At the beginning of a recent year, JetBlue's assets were $6,549 million and its equity was $1,546 million. During the year, assets increased by $44 million and liabilities decreased by $64 million. What was JetBlue's equity at the end of the year

Answer:

The market price of the security will be $42.86 when the Beta doubles and all other variables remains constant.

Explanation:

Given information -       Current market price    = $60

                                      Risk free rate                 = 6%

                                      Expected rate of return = 10%

                                      Market risk premium      = 8%

In this question we have to find the market price of the security when beta doubles it self, the formula which we can use to take out the market price is,

 \frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}

But here we have to first find out both the dividend and new expected rate of return and it is also told here that beta doubles itself but we don't know what the initial beta is, so lets take out what beta is , using formula for expected rate of return

Expected rate of return = Risk free rate + Beta x Market risk premium

                 10%               = 6% + Beta x 8%

                 4%                 = Beta x 8%

           Beta                  = 4% / 8%

           Beta                  = 1% / 2%    = .01 / .02 = .5

Now doubling the beta = .5 x 2 = 1

Putting this value of beta in the expected rate of return formula to calculate the new expected rate of return,

New expected rate of return = 6% + 1 x 8%

                                                = 14%

Now we just have to find the dividend , which we can by using formula of

Market price =  \frac{DIVIDEND}{\:EXPECTED\:RATE\: OF\: RETURN}

$60               = Dividend / 10%              (10% = .1)

$60 x .1          = Dividend

$6                  = Dividend

Now we have both dividend and new market rate of return and we just have to put these values in the formula

 \frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}

New market price = $6 / 14%            (14% = .14)

                              = $6 / .14

                              = $42.86

Answer: $42.85 per share

Explanation:

Given that,

The market price of a security(P) = $60 per share

expected rate of return(ERR) = 10%

the market risk premium(MRP) = 8%

risk-free rate(RFR) = 6%

ERR = RFR + Beta × (MRP)

10 = 6 + Beta(8)

Beta = [tex]\frac{4}{8}[/tex]

= 0.5

In this question, it is given that constant dividend paid in perpetuity

current market price per share, P = [tex]\frac{DPS}{ERR}[/tex]

Where, DPS - dividend per share

60 × 0.1 = DPS

$6 per share = DPS

If beta doubles then,

Beta = 0.5 × 2

= 1

∴ Required rate of return = 6 + 1 × 8

= 14%

So, market price of security = [tex]\frac{DPS}{Required rate of return}[/tex]

= [tex]\frac{6}{0.14}[/tex]

= $42.85 per share

Answer:

Billy's mom increases his weekly allowance by $ 55 . As a result, Billy increases the number of apps he downloads on his smartphone.

If with increase in income demand increases, the good will be a normal good. Thus, apps that billy downloads are normal goods.

Susan gets a 15 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are: Inferior goods

Here with increase in income, the demand for a commodity falls, the so called commodity is a inferior good. Thus, in this case frozen pizzas are inferior goods.

Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is: Inferior goods

If there is a fall in income and thus demand increases, the good is inferior. Thus, in this case generic cereal is an inferior good.

Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are: Normal goods

If there is a decrease in income and thus demand falls, the good is normal. Thus, smoothies as commodity in this case will be refereed to as normal goods.

Final answer:

Smartphone apps are normal goods, frozen pizzas are inferior goods, generic cereal is a normal good, and smoothies are inferior goods.

Explanation:

According to the information provided, we can determine if a good is a normal good or an inferior good by analyzing the relationship between income and quantity consumed.

Answer:

Supply curve for loanable funds would shift, leading to a fall in the equilibrium interest rate.

Explanation:

If the people are convinced that saving is important and start saving more, the  supply of loanable funds will increase. As a result the supply curve will shift to the right. This shift in the supply curve will be accompanied with a decline in the equilibrium interest rate.

So, the correct answer is: supply; downwards.

1. Cash received from the sale of equipment is $39,400. 2. Depreciation expense recorded on equipment in 2017 is $110,000. 3. Cost of new equipment purchased in 2017 is $185,000.

1. The cash received from the sale of equipment can be determined by calculating the difference between the book value of the equipment and the loss on the sale. In this case, the book value of the equipment is $43,000 and the loss on the sale is $3,600. Therefore, the cash received would be $43,000 - $3,600 = $39,400.

2. The depreciation expense recorded on equipment during 2017 can be calculated by taking the difference in the accumulated depreciation of equipment between 2017 and 2016. In this case, the accumulated depreciation in 2017 is $106,000 and in 2016 it is $216,000. Therefore, the depreciation expense for 2017 would be $216,000 - $106,000 = $110,000.

3. The cost of new equipment purchased by Anders during 2017 can be determined by taking the difference in the net plant assets (equipment and buildings) between 2017 and 2016. In this case, the net plant assets in 2017 is $89,000 (equipment) + $286,000 (buildings) = $375,000, and in 2016 it is $69,000 (equipment) + $121,000 (buildings) = $190,000. Therefore, the cost of new equipment purchased during 2017 would be $375,000 - $190,000 = $185,000.

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Anders Company received $39,400 from the sale of equipment. A total depreciation expense of $72,000 was recorded on equipment during 2017. The cost of new equipment purchased in 2017 was $135,000.

Given the information in the comparative balance sheets and additional details of the equipment sale, we can answer the following questions:

How much cash did Anders receive from the sale of equipment?

The book value of the equipment sold was $43,000, and it was sold at a loss of $3,600. The cash received is the book value minus the loss, which can be calculated by:

43,000 - 3,600 = $39,400

How much depreciation expense was recorded on equipment during 2017?

The accumulated depreciation on equipment decreased from 2016 to 2017, suggesting that some assets were removed (in this case, sold). To find out how much was for depreciation apart from the disposition of equipment, we add the accumulated depreciation related to the sold equipment (original cost $225,000 minus book value $43,000) to the ending accumulated depreciation:

225,000 - 43,000 = 182,000

Then, the increase in depreciation is the beginning accumulated depreciation minus the ending accumulated depreciation, including the adjustment for sold equipment:

216,000 - (106,000 + 182,000) = $72,000.

What was the cost of new equipment purchased by Anders during 2017?

To find the cost of new equipment purchased, we start with the beginning equipment cost, subtract the cost of equipment sold, add the ending equipment total, and then subtract the original equipment cost total:

285,000 - 225,000 + 195,000 - 285,000 = $135,000.

Answer: 12.6 %

Explanation: The rate of growth that a company expects to maintain for a long term is called sustainable growth rate. It is denoted by G. Sustainable

growth rate helps the analysts to determine at what stage the company is in its life cycle.

.

FORMULA :-

GROWTH = Retention ratio *  return on equity

                 = ( 1 - Dividend payout ratio) * return on equity

                 [tex]= (1-\frac{5}{50} \%) * 14 \%[/tex]

                 = 0.9 * 0.14

                = 12.6 %

The expected growth rate of Arts and Crafts Inc.'s dividends is calculated using the Gordon Growth Model. Taking into account the current price of stock, the expected dividend, and the required rate of return, the growth rate comes out to be 4%.

To find the expected growth rate of the company’s dividends, the formula to use is the Gordon Growth Model. This model is as follows:

P = D / (r - g)

Where:
P represents the price of the stock today ($50 in this case),
D represents the expected dividend ($5 in this case),
r represents the required rate of return (14% in this case), and
g represents the rate of growth.

First, rearrange the formula to solve for g:

g = r - (D / P)

Then you substitute the given numbers:

g = 0.14 - (5 / 50)
g = 0.14 - 0.10
g = 0.04, or 4%

So, the expected growth rate of Arts and Crafts Inc.'s dividends is 4%.

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Answer:

The correct answer is that Mark's opportunity cost of holding cash is higher

Explanation:

Opportunity cost is nothing but the value of the next best alternative that a person has given up , when that person had the choice of selecting between any number of options. You will not find this cost to be shown in your financial  statements or balance sheets but this cost is very important in telling which option is the best to use or more profitable for a person or company.

In this question the reason why Mark uses ATM more frequently is because for him the opportunity cost for him in holding more money in hand is high as compared to the Jim whose opportunity cost of holding more money in hand is less , which means he is not not going to miss out on much of the opportunity. The reason why the opportunity cost is high for Mark is because of high rate of interest in his country , if Mark holds more money in hand then the amount of money he is going to lose on interest that he would have gained by keeping the money in bank will be high which means his opportunity cost of holding money is high.

Answer:

The correct answer is adjusted trial balance.

Explanation:

Financial statements include specific information taken directly from the adjusted trial balance. Adjusting entries have been recorded in the general journal and posted to the ledger accounts.

Answer:

b. 5.2

Explanation:

First we need to Calculate the Income before interest and taxes,

so we have to add the interest expense to get EBIT

then we calculate the TIE Times Interest Earned

[tex]TIE = \frac{EBIT}{interest \: expense} \\\\EBIT = EBT + Interest \: expense\\\\EBIT = 845,000,000 + 200,000,000\\EBIT = 1,045,000,000\\\\TIE = \frac{1,045,000,000}{200,000,000} = 5.225[/tex]

For rounding reasons, option "B" should be correct.

The best production method is determined by evaluating the costs of labor and capital for each method. Method 1 is the most cost-effective initially and remains so even if labor costs increase or if the cost of capital decreases.

When evaluating the best production method, we must consider the costs of labor and capital for each method. With labor costing $100/unit and capital costing $400/unit:

Thus, Method 1 is the most cost-effective initially. If the cost of labor rises to $200/unit, the costs change:

Even with increased labor costs, Method 1 remains the least expensive. Finally, if the cost of labor remains at $40/unit, but the cost of capital decreases to $50/unit, the total cost for each method would be:

In this last scenario, Method 1 should be used as it is still the most cost-effective.

Answer:

Inventory at December 31th, 2017 = $85,000

Marketable securities at December 31th, $88,000

Explanation:

Inventory $100,000 WON (foreing currency)

securities $100,000 WON (foreing currency)

At April 1  The currenct exchage is 0.85

So their are posted at 100,000 x 0.85 = 85,000 Dollars

Because Inventory is carried at cost under the lower-of-cost-or-net realizable rule. their valuation doesn't change, because the WON never went down the 0.85 so their net realizable was higher than cost so

Inventory at December 31th, 2017 = $85,000

The marketable securities will be adjusted at the current exchange because they are a short term investment

Marketable securities at December 31th, $88,000

Answer:

Sales                                  2,250,000

variable cost                      1,250,000

25 x 50,000

Gross Profit                      1,000,000

Fixed Cost

Selling & Administrative    300,000

Operating income         700,000

interest expense

10,000

non- controllable expenses 10,000

non-controllable income   690,000

income taxes                      200,000

net income                        490,000

Explanation:

the interest expense is not part of the operating cost, those cost are not part of the business activity. It is on the non-controllable expenses

The budgeted multiple-step income statement for North Company shows a gross profit of $1,000,000, operating income of $700,000, and a net income of $490,000 for the year ending December 31, 2017.

Budgeted Multiple-Step Income Statement

To prepare the budgeted income statement for North Company for the year ending December 31, 2017, we will use the data provided:

Sales (50,000 units at $45 each) = $2,250,000

Cost of Goods Sold (50,000 units at $25 each) = $1,250,000

Gross Profit (Sales - Cost of Goods Sold) = $1,000,000

Selling and Administrative Expenses = $300,000

Operating Income (Gross Profit - Selling and Administrative Expenses) = $700,000

Interest Expense = $10,000

Income Before Taxes (Operating Income - Interest Expense) = $690,000

Income Taxes = $200,000

Net Income (Income Before Taxes - Income Taxes) = $490,000

The budgeted multiple-step income statement measures North Company's financial performance for the specified period by detailing gross profit, operating income, and net income.

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Answer:

52.12

Explanation:

The present value of an annuity of $9.05 for 9 years at a 10% will be $52.12

So the current share price of Burnett Corp must be $52.12 to fullfil the requirement of a 10% return

Answer:

The answer is $52.12.

Explanation:

We apply the dividend discount model to come up with the price for share.

The price for share under the dividend discount model is the present value of all its future dividend discounted at the required rate of return.

As the share has 9 annual equal dividend payments of $9.05 each year and the required rate is 10%, we have the price of the share is calculated by applying the annuity formula as:

(9.05/0.1) * [1 - 1.1^(-9) ] = $52.12.

So, the current share price is $52.12.

Answer:

$12.5(at least) would be needed to induce Lisa for driving Uber instead of working on web designing.

Explanation:

Lisa makes $25 per job on web designing from her home and in the first hour she can complete 2 additional jobs. But as per the question by the eight hour she can only do .5 jobs which means that for the eight hour she would earn -

                        .5 x $25 = $12.5 ( per job she gets $25)

So if Lisa goes on doing work as uber driver she is going to loose $12.5 in the eight hour , so we can say that if Lisa is offered $12.5 hourly rate to work as cab driver then she is not going to miss out on the money she would have made as web designer from home.

Lisa would need to make more than $12.5 per hour driving for Uber in her 8th hour to make it more financially beneficial than working her job as a web designer.

If Lisa can make $25 per job in an hour's work as a web designer, and she is capable of completing 2 jobs in the first hour but only an additional 0.5 jobs by the eighth hour, we need to determine the opportunity cost of her working as an Uber driver instead. The opportunity cost of the eighth hour of work as an Uber driver would be the income she could potentially make in web designing, which is $25*0.5 = $12.5. Therefore, the hourly rate she would need to earn driving for Uber to make it more productive than web designing would need to be higher than $12.5.

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Answer: HRM's responsibility to serve as a strategic partner

Explanation: an strategic partner is the person with whom a long-term agreement is reached for sharing of physical and/or intellectual resources in achievement of defined common objective.

Answer:

The correct answer would be option C, $26000

Explanation:

There are a lot of costs associated with the production, Advertisement, Sales, etc of a product. These costs acts as the overheads for the company. If there is a cost which cannot be capitalized into Inventory, Prepaid expenses, or fixed assets, it is called as the Period Cost. Good examples of Period costs are Advertisement expenses, Selling Expenses, etc.

In the given question, Office Rent is the such type of a cost which cannot be capitalized into above mentioned accounts. Office Rent comes under the period cost category. So the correct answer is $26000.

Final answer:

The total period costs for Castillo Corporation are $26,000, which is the cost for Office Rent. This is the only non-manufacturing cost provided in the data.

Explanation:

The total period costs for Castillo Corporation consist of the costs that are not directly tied to the manufacturing process, which include selling and administrative expenses. In the given data, the only cost that is not directly related to manufacturing is Office Rent, amounting to $26,000. Hence, the total period costs are $26,000. Costs such as Direct Materials Used, Wages to Line Workers, and Indirect Materials Used are all part of the manufacturing process, and therefore, are considered product costs, not period costs.

Answer:

The direct labor rate variance is negative 16,500

Explanation:

8,000 units at 2hours per unit = 16,000 hours x $12 per hour = $192,000 standart cost for the job

actual 15,000 hours and $196,200 total labor cost

labor cost per hour = 196,200/15,000 = 13.1 actual rate per hour

( standar rate - actual rate ) x actual hours = rate variance

(12 - 13.1) x 15,000 = -1.1 x 15,000 = -16,500

Answer:

The option B is a correct answer which is useful in assessing the liquidity position of a company.

Explanation:

Defensive Interval Ratio :

The defensive interval ratio (DIR) is that ratio which measures that by how many days can company operate without fixed assets or non current assets.

It is a type of liquidity ratio which shows that company can pay its current obligations without impacting long term obligations. It is always display in days.

Return on Stockholders' equity :

The return on stockholder equity is a profitability ratio which represents how much the company is earning profit during a particular period.

Liquidity ratio:

The liquidity ratio is that ratio which shows the relationship between current assets and current liabilities. It describes that how the company can meet its short term obligations with its available current assets.

Thus, by above explanation it is clear that the option B is a correct answer which is useful in assessing the liquidity position of a company.

The defensive-interval ratio is the only ratio among the options provided that is useful in assessing the liquidity position of a company. It measures the company's ability to cover daily operational expenses with its liquid assets. Return on stockholders' equity is related to profitability rather than liquidity.

To assess the liquidity position of a company, certain financial ratios are used. The correct answer to which ratio is useful in assessing this is B. Defensive-interval ratio only. The defensive-interval ratio (also known as the defensive interval period) measures a company's ability to operate without access to additional external financial resources. It calculates how many days a company can cover its cash expenses without the need for additional cash inflows. This ratio is computed by dividing liquid assets by daily operational expenses.

On the other hand, the return on stockholders' equity (ROE) measures a company's profitability and how efficiently it uses its equity capital. It is not a measure of liquidity but of profitability and return on investment. To calculate ROE, you divide net income by average shareholders' equity.

Therefore, for assessing liquidity, we focus on ratios that evaluate how well a company can meet its short-term obligations, like the defensive-interval ratio. Ratios dealing with profitability or return on investment, such as ROE, are not relevant to liquidity assessments.

Answer:

RE break point = $24500

Explanation:

21,000 net income

30% OF Earnings as dividends

21,000 x 30% = 6,300 dividends

Retained Earnings (assuming no previous beginning value)

21,000 - 6,300 = 14,700

RE break point = 14,700/0.6 = 24500

What does the $24,500 mean?

This mean that the company can raise financing for this ammount without changing their capital structure (60% equity 40% debt)

If the company wants to finance for more, it will need to raise new shares or chance their capital structure, and therefore the WACC will change

Answer:

It should buy the subassemblies

as it generates a 4,000 cost savings.

Explanation:

DM 1

DL 10

VFO 5

FO 8

total 24

make cost:

4,000 x 24 = 96,000

buy cost:

4,000 x 17 = 68,000

fixed cost:

8 per unit - 2 allocated in other product: 6 per unit

4,000 x 6 = 24,000

Total cost 92,000

Current cost - alternative cost:

96,000 - 92,000 = 4,000 COST SAVINGS

Answer:

the general welfare will be the sum of consumer surplus and producer surplus.

Explanation:

The consumer and producer surplus assessment serves to measure the overall efficiency of the market, which in turn is associated with overall well-being. An efficient market is one in which both consumers and producers have the incentive to negotiate and effect trade.

Consumer surplus is the difference between the amount he or she is willing to pay and how much he or she actually pays for the product. This surplus is positive when the amount paid is less than the amount for which the consumer would be willing to pay.

Similarly, the producer's surplus is the difference between the market price and the price at which the seller is willing to produce and sell. When the producer's surplus is positive, it means that he sells the product for a price higher than the minimum value that would stimulate him to produce.

Thus, the general welfare will be the sum of consumer surplus and producer surplus.

Answer: Low, high, opportunity, reservation.

Explanation: When the price of a good or service is low enough, it will encourage consumers to buy. However, the price also has to be high enough to encourage producers to sell. In this way, both parties benefit from the sale. In order to calculate producer surplus, sellers must understand their direct costs and their opportunity costs, whereas consumers must consider their reservation price based on the value they place on a particular good or service.

Answer:

The correct answer is B) $29,200

Explanation:

Px is total receipts for the month including sales taxes

Px' is total receipts for the month not  including sales taxes

t=is tax rate

Taxes is  Px' *tax rate

Px=Px' + taxes

Px=Px' + Px' *tax rate

Px=Px'*(1+tax rate)

We need to know Px'

So,  Px'=Px/(1+tax rate)

Replacing,  

Px'=30,660/1,05=$29,200

Final answer:

To determine Julie's Boutique's sales before sales tax from the total receipts of $30,660 with a 5% tax rate, we divide the total by 1.05, resulting in sales of B) $29,200.

Explanation:

The question is asking to determine Julie's Boutique's sales for the month excluding the sales tax. The total receipts including sales taxes is $30,660, and the sales tax rate is 5%.

To find the sales amount before tax, we can set up an equation where the total receipts (R) equal the sales (S) plus the sales tax (0.05 * S), which is R = S + 0.05 * S. Since R is $30,660, the equation becomes $30,660 = S + 0.05 * S. This can be simplified to $30,660 = 1.05 * S.

To find S, we divide the total receipts by 1.05:

$30,660 / 1.05 = $29,200

Therefore, Julie's sales for the month before sales tax were B) $29,200.

Answer:

a. Investment decision b. financial asset c. Public corporation d. Corporation e. Treasurer f. the cost incurred from conflicts of interest between managers and shareholders

Explanation:

a. Expenditure on research and development will be categorized as an investment decision, as the return on this is not certain. Such investment may or may not increase productivity or find a new product line.

b. A bank loan is classified as a financial asset because it is a non physical, liquid asset. A real asset is a physical asset which has some intrinsic value, for instance, land, equipment etc.

c. A public corporation is a company owned by government whose shares are publicly traded, so if it's listed on stock exchange the company will be a public corporation.

d. In partnerships, the partners share profits and liability equally. While in the corporations there is limited liability.

e. The controller supervises over accountants and oversees the preparation of reports, auditing and accounting functions of a company. While the treasurer manages the external interactions, such as interactions with bankers, investors and share holders.

f. Agency cost is an internal expense. It arises when an agent acts on behalf of principal. It arises from core inefficiencies, for instance,it arises when interest of managers of the company and the shareholders is in conflict.

The terms 'investment decision,' 'financial asset,' 'public corporation,' 'corporation,' 'the treasurer,' and 'agency cost' are correct answers in the context of finance and business vocabulary related to decisions, assets, corporations, roles, and costs.

The vocabulary check for a student studying basic concepts in finance and business might look like this:

Answer:

The given statement is True. Online Aggregators are more comprehensive than the home listing service that real estate agents use.

Explanation:

Online aggregators are the programs or sites in the digital space which collects related items of content and link them and show them through their sites or programs.

Online aggregators puts the most relevant information that people are looking for. They link different aspects with each other to help people take decisions, like in this question, regarding the real estate.

Real Estate agents don't tell certain information to the client due to some laws or some insecurities of loosing the clients, but online aggregators make each and everything clear and even finds links between the choices of homes and display them on their sites. For example, an online aggregator may list the houses that are near to schools, hospitals, community service centers and also put the ranking of those schools and other services in that area, they tell the crime rate in that area, security, etc. But all such things are usually kept hidden by the real estate agents due to some overly restricted codes in their agreement of the licence from the government.

It is true!

Further Explanation:

Online aggregators:

A substance aggregator is an individual or association that assembles web content (or potentially at times applications) from various online hotspots for reuse or resale.  

online aggregators more extensive than the home posting administration:

Online Aggregators are more exhaustive than the home posting administration that realtors use. Clarification: Online aggregators are the projects or locales in the computerized space which gathers related things of substance and connection them and show them through their destinations or projects.  

Aggregators:

In the computerized fund environment, aggregators work as the paste that enables substances to like organizations, governments and benefactors effectively associate with an assortment of installment stages like portable cash administrations or banks and the clients who pay by means of those administrations.  

The reason for an aggregator:

A substance aggregator is an individual or association that assembles Web content (as well as at times applications) from various online hotspots for reuse or resale.  

Aggregator model:  

An aggregator model is a type of E-Commerce in which a site does not store or distribution center its own merchandise, yet rather gathers, or totals, data on a few products and ventures and combinations them into a solitary stage.

Subject: business

Level: college

Keywords: online aggregators, online aggregators more extensive than the home posting administration, Aggregators, The reason for an aggregator, Aggregator model.

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Answer:

Given:

Firm with an average Price/Earning-Growth(PEG) ratio of 1.6, the stock price is Overpriced, because it has Price/Earning-Growth(PEG) ratio of 1.

where;

PEG = [tex]\frac{Price/Earning}{Earning\:Grtowth\:Rate}[/tex]

Price/Earning ration = [tex]\frac{Share Price}{Earning per share}[/tex]

Reason: It can be stated that a PEG ratio of less than 1 denotes that the stock is a good investment since it is below its “fair value.”

If a PEG ratio is greater than 1 this will further means that stock is relatively expensive,and overpriced.

Therefore, the correct option is (b) Overpriced, because it has Price/Earning-Growth(PEG) ratio of 1.

Answer:

Given:

Monopolist earns = $60 million

The opportunity cost of funds = 18 %

The monopolist will earn = $20 million after another firm enters the market

The present value of the monopolist’s current and future earnings if entry occurs can be computed using the following formula:

[tex]\Pi_{MD} = Earning Annualy + \frac{Earning After firm enters}{Opportunity cost}[/tex]

[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]

[tex]\Pi_{MD} = 60 + \frac{20}{0.18}[/tex]

[tex]\Pi_{MD} = 171.1[/tex]

The present value of the monopolist’s is $171.1 million

If the monopolist can earn $35 million indefinitely by limit pricing,then the present value of the monopolist’s current earnings:

[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]

[tex]\Pi_{MD} = 60 + \frac{35}{0.18}[/tex]

[tex]\Pi_{MD} = 254.4[/tex]

∴ If the monopolist can earn $35 million indefinitely by limit pricing, then they should do so.

Final answer:

The present value of the monopolist’s earnings when entry occurs is the $60 million for the first year plus the discounted value of the $20 million annual profit thereafter. When compared to the present value of $35 million annual profits indefinitely achieved through limit pricing, the monopolist can make a strategic decision by comparing the present values of both scenarios.

Explanation:

To solve for the present value of the monopolist's current and future earnings with another firm entering the market, we must discount the future profits to the present value using the opportunity cost of funds, in this case, 18%. The monopolist earns $60 million initially and $20 million annually thereafter. The present value of earning $60 million indefinitely is calculated by dividing $60 million by the opportunity cost rate, which is $60 million / 0.18. However, since entry occurs, we calculate the present value of the first year's profit of $60 million plus the perpetuity starting from the second year at $20 million annually, discounted by the 18% rate.

The first year's profit is:

PVfirst year = $60 million

The perpetuity starting from the second year is:

PVsecond year onwards = $20 million / 0.18

The total present value when another firm enters the market is:

PVtotal = PVfirst year + PVsecond year onwards / (1 + 0.18)

In the case of limit pricing, the monopolist would earn $35 million indefinitely. To calculate the present value of these earnings:

PVlimit pricing = $35 million / 0.18

To decide if the monopolist should pursue limit pricing, we compare the present value of earnings with limit pricing to that of earning $60 million initially and $20 million thereafter when there is entry.

Answer:

The cost of land is $408,500.

Explanation:

For calculating the amount of cost of land . Following things is need to be considered.

1. Cash Paid - $ 65,000

2. Notes Payable - $330,000

3. Property tax - $2,500

4. Title Insurance - $6,000

5. Land leveling cost   - $ 5,000

Other costs are irrelevant because it is not related to the land.

The cost of land includes those cost which is related to the land. It can be any transactions, any tax or anything. Whether the cost is additional also, but it should be associated to the land.

So,

Cost of land = Cash paid + notes payable + property tax + title insurance + land leveling cost  

= $ 65,000 + $330,000 + $2,500 + $6,000 + $ 5,000

= $408,500

Hence, the cost of land is $408,500.

Answer: Option D

Explanation: Short term investments can be defined as the liquid investments that are expected to be sold or be converted into cash within a particular time period, generally a year or operating cycle of the company. Primary examples are commercial paper and US treasury bills.

These are generally used to have cash availability at  short term notice in the entity or for some future project funding investment. For bad debt buffering specific provisions are made.

Businesses hold short-term securities as a substitute for cash and as a temporary repository for cash for specific purposes, but not typically as a buffer against bad debt losses.

Businesses hold short-term securities for a couple of key reasons. A. As a substitute for cash and B. As a temporary repository for cash being accumulated for a specific purpose are both correct answers. Holding short-term securities is a liquidity management strategy. These securities are easily convertible to cash, providing businesses with flexibility to cover short-term expenses or opportunities. It is not typically done as a buffer against bad debt losses, which is more associated with accounting practices and credit risk management.

Answer: the correct answer is C) the diminishing marginal product of capital.

Explanation:

Inputs include labor and raw materials. The law of diminishing marginal returns states that when an advantage is gained in a factor of production, the marginal productivity will typically diminish as production increases. This means that the cost advantage usually diminishes for each additional unit of input produced.

To maximize total revenue, a theater should charge a lower price for afternoon shows and a higher price for evening shows due to the slightly higher price elasticity of demand for afternoon screenings. This tactic leverages higher consumer price sensitivity during afternoons to increase ticket sales, while maintaining profits during evenings when demand is less elastic.

When considering how a theater should price its tickets to maximize total revenue, understanding the price elasticity of demand is crucial. Since the price elasticity of demand is greater than 1 for both afternoon and evening shows, it indicates that demand is elastic for both time slots. A highly elastic demand means that consumers are very responsive to price changes. Following the principles of elasticity, a business should lower prices when demand is elastic to increase the total quantity sold and thus increase total revenue. In this case, given that the demand elasticity is slightly higher for afternoon shows (22.28) than for evening shows (20.85), this could suggest that afternoon show consumers are slightly more price-sensitive than evening show consumers.

Therefore, to maximize revenue, the theater should pursue option c: charge a lower price for the afternoon shows and a higher price for the evening shows, holding other things constant. This strategy would capitalize on the higher elasticity during the afternoon to sell more tickets when a price drop leads to a disproportionately larger increase in quantity sold. During the evening, where demand is slightly less elastic, a higher price could be maintained as the quantity sold would not decrease by as much in response to a price increase.

Final answer:

Using a normal costing system, Financial Planning Partners Inc. will show that the year-end accounting records have applied $336,000 in indirect costs for the year after calculating the predetermined overhead rate and applying it to the actual direct labor hours worked.

Explanation:

To calculate the year-end accounting records for indirect costs using a normal costing system, we need to calculate the predetermined overhead rate (POR) and then apply it to the actual direct labor hours (dlh) worked during the year.

Step 1. Calculate the predetermined overhead rate:

Budgeted indirect costs: $300,000

Budgeted direct labor-hours: 50,000 dlh

Predetermined overhead rate (POR) = Budgeted indirect costs ÷ Budgeted direct labor-hours

POR = $300,000 ÷ 50,000 dlh

POR = $6 per dlh

Step 2. Apply the POR to the actual direct labor hours:

Actual direct labor-hours: 56,000 dlh

Applied indirect costs = POR × Actual dlh

Applied indirect costs = $6 per dlh × 56,000 dlh

Applied indirect costs = $336,000

Therefore, the year-end accounting records will show that the company applied $336,000 in indirect costs for the year.