Suppose a company invests in technological innovation and, therefore, has lower capital
stocks in the current period. What are the effects on current aggregate output, consumption, investment, employment, real wage, real interest rate, nominal interest rate, and price level? Explain your results and show the graph.

Hi Tutor, nice to meet you. This is the task C of my (Entreprenuership and small business )assignment which is divided into several parts as well.

1 Definitions of creativity and innovation.

2 The main sources of generating business and entrepreneurial ideas.

3 How businesses protect intellectual property rights.

On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $3,200,000, and construction is expected to take 18 months. Drewry is billed and pays $1,600,000 of the contract price on January 2, 2019, and will pay the balance at completion.

TI estimates that the cost of construction will be $2,300,000.

Drewry includes two performance bonuses in the contact:

The bonuses are payable when a U.S. patent is approved and when international distribution is approved.

On the date the contract is signed, TI estimates that there is an 80% chance it will receive U.S. patent protection by March 15, 2020, but only a 30% chance that the equipment will be approved for international distribution.

TI received a U.S. patent on the equipment design on November 15, 2019, and immediately billed Drewry and received its bonus payment. On December 31, 2019, TI has incurred $1,840,000 of contract costs and is 80% complete. TI won approval for international distribution on January 15, 2020, and completed the equipment project on April 15, 2020, at a cost of $2,300,000.

Required:

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Hello This is my question tonight.

Sandhill Corporation had net income of $51,200 for the year ended December 31, 2020, and a weighted average number of common shares outstanding of 14,700. The following information is provided regarding the capital structure:

3. CDE Ltd has provided the following budgeted Income Statement extract for the July-September quarter in 2020.

July             August       September
$,000               $’000               $’000

Sales (all on credit) 85                    88                    91
Purchases (43)                  (45)                 (47)
Depreciation expense (5)                    (5)                   (5)
Electricity expense (6)                    (6)                   (6)
Other expenses (25)                  (25)                 (25)

You are also given the following additional information:

• All sales are collected in cash the month after sale.
• All purchases are made on credit and paid for in cash the month after purchase.
• Electricity is paid at the end of each quarter (i.e. on 30 September)
• Other expenses are paid in cash in the same month they are incurred.
• The business plans to buy a delivery van in August for $40,000 cash.
• The cash balance is $17,000 on 31 July 2020.

1. Prepare a cash budget for CDE Ltd for the month of August and September.
2. Assess the cash position of CDE Ltd. Should CDE Ltd proceed with the purchase of delivery van as planned?
3. Give your reasons and suggest alternatives if applicable.

on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for 4.6millions. The bonds pay interest on march 31 and September 30 and mature on September 30, 2027. Each 1000$ bond can be converted into 80 no par value common shares. In addition, each bond include 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of 15$. Immediately after the bond issuance, the warrants traded at 3$ each. Without the warrants and the conversion rights, the bonds would have been expected to sell for 4.2 million. On march 23, 2020, half of the warrants were exercised. The common shares of Gargiola inc. were trading at 20$ each on this day. Immediately after the payment of interest on the bonds, on september 30, 2022, all bonds outstanding were converted into common shares.

Required:

E) prepare the journal entry to account for the exercise of the warrants pro march 23, 2020. How many common shares were issued in this transaction?

Question 5.

The Rubio’s Fantastic Cs is a medium-size, Los Angeles based company that has been in business for the last ten years. It specializes in manufacturing the air conditioners. Over the last two years, the Rubio’s has spent $20,000 developing a new energy efficient and eco-friendly air conditioner called EcoStar.

Suppose you are a financial consultant advising the Rubio’s on whether to build a new plant in San Diego that will manufacture the EcoStar. The current date is December 31, 2017. The plant will be built over the two years and will be ready to start production on January 1, 2020. The plant is expected to operate only for the two years and so it will cease production on December 31, 2021. The investment for the plant requires an outlay of $10 million to be paid at the end of 2017 year. The IRS rules prescribe that this expenditure is depreciated using the straight-line depreciation schedule (to 0$) over five years as soon as the plant starts producing. The plant is expected to be reselled for $5 million on December 31, 2021. The plant will be built on the land that could be rented out for $375,000 a year.

To launch the manufacture of the EcoStar, the firm would also need to acquire new equipment. The equipment will cost $1 million to be paid at the end of 2019 year and will be depreciated using the straight line depreciation over the two years the plant is manufacturing the EcoStar. After two-years of the manufacture the equipment has no salvage value.

The Fabio’s new plant will produce 100,000 air conditioners a year. The EcoStar air conditioner can be sold at $500 per unit. Raw materials costs are $220 per unit and total labor costs are $500,000 a year. These revenues and costs are expected to be the same for the two year the plant is producing.

The working capital required on December 31, 2019 to allow inventories to be financed during the first year of productions is $100,000. Working capital needs for the second year will be $200,000. When the plant ceases manufacture all the working capital will be recovered (i.e. working capital equals $0 on December 31, 2021).

The Rubio’s Fantastic Cs has a corporate tax rate of 20% and other profitable ongoing operations. The opportunity cost of capital for this kind of project is 10%.

For all questions state your solution in millions of dollars (i.e. instead of writing $1,000,000 write $1m).

Part (a) What are the depreciation tax shields associated with the purchase of new equipment?

Year     Depreciation Schedule    Depreciation Amount   Depreciation Tax Shields

Part (b)

What are the depreciation tax shields associated with the new plant?

Year     Depreciation Proportion Depreciation Amount   Depreciation Tax Shields

Part(c)

What is the book value of the equipment and plant in every year?

Part (d)

What is the capital gain tax (capital loss tax credit) that the firm incurs on December 31, 2021 when selling the plant?

Part (e)

What is the plant’s salvage value (net of taxes)?

Part (f)

What are the firm’s NOPAT in every year if the firm builds the plant and starts manufacturing the EcoStar? First, give the answers to the following questions and then fill in the table.

1. What are the firm’s revenues in the first year of production?
2. What are the firm’s costs in the first year of production (excluding depreciation)?
3. What is the firm’s EBIT (earnings before interest and tax) in the the first year of production?
4. What is the firm’s income taxes in the first year of production?
5. What is the firm’s NOPAT (net operating profit after tax) in the first year of production?

Part (g)

What is the level of NWC (net working capital) required for the EcoStar manufacture in every year?

Part (h)

What are the free cash flows of the firm in every year that the firm manufactures the EcoStar?

As part of his effort in promoting innovation and healthy relationship among all the

employees working in different locations (branches), Andrus started an annual activity

where groups of employees (based on location) compete to pitch their most extreme ideas

to one another. Each group would present their ideas, then the branches vote one by one.

(They are not allowed to vote for their own branch) Each branch awards 8 votes to their

favorite, 4 to the second, 2 to the third and 1 to the fourth. Clearly, tactical voting is

important, so the order of voting is changed every year. This year, the branches vote in

order from most northerly to most southerly. The results before the last two branches have

voted are shown below (in voting order). Who still stands a chance of winning? Walk me

through your entire thought process!

1. As part of his effort in promoting innovation and healthy relationship among all the employees working in different locations (branches), Andrus started an annual activity where groups of employees (based on location) compete to pitch their most extreme ideas to one another. Each group would present their ideas, then the branches vote one by one. (They are not allowed to vote for their own branch) Each branch awards 8 votes to their favorite, 4 to the second, 2 to the third and 1 to the fourth. Clearly, tactical voting is important, so the order of voting is changed every year. This year, the branches vote in order from most northerly to most southerly. The results before the last two branches have voted are shown below (in voting order). Who still stands a chance of winning? Walk me through your entire thought process! (30 points)

As part of his effort in promoting innovation and healthy relationship among all the employees working in different locations (branches), Andrus started an annual activity where groups of employees (based on location) compete to pitch their most extreme ideas to one another. Each group would present their ideas, then the branches vote one by one. (They are not allowed to vote for their own branch) Each branch awards 8 votes to their favorite, 4 to the second, 2 to the third and 1 to the fourth. Clearly, tactical voting is important, so the order of voting is changed every year. This year, the branches vote in order from most northerly to most southerly. The results before the last two branches have voted are shown below (in voting order). Who still stands a chance of winning? Walk me through your entire thought process! (30 points)