...Discussion Issues and Derivations What is the cost of using excess capacity? Firms often use the excess capacity that they have on an existing plant, storage facility or computer resource for a new project. When they do so, they make one of two assumptions: 1. They assume that excess capacity is free, since it is not being used currently and cannot be sold off or rented, in most cases. 2. They allocate a portion of the book value of the plant or resource to the project. Thus, if the plant has a book value of $ 100 million and the new project uses 40% of it, $ 40 million will be allocated to the project. We will argue that neither of these approaches considers the opportunity cost of using excess capacity, since the opportunity cost comes usually comes from costs that the firm will face in the future as a consequence of using up excess capacity today. By using up excess capacity on a new project, the firm will run out of capacity sooner than it would if it did not take the project. When it does run out of capacity, it has to take one of two paths: &Mac183; New capacity will have to be bought or built when capacity runs out, in which case the opportunity cost will be the higher cost in present value terms of doing this earlier rather than later. &Mac183; Production will have to be cut back on one of the product lines, leading to a loss in cash flows that would have been generated by the lost sales. Again, this choice is not random, since the logical action to take is the one that...
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...30 for 30: Pony Excess. The film Pony Excess delved into the unfortunate past of the SMU Mustangs football team. In this gripping, multi-sourced documentary directors shine light on how SMU boosters and coaches colluded to form the consummate college football team. Through the acts of mere perfect cheating, SMU succeeded in bribing top high school recruits to narrow college options only to SMU. Once one ex-Mustang spilled the gruesome details of SMU’s “secret plan,” NCAA officials introduced the most extreme penalty to college football, the Death Penalty. This source provides an eye-catching timeline of the rise and fall of the Mustangs football program. With the use of interviews of former players, coaches, and boosters, viewers become learned of the snide deals made with recruits, which may have been shadowed through the decades. The Pony Excess manifests the topic of excessive boosting and how in football history, it can be the demolishment of a team. This becomes useful in the topic of SMU and the Death Penalty through the detailed interviews and research that scrutinize what really caused the SMU death penalty. This film gives a very straightforward approach to the SMU football scandal and elicits the true story. Although SMU was guilty for the entire scheme, this film does take a very objective and unsympathetic view of the scandal possibly exaggerating the intent behind all decisions made during the process. In the scheme of 1980’s SMU football and...
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...Principles of Business Credit Chapter 1 - Credit: must involve exchange of values - 5 C’s of credit: character, capacity, capital, collateral, conditions - credit ( can be private or public - Credit Process: o First goes through a buyer who wants to buy a service or product o operating cycle: activities company goes through to produce and sell its goods and services o production stage: when material is converted into goods o manufacturer then sells finished goods to customers and customer pays for goods that were purchased on credit (collection stage) - Types of Credit o Public credit: government credit o Private credit: extended or used by individuals or businesses to carry on exchange of goods and services in private sector Private credit: - Investment credit - Consumer credit - Agricultural credit - Business credit - Bank credit Investment Credit: long-term borrowing of large amounts of money to finance productive assets. Primarily loans made to governments or businesses to raise money to pay for expansion modernization or public projects. - Bonds of fixed income securities (generally 10+ years) - Asset backed bond (backed by specific holdings for ex. Real estate) - Debentures (backed by financial standing, not assets) most common. - Secured bonds o Mortgage bonds o Equipment trust certificates (bonds issued to buy new...
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...Report of CVS Pharmacy’s Excess Return I. company introduction CVS Pharmacy (styled as CVS) is an American pharmacy retailer and currently stands as the second largest pharmacy chain, in the United States, with more than 7,600 stores, and is the second largest US pharmacy based on total prescription revenue. II. Purpose To determine if there are excess returns on CVS’ stock. III. Time period of data Monthly Fama/French Benchmark Return(SMB, HML, Rm-Rf), Monthly risk-free rate and Monthly price of CVS from Oct 2005 to Oct 2015. IV. Test of the correlation The correlation matrix for the excess return variables (SMB, HML, Rcvs-Rf, Rm-Rf) | Rm-Rf | SMB | HML | Rcvs-Rf | Rm-Rf | 1 | | | | SMB | 0.394264 | 1 | | | HML | 0.424707 | 0.305891 | 1 | | Rcvs-Rf | 0.597283 | 0.305935 | 0.197747 | 1 | Analysis: V. Serial correlation tests Method: Durbin-Watson statistic Procedure: first, we use the formula DW=t=2Tεt-εt-12t=1Tεt2 to calculate the DW value. It is 2.2161. It is higher than 2.0 so we use (4-DW=1.7839) to compare with the criteria. Then we find that the critical values dl and du for 121 observations when there is one independent variable are 1.65 and 1.69. Because the DW statistic of 1.7839 for the regression is higher than du, we can’t reject the null hypothesis of no serial correlation. Conclusion: There is no serial correlation on the CAPM model. VI. CAPM model: Rcvs-Rf=α+β(Rm-Rf) 1. Model The Rcvs-Rf...
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...At the entrance of the temple of Apollo at Delphi there were three Maxims inscribed: “Know Yourself”, “Nothing in Excess”, and “A Promise will be Your Ruin”. When the Greeks said “Nothing in Excess” they meant in all aspects of life. The Greek maxim “Nothing in Excess” reflects the idea of moderation and reasonable sufficiency which influences behaviors and choices. Defiance of the maxim “Nothing in Excess” invited discord, catastrophe and repudiation of living wholly with beauty and truth. The maxim, “Nothing in Excess”, is exemplified and defied in Greek myths through the figures Heracles, Niobe, Oedipus and Creon. Heracles, son of Zeus and Alcmena, exhibited excessive mortal strength from infant to adult. When Heracles was eight months old, Hera, desiring his death, sent two serpents to Heracles’ bed; but because of his excessive strength he strangled the serpents with his bare hands. Another example of “the strength of stout Heracles” (Theogony 332) is when he kills Linus, his tutor, in self-defense. Hera, still persecuting Heracles, drove him mad, and as a result he killed his wife, Megara, and his children, flinging them into the fire. Arriving at the temple of Apollo at Delphi, the Pythian priestess told Heracles to reside in Tiryns, serving Eurystheus for twelve years and to perform ten labors to be purified for his crime (Parada). His first labor was to destroy the Nemean Lion. Heracles first shot him with an arrow, but when he perceived that the animal was invincible...
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...A tax is an involuntary fee levied on producers and consumers by the government that is used to finance government activities. A land value tax is a tax that is paid by landowners to the government based on the value of the land, disregarding property and any improvements made to the land. The most efficient tax would result in the least distortion of economic decision making thereby interfering the least with the market’s efficient allocation of resources and reducing the “excess burden” on society. In this essay, we shall be first examining the economic effect of a land tax, and discuss how land tax is economically efficient. Then I will discuss how land value tax may not be the most efficient tax due to the supply elasticity of land created by government land use regulations and the existence of alternative potentially efficient tax bases. Refer to figure 1. As land is immobile and the amount of land available at any point in time is fixed, we assume the supply of land (S) is perfectly price inelastic. Demand for land use is represented by D. The rent paid by the land user to the landowner is OR, and the rental revenue earned by the owner is ORAQ on figure 1. Changes in the economic rent of land do not affect the quantity of land supplied. With the implementation of a land value tax of OT, based on the value of the land, the total rental revenue received by the landowner is reduced from ORAQ to TRAB, and the tax revenue earned by the government is OTBQ. As the supply...
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...One of history’s most famous philosophers, Plato, once said “Excess generally causes reaction, and produces a change in the opposite direction, whether it be in the seasons, or in individuals, or in governments.” This is a trope of history, where many know the dangers of excess but cannot resist the temptation. In particular, it is the dangerous attraction to wealth and excess in the 1920s that will lead to the most devastating economic crash in world history. And even in more modern times, including the 1980s, the excessive habits of the modern world will be a bitter reminder of how toxic superfluous wealth can be. Plato may have lived more than two thousand and five hundred years ago, yet his insight on the perils of decadence will continue...
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...After viewing the documentary, Pony Excess, I thought that the film was both entertaining and informative about college football in the 1980s. The power of the media was well portrayed in the film because all the news sources such as newspaper, radio, TV channels had roles in breaking out the news of SMU. I thought this film was great to have the whole class watch it together because sports in general are for entertaining but can also be educational for us. The film interviewed some of the influential people at that time such as coaches, athletes, and media members. My thoughts about the documentary, I was impressed that the coaches, athletes, and some people who were involved in the scandals come forward and speak out. The cheating that was happening back then occurred because winning was the ultimate goal of sport team such as SMU. The way SMU played their games were not how sport is played, but just to get...
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...Over a long period of time, many traders and portfolio managers have shown a keen interest in earning excess returns through different trading strategies. There has been a long debate whether financial markets are efficient or not, especially in the Indian context. If markets are efficient, there will not arise any arbitrage opportunities to take advantage of mispricing of securities. This paper intends to find out whether is it possible to earn excess returns in the Indian market by using any trading strategy and if it is possible, then which strategy is better. We take 30 companies out of 50 belonging to CNX Nifty and through data from Jan’2000-July’2014; we try to find whether one can earn excess returns from the market in the long run. We use Capital Asset Pricing Model (CAPM) to test for excess returns. The variable of our interest is the alpha or the intercept term while applying regression as stated under the CAPM model. For this, we take the return on the CNX Nifty Index as return on the market and the yield on 91-Day T-Bills as a proxy for the risk free rate. Our results show that the alpha is significant and we are able to generate excess return of 1.47% through momentum strategy and excess return of 0.74% through contrarian strategy. This also shows that momentum strategy is better in the long run than contrarian strategy in the context of Indian market. References Antoniou A.; Lam, H.Y.T; Paudyal, K.(2007). Profitability of momentum strategies in international...
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...Is the salary paid to sportsmen far excess of their value to society? Nowadays there are a lot of spheres with great money turnover such as show business including musical one, food industry, film industry, advertising, building industry, politics... This list we can expand and expand. But we should not forget to include here professional sport. It's an obvious fact that now professional sportsmen get incredibly high salaries in comparison with people involved in wage labour. That is why some people ask themselves a question: "what do these athletes do so valuable for society to get such munificent reward?" Of course, this question is not incurious, so let's look into it. At first, nobody will deny that if sportsmen get such serious money, someone is interested in it and is ready to go to expense. And of course, these money-bags are mainly sponsors that give money for positioning of their ads on T-shirts, on different products of professional clubs, on advertising panels standing near pitches, and so on. Sometimes even stadiums have the name of the sponsor: for example, Etihad Stadium, Emirates Stadium (Etihad and Emirates are international airlines). Why do they do it? Obviously, to make people know about them through the TV and other channels of communication in order to attract attention of potential consumer of their product. Okay, advertisement is printed on the team form, and here is a turn of a sportsmen. Showing brilliant talents of ball possession, tactic...
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...Credit Cards, Excess Debt, and the Time Value of Money: The Parable of the Debt Banana Timothy Falcon Crack and Helen Roberts University of Otago, New Zealand The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created this parable to grab student attention and to then serve as a springboard for discussion of personal debt, time value of money mathematics, the mechanics of credit cards, personal bankruptcy, moral hazard, ethics, and credit card reform. A follow-up survey in a large class (453 students; 84% response rate) showed that 92% of students seeing the parable alongside the underlying finance principles said that it grabbed their attention more than if the underlying finance principles alone were presented, and 87% of students said it made an impression upon them that will make them more careful in their future credit card spending habits. We provide worked examples of credit card use as well as a spreadsheet that lets readers explore these examples and perform sensitivity analysis. INTRODUCTION The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created and presented our parable in a compulsory Finance 101 course taken by all business majors. Most students had little or no exposure to the world of finance and many had poor mathematical skills. Both their lack of financial...
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...The relationship of excess body weight and health-related quality of life: evidence from a population study in Taiwan I-C Huang, C Frangakis, and AW Wu Abstract Objective: Excess body weight is related to significant morbidity and mortality. However, less is known about the relationship of body weight to health-related quality of life (HRQOL), especially for Asian populations. We examined the relationship of excess weight and HRQOL in a general population sample from Taiwan. Research methods and procedures: This cross-sectional study used a national representative sample (n=14221) from the 2001 Taiwan National Health Interview Survey. Body weight was categorized using body mass index (BMI in kg/m2) as normal (18.5–24.9), overweight (25–29.9), and obese (>=30). HRQOL was measured using the Taiwan version of the SF-36. We compared the body weight–HRQOL relationships by age, gender, and status of chronic condition, respectively. We especially used the Generalized Estimating Equations (GEE) to examine the relationships of BMI and HRQOL by taking into account the correlations of HRQOL within households. Four models were developed to adjust sequentially for sets of covariates: Model 1 with no adjustment; Model 2 adjusting for socio-demographic variables; Model 3 adding chronic conditions; Model 4 further adding smoking status. Results: Unadjusted physical HRQOL was best for normal weight, worse for overweight, and worst for obese individuals. For unadjusted mental HRQOL, overweight...
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...The costs of healthcare in the United States has skyrocketed over the last several years. According to CMS, as cited on unitedhealthgroup.com (2015) the GDP has grown from historically 11% to an estimated 19.6% by 2021. This trend indicates that the cost of healthcare in the US is rapidly excessing the income level of those who pay for it. Over 60% of employed individuals that receive healthcare benefits from their employers have experienced such a rise in premiums and out-of-pockets expenses that it has more than doubled between 1999 and 2008 (ssab.gov, 2009). While there are multiple components of the healthcare system and multiple populations that the healthcare system needs to cover one of the largest single population that will be a tremendous consumer of healthcare is the elderly population. As we have discussed many times throughout this class, the elderly population is growing by huge numbers primarily due to the baby boomer generation hitting retirement age. According to the American Hospital Association (2007) the aging Baby Boomers will cause the over 65 population to almost triple by year 2030. Along with this immense population group they will bring with them demands and challenges for the healthcare system as 6 out of 10 will be living with multiple chronic illness. With Medicare being the primary source of payment of healthcare in the over-65 age group it has been noted that the median annual out-of-pocket cost to Medicare beneficiaries will reach approximately...
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...the base tax for that salary range and the product of percentage of excess and the amount of salary over the minimum salary for that range. In the following example, the second line of the table specifies that tax due on a salary of $2000.00 is $225.00 plus 16% of excess salary over $1500.00 (that is, 16% of $500.00). Therefore, the total tax is $225.00 + $80.00, or $305.00. | |Salary Range in Dollars |Base Tax in Dollars |Percentage of Excess | |1. 1|0.00-1,499.99 |0.00 |15 % | |2. 2|1,500.00-2,999.99 |225.00 |16 % | |3. 3|3,000.00-4,999.99 |465.00 |18 % | |4. 4|5,000.00-7,999.99 |825.00 |20 % | |5. 5|8,000.00-14,999.99 |1425.00 |25 % | Process: 1. Get user input 2. Calculate base tax 3. Calculate tax percentage 4. Calculate total with holdings 5. total amount in taxes paid. Design Main Module Declare Name of Program as (string) Declare Percentage of Excess as (real) Write “Total Tax” Write “Compute total tax for employee...
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...Axia College Material Appendix G Sequential and Selection Process Control Structure In the following example, the second line of the table specifies that tax due on a salary of $2000.00 is $225.00 plus 16% of excess salary over $1500.00 (that is, 16% of $500.00). Therefore, the total tax is $225.00 + $80.00, or $305.00. Salary Range in Dollars 1 2 3 4 5 Base Tax in Dollars 0.00 225.00 465.00 825.00 1425.00 Percentage of Excess 15 % 16 % 18 % 20 % 25 % 0.00-1,499.99 1,500.00-2,999.99 3,000.00-4,999.99 5,000.00-7,999.99 8,000.00-14,999.99 Main Module Declare Associate_Name as string Declare Salary_Amount as real Declare Base as real Declare Excess as real Declare Salary as real Declare Start_Over as string REM these are the calls for the modules that can be ran. Not all modules will run REM because associates will only fall into 1 tax bracket Call Input Data Module Call Range Module IT 210 Call Salary1 Module Call Salary2 Module Call Salary3 Module Call Salary4 Module Call Salary5 Module Call Output Module End Main Module Input Data Module Write, “Please Enter Associate’s Full Name” Input Associate_Name Write, “Associates Salary Amount?” Input Salary_Amount Call Range Module End Input Data Module Range Module REM these statements (if, then, else) will determine what module to call upon. If Salary_Amount < 1,499.99 Then Call Salary1 Module Else If Salary_Amount > 1,500.00 AND Salary_Amount < 2,999.99 Then Call Salary2 Module Else If Salary_Amount > 3,000...
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