Answer: $900,000
Explanation:
Net fixed assets(2014) = $3 million
Net fixed assets(2015) = $3.7 million
Depreciation expense = $200,000
Net capital spending for 2015 = closing balance of 2015 - opening balance of assets + depreciation for the year
= $3,700,000 - $3,000,000 + $200,000
= $900,000
Therefore, the net capital spending for the year 2015 is $900,000.
The price of imported oil rises. If the government wanted to stabilize output, which of the following could it do?
a. increase government expenditures or increase the money supply
b. increase government expenditures or decrease the money supply
c. decrease government expenditures or increase the money supply
d. decrease government expenditures or decrease the money supply
Answer:
The correct answer is letter "A": increase government expenditures or increase the money supply.
Explanation:
Fiscal policy refers to the joint governmental decisions concerning taxation and spending of a nation. The term was coined by the British economist John Maynard Keynes (1883-1946) who claimed that governments could control rates of macroeconomic growth by raising the rate of employment, battling inflation and flattening business cycles.
Whether increasing government expenses or money supply, the overall economy will be balanced as long as the prices are going up as well.
Barry’s Steroids Company has $1,000 par value bonds outstanding at 13 percent interest. The bonds will mature in 40 years. If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent?
Answer:
[tex]principle payement = 1.75[/tex]%
Explanation:
From Appendix D
Present Value of Interest Payments
PVA = A × PVIFA (n = 40, i = 13%)
A = 0.13 * 1000 = 130
[tex]PVIFA = \frac{1 - (1-\frac{r}{t}^(-m\times t)}{\frac{r}{t}}[/tex]
[tex]PVIFA = \frac{1 - (1-\frac{0.13}{40}^(-40)}{0.13}[/tex]
= 7.650
PVA = $130 × 7.650 = $994.5
From Appendix B
Present Value of Principal Payment
PV = FV × PVIF (n = 40, i = 13%)
PV = $1,000 × .0075 = $7.5
here PVIF value AT 40 YEAR FOR 13 % is 0.0075
Present Value of Interest Payments = $994.5
Present Value of Principal Payment = $ 17.5
Total Present Value the Bond = interest payment + principal payment = $ 856.96
[tex]principle \ payement = \frac{17.5}{994.5} \times 100[/tex]
[tex]principle payement = 1.75[/tex]%
Sam makes a deposit at the bank which is comprised of $5, $10, and $20 bills. If the number of $5 bills is three more than the number of $10 bills, the number of $20 bills is half the number of $5 bills, and his total deposit is $270, how many bills of each type did he deposit?
Answer:
Number of $5 bills= 12
Number of $10 bills= 9
Number of $20= 6
Explanation:
Giving the following information:
Total deposit= $270
$5 bills are three more than the number of $10 bills.
The number of $20 bills is half the number of $5 bills.
x1= number of $5 bills
x2= number of $10 bills
x3= number of $20 bills
x1=3+x2
x3=x1/2
The function to calculate the number of bills is:
Total number of bills= (3+x2)*$5 + x2*$10+ (x1/2)*$20
n $x1 n $x2 n $x3
4 20 1 10 2 40 70
5 25 2 20 2,5 50 95
6 30 3 30 3 60 120
7 35 4 40 3,5 70 145
8 40 5 50 4 80 170
9 45 6 60 4,5 90 195
10 50 7 70 5 100 220
11 55 8 80 5,5 110 245
12 60 9 90 6 120 270
x1= 12
x2= 9
x3=6
To solve the problem, we set up an equation using the variable x to represent the number of $10 bills. After following a series of algebraic steps, we find that Sam deposited 12 $5 bills, 9 $10 bills, and 6 $20 bills.
Let's represent the number of $10 bills that Sam has as x. According to the problem, the number of $5 bills is three more than the number of $10 bills, and the number of $20 bills is half the number of $5 bills. Therefore, we have:
Number of $5 bills: x + 3Number of $10 bills: xNumber of $20 bills: (x + 3) / 2These bills add up to a total of $270, which we can express in the following equation:
5(x + 3) + 10x + 20((x + 3) / 2) = 270
Solving this equation:
5x + 15 + 10x + 10(x + 3) = 2705x + 15 + 10x + 10x + 30 = 27025x + 45 = 27025x = 225x = 9From x, we can find:
Number of $10 bills: 9Number of $5 bills: 9 + 3 = 12Number of $20 bills: (12) / 2 = 6Sam deposited 12 $5 bills, 9 $10 bills, and 6 $20 bills.
Mapoob Sapling Learning macmilan learning Label each scenario by deciding whether opportunity cost has increased or decreased. Emily is deciding between her two favorite restaurants. One makes Indian food and the other makes Chinese food. The Indian restaurant has just raised its prices. The opportunity cost of Chinese food has Jacob has a bagel or a muffin for breakfast. Muffins are on sale so they cost $1 less than usual. The opportunity cost of eating a bagel has: Taylor has to take time off work to study. Since her wage has increased from $10 per hour to $15 per hour, the opportunity cosť of studying has: Justin decides to take the bus to school instead of driving to school. The rice of gasoline has just decreased. The opportunity cost of taking the bus Increased Decreased
Answer:
(a) The opportunity cost of Chinese food has decreased because Indian restaurant raises its price, so Chinese food is more affordable and indian food become expensive.
(b) The opportunity cost of eating a bagel has increased because the price of muffins falls.
(c) The opportunity cost of studying has increased because his wages increases from $10 to $15, so now he have to foregone more money income than before.
(d) The opportunity cost of taking the bus has increased because bus travel becomes more affordable or cheaper due to lower gasoline prices.
Exotics Faucets and Sinks LTD., guarantees that its new infrared sensor faucet will save any household that has 2 or more children at least $30 per month in water costs beginning 1 month after the faucet is installed. If the faucet is under full warranty for 5 years, the minimum amount a family of four could afford to spend now on such a faucet at an interest rate of 1/2% per year, compounded monthly, is closest to(a) $149c) $1787(b) $1552d) $1890
Answer:
$1552
Explanation:
it will save 30 per month during 5 years.
we can calculate this as an annuity. So the value of the faucets will be the present value of the cash savings:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C $30 saving per month
time 5 years x 12 month per year = 60 months
rate 0.5% = 0.5/100 = 0.005
[tex]30 \times \frac{1-(1+0.005)^{-60} }{0.005} = PV\\[/tex]
PV $1,551.7668
Rounding it will be closest to 1,552
Compute Emily's 2018 taxable income on the basis of the following information. Her filing status is single. Salary $85,000 Interest income from bonds issued by Xerox 1,100 Alimony payments received (divorce finalized in 2014) 6,000 Contribution to traditional IRA 5,500 Gift from parents 25,000 Capital gain from stock investment, held for 7 months 2,000 Amount lost in football office betting pool 500 Age 40
Answer:
The Emily's 2018 taxable income is $76,600
Explanation:
The computation of the taxable income for the year 2018 is shown below:
= Salary + interest income from bonds issued by Xerox + Alimony payments received + Capital gain from stock investment, held for 7 months - Contribution to traditional IRA - standard deduction
= $85,000 + $1,100 + $6,000 + $2,000 - $5,500 - $12,000
= $76,600
The standard deduction for married and single tax payers is $12,000
And, the Gift from parents is not taxable & Amount lost in football office betting pool is not allowed for deduction as it is come under gambling.
Emily’s taxable income for 2018 is determined by adding her salary, interest, alimony, and short-term capital gains, then subtracting her deductible IRA contribution, which results in a total taxable income of $88,600.
However, the gift from her parents and her losses in the football pool do not affect her taxable income.
Explanation:To calculate Emily's taxable income in 2018, we need to add up all her taxable incomes and subtract any deductions.
Emily's salary of $85,000 is fully taxable.The interest income from the bonds of $1,100 is taxable.Because Emily's divorce finalized in 2014, her alimony payments of $6,000 are taxable.The capital gain of $2,000 from her stock investments could is taxable as it was held for less than a year.Subtract any deductions:
Emily made a $5,500 contribution to a traditional IRA which is deductible.Gifts are not considered income for the recipient, and likewise, so the $25,000 gift from her parents isn't included in taxable income.The $500 Emily lost in the football pool is unfortunately not a deductible loss.Therefore, her taxable income will be $85,000 (salary) + $1,100 (interest) + $6,000 (alimony) + $2,000 (capital gain) - $5,500 (IRA Contribution) = $88,600.
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Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $8, and each clock sells for $18. Calculate Red Hawk’s unit contribution margin and contribution margin ratio. Suppose Red Hawk sells 2,000 clocks this year. Calculate the total contribution margin.
Answer:
Instructions are listed below
Explanation:
Giving the following information:
Its variable cost per clock is $8.
Each clock sells for $18.
Suppose Red Hawk sells 2,000 clocks this year.
A) contribution margin= selling price - variable costs= 18-8= $10
B) Contribution margin rate= contribution margin/ selling price= 10/18= 0.5556
C= Total contribution margin= units* contribution margin= 2000*10= $20,000
Calculate unit contribution margin, contribution margin ratio, and total contribution margin for Red Hawk Enterprises selling 2,000 clocks.
Unit Contribution Margin: $18 - $8 = $10 per clock
Contribution Margin Ratio: ($10 / $18) x 100% = 55.56%
Total Contribution Margin: $10 x 2,000 = $20,000
A reduction in transaction costs will tend to
(A) reduce the number of mutually beneficial exchanges that occur.
(B) make specialization according to the law of comparative advantage more difficult.
(C) decrease the value created by exchanges in an economy.
(D) increase the number of mutually beneficial exchanges that occur.
Answer:
increase the number of mutually beneficial exchanges that occur.
Explanation:
When you reduce the transactions cost, the number of transactions increase, it means that every agent it’s benefit, because the buyer could afford more transactions and the seller could reduce the price of their products or services that are included in the purchase. Even the agent it's in charge of the transaction its benefit too, because the number of transactions increase due to the increase of the demand.
How much cash does the firm actually have? You are Olivia, a financial analyst who works for an investment bank in downtown Denver, Colorado. You are analyzing the current cash condition of Sukam Inc. You have the following information from the company's financial reports: The company reported net sales of $5,000 million. Assume that there were no noncash sales. Operating costs (excluding depredation and amortization) were 65% of its total revenues. Depreciation and amortization charges were 5% of total sales. Interest charges were 15% of EBIT with a tax rate of 40%. is the money that the business is left with after paying operating expenses, interest expense, and taxes. However, because some revenues and expense are not cash transactions, net cash flow indicates the true cash flow situation of the company. The company's current cash flow is: $1,275 million $765 million $1,015 million $506 million
Answer:
Net profit= $765000 million
Explanation:
Giving the following information:
The company reported net sales of $5,000 million.
Operating costs (excluding depredation and amortization) were 65% of its total revenues.
Depreciation and amortization charges were 5% of total sales. Interest charges were 15% of EBIT with a tax rate of 40%.
Revenues= 5000000
Operating costs= (5000000*0.65)= (3250000)
EBITDA= 1750000
Depreciation and amortization= (50000000*0.05)= (250000)
EBIT= 15000000
Interest= (1500000*0.15)= (225000)
Tax= (15000000-225000)*0.40= (510000)
Net profit= $765000 million
Last year, the price of hamburger was $5 per pound and the price of trout was $6 per pound. This year, the price of hamburger is $8 per pound and the price of trout is $9 per pound. All other things equal, and assuming that Phillip purchased both items before, what would you expect to happen to his purchases of hamburger (relative to trout) this year?
Answer: The relative Price of Hamburger has decreased, so Phillip would be expected to purchase more.
Explanation:
Given that,
Price of Hamburger(H):
Last year = $5 per pound
This year = $8 per pound
Price of trout(T):
Last year = $6 per pound
This year = $9 per pound
Last year's Relative price of Hamburger = [tex]\frac{H}{T}[/tex]
= [tex]\frac{5}{6}[/tex]
= 0.833
This year's Relative price of Hamburger = [tex]\frac{H}{T}[/tex]
= [tex]\frac{8}{9}[/tex]
= 0.888
The relative Price of Hamburger has decreased, so Phillip would be expected to purchase more.
Final answer:
As the price of hamburger has increased relatively more than trout, the substitution effect implies that Phillip is expected to decrease his purchases of hamburger relative to trout this year.
Explanation:
Last year, the price of hamburger was $5 per pound, and the price of trout was $6 per pound. This year, the price of hamburger has increased to $8 per pound, and the price of trout has risen to $9 per pound. Based on the provided price changes and assuming all other factors remain constant, we would expect Phillip's purchases of hamburger, relative to trout, to decrease this year. This expectation is based on the economic principle of substitution effect, which suggests that as the price of hamburger rises relatively more than the price of trout, consumers like Phillip would likely buy less hamburger and possibly more trout, or switch to other substitutes if available.
A duopoly faces an inverse market demand of: p equals 390 minus 3 q 1 minus 3 q 2. You are told that firm 1 is the leader and firm 2 is the follower. Otherwise the firms are identical, each with a constant marginal cost of $90. What oligopoly model will you use to analyze this market?
Answer:
Stackelberg duopoly
Explanation:
The Stackelberg duopoly is characterized by having two firms that produce a homogeneous good, both face the same costs and the same demand. One of the two firms is the leader and the other is the follower. This happens because one of them is bigger or is more recognized. The leader firm can choose the quantity that it will produce (q1) and then the follower firm will produce according to the leader firm choice. In game theory, people use backward induction to find the Nash equilibrium.
Sheffield Corp. is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following financial information as of December 31, 2017. Service revenue (from camping fees) $174,240 Dividends $11,880 Sales revenue (from general store) 33,000 Notes payable 66,000 Accounts payable 14,520 Expenses during 2017 166,320 Cash 11,220 Supplies 7,260 Equipment 150,480 Common stock 52,800 Retained earnings (1/1/2017) 6,600 Determine Sheffield Corp.’s net income for 2017. Sheffield Corp.’s net income for 2017
Answer:
Net Income for 2017 - $40.920
Explanation:
Income Statement
Sales Service and Store $207.240
Cost of goods sold -$166.320
Gross Profit $40.920
Net Income $40.920
Accounting Cycle Review Do IT 0-10a Cullumber Company shows the following balances in selected accounts of its adjusted trial balance. Supplies $30,080 Supplies Expense 5,640 Accounts Receivable 11,280 Dividends 20,680 Retained Earnings 65,800 Service Revenue 101,520 Salaries and Wages Expense 37,600 Utilities Expense 7,520 Rent Expense 16,920 Prepare the remaining closing entries at December 31. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered.
Answer:
Service Revenue 101,520 debit
Income Summary 101,520 credit
to close revenue account
Income Summary 67,680 debit
Supplies expense 5,640 credit
Salaries and Wages Expense 37,600 credit
Utilities Expense 7,520 credit
Rent Expense 16,920 credit
to close expenses account
Income Summary 20,680 debit
Dividends 20,680 credit
to close dividends
Income Summary 13,160 debit
Retained Earnings 13,160 credit
to close income summary agains retained earnings
Explanation:
we will close the temporary account against income summary.
The temporary accounts will be dividends, revenues and expense account.
Then we will close income summary balance against retained earings.
Income Summary balance:
credit 101,520
debit 67,680
debit 20,680
Balance: 13,160
Emily purchased a building to store inventory for her business. The purchase price was $760,000. Emily also paid legal fees of $300 to acquire the building. In March, Emily incurred $2,000 to repair minor leaks in the roof (from storm damage earlier in the month) and $5,000 to make the interior suitable for her finished goods and $300 for legal fees. What is Emily's cost basis in the new building?
Answer: Emily's cost basis in the new building is $81,600
Explanation: Hi, the resolution of this problem is :
$76,000(purchase price) + $600 (legal fees) + $5000(improvements) =$81,600
The $2000 repair of the minor leaks in the roof is not a capitalized cost, it´s a routine maintenance expenditure.
The improvements in the building and the legal fees would be capitalized as expenses to begin using the building.
Emily's cost basis in the new building is $81,600
Answer:
$765300
Explanation:
Please see attachment .
Inventory records for Dunbar Incorporated revealed the following:
Date Transaction Number ofUnits Unit Cost
Apr. 1 Beginning inventory 500 $2.13
Apr. 20 Purchase 310 2.63
Dunbar sold 620 units of inventory during the month. Ending inventory assuming LIFO would be (Do not round your intermediate calculations. Round your answer to the nearest dollar amount):
A. $815.
B. $405.
C. $1,065.
D. $500
Answer:
Ending inventory assuming LIFO would be 405
Explanation:
Date Q U.cost Cost Sold Inventory Cost
april 1 500 2,13 1065 310 190 405
apri 20 310 2,63 815,3 310 0 0
620
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $38; (ii) $40; (iii) $46? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.) b. What is your real (inflation-adjusted) rate of return if the inflation rate is 3%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.)
Answer:
a (i) 0%
a (ii) 5%
a (iii) 20%
a (i) - 2.91%
a (ii) 1.94%
a (iii) 16.51%
Explanation:
The computation is shown below:
a (i) Rate of return = (End year stock price - purchase price) + dividend ÷ (purchase price)
= ($38 - $40) + $2 ÷ 40
= 0%
a (ii) Rate of return = (End year stock price - purchase price) + dividend ÷ (purchase price)
= ($40 - $40) + $2 ÷ 40
= 5%
a (iii) Rate of return = (End year stock price - purchase price) + dividend ÷ (purchase price)
= ($46 - $40) + $2 ÷ 40
= 20%
The computation of the real rate of return is shown below:
b. (i) Real rate of return = {( 1 + nominal rate of return) ÷ ( 1+ inflation rate)} - 1
= {( 1 + 0) ÷ ( 1 + 0.03)} - 1
= - 0.029 or - 2.91%
b. (ii) Real rate of return = {( 1 + nominal rate of return) ÷ ( 1+ inflation rate)} - 1
= {( 1 + 0.05) ÷ ( 1 + 0.03)} - 1
= 0.019 or 1.94%
b. (iii) Real rate of return = {( 1 + nominal rate of return) ÷ ( 1+ inflation rate)} - 1
= {( 1 + 0.20) ÷ ( 1 + 0.03)} - 1
= 0.016 or 16.51%
The rates of return are 0%, 5%, and 20% for the stock prices $38, $40, and $46 respectively. The inflation-adjusted rates of return are -3%, 1.94%, and 16.5% respectively.
Explanation:The rate of return on an investment is calculated as the total income from the investment, i.e., gains plus dividends, divided by the initial investment, multiplied by 100 to get a percentage.
For stock price (i) $38: The total income is ($38 - $40)*100 + $2*100 = -$200 + $200 = $0, therefore, the Rate of Return is $0/$4000 * 100% = 0%.
For stock price (ii) $40: The total income is ($40 - $40)*100 + $2*100 = $200, therefore, the Rate of Return is $200/$4000 * 100% = 5%.
For stock price (iii) $46: The total income is ($46 - $40)*100 + $2*100 = $800, therefore, the Rate of Return is $800/$4000 * 100% = 20%.
The real rate of return, or the inflation-adjusted rate of return, is calculated by subtracting the inflation rate from the nominal rate. Therefore, the real rates of return for stock prices $38, $40, and $46 are -3%, 1.94%, and 16.5%, respectively.
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Using the data below, calculate GDP. Show your work. Personal consumption expenditures $5,207 Interest 425 Corporate profits 735 Government spending 1,406 Depreciation 830 Rental income 146 Gross private domestic investment 1,116 Compensation of employees 4,426 Exports 870 Imports 965 Indirect business taxes 553 Proprietors' income 520 Personal taxes 886 Social Security taxes 432 Transfer payments 376
Answer:
GDP= 7634
Explanation:
Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. It is an indicator to measure the economic health of a country.
The formula to calculate GDP is of three types – Expenditure Approach, Income Approach, and Production Approach.
The Expenditure Approach is a method of measuring GDP by calculating all spending throughout the economy including consumer consumption, investing, government spending, and net exports. This method calculates what a country produces, assuming that the finished goods and services of a country equals the amount spent in the country for that period.
The formula is:
GDP=C+I+G+/-NX
GDP: Gross Domestic Product
(C) consumer spending – this is the amount that all consumers spend on goods and services for personal use.
(I) investment – this is the amount that businesses or owners spend to invest in new equipment or expansions.
(G) government spending – this includes spending on new infrastructure like bridges and roads.
(NX) net exports – this includes spending on a country’s exports minus its spending on imports.
Personal consumption expenditures $5,207
Government spending 1,406
Gross private domestic investment 1,116
Exports 870
Imports 965
GDP= 5207+1406+1116+(870-965)
GDP= 7634
Notice that we didn't include Wages, Corporate Profits, Depreciation, etc. The expenditure income approach doesn't include Wages. They are part of the formula to calculate GDP by the Income Approach.
You are setting up a part-time business with an initial investment of $27,000. The unit cost of the product is $11.30, and the selling price is $18.80. (a) Find equations for the total cost C (in dollars) and total revenue R (in dollars) for x units. C(x) = R(x) = (b) Find the break-even point by finding the point of intersection of the cost and revenue equations. units (c) How many units would yield a profit of $1000? units
Answer:
A. The function to express the cost is:
C(X) = $11.3*X + $27,000
The function to express the revenue is:
R(X) = $18.8*X
B. The break-even point is obtained for 3600 units
C. It is needed 3734 units to yield a profit of $1,000.
Explanation:
The expression for the cost of bussines is obtained by adding the initial investment to the cost of production of X units:
C(X) = $11.3*X + $27,000
Meanwhile the revenue for selling X is units is represented as:
R(X) = $18.8*X
Then the break-even point is found by equalling C(X) with R(X):
R(X) = C(X)
$18.8*X = $11.3*X + $27,000
$18.8*X - $11.3*X = $27,000
$ 7.5*X = $27,000
X = $27,000 / $7.5
X = 3,600 units
The profit of the bussines P(X) can be expressed sustracting the cost C(X) to the revenue R(X):
P(X) = R(X) - C(X)
P(X) = $18.8 * X - ($11.3*X + $27,000)
Equalling the profit to $1000 we will find the amount of units for selling:
$1,000 = $18.8*X - ($11.3*X + $27,000)
$1,000 = $18.8*X - $11.3*X - $27,000
$1,000 = $7.5*X - $27,000
$1,000 + $27,000 = $7.5*X
$28,000 = $7.5*X
$28,000 / $7.5 = X
X = 3734 units
_____ refers to efforts to create, develop, and defend markets that satisfy individual and business customers.
a. Marketing
b. Supply chain
c. Sales
d. Business managemen
Answer: Marketing
Explanation: The concept of marketing in business management focuses on developing healthy relationship with the existing customers and attracting the potential customers. It is considered a primary function of business management.
The customer service and satisfaction are main objectives of marketing.
Thus, from the above we can conclude that the correct option is A.
Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500. If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns?
a. by exactly $500
b. by less than $500
c. by more than $500 but less than $5,000
d. by more than $5,000 but less than $20,000
Answer:
B
Explanation:
If GDP increased $500 when the capital per hour increased $5,000, then if the capital per hour increases another $5,000, GDP should increase in $500 more. But the capital productivity has diminishing returns, which means that the increase in marginal productivity decreases as the capital per hour grows.
For example, if the capital per hour is $1,000 and there is an increase in one unit of it ($1,001), the GDP first will increase 0,3 units, if there is another increase in one unit ($1,002), GDP will increase in 0,29 units, if there is an increase in another unit ($1,003) GDP will increase in 0,28 units, and so on. Notice that GDP still increases but in a lower rate.
In this case, the first increase of the capital per hour of $5,000 produced an increase in $500 in the GDP, but because each extra unit will increase less the GDP, we can expect that another increase in capital per hour of $5,000 will traduce in an increase by less than $500 in the GDP.
Debt ratios measure the proportion of total assets financed by a firm’s creditors. Sunny Co. has a debt-to-equity ratio of 4.00, compared to the industry average of 3.20. Its competitor Carter Co., however, has a debt-to-equity ratio of 6.00. Based on what debt-to-equity ratios imply, which of the following statements is true? Carter Co. has greater financial risk as compared to Sunny Co. and to the average financial risk in the industry. Sunny Co.’s shareholders expect magnified returns but higher risk as compared to Carter Co. Carter Co.’s creditors face lesser risk than the average financial risk in the industry. Carter Co. has higher creditworthiness as compared to Sunny Co.
Answer:
Carter Co. has greater financial risk as compared to Sunny Co. and to the average financial risk in the industry.
Explanation:
Since the industry average is 3.20
Provided Debt to Equity is
Sunny Co. 4.00
Carter Co. 6.00
Since debt to equity represents the financial risk associated with the product.
It is clear that both the companies are on a higher financial risk than that of the industry.
Further the company is still in a better position than that of the competitor, as the later has higher debt to equity ratio.
Therefore, the first statement concluding that the financial risk of Carter Co. is highest of all including the competitor and the industry average is True.
Classify each item as an asset, liability, common stock, revenue, or expense. (a) Issuance of ownership shares. select the correct category (b) Land purchased. select the correct category (c) Amounts owed to suppliers. select the correct category (d) Bonds payable. select the correct category (e) Amount earned from selling a product. select the correct category (f) Cost of advertising. select the correct category
Answer:
The classified list of items is as follows:
(a) Issuance of ownership shares - Common stock
(b) Land purchased - Asset
(c) Amounts owed to suppliers - Liability
(d) Bonds payable - Liability
(e) Amount earned from selling a product - Revenue
(f) Cost of advertising - Expense
Hence, all the items are classified as asset, liability, revenue, common stock and expense.
At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,500. During the year, Buffalo reports net income of $7,800 and pays dividends of $2,500. In addition, Buffalo issues additional common stock for $7,300. Required: Prepare the statement of stockholders' equity at the end of the year (December 31).
Answer:
Explanation:
For preparing the statement, first we have to compute the ending balance of the common stock and the retained earning
Ending balance of the common stock = Beginning balance + Additional common stock issued
= $10,000 + $7,300
= $17,300
Ending balance of the retained earnings = Beginning balance + Net income - dividend paid
= $7,500 + $7,800 - $2,500
= $12,800
So, the total stockholder equity = Ending balance of the common stock + Ending balance of the retained earnings
= $17,300 + $12,800
= $30,100
The statement of stockholder equity is shown in the spreadsheet. Kindly find the attachment below.
The statement of stockholders' equity for Buffalo Drilling at year-end will show common stock of $17,300 and retained earnings of $12,800, totaling $30,100 in stockholders' equity.
Explanation:Statement of Stockholders' EquityTo prepare the statement of stockholders' equity for Buffalo Drilling at the end of the year, one must perform a few calculations to determine the changes in the equity accounts throughout the year. The opening balances of common stock and retained earnings and the transactions during the year will be included.
At the beginning of the year:
Common stock: $10,000Retained earnings: $7,500Changes during the year:
Net income: +$7,800Dividends paid: -$2,500Issue of additional common stock: +$7,300Ending balances on December 31 will be:
Common stock: $10,000 + $7,300 = $17,300Retained earnings: $7,500 + $7,800 (net income) - $2,500 (dividends) = $12,800So the statement of stockholders' equity will show:
Common stock: $17,300Retained earnings: $12,800The total stockholders' equity at the end of the year will be the sum of common stock and retained earnings, which amounts to $30,100.
Consider the widget exchange. Suppose that each widget contract has a market value of $0 and a notional value of $100. There are three traders, A, B, and C. Over one day, the following trades occur: A long, B short, 5 contracts. A long, C short, 15 contracts. B long, C short, 10 contracts. C long, A short, 20 contracts. What is trader B's net position in the contract at the end of the day?
Answer:
The trader B's net position in the contract at the end of the day is 5 long position contract
Explanation:
The computation of net position for the trader B is shown below:
Net position = Long position - short position
= 10 long position contracts - 5 short position contracts
= 5 long position contract
The other traders are irrelevant because we have to find out the net income for traders B only. Hence, all other information is ignored
Final answer:
Trader B's net position at the end of the day is 5 contracts long, calculated by subtracting the shorted 5 contracts from the 10 contracts bought long.
Explanation:
The student's question relates to finding trader B's net position in a contract market at the end of the day after a series of trades have been made between three traders. To compute this, we need to tally the long and short positions that B has engaged in during the trading day.
Firstly, when B trades short, this is a promise to deliver a commodity at a later date, and when B trades long, this is a commitment to receive the commodity. To tally B's position, we calculate the difference between B's long and short positions:
B short 5 contracts to A.
B long 10 contracts from C.
Trader B's net position is the difference between the long and short contracts:
Net Position = Long positions - Short positions
Net Position = 10 contracts - 5 contracts
Net Position = 5 contracts long
Therefore, at the end of the trading day, trader B has a net position of being 5 contracts long.
Schwert Corp. shows the following information on its 2019 income statement: sales = $235,000; costs = $147,000; other expenses = $7,900; depreciation expense = $17,500; interest expense = $13,500; taxes = $17,185; dividends = $10,500. In addition, you’re told that the firm issued $5,000 in new equity during 2019 and redeemed $3,500 in outstanding long-term debt. (Do not round intermediate calculations.) a. What is the 2019 operating cash flow? b. What is the 2019 cash flow to creditors? c. What is the 2019 cash flow to stockholders? d. If net fixed assets increased by $20,000 during the year, what was the addition to net working capital (NWC)?
Answer:
a. $62,915
b. $17,000
c. $5,500
d. $2,915
Explanation:
a. The operating cash flow is shown below:
= EBIT + Depreciation - Income tax expense
where,
EBIT = Sales - cost of good sold - other expenses - depreciation expense
= $235,000 - $147,000 - $7,900 - $17,500
= $62,600
And all other items would remain same
Now put these values to the above formula
So, the value would equal to
= $62,600 + $17,500 - $17,185
= $62,915
b. The computation of the cash flow to creditors is shown below:
= Interest expense - ending balance of long term debt + beginning balance of long term debt
= $13,500 - (-$3,500)
= $17,000
c. The computation of the cash flow to stockholder is shown below:
= Dividend expense - new equity
= $10,500 - $5,000
= $5,500
d. Computation of the addition to the net working capital is shown below:
The computation of the cash flow from assets = cash flow to creditors + cash flow to stockholders
= $17,000 + $5,500
= $22,500
Now addition to NWC = Operating cash flow - cash flow from assets - net capital spending
= $62,915 - $22,500 - ($20,000 + $17,500)
= $2,915
This problem has been solved!
See the answer
Knight Company reports the following costs and expenses in May.
Factory utilities $16,942 Direct labor $71,743
Depreciation on factory equipment 13,387 Sales salaries 47,310
Depreciation on delivery trucks 4,546 Property taxes on factory building 3,252
Indirect factory labor 49,656 Repairs to office equipment 2,179
Indirect materials 84,468 Factory repairs 2,465
Direct materials used 142,667 Advertising 15,712
Factory manager%u2019s salary 8,285 Office supplies used 3,523
From the information, determine the total amount of:
(a) Manufacturing overhead $Knight Company reports the following costs and exp
(b) Product costs $Knight Company reports the following costs and exp
(c) Period costs $Knight Company reports the following costs and exp
Answer:
A Overhead: 180,634
B Production Cost: 214,410
C Period Cost: 71,091
Explanation:
Manufacturing overhead
Factory utilities 16,942
Depreciation on factory equipment 13,387
Property taxes on factory building 3,252
Indirect factory labor 49,656
Repairs to office equipment 2,179
Indirect materials 84,468
Factory repairs 2,465
Factory manager's salary 8,285
Total: 180.634
Product Cost
Direct labor 71, 743
Direct materials used 142,667
Total: 214,410
Period Cost
Sales salaries 47, 310
Depreciation on delivery trucks 4,546
Advertising 15, 712
Office supplies used 3,523
Total: 71,091
Calculate each category by summing their respective costs: Manufacturing overhead comprises all indirect manufacturing costs. Product costs include direct materials, direct labor, and manufacturing overhead. Period costs are non-manufacturing expenses like advertising and office supplies.
Explanation:The student's question asks to calculate total manufacturing overhead, product costs, and period costs from given expenses for Knight Company. To answer this, we must categorize each cost listed.
Manufacturing overhead is the total of all the indirect costs associated with manufacturing the product. This includes:
Factory utilities: $16,942Depreciation on factory equipment: $13,387Property taxes on factory building: $3,252Indirect factory labor: $49,656Indirect materials: $84,468Factory repairs: $2,465Factory manager’s salary: $8,285Product costs are the total costs incurred to create a finished product ready for sale. This includes:
Direct materials used: $142,667Direct labor: $71,743Manufacturing overhead: (sum of the above overhead costs)Period costs are costs that are not directly tied to the production process and include:
Sales salaries: $47,310Depreciation on delivery trucks: $4,546Repairs to office equipment: $2,179Advertising: $15,712Office supplies used: $3,523To get the total for each category, one would simply sum up the respective costs.
Learn more about Cost Accounting here:https://brainly.com/question/24130824
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Factors of production are
(A) the mathematical calculations firms make in determining their optimal production levels.
(B) social and political conditions that affect production.
(C) the physical relationships between economic inputs and outputs.
(D) inputs into the production process.
Answer: Factors of production are "(D) inputs into the production process."
Explanation:The factors of production or inputs are the goods or services that are used to produce other goods or services. There are four types of production factors: land, labor, capital and technology.
With these companies produce other goods or services.
Lemony Company made sales of $ 32 comma 200 million during 2018. Cost of goods sold for the year totaled $ 12 comma 880 million. At the end of 2017, Lemony's inventory stood at $ 1 comma 200 million, and Lemony ended 2018 with inventory of $ 1 comma 600 million. Compute Lemony's gross profit percentage and rate of inventory turnover for 2018. Begin by computing Lemony's gross profit percentage for 2018. (Round your answer to the nearest tenth of a percent, X.X%.) Lemony's gross profit percentage for 2018 is %.
To find Lemony Company's gross profit percentage for 2018, we subtract the cost of goods sold from the total sales to get the gross profit and then divide it by the total sales. The calculation shows that the gross profit percentage for 2018 is 59.9%.
Explanation:To calculate the gross profit percentage, we first need to determine the gross profit in dollars. Gross profit is calculated by subtracting the cost of goods sold (COGS) from total sales. In this scenario, the total sales are $32,200 million and the cost of goods sold is $12,880 million. Therefore, the gross profit is calculated as follows:
Gross Profit = Total Sales - Cost of Goods Sold
Gross Profit = $32,200 million - $12,880 million
Gross Profit = $19,320 million
Next, to find the gross profit percentage, we divide the gross profit by the total sales and multiply by 100 to convert it to a percentage:
Gross Profit Percentage = (Gross Profit / Total Sales) × 100
Gross Profit Percentage = ($19,320 million / $32,200 million) × 100
Gross Profit Percentage = 59.9%
Therefore, Lemony's gross profit percentage for 2018 is 59.9%.
Donata Company purchased equipment for $30,000 in December 20x1. The equipment is expected to generate $10,000 per year of additional revenue and incur $2,000 per year of additional cash expenses, beginning in 20x2. Under MACRS, depreciation in 20x2 will be $3,000. If the firm's income tax rate is 40%, the after-tax cash flow in 20x2 would be:
Answer:
Total after-tax cash flow= $6000
Explanation:
Giving the following information:
Equipment value= $30,000 in December 20x1.
Income= $10,000 p
Cost= $2,000 per year.
Depreciation= $3,000.
t=0,40
Cash flow has the following structure:
Income (+)
Cost (-)
Depreciation (-)
=EBIT
TAX (-)
Depreciation (+)
Total
Income= 10000
Costs= -2000
Depreciation= -3000
EBIT= 5000
Tax= -2000
Depreciation= 3000
Total= 6000
Lara allocates wealth between two periods: youth (time 1) and old age (time 2).Currently (in her youth) she has $8,000 in cash. She can borrow and lend at the bankat a rate of 15% between time 1 and time 2 (that is, lending $1 in youth will give her$1.15 in old age). Her only investment opportunity other than the bank is a projectthat costs $5,000 now in her youth and has a payoff of $6,000 in her old age. What isthe most Lara can consume in her old age? Assume Lara cannot consume a negativeamount in her youth.
Answer:
The second alternative is the one that will allow her to consume more in her old age.
Explanation:
Giving the following information:
Lara allocates wealth between two periods: youth (time 1) and old age (time 2).
In her youth, she has $8,000 in cash. She can borrow and lend at the bank at a rate of 15% between time 1 and time 2.
Her only investment opportunity other than the bank is a project that costs $5,000 now in her youth and has a payoff of $6,000 in her old age.
Alternative A:
We will use the final value formula.
FV= Present Value*(1+i)^n
FV= 8000*(1.15)^1= $9200
Alternative B:
Receive $6000
Invest 3000= 3000*(1.15)^1= 3450
Total= $9450
The second alternative is the one that will allow her to consume more in her old age.