The price of a stock is calculated by discounting the value of all future dividends to the present using the required rate of return. In this case, the dividends for the next eight years grow at a rate of 15 percent and then level off at a 6 percent growth rate indefinitely. The discounted dividends are then summed to get the present value of the stock.
Explanation:To calculate the price of a stock today, you can use the Dividend Discount Model (DDM). The DDM is based on the expectation that the price of a stock is equivalent to the present value of all its future dividends. Dividends for the next eight years can be calculated individually considering the 15 percent dividend growth. This should be followed by calculating dividend value from year 9 onward, considering the indefinite 6 percent growth from then on. The cost of each future dividend should then be discounted to the present by the required 14 percent rate of return, and all these discounted dividends should be summed up to get the present stock value.
Here is a short example of how you can find the first two future dividends. The dividend in the next year (D1) would be the current dividend multiplied by 1.15 (15 percent growth), i.e., $2.30 * 1.15 = $2.645. The dividend in the second year (D2) would be the first year's dividend multiplied by 1.15 i.e., $2.645 * 1.15 = $3.04175. Then you would discount these by the required return and calculate the present value of each dividends.
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A fall in the value of the dollar againstother currencies makes U.S. final goods and services cheaper toforeigners even though the U.S. aggregate price level stays thesame. As a result, foreigners demand more American aggregateoutput. Your study partner says that this represents a movementdown the aggregate demand curve because foreigners are demandingmore in response to a lower price. You, however, insist that thisrepresents a rightward shift of the aggregate demand curve. Who isright? Explain.
Answer: I am right, the increased demand represents a rightward shift of the aggregate demand curve.
Explanation:
The increase in aggregate demand by foreigners occurred as a result of a fall in the value of the US dollars and aggreagrate price level stayed the same. Therefore, the change in aggregate demand didn't occur as a result of a change in price.
If agregrate demand changed as a result of a change in the aggregate price levels, there would be a change in quantity demanded and a movement along the demand curve.
It's only a change in price that result results in a movement along the aggregate demand curve.
Other factors that leads to a change in demand either shifts the aggregate demand curve to the left or to the right.
Therefore, an increase in aggregate demand as a result of the fall in value of US dollars causes the aggregate demand curve to shift to the right.
The shift in the aggregate demand curve to the right shows that demand has increased but aggregate price hasn't changed.
Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by C = 200 + 2q^2, where q is the level of output and C is total cost. (The marginal cost of production, MC(q), is 4q; the fixed cost, FC, is $200). a. If the price of a watch is $80, how many watches should you produce to maximize profits? (Enter your response as an integer.) b. What will the profit level be? (Enter your response rounded to two decimal places.) c. At what minimum price will the firm produce a positive output? (Enter your response as an integer.)
Answer:
1. 20 units
2. $600
Explanation:
1. [tex]C = 200 + 2q^{2}[/tex]
MC = 4q
Price, P = $80
For maximizing profits,
Marginal cost = Price of the commodity
4q = 80
q = 20 units
[tex]C = 200 + 2q^{2}[/tex]
[tex]C = 200 + 2(20)^{2}[/tex]
= 200 + 800
= 1,000
2. Profit = Total revenue - Total cost
= (Price × Quantity) - TC
= (80 × 20) - $1,000
= $1,600 - $1,000
= $600
3. We know that the firm in the short run will be produce at a point where total revenue is greater than the total variable cost
Average variable cost = variable cost ÷ quantity
[tex]=\frac{2Q^{2}}{Q}[/tex]
= 2Q
MC = 4Q
Here, MC is greater than AVC at any given point.
so in the short run firm will producing short run positive profit.
The treasurer of a major U.S. firm has $29 million to invest for three months. The interest rate in the United States is .29 percent per month. The interest rate in Great Britain is .33 percent per month. The spot exchange rate is £.629, and the three-month forward rate is £.632. What would be the value of the investment if the money is invested in the U.S. and in Great Britain?
Answer:
Check the following calculations.
Explanation:
The U.S. firm has $29 million
Investment is for three months
And the interest rate in the United States is .29 percent per month
The value of the investment if the money is invested in U.S
= $29 million *(1+ 0.29%) ^3
= $29.2530 million
The interest rate in Great Britain is .33 percent per month.
The spot exchange rate is £.629
And the three-month forward rate is £.632.
The value of the investment if the money is invested in Great Britain
Value after spot exchange = $29 million *(£.629/$1) = £ 18.241 million
Value after three months interest earning = £ 18.241*(1+0.33%) ^3
= £ 18.4222 million
Exchanging again in US $ after 3 months
= £ 18.4222 *($1/£ .632) = $29.1490 million
Therefore the value of the investment if the money is invested in Great Britain is $29.1490 million.
The value of investment will be more if the money is invested in U.S.
A department store decides to use "secret shoppers" at unannounced times to test for service quality among its personnel. Store personnel are rewarded for excellent service attitudes. Which of the following reinforcement schedules would most likely apply in this situation?
A) fixed-ratio reinforcementB) fixed-interval reinforcementC) variable-ratio reinforcementD) variable-interval reinforcement
Answer:
The answer is letter D.
Explanation:
The reinforcement schedule most likely applied in this situation is variable interval reinforcement.
Final answer:
The department store using 'secret shoppers' employs a variable-interval reinforcement schedule to encourage consistent quality service from their personnel.
Explanation:
The reinforcement schedule that most likely applies to a department store using 'secret shoppers' to reward personnel for excellent service attitudes is variable-interval reinforcement. This schedule rewards employees after varying and unpredictable periods, which in this context, means they never know when a secret shopper will visit, encouraging consistent quality of service. It's similar to the scenario of Manuel, the manager at a fast-food restaurant, who never knows when the quality control person will come, thereby maintaining a high level of cleanliness and customer service to ensure his team earns their bonus.
In a certain state's lottery, 45 balls numbered 1 through 45 are placed in a machine and seven of them are drawn at random. If the seven numbers drawn match the numbers that a player had chosen, the player wins $1,000,000. In this lottery, the order in which the numbers are drawn does not matter.
Compute the probability that you win the million-dollar prize if you purchase a single lottery ticket. Write your answer as a reduced fraction.
P P (win) = A single lottery ticket costs $2. Compute the Expected Value, to the state, if 10,000 lottery tickets are sold. Round your answer to the nearest dollar.
Answer: $ A single lottery ticket costs $2. Compute the Expected Value, to you, if you purchase 10,000 lottery tickets. Round your answer to the nearest dollar. Answer: $
Answer:
[tex]P(win) = \frac{1}{45,379,620}[/tex]
Expected value to the state if 10,000 tickets are sold = $19,780
Expected value to you if you purchase 10,000 tickets = -$19,780
Explanation:
Number of lotterry balls = 45
Number of balls drawn = 7
Win payout = $1,000,000
Ticket cost = $2
a) Since the order does not matter, the number of total possibilities of choosing 7 balls out of 45 is:
[tex]_{45}C_{7}=\frac{45!}{(45-7)!7!} \\_{45}C_{7}=\frac{45*44*43*42*41*40*39}{7!} \\_{45}C_{7}=45,379,620[/tex]
Therefore, the probability of winning, P(win) by purchasing a single ticket is:
[tex]P(win) = \frac{1}{45,379,620}[/tex]
b) The expected value is given by the sum of the products of each outcome's pay by its likelihood. There are two outcomes, winning (which costs the state $1,000,000) and losing (which gives the state $2).
The expected value to the state if 10,000 tickets are sold is:
[tex]EV(N=10,000) = 10,000*EV(N=1)\\EV(N=10,000)=10,000*((2*\frac{45,379,620-1}{45,379,620})-(\frac{1}{45,379,620}*1,000,000))\\EV(N=10,000) = 10,000*1.9779636\\EV(N=10,000) = \$19,780[/tex]
The expected value, to the state, if 10,000 lottery tickets are sold is $19,780
c) The expected value to a player, for 'n' given games, is the opposite of the expected value to the state since each ticket costs $2 and the potential payout is $1,000,000 is case of victory. Therefore, the expected value, to a player, if they purchase 10,000 lottery tickets is -$19,780
The probability that an individual will win the million-dollar prize if one purchases a single lottery ticket will be 1/45379620.
How to calculate probability?From the information given, the number of possibilities that one will choose 7 balls out of 45 will be:
= 45! / (45-7)!7!
= 45379620
Therefore, the probability is 1/45379620.
The expected value if 10,000 lottery tickets are sold will be:
= 10000 × [(2 × 45379620- 1)/45379620] - (1/45379620) × 1000000
= $19780
Therefore, the expected value is $19780.
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(Ignore income taxes in this problem.) Blaine Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $12,000 per year to operate and maintain, but would save $48,000 per year in labor and other costs. The old machine can be sold now for scrap for $20,000. What is the simple rate of return on the new machine (round off your answer to the nearest one-hundredth of a percent)? Select one:
1) 10.00%2) 26.67%3) 22.50%4) 11.25%show work please
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.
(Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand, and it is trying to decide whether to sell the T-bone steaks as they are initially cut or to process them further into filet mignon and the New York cut.If the T-bone steaks are sold as initially cut, the company figures that a 1-pound T-bone steak would yield the following profit:Selling price ($7.95 per pound) $ 7.95Less joint costs incurred up to the split-off point whereT-bone steak can be identified as a separate product 3.80Profit per pound $ 4.15If the company were to further process the T-bone steaks, then cutting one side of a T-bone steak provides the filet mignon and cutting the other side provides the New York cut. One 16-ounce T-bone steak cut in this way will yield one 6-ounce filet mignon and one 8-ounce New York cut; the remaining ounces are waste. It costs $0.55 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $12.00 per pound, and the New York cut can be sold for $8.80 per pound.What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks?
Answer:
The financial advantage (disadvantage) from further processing is $0.40.
Explanation:
Compute the financial advantage (disadvantage) of further processing of T-bone into filet mignon and New York cut steaks using the equation as shown below:
Financial advantage = Total sales from further processing −
Sale revenue lost of one T−bone − Cost of further processing
=$8.90−$7.95−$0.55
=$0.40
Hence, the financial advantage (disadvantage) of further processing of T-bone into filet mignon and New York cut steaks is $0.40.
Working Notes:
Compute the total sales from further processing using the equation as shown below:
Sales from further processing = One Fileted Mignon + New York Cut
=$4.50+$4.40
=$8.90
Hence, the total sale from further processing is $8.90.
Compute the Sales revenue from one fileted mignon after further processing using the equation as shown below:
One Fileted Migon = (Selling price per filet mignon×Yeild per ounce / Size of one T−bone steak )
= $12×6 ounce / 16 ounce
=$4.50
Hence, the sales revenue from one fileted mignon after further processing is $4.50.
Compute the Sales revenue from one New York cut after further processing using the equation as shown below:
New York cut = (Selling price per New York cut × Yeild per ounce / Size of one T−bone steak )
= $8.8×8ounce / 16 ounce
=$4.40
The financial advantage of further processing one T-bone steak into filet mignon and New York cut steaks overselling it as initially cut is $4.20 per pound.
A student has inquired about the financial advantages or disadvantages of further processing one T-bone steak into filet mignon and New York cut steaks. To answer this, we need to perform a cost-benefit analysis. We know that selling T-bone steaks as initially cut yields a profit of $4.15 per pound after joint costs of $3.80 are deducted from the selling price of $7.95 per pound.
If Lone Star Meat Packers further processes a 1-pound T-bone steak, it will result in a 6-ounce filet mignon and an 8-ounce New York cut, with processing costs of $0.55 per steak. At $12.00 per pound for filet mignon and $8.80 per pound for New York cut, the revenue from the processed steak is:
Filet mignon: 6 ounces / 16 ounces per pound * $12.00 per pound = $4.50New York cut: 8 ounces / 16 ounces per pound * $8.80 per pound = $4.40Adding these together gives a total revenue of $8.90 for the processed meats. After subtracting the processing cost of $0.55, we get $8.35. Compared to the $4.15 profit from the unprocessed 1-pound T-bone steak, the additional profit from processing is $8.35 - $4.15 = $4.20.
Therefore, Lone Star Meat Packers would have a financial advantage of $4.20 per pound by further processing the T-bone steaks into filet mignon and New York cut steaks.
Prepare a master schedule given this information: It is now the end of week 1; customer orders are 25 for week 2, 16 for week 3, 11 for week 4, 8 for week 5, and 3 for week 6. Use the MPS rule of ordering production when projected on-hand inventory would be negative without production. Suppose that there are currently 64 pumps in inventory and a production lot size of 70 pumps is used.
Answer:
You didn´t post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.
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.
Final answer:
To create a master schedule for pump production from weeks 2 to 6, we calculate inventory depletions from customer orders. If projected inventory dips below zero, we produce in lot sizes of 70 pumps. For the specified demand, no production is needed for these weeks.
Explanation:
The student's question relates to creating a master schedule for production based on customer orders and current inventory levels. To prepare a master schedule, we must analyze customer demand, beginning inventory, and production lot size to ensure that production meets demand without resulting in negative on-hand inventory. Let's outline a five-week schedule using the Master Production Schedule (MPS) rule:
Calculate projected inventory for each week by subtracting customer orders from the current inventory.When projected inventory is negative, schedule production of a predefined production lot size to meet demand.Factor in the new inventory after production to calculate the following week's beginning inventory.Starting with a current inventory of 64 pumps and a week 2 demand for 25 pumps:
Week 2 projected inventory: 64 - 25 = 39 pumps (No production needed).Week 3 demand is 16 pumps. Week 2 ending inventory (39 pumps) - Week 3 demand (16 pumps) = 23 pumps remaining (No production needed).Week 4 demand is 11 pumps. On-hand inventory would be 23 - 11 = 12 pumps remaining (No production needed).Week 5 demand is 8 pumps. On-hand inventory would be 12 - 8 = 4 pumps remaining (No production needed).Week 6 demand is 3 pumps. Projected on-hand inventory is 4 - 3 = 1 pump (No production needed).Throughout weeks 2 to 6, the inventory levels never drop below zero, so no production is needed based on a lot size of 70 pumps and given demand. However, the week after Week 6 might require production if there are any orders since on-hand inventory would start at just 1 pump.
Consumers today receive commercial messages from a broad range of sources.
However, consumers ________ the way marketers do.
A) don't distinguish between message sources
B) never pay attention to sales promotions
C) don't care about buzz marketing
D) are not able to block out messages
E) block out all media messages
Answer:
Letter A is correct. Don't distinguish between message sources.
Explanation:
Integrated marketing communication is a relevant tool whose primary objective is to ensure that there is compliance in corporate marketing communication across all media channels used by the organization, ie all communication of promotions and dissemination of company products and services is organized and consistent to create reliability and customer experience.
There are many benefits to ensuring that integrated marketing communication is well developed, some of which are brand awareness according to their individual exposed elements, cost savings and less waste with inconsistent messages, the consumer experience that assists continuous improvement. communication and focus on results, achieved most effectively when there is synchronization between internal and external communication in the company.
In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $1,584,000,and direct labor costs, $440,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $1,233,900. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released $ 300,000 Movies still in production 46,000 Total actual direct labor cost $ 346,000 1. Determine the predetermined overhead rate for 2017. 2
Answer:
$3.6
Explanation:
The computation of the predetermined overhead rate is shown below:
Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor costs)
= $1,584,000 ÷ $440,000
= $3.6
It shows a relationship between the estimated manufacturing overhead cost and the estimated direct labor cost so that the correct overhead rate can be computed
Aviation Systems is involved in a $10 million lawsuit filed against one of its suppliers, Electronic Innovators. The litigation is in final appeal, and legal counsel advises that it is probable that Aviation Systems will win the lawsuit and be awarded somewhere between $6 and $10 million. Which of the following statement is true?
Answer:
Gain contingencies are not recorded
Explanation:
Aviation Systems must take into account that it is an uncertain situation that MAY result in a gain but is not garanteed.
Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $ 7,000 $10,000 2 8,000 9,000 3 9,000 8,000 4 10,000 7,000 Total $34,000 $34,000 The discount rate is 7%. Use Excel or a financial calculator to solve the homework. Round answers to the nearest dollar. Required: Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment.
Answer:
Please see attachment
Explanation:
Please see attachment
Answer:
Project A = $28,505
Project B = $29,077
Explanation:
See narrative computation in the attached document.
LIFO LIquIdatIonDuring July, Laesch Company, which uses a perpetual inventory system, sold 1,240 units from its LIFO-based inventory.which had originally cost 518 per unit. The replacement cost is expected to be $27 per unit.RequiredPlease respond to the following two independent scenarios as requested.a. Case 1: In July, the company is planning to reduce its inventory and expects to replace only 900 of these units byDecember 31, the end of its fiscal year.(1) Prepare the entry in July to record the sale of the 1,240 units.(2] Discuss the proper financial statement presentation of the valuation account related to the 1,240 units sold.(3) Prepare the entry for the replacement of the 900 units in September at an actual cost of $31 per unit.b. Case2~ In July, the company is planning to reduce its inventory and expects to replace only300 of its units by December 31, the end of its fiscal year.(1) Prepare the entry in July to record the sale of the 1,240 units.(2] In December, the company decided not to replace any of the 1,240 units. Prepare the entry required on December 31 toeliminate any valuation accounts related to the inventory that will not be replaced.
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Given the following information, determine the final appraisal value of the subject property.
Adjustments
Market conditions .50% (per month)
Lot Size $25,000 (per acre)
Effective age (years) $1,000 (per year)
Living area (sq. ft) $45.00 (per sq. ft)
Bath $1,250 (per bath)
Bedroom $3,000 (per bedroom)
Subject Property Comparable Property
Time sold Today 4 months ago
Lot size (acres) 0.83 0.80
Effective age (years) 8 7
Living area (sq, ft) 2,197 2,383
Bath 3.5 3.5
Bedroom 4 4
Sales price $287,000
The final appraisal value of the subject property, considering all adjustments, is $294,490.
Explanation:In real estate, appraisal value is determined by comparing the subject property with comparable properties and adjusting for differences. First, start with the sale price of the comparable property ($287,000). Then, adjust for each difference between the subject and comparable property.
Market conditions: the comparable was sold 4 months ago, so adjust by 4 * 0.5%= 2% of the sales price, gives us $287,000 * 2% = $5,740.
Lot Size: at $25,000 per acre, the difference 0.83 - 0.80 = 0.03 acre leads to an adjustment of 0.03 * $25,000 = $750.
Effective age: the subject is one year old, so adjust by $1,000.
The total adjustment is $5,740 + $750 + $1,000 = $7,490. So, the final appraisal value of the subject property would be $287,000 + $7,490 = $294,490.
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When forecasting fixed asset requirements, the projected fixed asset balance will
A. always increase proportionally with sales.
B. not increase proportionally if excess capacity exists.
C. not increase proportionally with sales if the existing level of fixed assets is sufficient to support current sales.
D. remain the same since the balance is fixed.
Answer:
C. not increase proportionally with sales if the existing level of fixed assets is sufficient to support current sales.
Explanation:
The total assets comprises of current assets, fixed assets and the intangible assets .
The current assets includes cash, stock, account receivable, etc
Fixed assets include plant & machinery, land, equipment, furniture & fittings, etc.
And, the intangible assets include patents, copyrights, goodwill, etc.
If the existing level of the fixed asset is enough to support the current assets so the projected fixed assets balance would not be increased proportionally with the increase in sales
Vendors at Municipal Stadium sell their wares at prices that include the city, state, and transit district sales taxes; the total of these taxes is 8.25 percent when added to prices that do not include the sales tax.
a. Convert this 8.25 percent tax-exclusive sales tax rate into its tax-inclusive equivalent rate (Hint: Use the method outlined for VAT calculations.)
b. A vendor has receipts (including sales tax) at a game of $15,325. What sales tax must the vendor remit to the tax authorities?
Answer:8.25/108.25
It means the goods is sold of tax inclusive rate 8.25
B.$1167.96
8.25/108.25 * 15325= $1167.96 this is the amount to be remitted to the tax authority as the sales was inclusive of vat.
In December, General Motors produced 7,500 customized vans at its plant in Detroit. The labor productivity at this plant is known to have been 0.10 vans per labor hour during that month. 300 laborers were employed at the plant that month.
A) How many hours did the average laborer work that month ?
B) If productivity can be increased to 0.12 vans per hour, how many hours would the average laborer work that month ?
Final answer:
To find the average laborer work hours at General Motors with a known productivity, divide the total vans produced by the labor productivity rate and then by the number of laborers. With a productivity of 0.10 vans/hour, the average laborer worked 250 hours. If productivity increased to 0.12 vans/hour, the average would decrease to 208.33 hours.
Explanation:
In December, General Motors produced 7,500 customized vans with a labor productivity of 0.10 vans per labor hour and employed 300 laborers. To find how many hours the average laborer worked that month, we use the total production and productivity rate. The calculation is 7,500 vans divided by (0.10 vans/hour) to get the total labor hours, and then we divide that by the number of laborers (300) to find the average labor hours.
A) The total labor hours are 7,500 vans / 0.10 vans per hour = 75,000 labor hours. Divided by 300 laborers, the average laborer worked 75,000 / 300 = 250 hours that month.B) If labor productivity increased to 0.12 vans per hour, the calculation would change. We divide the total vans produced by the new productivity rate (7,500 / 0.12 vans per hour) to get the total labor hours, then divide by 300. With increased productivity, the total labor hours are now 62,500, and the average laborer would work 62,500 / 300 = 208.33 hours that month.Dell did not reveal Intel's "additional rebates" as an unusual cost reduction that might not continue in the future. A study by Dichev et al. revealed the beliefs of some 169 CFOS. CFOS believed that earnings quality is high when they are what? Predictable and accrued Sustainable and accrued Sustainable and backed by cash flow Predictable and backed by cash flow
Answer:
Solution: Sustainable and backed by cash flow .
Explanation:
Explanation: The CFOs have a belief that earnings would be of high quality when these are sustainable, as well as backed by actual cash flow. The specific quality characteristics are those which has consistent reporting choices over time, and long-term estimation avoidances.
A profit-maximizing monopolist has the cost schedule c(y) = 20y. The demand for her product is given by y = 600/p^4, where p is her price. Suppose that the government tries to get her to increase her output by giving her a subsidy of $15 for every unit that she sells. Giving her the subsidy would make her
answer. decrease her price by $20.
Answer:
Decrease her price by $20
Explanation:
Please see attachment for working notes and explanation
On December 31, 2017, a company sells a plant asset that originally cost $375,000, receiving cash of $125,000. The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded. The company should recognize a: ___________?
Answer:
$100,000 loss on disposal
Explanation:
The current value (V) of the plant asset is the original $375,000 subtracted by the accumulated depreciation until the end of the current year, $150,000:
[tex]V=\$375,000 -\$150,000 =\$225,000[/tex]
The gain or loss from this transaction is measured by the amount received in cash subtracted by the current value of the plant asset:
[tex]\$125,000-\$225,000 = -\$100,000[/tex]
Therefore, the company should recognize a $100,000 loss on disposal.
Calculating Average Operating Assets, Margin, Turnover, and Return on InvestmentEast Mullett Manufacturing earned operating income last year as shown in the following income statement:Sales $531,250Cost of goods sold 280,000Gross margin $251,250Selling and administrative expense 194,000Operating income $57,250Less: Income taxes (@ 40%) 22,900 Net income $34,350At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000.Required:For East Mullett Manufacturing, calculate the following:1. Average operating assets $ 2. Margin (round to two decimal places) %3. Turnover (round to two decimal places) 4. Return on investment (round to one decimal place) %
Answer:
1. $425,000
2. 10.78%
3. 1.25
4. 13.5%
Explanation:
The computations are shown below:
1. For Average Operating Assets
Average operating assets = (Beginning Operating Assets + Ending Operating Assets) ÷ 2
= ($390,000 + $460,000) ÷ 2
= $425,000
2. For margin
Margin = Operating Income ÷ Sales × 100
= $57,250 ÷ $531,250 × 100
= 10.78%
3. For turnover:
Turnover = Sales ÷ Average Operating Assets
= $531,250 ÷ $425,000
= 1.25
4. For Return on investment:
Return on investment = Operating Income ÷ Average Operating Assets
= $57,250 ÷ $425,000
= 13.5%
Bosch is a German firm that manufactures home appliances such as dishwashers, ovens, and ranges. It competes with companies such as GE Elite and LG. Bosch is perceived as the class of the industry. Bosch pursues a(n) _____strategy.
1) focus
2) blue ocean
3) overall cost leadership
4) differentiation
5) middle-of-the-road
Answer:
Differentiation
Explanation:
Differentiation strategy, is the strategy that distinguishes a product or service, from other similar products, rendered by the competitors in the market. The requirements involved is the development of a product or service, that is a unique selling point for the customers, in terms of product design, features, brand image, quality, or customer service.
When a firm pursues differentiation strategy, it attempts to become crave out a niche for itself in the industry, by offering those products and services, which have value to the customers. In this strategy, the firm picks one or more such dimensions that are regarded as important by the customer’s flock.s.
Bosch is implementing a differentiation strategy by focusing on unique features and high quality, which sets them apart from competitors and justifies a higher price point.
Explanation:Bosch, a German firm known for its high-quality home appliances, appears to be employing a differentiation strategy. This strategy involves offering unique features that are valued by customers and can include superior service, advanced technology, or other enhanced attributes. Bosch is perceived as the class of the industry, which suggests that its products offer something that competitors such as GE Elite and LG do not, justifying potentially higher prices.
In the context of a differentiation strategy, some businesses might concentrate on their core competencies, which is an approach that can contribute to their success by focusing on a limited range of products or services in which they excel. This allows them to maintain a unique position in the market and please their target audience who is willing to pay a premium for these differentiated attributes.
Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.4 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 4.8 percent. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$1,923.29
Explanation:
Price of the bond is its PV. Using financial calculator, key in the following inputs;
FV; Face value of a bond = 2,000
PMT; semi-annual coupon payment = (4.4%/2) *2,000 = 44
N; Total duration of investment = 13*2 = 26
I/Y; Semiannual interest rate in this case = 4.8% /2 = 2.4%
then CPT PV = 1,923.29
Therefore, the price of this bond is $1,923.29
The price of the bond can be calculated by discounting the bond's future cash flows to the present using the yield to maturity. Using this method, the price of the bond is $1981.44.
Explanation:The price of a bond is calculated by discounting the bond's future cash flows to the present using the yield to maturity. The bond's cash flows include its semiannual interest payments and the principal repayment at maturity.
The semiannual interest payment is $2,000 * (4.4% / 2) = $44. The principal repayment is the par value of $2,000 at the end of 13 * 2 = 26 periods (since it's semiannual).
The bond's price is then given by the present value of these cash flows, which can be calculated using the formula for the present value of an annuity for the interest payments, and the formula for the present value of a lump sum for the principal repayment. The yield to maturity should be used as the discount rate, and it should be divided by 2 since payments are semiannual.
So, the bond's price is $44 * [(1 - (1 + 4.8% / 2) ^ -26) / (4.8% / 2)] + $2,000 / (1 + 4.8% / 2) ^ 26 = $891.60 + $1089.84 = $1981.44. So the price of the bond is $1981.44.
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Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,440 per unit; variable costs = $460 per unit; fixed costs = $3.9 million; quantity = 85,000 units. Suppose the company believes all of its estimates are accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Answer:
Best case scenario:
Selling price = $1,656 per unit
Variable costs = $391 per unit
Fixed costs = $3.315 million
Quantity sold = 97,750 units.
Worst case scenario:
Selling price = $1,224 per unit
Variable costs = $529 per unit
Fixed costs = $4.485 million
Quantity sold = 72,250 units.
Explanation:
Selling price (P) = $1,440 per unit
Variable costs (V) = $460 per unit
Fixed costs (F)= $3.9 million
Quantity sold (Q) = 85,000 units.
The company's revenue is given by:
[tex]R=P*Q - (V*Q) - F[/tex]
For the best case scenario, that is, to maximize revenue, price and quantity sold must be at the highest value (+15%) while fixed and variable costs must be at the lowest value (-15%).
Selling price (P) = $1,440 * 1.15 = $1,656 per unit
Variable costs (V) = $460 *0.85 = $391 per unit
Fixed costs (F)= $3.9 *0.85 = $3.315 million
Quantity sold (Q) = 85,000 *1.15 = 97,750 units.
For the worst case scenario, that is, to minimize revenue, price and quantity sold must be at the lowest value (-15%) while fixed and variable costs must be at the highest value (-15%).
Selling price (P) = $1,440 * 0.85 = $1,224 per unit
Variable costs (V) = $460 *1.15 = $529 per unit
Fixed costs (F)= $3.9 *1.15= $4.485 million
Quantity sold (Q) = 85,000 *0.85 = 72,250 units.
The best-case scenario variables would be: price = $1,656 per unit, variable costs = $391 per unit, fixed costs = $3.315 million, quantity = 97,750 units. The worst-case scenario variables would be: price = $1,224 per unit, variable costs = $529 per unit, fixed costs = $4.485 million, quantity = 72,250 units.
Explanation:In order to work out the best-case and worst-case scenarios for the Sloan Transmissions, Inc., we must take into account the provided estimate that all the given variables are accurate to within ±15%. When it comes to the best-case scenario, we will assume a higher price and quantity, and lower costs.
So, the best-case scenario variables would be: price = $1,656 per unit (1440*1.15), variable costs = $391 per unit (460*0.85), fixed costs = $3.315 million (3.9*0.85), quantity = 97,750 units (85000*1.15). For the worst-case scenario, we will assume a lower price and quantity, and higher costs. This would result in: price = $1,224 per unit (1440*0.85), variable costs = $529 per unit (460*1.15), fixed costs = $4.485 million (3.9*1.15), quantity = 72,250 units (85000*0.85).
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The trial balance before adjustment of Taylor Swift Inc. shows the following balances.
DrCr
Accounts Receivable90,000
Allowance for Doubtful Accounts1,750
Sales Revenue (all on credit)$680,000
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of a 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,700 credit balance.
Answer:
Explanation:
The journal entries are shown below;
a. Bad debt expense A/c Dr $5,350
To Allowance for doubtful debts $5,350
(Being bad debt expense is recorded)
The computation of the bad debt expense is shown below:
= Account receivable × estimated percentage given + debit balance of Allowance for Doubtful Accounts
= $90,000 × 4% + $1,750
= $5,350
B. Bad debt expense A/c Dr $2,800
To Allowance for doubtful debts $2,800
(Being bad debt expense is recorded)
The computation of the bad debt expense is shown below:
= Account receivable × estimated percentage given - credit balance of Allowance for Doubtful Accounts
= $90,000 × 5% - $1,7000
= $2,800
Final answer:
The Federal Reserve's open market sale of Treasury bonds to Acme Bank affects its balance sheet by adjusting reserves and bonds, with a potential reduction in loans to maintain reserve requirements. A hypothetical bank's net worth is calculated as the difference between its assets and liabilities, determined through a T-account balance sheet.
Explanation:
Balance Sheet Adjustments for Acme Bank after Open Market Sale
When the Federal Reserve sells $10 million in Treasury bonds to Acme Bank, Acme's assets increase in bonds by $10 million, but their reserves decrease as they pay for these bonds. Assuming the bank maintains a 10% reserve requirement, the balance sheet would be adjusted as follows:
Reserves decrease by $10 million (payment for bonds)Bonds increase by $10 million (acquisition of bonds)Loans need to be reduced to restore reserves to the required 10% of depositsAfter purchasing the bonds, Acme Bank's reserves would be insufficient to meet the required reserve ratio. To comply, Acme Bank would need to reduce its loans. In terms of numbers:
Initial reserve requirement: 10% of $300 million in deposits = $30 million.After buying bonds, reserves are $20 million (initial $30 million - $10 million for bond purchase).To restore reserves to the required $30 million, Acme needs an additional $10 million.Acme Bank would reduce loans by $10 million to increase reserves.This would bring the reserves back to the required level, ensuring compliance with the reserve requirement.Net Worth Calculation for a Hypothetical Bank
A different bank with deposits of $400, reserves of $50, government bonds worth $70, and loans of $500 would have the following T-account balance sheet:
Assets: Reserves ($50) + Bonds ($70) + Loans ($500) = $620Liabilities: Deposits ($400)Equity (Net Worth): Assets - Liabilities = $620 - $400 = $220Thus, the bank's net worth would be $220. This reflects the bank's financial health as the difference between its assets and liabilities.
Charles orders 40 cases of mescal from a Mexican distributor at a price of $90 per case. 2. A U.S. company sells 200 spark plugs to a Korean company at $5.00 per spark plug. 3. Gilberto, a U.S. citizen, pays $1,500 for a laptop he orders from Microell (a U.S. company).Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year.Hint: Be sure to enter a "0" if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative.Amount(Dollars)Consumption Investment Government Purchases Imports Exports Net Exports Gross Domestic Product (GDP)
Answer:consumption= 4600, Investment=0 , Government Purchases=0
imports = 3600, exports= 1000, net exports= -2600, GDP=2000
Explanation:
Charles order will be considered as imports which are 40*90=3600
us company's selling will be considered as exports which are 200* 5 =1000
net exports (NX) = exports (x) - imports (M)
- 2600 = 1000 - 3600
NX = -2600
total consumption (c) = exports + imports
4600 = 1000 + 3600
C = 4600
GDP ( gross domestic product) is the final value of good and services which are produced within an economy
open economy is when there is free trade between countries and there are no restriction on imports and exports of goods and services;
GDP = C + G + I+ NX
GDP = 4600 +0+0 +(-2600)
GDP =4600-2600
GDP=2000
Investment and Government Purchases are considered s 0 as no transaction is given.
No-Toxic-Toys currently has $200,000 of equity and is planning an $80,000 expansion to meet increasing demand for its product. The company currently earns $50,000 in net income, and the expansion will yield $25,000 in additional income before any interest expense. The company has three options: (1) do not expand, (2) expand and issue $80,000 in debt that requires payments of 8% annual interest, or (3) expand and raise $80,000 from equity financing. For each option, compute (a) net income and (b) return on equity (Net Income ÷ Equity). Ignore any income tax effects. (Round "Return on equity" to 1 decimal place.)
Depending on whether No-Toxic-Toys chooses to not expand, expand with debt financing, or expand with equity financing, the company will experience different changes in net income and return on equity. If the company expands through debt financing, it may increase its net income and return on equity to 34.3%. Equity financing increases the return on equity to 26.8%.
Explanation:To answer this question, we need to compute the net income and return on equity for each of the three options.
I. Do not expand: Since the company does not make any changes, the net income remains $50,000 and equity is $200,000. The return on equity (ROE) is Net Income ÷ Equity = 50,000 ÷ 200,000 = 0.25 or 25%
II. Expand with debt financing: The company borrows $80,000 at an 8% interest rate. First compute the annual interest payments: 80,000 * 8% = $6,400. The new net income is existing income plus additional income minus interest: 50,000 + 25,000 - 6,400 = $68,600. The equity stays the same at $200,000, so ROE = 68,600 ÷ 200,000 = 0.343 or 34.3%
III. Expand with equity financing: The company raises $80,000 in new equity, so total equity is 200,000 + 80,000 = $280,000. The new net income is simply the old income plus the additional income: 50,000 + 25,000 = $75,000. ROE = 75,000 ÷ 280,000 = 0.268 or 26.8%
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Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Aquatic uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $ 4 per pound Direct labor: 4 hours per unit; $ 19 per hour During the first quarter, Aquatic produced 5 comma 000 units of this product. Actual direct materials and direct labor costs were $ 66 comma 000 and $ 325 comma 000, respectively. For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5 comma 000 units.
Answer:
Please see attachment
Explanation:
Please see attachment
Horner Construction Co. uses the percentage-of-completion method. In 2014, Horner began work on a contract for $16,500,000; it was completed in 2015. The following cost data pertain to this contract :
Year ended December 31
2014 2015
Costs incurred during the year $5,850,000 $4,200,000
Estimated costs to complete at the end of year 3,900,000 —
If the completed-contract method of accounting was used, the amount of gross profit to be recognized for years 2014 and 2015 would be ____________?
Answer:
2014 = zero
2015 = $6,450
Explanation:
2014
Under the completed-contract method of accounting, revenue, expenses, and gross profit is deferred until the completion of the contract. If at the end of the business fiscal year of a company work on a contract remains incomplete, no revenue, expenses, and profit on that contract is recognized in the current year on the income statement; all costs and billings are accumulated in respective balance sheet accounts.
2015
This year, the construction is completed so Horner Construction Co. will now recognize its Revenue and gross profit in relation to the project.
Contract price $16,500,000
Less: constructions costs 10,050,000
Gross profit $6,450,000
* construction cost = ($5,850,000 + $4,200,000)
A manager would like to compare four methods for completing a task. Ten employees are randomly assigned to each of the four methods, and the time taken to complete the task is recorded. What is the factor in this study? a. The factor is the manager. b. The factor is the time to complete the task. c. The factor is the method used. d. The factor is the 10 employees.
The factor in the study is the method used.
Option c
Explanation:
Method analysis, a periodical process is the process of studying or understanding how a task or job assigned is done. It details the job or the task.
Here in the given scenario, the manager compares four different methods to do a task. For this, he assigns all the four methods randomly to ten employees thereby he tries to understand the various aspects of all the four methods and the time taken to finish the task using those methods.
This study will help him in figuring out the best method that can be implemented in the job for better results or productivity. Method analysis is basically done for improving or upgrading the efficiency of the method that is used currently.