Answer:
e) 6.45%
Explanation:
Since the coupons are paid semiannually, adjust the coupon payment(PMT), the time (N) of the bond.
You can solve for cost of debt using financial calculator with the following inputs;
Maturity of the bond; N = 20 *2 = 40
Face value; FV = 1000
Coupon payment; PMT = (6%/2) *1000 = 30
Price ; PV = -(1000 - floatation cost) = -(1000 - (5%*1000) = -950
then compute semiannual interest rate; CPT I/Y = 3.224%
Convert semiannual interest rate to annual rate to find the cost of debt;
3.224% *2 = 6.45%
Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.65% at a time when inflation is around 1.45%.
For the average saver, the real rate of interest on his or her savings is -0 80 %. If banks expect that the rate of inflation in the coming year will be 445% and they want a real return of 6% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is ______ %
Answer:
10.45 %
Explanation:
Please see attachment
Fenton Manufacturing Company at June 30: Cash in bank account $ 6,455 Inventory of postage stamps $ 74 Money market fund balance $ 12,400 Petty cash balance $ 350 NSF checks from customers returned by bank $ 867 Postdated checks received from customers $ 391 Money orders $ 257 A nine-month certificate of deposit maturing on December 31 of current year $ 8,000 Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
The Cash and Cash Equivalents of Fenton Manufacturing Company on June 30 should be reported as $26,855. This is derived from the sum of cash in the bank account, money market fund balance, and a 9-month certificate of deposit maturing by the year's end.
Explanation:The Fenton Manufacturing Company should report its Cash and Cash Equivalents by calculating the total of its cash, money market fund balance, and the nine-month certificate of deposit. The total would then be calculated as follows: $6,455 (Cash in bank account) + $12,400 (Money market fund balance) + $8,000 (A 9-month certificate maturing in December). Therefore, the total Cash and Cash Equivalents reported on June 30 would be $26,855.
It's important to note that some items are not included in this calculation.
Inventory of postage stamps: This is not cash and thus is not included.Petty cash: This can be included under cash.Not sufficient funds (NSF) checks: These are not considered good cash until they have cleared the bank.Postdated checks: These cannot be included because they aren’t yet available.Money orders: These are included within Cash and Cash Equivalents because they can be converted easily into cash.Learn more about Cash Equivalents here:https://brainly.com/question/34319867
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Final answer:
Fenton Manufacturing Company should report $19,462 as Cash and Cash Equivalents on June 30, including cash in the bank, the money market fund balance, the petty cash, and money orders.
Explanation:
To determine the Cash and Cash Equivalents that Fenton Manufacturing Company should report on June 30, we must identify items that are considered cash or equivalent to cash. According to accounting standards, cash and cash equivalents include currency on hand, demand deposits, and investments with original maturities of three months or less.
Cash in bank account: $6,455
Money market fund balance: $12,400
Petty cash balance: $350
Money orders: $257
Items such as inventory of postage stamps, NSF (non-sufficient funds) checks, postdated checks received, and long-term certificates of deposit are not considered cash equivalents. Thus, the Cash and Cash Equivalents for Fenton Manufacturing Company on June 30 would be the sum of the amounts listed above.
Adding these amounts gives us $6,455 (Cash in bank) + $12,400 (Money market) + $350 (Petty cash) + $257 (Money orders) = $19,462 as the total Cash and Cash Equivalents that should be reported.
On June 1, Forrest Inc. issues 3,000 shares of no-par common stock at a cash price of $7 per share. Journalize the issuance of the shares. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit June 1 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
Answer:
Explanation:
The journal entry is shown below:
Cash A/c Dr $21,000 (3,000 shares × $7)
To Common stock A/c $21,000
(Being the issuance of the shares are recorded)
For recording this transaction, we debited the cash account and credited the common stock account so that the correct posting can be done for $21,000 by considering the number of share and price per share
Millie Co. completed its first year of operations on December 31, 2017, with pre-tax financial income of $400,000. Millie accrued a contingent liability of $900,000 for financial reporting purposes; however, the $900,000 will be paid and therefore is deductible for tax purposes in 2018. Millie also has gross profit of $800,000 from certain sales recognized currently for financial reporting purposes but that will be taxable as installment sales in 2018 and 2019 when the cash is received ($400,000 each year). Millie’s pre-tax financial income includes $38,000 interest earned on its holdings of the bonds of the State of Montana. The tax rate is 35% for all years. Required: Determine Millie’s taxable income and taxes due for 2017. Determine the changes in Millie’s deferred tax amounts for 2017. Calculate tax expense for Millie for 2017.
Millie's taxable income for 2017 is $138,000 leading to taxes due of $48,300. The changes in deferred tax amounts result in a deferred tax asset of $140,000. The total tax expense for 2017 is $188,300.
Explanation:To determine Millie's taxable income for 2017, we start with the pre-tax financial income of $400,000. We then subtract the contingent liability of $900,000, recognized for financial reporting purposes, but deductible for tax purposes. Likewise, we need to subtract the $400,000 of the gross profit, which is taxable as an installment sale in 2018. Conversely, the $38,000 interest earned on the State of Montana bonds are not taxable and, thus, added back to our total. Therefore, Millie's taxable income for 2017 is $138,000.
To calculate the taxes due, we simply multiply by the tax rate of 35%, giving a result of $48,300.
The changes in deferred tax amounts are the tax effects of differences between financial income and taxable income. For Millie, this is the tax effect of the $400,000 gross profit, yielding a deferred tax asset of $140,000 ($400,000 * 35%).
Finally, the tax expense for Millie for 2017 is the sum of current tax expense ($48,300) and deferred tax expense (increase in deferred tax assets of $140,000), hence, $188,300.
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Use the following two statements to answer this question:
I. Increasing returns to scale cause economies of scale.
II. Economies of scale cause increasing returns to scale.
(A) Both I and II are false.
(B) Both I and II are true.
(C) I is false, and II is true.
(D) I is true, and II is false.
Answer:
(D) I is true, and II is false
Explanation:
Increasing returns to scale means that during a production process, as input increases, output increases but by a larger proportion.
Economies of scale refers to the decrease in average cost per unit as a firm increases its output.
The increase in output brought about by increasing returns to scale causes cost per unit to decrease (which is economies of scale).
Therefore increasing returns to scale causes economies of scale.
Sheridan Company’s standard labor cost per unit of output is $33.00 (3.00 hours x $11.00 per hour). During August, the company incurs 2,970 hours of direct labor at an hourly cost of $12.10 per hour in making 1,100 units of finished product.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Sheridan Company’s standard labor cost per unit of output is $33.00 (3.00 hours x $11.00 per hour). During August, the company incurs 2,970 hours of direct labor at an hourly cost of $12.10 per hour in making 1,100 units of finished product.
Direct labor efficiency variance= (SQ - AQ)*standard rate
Direct labor efficiency variance= (3,300hs - 2,970hs)*11= $3,630 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (11 - 12.1)*2,970= $3,267 unfavorable
Suppose that this year's money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion. The price level is , and the velocity of money is . Suppose that velocity is constant and the economy’s output of goods and services rises by 5 percent each year. Use this information to answer the questions that follow. If the Fed keeps the money supply constant, the price level will , and nominal GDP will . If the Fed wants to keep the price level stable instead, it should next year. If the Fed wants an inflation rate of 10 percent instead, it should . (Hint: The quantity equation can be rewritten as the following percentage change formula:
The Fed can control the price level and nominal GDP by manipulating the money supply, assuming a constant velocity. If the Fed aims for stable price levels, the rise in nominal GDP has to be due to an increased real output. For a 10% inflation, the Fed should increase the money supply by 15%, encompassing both increased output and price levels.
Explanation:This question applies the formula of the Quantity Theory of Money, which is Money Supply × Velocity = Nominal GDP. This formula is also referencing to the concept that nominal GDP equals the Price Level multiplied by Real GDP.
If the Fed keeps the money supply constant and velocity stays the same, but real output increases (i.e. Real GDP increases by 5%), then the nominal GDP would increase as well. For the price level to remain stable, the increase in nominal GDP must be entirely due to the increase in real output (i.e. the 5% increase in Real GDP), hence no change in the price level.
However, if the Fed wants an inflation rate of 10%, it should increase the money supply by 15% (5% for real GDP growth and 10% for inflation). This is because with the assumed constant velocity, an increase in the money supply would lead to an increase in nominal GDP either through inflation (increase in prices) or through an increase in the output of the economy (Real GDP).
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Which of the following is NOT a diversifiable risk?
A) the risk that oil prices rise, increasing production costs
B) the risk that the CEO is killed in a plane crash
C) the risk of a key employee being hired away by a competitor
D) the risk of a product liability lawsuit
Answer:
A) the risk that oil prices rise, increasing production costs
Explanation:
A diversifiable risk also known as unsystemic risk is risk that is specific only to a company. It can be mitigated against by diversifying a portfolio.
The risk that the CEO is killed in a plane crash , the risk of a key employee being hired away by a competitor and the risk of a product liability lawsuit are all specific to the company and are all diversifiable risks.
The risk that oil prices rise, increasing production costs is non diversificable risk.
Non diversificable risk is risk that can affect the whole industry or economy. Non diversificable risk cannot be avoided by diversifying the portfolio.
The risk that oil prices rise, increasing production costs isn't company specific, it would affect the whole industry or economy.
A major purpose of using an Allowance for Doubtful Accounts is to recognize uncollectible accounts expense in the same accounting period as the related sales which caused the expense. True or False?
Answer:
True
Explanation:
Allowance is made to be ready and prepared for any kind of loss to be incurred, or expense to be beared. Based on relative information and estimate an approximate amount is provided for.
When an yearly allowance is made for bad debts losses, the purpose is to meet the loss of bad debts due to current year sales on credit.
As the allowance is made yearly, and that represents the system of providing for losses, and to meet the criteria of matching principle to match revenue with its related costs, this is essential.
Thus, the statement is question is True.
Delaware Coatings Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2019: Net cash provided by operating activities: $45,000 Net cash used for investing activities: ($29,000) Net cash provided by financing activities: $2,000 What is the net change in cash during the year?
Answer:
The net change in cash during the period is $18,000
Explanation:
The net change in cash during the period is computed as:
Net change in cash during the period = Net Cash provided by the operating activities - Net Cash used by the investing activities + Net Cash provided by the financing activities
where
Net Cash provided by the operating activities is $45,000
Net Cash used by the investing activities is ($29,000)
Net Cash provided by the financing activities is $2,000
Putting the values above:
= $45,000 - $29,000 + $2,000
= $16,000 + $2,000
= $18,000
The net change in cash for Delaware Coatings Company in the year 2019 is calculated by summing the cash flows from operating, investing, and financing activities, resulting in a net increase of $18,000.
Explanation:The student is asking about calculating the net change in cash during the year for the Delaware Coatings Company when using the indirect method for the statement of cash flows. To find the net change in cash, you add up the net cash provided by (or used in) operating activities, investing activities, and financing activities for the period.
In this case, you have the following:
Net cash provided by operating activities: $45,000
Net cash used for investing activities: ($29,000)
Net cash provided by financing activities: $2,000
By adding these figures together ($45,000 - $29,000 + $2,000), the net change in cash during the year 2019 for the company is $18,000.
Lori approaches Pedro about creating a special wine for her daughter's upcoming wedding. Lori will buy 50 bottles of Pedro's wine, but the order will have fixed costs for special labeling and delivery of $300o. What is the breakeven price Pedro will need to charge to breakeven on this special order?
Answer:
New Break Even volume 74.42 or 74 units
Explanation:
Assuming the following given data:
A . Fixed Cost $893
B . Sale price per bottle $28
C = $ 14 + 2= $16 ----> New Variable cost per bottle
D = B - C -----> New unit contribution margin $12
E = A/D -------> New Break Even volume 74.42 or 74 units
A gum manufacturer wants to determine whether blue packaging or red packaging is preferred. The company performs a sales test by introducing red packages into a random sample of ten stores and blue packages are introduced in an independent, random sample of ten stores. The technique most appropriate for analyzing the data is:a. paired sample t-test for means.b. Spearman rank-order correlation analysis.c. regression analysis.d. independent samples t-test for means.e. correlation analysis.
Answer:
d. independent samples t-test for means.
Explanation:
The technique independent sample t-test for means is an statistical tool used for calculating a difference between two mean values calculated.
As in the given instance there are two types of sample population which represents different samples.
Thus, they shall be compared effectively with this tool so that the more favorable option shall be chosen properly.
The independent t-test sample mean is helpful in this instance.
Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing $77,000 to Angela for $110,000. Of this inventory, $40,000 worth was not sold to outsiders until 2018. During 2018, Corby sold inventory costing $72,000 to Angela for $120,000. A total of $50,000 of this inventory was not sold to outsiders until 2019. In 2018, Angela reported separate net income of $150,000 while Corby's net income was $90,000 after excess amortizations. What is the noncontrolling interest in the 2018 income of the subsidiary?
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Charles is a single person, age 35, with no dependents. In 2019, Charles has gross income of $75,000 from his sole proprietorship. Charles also incurs $80,000 of deductible business expenses in connection with his proprietorship. He has interest and dividend income of $22,000. Charles has $7,000 of itemized deductions. Charles's taxable income is
A) $6, 650.
B) $17,000.
C) $12, 950.
D) $10, 700.
Answer:
A)
Explanation:
Suppose that the president of a small island nation has decided to increase government spending by building more libraries. The legislation was enacted without any delay. From here, planning will take 6 months and building will take 2 months. Which of the following is true? Choose one: O A. The planning and building of the libraries represent an impact lag of this policy B. The Laffer curve would be used to recommend this policy. O C. The planning and building of the libraries represent a recognition lag of this policy D. This policy is contractionary. E. This policy shows an example of automatic stabilizers taking effect.
Answer:
A. The planning and building of the libraries represent an impact lag of this policy
Explanation:
Impact lag, is the time it takes for monetary and fiscal policies to smooth out the economic cycle or respond to an adverse economic event, to affect the economy once they have been implemented.
Recognition lag is the time lag between when an actual economic shock such as sudden boom or bust and when it is recognized by economists, central bankers and the government.
Steinberg Corporation and Dietrich Corporation are identical companies except that Dietrich is more levered. Both companies will remain in business for one more year. The companies' economists agree that the probability of the continuation of the current expansion is 80 percent for the next year, and the probability of a recession is 20 percent. If the expansion continues, each company will generate earnings before interest and taxes (EBIT) of $3.7 million. If a recession occurs, each company will generate earnings before interest and taxes (EBIT) of $1.1 million. Steinberg's debt obligation requires the company to pay $910,000 at the end of the year. Dietrich's debt obligation requires the company to pay $1.2 million at the end of the year. Neither company pays taxes. Assume a discount rate of 12 percent.
a-1.
What is the value today of Steinberg's debt and equity? (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Steinberg's
Equity value $
Debt value $
a-2.
What is the value today of Dietrich's debt and equity? (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Dietrich's
Equity value $
Debt value $
b. Steinberg’s CEO recently stated that Steinberg’s value should be higher than Dietrich’s because the company has less debt and therefore less bankruptcy risk. Do you agree or disagree with this statement?
Disagree
Agree
Answer:
a-1.
Steinberg's debt:
Steinberg's equity:
a-2.
Dietrich's debt:
Dietrich's equity:
b. Disagree as the values of the two companies are the same ( please see below Explanation for further clarification)
Explanation:
It is clear to determine that the value of debt and equity of the two firms is the present value of cash flow received in 1 year, discounted at 12%.
a-1.
In one year:
- Debt holder of Steinberg will receive $910,000 regardless of its EBIT. -=> Thus, Steinberg's debt present value = 910,000 / 1.12 = $812,500
- Given the probability of expansion and recession, Steinberg's shareholder will receive the amount equal EBIT - amount paid to its debt holders: 0.8 x (3,700,000 - 910,000) + 0.2 x (1,100,000-910,000) = $2,270,000.
=> Thus, Steinberg's equity present value = $2,270,000/ 1.12 = $2,026,786
=> Value of Steinberg = D+E = 812,500 + 2,026,786 = $2,839,286 ( note: no tax applied)
a-2.
In one year:
- Debt holder of Dietrich will receive $1,200,000 when the business expands while only $1,100,000 when the business goes into recession (i.e business loss is 100,000): 0.8 x 1,200,000 + 0.2 x 1,100,000 = $1,180,000
=> Thus, Dietrich's debt present value = 1,180,000 / 1.12 = $1,053,571
- Given the probability of expansion and recession, Dietrich's shareholder will receive the amount equal EBIT - amount paid to its debt holders: 0.8 x (3,700,000 - 1,200,000) + 0.2 x (1,100,000-1,100,000) = $2,000,000.
=> Thus, Dietrich's equity present value = 2,000,000 / 1.12 = $1,785,714
=> Value of Steinberg = D+E =$1,053,571+$1,785,714 = $2,839,286( note: no tax applied)
a-3.
From the calculation, it is clear that the values of the two companies are the same.
2. A lumber company purchases and installs a wood chipper for $280,000. The chipper is classified as MACRS 7-year property. The chipper’s useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000. Using straight-line depreciation, what is the approximate first year depreciation?
Answer:
Annual depreciation= $16,000
Explanation:
Giving the following information:
A lumber company purchases and installs a wood chipper for $280,000. The chipper’s useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (280,000 - 40,000)/15= $16,000
The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state’s newest millionaire. By choosing the six winning numbers on last week’s state lottery, Mr. Ormsby has won the week’s grand prize totaling $1.12 million. The State Lottery Commission has indicated that Mr. Ormsby will receive his prize in 20 annual installments of $56,000 each.Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.Required:1. If Mr. Ormsby can invest money at a 8% rate of return, what is the present value of his winnings? (Use the appropriate table to determine the discount factor(s).)
GMM co. plans to issue annual coupon bonds with 7.5% coupon rate to the public, maturing in 10 years. The face value of the bond is $1,000. You, as the CFO, want to decide how to set the price for the bond.
You notice that 2 years ago, your company issued a 15-year annual coupon bond with 8% coupon rate.
The current market price for the outstanding old bond is $950.
What is the fair price for the new 10-year annual coupon bond?
a. 1000
b. 924.70
c. 1024.70
d. 934.70
e. 1034.70
Answer:
What is the fair price for the new 10-year annual coupon bond?b. 924.70
Explanation:
First it's needed to calculate the YTM of the current bonds, issued 2 years ago, if we applied the Present Value formula to the Principal and Coupons we get the YTM to the current bonds.
With a market price of $950, we can find the YTM of these bonds today, when there are 13 years left until the expiration date, the YTM is 8,66%.
If we apply this 8,66% rate to the new bond issue, we can obtain the price that could be accepted for the market.
Bond Value
Principal Present Value = F / (1 + r)^t
Coupon Present Value = C x [1 - 1/(1 +r)^t] / r
YTM of the Bond that was issued 2 years ago.
The price of this bond it's $340 + $610 = $950
Present Value of Bonds $340 = $1,000/(1+0,0866)^13
Present Value of Coupons $610 = $80 (Coupon) x 7,63
7,63 = [1 - 1/(1+0,0866)^13 ]/ 0,0866
The bond price to be issued:
The price of this bond it's $436 + $489 = $924,70
Present Value of Bonds $436 = $1,000/(1+0,0866)^10
Present Value of Coupons $489 = $75 (Coupon) x 6,52
6,52 = [1 - 1/(1+0,0866)^10 ]/ 0,0866
The Executive Director of Operations has assigned Joe Tanney the role of Team Leader for a high priority project. The task is to generate a proposal for streamlining the antiquated blueprint generation process. Each office is at different stages of computerization, with different teams preferring different technologies for particular tasks. This makes everything more complex – from collaboration to revisions to cost and time management, and is having a serious impact on the company’s bottom line. The team includes Rosa Denson, Cheng Jing, and Simon Mahoney. The type of conflict exhibited by members of Joe’s team is known as ______ conflict. a.multicultural b. functional c. dysfunctional d. gender e. intergroup
Answer: Dysfunctional conflict
Explanation:
This is a team conflicts that have negative consequences on the firm.
The conflict is not multicultural because their cultures doe have an impact on the conflict results, it's equally not functional because it's not bringing in a positive results, Both gender and intergroup do not also have an effect on the conflict.
The conflict within Joe Tanney's team, which arises from differing technology preferences and their impact on work processes, represents functional conflict. This type of conflict is associated with constructive disagreements that can lead to improved team performance and organizational efficiency when managed appropriately.
Explanation:The type of conflict exhibited by members of Joe's team is known as functional conflict. Functional conflict is a healthy, constructive disagreement that occurs among a group of people such as a work team. It stems from differing ideas and opinions regarding task-related issues and can often result in improvements to processes or problem-solving outcomes. Given that Joe Tanney's team is tasked with streamlining an antiquated process and the conflict arises from different preferences for technologies and their effects on collaboration, cost, and time management, it fits within the definition of functional conflict. This type of conflict, as opposed to being destructive, can enhance the effectiveness of the team when managed properly and lead to a more efficient organizational process.
The shares of preferred stock issued by Saturn Corporation can be exchanged for common stock. However, any dividends in arrears are lost. Which of the following features are present in the preferred stock issued by Saturn?Select all answers that apply to this question.ConvertibleRedeemableCumulativeNoncumulative
Convertible and Noncumulative features are present in the preferred stock issued by Saturn.
Explanation:
It requires the owners of these preferred shares to be traded for common stocks so as to have the possibility of exchanging their preferential stock to common equity within a predisposed time.
Since it states that "the arrears payments have been lost," though, this means that the preferred stock does not collect.
You have no right to receive past dividends as the holders of this form of share if the Company starts to question again expectations for dividends. If the distributing company is making losses during that year, it can opt to miss dividends on such non-cumulative, convertible redeemable preferred stock.
When Bruno's basis in his LLC interest is $150,000, he receives cash of $55,000, a proportionate share of inventory, and land in a distribution that liquidates both the LLC and his entire LLC interest. The inventory has a basis to the LLC of $45,000 and a fair market value of $48,000. The land's basis is $70,000, and the fair market value is $60,000. How much gain or loss does Bruno recognize, and what is his basis in the inventory and land received in the distribution?
Answer:
Please see attachment
Explanation:
Please see attachment .
Please note that B= Bruno
Gangland Water Guns, Inc. is expected to pay a dividend of $2.10 one year from today. If the firm's growth in dividends is expected to remain at a flat 3 percent forever, what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50.
Answer:
15%
Explanation:
Use Dividend discount model to find the required return of equity or cost of equity capital;
Return r formula;
[tex]=\frac{D1}{P0} +g[/tex]
whereby; D1 = Next year's dividend = $2.10
P0 = Current price = $17.50
Growth rate; g = 3% or 0.03 as a decimal
Next, plug in the numbers to the formula above to calculate the cost of equity;
r [tex]=\frac{2.10}{17.50} +0.03\\ \\ =0.12+ 0.03[/tex]
r = 0.15 or 15%
Therefore, cost of equity is 15%
The cost of equity capital for Gangland Water Guns, Inc. is 15%, calculated using the Gordon Growth Model (GGM) with a dividend of $2.10, a growth rate of 3%, and a current stock price of $17.50.
The cost of equity capital for Gangland Water Guns, Inc. can be calculated using the Gordon Growth Model (GGM), which determines the present value of an infinite series of dividends that grow at a constant rate. The formula for the GGM is P = D1 / (k - g), where P is the current stock price, D1 is the dividend in one year, k is the cost of equity, and g is the growth rate of dividends. In this scenario, we have a dividend (D1) of $2.10, a growth rate (g) of 3 percent, and a current stock price (P) of $17.50. To find the cost of equity (k), we rearrange the formula to k = (D1 / P) + g. Plugging in the values, k = ($2.10 / $17.50) + 0.03. This yields a cost of equity capital of 15%.
Marisol was granted 100 NQSOs five years ago. At the time of the option grant, the value of the underlying stock was $100 and the exercise price was equal to $100. If Marisol exercises the options on August 22 of this year when the stock is valued at $145, what are the tax consequences (per share) to Marisol from exercising the options?
A. $45 of W-2 income, $100 of short -term capital gain.
B. $100 of W-2 income, $45 of short-term capital gain.
C. $145 of W-2 income.
D. $45 of W-2 income.
Answer:
D. $45 of W-2 income.
Explanation:
Please see attachment.
The Solomon, Smith, and Samson law firm produces many legal documents that must be word processed for clients and the firm.
Requests average eight pages of documents per hour, and they arrive according to a Poisson distribution.
The secretary can word process 10 pages per hour on average according to an exponential distribution.
a. What is the average utilization rate of the secretary?
b. What is the probability that more than four pages are waiting or being word processed?
c. What is the average number of pages waiting to be word processed?
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
The secretary has an average utilization rate of 80%. The probability of more than four pages waiting or being processed can't be accurately provided without additional data. Similarly, the average number of pages waiting to be processed can't be determined without additional data.
Explanation:The subject of this question is Business, specifically related to operations management, and appropriate for a College level course. The questions focus on determining the secretary's average utilization rate, the probability of a certain number of pages being processed, and the average number of pages waiting to be processed.
a) The average utilization rate of the secretary can be calculated by dividing the average rate at which the work (requests for document processing) arrives by the rate at which the work is done. In this case, the rate of arrival is 8 pages per hour and the rate of work done is 10 pages per hour. So, the utilization rate is 8/10 or 0.8, which is 80%.
b) The probability that more than four pages are waiting or being word processed is more complex to calculate and generally requires the use of a Poisson distribution formula or tables. As the question doesn't provide enough information, this aspect can't be accurately answered.
c) The average number of pages waiting to be word processed is calculated by the formula (λ^2)/(μ*(μ-λ)), where λ is the arrival rate and μ is the service rate. However, without additional data, a specific number cannot be given.
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Blue Company estimates that unit sales will be 10,500 in quarter 1, 12,400 in quarter 2, 14,100 in quarter 3, and 18,800 in quarter 4. Using a sales price of $85 per unit. Prepare the sales budget by quarters for the year ending December 31, 2017.
Answer:
Explanation:
The preparation of the sales budget for 4 quarters are shown below:
Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Estimated
Unit sales 10,500 12,400 14,100 18,800 55,800
Unit sales
price $85 $85 $85 $85 $85
Total sales $892,500 $1,054,000 1,198,500 1,598,00 $4,743,000
ABC Company currently pays a dividend of $2.15 per share, D0=2.15. It is estimated that the company’s dividend will grow at a rate of 30 percent per year for the next 3 years, then the dividend will grow at a constant rate of 8 percent thereafter. The market rate of return is 11 percent. What would you estimate is the stock’s current price?
Answer:
$133.26
Explanation:
Please see attachment
Terra Corporation purchased equipment with a 10-year useful life and zero residual value for $100,000. At the end of the fourth year, the equipment is exchanged for new equipment worth $110,000. Terra gets a trade-in allowance of $70,000 on the exchange, with the remaining $40,000 paid in cash. Which of the following is true of the net effect of this transaction? Assume the straight-line depreciation method is used.Select all that apply:Assets decrease by $10,000Assets increase by $10,000Liabilities increase by $10,000Total stockholders' equity decreases by $10,000Total stockholders' equity increases by $10,000
Answer:
Assets increase by $10,000
Total stockholders' equity increases by $10,000
Explanation:
Since in the question, it is given that, the purchase value of equipment is $100,000 and the exchanged value is $110,000
So, the difference of $10,000 ($110,000 - $100,000) would reflect that the assets would increase by $10,000 and the total stockholders' equity is also increased by $10,000
The exchange value is a combination of $70,000 in trade allowance and $40,000 was paid in cash
The financial statements of Carrier Office Furniture Company include the following items: 2019 2018 Cash $42,500 $42,000 Shortminusterm Investments 28,000 19,000 Net Accounts Receivable 102,000 98,000 Merchandise Inventory 166,000 148,000 Total Assets 527,000 547,000 Total Current Liabilities 273,000 285,000 Long-term Note Payable 64,000 60,000
What is working capital for 2019?
Answer:
$65,500
Explanation:
Data provided in the question:
2019 2018
Cash $42,500 $42,000
Short-term Investments 28,000 19,000
Net Accounts Receivable 102,000 98,000
Merchandise Inventory 166,000 148,000
Total Assets 527,000 547,000
Total Current Liabilities 273,000 285,000
Long-term Note Payable 64,000 60,000
Now,
Working capital = Current assets - Current liabilities
Also,
Current assets (i.e for the year 2019 )
= Cash + Short-term Investments + Net Accounts Receivable + Merchandise Inventory
= $42,500 + $28,000 + $102,000 + $166,000
= $338,500
and,
Current liabilities = $273,000
Therefore,
Working capital for 2019 = $338,500 - $273,000
= $65,500
Which of the following is NOT one of the activities carried on in a distribution center?A. Coordinating inbound transportationB. Receiving, checking, storing, and cross-dockingC. Distributing paychecks and paystubs for retail employeesD. Getting merchandise floor readyE. Coordinating outbound transportation
Answer:
C. Distributing paychecks and pay stubs for retail employees
Explanation:
Distribution centers are basically the alternative for warehouses in case of emergency, that is for temporary purposes. It helps in meeting the need in case of emergency that might occur in case of any storage facility not available.
It provides for basic management of inventory and stock at the time of procuring it, storing it, and then deploying it as and when needed.
It nowhere involves any step where the distribution center is responsible for any kind of payments through paychecks to any vendor supplying the goods, or that providing transportation of goods.