The statement that best describes what is required of company directors in relation to climate change is option e: Both b and c.
b. Company directors should obtain expert advice about the implications of climate change for their business and ensure that climate risk is considered, managed, and reported by the company where appropriate. In terms of managing these risks, directors have some discretion to make a judgment on what is in the best interests of the company as long as this judgment is based on informed and rational assessment.
c. The duty of care and diligence does not require directors to take a particular course of action. It does not impose liability for an incorrect commercial judgment that harms the company. Rather, the duty is focused on the rigor and robustness of processes of information gathering and deliberation, as well as whether the director took proportionate steps to manage known and foreseeable risks in the particular context.
These statements reflect the current understanding of the duty of care and diligence in relation to climate change. Company directors are expected to consider and manage climate-related risks and opportunities, but they have some discretion in determining the best course of action for their company based on informed decision-making. They should seek expert advice, evaluate climate risks, and ensure appropriate reporting, while following rigorous processes and taking proportionate steps to address known and foreseeable risks. The duty is focused on the process and management of risks rather than prescribing specific actions or outcomes.
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Why should a business be concerned with stakeholders?
Businesses should be concerned with stakeholders because they are the ones that provide the finance for businesses.
What is meant by the term stakeholder?A stakeholder is an individual or a set of individuals who have a stake or shares in a company, they are basically investors.
Stakeholders have an interest in a business, there are several types of customers they are Customers, Employees, Investors, Communities, and Governments.
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P2.7 ( LO3, 4) (Adjusting Entries and Financial Statements) Rolling Hills Golf Inc. was organized on July 1, 2025. Quarterly financial statements are prepared. The unadjusted trial balance and adjusted trial balance on September 30 are as follows.
The given information includes the unadjusted trial balance and adjusted trial balance of Rolling Hills Golf Inc. on September 30. To complete this question, we need to prepare the adjusting entries and the financial statements.
First, let's identify the differences between the unadjusted and adjusted trial balances. Adjusting entries are made to ensure that the financial statements reflect the correct balances for revenues, expenses, assets, and liabilities.
Next, we need to analyze the trial balances to determine the necessary adjusting entries. This involves reviewing accounts such as prepaid expenses, accrued revenues, accrued expenses, and depreciation.
After identifying the adjusting entries, we can proceed to record them in the general journal. Each entry should include the date, the accounts affected, the debit and credit amounts, and an explanation.
Once the adjusting entries have been recorded, we can update the adjusted trial balance. This will reflect the adjusted balances for each account.
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in New York City, what is the minimum top height of an unenclosed perimeter protection wire rope cable? A: 42in B:60in C: New York City Department of building requires four enclosures of perimeter's that are under construction D: chapter 33 only provides recommendations for top height of wire rope cables but OSHA says 60 inches E: 72in
In New York City, the minimum top height of an unenclosed perimeter protection wire rope cable is that New York City Department of building requires four enclosures of perimeter's that are under construction.
To safeguard open perimeters, safety netting and guardrail systems must be installed in accordance with this rule. No work shall be done or items held on any level where necessary unenclosed perimeter security is not present, unless this section specifically permits such temporary removal. Building of safety netting and guardrail structures that comply with this provision does not call for a permit. A registered design expert must create safety netting systems that can withstand wind and other transient loads. When designing the installation, the registered design professional must take the supporting structure into consideration and must provide information on connections, anchorages, and supports.
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golden company had the following accounts and balances at the end of the year. what are total assets at the end of the year?
The golden company had the following accounts and balances at the end of the year. Accounts Payable $18,000 are total assets at the end of the year.
The assets is a set of collection like stock, gold etc, which has the chance to increase the price of the current market-price.
The accounts payable is the amount that transact after the selling of the gold products. It can include the depositing funds, and card transaction. The importance of asset is basically give strong impact on the IPO time, more investor can invest in the business if they have more assets.
The more assets reflects the good image of the business or company and show it is financially well and earn profitable by the selling more goods or services.
The Accounts Payable $18,000 are total assets at the end of the year.
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which of the following is a good or service that is rival in consumption? multiple choice a hamburger correct radio signals broadcast over the air national defense public utilities
Rivalry consumption refers to the characteristic of a good or SERVICE where its consumption by one individual reduces or limits its availability for others. In the case of a hamburger, once it is consumed by one person, it is no longer available for others to consume.
It is a tangible and physical item that can only be used by one person at a time.
On the other hand, radio signals broadcast over the air, national defense, and public utilities are examples of goods or services that are not rival in consumption.
Radio signals broadcast over the air are non-rival as multiple individuals can receive and benefit from the same signal simultaneously without diminishing its availability to others. National defense is a collective good where the protection provided to one person does not reduce the protection available to others. Public utilities, such as electricity or water supply, can be used by multiple individuals simultaneously without diminishing their availability.
It's important to understand these concepts when considering the characteristics of goods and services, as they have implications for their production, distribution, pricing, and economic efficiency.
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define finance education for class 8
Compute Ke (cost of equity), given beta of 0.97, long term government bond yield = 4.65% and expected market returns of 8.07%.
(Enter your answer as a percent with 2 decimal places but without the % symbol. For example, if you compute 25.00%, enter 25.00)
The cost of equity (Ke) is approximately 7.97%.
To compute the cost of equity (Ke), we can use the Capital Asset Pricing Model (CAPM) formula:
Ke = Risk-Free Rate + Beta × (Market Return - Risk-Free Rate)
Beta = 0.97
Risk-Free Rate (Long-term government bond yield) = 4.65%
Expected Market Return = 8.07%
Substituting these values into the formula, we get:
Ke = 4.65% + 0.97 × (8.07% - 4.65%)
= 4.65% + 0.97 × 3.42%
≈ 4.65% + 3.32%
≈ 7.97%
Explanation:
The cost of equity represents the return required by investors to compensate for the risk associated with investing in a particular stock or company.
The CAPM model estimates the cost of equity by considering the stock's beta, the risk-free rate (typically represented by long-term government bond yields), and the expected market return.
In this case, the beta of 0.97 indicates that the stock's returns are expected to move in line with the market, but with slightly less volatility.
The risk-free rate is the return expected from a risk-free investment, such as long-term government bonds. The expected market return represents the average return expected from the overall market.
By plugging in the given values into the CAPM formula, we calculate the cost of equity as 7.97%. This implies that investors would expect a return of approximately 7.97% from investing in this stock to compensate for the risk associated with its beta and the overall market conditions.
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Eric paid $21,207 for a semester's tuition at the local university. He bought tuition Insurance at a cost of 1% of that
semester's cost. How much was his tuition insurance for the semester?
$2.12
$21.21
$212.07
$2,122.70
For most people, almost two-thirds of each work day is taken up by work and sleep. Please select the best answer from the choices provided T F
Answer:
True
Explanation:
For most people, almost two-thirds of each workday is taken up by work, and sleep is a true statement.
What is the statement?Statements are sentences that express a fact, idea, or opinion. Statements do not ask questions, make requests or give commands. They are also not utterances. Statements are sentences that express a fact, idea, or opinion. Statements do not ask questions, make requests or give speech acts. They are also not exclamations.
The term working day refers to the days in the working week, the span of (often five) days that are not the weekend, and when many people work. The word workday means the same thing as a working day
Therefore, By the above statement, for the t two-thirds of each work day is taken up by work and sleep is correct.
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Which one of the following is an example of a "flexibility" option? Group of answer choicesA company has an option to close down an operation if it turns out to be unprofitable. A company agrees to pay more to build a plant in order to be able to change the plant's inputs and/or outputs at a later date if conditions change. A company invests in a project today to gain knowledge that may enable it to expand into different markets at a later date. A company invests in a jet aircraft so that its CEO, who must travel frequently, can arrive for distant meetings feeling less tired than if he had to fly commercial. A company has an option to invest in a project today or to wait a year. Next
Answer:
A company agrees to pay more to build a plant in order to be able to change the plant's inputs and/or outputs at a later date if conditions change.
Explanation:
Real option analysis
This is simply described as a form of an analysis of capital budgeting projects. It is often used by managers so as to influence the size and riskiness of a project's cash flows. And this can be done only by taking different actions or at the end of the project's life.
It uses the usual NPV capital budgeting analysis along with an analysis of opportunities as a result of manager's responses to changing circumstances that can change a project's outcome.
Examples of Real Options
1. Investment timing
2. Abandonment/shutdown
3. Flexibility
4. Growth/expansion
Flexibility Option
This type of re option simply allows operations to be changed based on how conditions change during a project's life. It is said to exists when it is useful spending money today, which therefore helps one to maintain flexibility down the line. That is, either inputs or outputs (or both) can be altered.
Why are companies required to perform payroll withholding?
A. To make sure employees are being paid fairly
B. To make sure employees can pay their taxes
C. To help employees save for retirement
D. To help the company pay its share of taxes
Answer:
its B
Explanation:
TRUST
Researchers are interested in the following question. How many years, since first arrival in a country, does it take for an immigrant to catch up to a similar native resident in terms of earnings? • Earnings: annual income of an individual ($'000) Nyears: number of years since first arrival in a country Age: age of individual - Male: = 1 if individual is male, -0 otherwise - Educ: - 1 if individual has a university degree, = 0 otherwise . a) The researchers estimated the following two models. Please help the researchers to determine whether they should use a cubic model or a quadratic model. Earnings: = 32.42+0.84 Nyears - 0.03 Nyears2 +0.0002Nyears³ (0.19) (0.09) (0.01) (0.001) Earnings = 32.42+0.79 Nyears - 0.02 Nyears² (0.19) (0.03) (0.001) With the quadratic model as below, find out the average difference in earnings between two immigrants who arrived in the country for 5 years and 6 years. Earnings = 32.42 +0.79 Nyears- 0.02 Nyears² (0.19) (0.03) (0.001) b) Given the following models, interpret the meaning of the coefficient associated with Nyears] Earnings\= 32.65+2.16ln(Nyears) In (Earnings\) = 3.60+0.005Nyears + u In(Earnings\ ) 3.49+0.05961 In(Nyears) Given the model below, what is the effect of Male on Earnings?] Earnings Bo+ BiNyears + B2Male + Ba(Nyears Male) + u
a) To determine whether the researchers should use a cubic model or a quadratic model, they can compare the goodness of fit for both models.
b) In the model Earnings=32.65+2.16ln(Nyears), the coefficient associated with ln(Nyears) (2.16) represents the percentage change in earnings associated with a one percent increase in Nyears.
A commonly used measure of goodness of fit is the R-squared value, which indicates the proportion of variance in the dependent variable that is explained by the independent variables. The model with the higher R-squared value is generally preferred.
Alternatively, the researchers can use statistical tests such as the F-test or likelihood ratio test to compare the two models. These tests compare the fit of the two models and can indicate whether the more complex cubic model provides a significantly better fit than the simpler quadratic model.
For the given models, the cubic model has a higher R-squared value and the coefficients are statistically significant at conventional levels. Therefore, the researchers should use the cubic model.
To find out the average difference in earnings between two immigrants who arrived in the country for 5 years and 6 years, we can plug in the values of Nyears into the quadratic model:
Earnings(5) = 32.42 + 0.79(5) - 0.02(5)^2 = 35.87
Earnings(6) = 32.42 + 0.79(6) - 0.02(6)^2 = 36.13
The difference in earnings between these two immigrants is:
36.13 - 35.87 = 0.26 thousand dollars, or $260.
b) In the model Earnings=32.65+2.16ln(Nyears), the coefficient associated with ln(Nyears) (2.16) represents the percentage change in earnings associated with a one percent increase in Nyears. Specifically, a one percent increase in Nyears is associated with a 2.16 percent increase in earnings, all else held constant.
In the model In(Earnings)=3.60+0.005Nyears+u, the coefficient associated with Nyears (0.005) represents the change in the natural logarithm of earnings associated with a one-unit increase in Nyears. Specifically, a one-year increase in Nyears is associated with a 0.5 percent increase in earnings, all else held constant.
In the model Earnings=Bo+BiNyears+B2Male+Ba(Nyears Male)+u, the coefficient associated with Male (B2) represents the difference in earnings between males and females, all else held constant. Specifically, if Male = 1 for a male individual and Male = 0 for a female individual, then the expected difference in earnings between the two individuals is B2 thousand dollars, holding Nyears constant.
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In this activity, you will draft your own cover letter You do not need to have a specific person or employer to address the letter right now. After you draft and save a template, you will be able to revise and customize the cover letter to meet your needs in the future. The activity worksheet is a basic template to guide your writing. A rubric is also included on the worksheet to help you review your letter. You might ask your pod leader or another
significant adult in your life to review your cover letter, too.
A cover letter is a one-page document that you include with your resume or CV when applying for a job. Its objective is to introduce you and provide a brief summary of your professional history. Your cover letter should be between 250 and 400 words long on average.
What exactly is a cover letter?A cover letter typically consists of three paragraphs that explain why you are applying for a particular position, provide a brief summary of your professional history, and highlight your unique qualifications for the position. Some employers require applicants to submit a cover letter, while others make it optional.
In a cover letter, how should one introduce themselves?Yes, your cover letter should introduce you. Include your name, the position you're applying for, and how you found it in your introduction. For instance: I'm Henry Applicant and I'm applying for the open position of Account Manager on LinkedIn.
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The master budget process begins with the operating budget. production budget. cash budget. sales budget.
The master budget process begins with the sales budget.
The sales budget is a forecast of expected sales revenue for a specific period. Once the sales budget is determined, it serves as the foundation for developing other budgets, such as the production budget, operating budget, and cash budget.
The production budget outlines the quantity of goods to be produced to meet the sales forecast.
The operating budget includes all the revenues and expenses necessary to operate the business.
Lastly, the cash budget forecasts the inflows and outflows of cash to ensure sufficient funds are available to cover expenses and invest in future growth.
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The Discount Rate is equal to 1% and the Fed Funds Rate is equal to .5%
At what rate would banks be able to borrow from each other's reserve balances?
When an RBT does not know how to perform an intervention or strategy, which of the following is the best course of action?
When an RBT does not know how to perform an intervention or strategy, the best course of action is to ask for training and supervision on the skill.
There is a paraprofessional certification in behavior analysis called Registered Behavior Technician® (RBT®). RBT Supervisors and/or RBT Requirements Coordinators, who are in charge of all work RBTs do, direct and closely supervise RBTs as they aid in providing behavior analysis services and practice.
A patient care plan developed by a board-certified behavior analyst is supported and carried out by a registered behavior technician. They offer ABA interventions that promote replacement behaviors that are socially acceptable so that clients can develop and enhance their communication, social interaction, and problem-solving abilities.
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denver, incorporated, has sales of $29 million, total assets of $27.1 million, and total debt of $9.3 million. assume the profit margin is 11 percent. a. what is the company's net income? (do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) b. what is the company's roa? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. what is the company's roe? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
We need to find net income first. So:
Profit margin = Net income / Sales
Net income = Profit margin(Sales)
Net income = .11($29,000,000)
Net income = $3,190,000
ROA = Net income / TA
ROA = $3,190,000 / $27,100,000
ROA = .1177, or 11.77%
To find ROE, we need to find total equity. Since TL & OE equals TA:
TA = TD + TE
TE = TA − TD
TE = $27,100,000 − 9,300,000
TE = $17,800,000
ROE = Net income / TE
ROE = $3,190,000 / $17,800,000
ROE = .1792, or 17.92%
What does a favorable ROA indicate?A major indicator of a business's profitability is return on assets (ROA). The ROA ratio evaluates how much net income a company generates in comparison to its total assets. 5% or above is regarded as desirable, yet a decent ROA depends on the business and the sector.
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Cody worked 59 hours last week. Of those hours, 40 hours were paid at the regular rate of $12.50. Ten hours were paid at time-and- a-half, and 9 hours at the double-time rate.
a) What was the gross pay for regular hours?
b) What was Cody’s overtime wages?
c) What was Cody’s total gross pay for the week?
Answer:
Explanation:
a. What was the gross pay for regular hours?
This will be the regular pay multiplied by the regular hours. This will be:
= $12.50 × 40
= $500
b) What was Cody’s overtime wages?
Cody's overtime wages will be the total amount earned during overtime. This will be:
= [10 × ($12.50 × 1.5)] + [ 9 × ($12.50 × 2)]
= (10 × $18.75) + (9 × $25)
= $187.50 + $225.
= $412.50
c) What was Cody’s total gross pay for the week?
The total gross pay for the week will be the addition of the amount that was earned during regular hours and overtime. This will be:
= $500 + $412.50
= $912.50
known deposits from which oil can be extracted profitably at current prices using current technology are called ____.
These known deposits of oil that can be extracted profitably at current prices and with current technology are commonly referred to as "proven reserves"
Proven reserves are the oil reserves that have been discovered and assessed with a high degree of certainty to be commercially recoverable. The assessment takes into account factors such as geological and engineering data, production technology, and prevailing market conditions. Proven reserves represent the portion of oil resources that can be economically extracted and are typically reported by oil companies and countries to provide an estimate of their available oil assets.
Proven reserves play a crucial role in the energy industry as they indicate the tangible assets that can be utilized for oil production. These reserves provide a level of certainty to investors, governments, and companies in planning future oil exploration, development, and production activities. The identification and estimation of proven reserves require detailed geological surveys, exploration drilling, and comprehensive assessment methodologies. It is important to note that proven reserves can change over time as new discoveries are made, existing reserves are depleted, and advancements in technology and market conditions impact their economic viability.
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The advertising industry was worth how much money in 1920
Answer:
nearly 3 billon
Explanation:
Explain the government policies that can be used to address each of the causes of market failure which include:
Public goods
Externalities monopolies or imperfect market
poor market information (ignorance and uncertainty)
Immobility of factors of production
2) explain what is meant by market failure?
Market failure occurs when resources aren't allocated efficiently due to the presence of market distortions. It is a circumstance in which the allocation of resources by a free market is not efficient, resulting in waste or overproduction. In response to each of the causes of market failure, government policies can be implemented. They are as follows:
Public goods are one of the causes of market failure that can be addressed using government policies. Since market participants cannot earn a profit from goods that are accessible to the public, such as public security, environmental preservation, and knowledge, government involvement is necessary to finance and distribute them fairly. This can be done through taxes and provision by the government.Externalities monopolies or imperfect markets are another cause of market failure. Government intervention can be used to ensure that monopolies and oligopolies are restricted, or that monopolies are regulated, to ensure that competition is maximized, and the market works effectively. For externalities, government can either tax the negative externalities or subsidize positive externalities to ensure the social costs and benefits are considered.Poor market information (ignorance and uncertainty) is another cause of market failure. The government can establish regulations requiring companies to disclose more information to customers or invest in education to make customers more informed when making buying decisions.Immobility of factors of production is another cause of market failure.
The government can provide training programs, scholarships, and other services to increase the mobility of labor. The government can also provide financial assistance to companies to increase capital mobility.
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when using a roth plan, you invest your money after paying taxes, and the investment grows tax-free.
True - When using a roth plan, you invest your money after paying taxes, and the investment grows tax-free.
That is, when you contribute to a Roth IRA with money that you have already paid taxes on, there is no additional tax due when you remove funds from the account in retirement.
A Roth IRA is an individual retirement account that accepts after-tax contributions. While there are no tax benefits for the current tax year, after you turn 59 \(\frac{1}{2}\) and the account has been open for five years, your contributions and earnings can grow tax-free and you can withdraw them without paying taxes or penalties.
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On March 1, 2024, Gold Examiner receives $147,000 from a local bank and promises to deliver 100 units of certified 1-ounce gold bars party carrier. In addition, Gold Examiner has agreed to provide a replacement shipment at no additional cost if the product in transit. The stand-alone price of a gold bar is $1,440 per unit, and Gold Examiner estimates the the stand insurance service to be $60 per unit. Brink's picked up the gold bars from Gold Examiner on March 30 , and delivery to the bank occurred on April 1. Required: 1. How many performance obligations are in this contract? 2. to 4. Prepare the journal entry Gold Examiner would record on March 1, March 30, and April 1.
The revenue recognition is based on the transfer of control principle and that the performance obligations have been satisfied based on the delivery of the gold bars and the provision of the insurance service. The journal entries reflect the recognition of revenue as the performance obligations are fulfilled.
1. In this contract, there are two performance obligations:
a. Delivery of 100 units of certified 1-ounce gold bars.
b. Providing a replacement shipment at no additional cost if the product is lost in transit.
2. Journal entry on March 1:
Date: March 1, 2024
Account Debit Credit
Cash $147,000
Unearned Revenue $147,000
(To record receipt of payment for the contract)
3. Journal entry on March 30:
Date: March 30, 2024
Account Debit Credit
Unearned Revenue $144,000
Sales Revenue $144,000
(To recognize revenue for the delivered gold bars - 100 units x $1,440 per unit)
4. Journal entry on April 1:
Date: April 1, 2024
Account Debit Credit
Unearned Revenue $3,000
Sales Revenue $3,000
(To recognize revenue for the insurance service - 100 units x $60 per unit)
Please note that the journal entries assume that the revenue recognition is based on the transfer of control principle and that the performance obligations have been satisfied based on the delivery of the gold bars and the provision of the insurance service. The journal entries reflect the recognition of revenue as the performance obligations are fulfilled.
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suppose that at a gas station across the street, prices are always 20% higher than bob’s. in absolute dollar terms, the difference between bob’s prices and the prices across the street is when gas costs $4.20 than when gas costs $3.70.
The difference in prices between Bob's gas station and the gas station across the street is $0.84 when gas costs $4.20 and $0.74 when gas costs $3.70.
To find the difference in prices between Bob's gas station and the gas station across the street, we can use the given information.
Let's first calculate the price difference when gas costs $4.20.
If Bob's gas station sells gas at $4.20, then the gas station across the street sells it at 20% higher, which is 1.2 times the price of Bob's gas.
So, the price across the street would be 1.2 * $4.20 = $5.04.
The absolute dollar difference between Bob's gas station and the gas station across the street would be $5.04 - $4.20 = $0.84.
Now, let's calculate the price difference when gas costs $3.70.
If Bob's gas station sells gas at $3.70, then the gas station across the street sells it at 20% higher, which is 1.2 times the price of Bob's gas.
So, the price across the street would be 1.2 * $3.70 = $4.44.
The absolute dollar difference between Bob's gas station and the gas station across the street would be $4.44 - $3.70 = $0.74.
Therefore, the difference in prices between Bob's gas station and the gas station across the street is $0.84 when gas costs $4.20 and $0.74 when gas costs $3.70.
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When something is grown and harvested in the same country it is distributed in, it can be considered what?
capital
international
duties
domestic
Answer:
domestic
Explanation:
In business, domestic refers to the home country of the producer or consumer. The domestic market is the market within the borders of the seller's country. Domestic contrasts with international, which refers to beyond the borders of a country.
Products that are produced and distributed within the country are domestic products. They are often referred to as local products. Domestic goods become exports if sold outside the borders of their country of origin.
which of the following can impact your credit score
The number of times you choose credit when given the choice between debit and credit at a register
you’re a debit to credit ratio
if you buy items at full price or at a discounted price when using credit
Types of items you’re buying using credit
Answer: B. your Debt to Credit ratio
Explanation:
Your debt to credit ratio is important to lenders because it shows whether you spend wisely when given debt.
Debt to credit is measured as the percentage of debt you have given your credit limit. If for instance you have a credit card limit of $50,000 and have debt of $10,000, your debt to credit ratio is:
= 10,000/50,000 * 100
= 20%
Generally the lower this ratio, the better the contribution to your credit score.
A company paid $200 cash for supplies that were purchased last month. However, the company recorded a debit to Accounts Payable of $200 and a credit to Cash of $20. This company's accounting records are ______.
This company's accounting records are: Incorrect because debits side do no equal credits side.
Accounting recordBased on the information given their is an error when recording the journal entry reason been that we are supposed to credit cash with the amount of $200 and not $20.
Due to this error this company's accounting records will be wrong or Incorrect based on the fact that the debits side do no equal credits side.
The principle of accounting entry states that "Every debit entry must have a corresponding credit entry and every credit entry must have a corresponding debit entry"
The correct entry was supposed to be:
Debit Account payable $200
Credit Cash $200
Inconclusion this company's accounting records are: Incorrect because debits side do no equal credits side.
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a diversification strategy should avoid adding businesses that make excessive demands on nonfinancial resources, including which of the following? multiple select question. technology and information systems managerial talent marketing support surplus cash reserves
A diversification strategy must avoid adding businesses that place an undue strain on nonfinancial resources such as marketing support, managerial talent, technology and information systems.
What is diversification strategy ?When a company wants to grow, it employs a diversification strategy. It is the process of introducing a new product in to the your supply chain to boost profits. These products could be in a new industry segment that your company already operates in, which is known as business-level diversification.Diversification is a risk-management strategy used by businesses to expand into new markets and industries and increase profitability. This can be accomplished by introducing new products and services into new markets, attracting new customers, and increasing profitability.Diversification seeks to maximize returns by investing in various areas that will react differently to the same event.
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if the supply and demand curves intersect at a price of $25, then any price below that price would result in: an increase in demand. a shortage. equilibrium at a price of $60. a surplus.
If the supply and demand curves intersect at a price of $25, then any price below that price would result in a shortage. Thus the correct option is B.
What is Supply?Supply is referred to as making the availability of the demanded object in the market. This can be goods, commodities, or currencies as well. If the supply of demanded goods is not fulfilled it reflects scarcity.
At the equilibrium point, the market's supply and demand curves intersect. There will be a market scarcity at any price below the equilibrium price.
Therefore, option B is appropriate.
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Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $4.4 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $5.2 million. In five years, the aftertax value of the land will be $5.6 million, but the company expects to keep the land for a future project. The company wants to build its new manufacturing plant on this land; the plant and equipment will cost $31.92 million to build. The following market data on DEI’s securities is current:
Debt:
229,000 7 percent coupon bonds outstanding, 25 years to maturity, selling for 107 percent of par; the bonds have a $1,000 par value each and make semiannual payments.
Common stock:
8,700,000 shares outstanding, selling for $70.90 per share; the beta is 1.3.
Preferred stock:
449,000 shares of 4 percent preferred stock outstanding, selling for $80.90 per share and and having a par value of $100.
Market:
6 percent expected market risk premium; 4 percent risk-free rate.
DEI uses G.M. Wharton as its lead underwriter. Wharton charges DEI spreads of 7 percent on new common stock issues, 5 percent on new preferred stock issues, and 3 percent on new debt issues. Wharton has included all direct and indirect issuance costs (along with its profit) in setting these spreads. Wharton has recommended to DEI that it raise the funds needed to build the plant by issuing new shares of common stock. DEI’s tax rate is 40 percent. The project requires $1,275,000 in initial net working capital investment to get operational. Assume Wharton raises all equity for new projects externally.
a.
Calculate the project’s initial Time 0 cash flow, taking into account all side effects. Assume that the net working capital will not require flotation costs. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Cash flow $
b.
The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has told you to use an adjustment factor of 1 percent to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating DEI’s project. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Discount rate
%
c.
The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (that is, the end of Year 5), the plant and equipment can be scrapped for $4.4 million. What is the aftertax salvage value of this plant and equipment? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Aftertax salvage value $
d.
The company will incur $6,700,000 in annual fixed costs. The plan is to manufacture 16,500 RDSs per year and sell them at $10,750 per machine; the variable production costs are $9,350 per RDS. What is the annual operating cash flow (OCF) from this project? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Operating cash flow $
e.
DEI’s comptroller is primarily interested in the impact of DEI’s investments on the bottom line of reported accounting statements. What will you tell her is the accounting break-even quantity of RDSs sold for this project? (Do not round intermediate calculations and round your final answer to the nearest whole number.)
Break-even quantity
units
f.
Finally, DEI’s president wants you to throw all your calculations, assumptions, and everything else into the report for the chief financial officer; all he wants to know is what the RDS project’s internal rate of return (IRR) and net present value (NPV) are. Assume that the net working capital will not require flotation costs. (Enter your NPV answer in dollars, not millions of dollars (e.g., 1,234,567). Enter your IRR answer as a percent. Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)
IRR
%
NPV $
A.the initial time 0 cash flow is $28,805,000. B.the appropriate discount rate is 6.62%. C.the aftertax salvage value of the plant and equipment is $376,000. D.the annual operating cash flow from this project is $13,830,000.
a.
The initial time 0 cash flow is calculated as follows:
Initial investment:
Land cost = $5,200,000
Plant and equipment cost = $31,920,000
Initial net working capital investment = $1,275,000
Total initial investment = $38,395,000
Side effects:
Tax benefit from depreciation = $3,990,000 (calculated as ($31,920,000 - $4,400,000) / 8 * 0.4)
Sale of land at the end of Year 5 = $5,600,000
Total side effects = $9,590,000
Initial time 0 cash flow:
= Total initial investment - Total side effects
= $38,395,000 - $9,590,000
= $28,805,000
Therefore, the initial time 0 cash flow is $28,805,000.
b.
The appropriate discount rate can be calculated using the following formula:
Discount rate = Risk-free rate + Beta × Market risk premium + Risk premium for increased riskiness
Risk premium for increased riskiness = 1% of the market risk premium
Market risk premium = 6% - 4% = 2%
Discount rate = 4% + 1.3 × 2% + 1% × 2%
= 4% + 2.6% + 0.02%
= 6.62%
Therefore, the appropriate discount rate is 6.62%.
c.
The aftertax salvage value of the plant and equipment can be calculated as follows:
Book value of the plant and equipment at the end of Year 5:
= Initial cost - (Annual depreciation × Number of years)
= $31,920,000 - ($31,920,000 / 8 × 5)
= $15,960,000
Tax on sale:
= (Sale price - Book value) × Tax rate
= ($4,400,000 - $15,960,000) × 40%
= -$4,024,000 (negative because it is a tax benefit)
Aftertax salvage value:
= Sale price + Tax on sale
= $4,400,000 - $4,024,000
= $376,000
Therefore, the aftertax salvage value of the plant and equipment is $376,000.
d.
The annual operating cash flow can be calculated as follows:
Revenue:
= Quantity sold × Selling price
= 16,500 × $10,750
= $177,375,000
Variable costs:
= Quantity sold × Variable cost per unit
= 16,500 × $9,350
= $154,275,000
Fixed costs = $6,700,000
Earnings before interest and taxes (EBIT):
= Revenue - Variable costs - Fixed costs
= $177,375,000 - $154,275,000 - $6,700,000
= $16,400,000
Tax:
= EBIT × Tax rate
= $16,400,000 × 40%
= $6,560,000
Net income:
= EBIT - Tax
= $16,400,000 - $6,560,000
= $9,840,000
Depreciation:
= Plant and equipment cost / Number of years
= $31,920,000 / 8
= $3,990,000
Operating cash flow:
= Net income + Depreciation
= $9,840,000 + $3,990,000
= $13,830,000
Therefore, the annual operating cash flow from this project is $13,830,000.
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