after recessions, Size and value anomaly returns predicting next year's GDP growth and small stocks are illquid.
Small stocks performing badly during recessions but well after recessions: This pattern suggests that investors may be rational in pricing small stocks. During economic downturns, small companies may face higher financial risks and have limited access to capital, which can result in their stock prices underperforming.
Size and value anomaly returns predicting next year's GDP growth: If the size and value effects were not rational pricing phenomena, it would be unlikely for them to have predictive power for macroeconomic factors such as GDP growth.
Illiquidity and higher transaction costs for small stocks: The higher transaction costs associated with trading small stocks due to their illiquidity can be seen as a rational response by investors.
These pieces of evidence support the notion that value or size effects are based on rational pricing, where investors incorporate relevant information and risks into the pricing of different stocks or asset classes.
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Your company has purchased a new piece of equipment for $1,000,000 and the equipment has a useful life of 5 years and uses the straight-line method of depreciation. It is estimated that labor costs and maintenance costs will be reduced by $500,000 per year for the next 5 years. Your company has a hurdle rate of 10%.
Using the Payback Method, calculate the number of years to return the initial investment.
A) Two years
B) One ear
C) Five years
D) Three years
The number of years to return the initial investment is three years.
Investment Required (I) = Annual Net Cash Inflow (ANI) × Payback Period (PP) + Unrecovered Investment at end of the Payback period therefore, the number of years to return the initial investment is calculated by dividing the initial investment by the annual net cash inflow.
The initial investment is the price of the new equipment, which is $1,000,000. The equipment has a useful life of five years and uses the straight-line method of depreciation. Depreciation will be calculated as $1,000,000 / 5 years = $200,000 per year. Over the equipment's useful life of five years, the reduction in labor costs and maintenance expenses is expected to be $500,000 per year.
Therefore, the net annual cash inflow will be $500,000 - $200,000 = $300,000.The payback period can now be determined as follows: Payback Period (PP) = Investment Required (I) / Annual Net Cash Inflow (ANI)= $1,000,000 / $300,000 = 3.33 years therefore, it will take 3.33 years to pay back the initial investment. However, since the Payback Method formula only allows whole numbers, the correct answer is option D) Three years.
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Make a proposed mission statement of Puregold (Aling Puring) that incorporates ALL of the components and label them:
1. Customers
2. Products or serviced
3. Markets
4. Technology
5. Concern for survival, growth and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
Limit to 150 words only
The proposed mission statement of Puregold (Aling Puring) that incorporates the given components is written here.
Mission Statement of Puregold (Aling Puring):
At Puregold (Aling Puring), our mission is to provide our customers (1) with a wide range of quality products and exceptional services (2) in the markets (3) we serve. By leveraging innovative technology (4), we aim to ensure the survival, growth, and profitability (5) of our organization.
We are driven by a philosophy (6) of delivering value and convenience to our customers, while maintaining a strong self-concept (7) as a trusted and reliable retailer. Our commitment to excellence extends beyond our customers and encompasses a concern for our employees (9), fostering a positive and supportive work environment.
Additionally, we prioritize a strong public image (8) by actively engaging in initiatives that benefit the community and promote social responsibility. Through these components, we strive to achieve our mission of providing exceptional products and services to our valued customers while ensuring the well-being of our employees and maintaining a positive public image.
This was the proposed mission statement of Puregold (Aling Puring) that incorporates the given components.
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What interest rate, compounded monthly, is equivalent to 10.04% effective interest rate?
Amount compounded monthly, is equivalent to 10.04% effective interest rate therefore, the equivalent interest rate is 12.6826% approximately.
To find out the equivalent interest rate that is compounded monthly when an effective interest rate is given, we need to use the following formula:
Effective rate = (1 + r/n)n - 1 Where:
r = the nominal interest rate (annual) and
n = the number of compounding periods per year
Firstly, let's write the given data:
r = 10.04% effective interest rate
n = 12 since it is compounded monthly
Now let's substitute the values in the formula and solve for r:
r = (1 + 10.04%/12)^12 - 1r
= (1.0083667)^12 - 1r
= 0.1268257 or 12.6826% (rounded to 4 decimal places)
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OUR COMPANY IS OGDC PAKISTAN
1.1 Executive Summary
Executive Summary should cover the following points:
Brief Introduction of your chosen Company
Purpose of your report
Major findings abou
The OGDC (Oil and Gas Development Company) is a Pakistan-based oil and gas exploration and production company. Its primary objective is to ensure Pakistan's energy security while working towards the growth of the country's economy. The company holds a significant place in the country's petroleum industry and contributes significantly to Pakistan's economy through its exploration and production activities.
The purpose of the report is to evaluate the company's financial and non-financial performance, including its growth, profitability, and efficiency, among other aspects. The report will help to identify areas where the company is performing well and areas that need improvement.
OGDC is one of the largest oil and gas companies in Pakistan. It has a significant presence in the country's upstream oil and gas industry and contributes significantly to the country's energy requirements. The company has been expanding its operations and investing in new oil and gas exploration projects to maintain its growth trajectory.
In terms of financial performance, the company has reported steady growth in revenue and profits over the past few years. The company's net profit for the last year was Rs. 105 billion, which was a significant increase from the previous year's profits. Despite the challenging business environment, the company has managed to maintain its profitability by optimizing its operations and adopting cost-cutting measures.
Overall, the company's performance has been satisfactory, and it is well-positioned to take advantage of the country's growing demand for energy.
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If a seller elects, in the listing contract, to provide
a buyer with a sellers property disclosure form, it must
be
a. completed by the listing broker
b. signed by the seller and verified by the listi
If a seller elects, in the listing contract, to provide a buyer with a sellers property disclosure form, it must be completed to the best of the sellers current actual knowledge. The correct answer is option (c).
When a seller elects to provide a buyer with a seller's property disclosure form, it is the seller's responsibility to complete the form honestly and accurately. The form is designed to disclose any known material defects or issues with the property that could affect its value or desirability. The completion of the form by the seller ensures that they provide the buyer with relevant information about the property. Hence, option (c) is the correct answer.
It is important for the seller to disclose to the best of their current actual knowledge because they are responsible for sharing accurate and truthful information about the property. If the seller does not occupy the property, they are still required to provide the disclosure based on the information they have obtained from the tenant or other sources. Ultimately, the completion of the form by the seller ensures transparency and helps establish a fair and informed transaction between the seller and the buyer.
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Complete Question : If a seller elects, in the listing contract, to provide a buyer with a sellers property disclosure form, it must be
a. completed by the listing broker
b. signed by the seller and verified by the listing broker
c. completed to the best of the sellers current actual knowledge
d. completed by the tenant if the seller does not occupy the property
which of the following circumstances most likely would cause an auditor to consider whether material
An auditor would most likely consider whether material misstatements exist in the financial statements when there are significant changes in accounting policies or estimates, high levels of uncertainty or complexity, indications of fraud or errors, and potential litigation or regulatory investigations.
When significant changes occur in accounting policies or estimates, it can impact the accuracy and reliability of the financial statements. High levels of uncertainty or complexity can increase the risk of errors or fraud. Indications of fraud or errors, such as unusual transactions or inconsistencies, may require further investigation. Potential litigation or regulatory investigations can lead to financial implications and require a careful examination of the financial statements. In these circumstances, auditors would be inclined to scrutinize the financial statements for material misstatements that could affect the fairness of the reported information.
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Which of the following circumstances is most likely to cause an auditor to consider whether a material misstatement exists? Transactions selected for testing are not supported by proper documentation.
What challenges do economies face in light of optimal
allocation and public goods?
The challenges faced by economies in the optimal allocation of resources and public goods are insufficient funding and inadequate information.
Optimal allocation is a strategy used by economies in the allocation of resources in the production of goods and services. The public goods system provides essential goods and services that are crucial to the well-being of the society. However, funding for these public goods is often inadequate, and this makes it difficult for economies to optimize the allocation of resources.
Additionally, the information provided for the production of goods and services is often insufficient, leading to inefficient use of resources. This inadequacy can arise due to either insufficient research or insufficient information about the demand and supply of goods and services.
Another challenge is the issue of negative externalities. Negative externalities are the cost or harm incurred by a third party due to the production or consumption of goods and services. The cost can be in the form of pollution or other environmental hazards that can impact the health and well-being of the public.
Lastly, the distribution of public goods can be skewed in favor of the rich or the elite in society, making it difficult to allocate resources optimally. Therefore, economies must address these challenges and create policies that can effectively allocate resources to public goods and ensure optimal allocation.
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DVD retailers choose how many copies of a movie to purchase from a studio and to stock. The retailers have the right to return all unsold copies to the studio for a full refund, but the retailer pays the shipping costs for returned copies. A small mom-and-pop retailer will sell 1, 2, 3, or 4 copies with probabilities
0.2,
0.3,
0.3,
and
0.2,
respectively. Suppose that the retail market price of the DVD is
$15
and that the retailer must pay the studio
$8
for each copy. The studio's marginal cost is
$1.
The retailer's marginal profit is
$7
for selling each copy, and the studio's marginal profit is
$7
for each nonreturned copy sold to the retailer. The cost of shipping each DVD back to the studio is
$2.
The studio and retailer are risk neutral. a. How many copies of the DVD will the retailer order from the studio? What is the studio's expected profit-maximizing number of copies for the retailer toorder?
The retailer will order
nothing
DVDs, and the profit-maximizing quantity for the studio is
nothing
DVDs.
Given, Small mom-and-pop retailer will sell 1, 2, 3, or 4 copies with probabilities 0.2, 0.3, 0.3, and 0.2, respectively. Suppose that the retail market price of the DVD is $15 and that the retailer must pay the studio $8 for each copy.
The studio's marginal cost is $1. The retailer's marginal profit is $7 for selling each copy, and the studio's marginal profit is $7 for each non-returned copy sold to the retailer. The cost of shipping each DVD back to the studio is $2. The studio and retailer are risk-neutral.
To calculate the expected profit and to find out the optimal quantity to order, the following formula will be used. Expected profit = Expected revenue - Expected cost expected revenue = ($15 × number of copies) × probability of sellingExpected cost = $8 × number of copies purchased by the retailer + $1 × the number of copies not returned by the retailer to the studio + $2 × the number of copies returned by the retailer to the studio. Let x be the number of DVDs the retailer order from the studio.
The expected revenue of the studio is($15 × number of copies) × probability of selling$15(x) (0.2 + 0.3 + 0.3 + 0.2) = $3xThe expected cost of the studio is$8 × number of copies purchased by the retailer + $1 × the number of copies not returned by the retailer to the studio + $2 × the number of copies returned by the retailer to the studio= $8x + $1(x)(1 - 0.2 - 0.3 - 0.3 - 0.2) + $2($15 - x)(0.2 + 0.3 + 0.3 + 0.2) = $8x + $7($15 - x) = $105 - $1xThen the expected profit of the studio is$3x - $105 + $1x = $2x - $105So the expected profit of the studio is $2x - $105
The retailer will order nothing DVDs, and the profit-maximizing quantity for the studio is nothing DVDs.
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When there is an excess demand of a product in an unregulated market, the tendency is for quantity demanded to increase. quantity supplied to decrease. O price to rise. O price to decrease.
When there is an excess demand of a product in an unregulated market, the tendency is for price to rise. Therefore, option C is the correct fill up for the given statement.
In unregulated market, Excess demand occurs when quantity demanded for goods or service exceed current supply at prevailing price. To alleviate this shortage, buyers can bid up prices to secure limited supplies of these commodities. When prices rise, supply will increase, while some consumers may choose to demand less. This price adjustment creates an equilibrium where the quantity demanded matches the quantity supplied, reducing or eliminating excess demand.
Therefore,unregulated markets tend to push up prices as they help balance imbalances between market supply and demand. Thus, option C is the correct answer.
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The complete question is:
When there is an excess demand of a product in an unregulated market, the tendency is for :
A. quantity demanded to increase.
B. quantity supplied to decrease.
C. price to rise.
D. price to decrease.
A borrower can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90 percent loan at an 8.5 percent rate with the same loan term. The borrower plans to own the property for the entire loan term. a) What is the incremental cost of borrowing the additional funds? (Hint: The dollar amount of the loan doesn't affect the answer.) b) How would your answer change is two points were charged on the 90 percent loan? c) Would your answer to part (b) change if the borrower planned to sell the property after 5 years (at which point the remaining loan balance would also need to be paid off)?
a) Incremental cost of borrowing additional funds can be calculated as follows:
To calculate the incremental cost of borrowing the additional funds, we need to calculate the present value of the difference between the two monthly payments using an 8% discount rate.
Here, the loan amount is not given, so it doesn't affect the answer.
Thus, the incremental cost of borrowing the additional funds is $18,800.
b) If two points were charged on the 90% loan, then the calculation would be as follows: Here, the incremental cost of borrowing the additional funds increased by $9,853.c)
If the borrower planned to sell the property after 5 years, then the calculation would be as follows: The incremental cost of borrowing the additional funds would be $10,065.80. This is because the borrower would pay off a larger portion of the loan in 5 years with the 90% loan, resulting in a lower balance at the time of sale.
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If you were the holder of a call option (having cost you $2) on some stock with an exercise price of $20, it would be best for you to exercise your option when the market price is at Question 11 options: a) $18 b) $20 c) $22 d) $24
If you were the holder of a call option (having cost you $2) on some stock with an exercise price of $20, when the market price is at 22.
This is because exercising the option at the market price of $22 would result in a profit of $0, as opposed to exercising at any other market price, which would result in a loss.
If the option were to be exercised at a market price of $18, it would result in a loss of $2, a profit of $0 at a market price of $20, and a profit of $2 at a market price of $24. Due to this, $22 is the optimal market price at which to exercise the option.
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There are 100 workers in Pakistan, and each worker can produce
either 10 shirts or 2 hats. There are 200 workers in the
Bangladesh, and each can produce 4 shirts or 10 hats.
[Draw the Production Possi
Bangladesh has an absolute advantage in producing shirts and hats, while Pakistan has a comparative advantage in shirt production and Bangladesh in hat production.
The production possibilities for Pakistan and Bangladesh can be illustrated through production possibility curves, which show the maximum output each country can achieve given its resources and technology. Assuming equal working hours for all workers, the production possibility curve for Pakistan indicates its capacity to produce 10 shirts or 2 hats per worker, while the curve for Bangladesh reflects its ability to produce 4 shirts or 10 hats per worker. By comparing the two curves, it becomes evident that Bangladesh holds an absolute advantage in the production of both shirts and hats, as it can produce more of each item compared to Pakistan using the same resources. However, when considering comparative advantage, Pakistan has a lower opportunity cost of producing shirts, meaning it foregoes fewer hats to produce an additional shirt. Conversely, Bangladesh has a lower opportunity cost of producing hats, as it sacrifices fewer shirts to produce an additional hat. These comparative advantages highlight each country's strengths and potential for specialization in trade.In conclusion, Bangladesh has an absolute advantage in producing both shirts and hats, while Pakistan has a comparative advantage in shirt production and Bangladesh has a comparative advantage in hat production.
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For several years, Procter & Gamble (P&G) viewed its Ivory soap as just plain old soap. P&G focused on how well it made Ivory soap and not on what customers wanted from a bar of soap. What type of ori
B) A production orientation is one in which a company concentrates on its products and their continual improvement rather than the market or client preferences.
The emphasis of this sort of orientation is on the size of its production and providing the best quality product at the lowest possible price.
Similarly, P&G is concerned with the quality of its ivory soap rather than the customer's preference or need for a bar of soap. This indicates that the corporation is focused on production, making option b the correct response.
answer A: This answer is erroneous because in customer orientation, the main emphasis is placed on the consumers and their demands, however P&G does not place any emphasis on its customers.
Option C: A market-oriented business prioritizes analyzing the market in which it works and then determining its target audience. The target audience is then used to build products and marketing tactics. This means that option c is not an appropriate response in this case.
choice D: This choice is similarly inaccurate because a company's main aim is to increase revenues through aggressive selling methods. The emphasis here is on boosting sales rather than product quality, whereas P&G is concerned about the quality of its soap bars.
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Correct question:
For many years, Procter & Gamble (P&G) viewed its Ivory soap as just plain old soap. P&G focused on how well it made Ivory soap and not on what customers wanted from a bar of soap. What type of orientation did the company have?
A) customer
B) production
C) market
D) sales
Paper Manufacturing makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: Not yet answered Points out of 3 P Flag Variable Cost Monthly Per Yute Sold Fixed Cost question Sales commissions Shipping Advertising Executive salaries Depreciation on office equipment Other All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 22,000 Yutes in November, then the total budgeted selling and administrative expenses for November would be: $2.10 $3.90 $7.40 $34,000 $198,000 $10,000 AM $0.60 $38,000 12 6 Ch 7 Select one: O a. $588,000.00 O b. $541,800.00 O c. $578,000.00 O d. $528,000.00 xam Ch 10 Ch 8 Question 25
To calculate the total budgeted selling and administrative expenses for November, we need to add up the variable costs and fixed costs associated with selling and administrative expenses.
Given the information provided, the variable costs per Yute sold are as follows:
Sales commissions: $2.10Shipping: $3.90Advertising: $7.40So the total variable cost per Yute sold is $2.10 + $3.90 + $7.40 = $13.40.
The fixed costs for November are as follows:
Executive salaries: $34,000Other expenses: $10,000Therefore, the total fixed costs for November are $34,000 + $10,000 = $44,000.
To find the total budgeted selling and administrative expenses for November, we multiply the total variable cost per Yute sold by the number of Yutes budgeted to be sold in November and then add the fixed costs:
Total budgeted selling and administrative expenses = (Total variable cost per Yute sold) x (Number of Yutes sold) + Total fixed costs
= ($13.40 x 22,000) + $44,000 = $294,800 + $44,000 = $338,800Therefore, the total budgeted selling and administrative expenses for November would be $338,800. None of the given answer choices match the correct value, so the correct answer is not provided.
About ValueValue in mathematics refers to results or numbers that represent a measure or amount in a mathematical context. Values can represent various concepts such as numbers, variables, or functions. In mathematics, values are often used to perform calculations, comparisons or modeling of mathematical phenomena.
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You met a businessman who has read a little about strategic intent and he says to you the idea of starategic intent does not appeal to me why spend 5 to 10 years in developing certain ability when one can easily go out and buy the best in technology and hire the best minds i will wait until i see what works and then take appropriate actions about technology updagradation and recruitment. how would you respond to this businessman?
The concept of strategic intent can be described as the aspirations and goals of an organization, which help in providing direction, motivation, and focus to its employees toward achieving a desirable future state. The concept is used to define an organization's vision of what it intends to become and focuses on exploiting core competencies and fostering organizational learning. In light of this, it is worth noting that businesses that adopt strategic intent have a greater chance of achieving success in the future as opposed to those that do not invest in it.
However, the businessman who argues against the concept of strategic intent and suggests that it is better to buy the best technology and hire the best minds misses a key point. Strategic intent goes beyond simply purchasing technology or hiring the best minds. Rather, it requires a long-term approach toward the development of competencies, skills, and expertise. It calls for an ongoing commitment to the development of an organization's core competencies, which in turn provide a competitive advantage in the marketplace. It is through this process that an organization becomes more efficient, effective, and successful.
In conclusion, investing in strategic intent allows organizations to become more focused and aligned in their efforts toward achieving a desirable future state. Therefore, it is essential for businesses to invest time, energy, and resources in the development of their core competencies and skills. By doing so, they will be better equipped to navigate the complex and dynamic business environment and remain competitive in the long run.
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In which scope management process we develop the work packages? O • WBS O • Validate scope Control scope Define scope
The scope management process where we develop the work packages is Define Scope.
What is the Define Scope Process?The Define Scope process is the method of establishing a defined, complete, and clear description of the project and product. Project requirements are defined in detail in this process, and the project deliverables are identified.
This phase is sometimes referred to as the scope definition, and it is frequently followed by the Work Breakdown Structure (WBS) development stage. This stage's major output is the Scope Statement.
The scope statement establishes the project's overall objective and specifies the deliverables that will be produced as a result of the project. In addition, the scope statement also sets out the project's limitations and exclusions, which are important in controlling project scope
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A monopolistic firm is considering to decrease the price of its product from $10 to $7. According to the available data, the quantity demanded will rise from 1200 units to 1800 units. (1) Using the midpoint method, compute the arc elasticity between two prices, $10 and $7. (2) Based on the elasticity you computed in (1), explain whether or not the firm should decrease the price from $10 to $7 in order to increase its revenue.
1) The arc elasticity between the prices $10 and $7 can be calculated using the midpoint method. It measures the responsiveness of quantity demanded to a change in price. By using the formula for arc elasticity, we can determine the percentage change in quantity demanded and the percentage change in price.
2) Based on the computed elasticity, we can assess whether the firm should decrease the price from $10 to $7 to increase its revenue. If the elasticity is greater than 1, the demand is elastic, and a price decrease will lead to a proportionally larger increase in quantity demanded.
If the elasticity is less than 1, the demand is inelastic, and a price decrease may not significantly impact quantity demanded. The firm should consider the elasticity value to make an informed decision regarding price adjustment.
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Fields & Company expects its EBIT to be $125,000 every year forever. The firm can borrow at 7 percent. The company currently has no debt, and its cost of equity is 12 percent. a. If the tax rate is 24
a. If the tax rate is 24% and Fields & Company decides to finance itself entirely with equity, what is the value of the firm? b. If Fields & Company borrows $325,000 at 7 percent, what is the value of the firm? If the tax rate is 24% and Fields & Company decides to finance itself entirely with equity, the value of the firm is calculated as follows: Value of the firm = EBIT / rWhere, EBIT = $125,000, r = Cost of equity = 12%
The value of the firm is,$125,000 / 0.12 = $1,041,667b. If Fields & Company borrows $325,000 at 7 percent, the value of the firm is calculated as follows: Value of the firm = [EBIT × (1 - t) / rD] + [D × (1 - t)]Where, EBIT = $125,000, t = Tax rate = 24%, rD = Cost of debt = 7%D = Debt = $325,000Substitute the values, Value of the firm = [$125,000 × (1 - 0.24) / 0.07] + [$325,000 × (1 - 0.24)] = $1,584,667Therefore, the value of the firm when Fields & Company decides to finance itself entirely with equity is $1,041,667, and the value of the firm when it borrows $325,000 at 7 percent is $1,584,667.
The first part of the question required the determination of the value of the firm if the tax rate is 24% and Fields & Company decides to finance itself entirely with equity. Since the company does not have any debt, the value of the firm can be obtained by using the formula; Value of the firm = EBIT/r, where EBIT = $125,000 and r = cost of equity = 12%. Therefore, the value of the firm is $1,041,667. For the second part of the question, it was required to calculate the value of the firm if Fields & Company borrows $325,000 at 7 percent. In this case, the cost of capital will be a combination of debt and equity. The formula used in this case is; Value of the firm = [EBIT × (1 - t) / rD] + [D × (1 - t)], where EBIT = $125,000, t = tax rate = 24%, rD = cost of debt = 7%, and D = debt = $325,000. When these values were substituted into the formula, the value of the firm was found to be $1,584,667.
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xyz insurance company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. which authority grants the producer the right to collect premiums?
In the absence of specific information in the agency contract, the implied authority would grant producers the right to collect premiums
Implied authority refers to the powers that are reasonably necessary to carry out the expressly granted authority. Since XYZ Insurance Company has given direct authority to its producers to sell insurance through an agency contract, it can be inferred that the producers would also have the implied authority to collect premiums from policyholders.
The implied authority to collect premiums is a customary practice in the insurance industry. Collecting premiums is an essential part of the insurance business, as it ensures that policyholders pay for their coverage and helps maintain the financial stability of the insurer.
By granting producers the authority to sell insurance, it is generally understood that they would also have the implied authority to collect the corresponding premiums.
However, it is crucial to note that the specifics of the authority granted to producers should be clarified in the agency contract or through separate agreements to avoid any ambiguity or misunderstanding. It is always advisable for insurance companies to clearly outline the extent of authority granted to producers, including the collection of premiums, to ensure a smooth and compliant operation.
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2. Examine the role of feasibility analysis in determining whether a business idea is viable. (40 marks)
Feasibility analysis is a critical process that assesses the viability of a business idea. The process helps an entrepreneur determine if the idea is viable, and if it can succeed in the market.
The process is also vital in determining the potential success and financial viability of a business idea. To conduct a feasibility analysis, entrepreneurs must analyze the market, competition, financial resources, and other relevant factors. An entrepreneur can use the data gathered to determine if the business idea is feasible and worth pursuing.Feasibility analysis plays an important role in determining whether a business idea is viable or not. The analysis can help entrepreneurs identify the strengths and weaknesses of the idea, and determine if it can succeed in the market. A feasibility analysis can help an entrepreneur identify potential risks, and evaluate if the business idea is worth pursuing.The analysis typically involves assessing the market, competition, and financial resources. The market assessment focuses on the size of the market, the demand for the product or service, and the target customers. The competition assessment focuses on the competition in the market, the strengths and weaknesses of competitors, and the potential barriers to entry.The financial assessment evaluates the financial resources needed to start the business, the potential revenue and profit, and the financial risks involved. A feasibility analysis can help an entrepreneur make an informed decision about whether to pursue a business idea or not.Longer than 100 words:Feasibility analysis is a crucial process in determining whether a business idea is viable. The process assesses the viability and potential success of a business idea. To conduct a feasibility analysis, entrepreneurs must analyze the market, competition, financial resources, and other relevant factors.
The analysis can help entrepreneurs identify potential risks, strengths, and weaknesses of the business idea. Entrepreneurs can also use the data gathered to evaluate the feasibility and financial viability of the business idea. The analysis can help entrepreneurs make an informed decision about whether to pursue the idea or not. A feasibility analysis is a vital tool for entrepreneurs looking to start a business, as it can help them avoid costly mistakes and increase their chances of success.
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Analyze the system flowchart below and describe in detail the
processes that are occurring.
This flowchart shows payroll and employee management process. Analyze chart, describe employee processes at each step, including Employee Master File.
What is the the system flowchart?Enter time sheet data into the system. Inputting info from time sheets or importing from digital systems. Payroll data based on time sheets for wages, overtime, and more.
Edit Errors: This step corrects any identified errors or discrepancies during payroll data processing. Review, cross-check, adjust as necessary. Cost Center Master File stores info about organizational units or departments. Cost centers track expenses.
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Wellington Holdings uses the Weighted Average process costing method to account for production. The following information is available for a recent period: Beginning work in process on January 1 consisted of 90,000 units that were 80% complete with respect to raw materials and 40% complete with respect to conversion costs. Ending work in process on January 31 consisted of 50,000 units that were 60% complete with respect to raw materials and 50% complete with respect to conversion costs. 200,000 units were put into production during the month of January. Beginning work in process carried a total cost of $750,000 ($387,000 Direct Materials and $353,000 Conversion Costs). Additional costs incurred during the month were Direct Materials $693,000, Direct Labour $674,000 and Manufacturing Overhead of $700,000. Required: (a) Prepare a schedule reconciling the Physical Flow of Units. (b) Calculate the Equivalents Units for Direct Materials and Conversion Costs. (c) Calculate the Cost per Equivalent Units. (d) Determine the Cost of Completed Units for January. (e) Determine the Cost assigned to Ending Work in Process Inventory for January.
For Wellington Holdings and provided information, (a) A schedule reconciling the Physical Flow of Units would include units put into production during the month of January, total units accounted for during the month of January, units accounted for as ending work in process on January 31, and units accounted for as completed during the month of January.
(b) The Equivalents Units for Direct Materials and Conversion Costs are 270,000 and 265,000 respectively.
(c) The Cost per Equivalent Units is $6.52 per equivalent unit.
(d) The Cost of Completed Units for January is $2,644,800.
(e) The Cost assigned to Ending Work in Process Inventory for January is $283,000.
(a) Schedule reconciling the Physical Flow of Units
Beginning work in process on January 1 consists of 90,000 unitsUnits put into production during the month of January = 200,000Total units accounted for during the month of January = 290,000Units accounted for as ending work in process on January 31 = 50,000Units accounted for as completed during the month of January = 240,000(b) Equivalent Units = Units Transferred + Units in Ending Work in Process
Inventory (EWIP) × % Work done EWIP
During the month of January,
Direct materials: Equivalent Units = 240,000 + (50,000 × 60%) = 270,000Conversion costs: Equivalent Units = 240,000 + (50,000 × 50%) = 265,000(c) During the month of January,
Direct Materials
Cost of beginning work in process $387,000 + Direct Materials cost incurred during the month $693,000 = Total Direct Materials cost $1,080,000Cost per equivalent unit = Total Direct Materials cost ÷ Equivalent Units= $1,080,000 ÷ 270,000= $4 per equivalent unitConversion Costs
Cost of beginning work in process $353,000 + Manufacturing overhead costs incurred during the month $700,000 + Direct labour cost incurred during the month $674,000 = Total Conversion Costs $1,727,000Cost per equivalent unit = Total Conversion Costs ÷ Equivalent Units= $1,727,000 ÷ 265,000= $6.52 per equivalent unit(d) Cost of Completed Units for January
Equivalent Units of Direct Materials: 270,000 × $4 = $1,080,000Equivalent Units of Conversion Costs: 240,000 × $6.52 = $1,564,800Cost of completed units for January = Cost of direct materials + Cost of conversion costs= $1,080,000 + $1,564,800= $2,644,800(e) Cost assigned to Ending Work in Process Inventory for January
Equivalent Units of Direct Materials: 50,000 × 60% × $4 = $120,000Equivalent Units of Conversion Costs: 50,000 × 50% × $6.52 = $163,000Cost assigned to ending work in process inventory for January = Cost of direct materials + Cost of conversion costs= $120,000 + $163,000= $283,000.Learn more about Direct Materials:
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What is the difference between income and wealth? Which would have a higher Gini coefficient, income inequality in the United States or wealth inequality in the United States ? Briefly explain .
Find and share some statistics that you find interesting. What do you learn from these statistics? What questions do these statistics raise? Housing investments are one way to build intergenerational wealth.
Income and wealth are two separate concepts that refer to the financial well-being of an individual. Income refers to the money earned from work or investments, while wealth refers to the total value of a person's assets minus liabilities. Below are the differences between income and wealth:
The difference between income and wealth is the amount of money earned through work or investments over a period of time.
Interesting statistics related to income and wealth inequality in the United States:
1. The top 1% of households in the United States own more wealth than the bottom 90% combined.
2. The median income for Black households is less than 60% of the median income for white households.
3. The top 1% of earners in the United States earn more than 40 times the average income of the bottom 90% of earners.
4. In 2019, the average CEO in the United States earned 320 times the average worker's salary.
These statistics demonstrate the significant income and wealth inequality in the United States. There is a vast difference between the top earners and the bottom earners, and minorities are disproportionately affected by this inequality.
It raises questions about the effectiveness of current policies in reducing income and wealth inequality, and whether there is a need for more redistributive policies to address this issue.
Housing investments are one way to build intergenerational wealth because it provides a tangible asset that can increase in value over time. However, not everyone has equal access to housing investments due to systemic barriers such as discrimination in the housing market. These barriers contribute to the widening wealth gap in the United States, where only a few individuals can benefit from these investments.
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The following comparative balance sheet is given for Estern Co Assets Dec 31, 2021 Dec 31, 2020 Cash $117,000 Notes Receivable $19,500 21,000 24,000 Supplies & Inventory 27,000 40,500 Prepaid expense 10,500 18,000 Long-term investments 0 27,000 Machines and tools 55,500 48,000 Accumulated depreciation equipment (21.000) (15.000) Total Assets $213.000 $159.000 Liabilities & Stockholders' Equity Accounts payable $ 25,500 $ 10,500 Bonds payable (long-term) 55,500 70,500 Common Stock 60,000 34,500 Retained Earnings 72.000 43.500 Total Liabilities & Stockholders $213.000 $159.000 Equity Income Statement Information (2021) 1. Net income for the year ending December 31, 2021 is $43,500 2. Depreciation expense is 56,000. 3. There is a loss of $3,000 resulted from the sale of long-term investment. Additional information (2021): 1 All sales and purchases of inventory are on account (or credit) agree that kind a cost at $27.000 sueldine $3.000 11 points $213.000 Total Liabilities & Stockholders Equity $159.000 Income Statement Information (2021): 1. Net income for the year ending December 31, 2021 is $43,500 2. Depreciation expense is $6,000. 3. There is a loss of $3,000 resulted from the sale of long-term investment. Additional information (2021): 1. All sales and purchases of inventory are on account (or credit) 2. Received cash for the sale of long-term investments that had a cost of $27,000, yielding a $3.000 loss 3. Cash dividends paid is $15,000 4. The company purchased new machines and tools for $7,500 cash Required: Prepare the FIRST (Operating) and the SECOND (Investing) sections of the statement of cash flows for the year ended December 31, 2021 (PLEASE PROVIDE EACH AMOUNT/ITEM IN A SEPARATE LINE) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac IX D 3 10pt EM Arial BIV Paragraph ±5 152 - XX, FE 38 HE CED * 0 191. v hp a B A 8.10 ***
The first (Operating) section of the statement of cash flows for the year ended December 31, 2021, shows net cash provided by operating activities of $69,000.
To prepare the first (Operating) and second (Investing) sections of the statement of cash flows for Estern Co for the year ended December 31, 2021, we need to analyze the provided information and make the necessary adjustments.
First (Operating) Section of the Statement of Cash Flows:
Net Income: $43,500
Adjustments for non-cash items:
Depreciation Expense: $6,000
Loss on Sale of Long-Term Investment: $3,000
Operating activities:
Net Income: $43,500
Add: Depreciation Expense: $6,000
Add: Loss on Sale of Long-Term Investment: $3,000
Changes in working capital:
Increase in Notes Receivable: $1,500 ([$19,500 - $21,000])
Decrease in Supplies & Inventory: $13,500 ([$40,500 - $27,000])
Decrease in Prepaid Expense: $7,500 ([$18,000 - $10,500])
Increase in Accounts Payable: $15,000 ([$25,500 - $10,500])
Net Cash Provided by Operating Activities: $69,000
Second (Investing) Section of the Statement of Cash Flows:
Sale of Long-Term Investment:
Cash received from the sale: $24,000 ([$27,000 - $3,000 loss])
Purchase of Machines and Tools:
Cash paid for new machines and tools: $7,500
Net Cash Used in Investing Activities: ($7,500) (Negative because cash was used)
The second (Investing) section shows net cash used in investing activities of ($7,500).
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