Answer:
A) retained earnings represents a claim on cash.
Explanation:
Retained earnings are the accumulated profits that a company keeps that are left after dividends are paid. Retained earnings are the equivalent of a savings account for an individual. Retained earnings are shown in the balance sheet as part of owners' equity.
For example, corporation A had a net profit of $10 million during last year, and it paid dividends for a total of $4 million, its retained earnings for last year are $6 million.
Companies use retained earnings as money available for financing new or existing projects.
Suzi owns 100 shares of AB stock. She expects to receive a $238 in dividends next year. 12) Investors expect the stock to sell for $46 a share one year from now. What is the intrinsic value of this stock if the dividend payout ratio is 40% and the discount rate is 13.5%?
A) $38.19
B) $42.63
C) $45.77
D) $40.53
Answer:
B) $42.63
Explanation:
To determine the value of AB stock we must find the present value of the cash flow for next year:
total cash flow for next year = $46 (selling price) + $2.38 (= $238 / 100 shares) = $48.38
present value = $48.38 / (1 + 13.5%) = $48.38 / 1.135 = $42.63
Swiss Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $780,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The accounts receivable turnover ratio was
A. 9.2 times.
B. 9.0 times.
C. 8.4 times.
D. 8.8 times.
Answer:
B. 9.0 times.
Explanation:
Accounts Receivable Turnover (ART) = Net credit sales/ Average accounts receivable
Net credit sales = $7,200,000
Average accounts receivable = (beginning AR - ending AR) /2
Average Accounts receivable = ($820,000 + $780,000)/2
Average AR = $800,000
Therefore Accounts receivable turnover = $7,200,000/800,000 = 9.0 times
Final answer:
The accounts receivable turnover ratio for Swiss Clothing Store is calculated by dividing the net credit sales of $7,200,000 by the average accounts receivable of $800,000, resulting in a turnover ratio of 9.0 times.
Explanation:
The accounts receivable turnover ratio is a measure of how effectively a company manages its accounts receivable. To calculate this ratio, you divide the net credit sales by the average accounts receivable. The average accounts receivable is found by adding the beginning balance to the ending balance and dividing by two. So, for the Swiss Clothing Store, the calculation would be as follows:
Net Credit Sales: $7,200,000
Beginning Accounts Receivable: $820,000
Ending Accounts Receivable: $780,000
Average Accounts Receivable: ($820,000 + $780,000) / 2 = $800,000
Now, using this information, you calculate the turnover ratio:
Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable = $7,200,000 / $800,000 = 9 times,
Therefore, the accounts receivable turnover ratio for Swiss Clothing Store is 9.0 times, which corresponds to option B.
One year ago, Debra purchased 5,400 shares of KNF stock for $218,056. Today, she sold those shares for $19.49 a share. What is the capital gains yield on this investment if the dividend yield is 1.7 percent?
A.-28.01 percent
B.-48.28 percent
C.3.07 percent
D.-51.73 percent
E.4.53 percent
Answer:
Capital gain yield will be -51.73%
So option (d) will be the correct answer
Explanation:
We have given that Debra purchased 4500 shares of KNF stock for $218056
So price of one share [tex]=\frac{218056}{5400}=$48.380[/tex]
So the beginning price = $40.380
She sold the share at price of 19.49 per share
So ending price = $19.49
We have to find the capital gain yield
We know that capital gain yield is given by
Capital gain yield [tex]=\frac{end\ price-beginning\ price}{begninning \ price}=\frac{19.49-40.380}{40.390}=-51.73[/tex] %
So option (d) will be correct option
At December 31, Year 1, Kale Co. had the following balances in the accounts it maintains at First State Bank: Checking account #101 $175,000 Checking account #201 (10,000) Money market account 25,000 90-day certificate of deposit, due 2/28/Y2 50,000 180-day certificate of deposit, due 3/15/Y2 80,000 Kale classifies investments with original maturities of three months or less as cash equivalents. In its December 31, Year 1, balance sheet, what amount should Kale report as cash and cash equivalents? a) $200,000 b) $190,000 c) $240,000 d) $320,000
Answer:
c) $240,000
Explanation:
The computation of the cash and cash equivalents are shown below:
= Checking account #101 - Checking account #201 + Money market account + 90-day certificate of deposit
= $175,000 - $10,000 + $25,000 + $50,000
= $240,000
Since the 180 days certificate of deposit has not come under the computation part as the maturity period of this period is more than the actual maturity given in the question i.e three months
The most important factor in determining whether a research collaboration will be successful is:
Whether each research team member has an equal share of resources.
Whether there is ongoing communication among the team members about their goals and responsibilities.
Whether the research team has access an effective Technology Transfer Office.
Whether each research team member was trained in the same research methods
Answer:
The most important factor in determining whether a research collaboration will be successful is: B) Whether there is ongoing communication among the team members about their goals and responsibilities.
Explanation:
The research that involves participants from multiple organizations working together to achieve common goals is known as Collaborative Research. This type of research technique is an efficient and more effective way to achieve better results in a short time.
Various factors determine the success of collaborative research, such as the availability of resources, technology, relevant knowledge of the team members, but, the most important factor which determines success is an effective communication between the multiple research teams. If there is no proper communication between the teams, then there will be a lack of coordination, which is harmful for any collaboration.
Therefore, statement B is most suitable.
Final answer:
The pivotal factor for a successful research collaboration is sustained and clear communication among team members about their goals and responsibilities. Communication fosters trust, ensures buy-in, and efficiently manages resources, surpassing other factors like equal resource distribution, technology transfer support, and identical training methods.
Explanation:
The most important factor in determining whether a research collaboration will be successful is whether there is ongoing communication among the team members about their goals and responsibilities. Effective communication is the cornerstone of any successful collaboration, as it allows for the alignment of the team's ideas, promotes sustainability, and is crucial in managing and preventing disputes and conflicts. Sustained and clear communication practices are essential, whether it is in setting and resetting expectations due to staff turnover, deciding who controls the release of results, or navigating the distance in long-distance collaborations.
Other factors such as equal share of resources, technology transfer offices, and uniform training in research methods are important, but they tend to take a secondary role compared to the imperative of strong communication skills. It is through effective communication that trust is built, buy-in is secured from all parties, and resources are managed efficiently. As such, in the realm of collaborative partnerships, ensuring that all team members are open, forthcoming, and transparent, and making concerted efforts to use clear, jargon-free language is key to a booming partnership.
In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, planned investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40. The slope of the expenditure line is:
a. 990
b. 940
c. 900
d. 890
Answer:
expenditure = 900 + 0.80Y
correct option is c. 900
Explanation:
given data
Econland autonomous consumption Co = 700
marginal propensity to consume = 0.80
net taxes = 50
planned investment = 100
government purchases = 100
net exports = 40
to find out
The slope of the expenditure line
solution
we know equation of consumption line that is express as function C
C = a+b(Y-T) ...................1
here a is autonomus consumption and b is marginal propensity and Y is equilibrium GDP and T is taxes so
it will be
C = [700 + 0.80(Y - 50)]
and aggregate expenditure is here
aggregate expenditure = C + I + G + NX ..............................2
here I is plan investment and G is government purchases and NX is net exports so
put all value we will get here
expenditure PAE = [700 + 0.80(Y - 50)] + 100 + 100 + 40
PAE = 700 + 0.80Y - 40 + 100 + 100 + 40
PAE = 900 + 0.80Y
as slope of expenditure is marginal propensity
and we know that all are fixed except marginal propensity to consume
so correct option is c. 900
For a group to reach the deepest and most effective levels of the Working Stage, it is essential that members _____________ to work through areas of interference that hinder achievement.
Answer: COMMIT
Explanation: The word that best fit into question would be:
It is essential that members COMMIT to work through areas of interference that hinder achievement.
Explaining the statement in the question, for a group of individuals bound by a common objective to reach their target goal, there needs to be a commitment by the group members to do what's needed of them regardless the challenge they may face while doing their task.
Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 30%. Then Andy deposits $1,000 of cash into his checking account and the bank lends $600 to Molly. That bank can lend an additional:
A) $100.
B) $800.
C) $900.
D) $300
Answer:
excess reserves after lending = $900
so correct option is C) $900
Explanation:
given data
reserves = $800
reserve ratio = 30%
deposits = $1,000
bank lends = $600
to find out
That bank can lend an additional
solution
first we get required reserves from new deposit that is express as
required reserves = deposit × reserve ratio ......................1
put here value
required reserves = $1000 × 30%
required reserves = $300
and
now excess reserves from new deposits will be
excess reserves = deposits - required reserves .......................2
put here value
excess reserves = $1000 - $300
excess reserves = $700
and
total excess reserves will be here
total excess reserves = old excess reserves + new excess reserves ...........3
put here value
total excess reserves = $800 + $700
total excess reserves = $1500
so that
excess reserves after lending is here express as
excess reserves after lending = excess reserves - amount given to Molly ..........................4
put here value
excess reserves after lending = $1500 - $600
excess reserves after lending = $900
so correct option is C) $900
At year-end, Stick Company has cash of $ 15 comma 000, current accounts receivable of $ 30 comma 000, merchandise inventory of $ 40 comma 200, and prepaid expenses totaling $ 5 comma 900. Liabilities of $ 60 comma 000 must be paid next year. What is Stick's acid-test ratio?
Answer:
0.75 times
Explanation:
The computation of the acid test ratio is shown below:
Quick ratio = Quick assets ÷ total current liabilities
where,
Quick assets = Account receivable + cash balance
= $30,000 + $15,000
= $45,000
And, the current liabilities is $60,000
Now put these values to the above formula
So, the value would equal to
= $45,000 ÷ $60,000
= 0.75 times
A local newspaper is planning to come up with a special series on the growth of entrepreneurship within the community. Each week an article featuring a different business owner and his or her success story will be published. For the featured business owners, this type of promotion would constitute _____.
Answer:
The correct answer is Publicity.
Explanation:
Publicity is the set of strategies with which a company makes its products known to society. Advertising uses media as its main tool, these are so diverse and have so much expansion and impact on the general public that they are essential for commerce in general. If a product is not advertised, people will hardly know it and will refer to it as something of good quality with respect to the name it has. Advertising is a marketing strategy to position products in the global market, their participation in the expansion of companies is accurate and necessary. The corresponding factor used for the diversification of goods and services is referential, but what is sought is that the impact on society is acceptable, to give way to active consumerism.
Golda Rush quit her job as a buyer for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs?
a) $80,000
b) $70,000
c) $42,000
d) $41,500
e) none of the above
Answer:
d) $41,500
Explanation:
Implicit cost is forgiven cost = salary + interest on investment
= $40,000 + $30,000*0.05
= $41,500
Therefore, The amount of her implicit costs is $41,500.
Golda Rush's implicit costs are the total of her forgone salary from her Home Depot job, the foregone interest on her savings, and the interest on the borrowed funds. This totals to $42,000, making the correct answer (c) $42,000.
To calculate Golda Rush's implicit costs for her hairdressing salon, we need to consider the income and benefits she would have earned if she had not left her job and invested her savings elsewhere. The implicit costs are comprised of her forgone salary at Home Depot, the forgone interest on her savings, and the interest on the borrowed money that could have been earned if it were invested.
Forgone Salary: $40,000 (the salary she would have earned at Home Depot)
Forgone interest on savings: 5% of $30,000 = $1,500
Interest on borrowed funds: 5% of $10,000 = $500
The total implicit cost is the sum of these figures: $40,000 (forgone salary) + $1,500 (interest on savings) + $500 (interest on borrowed funds) = $42,000.
Thereby, the correct answer for the amount of her implicit costs is:
c) $42,000
An increase in the price level when the money wage rate remains unchanged increases ______.
a. resource prices by the same percentage as the increase in the price level
b. the quantity of real GDP supplied
c. potential GDP
d. aggregate supply
Answer:
The correct answer is option b.
Explanation:
An increase in the price level will the money wage rate remains the same will cause the aggregate quantity supplied to increase. This happens because we know that the cost of input is not increasing while the price is rising.
According to the law of supply quantity supplied is positively related to the price level. So there will be an upward movement on the same supply curve. This indicates that the quantity of real GDP supplied has increased.
Assume net income was $210,000, depreciation expense was $6,200, accounts receivable decreased by $11,500, and accounts payable decreased by $3,000. The amount of cash flows from operating activities is:
a 224,700
b 210,000
c. 208,300
d 216,200
Answer:
Amount of cash flow will be $224700
So option (a) is correct option
Explanation:
We have given net income = $210000
Depreciation expense = $6200
Account receivable is decreased by $11500
And account payable is decreased by $3000
We have to find the amount of cash flow
We know that amount of cash flow is given by
Cash flow = net income + Depreciation expense +amount which is decreased in account receivable - amount which is decreased in account payable
So cash flow = $210000+$6200+$11500-$3000 = $224700
So option (a) is the correct option
On April 1, Fine Corp. faxed Moss an offer to purchase Moss’ warehouse for $500,000. The offer stated that it would remain open only until April 4 and that acceptance must be received to be effective. Moss sent an acceptance on April 4 by overnight mail and Fine received it on April 5. Which of the following statements is correct?a. No contract was formed because Moss sent the acceptance by an unauthorized method.
b. No contract was formed because Fine received Moss' acceptance after April 4.
c. A contract was formed when Moss sent the acceptance.
d. A contract was formed when Fine received Moss's
acceptance.
Answer:
B) No contract was formed because Fine received Moss' acceptance after April 4.
Explanation:
The mailbox rule established that an acceptance is effective if it has been sent by a means authorized by the offeror, or by the same means used to sent the offer.
Fine Corp. didn't state by what means it would accept an offer, but if Moss would have faxed his acceptance at 23:59 April 4th, the acceptance would have been valid. But since Moss used an overnight mail service, his acceptance was not received on time and therefore is not effective.
When Kimberly begins working for Pharmco Industries, the company tells her that at a future date, after so many years of employment with the company, she can receive retirement pay. Her rights on that date to receive pay upon retirement would be considered:a. vested.b. accrued.c. sheltered.d. inferred
Answer: Vested
Explanation: In simple words, vested refers to the right of possessing an asset or such in future which is secured by law and no third party can take away that right without the permission of the vested party.
The asset vested belongs to some other party but remains secured in the possession of some other party for a specified period of time. In the given case, Kimberly has been informed that so many years she will get her retirement pay.
Hence we can conclude that her retirement pay is vested.
Saltdust Grill is known as the premier restaurant in town. With its elegant dining area, extensive wine list, and gourmet chef, residents and tourists flock to the restaurant. Recently, Trey took a large group to the Saltdust Grill and almost every diner sent their entrée back to the kitchen. The Saltdust Grill was experiencing a(n) __________ gap in service quality.
A. knowledge
B. communication
C. standards
D. delivery
E. empowerment
Answer:
D) delivery
Explanation:
A delivery gap in service quality refers to the difference between the actual delivery of a good or service versus the service delivery policies. In other words, it is the difference between reality and theory.
Theoretically Saltdust should be a premier restaurant and serve delicious dishes, but in reality its service is not that good.
Which of the following is NOT one of the functions of the Federal Reserve? Group of answer choices
Clearing checks
Supervising and regulating banks
Printing currency
Controlling the money supply
Answer:
The one which is not the function is printing the currency.
Explanation:
Federal Reserve is the system of the central banking, that is accountable for setting or making the policy on the matters of the monetary like money supply and interest rates.
The functions of the federal reserve are conduct or perform the monetary policy of the nation, keeping or maintaining an efficient and effective system of payment and supervising and regulating the banking operations.
The director of engineering at a local company was very impressed that Jerry, a production engineer, had not missed a single day of work in the past 12-month period. Based on this one item, the director of engineering rated Jerry very high on all dimensions of his performance appraisal. This error in the performance appraisal process is known as a__________.
a) halo effect
b) projection error
c) contrast error
d) leniency error
e) statutory effect
Answer: D - Leniency Error
Explanation: Leniency Error is a subjective appraisal by an employer. This error is based on the employers perception of the employee.
Leniency error gives the employee a perception that he/ she needs no improvement at work due to the high rating from his employer which is not a general appraisal.
The employer only appraises the employee on an aspect of work while other aspect are left. This makes the employee loose focus on areas of improvement and focus more on his high appraisal.
Suppose you purchased a $1,000 face value, 15-year bond one year ago. The bond has a 7.125% (annual) coupon rate - but the bonds pay coupons semiannually. You paid $974.24 for the bond last year. However, yields have increased 1%. What is the price of the bond today?
a) $991.33
b) $955.78
c) $896.14
d) $912.85
e) $917.28
f) $1,000
Answer:
Explanation:
From the question, we have the followed parameters;
The Face value=1,000 United States of America Dollar($); yield to maturity= fifteen(15) years; The bond = 7.125 percent (annual) coupon rate; payment for last year = $974.24.
First thing to do is to calculate the market value after one percent extra= 1%+7.125%= 8.125%
Next, we need to calculate the present value of 14 year coupon of 71.25 USD = 573.00+ 1,000/1+ 0.8125^14
=>573.00+322.15
= 895.15
Therefore, the price of the bond today is $ 895.15.
Explicit knowledge can be documented and codified, whereas tacit knowledge encompasses insights, judgment, creative processes, and wisdom that come from learning through several trials and errors. True or False
Answer:
True.
Explanation:
Explicit knowledge is that kind of knowledge that is already coded, can be found, articulated, and stored in media format and is ready to be shared with other individuals. Some examples of explicit knowledge: books, articles, videos, audios, documents and memos.
Tacit knowledge is knowledge that is embodied in the human mind, extremely personal and individual, as it derives from individual perspectives, values, emotions and experiences. It's kind of knowledge includes ideas, opinions, and intuitions, which are hard to codify and formalize, making it harder to share.
Jack determined one of the metrics he would use to gauge the level of exposure his marketing message had with his target market was the number of times the target was exposed to his message throughout the six weeks of the campaign, representing its
Answer:
This represents its "frequency".
Explanation:
Frequency of a marketing message refers to how many times a target market or potential customers are exposed to the marketing message.
This is similar to "reach" but with a slight difference. Reach refers to the number of customer who have come across the message.
For example, it is possible for one customer to see the message five times. Frequency takes this into account while reach does not.
Bates Manufacturing purchased merchandise inventory for $10,000. At the end of the accounting period it has a market value of $8,700. Using the lower-of-cost-or-market rule, what is amount to report on the Balance Sheet as Merchandise Inventory?
Answer:
$8,700
Explanation:
According to the accounting principle, the inventory should be valued at lower of cost or market value and the same is presented on the balance sheet.
The purchase value of inventory is $10,000
And, the market value of inventory is $8,700
So, the lower value would be $8,700 and the same is reported on the balance sheet
An analysis of the total cost of ownership (TCO), when making purchasing decisions, shows that the costs for additional training, upgrades, maintenance, repair, and other expenses are usually much smaller than the cost of acquisition. True or False?
Answer:
false
Explanation:
No two companies are the same, so you cannot assume that something that was true for one company will be true for another especially when you consider human resources and production related activities.
A company might be very profitable and can be worth tons of money but its management can be disastrous. For example, when Bill Gates was the CEO of Microsoft, he was the first person to acknowledge that his company was managed by cavemen. They burnt cash like crazy and their whole organization was a mess. The fact that they had a monopoly with Windows and Office was the only reason why they were still functional and profitable.
Sometimes factories are very profitable but use very old equipment and machinery, and their maintenance and repair costs may be huge. Or maybe the opposite may happen, a company may have invested too much money in new modern equipment.
Even if a company is managed perfectly and everything is under control, new equipment, new offices, huge sales numbers, etc. But it uses a different ERP software than its potential buyer, and that may be a very expensive issue to solve.
On July 1, 2018, Mason & Beech Services issued $ 33,000 of 10% bonds that mature in five years. They were issued at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2018, what is the total amount paid to bondholders?
Answer:
$1,650
Explanation:
The computation of the total amount paid to bondholders is shown below:
= Issued amount × rate of interest × number of months ÷ (total number of months in a year)
= $33,000 × 10% × (6 months ÷ 12 months)
= $1,650
The six months are calculated from June 30 to December 31. And, we simply use the simple interest formula so that the correct amount can come.
As part of its web redesign, Pizza Hut implemented a system to collect and store consumer information including pizza preferences, delivery addresses, and payment information. Pizza Hut also allowed consumers to opt in or out of future promotional emails on its website, an example of
A. showroomng
B. interactive marketing
C. viral marketing
D. choiceboarding
E. permission marketing
E.Permission marketing, as exemplified by Pizza Hut's opt-in for promotional emails, involves obtaining explicit consent from consumers before sending marketing messages, fostering trust and engagement.
Permission marketing, exemplified by Pizza Hut's opt-in feature for promotional emails, is a strategy where businesses seek explicit consent from consumers before sending them marketing messages or collecting their information.
Unlike traditional marketing, which often involves intrusive tactics like cold calling or unsolicited emails, permission marketing respects the consumer's preferences and empowers them to control their interactions with the brand.
By allowing consumers to choose whether they want to receive promotional emails, Pizza Hut builds trust and rapport with its customers, enhancing their overall experience.
This approach fosters a more positive relationship between the brand and the consumer, leading to higher engagement and loyalty. Additionally, permission marketing tends to yield better results because it targets individuals who have already expressed interest in the brand's offerings, resulting in more qualified leads and increased conversion rates.
Overall, permission marketing is a customer-centric approach that prioritizes transparency, consent, and personalized communication.
A national magazine with regional editions _____. Group of answer choices
a) tailors ads to different age groups contains different stories for different geographic regions relies solely on
b) subscription sales relies solely on
c) newsstand sales sends special editorial content to readers with high incomes
Answer:
contains different stories for different geographic regions
Explanation:
A national magazine with regional editions contains different stories for different geographic regions. there are many of these types of magazines all over the world. Each of which focuses on many topics and modify each copy in order to appeal distinctly to the geographic region in which it is releasing in order to increase sales.
Comcast is advertising a new paperless statement program. With a few clicks of the mouse, you can now get your statements, pay it, and get a receipt. This is one example of retailers offering _____.
a. online purchase programs
b. electronic bill presentment and payment
c. cybermediary payment processing
d. email statement processing
Answer:
The correct answer is B that is electronic bill presentment and payment.
Explanation:
A company Comcast who is advertising a program where the work is paperless. Everything is done with a few clicks of the mouse which in the mode of electronic and the person or an individual get the statements, get a receipt or pay it.
This is an example of the retailers which are offering the electronic bill presentment and payment.
The given excerpt is one example of retailers offering Electronic Bill presentment and payment.
Option - b
Explanation:
Electronic bill payment and presentment (EBPP) is a method used by firms by systems such as the Internet, Personal Access and Automated Platform Machines (ATMs) to collect transactions electronically.
Today in many financial institutions, it has become the key component of internet banking. EBPP services are also the responsibility of the rest of the industries, including health care, telecom, and utility companies.
Two forms of EBPPs are available: the direct biller and the banking aggregator.
Biller-direct is digital billing, provided by the goods or services sold by the company. The company provides the opportunity for customers to pay their bills directly on their website and may inform them of the fee via phone. The user logs into the system via a secure site checks the data on the invoice and inputs the sum of payment.
During 2017 the inflation rate increased slightly but remained in the "comfort zone" and the unemployment rate was low.
Why might the Fed decide to raise interest rates in this situation?
The Fed might decide to raise interest rates ______ .
A. the quantity of loanable funds demanded exceeded the quantity of loanable funds suppliedB. it thought that the rising inflation rate was a greater problem than unemploymentC. it thought that unemployment was a greater problem than the rising inflation rateD. the quantity of money was growing too quickly
Answer:
C. it thought that unemployment was a greater problem than the rising inflation rate
Explanation:
Through monetary policies tools, the Fed ensures both the unemployment rate and inflation rates are at the desired level. There is an inverse relationship between the rate of unemployment and the inflation rate. Economists argue that a high rate of unemployment poses a greater challenge than a high inflation rate.
If the inflation rate is within an acceptable level, central banks are more worried about the unemployment rate. When a person loses their job, it affects the well-being of the individual, his family, and friends. The person becomes a financial burden in the family. Co-workers develop fear which affects productivity. Unemployment causes more misery to people than inflation.
A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter requires the French importer to obtain a letter of credit. When the bank accepts the draft, the exporter discounts the 90-day note at a 4 percent discount. What does the exporter's true effective annual financing cost?
Answer:
0.0416483 or 4.16%
Explanation:
Annual percentage rate, APR = 4%
Value of toys sold = $200,000
Note period = 90 day
N = 365 ÷ 90
= $200,000 × [1 - (0.04 × 90/360)]
= $198,000
Effective annual financing cost:
[tex]=(\frac{Value\ of\ toys\ sold}{Calculated\ value} )^{\frac{365}{90} }-1[/tex]
[tex]=(\frac{200,000}{198,000} )^{\frac{365}{90} }-1[/tex]
= 1.0416483 - 1
= 0.0416483 or 4.16%
The cost advantage for offshore outsourcing to India used to be 6:1 or more. It is estimated that once this advantage shrinks to _____ or less, cost savings would no longer be an incentive for U.S. offshore outsourcing to India.
Answer:
1.5 : 1
Explanation:
1.5 to 1, means that for every $1 that an American company spends in offshoring activities in India, it would need to spend $1.50 in the United States to perform the same activity. By offshoring activities, American companies are saving at least 50%.
If this ratio is reduced to less than 1.5 : 1, American companies will not have any motivation to offshore activities to India. Many companies offshore activities because they save money, but if they wouldn't be able to save money, then it is always better to perform your activities at your home country since the economy as a whole benefits.
The cost savings threshold for offshore outsourcing to India is estimated to be 3:1 or less, at which point the incentive diminishes. This is due to factors like rising wages, demand exceeding supply for skilled workers, and the importance of quality and reliability of services.
The cost advantage for offshore outsourcing to India used to be 6:1 or more. It is estimated that once this advantage shrinks to 3:1 or less, cost savings would no longer be an incentive for U.S. offshore outsourcing to India. Offshore outsourcing typically leverages infrastructure and labor cost advantages when compared to traditional outsourcing. However, this advantage can diminish as wages in the outsourcing country rise, demand for skilled workers exceeds supply, and the quality and reliability of services become increasingly important factors for companies considering offshore outsourcing.
The New York Times reported in 2004 that rising wages in India might lead to a loss in its outsourcing edge, forecasting a situation where demand for college graduates in the outsourcing markets would exceed supply by 20% by 2008. This implies that the demand for Indian workers was increasing while the supply was not keeping up, possibly inflating wages and reducing the cost advantage. Additionally, while labor cost differentials between countries are a significant factor, they are not the only one; companies also need assurance of service quality and reliability, as well as considering the political and economic environment.