Answer:
option (a) 0.0056
Explanation:
Data provided in the question:
Return that can be earned : 2% 20% 8%
Probability of returns : 30% 36% 34%
Now,
Average return, m = [tex]\frac{2\% + 20\% + 8\%}{3}[/tex] = 10%
Return (X) P(X) X - m ( X - m )² ( X - m )² × P(X)
2% 30% -8% = -0.08 0.0064 0.00192
20% 36% 10% = -0.10 0.01 0.0036
8% 34% -2% = -0.02 0.0004 0.000136
Thus,
Variance of the stock’s return = ∑ ( ( X - m )² × P(X) )
= 0.00192 + 0.0036 + 0.000136
= 0.005656 ≈ 0.0056
Hence,
The correct answer is option (a) 0.0056
Final answer:
The variance of the stock's return is found by calculating the expected return and then summing the squared deviations of each return from the expected return, multiplied by their respective probabilities. The right answer is option (b) .0923.
Explanation:
To calculate the variance of the stock's return, we need to first find the expected value (mean return) of the stock, and then use this to calculate the variance. The expected return is calculated as the sum of the products of each return and its associated probability:
Expected return (E) = (2% * 30%) + (20% * 36%) + (8% * 34%)Next, we calculate the variance by finding the squared deviation of each return from the expected return, multiplying by the probability of that return, and summing these values:
Variance = (30% * (2% - E)^2) + (36% * (20% - E)^2) + (34% * (8% - E)²)After calculating, we will see that the correct option from the provided list is (b) .0923, assuming there are no calculation errors.
In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion.4.(Scenario: Open Economy S = I) What is the government budget balance?
A)a surplus of $1.5 trillion
B)a deficit of $1.5 trillion
C)a deficit of $0.5 trilli
Answer:
B)a deficit of $1.5 trillion
Explanation:
The computation of the government budget balance is shown below:
= Taxes - government spending
= $0.5 trillion - $2 trillion
= $1.5 trillion deficit
For computing the government budget balance, we deduct the government spending from the taxes so that the correct amount can come
All other information which is given is not relevant. Hence, ignored it
Hitzu Co. sold a copier (that costs $4,500) for $9,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 5% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $146 for materials taken from the repair parts inventory. These are the only repairs required in Year 2 for this copier.
1. How much warranty expense does the company report for this copier in Year 1?
Answer:
In year 1 the warranty expense reported is $450 ($9,000 x 5%)
Explanation:
The journal entries would be:
Sales journal entry - August 16 - Year 1
Account Debit Credit
Cash $9,000
Cost of goods sold $4,500
Revenue $9,000
Inventory $4,500
Accrued Warranty Expense - December 31 - Year 1
Account Debit Credit
Warranty Expense $450
Estimated Warranty
Liability $450
By the end of Year 1, the company has recognized an accrued expense (an accrued expense is recognized before cash is actually paid out) for $450.
A manager receives a forecast for next year. Demand is projected to be 590 units for the first half of the year and 940 units for the second half. The monthly holding cost is $2 per unit, and it costs an estimated $55 to process an order.
a. Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for each of the six-month periods. (Round your answers to the nearest whole number.)
Answer:
74 units; 93 units
Explanation:
Given that,
Holding cost, H = $2 per unit
Carrying cost, O = $55
Demand in first half, D1 = 590 units
= 590 ÷ 6
= 98.33 per month
Demand in second half, D2 = 940 units
= 940 ÷ 6
= 156.67 per month
For D1; EOQ:
[tex]EOQ=\sqrt{\frac{2\times D\times O}{H} }[/tex]
[tex]EOQ=\sqrt{\frac{2\times 98.33\times 55}{2} }[/tex]
= 73.54 or 74 units
For D2; EOQ:
[tex]EOQ=\sqrt{\frac{2\times D\times O}{H} }[/tex]
[tex]EOQ=\sqrt{\frac{2\times 156.67\times 55}{2} }[/tex]
= 92.82 or 93 units
Hence, the appropriate order size will be 74 units and 93 units.
A single individual has an adjusted gross income of $15,000, no tax-exempt interest, and Social Security benefits of $14,000. How much of this individual’s Social Security benefits is subject to income tax? $0. $7,500. $11,900. $15,500.
Answer:
$0
Explanation:
The social security Benefits are taxable only if the MAGI and half of the Adjusted Gross Income exceeds $25,000, in case of a single individual.
Modified Adjusted Gross Income (MAGI) includes all the wages, interest or any other taxable income. Also the tax exempt interest income is also included in such income.
Thus, MAGI here = $15,000
Further one half of the Social Security Benefits = $14,000/2 = $7,000
Jointly MAGI + One half of Social Security Benefits = $15,000 + $7,000 = $22,000
Since it is below $25,000, no social security benefit shall be taxable in the hands of individual.
Suppose that a labor economist finds that one of her research subjects has earned significantly higher wages throughout his lifetime than would be predicted by standard measured variables. The economist also notes that each of the subject's positions was found through connections at his family's exclusive country club.
Which one of the following most likely explains this person's unusually high earnings?
(A) Chance
(B) Compensating differentials
(C) Effort
(D) Efficiency
Answer:
(A) Chance
Explanation:
Please see attachment .
A few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back. What is it about the petroleum industry that simultaneoulsy prevents entry and fosters joint ventures and other collaberations
Answer:
High fixed (and sunk) costs
Explanation:
Petroleum industry is marked by high fied and sunk cost as exploration of oil is an expensive business. The companies need to spend a lot of money on technology and machinery and even that does not guarantee success. Hence all these fied cost and sunk cost make the entry of new firm difficult.
Crane Company is evaluating its Piquette division, an investment center. The division has a $66000 controllable margin and $480000 of sales. How much will Crane’s average operating assets be when its return on investment is 10%?
Answer:
$600,000
Explanation:
Data provided in the question:
Controllable margin = $66,000
Sales = $480,000
Return on investment = 10%
Now,
Return on investment = Controllable Margin ÷ Average Operating Assets
or
10% = $60,000 ÷ Average Operating Assets
or
Average Operating Assets = 60000 ÷ 10%
or
Average Operating Assets = 60000 ÷ 0.01
or
Average Operating Assets = $600,000
13. Jensen and Associates has a projected balance sheet that includes the following accounts. What is the projected marketable securities balance? Cash $ 225,000 Marketable securities ? Accounts receivable 680,000 Inventory 940,000 Non-current assets, net 1,420,000 Current liabilities 375,000 Total liabilities 1,060,000 Total equity 2,985,000
Answer:
$780,000
Explanation:
In the balance sheet, the assets, liabilities, and stockholder equity is recorded. In this the accounting equation is used which is shown below:
Total assets = Total liabilities + stockholder equity
= $1,060,000 + $2,985,000
= $4,045,000
And, the total assets would equal to
Total assets = Cash + Marketable securities +Accounts receivable + Inventory + Non-current assets, net
$4,045,000 = $3,265,000 + Marketable securities
So, the marketable securities would be
= $4,045,000 - $3,265,000
= $780,000
This question compares the effects of a tax cut on aggregate demand and aggregate supply. A tax cut of 150 is targeted to business enterprises so that, as their after-tax profits rise, they raise their spending on investment goods by the full 150. When subsequent rounds of increases in income occur, however, there is a normal marginal propensity to consume, and a multiplier of two. Investment has the following effect on aggregate supply: for every $3 of investment goods produced, annual output rises by $1.a) What increase in aggregate demand will result from this tax cut?b) What increase in aggregate supply will occur in the first year?c) Comparing your answers in a) and b), which impact is bigger?d) Assuming the tax reduction is permanent, how many years will it take before the effects on aggregate demand and aggregate supply are equal?e) Suppose the tax cut is not quite as well targeted toward the supply side as the government hoped. Of the cut of 150, initially 60 is spent on investment, 60 is spent on consumption, and 30 is saved. Answer questions a) through d) above under these circumstances.
Answer:
Check the following explanation.
Explanation:
Ans a - Aggregate demand will increase by $150.
Ans b - Aggregate supply will increase by $50 in the first year.
Ans c - The aggregate demand impact is bigger.
Ans d - If the tax reduction is permanent then the aggregate demand and aggregate supply will be equal in 3 years.
Ans e - The aggregate demand increases by 120. The aggregate supply increases by 20. The aggregate demand impact is bigger. If the tax reduction is permanent then the aggregate demand and aggregate supply will be equal in 6 years.
Sunland Company is considering two capital investment proposals. Estimates regarding each project are provided below. Project Soup Project Nuts Initial Investment $600,000 $900,000 Annual Net Income $30,000 $63,000 Annual Cash Inflow $150,000 $213,000 Salvage Value $0 $0 Estimated Useful Life 5 years 6 years The company requires a 10% rate of return on all new investments. Part (a): Calculate the payback period for each project. Part (b): Calculate the net present value for each project. Part (c): Which project should Carr Company accept and why?
Answer:
a. 4 years and 4.22 years
b. -$31,350 and $27,615
c. Project Nuts
Explanation:
a. The formula to compute the payback period is shown below:
= Initial investment ÷ Net cash flow
For project soup, it would be
= $600,000 ÷ $150,000
= 4 years
For project nuts, it would be
= $900,000 ÷ $213,000
= 4.22 years
b. The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor - initial investment
For project soup, it would be
= $568,650 - $600,000
= -$31,350
The present value is computed below:
= Annual cash flow × pvifa for 5 years at 10%
= $150,000 × 3.791
= $568,650
For project nuts, it would be
= $927,615 - $900,000
= $27,615
The present value is computed below:
= Annual cash flow × pvifa for 6 years at 10%
= $213,000 × 4.355
= $927,615
Kindly refer pvifa table
c. The project Nuts should be accepted as it has positive net present value.
On January 1, 2016, Martini, Inc. acquired a machine for $1,030,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $87,000. What is the book value of the machine at the end of 2017 if the company uses the straight-line method of depreciation?
Answer: $652,800
Explanation:
Straight Line Depreciation per year = (Cost – Residual Value) / Useful Life
Straight Line Depreciation per year = ($1,030,000 - $87,000) / 5
Straight Line Depreciation per year = $188,600
Accumulated Depreciation at the end of 2017 = Depreciation per year * No. of years used
Accumulated Depreciation at the end of 2017 = $188,600 * 2
Accumulated Depreciation at the end of 2017 = $377,200
Book Value at the end of 2017 = Cost – Accumulated Depreciation at the end of 2017
Book Value at the end of 2017 = $1,030,000 - $377,200
Book Value at the end of 2017 = $652,800
Final answer:
The book value of the machine at the end of 2017, using the straight-line method of depreciation, is calculated to be $652,800 after taking into account the total depreciation over two years.
Explanation:
The question asks for the book value of a machine at the end of 2017 if the company uses the straight-line method of depreciation. The initial cost of the machine is $1,030,000, with an estimated residual value of $87,000 at the end of its five-year useful life. To calculate depreciation using the straight-line method, subtract the residual value from the cost and then divide by the useful life. So, depreciation per year = ($1,030,000 - $87,000) / 5 = $188,600. By the end of 2017, which is two years from the acquisition date, the total depreciation would be $188,600 * 2 = $377,200. The book value of the machine at the end of 2017 is then the cost minus the accumulated depreciation, which equals $1,030,000 - $377,200 = $652,800.
Amy and Soma discover a stream that flows wine. Amy and Soma decide to bottle the wine and sell it. The marginal cost and the fixed cost to bottle wine are 54 and zero respectively. The market demand for bottled wine is given by: P = 904-50, where Q is the total quantity of bottled wine produced and Pis the market price of bottled wine. Answer the following questions. a. What are the economically efficient (in other words, perfectly competitive) price and quantity of bottled wine? Show your work. How much will be the profit? (1+1+2+2 - 6 points) b. If Amy and Soma were to collude with one another and produce the pront-maximizing monopoly quantity of bottled wine and share the profit equally, how much bottled wine will each one of them produce? Show your work. At what price? How much profit will each one of them earn? (2+2+242 - 8 points) C. Suppose that Amy and Soma act as Cournot duopolists. How much bottled wine will each one of them produce? Show your work. At what price? How much proht will each one of them earn? (2+8+2+2 -14 points) d. Suppose Soma isa naive Cournot duopolist so that Amy can act as a Stackelberg leader. What level of output will each one of them produce? Show your work. What will be the price of wine? How much will be the profit for each one of them? (4+6+2+4 - 16 points)
Answer
Profit of Amy = (229)(90) - 9(90)
=20610 - 360
=20250
Profit of Sonia (229)(95) - 4(45)
=1035-180
=10125
The answer and procedures of the exercise are attached in the following images.
Explanation
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A bakery sells 6 different varieties of cupcakes (chocolate, vanilla, red velvet, etc.). How many ways are there to fill a box with 24 cupcakes from the 6 varieties? The order in which the cupcakes are selected is unimportant; all that matters is the number of each variety in the box after they are chosen.
Answer:
118755
Explanation:
Here let x1, x2, x3……, x6 are number of cupcakes from each variety;
Therefore x1+x2+x3+x4+x5+x6 =24
Since the order in which the cupcakes are selected is unimportant we have the following;
Number of non-negative solution of above equation =24+6-1C6-1 =29C5 =118755
Therefore the correct answer is 118755
Changes to the marketing communications model include that consumers are changing and are better informed, that marketing strategies are changing and are moving from mass marketing, and that ________.
A) manufacturing processes are becoming more efficient
B) distribution of products worldwide is more feasible and cost-effective
C) segmenting and targeting of consumers are more detailed than ever before
D) digital technologies are changing the ways companies and customers communicate
E) retailing is more competitive with more sources of products available for consumers
Answer:
The answer to the question would be D
Explanation:
The world of marketing is walking in an accelerated way as I had not imagined, barely and is finishing to internalize in each of the strategies, tactics and tools of digital marketing, but the new social networks, technology and instruments makes everything have You go almost at the speed of light. However, it is a positive aspect that helps us make marketing strategies more effective, creative, different and of course, also measurable and profitable.
As technology has advanced, effective, efficient and economical tools have emerged that companies can use to make processes faster and more quality; one of them is marketing automation
Digital marketing strategies have become an important axis for companies, although some are still afraid to bet on them. However, creating an effective digital marketing strategy is not an easy task, you have to know very well how to plan it, execute it and follow it up to make the corrections along the way and thus improve, to take the company to the top of success .
For businesses, one of the biggest impacts has been the access to information about customers and consumers. While this obvious advantage is available to many, the most successful companies are those that use this information to deliver superior customer value.
Businesses have changed dramatically in the last decade, and the most significant catalyst has been the impact of computer technology on the everyday lives of organizations and individuals. Information and communications technology, has facilitated information processing.
Developments in computer technology have also allowed companies with large customer bases to provide a superior level of individualized service and to customize their product or service offering to suit the customer.
It is estimated that consumers are bombarded with up to 3000 communications and messages every day, and as a result they have become much more discerning as to which ones they listen to, never mind respond to.
The Princeville Company placed five (5) orders for Product 12B from Brookston Corporation. Brookston has the following information about Product 12B: Activity Cost Pools Activity Rate Product 12B Activity Machine Setups $ 12.00 per Machine hour 40 MHs Customer Orders $ 10.00 per Order 5 Orders What is the overhead cost assigned to Princeville for their five (5) orders of Product 12B?
A. $480
B. $530
C. $2,650
D. $990
Answer:
B. $530
Explanation:
Please see attachment
Final answer:
The total overhead cost for Princeville's five orders of Product 12B is calculated by adding the costs of Machine Setups and Customer Orders, which amounts to $530. This is found by multiplying activity rates with the respective activities required and then summing them up. The correct option is b.
Explanation:
The overhead cost assigned to Princeville for their five (5) orders of Product 12B from Brookston Corporation can be calculated using the information about activity cost pools and activity rates. We have two types of costs to consider: Machine Setups and Customer Orders.
Machine Setups cost is $12.00 per machine hour, and for Product 12B, 40 machine hours (MHs) are required. Therefore, the total Machine Setups cost is 40 MHs times $12.00/MH, which equals $480.
Customer Orders cost is $10.00 per order, and since there were 5 orders, the total cost for this activity is 5 orders times $10.00/order, which equals $50.
Add the two costs together to get the total overhead cost for Princeville: $480 (Machine Setups) + $50 (Customer Orders) = $530.
Therefore, the correct answer is B. $530.
A friend of yours suggests a get-rich-quick scheme: borrow from the nation with the lower nominal interest rate, invest in the nation with the higher nominal interest rate, and profit from the interest-rate differential. Which of the following statements explains the flaw in your friend's logic? Nominal exchange rates adjust for the effects of inflation. The scheme would work only if the real interest rates are the same in both nations. The scheme would work only if there is greater inflation in one nation than in the other.
Answer:
Nominal exchange rates adjust for the effects of inflation.
Finish Co. uses the allowance method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows an accounts receivable balance of $30,000; allowance for doubtful accounts balance of $200 (credit); and sales of $600,000. Based on history, Finish estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:
Answer:
$6000
Explanation:
Because you have to debit the Back Debts account. and 1% of 600,000 is 6000.
600,000 is the amount of sales.
Discuss how the need for control over foreign operations varies with firms’ strategies and core competencies. What are the implications for the choice of entry mode?
Answer:
- The core competence of a firm’s competitive advantage is based on control over proprietary technological and innovation know-how, licensing and joint venture arrangements should be avoided when necessary so as to avoid and minimize the risk of losing control over that technology. For firms with a competitive advantage based on management effectiveness, the risk of losing control over the management skills to franchisees or joint venture partners is not that welcomed or encouraged. However, many service firms favor a combination of franchising and subsidiaries to control the franchises within particular countries or regions. The subsidiaries may be wholly owned or joint ventures, but most service firms have believed that joint ventures with local partners works best for controlling subsidiaries.
Firms' need for control over foreign operations is influenced by their strategies and core competencies, leading to varying choices of entry modes like FDI or licensing depending on the level of control needed. Environmental and political considerations also impact these decisions. Companies must balance their strategic needs with external factors in foreign markets.
Explanation:The need for control over foreign operations varies with firms' strategies and core competencies. For companies with unique competencies that give them competitive advantage, control is vital to protect proprietary information and maintain quality standards. This implies choosing entry modes that allow for greater control such as foreign direct investment (FDI) or wholly-owned subsidiaries. In cases where firms are entering markets that are not strategically important or where their core competencies are not at risk, less control may be acceptable, making entry modes such as exporting or licensing more appealing. On the other hand, strategic behavior in response to potential competition can involve erecting barriers to entry, which can be natural, like economies of scale, or intended, as in strategic decisions to prevent entry by other firms.
Environmental and political considerations are also influencing firms' decisions on international operations and entry modes. Governments' concern over issues like environmental protection laws and national security can lead to restrictions on imports, affecting multinational firms' choices. Detailed analysis of these external factors, alongside strategic and competency considerations, is essential in determining the right entry mode and level of investment in foreign markets.
Vaughn Manufacturing had average operating assets of $5000000 and sales of $2500000 in 2016. If the controllable margin was $450000, the ROI was
50%
41%
9%
18%
Answer:
9%
Explanation:
The Return on Investment (ROI) is used to directly measure the amount of return, relative to the cost of the investment. It can be calculated by dividing the controllable margin by the company's average operating assets.
[tex]ROI = \frac{\$450000}{\$5000000} \\ROI =0.09[/tex]
Therefore, the return on investment for Vaughn Manufacturing was 0.09 or 9%.
96) XYZ inc. sends out a free razor to encourage switching. This is an example of using ________ as the sales promotion approach. A) coupons B) premiums C) product sampling D) advertising E) product placements
Answer:
C) product sampling
Explanation:
Product Sampling is the technique of marketing the product, by providing a small sample of the product for free, so that the customer uses the product and satisfy themselves.
This is one of the most expensive methods of marketing the product, as distributing the product for free, would cost the company, but as this proves the quality of the product, it creates belief among the consumers and customers.
Distribution of free razors is a product sampling method.
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers $ 490,000 Working capital required $ 175,000 Annual net cash receipts $ 190,000 * Cost to construct new roads in year three $ 55,000 Salvage value of equipment in four years $ 80,000 *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company’s required rate of return is 19%. a. Determine the net present value of the proposed mining project.
Answer:
Windhoek is located at 22 S, 17 E
.........
Explanation:
The net present value (NPV) of the proposed mining project is approximately $15,908.70.
Explanation:To calculate the net present value (NPV) of the mining project, we need to calculate the present value of each cash flow and then subtract the initial investment cost. The formula for NPV is: NPV = (CF1 / (1 + r)1) + (CF2 / (1 + r)2) + ... + (CFn / (1 + r)n) - Initial Investment
In this case, the cash flows are the annual net cash receipts, the cost to construct new roads in year three, and the salvage value of the equipment in four years. The initial investment includes the cost of new equipment and working capital required. The discount rate or required rate of return is 19%.
By plugging in the numbers into the formula and performing the calculations, we find that the NPV of the proposed mining project is approximately $15,908.70.
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On January 1, 2018, Purdy Company enters into a contract to transfer Blue and Rain to Georgia Co. for $300,000. The contract specifies that payment for Blue will not occur until Rain is also delivered. In other words, payment will not occur until both Blue and Rain are transferred to Georgia. Purdy determines that standalone prices are $110,000 for Blue and $190,000 for Rain. Purdy delivers Blue to Georgia on February 10, 2018. On March 15, 2018, Purdy delivers Rain to Georgia. Purdy should record...(a)Accounts Receivable of $300,000 on January 1.(b)Accounts Receivable of $110,000 on February 10.(c)Contract Asset of $110,000 on February 10.(d)Contract Asset of $110,000 on January 1.
Purdy recognizes revenue under IFRS 15 upon transferring control of Blue to Georgia, creating a Contract Asset of $110,000 on February 10. Revenue for Rain will be recognized upon delivery. Here option C is correct.
The revenue recognition principle under IFRS 15 requires revenue to be recognized when control of the goods or services is transferred to the customer. In this case, Purdy Company enters into a contract to transfer both Blue and Rain to Georgia Co. for $300,000, but payment for Blue will not occur until Rain is also delivered.
On February 10, 2018, Purdy delivers Blue to Georgia. Since Blue has been transferred, Purdy should recognize revenue for Blue, which has a standalone price of $110,000. However, payment has not yet occurred, and Rain is still pending delivery.
Therefore, Purdy should recognize a Contract Asset of $110,000 on February 10, reflecting the portion of the contract price attributable to the transferred goods (Blue) for which payment is still pending. The remaining portion related to Rain will be recognized when Rain is delivered. Here option C is correct.
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ART has come out with a new and improved product. As a result, the firm projects an ROE of 21%, and it will maintain a plowback ratio of 0.40.
Its earnings this year will be $2.0 per share. Investors expect a 13% rate of return on the stock.
What price do you expect ART shares to sell for in 4 years?
Answer:
$36.012
Explanation:
Data provided in the question:
ROE = 21%
Plowback ratio, b = 0.40
Earnings, E1 = $2.0 per share
Required rate of return on the stock, r = 13%
Now,
Growth rate, g = ROE × b
= 21% × 0.40
= 8.4%
D1 = E1 × (1-b)
= $2.0 × ( 1 - 0.40 )
= $1.2
[tex]V0^{Growth}[/tex] = [tex]\frac{D1}{(r - g)}[/tex]
= [tex]\frac{\$1.2}{(0.13 - 0.084)}[/tex]
= $26.087
V4 = [tex]\frac{D5}{(r - g)}[/tex]
= [tex]\frac{D1\times(1 + g)^4}{(r - g)}[/tex]
= V0 × (1 + g)⁴
= $26.087 × (1 + 0.084)⁴
= 36.019 ≈ $36.012
Suppose that a labor economist claims that recipients of economics PhDs gain little in terms of acquired productive skills from their graduate studies but that, instead, the degree simply reflects a high level of inherent mathematical ability. Which one of the following characterizes the labor economist's perspective on the link between education and wages? Compensating differentials Signaling The superstar phenomenon O Human capital A famous rapper has earned enormous sums of money by supplying creative music to millions of fans. Which of the following statements characterize this market in which some earn astronomical incomes, while others (who may have similar talent) earn very little? Check all chat Technology allows for supplying all customers at low cost. Nearly all customers in the market desire the good supplied by the superstar. Because of technology, his music is essentially a public good. The best recording artists earn dramatically more than good or mediocre artists. Customers in this type of market prefer having twice as much of a good from a recording artist half as talented as the superstar.
Answer
The answer and procedures of the exercise are attached in a 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.
If the expected proportionate change in the nominal exchange rate, measured in units of domestic currency per unit of foreign currency, is 2 % and the domestic interest rate is 6 %, then according to the uncovered interest parity condition, the foreign interest rate should be equal to:
Select one:
a. 6 % - 2 % = 4 %
b. 6 % + 2 % = 8 %
c. 6 % ÷ 2 % = 3 %
d. 6 % x 2 % = 12 %
Answer:
a. 6 % - 2 % = 4 %
Explanation:
Uncovered interest parity condition is that expected change in nominal interest rate equals difference between the interest rates.
domestic interest rate - foreign interest rate = expected change in nominal interest rate .
6 percent - foreign interest rate = 2 percent
So, foreign interest rate = 6 percent - 2 percent = 4 percent
The Zabel Company uses the periodic inventory system. Kelly Zabel, the CEO, believes that the ending inventory for 12/31/12 is understated by $12,000. Indicate whether the following statement relating to the above error is true or false. Net Income will be overstated in 2013 by $12,000. True or False
Answer:
Yes
Explanation:
A a lower opening inventory leads to a lower cost of sales, hence a higher net income while a lower closing inventory leads to a higher cost of sales and hence a lower net income.
Wilson Co. produces sports equipment and is currently producing 2,000 tennis rackets annually. A supplier has offered to produce the rackets for Wilson Co. for $370 per racket. Wilson incurs unit-level costs of $360 per unit. Wilson also spends $10,000 on product design each year and incurs $100,000 of facility-level costs. Based on your quantitative analysis, should Wilson Co. outsource the rackets? What is the effect on profit?
Answer:
Yes, Wilson Company shall outsource the rackets.
Effect on profit is that the profit will increase by the net cost avoided = $830,000 - $740,000 = $90,000
Explanation:
As for the information provided:
We will do a comparative analysis, of current situation and that of the offer given by supplier.
Total current cost in case of manufacturing:
Cost of production = $360 [tex]\times[/tex] 2,000 = $720,000
Cost of product design = $10,000
Facility level cost = $100,000
These all cost are avoidable in case of buying from supplier. Thus, total avoidable cost = $830,000
Total cost associated in case of buying the sports equipment from supplier shall be: $370 [tex]\times[/tex] 2,000 = $740,000
Since, the cost in case of buying is less, the tennis rackets shall be bought from supplier.
E21-6 (L04) EXCEL (Lessor Entries; Sales-Type Lease) Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $35,013 at the beginning of each year. The first payment is received on January 1, 2017. Crosley had purchased the machine during 2016 for $160,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Crosley. Crosley set the annual rental to ensure an 11% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crosley at the termination of the lease.
Answer:
all transaciton made at the moment the lease begins.
lease receivables 200,001.13 debit
sales revenues 200,001.13 credit
cost of good sold 160,000 debit
inventory 160,000 credit
cash 35,013 debit
lease receivables 35,013 credit
Explanation:
Present value of the lease payments
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 35,013.00
time 8
rate 0.11
[tex]35013 \times \frac{1-(1+0.11)^{-8} }{0.11} = PV\\[/tex]
PV $200,001.1278
The company will delcare this interest receivables and recognize the sales reveneue
It will also recognize the cost of good sold and decrease in inventory (it is equipment for the lessee but inventory for the lessor)
Then for each payment will recognzie a portion of interest revenue and decrease the lease receivables As the payment is at the beginning there is not interest revenue
Renata McCarter, an outside sales representative for Alinda Publications, receives 7 percent commission on all new magazine subscriptions she sells in her sales territory. During the week of March 27, she sold $6,500 of new subscriptions and worked 40 hours.
Required:
What is her gross pay?
Is she subject to minimum wage laws?
Answer:
Gross pay - $455
No
Explanation:
The computation of the gross pay is shown below:
= New subscription sold × commission percentage
= $6,500 × 7%
= $455
Since Renata McCarter is an outside sales representative so she is exempt from the minimum wage laws. Hence, not taxable.
For computing the gross pay, we simply multiply the new subscription sold with the commission percentage so that the accurate amount can come.
Kareem owns a pickup truck that he uses exclusively in his business. The adjusted basis is $22,000, and the fair market value is $14,000. In March 2019, Kareem exchanges the truck for another truck (worth $14,000) that he will use exclusively in his business.
1. What are Kareem’s realized and recognized gain or loss?
Answer:
The "Kareem" realized loss on the exchange is $8000.
Explanation:
The adjusted basis is = $22000
"Fair market value" is = $14000
"Kareem" exchanges the truck for another truck = worth $14000
"Realized gain" or "Realized loss = basis in the truck - exchange value
Realized gain or loss = $22000 - $14000
Realized gain or loss = $8000
Kareem's loss on the exchange is $8000.
There is no "recognized gain" or "recognized loss" because the exchange is like a kind exchange which is not documented.