Answer:
The computation is shown below:
Explanation:
The computation is shown below:
Current ratio = current assets ÷ current liabilities
where,
Current assets = cash + inventory + account receivables
= $500 + $300 + $200
= $1000
Current liabilities is
= $200 + $400
= $600
So, the current ratio is
= $1,000 ÷ 600
= 1.67 times
Debt Ratio is
= Total Liabilities ÷ Total Assets
= $600 ÷ $1,500
= 40%
TIE is Time Interest Earned ratio
= EBIT ÷ Interest Expense
= $5,000 ÷ $2,000
= 2.5
Profit margin is
= Net Income ÷ Total Sales
= $800 ÷$10,000
= 8%
And,
Total asset turnover is
= Sales ÷ Total Assets
= $10,000 ÷ $1,500
= 6.67
The examined financial ratios given the company's specifics are as follows: Current Ratio is 1.67, Debt Ratio is 0.4, TIE is 2.5, Profit Margin is 8%, and Total Asset Turnover is 6.67.
Explanation:Given data allows us to calculate several important financial ratios.
Current Ratio is calculated as Current Assets / Current Liabilities. Here, current assets ($500 cash + $300 inventory + $200 account receivables = $1000) and current liabilities ($200 account payables + $400 other current liabilities = $600). So, Current Ratio = 1000 / 600 = 1.67.Debt Ratio is calculated as Total Debt/Total Assets. Here, Total Assets = Current Assets + Long term assets, which equals to $1000 + $500 = $1500. Total Debt is the same as total liabilities = $600. So, Debt Ratio = 600 / 1500 = 0.4.TIE (Times Interest Earned) ratio is calculated as EBIT / Interest Expenses, which is 5000/2000= 2.5.Profit Margin is calculated as Net Income / Sales, equaling 800 / 10000 = 0.08 or 8%.Total Asset Turnover is calculated as Sales / Total Assets, which comes out as 10000 / 1500 = 6.67.Learn more about Financial Ratios here:https://brainly.com/question/31531442
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Melody lane music company was started by john ross early in 2016. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a loan. The company operates a retail store that sells records, tapes, and compact discs. Business was so good during the first year of operations that john is considering opening a second store on the other side of town. The funds neccesarry for expansion will come from a new bank loan. In order to approve the loan the bank requires financial statements. John asks for your help in prepareing the balance sheet and presents you with the following information for the year ending December 31 2016:
Cash receipts consist of the following,
From costumers $360,000
From issue of common stock 100,00
From bank loan 100,000
Cash disbursements were as follows:
Purchase of inventory 300,000
Rent 15,000
Salaries 30,000
Utilities 5,000
Insurance 3,000
Purchase of equipment and furniture 40,000
The bank loan was made on march 31 2016 a note was signed requiring payment of interest and principle on march 31 2017. The interest rate is 12%
The equipment and furniture were purchased on January 3 2016 and have an estimated useful life of 10 years with no anticipated salvage value. Depreciation per year is 4,000
Inventories on hand at the end of the year cost 100,000
Amounts owed at December 31, 2016 were as follows
To supliers of inventory $20,000
To the utility company $1,000
Rent on the store building is 1,000 per month. On Dec 1, 2016 four months rent was paid in advance.
Net income for the year was $76,000. Assume that the company is not subject to federal state or local income tax.
One hundred thousand shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding
Required: prepare a balance sheet at December 31, 2016.
Answer/Explanation:
Note 2: Interest on Bank Loan
Interest = (Principal x Time x rate) / 100
Principal = $100,000;
Time = 9/12 = 0.75
Rate = 12%
Interest = (100,000 x 0.75 x 12) / 100 = 9,000
See Note 1 and 3 on the attachment for the cash at hand and rent advance respectively.Balance sheet (see attachment):
Total Assets = 36,000 + 100,000 + 167,000 + 3,000 = 306,000
Total Liability + Capital = 100,000 + 76,000 130,000 = 306,000
Conclusion:
The balance sheet as can be seen in the attachment that has been prepared, revealed that the company’s current assets is sufficient to meet its current liabilities. Therefore the bank runs no risk for giving the company the credit facilities.
This answer draws up a balance sheet for Melody Lane Music Company for the year ending December 31, 2016 by categorising and calculating their assets, liabilities, and shareholders' equity based on the provided financial data.
Explanation:To prepare a balance sheet for the Melody Lane Music Company for the year ending December 31, 2016, you need to list the company's assets, liabilities, and shareholders' equity at that date based on the provided information.
Assets:Cash: The total cash is the sum of cash receipts minus the cash disbursements. ($360,000 + $100,000 + $100,000) - ($300,000 + $15,000 + $30,000 + $5,000 + $3,000 + $40,000) = $167,000Inventory: The inventory on hand at the end of the year is $100,000Prepaid Rent: Four months rent were paid in advance so $4,000 ($1,000 x 4 months) is counted as an assetEquipment and Furniture: Purchased for $40,000 and being depreciated at $4,000/year, so net value is $36,000 ($40,000 - $4,000)Liabilities:Accounts Payable: Amounts owed to suppliers of inventory and the utility company totaling $21,000 ($20,000 + $1,000)Bank loan: $100,000Interest Payable: Interest payable on the bank loan totaling $12,000 ($100,000 x 12%)Shareholder's Equity:Common Stock: $100,000 from issue of common stockRetained Earnings: Net income for the year, which is $76,000
In summary, total Assets ($167,000 Cash + $100,000 Inventory + $4,000 Prepaid Rent + $36,000 Equipment) should equal to total Liabilities and Shareholder's Equity ($21,000 Accounts Payable + $100,000 Bank Loan + $12,000 Interest Payable + $100,000 Common Stock + $76,000 Retained Earnings).
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Your company rents computers to local businesses and schools. You have 3,000 computers with a book value of $177,500. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $116,500 because of their outdated technology. Your company should report an asset impairment loss of:
Answer:
The answer is $61,000
Explanation:
An impairment loss is recognized when the carrying amount of an asset is less than its fair value(prevailing market price).
The difference between the carrying value and fair value is written off. Carrying amount is the cost of acquiring an asset minus any subsequent depreciation and impairment charges.
Impairment Loss = Book Value – Market Value
Impairment Loss = $177,500 - $116,500
Impairment loss is $61,000
The provisions of some laws and regulations have a direct effect on the financial statements in determining the reported amounts and disclosures in the financial statements. Which of the following is least likely to have a direct effect on the financial statements of the entity identified?
A. A corporation’s compliance with the tax code.
B. A bank’s compliance with legal capital requirements.
C. A service firm’s compliance with pension laws.
D. A manufacturer’s compliance with the occupational and safety code.
Answer:
Option D is correct.
Explanation:
A manufacturer’s compliance with the occupational and safety code is least likely to have a direct effect on the financial statements of the entity identified.
A note disclosed that the allowance for uncollectible accounts had a balance of $42.4 million and $39.7 million at the end of 2015 and 2014, respectively. Bad debt expense for 2015 was $30.0 million. Required:Determine the amount of cash collected from customers during 2015. (All sales are on credit. Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Answer:
Allowance for uncollectible accounts: ($ in millions)
Balance, beginning of year $39.7
Add: Bad debt expense $30.0
Less: End of year balance ($42.4)
Write offs during the year $27.3
Accounts receivable analysis:
Balance, beginning of year ($2,076.6 + $39.7) $2,116.3
Add: Credit sales $19,281.6
Less: Writeoffs ($27.3)
Less: Balance end of year ($2,949.4 + $42.4) ($2,991.8)
Cash collections $18,378.8
Final answer:
The amount of cash collected from customers during 2015 is calculated to be $57.3 million after considering the bad debt expense and adjustments to the allowance for uncollectible accounts.
Explanation:
To determine the amount of cash collected from customers during 2015 when all sales are on credit, we should analyze the changes in the allowance for uncollectible accounts and the bad debt expense reported for the year. The beginning balance of the allowance for uncollectible accounts was $39.7 million in 2014 and increased to $42.4 million by the end of 2015. Given that the bad debt expense for 2015 was $30.0 million, we can calculate the cash collections.
The changes in the allowance for uncollectible accounts can be represented by the following equation:
Beginning Allowance Balance + Bad Debt Expense – Write-offs = Ending Allowance Balance.
Plugging in the known values, we get:
$39.7 million + $30.0 million – Write-offs = $42.4 million.
To find the value of the write-offs, we rearrange the equation:
Write-offs = $39.7 million + $30.0 million - $42.4 million.
Write-offs = $27.3 million.
Now, since all sales are on credit, the cash collected from customers is equal to the sales minus the increase in the accounts receivable (which includes both the bad debt expense and write-offs). Assuming no incremental increase in sales on credit, the cash collected is represented by:
Cash Collected = Bad Debt Expense + Write-offs
Cash Collected = $30.0 million + $27.3 million
Cash Collected = $57.3 million
A chemical plant stores spare parts for maintenance in a large warehouse. Throughout the working day, maintenance personnel go to the warehouse to pick up supplies needed for their jobs. The warehouse receives a request for supplies, on average, every three minutes. The average request requires 2.75 minutes to fill a request. Maintenance employees are paid $21.50 per hour and warehouse employees are paid $16 per hour. The warehouse operates 8 hours per day. a) Based on the number of maintenance employees in the system, an 8 hour work day, and the given arrival and service rates. What is the system cost per day (to the nearest $) if there is only 1 warehouse employees working?
Answer:
$304 per day
Explanation:
See attached file
Kellogg Company is the world's leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffles and cereal bars. Suppose the following items were taken from its 2014 income statement and balance sheet. (All dollars are in millions.)
Type of Account Account Name Dollar Amount
Stockholders' Equity Retained earnings $5,481
Expense Cost of goods sold 7,184
Expense Selling and administrative expenses 3,390
Asset Cash 334
Liability Notes payable 44
Expense Interest expense 295
Liability Bonds payable 4,835
Asset Inventory 910
Revenue Sales revenue 12,575
Liability Accounts payable 1,077
Stockholders' Equity Common stock 105
Expense Income tax expense 512
Prepare an income statement for Kellogg Company for the year ended December 31, 2014.
Answer:
Please see answer in the explanation column.
Explanation:
Given,
Type of Account----- Account Name --- Amount in dollars
Stockholders' Equity--- Retained earnings ----$5,481
Expense----- Cost of goods sold ----$7,184
Expense---- Selling and administrative expenses ----$3,390
Asset ---Cash -----$334
Liability -----Notes payable---- $44
Expense---- Interest expense----$ 295
Liability---- Bonds payable----$ 4,835
Asset---- Inventory---- $910
Revenue---- Sales revenue----$12,575
Liability ----Accounts payable---- $1,077
Stockholders' Equity--- Common stock---- $105
Expense---- Income tax expense -----$512
Journal for income statement for Kellogg Company for the year ended December 31, 2014.
Revenue----
Sales revenue----$12,575
Expenses
Cost of goods sold ----$7,184
Selling and administrative expenses $3,390
Interest expense---- $295
Income tax expense -----$512
Total Expense---$11,381
Net Income = Total Revenue – Total Expense= $1,194
The Net income of the Kellogg Company for the year ended Dec. 31, 2014, is $23, 956. The preparation of the Income statement is attached below in the form of an MSWord Document.
An income statement, often known as a profit and loss account, is one of a company's financial statements that shows the company's or firm's revenues and expenses for a specific time period. It explains how revenues are converted into net profit or net income.
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When a purchase order is released, a commitment is made by a governmental unit to buy a computer to be manufactured to specifications for use in property tax administration. This commitment should be recorded in the general fund as a(n) General capital asset. Appropriation. Expenditure Encumbrance
Answer: Encumbrance
Explanation: The commitment made by a governmental unit to buy some product for use in administration is recorded in the general fund as an encumbrance which is defined as an interest, right, burden or liability that must be carried. As such, an encumbrance ensures that there will be enough funds available for the payment of certain governmental obligations and commonly refers to restricted funds in the general fund account.
Answer:
Encumbrance
Explanation:
An encumbrance is a portion of a budget set aside for spending required by law or contract. Like the budget itself, an encumbrance is a projection and not yet a reality. If business conditions continue as they are when you set the budget, then the encumbrance will become an expense.
The most common types of encumbrance apply to real estate; these include mortgages, easements, and property tax liens. Not all forms of encumbrance are financial, easements being an example of non-financial encumbrances. An encumbrance can also apply to personal – as opposed to real – property.
Wright Company's cash account shows a $29,300 debit balance and its bank statement shows $27,600 on deposit at the close of business on May 31. a.The May 31 bank statement lists $190 in bank service charges; the company has not yet recorded the cost of these services. b.Outstanding checks as of May 31 total $6,500. c.May 31 cash receipts of $7,100 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement. d.In reviewing the bank statement, a $490 check written by Smith Company was mistakenly drawn against Wright’s account. e.The bank statement shows a $420 NSF check from a customer; the company has not yet recorded this NSF check. Prepare its bank reconciliation using the above information.Prepare a bank reconciliation for the company using the above information
Answer:
Bank Reconciliation Statement:
Calculation of Adjusted cash Balance on 31 May:
Cash Balance: $ 29,300
less: Bank Charges $ (190)
less: NSF Check $ (420)
Adjusted cash Book Balance $ 28,690
Add: Outstanding Checks $ 6,500
Less: Uncleared Checks $ 7,100
Revised Cash Book Balance (A) $ 28,090
Bank Statement Balance $ 27,600
Add: Error by Bank $ 490
Adjusted Bank Balance (B) $ 28,090
Explanation:
Bank reconciliation is a company document prepared in order to reconcile difference between balance as per cash book and balance as per bank statement.
The difference arise because of two reasons:
Timing differences (Outstanding checks and Uncleared checksError and Omissions. (Bank charges -NSF)Final answer:
The bank and book balances now reconcile to $27,710 and $28,690, respectively, after accounting for the bank error correction, which would increase the cash account by $490 to $29,180.
Explanation:
Preparing a bank reconciliation involves adjusting the balance shown on the bank statement and the balance in the company's cash account to reflect all relevant transactions. Using the information provided, here is how you would prepare Wright Company's bank reconciliation:
Start with the bank statement balance of $27,600.Add the May 31 cash receipts of $7,100, which were not included in the bank statement (Deposits in Transit).Subtract the outstanding checks total of $6,500.Subtract the bank error of $490 mistakenly deducted from Wright's account (Bank Error).The adjusted bank statement balance would be $27,600 + $7,100 - $6,500 - $490 = $27,710.
Now, adjust the company's cash account:
Start with the company's book balance of $29,300.Subtract the bank service charges of $190 not previously recorded (Bank Service Charges).Subtract the $420 NSF (non-sufficient funds) check from a customer (NSF Check).The adjusted cash account balance would be $29,300 - $190 - $420 = $28,690.
If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that a. marginal revenue exceeds marginal cost. b. marginal cost exceeds marginal revenue. c. total cost exceeds total revenue. d. None of the above is correct.
Answer:
a. Marginal revenue exceeds marginal cost.
Explanation:
Note: The words "profit is not maximized" have been interpreted as, "the firm at current level of output earns profits, but not maximum profits it can earn." The answer provided herein is based upon this assumption.
Marginal revenue (MR) refers to the addition to total revenue when an additional unit of output is sold.
Similarly, marginal cost (MC) refers to the addition to total cost of production, when an additional unit is produced.
For an optimal level of production, and as a condition for profit maximization under perfect competition,
MR = MC and the marginal cost should increase post the level of output at which MR = MC.
If a competitive firm operates at a level wherein profits are not maximized, but the firm does earn profits, it indicates the stage of production wherein the marginal revenue exceeds the marginal cost.
Thus, as firm produces more and more units of output, it would reach a stage wherein marginal revenue would equal marginal costs and profits shall be maximized.
Kimble Electronics issued its 6%, 20-year bonds payable at a price of $855,000 (face value is $900,000). The company uses the straight-line amortization method for the bond discount or premium. Interest expense for the first year is:
Interest expense for the first year is: $56,250
Solution:
Kimble Electronics issued = 6%, 20-year bonds payable
The corporation follows the straight-line amortization approach for the discount or premium on debt.
$900,000 - $855,000= $45,000
$45,000/20 years= $2,250 per year
$900,000 * 0.06 = $54,000
$2,250 + $54,000 = $56,250 interest expense.
Final answer:
The annual interest expense for Kimble Electronics's 6%, 20-year bonds payable, sold at a discount, is calculated by adding the straight-line amortization of the discount to the annual interest payment, resulting in $56,250 for the first year.
Explanation:
Kimble Electronics issued 6%, 20-year bonds payable with a face value of $900,000 but sold them at a discount for $855,000. To calculate the interest expense for the first year using the straight-line amortization method, we first determine the total discount on the bonds by subtracting the issue price from the face value:
$900,000 - $855,000 = $45,000.
This $45,000 is the bond discount that needs to be amortized over the 20-year life span of the bond. To get the annual amortization amount:
$45,000 ÷ 20 years = $2,250 per year.
Next, we calculate the annual interest payment based on the face value:
$900,000 × 6% = $54,000 per year.
The interest expense for the first year combines the annual bond payment with the annual amortization of the discount:
$54,000 + $2,250 = $56,250.
Therefore, the interest expense for the first year is $56,250.
Standard costs rather than actual costs should be used in transfer-pricing methods because:
A. financial accounting rules (GAAP) require the use of standard costs.
B. tax rules require the use of standard costs.
C. standard costs are more readily available than actual costs.
D. standard costs facilitate a professionally negotiated, amicable settlement between the buying and selling divisions.
E.inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.
Answer:
E.inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.
Explanation:
The transfer price refers to that price in which the one firm is charging the prices from the other firm with respect to the service rendered. It is based on price charged in the market
To find out the transfer price we considered the standard cost instead of the actual cost as the divisions may be have more actual cost as compare to the standard cost which resulted into the inefficiency that impact the buying based on the transfer price
Stocks and bonds Use letters in alphabetical order to select options A are examples of stores of value, but not units of account nor medium of exchange. B are examples of stores of value and units of account, but do not function as medium of exchange. C are forms of money, according to economists. D have all the same functions as money, but are not considered money by economists.
Answer:
B are examples of stores of value, but not units of account nor medium of exchange.
Explanation:
(Stocks and bonds are store of value as they store the wealth of an individual but they are not units of account or medium of exchange and goods are not valued in terms of stock or bond and thus stock or bond can be used to purchase something.)
The Ramirez Company's last dividend was $1.5. Its dividend growth rate is expected to be constant at 15% for 2 years, after which dividends are expected to grow at a rate of 5% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
Answer:
current stock price, [tex]P_{0}[/tex] = $26.84
Explanation:
Given,
Most recent dividend, [tex]D_{0}[/tex] = $1.50
Growth rate, [tex]g_{1}[/tex] = 15% = 0.15 (Next 2 years)
[tex]g_{2}[/tex] = 5% = 0.05 (remain constant after 2 years)
required rate of return , [tex]r_{s}[/tex] = 12% = 0.12
We know,
Current stock price, [tex]P_{0}[/tex] = [[tex]D_{1}[/tex] ÷ (1 + [tex]r_{s}[/tex])] + [tex]\frac{D_{2} + P_{2}}{(1 + r_{s})^{2}}[/tex]
or, [tex]P_{0}[/tex] = [{[tex]D_{0}[/tex] × (1 + [tex]g_{1}[/tex])} ÷ (1 + [tex]r_{s}[/tex])] + [tex]\frac{D_{0} (1 + g_{1})^{2} + \frac{D_{3}}{r_{s} - g_{2}}}{(1 + r_{s})^{2}}[/tex]
or, [tex]P_{0}[/tex] = [{$1.50 × (1 + 0.15)} ÷ (1 + 0.12)] + [tex]\frac{1.50*(1+0.15)^{2} + \frac{D_{2} (1 + g_{2})}{(0.12 - 0.05)}}{(1+0.12)^{2}}[/tex]
or, [tex]P_{0}[/tex] = ($1.725 ÷ 1.12) + [tex]\frac{1.98375 + \frac{1.98375*(1 + 0.05)}{0.07}}{1.2544}[/tex]
or, [tex]P_{0}[/tex] = $1.5402 + [(1.98375 + 29.75625) ÷ 1.2544]
or, [tex]P_{0}[/tex] = $1.5402 + (31.74 ÷ 1.2544)
or, [tex]P_{0}[/tex] = $1.5402 + 25.3029
Therefore, current stock price, [tex]P_{0}[/tex] = $26.84
Coolmist produces high quality juices and competes head-on with the large national brands. Because of this stiff competition, they find it very difficult to raise the price of their juice. Oranges are a key raw material. As a rule the risk managers of Coolmist are NOT interested in designing an expensive risk management insurance strategy aimed at protecting their profit margins against small changes in the price of oranges. However, they are very interested in designing a cheaper risk management strategy that will protect margins against large changes in he price of oranges. Given this scenario, what financial engineering strategy would be most beneficial to Coolmist
Answer:
Explanation:
Being a juice producer, for which the raw material is oranges, Coolmist has to keep an eye on the prices of oranges. To protect herself from an increase in the cost of oranges, the financial engineering strategy that would be most beneficial to her is that she should buy in-the-money calls on oranges so that she will have an option to buy the oranges at the pre-decided strike price of the call option.
By doing the above, she would be protected against the price hike.
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $970,000, and it would cost another $19,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $617,000. The machine would require an increase in net working capital (inventory) of $15,000. The sprayer would not change revenues, but it is expected to save the firm $473,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%. Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. What is the Year-0 net cash flow
Answer:
-1,004,500
Explanation:
Cash used by an transaction is known as the cash outflow and cash provided by the transaction is known as cash inflow. Expenses and payments uses the cash and Revenue or receipts provide the cash.
All of the following cash flows are incurred in year 0
Base price = $970,000
Installation cost = $19,500
Increase in Working capital = $15,000
Total Cash Flow = $970,000 + $19,500 + $15,000 = $1,004,500
Cash has been used by each above transaction so,There is a Cash out flow of $1,004,500.
Final answer:
The Year-0 net cash flow for the Campbell Company upon purchasing a robotic paint sprayer is the sum of its cost, installation, and increased inventory needs, amounting to -$1,004,500.
Explanation:
The Year-0 net cash flow for Campbell Company considering the purchase of a robotic paint sprayer is calculated by adding the initial cost of the sprayer, installation costs, and the change in net working capital. We do not include depreciation here as it not a cash flow, and it will be considered when calculating tax savings in the later years. Therefore, the initial cash outflow (net cash flow at Year-0) for the sprayer is:
Cost of the sprayer: $970,000
Installation costs: $19,500
Increase in net working capital: $15,000
Adding these together, the total Year-0 net cash flow is:
-$970,000 (cost of the sprayer) - $19,500 (installation costs) - $15,000 (net working capital) = -$1,004,500
Wexell Framing's cost formula for its supplies cost is $1,230 per month plus $10 per frame. For the month of October, the company planned for activity of 592 frames, but the actual level of activity was 597 frames. The actual supplies cost for the month was $7,050. The activity variance for supplies cost in October would be closest to:
Answer:
The correct answer is $50 (unfavorable).
Explanation:
According to the scenario, computation of the given data are as follow:-
Planning supply activity cost = (592 × $10) +$1230
= $7,150
Actual supply activity cost = (597 × $10) + $1230
= $7,200
We can calculate the activity variance for supply cost by using following formula:-
Activity variance for supplies cost = Actual activity cost – Planning activity cost
= $7,200 - $7,150
= $50 ( positive shows unfavorable)
Charisma, Inc., has debt outstanding with a face value of $6.2 million. The value of the firm if it were entirely financed by equity would be $29.9 million. The company also has 425,000 shares of stock outstanding that sell at a price of $58 per share. The corporate tax rate is 22 percent. What is the decrease in the value of the company due to expected bankruptcy costs
Answer:
Decrease in value of company due to expected bankruptcy cost = $414,000
Explanation:
As per the data given in the question,
According to M & M proportional I with taxes,
Levered firm value is = Equity + Debt
= $29,900,000 + 0.22 × $6,200,000
= $31,264,000
Market value of the firm = market value of debt + market value of equity
= $6,200,000 + 425,000 × $58
= $30,850,000
Decrease in value of company due to expected bankruptcy cost = $31,264,000 - $30,850,000
= $414,000
"Individuals who participate in coaching programs that provide information on interviews and tips on successful interviewing tend to have higher interview scores than those who do not"
The effects of coaching on interviews evaluations
Explanation:
This is a true statement, but it does contain some caveats, because for an interview to be successful, it must consider a number of factors, such as the candidate's compatibility with the vacancy, the psychological profile must be compatible, but it will complement academic training and experiences required for the vacancy available.
However, it is a fact that
individuals who participate in training programs that provide information about interviews and tips on successful interviews, may perform better than those who did not, as they will learn the best self-confidence and public speaking techniques that they can achieve with higher scores.
Answer:
The statement is: True.
Explanation:
Interview coaching programs are useful for people who want to learn techniques to pass job interviews with optimal performances. How to prepare a resume, keep control in front of stress interviews or direct interviews, and techniques on how to pass multiple-skill tests are some of the topics reviewed in such training.
Under those circumstances, individuals increase their chances of being accepted for those jobs compared to applicants who do not prepare at the same level.
Newlife Inc. announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.63 a share. The following dividends will be $.68, $.83, and $1.13 a share annually for the following three years, respectively. After that, dividends are projected to increase by 4.1 percent per year. How much are you willing to pay today to buy one share of this stock if your desired rate of return is 15 percent?
Answer:
$7.63
Explanation:
Worth of the stock is the present value of all the cash flows associated with the stock. Dividend is the only cash flow that a stock holder receives against its investment in the stocks. We need to calculate the present values of all the dividend payments.
Formula for PV of dividend
PV of Dividend = Dividend x ( 1 + r )^-n
1st year
PV of Dividend = $0.63 x ( 1 + 15% )^-1 = $0.55
2nd year
PV of Dividend = $0.68 x ( 1 + 15% )^-2 = $0.51
3rd year
PV of Dividend = $0.83 x ( 1 + 15% )^-3 = $0.55
4th year
PV of Dividend = $1.13 x ( 1 + 15% )^-4 = $0.65
After four years the dividend will grow at a constant rate of 4.1%, so we will use the following formula to calculate the present value
PV of Dividend = [ $1.13 x ( 1 + 4.1% ) / ( 15% - 4.1% ) ] x [ ( 1 + 15% )^-5 ]
PV of Dividend = $5.37
Value of Stock = $0.55 + $0.51 + $0.55 + $0.65 + $5.37 = $7.63
Madsen Motor's bonds have 23 years remaining to maturity. Interest is paid annually, they have $1,000 par value, the coupon interest is 9%, and the yield to maturity is 11%. What is the bond's current market price
Answer:
The bond's current market price is $834.67
Explanation:
Market Value of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Price of the bond is calculated by following formula:
According to given data
Assuming the Face value of the bond is $1,000
Coupon payment = C = $1,000 x 9% = $90 annually
Number of periods = n = 23 years =
Current Yield = r = 11% / 2 = 5.5% semiannually
Market Value of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ $1,000 / ( 1 + r )^n ]
Market Value of the Bond = $90 x [ ( 1 - ( 1 + 11% )^-23 ) / 11% ] + [ $1,000 / ( 1 + 11% )^23 ]
Market Value of the Bond = $743.98 + $90.69 = $834.67
The current market price of Madsen Motor's bond can be calculated by determining the present value of the bond's annual payments and the present value of its face value when it matures, which adds up to $1045.75.
Explanation:In order to calculate the current market price of a bond, we need to calculate its present value using the coupon payment, the yield to maturity, and the face value. The bond's coupon payment can be calculated as it's face value multiplied by the coupon interest rate. Therefore, for the Madsen Motor's bond, the coupon payment is $1,000 X 0.09 = $90 annually. The present value of these annual payments for the remaining term of the bond can be calculated using the formula for the present value of an annuity: PVA = PMT X ((1 - (1 + r)^-n ) / r), where PMT is the annual payment, r is the yield to maturity divided by the number of periods, and n is the number of periods. In the case of this bond, this gives us the present value of annuity as $90 X ((1 - (1 + 0.11)^-23) / 0.11) = $807.57. The present value of the face value of the bond when it matures, also known as the present value of a lump sum, is computed as: PVLS = FV / (1+r)^n, where FV is the face value of the bond. For the Madsen Motor's bond, this is $1,000 / (1 + 0.11)^23 = $238.18. The current market price of the bond is the sum of these two present values, which comes to $807.57 + $238.18 = $1045.75.
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Erosion costs. Fat Tire Bicycle Company currently sells 39 comma 000 bicycles per year. The current bike is a standard balloon-tire bike selling for $120, with a production and shipping cost of $35. The company is thinking of introducing an off-road bike with a projected selling price of $375 and a production and shipping cost of $250. The projected annual sales for the off-road bike are 17 comma 000. The company will lose sales in fat-tire bikes of 9 comma 000 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike?
Answer:
Erosion cost from the new bike is equal to the profit lost from existing bike
= 9,000 x (120 - 35)
= $765,000
Benefit from new bike = 17,000 x (375 - 250)
= $2,125,000
Net Benefit = $2,125,000 - $765,000
= $1,360,000
Since there is net benefit from new bike, Fat Tire should start producing the off-road bike
Grocery Corporation received $300,328 for 11 percent bonds issued on January 1, 2018, at a market interest rate of 8 percent. The bonds had a total face value of $250,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Required: Prepare the following table for each account by indicating (a) whether it is reported on the Balance Sheet (B/S) or Income Statement (I/S); (b) the dollar amount by which the account increases, decreases, or does not change when Grocery Corporation issues the bonds; and (c) the direction of change in the account [increase, decrease, or no change] when Grocery Corporation records the interest payment on December 31.
Answer:
For A. and B see attached files
Explanation:
The terpsichorean was familiar with the risks associated with various moves, the accountant knew financial risks forwards and backwards, while the civil engineer could quantify the risks associated with distributed loads on the temporary stage. Their input was used as part of:
Complete Question:
The terpsichorean was familiar with the risks associated with various moves, the accountant knew financial risks forwards and backwards, while the civil engineer could quantify the risks associated with distributed loads on the temporary stage. Their input was used as part of:
A) a brainstorming meeting approach to risk factor identification.
B) the Delphi method approach to risk factor identification.
C) a past history approach to risk factor identification.
D) a multiple assessments approach to risk factor identification.
Correct Option:
Their input was used as part of "a multiple assessments approach to risk factor identification".
Option: D
Explanation:
The multiple assessments approach is collective procedure, which need unity from all the sectors to report their respective field experience in any firm or organization or department to identify the type of risk, its vulnerability, measures, etc.
The use of several indicators facilitates a more comprehensive and precise assessment. Like here terpsichorean was aware about risks, which was showcased by accountant and civil engineer in order to shape a strategy for preventing such risks or finding measures accordingly by full observation and analysis of situations.
Bardell, Inc. prepared its statement of cash flows for the year. The following information is taken from that statement: Net cash provided by operating activities $ 29,000 Net cash provided by investing activities 8,400 Cash balance, beginning of year 11,600 Cash balance, end of year 18,200 What is the amount of net cash provided by (used in) financing activities
Answer:
The Net Cash used in Financing activities is $30,800
Explanation:
Step 1 Determine the Movement in Cash during the period.
Movement = Ending Cash Balance - Beginning Cash Balance \
= 18,200 - 11,600
= 6,600 (inflow)
Step 2 Determine the Cash flow in Financing Activities
Cash flow statement for the year
Cash flow from Operating Activities $29,000
Net Cash flow from Investing Activities $ 8,400
Net Cash flow from Financing Activities (Balancing figure) ($30,800)
Movement in Cash during the year $6,600
Therefore, The Net Cash used in Financing activities is $30,800
________ are more effective at generating recall and familiarity with a product, whereas ________ generate cognitive activity that encourage consumers to evaluate the advantages and disadvantages of a product. A) Distributed communications; massed communicationsB) Interference effects; involvement effects C) Pictorial cues; verbal cues D) Narrow categorizers; broad categorizers E) Copy tests; recognition tests
Answer:
The correct answer is letter "C": Pictorial cues; verbal cues.
Explanation:
Marketing uses different approaches to attract consumers' attention. When it comes to portraying images, advertising can implement pictorial cues to create a depth sensation on two-dimensional surfaces like flyers. Though, a verbal cue is necessary as well to provide the information the promotion is intended to transmit. That data can let the audience know what the advantages and disadvantages of the product promoted are.
Product Pricing: Single Product Assume that you plan to open a soft ice cream franchise in a resort community during the summer months. Fixed operating costs for the three- month period are projected to be $5,650. Variable costs per serving include the cost of the ice cream and cone, $0.50, and a franchise fee payable to Austrian Ice, AG, $0.15. A market analysis prepared by the Austrian Ice indicates that the summer sales in the resort community should total 24,000.
Required: Determine the price should charge for each ice cream cone to achieve a $20,000 profit for the three-month period.
Answer:
$1.71
Explanation:
The computation of sales per unit is shown below:-
Variable cost = Total units × (Cost of ice cream and cone + Franchise fee payable)
= 24,000 × ($0.50 + $0.15)
= 24,000 × $0.65
= $15,600
Total cost = Fixed cost + Variable cost
= $5,650 + $15,600
= $21,250
Sales = Total cost + Profit
= $21,250 + $20,000
= $41,250
Sales price per unit = Sales ÷ Community total
= $41,250 ÷ 24,000
= $1.71
When interest is accrued on an interest-bearing note receivable, the Interest Revenue account is Select one: a. Increased; the Interest Receivable account is increased b. None of the above c. Decreased; the Interest Receivable account is increased d. Increased; the Notes Receivable account is decreased e. Increased; the Notes Receivable account is increased
Answer:
The correct answer is Option A.
Explanation:
Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.
Interest revenue on the note is calculated as: Principal x Interest Rate x Time
So, when the interest is accrued, the required journals would be:
Debit Interest receivable XXX
Credit Interest revenue XXX
(Interest accrual on notes receivable)
The debit and credit to the corresponding accounts mean an increase.
Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows: Unit-level materials $ 6,000 Unit-level labor 6,400 Unit-level overhead 3,300 Product-level costs* 8,100 Allocated facility-level costs 27,500 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required Calculate the total relevant cost. Should Rundle continue to make the containers? Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $12,300 per month, calculate the total avoidable costs. Should Rundle continue to make the containers?
Final answer:
To calculate the total relevant cost, you need to add up the unit-level materials, labor, and overhead, as well as the product-level costs and the allocated facility-level costs. To determine if Rundle should continue making the containers, compare the total relevant cost to the cost of purchasing the containers from Russo Container Company. To calculate the total avoidable costs if Rundle leased the space, subtract the monthly lease amount from the total relevant cost. Compare the total avoidable costs to the cost of purchasing the containers to determine if Rundle should continue making them.
Explanation:
To calculate the total relevant cost, we need to add up the unit-level materials, labor, and overhead, as well as the product-level costs and the allocated facility-level costs. The total relevant cost is as follows:
Add all these costs together to get the total relevant cost.
To determine if Rundle should continue making the containers, we need to compare the total relevant cost to the cost of purchasing the containers from Russo Container Company. If the total relevant cost is less than the cost of purchasing the containers, it would be more cost-effective for Rundle to continue making the containers. If the total relevant cost is greater than the cost of purchasing the containers, it would be more cost-effective for Rundle to buy the containers from Russo Container Company.
To calculate the total avoidable costs if Rundle were to lease the space it currently uses in the manufacturing process, we need to subtract the monthly lease amount of $12,300 from the total relevant cost. The total avoidable costs would be the difference between the total relevant cost and the lease amount.
To determine if Rundle should continue making the containers after leasing the space, we would compare the total avoidable costs to the cost of purchasing the containers. If the total avoidable costs plus the cost of leasing the space is less than the cost of purchasing the containers, it would be more cost-effective for Rundle to continue making the containers. If the total avoidable costs plus the cost of leasing the space is greater than the cost of purchasing the containers, it would be more cost-effective for Rundle to buy the containers from Russo Container Company.
It is cheaper for Rundle to continue producing the containers at $21,100 than to buy them for $23,920. However, considering additional avoidable costs, Rundle should stop producing and lease the space, as the total avoidable cost is $58,200.
Russo Container Company offers to sell the containers for $2.60 each. The total cost of buying the containers would be 9,200 × $2.60 = $23,920.
To find the total relevant cost of producing the containers, we consider the avoidable costs:
Unit-level materials: $6,000Unit-level labor: $6,400Unit-level overhead: $3,300Two-thirds of Product-level costs (which are not avoidable): $8,100 × (2/3) = $5,400The total relevant cost of producing is $6,000 + $6,400 + $3,300 + $5,400 = $21,100.
Comparing the total relevant cost of producing ($21,100) to the cost of buying ($23,920), it is cheaper to continue producing the containers.
Given the new lease opportunity at $12,300 per month, the avoidable costs including product-level costs (one-third) and allocated facility-level costs are factored in:
Unit-level costs: $6,000 + $6,400 + $3,300 = $15,700One-third of Product-level costs: $8,100 × (1/3) = $2,700Allocated facility-level costs: $27,500The total avoidable costs are $15,700 + $2,700 + $27,500 = $45,900.
Including the lease opportunity, the total cost avoided by not producing is $45,900 + $12,300 = $58,200.
Thus, Rundle should stop producing and lease the space since the avoidable cost ($58,200) is significantly higher than the cost of buying the containers ($23,920).
Expert systems are used when: predictions for the future are required. patterns of consumer behavior need to be investigated. Big data needs to be analyzed. expertise is in short supply and needs to be captured. senior managers need reports on overall business performance.
Answer:
predictions for the future are required.
Explanation:
Expert system is defined as a computer system that mimics the decision making ability of a human being. It does this by using bodies of knowledge to solve complex problems.
Expert systems is made up of the knowledge base and the inference system. Facts are analysed and inferences about future outcomes are presented.
This is a useful tool for making accurate forecasts.
What does it mean when a manager takes a systems view? A. To ensure a firm has no carbon footprint B. To focus on common resources such as sunshine, air, and airspace C. To maximize the triple bottom line D. To look at a product's life from design to disposal, including all the resources required
Answer: D. To look at a product's life from design to disposal, including all the resources required
Explanation: To take a systems view is to look at a product's life from design to disposal, including all the resources required. It means that the manager is taking a step back to examine the entire scope of the project in order to understand all the operations involved the project including function. In simpler terms, it means taking a holistic view of the project and how it relates to the larger organization. Taking a systems view can lead to better assessments of the product, the resources that are required in making the product, the entire design process among others thereby providing a way of examining the potential consequences of actions, minimize risks, recognize the impact of time delays and feedback.