Ultimately, the market unravels because buyers are risk-averse. If buyers were risk-neutral, there would always be prices at which cars would sell.
a. True
b. False
Answers
The given statement, "Ultimately, the market unravels because buyers are risk averse. If buyers were risk neutral, there would always be prices at which cars would sell," is false (b) because it oversimplifies the factors that affect market dynamics.
Also it assumes that price is the only variable that determines sales.
While risk aversion can certainly impact buying decisions, it is not the only factor that determines market outcomes. Other factors, such as market saturation, changes in consumer preferences, and the availability of substitutes can also affect the demand for a product and ultimately impact its market price.
Additionally, barriers to entry, such as high production costs or limited distribution channels, can prevent a product from selling at certain prices, regardless of buyer risk preferences. Therefore, it is inaccurate to suggest that buyer risk aversion is the sole determinant of market outcomes.
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Read the following scenario, and then answer the question below.
An intern notices a problem with a new software package. She then complains to a technician who criticizes the new package. An engineer overhears their criticism, asks some more questions about the problem, and proposes a solution to their supervisor.
Who is demonstrating critical thinking?
the intern, who noticed the problem and complained about it
the technician, who criticized the new software package
the engineer, who investigated the problem and proposed a solution
the supervisor, who understood the problem and implemented the idea
Which of the following is least likely to help a team solve a problem together?
meet as a team and examine a problem
divide work according to skill and ability
reconvene with team members periodically until a problem is solved
limit communication between meetings to maximize creative thinking
Answers
Answer:c
Explanation:
the engineer, who investigated the problem and proposed a solution
An engineer, who investigated the problem and proposed a solution was demonstrating critical thinking. Hence, option C is appropriate.
Who is An Engineer?Engineers are specialists who create, design, analyze, construct, test, and evaluate machines, complex systems, buildings, gadgets, and materials to satisfy functional objectives and criteria while taking into account practicality, regulation, safety, and cost constraints.
An engineer is indeed a specialist who creates, designs and maintains a wide range of tools, buildings, and information systems. Engineers must also follow the budget and timeline requirements set forth by their employers. Engineers are masters in their domains, always inventing and developing.
The Latin terms ingeniare and Ingenium are the roots of the English word engineer (Latin inventor) ("cleverness"). A four-year liberal arts degree in engineering, or some territories, a master's degree in engineering, along with between four and six years of participant professional conduct (culminating in a project or thesis), and passing the engineering board examinations make up the fundamental requirements for becoming an engineer.
Hence, option C is correct.
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7. What is the purpose of the risk score and how is it calculated?
Answers
For example, if an event has a high likelihood of occurring and would have a high impact if it did occur, then the risk score would be high. Conversely, if an event has a low likelihood of occurring and would have a low impact if it did occur, then the risk score would be low.
The risk score is a useful tool for prioritizing risks and determining which risks require the most attention and resources. It can also be used to compare the relative risk of different events or situations.
Ell us about a time when your attention to detail was critical in preventing a major issue/error
Answers
Tell us about an error instance when your focus on detail was essential in avoiding a significant way is troubleshooting error.
The capacity to concentrate on a particular job while carefully considering and attending to all of its important features might be characterized as attention to detail. An illustration of paying attention to detail is finding and fixing any typos or grammatical problems in an email before sending it.
When describing anything that is more substantial, serious, or crucial than other elements within a group or circumstance, you use the word major. If the situation is casual, use the word "issue." You may use the word "issue" while discussing a political matter or a topic for a discussion. if the circumstance is official.
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Correct Question:
Tell us about a time when your attention to detail was critical in preventing a major issue/error.
"Your supervisor repeatedly informs you that "Goals without objectives are essentially meaningless." What is the rationale for such a philosophy?"
Answers
Answer:
progress is impossible to track without measurable performance targets.
Explanation:
The rationale for this philosophy is that progress is impossible to track without measurable performance targets. Meaning that without actively keeping track of the progress you make throughout your journey it will continue seeming as though you are not advancing at all towards your end goal. That is why you need objectives or smaller milestones that act as accomplishments and let you know that you are making progress towards achieving the goal that you have been working towards.
Sometimes events on Salesforce need to be handled by an external system due to the scale or type of process being executed. Consider the use case of a user in Salesforce needing to get pricing for an order they are building in Salesforce while on the phone with a customer. The pricing logic already exists in a third-party system. Instead of creating this logic in Salesforce, it will be leveraged by making a request of the third-party system. The response, in this case the pricing, will be returned and stored back in Salesforce. What is the optimal solution
Answers
Answer:
A trigger that upon saving
customer order, will make a real time callout saving the pricing back in Salesforce
Explanation:
Salesforce a software that is used to organise customer interactions in such a way that transactions between the company and customer is effectively managed by the software.
In the given scenario pricing needs to be handled by an external system. The response will be returned and stored back in Salesforce.
Instead of doing this manually the best solution will be to have an trigger that starts a real-time callout, saving the pricing back in the salesforce.
An trigger allows one to perform customised actions before or after an event. The action can be an update or deletion.
Catherine has been managing her company for a couple of years. She now plans to expand her business by bringing in fresh funding through a new stock issue. She would like to inform her investors about this development. What would Catherine use to inform investors about this development in her company?
Catherine would use to inform investors about the development in her company.
Answers
Answer:
Newsletter on website and social media platforms. Email to investorsExplanation:
In order to reach as many of her investors as possible, Catherine can write up a news update or newsletter explaining the change to her investors and then post it on the company website. She should also post it to their social media platforms as an increasing number of people check these as opposed to websites.
In the event that her investors are not public but rather private, Catherine would have would have their contact details such as email. She can therefore send the update to their email addresses. This will increase the chances of the investors seeing it.
Answer: Direct mail
Explanation: Direct mail enables an advertiser to reach target customers through mail, thereby making it a selective and specific medium. Media vehicles in direct mail include manuals, booklets, catalogues, newsletters, invitations, posters, coupons, and charts. To send out mailers, however, an advertiser needs to have an updated list of target contacts. Direct mail is a cheap advertising medium, and its advantage is that mailers can contain a lot of information. It also includes a feedback option in the form of reply cards to prompt customers to respond.
You are a project manager in a strong matrixed organization. Your project plan has been approved, and therefore you have management backing to execute. A stakeholder notifies you of critical functionality for the end product, which is missing in the design document.
Your next step is to:
Answers
Answer:
Ensure the change request is documented and presented to the Change Control Board.
Explanation:
As a project manager in a strong matrixed organization, it is important to ensure that all stakeholders are involved in the project planning and design process. However, in the event that a stakeholder notifies me of critical functionality that is missing in the design document, my next step would be to assess the impact of this missing functionality on the project timeline, budget, and overall success.
After assessing the impact as a project manager, I would then work with the project team and the stakeholder to identify potential solutions or workarounds that could address the missing functionality. This may involve revising the project plan, adjusting the budget, or potentially adding additional resources to the project team. It is important to communicate any changes or adjustments to the project plan to all stakeholders, including management, to ensure that everyone is aware of the impact on the project timeline and budget. Additionally, I would work with the design team to ensure that any revisions to the design document are captured and documented appropriately. Overall, as a project manager in a strong matrixed organization, it is important to remain flexible and adaptable in the face of changing stakeholder requirements and to work collaboratively with all project team members to ensure project success.
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Dennis has just gotten a new job at a national credit card company's headquarters. He is working in the
human resources department. It is likely that, as far as health insurance is concerned,
his employer is paying 100 percent of the contributions
he must find his own health insurance
he is paying 100 percent of the contributions
he and his employer are both paying a portion of the contributions
Answers
Answer:
He and his employer are both paying a portion of the contributions
Explanation:
Most employees of private companies in the United States have employer-sponsored healthcare insurance. This means that the company they work for chooses the insurance plan, and pay the biggest share of the cost of the plan. However, the employee also has to contribute to the cost, allocating a percentage of his salary for this installment.
This is the type of plan Dennis would be enrolled once hired by the national credit card company.
One positive impact that industrialization has had is that.
Answers
One positive impact that industrialization has had is that industrialization has been a source of many jobs for people.
What is industrialization?Industrialization refers to the development of industries in a country or region on a wide scale.
One positive impact that industrialization has had is that industrialization has been a source of many jobs for the people.
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what does the previous analysis suggest about the market for money? the supply of money is independent of the interest rate. the quantity of money demanded increases as the interest rate falls. the quantity of money demanded decreases as the interest rate falls.
Answers
The previous analysis suggest that the market for money is: B. The quantity of money demanded decreases as the interest rate rises.
What is demand?Demand can be defined as the amount that a customer is willing and ready to pay for the goods and services.
In the market for money the quantity of money that are demanded tend to reduces as the interest rate rises compare to when the interest rate is low based on the fact that when the interest rate is low the quantity of money demanded will increase.
Therefore the correct option is B.
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The presentation recommends updating and modifying your budget how often?
Answers
The presentation recommends updating and modifying your budget on a regular basis, typically at least once a month.
What is presentation?Presentation is the act of presenting something to an audience. It could be a speech, a product demonstration, or a visual aid. Presentations are typically used to inform, explain, persuade, and/or entertain. They often involve visuals such as slides, charts, graphs, pictures, and videos. Presentations can also be used to teach, illustrate a concept, or to demonstrate a process. Presentations can take place in a variety of settings, such as a classroom, boardroom, or auditorium.]
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Which phrase best completes the diagram?
?
A person's credit score
gets worse.
O A. A person spends part of a credit card's credit limit.
B. A person files for bankruptcy to remove debts.
C. A person uses his or her savings to buy a new car.
D. A person pays the full balance of a credit card.
Answers
The best option for what reduces a person's credit score is B. A person files for bankruptcy to remove debts.
There are several things that can reduce a person's credit score such as:
Filing for bankruptcy to get debts wiped away Defaulting on debt Failing to pay debt interest on timeWhen a person uses bankruptcy to get rid of debt, they have essentially defaulted on their debt and so they will lose credit score points as a result.
In conclusion, filing bankruptcy causes a person's credit score to fall.
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Answer: a person files bankruptcy to remove debts
Explanation:
got it right
In a recent year's financial statements, Procter & Gamble showed an unfunded pension liability of $4,391 million and a periodic pension cost of $208 million. Select the correct statement that reflects the meaning of the $4,391 million unfunded pension liability. a. The $4,391 million unfunded pension cost is a measure of the amount of pension paid out the retirees during the year. b. The obligation decreases yearly by the amount of the $4,391 million unfunded pension cost. c. The $4,391 million unfunded pension liability is the approximate amount that the value of the net assets of the pension plan exceeds the pension obligation. d. The $4,391 million unfunded pension liability is the approximate amount of the pension obligation that exceeds the value of the net assets of the pension plan.
Answers
The correct statement that reflects the meaning of the $4,391 million unfunded pension liability is option d. The $4,391 million unfunded pension liability is the approximate amount of the pension obligation that exceeds the value of the net assets of the pension plan.
An unfunded pension liability represents the portion of a pension obligation that exceeds the value of the net assets in a pension plan. It indicates that the pension plan's assets are insufficient to cover the future pension payments to retirees.
In this case, Procter & Gamble has an unfunded pension liability of $4,391 million. This means that the pension obligation of the company exceeds the value of the net assets in its pension plan by approximately $4,391 million. The company would need additional funds to cover the pension payments and fulfill its obligations to retirees.
It is important to note that the periodic pension cost of $208 million represents the expense incurred by Procter & Gamble during the year for providing pension benefits to its employees. It does not directly relate to the unfunded pension liability.
The $4,391 million unfunded pension liability indicates the amount by which the pension obligation exceeds the value of the net assets in Procter & Gamble's pension plan. This liability represents the additional funding required to fulfill the company's pension obligations to retirees.
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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.20 −7 % 20 % Normal economy 0.60 22 % 11 % Boom 0.20 33 % 7 %
a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? No Yes
b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)
c. Which investment would you prefer?
Answers
No, it is not reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms.
To calculate the expected rate of return and standard deviation for each investment, first, we will find the expected returns and standard deviation for stocks and bonds separately using the following formulas;
Expected return = ∑ (Return × Probability)
Standard deviation = √∑ [Probability × (Return – Expected return)²]
Let us calculate the expected returns and standard deviation for stocks and bonds separately.
Expected return = (-7% × 0.20) + (22% × 0.60) + (33% × 0.20)
= -1.4% + 13.2% + 6.6%
= 18.4%
Standard deviation = √[(0.20 × (-7% - 18.4%)²) + (0.60 × (22% - 18.4%)²) + (0.20 × (33% - 18.4%)²)]
≈ 11.5%
Expected return = (20% × 0.20) + (11% × 0.60) + (7% × 0.20)= 4% + 6.6% + 1.4%= 12%
Standard deviation = √[(0.20 × (20% - 12%)²) + (0.60 × (11% - 12%)²) + (0.20 × (7% - 12%)²)]
≈ 5.3%c.
As per the above calculations, the expected rate of return for stocks is 18.4%, and for bonds is 12%. The expected return of stocks is higher than bonds, but the standard deviation of stocks (11.5%) is also higher than bonds (5.3%). As we know, a higher return is always associated with higher risk. So, it depends on the investor's risk appetite and investment objectives. If the investor is risk-averse and wants stable returns, they should invest in bonds. However, if the investor is willing to take risks and wants a higher return, they can invest in stocks.
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Lindsay is in 11th grade and wants to be a physical trainer and work with athletes for her career. She wants to help them learn how to strengthen their muscles and keep their bodies in prime condition so that they will perform at their best. Which of these is a LONG-TERM goal? *
1.Get an 'A' on her anatomy test
2.Get an after-school job to help pay for college
3.Exercise after school to stay in shape for her upcoming varsity basketball season
4.Graduate from college with a degree in sports medicine
Answers
Which of the following personal decisions could have an effect on your job? a. Staying up late at night causing you to be tired and sluggish at work b. Choosing to wear pajama pants in a formal office setting c. Inviting your rowdy and loud friends to hang out at your job d. All of the above
Answers
Answer:
d. All of the above
Explanation:
Every workplace has its written and unwritten rules, regulations, and social conventions.
Staying up late which would make an employee sluggish at work, choosing to wear pajama pants in a formal office meeting, and inviting loud and rowdy friends to your workplace would definitely have a negative effect on one's job because those decisions and behavior are unprofessional.
Answer: D. All of the above.
Explanation: I just did it on edge 2023. Hope this helps!
Which question should be answered by a business plan
Answers
A business plan should answer several key questions related to the creation and operation of a business.
Some of the most important questions that a business plan should address:What is the purpose and mission of the business?
Who is the target market for the business and how will it be reached?
What products or services will be offered by the business?
What are the unique features or competitive advantages of the business?
How will the business be structured and managed?
What are the financial projections and funding requirements for the business?
What are the risks and challenges that the business may face, and how will they be addressed?
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for management to be effective, it should focus on business processes, rather than functional departments, to serve the needs of its customers. T/F
Answers
True. Management is most effective when it focuses on business processes rather than functional departments to serve the needs of its customers.
By focusing on processes, management is able to identify areas where there may be bottlenecks or inefficiencies and make changes to improve overall performance. When management focuses on functional departments, it can lead to a siloed approach to business where each department is focused solely on its own goals rather than the overall goals of the organization.
Furthermore, by focusing on business processes, management is better able to understand the needs of its customers and develop products and services that meet those needs. It allows for a more customer-centric approach, which is essential in today's competitive marketplace.
Overall, by prioritizing business processes over functional departments, management can improve efficiency, better understand customer needs, and ultimately drive business success.
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The line on a supply curve moves in which direction?
Responses
upward and to the left
downward and to the center
upward and to the right
downward and to the left
Answers
Explanation:
The supply curve will move upward from left to right, which expresses the law of supply: As the price of a given commodity increases, the quantity supplied increases (all else being equal).
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Which factor played the most important role in the expansion of economle
connections between countries since the mid-20th century?
A. Rapid inflation in most countries
B. International efforts to protect the environment
C. Advances in technology
D. Reduced trade between neighboring countries
Answers
Witch method of commuting is most likely to reduce your need to go to the gym or get a treadmill
Answers
Answer:
Walking or using of bicycle
Explanation:
Use of legs are needed in both method of commuting. Leg muscles will be worked up and it also produces sweat that is equivalent to gym exercise
Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $25,148 and has a margin of 8%. Based on historical averages, 89 of people buying a new vehicle at Eastern will return for service 7 times over the next 5 years. Though it varies considerably, Eastern generates approximately $96 in margin on each service visit after accounting for parts and direct labor costs.
Not including service, what is the average dollar margin for each new vehicle sold?
Answers
The total estimated CLV over a 5 year time horizon for someone who purchases a new vehicle at Eastern Motors is $2,609.92
Given,
Year time horizon = 5 year
Average vehicle sells for = $25,148
Margin = 8%
So, margin on selling vehicle = Average vehicle selling price * Margin = $25,148 * 8% = $2,011.84
Margin generated by 89% of people who return for service over 5 years = Number of times * Margin generated on each service = 7 * $96 = $672
Total estimated customer lifetime value (CLV) at Eastern Motors = Margin on selling vehicle + (Margin generated by 89% of people who return for service over 5 years * 89%) +
(Margin generated by 226% of people who do not return for service over 5 years * 22%) = $2,011.84 + ($672 * 89%) + ($0 * 22%) = 2,609.92
Hence, the total estimated CLV over a 5 year time horizon for a person who purchases new vehicle at Eastern Motors is $2,609.92
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Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called Group of answer choices auditing. economics. finance. accounting.
Answers
Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called accounting.
Accounting is a fundamental process in business and financial management. It involves systematically recording financial transactions, classifying them into appropriate categories, and summarizing the information to create financial statements such as the income statement, balance sheet, and cash flow statement. These financial statements provide a snapshot of a company's financial performance, position, and cash flows, enabling decision-makers to analyze and make informed decisions about the organization's operations, investments, and financial strategies.
While auditing, economics, and finance are related disciplines, each has its own distinct focus. Auditing involves examining and evaluating financial records and statements to ensure accuracy, compliance, and reliability. Economics studies the production, distribution, and consumption of goods and services within an economy. Finance, on the other hand, focuses on managing financial resources, investments, and the financial aspects of decision making. However, accounting serves as the foundation for providing the necessary financial information in these areas.
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Fill in the blanks to answer the question: what is likely to happen to consumer and producer surplus when taxes increase on smartphones?.
Answers
The most likely impact of an increase in taxes on smartphones is that the consumer and producer surplus would decline.
What is producer and consumer surplus?
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good. Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
When tax is increased, the price of a smartphone increases, this reduces both the consumer and producer surplus.
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2.1 Answer questions on the business opportunity and related factors Develop a research instrument that can be used to assess customers' buying behaviour for any product of your choice.
Answers
Consumer market research employs two research methods: Qualitative and Quantitative.
1. Qualitative Consumer Research
Focus Groups: As the name implies, focus groups are small groups of highly validated subject experts who gather to analyze a product or service.
One-on-one Interview is a more conversational method in which the researcher asks open-ended questions to the respondents in order to collect data.
Text analysis is a qualitative research method in which researchers analyze social life by decoding words and images from available documents.
2.Quantitative consumer research is all about statistics and numbers. A savvy consumer who makes frequent purchases can attest to how consumer-centric businesses have evolved in recent years.
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Select a single stock issue, then perform each of the ratio valuations, covered in the lesson. Compare the information and make a recommendation on the value of the stock, and whether it is a good investment. Your submission must list the name of the stock, the data. The information was obtained, the source from which the information was drawn, and a list of each of the ratio models, showing the results. Also, prepare a narrative of at least two paragraphs that analyzes your findings and indicates your recommendations.
Answers
We should note that stock valuation helps to predict the future price or potential market prices for the investors to time their sales or purchase of investments. Its values the intrinsic value of the stock that shows the profitability of the business and its future market value.
What is the stock valuation of Apple Inc?In this context, let's assume we're analyzing Apple Inc. (AAPL), a technology company that designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players.
One key ratio valuations that investors might use to assess the value of AAPL is Price-to-earnings ratio (P/E ratio). This ratio compares the current stock price to the company's earnings per share (EPS). A high P/E ratio suggests that investors are willing to pay a premium for the stock based on its earnings potential.
To calculate the P/E ratio for AAPL, we would divide the current stock price by the company's EPS. As of 2022, AAPL had a P/E ratio of around 28, which is slightly higher than the industry average of around 24.
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Flint Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of $990,700. At December 31, 2018, the raw materials to be purchased have a market value of $942,000. Prepare any necessary December 31, 2018 entry.
Answers
Answer:
JOURNAL ENTRY :
Unrealized holding loss on purchase commitment - - - - - $48,700 Dr.
Estimated liability on purchase commitment ($990,700 - $942,000) - - - - 48,700 Cr.
Explanation:
Given the following :
Agreed purchase price of raw materials in 2018 = $990,700
Market value of raw material at 31, December 2018 = $942,000
JOURNAL ENTRY :
Unrealized holding loss on purchase commitment - - - - - $48,700 Dr.
Estimated liability on purchase commitment ($990,700 - $942,000) - - - - 48,700 Cr.
which of the following challenges facing hr is related to technology becoming more prevalent in many previously unskilled environments? a. shifts in industries/retraining b. baby boomer retirements c. decreased employee loyalty d. differing benefits preferences
Answers
A. Shifts in industries/retraining is the challenge related to technology becoming more prevalent in many previously unskilled environments.
As technology advances, many unskilled jobs are becoming automated, so employees must be retrained in order to remain employable. This can be a daunting and expensive task for employers, as it may require significant investments in employee training and development for certain industries. Additionally, some employers may have difficulty finding qualified workers to replace those who are retiring or being made redundant due to automation.
This creates a wide range of challenges for human resources departments. They must decide how to best allocate resources towards retraining, and find the most cost effective ways to do so. Companies may need to consider new sources of labour, such as contract workers or offshore staff, in order to remain competitive and meet staffing requirements. Additionally, they must ensure compliance with relevant legislation and regulations, while providing a safe and equitable working environment. Furthermore, they must also consider how to ensure that their retraining initiatives are both effective and cost-efficient. HR departments will also need to ensure a smooth transition for those employees who are being retrained, as well as for those who are entering the workforce for the first time.
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The difficulty associated with technology becoming more prevalent in many previously unskilled environments is shifting in industries and retraining. In this case, option A is correct
Many low-skilled jobs are becoming automated as a result of technological advancements, so workers must retrain in order to stay employable. Due to the potential need for significant investments in employee training and development for some industries, this can be a challenging and costly task for employers. Additionally, some employers might have trouble replacing those who are retiring or losing their jobs as a result of automation with qualified workers.For human resources departments, this poses a variety of difficulties. They must choose how to best allocate funds for retraining and identify the most economical strategies for doing so. Companies might need to think about new labor sources.To learn more about human resources departments click below:
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Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available:
Cost of expansion $ 3,310,000
Discount rate 9 %
Useful life 20
Annual rental income $ 1,900,000
Annual operating expenses $ 1,450,000
Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,520,000. Required:
1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places. )
4. Calculate the payback period. (Round your answer to 1 decimal place. )
5. Calculate the NPV. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1. ) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. )
Answers
The annual net operating income from the expansion is: $450,000.
The annual net cash inflow from the expansion is $450,000. The ARR is 13.64%. The payback period is 7.35 years. The NPV of the expansion is $117,763.
To calculate the annual net operating income from the expansion, we subtract the annual operating expenses from the annual rental income. Thus, the annual net operating income is $450,000 ($1,900,000 - $1,450,000).
To calculate the annual net cash inflow from the expansion, we add the annual net operating income to the depreciation expense, which is calculated as the cost of expansion minus the residual value divided by the useful life. Thus, the annual net cash inflow is $382,500 (($3,310,000 - $2,520,000) / 20 + $450,000).
To calculate the ARR, we divide the average annual net operating income by the cost of the expansion. Thus, the ARR is 13.64% ($450,000 / $3,310,000).
To calculate the payback period, we divide the cost of the expansion by the average annual net cash inflow. Thus, the payback period is 7.35 years ($3,310,000 / $450,000).
To calculate the NPV, we discount the future net cash inflows back to the present using the discount rate of 9%. We calculate the PV of the annual net cash inflows using the present value of an annuity formula and add it to the PV of the residual value using the present value of a single amount formula.
We then subtract the cost of the expansion from the sum of these two present values. Thus, the NPV of the expansion is $117,763.
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Why do you think it is important to understand GDP?