a. In relation to maintenance cost, questions that should be answer include cost of product maintenance, repairing, and replacement parts.
b. Capital cost refers to cost incurred for procuring a fixed asset while operational cost refers to cost incurred for the day-to-day running.
c. List of the significant general ledger line items for an operating budget are sales or revenues, cost of goods sold, gross margin, operating expenses, depreciation and amortization, interest expense, and taxes.
a. In relation to maintenance cost, the following questions need to be answered:
What is the cost of maintaining the product?What is the cost of repairing the product?What is the cost of replacing parts of the product?What is the cost of labor involved in maintaining the product?What is the cost of purchasing the tools and equipment required for maintaining the product?What is the cost of training the personnel required for maintaining the product?b. Capital cost is the cost incurred for procuring a fixed asset or a capital asset which is used for generating revenue for the business for a long period of time.
Examples of Capital Cost: Cost of purchasing machinery, furniture and fixtures, patents and trademarks, land and buildings etc.
Operational cost is the cost incurred for the day-to-day running of the business which includes the cost incurred for raw materials, wages and salaries, utilities, rent, etc.
Examples of Operational Cost: Cost of electricity, rent, stationery, wages and salaries, legal and professional fees, etc.
c. Significant General Ledger Line Items for an Operating Budget
1. Sales or Revenues: This is the amount of money received for selling products or services.
2. Cost of Goods Sold: This is the cost of the products or services that were sold.
3. Gross Margin: This is the difference between sales and the cost of goods sold.
4. Operating Expenses: These are the expenses incurred in the day-to-day running of the business, such as rent, salaries, and utilities.
5. Depreciation and Amortization: This is the amount that is deducted from the cost of a fixed asset over time.
6. Interest Expense: This is the cost of borrowing money.
7. Taxes: This is the amount of money paid to the government.
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Section B: Scenario Based Question Use the IRAC method to answer the following legal problem. 1. Vin wants to sell his house which is situated in a high-demand area for RM 1.8 million. In February 2022 he made the offer to several people stating that the offer will remain open until 31st March 2022. An interested buyer must sign an acceptance letter and pay a deposit of RM200.000 at the same time to show his/ her serious intention. Both the acceptance letter and the deposit money must be handed to Vin's lawyer on or before 31st March. Diesel wishes to buy the house. On March 2nd, he went to the lawyer's office, signed the letter, and told them that he will bank the money in three days' time. On March 3rd, Vin's lawyer contacted Diesel telling him that vin has decided to revoke the offer. Diesel who is really looking forward to owning the house wishes to sue Vin for breach of contract. Discuss whether a valid contract has been formed between Vin and Diesel. (7 Marks) • Issue Rules . Application conclusion Y 5 G B H N U M K O V L Alt Gr foru P V .. P Sym -- 14 Te Lah Break 2
Issue: Whether a valid contract has been formed between Vin and Diesel. Rules:An agreement arises when the offer is accepted by the offeree. The offeror is entitled to withdraw the offer at any time before it is accepted, and revocation of an offer may be communicated directly or indirectly.
Application: Vin is interested in selling his house situated in an area with high demand for RM 1.8 million. In February 2022, he made an offer to many people, stating that the offer will remain open until March 31, 2022. An interested buyer must sign an acceptance letter and pay a deposit of RM200,000 to Vin's lawyer on or before March 31. Diesel wants to purchase the house. He went to the lawyer's office on March 2nd and signed the letter, informing them that he would deposit the money in three days.
On March 3rd, Vin's lawyer informed Diesel that Vin has decided to revoke the offer. Diesel, who is looking forward to owning the house, wishes to sue Vin for breach of contract. Diesel can sue Vin for breach of contract because a valid contract was created between them.The essential elements of a contract are agreement, consideration, intention to create legal relations, capacity, and legality. Vin, as the offeror, made a valid offer by stating that it would remain open until March 31st. The offer was accepted by Diesel, the offeree, by signing the acceptance letter and paying the deposit fee. Both parties were therefore bound by the contract's terms and conditions until March 31st when the offer was supposed to be withdrawn.
Even if Diesel had not paid the deposit, the acceptance of the offer by Diesel was adequate to create a binding agreement. Vin's lawyer, on the other hand, communicated the revocation of the offer to Diesel on March 3rd. However, this was too late since the acceptance of the offer had already been completed by Diesel on March 2nd. Vin had no right to revoke the offer after it had been accepted by Diesel. Vin's revocation of the offer was therefore ineffective, and he breached the contract's terms and conditions.Conclusion:Therefore, Diesel can sue Vin for breach of contract.
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CASE STUDY PEFORMING ROR ANALYSIS FOR 3D PRINTER AND IIOT TECHNOLOGY Background Software used in 3D printer systems manufactured by Spectrum LASER Corp. is currently able to automatically develop hollows, shells, and "tree supports" to save development time. Network printing for use on multiple machines and at different locations globally is available. New software, called JIT II, is being beta tested that will allow IIoT-type (Industrial Internet of Things) connections between machines at distant locations. When onboard monitoring sensors detect that a part is about to fail, or it is time to replace one of several high-profile parts, the JIT II software will automatically queue the part's manufacturing code onto a 3D printer that is detected to be locally idle or ready. The company believes it can design and produce the JIT II software, the 3D printers, and the accompanying computer equipment necessary to place this technology in a wide variety of harsh environments-chemically toxic to humans, in flight, underground in mines, on the ocean floor, in war-torn areas, etc. Information For this case, we will analyze the available computers that can provide the server function necessary to make this interlinking available and successful. The first cost and other parameter estimates, including expected contribution to annual net cash flow, are summarized below. Server 1 Server 2 First cost, $ 101,694 200,000 50,000 year 1, plus 5000 per year for years 2, 3, and 4 (gradient Net cash flow, $/ye 35,000 70,000 maximum for years 5 on, even if the server is replaced Life, years 3 or 4 5 Case Study Exercises Use spreadsheet analysis to determine the following: 1. If the MARR = 12%, which server should be selected? Use the PW or AW method to make the selection. For server 1 use 3 and 4 and for server 2 use 5 years. Note that you have to use LCM. 2. Use incremental ROR analysis to decide between the servers at MARR = 12%.
Hence, the results obtained through both the methods are contradictory. The difference is due to the difference in assumptions between the two methods. In the PW method, it is assumed that cash flows are reinvested at MARR, while in the ROR method, it is assumed that cash flows are reinvested at the internal rate of return (IRR) of the investment. So, the company needs to consider all factors and select a suitable server.
CASE STUDY PEFORMING ROR ANALYSIS FOR 3D PRINTER AND IIOT TECHNOLOGY
In the given case study, the company is considering the installation of JIT II software, the 3D printers, and the accompanying computer equipment necessary to place this technology in a wide variety of harsh environments.
For this case, we will analyze the available computers that can provide the server function necessary to make this interlinking available and successful.
The first cost and other parameter estimates, including expected contribution to annual net cash flow, are summarized below:
Server 1 Server 2First cost, $ 101,694 200,00050,000 year 1, plus 5000 per year for years 2, 3, and 4 (gradient)Net cash flow,
$/ye 35,000 70,000 maximum for years 5 on, even if the server is replaced
Life, years 3 or 4 5 The following analysis is done for MARR = 12%.1.
If the MARR = 12%, which server should be selected?
Use the PW or AW method to make the selection. For server 1 use 3 and 4 and for server 2 use 5 years.
Note that you have to use LCM.
The formula used for the calculation is:
PW = F / (1 + r) n
where,
F = Future worth value of the cash flow, which is the sum of the present worth of the net cash flow (NCF) for all years,
r = Rate of interest,
n = Number of years
For server 1, Present worth of Net cash flow (PWNCF) at the end of year 4, gradient for year 2, 3, and 4 = 35000
[(P/A, 12%, 3) + 0.23(P/G, 12%, 3)]
PWNCF at end of year 4 = 35000 [(P/A, 12%, 3) + 0.23(P/G, 12%, 3)]
= 35000 [(2.4018) + 0.23 (8.2069)]
= $132,321.86
Present worth of first cost (PWFC) of server 1 = $101,694.
Present worth of PWFC and PWNCF of server 1 (PW1) = $101,694 + $132,321.86
= $234,015.86.
For server 2, PWNCF for year 5 to infinity = 70000 / 0.12
= $583,333.33 (approx.)
PWFC of server 2 = $200,000.
PWNCF for year 1 to 4, gradient = 50,000 + 5000 (P/G, 12%, 5-4) + 5000 (P/G, 12%, 5-3) + 5000 (P/G, 12%, 5-2)
= 50,000 + 9,322.03 + 7,483.22 + 6,022.98
= $72,828.23
Present worth of PWFC and PWNCF of server 2 (PW2) = $200,000 + $72,828.23 + $583,333.33
= $856,161.56.
Since PW1 < PW2, Server 1 should be selected.2.
Use incremental ROR analysis to decide between the servers at MARR = 12%.
The formula for ROR is:
ROR = LWRR + (H – L) (IRRH – LWRR) / (IRRH – IRRL)
where, L = Lower investment amount,
H = Higher investment amount,
LWRR = Lower worth-rate-of-return,
IRRH = Internal rate of return of higher investment amount,
IRRL = Internal rate of return of lower investment amount,
ROR for incremental analysis = 12% + [($200,000 - $101,694) x (IRR2 - 12%) / (IRR2 - IRR1)]
ROR for incremental analysis = 12% + [($200,000 - $101,694) x (25.69% - 12%) / (25.69% - 16.11%)]
= 18.02%
Since ROR for incremental analysis > MARR, Server 2 should be selected.
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If there is a very strong correlation between two variables, then the coefficient of correlation must be _____.
a. much larger than 1, if the correlation is positive
b. much smaller than 1, if the correlation is negative
c. Both answers are correct
d. None of the above
If there is a very strong correlation between two variables, then the coefficient of correlation must be much larger than 1, if the correlation is positive and much smaller than 1, if the correlation is negative. Hence, the correct option is C.
The coefficient of correlation, often represented as "r," measures the strength and direction of the linear relationship between two variables. It ranges from -1 to +1, where -1 indicates a perfect negative correlation, +1 indicates a perfect positive correlation, and 0 indicates no correlation. When there is a very strong correlation, it means that the variables are highly related.
This can be either a strong positive correlation or a strong negative correlation. Therefore, the coefficient of correlation must be either much larger than 1 (if the correlation is positive) or much smaller than -1 (if the correlation is negative).
Hence, the correct option is C.
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Calculate the monthly payment for a $2,500 loan at 10% annual interest for two years.
Use the formula, M = Pm(1+m)^na/(1+m)^na-1
A.
$85.15
B.
$115.40
C.
$125.72
D.
$138.48
The correct answer is: B. $115.40
To calculate the monthly payment for a loan, we can use the formula:
M = P * [m * (1 + m)^(na)] / [(1 + m)^(na) - 1]
Where:
M = Monthly payment
P = Principal loan amount
m = Monthly interest rate (annual interest rate divided by 12)
n = Number of payments per year
a = Number of years
In this case:
P = $2,500
Annual interest rate = 10%
n = 12 (since we're calculating monthly payments)
a = 2 years
First, let's calculate the monthly interest rate (m):
m = 10% / 12 = 0.00833
Now, let's substitute the values into the formula and calculate the monthly payment (M):
M = 2500 * [0.00833 * (1 + 0.00833)^(122)] / [(1 + 0.00833)^(122) - 1]
After performing the calculation, the monthly payment (rounded to two decimal places) is approximately $115.40.
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Demand for Corn Flakes is: P22- Q. Supply of Kellogg's Corn Flakes is: P = 2 + Q. Now a generic company enters the market, selling generic Corn Flakes for $8. Assume consumers are indifferent between generic and Kellogg's Corn Flakes. How many boxes of Kellogg's (brand) Corn Flakes will sell? Enter as a value
The quantity of Kellogg's Corn Flakes that will sell has to be determined after the entry of the generic cornflakes company, given the demand and supply function of corn flakes.
Hence, in order to determine the equilibrium quantity of Kellogg's Corn Flakes sold after the entry of generic Corn Flakes, we can start by determining the quantity of generic Corn Flakes demanded and supplied, which is given below: Demand for generic Corn Flakes = Q; Supply of generic Corn Flakes = 8;
Since consumers are indifferent between generic and Kellogg's Corn Flakes, the total quantity of cornflakes demanded at equilibrium is Q + Q, which can be simplified to 2Q. This equilibrium quantity is equivalent to the quantity supplied in the market, hence we can equate the quantities demanded and supplied in order to obtain the equilibrium quantity.
2Q = 2 + Q, by substituting the values of demand and supply, we get: Q = 2Kellogg's Corn Flakes demand at equilibrium is given by Q = 22 - P. Substituting the value of Q, we get: P = 22 - 2 = 20.So, Kellogg's Corn Flakes are being sold for $20, the number of boxes that will sell at that price is given by: Q = 22 - P = 22 - 20 = 2.
So, 2 boxes of Kellogg's Corn Flakes will be sold at $20 after the entry of the generic Corn Flakes company.
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All else equal, which of the following would reduce the value of the multiplier for an economy? Select one: O An increase in the marginal propensity to import O b. An increase in the marginal propensi
The option that would reduce the value of the multiplier for an economy is an increase in the marginal propensity to import (option a).
In economics, the multiplier is a factor that quantifies the effect of an increase in the autonomous spending on total spending. It is calculated as the ratio of the change in the equilibrium level of national income to a change in autonomous expenditure.
An increase in the marginal propensity to import will reduce the value of the multiplier for an economy since it will increase the import of goods and services. This will, in turn, decrease the level of aggregate demand and the overall spending. Therefore, the multiplier will be reduced because an increase in the marginal propensity to import would reduce the amount of new spending that is injected into the economy. The correct option is an increase in the marginal propensity to import.
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HR can contribute to the organization by recruiting and retaining employees who can work efficiently and productively and where the reward systems are based more on quantity of output if the organization pursues a cost leadership strategy... True False Question 2 (5 points) Listen This is the reason an organization or business exists. Question 3 (5 points) Listen This strategy outlines how an organization will compete in each market where it conducts business. Z Question 4 (5 points) EListen The attributes or traits that distinguish one person from another (personality) and what causes people to behave in certain ways (motivation) are key factors that HR professionals must determine, verify, and relate to job performance. True False Question 5 (5 points) Listen This is an organization's statement of how it intends to fulfill its purpos A
Mission statement.
HR can contribute to the organization by recruiting and retaining employees who can work efficiently and productively and where the reward systems are based more on quantity of output if the organization pursues a cost leadership strategy. True.Question 2:This is the reason an organization or business exists. Answer: Purpose.Question 3:This strategy outlines how an organization will compete in each market where it conducts business. Answer: Competitive strategy.Question 4:The attributes or traits that distinguish one person from another (personality) and what causes people to behave in certain ways (motivation) are key factors that HR professionals must determine, verify, and relate to job performance. True.Question 5:This is an organization's statement of how it intends to fulfill its purpose.
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TRUE / FALSE. "asap
Question 2 [CLO-6] While Present Worth is a very popular metric in estimating a project's profitability, it can't be used alone in evaluation. O True O False"
The statement given "While Present Worth is a very popular metric in estimating a project's profitability, it can't be used alone in evaluation. " is false because present Worth can be used as a standalone metric in project profitability evaluation.
Present Worth is a commonly used metric in project profitability evaluation, and it can be used as a standalone measure. However, it is recommended to consider other metrics as well to obtain a comprehensive evaluation. By incorporating additional evaluation criteria such as internal rate of return, payback period, and net present value, a more informed decision can be made regarding the project's financial viability and profitability. Therefore, while Present Worth is valuable, it is not the only factor to consider in project evaluation.
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Your friend is looking to launch a new hotel chain, Roxy Inc., designed to serve the traveling needs of the budget-minded millennial traveler. To launch Roxy Inc., she is expected to invest $500 million this year (year=0). The hotel chain is expected to generate free cash flows of $27 million per year, starting in year 1. Thereafter, these free cash-flows are expected to grow at 3 percent per year in perpetuity. For simplicity, assume these cash-flows are received at the end of each year. Your friend knows you've been taking this class, so she asked you to assess the potential value of the new hotel chain. To help you, she gives you the following reports for a handful of publicly-traded firms, as well as the expected returns on the government bond (Treasury), and the risk premium on the value-weighted market portfolio: Market Market Value of Value of Equity Company Equity Debt Beta Dropbox 900 150 2 Ikea 1,000 100 2.3 Intercontinental Hotels Group 7,500 2,500 1.6 10-year Treasury rate Expected Market Risk Premium 2.0% 5.0% Assume throughout that the CAPM holds for all assets, and that the debt of Dropbox, Ikea, and Intercontinental Hotel Group is risk-free. None of these firms hold (excess) cash assets. (a) If Roxy Inc. were to be 100% equity financed, what would be a reasonable estimate of the expected return on Roxy's equity? What is Roxy's WACC? [10 marks] The expected return on equity is: Roxy's WACC is: [SHOW YOUR WORKING] (b) What is the value of Roxy Inc.? Is the project worth pursuing? [10 marks] The estimated value of Roxy Inc. is: The estimated gain to your friend from investing in Roxy's Inc. is: Is the investment worth pursuing (Yes/No). [SHOW YOUR WORKING] (c) Assume now that the new hotel chain is financed instead with a debt-to-value ratio of 25%, and that this leverage ratio is not expected to change over time. What is Roxy's WACC? What is its cost of equity? What is the value of Roxy? In this part, assume that the debt issued is risk-free and that there are no frictions in financial markets (no taxes, bankruptcy costs, etc). [10 marks] Roxy's WACC with leverage is: Roxy's return on equity: The value of Roxy Inc. is now: Is the investment worth pursuing (Yes/No). [SHOW YOUR WORKING] (d) After you complete your analysis in part (C), you learn that Roxy does actually pay a corporate tax of 35%. Describe the effect of corporate taxes on (i) Roxy's WACC and (ii) Roxy's expected value. [10 marks] Roxy's WACC is: Roxy's value is:
If Roxy Inc. were to be 100% equity financed, the reasonable estimate of the expected return on Roxy's equity will be calculated using CAPM.
Roxy Inc. has no debt. Therefore, the weight of equity is 100%.
Given that Roxy Inc.'s beta is not given, it will be calculated first using the levered beta formula, which is:
β = βU[1+(1-T)D/E]
Given the information that Dropbox, Ikea, and Intercontinental Hotel Group have no cash, their debt is risk-free. Therefore, their levered betas are equal to their unlevered betas.
The average unlevered beta of these companies is calculated as:
βU = (2 + 2.3 + 1.6)/3 = 1.9667
The corporate tax rate (T) is 0%.
Therefore, Roxy Inc.'s beta (β) will be:
β = 1.9667[1+(1-0)(0/100)] = 1.9667
The risk-free rate is 2%.
The expected market risk premium is 5%.
Therefore, the expected return on the market portfolio (Rm) will be:
Rm = Risk-free rate + Market risk premium = 2% + 5% = 7%
Roxy Inc.'s cost of equity (ke) will now be calculated using CAPM, which is:
ke = Risk-free rate + β(Rm - Risk-free rate)
ke = 2% + 1.9667(7% - 2%)
ke = 2% + 1.9667(5%)
ke = 12.83%
Roxy's WACC is:
WACC = E/V * keWACC = 1 * 12.83%
WACC = 12.83%
The value of Roxy Inc. will be calculated using the free cash flows of Roxy Inc. and the WACC of Roxy Inc., which is calculated as 12.83%.
The estimated value of Roxy Inc. is:
Estimate of value = FCFF/(WACC - g)
FCFF in year 1 is $27 million.
The growth rate of free cash flows (g) is 3%.
Estimate of value = $27 million/(12.83% - 3%)
= $300.33 million
The estimated gain to your friend from investing in Roxy's Inc. is:
Estimated gain = Value - Investment
Estimated gain = $300.33 million - $500 million
= -$199.67 million
The investment is not worth pursuing because the estimated gain is negative.
With 25% debt financing, Roxy Inc.'s WACC will be calculated as follows:
After-tax cost of debt (kd) = Before-tax cost of debt (k0)(1 - T)
Given that the debt issued is risk-free, the before-tax cost of debt (k0) will be equal to the risk-free rate of 2%.
The corporate tax rate (T) is 35%.
Therefore, Roxy Inc.'s after-tax cost of debt (kd) will be:
kd = 2%(1 - 35%) = 1.3%
Roxy Inc.'s weight of equity is 75%.
Roxy Inc.'s weight of debt is 25%.
Given the information that Dropbox, Ikea, and Intercontinental Hotel Group have no cash, their debt is risk-free. Therefore, their levered betas are equal to their unlevered betas. The average unlevered beta of these companies is calculated as:
βU = (2 + 2.3 + 1.6)/3 = 1.9667
The corporate tax rate (T) is 35%.
Therefore, Roxy Inc.'s beta (β) will be:
β = 1.9667[1+(1-35%)(0.25/0.75)]
= 1.7004
The expected return on the market portfolio (Rm) is 7%.
The risk-free rate is 2%.
Roxy Inc.'s cost of equity (ke) will now be calculated using CAPM, which is:
ke = Risk-free rate + β(Rm - Risk-free rate)
ke = 2% + 1.7004(7% - 2%)
ke = 11.51%
Roxy's WACC is:
WACC = E/V * ke + D/V * kdWACC
= 0.75 * 11.51% + 0.25 * 1.3%
WACC = 8.965%
Roxy's return on equity:
Return on equity = Cost of equity
Return on equity = 11.51%
The value of Roxy Inc. is now:
Estimate of value = FCFF/(WACC - g)
FCFF in year 1 is $27 million.
The growth rate of free cash flows (g) is 3%.
Estimate of value = $27 million/(8.965% - 3%)
= $405.94 million
The estimated gain to your friend from investing in Roxy's Inc. is:
Estimated gain = Value - Investment
Estimated gain = $405.94 million - $500 million
= -$94.06 million
The investment is not worth pursuing because the estimated gain is negative.
When there are corporate taxes, the after-tax cost of debt (kd) is lower than the before-tax cost of debt (k0). Therefore, the weighted average cost of capital (WACC) is lower when there are corporate taxes than when there are no corporate taxes.The effect of corporate taxes on Roxy's WACC is to lower it.The effect of corporate taxes on Roxy's expected value is to increase it.
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as a consumer electronics retailer, how would you appeal to "up and comers"?
We would appeal to "up and comers" by offering a curated selection of cutting-edge and affordable products, providing personalized recommendations, and hosting educational workshops and events.
As a consumer electronics retailer targeting "up and comers," we would focus on a few key strategies. Firstly, we would curate our product selection to include the latest and most innovative gadgets and devices at affordable prices, catering to the budget-conscious nature of this demographic. Secondly, we would invest in a personalized recommendation system that takes into account individual preferences, allowing us to suggest products tailored to each customer's unique needs and interests.
Lastly, we would host educational workshops and events to empower and engage with our customers, offering opportunities to learn new skills, explore emerging technologies, and foster a sense of community. By combining these approaches, we aim to provide a compelling and tailored shopping experience for "up and comers."
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List reasons why economists should not consider GDP an effective measure of the standard of living in a country. Why do economists do not consider GDP an effective measure of the standard of living in a country?
The Gross Domestic Product (GDP) has been used as an indicator of economic growth in a country, and yet, it is not an effective measure of standard of living.
This is because the GDP does not consider non-monetary aspects of life, and so does not reflect the quality of life in a country. Some of the reasons why economists do not consider GDP an effective measure of the standard of living are:Firstly, the GDP does not measure the distribution of income.
This means that although a country might have a high GDP, the income inequality may be very high. Thus, the GDP does not consider the welfare of the majority.Secondly, the GDP does not measure the value of unpaid work such as housework or volunteer work.
This means that even though people are contributing to their communities, this is not recognized in GDP.Thirdly, the GDP does not measure the social and environmental factors that are important for a good standard of living such as health, education, environmental quality, and access to clean water.
Thus, the GDP does not account for the long-term welfare of the country.
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2 The chart below is the prodution cost of US. and UK. U.S. U.K. 6 1 4 2 (2) what is the gain from trade if the two trade for 4 wheat for 4 cloth? Wheat (bushels/labor hour) Cloth (yards/labor hour) q
The gain from trade for the US is 10/3 yards of cloth, and for the UK, it is 4 bushels of wheat.
To calculate the gain from trade between the US and UK, we need to compare the opportunity costs of producing wheat and cloth in each country.
From the given data:
US:
- Wheat: 6 bushels/labor hour
- Cloth: 1 yard/labor hour
UK:
- Wheat: 4 bushels/labor hour
- Cloth: 2 yards/labor hour
The opportunity cost of producing wheat in the US is 1/6 yard of cloth per bushel of wheat (1/6 yard/bushel), while in the UK, it is 1/2 yard of cloth per bushel of wheat (1/2 yard/bushel).
The opportunity cost of producing cloth in the US is 6 bushels of wheat per yard of cloth (6 bushels/yard), while in the UK, it is 2 bushels of wheat per yard of cloth (2 bushels/yard).
Now, let's consider the trade terms: 4 wheat for 4 cloth.
In the US, producing 4 wheat would require 4/6 yards of cloth (4/6 yard = 2/3 yard).
In the UK, producing 4 cloth would require 4 * 2 bushels of wheat (8 bushels).
If the US and UK trade at this exchange rate, the US can acquire 4 cloth for 4 wheat, which would have cost them 2/3 yard of cloth to produce domestically.
The gain from trade for the US would be the difference between the domestic production cost (2/3 yard) and the amount of cloth obtained through trade (4 yards). Therefore, the gain from trade for the US is 4 - 2/3 = 10/3 yards of cloth.
Similarly, the UK would gain 4 wheat (the equivalent of 8 bushels) through trade, which would have cost them 4 yards of cloth to produce domestically.
The gain from trade for the UK would be the difference between the domestic production cost (4 yards) and the amount of wheat obtained through trade (8 bushels). Therefore, the gain from trade for the UK is 8 - 4 = 4 bushels of wheat.
In summary, the gain from trade for the US is 10/3 yards of cloth, while the gain from trade for the UK is 4 bushels of wheat.
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There are essentially two approaches to predict the fatigue life of components and structures. One is based on so called S-N (or Stress versus Number of cycles) diagrams and the other is based on Crack Propagation Rate versus Stress Intensity Factor Range diagrams. Give a brief description for each approach and comment on how you would decide which approach to use for a particular application in metallic materials? (5 marks) (b) Explain why the surface condition may have a profound effect on fatigue life of a component. Give one example of a surface treatment for improving fatigue life of components. (4 marks) (c) Figure 3 shows a fracture surface of a test sample made of aluminium alloy. It represents aircraft wing skin with a countersunk fastener (rivet) hole, which was subjected to a cold-expansion process. The test sample has failed due to fatigue after being cyclically loaded in tension in the direction of the arrow. The two distinct regions on the fracture surface are labelled as A and B. Account for both these regions and identify any particular feature that is associated with each region. Suggest where the point of initiation of the fatigue crack is located.
(a) The S-N (Stress versus Number of Cycles) approach is commonly used to predict fatigue life. It involves plotting the stress amplitude (S) applied to a component against the number of cycles to failure (N).
This approach is based on the assumption that fatigue failure occurs when a critical stress level is reached, leading to crack initiation and subsequent propagation. The S-N curve provides information about the fatigue strength of a material and helps estimate the number of cycles a component can sustain before failure.
On the other hand, the Crack Propagation Rate versus Stress Intensity Factor Range (da/dN vs. ΔK) approach focuses on crack growth rather than crack initiation. It involves plotting the crack propagation rate (da/dN) against the stress intensity factor range (ΔK). This approach is more suitable for situations where the initial crack size is known or where crack growth is the dominant factor affecting fatigue life.
To decide which approach to use for a particular application in metallic materials, several factors need to be considered. These include the nature of the loading conditions, the presence of pre-existing cracks, the required accuracy of the prediction, and the available data and resources. If crack initiation is the primary concern, the S-N approach may be more appropriate. If crack growth is of greater significance, the Crack Propagation Rate versus Stress Intensity Factor Range approach would be more suitable.
(b) The surface condition of a component can have a significant effect on its fatigue life. Surface imperfections, such as scratches, notches, or corrosion, can act as stress concentrators, leading to localized stress intensification and accelerating crack initiation and propagation. Additionally, surface roughness can affect the distribution of stresses and introduce microstructural changes, further influencing fatigue behavior.
(c) Region A on the fracture surface represents the fastener hole, while region B corresponds to the surrounding material. Region A exhibits a distinct dimpled morphology, known as dimples or beach marks. These dimples indicate a ductile mode of fracture, suggesting that the crack propagated slowly under cyclic loading, resulting in plastic deformation and energy absorption. The dimples in region A are associated with the final stages of crack propagation.
The point of initiation of the fatigue crack is likely located at the edge of the fastener hole, where stress concentrations are typically high. The cyclic loading in tension, combined with the geometric stress concentration introduced by the countersunk fastener hole, would initiate a crack at this location. Over time, the crack would propagate through the material until reaching the final fracture surface, characterized by the dimples in region A.
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the relative price inelasticity of demand for agricultural products has resulted in
higher food prices even when there is an increase in supply. Agricultural products, being necessities, have a relatively inelastic demand, meaning that changes in price have a smaller impact on consumer demand.
As a result, when there is an increase in the supply of agricultural products, the price does not decrease significantly, leading to higher food prices. The relative price inelasticity of demand for agricultural products can be attributed to several factors. Firstly, food is a basic need, and consumers are less likely to reduce their consumption even in the face of price increases.
The price inelasticity of demand also affects the behavior of agricultural producers. With relatively inelastic demand, producers have less incentive to increase supply in response to price changes, as the price elasticity of demand is low. In conclusion, the relative price inelasticity of demand for agricultural products leads to higher food prices even when there is an increase in supply, as consumer demand is less responsive to price changes.
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briefly introduce the danger of 'complete' negotiation
strategies
Complete negotiation strategies may pose certain dangers to the parties involved.
What are Complete negotiation strategies?Complete negotiation strategies are commonly used in business to reach an agreement between two parties. It can be very effective and can benefit both parties, but it may not be the best way to negotiate in all circumstances.
A complete negotiation strategy involves a win-lose approach in which one party tries to take all of the available gains and the other loses.
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E25-18 Making outsourcing decisions Cool Systems manufactures an optical switch that it uses in its final product. The switch has the following manufacturing costs per unit: $ 5.00 3.00 Direct materials Direct labor Variable overhead Fixed overhead Manufacturing product cost 6.00 7.00 $ 21.00 Another company has offered to sell Cool Systems the switch for $15.00 per unit. If Cool Systems buys the switch from the outside supplier, the idle manufacturing facili- ties cannot be used for any other purpose, yet none of the fixed costs are avoidable. Prepare an outsourcing analysis to determine whether Cool Systems should make or buy the switch.
Based on the cost analysis, Cool Systems should consider buying the switch from the outside supplier rather than manufacturing it in-house.
To perform an outsourcing analysis and determine whether Cool Systems should make or buy the switch, we need to compare the costs of manufacturing the switch in-house with the cost of buying it from the outside supplier.
Calculate the total cost of manufacturing the switch in-house:
Total manufacturing cost per unit = Direct materials + Direct labor + Variable overhead + Fixed overhead
Total manufacturing cost per unit = $5.00 + $3.00 + $6.00 + $7.00 = $21.00
Compare the in-house manufacturing cost with the cost of buying the switch from the outside supplier:
Cost per unit from the outside supplier = $15.00
Analyze the costs;
If the in-house manufacturing cost is lower than the cost of buying from the outside supplier, it is more cost-effective to make the switch in-house. However, if the cost of buying from the outside supplier is lower than the in-house manufacturing cost, it is more cost-effective to buy the switch.
In this case, comparing the in-house manufacturing cost of $21.00 per unit with the cost of buying from the outside supplier at $15.00 per unit, we can see that it is more cost-effective to buy the switch from the outside supplier.
Therefore, based on the cost analysis, Cool Systems should consider buying the switch from the outside supplier rather than manufacturing it in-house.
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if a company implements the 4/5ths rule provided under uniform guidelines, they are able to test for ______.
If a company implements the 4/5ths rule provided under the Uniform Guidelines, they are able to test for adverse impact.
The 4/5ths rule is a statistical test used in employment practices to determine if there is a potential adverse impact on protected groups based on race, gender, or ethnicity. Under the 4/5ths rule, the selection rate of the protected group is compared to the selection rate of the group with the highest selection rate. If the selection rate for the protected group is less than 80% (or 4/5ths) of the selection rate for the group with the highest rate, it is considered evidence of potential adverse impact. This indicates that the employment practice may be discriminatory.
By implementing the 4/5ths rule, companies can assess and identify potential disparities in selection rates and evaluate if further investigation or corrective actions are necessary to ensure fair and unbiased employment practices.
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You are investigating a savings account that is offered by 2 different banks.
Bank A is offering 0.464% interest per month, compounded monthly.
Bank B is offering an effective annual interest rate of 6.50%
In the given case, Bank B must be chosen as it offers a higher interest rate, with higher returns on the savings account.
It is required to determine Bank A's effective yearly interest rate in order to compare the two savings accounts that Bank A and Bank B provide.
For Bank A:
Monthly interest rate -
= 0.464%
= 0.464/100
= 0.00464
Calculating the effective annual interest rate for Bank A -
Effective annual interest rate = (1 + Monthly interest rate)^Number of compounding periods - 1
[tex]= (1 + 0.00464)^12 - 1[/tex]
= 0.0568 or 5.68%
Comparing the effective annual interest rates -
Bank A: Effective annual interest rate = 5.68%
Bank B: Effective annual interest rate = 6.50% ( Already given)
Comparing the two banks' effective annual interest rates, Bank B provides a higher rate of 6.50%, while Bank A offers 5.68%. Because Bank B provides a greater interest rate and the possibility for bigger earnings on the savings account, it must be picked.
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Complete Question:
You are investigating a savings account that is offered by 2 different banks.
Bank A is offering 0.464% interest per month, compounded monthly.
Bank B is offering an effective annual interest rate of 6.50%
Which bank must be chosen ?
A __________ endorsement is most useful when depositing checks by mail.
a) Special
b) blank
c) restrictive
d) multiple"
A restrictive endorsement is most useful when depositing checks by mail. A restrictive endorsement is the best for depositing checks through mail. It helps to prevent the unauthorized deposit of the check.
A restrictive endorsement is a type of endorsement on a check that specifies the purpose for which the check can be used. When someone endorses a check restrictively, they limit the ways the check can be used. It helps to prevent the unauthorized deposit of the check, especially when using the mail service to deposit checks. Banks require this endorsement for situations like depositing money into a bank account or using a check to pay off a loan or credit. A restrictive endorsement ensures that the person for whom the check was intended can use it for the stated purpose. Additionally, restrictive endorsements also make it difficult for someone who has found or stolen a check to deposit it in their account.
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An example of manufacturing overhead costs would be O Direct Materials O CEO's Salary O Wage of factory supervisor O Direct Labor O Raw Materials O Utility expense on corporate offices
An example of manufacturing overhead costs would be Utility expense on corporate offices.
Manufacturing overhead costs refer to all the indirect costs that are not included in direct materials and direct labor. These costs include utilities, rents, salaries, and insurance. Manufacturing overheads are the indirect costs that are not included in direct labor or direct materials. These expenses are necessary to keep the manufacturing process running but cannot be directly attributed to a single product.
The manufacturing overhead costs could include but are not limited to; Electricity and lighting costs Rent of the manufacturing building Property taxes and insurance on the manufacturing building Depreciation of the manufacturing equipment and tools Maintenance of the manufacturing equipment and tools Corporate office salaries Security costs (guards)Quality control testing and salaries
Direct materials refer to the raw materials that are used to make a product. These materials can be traced to the finished product, and they have a significant impact on the cost of production. Direct labor is the cost of the wages of employees who work directly on the manufacturing process. This can include assembly line workers or machine operators.
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a) Illustrate and explain the Gross Domestic Product (GDP) and unemployment for Malaysia for the years 2018-2021 using graphs. b) Identify the macroeconomic problems that Malaysia is currently facing and discuss how the Malaysian government and Bank Negara Malaysia can mitigate the identified macroeconomic problems.
a) Malaysia's macroeconomic problems include the impact of the COVID-19 pandemic, income inequality, and environmental challenges. The Gross Domestic Product (GDP) and unemployment trends for Malaysia from 2018-2021 can be illustrated using graphs to visualize the economic performance and labor market conditions during this period.
b) To address these macroeconomic problems, the Malaysian government and Bank Negara Malaysia can implement various measures. They can introduce fiscal policies such as stimulus packages, financial assistance, and infrastructure investments to support affected industries and stimulate economic growth. Additionally, monetary policies like adjusting interest rates and implementing liquidity measures can encourage borrowing and investment. To mitigate income inequality, progressive taxation, social welfare programs, and skills development initiatives can be implemented. Lastly, environmental challenges can be tackled through sustainable development policies and investments in renewable energy. These measures aim to foster inclusive and sustainable economic growth in Malaysia.
a) The Gross Domestic Product (GDP) and unemployment in Malaysia for the years 2018-2021 can be illustrated using line graphs. The GDP graph will show the trend in economic output, while the unemployment graph will depict the changes in the unemployment rate over the specified period.
In the GDP graph, we can observe the annual GDP growth rate or GDP in constant prices (adjusted for inflation) for each year. The line will indicate the direction and magnitude of economic growth or contraction. If the line is upward-sloping, it signifies positive GDP growth, while a downward-sloping line indicates a decline in economic output.
The unemployment graph will display the unemployment rate, which represents the percentage of the labor force that is unemployed. A rising trend in the line suggests an increase in unemployment, while a declining trend indicates a decrease in unemployment.
b) Currently, Malaysia is facing several macroeconomic problems. One key issue is the economic impact of the COVID-19 pandemic, which has led to reduced economic activity, job losses, and disruptions in supply chains. To mitigate this, the Malaysian government and Bank Negara Malaysia can implement fiscal and monetary policies. The government can provide stimulus packages to support affected industries, offer financial assistance to businesses and individuals, and invest in infrastructure projects to stimulate economic growth and job creation.
Monetary policy tools, such as adjusting interest rates and implementing liquidity measures, can be employed by Bank Negara Malaysia to encourage borrowing and investment, stimulate consumer spending, and maintain price stability.
Another macroeconomic problem in Malaysia is income inequality. The government can address this by implementing policies that promote equitable income distribution, such as progressive taxation, social welfare programs, and skills development initiatives to enhance employability and income-earning potential.
Additionally, Malaysia faces environmental challenges, particularly in relation to deforestation and climate change. The government can implement sustainable development policies, invest in renewable energy, promote environmentally-friendly practices, and encourage responsible resource management to mitigate these issues.
Overall, a combination of fiscal and monetary policies, along with targeted measures to address income inequality and environmental concerns, can help Malaysia navigate its macroeconomic challenges and foster sustainable and inclusive economic growth.
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QUESTIONS 28 Explain three negative effects of money-laundering [6 marks]
Money laundering, the process of concealing the origins of illegally obtained funds, has several negative effects on individuals, economies, and society as a whole.
1. Erosion of Financial Systems: Money laundering weakens the integrity of financial systems by introducing illicit funds into legitimate channels. This undermines trust and confidence in financial institutions, making them vulnerable to exploitation.
It distorts economic activities, artificially inflates asset prices, and can lead to market instability. Money laundering also enables the financing of other criminal activities, such as drug trafficking and terrorism, further exacerbating social harm.
2. Economic Consequences: Money laundering negatively impacts economies in various ways. First, it distorts competition by allowing criminals to gain unfair advantages over legitimate businesses. Second, it diverts resources from productive sectors into illicit activities, hindering economic growth and development
. Third, money laundering can lead to capital flight as individuals seek to move their illicitly acquired wealth to other jurisdictions, draining resources from the local economy and impeding investment.
3. Social Consequences: Money laundering has profound social consequences. The proceeds of criminal activities laundered through legitimate channels can perpetuate corruption, inequality, and social injustice.
It can foster a culture of impunity, as criminals exploit weaknesses in the system and escape legal repercussions. Money laundering also perpetuates organized crime, as criminal organizations are able to reinvest their profits and expand their illicit operations, leading to increased violence, insecurity, and social harm.
In conclusion, money laundering erodes financial systems, has adverse economic consequences, and perpetuates social harm. Combating money laundering is crucial to safeguarding economies, ensuring fair competition, and fostering a just and secure society.
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1.42points
Return to question
Item 4
Problem 6-52 (LO 6-4)
Jordan took a business trip from New York to Denver. She spent two days in travel, conducted business for nine days, and visited friends for five days. She incurred the following expenses:
Airfare $ 510
Lodging 3,100
Meals 775
Entertainment of clients 620
Required:
How much of these expenses can Jordan deduct?
The deductible amount of the expenses incurred by Jordan on her business trip are calculated to be $22,076. Therefore, the answer is $22,076.
The deductible amount of the expenses incurred by Jordan on her business trip can be calculated as follows:
Airfare: Non-deductible as personal expenses.
Lodging: 7 × $3100 = $21700 (100% deductible)
Meals: $775 × 16/75 = $166 (50% deductible)
Entertainment of clients: $620 × 50% = $310 (50% deductible)
Thus, the total amount that Jordan can deduct is $22076 (21700 + 166 + 310). Therefore, the answer is $22,076.
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You are asked to audit a project on Patient Life Cycle Management in a reputed hospital . How will you conduct the audit and what data you would like to collect during the audit process?
The series of actions an auditor must take in order to complete an audit engagement with a client is known as the audit process. The nature of the audit engagement will determine the particular steps that must be taken.
An audit of a project on Patient Life Cycle Management in a reputable hospital requires the following steps to be followed:-
The first stage of an audit is to identify the objectives and scope of the audit. This stage will entail the use of patient life cycle management to identify areas of concern.
The second step is to collect and analyze data. In this phase, auditors will use a wide range of techniques to gather and examine data that will aid them in making assessments. The objective of data analysis is to recognize any significant variations, anomalies, or irregularities. It is also necessary to determine the root causes of the anomalies observed and to assess their implications. The auditors must analyze the data they have gathered for accuracy and completeness.
The third step is to assess the hospital's internal control systems. During the audit, auditors may investigate hospital procedures and processes for identifying, evaluating, and responding to internal control hazards. As a result, auditors should evaluate the adequacy of internal controls and recommend modifications where necessary. The objective of this process is to ensure that the internal control system is sufficient and effective.
Finally, the audit report is prepared. After collecting data, assessing internal control systems, and conducting any additional testing, the audit report is written. The audit report should be concise and professional, outlining the audit's objectives, methodology, and findings. Recommendations for changes should be included in the report, as well as follow-up action that will be required to address the findings.
The data that will be collected during the audit process will include the following:-
Patient Information: The records of the patients have to be checked, analyzed, and ensure that the information is kept confidential.
Patient Safety: The hospital must ensure patient safety, and its policies should be in line with the healthcare requirements.
Patient Services: The audit must examine the services provided to patients in the hospital in terms of quality, safety, and effectiveness.
Patient Medical Records: The medical records must be checked to ensure they contain accurate information and are maintained as required.
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aviation incorporated has 135,000 shares authorized, 125,000 shares issued and no treasury stock. determine the number of shares outstanding:
a. 240,000. b. 0 c. 10,000. d. 125,000. e. 115,000.
Aviation incorporated has 135,000 shares authorized, 125,000 shares issued and no treasury stock. The number of shares outstanding is 125000.
The number of shares outstanding represents the total number of shares that have been issued by the company and are held by investors. In this case, Aviation Incorporated has 125,000 shares issued, which means that these shares have been distributed to shareholders.
Since there is no mention of any shares being repurchased or held as treasury stock, we can assume that all the issued shares are still outstanding.
Therefore, the number of shares outstanding for Aviation Incorporated is 125,000, as stated in the given information.
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The Caffeine Coffee Company uses the modified internal rate of return. The firm has a cost of capital of 9 percent. The project being analyzed is as follows ($38,000 investment): Use Appendix A and Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year Cash Flow
1 $20,000
2 19,000
3 12,000
What is the modified Internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Internal rate of return____%
Using Excel Funtions, MIRR and IRR we get the MIRR = 14.12% and IRR = 17.82%. Thus the internal rate of return is 17.82%.
The internal rate of return (IRR) is a formula for estimating the rate of return on an investment. The computation does not take into account external variables like the risk-free rate, inflation, the cost of capital, or financial risk, hence the name "internal."
Ex-post or ex-ante applications of the approach are both possible. The IRR is a projection of a potential prospective annual rate of return when used ex-ante. It evaluates the real investment return of a past investment when applied ex post. It is also known as the yield rate or the discounted earnings rate of return (DCFROR).
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please fast
The following comparative balance sheet is given for Estern
Co.: Assets Dec 31, 2021 Dec.31, 2020 $58,500 $351,000 Cash 72,000
63,000 Notes Receivable 81,000 121,500 Supplies & Invento
The following comparative balance sheet is given for Estern Co. Assets Dec 31, 2021 Dec 31, 2020 Canl $58,500 $351,000 72,000 Notes Receivable 63,000 81,000 121,500 Supplies & Inventory Prepaid expens
There are three asset accounts in the comparative balance sheet given for Estern Co: cash, notes receivable, and supplies & inventory.
The cash account's balance is $58,500 at the end of December 31, 2021, compared to $351,000 at the end of December 31, 2020. The notes receivable balance is $72,000 at the end of December 31, 2021, compared to $63,000 at the end of December 31, 2020. The supplies & inventory balance is $81,000 at the end of December 31, 2021, compared to $121,500 at the end of December 31, 2020.
A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It presents the company's assets, liabilities, and shareholders' equity. The balance sheet provides insights into a company's liquidity, solvency, and financial health. It is often used by investors, creditors, and other stakeholders to assess a company's financial position and make informed decisions.
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________ focuses on studying customer behavior and perceptions in order to provide the business intelligence necessary to identify new opportunities and to provide superior customer service.
Customer intelligence focuses on studying customer behavior and perceptions in order to provide the business intelligence necessary to identify new opportunities and to provide superior customer service
Customer intelligence refers to the practice of gathering and analyzing customer information and data to extract insights. Businesses use these insights to tailor their strategies and customer interactions in a way that maximizes customer satisfaction and revenue growth.
Customer intelligence also involves the systematic collection and evaluation of customer feedback, interactions, behaviors, and other relevant data points. By analyzing these data points, companies can identify patterns and trends in customer behavior that can help them make better decisions and increase customer satisfaction.
Customer intelligence involves the following activities:
Data collection
Customer segmentation
Customer profiling
Behavioral analysis
Competitive analysis
Market analysis
Benefits of Customer Intelligence:
Improved customer segmentation
Increased customer engagement
Improved customer retention
Improved customer acquisition
Improved sales revenue
Gives insight into customer needs and preferences
Conclusion: The term that focuses on studying customer behavior and perceptions in order to provide the business intelligence necessary to identify new opportunities and to provide superior customer service is Customer intelligence.
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You are considering an investment opportunity that requires an initial investment of $95 million today. One year from now, it will pay $9 million, and the payments will grow by 5% every year after that forever (i.e. in perpetuity). The cost of capital is 14%. What is the IRR?
If you are considering an investment opportunity that requires an initial investment of $95 million today. The IRR is: 4.47%.
What is the IRR?Using this formula for the present value of a growing perpetuity:
PV = CF1 / (r - g)
Let plug in the formula
-$95 million = $9 million / (r - 0.05)
Solving for r
(r - 0.05) / $9 million = 1 / -$95 million
Cross-multiply:
-$95 million * (r - 0.05) = $9 million
Simplify
-$95 million * r + $4.75 million = $9 million
-$95 million * r = $9 million - $4.75 million
-$95 million * r = $4.25 million
Dividing both sides by -$95 million:
r = $4.25 million / -$95 million
r ≈ -0.0447
The negative IRR in this case implies that the investment opportunity does not meet the required rate of return (14%).
Therefore this investment opportunity would not be considered favorable based on the given assumptions.
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KLM company has 20,000 authorized ordinary shares, $3 par value. In its first year in business, KLM have issued 5000 shares at $5, and 2000 shares issued at $7. what is the net balance of Share Premium-Ordinary after the second share issuance?
The net balance of Share Premium-Ordinary after the second share issuance is $26,000.
In the question, the company has 20,000 authorized ordinary shares, $3 par value. In the first year of business, KLM has issued 5,000 shares at $5 and 2,000 shares issued at $7. We need to calculate the net balance of Share Premium-Ordinary after the second share issuance.
Here's how we can do it:
Step 1: Calculate the issue price of the shares issued in the first year
Total amount received for 5,000 shares = 5,000 x $5 = $25,000
Total amount received for 2,000 shares = 2,000 x $7 = $14,000
Issue price per share = Total amount received/Number of shares issued
Total amount received = $25,000 + $14,000 = $39,000
Issue price per share = $39,000/(5,000 + 2,000) = $39,000/7,000 = $5.57
Step 2: Calculate the par value of the shares issued in the first year
Par value per share = $3
Total par value of 5,000 shares = 5,000 x $3 = $15,000
Total par value of 2,000 shares = 2,000 x $3 = $6,000
Total par value = $15,000 + $6,000 = $21,000
Step 3: Calculate the share premium for the shares issued in the first year
Total share premium = Total amount received - Total par value= $39,000 - $21,000= $18,000
Step 4: Calculate the net balance of Share Premium-Ordinary after the second share issuance.
Number of shares issued in the second year = 2,000
Issue price per share = $7
Par value per share = $3
Total amount received = 2,000 x $7 = $14,000
Total par value = 2,000 x $3 = $6,000
Share premium for the second share issuance = Total amount received - Total par value
= $14,000 - $6,000= $8,000
Net balance of Share Premium-Ordinary after the second share issuance = Share premium for the first share issuance + Share premium for the second share issuance= $18,000 + $8,000= $26,000
Therefore, the net balance of Share Premium-Ordinary after the second share issuance is $26,000.
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