Busi 100 Midterm

Class 1 PollEv:

Mark Twain has the famous quote of: "a 'classic' is a boo that people praise and don't read." Would Henry David Thoreau agree with this statement?

Yes

No

It isn't clear from Thoreau's writings as he discusses contemporary writings only

Yes

Class 1 PollEv:

Which of the following phrases is from Thoreau?

"The more that you read, the more things you will know. The more that you learn, the more places you'll go"

"The works of the great poets have never yet been read by mankind, for only great poets can read them."

"Outside of a dog, a book is a man's best friend. Inside of a dog, it's too dark to read."

"My alma mater was books, a good library... I could spend the rest of my life reading, just satisfying my curiosity."

"The works of the great poets have never yet been read by mankind, for only great poets can read them."

Reading from Walden:

Education is not simply doing the thins we like, studying the things that appeal to us, or wandering around the world of thought. But, rather, education is the unpleasant task, the hard lesson, and the bitter experience that often lead to knowledge and power and good - WEB Du Bois

Class 2 PollEv: In Plato's The Republic, who or what is the "true creator" of a State?

Creativity

Geography

Mojang

Natural Resources

Necessity

Political Leader

None of the Above

Necessity

Class 2 PollEv: In Plato's the Republic, individuals exchange with one another, and one gives, and another receives, with the intention that the exchange

will _______•

benefit the State

be nullified

enrich one, but not the other

be a "zero-sum" transaction

none of the above

None of the above

(the exchange should be mutually beneficial)

Class 2 PollEv: What was Thoreau referencing when he said that it leads to a "dulness of sight, a stagnation of the vital circulations, and a general deliquium and sloughing off of all the intellectual faculties."

Growing Beans

Public Speaking

Reading

Writing

Watching TV

None of the above

Reading

(easy reading)

Class 2 PollEv: An example of Adam Smith's "invisible hand" is a statesman, council, or senate who directs private citizens in what manner they ought to employ their capital.

True

False

False

Class 2 PollEv: In Smith's Wealth of Nations, he makes the argument that given equal profits between domestic and foreign trade, a merchant is likely to put his greatest support into developing the foreign market.

True

Flase

False

Foundations of Trade: Mutually Beneficial

Smith: The natural advantages which one country has over another, in producing particular commodities, are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them...As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over his neighbour, who exercises another trade; and yet they both find it more advantageous to buy of one another, than to make what does not belong to their particular trades.

Plato: A State, I said, arises, as I conceive, out of the needs of mankind; no one is self-sufficing, but all of us have many wants. Can any other origin of a State be imagined?

Then, as we have many wants, and many persons are needed to supply them, one takes a helper for one purpose and another for another; and when these partners and helpers are gathered together in one habitation the body of inhabitants is termed a State.

And they exchange with one another, and one gives, and another receives, under the idea that the exchange will be for their good.

Foundations of Trade: Absolute Advantage

Smith: The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or, what is the same thing, with the price of a part of it, whatever else they have occasion for.

Plato: Adeimantus thought that he should aim at producing food only and not at producing everything.

Probably, I replied, that would be the better way; and when I hear you say this, I am myself reminded that we are not all alike; there are diversities of natures among us which are adapted to different occupations... And if so, we must infer that all things are produced more plentifully and easily and of a better quality when one man does one thing which is natural to him and does it at the right time, and leaves other things.

Plato and Smith seem to agree on the foundations of trade.. what about final outcomes?

Smith: [He] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention...By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.

Milton Friedman: "Literally, thousands of people cooperated to make this pencil.

People that don't speak the same language, who practice different religions, who might hate one another if they ever met. When you go down to the store and buy this pencil, you are in effect trading a few minutes of your time for a few seconds of the time of all those thousands of people... That is why the operation of the free market Is so essential, not only to promote productive efficiency, but, even more, to foster harmony and peace among the peoples of the world."

Carnegie: Outcomes of Capitalism

The poor enjoy what the rich could not before afford.

Rigid castes are formed, and, as usual, mutual ignorance breeds mutual distrust... Human society loses homogeneity.

To those who propose to substitue Communism for this intense individualism the answer, therefore, is: The race has tried that. All progress from that barbarous day to the present time has resulted from its displacement.

Carnegie: a proposed remedy

Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor, entrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself... The man who dies thus rich dies disgraced.

Class 4 PollEv: In 1970, Andrew Carnegie wrote an influential article in the New York Times arguing "there is one and only one social responsibility of business - to increase its profits without deception or fraud."

True

False

False

Social Responsibilty

Friedman

Class 4 PollEv: The key argument in Friedman's essay is that the manager is the _______ of the individuals who own the corporation and her primary responsibility is to them.

Agent

Boss

Broker

Principal

Regulator

None of the above

Agent

Class 4 PollEv: The insider ownership percentage for most large firms in the U.S. is in what range.

0% < x < 10%

10% < x < 25%

25% < x < 50%

50% < x < 75%

75% < x < 100%

0% < x < 10%

Class 4 PollEv: Andrew Carnegie argues that the law of competition has resulted in several economic outcomes. Which of the following outcomes does he not include?

The laborer has now more comforts than the landlord had a few generations ago

The living conditions of the apprentice and the master are made more equal

The landlord now has books and pictures rarer than a King could previously obtain

The poor now enjoy what the rich could not before enjoy

The living conditions of the apprentice and the master are made more equal

Class 4 PollEv: Ayn Rand notes "Money is a living power that dies without its root. Money will not serve the mind that cannot match it." Which other author have we read in class that also speaks about this idea of who is best fit to spend money?

Adam Smith

Andrew Carnegie

John Burr Williams

Milton Friedman

Andrew Carnegie

Class 4 PollEv: According to John Burr Williams, what do all prices ultimately depend on?

The popularity of the security

The market trends

Someone's estimate of future income

The speculators trading skills

All of the above

Someone's estimate of future income

How does the reading from Ayn Rand relate to Plato and Smith?

Money permits no deals except those to mutual benefit by the unforced judgment of the traders. (Commerce should be mutually beneficial.)

How does the reading from Ayn Rand relate to Carnegie?

Carnegie: Money is a living power that dies without its root.

"So long as men live together on earth and need means to deal with one another - their only substitute, if they abandoned money, _____"

The muzzle of a gun

Rand argues that "to make money" is the proudest disticnction of all Americans. Why?

They were the people who created the phrase 'to make money.'

Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality.

How does the Ayn Rand reading resemble when Alice in Wonderland met the Cheshire Cat?

Money that will give you the ability to satisfy your desires, but it won't give you the desires.

Pacioli notes that merchants must quit their ____, because they who lie on feathers or under covers will never amount to anything.

laziness

Pacioli argues that the purpose of every merchant is to make a lawful and reasonable ________ so as to keep up his business

profit

Pacioli indicates that arranging all transactions systematically is essential to merchants and that it will be impossible to conduct their business without doing so, for they would have no _______ and their minds would always be troubled.

rest

Pacioli indicates that the third and last thing necessary in business is to arrange all the transactions in such a systematic way that one may understand each one of them at a _________.

glance

Defoe admonishes us to never sit down satisfied with an ________ in the cash.

error

Defoe argues that it cannot be ________ to any tradesperson to let their books go unsettled, for then they know nothing of themself, or of the circumstances in the world, the books can tell them at any time what their condition is.

satisfactory

Defoe notes that some merchants neglect their books, not because they don't understand bookkeeping. but because they have no heart to look in them no courage to balance them, because of the ______ prospect of them.

afflicting

Patel Inc. started a new business on November 1, 2021. That same day, Patel Inc. also received $220,000 of cash from issuing common stock and borrowed $110,000 from a friend. On November 1, 2021 Patel Inc. also purchased equipment for $108,000. The equipment has a useful life of 60 months. On November 1, 2021, Patel also paid $86,400 of cash to rent office space for a 36 month period. During 2021, the Company provided services valued at $33,000 and had collected $16,500 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $11,300, which was paid in full during 2021. Use this information to answer the following questions:

1) What are Patel Inc's revenues for 2021?

2) What are Patel Inc's liabilities as of 12/31/2021?

3) What is Patel Inc's net income for 2021?

Accounting Income:

Revenue 33,000

Truck Expense (3,600)

Rent Expense (4,800)

Wages Expense (11,300)

------------------------------------

Net Income 13,300

Supporting calculations:Truck expense: $108,000/60 months equals $1800/ month

Rent expense: $86,400/36 months = $2400/month

Last month, Professor Hendricks highlighted one of his research papers that indicated a common configuration of successful solo-founded startups is to have a "benefactor" who helps the startup overcome obstacles without the expectation of receiving anything in return. Would Bacon or Mill expect lenders and investors to behave in this manner? Support your answer.

They would argue that no, they would not behave that way because that idea of interest is to be able to mitigate the risk.

Bacon: "It is a vanity to conceive that there would be ordinary borrowing without profits; and it is impossible to conceive the number of inconveniences that will ensue, if borrowing be cramped. Therefore, to speak of abolishing usury is idle."

Mill: "If he embarks in business on his own account, he always exposes his capital to some, and in many cases to very great, danger of partial or total loss. For this danger he must be compensated, otherwise he will not incur it. He must likewise be remunerated for the devotion of his time and labour."

Thoreau notes that most of his townsmen have learned to read, not only to

keep accounts and not be cheated in trade, but also as a noble intellectual

exercise.

True

False

False

Which of the following is a reasonable interpretation of Adam Smith's

statement, "What is prudence in the conduct of every private family can

scarce be folly in that of a great kingdom."

It will help the community at large if an individual leaves his or her wealth to

their family instead of to the government at their death.

It is important to realize that government regulation is important to the

conduct of family business.

If the pursuit of self-interest works at the individual level, it will also work at

the national level.

Motives for commerce change as one moves from the family stage to the

governmental stage.

Matter will pay her debt if we don't reconcile the means of progress

between the individual businesses and the government.

If the pursuit of self-interest works at the individual level, it will also work at the national level

Which of the following statements is Plato most likely to indicate is

necessary to a well-functioning society?

tasks are divided and each person focuses on a specific role

people are self-sufficient and occupy multiple roles

it is made up of like-minded people that have similar skillsets

people are self-sufficient, but communicate with others to learn best

practices

tasks are divided and each person focuses on a specific role

Which of the following would Milton Friedman be most likely to disagree

with?

-Imposing social responsibilities harms the foundations of a free society.

-Tax proceeds used for social improvements is different in nature than

proceeds from companies used for the same social improvements.

-A company executive decreasing the price to help with inflation is an

example of spending someone else's money.

-Big corporations are responsible for the large wealth disparity, and

managers should thus use the excess profits to mediate disparity.

-Friedman would agree with all of these statements.

Big corporations are responsible for the large wealth disparity, and managers should thus use the excess profits to mediate disparity

Carnegie describes the historical mode of manufacture as producing:

- crude articles at high prices

- crude articles at low prices

- refined articles at high prices

- refined articles at low prices

- the correct answer is not listed

crude articles at high prices

In his book Walden, Thoreau argues that the eloquence of the orator's

spoken language is the most powerful form of communication.

True

False

false

An example of Adam Smith's "invisible hand" is a statesman, council, or

senate who directs private people in what manner they ought to employ their

capital.

True

False

false

Friedman argues that an executive exercising social responsibility to divert

stockholders' money to a social cause the executive values is, in essence,

reflective of what famous battle cry from the American Revolution?

taxation without representation

liberty or death

join or die

don't tread on me

the correct answer is not listed

taxation without representation

Adam Smith argues that the most efficient economies are those

where the government intervenes to direct how people employ

their capital.

True

False

False

According to Plato's The Republic, creativity is the mother of

invention, capable of giving rise to a new state.

True

False

false

Under which of the following circumstances would Milton Friedman

be most likely to tolerate the manager of a publicly-owned

corporation making a charitable contribution using the

corporation's money?

-The contribution fights racial injustice in communities where some

of the corporation's customers reside

-The intent of the contribution is to improve the corporation's image

so that more people desire to purchase the company's products

and services

-The contribution would help to reduce the death rate from AIDS in

Africa

-The contribution is to the U.S. government to help reduce the

national debt

-Friedman would be agreeable to all of the listed charitable

contributions

The intent of the contribution is to improve the corporation's image so that more people desire to purchase the company's products and services

Andrew Carnegie noted the drawbacks of open competition, but

he also noted some of the benefits. Which one of the following

was not one of the benefits:

-Can acquire good quality commodities at reasonable prices

-The poor enjoy what the rich could not afford

-What were the luxuries have become the necessaries of life

-It promotes the concentration of business in the hands of a few

It promotes the concentration of business in the hands of a few

Hsieh LLC is considering a new project. The initial cash outflows are

$8,000. The Company believes the project will yield cash inflows of $1,632

in year 1, $1,632 in year 2, $3,264 in year 3, and $4,352 in year 4.

Assuming an annual discount rate of 10%, calculate the present value of

future cash flows for the project.

8,257.16

Trott LLC is considering a new project. The initial cash outflows are

$20,000. The Company believes the project will yield cash inflows of

$2,320 in year 1, $5,800 in year 2, $4,640 in year 3, and $10,440 in

year 4. Assuming an annual discount rate of 5%, calculate the present

value of future cash flows for the project.

20,067.51

Vadapalli Company is considering a new project. The initial cash

outflows are $14,000. The Company believes the project will yield cash

inflows of $1,540 in year 1, $3,850 in year 2, $3,850 in year 3, and

$6,160 in year 4. Assuming an annual discount rate of 7%, calculate the

project's net present value.

-1,355.83

In a free society, which of the following statements is Ayn Rand most

likely to agree with?

Nguyen Partners is considering a new project. The initial cash outflows are

$19,000. The Company believes the project will yield cash inflows of

$2,242 in year 1, $6,726 in year 2, $5,605 in year 3, and $7,847 in year 4.

Assuming an annual discount rate of 9%, calculate the project's net

present value.

-1,394.88

Petropoulos Partners is considering a new project. The initial cash

outflows are $13,000. The Company believes the project will yield cash

inflows of $1,534 in year 1, $3,835 in year 2, $3,835 in year 3, and $6,136

in year 4. Assuming an annual discount rate of 5%, calculate the present

value of future cash flows for the project.

13,300.33

Shah LP is considering a new project. The initial cash outflows are

$18,000. The Company believes the project will yield cash inflows of

$3,294 in year 1, $4,392 in year 2, $7,686 in year 3, and $6,588 in year 4.

Assuming an annual discount rate of 4%, calculate the project's net

present value.

1,692.23

According to Ayn Rand, money is the foundation of an immoral society.

True

False

false

John Burr Williams would agree that company dividends, not earnings, are

the primary consideration in determining investment value.

True

False

true

According to Ayn Rand, when men live by trade with force as the final judge,

the best product/performance will win.

True

False

false

Clark Co. is considering a new project. The initial cash outflows are $18,000.

The Company believes the project will yield cash inflows of $3,186 in year 1,

$4,248 in year 2, $8,496 in year 3, and $5,310 in year 4. Assuming an

annual discount rate of 7%, calculate the project's net present value.

-325.82

Riechman LP is considering a new project. The initial cash outflows are

$1,000. The Company believes the project will yield cash inflows of $168 in

year 1, $336 in year 2, $448 in year 3, and $168 in year 4. Assuming an

annual discount rate of 6%, calculate the present value of future cash flows

for the project.

966.75

Van Rossen Group is considering a new project. The initial cash

outflows are $18,000. The Company believes the project will yield

cash inflows of $4,824 in year 1, $6,030 in year 2, $12,060 in year

3, and $1,206 in year 4. Assuming an annual discount rate of 8%,

calculate the present value of future cash flows for the project.

20,167.4

Subramanian LLC is considering a new project. The initial cash

outflows are $14,000. The Company believes the project will yield

cash inflows of $2,436 in year 1, $4,060 in year 2, $4,872 in year

3, and $4,872 in year 4. Assuming an annual discount rate of 7%,

calculate the project's net present value.

-483.37

According to Ayn Rand, it is a sign that society is doomed when

trading is done by consent.

True

False

False

During lecture, we watched a brief interview exchange between David

Letterman and former President Barack Obama. In that exchange, former President Obama indicated that the use of Twitter, Facebook, and other social media sites to get news and other information is creating a common information base for society, thus resulting in less polarization of individual beliefs.

True

False

False

Pacioli would agree that every merchant's main purpose is to arrange all business transactions in such a systematic way that one may understand each one of them at a glance.

True

False

False

Defoe's statement that "Tradesmen often suffer as much by their

slothfulness and neglect of book-keeping, as might, especially if their

business is considerable, pay for a book-keeper" is best interpreted as:

-Accountants likely have salaries that exceed the value they provide,

particularly for large companies

-Accountants likely provide value in excess of their salaries, particularly for

large companies

-Accountants are boring, particularly Professor Hendricks (hint: this is not

the right answer, even though it may be truthful)

-Large companies often employ slothful accountants that neglect their

bookkeeping responsibilities

-Tradesmen that employ accountants are slothful and neglectful

Accountants likely provide value in excess of their salaries, particularly for

large companies

Du Bois writes that that the Emancipation of the slaves was a factor in helping to resolve the debt problem that plagued the Black Belt throughout

the 19th century.

True

False

False

Which of the following elements does John Stuart Mill not cite as

something the gross profits from capital must cover?

Compensation for the necessaries of life

Compensation for abstinence

compensation for managerial expertise

compensation for risk

Compensation for the necessaries of life

Francis Bacon says what relating to the pursuit of riches through usury?

It is a noble endeavor

It provides the most certain means of gain

It is the most natural form of enrichment

it is a slow and steady pursuit

It provides the most certain means of gain

True or False?

Thoreau notes that most of his townsmen have learned to read, not

only to keep accounts and not be cheated in trade, but also as a noble

intellectual exercise.

False

True or False

An example of Adam Smith's "invisible hand" is a statesman, council, or

senate who directs private people in what manner they ought to employ

their capital.

False

True or False

Plato's belief that "one man is naturally fitted for one task, and another

for another" aptly describes the economic concept of specialization of

labor.

True

True or False

Friedman believed that it is appropriate for a manager of a publicly held

corporation to reduce the wages of its employees in order for it to invest

in an activity of general social interest.

False

True or False

Carnegie believes that if society were to revert to the "good old times",

the conditions for life would become better situated for the servant, but

worse for the master.

False