Answer:
Buy at a lower strike put option or sell at a higher call option
Explanation:
100 shares of apple stock bought at $300
premium of put option ( cost ) = $12
Put option = $300
What can be done to reduce the cost of protective put position
To reduce the cost we can either buy at a lower strike put option or sell at a higher call option
Buying at a lower strike put option price ( < $300 )
This way premium will be reduced but this will not hedge against small fall in price
Sell at a higher call option
This way the premium charged will be reduced but if the price rises above the entry price on expiration then the gains made above the price will be foregone .
what symptom must be reported to a manger
vomiting, diarrhea, jaundice, or a fever accompanied by a sore throat
The payroll records of Speedy Software show the following information about Marsha Gottschalk, an employee, for the weekly pay period ending September 30, 2017. Gottschalk is single and claims one allowance. Compute her Social Security tax (6.2%), Medicare tax (1.45%), federal income tax withholding, state income tax (1.0%), and net pay for the current pay period.
Total (gross) earnings for current pay period $620
Cumulative earnings of previous pay periods $8,060
Answer:
The Social Security Tax is $38.44
The Medicare Tax is $8.99
The Federal Income Tax withholding is $70.00
The Income Tax is $6.2
The Net Pay is $496.37
Explanation:
Use the following formula to calculate the Social Security Tax
Social Security Tax = Gross Pay x Social Security tax rate = $620 x 6.2% = $38.44
Use the following formula to calculate the Medicare Tax withholding
Medicare Tax = Gross Pay x Medicare tax rate = $620 x 1.45% = $8.99
Federal Income Tax withholding = $70.00 ( From the attached Table )
Use the following formula to calculate the Income Tax
Income Tax = Gross Pay x Income tax rate = $620 x 1% = $6.2
Use the following formula to calculate the net pay
Net Pay = Gross Pay - Social Security Tax - Medicare Tax - Federal Income Tax withholdiing - Income Tax = $620 - $38.44 - $8.99 - $70.00 - $6.2 = $496.37
Assume that in 2018, a copper penny struck at Philadelphia mint in 1796 was sold for $480,000. What was the rate of return on this investment?
Answer:
The annual rate of return on this investment is 8.29%
Explanation:
The computation of the rate of return on this investment is shown below:
Since the copper penny is in 1795 is 1 cent
And,
1 cent = .01 dollars
Now
Year 1796 2018
Amount (in dollars) 0.01 $390,000
We know that
Future Value = Present Value × ((1 + rate )^time period)
Here,
t = 2018 - 1795 = 222
So,
.01 × ((1+rate)^(222)) = $480,000
(1+rate)^(222) = $48,000,000
1 + rate = $48,000,000^(1 ÷ 222)
1 + rate = $48,000,000^(0.004505)
1+rate = 1.082929503
rate = 0.082929503
Hence, The annual rate of return on this investment is 8.29%
The Kentucky government approves tax incentives to encourage more industry to move to the state. Which of the following statements best describes a potential negative externality? (1 point)
a
Development results in reduction of green space.
b
Taxes for local road maintenance decrease.
c
The state gambling industry fails to fund education.
d
The state park system loses positive media coverage.
Answer:
a
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.
Government can regulate the amount of externality produced by placing an upper limit on the amount of negative externality permissible
Sea Green Enterprises reports the following assets and liabilities on its balance sheet. Net Book Value Fair Market Value Assets $600,000 $925,000 Liabilities 200,000 200,000 Sea Green just lost a product liability suit with damages of $10,000,000 being awarded to the plaintiff. Although Sea Green will appeal the judgment, legal counsel indicates the judgment is highly unlikely to be overturned by the appellate court. The product liability insurance carried by Sea Green includes a payout ceiling of $6,000,000. Assume any net assets of the company will be used to reduce the judgment. For how much of the judgment is the entity and its owners liable if Sea Green is a sole proprietorship, a partnership, an LLC, a C corporation, and an S corporation
Answer:
A. $3,275,000
B. $3,275,000
C. $3,075,000
D. $3,075,000
Explanation:
A. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a SOLE PROPRIETORSHIP,
First step is to calculate the FMV of the net assets
FMV of the net assets=($925,000 - $200,000)
FMV of the net assets =$725,000
Now let calculate the amount the owner is liable of
Amount liable=($10,000,000-$6,000,000)-$725,000
Amount liable= ($4,000,000 - $725,000).
Amount liable=$3,275,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a SOLE PROPRIETORSHIP is $3,275,000
B. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a PARTNERSHIP
First step is to calculate the net FMV of the
net assets
Net FMV of the
net assets =($925,000 - $200,000)
Net FMV of the
net assets= $725,000
Now let calculate the partners are liable of
Amount liable=($10,000,000-$6,000,000)-$725,000
Amount liable= ($4,000,000 - $725,000).
Amount liable=$3,275,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a PARTNERSHIP is $3,275,000
C. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a C corporation
Corporate debts=($10,000,000-$6,000,000)-$925,000
Corporate debts=($4,000,000 - $925,000).
Corporate debts =$3,075,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a C corporation is $3,075,000
D. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a S corporation
Corporate debts=($10,000,000-$6,000,000)-$925,000
Corporate debts=($4,000,000 - $925,000).
Corporate debts =$3,075,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a S corporation is $3,075,000
Assume that IBM leased equipment that was carried at a cost of $182,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1, 2017, with equal rental payments of $35,685 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair value of the equipment at the inception of the lease is $182,000. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 7%, no bargain-purchase option, and no transfer of title. Collectibility is reasonably assured with no additional cost to be incurred by IBM.
Prepare IBM’s January 1, 2017, journal entries at the inception of the lease
Date Account Titles & Explnation Debit Credit
January 1
January 1
Answer:
IBM
Journal entries at the inception of the lease
Date Account Titles & Explanation Debit Credit
January 1
Debit Accounts receivable (Sharon Swander Company) $182,000
Credit Leased Asset $182,000
To record the lease of the asset to Sharon Swander.
January 1
Debit Cash $35,685
Credit Accounts receivable (Sharon Swander Company) $35,685
To record the receipt of the first rental payment.
Explanation:
a) Data and Calculations:
Cost of equipment on lease = $182,000
Lease terms:
Lease period = 6 years
Annual rental payments = $35,685
Implicit interest rate = 7%
Mandy, who has AGI of $80,000 before considering rental activities, is active in three separate real estate rental activities. Mandy has a marginal tax rate of 22%. She has $12,000 of losses from Activity A, $18,000 of losses from Activity B, and income of $10,000 from Activity C. She also has $2,100 of tax credits from Activity A. Calculate her deductions and credits allowed and the suspended losses and credits.
Answer: See explanation
Explanation:
Mandy's deductions and credits allowed and the suspended losses and credits are calculated as follows:
Mandy's deduction (her utilized loss) total = $12000 + $18000 - $10000 = $20000
Her suspended loss = $0
After deducting the loss, Mandy has available a deduction equivalent of = $5000
Hee utilized credit is ($5000 × 22%) = $1100 and her suspended credit is ($2100 - $1100) = $1000.
Net Present Value Analysis [LO12-2]
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company’s common stock. She received a $420 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $16,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provide a 14% return and would like some help with the necessary computations.
Required:
1. Compute the net present value that Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 14% return?
Answer:
NPV = $-1,225.37
No. The return is less than 14%, because the net present value is negative
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-13,000
Cash flow in year 1 and 2 = 420
Cash flow in year 3 = $420 + $16,000 = $16,420.
I = 14%
NPV = $-1,225.37
The return is less than 14%, because the net present value is negative
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Regardless which form of media used, all ads can be divided into _?_types based on the kind of message conveyed.
seven
C. five
b. two
d. three
a.
Payroll entries.
Total payroll of Walnut Co. was $1,840,000, of which $320,000 represented amounts paid in excess of $106,800 to certain employees. The amount paid to employees in excess of $7,000 was $1,440,000. Income taxes withheld were $450,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee's salaries and wages to $106,800 and 1.45% in excess of $106,800.
Instructions
(a) Prepare the journal entry for the salaries and wages paid.
(b) Prepare the entry to record the employer payroll taxes.
Answer:
A. Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
Cr Cash $2,169,080
B. Dr Employer's Tax expenses $112,920
Cr FICA taxes payable $120,920
Cr SUTA payable $4,800
Cr FUTA payable $3,200
Explanation:
a. Preparation of the journal entry for the salaries and wages paid.
Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr Cash $2,169,080
($1,840,000+$450,000-$120,920)
(Being net salaries and wages paid after holding taxes)
b. Preparation of the entry to record the employer payroll taxes.
Dr Employer's Tax expenses $112,920
($120,920-$4,800 -$3,200)
Cr FICA taxes payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr SUTA payable $4,800
($1,840,000-$1,440,000*1.2%)
Cr FUTA payable $3,200
($1,840,000-$1,440,000*.8%)
(Being employer's taxes made payable towards salaries & wages)
Choose 2 multinational companies (1 U.S.-based company + 1 foreign-based company).
Visit the websites of the 2 companies and conduct research using databases such as Business and Company ASAP and Business
Source Complete.
How do these 2 multinational companies have organized their global business operations?
What are their similarities and differences, and what might explain those similarities and differences?
How might you characterize their business and international strategies?
Tools like nation portfolio analysis and political risk assessment, which primarily concentrate on the potential benefits from doing business in emerging countries, are used by companies that seek new markets.
How a Global Corporation Operates?An organisation is considered a global corporation if its operations span at least two nations. Some individuals would classify any business having an overseas branch as a multinational corporation. Some people might restrict the term to only include businesses with at least 25% of their revenue coming from sources outside of their own nation.
What Are Some of the Risks Facing Global Corporations?The various nations and regions in which multinational firms operate expose them to dangers. These include potential dangers to regulations or the law, political unpredictability, crime and violence, and cultural
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Apple invented the modern smart phone but Android con trolled 80 percent of the world market in 2016 because of:__________.
Answer:
Stimulus diffusion
Explanation:
In simple words, When a concept spreads from its historical flame outwards, the original thought is altered by the future followers which is known as stimulus diffusion. Given of the manner civilization adjusts to various environmental, economic, as well as political contexts, mostly all cultural evicting will include some form of stimulus dissemination.
Thus, from the above we can conclude that the correct answer is stimulus diffusion.
The following accounts are from last year's books at Sharp Manufacturing: Raw Materials Bal 0 (b) 87,000 (a) 93,000 5,000 Work In Process Bal 0 (f) 251,000 (b) 69,000 (c) 82,000 (e) 100,000 0 Finished Goods Bal 0 (g) 226,000 (f) 251,000 25,000 Manufacturing Overhead (b) 18,000 (e) 100,000 (c) 12,000 (d) 67,000 (h) 3,000 3,000 Cost of Goods Sold (g) 226,000 (h) 3,000 223,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?
Answer:
$251,000
Explanation:
Calculation to determine the amount of cost of goods manufactured for the year
Using this formula
Cost of goods manufactured=Debit to Finished Goods+Credit to Work in Process
Let plug in the formula
Cost of goods manufactured =$226,000+$25,000
Cost of goods manufactured =$251,000 (entry f)
Therefore the amount of cost of goods manufactured for the year is $251,000 (entry f)
Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow: Beginning Ending Accounts receivable (net) $ 45,000 $ 55,000 Inventory 60,000 40,000 Required: Compute the following turnover ratios. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory.
Answer:
(1) Account receivable turnover Ratio = 6 times
Inventory turnover Ratio = 3.6 times
(2) Average days to collect receivables = 61 days
Average days to collect inventory = 101 days
Explanation:
(1). Net credit sales = $300,000
Average account receivable = ($45,000 + $55,000) ÷ 2 = $50,000
COG sold = $300,000 - (40% × $300,000) = $180,000
Average inventory = (60,000 + 40,000) ÷ 2 = 50,000
Account receivable turnover Ratio= Net Credit Sales ÷ Average Accounts receivable
= $300,000 ÷ 50,000
= 6 times
Inventory turnover Ratio= COG Sold ÷ Average Inventory
= 180,000 ÷ 50,000
= 3.6 times
(2). Average days to collect receivables= 365 ÷ 6
= 60.83 or 61 days
Average days to collect inventory= 365 ÷ 3.6
= 101.38 or 101 days
Broadbean Co. had the following amounts on its balance sheet on December 31, 2018: Common stock and Additional paid in capital $ 106,000 Retained earnings 642,000 Treasury stock 82,000 Accumulated other comprehensive income (loss) $ (25,000 ) During 2019, Broadbean Co. reported net income of $46,200, declared cash dividends of $31,800, purchased additional treasury stock for $8,400, and experienced a foreign currency translation gain of $3,600. What amount will Broadbean report as total stockholders’ equity at December 31, 2019 on its statement of stockholders’ equity? Multiple Choice
Answer:
$650,600
Explanation:
Stockholders’ equity as at December 31, 2019
Common stock and Additional paid in capital $106,000
Retained earnings {642000+46200-31800] $656,400
Less: Treasury stock [82000+8400] $90,400
Accumulated other comprehensive income ($21,400)
(loss) [(25000)+3600]
Stockholders’ equity $650.600
The efficient frontier of risky assets is:_______
A. The portion of the minimum-variance portfolio that represents the highest standard deviations.
B. The portion of the minimum-variance portfolio that includes the portfolios with the lowest standard deviation.
C. The portion of the minimum-variance portfolio that lies above the global minimum variance portfolio.
D. The set of portfolios that have zero standard deviation.
7. How micro and macro economics are interdependent
to each other?
Explanation:
Actually micro and macroeconomics are interdependent. The theories regarding the behaviour of some macroeconomic aggregates (but not all) are derived from theories of individual behaviour. ... Similarly, the theory of aggregate consumption function is based upon the behaviour patterns of individual consumers.
All of the following statements about the online insurance industry are true except: Group of answer choices the industry has been very successful in attracting visitors searching for information about prices and terms of insurance policies. the Internet has lowered search costs, increased price comparison, and decreased prices to consumers for all forms of insurance. websites of almost all the major firms provide the ability to obtain an online quote. the wave of interest in fintech companies has not yet reached the insurance industry.
g Over the last several years your company has collected the following monthly repair frequency history on a key piece of manufacturing equipment. If the average repair cost (parts and labor) is $356/repair, calculate the expected annual repair budget for this piece of equipment. Repairs/month Probability 0 0.02 1 0.05 2 0.08 3 0.1 4 0.12 5 0.13 6 0.12 7 0.16 8 0.11 9 0.09 10 0.02
Answer:
The expected annual repair budget for this piece of equipment is $1,933.20.
Explanation:
Note: See the attached excel file for the calculation of the expected annual repair budget for this piece of equipment.
In the attached excel file, the following formula is used
Expected monthly repair cost = Repairs/month * Probability * Average cost per repair
From the attached excel file, we have:
Expected annual repair budget = Total of expected monthly repair cost = $1,933.20
Therefore, the expected annual repair budget for this piece of equipment is $1,933.20.
Harry Company sells 38,000 units at $37 per unit. Variable costs are $30.71 per unit, and fixed costs are $136,200. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) operating income. a. Contribution margin ratio (Enter as a whole number.) fill in the blank 1 % b. Unit contribution margin (Round to the nearest cent.) $fill in the blank 2 per unit c. Operating income $fill in the blank 3
Answer:
Results are below.
Explanation:
First, we will determine the unitary contribution margin:
Unitary contribution margin= selling price - unitary variable cost
Unitary contribution margin= 37 - 30.71
Unitary contribution margin= $6.29
Now, the contribution margin ratio:
contribution margin ratio= Unitary contribution margin / selling price
contribution margin ratio= 6.29 / 37
contribution margin ratio= 0.17
Finally, the operating income:
Operating income= total contribution margin - fixed costs
Operating income= 38,000*6.29 - 136,200
Operating income= $102,820
Vextra Corporation is considering the purchase of new equipment costing $38,000. The projected annual cash inflow is $11,600, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows:
Periods 12%
1 0.8929
2 1.6901
3 2.4018
4 3.0373
What is the net present value of the machine (rounded to the nearest whole dollar)?
a. $(35,233).
b. $(2,767).
c. $38,000.
d. $(3,700).
e. $5,233.
Answer:
b
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-38,000.
Cash flow in year 1 - 4 = $11,600
I = 12%
NPV = $(2,767).
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Actual sales price is 20% higher than budgeted. Actual sales revenue in dollars is 14% higher than budgeted. Actual sales volume in units is 5% lower than budgeted. Actual input quantity per unit is 2% higher than budgeted. Actual input price is 4% lower than budgeted. Which of the following is true: Group of answer choices Sales volume variance is unfavorable and input efficiency variance is unfavorable Sales volume variance is unfavorable and input efficiency variance is favorable Sales volume variance is favorable and input efficiency variance is unfavorable Not enough information Sales volume variance is favorable and input efficiency variance is favorable
Answer: Sales volume variance is unfavorable and input efficiency variance is unfavorable
Explanation:
The sales volume variance is regarded as the difference in the revenue or the profit which is as a result of the difference between the actual sales and the budgeted sales.
With regards to the question, since the Actual sales volume in units is 5% lower than the budgeted sales, we can infer that the sales volume variance will be unfavourable. On the other hand, since, the actual input quantity per unit is 2% higher than budgeted input quantity per unit, then we can infer that the input efficient variance is unfavourable.
LM Enterprises produces two products in a common production process, each of which is processed further after the split-off point. Joint costs incurred for the current month are $36,000. The following information for the current month was also gathered: Product Units Produced Units Sold Separable Costs Selling Price per Unit L 10,000 9,500 $20,000 $ 8 M 5,000 4,000 $40,000 20 What amount would be the joint cost allocated to product M, assuming that LM Enterprises uses the estimated net realizable value method to allocate costs
Answer:
$18,000
Explanation:
The computation is shown below
As we know that
Net realizable value = eventual sales price - separable costs.
For Product L, the net realizable value is
= (10,000 units ×$8) - $20,000
= $80,000 - $20,000
= $60,000
For Product M, the net realizable value is
= (5,000 units ×$20) - $40,000
= $100,000 - $40,000
= $60,000
Now Net realizable value of the two products is
= $60,000 + $60,000
= $120,000
Product M is allocated 60 ÷ 120 or 50% of joint costs.
So,
= 50% of $36,000
= $18,000
Which entities offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field?
Answer:
Entities that offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field include:
Explanation:
Certified Public Accountant (CPA), Certified Financial Analyst (CFA), Certified Fraud Examiner (CFE), and Certified Internal Auditor (CIA). Additionally, organizations such as the American Institute of Certified Public Accountants, the Institute of Management Accountants, and the International Ethics Standards Board for Accountants (IESBA) offer certifications and qualifications that are beneficial for those in the accounting field.
Augustus Company is considering investing in new equipment. Based on the following, what is the Average Annual Operating Income (as in the Accounting Rate of Return calculation)?
Estimated Cost of New Equipment $500,000
Useful life in years 5
Estimated Residual Value $50,000
Expected New Cash Inflows over life of asset $700,000
Answer:
$50,000
Explanation:
Estimated Cost of New Equipment = $500,000
Useful life in years = 5
Estimated Residual Value = $50,000
Expected New Cash Inflows over life of asset = $700,000
Annual depreciation expense = (Estimated Cost of New Equipment-Estimated Residual Value)/Useful life in years
= ($500,000 - $50,000) / 5
= $450,000 / 5
= $90,000
Average annual cash flow = Expected New Cash Inflows over life of asset/ Useful life in years
= $700,000/5
= $140,000
Average annual operating income = Average annual cash flow - Annual depreciation expense
= $140,000 - $90,000
= $50,000
A project scope statement provides the first phase the project.
True
False
Answer:
true coz i know the answer
Why should interest earned NOT be a factor with your emergency fund?
O Interest-bearing accounts at banks earns a high rate of interest, therefore, interest is not a concern.
It should be a factor.
O Inflation can eat up the interest earned.
O The emergency fund is not intended to grow wealth
Answer:
O The emergency fund is not intended to grow wealth
Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 11 percent return and can be financed at 6 percent with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 9 percent return but would cost 15 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm’s capital structure. a. Compute the weighted average cost of capital. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Answer:
10.5%
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
(6% x 0.5) + (15% x 0.5) = 3% + 7.5% = 10.50%
"Group Think" happens when
everyone agrees with the same
thought.
True or false
It is a phenomenon that can lead to poor decision-making True.
What is group think?Group think is a phenomenon in which a group of people, influenced by their desire for consensus, make irrational or poor decisions. It often occurs when group members are unwilling or unable to express their individual opinions, or when group members feel pressure from an authority figure to come to an agreement. Group think can lead to poor decision-making, as group members may ignore potential problems or negative information that could be beneficial to the decision-making process. Additionally, group think can lead to conformity among members, making it difficult for them to think outside the box and come up with creative solutions.
Group Think can lead to poor decision-making because it eliminates any divergence of opinion, leading to conformity and the absence of critical thought. This can lead to an inability to objectively evaluate the risks and benefits involved in a decision, as well as a lack of creativity and innovation. Additionally, group think can lead to a lack of accountability, as members of a group may be less likely to challenge decisions or provide constructive criticism.
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Consider a project with the following data: accounting break-even quantity = 16,700 units; cash break-even quantity = 15,000 units; life = four years; fixed costs = $150,000; variable costs = $32 per unit; required return = 15 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer: 17381.80 units
Explanation:
To solve the question, the OCF need to be known. To solve this, we need to know the price of the project which will be:
15000 = $150,000/(P - $32)
15000P - 480000 = 150000
15000P = 150000 + 480000
15000P = 630000.
P = 630000/150000
P = 42
Since we know the price, we'll calculate depreciation which will be:
16700 = ($150,000 + D)/($42 -$32)
Depreciation = 17000
Based on the information, initial investment will now be:
= 4 × 17000
= 68000
Then, we can now solve the OCF which will be:
68000 = OCF(PVIFA15%,4)
OCF = 23818.04
Therefore, the financial breakeven quantity will be:
= 150,000 + 23818.04/(42-32)
= (150000 + 23818.04)/10
= 173818/10
= 17381.80 units
Therefore, the financial breakeven quantity is 17381.80 units