Answer:
$41,623.84
Explanation:
[tex]\text{Present Lump\: Sum}, \:A_0=\dfrac{P[1-(1+i)^{-kt}]}{\frac{r}{k} }[/tex]
C=Payment Per Period
Yearly Interest Rate, =6%=0.06
Therefore, Periodic(Quaterly) Interest Rate, i= 0.06/4=0.015
Total number of Periods, n =4 X 30 =120 Quarters
Therefore, the maximum lump sum that the client will be willing to pay is:
[tex]=\dfrac{750[1-(1+0.015)^{-4X30}]}{0.015}=\$41,623.84[/tex]
After combing through the data, you have noticed that firms hiring Fishergraduates earn average abnormal returns of 3% per year over the next few years. You are convinced that this is a genuine profit opportunity and so have decided to trade on it. You have $10,000 to invest and two options: (1) invest all $10,000 in one company that has just hired a Fisher graduate; (2) invest $1,000 in each of ten companies that have just hired Fisher graduates. Which choice is preferable, or does it not matter?
Answer:
option (2)
Explanation:
That's right, but what if all $ 10,000 was invested in a company and it didn't come out much? The probability of earning an extraordinary income increases. It is also dangerous. This is because there is a 50% probability that the company will perform better. Therefore it is advisable to invest 1,000 companies in ten companies. Thereby reducing the risk. Well, diversification not only reduces risk but also increases the chances of profit.
Stock Investment Transactions On September 12, 3,600 shares of Aspen Company are acquired at a price of $45.00 per share plus a $180 brokerage commission. On October 15, a $1.20-per-share dividend was received on the Aspen Company stock. On November 10, 1,440.00 shares of the Aspen Company stock were sold for $38 per share less a $72 brokerage commission. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.
Answer and Explanation:
According to the scenario, journal entries for the given data are as follows:
Journal Entries
Sep. 12 Stock investment in Aspen company A/c Dr. $162,180 (3,600×$45)+$180
To Cash A/c $162,180
( Being purchase is recorded)
Oct. 15 Cash A/c Dr. $4320 (3,600×$1.2)
To Revenue from dividend A/c $4320
( Being dividend revenue is recorded )
Nov. 10 Cash A/c Dr. $54,648 (1,440×$38)-$72
Loss due to sale of investment A/c Dr. $10,224 ($64,872 - $54,648)
To Investment in Aspen company investment A/c $64,872 (1,440× $45)+$72
( Being sale is recorded)
A sixminusmonth note receivable for $ 7 comma 000 at 12%, dated October 1, 2020, has accrued interest revenue of ________ as of December 31, 2020. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
Answer:
The accrued interest revenue is $210
Explanation:
The period of interest is from 1 October,2020 to 31 December ,2020,which translates into 3 months of interest accrued overall.
The interest accrued can be computed using the formula below:
interest accrued=note receivable amount*interest rate*number of applicable months/12
note receivable amount is $7,000
interest rate is 12%
applicable months is 3
interest accrued=$7,000*12%*3/12
=$210
The accrued interest revenue is $210 as shown above.
The timeline of 3 months is the key to unlocking the question.
The accrued interest revenue on a $7,000 note receivable at 12% interest from October 1, 2020, to December 31, 2020, is $210.
To determine the accrued interest revenue on a note receivable, we need to perform a simple interest calculation with the given interest rate, principal amount, and time period. The formula to compute interest is I = PRT, where I is the interest, P is the principal amount, R is the annual interest rate expressed as a decimal, and T is the time period in years.
In this scenario, the principal amount (P) is $7,000, the annual interest rate (R) is 12%, and the time period (T) from October 1, 2020, to December 31, 2020, is 3 months or 0.25 years. Thus, the calculation would be:
P = $7,000R = 12% or 0.12 (as a decimal)T = 3/12 or 0.25 (as a year fraction)I = PRT = $7,000 × 0.12× 0.25 = $210
The accrued interest revenue as of December 31, 2020, would be $210. As the question requests, this amount is rounded to the nearest dollar.
Sam agrees to buy and Meranda agrees to sell 1000 lbs of bananas actually worth $5000, but they have not agreed on the price yet. Details are finalized, and part of their agreement is that the exact price of the bananas will be determined in the future. Later, they are unable to agree on a price.
a) Since this transaction is covered by the UCC, is there a contract for the sale and, if so, what would the court say is the price, and on what basis?
b) If the sale were not bananas but involved the agreement to repair several air conditioners in an apartment building, how would a court handle this agreement? Would it enforce it?
a. There is a contract for the sale of the bananas because UCC allows to keep certain terms open while contracting, which includes price. If the parties are not clear on the price or the price is to be set over time, the parties can fill the term later under UCC. Hence the agreement between Sam and Meranda for the sale of bananas constitutes a valid contract. If the parties are unable to determine the price, court will determine a reasonable price based on the fair market value or the intention of the parties while making the contract and by using the most reasonable method as per the business practices. Here 1000 lbs of bananas actually worth $5000. Hence the court may decide the price to be $5000 or determine the price by analyzing the intention of the parties while making the contract.
b. If the agreement was to repair several air conditioners in an apartment building, it does not come under UCC because UCC governs only contracts for sale of goods. Service contracts are governed by common law of contracts and price is necessary to form a valid contract. Hence the court will rule the contract as invalid and would not enforce the contract.
Marx Company has a current production capacity level of 200,000 units per month. At this level of production, variable costs are $0.50 per unit and fixed costs are $0.50 per unit. Current monthly sales are 183,000 units. Heaven Company has contacted Marx Company about purchasing 15,000 units at $1.00 each. Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order. Marx Company's change in profits if the order is accepted will be:
Answer:
Effect on income= 7,500 increase
Explanation:
Giving the following information:
Variable costs are $0.50 per unit.
Current monthly sales are 183,000 units.
Heaven Company has contacted Marx Company about purchasing 15,000 units at $1.00 each.
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Sales= 15,000*1= 15,000
Variable cost= 15,000*0.5= (7,500)
Effect on income= 7,500 increase
Answer:
Increase of $7,500
Explanation:
Consider the Incremental Costs and revenues arising from acceptance of the offer.
Note : Fixed Costs will not increase as the offer is within the capacity of Marx Company and are therefore irrelevant for this decision.
Sales(15,000×$1.00) $15,000
Less variable costs (15,000×$0.50) ($7,500)
Net Income $7,500
Therefore an increase of $7,500 is expected in profits if Marx Company accepts the order
Cartels often dissolve because a. their members often set a time limit as to how long the cartel should exist. b. their members often cheat on the cartel agreements because they have incentive to. c. their members often find that they do not earn as high profits from the cartel as they had hoped to. d. firms in a cartel face different costs than firms outside a cartel. e. none of the above
Answer:
B-Their members often cheat on the cartel agreements because they have incentive to.
Explanation:
Cartels dissolve because there is an incentive to cheat and produce goods by maximizing their own profits as the maximization of profits of cartels doesn't imply the maximization of profits of individual firms.
Read the following letter and help Shady Slim with his tax situation. Please assume that his gross income is $172,900 (which consists only of salary) for purposes of this problem.
December 31, 2015
To the friendly student tax preparer:
Hi, it’s Shady Slim again. I just got back from my 55th birthday party, and I’m told that you need some more information from me in order to complete my tax return. I’m an open book! I’ll tell you whatever I think you need to know.
Let me tell you a few more things about my life. As you may recall, I am divorced from my wife, Alice. I know that it's unusual, but I have custody of my son, Shady, Jr. The judge owed me a few favors and I really love the kid. He lives with me full-time and my wife gets him every other weekend. I pay the vast majority of my son's expenses. I think Alice should have to pay some child support, but she doesn't have to pay a dime. The judge didn't owe me that much, I guess.
I had to move this year after getting my job at Roca Cola. We moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I left a little bit early to go on a house-hunting trip that cost me a total of $450. I hired a moving company to move our stuff at a cost of $2,300. Junior and I got a hotel room along the way that cost us $45 (I love Super 8!). We spent $35 on meals on the way to our new home. Oh yeah, I took Junior to a movie on the way and that cost $20.
Can you believe I’m still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year.
Remember when I told you about that guy that hit me with his car? I had a bunch of medical expenses that were not reimbursed by the lawsuit or by my insurance. I incurred a total of $20,000 in medical expenses, and I was only reimbursed for $11,000. Good thing I can write off medical expenses, right?
I contributed a lot of money to charity this year. I’m such a nice guy! I gave $1,000 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! I contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,000 today (the appraiser surprised me!), even though I only paid $1,000 for it back in the day. When I contributed the furniture, the pastor said he didn’t like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United Way this year and I contributed $90. Turns out, I don’t even miss it, because Roca Cola takes it right off my paycheck every month . . . $15 a month starting in July. My pay stub verifies that I contributed the $90 to the United Way. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house. I gave him $500 to help him out.
I paid a lot of money in interest this year. I paid a total of $950 in personal credit card interest. I also paid $13,000 in interest on my home mortgage. I also paid $2,000 in real estate taxes for my new house.
A few other things I want to tell you about last year. Someone broke into my house and stole my kid's brand new bicycle and my set of golf clubs. The total loss from theft was $900. I paid $100 in union dues this year. I had to pay $1,000 for new suits for my job. Roca Cola requires its managers to wear suits every day on the job. I spent a total of $1,300 to pay for gas to commute to my job this year.
Oh, this is pretty cool. I've always wanted to be a firefighter. I spent $1,000 in tuition to go to the local firefighter's school. I did this because someone told me that I can deduct the tuition as an itemized deduction, so the money would be coming back to me.
That should be all the information you need right now. Please calculate my taxable income and complete pages 1 and 2 of Form 1040 (through taxable income, line 43) and Schedule A. You're still doing this for free, right?
Can you calculate the taxable income?
The taxable income that Shady Slim would have from this tax situation is: $144,210.
What is the taxable income?Taxable income is the amount that should be legally remitted to the government after subtracting expenses. The formula for taxable income is:
Taxable Income = Gross Income - (Moving Expenses + Student Loan Interest + Charitable Contributions + Interest Expenses + Theft Loss + Union Dues + Work-Related Expenses + Tuition)
So, when we account for gross income and the expenses by Shady Slim, we would have the taxable income as:
Taxable Income = $172,900 - ($2,850 + $900 + $6,590 + $13,950 + $900 + $100 + $2,300 + $1,000)
= $172,900 - $28,690
= $144,210
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Shady Slim's taxable income is calculated by subtracting his eligible itemized deductions from his adjusted gross income (AGI). His AGI is $172,900, and the eligible deductions total up to $35,740. Thus, his taxable income is $137,160.
Explanation:Shady Slim's adjusted gross income (**AGI**) is $172,900, his total salary. This is important as it is the starting point for determining his tax situation.
The **itemized deductions** that Shady can claim are:
$1,250 for student loan interest ($900 is the max without considering other factors such as income, with $2,500 the overall limit if all conditions are met) $9,000 medical and dental expenses ( only the portion that exceeds 10% of AGI is deductible which is $20,000 - $11,000 - ($172,900 * 10%) = $9,000) $6,090 charitable contributions (cash to church + fair market value of donated goods + money given to friend + money donated through employer) $15,950 for mortgage interest and real estate taxes $1,000 for theft loss $1,000 for union dues $450 for moving expenses (house-hunting cost)
Total deductions: $35,740.
It's notable that the tuition paid for firefighter’s school and wardrobe expenditure for his job cannot be claimed as Shady's profession is not firefighting and clothing that is suitable for everyday wear even if it’s required for work is not deductible
Shady Slim's taxable income: $172,900 (AGI) - $35,740 (itemized deductions) = $137,160.
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burnett corp. pays a constant $7.40 dividend on its stock. the company will maintain this dividend for the next 8 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price
Answer:
The correct answer is $36.778.
Explanation:
According to the scenario, the given data are as follows:
Dividend = $7.40
Time period (t) = 8 years
Return required (r) = 12%
So, we can calculate the current share price by using following formula:
Current share price = Dividend × Present value of annuity for 8 years
Where, Present value of Annuity for 8 years = = (1 - (1+r)^-t) ÷ r
= (1 - (1+12%)^-8) ÷ 12%)
= (( 1 - 0.40388322797) ÷ 0.12)
= $4.967639766916667 or $4.97
So, by putting the value, we get
Current share price = $7.40 × $4.97
= $36.778
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $22, computed as follows: Direct materials $ 7 Direct labor 8 Variable manufacturing overhead 3 Fixed manufacturing overhead 4 Unit product cost $ 22 An outside supplier has offered to provide the annual requirement of 4,700 of the parts for only $15 each. The company estimates that 50% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Answer:
It is cheaper to buy the component.
Financial advantage= $23,500
Explanation:
Giving the following information:
Direct materials $7
Direct labor $8
Variable manufacturing overhead $3
Fixed manufacturing overhead $4
An outside supplier has offered to provide the annual requirement of 4,700 of the parts for only $15 each.
First, we need to calculate the total cost of making the product:
Production in-house:
Total cost= (7 + 8 + 3 + 4)*4,700= 103,400
Buy:
Fixed costs= 2*4,700= 9,400
Buy= 4,700*15= 70,500
Total cost= 79,900
It is cheaper to buy the component.
Financial advantage= 103,400 - 79,900= $23,500
Suppose Stark Ltd. just issued a dividend of $1.73 per share on its common stock. The company paid dividends of $1.40, $1.47, $1.54, and $1.65 per share in the last four years. If the stock currently sells for $60, what is your best estimate of the company’s cost of equity capital using the arithmetic average growth rate in dividends?
Answer:
Cost of equity = 8.44%
Explanation:
The price of a share can be calculated using the dividend valuation model
According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return.
The model can be modified to determine the cost of equity
Ke =Do (1+g)/P + g
g- growth rate in dividend, P- current price, D- recent dividend
growth rate = (( Recent dividend /oldest dividend)^1/n - 1)× 100
n- no of years of growth
growth rate = (1.73/1.40)^1/4 - 1 × 100 = 5.4%
Cost of equity = 1.73×(1.054)/60 + 0.054 = 8.44%
Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. Current Machine New Machine Original purchase cost $14,700 $25,500 Accumulated depreciation $6,500 _ Estimated annual operating costs $24,900 $19,800 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $10,400. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Prepare an incremental analysis to determine whether the current machine should be replaced.
Solution and Explanation:
The following is the incremental analysis :
Particulars Retain machine Replace machine Net income
Increase / (Decrease)
Operating costs $124500 $99000 25500
($124500 - $99000)
New machine costs - 25500 (25500)
Salvage value (Old) 10400 10400
Total $124500 $114100 $10400 Working notes:
Operating cost of retain machine is calculated by multiplying the estimated operating costs of old machine with the number of years. ($24900 multiply with 5 years = $124500).
Operating cost of replace machine is calculated by multiplying with the estimated operating costs of new machine with the number of years ($19800 multiply with 5 years = $99000).
CONCLUSION: using the old machine or the current machine costs higher than the purchasing of the new machine. Therefore, it is advised to replace the old machine with a new machine to save the cost.
The total Net income is $10400 it is recommended to replace the old machine with a new machine to preserve the cost.
Calculation of Net income:The following is incremental analysis are :
Particulars Retain machine Replace machine Net income
Increase / (Decrease)
Operating costs $124500 $99000 25500
($124500 - $99000)
New machine costs - 25500 (25500)
Salvage value (Old) 10400 10400
Total $124500 $114100 $10400
Working notes:
The operating cost of the retaining machine is calculated by reproducing the calculated operating costs of the old machine by the number of years. ($24900 multiply with 5 years = $124500).
The operating cost of substituting the machine is calculated by multiplying the calculated operating costs of the new machine by the number of years ($19800 multiplied by 5 years = $99000).
CONCLUSION: When using the old machine or the current machine costs are higher than the purchase of the new machine. Thus, it is advised to replace the old machine with a new machine to save the cost.
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You deposit $5,000 per year at the end of each of the next 25 years into an account that pays 8% compounded annually. What will be the value of the account in 25 years, rounded to the nearest dollar
Answer:
future value = $365529.69
Explanation:
given data
deposit = $5,000
time period = 25 years
compounded annually = 8%
solution
we get here future value that is express as in excel by formula that is
=FV(rate;NPER; PMT)
here NPER is 25 and PMt is -5000
and rate is 8%
put value and we get
future value = $365529.69
The government of Sharonville is deep in debt, and consequently enacts a city ordinance that requires citizens to do volunteer work for the city once per week. Such and act would be in accordance with the __________ school of jurisprudential thought.
Legal Realism
Command
Irrational Forces
Sociological
Law and Economics
the correct answer is Sociological.The ordinance requiring volunteer work is aligned with the Sociological school of jurisprudential thought, which emphasizes laws that address societal needs and promote community welfare.
The government of Sharonville enacts a city ordinance requiring citizens to do volunteer work once per week due to its deep debt. This act aligns with the Sociological school of jurisprudential thought. The Sociological perspective emphasizes that law should reflect and serve societal needs, promoting community welfare, and ensuring that individuals contribute to the common good. By mandating volunteer work, the ordinance aims to address the city's economic challenges through collective citizen effort, resonating with the sociological viewpoint on law and society.
Job enlargement: is a systematic approach to help an organization modify its core processes to achieve more efficient results. aims at greater productivity through reduced application of mental and physical effort. involves adding challenges or new responsibilities to employees' current jobs. involves moving employees through a series of job assignments in one or more functional areas.
Job enlargement: involves adding challenges or new responsibilities to employees' current jobs.
Explanation:Job enlargement is a job plan manner wherein there is an expansion in the quantity of tasks correlated with a specific job. The description of job enlargement is appending extra activities within the equivalent level to a current role.
This indicates that a person will do more further, various activities in their contemporary job. One of the essential aspects of enlargement is that it expands the range of the job horizontally. This executes the job more diverse, building a wider spectrum of activities.
(8 points) Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye. Date Transaction Quantity Price/Cost 1/1 Beginning inventory 3,980 $18 2/4 Purchase 4,000 22 2/20 Sale 4,650 4/2 Purchase 5,250 24 7/17 Purchase 3,100 27 11/4 Sale 6,200.Compute cost of goods sold, assuming Ehlo uses:a. Periodic system, FIFO cost flowb. Perpetual system, FIFO cost flowc. Periodic system, LIFO cost flowd. Perpetual system, LIFO cost flowe. Periodic system, weighted=average cost flowf. Perpetual system, moving-average cost flow
Answer:
k
Explanation:
Periodic FIFO is a cost flow tracking system that is used within a periodic inventory system. In a periodic system, the ending inventory balance is only updated when there is a physical inventory count.
Under first-in, first-out method, the ending balance of inventory represents the most recent costs incurred to purchase merchandise or materials.
Please go to attachment for a step by step explaination of the answer.
In the video, Mike Boyle says he has read that meeting with employees regularly is important to motivation. Although he and Bob hold weekly staff meetings with their employees, Mike believes they should meet more often. He knows that employee meetings should have a purpose, and he asks you for advice. To make sure meetings are motivational for employees, what should be discussed?
Answer:
A meeting should have a specific time limit. Within that time limit, only a several amount of topics should be discussed as more focused the topics will be, the more effective the meeting will be.
In these meetings, the employers must make a platform for the employees to present the challenges and difficulties they face over the course of their work. This way, many problems can be identified and solved effectively.
Moreover, employees grievances must be discussed as well.
Explanation:
Employee meetings should focus on performance appraisals, career development, and open feedback discussions to be motivational. Building a strong manager-employee relationship and translating meeting outcomes into actionable plans are also key for meeting effectiveness.
Explanation:To ensure that employee meetings are motivational and effective, several key topics should be discussed. First, performance appraisals should be on the agenda, allowing for a structured evaluation of an employee's work performance, which may involve discussing job responsibilities and setting goals for future improvement. This process should be based on original job analysis and relevant objectives.
Another topic is career development, where employees' paths within the company are explored, including skills development and growth opportunities. This could be broken down into specific time frames for milestones and goals, as suggested in their first year on the job. Thirdly, meetings should include open feedback discussions where employees have the chance to communicate their perceptions of the work environment, express concerns, and provide suggestions for improvement in a confidential and trusting setting.
Furthermore, the aspect of the manager-employee relationship cannot be overstated. Managers can enhance this relationship by understanding and addressing what motivates and frustrates their employees, thus promoting a collaborative work atmosphere. Lastly, it is crucial for both parties to translate the outcomes of these meetings into actionable plans, with employees taking initiative to work on identified weaknesses and managers working eficiently to aid their team's development.
Glenville Company has the following information for April: Cost of direct materials used in production $50,000 Direct labor 56,000 Factory overhead 35,000 Work in process inventory, April 1 39,000 Work in process inventory, April 30 34,000 Finished goods inventory, April 1 25,000 Finished goods inventory, April 30 17,000 a. For April, determine the cost of goods manufactured. Using the data given, prepare a statement of Cost of Goods Manufactured.
Answer and Explanation:
The preparation of Cost of Goods Manufactured is shown below:
Glenville Company
Statement of Cost of Goods Manufactured
Work in progress inventory April, 1 $39,000
Cost of direct materials used in production $50,000
Direct labor $56,000
Factory overhead $35,000
Total manufacturing cost incurred in April $141,000
Total manufacturing cost $180,000
Work in progress inventory April, 30 $34,000
Cost of goods manufactured $146,000
($180,000 - $34,000)
Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 2010, for $400,000 cash. A contingent payment of $16,500 will be paid on April 15, 2011, if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year, and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability-weighted approach, is $3,142.
When recording consideration transferred for the acquisition of Rhine on January 1, 2010, Harrison will record a contingent performance obligation in the amount of:
a) $628.40. b) $2,671.60. c) $3,142.00. d) $13,358.00. e) $16,500.00.
Answer:
c) $3,142.00
Explanation:
The recording of the contingent performance obligation should be recorded at $3,142 which should be equal to the fair value of $16,500 at 5% using the probability-weighted approach
Moreover, at the time of payment, the journal entry is
Contingent performance obligation Dr $3,142
Loss from revaluation of contingent performance obligation $13,358
To Cash A/C $16,500
(Being the cash paid is recorded)
Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.33 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes.
a. If EBIT is $200,000, what is the EPS for each plan?
b. If EBIT is $450,000, what is the EPS for each plan?
c. What is the break-even EBIT?
a. Plan I: $1.29, Plan II: $1.16
b. Plan I: $2.90, Plan II: $3.54
c. The break-even EBIT, with an interest rate of 6%, is approximately $221.27.
a. EPS Calculation for EBIT of $200,000:
**Plan I:**
[tex]\[ EPS = \frac{EBIT - Interest}{Number of Shares} \][/tex]
[tex]\[ EPS = \frac{200,000}{155,000} = $1.29 \][/tex]
**Plan II:**
[tex]\[ EPS = \frac{EBIT - (Interest \times (1 - Tax Rate))}{Number of Shares} \][/tex]
Since there are no taxes, the equation simplifies to [tex]\[ EPS = \frac{EBIT - Interest}{Number of Shares} \][/tex]
[tex]\[ EPS = \frac{200,000 - (1.3 million \times 0.06)}{105,000} = $1.16 \][/tex]
b. EPS Calculation for EBIT of $450,000:
**Plan I:**
[tex]\[ EPS = \frac{450,000}{155,000} = $2.90 \][/tex]
**Plan II:**
[tex]\[ EPS = \frac{450,000 - (1.3 million \times 0.06)}{105,000} = $3.54 \][/tex]
c. Break-even EBIT Calculation:
For break-even EBIT, the EPS for both plans are equal:
[tex]\[ \frac{EBIT - \text{Interest}}{155,000} = \frac{EBIT - (1.3 \, \text{million} \times 0.06)}{105,000} \][/tex]
To simplify, we can cross-multiply to eliminate the denominators:
[tex]\[ 105,000 \times (EBIT - \text{Interest}) = 155,000 \times (EBIT - 1.3 \, \text{million} \times 0.06) \][/tex]
Next, distribute and collect like terms:
[tex]\[ 105,000 \times EBIT - 105,000 \times \text{Interest} = 155,000 \times EBIT - 155,000 \times 1.3 \, \text{million} \times 0.06 \][/tex]
Now, isolate the terms involving EBIT:
[tex]\[ 105,000 \times EBIT - 155,000 \times EBIT = - 155,000 \times 1.3 \, \text{million} \times 0.06 + 105,000 \times \text{Interest} \][/tex]
Combine like terms:
[tex]\[ -50,000 \times EBIT = - 155,000 \times 1.3 \, \text{million} \times 0.06 + 105,000 \times \text{Interest} \][/tex]
Finally, solve for EBIT:
[tex]\[ EBIT = \frac{- 155,000 \times 1.3 \, \text{million} \times 0.06 + 105,000 \times \text{Interest}}{-50,000} \][/tex]
Now, plug in the given values:
[tex]\[ EBIT = \frac{- (155,000 \times 1,300,000 \times 0.06) + 105,000 \times \text{Interest}}{-50,000} \][/tex]
Calculate the terms:
[tex]\[ EBIT = \frac{- (11,070,000) + 105,000 \times \text{Interest}}{-50,000} \][/tex]
Now, express the equation without the fraction:
[tex]\[ -50,000 \times EBIT = -11,070,000 + 105,000 \times \text{Interest} \][/tex]
Isolate EBIT:
[tex]\[ EBIT = \frac{-11,070,000 + 105,000 \times \text{Interest}}{-50,000} \][/tex]
Substitute the given interest rate of 6% into the equation:
[tex]\[ EBIT = \frac{-11,070,000 + 105,000 \times 0.06}{-50,000} \][/tex]
Simplify the expression:
[tex]\[ EBIT = \frac{-11,070,000 + 6,300}{-50,000} \][/tex]
[tex]\[ EBIT = \frac{-11,063,700}{-50,000} \][/tex]
[tex]\[ EBIT = 221.274 \][/tex]
Therefore, the break-even EBIT, when the interest rate is 6%, is approximately $221.27.
The question probable maybe:
Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.3 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes.
a. If EBIT is $200,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. If EBIT is $450,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
a. Plan I $1.29
Plan II $1.16
b. Plan I $2.90
Plan II $3.54
c. Break-even EBIT ???
Videoworld is a discount store that sells color televisions. The monthly demand for color television sets is 100. The cost per order from the manufacturer is $600. The carrying cost is $64 per set each year. Assume a year has 360 working days. Determine the following values rounding to the nearest integer (answer them using only numbers without any sign such as the dollar sign, comma, ...): Q1. The optimal quantity per order: Q2. The minimum total annual inventory costs: Q3. The optimal number of orders per year: Q4. The optimal time between orders (in working days): If the store had an inventory policy that allows shortages with the shortage cost per set estimated at $80, determine the following values:
Complete question:
Videoworld is a discount store that sells color televisions. The monthly demand for color television sets is 100. The cost per order from the manufacturer is $600. The carrying cost is $64 per set each year. Assume a year has 360 working days. Determine the following values rounding to the nearest integer (answer them using only numbers without any sign such as the dollar sign, comma, ...):
Q1. The optimal quantity per order: Q2. The minimum total annual inventory costs:
Q3. The optimal number of orders per year:
Q4. The optimal time between orders (in working days):
If the store had an inventory policy that allows shortages with the shortage cost per set estimated at $80, determine the following values:
5) The optimal quantity per order when the store allows shortages
6) The optimal storage level when the store allows shortages
7) The optimal number of orders when the store allows shortages
8)The optimal time between orders (in working days) when the store allows shortages.
Answer:
1) 150
2) $4,800
3) 8
4) 45 days
5) 201
6) 89
7) 6
8) 60 days
Explanation:
We are given:
Monthly demand, = 100
Cost per order, S= $600
Carrying cost, H = $64 per set/ year
Shortage cost, Cs = $80
Yearly demand will be, D= 100*12 =1200
1) The optimal quantity per order:[tex] (Q*) = \sqrt{\frac{2*D*S}{H}} [/tex]
[tex] = \sqrt{\frac{2*1200*600}{64}} [/tex]
[tex] = \sqrt{22500} = 150 [/tex]
2) The minimum total annual inventory cost:
Average inventory * H
Where average inventory = Q*/2
[tex] = \frac{150}{2} = 75 [/tex]
Therefore,
Average inventory * H
= 75 * 64
= $4,800
3)The optimal number of orders per year:
[tex] = \frac{D}{Q*} = \frac{1200}{150} = 8[/tex]
4) The optimal time between orders:
[tex] = \frac{360}{8} = 45 days [/tex]
5)The optimal quantity per order when the store allows shortages:
[tex] Q= \sqrt{\frac{2*D*S*(H+Cs)}{H * Cs} [/tex]
[tex] = \sqrt{\frac{2*1200*600*(64+80)}{64 * 80} [/tex]
= 201.25 ≈ 201
6) The optimal shortage level when the store allows shortages:
[tex] = \frac{Q* H}{H* Cs} [/tex]
[tex] = \frac{201 * 64}{64* 80} [/tex]
= 89.33 ≈ 89
The optimal shortage level when the store allows shortages = 89
7) The optimal number of orders per year when the store allows shortages:
No. of orders =
[tex] \frac{D}{Q} = \frac{1200}{201} [/tex]
= 5.97 ≈ 6
Optimal number of orders per year = 6
8) The optimal time between orders (in working days) when the store allows shortages:
Time between orders = Number of working days/ Number of orders
[tex] = \frac{360}{6} = 60 [/tex]
The optimal time between orders (in working days) = 60 Days
A binding ruling, issued by the U.S. Bureau of Customs and Border Protection, is issued with regard to: A. Penalties imposed for non-payment of duties owed B. Advance determination of the dutiable status of goods C. Seizure of goods not allowed for import to U.S. D. All of the above
Answer:
D. All of the above
Explanation:
Customs rulings are binding administrative decisions issued by U.S. Customs and Border Protection (CBP) pursuant to 19 C.F.R. Part 177. Rulings may address customs-related matters, including the United States tariff classification, marking, and valuation. CBP may issue such rulings to any importer or exporter of merchandise; to any individual or business entity that has a direct and demonstrable interest in the matters or questions presented in the ruling request; or to an agent (such as an attorney) of either of the aforementioned parties. Rulings may only be prospective and in response to a ruling request.
Exercise 20-19 Budgeted cash payments LO P2 Zisk Co. purchases raw materials on account. Budgeted purchase amounts are: April, $80,000; May, $110,000; and June, $120,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is $22,000. Prepare a schedule of budgeted cash payments for April, May, and June.
Answer:
See explanation section.
Explanation:
P2 Zisk Co.
Budgeted cash payments
For the 2nd quarter
April May June
Accounts payable $22,000
70% in the month of purchase $56,000 $77,000 $84,000
30% in the month after purchase $24,000 $33,000
Budgeted cash payments $78,000 $101,000 $117,000
Total budgeted cash for the 2nd quarter = $296,000.
30% in the month after purchase means 30% amount will be given in the following month.
Final answer:
The student's question involves creating a schedule of budgeted cash payments for a company based on monthly purchases and specified payment terms. The company pays 70% of purchases in the same month and 30% in the following month, with an accounts payable balance carried from March.
Explanation:
The student's question involves preparing a schedule of budgeted cash payments for Zisk Co., which has planned purchases for the months of April, May, and June, with specific payment terms: 70% paid in the month of purchase and 30% paid in the following month. To begin with, we need to consider the existing accounts payable balance from March 31, which amounts to $22,000.
Here's how you can calculate the cash payments for each month:
April: Payments for April purchases (70% of $80,000) plus the carryover balance from March (30% of $22,000).
May: Payments for May purchases (70% of $110,000) plus the remaining amount from April's purchases (30% of $80,000).
June: Payments for June purchases (70% of $120,000) plus the remaining balance from May (30% of $110,000).
Using this approach, you can detail the cash outflows for Zisk Co. and accurately prepare the cash budget.
Go to the Office of the Comptroller of the Currency Web site. Find the most recent levels of futures, forwards, options, swaps, and credit derivatives using the following steps:Click on "Publications." From there, click on "Other Publications/Reports."Then, click on "Quarterly Report on Bank Derivatives Activities."Click on the most recent date, and download the latest report. The tables containing the data are at the bottom of the document.Then, discuss the following: How have these values increased since 2015?Use charts or tables to illustrate the difference between the numbers.2–3 pages (body of paper, not including charts/table)
Answer and explanation:
The notional sums extraordinary of credit subordinates expanded $163.1 billion (3.9 percent), to $4.3 trillion, in the second from last quarter of 2018 (see table 10). Contracts referencing sub-investment grade firms expanded $57.0 billion and contracts referencing speculation evaluation firms expanded $105 billion in the second from last quarter (see chart 14 in the informative supplement). Credit subsidiaries extraordinary stayed well beneath the pinnacle of $16.4 trillion in the main quarter of 2008 (see chart 1 in the informative supplement). As appeared in figure 5, credit default swaps are the overwhelming item, at $3.9 trillion (89.4 percent) of all credit subordinate notional sums.
Credit subordinate contracts referencing venture grade substances with developments from one to five years spoke to the biggest fragment of the market at 45.8 percent of all credit subsidiary notional sums. Contracts of all tenors that reference speculation grade substances are 71.2 percent of the market.
Check the attached file for representing Pie chart
The notional sum for the 79 banks that net sold credit assurance (i.e., accepted credit hazard) was $2.1 trillion, down $68.4 billion (3.4 percent) from the second quarter of 2018 (see table 12 in the index). The notional sum for the 60 banks that net bought credit security (i.e., supported credit hazard) was $2.2 trillion, $94.7 billion lower (4.4 percent) than in the second quarter of 2018
Safeguarded U.S. business banks and reserve funds affiliations detailed exchanging income of $4.3 billion in the final quarter of 2015, $1.0 billion lower (19.6 percent) than the past quarter, and $0.2 billion lower (4.3 percent) than a year sooner
• Credit introduction from subordinates diminished in the final quarter of 2015. Net current credit introduction (NCCE) diminished $49.7 billion, or 11.2 percent, to $395.0 billion.
• Trading hazard, as estimated by Value-at-Risk (VaR), declined in the final quarter of 2015.
Normal VaR over the main five vendor banking organizations diminished $28 million, or 7.8 percent, to $329 million
• Credit subordinates, which spoke to 3.9 percent of all out subsidiaries notionals, declined 14.8 percent from the past quarter to $7.0 trillion
• Notional subordinates fell $11.1 trillion, or 5.8 percent, to $181.0 trillion, the most reduced level since the principal quarter of 2008. Notionals have declined in every one of the previous five quarters
• Derivative contracts stayed amassed in financing cost items, which spoke to 76.5 percent of complete subordinate notional sums.
The Office of the Comptroller of the Currency's (OCC) quarterly report on bank exchanging and subordinates exercises depends accessible if the need arises report data given by all guaranteed U.S. business banks, reserve funds affiliations and trust organizations (all things considered, banks), reports recorded by U.S. monetary holding organizations, and other distributed information. Starting in the principal quarter of 2012, reserve funds affiliations announced their money related outcomes in the call reports. Thus, their exchanging also, subordinates movement is currently incorporated into the OCC's quarterly subsidiaries report.
A sum of 1,410 safeguarded U.S. business banks and investment funds affiliations detailed subordinates exercises toward the finish of the final quarter of 2015, five less than the past quarter. A little gathering of enormous monetary establishments keeps on ruling subsidiaries movement in the U.S. business banking framework. During the final quarter of 2015, four enormous business banks spoken to 90.8 percent of the all out financial industry notional sums and 83.2 percent of industry NCCE.
The OCC and different directors have inspectors on location at the biggest banks to assess
ceaselessly the credit, advertise, operational, notoriety, and consistence dangers of bank subordinates exercises. Notwithstanding the OCC's on location supervisory exercises, the OCC works with other budgetary administrators and significant market members to address framework, clearing, and margining issues in over-the-counter (OTC) subordinates. Exercises incorporate advancement of destinations and achievements for more grounded exchange handling and improved market straightforwardness over every OTC subsidiary classes, relocation of certain very fluid items to clearinghouses, and necessities for posting and gathering edge. Office of the Comptroller of the cash.
Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 72,500 Estimated variable manufacturing overhead $3.10 per machine-hour Estimated total fixed manufacturing overhead $838,790 The predetermined overhead rate for the recently completed year was closest to:
Answer:
$11.57 per machine hour
Explanation:
Predetermined overhead rate is used to allocate overheads (indirect) to products / jobs or departments.
Predetermined overhead rate = Budgeted Fixed Costs / Budgeted Activity
Note : Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.
Predetermined overhead rate = $838,790/ 72,500
= $11.57 per machine hour
Beth Corbin’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Beth works 45 hours. Beth’s federal income tax withholding is $95, and she has no voluntary deductions. Use January 15 for the end of the pay period and the payment date.
Beth Corbin earns a regular hourly wage of $16, with a $24 overtime rate for hours exceeding 40. Working 45 hours in January, her gross pay is $760. After a $95 federal income tax withholding, her net pay is $665.
Beth Corbin earns a regular hourly wage of $16, with an overtime rate of $24 for hours exceeding 40. In January, she works 45 hours. To calculate her gross pay, we determine her regular pay for the first 40 hours and add the overtime pay for the additional 5 hours.
Regular Pay = $16/hour * 40 hours = $640
Overtime Pay = $24/hour * 5 hours = $120
Total Gross Pay = Regular Pay + Overtime Pay = $640 + $120 = $760
Subtracting the federal income tax withholding of $95 gives Beth's net pay.
Net Pay = Total Gross Pay - Federal Income Tax = $760 - $95 = $665
Thus, Beth Corbin's net pay for the January pay period is $665.
Susan is a single mother who can earn $8/hour and work up to 1,800 hours per year. If she earns no income, she will receive $16,000/year in government benefits. Creating a table to show her income based on work hours reveals that her total income is always less than the total income she would receive without working, reducing her incentive to work.
Explanation:Susan is a single mother with three children. She earns $8 per hour and can work up to 1,800 hours per year. If she does not earn any income, she will receive government benefits totaling $16,000 per year. For every $1 of income earned, her government support will be reduced by $1. To understand the impact of this assistance program on Susan's incentive to work, we can create a table:
Based on this table, as Susan earns more income from work, her government support decreases. However, even at the maximum of 1,800 work hours, her total income ($14,400) is less than the total income she would receive without working ($16,000). This assistance program might reduce Susan's incentive to work as her additional income from work doesn't match the reduction in government support.
Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Gabrielle and Trent use to arrive at the marketing communications budget
Answer:
The correct answer is letter "C": competitive-parity method.
Explanation:
The competitive-parity method is the marketing approach in which companies simply adopt the same advertisement strategy its competitors incorporate in an attempt of reducing costs. No major research is conducted implementing this practice since entities limit themselves to follow the current marketing trend.
Incorporating similar advertisement approaches in most cases takes companies to allocate for it the same amount of money than rivals.
Assume that interest rate parity holds. The U.S. five‑year interest rate is 5% annualized, and the Mexican five‑year interest rate is 8% annualized. Today’s spot rate of the Mexican peso is $.20. What is the approximate five‑year forecast of the peso’s spot rate if the five‑year forward rate is used as a forecast?
Answer:
Using equation
F=P(1+i)^n
n=5
using u.s forecast i=0.05
p=$0.2
F=0.2(1+0.05)^5
F=$0.255
Using mexican forecast,we will have
i=0.08
F=$0.2938
Taking average approximate forecast=0.2938+0.255/2=$0.2744
Merone Company allocates materials handling cost to the company's two products using the below data:
Modular Homes Prefab Barns
Total expected units produced 6500 9500
Total expected material moves 650 250
Expected direct labor-hours per unit 850 350
The total materials handling cost for the year is expected to be $265,500.
If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
Material handling cost allocated to Prefab Barns= $99,750
Explanation:
Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.
Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.
Activity rate per driver is calculated as:
Activity overhead for the period / Total cost drivers for the period
Using direct labour hours, the material handling cost can allocated as follows:
Total direct labour hours
(850 ×6500) +(9500×350) =8850000
Material handing cost allocated to Prefab =
(9500×350)/8850000 × $265,500 =$99750
Material handling cost allocated to Prefab Barns= $99,750
Final answer:
The total materials handling cost allocated to the prefab barns, when based on direct labor-hours, is approximately $99,713.35.
Explanation:
To allocate the materials handling cost on the basis of direct labor-hours to the prefab barns, we must follow a series of steps:
Calculate the total direct labor-hours for each product.
Determine the proportion of total direct labor-hours attributable to prefab barns.
Allocate the materials handling cost based on that proportion.
For Modular Homes: 6500 units imes 850 labor-hours = 5,525,000 labor-hours
For Prefab Barns: 9500 units imes 350 labor-hours = 3,325,000 labor-hours
Total labor-hours = 5,525,000 + 3,325,000 = 8,850,000 labor-hours
The proportion for Prefab Barns = 3,325,000 / 8,850,000 = 0.3757 (rounded to four decimal places)
Total materials handling cost for Prefab Barns = 0.3757 imes $265,500 ≈ $99,713.35 (rounded to two decimal places)
Perez Corporation has 100,000 shares of $1 par value common stock and 20,000 shares of 8% cumulative preferred stock, $100 par value, outstanding. The balance in Retained Earnings at the beginning of the year was $1,600,000, and one year's dividends were in arrears. Net income for the current year was $870,000.
If Perez Corporation paid a dividend of $2 per share on its common stock, what is the balance in Retained Earnings at the end of the year?
a. $2,150,000.
b. $2,270,000.
c. $2,110,000.
d. $1,950,000.
Answer:
Option D is correct,$1,950,000
Explanation:
In order to compute the closing balance of retained earnings, the preferred shares dividends for prior and current years as well as the common stock dividend must be deducted from net income before adding the remnant to the opening retained earnings:
Net income $870,000
Preferred dividend prior year($100*20000*8%) ($160,000)
Preferred dividend current year($100*20000*8%) ($160,000)
Common stock dividend($2*100,000) ($200,000)
net income after dividends $350,000
Closing retained earnings=$1600,000+$350,000
=$1,950,000
Answer:
D. $1,950,000
Explanation:
The following information is available for Amos Company for the year ended December 31, 2017. Balance of retained earnings, December 31, 2016, prior to discovery of error, $859,000. Cash dividends declared and paid during 2017, $29,000. It neglected to record 2015 depreciation expense of $37,600, which is net of $6,900 in tax benefits. The company earned $223,000 in 2017 net income. Prepare a 2017 statement of retained earnings for Amos Company. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Amos Company
Statement of retained earning
as on December 31, 2017
Retained Earning December 31, 2016 $859,000
Add: Net Income for 2018 $223,000
Dividend -$29,000
Prior years error adjustment -$37,600
Retained Earning December 31 $1,015,400
Explanation:
Retained Earning is an equity account and its balance is credit in nature. It is the accumulated balance of all the prior year's income / losses after paying all the dividend. This balance can be used for the dividend payment or reinvestment in the business.
Omission of depreciation expense understated the expenses for the year and overstated the profit of 2015, which ultimately overstated the retained earning value. we need to adjust this error in retained earning balance because it is adjustment of an prior year error, it will not be included in the current years net income calculations. It already netted off so we just simply adjust it in the retained earning with the value of $37,600.