Assessing calculates Dividend Payouts Essay Example Pdf - Free Essay Example

Sample details Pages: 9 Words: 2792 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? In this scenario, we are assuming that the company pays out all of its $889,000 net income after tax as dividends; thus, classified as fully franked dividends. Also, due to the absence of investment allowance (which permits businesses to deduct a specified percentage of certain capital costs from their taxable income) and other investment allowances specified under tax law, the companys taxable income is the same as its accounting net income. Pearls Pty Ltd has a net income after tax of $889,000 that could be paid out as dividends to the shareholders, A (55%) and B (45%); therefore, each shareholder will receive a cheque for the following dividend amounts that are fully franked. Don’t waste time! Our writers will create an original "Assessing calculates Dividend Payouts Essay Example Pdf" essay for you Create order Pearls Pty Ltd: Fully Franked Dividend Payments A: $488,950 (i.e. $889,000 x 55%) B: $400,050 (i.e. $889,000 x 45%) Total $889,000 (= company net income after tax) Pearls Pty Ltd: Imputation Credits A: $209,550 (i.e. 55% x $381,000 company income tax) B: $171,450 (i.e. 45% x $381,000 company income tax) Total $381,000 (= income tax paid by the company on its net income of $381,000 Alternatively, Imputation Credit = Fully franked dividend x Company tax rate 1 Company tax rate As imputation credit = $488,950 x 30% 1-0.30 = $209,550 Bs imputation credit = $400,050 x 30% 1-0.30 = $171,450 Shareholder A will receive a dividend payment of $488,950 with an imputation credit of $209,550 whereas Shareholder B will receive a dividend payment of $400,500 with an imputation credit of $171,450. (b) The Australian dividend imputation system eliminates the double taxation of dividends wherein fully taxed company profit distributed as dividends is effectively taxed only once at shareholders marginal tax rate, a stark contrast to the classical tax system. When a dividend is paid out of corporate profits that have been taxed at the statutory corporate tax ra te, the shareholder receives the cash dividend plus an imputation tax credit which can be used to offset personal income tax obligations. In other words, the shareholder is able to reduce the tax paid on the dividend by an amount equal to the tax imputation credits. Basically, taxation of dividends has been partially paid by the company issuing the dividend. The net effect of the imputation process once dividends are distributed by the company is for income tax to be levied on the net income earned by a company at the shareholders marginal personal tax rates. Although the dividend imputation system does lower the overall tax rate, the system describes that the amount of income tax payable by a company on its net income will not change the after-tax wealth of its shareholders. Dividend imputation system may also encourage domestic business investment by reducing the cost of capital for domestically owned companies. Consequently, companies would withhold tax on profits as it lev els the cost of financing a business with debt, on which interest is deductible, and equity. Thus, this increases company income tax revenues. Also, imputation brings integrity benefits as the benefit to companies and their shareholders encourages the anti-avoidance of income tax. However, imputation tax credits are of no direct value to non-resident shareholders who have no Australian personal tax obligations. Thus, dividends paid to foreign shareholders will be taxed twice as company income tax and by shareholders home country as tax on dividend income and vice versa. From the perspective of Australian companies, the non-creditability of foreign taxes may increase the required return for offshore investment, discouraging such investments and encouraging a domestically-oriented investment focus. Thus, this creates biasness against investment in an internationally orientated Australian company or in a foreign company. Finish answer Question 2 (17 marks) Joanna Pickford has been working with ABC Bank for a year and has just been promoted to junior financial adviser. Her first client wants to set up a savings account to accumulate $30,000 for a new car and the client can deposit $200 each fortnight from his salary into the account. ABC Bank currently pays interest on its savings accounts at a daily compound rate of 4.0% p.a. Joanna worked out that with depositing $5,200 (26 x $200) into the account each year it would take the client 5.29 years (30,000 FV, 5,200 +/- PMT, 4 i COMP n) to reach his target. As there are 26 fortnights in a year this would be equivalent to 137.5 fortnights so she told the client that he would have to make 137 fortnightly deposits of $200 and a final deposit of $100 (0.5 of $200) one fortnight later. Do you agree with Joannas calculations? Explain why. If not, how long will it take the client to reach his savings target and how much should the last deposit into the account be? Start answer Question 2 a) According to Joannas calculation: PMT = $200 N = 137 I/Y = 4%/26 = 0.153846154% Additional = $100 Using Financial Calculator: 200 +/- PMT 137 N 0.153846154 I/Y 100 +/- PV 1 N 0.153846154 I/Y COMP FV giving $30,475.57 COMP FV giving $100.1538 FV = $30,475.57 + $100.15 = $30,575.72 Note: The future value of final deposit of $100 should also be calculated with reference to the interest rate and compounding periods. Based on the computation above, Joannas calculation is incorrect as the client will accumulate $30,575.72 which is greater than what the client wanted ($30,000). This is due to incorrect calculation of compounding periods (which will be calculated in part (b)). b) i) Every fortnight: PMT = $200 FV = $30,000 I/Y = 4%/26 = 0.153846154% N = ? 30,000 FV 200 +/- PMT 0.153846154 I/Y COMP N giving 135.0693802 periods Based on the computation above, the correct compounding periods would be 135 fortnights. Therefore, her client would need to deposit $200 for 135 fortnights or 5.192 years (135/26). ii) PMT = $200 I/Y = 4%/26 = 0.153846154% N = 135 FV = ? 200 +/- PMT 0.153846154 I/Y 135 N COMP FV giving $29,982.94 Therefore, the 135th fortnightly deposit would bring the future value to $29,982.94 $30,000 $29,982.94 = $17.06 Based on the computation above, the remaining final deposit into the savings account should be $17.06 one fortnight later to achieve his savings target of $30,000. Finish answer Question 3 (11 marks) Kym Baker had a HECS liability of $12,500 at the end of the year in which he finished his degree. The HECS debt accumulates interest at a rate equal to the inflation rate, which was 1.25% per annum over the first year after he graduated and 0.35% for the following year. At the end of the second year after graduation Kyms annual taxable income has increased to $29,000 and he is required by the tax office to pay an amount equivalent to 1% of his annual taxable income to reduce his HECS debt. How much HECS does Kym owe at the end of the second year after graduation after making payment for that year to the Tax Office? Draw appropriate time-line(s) to demonstrate your calculations. Start answer Question 3 End of First Year After Graduation: I/Y = 1.25% pa PV = $12,500 N = 1 12,500 +/- PV 1.25 I/Y 1 N COMP FV giving $12,656.25 Second Year After Graduation: I/Y = 0.35% pa PV = $12,656.25 N = 1 12,656.25 +/- PV 0.35 I/Y 1 N COMP FV giving $12,700.55 Payment = $29,000 x 1% = $290 Balance = $12,700.55 $290 = $12,410.55 Repayments = $290 Balance = $12,410.55 Interest p.a. = $156.25 Interest p.a. = $44.30 $12,500 $12,656.25 $12,700.55 t=0 t=1 t=2 Year Payment Principal Interest Loan 0 $12,500 1 $156.25 $12,656.25 2 $290 $245.70 $44.30 $12,410.55 Finish answer Question 4 (20 marks) Mr. Rupert Temby has borrowed some funds to buy a new Hi-fi system from a reputable electrical retailer. The electrical retailer has an associated finance company, Ezy Credit who has provided Mr. Temby with the following finance options to pay for the Hi-fi system; Option A: A lump sum in 10 years from today, or Option B: $500 in 5 years time with a further $1,000 payable in 15 years time. Mr. Temby believes that he could earn a return of approximately 6% p.a. on any savings he would have by not being required to pay for the Hi-fi system today. Required : Determine and justify to Mr. Temby the maximum amount that he should pay for Option A. (7 marks) Mr. Temby has now received further advice from Ezy Credit that instead of the lump sum in 10 years time (Option A) or the instalment payments after 5 and 15 years as previously indicated (Option B), they would be willing to accept a payment today of $850. Should Mr. Temby accept this offer? Justify your response. (8 marks) What important assumptions are you making in your answers to a) and b) above which should be discussed with Mr. Temby to ensure that you have given him appropriate advice so that he can readily understand the consequences of any decisions made based on your calculations? (5 marks) Start answer Question 4 a) At 10th year, PV = $ At 10th year, FV = $ $500 $1000 t=0 t=5 t=10 t=15 From Option B ($500 in 5 years with a further $1,000 payable in 15 years), the future value of this option would be the same as the maximum future value of the lump sum of Option A at 10th year in accordance to the timeline described above. PV = 500 N = 5 I/Y = 6% 500 +/- PV 5 N 6 I/Y COMP FV giving $ 669.11 FV = 1000 N = 5 I/Y 6% 1000 FV 5 N 6 I/Y COMP PV giving $ 747.26 $669.11 + $747.26 = $ 1,416.37 Therefore, the Option As maximum amount Mr. Temby should pay in 10 years is $ 1,416.37. b) The third options present value is found, as at today which is also known as time period 0. In other words, PV0 = $850. Therefore, to be comparable with third option, Option A and Bs present value must also be expressed at time zero. Option A (A lump sum in 10 years from today): The present value is calculated as below: FV = 1,416.67 I/Y = 6% N = 10 1,416.67 FV 6 I/Y 10 N COMP PV giving $ 791.06 Therefore, the present value of the lump sum of Option A is $791.06. Option B ($500 in 5 years time with a further $1,000 payable in 15 years time): The present value is calculated as below: 1st 5 years: Next 10 years: FV = 500 FV = 1000 I/Y = 6% I/Y = 6% N = 5 N = 15 500 FV 6 I/Y 5 N 1000 FV 6 I/Y 15 N COMP PV giving $373.63 COMP PV giving $417.27 $373.63 + $417.27 = $790.90 The present value of the instalment payment of Option B is $790.90. No, Mr. Temby should not accept the third option wherein he is allowed to pay $850 now to clear his debt. This is unacceptable because the present value from Option B of $790.90 is a cheaper option as compared to the present value of $850 for the third option. c) Assumptions: Individuals have time preference for money due to: Risk Preference for consumption Investment Opportunities Finish answer Question 5 (9 marks) You have just won the Golden Basket lottery which gives you the choice of your prize being either a house and land package with a current market value of $500,000 or receiving cash totalling $600,000 paid in three instalments of $200,000, $150,000, $250,000 respectively. If you choose the cash alternative the first of amount will be paid to you at the end of two years from todays date and the next and subsequent amount will be paid at the end of 3 years from the date of the previous instalment. If you use the nominal rate of 6.5 percent per annum that currently applies for a monthly repayment housing loan as your time value of money, use appropriate calculations to determine whether you should accept the house and land package or the cash instalment alternative. Draw appropriate timeline(s) to demonstrate your calculations. Start answer Question 5 Time Lines: House and Loan Package $500,000 t=0 t=2 t=5 t=8 Cash Instalments: The first instalment will be paid in year 2. The next one will be after 3 years and so in year 5 and the last one after another 3 years. So, in year 8, the time line would be: $200,000 $150,000 $250,000 t=0 t=2 t=5 t=8 In order to make the decision, we would need to compare the present value of the two options the land and house package is given now at present value of $500,000. For the instalments, we would need to discount the cash flows to get the present value. The interest rate is given as 6.5%. This is with monthly compounding as it is applicable to monthly repayments. We would need to calculate the effective annual rate as the cash flows are on yearly basis. Effective annual rate = (1 +j/m)m 1 = (1+6.5%/12)12 1 = 6.6972% 0 ENT 0 ENT 200,000 ENT 0 (x,y) 2 ENT 150,000 ENT 0 (x,y) 2 ENT 250,000 ENT 2ndF CASH 6.6972 ENT ? COMP giving $432,993.47 Therefore , we should accept the house and land package as it has a higher present value ($500,000) as compared to the cash instalments present value at $432,993.47 Finish answer Question 6 (26 marks) You have some money to invest for 12 months and are considering purchasing shares in the retail sector. After reviewing the historical performance and future prospects for Elite Jewellery Ltd. and So Lo Supermarkets Ltd, you have prepared the following information that you will use for your investment decision: Elite Jewellery Ltd So Lo Supermarkets Ltd Current share price $9.00 $11.60 Current EPS $1.20 0.90 Current Beta 0.85 0.60 Elite Jewellery Ltd So Lo Supermarkets Ltd Probability of Return Likely Return over next 12 mths Probability of Return Likely Return over next 12 mths 0.15 -1% 0.10 1% 0.60 12% 0.40 7% 0.25 18% 0.30 10% 0.20 14% Other relevant information: Current risk free rate of return: 5% p.a. Long run average return on market portfolio: 12% p.a. Required: (a) Calculate the expected return (R*) and standard deviation (s) for each share. (9 marks) (b) Briefly explain the meaning of expected return and standard deviation and outline what your calculations indicate about a relationship between risk and return. (4.5 marks) Briefly outline in words that an average person in the street can understand the difference between standard deviation and beta as measures of risk. (3 marks) Calculate the return investors with a diversified portfolio should require from each share. (2 marks) With reasons based on your computations, in (a) and (d) above, provide a recommendation of which share (if any) you should purchase/not purchase. (3 marks) On the basis of your analysis in (e) above detail what you would expect to happen to the price of each share in the market. (2 marks) Briefly explain what is likely to occur, in relation to the risk exposure of your investment portfolio, as you increase the number of diversi fied investments in your investment portfolio. (2.5 marks) Start answer Question 6 a) Elite Jewellery Ltd E(R) = [P(R1) x R1] + [P(R2) x R2] + [P(R3) x R3] = (0.15 x -1%) + (0.60 x 12%) + (0.25 x 18%) = 0.1155 = 11.55% Standard deviation, s = aring; (R R )2 x P(R) = (11.55% -1%)2 x 0.15 + (11.55% 12%)2 x 0.60 + (11.55% 18%)2 x 0.25 = 5.84% Investing in Elite Jewellery Ltd is expected to provide a return of 11.55% with a riskiness of 5.84% So Lo Supermarkets Ltd E(R) = [P(R1) x R1] + [P(R2) x R2] + [P(R3) x R3] + [P(R4) x R4] = (0.10 x 1%) + (0.40 x 7%) + (0.30 x 10%) + (0.20 x 14%) = 0.087 = 8.7% Standard deviation, s = aring; (R R )2 x P(R) = (8.7% 1%)2 x 0.1 + (8.7% 7%)2 x 0.4 + (8.7% 10%)2 x 0.3 + (8.7% 14%)2 x 0.2 = 3.63% Investing in So Lo Supermarkets Ltd is expected to provide a return of 3.63% with a riskiness of 3.63% b) The expected return indicates the average return that we may expect to earn over the next 12 months where all possible outcomes are weighted by the probability that each will occur. The standard deviation serves as an indicator of risk and measures the weighted average of the deviations of the returns from the average (expected) value. Using a normal distribution we can assign probabilities. There would be 68% probability that the returns would be between +/- 1 standard deviation (the return may be 11.55% + 5.84% or 11.55% 5.84% for Elite Jewellery), 95.5% possibility that returns would be between +/- 2 standard deviation and 99.7% probability that returns would be between +/- 3 standard deviation. The risk is denoted by the standard deviation. The higher the standard deviation, the higher the risk since variability in return is higher. So we would expect to have a higher expected return where the standard deviation is higher. c) The difference is that standard deviation is a measure of the risk if a particular stock is the only stock in the investment portfolio. What this implies is that if we have only one stock in our investment, the standard deviation of the return is the measure of risk since it indicates the variability in return, that is how much more or less the actual return can be from the expected return. On the other hand, Beta is measure of risk in the portfolio context. If we have more than one stock in our investment portfolio, we should not look at standard deviation but the beta of the stocks. The reason is that the portfo lio return will be influenced by the expected return of individual stocks in the portfolio and also by the correlation between the returns. It may be possible that one stock has a higher return, whilst another stock has a lower return. The portfolio return would be close to zero and the variability would be less, hence reducing risk. d) As mentioned in point 3, for a diversified portfolio, the measure of risk is the beta, thus the expected return would be dependent on beta. We will use the Capital Asset Pricing Model equation to calculate the expected return. Rf = 5% Rm = 12% b EJ = 0.85 b SL = 0.60 Elite Jewellery Ltd E(R) = Rf + bEJ (Rm Rf) = 5% + 0.85 (12% 5%) = 10.95% So Lo Supermarkets Ltd E(R) = Rf + b SL (Rm Rf) = 5% + 0.60 (12% 5%) = 9.20% Therefore, the expected return for the diversified portfolio on Elite Jewellery Ltd and So Lo Supermarkets Lts is 10.95% and 9.20% respectively. (e) Based on the computation above, it is recommended that Elite Jewellery Ltd shares should be bought as it generates a higher expected return as compared to So Lo Supermarkets Ltd and the risk-free investment. Although higher returns are accompanied with a higher risk, it is assumed that we are interested in shares with the highest return. (f) (g) Finish answer

The Inefficiency Of Our War On Drugs Essay - 1383 Words

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Cross Cultural Management One Group of Individuals

Question: Discuss about theCross Cultural Managementfor One Group of Individuals. Answer: Introduction Cultural differences are one which is obvious and common from one group of individuals to another group of individuals. The main reason of the increased cultural diversity is the presence of numerous cultures in one society. The cultural diversity is based upon number of things which are transferred from one generation to the next generation. The cultural differences arise from differences in the values, beliefs and languages. China and the United States are the two nations which are such large countries that their cultures are recognized across the globe. There are number of differences in the cultures of both these nations but still there are various factors which play a major contribution in shaping up the cultures of both the nations. The history of any nation gives rise to the cultural differences among the various countries. These differences do not make any culture strong or another culture weak but creates a unique identity for every nation (Banks, 2015). The report will prov ide an in-depth knowledge of the cultural differences among the United States and China. The cultural differences are based upon various elements such as difference in language, religion, education, values, norms and laws of the respective countries. The individuals of every country have a different set of values, norms, knowledge and interests which divides the entire nation into various societal groups. And these groups practice diverse culture which gives rise to cultural difference among the countries. The report also highlights the major factors which are the foundation of the cultural diversity in the nations. It also shows which areas require further development for the countrys economic growth and success (Appadurai, 2011). Cultural Differences in the United States and China In both the nations i.e. the United States and China there are several cultural differences which separate the identity of people living in both the countries. The difference in the culture or the cultural diversity builds a unique identity of every nation. Following are the major factors on the basis of which there are present differences in the cultures of the United States and China. Cultural Differences Based on Language Language is one of the elements which is universal but still have different sounds and meanings and this diverse nature of language results into cultural differences. In China, the most of the population i.e. approx 94 percent speak Chinese. Mandarin was announced as the official speech of the nation (Shang, Chin, and Chan, 2015). But when talked about the United States, there are several ethnic groups which gave rise to number of different languages. As there were several groups of people migrated from various other regions and it resulted into Multilanguage nation. But English language is regarded as the official speech of the nation. There is difference in the languages of both the nations in terms of sound and meaning. This difference has been the result of the function, believe and the culture of the societies. And hence the cultural difference based on the language spoken is one of the primary differences which show the cultural diversity of one section of society from another section. Cultural Differences based on Religion Another cultural difference occurs on the basis of religion. Religions play a vital and important part in the cultural diversity of the world. As it is the part of the peoples lives. There is multicultural religion followed in the states of China. There are three primary religions which prevail in China i.e. Buddhism, Taoism and Islam. There is a book named Koran which has Islam teachings which was founded by Muhammed and it was claimed that he had a vision from God (Murtaza, et al., 2016). There practiced two different forms of Islamic religion in China. One has a belief that modernism threatens the religion and the other has a belief that for interpreting the Koran the religious leader has been inspired. Another religion i.e. Buddhism is the act of worship of the one which is enlightened and it provide teachings for overcoming the desire of an individual for overcoming the pain. In America, there are numerous and unlimited sects of religion as there are multicultural societies pres ent in the United States. The most of the population i.e. approximately 69 percent of the overall Americans belongs to a synagogue or a church (Putnam, Campbell and Garrett, 2012). In the nation of the United States, the maximum percentages of people are basically drawn towards a particular religion because of age, race and the social class. The most vital element on which the classification of religion depends is the race. There are different churches in the United States i.e. divided on the basis of White population and the other segment is African Americans. And because of multiple religions present in the country there is no such religion which dominates the nation. But with increased modernization the country led less focus and importance over the religion. But the culture of China is very much revolve around and focused over the religion the people practices (Moran, Abramson and Moran, 2014). Cultural Differences Based on Education In the present scenario there is huge importance led over the education sector. The various cultures are getting affected by the type of education they are receiving. There was an era where the children were given education which was necessary for their living. At some places only the children of wealthy families were getting higher education and the remaining who does not possess sound financial condition were not able to provide their children the higher education. The Government of China led great emphasis over the development of the education sector and to make the people literate and there are number of programs which have been implemented in China for the success of the educational sector. China has already established a system for raising fund for the development of the educational system so that more amount of money can be sent to the schools and higher number of people can get the opportunity to read and write (Moran, Abramson and Moran, 2014). There has also been implemente d a Compulsory Education Program in China which focus upon the education of the poor people and their children. In the last few years there has been a sudden increase in the implementation of the Kindergartens and the success of these kindergartens can be realized as there was 42.2 percent of children under the age group 3 to 5 have been enrolled in those kindergartens (Chen, Yang and Ren, 2015). As per the statistics of UNESCO, it was identified that the ration of children who are school aged which have been enrolled in China is greater than all other nations with similar level of economic development (Tsui and Lau, 2012). The United States educational system started educating people about the government and politics. It was found that there was no such comprehensive or actual school system and mostly the schools were dependent upon the tuitions only. Some of the poor children were provided free education in the schools. But in the year 1918, there were laws which were passed which made the education compulsory for all the children (Beard, 2012). In the educational system of the United States there are several problems which are prevailing such as teen pregnancy, drugs, school violence and SAT tests. One of the major concerns which the schools are facing is the gun shooting and the US government is trying to solve this issue with several techniques. Both the nations i.e. China and the United States recognize education as one of the most vital element of their culture and society but there are still rooms for improvements (Law and Versteeg, 2012). Cultural Differences Based on Values The culture of a nation led high importance over the values. The values can be demonstrated in terms of standards, definitions and ideas of individuals. With the change in time, Chinas traditional values are changing but still there are various regions which are recognized as the vital part of the modern societies (Pieterse, 2015). There are numerous elements which are the part of traditional values such as male domination, living in joint families, only males are working etc. presently in China there is great emphasis over the reputation and importance of families. But now there are smaller families with minimum number of people. There has been a great change in the social values as now the girls are given equal importance and are treated equally like the boys. Earlier they were values which give privilege to only the arranged marriages but with the change in time the people are very much free to select their life partners. There are few traditional festivals which are given great s ignificance in the Chinese culture. These festivals are the part of the lives of Chinese people. The most general aspects of the Chinese festivals are family reunion, recognizing a connection among the heaven and the man, misfortune ward off, desire for well being and happiness (Farh, Zhong and Organ, 2004). For the reinforcement of the Chinese cultural identity the traditional festivals of China are regarded as the robust bonds. In the United States as there are multicultural societies and religion prevailing so there are different kind of values which are practiced based upon the ethnic, racial and special interest groups. Specification of the values of the United States is difficult as there are several groups in the country. But there are few common shared values which are similar for maximum of the groups in the nation (Moran, Abramson and Moran, 2014). This includes success and achievement, personal achievement in context with prestige, power, and attainment of wealth, work, s chool and authority. Americans major value is leisure. It is evident buy the development of recreational industry. Identified from the various self-help programs and products it has well recognized that self-fulfillment is one of the most vial values for the Americans. One of the values which have recently attained huge attention is the physical fitness. The difference in the values of both the nations is that the Chinese values are family centered whereas the values of the United States are mostly self-centered (Omi and Winant, 2014). Cultural Differences Based on Norms Norms are basically the expectations which take place in context with the societal values. There are norms which are associated with every culture in which the people live. In China, the norms are for the family honor and closeness. This closeness is usually recognized among the people of Chinese families. There are norms such as the number of children which a Chinese family can have. The limit in China is two. This norm has been created so that the rapidly increasing population in China can be control as China is already recognized as an over populated country. In the United States there are also several norms which are required to be followed by the people of the US. The children in the United States are expected to have their schooling, graduation, families and other things but after the accomplishment of the personal goals and objectives i.e. after achieving success. Similar to these norms these norms there are several other norms which are developed for the benefit of the indivi duals and the nation but it has been realized that people do not follow these norms adequately (Oetzel, et al., 2001). Cultural Differences Based on Laws and Regulations The laws and regulations are very much necessary for the smooth functioning of the societies and the culture. Every culture have some or the other laws which regulates the culture in a proper manner. These laws are derived by the associated beliefs and ideas. The Chinese society is recognized as socialistic with great economic development growth. The various strict laws have supported in progressing the educational system and improving the living standards of the people. By joining hands, individuals of all the nationalities of China have built a unitary multinational state called Peoples Republic of the China. There are various principles in the constitution of China. In the Peoples Republic of the China, there is an article 4 which states that all the nationalities are equal which are mentioned (ChiNa, 2010). In the article 19, the nation encourages education (ChiNa, 2010). The state invests in the educational sector for eradicating illiteracy from the country and to provide profes sional, technical, scientific, cultural and political education to the working people. In the entire constitution of China, there are norms which facilitates offering of various services related to medical and health, environment protection and family planning. The constitution of China is regarded as the basic norm of conduct by the Chinese people. In the United States, the laws are more regarding the protection of the people and keeping their rights safe (Moran, Abramson and Moran, 2014). There are few precious rights which the Americans have such as rights related to press, arms, religion and freedom of speech. The Bill of rights and the constitution of the United States protect and kept these rights. There has been passed decades when there were established great programs by the government of US. There are highly beneficial government programs and laws for the educational assistance, government loans, Medicaid and social security of the people of the nation. All the people of th e United States are offered a land of opportunity and freedom by the United States Federal Republic (Aaker and Schmitt, 2001). Conclusion The above information which has been offered regarding the two nations i.e. the United States and China clearly shows that both the nations and their respective cultures are very much different from each other. The culture of the nation depends upon several things such as the norms, ideas, beliefs and values of people and the manner in which the individuals perceive them. These factors divide the society in various groups and each group possesses a different set of cultural values on the basis of these factors. It has been analyzed that on all these factors both the nations possess a diverse cultural stand. For developing unity in the societies and the countries, it is required that people must get aware, educate and inform that there are differences which occurs from culture to culture. With the reduced cultural differences there will be improved intercontinental associations. The main difference which has been identified among these two nations is the order of the priorities these countries possess. In China, the religion and the family norms are at priority whereas in the United States this is considered as the least prioritized element. Hence this creates an ignorance of the individuals regarding the non-happening events taking place in the country (Egri and Ralston, 2004). Both the nations practice strong cultural beliefs but as there is multicultural societies in the Unites States which does not give the power to a single culture to dominate the entire nation. In China, there is majority of people who possess the similar culture and thus there develops cultural dominance in the nation. It can be conclude that Chins possess strong global cultural presence whereas the United States is recognized as a multicultural society. References Aaker, J. and Schmitt, B., 2001. Culture-dependent assimilation and differentiation of the self preferences for consumption symbols in the United States and China.Journal of Cross-Cultural Psychology,32(5), pp.561-576. Appadurai, A., 2011. Disjuncture and difference in the global cultural economy 1990.Cultural theory: An anthology,2011, pp.282-295. 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