Answer: When the price of the flour falls, the equilibrium price of the cream rises and the equilibrium quantity of the cream cheese also rises
Answer A is correct
Explanation:
if flour is cheaper, bagels are chepear so demand increases and both equilbrium price and equilibrium quantity rises
Final answer:
When the price of flour used to make bagels falls, the equilibrium price of cream cheese rises and the equilibrium quantity of cream cheese also rises, based on their status as complementary goods. Cross price elasticity of demand shows that bagels and cream cheese are complements, and income elasticity indicates that bagels are a normal good.
Explanation:
Given that bagels and cream cheese are complementary goods, a decrease in the price of flour, which is used to make bagels, would likely lead to an increase in the supply of bagels, thereby reducing their price. The lower price of bagels would increase the demand for cream cheese, as they are often consumed together, thus increasing the equilibrium quantity of cream cheese. However, the price change of cream cheese depends on the relative changes in supply and demand; if the demand increases by a higher proportion than the increase in supply, the price of cream cheese will rise. Conversely, if the supply increases more significantly than the demand, the price may fall. Assuming that the demand for cream cheese increases due to the increased consumption of bagels, the answer would be (A) Rises; rises.
To determine the cross price elasticity of demand for cream cheese with respect to the price of bagels, we use the given percentage changes: eAB = (-3%)/(10%) = -0.3. This negative value indicates that bagels and cream cheese are complements. Now, calculating the income elasticity of demand: ey = (+1%)/(10%) = +0.1. Since this is a positive value, it shows that bagels are considered a normal good.
Compute cost of goods sold for the period using the following information.
Finished goods inventory, beginning $ 374,000
Work in process inventory, beginning 84,500
Work in process inventory, ending 73,200
Cost of goods manufactured 961,300
Finished goods inventory, ending 319,000
Answer:
Cost of sold goods= $1,027,600
Explanation:
The cost of goods sold refers to the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the goods along with the direct labor costs used to produce the goods. It excludes indirect expenses, such as distribution costs and sales force costs.
COGS=Beginning Inventory+Production during period−Ending Inventory
We need to calculate the production during the period.
Cost of manufactured period= Beginning work in progress inventory+ direct materials + direct labor + factory overhead - ending work in progress
Cost of manufactured period=84,500+961,300-73,200
= $972,600
Cost of sold goods= $374,000 + $972,600 - $319,000
Cost of sold goods= $1,027,600
The Cost of Goods Sold (COGS) in this case is calculated using the formula: COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Substituting the given values, the COGS is found to be $1,016,300.
Explanation:The Cost of Goods Sold (COGS) can be computed using the formula: COGS = Beginning Inventory + Purchases – Ending Inventory. In this case, we use a slightly adjusted formula because of the given 'Cost of Goods Manufactured'. Our formula now becomes: COGS = Finished Goods Inventory, Beginning + Cost of Goods Manufactured – Finished Goods Inventory, Ending
By substituting the provided values, we get: COGS = $374,000 + $961,300 - $319,000 which equates to $1,016,300.
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In the Month of March, Chester Corporation received orders of 137 units at a price of $15.00 for their product Cell. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 92 units in March and the balance of 46 units in April. They received payment for 46 units in March, 46 units in April, and 46 units in May. How much revenue is recognized on the March income statement from this order
Answer:
earned revenue for March 1,380 dollars
Explanation:
For March, the revenue recognize will be for the 92 units delivered. As the remainder are unrealized. The cleint can cancel the orderor the company could not delvier the units. Be must remember the accounting follow principles of conservatisims for revenue recognition.
the amount will be 92 units x 15 dollars each = 1,380 dollars
The payment dates are irrelevant for accrual basis.
The revenue recognized on the March income statement is $1380.00.
Explanation:The revenue recognized on the March income statement from this order can be calculated by multiplying the number of units delivered in March with the price per unit. In this case, Chester Corporation delivered 92 units in March and the price per unit is $15.00. Therefore, the revenue recognized on the March income statement is $15.00 * 92 = $1380.00.
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The government rations the amount of gasoline that consumers can purchase. A consumer who would have purchased more than the rationed amount of gasoline will instead A. purchase less gasoline, more of other goods, and be on a higher indifference curve. B. purchase less gasoline, more of other goods, and be on a lower indifference curve. C. purchase more gasoline, less of other goods, and be on a higher indifference curve. D. purchase more gasoline, less of other goods, and be on a lower indifference curve.
Answer:
B. purchase less gasoline, more of other goods, and be on a lower indifference curve.
Explanation:
When the goverment rationing is at the left of the equilibrium position, the consumer will be forced to consume less of the limited good. Thus, we will consume more of other goods.
The indiference curve, will be lower thus, rationing binds the consumer and reduces his welfare. Because, without the restriction he will consume larger amount of gasoline.
Shown below are comparative balance sheets for Carla Vista Company. Carla Vista Company Comparative Balance Sheets December 31 Assets 2017 2016 Cash $ 165,172 $ 53,438 Accounts receivable 213,752 184,604 Inventory 405,643 459,081 Land 194,320 242,900 Equipment 631,540 485,800 Accumulated depreciation—equipment (160,314 ) (77,728 ) Total $1,450,113 $1,348,095 Liabilities and Stockholders’ Equity Accounts payable $ 94,731 $ 104,447 Bonds payable 364,350 485,800 Common stock ($1 par) 524,664 422,646 Retained earnings 466,368 335,202 Total $1,450,113 $1,348,095 Additional information: 1. Net income for 2017 was $225,897. 2. Depreciation expense was $82,586. 3. Cash dividends of $94,731 were declared and paid. 4. Bonds payable amounting to $121,450 were redeemed for cash $121,450. 5. Common stock was issued for $102,018 cash. 6. No equipment was sold during 2017. 7. Land was sold for its book value. Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000)).
Answer:
Cash Flow : $111,734
Please see details below:
Explanation:
Assets 2017 2016
Cash $165,172 $53,438
Accounts Receivable $213,752 $184,604
Inventory $405,643 $459,081
TOTAL CURRENT ASSETS $784,567 $697,123
Property and Equipment $471,226 $408,072
Land $194,320 $242,900
TOTAL ASSETS $1,450,113 $1,348,095
Accounts Payable $94,731 $104,447
Bonds Payable $364,350 $485,800
TOTAL CURRENT LIABILITIES $459,081 $590,247
TOTAL LIABILITIES $459,081 $590,247
Common Stock $524,664 $422,646
Retained Earnings $466,368 $335,202
TOTAL EQUITY $991,032 $757,848
TOTAL EQUITY + LIABILITIES $1,450,113 $1,348,095
Cash Flow Ind Method $111,734
Net Income $225,897
Depreciation $82,586
Dividends -$94,731
Bonds Payables -$121,450
Stock Issued $102,018
Land Sold -$48,580
Accounts Payables -$9,716
Inventory -$53,438
Accounts Receivable $29,148
The amount of Cash Flow by indirect method can be verified by the difference in the Cash on Balance Sheet between one year and other.
Assets 2017 2016
Cash $165,172 $53,438 = $111,734
Model Magic Manufacturing reported the following year-end balances: Beginning work in process inventory, $35,000; beginning raw materials inventory, $18,000; ending work in process inventory, $38,000; ending raw materials inventory, $15,000; raw materials purchased, $510,000; direct labor, $180,000; and manufacturing overhead, $75,000. What is the amount of total work in process for Model Magic for the current year?
Answer:
Cost of good manufactured= $765000
Explanation:
To calculate the cost of manufactured goods we need to use the following formula:
Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress
Beginning work in progress= $35000
Direct materials = beginning inventory + purchase - ending inventory= 18000 + 510000 - 15000= 513000
Direct labor= 180000
Manufactured overhead=75000
Ending work in progress= 38000
Cost of good manufactured= 35000 + 513000 + 180000 + 75000 -38000= $765000
During the past year, you had a portfolio that contained U.S. government T-bills, long-term government bonds, and common stocks. The rates of return on each of them were as follows: U.S. government T-bills 5.70 % U.S. government long-term bonds 8.20 U.S. common stocks 11.10 During the year, the consumer price index, which measures the rate of inflation, went from 100 to 110 (1982 – 1984 = 100). Compute the rate of inflation during this year. Round your answer to one decimal place.
Answer:
10.0%
Explanation:
Inflation is the sustained rise in prices of goods and services. A rate, on the other hand, is a coefficient that expresses the relationship between two magnitudes. Both concepts allow us to approach the notion of inflation rate, which reflects the percentage increase in prices in a certain time period.
The inflation rate is calculated by dividing the two consumer price indices (110 divided by 100) and subtracting one.
Rate of inflation = (110/100) - 1 = 1.1 - 1 = 0.1 = 10.0%
Hope this helps
The rate of inflation for the year was 10.0% when calculated based on the given change in the consumer price index, from 100 to 110.
Explanation:The question solicits a calculation of the rate of inflation during a given year based on changes in the consumer price index (CPI). To calculate the rate of inflation, you use the formula: ((CPI in the final year - CPI in initial year) / (CPI in the initial year)) * 100%.
In the situation described by the question, CPI moved from 100 to 110. So the rate of inflation calculation would be: ((110 - 100) / 100) * 100 = 10%. The rate of inflation for the year was 10.0% when rounded to one decimal place.
Remember, the rate of inflation measures the rate at which the general level of prices for goods and services is rising and subsequently, purchasing power is falling. It is important to keep inflation in mind when examining the return on investments.
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Marian Kirk wishes to select the better of two 10-year annuities, C and D. Annuity C is an ordinary annuity of $2,500 per year for 10 years. Annuity D is an annuity due of $2,200 per year for 10 years.
a. Find the future value of both annuities at the end of year 10, assuming that Marian can earn
(1) 10% annual interest and
(2) 20% annual interest.
b. Use your findings in part a to indicate which annuity has the greater future value at the end of year 10 for both the
(1) 10% and
(2) 20% interest rates.
In financial mathematics, the future values of two annuities at the end of year 10 with both 10% and 20% interest rates are calculated. Annuity C has values are $25,937.42 and $38,759.36 respectively, while annuity D's values at these rates are $28,531.16 and $42,635.23. Hence, Annuity D has the greater future value for both interest rates.
Explanation:The subject matter of this particular question involves financial mathematics, and more specifically, annuities. To determine the future value of annuities C and D at the end of year 10 with both 10% and 20% interest rates, we'll use the future value formula for an ordinary annuity and annuity due.
For the ordinary annuity (C), the formula is: FV = P * [ (1 + r)n - 1) / r ] where P = periodic payment, r = interest rate, n = number of periods. Meanwhile, for the annuity due (D), it's: FV = P * [ (1 + r)n - 1) / r ] * (1 + r).
Calculating these for each scenario gives:
At 10% annual interest, annuity C = $25,937.42 and annuity D = $28,531.16.At 20% annual interest, annuity C = $38,759.36 and annuity D = $42,635.23.Therefore, Annuity D has the greater future value at the end of year 10 for both 10% and 20% interest rates.
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Which of the following statements about profit maximizing firms in a competitive market is FALSE? A. Marginal revenue does not have to equal marginal cost. B. Firms earn no economic profit in the long run. C. p minus MC = 0 D. Price equals marginal revenue.
The FALSE statement about profit-maximizing firms in a competitive market is B. Firms earn no economic profit in the long run.
Explanation:Profit-maximizing firms in a competitive market aim to earn the highest possible profit by producing and selling goods or services at a quantity and price where marginal cost equals marginal revenue. In such markets, firms are price takers, meaning they cannot influence market prices. They operate efficiently, minimizing costs while maximizing output to achieve economic profit in the short run.
In the long run, economic profits attract new firms, leading to a zero economic profit equilibrium. In a competitive market, firms are price takers and therefore, they cannot earn economic profit in the long run. In the long run, new firms will enter the market and existing firms will exit if they are not making economic profit. This process will continue until firms earn only normal profit, which means that their total revenue equals their total cost.
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Just for the Halibut, Inc. designs and manufactures custom made fishing rods. On June 1, it had one job started with a beginning Work in Process balance of $578578. During June the job was finished and sold. Direct labor for the job in June was $75 and direct materials used were $60. Direct laborers are paid a wage rate of $15 per hour and manufacturing overhead is applied to production at a rate of $99 per direct labor hour. The company marks up costs 35% to determine the selling price. What was the selling price of the job?
Answer:
Price= $850,5
Explanation:
With the following information we need to calculate the price of the job:
Direct materials issued to production<= $60
Direct labor= $75
Manufacturing overhead= $99*direct hour=99*5=$495
Direct hours=$75/$15hour= 5hours
Total cost= 60+75+495= $630
Price= total cost*1,35=$850,5
There are 10 workers in Thailand and each can produce either 4 computers or 60 tons of rice. There are 20 workers in the United States and each can produce either 10 computers or 80 tons of rice. Draw the production possibilities curve for each country.
Answer:
The answer is in the image attached
Explanation:
We will ultiply the output per worker by the amount of workers to get the output for each country
United States:
20 workers x 10 output each = 200 computers
20 workers x 80 output each = 1,600 tons of rice
Thailand:
10 x 4 = 40 computer
10 x 60 = 600 tons of rice
Final answer:
To draw the production possibilities curves for Thailand and the U.S., plot the maximum output of computers and rice for each using their respective workforces. Thailand's PPF would have end points of 40 computers and 600 tons of rice, and the U.S.'s would have 200 computers and 1600 tons of rice. Normally, the curve should be bowed-out due to increasing opportunity costs, although it can be linear if opportunity costs are constant.
Explanation:
The question is asking to draw the production possibilities curve (PPF) for Thailand and the United States. A PPF shows the maximum output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed, given the technology at the time.
For Thailand, with 10 workers, the two end points of the PPF are 10 workers x 4 computers = 40 computers and 10 workers x 60 tons of rice = 600 tons of rice. For the United States, the end points are 20 workers x 10 computers = 200 computers and 20 workers x 80 tons of rice = 1600 tons of rice. To sketch the curves, you place computers on the horizontal axis and rice on the vertical axis. The curve will stretch from the point on the horizontal axis representing the maximum number of computers produced if all resources were allocated to computers production (40 for Thailand, 200 for the US), to the point on the vertical axis representing the maximum quantity of rice (600 tons for Thailand, 1600 tons for the US).
The PPF typically has a bowed-out shape due to the increasing opportunity cost of producing one additional unit of a good, which in turn is due to the fact that not all resources are of the same quality for producing all goods. However, if the production possibilities were to be assumed linear for both countries, the PPF would be a straight line.
In a world where comparative advantage dictates the production allocation, countries specialize in producing the goods for which they have the lowest opportunity cost and trade with each other. This allows the countries to consume beyond their own PPFs.
You’re on a product development team for Kard Foods. Your team’s mission is to develop new products targeted at the Hispanic/Latino market. You’re in your fourth meeting with the team, and you’re beginning to wonder whether you’ll ever manage to settle on a product. Two of your teammates are proposing an enchilada kit. Another team member thinks Kard should get into the dessert market and suggests churros. You believe that a Mexican-style sauce, mole perhaps, would be a more versatile option. You and your teammates are going around and around in circles while the leader attempts to refocus the team on its purpose and review the group’s ground rules for discussion. Which phase of team development does this situation describe?
Answer:
The situation fits well in the storming stage of the team development process.
Explanation:
Team development is based on five stages and storming is the second phase. The chances of conflicts and personality clashes is high during this stage as members tend to disagree with each other view points. The disagreements are also caused due to the fact that the team is newly formed and members are in the process making peace with each other.
The typical role of a securities firm in a public offering of securities is to 1) purchase the entire issue for its own investment. 2) place the entire issue with a single large investor. 3) spread the issue across several investors until the entire issue is sold. 4) provide all large investors with loans so that they can invest in the offering.
Answer: Option C
Explanation: Public offering refers to the offering made by a company to the general public. Securities firm are the firms which specializes in such kinds of transactions.
The job of such firm is to make sure that the offering takes place correctly and all the shares are sold at the determined price. These firms then charge their fees from the issuing company. The fees could be fixed or variable as per the sale made.
Hence the correct option is C.
Phildell Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax rate for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the total amount of taxes withheld from the Phoenix's earnings?Select one:a. $3,097.17b. $2,443.21c. $2,009.21d. $1,722.00e. $1,495.36
Answer:
Total deduction 2,443.21
Explanation:
8,288
x 6.20% Sccial Security 513.856
x 1.45% Medicate 120.176
x 6.20% FUTA&SUTA (for 7,000) 434
Income tax witheld 1,375.17
Total deduction 2,443.21
We will multiply his taxable wages for period by the tax rate.
We must noticew FUTA and SUTA applies fdor the first 7,000 only so we multiply by 7,000 not by 8,288
Final answer:
The total amount of taxes withheld from Phildell Phoenix's earnings for January is $2,443.21 after calculating the Social Security tax, Medicare tax, FUTA tax, SUTA tax, and adding the federal income tax.
Explanation:
To calculate the total amount of taxes withheld from Phildell Phoenix's earnings for the month of January, we need to consider the following: federal income tax, Social Security, Medicare, FUTA, and SUTA taxes. As specified, the Social Security tax rate is 6.2%, Medicare tax rate is 1.45%, FUTA tax rate is 0.8%, and SUTA tax rate is 5.4%. The federal income tax withheld is given as $1,375.17.
First, calculate the Social Security tax:
$8,288 x 6.2% = $513.86. Next, calculate the Medicare tax: $8,288 x 1.45% = $120.18. The FUTA and SUTA taxes only apply to the first $7,000 of Phoenix's pay. So, the FUTA tax is $7,000 x 0.8% = $56. The SUTA tax is $7,000 x 5.4% = $378.
Add these tax amounts to the federal income tax withheld:
Federal Income Tax: $1,375.17
Social Security Tax: $513.86
Medicare Tax: $120.18
FUTA Tax: $56
SUTA Tax: $378
Total Taxes Withheld = $1,375.17 + $513.86 + $120.18 + $56 + $378 = $2,443.21
Therefore, the total amount of taxes withheld from Phoenix's earnings is $2,443.21, which corresponds to option b.
Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the...
a. supply of loanable funds to the right, causing interest rates to fall.
b. supply of loanable funds to the left, causing interest rates to rise.
c. demand for loanable funds to the right, causing interest rates to rise.
d. demand for loanable funds to the left, causing interest rates to fall.
Answer:
The correct answer is option a.
Explanation:
Suppose the government used to tax incomes.
But a change in law will exempt tax for the first $5,000 of interest income.
This means that the income from providing loans will increase and the cost of supplying funds will decline. This will cause an increase in the supply of loanable funds. As a result, the supply for loanable funds curve will shift to the right. This rightward shift will cause the interest rate to fall.
An executive from a large merchandising firm has called your vice president for production to get a price quote for an additional 100 units of a given product. The vice president has asked you to prepare a cost estimate. The number of hours required to produce a unit is 8. The average labor rate is $17 per hour. The materials cost $14 per unit. Overhead for an additional 100 units is estimated at 30% of the direct labor cost. If the company wants to have a 40% profit margin, what should be the price to quote for 100 units?
Final answer:
To prepare a cost estimate for an additional 100 units, calculate the total direct costs and overhead, then apply the desired profit margin. The total cost of production for 100 units is $19,080, and to achieve a 40% profit margin, the quoted price for 100 units should be $31,800, or $318 per unit.
Explanation:
To calculate the price quote for 100 units of a product, we begin with the direct costs, which include labor costs and the cost of materials. The labor cost per unit is $17 per hour for 8 hours, totaling $136 per unit. The material cost per unit is $14. Therefore, the total direct cost is $136 (labor) + $14 (materials) = $150 per unit. For 100 units, the direct cost is $150 x 100 = $15,000.
The overhead cost is estimated at 30% of the direct labor cost, which is 0.30 x ($17 x 8 x 100) or $4,080. Adding the direct costs and the overhead cost, the total cost of production for 100 units is $15,000 + $4,080 = $19,080.
To achieve a 40% profit margin, the profit is calculated as a percentage of the total cost. To find the price to quote, we divide the total cost by (1 - profit margin), i.e., $19,080 / (1 - 0.40) = $31,800 for 100 units. This means the price per unit should be $31,800 / 100 = $318.
Hernandez Company has 560,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 10% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by
The retained earnings of Hernandez company decreased by $1.96 million during the year due to the declaration of both a 10% stock dividend and a $.50 per share cash dividend.
Explanation:Firms can reward their investors through issuing dividends, which can impact retained earnings. In Hernandez company's case, first the stock dividend needs to be calculated. A 10% stock dividend on 560,000 shares gives 56,000 new shares. Since stock dividends are a reallocation of retained earnings to common stock, the value at which the new shares are issued is important. Here, the market value is $30 per share, hence the reduction in retained earnings due to the stock dividend is 56,000 * $30 = $1,680,000.
Next, the cash dividend amount is also subtracted from retained earnings. With $.50 for each of the 560,000 shares, the cash dividend totals to 560,000 * $.50 = $280,000.
So the total decrease in retained earnings from both stock and cash dividends comes to $1,680,000 + $280,000= $1,960,000.
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Which of the following statements about marketing is TRUE? A) It is of little importance when products are standardized. B) It can help create jobs in the economy by increasing demand for goods and services. C) It helps to build a loyal customer base but has no impact on a firm's intangible assets. D) It is not needed in an Internet-fueled environment. E) It is seldom used by nonprofit organizations.
Answer:
B) It can help create jobs in the economy by increasing demand for goods and services
Explanation:
E) UNICEF and other nonprofit organizatin do marketing do raise funds
D) on internet there are tons of marketing campaing of different company's and styles.
C) if it build loyal customers, it is building a brand name which is an intangible assets
A) no company would spend on activities with no importance.
B) The marketing aims to increase the knowledge of the firm and sales or fund rasing, his will create jobs and therefore, helping the economy.
Marketing plays a crucial role in the economy by stimulating demand for goods and services, creating jobs, and contributing to a firm's intangible assets. Therefore, option B is correct.
Marketing is the process of identifying, anticipating, and satisfying customer needs and wants through the creation, communication, and delivery of valuable offerings.
It involves various activities such as market research, product development, pricing, promotion, and distribution, with the goal of creating and capturing customer value.
Marketing aims to attract, retain, and grow a customer base by understanding their preferences and providing superior value compared to competitors.
It encompasses both strategic planning and tactical execution to effectively reach target markets, build brand awareness, and foster long-term customer relationships.
Therefore, option B is correct.
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Consider four different stocks, all of which have a required return of 15 percent and a most recent dividend of $4.20 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, 0 percent, and –5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 10 percent growth rate thereafter. What is the dividend yield for each of these four stocks
Answer:
Dividend yield for W = 5%
Dividend yield for X = 15%
Dividend yield for Y = 20%
Dividend yield for Z = 4.6%
Explanation:
For a constant growth stock [tex]Price =\frac{D1}{r-g}[/tex]
If r is made subject of formula; r=[tex] \frac{D1}{Price}+g[/tex] = div yield + growth rate
For Stock W, given r = 15% and g= 10%; dividend yield = 15%-10%=5%
For Stock X, given r = 15% and g= 0%; dividend yield = 15%-0%=15%
For Stock Y, given r = 15% and g= -5%; dividend yield = 15%-(-5)%=20%
For Stock Z, the price of the stock today is calculated as follows:
Price of the stock today = [tex]\frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{P2}{(1+ke)^2}[/tex].
where P2= [tex] \frac{D3}{ke-g}[/tex]
Price of the stock today = [tex]\frac{4.2(1.2)}{(1+0.15)^1}+\frac{4.2(1.2)^2}{(1+0.15)^2}+\frac{4.2(1.2)^2(1.1)}{(0.15-0.1)(1+0.15)^2}[/tex]=109.57
Therefore dividend yield =[tex]\frac[D1}{Price}[/tex] = [tex]\frac{4.2(1.2)}{109.57}= [/tex]4.6%
Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply.
(A) The principal amount of a perpetuity is repaid as a lump-sum amount
(B) In a perpetuity, returns-m the form of a series of identical cash flows-are earned.
(C) A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue Indefinitely Into the future.
(D) A perpetuity continues for a fixed time period.
Answer:
(C) A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue Indefinitely Into the future.
Explanation:
a false
the principal is never repaid on a perpetuity
d false the perpetuity is for an indefinite period of time.
definition:
the perpetuity consist in a principal which yield a return over time indefinite. this return do not include any amortization in the principal neither principal installment are done through the investment or loan life
Pastureland Dairy makes cheese, which it sells at local supermarkets. The fixed monthly cost of production is $4,000, and the variable cost per pound of cheese is $0.21. The cheese sells for $0.75 per pound; however, the dairy is considering raising the price to $0.95 per pound. The dairy currently produces and sells 9,000 pounds of cheese per month, but if it raises its price per pound, sales will decrease to 5,700 pounds per month. Should the dairy raise the price?
Answer:
The income and margin of safety decrease under the proposed scenario.
It should not raise the price to 0.95. It should analize for another price.
Explanation:
Analysis under the current scenario:
Income
(sales price - variable price ) x units sold - fixed cost = income
(0.75 - 0.21) x 9,000 - 4,000
0.54 x 9,000 - 4,000 = 860
Break even point:
4,000/0.54 = 7,407 pounds
Margin of Safety;
9,000 - 7,407 = 1,593 pounds
Analysis under the proposed scenario:
Income
(0.95-0.21) x 5,700 - 4,000 =
0.74 x 5,700 - 4,000 = 218
Break even point:
4,000/0.74 = 5,405
Margin of Safety:
5.700 - 5,405 = 295
Raising the price of cheese will increase the profit for Pastureland Dairy.
Explanation:To determine whether Pastureland Dairy should raise the price of its cheese, we need to compare the costs and revenues at the current price and the potential higher price. At the current price of $0.75 per pound, the dairy sells 9,000 pounds of cheese per month, resulting in total revenue of $6,750 ($0.75 x 9,000). The variable cost per pound is $0.21, so the total variable cost is $1,890 ($0.21 x 9,000). The fixed cost is $4,000.
If the price is raised to $0.95 per pound, the dairy would sell 5,700 pounds of cheese per month, resulting in total revenue of $5,415 ($0.95 x 5,700). The total variable cost would be $1,197 ($0.21 x 5,700). The fixed cost remains the same.
Comparing the two scenarios, at the current price, the dairy has a total profit of $870 ($6,750 - $1,890 - $4,000). If the price is raised, the total profit would be $1,218 ($5,415 - $1,197 - $4,000). Therefore, raising the price would result in a higher profit for the dairy.
If the inflation rate is 5 percent and a $1000 bank deposit increases in one year to $1120, then the real interest rate for that deposit is...
a. 12 percent
b. 12.5 percent
c. 7 percent
d. 7.2 percent
Answer:
c. 7 percent
Explanation:
The real interest rate will be net of the effect of inflation.
In this case we are givne with the principal and the amount.
We will solve for nominal rate first:
amount/ principal - 1 = rate
1,120/1,000 - 1 = 0.12
Now, we calculate the real rate of return. we subtract the inflation from the nominal to achieve the real rate.
nominal - inflation = real rate
0.12 - 0.5 = 0.07
The real interest rate will be of 0.07 = 7%
You can buy property today for $2.2 million and sell it in 5 years for $3.2 million. (You earn no rental income on the property.) a. If the interest rate is 10%, what is the present value of the sales price?
Answer:
PV of the sales price $1,986,948.23
Explanation:
We will calcualte the present value of the sale price using the present value of a lump sum formula:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 3,200,000
time 5 years
rate 10% = 10/100 = 0.1
[tex]\frac{3200000}{(1 + 0.1)^{5} } = PV[/tex]
PV $1,986,948.2338
This indicates the 3,200,000 in five years are equivalent to 1,986,948.23 dollars Thus, this investment is not profitable as the property will be purchased at 2,200,000
Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?
Answer:
A money market account
Explanation:
A money market account is an interest-bearing account at a bank or credit union.
Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc. is currently selling for $20.00 a share. Bad Boys, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. The Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys, Inc.’s cost of capital?
Answer:
Ans. Bad Boys, Inc.’s cost of capital = 9.09%
Explanation:
hi, we need to find the cost of all the debt instruments of the problem, let´s start by stating that the cost of hte tax-deductable debt is 8% (equals to the coupon rate of the bond).
Preffered Stock
In order to find the cost of the preffered stock, we need to use the following formula.
[tex]Cost P.Stock =\frac{Dividend}{Price} =\frac{2.5}{25}=0.1[/tex]
Cost of Preffered Stock= 10%
Common Stock
To find the cost of the common stocks, we have to use the following formula.
[tex]CommonStock=\frac{Div1+Price*GrowthRate}{Price}[/tex]
[tex]CommonStock=\frac{1.5+20*0.05}{20} =0.125[/tex]
Common Stock Cost = 12.5%
If tax rate is 35%, the cost of capital of Bad Boys, Inc is found by using the following formula.
[tex]CostCapital=Bond(CostBond)(1-T)+P.Stock(costP.Stock)+C.Stock(Cost.C.Stock)[/tex]
[tex]CostCapital=0.45(0.08)(1-0.35)+0.05(0.1)+0.5(0.125)=0.0909[/tex]
The cost of capital is =9.09%
Best of luck.
The cost of capital for Bad Boys, Inc., considering their mixed financing strategy and marginal tax rate, is calculated to be approximately 9.09%. The calculation considers the costs of debt, preferred stock, and common equity, all weighted according to their proportion in the capital structure.
Explanation:To calculate Bad Boys, Inc.’s cost of capital, we must compute the costs of debt, preferred stock, and common stock, then weight them according to their proportions in the firm's capital structure. The cost of debt (interest rate) is 8%, but because interest expense is tax deductible, we multiply this by 1 minus the tax rate: 8% * (1 - 35%) = 5.2%. The cost of preferred stock (dividend rate) is the dividend divided by the price per share: $2.50 / $25 = 10%. For common stock, we use the Gordon Growth Model to find the cost of equity: (next year’s dividend / current stock price) + growth rate of dividends: ($1.50 / $20) + 5% = 12.5%.
Now, we must weight these costs according to the proportions of capital: 5.2% * 45% (debt) + 10% * 5% (preferred stock) + 12.5% * 50% (common equity) = 2.34% + 0.5% + 6.25% = 9.09%. Thus, Bad Boys, Inc.'s cost of capital is estimated to be 9.09%. Understanding this concept allows companies to make informed decisions about future investments and financial management practices.
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Flounder Corporation began operations on January 1, 2020 when $230,000 was invested by shareholders of the company. On March 1, 2020, Flounder purchased for cash $101,000 of debt securities that it classified as available-for-sale. During the year, the company received cash interest of $8,900 on these securities. In addition, the company has an unrealized holding loss on these securities of $13,100 net of tax. Determine the following amounts for 2020: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2020). (Enter negative amounts using either a negative sign preceding the number e.g. -15 or parentheses e.g. (15).)
Answer:(a) $8,900
(b) -($4,200)
(c) -($13,100)
(d) -($13,100)
Explanation:
Given that,
Amount invested by shareholders = $230,000
Debt securities purchased for cash = $101,000
Received cash interest on securities = $8,900
unrealized holding loss on these securities = $13,100
(a) Net Income = $8,900(Cash interest received)
(b) Comprehensive Income = Net Income - unrealized holding loss
= $8,900 - $13,100
= -($4,200)
(c) Other Comprehensive Income = unrealized holding loss
= -($13,100)
(d) Accumulated other comprehensive income:
Ending Balance of other comprehensive income = Beginning Balance + During this year
= $0 + (-$13,100)
= -($13,100)
You've decided to try your hand at project management in the entertainment industry. You're working on a movie production and the phases are performed sequentially. The team has just completed the storyboard phase of the project. Which of the following is true? A. The storyboard is a deliverable that marks the end of the phase. B. The storyboard phase marks the end of the Initiating process group, and the next phase of the project should begin. C. The writing phase can begin once the majority of the storyboard phase is complete. D. The division of phases and determining which processes to use in each phase is called tailoring.
Answer:
A. The storyboard is a deliverable that marks the end of the phase.
Explanation:
As in the information provided, it is clearly stated that the entire film making is properly divided into separate phases.
And thus, each phase itself is a deliverable component.
Therefore, when it is said that the storyboard is completed, it is clear that a particular phase, which is a individual deliverable component is completed.
Correct option is,
Statement A
A facility management pro forma cash flow statement has beginning accounts receivable and payable balances of ¥18,000,000 (Japanese Yen) and ¥20,000,000. The facility manager estimates ending balances for accounts receivable will decrease and accounts payable will increase. Based on these projections, what is the combined effect on cash available?
Answer:
Cash available will increase.
Explanation:
Decrease in of Account Receivable in terms of cash:
The company will collect quicker from his customers. Theerfore the collection cycle will decrase and more cash will be available for use
Increase of Account Payable in terms of cash:
The company will delay payment for longer period of time. The payment cycle will increase. Less cash will be used as the obligation are settle in longer periods
Overall:
The combined effect will increase cash available, as the cash inflow increase form the reduced collection cycle. And also, the cash outflow decrease from the increase in the payment cycle
Income Statement Talbot Enterprises recently reported an EBITDA of $7.5 million and net income of $1.875 million. It had $1.95 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.
Answer:
D&A= 2425000
Explanation:
Giving the following information, we need to find the charge for depreciation and amortization:
EBITDA= 7500000
Interest=1950000
Net income= 1875000
t=0,40
We know that:
EBITDA
Depreciation & Amortization Expense (-)
=Operating Income or EBIT
Interest (-)
Other Expenses (-)
=EBT (Pre-Tax Income)
Income Taxes (-)
=Net Income
First, we need to calculate the amount of tax:
Tax= [net income/(1-t)]- net income= 1250000
EBIT= Net profit + Tax + Interest= 1875000 + 1250000+ 1950000= 5075000
Now we can calculate the amount of depreciation and amortization:
D&A= EBITDA- EBIT= 7500000 - 5075000= 2425000
In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. What amount will Erin have to invest to give her a one-fourth interest in the capital of the partnership if no goodwill or bonus is recorded?
A. $45,000
B. $50,000
C. $60,000
D. $66,000
Answer:
C. $60,000
Explanation:
For computing the Erin investment, we have to assume the things which is shown below:
Let us assume Erin investment be X
We know that Erin would contributed 1 ÷ 4 investment in partners capital
So, the equation would be
1 ÷ 4 × ( $140,000 + $40,000 + X) = X
1 ÷ 4 × ($180,000 + X) = X
$45,000 + 1 ÷ 4X = X
So, $45,000 = 3 ÷ 4X
So, X = $45,000 × 4 ÷ 3
= $60,000
A= The amount of tangible assets contributed by the new partner into the partnership
B= The amount of capital credited to the new partner
C= Total Capital of the partnership before the admission of a new partner
D= Total capital of the partnership after the admission of the new partner
Refer to the above information. Which statement below is correct if a new partner's goodwill is recognized upon contributing assets into the partnership?
A. B = A and D > C + A
B. B < A and D < C + A
C. B > A and D = C + A
D. B > A and D > C + A
Answer:
A. B = A and D > C + A
Explanation:
This will be explain better with an example
If there is 2 partners with 65,000 each
An a partner acquired 10% of a partnership for 20,000
Then the partnership worth will be: 20,000/0.1 = 200,000
But the capital will be 65,000 + 65,000 + 20,000 = 150,000
Then, there is a goodwill that will be recognize and increase the other partners capital accounts.
So, the amount credited for the new partner will be equal to his investment. (20,000 cash debit, partner 20,000 credit)
but the company's total capital will be higher than the sum of the capital before admission (130,000+20,000 = 150,000 while the capital is 200,000)