If the inflation rate in Mexico is significantly higher than its trading partners, it will cause the demand for Mexican goods and services to-D. decrease because they will become relatively more expensive compared to those of its trading partners.
What is the reason?This decrease in demand will lead to a decrease in the supply of Mexican goods and services, as producers will produce less due to the lower demand.
This decrease in supply will ultimately lead to a depreciation of the Mexican Peso's international value as there will be fewer people willing to hold onto the currency due to the lower demand for Mexican goods and services.
Therefore, the correct answer is option d - decrease in demand, increase in supply, and depreciation of the Mexican Peso's international value.
Hence, option d. is correct.
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butte sold a machine to a machine dealer for $51,700. butte bought the machine for $53,300 several years ago and has claimed $11,650 of depreciation expense on the machine. what is the amount and character of butte's gain or loss?
To calculate Butte's gain or loss on the sale of the machine, we need to compare the selling price with the adjusted basis of the machine.
The adjusted basis is the original cost of the machine minus the accumulated depreciation. In this case, the machine was bought for $53,300, and $11,650 of depreciation has been claimed. Therefore, the adjusted basis is:
Adjusted basis = Purchase price - Accumulated depreciation
Adjusted basis = $53,300 - $11,650
Adjusted basis = $41,650
Now, we can calculate the gain or loss:
Gain or loss = Selling price - Adjusted basis
Gain or loss = $51,700 - $41,650
Gain or loss = $10,050
Since the selling price is lower than the adjusted basis, there is a loss on the sale.The amount of Butte's loss on the sale of the machine is $10,050.
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Company currently has the capacity to manufacture 250,000 widgets a year and 100,000 gadgets a year in its factory. Company has the following costs related to manufacturing and selling 200,000 widgets:
Scenario 1
Scenario 2
Direct materials and direct labor
$840,000
Variable manufacturing overhead
$180,000
Rent on equipment only used for the widgets
$40,000
Allocated share of depreciation on factory
$100,000
Annual salary of widget production manager
$70,000
Variable selling costs (commissions)
$60,000
Allocated share of fixed selling costs
$80,000
Total
$1,370,000
Scenario 1: Assume Firm asks Company to manufacture a special order of 4,000 widgets. Indicate in the column labeled ‘Scenario 1’ whether each cost is relevant (R) or not relevant (NR) for this special order decision.
Scenario 2: Assume Company is considering outsourcing production of the widget product line. They would purchase the widgets from a supplier. The widget production manager will be laid off. Sales of the widget are expected to stay at 200,000 units. Indicate in the column labeled ‘Scenario 2’ whether each cost is relevant (R) or not relevant (NR) for making the decision to outsource the widget production.
The allocated share of depreciation on the factory is a fixed cost that does not change with the decision.
Here are the relevant (R) or not relevant (NR) categorizations for each cost in Scenario 1 and Scenario 2:
Scenario 1:
Direct materials and direct labor: Relevant (R)
Direct materials and direct labor costs are directly attributable to the production of widgets, including the special order of 4,000 widgets. These costs would increase with the additional production.
These costs should be considered when evaluating the profitability of accepting the special order.
Variable manufacturing overhead: Relevant (R)
Variable manufacturing overhead costs are directly related to the level of production. Since the special order would increase the production of widgets, these costs would also increase.
These costs should be considered when evaluating the profitability of accepting the special order.
Rent on equipment only used for the widgets: Not Relevant (NR)
The rent on equipment used exclusively for widgets remains the same regardless of the level of production or the special order. It does not change with the decision to accept the special order.
This cost is not relevant to the decision of accepting the special order.
Allocated share of depreciation on factory: Not Relevant (NR)
The allocated share of depreciation on the factory is a fixed cost that does not change with the level of production or the special order. It remains the same regardless of the decision to accept the special order.
This cost is not relevant to the decision of accepting the special order.
Annual salary of widget production manager: Not Relevant (NR)
The annual salary of the widget production manager is a fixed cost that does not change with the level of production or the special order. It remains the same regardless of the decision to accept the special order. Additionally, the manager's salary is not directly tied to the production of widgets but rather to their management.
This cost is not relevant to the decision of accepting the special order.
Variable selling costs (commissions): Not Relevant (NR)
Variable selling costs, such as commissions, are associated with the sale of widgets, not their production. The special order does not affect the selling costs.
This cost is not relevant to the decision of accepting the special order.
Allocated share of fixed selling costs: Not Relevant (NR)
The allocated share of fixed selling costs is a fixed cost that does not change with the level of production or the special order. It remains the same regardless of the decision to accept the special order.
This cost is not relevant to the decision of accepting the special order.
Scenario 2:
Direct materials and direct labor: Relevant (R)
Direct materials and direct labor costs are directly attributable to the production of widgets. If the decision is made to outsource the widget production, these costs would no longer be incurred by the company.
These costs should be considered when evaluating the cost savings associated with outsourcing the widget production.
Variable manufacturing overhead: Relevant (R)
Variable manufacturing overhead costs are directly related to the level of production. If the decision is made to outsource the widget production, these costs would no longer be incurred by the company.
These costs should be considered when evaluating the cost savings associated with outsourcing the widget production.
Rent on equipment only used for the widgets: Not Relevant (NR)
The rent on equipment used exclusively for widgets remains the same regardless of the decision to outsource the production. It does not change with the decision to outsource the widget production.
This cost is not relevant to the decision of outsourcing the widget production.
Allocated share of depreciation on factory: Not Relevant (NR)
The allocated share of depreciation on the factory is a fixed cost that does not change with the decision
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forte co., had 2,000 units of work in process on april 1 that were 60% complete. during april, 15,300 units were started and as of april 30, 6,800 units that were 30% complete remained in production. how many units were completed during april? multiple choice 10,500. 14,700. 15,300. 15,900. none of the answers is correct.
None of the answers is correct. The correct number of units completed during April cannot be determined from the given information.
To determine the number of units completed during April, we need to calculate the change in the number of units in progress from the beginning to the end of the month. However, the information provided only gives us the number of units started in April and the number of units remaining in production at the end of April. We know that 2,000 units were in progress on April 1, and 6,800 units were 30% complete on April 30. However, without information about the completion level of the units started in April, we cannot accurately determine the number of units completed during April. Therefore, none of the given answer choices is correct, as the calculation requires additional information that is not provided.
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By adopting the twinning strategy and encouraging collaboration across units, ArcelorMittal was trying to become more of a ___________ organization. a) Hierarchical b) Decentralized c) Centralized
The b) Decentralized organizational structure, in which decision-making and power are divided among various levels and departments within the firm, as demonstrated by ArcelorMittal's adoption of the twinning strategy and encouragement of collaboration between units.
This is in contrast to a hierarchical organization, which has a clear chain of command and centralized decision-making, or a centralized organization, which has decision-making concentrated at the top levels of management.
An organization that distributes decision-making authority among several organisational levels or units is said to be decentralized. Decentralization's major characteristics include twinning strategy and fostering cooperation since they foster information exchange, teamwork, and improved decision-making by incorporating many units in the process.
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ABC Corp’s beta is 1.5, risk-free rate is 4%, and the market
return is 10%. If the risk-free rate increases to 5%, what will be
the required return of ABC?
When the risk-free rate increases from 4% to 5%, the required return of ABC Corp decreases from 13% to 12.5%.
To determine the required return of ABC Corp, we can use the Capital Asset Pricing Model (CAPM). The CAPM formula is as follows:
Required Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given the information provided, initially, the risk-free rate is 4%, the market return is 10%, and the beta of ABC Corp is 1.5. Using these values, we can calculate the required return as follows:
Required Return = 4% + 1.5 * (10% - 4%)
= 4% + 1.5 * 6%
= 4% + 9%
= 13%
Therefore, the required return of ABC Corp is initially 13%.
Now, let's calculate the required return when the risk-free rate increases to 5%. We will use the same formula:
Required Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Using the new risk-free rate of 5% and the same values for the beta and market return, we can calculate the required return as follows:
Required Return = 5% + 1.5 * (10% - 5%)
= 5% + 1.5 * 5%
= 5% + 7.5%
= 12.5%
Therefore, when the risk-free rate increases to 5%, the required return of ABC Corp decreases to 12.5%.
This implies that as the risk-free rate increases, the required return of an investment also decreases.
This is because the risk-free rate represents the return on an investment with no risk, and as it increases, investors may require lower returns from risky investments to compensate for the additional risk they are taking.
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true or false? implemented controls should be evaluated regularly to determine whether they still provide the expected protection.
This is a true statement. Implemented controls, whether they are physical, administrative, or technical, should be evaluated regularly to ensure that they are still effective in providing the expected protection against identified risks.
This evaluation may include regular testing, monitoring, and auditing of the controls to identify any potential weaknesses or gaps in the control framework. Any identified weaknesses or gaps should be addressed promptly to ensure that the control framework remains effective and relevant. Additionally, as threats and risks evolve over time, controls may need to be updated or modified to reflect these changes and remain effective. Therefore, ongoing evaluation of implemented controls is critical to maintaining an effective control framework that mitigates risks and protects organizational assets.
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do you prefer to work at a job you hate and get paid a lot of money or at a job that's fun and doesn't pay well? in asl
One would prefer to work at a job that's fun and doesn't pay well. While money is important, I believe that being happy and enjoying what you do is equally important.
Happiness and job satisfaction are factors that can greatly impact your overall well-being. However, this is just my personal preference and others may feel differently based on their own priorities and circumstances. The decision ultimately depends on an individual's priorities and values. Some may prioritize financial stability and the benefits that come with a high salary, even if it means sacrificing enjoyment in their work.
Others may prioritize job satisfaction and fulfillment, valuing a positive work environment and personal happiness over monetary compensation. Each person's choice is subjective and influenced by their unique circumstances and aspirations. It is important to strike a balance that aligns with one's personal values, taking into consideration both financial stability and personal happiness in the decision-making process.
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a verbal reasonable accommodation starts the reasonable accommodation process. T/F
It is true that verbal request for a reasonable accommodation can initiate the reasonable accommodation process.
However, it is important to follow up with a written request and documentation of the need for the accommodation. The interactive process between the employee and employer should also take place to determine the appropriate accommodation and any potential alternatives. It is the responsibility of the employer to engage in good faith in the interactive process and provide reasonable accommodations, unless doing so would cause undue hardship on the employer. It is also important to note that employees with disabilities have the right to request reasonable accommodations at any time during their employment, not just during the hiring process.
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The statement is True. A verbal reasonable accommodation request starts the reasonable accommodation process.
What does this mean?This means that an individual can make a request for accommodation by speaking with their employer or supervisor. Once the request is made, the employer must engage in an interactive process with the individual to determine what accommodations may be necessary to allow the individual to perform the essential functions of their job.
This process may involve gathering medical documentation or discussing potential accommodations with the individual.
It is important for employers to take requests for reasonable accommodations seriously and to provide accommodations that are effective and appropriate for the individual's needs.
Hence, its true.
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treasury stock is stock that has been authorized, issued, and is outstanding. group of answer choices true false
Treasury stock is not considered to be "outstanding" because it is no longer in the hands of shareholders, but rather held by the issuing company itself.
the statement "treasury stock is stock that has been authorized, issued, and is outstanding" is false.
treasury stock refers to the shares of a company's own stock that it has repurchased from the shareholders and is held by the company itself. these repurchased shares are not considered to be outstanding because they are no longer held by the public or available for trading. instead, they are held by the company as an asset on its balance sheet.
when a company repurchase its own shares, it reduces the number of outstanding shares in the market. treasury stock can be held by the company for various reasons, such as for future reissuance, employee stock programs, or to increase the company's earnings per share.
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consider the market for gasoline. because there are very few good substitutes for gasoline, the demand for gasoline is probably inelastic. i. if the price of gasoline rises by 10%, by what percentage is the quantity demanded likely to fall?
If the demand for gasoline is inelastic, the quantity demanded is likely to fall by a smaller percentage than the price increase.
When the demand for a good is inelastic, it means that the quantity demanded is not very responsive to changes in price. In this case, if the price of gasoline rises by 10%, the quantity demanded is expected to fall by a smaller percentage.
For example, if the price of gasoline increases by 10% and the quantity demanded only decreases by 2%, it indicates an inelastic demand. In this scenario, the percentage decrease in quantity demanded (2%) is less than the percentage increase in price (10%).
The inelastic demand for gasoline can be attributed to the limited availability of substitutes. Since there are few viable alternatives to gasoline for most consumers, they may continue to purchase gasoline even if the price increases, albeit in slightly lower quantities.
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Alice has a deep concern for the welfare of her subordinates and she promotes interactive discussions with them. Alice can be described as a manager who scores high on:
A) initiating structure.
B) autocratic leadership.
C) consideration.
D) managerial control.
E) discipline.
Alice can be described as a manager who scores high on (C) consideration.
Consideration is a leadership style that focuses on the welfare and well-being of subordinates, promoting open communication and fostering positive relationships. In this case, Alice's deep concern for her subordinates' welfare and her promotion of interactive discussions demonstrate her emphasis on consideration in her management approach. This style contrasts with other options like initiating structure (A), autocratic leadership (B), managerial control (D), and discipline (E), which focus more on task-oriented behaviors, strict control, or maintaining order.
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capacity is constrained when exceeds and the flow rate is equal to .
Capacity is constrained when demand exceeds supply, and the flow rate is equal to the capacity of the system.
When demand exceeds supply, it means that there is more demand for a product or service than the available quantity or capacity to fulfill that demand. constraint can occur in various contexts, such as MANUFACTURING, transportation, or service industries.
The flow rate refers to the rate at which goods, services, or information can move through a system. It represents the maximum rate at which the system can operate effectively. If the flow rate matches the capacity of the system, it implies that the system is operating at its full capacity, and any additional demand cannot be met due to the constraint.
For example, if a manufacturing facility has a production capacity of 1,000 units per day, and the demand for the product is 1,200 units per day, the capacity is constrained because the demand exceeds the supply. In this case, the flow rate, which is the production rate, is equal to the capacity of 1,000 units per day. The system is operating at its maximum capacity, and the excess demand of 200 units cannot be fulfilled unless additional capacity is added.
In summary, capacity is constrained when demand exceeds supply, and the flow rate is equal to the capacity of the system.
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which of the following statements about investment decision models is true? the discounted payback rate takes into account cash flows for all periods. the payback rule ignores all cash flows after the end of the payback period. the net present value model says to accept investment opportunities when their rates of return exceed the company's incremental borrowing rate. the internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return.
When making investment decisions, companies have several decision models to choose from.
The discounted payback rate model takes into account cash flows for all periods, ensuring that the investment is profitable in the long run. On the other hand, the payback rule ignores all cash flows after the end of the payback period, which may not be the best option for long-term investments.
The net present value model advises companies to accept investment opportunities when their rates of return exceed the company's incremental borrowing rate. This model takes into account the time value of money and the risk associated with the investment. Therefore, it is a more comprehensive model for making investment decisions.
The internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return. This model calculates the rate at which the investment generates cash flows equal to the cost of the investment, making it a valuable tool for decision-making.
In conclusion, the net present value model is the most recommended investment decision model because it takes into account the time value of money and the risk associated with the investment. The internal rate of return model is also a useful tool to determine the potential profitability of an investment. It is essential for companies to choose the right investment decision model to make informed and profitable investment decisions.
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Show in tabular form the depreciation schedule of the computation for the annual depreciation expenses for a machine worth $1,000,000 with a salvage salue of 10% the orginal cost and a depreciable life of 5 years, using:
(show BV, dn and Dn)
a. straight line method
b. sum of year's digit
c. declining balance
d. double declining balance
a. Straight Line Method:
In the straight-line method, the annual depreciation expense is the same throughout the depreciable life.
b. Sum of Years' Digits Method:
In the sum of years' digits method, the annual depreciation expense is calculated based on a fraction of the depreciable cost, where the numerator is the remaining years of useful life and the denominator is the sum of the digits of the useful life.
c. Declining Balance Method:
In the declining balance method, a fixed percentage is applied to the book value to calculate the depreciation expense.
d. Double Declining Balance Method:
In the double declining balance method, a fixed percentage (twice the straight-line rate) is applied to the book value to calculate the depreciation expense.
Here is the depreciation schedule for the computation of annual depreciation expenses for a machine worth $1,000,000 with a salvage value of 10% of the original cost and a depreciable life of 5 years using different depreciation methods:
a. Straight Line Method:
In the straight-line method, the annual depreciation expense is the same throughout the depreciable life.
| Year | BV (Beginning Value) | Depreciation (dn) | Depreciation Expense (Dn) |
|------|---------------------|------------------|--------------------------|
| 1 | $1,000,000 | $200,000 | $200,000 |
| 2 | $800,000 | $200,000 | $200,000 |
| 3 | $600,000 | $200,000 | $200,000 |
| 4 | $400,000 | $200,000 | $200,000 |
| 5 | $200,000 | $200,000 | $200,000 |
b. Sum of Years' Digits Method:
In the sum of years' digits method, the annual depreciation expense is calculated based on a fraction of the depreciable cost, where the numerator is the remaining years of useful life and the denominator is the sum of the digits of the useful life.
| Year | BV (Beginning Value) | Depreciation (dn) | Depreciation Expense (Dn) |
|------|---------------------|------------------|--------------------------|
| 1 | $1,000,000 | $250,000 | $250,000 |
| 2 | $750,000 | $200,000 | $200,000 |
| 3 | $550,000 | $150,000 | $150,000 |
| 4 | $400,000 | $100,000 | $100,000 |
| 5 | $300,000 | $50,000 | $50,000 |
c. Declining Balance Method:
In the declining balance method, a fixed percentage is applied to the book value to calculate the depreciation expense.
Assuming a depreciation rate of 40%:
| Year | BV (Beginning Value) | Depreciation (dn) | Depreciation Expense (Dn) |
|------|---------------------|------------------|--------------------------|
| 1 | $1,000,000 | $400,000 | $400,000 |
| 2 | $600,000 | $240,000 | $240,000 |
| 3 | $360,000 | $144,000 | $144,000 |
| 4 | $216,000 | $86,400 | $86,400 |
| 5 | $129,600 | $51,840 | $51,840 |
d. Double Declining Balance Method:
In the double declining balance method, a fixed percentage (twice the straight-line rate) is applied to the book value to calculate the depreciation expense.
Assuming a depreciation rate of 40% (twice the straight-line rate):
| Year | BV (Beginning Value) | Depreciation (dn) | Depreciation Expense (Dn) |
|------|---------------------|------------------|--------------------------|
| 1 | $1,000,000 | $400,000 | $400,000 |
| 2 | $600,000 | $
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A perfectly competitive industry is in equilibrium with price P0 and quantity Q0. Then the government imposes a price ceiling of Pmax. Use the diagram to the right to answer the following questions.
The change in consumer surplus due to the price ceiling is represented by area
A.
D + E + F + G.
B.
A + B + C.
C.
D−C.
D.
D + E + H
E.
D + E.
F.
A + B + D.
The change in consumer surplus due to the price ceiling is represented by area D + E + F + G.
The diagram represents a perfectly competitive industry in equilibrium, where the original price is P₀ and the original quantity is Q₀. When the government imposes a price ceiling of [tex]$P_{\text{max}}$[/tex], it restricts the price from exceeding that level.
The change in consumer surplus is represented by the difference between the original consumer surplus and the consumer surplus under the price ceiling. In the given diagram, area D represents the reduction in consumer surplus due to the decrease in quantity from Q₀ to Q₁.
Area E represents the additional consumer surplus gained from paying a lower price [tex]($P_{\text{max}}$)[/tex] for the quantity Q1. Area F represents the loss in consumer surplus due to the unmet demand resulting from the price ceiling. Lastly, area G represents the loss in consumer surplus due to the reduction in producer surplus caused by the decrease in price.
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On august 1, year 1, jackson company issued a one-year $70,000 face value interest-bearing note with a stated interest rate of 9.00% to galaxy bank. jackson accrues interest expense on december 31, year 1, its calendar year-end. What is the amount of interest expense and the cash outflow for interest during the year ending december 31, year 1? (do not round your intermediate calculations.) option interest expense cash outflow a. $6,300 $6,300 b. $6,300 $0 c. $2,625 $0 d. $2,625 $2,625
To calculate the interest expense and cash outflow for interest during the year ending December 31, Year 1, The final answer is correct answer is: Option: c. $2,625 (Interest Expense) $0 (Cash Outflow).
We need to determine the interest amount and the payment made.
The interest amount can be calculated using the formula: Interest Expense = Face Value * Interest Rate
Interest Expense = [tex]$70,000 * 9.00[/tex]% =[tex]$6,300[/tex].
Since Jackson accrues interest expense, the interest expense of $[tex]6,300[/tex] would be recorded.
However, since the note has not matured yet, there would be no cash outflow for interest expense during the year ending December 31, Year 1. The payment of the interest would occur at the maturity of the note.
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what does the bowed outward shape of the production possibilities curve indicate? b) which point(s) on the graph is (are) efficient production possibilities
The bowed outward shape of the production possibilities curve indicates increasing opportunity costs. Efficient production possibilities are represented by points on the curve.
The bowed outward shape of the production possibilities curve indicates that resources are not equally efficient in producing different goods or services. It implies that as an economy moves from producing more of one good to producing more of another good, the opportunity cost increases. This means that to produce more of a particular good, the economy must give up increasing amounts of the other good.
The reason for the bowed outward shape is the concept of diminishing returns. In the early stages of production, reallocating resources from one good to another may result in relatively small opportunity costs. However, as the economy continues to specialize and produce more of a particular good, the opportunity costs increase because the resources that are best suited for that good are being diverted from other goods where they are less productive.
Efficient production possibilities are represented by points on the production possibilities curve itself. These points indicate the maximum combination of goods that can be produced with the given resources and technology, without wasting any resources. Any point inside the curve represents an inefficient allocation of resources, while any point outside the curve is unattainable with the current resources and technology.
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(True / False) benchmarking processes is less common than benchmarking performance metrics
False. Benchmarking processes is very common than benchmarking performance metrics.
Benchmarking processes is a common practice in organizations to compare and improve their processes, while benchmarking performance metrics is a subset of benchmarking processes, focusing specifically on comparing and improving performance metrics. Both practices are widely used in business and organizational settings.
Benchmarking processes involves studying and analyzing the steps, procedures, workflows, and best practices employed by top-performing organizations in a particular field. By understanding how other successful entities approach their processes, organizations can identify gaps, inefficiencies, and opportunities for optimization within their own operations.
Process benchmarking can involve comparing factors such as cycle times, error rates, resource utilization, cost structures, and overall process effectiveness. It aims to uncover insights and strategies that can be adopted and adapted to improve organizational processes and achieve better outcomes
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1. Suppose that the treasurer of IBM has an extra cash reserve of $100,000,000 to invest for six months. The six-month interest rate is 8 percent per annum in the United States and 7 percent per annum in Germany. Currently, the spot exchange rate is €1.01 per dollar and the six-month forward exchange rate is €0.99 per dollar. The treasurer of IBM does not wish to bear any exchange risk. Where should he/she invest to maximize the return?
2. Currently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The three-month interest rate is 8.0% per annum in the U.S. and 5.8% per annum in the U.K. Assume that you can borrow as much as $1,500,000 or £1,000,000.
a. Determine whether the interest rate parity is currently holding.
b. If the IRP is not holding, how would you carry out covered interest arbitrage? Show all the steps and determine the arbitrage profit.
c. Explain how the IRP will be restored as a result of covered arbitrage activities.
3. Suppose that the current spot exchange rate is €0.80/$ and the three-month forward exchange rate is €0.7813/$. The three-month interest rate is 5.60 percent per annum in the United States and 5.40 percent per annum in France. Assume that you can borrow up to $1,000,000 or €800,000.
a. Show how to realize a certain profit via covered interest arbitrage, assuming that you want to realize profit in terms of U.S. dollars. Also determine the size of your arbitrage profit.
b. Assume that you want to realize profit in terms of euros. Show the covered arbitrage process and determine the arbitrage profit in euros.
1. To determine where the treasurer of IBM should invest to maximize the return, we need to compare the returns from investing in the United States and Germany.
Option 1: Investing in the United States
Six-month interest rate in the United States = 8% per annum
The treasurer has $100,000,000 to invest for six months, so the interest earned in the United States can be calculated as:
Interest earned in the United States = $100,000,000 * (8% / 2)
= $4,000,000
Option 2: Investing in Germany
Six-month interest rate in Germany = 7% per annum
The spot exchange rate is €1.01 per dollar, and the six-month forward exchange rate is €0.99 per dollar.
To eliminate exchange risk, the treasurer can convert the dollars to euros at the spot rate and invest in Germany. After six months, the euros can be converted back to dollars at the forward rate.
Amount of euros received at the spot rate:
€1.01 * $100,000,000 = €101,000,000
Amount of dollars received after converting euros at the forward rate:
€101,000,000 / €0.99 = $102,020,202.02
The interest earned in Germany can be calculated as:
Interest earned in Germany = $102,020,202.02 * (7% / 2)
= $3,571,414.15
Comparing the returns:
Investing in the United States: $4,000,000
Investing in Germany: $3,571,414.15
Therefore, investing in the United States would provide a higher return of $4,000,000 compared to $3,571,414.15 from investing in Germany. Thus, the treasurer of IBM should invest the extra cash reserve in the United States to maximize the return.
2. a. To determine whether interest rate parity (IRP) is currently holding, we need to compare the implied forward exchange rate calculated using the spot exchange rate and interest rates with the actual forward exchange rate.
Spot exchange rate: $1.50/£
Three-month forward exchange rate: $1.52/£
Three-month interest rate in the U.S.: 8.0%
Three-month interest rate in the U.K.: 5.8%
Implied forward exchange rate = Spot exchange rate * (1 + U.S. interest rate) / (1 + U.K. interest rate)
Implied forward exchange rate = $1.50 * (1 + 8.0% / 4) / (1 + 5.8% / 4)
Implied forward exchange rate ≈ $1.5205/£
Since the actual forward exchange rate ($1.52/£) is equal to the implied forward exchange rate ($1.5205/£), we can conclude that interest rate parity is currently holding.
b. Since the interest rate parity is holding, there is no opportunity for covered interest arbitrage.
c. As the interest rate parity is already holding, there is no need for covered arbitrage activities to restore it.
3. a. To realize a certain profit via covered interest arbitrage, assuming the goal is to realize profit in terms of U.S. dollars:
Spot exchange rate: €0.80/$
Three-month forward exchange rate: €0.7813/$
Three-month interest rate in the U.S.: 5.60%
Three-month interest rate in France: 5.40%
Borrow $1,000,000 and convert it to euros at the spot rate:
€0.80 * $1,000,000 = €800,000
Invest €800,000 in France for three months. At the end of the three months, the investment will grow with the interest rate.
Interest earned in France = €800,000 * (5.40% / 4) = €10,800
At the end of three months, convert the euros back to dollars at the forward rate:
€800,000 / €0.7813 = $1,025,467.55
Profit from covered interest arbitrage:
Profit = Final amount in dollars - Initial borrowed amount
Profit = $1,025,467.55 - $1,000,000 = $25,467.55
Therefore, by engaging in covered interest arbitrage, you can realize a certain profit of $25,467.55 in terms of U.S. dollars.
b. If the goal is to realize profit in terms of euros:
Borrow €800,000 and convert it to dollars at the spot rate:
€800,000 / €0.80 = $1,000,000
Invest $1,000,000 in the U.S. for three months. At the end of the three months, the investment will grow with the interest rate.
Interest earned in the U.S. = $1,000,000 * (5.60% / 4) = $14,000
At the end of three months, convert the dollars back to euros at the forward rate:
$1,000,000 * €0.7813 = €781,300
Profit from covered interest arbitrage:
Profit = Final amount in euros - Initial borrowed amount
Profit = €781,300 - €800,000 = -€18,700
Therefore, by engaging in covered interest arbitrage, you would incur a loss of -€18,700 in terms of euros.
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question 2 as a project manager, you encounter a problem that you need to send to your stakeholders. you synthesize the information for the stakeholders. what should your synthesis be
As a project manager, when encountering a problem, it is crucial to synthesize the information before sending it to stakeholders. Your synthesis should concisely identify the issue, its impact on the project, potential solutions, and recommendations.
As a project manager, if you encounter a problem that needs to be communicated to your stakeholders, you must synthesize the information and explain it in a concise and understandable manner. Your synthesis should include a brief summary of the problem, its potential impact on the project, and possible solutions or mitigation strategies. The information should be presented clearly and objectively to avoid confusion or misunderstandings. In addition, it's essential to provide any necessary context to help stakeholders understand the problem fully. Overall, your synthesis should be around 80 words and should focus on providing a clear and concise summary of the issue at hand. Hence, communicate the problem's urgency, outline the proposed actions, and specify any support needed from stakeholders to resolve the issue. This clear and concise synthesis will enable stakeholders to understand the problem and make informed decisions to ensure the project's success.
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you are looking at an investment that will pay $1,200 in 5 years if you invest $1,000 today. what is the implied rate of interest?
The implied rate of interest is approximately 4.7128% for the investment that will pay $1,200 in 5 years when investing $1,000 today.
to calculate the implied rate of interest, we can use the formula for compound interest:
future value = present value * (1 + interest rate)^number of periods
in this case, the future value is $1,200, the present value is $1,000, and the number of periods is 5 years. we need to solve for the interest rate.
$1,200 = $1,000 * (1 + interest rate)⁵
dividing both sides by $1,000:
1.2 = (1 + interest rate)⁵
taking the fifth root of both sides:
(1 + interest rate) ≈ 1.047128
subtracting 1 from both sides:
interest rate ≈ 0.047128 or 4.7128%
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identify which principle applies to each scenario and place the appropriate terms in the corresponding spaces.
a. after spending hours researching his choices, mark decides on a laptop that will cost him $799. as he walks into his local retailer, a salesman presents him a laptop with marginally better features at the same price. however, mark would have to do further research to verify that the new alternative is in fact better. as a result, he decides that the laptop he previously decided on is good enough and buys it. Mark's decision is an example of__ a) bounded rationality. b) fairness. c) risk aversion
Mark's decision is an example of a) bounded rationality.
Bounded rationality refers to the idea that individuals make decisions based on limited information and cognitive abilities, rather than being fully rational and able to consider all possible alternatives. In this scenario, Mark has already spent a significant amount of time researching his choices and has made a decision based on the information he has gathered so far. When presented with a potentially better alternative, he is hesitant to change his decision without further research, as he is limited by his cognitive abilities to fully consider all possible alternatives.
Therefore, Mark's decision is an example of bounded rationality.
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You have to motivate the installation of an IPCC system at your mine that would last
for at least 10 years. Discuss the advantages, disadvantages and risks typically
inherent to an IPCC system
Installation of an IPCC system at your mine can help to reduce operational costs and increase efficiency.Supporting
An IPCC system is an in-pit crushing and conveying system that has a wide range of benefits. This system can help reduce the operational costs of a mine by eliminating the need for haul trucks and reducing fuel consumption. IPCC systems are also more efficient than traditional mining methods, as they can transport larger quantities of material in a shorter period of time.Another benefit of IPCC systems is that they are environmentally friendly. Since the IPCC system does not require the use of haul trucks, there is less air pollution and noise pollution. Additionally, the system is safer for workers, as it reduces the number of heavy vehicles on the mine site.Overall, the installation of an IPCC system can improve the productivity and profitability of a mine while also providing environmental benefits and improving worker safety.
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a company's product sells at $12.04 per unit and has a $5.06 per unit variable cost. the company's total fixed costs are $97,800. the break-even point in units is:
To calculate the break-even point in units, we need to determine the number of units that need to be sold in order to cover the total fixed costs.
The break-even point is the point at which total revenue equals total costs, resulting in zero profit or loss.
Let's calculate the break-even point:
Break-even point (in units) = Total fixed costs / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
Selling price per unit = $12.04
Variable cost per unit = $5.06
Contribution margin per unit = $12.04 - $5.06 = $6.98
Break-even point (in units) = $97,800 / $6.98 ≈ 14,006.01
Rounding to the nearest whole number, the break-even point in units is 14,006 units.
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the new deal set up a federal agency to produce electricity in the 1929 collapse of the stock market occurred on what has been called:
During the Great Depression, the stock market crash of 1929 left the country in a state of economic turmoil. To address this issue, President Franklin D. Roosevelt implemented the New Deal.
The New Deal established the Tennessee Valley Authority (TVA) in 1933 as a federal agency to produce electricity and support economic development after the 1929 stock market collapse, known as the Great Depression. The stock market crash occurred on a day referred to as "Black Tuesday," October 29, 1929. The TVA aimed to improve the living conditions in the Tennessee Valley region through electricity generation, flood control, and promoting sustainable agriculture. It established the Federal Emergency Relief Administration (FERA) to help the American people. In addition, the New Deal also created the Tennessee Valley Authority (TVA), a federal agency tasked with producing electricity in the Tennessee Valley region. The TVA played a critical role in bringing electricity to rural areas and providing jobs to those affected by the economic crisis. The stock market crash occurred on what has been called "Black Tuesday," October 29, 1929.
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View Policies Current Attempt in Progress Sandhill Inc. is considering Plan 1 that is estimated to have sales of $39,200 and costs of $15,190. The company currently has sales of $36,260 and costs of $13,720. Compare plans using incremental analysis. If Plan 1 is selected, there would be incremental in?
If Plan 1 is selected, there would be incremental income of $2,290.
To compare the two plans using incremental analysis, we need to calculate the difference in income between the two plans. Incremental income represents the change in income that would result from selecting Plan 1 over the current plan.
Sales for Plan 1: $39,200
Costs for Plan 1: $15,190
Sales for the current plan: $36,260
Costs for the current plan: $13,720
Incremental income = (Sales for Plan 1 - Costs for Plan 1) - (Sales for the current plan - Costs for the current plan)
= ($39,200 - $15,190) - ($36,260 - $13,720)
= $24,010 - $22,540
= $2,290
Therefore, if Plan 1 is selected, there would be incremental income of $2,290
Based on incremental analysis, selecting Plan 1 would result in an incremental income of $2,290 compared to the current plan. This indicates that Plan 1 is expected to generate additional income for Sandhill Inc.
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Calculate the shareholders' equity of Sophie's Sofas Inc. The data about the firm's assets and liabilities are as follows: Cash EUR 20,000 Store and property = EUR 200 000 Accounts payable = EUR 34,000 Inventory of sofas = EUR 240 000 Accounts receivable = EUR 26,000 Long-term debt = EUR 180,000
The shareholders' equity of Sophie's Sofas Inc. with total assets of EUR 486,000 and total liabilities of EUR 214,000 will be EUR 272,000.
To calculate the shareholders' equity of Sophie's Sofas Inc., we need to first calculate the total assets and liabilities of the firm.
Total Assets = Cash + Store and Property + Inventory of Sofas + Accounts Receivable
= EUR 20,000 + EUR 200,000 + EUR 240,000 + EUR 26,000
= EUR 486,000
Total Liabilities = Accounts Payable + Long-term Debt
= EUR 34,000 + EUR 180,000
= EUR 214,000
Now, we can calculate the shareholders' equity by subtracting the total liabilities from the total assets.
Shareholders' Equity = Total Assets - Total Liabilities
= EUR 486,000 - EUR 214,000
= EUR 272,000
Therefore, the shareholders' equity of Sophie's Sofas Inc. is EUR 272,000. This represents the amount of assets that are owned by the shareholders of the company after all of the liabilities have been paid off. Shareholders' equity is an important measure of a company's financial health and is often used by investors to determine the value of their investment in the company.
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Gaston owns equipment that cost $28,500 with accumulated depreciation of $5,700. Gaston sells the equipment for $20,500. Which of the following would not be part of the journal entry to record the disposal of the equipment?
a. Credit Equipment $28,500.
b. Debit Cash $20,500.
c. Debit Loss on Disposal of Equipment $2,300.
d. Credit Gain on Disposal of Equipment $2,300.
e. Debit Accumulated Depreciation $5,700.
"Credit Gain on Disposal of Equipment $2,300," would not be part of the journal entry to record the disposal of the equipment. The correct option is d.
When Gaston sells the equipment, the first step is to remove the asset's cost and accumulated depreciation from the books. This involves crediting Equipment for $28,500 (option a) and debiting Accumulated Depreciation for $5,700 (option e).
Next, Gaston receives cash for the sale, so a debit to Cash for $20,500 (option b) is recorded.
To determine if there's a gain or loss on the disposal, we need to compare the net book value of the equipment (cost minus accumulated depreciation) to the cash received. In this case, the net book value is $28,500 - $5,700 = $22,800. Since Gaston sells the equipment for $20,500, which is less than its net book value, there's a loss on disposal.
The loss on disposal is calculated as the net book value minus the cash received: $22,800 - $20,500 = $2,300. To record this loss, a debit to Loss on Disposal of Equipment for $2,300 (option c) is necessary.
Since there's a loss on disposal, a credit to Gain on Disposal of Equipment (option d) would not be appropriate in this journal entry.
Therefore, The correct option is d. Credit Gain on Disposal of Equipment $2,300.
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1A To analyze the sources of specific risk, IBM uses sensitivity analysis to determine the impact of different market risk exposures on the fair value of the company's assets. What kind of financial instruments are included in this sensitivity analysis?
The financial instruments included in IBM's sensitivity analysis are market risk exposures, which help to determine the impact of specific risks on the fair value of the company's assets.
In order to perform sensitivity analysis, IBM must first identify the specific risks that could affect the value of its assets. These risks can include changes in interest rates, exchange rates, commodity prices, and other market variables. Once these risks are identified, IBM can use financial models to simulate different scenarios and determine the potential impact on the value of its assets.
The financial instruments used in this analysis can include options, futures, and other derivatives that are sensitive to changes in market variables. By understanding the sources of specific risk, IBM can better manage its overall risk profile and make more informed decisions about its investments and operations.
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The A-B-C department of a large company makes three products (A, B and C). To determine the best production schedule, the manager has formulated the following linear programming model: Decision variables: A - quantity of product A B - quantity of product B C - quantity of product C Objective function: Maximize 12 A+ 15 B + 16 C (total profit: coefficients are net profit per unit in dollars) Constraints: Material 1 3 A+ ** B + 8 C<= 720 pounds Material 2 +3C <600 pounds Material 3 4 A+6 B+ 4 C<= 640 pounds Non-negativity A, B, C >=0 The manager has solved this problem using Excel Solver and the sensitivity report is given below: 2A Variable Cells Name Cell $B$2 A $C$2 B $D$2 C Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 16 12 4 0.5 0 - 1 15 1 1E+30 84 0 16 2 Constraints Cell Name $E$6 Material 1 $E$7 Material 2 $E$8 Material 3 Final Shadow Constraint Allowable Allowable Value Price R.H. Side Increase Decrease 720 0.8 720 80 420 284 0 600 1E+30 316 400 2.4 400 40 560 Based on the information given (No need to implement this problem into solver), what is the most the company willing to pay to purchase one additional pound of Material 12 Can't be computed with the given information
Based on the given information, it is not possible to determine the most the company is willing to pay to purchase one additional pound of Material 1 (not Material 12 as stated).
The sensitivity report provides information on the allowable increase and decrease in the objective function coefficients and the constraints' right-hand side values. However, it does not directly provide the information needed to calculate the maximum amount the company is willing to pay for an additional pound of Material 1.
To determine the most the company is willing to pay for an additional pound of Material 1, you would need the shadow price associated with Material 1 constraint.
The shadow price indicates the rate of change in the objective function value per unit increase in the right-hand side value of the constraint while keeping all other variables and constraints constant.
Unfortunately, the shadow price for Material 1 constraint is not provided in the sensitivity report. Therefore, without that information, it is not possible to compute the maximum amount the company is willing to pay for an additional pound of Material 1.
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