Answer:
Total amount = $10906400
He would receive = $ 45443.33 every month
Explanation:
Ken invested $1.6 million at 9.6% for 20 yes compounded monthly.
n = 20*12= 140
t = 20
P= 1600000
R= 9.6% = 0.096
Amount A is equal to
A = p(1+r/n)^(nt)
A =
1600000(1+(0.096/140))^ (140*20)
A =
1600000(1 + (6.857*10^-4))^(2800)
A= 1600000(1.0006857)^2800
A = 1600000*6.8165
A = 10906400
Every month, he will get
10906400/(12*20)
= 10906400/240
=$ 45443.333
Answer: Therefore, he would recieve $15,018.74 at the end of each month.
Explanation:
$1.6 million investment is the present value (PV)
PV = $1,600,000
INTEREST RATE(r) = 9.6% or 0.096 compounded monthly = (0.096÷12) = 0.008
PERIOD(n) = 20 years = (20×12) = 240 months
Ordinary value of annuity:
Annuity = (rate × PV) ÷ (1 - (1 + r)^-240)
Annuity = (0.008 × $1,600,000) ÷ (1 - (1 + 0.008)^-240)
Annuity = ($12,800) ÷ (1 - (1.008)^-240)
Annuity = $12,800 ÷ 0.8522687768
Annuity = $15,018.74
Therefore, he would recieve $15,018.74 at the end of each month.
On January 1, 20X4, Polar Corp. paid $104,000 for $100,000 par value, 9% bonds of Seal Corp. Seal had issued $300,000 of the 10-year bonds on January 1, 20X2 for $360,000. The bonds pay interest semi-annually. Polar had previously purchased 80% of the common stock of Seal on January 1, 20X1, at underlying book value. Polar reported operating income (excluding income from subsidiaries) of $50,000 and Seal reported net income of $30,000 for 20X4. Both companies use straight-line amortization. What amount of interest expense and gain/loss should be included in the 20X4 consolidated income statement
Answer:
$14,000
Explanation:
Amount of interest expense = [(Bond issued by 'S' company x 9%) - Amount of
premium x (unsold bonds / Bonds issued)]
= (300,000 x 0.09) - 60000/10 x 200,000/300,000
= (27,000 - 6000) x 0.66667
= 21,000 x 0.66667
= $14,000
For the 20X4 consolidated income statement:
Interest expense should be[tex]\$15,500.[/tex]
No gain or loss related to the bonds should be recognized.
1. Calculate the amortization of the bond premium/discount:
Seal Corp.'s Bonds:
Issued amount: $360,000
Par value: [tex]\$300,000[/tex]
Premium: [tex]\$360,000 - \$300,000 = \$60,000[/tex]
Life of bonds: [tex]10[/tex] years ([tex]20[/tex] semi-annual periods)
Annual amortization of the premium:
[tex]\[ \frac{\$60,000}{20} = \$3,000 \][/tex]
Semi-annual amortization of the premium:
[tex]\[ \frac{\$3,000}{2} = \$1,500 \][/tex]
2. Determine Seal Corp.'s interest expense:
Seal Corp. pays interest semi-annually on the par value of the bonds:
[tex]\[ \$300,000 \times 9\% = \$27,000 \] (annual interest)[/tex]
[tex]\[ \text{Semi-annual interest payment} = \$27,000 / 2 = \$13,500 \][/tex]
Adjust for the amortization of the premium:
[tex]\[ \text{Annual interest expense} = \$27,000 - \$3,000 = \$24,000 \][/tex]
[tex]\[ \text{Semi-annual interest expense} = \$13,500 - \$1,500 = \$12,000 \][/tex]
Total interest expense for 20X4:
[tex]\[ 2 \times \$12,000 = \$24,000 \][/tex]
3. Calculate Polar Corp.'s interest income:
Polar purchased [tex]\$100,000[/tex] par value bonds at [tex]\$104,000[/tex], indicating a premium of [tex]\$4,000.[/tex]
Annual amortization of Polar's premium:
[tex]\[ \frac{\$4,000}{8} = \$500 \][/tex]
Semi-annual amortization of the premium:
[tex]\[ \frac{\$500}{2} = \$250 \][/tex]
Semi-annual interest income for Polar:
[tex]\[ \$4,500 - \$250 = \$4,250 \][/tex]
Total interest income for 20X4:
[tex]\[ 2 \times \$4,250 = \$8,500 \][/tex]
4. Consolidate and eliminate intercompany transactions:
When consolidating, the intercompany interest expense and income need to be eliminated:
Seal's interest expense:
[tex]\[ \$24,000 \][/tex]
Polar's interest income:
[tex]\[ \$8,500 \][/tex]
The intercompany interest expense and income should be eliminated, so:
[tex]\[ \text{Consolidated interest expense} = \$24,000 - \$8,500 = \$15,500 \][/tex]
Gain/Loss on Bonds:
There is no gain or loss to be recognized in the consolidated income statement related to the bonds, as the purchase price and carrying amount adjustments are amortized and included in the interest expense and income calculations.
The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,700 direct labor-hours will be required in February. The variable overhead rate is $8.30 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $137,740 per month, which includes depreciation of $18,140. All other fixed manufacturing overhead costs represent current cash flows. The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
190,390
Explanation:
Budgeted direct labor-hours 9,400
Variable manufacturing overhead rate $ 8.60
Variable manufacturing overhead $ 80,840
Fixed manufacturing overhead 127,840
Total manufacturing overhead 208,680
Less depreciation 18,290
Cash disbursement for manufacturing overhead $ 190,390
Jorge is willing and able to pay up to $25 for an authentic autograph of Michael Jordan that he buys for $20. Melissa requires a minimum price of $16 before she will sell the autograph to Jorge. In this situation, the consumer's surplus is _____ and the producer's surplus is ____.
Answer:
Consumer's surplus is $5 and the producer's surplus is $4.
Explanation:
1) Consumer surplus is the extra amount a consumer is willing to pay for a product above the price they actually do pay.
Consumer surplus = maximum price willing to pay – actual price
Maximum price willing to pay = $25
Actual price = $20
Consumer surplus = $25 – $20
Consumer surplus = $5
Therefore, the customer saved $5 as a consumer surplus which he/she can spend on some other goods or services.
2) Producer surplus is the difference between what price producers are willing and able to sell a good for and what price they actually receive from consumers (market price).
Producer surplus = Actual price – minimum price willing to accept
Actual price = $20
Minimum price willing to accept = $16
Producer surplus = $20 – $16
Producer surplus = $4.
Suppose there are 100 workers in the economy in which all workers must choose to work a risky or a safe job. Worker 1's reservation for accepting the risky job is $1; worker 2's reservation price is $2, and so on. Because of technological reasons, there are only 10 risky jobs.
A. What is the equilibrium wage differential between safe and risky jobs? Which workers will be employed at the risky firm?
B. Suppose now that an advertising campaign, paid for by the employers who offer risky jobs, stresses the excitement associated with "the thrill of injury," and this campaign changes the attitudes of the work force toward being employed in a risky job. Worker 1 has a reservation price of -$10 (that is, she is willing to pay $10 for the right to work in a risky job); worker 2's reservation price is -$9, and so on. There are still only 10 risky jobs. What is the new equilibrium wage differential?
C. Show a supply and demand for risky jobs diagram to represent the situations in question a and b.
Final answer:
The equilibrium wage differential between safe and risky jobs depends on the workers' reservation prices and the number of risky jobs available. In the first scenario, if the 10th worker's reservation price is $10, then the equilibrium wage differential would be $10. In the second scenario, if the 10th worker's reservation price is -$1, then the new equilibrium wage differential would be -$1.
Explanation:
The equilibrium wage differential between safe and risky jobs can be determined by looking at the workers' reservation prices and the number of risky jobs available. In this scenario, there are 100 workers and 10 risky jobs. The equilibrium wage differential will be determined by the reservation price of the 10th worker, as the risky jobs are filled starting from the worker with the lowest reservation price. So, if the 10th worker's reservation price is $10, then the equilibrium wage differential between safe and risky jobs would be $10.
In the second scenario, where the workers' reservation prices for risky jobs change and become negative, the equilibrium wage differential would also change. Since there are still only 10 risky jobs available, the equilibrium wage differential would be determined by the reservation price of the 10th worker who gets employed at the risky firm. If the 10th worker's reservation price is -$1, then the new equilibrium wage differential would be -$1.
Unfortunately, I'm unable to provide diagrams in this format. However, you can represent the situation using a supply and demand graph, where the demand curve represents the number of risky jobs demanded at different wage differentials, and the supply curve represents the number of workers willing to take risky jobs at different wage differentials.
Moreno Company Comparative Income Statement For the Years Ended December 31, 20-- 1 Current Year Previous Year
2Sales $1,120,000.00 $1,000,000.00
3 Cost of goods sold 971,250.00 875,000.00
4 Gross profit $148,750.00 $125,000.00
5 Selling expenses $71,250.00 $62,500.00
6 Administrative expenses 56,000.00 50,000.00
7 Total operating expenses $127,250.00 $112,500.00
8 Income before income tax $21,500.00 $12,500.00
9 Income tax expense 8,000.00 5,000.00
10 Net income $13,500.00 $7,500.00
Required: A. Prepare a comparative income statement with horizontal analysis for the two-year period, indicating the increase (decrease) for the current year when compared with the previous year. Use the minus sign to indicate an amount or percent decrease. If required, round percentages to one decimal place. B. What conclusions can be drawn from the horizontal analysis?
Answer:
Moreno Company
Comparative Income Statement
For the Years Ended December 31, 20-- 1
Amount %
Current Year Previous Year Increase Increase
(Decrease) (Decrease)
(1) (2) 3= (1-2) 3/2*100
Sales $1,120,000 $1,000,000 120,000 12%
Cost of goods sold 971,250 875,000 96,250 11%
Gross profit $148,750 $125,000 23,750 19%
Selling expenses $71,250 $62,500 8750 14 %
Administrative expenses56,000 50,000 6000 12%
Total operating expenses$127,250 $112,500 14,750 13.11%
Income before income tax $21,500 $12,500 9000 72%
Income tax expense 8,000 5,000 3000 60%
Net income $13,500 $7,500 6000 80%
The sales have increased 12 and so has the gross profit by 19% which shows a good advance.
Net income has increased by 80% which is good progress.
The operating expenses have increased more than sales which should be controlled.
Sufficient Dwelling Coverage? Colton Gentry of Lancaster, California, has owned his home for ten years. When he purchased it for $178,000, Colton bought a $160,000 homeowner's insurance policy. He still owns that policy, even though the replacement cost of the home is now $300,000.a. If Colton suffered a $15,000 fire loss to the home, what percentage of the loss would be covered by his policy? Round your answer to one decimal place 89.9 What dollar amount of the loss would be covered by his policy? Enter the amount of the loss as a positive number. Round your answer to the nearest dollar. $13485 b. How much insurance on the home should Colton carry now to be fully reimbursed for a fire loss? Round your answer to the nearest dollar. $125000 Hide Feedback Incorrect Check My Work (No more tries available)
In the event of a $15,000 fire loss, Colton's current insurance policy would cover only 53.3% of his loss, meaning he would receive only $8,000 from the insurance company. If he wants to fully insure his home for any damages due to fires, he should carry an insurance that matches his current home replacement cost, which is $300,000.
Explanation:The subject of this problem is insurance coverage, specifically dwelling coverage for homeowners. Dwelling coverage ensures that a home gets rebuilt or repaired in case of damage resulting from factors like fire or hail.
Let's tackle the two parts of the question. a. In Colton's case, his current policy covers $160,000 while the total replacement cost of his home is now $300,000. Hence, his coverage is partial and proportional. If he suffered a $15,000 fire loss, the percentage of the loss covered by his current policy would be given by (coverage amount / total replacement cost) * loss which translates to ($160,000/$300,000) * $15,000 = $8,000. This means 53.3% of his loss (approx) would be covered and Colton would personally bear the rest.
b. If Colton wants to fully cover his home from any loss due to fire, he should carry insurance that matches his home replacement cost, i.e., $300,000. Then, the insurance would fully cover his loss and he would not bear any out of pocket expenses in events like fires.
Similar to how an insurance company collects $1,860 premium from each driver to cover the projected cost of accidents, homeowners must keep an eye on their home’s value and the corresponding insurance coverage to ensure adequate protection at all times.
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Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $35,000. The estimated useful life was five years and the residual value was $3,500. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production for year 1, 2,000 units; year 2, 3,000 units; year 3, 2,000 units; year 4, 2,000 units; and year 5, 1,000 units.
Answer:
Refer explanation
Explanation:
1. Straight-line depreciation:
It is the simplest method of calculating depreciation and believes that the asset's value depreciates equally every year.
Depreciation per year = (Cost of asset - salvage value) / number of useful life years.
Please refer attached table one for all years depreciation.
2. Double-declining balance Method:
This is where the asset's value is depreciated at twice the rate than the straight line method. The depreciation amounts would be higher in the early years of the asset's life and gradually reduce towards the end. Hence, it does not mean that the depreciation amount would be higher than the straight line basis.
Straight Line depreciation per year = 1/5* x 100 = 20%
*as it is useful for five years
Hence double-depreciation value = 20% x 2 = 40%
It is calculated as depreciation rate x book value of asset at the beginning of the period.
Please refer attached table two for all years depreciation.
3. Activity based depreciation is whereby an asset is depreciated based on the asset’s activity such as the number of hours worked or the number of units produced, during a particular period of time. Activity based depreciation per year is calculated as:
[(Cost - Salvage value) x activity performed during the period] / Total estimated life activity of the asset
Please refer attached table three for all years depreciation.
The estimated production cost per unit can be calculated by subtracting the depreciation expense from the expected production in each year.
Explanation:The estimated productive life of the machine is 10,000 units. In year 1, the expected production is 2,000 units, in year 2 it is 3,000 units, in year 3 it is 2,000 units, in year 4 it is 2,000 units, and in year 5 it is 1,000 units. To calculate the depreciation expense for each year, we can use the formula: Depreciation expense = (Cost - Residual value) / Estimated useful life.
Depreciation expense for year 1 = ($35,000 - $3,500) / 5 = $6,700.
Similarly, we can calculate the depreciation expense for each year and subtract it from the expected production in that year to get the estimated production cost per unit.
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Crandle Manufacturers Inc. is approached by a potential customer to fulfill a oneminustimeminusonly special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $ 130 Direct labor 100 Manufacturing support 105 Marketing costs 65 Fixed costs: Manufacturing support 185 Marketing costs 55 Total costs 640 Markup (50%) 320 Targeted selling price $ 960 What is the change in operating profits if the oneminustimeminusonly special order for 1 comma 100 units is accepted for $ 560 a unit by Crandle? A. $ 176 comma 000 decrease in operating profits B. $ 175 comma 360 increase in operating profits C. $ 176 comma 000 increase in operating profits D. $ 175 comma 360 decrease in operating profits
Answer:
C. $176000 increase in operating profits
Explanation:
Contribution margin is the ability of a company to cover its variable costs using revenue. It is calculated as selling price per unit minus variable cost per unit. The amount left covers fixed costs or is profit.
Contribution margin per unit = 560 - (130 + 100 + 105 + 65) = $160
Profit increase = $160 x 1100 units = $176000
This is profit because the company already covers it’s fixed costs selling to regular customers since it had total costs of $640 per unit and sold at $960 (with a 50% mark up).
Barnes Enterprises has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and a price of $958. At this price, the bonds yield 8.9 percent. What must the coupon rate be on the bonds
Answer:
8.36%
Explanation:
To find out the coupon rate, first we have to determine the PMT which is shown in the attachment below:
Given that,
Present value = $958
Future value = $1,000
Rate of interest = 8.9%
NPER = 14 years
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the yearly payment is $83.64
Now the coupon rate is
= $83.64 ÷ $1,000
= 8.36%
Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 10% per year. If D0 = $6 and rs = 15%, what is the value of Maxwell Mining's stock? Round your answer to the nearest cent.
Answer:
The current value of stock is $21.60 per share.
Explanation:
The current value of the stock whose dividends are growing/declining at a constant rate can be calculated using the constant growth model of DDM.
The growth will be taken as a negative percentage in case the growth rate is falling. So, g will be g= -0.1 or -10%. The formula for price under this model is,
P0 = D0 * (1+g) / ( r - g)
Where,
D0 * (1+g) is the dividend expected for the next period or D1r is the required rate of returng is the growth rateTaking g as -0.1.
P0 = 6 ( 1 - 0.1) / (0.15 + 0.1)
P0 = $ 21.60
To find the value of Maxwell Mining Company's stock, we can calculate the present value of its future earnings and dividends by using the present value formula. The stock price per share is approximately $256,500.
Explanation:To find the value of Maxwell Mining Company's stock, we need to calculate the present value of its future earnings and dividends. Given that D0 (current dividend) is $6 and rs (required rate of return) is 15%, we can use the present value formula to determine the stock value. Assuming the constant decline in earnings and dividends at a rate of 10% per year, we can calculate the present value of total profits and divide it by the number of shares to arrive at the price per share. In this case, the price per share should be approximately $256,500.
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Marsha’s Pet Store employs six employees. Their duties are to sell pets, replenish the stock, keep the pets’ cages clean, feed the pets, and maintain good records. Marsha pays a fixed hourly rate and a commission on sales of pets. Lately, Marsha has been finding that the records have not been well maintained and the stock has not been replenished. However, pet sales are good and the pets’ cages are clean. Based on the above facts, state whether the following statement is true or false. Marsha may consider changing the scheme to include careful performance of the other duties before any sales commission can be earned. True False
Answer: True.
Explanation:
People sometimes have a tendency of doing only what they are told to do or only what they are paid for. This is why most people who progress in a company do so on the basis of having done work that was not in their description, but would have helped the company progress.
It would appear that Marsha's 6 employees are all of the caliber of employees who just do what they are told and nothing more.
For this reason therefore, she would include a stipulation changing the scheme to include careful performance of the other duties before any sales commission can be earned. This way they'll start to do those other things since they are now paid to do so.
Midland Company buys tiles and prints different designs on them for souvenir and gift stores It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tries needed for three months' sales The tiles cost $3 each and must be paid for in cash. The company has 28,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months: Estimate purchases (in units) and cash required to make purchases in January.
Answer:
The question is not complete,find below complete question:
Midland Company buys tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tiles needed for three months’ sales. The tiles cost $3 each and must be paid for in cash. The company has 28,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months:
January 11,900
February 18,700
March 13,600
April 14,700
May 10,300
June 7,100
Required: a. & b. Estimate purchases (in units) and cash required to make purchases in January, February, and March.
Purchases in units is 30,900 units
Purchases amount is $92,700
Explanation:
The purchases in January is the sales estimate plus the desired ending inventory minus the opening stock of inventory.
The desired closing inventory in the sense implies three months future sales units i.e February,March and April sales units.
Sales in January 11,900
desired closing inventory(18,700+13,600+14,700)47,000
Total required units 58,900
Opening stock of inventory 28,000
Total purchases 30,900
Total purchases in dollar terms=purchases units*sales price per unit
sales price per unit is $3
total purchases in dollar terms=$3*30,900=$92,700
Ruiz Co. provides the following sales forecast for the next four months. April May June July Sales (units) 500 580 540 620 The company wants to end each month with ending finished goods inventory equal to 25% of next month’s forecasted sales. Finished goods inventory on April 1 is 190 units. Prepare a production budget for the months of April, May, and June.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Sales:
April= 500
May= 580
June= 540
July= 620
Finished goods inventory on April 1 is 190 units
Desired ending inventory= 25% next month sales.
To calculate the production for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 500
Desire ending inventory= (580*0.25)= 145
Beginning inventory= (190)
Total production= 455 units
May:
Sales= 580
Desire ending inventory= (540*0.25)= 135
Beginning inventory= (145)
Total production= 570 units
June:
Sales= 540
Desire ending inventory= (620*0.25)= 155
Beginning inventory= (135)
Total production= 560 units
The production budget for Ruiz Co. for April, May, and June involves calculating the required monthly production to meet sales forecasts while also maintaining ending inventories at 25% of the next month’s forecasted sales. The calculations lead to required production of 455 units in April, 570 units in May, and 560 units in June.
The question requires calculating a production budget for Ruiz Co. for the months of April, May, and June, considering its sales forecast and the desire to maintain ending finished goods inventory at 25% of the next month’s forecasted sales.
April Production: We start with April's forecast of 500 units and aim for an ending inventory of 25% of May's forecast (580 units), which is 145 units. Considering the starting inventory of 190 units, the production needed is 500 - 190 + 145 = 455 units.May Production: May forecasts 580 units and desires an ending inventory of 25% of June's forecast (540 units), equating to 135 units. The required production is 580 - 145 + 135 = 570 units, accounting for April's ending inventory as the starting point for May.June Production: June expects 540 units with an ending inventory of 25% of July's forecast (620 units), which is 155 units. Thus, the production needed is 540 - 135 + 155 = 560 units.By ensuring inventories match 25% of the subsequent month's sales forecasts, Ruiz Co. effectively plans its production to meet both current sales and future inventory requirements.
You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52 weeks a year, 365 days, and has the following characteristics for its primary item:Demand = 450 units/per weekOrdering cost = $35/orderEOQ = 468 units What is the unit holding cost per year?A. Not greater than $3B. Greater than $3 but not greater than $6C. Greater than $6 but not greater than $9
Answer:
C. Greater than $6 but not greater than $9
Explanation:
The computation of the unit holding cost per year is shown below:
As we know that
[tex]Economic\ order\ quantity = \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand is 450 × 52 weeks = 23,400 units
Ordering cost is $35 per order
Economic order quantity is 468 units
Now placing these values to the above formula
[tex]468\ units = \sqrt{\frac{2\times \text{23,400}\times \text{\$35}}{\text{Carrying\ cost}}}[/tex]
Now to find out the carrying cost, the calculation is given below:
= (2 × 450 units × $35) ÷ 468^2
= $7.48 per unit
The carrying cost is also known as holding cost
itemized summary of the expected income and expenses for a defined period of time
Answer:Budget
Explanation:Budget refers to when you create a list of your proposed income and ecpenditure in order to aid decision making .
It is often estimated and can be made for a person , government or organization .
Answer:
Budget
Explanation:
An itemized summary of probable income and expenses for a given period. A budget is a plan for managing income, spending, and saving during a given period of time. The portion of personal income available for spending after taxes and basic essentials have been deducted.
Standahl Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $41,490 per month plus $2,839 per flight plus $23 per passenger. The company expected its activity in August to be 101 flights and 313 passengers, but the actual activity was 104 flights and 316 passengers. The actual cost for plane operating costs in August was $265,190. The plane operating costs in the planning budget for August would be closest to: Multiple Choice $265,190 $335,428 $344,014 $324,110
Answer:
$335,428
Explanation:
The computation of the plane operating cost is shown below:
Plane Operating Cost = Fixed cost + (Variable cost per unit × quantity) + (Variable cost per unit × quantity)
= $41,490 + ( $2,839 × 101 flights) + ($23 × 313 passengers)
= $41,490 + $286,739 + $7,199
= $335,428
We only considered the planned activity as we have to compute the plane operating cost for the planning budget
AFW Industries has 214 million shares outstanding and expects earnings at the end of this year of $ 723 million. AFW plans to pay out 59 % of its earnings in total, paying 40 % as a dividend and using 19 % to repurchase shares. If AFW's earnings are expected to grow by 8.4 % per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.2 %
Answer:
32
Explanation:
32323
Final answer:
AFW Industries' share price can be calculated by finding the present value of future dividends and share repurchases using the equity cost of capital. After calculating the present value of dividends and share repurchases, we can add them together to find the total present value. Dividing the total present value by the number of shares outstanding gives us the share price. The number of shares outstanding: $33.64 per share.
Explanation:
To determine AFW Industries' share price, we need to calculate the present value of future dividends and share repurchases. First, we need to find the total dividends and share repurchases based on the payout rates. The dividend payout would be 723 million * 0.40 = 289.2 million, and the share repurchase would be 723 million * 0.19 = 137.37 million. The total payout would be 289.2 million + 137.37 million = 426.57 million.
To calculate the present value, we need to discount the future payouts using the equity cost of capital. The equity cost of capital is 11.2 percent, so we can use the formula PV = C / (1 + r)^n, where C is the cash flow, r is the discount rate, and n is the number of periods (years). Since AFW expects earnings to grow by 8.4% per year, we can assume a perpetual growth model.
The present value of dividends can be calculated as 289.2 million / (0.112 - 0.084) = 4.9 billion. The present value of share repurchases can be calculated as 137.37 million / (0.112 - 0.084) = 2.3 billion. Adding these present values together gives us a total present value of 4.9 billion + 2.3 billion = 7.2 billion. Finally, to find the share price, we divide the total present value by the number of shares outstanding: 7.2 billion / 214 million = $33.64 per share.
Budgetary Performance for Cost Center Suwanee Company's costs were under budget by $59,700. The company is divided into North and South regions. The North Region’s costs were over budget by $4,200. Determine the amount that the South Region’s costs were over or under budget.
Answer
The South's budget was under budgeted by $63,900
Explanation
The sum of the north and south division equals that of the entire Company.
Company's budget = North + South budget
Let us represent the value of the south budget by y
(59,700) = 4,200 + y
y = -59,700 - 4200
y = 63,900
The South's budget was under budgeted by $63,900
Copying an article from a computer science journal that sells subscriptions and then distributing it to 25 employees at your company: a. would be fair use. b. would be copyright infringement. c. would not be copyright infringement unless you charged the employees for the copies. d. none of the above
Answer:
The correct answer is b. would be copyright infringement.
Explanation:
Any copy of information for publication without the author's consent means an infringement of copyright, since the information is presented as if it were the company's own when it is not. In order for this situation not to occur, the company is required to notify the author of the intention to communicate the information and receive authorization to carry it out.
Answer: b. would be copyright infringement.
Explanation:
Copyright infringement is the use of works protected by copyright law without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or to make derivative works.
Copyright infringement is using someone else's work without getting that person's permission. The owner of a copyright gets to decide who can legally make copies of that work. It is illegal to copy large sections of someone else's copyrighted work without permission, even if you give the original author credit.
Other examples of copyright infringement include:
1. Downloading movies and music without proper payment for use.
2. Recording movies in a theater.
3.Using others' photographs for a blog without permission.
4. Copying software code without giving proper credit.
5. Creating videos with unlicensed music clips.
Walters manufactures a specialty food product that can currently be sold for $22 per unit and has 20,000 units on hand. Alternatively, it can be further processed at a cost of $12,000 and converted into 12,000 units of Deluxe and 6,000 units of Super. The selling price of Deluxe and Super are $30 and $20, respectively. The incremental net income of processing further would be:
Answer:
$28,000
Explanation:
The computation of incremental net income is shown below:-
Deluxe = 12,000 × $30
= $ 360,000
Super = 6,000 × $20
= $120,000
Total sales value = Deluxe + Super
= $ 360,000 + $120,000
= $480,000
Deduct amount = Total sales value - Further processing cost
= $480,000 - $12,000
= $468,000
Incremental net income after further processing = Deduct amount - sales value before further processing
= $468,000 - (20,000 × $22)
= $28,000
So, for computing the incremental net income of processing further we simply applied the above formula.
Company X is expected to earn $2.25 per share this quarter. Last quarter they earned $2.50 per share, and a year ago their earnings were $3.00 per share. Before the market opened this morning, they announced earnings of $2.30 per share. If there is no other news about this stock, and leaving out what the market as a whole is expected to do today, what should happen to the price of the stock when the market opens.
Answer:
Price of the stock will go up
Explanation:
In order to predict future movements of stock prices, analysts use reported quarterly earnings, usually in the forms of earnings per share. However, analyst's estimation is only opinion, that may differ from what would really happen. If company's earnings exceed their own estimations, as in this case, we could expect stock value to rise. However, in the case where actual earnings are a bit lower than projected ones, the price of the stock will drop.
The following information pertains to Torque Corp.'s outstanding stock for 2021: Common stock, $1 par value Shares outstanding, 1/1/2021 60,000 2-for-1 stock split, 4/1/2021 Shares issued, 7/1/2021 30,000 Preferred stock, $10 par value, 6% cumulative Shares outstanding, 1/1/2021 12,000How many shares should Torque use to calculate 2021 basic earnings per share?
Answer:
135,000 shares
Explanation:
The stock split is the re-denomination of the shares where the number of shares increases without a corresponding increase in shareholders' equity.For instance assigning two shares for each share had earlier with two new shares priced at the price of previous one share,however in calculating the number of shares applicable to basic earnings stock split is treated retrospectively,as if it has always been part of the company's shares
Opening number of shares 60,000
add increase due to stock split(2*60,000)-60,000 60,000
new shares half-way through the year 30,000*6/12 15,000
Weighted average number of shares 135,000
Answer:
135,000 shares
Explanation:
An example of a difference in types of business combination is: A. A statutory merger can only be effected by a capital stock acquisition while a statutory consolidation can only be effected by an asset acquisition. B. A statutory merger requires dissolution of the acquired company while a statutory consolidation does not require dissolution. C. A statutory merger can only be effected by an asset acquisition while a statutory consolidation can only be effected by a capital stock acquisition. D. A statutory consolidation requires dissolution of the acquired company while a statutory merger does not require dissolution.
Answer:
B. A Statutory merger requires dissolution of the acquired company while a statutory consolidation does not require dissolution.
Explanation:
A statutory merger refers to collaboration between two entities wherein one entity i.e the acquiring firm gets entitled to continue it's legal existence while the weak company or the acquired company's identity is lost.
In case of statutory consolidation, it is a kind of merger wherein, the merged entities lose their identity and an altogether new entity is formed to take over the assets and liabilities.
In case of statutory merger, the acquiring company takes over the business and assets and liabilities of the acquired company whereas under consolidation, the assets and liabilities of both the entities are pooled together and taken over by a new entity which is created.
Federal and state governments may oppose and disallow any of the two mergers if they believe, such mergers would lead to anti competitive practices and creation of monopolies.
At least six months before the Summer Olympic Games in Atlanta, Georgia, Stafford Fontenot and four others agreed to sell Cajun food at the games and began making preparations. On May 19, the group (calling themselves "Prairie Cajun Seafood Catering of Louisiana") applied for a business license from the county health department. Later, Ted Norris sold a mobile kitchen to them for $40,000. They gave Norris an $8,000 check drawn on the "Prairie Cajun Seafood Catering of Louisiana" account and two promissory notes, one for $12,000 and the other for $20,000. The notes, which were dated June 12, listed only Fontenot "d/b/a Prairie Cajun Seafood" as the maker (d/b/a is an abbreviation for "doing business as"). On July 31, Fontenot and his friends signed a partnership agreement, which listed specific percentages of profits and losses. They drove the mobile kitchen to Atlanta, but business was "disastrous." When the notes were not paid, Norris filed a suit in a Louisiana state court against Fontenot, seeking payment. (See Formation and Operation.) a. The first group will discuss the elements of a partnership and determine whether a partnership exists among Fontenot and the others. b. The second group will determine who can be held liable on the notes and why.
Answer:
See the explanation for the answer.
Explanation:
To be considered a partnership, a business relationship must meet the following criteria;
1, the parties must have consented to form a partnership and to share in business's profits and losses.
2. The parties must jointly own the ventures
3. The parties must have equal right to manage the operation.
a)
Here, several months before the Olympics, F and his friends agree to sell Cajun food in Atlanta and applied for a license as a group. Although, a written partnership agreement was not sign until a couple of months later. F and his friends had a oral agreement to form an association and to work together towards a common goal until they bought the mobile kitchen. The written agreement contains specific divisions of profits and losses. Thus, a partnership existed between F and his friends.
(b) In signing the notes to buy the kitchen, N received an $8,000 check drawn on "C food" account and two promissory notes as well as P as the maker. which is partnership firm of F and his friends. F was acting on behave of this partnership in this deal. Therefore, partnership is liable on the notes.
Perez, Inc. recently completed 40,000 units of a product that was expected to consume six pounds of direct material per finished unit. The standard price of the direct material was $7.50 per pound. If the firm purchased and consumed 246,000 pounds in manufacturing (cost = $1,881,000), the direct-material quantity variance would be (with steps)
Answer:
$45,000 Unfavorable
Explanation:
The computation of direct-material quantity variance is shown below:-
Direct Material Quantity Variance = Standard Rate × (Actual Quantity - Standard Quantity Used for Actual Production)
= $7.50 × (246,000 - 40,000 × 6)
= $7.50 × (246,000 - 240,000)
= $7.50 × 6,000
= $45,000 Unfavorable
Therefore for computing the direct-material quantity variance we simply applied the above formula.
David considers himself to be a responsible and safe driver. He has never been in an accident and never received a speeding ticket. He is looking for the minimal amount of automobile insurance possible. Which type of coverage best fits David's goals
Answer:
The correct answer is letter "A": liability coverage.
Explanation:
Liability coverage is the type of insurance that takes care of damages of other parties involved in a car accident rather than its policyholder. Most liability coverages are inexpensive since the damages the insurance company covers have a limit. Vehicle damages and medical bills as a result of an accident are typical expenses covered by liability coverage. In some cases, it covers a rental car for the other party affected if the vehicle is not drivable after the collision.
Snoke Inc's current price is $100 and the price is expected to rise to $110 in one year. The dividends are paid annually and the next dividend will be $6.00 per share. What is the expected stock return?
Answer:
Expected stock Return = 16%
Explanation:
The return of a stock is calculated by subtracting ending stock price to ending stock price and add adding and income distributions made during the period and divide by the stock price at beginning
Current stock price = $100
Expected stock price = $110
Dividends = $6
So in Snoke Inc's the only income distributions are dividends
Return = Ending stock price - Current stock price + dividends/Current stock price
=110-100+6/100
=0.16/16%
You buy a share of stock, write a 1-year call option with X = $55, and buy a 1-year put option with X = $55. Your net outlay to establish the entire portfolio is $54. The stock pays no dividends. a. What is the payoff of your portfolio?
Final answer:
The payoff of a hedged portfolio created by purchasing stock, writing a call option, and buying a put option with the same exercise price and a net outlay will depend on the stock price at option expiration. The maximum loss is limited to the net outlay, and the potential gain occurs if the stock price is below the exercise price, limited to $1 per share.
Explanation:
The scenario involves building a hedged portfolio by purchasing a share of stock, writing a 1-year call option, and buying a 1-year put option, all with the same exercise price of $55, and a net outlay of $54. The payoff of this portfolio will vary depending on the stock's price at the expiration of the options.
If the stock's price is above $55, the call option will be exercised, and you will have to sell the stock at $55, leading to a capital gain equivalent to $55 minus the net outlay. However, since you are also holding the stock, any amount above $55 at which you could sell the stock is forfeited due to the call option.If the stock's price is below $55, the put option can be exercised, allowing you to sell the stock for $55 regardless of the lower market price. Your gain will be $55 minus the net outlay.If the stock's price is exactly $55, neither the call nor the put option will be exercised, and your position will be neutral, with the stock's value equal to the exercise price.Thus, the payoff of this portfolio will be a maximum loss of the net outlay ($54) if the stock price is at or above the exercise price, and a potential gain if the stock price falls below the exercise price, limited to the difference between $55 and the $54 outlay.
Suppose that nominal GDP was $9250000.00 in 2005 in Orange County California. In 2015, nominal GDP was $11750000.00 in Orange County California. The price level rose 2.50% between 2005 and 2015, and population growth was 4.25%. Calculate the following figures for Orange County California between 2005 and 2015. Give all answers to two decimals. a. Nominal GDP growth was %. Part 2 (1 point)FeedbackS Hit by. Economic growth was %.
The nominal GDP growth rate, reflecting the percentage change in nominal GDP from 2005 to 2015, is 27.02%. This growth signifies the increase in the economy's production of goods and services during the period.
The nominal GDP growth rate measures the percentage change in nominal GDP from one year to the next. For the period between 2005 and 2015:
Nominal GDP in 2005 was $9,250,000, and in 2015, it rose to $11,750,000.
The rise in the price level over the same period was 2.50%, and the population growth rate was 4.25%.
To calculate the nominal GDP growth rate:
[tex]\[ \text{Nominal GDP growth rate} = \left( \frac{\text{Nominal GDP in 2015} - \text{Nominal GDP in 2005}}{\text{Nominal GDP in 2005}} \right) \times 100 \][/tex]
Substituting the values:
[tex]\[ \text{Nominal GDP growth rate} = \left( \frac{11,750,000 - 9,250,000}{9,250,000} \right) \times 100 = 27.02\% \][/tex]
The economic growth rate, which represents the change in the economy's production of goods and services, is also calculated as 27.02% using the formula:
[tex]\[ \text{Economic growth rate} = \left( \frac{\text{Nominal GDP in 2015}}{\text{Nominal GDP in 2005}} - 1 \right) \times 100 \][/tex]
Both rates indicate a 27.02% growth in the economy over the specified period.
At Lone Star Construction, accident rates have been high over the last six months, so the owners are providing a training program to employees. The objective of the accident prevention program is to reduce the number and severity of accidents by 15 percent. The firm will compare accident rates before and after training in order to measure the success of the program. This is most likely an example of what level of T&D evaluation?
Answer:
According to Kirkpatrick's model of T&D Evaluation, the level which involves comparing before end after effect is Level 3
Explanation:
Training and development involves improving the effectiveness of organizations and the individuals and teams within them.
At Lone Star Construction, the type of training program proposed is an accident prevention program is to reduce the number and severity of accidents by 15 percent.
The level of T&D evaluation which involves comparing accident rates before and after training in order to measure success according to Kirk Patrick's model is Level 3.
Level 3 evaluation involves both pre- and post-event measurement and the degree to which participants' behaviors change as a result of the training and evaluates whether the knowledge and skills from the training are applied on the job.
The level of T&D evaluation depicted in Lone Star Construction's training program is the results-based criteria level, focusing on reducing accidents by 15 percent in measurable outcomes. Training effectiveness is gauged through practical comparisons of accident rates before and after the program, aligning with performance-oriented standards.
Explanation:The training program introduced at Lone Star Construction to reduce the number and severity of accidents by 15 percent can be evaluated at multiple levels. However, the most fitting level of Training and Development (T&D) evaluation for this scenario is results-based criteria. This particular level of evaluation focuses on the measurable outcomes such as reductions in accident rates, which is exactly what the firm intends to do in their comparison before and after the training. Studies, like those by Arthur, Bennett, Edens, and Bell (2003), have shown that training can be effective when evaluated on factors including behavioral changes and results-based criteria like productivity or safety improvements.
By setting a clear objective of reducing accidents by a quantifiable percentage, Lone Star Construction takes a performance-oriented approach. This approach allows the firm to measure the success of the training program in practical and definitive terms, which is in line with economic principles favoring standards that grant flexibility over strict command-and-control regulations. The fact that the firm will compare accident rates before and after the program is an indicative measure of the effectiveness of the training received by the employees.