Answer:
10.72%
Explanation:
Firstly, we need to calculate cost of equity using capital pricing model (CAPM):
Cost of equity = Risk-free rate + Beta x Market risk premium
= 4% + 1.7 x 7% = 15.9%
Note: Treasury bill rate is used as a proxy for risk-free rate in this case.
Then, we will calculate weighted average cost of capital (WACC) as below:
Weighted average cost of capital = Debt weight in capital structure x Pre-tax cost of debt x (1 - tax rate) + Equity weight in capital structure x Cost of equity
= [780/(780 + 780)] x 7% x (1 - 21%) + [780/(780 + 780)] x 15.9%
= 10.72%
Note: Yield to maturity on long-term debt is used as a proxy for pre-tax cost of debt in this case. Weights used in WACC calculation have to be based on market value.
So, the company WACC is 10.72%.
As of 2014, Fischer Corp. has $10 par, 4% preferred stock, 6,000 shares outstanding, and $1 par common stock with 38,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2012.
If the company wants to distribute $3 per share to the common stockholders in 2014, what is the total amount of dividends that the company must pay in the current year?
A) $ 60,000
B) $118,800
C) $ 54,000
D) $114,000
Answer:
B) $118,800
Explanation:
The computation of the total amount of dividends are shown below:
= Preference dividend for year 2013 + Preference dividend for year 2014 + dividend for common stock
= (6,000 shares × $10 × 4%) + (6,000 shares × $10 × 4%) + (38,000 shares × $3)
= $2,400 + $2,400 + $114,000
= $118,800
Simply we added the preference dividend for 2013 and 2014 and then added the common stock dividend so that the accurate value can come.
The major problem addressed by the warehouse layout strategy is: O requiring frequent close contact between forklift drivers and item pickers. O balancing product flow from one work station to the next. O locating the docks near a convenient access point to the closest highway minimizing difficulties caused by material flow varying with each product. O addressing trade-offs between space and material handling.
Answer:
addressing trade-offs between space and material handling.
Explanation:
Warehouses are the one which store goods for the daily needs and that of every nature, raw material, work in process or finished. It basically targets to store goods so that there is no shortage of goods in case of need.
Since the cost of warehouses are huge because of the area and other facilities they offer, there is a standard planning which a company performs to meet the requirements of goods and also shall be cost effective.
There for the warehouses face this problem of balancing in between the cost related to material handling and that of space available.
The primary challenge addressed by warehouse layout strategy is managing the trade-offs between storage space and material handling. Just-in-time delivery systems and trade site locations heavily influence warehouse positioning due to factors such as proximity to suppliers and transportation hubs.
Explanation:The major problem addressed by the warehouse layout strategy is addressing trade-offs between space and material handling. A well-designed warehouse layout should ensure that there is a balance in the use of space and the efficiency of moving materials around. Central to this issue is how the docks are positioned in relation to access points to highways, optimizing material flow, and how close or far suppliers are in terms of just-in-time delivery systems. Warehouses have to be designed to handle the varying material flow that comes with different products, which includes understanding Weber's Location Model and considering land costs and transportation methods.
Advanced technology, transportation methods, and effective labor policies play a crucial role in reducing congestion in shipping networks and maintaining effective supply chains, particularly in times of national emergencies. The practice of just-in-time delivery, such as used by car manufacturers, indicates the importance of having parts delivered when needed, which influences the location of suppliers and warehouses.
Trade site locations are also a critical consideration, as historically cities that offer multiple transportation modes grow larger due to the convenience of breaking bulk. Therefore, considering site factors such as transportation intersections is key for business logistics.
William is a single writer (age 35) who recently decided that he needs to save more for retirement. His 2019 AGI before the IRA contribution deduction is $66,000 (all earned income). (Leave no answer blank. Enter zero if applicable.)If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution William can make in 2018?
Answer:
$ 3,850
Explanation:
Please see attachment
William can make a contribution to his IRA, but due to his AGI of $66,000 and the phase-out rules for singles participating in an employer-sponsored plan in 2018, he would only be eligible for a partial deduction, not the full $5,500 limit.
Explanation:Given William's situation, if he decides to participate in an employer-sponsored plan, his maximum deductible IRA contribution for the year 2018 would be influenced by the IRS rules on IRA contributions and deductions.
For the year 2018, the standard IRA contribution limit was $5,500 for individuals under 50 years of age. This limit is applicable to all contributors regardless of their participation in an employer-sponsored plan. However, deduction limits based on modified adjusted gross income (MAGI) apply for those participating in an employer-sponsored retirement plan.
Since William's AGI is $66,000 and assuming he is covered by an employer-sponsored retirement plan, his ability to take a full deduction for his IRA contribution is phased out between $63,000 and $73,000 for single filers in the year 2018. Therefore, William would be able to make a partially deductible contribution to his IRA, but not the full $5,500. To determine the exact deductible amount, he would need to calculate it based on the IRS phase-out calculation, which reduces the deductible amount as one's income increases within the phase-out range.
Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second annuity will pay him $15,000 per month for the following 10 years (years 11 through 20). Assuming a discount rate of 6%, what is the present value of the annuities?
Answer:
$1,643,344.308
Explanation:
These are Ordinary annuities because if it is not mentioned that the payments are made at the beginning of the year which is the case for Annuity Due.
You can use a financial calculator to find the Present value of these two ordinary annuities.
PV of Annuity 1 from (yr1-yr10)
Recurring payment; PMT = 10,000
Total duration ; N = 10 *12 = 120 months
Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%
Future value ; FV = 0 (use 0 if annuity variable is not given )
then CPT PV= $900,734.533
PV of Annuity 1 from (yr11-yr20)
This will happen in 2 steps sice it is a forward-starting annuity;
Recurring payment; PMT = 15,000
Total duration ; N = 10 *12 = 120 months
Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%
Future value ; FV = 0 (use 0 if annuity variable is not given )
then CPT PV( at t=10)= $1,351,101.80
Next find the PV of $1,351,101.80 at t=0;
$1,351,101.80 /(1.005^120) = $742,609.7754
Next, find the sum of these two PVs to find the answer;
=$900,734.533 + $742,609.7754
PV = $1,643,344.308
The present value of Bob's two annuities, given a discount rate of 6%, is approximately $1,637,896. This is calculated by discounting the future payments of each annuity back to their value in today's dollars.
Explanation:The subject of this question is annuities, specifically the concept of the present value of future cash flows. The present value calculation discounts future cash flows back to today's dollars using a specific discount rate, in this case, 6%. In this example, Bob's first annuity pays $10,000 per month for the next 10 years and is calculated using the present value of an ordinary annuity formula: PV = Pmt * [(1 - (1 + r)^-n) / r], where 'Pmt' is the monthly payment, 'r' is the monthly interest rate, and 'n' is the number of periods. For Bob's first annuity, this results in a present value of approximately $890,471. The second annuity's present value needs to be calculated with a delay of 10 years as it starts in the 11th year. The calculation is first done as if it starts today (resulting in approximately $1,335,707), then discounted back an additional 10 years, giving a present value of approximately $747,425. Summing these two amounts provides the total present value of approximately $1,637,896.
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Benny Company budgeted 610 pounds of direct materials costing $18.00 per pound to make 8,000 units of product. The company actually used 650 pounds of direct materials costing $30.00 per pound to make the 8,000 units. What is the direct materials quantity variance?
Answer:
-$720 unfavorable
Explanation:
The computation of the material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $18 per pound × (610 pounds - 650 pounds)
= $18 per pound × -40 pounds
= -$720 unfavorable
Simply we take the difference between the standard quantity and the actual quantity and then multiply it by the standard price so that the correct value can come
The direct materials quantity variance for Benny Company is $720 Unfavorable, calculated by multiplying the excess quantity of materials used (40 pounds) by the budgeted price per pound ($18.00).
The direct materials quantity variance is calculated by comparing the difference between the actual quantity of materials used and the budgeted amount, and then multiplying by the budgeted price per unit. The formula is as follows:
Direct Materials Quantity Variance = (Actual Quantity - Budgeted Quantity) × Budgeted Price
In this case, the budgeted quantity is 610 pounds, the actual quantity used is 650 pounds, and the budgeted price is $18.00 per pound. The variance calculation would be:
Variance = (650 pounds - 610 pounds) × $18.00/pound
Variance = 40 pounds × $18.00/pound
Variance = $720 Unfavorable
Since the company used more materials than it budgeted for, the variance is considered unfavorable.
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st.
Answer:
The machine's first year (partial) depreciation expense was $1,400
Explanation:
Harding Co. uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of machine − Salvage Value )/Useful Life = ($14,000 - $2,000)/5 = $2,400
Depreciation Expense of each month = $2,400/12 = $200
In the first year, from June 1st through December 31st, the machine had been used for 7 months.
Depreciation Expense = Depreciation expense of each month x 7 = $200 x 7 = $1,400
Answer:
$1400
Explanation:
Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10; direct labor, $14, variable overhead $3 and fixed overhead, $8. An outside supplier has offered to sell the product to Paxton for $32. Compute the net incremental cost or savings of buying the component.
Answer:
$5 per unit
Explanation:
In this question, we compare the total cost and outside supplier cost which are shown below:
Total cost = Direct material per unit + direct labor per unit + variable overhead per unit
= $10 + $14 + $3
= $27
And, the outside supplier cost is $32
So, the incremental cost would be
= $32 - $27
= $5 per unit
The fixed cost would remain unchanged. So, we do not consider it.
Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) ______________.
A. Both recoverability test and fair value test
B. Recoverability test but not fair value test
C. Not recoverability test but fair value test
D. Neither recoverability test nor fair value test
Answer: The correct answer is "C. Not recoverability test but fair value test".
Explanation: The impairment test to be used is Not recoverability test but fair value test. To determine whether intangibles of indefinite life have deteriorated and must present another value in their balance sheet, they must implement the fair value test.
Adams Corporation’s balance sheet indicates that the company has $510,000 invested in operating assets. During 2018, Adams earned operating income of $52,020 on $1,020,000 of sales. Required Compute Adams’s profit margin for 2018. Computed Adams turnover for 2018. Compute Adams’s return on investment for 2018. Recompute Adams’s ROI under each of the following independent assumptions:
(1) Sales increase from $1,020,000 to $1,224,000, thereby resulting in an increase in operating income from $52,020 to $55,080.
(2) Sales remain constant, but Adams reduces expenses, resulting in an increase in operating income from $52,020 to $54,060.
(3) Adams is able to reduce its invested capital from $510,000 to $408,000 without affecting operating income.
Answer:
Profit Margin = 5.1%
Asset Turnover Ratio = 2:1
ROI (Normal) = 10.20%
ROI (Scenario 1) = 10.80%
ROI (Scenario 2) = 10.60%
ROI (Scenario 3) = 12.75%
Explanation:
Normal Scenario
Profit Margin = Operating Income ÷ Sales Revenue for the year
Profit Margin = $52,020 ÷ $1,020,000 = 5.1%
Asset Turnover Ratio = Sales Revenue ÷ Operating Assets
Asset Turnover Ratio = $1,020,000 ÷ $510,000 = 2 : 1
Return on Investment = Operating Income ÷ Operating Assets
Return on Investment = $52,020 ÷ $510,000 = 10.20%
Scenario 1
Return on Investment = $55,080 ÷ $510,000 = 10.80%
Scenario 2
Return on Investment = $54,060 ÷ $510,000 = 10.60%
Scenario 3
Return on Investment = $52,020 ÷ $408,000 = 12.75%
The following information is available for the year ended December 31:
Beginning raw materials inventory $3,000
Raw materials purchases 4,200
Ending raw materials inventory 2,700
Office supply expense 1,600
The amount of raw materials used in production for the year is:
A. $4,500.
B. $1,500.
C. $7,200.
D. $2,900.
E. $4,000
Answer:$4500
Explanation:3000+ 4200 = 7200 - 2700 = 4500
Which of the following statements is correct about the provision of public goods?
Check all that apply.
O The government always provides the exact types of public goods that everyone in the society wants.
O It is hard for the government to decide the appropriate amount of public goods to produce because people have differing preferences regarding such goods.
O Majority rule is the most efficient way to determine the amount of public goods a society should produce.
Answer:It is hard for the government to determine the appropriate amount of public goods to produce because people have differing preferences regarding such goods.
Explanation:
Public goods refers to essential goods or services that are freely made available to the populace by the government, private groups or individuals.
Due to the large numbers of people, high cost, differences in preference the government cannot meet all the needs for public goods.
Majority rules may not be the most efficient way to determine the provision of public goods, for people are more likely to strive for their personal interest even if it antagonize the general interest. The needs of the people should be measured in providing public goods.
Final answer:
The provision of public goods is complex due to their nonexcludable and nonrival nature, causing it to be difficult for the government to gauge the exact public demand and appropriately allocate resources. Tools like surveys and cost-benefit analysis are used to estimate and address collective demands, which illustrates why not all statements about public goods and government provision can be deemed accurate.
Explanation:
When considering the provision of public goods, there are several accurate statements:
This statement is correct because determining the optimal quantity and type of public goods to provide is challenging due to varying individual valuations and the nonexcludable, nonrival nature of these goods. The government tends to use tools like surveys to ascertain the collective demand and applies cost-benefit analysis to accommodate the diverse needs and preferences within a society.
However, the assertion that the government always provides the exact types of public goods that everyone in the society wants is not correct due to the diverse needs and preferences among the population. Similarly, using majority rule to determine the amount of public goods a society should produce isn't always the most efficient method since it may not accurately capture the value all individuals place on different public goods.
Consider three bonds with 6.8% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a.What will be the price of each bond if their yields increase to 7.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 4 Years 8 Years 30 Years Bond price$ $ $ b.What will be the price of each bond if their yields decrease to 5.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 4 Years 8 Years 30 Years Bond price$ $ $
Answer:
a. What will be the price of each bond if their yields increase to 7.8%?4 Years : $966,73 (see example)
8 Years : $942,09
30 Years : $885,26
b. What will be the price of each bond if their yields decrease to 5.8%?4 Years : $1,034.81 (see example)
8 Years : $1,062.59
30 Years : $1,140.64
Explanation:
Principal Present Value = F / (1 + r)^t
Coupon Present Value = C x [1 - 1/(1 +r)^t] / r
This is an example for 4 years, 7,8%, to the others years only change "t".
The price of this bond it's $740,50 + $226,23 = $966,73
Present Value of Bonds $740,50 = $1,000/(1+0,0780)^4
Present Value of Coupons $226,23 = $68 (Coupon) x 3,33
3,33 = [1 - 1/(1+0,0780)^4 ]/ 0,0780
This is an example for 4 years, 5,8%, to the others years only change "t".
The price of this bond it's $798,10 + $236,71 = $1,034.81
Present Value of Bonds $798,10 = $1,000/(1+0,0580)^4
Present Value of Coupons $236,71 = $68 (Coupon) x 3,48
3,48 = [1 - 1/(1+0,0580)^4 ]/ 0,0580
Buttner Company borrows $88,500 on September 1, 2014, from Harrington State Bank by signing an $88,500, 12%, one-year note.
How much is accrued interest at December 31, 2014?A.) $2,655
B.) $10,620
C.) $3,540
D.) $4,425
Answer:
C.) $3,540
Explanation:
The loan borrowed is the Principal = $88,500
Interest rate per year = 12% or 0.012 as a decimal
Interest accrued formula = Principal * rate * time
Note: time will be from Sep1 - Dec 31 = 4 months or [tex]\frac{4}{12}[/tex]years
Interest accrued = 88,500 * 0.012 * [tex]\frac{4}{12}[/tex]
Interest accrued = 3,540
Therefore, as of December 31st, 2014, $3,540 would be the interest accrued hence choice C is correct.
Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $25,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $26,625,925. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.*
2. Journalize the entries to record the following:*
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
Answer:
Explanation:
1. CHECK THE FIRST IMAGE ATTACHED.
the cash received from the issuance of bond is debited with $26,625,925. The premium on bonds payable is credited with $1,625,925 and bonds payable is credited with $25,000,000.
Working notes:
Calculation is given below:
Premium on Bonds Payable = Cash − Bonds Payable
=$26,625,925−$25,000,000
=$1,625,925
2a and b. CHECK THE SECOND AND THIRD IMAGE.
It is given to record the semi-annual interest for June-30 and amortization of the premium in the journal entry. The interest expense is calculated by multiplying the interest rate with the value of bonds and dividing it by 2. Since the interest rate is given for one year, to calculate the semi-annual interest rate, only half of the year should be taken. The half of the year can be 6/12 or 1/2. The premium on amortization is calculated by dividing the premium on bonds by 20. Therefore, the calculated amortization premium on bonds payable is $81,296. The interest expense is calculated by subtracting the premium on bonds payable from cash. As per the debit and credit rules, the cash account is credited with $1,250,000, the premium on bonds payable is credited with $81,296, and bonds payable is credited with $1,168,704.
Therefore, the premium on bonds payable is $1,625,925.
The journal entries for Campbell Inc.'s bond issuance and premium amortization were provided, including the issuance of bonds and the first two interest payments. The premium amortization was calculated using the straight-line method.
Explanation:Campbell Inc.'s situation is a typical case in accounting for bonds issuance and premium amortization. Here are the necessary journal entries:
Issuance of Bonds: Dr. Cash $26,625,925, Dr. Premium on Bonds Payable $1,625,925, Cr. Bonds Payable $25,000,000. First Interest Payment (Dec 31, Year 1): Dr. Interest Expense $1,125,000 ([$25,000,000 x 10%]/2), Dr. Premium on Bonds Payable $81,296 ([$1,625,925/20]), Cr. Cash $1,250,000 ([$25,000,000 x 10%] / 2). Second Interest Payment (Jun 30, Year 2): Dr. Interest Expense $1,125,000, Dr. Premium on Bonds Payable $81,296, Cr. Cash $1,250,000
The calculation of the premium amortization is straight line, dividing the total premium by the number of payments over the life of the bond (10 years x 2 payments per year).
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The financial statements for Highland Corporation included the following selected information: Common stock $ 1,600,000 Retained earnings $ 900,000 Net income $ 1,000,000 Shares issued 90,000 Shares outstanding 80,000 Dividends declared and paid $ 800,000 The common stock was sold at a price of $30 per share. What is the amount o f additional paid-in capital?
What was the amount of retained earnings at the beginning of the year?
How many shares are in treasury stock?
Answer:
Please see attachment .
Explanation:
Please see attachment .
The amount of retained earnings at the beginning of the year is $700,000 and numbers of shares that are in treasury stock is 10,000 shares.
Retained earningsa. Beginning Retained earnings:
Beginning Retained earnings=Endingn retained earnings-Net income+Dividends
Beginning Retained earnings=$900,000-$1,000,000+$800,000
Beginning Retained earnings=$700,000
b. Number of shares:
Treasury stock=Issued shares-Outstanding shares
Treasury stock=90,000-80,000
Treasury stock=10,000 shares
Inconclusion the amount of retained earnings at the beginning of the year is $700,000 and numbers of shares that are in treasury stock is 10,000 shares.
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Hotel Cortez is an all-equity firm that has 125000 shares of stock outstanding at a market price of $44.46 per share. The firm's management has decided to issue $80000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 4.2 percent. What is the break-even EBIT? Ignore taxes.
Answer:
EBIT = $3387.42
Explanation:
At break even EBIT, both EPS are the same
EPS in case of all equity firm = EPS of leverd firm
EPS in case of all equity firm = EBIT/ 125.000
EPS of leverd firm = (EBIT-Interest) / Shares outstanding
(Shares outstanding= 125.000-80.000/44.46 = 1012.14 )
EPS of leverd firm = (EBIT - 4.2 %* 80.000 )/ 1012
=(EBIT - 3360)/ 1012
Hence
EBIT/ 125.000= (EBIT - 3.360)/ 1.012
1012 EBIT = 125.000 EBIT - 420.000.000
EBIT = $3387.42
Bet'R Bilt Bikes just announced that its annual dividend for this coming year will be $2.42 a share and that all future dividends are expected to increase by 2.5% annually. What is the market rate of return if this stock is currently selling for $22 a share?
Answer:
13.50%
Explanation:
The computation of the market rate of return is shown below:
Current selling price for share = Annual dividend ÷ (Market rate of return - growth rate)
$22 = $2.42 ÷ (Market rate of return - 2.5%)
(Market rate of return - 2.5%) = $2.42 ÷ $22
(Market rate of return - 2.5%) = 11%
So, the market rate of return would be
= 11% + 2.5%
= 13.50%
The market rate of return for Bet'R Bilt Bikes, given the current annual dividend of $2.42 per share, an expected annual dividend growth rate of 2.5% and the current share price of $22, is calculated to be approximately 13.5%.
Explanation:Your question is about determining the market rate of return for Bet'R Bilt Bikes, given the annual dividend and the expected annual dividend growth. To do this, we use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The formula is as follows:
Market Rate of Return = (Annual Dividend payment/Price per share) + Annual Growth Rate
Plugging in the values from your question, we get:
Market Rate of Return = (2.42 / 22) + 0.025 = 0.135 or 13.5%
So, the market rate of return for Bet'R Bilt Bikes, given the information provided, is approximately 13.5%.
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The social cost of a monopoly ______.
(A) is equal to the value of the economic rent
(B) equals the social benefit
(C) is illustrated by a curve that would also be the supply curve of the competitive industry
(D) is greater with rent seeking than it otherwise would be
Answer:
(D) is greater with rent seeking than it otherwise would be
Explanation:
In the monopoly, the company is alone to manufacture such product and gain through it. It do not make any efforts to advertise or gain the market share, as it is the sole producer.
Also, the company is the sole producer and thus, charges high for the product, accordingly its earning more than the actual efforts made by it.
Accordingly the social cost is more with the rent seeking concept, because efforts are less.
The social cost of a monopoly is greater with rent seeking than it otherwise would be.
Explanation:The social cost of a monopoly is greater with rent seeking than it otherwise would be.
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A fire destroyed most of the inventory in Mick’s warehouse on September 1. After the fire, Mick’s accounting records showed the following: Inventory, January 1 $ 55,000 Purchases, January 1 through September 1 $ 310,000 Sales, January 1 through September 1 $ 370,000 Inventory not damaged by fire $ 45,000 Gross profit percentage on sales 30 % What amount of inventory was lost in the fire?
Answer:
$61,000
Explanation:
For computing the inventory lost in fire, first we have to determine the various items like - cost of goods available for sale, gross profit, cost of goods sold and ending inventory
So, the cost of goods available for sale would equal to
= Opening inventory + purchase made
= $55,000 + $310,000
= $365,000
The gross profit would be
= Sales × Gross profit percentage
= $370,000 × 30%
= $111,000
And, the costs of goods sold would be
= Sales - gross profit
= $370,000 - $111,000
= $259,000
Now the ending inventory would be
= Cost of goods available for sale - costs of goods sold
= $365,000 - $259,000
= $106,000
And, the not damaged goods were $45,000
So, the lost goods would be
= $106,000 - $45,000
= $61,000
National Geographic is replacing an old printing press with a new one. The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 30% income tax bracket. What is the tax implication of the proceed of the sale of the old press? Round to the nearest penny. If tax liabilities, type a negative sign in front. Do not include a dollar sign in your answer. (i.e. If your answer is tax liabilites of $8,765,43, type -8765.43; if tax shield of $8,765.43, type 8765.43).
Answer:
$82,500
Explanation:
The computation of the tax implication on proceed on sale is shown below:
= (Sale value of old press - net book value) × income tax rate
= ($350,000 - $75,000) × 30%
= $275,000 × 30%
= $82,500
We simply deduct the net book value from the sale value of the old press and then multiply it with the income tax rate so that the correct amount can come.
Final answer:
The tax implication of the sale of National Geographic's old printing press is a tax liability of $82,500, calculated as 30% of the gain realized from the sale.
Explanation:
The tax implication of the sale of the old printing press for National Geographic involves calculating the gain on the sale and then applying the corporate income tax rate to determine the tax owed. The sold price of the old press is $350,000, and its net book value is $75,000, resulting in a gain of $275,000 ($350,000 - $75,000). Since National Geographic is in the 30% income tax bracket, the tax liability on the gain is 30% of $275,000, which is $82,500.
The Bigelow Company has a cost of equity of 12 percent, a pre-tax cost of debt of 7 percent, and a tax rate of 35 percent.
What is the firm's weighted average cost of capital if the debt-equity ratio is .60?
A. 6.58 percent
B. 9.21 percent
C. 10.01 percent
D. 10.13 percent
E. 11.11 percent
Answer:
B. 9.21 percent
Explanation:
The formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)
where,
Weighted of debt = Debt ÷ total firm
The total firm includes debt, and the equity which equals to
= 0.60 + 1 = 1.60
So, Weighted of debt = (0.60 ÷ 1.60) =0.3 75
And, the weighted of common stock = (Common stock ÷ total firm)
= 1 ÷ 1.60
= 0.625
Now put these values to the above formula
So, the value would equal to
= (0.375 × 7%) × ( 1 - 35%) + (0.625 × 12%)
= 1.71% + 7.5%
= 9.21%
Ted’s wallet is as empty as his bank account, and he needs $3,500 immediately.Fortunately, he has three gold coins that he inherited from his grandfather.Each is worth $2,500, but it is Sunday, and the local rare-coin store is closed. When approached, Ted’s neighbor Andreaagrees to buy the first coin for $2,300. Another neighbor, Cami, agrees to buy the second for $1,100. A final neighbor,Lorne, offers 'all the money I have on me"—SlOO—for the last coin. Desperate, Ted agrees to the proposal. Which of thedeals is supported by consideration? (a) Ted’s agreement with Andrea, only(b) Ted’s agreements with Andrea and Cami, only(c) All three ofthe agreements(d) None ofthe agreements
Answer:B. Teddy's agreement with Andrea and Cami, only.
Explanation:
Consideration is anything of value that moves from both parties to a contract, it must equally be specific and devoid of ambiguity.
The agreement with Andrea and Camil both meet these requirements. However the agreement with Lorne is not devoid of ambiguity because we are not sure of the amount of his consideration.
Which of the following are effective means of aligning management goals with shareholder interests?
I. Employee stock options
II. Threat of a takeover
III. Management bonuses tied to performance goals
IV. Threat of a proxy fight
A. I and III only
B. II and IV only
C. I, II, and III only
D. I, III, and IV only
E. I, II, III, and IV
Answer:
E. I, II, III, and IV
Explanation:
All of the mentioned strategies would work.
Employee stock option provides the enthusiasm and energy to perform good among employees. This is beneficial for the company and shareholders as well.
The threat of takeover, scares the shareholders in losing their share, and effective voting right. Also the management feels threaten as the new company might replace them with the management personnel they desire.
Management bonuses help management to get a boost in energy and accordingly motivates to work good, also the shareholders desiring performance will find it effective.
The threat of proxy fight engages both the parties to behave properly towards each other and respect each other.
A machine cost $1,200,000, has annual depreciation of $200,000, and has accumulated depreciation of $950,000 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $275,000, it is exchanged for a machine with a fair value of $1,350,000 and the proper amount of cash is paid. The exchange had commercial substance. The new machine should be recorded at:
a. $0.b. $25,000c. $50,000d. $150,000
The cost of the new machine is $1,325,000.
Cost of old machine: $1,200,000
Accumulated depreciation on old machine as of December 31, 2020: $950,000
Book value of old machine on April 1, 2021: $1,200,000 (cost) - $950,000 (accumulated depreciation) = $250,000
Fair value of old machine on April 1, 2021: $275,000
Gain on exchange: $275,000 (fair value) - $250,000 (book value) = $25,000
Since the exchange has commercial substance (fair value of exchanged assets differ significantly), the new machine should be recorded at its fair value of $1,350,000. However, we need to adjust for the gain recognized on the exchange:
Debit New Machine for $1,350,000 (fair value)
Credit Cash for $1,350,000 - $25,000 (gain on exchange) = $1,325,000
Therefore, the new machine is recorded at $1,325,000, not $0, $50,000, or $150,000.
Initially, three firms A, B, and C share the market for a certain commodity. Firm A has 30% of the market, Firm B has 45%, and C has 25%. Each year, the following changes occur:
• A keeps 75% of its customers, while losing 15% to B and 10% to C.
• B keeps 60% of its customers, while losing 5% to A and 35% to C.
• C keeps 65% of its customers, while losing 15% to A and 20% to B.
(a) What is the current market share vector (ordered for A, B, and C)?
(b) Find the transition matrix for this scenario.
(c) Find the share of the market that each company has after two years.
Final answer:
The current market share vector is (30%, 45%, 25%) for firms A, B, and C respectively. The transition matrix is [[0.75, 0.15, 0.10], [0.05, 0.60, 0.35], [0.15, 0.20, 0.65]]. To find the market shares after two years, one needs to perform matrix multiplication of the current market share vector with the transition matrix twice.
Explanation:
The student is presented with a scenario where three firms (A, B, and C) share the market for a commodity, and the dynamics of their market shares are defined by the given yearly customer retention and loss percentages. We will address the three parts of the question using the information provided.
a) Current Market Share Vector
The current market share vector, ordered for firms A, B, and C, is as follows:
Firm A: 30%
Firm B: 45%
Firm C: 25%
b) Transition Matrix
The transition matrix for the scenario where each firm keeps a certain percentage of its customers and loses some to the others is given by:
A B C
A 0.75 0.15 0.10
B 0.05 0.60 0.35
C 0.15 0.20 0.65
c) Market Share After Two Years
To find the share of the market after two years, we multiply the current market share vector by the transition matrix twice (representing two years). This calculation would yield the market shares of firms A, B, and C after two years, which can then be presented as a new vector.
Without performing the decimal operations this cannot be done completely here, but the process involves matrix multiplication, and the student should apply it to get the exact values.
Managerial leaders: Group of answer choices
build a strategic vision to change the organization.
act as change agents in the organization.
support and guide the performance and well-being of individual employees.
possess all of the competencies of great leaders.
engage in participative leadership.
Answer:
Support and guide the performance and well-being of individual employees.
Explanation:
A managerial leader is responsible for making his or her subordinates perform their tasks accordingly and effectively to achieve the expected organizational goals and results.
The main function of a manager is to manage, control and coordinate employee actions always with a focus on organizational results.
A good managerial leader must be flexible, have a vision of organizational systems and processes, set a schedule and know his subordinates, their expectations and motivations, in order to be always available to help improve their competencies and skills that will be essential to achieve. of goals and results.
Grover Corporation purchased a truck at the beginning of 2017 for $109,200. The truck is estimated to have a salvage value of $4,200 and a useful life of 120,000 miles. It was driven 21,000 miles in 2017 and 29,000 miles in 2018. What is the depreciation expense for 2018?a. $27,405b. $7,000c. $25,375d. $43,750
Answer:
The depreciation expense for 2018: c. $25,375
Explanation:
Grover Corporation uses the units-of-production depreciation method. Depreciation expense is calculated by the following formula:
Depreciation Expense = [(Cost of asset − Salvage Value )/Life in Number of Units
] x Number of Units Produced = Depreciation Expense per unit x Number of Units Produced
In the company,
Depreciation Expense per mile = ($109,200-$4,200)/120,000= $0.875
The truck was driven 29,000 miles in 2018, so the depreciation expense for 2018: $0.875 x 29,000 = $25,375
Sundance Motor Lodge has 5600 bonds outstanding with a face value of $1,000 each and a coupon rate of 6.7 percent. The interest is paid semi-annually. What is the present value of the interest tax shield if the tax rate is 32 percent? (That is, how much does the tax shield add to the value of the firm?)
Answer:
$1,792,000
Explanation:
The computation of the present value of the interest tax shield is shown below:
= Number of bonds outstanding × face value × tax rate
= 5,600 bonds × $1,000 × 32%
= $1,792,000
We simply multiply the number of bonds outstanding with the face value and the tax rate so that the correct amount can come.
All other information which is given is not relevant. Hence, ignored it
On March 31, 2011, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons.
During 2011, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2011.
At January 1, 2012, Belotti estimated that 20,000 tons still remained.
During 2012, Belotti loaded and sold 8,000 tons.
Belotti would record depletion in 2012 of:
(A) $54,667. (B) $65,600. (C) $52,480. (D) $55,760.
Answer:
Belotti would record depletion in 2012 of:
(C) $52,480.
Explanation:
The cost of the quarry rights was $164,000.Estimated salable rock of 20,000 tonsUnits Cost for Depletion : $ 8,20During 2011, Belotti loaded and sold 4,000 tons, it means a depletion during 2011 of $32,800.
At December 2011 the monetary balance of the quarry was $131.200
At January 1, 2012, Belotti estimated that 20,000 tons still remained.
The new unit cost of the quarry is $6,56
During 2012, Belotti loaded and sold 8,000 tons, it means a depletion during 2012 of $52,480, 8,000 tons * $6,56 = $52,480
Crane WaterWorks manufactures snorkel gear. During the past month, Washington purchased 4,160 pounds of plastic to use in its dive masks, at a cost of $6,684. The standard price for the plastic is $1.581 per pound. The company actually used 3,940 pounds of the plastic to produce 19,900 dive masks. Calculate Crane’s direct materials price variance for the month.
Answer:
$107.04 unfavorable
Explanation:
The computation of the material price variance is shown below:
= Actual Quantity × Actual price - Actual Quantity × Standard Price
= $6,684 - (4,160 pounds × $1.581 per pound)
= $6,684 - $6576.96
= $107.04 unfavorable
The $6,684 represents the actual quantity and the actual price.
All other information which is given is not relevant. Hence, ignored it