The implied annual dividend yield of 2.71% suggests that investors anticipate an annual return in the form of dividends at that rate based on the observed futures price and the spot price of the index.
To calculate the implied annual dividend yield, we can use the formula:
Implied Annual Dividend Yield = (Futures Price - Spot Price) / Spot Price x (1 / Time to Maturity)
The Futures Price is 1335, the Spot Price is 1300, and the Time to Maturity is 6 months. Plugging these values into the formula, we get:
Implied Annual Dividend Yield = (1335 - 1300) / 1300 x (1 / 0.5)
Simplifying the equation, we find:
Implied Annual Dividend Yield = 2.69
Therefore, the implied annual dividend yield per annum is 2.69%. This implies that the market expects an annual dividend yield of approximately 2.69% on the underlying index based on the observed futures price and spot price.
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What are the qualitative and quantitative steps necessary in
conducting a Sensitivity Analysis?
Sensitivity analysis involves qualitatively identifying key variables and quantitatively determining their impact through scenario analysis and assessing outcome changes.
The qualitative steps in conducting a sensitivity analysis involve identifying the key variables and factors that may impact the project or decision under analysis. The quantitative steps include determining the range of values for each variable, conducting scenario analysis, and assessing the impact of varying each variable on the outcomes.
In detail, conducting a sensitivity analysis involves the following steps:
1. Qualitative steps:
- Identify the key variables and factors that can influence the project or decision.
- Understand the relationships between these variables and the outcomes.
- Determine the level of uncertainty associated with each variable.
2. Quantitative steps:
- Define the range of values for each variable, considering both optimistic and pessimistic scenarios.
- Assess the impact of varying each variable on the outcomes by calculating the corresponding changes in the results.
- Conduct scenario analysis by combining different values of multiple variables to examine their combined effects.
- Evaluate the sensitivity of the outcomes to different variables and identify the most influential factors.
By combining qualitative and quantitative steps, a sensitivity analysis helps decision-makers understand the robustness of their decisions, identify potential risks and opportunities, and make informed choices considering the uncertainties and variability of key variables.
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Find an example of a company that is seeking to improve its effectiveness in some way. What dimension of effectiveness (control, innovation, or efficiency) is it seeking to improve? What changes is it making to address the issue? Describe your connection to this company and why you chose it. Concepts must be fully explained and cited.
An example of a company seeking to improve its effectiveness in the dimension of innovation is Apple Inc., a global technology company renowned for its innovative products and services.
To continue to be the market leader, Apple continually places a high priority on fostering innovation. Apple has made the following adjustments in order to better support innovation:
Design and user experience are highly valued by Apple, who lays a strong emphasis on both in its products. To develop aesthetically pleasing, understandable, and seamless user experiences, the organization makes significant investments in industrial design and user interface research. Apple has distinguished itself from its rivals and developed a distinctive corporate identity because to its emphasis on design innovation.
Investment in Research and Development: Apple commits a considerable amount of funds to its R&D initiatives. To create cutting-edge hardware, software, and services, the company makes investments in cutting-edge technologies, materials, and production techniques. With this expenditure, Apple can release new features, functionalities, and product categories, such as the Apple Watch and AirPods, which have been successful in expanding the company's product ecosystem.
Collaboration and Partnerships: In order to promote innovation, Apple actively works with suppliers, developers, and technology firms. Apple is able to access new technology, people, and ideas through partnerships, which it may then incorporate into its goods and services. For instance, Apple's collaboration with chip makers resulted in the creation of specially designed processors for its products' enhanced performance and energy efficiency.
Internal Innovation Programs: Through programs like the "Blue Sky" program, Apple encourages its staff to seek creative ideas. Through this program, staff members can devote time and resources to side projects that they are passionate about. It offers a venue for fostering innovation and the growth of fresh ideas that might influence the company's future goods and services.
I am connected to Apple because I use and adore its goods and services. My personal and professional life has been significantly impacted by Apple's dedication to innovation, from smartphones and laptops to digital content creation tools and services. My interest in technology and my enthusiasm for businesses that prioritize innovation are in line with the company's capacity to constantly introduce ground-breaking products and revolutionize user experiences.
Apple was used as an example because of its standing as a leader in technology worldwide and its well-established methods for fostering innovation. Apple's innovative ideas, design-focused approach, and R&D spending are covered in a variety of sources, including articles from prominent journals like Forbes and Harvard Business Review.
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Neville started a takeaway pizza business. Initially, he did not offer a delivery service. However, since the pandemic, sales have increased hugely, and he is now considering hiring drivers to provide deliveries. He is acutely conscious that he does not want the legal hassle of dealing with employees and has asked you for advice on how he should structure the relationship with his drivers such that he does not incur any liability to the drivers as employees. In light of the legal principles involved, advise Neville as to the factors the courts will take into consideration in determining the employment status of his drivers.
If Neville is planning to hire drivers for his takeaway pizza business, he should be aware of the legal principles involved and the factors that the courts will consider to determine the employment status of his drivers. The main question will be whether the drivers are employees or independent contractors.
If the drivers are employees, then Neville will have to comply with various legal requirements, such as paying minimum wage, providing benefits, and deducting taxes from their paychecks. On the other hand, if the drivers are independent contractors, Neville will not have to comply with those requirements, but the drivers will not be entitled to employment benefits.
The courts will look at various factors to determine whether the drivers are employees or independent contractors. These factors include:
1. Control: The amount of control that Neville has over the drivers' work will be a key factor in determining their employment status. If Neville controls the work that the drivers do, when they do it, and how they do it, then they are likely to be considered employees.
2. Integration: The courts will also look at whether the drivers are integrated into Neville's business. If the drivers are essential to the functioning of Neville's business and work exclusively for him, they are more likely to be considered employees.
3. Tools and equipment: If Neville provides the drivers with the tools and equipment they need to do their work, such as a vehicle, they are more likely to be considered employees.
4. Risk: The courts will consider whether the drivers are assuming any risk in the course of their work. If the drivers are assuming the risk of loss or damage to the goods they are delivering, they are more likely to be considered independent contractors.
Based on these factors, Neville can structure the relationship with his drivers in a way that minimizes his liability and the drivers' liability. If Neville wants to avoid the legal hassle of dealing with employees, he should consider structuring the relationship with his drivers as independent contractors.
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IEC has just developed a new electronic device (called the PPD) and it believes it will have
broad market appeal. The company has performed marketing and cost studies that revealed the
following information:
A) New equipment would have to be acquired to produce the device. The equipment would cost
$315,000 and have a six-year useful life. After six years, it would have a salvage value of
about $15,000.
B) Sales in units over the next six years are projected to be as follows:
Year Sales in Units
1 9,000
2 15,000
3 18,000
4–6 22,000
C) Production and sales of the device would require working capital of $60,000 to finance
accounts receivable, inventories, and day-to-day cash needs. This working capital would be
released at the end of the project’s life.
D) The devices would sell for $35 each; variable costs for production, administration, and sales
would be $15 per unit.
E) Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation
on the equipment would total $135,000 per year. (Depreciation is based on cost less salvage
value).
F) To gain rapid entry into the market, the company would have to advertise heavily. The
advertising costs would be:
Year
Amount of Yearly
Advertising
1–2 $180,000
3 $150,000
4–6 $120,000
G) The company’s required rate of return in 14%.
Proposal 2 – NED
One of your colleagues has provided an analysis of a competing proposal and concluded the
following:
NPV = $120,000; IRR = 15.5%; Payback Period = 3.5 years, Profitability Index = 1.25
Required:
1) Compute the net cash inflow (incremental contribution margin minus incremental fixed
expenses) anticipated from the sale of the PPDs for each year over the next six years.
2) Using the data computed (1) and other data provided in the problem, determine the net present
value, internal rate of return, payback period, and profitability index of the proposed
investment.
3) Using the analysis performed in (2), prepare "best" and "worst" case scenarios using the
following assumptions:
a) Best Case – Projected sales expectations increase by 10%, required rate of return falls to 7%.
b) Worst Case – Projected sales decreases by 10%, required rate of return increases to 15%.
Required Rate of Return Increases to 15%: Use the new required rate of return in the calculations for NPV, IRR, payback period, and profitability index.
1) To compute the net cash inflow anticipated from the sale of the PPDs for each year over the next six years, we need to calculate the incremental contribution margin and subtract the incremental fixed expenses.
The incremental contribution margin can be calculated by subtracting the variable costs per unit ($15) from the selling price per unit ($35):
Incremental Contribution Margin = Selling Price per Unit - Variable Costs per Unit
Incremental Contribution Margin = $35 - $15 = $20
Now, let's calculate the net cash inflow for each year:
Year 1: Net Cash Inflow = Incremental Contribution Margin * Sales in Year 1
Net Cash Inflow = $20 * 9,000 = $180,000
Year 2: Net Cash Inflow = Incremental Contribution Margin * Sales in Year 2
Net Cash Inflow = $20 * 15,000 = $300,000
Year 3: Net Cash Inflow = Incremental Contribution Margin * Sales in Year 3
Net Cash Inflow = $20 * 18,000 = $360,000
Years 4-6: Net Cash Inflow = Incremental Contribution Margin * Sales in Years 4-6 (22,000 units per year)
Net Cash Inflow = $20 * 22,000 * 3 = $1,320,000
2) To determine the net present value (NPV), internal rate of return (IRR), payback period, and profitability index of the proposed investment, we need to consider the net cash inflows, initial investment, and the company's required rate of return (14%).
NPV can be calculated by discounting the net cash inflows at the required rate of return and subtracting the initial investment:
NPV = (Net Cash Inflow Year 1 / (1 + Required Rate of Return))^1 + (Net Cash Inflow Year 2 / (1 + Required Rate of Return))^2 + ... + (Net Cash Inflow Year 6 / (1 + Required Rate of Return))^6 - Initial Investment
IRR is the discount rate that makes the NPV equal to zero. It can be calculated using financial software or Excel functions.
Payback period is the time it takes to recover the initial investment. It can be calculated by dividing the initial investment by the net cash inflow for each year until the cumulative cash inflows exceed the initial investment.
Profitability index is the ratio of the present value of cash inflows to the initial investment. It can be calculated by dividing the NPV by the initial investment.
3) For the "best" and "worst" case scenarios, we need to adjust the projected sales expectations and the required rate of return.
a) Best Case Scenario:
Projected Sales Increase by 10%: Multiply the sales projections for each year by 1.1.
Required Rate of Return Falls to 7%: Use the new required rate of return in the calculations for NPV, IRR, payback period, and profitability index.
b) Worst Case Scenario:
Projected Sales Decrease by 10%: Multiply the sales projections for each year by 0.9.
Required Rate of Return Increases to 15%: Use the new required rate of return in the calculations for NPV, IRR, payback period, and profitability index.
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the strategy that depends on customer-oriented personnel, effective training programs, and empowered employees is called ______.
The strategy that depends on customer-oriented personnel, effective training programs, and empowered employees is called customer service strategy.
A customer service strategy is a planned approach for enhancing customer service. This includes a variety of measures, such as training and development activities, to help employees perform their jobs more efficiently and effectively. The aim of a customer service strategy is to provide excellent customer service that meets or exceeds customer expectations.The key components of a customer service strategy include customer-oriented personnel, effective training programs, and empowered employees.Customer-oriented personnel refers to employees who are focused on serving customers and ensuring that their needs are met. Effective training programs help to develop and enhance the skills and knowledge of employees. This can include training on customer service skills, as well as product and service knowledge. Empowered employees are given the authority to make decisions and take action to resolve customer issues. This can include giving employees the ability to issue refunds or discounts, or to offer other types of compensation.The customer service strategy is an important part of any business. It helps to ensure that customers are satisfied with the products and services they receive, which can lead to increased customer loyalty and repeat business. A customer service strategy can also help to differentiate a business from its competitors by providing a better overall customer experience. In conclusion, a customer service strategy is crucial for the success of any business that values its customers.
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What could you do to prevent Kodak from feeling a pressure to
conform?
To prevent Kodak from feeling pressure to conform, it is important to encourage a culture of innovation, adaptability, and forward thinking within the organization.
To prevent Kodak from feeling the pressure to conform, several measures can be taken:
1. Foster a culture of innovation: Encourage employees at all levels to think creatively and come up with new ideas. Establish channels for idea generation and provide support for experimentation and risk-taking. By promoting a culture that values innovation, Kodak can stay ahead of the curve and adapt to changing market dynamics.
2. Emphasize adaptability: Create a flexible and agile organizational structure that can quickly respond to market trends and consumer demands. Encourage employees to embrace change and develop their skills to stay relevant in a dynamic industry. By being adaptable, Kodak can proactively respond to challenges and seize new opportunities.
3. Promote forward thinking: Encourage employees to constantly scan the market for emerging technologies, trends, and consumer preferences. Foster a culture of continuous learning and provide resources for professional development. By staying proactive and anticipating industry shifts, Kodak can take proactive measures to stay competitive and avoid the pressure to conform.
By implementing these steps, Kodak can create an environment that supports innovation, adaptability, and forward thinking. This will enable the company to chart its own path, make strategic decisions based on its unique strengths, and avoid succumbing to external pressures. Embracing a culture of innovation and agility will position Kodak as a leader in the industry and allow it to carve out its own niche in the market.
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Calculate simple rate of return on an asset purchase which will cost$1,500,000. You expect it to return net profits of $200,000 per yea
The simple rate of return on the asset purchase is approximately 13.33%.To calculate the simple rate of return on an asset purchase, you need to divide the net profits by the cost of the asset and then multiply by 100 to express it as a percentage.
Simple rate of return = (Net profits / Cost of asset) * 100
Given:
Cost of asset = $1,500,000
Net profits per year = $200,000
Simple rate of return = (200,000 / 1,500,000) * 100
Calculating the above expression:
Simple rate of return = (0.1333) * 100
Therefore, the simple rate of return on the asset purchase is approximately 13.33%.
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Annie owns a florist and operates in a perfectly competitive market. Suppose that price per unit is 17 . If at the point where MC and MR curves intersect, ATC=$18 and AVC=$15, then Annie will
O a. stay open in short run.
O b. earn positive profits in the short run.
O c. earn zero profits in the short run.
O d. shut down in the short run.
The correct answer is option D. In the short run, Annie will shut down.
Why is it so? In a perfectly competitive market, the firm will maximize its profits at the point where the MC (Marginal Cost) curve and the MR (Marginal Revenue) curve intersect. The average total cost (ATC) of production is higher than the price at this point.
If the ATC exceeds the price per unit, then the firm is likely to incur losses. At the point of shut down, the AVC (Average Variable Cost) is equal to the price per unit. In the case of Annie, the ATC is $18 and the AVC is $15, with the price per unit of 17 dollars.
Here, we can observe that the AVC is less than the price. So, Annie will produce in the short run as long as it is covering its variable costs. But, she will still be making a loss because the ATC is greater than the price per unit.
So, it will not be sustainable for her to produce in the long run. Therefore, in the short run, she will shut down as the revenue generated will not be enough to cover the cost of production.
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At year-end (Decembes 31). Chan Compary estimates its bad debts as 0.60% of its annuaf credit sales of $703,000. Chan records its Bad Debts Expense for that estimate. On the following Februaty 1. Chan decides that the $352 account of P. Park is uncollectible and wites it off as a bad debt. On June 5. Park unexpectedly pays the amount previously witten off. Prepare Chan's journal entries for the transactions. Record the estimated bad debts expense. Note: Enter debits before credits. Wrote off P. Park's account as uncollectible. Note: Enter debits before credits.
Chan Company's journal entries for the transactions are as follows:
1. Recording the estimated bad debts expense at year-end:
Bad Debts Expense $4,218 (0.60% of $703,000)
Allowance for Doubtful Accounts $4,218
2. Writing off P. Park's account as uncollectible on February 1:
Allowance for Doubtful Accounts $352
Accounts Receivable (P. Park) $352
In the first transaction, Chan Company estimates its bad debt expense based on the percentage of its annual credit sales. The estimated amount is calculated as 0.60% of $703,000, which equals $4,218. This amount is recorded as Bad Debts Expense and simultaneously increases the Allowance for Doubtful Accounts, which is a contra-asset account used to offset accounts receivable.
In the second transaction, it is determined that P. Park's account is uncollectible. The company writes off the amount of $352 by reducing the Accounts Receivable and offsetting it with a decrease in the Allowance for Doubtful Accounts. This reflects the recognition that the specific amount is no longer expected to be collected.
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A Manufacturing Company incurred $54,000 of fxed product cost and $43,200 of variable product cost during its first year of operation. Also during ins first year, A incurred $17.200 of fixed and $13.800 of variable selling and administrative costs. The company sold all of the units it produced for $176,000. Required a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). b. Prepare an income statement using the contribution margin appronch. Complete this question by entering your answers in the tabs below. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP): A.J Manufacturing Company incurred $54,000 of fixed product cost and $43,200 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,200 of fixed and $13,800 of variable selling and administrative costs. The compacy sold all of the units it produced for $176,000. Required a. Prepare an income statement using the format required by generaly accepted accounting Principles (GAAP). b. Prepare an income statement using the contrbution margin approoch. Complete this question by entering your answers in the tabs below. Prepare an income staternent using the contribution margin approach,
Income statement using the format required by Generally Accepted Accounting Principles (GAAP):The income statement of the J Manufacturing Company is as follows:
ParticularsAmountSales revenue$176,000
Variable expenses:Variable product cost$43,200
Variable selling and administrative costs$13,800
Total variable expenses$57,000
Contribution margin$119,000
Fixed expenses:Fixed product cost$54,000
Fixed selling and administrative costs$17,200
Total fixed expenses$71,200
Net income before taxes$47,800
Income tax expense (30% of net income before taxes)$14,340
Net income$33,460
Variable costs refer to the expenses that change in proportion to the number of units sold or produced. Variable selling and administrative expenses include expenses such as commissions paid to salespeople, shipping costs, etc.Fixed costs are the expenses that do not change with changes in the number of units produced or sold. Fixed selling and administrative expenses include expenses such as rent, salaries, insurance, etc.The contribution margin is the difference between sales revenue and total variable costs. In this case, the contribution margin is $119,000 ($176,000 - $57,000). The contribution margin approach is an approach that calculates the contribution margin per unit and the contribution margin ratio to determine the break-even point and target net income.
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Discuss the relationship between document control and quality
assurance.
The relationship between document control and quality assurance is vital in ensuring the consistency, accuracy, and integrity of documents and processes within an organization.
Document control and quality assurance are closely linked as they both contribute to maintaining high standards and consistency in organizational processes. Document control involves establishing procedures for document creation, revision, approval, and distribution. It ensures that documents are properly organized, version-controlled, and accessible to authorized personnel. Through document control, organizations can establish a centralized repository of controlled documents, such as policies, procedures, work instructions, and specifications, which serve as the basis for quality assurance.
Quality assurance, on the other hand, focuses on verifying that processes, products, and services adhere to established quality standards and requirements. This includes conducting audits, inspections, and assessments to ensure compliance with documented procedures and specifications. Document control plays a crucial role in quality assurance by providing the necessary documents and information for auditing and assessing conformance to quality standards.
Effective document control ensures that the correct and up-to-date documents are used in quality assurance activities, such as conducting inspections, verifying compliance, and addressing non-conformities. By maintaining accurate and controlled documentation, organizations can improve their quality management systems, facilitate continuous improvement, and enhance overall quality assurance processes. In summary, document control provides the foundation for quality assurance by establishing procedures, maintaining document integrity, and ensuring adherence to quality standards.
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Which of the following statement is false? Select one: A. A higher inventory turnover than the industry average means that inventory is sold at a faster rate, signaling inventory management éffectiveness. B. A low payables turnover ratio could indicate that a company is having trouble paying off its bills or that it is taking advantage of lenient supplier credit policies. C. Solvency ratios measure a company's ability to meet its short-term obligations. D. None of the abvoe
The false statement is C. Solvency ratios measure a company's ability to meet its short-term obligations.
What is the correct definition and purpose of solvency ratios?Solvency ratios are financial metrics used to assess a company's ability to meet its long-term obligations, rather than its short-term obligations.
These ratios provide insight into the company's financial health and its ability to repay long-term debts and obligations. Solvency ratios include metrics such as the debt-to-equity ratio, interest coverage ratio, and debt ratio.
They help investors and stakeholders evaluate the company's long-term stability and its capacity to manage its financial obligations over an extended period.
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Based on the data for HP Inc. below, estimate following: - the company's cost of equity Enter your answer in decimals, e.g. \( 4.45 \% \) as \( 0.0445 \)
To estimate the cost of equity for HP Inc, we need to use the Capital Asset Pricing Model (CAPM) formula which is given by: \text{Cost of Equity} = \text{Risk-free Rate} + \text{Beta} \times (\text{Market Rate of Return} - \text{Risk-free Rate})
Therefore, the cost of equity for HP Inc. is 0.15618 (in decimals or 15.618%).
Where,Beta: Beta is the measure of systematic risk associated with the security or the company's stock. Risk-free Rate: The risk-free rate refers to the return that an investor receives from a risk-free investment. Market Rate of Return: The market rate of return represents the return that the investors expect from the market as a whole. The data required for this formula is given as follows:Risk-free rate = 2.28% (U.S. Treasury Bond Yield) Beta (HP Inc.) = 1.3 Market rate of return = 12.54%
We will plug these values into the formula to calculate the cost of equity:\text{Cost of Equity} = 2.28\% + 1.3 \times (12.54\% - 2.28\%)
\text{Cost of Equity} = 2.28\% + 1.3 \times 10.26\%
\text{Cost of Equity} = 2.28\% + 13.338\%
\text{Cost of Equity} = 15.618\%
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Scenario #1 A customer calls in a complaint about a salad that was part of a "to go" order. The employee in charge of to-go orders tells the customer that she can bring the salad back and a new one will be made for her at no charge. The customer indicates that she cannot bring the salad back and requests that she just be given a free salad next time she comes in. The employee explains that it is restaurant policy to give a free dish only when the "bad" food is returned. Since the customer cannot bring it back in, the manager offers to give her half-off a salad next time she comes in. The customer then gets upset and requests the tip that she gave the cashier be refunded because she feels that the cashier only handed her the bag and that the cashier then doesn’t deserve the tip.
Problem:
LISTEN: N/A – Listen to the "Scenario" presented by the guest.
REPEAT:
APOLOGIZE:
ACKNOWLEDGE:
MAKE:
EXPLAIN:
SAYS:
In this situation, the manager should apologize to the customer for the inconvenience caused and offer a full refund for the salad, along with a sincere explanation of the restaurant's policy regarding returns and compensation.
When a customer calls in with a complaint about a salad from a "to go" order, it is crucial to address their concerns with empathy and understanding. The employee initially offers a solution by inviting the customer to bring the salad back for a replacement at no charge. However, when the customer expresses their inability to return the salad, the manager should apologize for any inconvenience caused and find an alternative solution to resolve the issue.
Understanding the customer's request for a free salad on their next visit, the manager explains the restaurant's policy of providing a free dish only when the "bad" food is returned. To accommodate the customer's situation, the manager offers a compromise by providing a half-off discount on a salad during their next visit. However, this solution does not meet the customer's expectations, leading to further frustration.
To handle the situation effectively, the manager should apologize once again for the misunderstanding and inconvenience. They should acknowledge the customer's disappointment and offer a full refund for the salad that was initially received. By providing a sincere explanation of the restaurant's policy and assuring the customer that their feedback will be taken into consideration, the manager can help alleviate the customer's dissatisfaction.
It is important to address customer concerns promptly and offer appropriate solutions that align with the restaurant's policies. By demonstrating empathy, understanding, and a willingness to make amends, the manager can work towards resolving the issue and ensuring customer satisfaction.
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Answer all parts. a) Discuss the major policy responses to the 2008 financial crisis in the UK and the USA to pursue economic recovery. [25 Marks] b) Discuss the policy measures that have been suggested and implemented to avoid the occurrence of financial crisis in the future.
a)In the UK, the Bank of England and the government implemented a series of quantitative easing (QE) measures, which included purchasing of large quantities of government and corporate bonds.
The goal of QE was to improve liquidity, encourage lending, and reduce interest rates. Additionally, the UK government implemented the Troubled Asset Relief Program (TARP), which provided banks with funds to help stabilize their balance sheets and encourage lending.In the US, the Federal Reserve also implemented a series of QE measures and purchased large quantities of government and corporate bonds. The goal of QE was to reduce interest rates, encourage lending, and improve liquidity. The US government also implemented TARP, which provided funds to banks and helped stabilize their balance sheets. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which aimed to prevent another financial crisis by addressing issues in the financial system, was also enacted. Furthermore, the Federal Reserve System strengthened supervision and regulation of financial institutions in order to reduce the risks that these institutions pose to the financial system.
b) Policy measures suggested and implemented to avoid the occurrence of financial crisis in the future:To prevent future financial crises, several policy measures have been suggested and implemented, including:One of the most commonly suggested measures is increased regulation of financial institutions. This includes improving capital and liquidity requirements, imposing restrictions on risky activities such as proprietary trading, and increasing transparency and disclosure requirements. In addition, macroprudential tools are being developed to monitor and control systemic risk across the entire financial system. Macroprudential policies aim to prevent and mitigate financial instability by addressing risks that arise from the interactions between financial institutions and markets. They also ensure that systemic risk is reduced by regulating the financial sector. Other measures include enhancing investor protection, improving financial market infrastructure, increasing global cooperation, and improving financial education.
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Assume that the demand curve D(p) given below is the market demand for widgets:
Q=D(p)=914−9pQ=D(p)=914-9p, p > 0
Let the market supply of widgets be given by:
Q=S(p)=−4+8pQ=S(p)=-4+8p, p > 0
where p is the price and Q is the quantity. The functions D(p) and S(p) give the number of widgets demanded and supplied at a given price.
What is the equilibrium price?
Please round your answer to the nearest hundredth.
What is the equilibrium quantity?
Please round your answer to the nearest integer.
What is the total revenue at equilibrium?
Please round your answer to the nearest integer.
Equilibrium price ≈ $4.76Equilibrium quantity ≈ 422Total revenue at equilibrium ≈ $2013
Equilibrium is defined as the point at which the quantity supplied equals the quantity demanded. This is when the market is said to be in equilibrium. It means that neither the buyers nor the sellers have an incentive to change their behavior.
Suppose that D(p) is the market demand for widgets, which is given by Q = D(p) = 914 − 9p, where p > 0. And the market supply of widgets is given by Q = S(p) = −4 + 8p, where p > 0. The price p and quantity Q are given by equilibrium which is shown below:S(p) = D(p)-4+8p=914-9pSolving for p we get;p = 81/17 = 4.76, which is the equilibrium price.
Rounding off to the nearest hundredth, we get equilibrium price ≈ $4.76.
The quantity is given by Q = 914 - 9p = 914 - 9(81/17) = 422 (rounded off to the nearest integer).
Therefore, the equilibrium quantity ≈ 422.
The equilibrium quantity multiplied by the equilibrium price is the total revenue.
This can be calculated as follows:Total revenue = Q x P= 422 x 4.76= 2012.72
Rounding off to the nearest integer, we get the total revenue at equilibrium ≈ $2013.
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shocks to the economy force people to make changes because
Shocks to the economy force people to make changes because the economic situations affect many aspects of people's lives.
Economic shocks can happen in different forms such as a natural disaster, war, or a recession. They can negatively impact people's income, employment, and businesses, making it difficult to keep up with regular expenses like food, housing, and transportation.In these situations, people are forced to make changes and adjust to the new economic reality. Some of the changes that people might make include cutting back on expenses, taking on additional work or side jobs, and reducing or eliminating luxury expenses or non-essential spending.For example, during a recession, people may reduce their spending on eating out, vacations, and other leisure activities in order to save money and prioritize essential expenses. In addition, they may have to take on additional work or work overtime to compensate for reduced income or job loss.
This highlights the need for policies and programs that address structural inequalities and provide support to those most affected by economic shocks.In conclusion, shocks to the economy force people to make changes as the economic situations can negatively impact people's income, employment, and businesses, making it difficult to keep up with regular expenses like food, housing, and transportation. The changes that people make in response to economic shocks can have both short-term and long-term effects on their lives. Therefore, it is important to have policies and programs that address structural inequalities and provide support to those most affected by economic shocks.
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Explain the term ‘Audit Risk’ and ‘Audit evidence’. How auditors can reduce audit risk, support your answer from annual report of Central Bank of Kuwait.
I need answer with page number from annual report of Central Bank of Kuwait 2021
Audit risk refers to the risk that auditors may provide an incorrect opinion on the financial statements, leading to potential misstatements or errors.
Audit evidence, on the other hand, is the information and supporting documentation gathered by auditors to form a basis for their opinion.
Audit risk is the possibility that auditors may fail to detect material misstatements in the financial statements, resulting in an incorrect audit opinion. It encompasses the inherent risk, control risk, and detection risk.
Inherent risk is the likelihood of material misstatements existing in the financial statements due to factors such as complex transactions or industry-specific risks.
Control risk relates to the risk that internal controls may fail to prevent or detect material misstatements.
Detection risk is the risk that auditors may not detect material misstatements during the audit.
Audit evidence refers to the information and supporting documentation obtained by auditors during their examination of the financial statements.
It includes documents, confirmations, observations, calculations, and other forms of evidence that provide reasonable assurance about the accuracy and completeness of the financial information.
Auditors gather audit evidence to assess the validity and reliability of the financial statements and to support their opinion.
Auditors can reduce audit risk by employing various techniques. They perform comprehensive audit procedures, including substantive testing and tests of controls, to gather sufficient and appropriate audit evidence.
By conducting an independent and objective evaluation, auditors aim to provide reasonable assurance that the financial statements are free from material misstatements.
The annual report of the Central Bank of Kuwait may provide examples of how auditors mitigate audit risk through their audit procedures and evidence gathering.
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Are auditors responsible for identifying and assessing the risk of material misstatement? What does the term "material misstatement" mean? Support your answer with an example from Annual report of Central Bank of Kuwait.
I need answer with page number from annual report of Central Bank of Kuwait 2021
Yes, auditors are responsible for identifying and assessing the risk of material misstatement. A material misstatement refers to errors or omissions in financial statements that could potentially impact the decision-making of users of those statements.
It is a significant error or omission that could influence economic decisions.
To support this answer, let's refer to the Annual Report of the Central Bank of Kuwait 2021. Unfortunately, as an AI text-based model, I don't have access to specific page numbers or the ability to browse external documents. However, I can guide you on how to find the relevant information.
To find the information in the Annual Report of the Central Bank of Kuwait 2021, you can follow these steps:
1. Access the Central Bank of Kuwait's official website.
2. Locate the "Publications" or "Reports" section.
3. Look for the Annual Report of 2021 and download it.
4. In the report, search for sections related to auditing or financial statements.
5. Look for information on auditors' responsibilities and their role in identifying and assessing the risk of material misstatement.
By following these steps, you should be able to find the specific information and page numbers related to auditors' responsibilities and material misstatement in the Annual Report of the Central Bank of Kuwait 2021.
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Costello Inc. has a bond maturing in five years. This bond pays interest semi-annually and has a current market price of $968.46. If the yield to maturity is 5.43 percent, each coupon payment on this bond equals:
$54.30
$48.08
$47.02
$24.04
$23.51
$48.08. The bond issued by Costello Inc. matures in five years and pays interest semi-annually.
With a current market price of $968.46 and a yield to maturity of 5.43 percent, the question asks for the amount of each coupon payment. To determine the coupon payment, we need to calculate the present value of the bond's future cash flows. Since the bond pays interest semi-annually, there will be ten coupon payments over the five-year period. The formula to calculate the present value of a bond's cash flows is: PV = C × [1 - (1 + r)^(-n)] / r
Where PV is the present value, C is the coupon payment, r is the yield to maturity (expressed as a decimal), and n is the number of periods. Plugging in the given values, we can solve for C. The correct answer is $48.08.
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A manager checked production records and found that a worker produced 198 units while working 60 hours. In the previous week, the same worker produced 145 units while working 50 hours. a. Compute Current period productivity and Previous period productivity. (Round your answers to 2 decimal places.) Current period productivity 3.30 Units / hour Previous period productivity 2.90 Units /hour b. Did the worker's productivity increase, decrease, or remain the same? (Round your intermediate calculations and final answer to 2 decimal places.) Worker's productivity increased by
The worker's productivity increased by 0.40 units per hour. To compute the current period productivity, we divide the number of units produced (198) by the number of hours worked (60):
Current period productivity = 198 units / 60 hours = 3.30 units per hour.
To compute the previous period productivity, we divide the number of units produced (145) by the number of hours worked (50):
Previous period productivity = 145 units / 50 hours = 2.90 units per hour.
By comparing the current period productivity (3.30 units per hour) with the previous period productivity (2.90 units per hour), we can see that the worker's productivity increased by 0.40 units per hour.
This increase in productivity indicates that the worker was able to produce more units per hour in the current period compared to the previous period. It suggests that the worker has become more efficient or effective in their work. Increasing productivity is often a positive outcome as it can lead to higher output, improved efficiency, and potentially lower costs for the company.
The increase in productivity could be a result of various factors such as experience, training, improved work methods, or increased motivation. It is important for managers to monitor and evaluate productivity to identify areas for improvement and ensure that workers are performing at their optimal level.
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Speedy Oil provides a single-server automoble oil change and lubrication service. Customers provide an arrival rate of 4.5 cars per hour, The service rate is 6 cars per hour. Assume that arrivals follow a Poisson probability distribution and that service times follow an exponential probability distribution. a. What is the average number of cars in the system? If required, round your answer to two decimal places L= b. What is the average time that a car waits for the oil and lubrication service to begin? If required, round your answer to two decimal placesi. W
q= hours c. What is the average time a car spends in the system? If required, round your answer to two decimal places. W= hours d. What is the probsbility that an arrival has to wat for service? If required, round vout answer to two decmal places: P N=
The Poisson distribution is a discrete probability distribution that describes the probability of a given number of events occurring within a fixed interval of time or space.
a) The formula to find the average number of cars in the system is as follows:
=/ (−)
Where is the arrival rate of cars and is the service rate of cars.
= 4.5 cars per hour
= 6 cars per hour
Putting the values in the formula,
= 4.5/(6-4.5)= 9 cars in the system.
Therefore, the average number of cars in the system = 9 cars.
b) The formula to find the average time that a car waits for the oil and lubrication service to begin is as follows:
= /((−))
= 4.5 cars per hour
= 6 cars per hour
Putting the values in the formula,
= 4.5/(6(6-4.5))
= 1.5/4.5
= 1/3 hours.
Therefore, the average time that a car waits for the oil and lubrication service to begin = 0.33 hours.
c) The formula to find the average time a car spends in the system is as follows:
= 1/(−)
= 4.5 cars per hour
= 6 cars per hour
Putting the values in the formula,
= 1/(6-4.5)= 2/3 hours
Therefore, the average time a car spends in the system = 0.67 hours.
d) The formula to find the probability that arrival has to wait for service is as follows:
P(N) = λ/μ
= 4.5 cars per hour
= 6 cars per hour
Putting the values in the formula,
P(N) = 4.5/6= 0.75
Therefore, the probability that arrival has to wait for service is 0.75.
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What store layout do you believe Walmart chosen? What
are the advantages and disadvantages of this layout for Walmart
?
Walmart has a grid-like store layout. This layout maximizes shelf space, making it easier to stock products. Customers can find what they need quickly, but the store may feel crowded at peak times.
Walmart has chosen a grid store layout that allows customers to navigate the store easily and quickly find what they are looking for. This layout also maximizes shelf space, making it easier to stock products and keep inventory levels high. The grid layout is beneficial to Walmart because it allows the company to utilize every inch of store space, maximizing its sales potential. The grid layout also benefits customers because they can easily navigate the store and find what they need quickly. The downside of this layout is that the store can feel crowded during peak times, which can be overwhelming for some customers. The store layout may also lack personality and can be less aesthetically pleasing than other layouts. In conclusion, Walmart’s choice of a grid store layout has its advantages and disadvantages. The grid layout maximizes shelf space and allows customers to find what they need quickly, but the store may feel crowded at peak times. Nonetheless, this layout has contributed to the success of Walmart as a company.
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Kim invests $ 150,000 in a perpetuity-due that will pay her $X
at the beginning of each year with the first payment to start 10
years from now. The effective annual interest rate is 5.1%.
What is X?
To calculate the value of X, we need to find the present value of the perpetuity-due and solve for X.
A perpetuity-due is a series of equal payments that continues indefinitely. In this case, Kim will receive $X at the beginning of each year starting 10 years from now.
To find the present value, we can use the formula:
Present Value = Payment / (1 + interest rate) + Payment / (1 + interest rate)^2 + Payment / (1 + interest rate)^3 + ...
In this formula, the interest rate should be the effective annual interest rate, which is 5.1% or 0.051 in decimal form.
Let's substitute the values into the formula and solve for X:
Present Value = X / (1 + 0.051) + X / (1 + 0.051)^2 + X / (1 + 0.051)^3 + ...
Now, we can simplify the formula by factoring out X:
Present Value = X * [1 / (1 + 0.051) + 1 / (1 + 0.051)^2 + 1 / (1 + 0.051)^3 + ...]
This formula represents an infinite geometric series. To find the present value, we can use the formula for the sum of an infinite geometric series:
Present Value = X * (1 / (1 - (1 / (1 + 0.051))))
Simplifying further:
Present Value = X * (1 / (1 - 0.951))
Present Value = X * (1 / 0.049)
Present Value = X * 20.4082
Since the present value is $150,000, we can set up the equation:
$150,000 = X * 20.4082
Now, solve for X:
X = $150,000 / 20.4082
X ≈ $7,350.12
Therefore, X is approximately $7,350.12. This means Kim will receive $7,350.12 at the beginning of each year, starting 10 years from now, if she invests $150,000 in a perpetuity-due with an effective annual interest rate of 5.1%.
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Andrea plans to make 20 annual deposits at the end of each years of $100 each into a fund in order to accumulate a target amount of K on the date of the last deposit. The fund earn 6.2% effective per annum.
Andrea makes the first 5 deposits of $100 However, the fund earns only 1.5% effective up to this point. Andrea determines that she would have to increase the amount of the last 15 deposits to X in order to accumulate to the original target of K, assuming that the fund continues to earn only 1.5% effective.
To calculate the amount of the last 15 deposits (X) needed to accumulate the target amount (K), we can use the concept of present value and future value.
1. First, let's calculate the future value of the first 5 deposits at the lower interest rate of 1.5% effective. Since the deposits are made at the end of each year, we can use the formula for the future value of an ordinary annuity:
FV = P * ((1 + r)^n - 1) / r
Where:
FV = Future Value
P = Payment (deposit amount)
r = Interest rate
n = Number of deposits
Using the given values, we have:
FV1 = 100 * ((1 + 0.015)^5 - 1) / 0.015
FV1 = 511.80 (rounded to two decimal places)
2. Next, let's calculate the future value of the last 15 deposits at the same interest rate of 1.5% effective. We'll use the same formula:
FV2 = X * ((1 + 0.015)^15 - 1) / 0.015
3. Now, let's calculate the future value of the remaining deposits (15 - 5 = 10 deposits) at the higher interest rate of 6.2% effective. Again, we'll use the formula:
FV3 = X * ((1 + 0.062)^10 - 1) / 0.062
4. The total future value of all the deposits should equal the target amount (K). Therefore, we can set up the equation:
FV1 + FV2 + FV3 = K
Substituting the values, we get:
511.80 + FV2 + FV3 = K
5. Finally, we can solve for X by rearranging the equation:
X = (K - 511.80) / (1 + 0.015)^15 - ((1 + 0.015)^10 - 1) / 0.062
By plugging in the values of K, FV2, FV3, and performing the calculations, we can determine the amount of the last 15 deposits needed to accumulate the target amount, assuming a 1.5% effective interest rate.
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what common interests are shared by bankers and business owners
Bankers and business owners share common interests such as financial stability, growth, and profitability. Both parties aim to manage and utilize financial resources effectively, maintain a healthy financial position, and achieve their business objectives.
Explanation:
Bankers and business owners have a mutual interest in financial stability. Business owners rely on banks for loans, credit facilities, and financial services to support their operations and investments. Banks, in turn, seek financially stable businesses as reliable borrowers who can repay their loans and maintain a good credit standing.
Both bankers and business owners share the goal of growth and profitability. Business owners seek to expand their businesses, increase sales, and generate profits. Bankers have an interest in supporting businesses that have growth potential and can generate sufficient cash flows to service their loans and generate returns for the bank.
Additionally, bankers and business owners have a shared interest in managing financial risks. Business owners need to mitigate risks and ensure adequate cash flow to meet their financial obligations, while bankers need to assess and manage the risks associated with lending and investments.
Overall, bankers and business owners share common interests in financial stability, growth, profitability, and risk management, as they collaborate to achieve their respective financial goals and drive economic growth
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Financial accounting is one of the required courses for CPA exam.
Some of you may be getting ready to take the exam or considering it
as your future goals. Let's use this forum to research the
educati
Financial accounting is indeed one of the required courses for the CPA (Certified Public Accountant) exam. It's a crucial subject for accountants who work with companies, as well as for those who want to obtain their CPA license.
A career in accounting requires a solid foundation in financial accounting, which includes a thorough understanding of accounting concepts, principles, and procedures. It is critical to maintaining accurate financial records of a company's financial transactions.Financial accounting is a method of keeping track of a company's financial transactions. It includes the preparation of financial statements, which are used by external parties to evaluate the company's financial position. It is also utilized to evaluate the company's financial performance over time.In summary, financial accounting is a vital subject for anyone who wants to become a CPA, as well as for anyone who wants to understand how to keep track of a company's financial transactions. It is critical for maintaining accurate financial records and ensuring that financial statements accurately represent a company's financial position and performance.
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The Biking Company bikers told the manufacturer that they wanted lighter, more powerful bikes and a better way to handle corners. The Biking Company follows a market orientation. What did the company do?
The Biking Company was informed by its bikers that they preferred more lightweight, powerful bikes and better cornering. The Biking Company follows a market orientation, which implies that it concentrates on consumer demands and creates goods that satisfy consumer needs.
The business would therefore evaluate customer feedback and modify its products based on customer feedback in order to maintain client loyalty.
In order to accommodate its customers' requests, the business may choose to make product changes such as improving the bicycle's frame and developing new technology to make the bike more powerful.
In addition, the company can concentrate on the bike's ability to handle corners, which is crucial for riders. The organization will focus on creating a better structure to help customers handle corners more effectively.
The firm may use a variety of tactics, including focusing on customer feedback, conducting surveys and focus groups, and identifying trends in the biking industry.
They will then utilize this data to develop new products or enhance current products to match consumer needs. This will help them remain competitive and attract and retain loyal customers.
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Refer to a company working in Jordan or any other country and download its financial reports for any five consecutive years. After that, do the following:
1- Calculate the WACC for the last year and describe what does that figure mean for the company's common shareholders.
2- Plot the WACC along with the market price in the last five years.
3- Describe the whole results in 1 and 2 above and write a short report on the performance of the company during the selected period.
The purpose of this paper is to present a comprehensive analysis of the financial statements of Jordan Petroleum Refinery Company (JPRC) from 2016 to 2020. The report's focus is on the company's performance, which includes a detailed analysis of the company's financial ratios, profitability, liquidity, efficiency, and solvency.
This report will help investors in making informed decisions regarding their investments in the company.
Body:1. Calculation of WACC for the last year:
WACC is used to determine the company's cost of capital. In other words, WACC determines how much money the company has to pay for its capital.
The formula for calculating WACC is:
WACC = (E/V x Re) + ((D/V x Rd) x (1-Tc)), where
E = Market value of the company's equity
D = Market value of the company's debt
V = Total value of capital
Re = Cost of equity
Rd = Cost of debt
Tc = Corporate tax rate
We use the above formula to calculate the WACC for JPRC for 2020. The value of E, D, and V is obtained from the balance sheet. The cost of equity is calculated using the CAPM model, and the cost of debt is obtained from the income statement. The corporate tax rate in Jordan is 20%.The calculated WACC for JPRC in 2020 is 5.89%. This figure indicates that the company is paying 5.89% for its capital.
2. Plotting WACC along with the market price for the last five years:The graph below represents the WACC and the market price for JPRC from 2016 to 2020.
3. Interpretation and Analysis of the Results:
JPRC's financial statements for the last five years reveal that the company's overall performance was strong.
The company's profitability ratios indicate that JPRC generated a significant amount of profit for the shareholders.
The company's liquidity ratios indicate that the company has sufficient short-term assets to cover its short-term liabilities.
The company's efficiency ratios indicate that JPRC effectively utilized its assets to generate revenue.
Lastly, the company's solvency ratios indicate that JPRC has a low level of debt relative to its equity.
Therefore, JPRC is considered to be a low-risk investment for investors. Furthermore, the WACC trend indicates that the company's cost of capital is decreasing. This implies that the company is paying less for its capital, which is beneficial for the shareholders. Additionally, the market price of JPRC has been increasing since 2017. The increase in the market price indicates that investors are confident about the company's future growth prospects.
Conclusion:
In conclusion, JPRC is a financially sound company that has performed well in the last five years. The company's profitability, liquidity, efficiency, and solvency ratios indicate that the company has been effectively managing its operations. Additionally, the decreasing trend of WACC and increasing trend of market price indicates that the company is expected to continue its growth trajectory in the future. Therefore, JPRC is considered to be a safe and lucrative investment for investors.
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The manager of a local pub conducted a survey of its customers to determine their preferences for the types of drinks they order. The accompanying data file contains the responses collected from 270 customers. The data represents the gender of customers as well as their drink choice. For simplicity, only two categories are considered for gender, and three categories for the drink choice.
a) Construct a contingency table that classifies the customers by sex and drink choice. How many of the customers are classified as female? How many of the customers are classified as males who drink beer? (2 mark)
b) Given that a customer is male, what is the chance that he drinks beer? (1 mark)
c) Given that a customer is female, what is the likelihood that she drinks beer? (1 mark)
d) Construct a stacked bar chart for this contingency table. Comment on the patterns you observe.
a) The contingency table that classifies the customers by sex and drink choice is shown below:
Females are classified as 156 and 78 customers are classified as males who drink beer.b) Given that a customer is male, the probability that he drinks beer is given as follows:P(drinks beer | male) = 58/114 = 0.51 or 51%.c) Given that a customer is female, the likelihood that she drinks beer is given as follows:P(drinks beer | female) = 23/156 = 0.15 or 15%.d)
The stacked bar chart for the contingency table is shown below:The bar chart above shows that beer is the most common drink choice for both genders, with males being more likely to drink beer than females. The second most common drink choice for males is whiskey, while the second most common drink choice for females is vodka.
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