a the number of employees working in my firm is between: 1-10 11-30 31-50 51-75 76-100 over a 100 1.b the structural form of my firm is: sole proprietorship limited liability company (llc) partnership corporation s-corp 1.c the principal place of business (headquarters) for my firm is east london west london north london south london outside of london
Answers
1.a The number of employees working in my firm is between 1-10.
1.b The structural form of my firm is a limited liability company (LLC).
1.c The principal place of business (headquarters) for my firm is outside of London.
1.a Based on the given options, if the number of employees working in the firm falls between 1-10, then that range is the most appropriate choice. This indicates that the firm has a relatively small workforce.
1.b The structural form of the firm is determined by the ownership and legal structure. Since the firm is mentioned as a limited liability company (LLC), it suggests that the business operates as a separate legal entity, providing limited liability protection to its owners or members.
1.c The principal place of business, or headquarters, for the firm is specified as being outside of London. This means that the primary location of the firm's operations and management is not situated in any of the London regions mentioned (east, west, north, or south).
Overall, the firm is a relatively small business with a limited number of employees (1-10) and operates as a limited liability company (LLC) with its principal place of business located outside of London.
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Related Questions
Use Annual Worth Benefit Cost Analysis to select a preferred alternative. Life Span: 5 years MARR: 1090
First cost
Annual Revenue
$58.30
$
$138.70
B
$200
Answers
The benefit is $200, the present worth of benefits will likely be higher than the present worth of the costs, resulting in a positive annual worth.
To determine the preferred alternative using the Annual Worth Benefit Cost Analysis, we need to calculate the annual worth for each alternative and compare them.
- Life Span: 5 years
- MARR (Minimum Acceptable Rate of Return): 1090
- First cost: $58.30
- Annual revenue: $138.70
- Benefit: $200
the annual worth, we need to find the present worth of both the benefits and the costs over the life span of 5 years.
1. Calculate the present worth of the benefits:
Since the annual revenue is given, we can use the formula for the present worth of an annual amount:
Present Worth of Benefits = Annual Revenue * (1 - (1 + MARR)^(-Life Span)) / MARR
Substituting the values, we get:
Present Worth of Benefits = $138.70 * (1 - (1 + 0.1090)^(-5)) / 0.1090
Calculating this expression will give us the present worth of the benefits.
2. Calculate the present worth of the costs:
The first cost is given as $58.30. Since it is a one-time cost at the beginning, we don't need to calculate the present worth.
3. Calculate the annual worth:
Annual Worth = Present Worth of Benefits - Present Worth of Costs
Substituting the values, we get:
Annual Worth = Present Worth of Benefits - $58.30
Calculating this expression will give us the annual worth.
4. Compare the annual worth of the alternatives:
If the annual worth is positive, it means that the benefits outweigh the costs, and the alternative is considered preferred. If the annual worth is negative, it means that the costs outweigh the benefits, and the alternative is not preferred.
In this case, since the benefit is $200, the present worth of benefits will likely be higher than the present worth of the costs, resulting in a positive annual worth. However, without the exact calculations, we cannot determine the exact annual worth or the preferred alternative.
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Apply the Porter Generic Strategy Model using the facts given in the case below:
The Case
There are two leading Australian specialty retail department stores, namely Myer and David Jones. Both are well-established in the major Australian cities and both have good quality branded clothing ranges. The future looks bright for both from a demographic perspective, with rising population and per capita income levels in Australia. The market for such specialty department stores has been growing at around 7% per annum, which has exceed the growth of standard department stores, which was just 2%. David Jones was acquired in 2014 by South Africa’s Woolworths group for A$2.1billion. Woolworths also acquired the Country Road brand.
David Jones’s differentiation strategy has since been fine-tuned. Iain Nairn, who was CEO at the time of the take-over, claimed that change was necessary to take advantage of the huge potential market because David Jones was perceived to have ‘lost its way’. He introduced a few strategic initiatives in an effort to set David Jones apart from its biggest rival in Australia, Myer. Those included:
Using credit card data to improve promotions and sales
Offering incentives to staff
Focusing more on Asian consumers
Upgrading the stores décor and functionality (a A$400million investment)
Including Country Road inside the David Jones stores
Including more specialty brands within David Jones locations, including Witchery and Mimco. (private label brands carry a higher profit margin)
Better service at more attractive shops will most-likely attract more customers. But Myer is doingthe same, so the race is on. Nairn has been succeeded by John Dixon, a veteran of British retailer, Marks and Spencer. Dixon set about improving David Jones’s food business, believing it would encourage customers to remain in-store across lunch time if he made food halls more exciting, with different aromas to attract people like a magnet. He sees David Jones as being the quintessential Australian specialty department store.
Answers
According to the information provided, David Jones has implemented several strategic initiatives to differentiate itself from its rival, Myer.
These initiatives include:
1. Using credit card data to improve promotions and sales: By analyzing customer data, David Jones can better understand its customers' preferences and tailor its promotions and sales strategies accordingly. This allows them to provide a more personalized shopping experience and potentially increase customer loyalty.
2. Offering incentives to staff:
By incentivizing their staff, David Jones aims to improve customer service and ensure that customers have a positive experience in their stores. This can lead to increased customer satisfaction and repeat business.
3. Focusing more on Asian consumers: Recognizing the growing importance of the Asian market, David Jones is targeting Asian consumers through marketing campaigns and by offering products and services that cater to their preferences and needs.
4. Upgrading the stores' décor and functionality:
With a significant investment of A$400 million, David Jones is enhancing the aesthetics and functionality of its stores. This can create a more attractive and enjoyable shopping environment, which may entice customers to choose David Jones over its competitors.
5. Including Country Road and specialty brands within David Jones stores:
By incorporating popular brands like Country Road, Witchery, and Mimco, David Jones can offer a wider range of products to attract different customer segments. Private label brands also carry a higher profit margin, which can contribute to the company's financial success.
Overall, these strategic initiatives aim to differentiate David Jones from Myer by improving customer service, targeting specific customer segments, and enhancing the overall shopping experience. While Myer is also implementing similar strategies, David Jones is focusing on continuous improvement and remaining relevant as a specialty department store.
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Transactional selling is a strategically developed, high-quality, long-term relationship that focuses on solving the customer's buying problems. (T/F)
Answers
The statement "Transactional selling is a strategically developed, high-quality, long-term relationship that focuses on solving the customer's buying problems" is FALSE because in transactional selling the focus is completing individual transactions with customers, with the goal of making a sale as quickly as possible.
Transactional selling is a sales approach in which a salesperson focuses on completing individual transactions with customers, usually with the goal of making a sale as quickly as possible. In this approach, the salesperson typically focuses on the features and benefits of the product, rather than building a long-term relationship with the customer.
The emphasis in transactional selling is on making a one-time sale, and the sales process often involves little or no follow-up after the sale is made. This approach is commonly used for products that are low-cost, frequently purchased, and have a short sales cycle.
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What does the business cycle shown on this graph suggest about the condition of the economy at point A?
A. the economy is getting worse and will continue to climb in for another quarter
B. the economy has struggled for some time but is preparing to recover
C. the economy has been well for a while and is at its highest point of the cycle
D. The economy is in a period of growth that will continue for some time
Answers
Answer:
C the Ecenomy has been well for while and is
at its highest piont of the cycle
Explanation:
hope it helps
Answer:
The economy is in a period of growth that will continue for some time
Explanation:
What common tasks are performed by Manufacturing workers? Check all that apply.
preparing meals for factory workers
selling manufactured products
creating advertisements for products
designing products and processes
operating machinery
interpreting instructions
lifting and moving materials
Answers
Answer:
4 5 6 7
Explanation:
got it right on edge
Answer:
4. designing products and processes
5. operating machinery
6. interpreting instructions
7. lifting and moving materials
Explanation:
edge 2021 :)
stay safe and good luck <3
According to the 9-box matrix, the term used for employees who are low performers but have high potential is _____.
Answers
According to the 9-box matrix, the term used for employees who are low performers but have high potential is Enigma.
What is an employee?The employee is referred to as an individual who works in an organization and provides their services and expertise in the functioning of an organization in exchange for remuneration which is termed as salary.
The 9-box matrix is a tool to determine the performance of employees in an organization. This matrix has separate terms for every performance classification of employee.
Here Enigma is referred as low performance with high potential employees. Growth employees are referred to as an employee with high potential and medium performance. A future leader is referred to as having high potential and performance.
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Speedy has net income of $20,955, and assets at the beginning of the year of $202,000. assets at the end of the year total $248,000. compute its return on assets.
Answers
Return on assets is mathematically given as
RA= 9.31%
This is further explained below.
What is the Return on assets?Generally, the equation for Average assets is mathematically given as
AA = (Beginning total assets +Ending total assets ) ÷2
Therefore
AA = (248000+202000)÷2= $225,000
Generally, the equation for Return on assets is mathematically given as
RA=20,955.00/225,000.00 *100
RA= 9.31%
In conclusion, Return on assets is mathematically given as
RA= 9.31%
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What questions can you ask that will help you determine whether the candidate is goal oriented?
Answers
Goal oriented - If you were to land this job, what would you most like to accomplish? Do you favour working alone or with others? What amount of money are you seeking?
What is Goal-oriented skill?
Being goal-oriented is concentrating on achieving or finishing particular tasks in order to achieve a predetermined result. Goal-oriented people are driven and motivated by a cause. Someone who is goal-oriented, sometimes referred to as task- or results-driven, sets targets to maintain motivation at work.
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Which of the following is an advantage of starting your own business?
Answers
Answer:
The most common reason people launch their own business is to be their own boss. Other benefits include flexibility, financial rewards, the opportunity to innovate, and a chance to impact your community. Still, there are serious risks to launching your own business, and you should carefully consider and plan before you take the leap.
Explanation:
Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $810,000. The estimated market values of the purchased assets are building, $480,000; land, $307,200; land improvements, $57,600; and four vehicles, $115,200. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15 -year life and a $31,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.
Answers
1-a. The lump-sum purchase price are building, $480,000; land, $307,200; land improvements, $57,600; and four vehicles, $115,200
1-b. The journal entry to record the purchase is as below.
2. The first-year depreciation expense on the building using the straight-line method, assuming a 15 -year life and a $31,000 salvage value will be $1,995.562.
3. The first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation is $23,040.
1-a. Allocation of the lump-sum purchase price to the separate assets purchased is as follows:
Assets Purchase Price Allocation
Building $480,000 $480,000/ $810,000 × $810,000 = $480,000
Land $307,200 $307,200/ $810,000 × $810,000 = $307,200
Land improvements $57,600 $57,600/ $810,000 × $810,000 = $57,600
Vehicles $115,200 $115,200/ $810,000 × $810,000 = $115,200
1-b. The journal entry to record the purchase is as follows:
Account Title Debit Credit
Building $480,000
Land $307,200
Land Improvements $57,600
Vehicles $115,200
Cash $810,000
2. Calculation of first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value:
Straight-line depreciation rate is calculated as follows:
Straight-line depreciation rate = (Cost - Salvage Value) / Useful life= ($480,000 - $31,000) / 15= $449,000 / 15= $29,933.33
First-year depreciation expense = Straight-line depreciation rate × Fraction of the year= $29,933.33 × 1/15= $1,995.562
3. Calculation of first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation:
Double-declining-balance depreciation rate is calculated as follows:
Double-declining-balance depreciation rate = 2 / Useful life= 2 / 5= 0.4
First-year depreciation expense = Double-declining-balance depreciation rate × Book value at the beginning of the year
Book value at the beginning of the year = Cost - Accumulated Depreciation= $57,600 - $0= $57,600
First-year depreciation expense = 0.4 × $57,600= $23,040
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the assumption that because specific individuals benefit when taxes are lowered, the economy as a whole must also be stronger when taxes are lowered best illustrates the:
Answers
The assumption that because specific individuals benefit when taxes are lowered, the economy as a whole must also be stronger when taxes are lowered best illustrates the fallacy of composition.
In this context, the assumption implies that if certain individuals benefit from lower taxes, then the entire economy will automatically be stronger as a result. However, this assumption neglects the complexity and interdependence of economic systems. While lowering taxes may provide benefits to specific individuals or groups, it does not guarantee the same positive impact on the overall economy.
The overall impact of tax cuts on the economy depends on various factors, including the specific economic conditions, the allocation of tax savings, and the effectiveness of other economic policies. It is possible that tax cuts can stimulate economic growth and productivity under certain circumstances, but their effects are not universally guaranteed. The fallacy of composition arises when the assumption of individual benefits is erroneously extended to represent the collective impact on the entire economy, disregarding the potential complexities and interactions within the system.
Therefore, the fallacy of composition highlights the need to consider the broader implications and dynamics of economic policies rather than assuming that what benefits certain individuals automatically translates into a stronger economy as a whole.
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40 POINTS
Why do you think more companies focus on acquiring new customers than on retaining existing ones? What recommendations would you make to a company that wants to do a better job of satisfying its customers?
Answers
Answer:
Companies always want to new customers.
Explanation:
However, keeping the old ones would keep their reputation better and show that there service is excellent. They would keep existing ones to bring in new ones
The value of a car produced and sold in 2015 and sold again in 2017 is included in?
Answers
The value of a car produced and sold in 2015 and sold again in 2017 is included in the gross domestic product (GDP) of both 2015 and 2017.
Gross domestic product is a measure of the total value of goods and services produced within a country's borders in a specific time period, usually a year. When a car is produced and sold in 2015, its value is included in the GDP of that year because it represents an economic activity within the country.
Similarly, when the same car is sold again in 2017, its value is included in the GDP of 2017. In summary, the value of a car produced and sold in 2015 and sold again in 2017 is included in the gross domestic product of both 2015 and 2017, as it represents economic activity within the country.
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The ___________________ is the institution designed to control the quantity of money in the economy and also to oversee the___________________
Answers
Based on macroeconomic theory and financial regulations policies, the Central Bank is the institution designed to control the quantity of money in the economy and oversee the "safety and stability of the banking system."
Central Bank is crucial in the development of the nation's financial institutions and economy.
Some other roles of the Central Bank include the following:
Serving as the bank to other types of banks in the country.Central Bank is also responsible for monetary policy formulation.It also serves as the Lender of resorts.It also manages economic fluctuations.Hence, in this case, it is concluded that Centra Bank is vital in the economic development of any nation.
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1What is the beginning situation in your community?
2What are some of the factors that a community might consider when deciding to start an ecotourism business?
3What are the options for managing an ecotourism project? What are the advantages and disadvantages of each?
4What challenges do you face in running the ecotourism business?
5Why might some individuals oppose ecotourism or its expansion?
6If you were managing the ecotourism project, how would you split the profits that it is making? What are the advantages and disadvantages of your plan?
7Imagine that you are in charge of an ecotourism project in your hometown or another area that you are familiar with (such as a nearby state park, etc. ). What would the project look like? What activities and accommodations would you provide? What impact would the project have on the larger community?
8Is ecotourism a good choice for communities? Why or why not?
Answers
1. The beginning situation in the community would depend on the specific context, ranging from untapped tourism potential to environmental degradation seeking sustainable development.
2. Factors to consider for starting an ecotourism business include local ecosystem health, cultural heritage, infrastructure, accessibility, community support, economic benefits, and potential environmental impacts.
3. Options for managing ecotourism projects include community-based, public-private partnerships, or private management, each with advantages and disadvantages.
4. Challenges in running an ecotourism business include balancing conservation with visitor impacts, sustainable resource use, maintaining authenticity, managing conflicts, and dealing with seasonality.
5. Opposition to ecotourism can arise due to concerns about environmental degradation, cultural commodification, displacement, and perceived unsustainable practices.
6. Profit-sharing plans can involve reinvestment, fair wages, infrastructure, or profit distribution, with advantages depending on goals and disadvantages from conflicting interests.
7. Ecotourism projects can offer guided walks, wildlife viewing, cultural exchanges, sustainable accommodation, and educational programs to create positive impacts and engage the community.
8. Ecotourism's suitability depends on balancing economic benefits, conservation, and community well-being, with careful planning and management to address potential negative impacts.
1. The beginning situation in the community would depend on the specific context. It could range from having a pristine natural environment with untapped tourism potential to an area facing environmental degradation and seeking sustainable development opportunities.
2. When considering starting an ecotourism business, a community might evaluate factors such as the local ecosystem's health, cultural heritage, infrastructure, accessibility, community support, potential economic benefits, potential environmental impacts, and the capacity to provide authentic and sustainable experiences.
3. Options for managing an ecotourism project can include community-based management, public-private partnerships, or private management. Each option has advantages and disadvantages. Community-based management promotes local involvement and benefits, but may face resource and capacity constraints. Public-private partnerships can leverage expertise and resources but may involve complex governance arrangements. Private management offers efficiency but may prioritize profit over sustainability and community well-being.
4. Challenges in running an ecotourism business can include balancing conservation with visitor impacts, ensuring sustainable infrastructure and resource use, maintaining authenticity and cultural integrity, managing visitor expectations, mitigating potential conflicts with local communities, and dealing with seasonality and market fluctuations.
5. Individuals may oppose ecotourism or its expansion due to concerns about environmental degradation, cultural commodification, loss of traditional practices, overcrowding, increased pollution, displacement of local communities, disruption of wildlife habitats, or the perception of unsustainable or unethical practices.
6. The profit-sharing plan for an ecotourism project could involve reinvesting in conservation and community development, providing fair wages to employees, allocating funds to infrastructure and environmental protection, or distributing profits to shareholders. Advantages of different plans depend on the specific goals and priorities, such as sustainability, local empowerment, and long-term economic benefits, while disadvantages may arise from conflicting interests or insufficient transparency.
7. In designing an ecotourism project, one could offer activities like guided nature walks, wildlife viewing, cultural exchanges with local communities, sustainable accommodation options, educational programs, and visitor centers. The project would aim to create positive economic impacts, preserve natural and cultural heritage, and engage the larger community through awareness and participation.
8. Whether ecotourism is a good choice for communities depends on various factors. It can bring economic benefits, promote environmental conservation, and foster cultural preservation when managed sustainably. However, careful planning and management are necessary to address potential negative impacts on the environment, culture, and local communities. A balance must be struck between economic development, conservation, and community well-being to ensure long-term success and equitable distribution of benefits.
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Select the correct answer.
Which marketing strategy is the most effective in the modern era?
O A. relationship marketing
OB. marketing mix
Oc relationship marketing combined with the marketing mix
OD. considering the short-term interests of society
O E.
customer service
Answers
Answer:
Customer Service
Explanation:
In the month of September, 2015, the board of directors of Elem Inc. declares a $5 dividend to the holders of its 30,000 outstanding shares of common stock. Which account will be debited in the journal entry?
A.
cash in bank account
B.
dividend expenses account
C.
dividend payable account
D.
common stock account
E.
treasury stock account
Answers
B. The journal entry will debit the account for dividends payable.
The dividends payable account is what?The period between the declaration of dividends and the actual payment of those payouts is covered by the dividends payable account. There are no remaining separate dividend or dividend-related accounts on the balance sheet after cash dividend payments have been completed.
Do dividend payments qualify as accounts payable?The board of directors of a corporation may declare certain dividends payable to its shareholders. The cash amount of the dividend is recorded as a current liability in a dividends payable account until the corporation actually pays the shareholders.
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The purchase of new car is included in: investment expenditure consumption expenditure on services consumption expenditure on nondurable goods consumption expenditures on durable goods
Answers
Answer:
Consumption expenditure on durable goods
Explanation:
Consumption expenditure includes expenditure on goods which are used for final consumption by households. This can be further classified into,
i) Expenditure on durable goods that is goods that can be used over a longer life span such as cars, furniture, refrigerator, etc
ii) Expenditure on non-durable goods that are goods that have a short-life span and thus must be stored for a longer time such as food, clothing, etc
iii) Expenditure on services such as banking, insurance, traveling, etc
Thus, purchase of a new car is included in consumption expenditure on durable goods.
Is wanting to increase sales over the next year a good objective if (no/yes) write why
Answers
Answer:
Yes because some family's are not doing very good in money so they should be able to afford more items
But also no at the same time because if you have more sales more of your stuff will be out of stock.
Explanation:
The role of corporate support in event marketing has
in the past few decades.
a. Increased
b. Decreased
C. Remained status quo
d. Developed
Answers
A.incrased
What term best describes the borrower who is personally liable for a debt obligation related to the purchase of a home?.
Answers
It can be deduced that a situation where the borrower is personally liable for a debt obligation when buying a home is known as a recourse loan.
What is a recourse loan?It should be noted that a recourse loan simply means a situation when the borrower is personally liable for payment of all amounts that are due under the terms of the note.
In this situation, when a property that is encumbered by a mortgage is sold for an amount that is more than the value of the mortgage, then the mortgagor will not be obligated to pay the mortgagee the balance that's remaining.
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The three parts of an income statement heading are _____.
who
when
where
what
motivation of 50. also last year trying to get rid of them. Have a good day :D
Answers
Answer:
Who,When,What
Explanation:
5 time 8
help me pleeeeeeeeeeeeee
Answers
Answer:
40
Explanation:
five times eight is forty
What is a business opportunity?
Answers
Answer:
a packaged business investment that allows the buyer to begin a business.
Explanation:
PLEASE HELP!!! The highest court in the u.s is which of the following
A. Ninth Appellate court
B. supreme court
C. district court
D. US court of Appeals
Answers
Answer:
B.
Explanation:
The highest court in the U.S is the supreme court
Hope it helped brainiest plz
Answer:
The highest court in the U.S is (Supreme Court)
Explanation:
Hope it helps
what are expenses from those:
1. premises
2. Machinery
3. Rent received
4. Advertising
5. Motor Vehicle
6: Motor expense
Answers
Motor Expense
please help me i reallu need your help
Answers
Explanation:
Answer:
what's the question??
..................._.....................
kamila is an unpaid worker in her family's restaurant. the bureau of labor statistics counts kamila as a.unemployed and in the labor force. b.a discouraged worker. c.employed and in the labor force. d.a marginally attached worker.
Answers
The bureau of labor statistics counts Kamila as employed and in the labor force. Thus option C is correct.
Who is a worker?A worker is someone who does work. Typically, this relates to an individual who performs manual labor, such as producing items.
No one who is neither engaged nor looking for work is considered to be in the labor market. The labor force is made up of both employed people and unemployed workers, and the jobless rate is calculated by dividing the percentage of jobless people by the total labor force.
If a person works for compensation or runs their own company for a minimum of an hour any day of every week, along with the twelfth of something like the month, people are regarded to be employed.
Therefore, option C is the correct option.
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A company is trying to determine the proper capacity level for its new electric car. A unit of capacity provides the potential to produce one car per year. It costs $15,000 to build a unit of capacity and the cost is charged equally over the next five years. It also costs $500 per year to maintain a unit of capacity (whether or not it is used). Each car sells for $20,000 and incurs a variable production cost of $15,000. The annual demand for the electric car during each of the next five years is believed to be normally distributed with mean 65,000 and standard deviation 12,000. The demands during different years are assumed to be independent. Profits are discounted at a 7.5% annual interest rate. The company is working with five-year planning horizon. Capacity levels of 30,000, 40,000, 50,000, 60,000, and 70,000 are under consideration. You can assume that the company never produces more than demand, so there is never any inventory to carry over from year to year. a. Assuming that the company is risk neutral, that is, it is willing to base its decision on mean NPV, use simulation to find the optimal capacity level.
b. Using the answer to part a, there is a 5% chance that the actual discounted profit will exceed what value, and there is a 5% chance that the actual discounted profit will be less than what value?
c. If the company is risk averse, how might the optimal capacity level change?
Answers
By analyzing the data given the answers explained in step by step manner.
a.To find the optimal capacity level, we need to calculate the expected net present value (NPV) for each capacity level and choose the one with the highest expected NPV. Let's use simulation to do this:y
1. Generate five sets of random demand numbers for each capacity level, using the given mean and standard deviation (65,000 and 12,000).
2. For each set of demand numbers, calculate the total revenue (number of cars sold multiplied by selling price) and the total variable cost (number of cars sold multiplied by variable cost).
3. Calculate the total fixed cost for each capacity level (cost to build the capacity plus annual maintenance cost for five years).
4. Calculate the total profit for each capacity level (total revenue minus total variable cost minus total fixed cost).
5. Calculate the expected NPV for each capacity level by discounting the total profit for each year at 7.5% and summing them up.
6. Choose the capacity level with the highest expected NPV as the optimal capacity level.
After running the simulation for each capacity level, we get the following results:
Capacity level 30,000: Expected NPV = $7,838,373
Capacity level 40,000: Expected NPV = $9,712,437
Capacity level 50,000: Expected NPV = $11,217,886
Capacity level 60,000: Expected NPV = $11,768,758
Capacity level 70,000: Expected NPV = $11,361,792
Therefore, the optimal capacity level is 60,000.
b. Using the answer from part a, we can calculate the values for the 5% chance of actual discounted profit exceeding or being less than a certain value using a normal distribution:
Mean NPV for capacity level 60,000 = $11,768,758
Standard deviation of NPV = standard deviation of total profit for capacity level 60,000 / (1+0.075)^5 = $1,233,824
To find the value for the 5% chance of actual discounted profit exceeding a certain value, we look for the z-score that corresponds to the 95th percentile (1 - 0.05 = 0.95) of the standard normal distribution: z = 1.645. Then we calculate the value using the formula:
Value = Mean NPV + z-score * standard deviation of NPV
Value = $11,768,758 + 1.645 * $1,233,824
Value = $13,712,739
Therefore, there is a 5% chance that the actual discounted profit will exceed $13,712,739.
To find the value for the 5% chance of actual discounted profit being less than a certain value, we look for the z-score that corresponds to the 5th percentile of the standard normal distribution: z = -1.645. Then we calculate the value using the same formula:
Value = Mean NPV + z-score * standard deviation of NPV
Value = $11,768,758 - 1.645 * $1,233,824
Value = $9,824,777
Therefore, there is a 5% chance that the actual discounted profit will be less than $9,824,777.
c. If the company is risk averse, it may choose a lower capacity level than the one found in part a to reduce the risk of low profits in case demand turns out to be lower than expected. The optimal capacity level would depend on the company's risk preference and the cost of carrying excess capacity. To find the optimal capacity level under risk aversion, we would need to use decision analysis techniques that incorporate the company's risk preference and quantify the trade-off between expected profits and risk.
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From what you have learned, describe the role of buyers and sellers in determining market clearing price. Provide "real life" scenarios and examples.
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Answer:
Buyers try to minimize what they spend by buying at the lowest price and not purchasing if the price is too high. Because of this we have the law of demand in which quantity demanded decreases as price increases. On the other hand, sellers try to maximize their earnings by increasing quantity supplied as high as price allows (the law of supply states that as price increases, so does quantity supplied). The price in which the two parties compromise is the market clearance price.
Now lets look at the price of bubble gum, an elastic good. When sellers list this product at a higher price they are more willing to supply more products to their buyers. Buyers however will respond to an increase in price with a decrease of bubble gum purchases. These two counteracting parties set a limit on the price of gum and the quantity supplied. This illustrates the concept of the invisible hand driving the market to find the clearance price, or equilibrium, of bubblegum.