Answer:
Total effect on income= $190,000
Explanation:
Giving the following information:
Sales (500,000 units) $90,000,000
Cost of goods sold 54,000,000
Gross profit 36,000,000
Operating expenses 24,000,000
Net income $12,000,000
An analysis of costs and expenses reveals that the variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses
Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.
Total unitary cost= 95 + 35 + (10,000/40,000)= 130.25
Contribution margin= 135 - 130.25= 4.75
Total effect on income= 4.75*40,000= $190,000
Final answer:
The incremental analysis for Carney Company's special order reveals that accepting the order would lead to an additional net income of $190,000, by generating $5,400,000 in revenue against $5,210,000 in total variable and shipping costs.
Explanation:
To conduct an incremental analysis for the special order that Carney Company received, we need to calculate the additional revenue and the additional costs that accepting this order would entail. The special order consists of 40,000 cappuccino makers at a price of $135 each. Variable costs are given as $95 per unit for cost of goods sold and $35 per unit for variable operating expenses, totaling $130 per unit.
Additional Revenue: 40,000 units * $135 = $5,400,000Additional Variable Costs: ($95 + $35) * 40,000 units = $5,200,000Shipping Costs: $10,000To calculate the incremental net income, we subtract the additional variable costs and shipping costs from the additional revenue.
Incremental Net Income = Additional Revenue - Additional Variable Costs - Shipping Costs = $5,400,000 - $5,200,000 - $10,000 = $190,000
Accepting the special order would result in an incremental net income of $190,000 for Carney Company, assuming no increase in fixed expenses.
Absorption costing and product pricing LO P4 A manufacturer reports the following information on its product. Direct materials cost $ 41.00 per unit Direct labor cost $ 11.10 per unit Variable overhead cost $ 5.10 per unit Fixed overhead cost $ 1.10 per unit Target markup 50 % Compute the target selling price per unit under absorption costing.
Final answer:
To compute the target selling price per unit under absorption costing, we need to consider the total cost per unit. The target selling price can be calculated by adding the target markup percentage to the total cost per unit.
Explanation:
To compute the target selling price per unit under absorption costing, we need to consider the total cost per unit. Total cost per unit can be calculated by summing up the direct materials cost, direct labor cost, variable overhead cost, and fixed overhead cost. Then, we can add the target markup percentage to the total cost per unit to determine the target selling price per unit.
Here is the calculation:
Total cost per unit = Direct materials cost + Direct labor cost + Variable overhead cost + Fixed overhead cost
Total cost per unit = $41.00 + $11.10 + $5.10 + $1.10 = $58.30
Target selling price per unit = Total cost per unit + (Target markup percentage * Total cost per unit)
Target selling price per unit = $58.30 + (0.50 * $58.30) = $87.45
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $105,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs would increase $3,200 per year using the gang punch, but raw material costs would decrease $12,250 per year. MARR is 5%/year. a)What is the present worth of this investment?
b)What is the decision rule for judging the attractiveness of investments based on present worth?
c)Should Bailey buy the gang punch?
Answer:
a) Present value of the investment: $198,936
b) if the present worth of the investment which are discounted at MARR rate is positive, the investment is worth investing, while if the present value of the investment is negative, Investor should not invest.
c) As calculated in (a), present value of the investment is $198,936, Bailey should buy the gang punch
Explanation:
Please find detailed of calculation in (a) which is shown as below:
Present value = Present value of saving in raw material - Present value of increase in labor cost - Initial investment = [ (12,250/ 5%) x (1-1.05^-15)] - [ (3,200/ 5%) x (1-1.05^-15)] - 105,000 = $198,936.
Geraldine Wolfe is a supervisor at Fantastigifts. She has an annual salary of $45,000, paid biweekly, and a garnishment for consumer credit of $375. Assuming that her disposable income is 80 percent of her gross pay per period, does the garnishment follow the CCPA? If not, what is the maximum garnishment allowed for Geraldine’s consumer credit garnishment?
Answer:
Explanation: The amount of the garnishment exceeds the allowable amount. Wolfe gross pay is $1,730.77 ($45,000 / 2624(bi weekly) income will be 80% which is $1,384.62. The allowed Consumer credit for garnishment is of 25% which would be $346.16 payment.
On September 1, 2020, Concord Corporation acquired Skysong Enterprises for a cash payment of $790,000. At the time of purchase, Skysongâs balance sheet showed assets of $630,000, liabilities of $180,000, and ownersâ equity of $450,000. The fair value of Skysongâs assets is estimated to be $890,000.Compute the amount of goodwill acquired by Concord.
Answer:
$710,000
Explanation:
For computing the cost of the goodwill, first we have to calculate the fair value of the net asset which is shown below:
The fair value of net asset = The fair value of Skysongâs assets - the fair value of liabilities
= $890,000 - $180,000
= $710,000
And, the acquired value of Skysong Enterprises for cash is $790,000
So, the goodwill would be
= $790,000 - $710,000
= $80,000
As sole heir, Gascon receives all of Lafayette's property (adjusted basis of $15,700,000 and fair market value of $16,900,500). Six months after Lafayette's death in 2019, the fair market value is $16,500,100. a. Can the executor of Lafayette's estate elect the alternate valuation date and amount?
Answer:
No
Explanation:
Fair market value of Mary's property = $16,900,000. Six months after Mary's death in 2018, the fair market value is = $16,900,000. Fair value has increased on alternate valuation date. The executor of Mary's estate cannot elect the alternate valuation date and amount as the election does not result in reduction in fair value of gross estate.
Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores, Inc.
Whether or not this agreement meets all of the requirements of a contract, the parties are likely to follow the rules of contract law because they :
a. want to avoid potential disputes.
b. are conscious of those rules.
c. are not conscious of those rules.
d. have a moral obligation to do so.
Answer:
a. want to avoid potential disputes.
Explanation:
The auditors are liable to report all the acts of the company, whether are in confirmation of law or not. This is because it is their duty to put a review on the balance sheet, and provide the users of such balance sheet the trust on the information presented.
Even if the agreement do not provide for complete details making it a valid contract this is sure that they need to act properly so that any moral dispute do not occur and that, all the work is done according to the responsibilities.
In our lecture about Strategic fit, we learned that a company's competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services, and its supply chain strategy determines the nature of procurement and transportation of materials as well as the manufacture and distribution of the product.
Answer:
The approach is correct but it is necessary to complete the competitive advantage, with the addition that to meet the needs of the client, it is necessary to differentiate from the competition and that is what makes an advantage in the market. Example: Shampoo companies for men, being specialized for men's hair care, have a competitive advantage in the market for these products where the target is usually women.
In relation to the supply chain, the important thing is to obtain maximum efficiency in each of the processes. Example: That the time in elaboration of the products is the best in the market.
1. Prepare the journal entry to record Tamas Company’s issuance of 6,300 shares of $100 par value, 7% cumulative preferred stock for $103 cash per share. 2. Assuming the facts in part 1, if Tamas declares a year-end cash dividend, what is the amount of dividend paid to preferred shareholders? (Assume no dividends in arrears.)
Answer:
2. $44,100
Explanation:
1. The Journal entry is as follows:
Cash (6,300 × $103) A/c Dr. $648,900
To Preferred Stock (6,300 × $100) $630,000
To APIC - Preferred Stock (6,300 × $3) $18,900
(Record issuance of Preferred Stock)
2. Preferred dividend:
= Dividend per preferred share × Number of preferred shares
= ($100 × 7%) × 6,300
= $7 × 6,300
= $44,100
To record Tamas Company's issuance of preferred stock, use a journal entry. To calculate the dividend paid to preferred shareholders, use the formula: Dividend Paid = Number of Preferred Shares x Dividend Rate x Par Value.
Explanation:To record Tamas Company's issuance of 6,300 shares of $100 par value, 7% cumulative preferred stock for $103 cash per share, the journal entry would be:
Debit: Cash for $649,900 ($103 x 6,300)Credit: Preferred Stock for $630,000 ($100 x 6,300)Credit: Additional Paid-in Capital on Preferred Stock for $19,900 ($649,900 - $630,000)If Tamas declares a year-end cash dividend, the amount of dividend paid to preferred shareholders can be calculated using the formula:
Dividend Paid = Number of Preferred Shares x Dividend Rate x Par Value
In this case, assuming no dividends in arrears, the dividend rate is 7% (given in the question) and the par value is $100. Therefore, the dividend paid to preferred shareholders would be $44,100 ($100 x 6,300 x 7%).
Learn more about Issuance of preferred stock and calculation of dividend paid to preferred shareholders here:https://brainly.com/question/14020432
#SPJ11
Compute the simple rate of return promised by the games.Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $425,000, have a fifteen-year useful life, and have a total salvage value of $42,500. The company estimates that annual revenues and expenses associated with the games would be as follows:
Answer
The answer and procedures of the exercise are attached inthe following images.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in 2 sheets with the formulas indications.
You are buying a car, and have settled on a price of $22,678.95. You put $2,678.95 down and borrow the rest at an 8.5% APR, compounded monthly for 48 months. This requires a monthly payment of $492.97. If you decide to pay off the loan in full with a lump sum after 25 payments, how much will you need to give the dealer?
Answer:
$10429
Explanation:
Please see attachment .
Because of the identity equation that relates to net exports, the in U.S. net exports is matched by in U.S. net capital outflow. Which of the following is an example of how the United States might be affected in this scenario? Check all that apply.
A. You store the Thai baht in your safety deposit box at home.
B. You exchange the THB 80,000 for dollars at your local bank, which then uses the foreign currency to purchase stock in a Thai corporation.
C. You purchase THB 48,000 worth of stock in a Thai corporation and THB 32,000 worth of Thai bonds.
Answer:
Please see attachment
Explanation:
Please see attachment
The following information describes the production activities of Mercer Manufacturing for the yearActual direct materials used 30,000 lbs. at $5.15 per 1bActual direct labor used 9,150 hours for a total of $186, 660Actual units produced 54,120Budgeted standards for each unit produced are 0.50 pounds of direct material at $5.10 per pound and 10 minutes at $21.40 per hourAQ =Actual QuantitySQ= Standard QuantityAP =Actual PriceSP= Standard PriceAH =Actual HoursSH= Standard HoursAR= Actual RateSR =Standard Rate(1) Compute the direct materials price and quantity variances.(2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Answer:
Standard quantity = Actual units produced × 0.50 pound per unit
= 54,120 × 0.50
= 27,060 pounds
Standard hours = Actual units produced × 1/6 hour per unit
= 54,120 × 1/6
= 9,020 hours
Actual rate per hour = $186, 660 ÷ 9,150 hours
= $20.4
(a) (i) Direct material price variance:
= (AQ × AP) - (AQ × SP)
= (30,000 × $5.15) - (30,000 × $5.10)
= $154,500 - $153,000
= $1,500 Unfavorable
(ii) Direct material quantity variance:
= (AQ × SP) - (SQ × SP)
= (30,000 × $5.10) - (27,060 × $5.10)
= $153,000 - $138,006
= $14,994 Unfavorable
(b) (i) Direct labor rate variances:
= (AH × AR) - (AH × SR)
= (9,150 × $20.4) - (9,150 × $21.40)
= $186,660 - $195,810
= $9,150 Favorable
(ii) Direct labor efficiency variances:
= (AH × SR) - (SH × SR)
= (9,150 × $21.40) - (9,020 × $21.40)
= $195,810 - $193,028
= $2,782 Unfavorable
Tami Strand’s regular hourly wage rate is $10, and she receives an hourly rate of $20 for work in excess of 40 hours. During a January pay period, Tami works 50 hours. Tami’s federal income tax withholding is $88, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%.
Compute Tami Strand’s gross earnings and net pay for the pay period.
Answer:
Gross earnings = $600
Net pay = $466.10
Explanation:
The computation of the gross earnings and the net pay is shown below:
Gross earnings
40 hours × $10 = $400
10 hours × $20 = $200
So, the total = $600
Since tami worked for 50 hours, 10 hours extra so $20 is paid for 1 hours extra. So, for 10 hours it would be $200
Net pay
Gross earnings $600
less: federal income tax withholding -$88
Less: FICA tax rate @7.65% on $600 - $45.90
Net pay $466.10
At the end of the current year, the following information is available for both Pulaski Company and Scott Company. Pulaski Company Scott Company Total assets $ 860,000 $ 440,000 Total liabilities 360,000 240,000 Total equity 500,000 200,000 Required: 1. Compute the debt-to-equity ratios for both companies
Answer:
ratio = 1.2 : 1
Explanation:
given data
Pulaski company scott company
Total assets 860,000 440,000
total liabilities 360,000 240,000
total equity 500,000 200,000
to find out
Compute the debt-to-equity ratios for both companies
solution
we get here debt-equity ratio that is express as
debt-equity ratio = [tex]\frac{Debt}{equity}[/tex]
here we get
Pulaski company = [tex]\frac{total\ liabilities}{equity}[/tex]
Pulaski company = [tex]\frac{360000}{500000}[/tex]
ratio are = 1.2 : 1
The debt-to-equity ratio is calculated by dividing a company's total liabilities by its stockholders' equity. For Pulaski Company, the ratio is 0.72 and for Scott Company, it is 1.2.
Explanation:The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders'equity and debt used to finance a company's assets. This ratio is calculated by dividing a company's total liabilities by its stockholders' equity. For Pulaski Company, using the provided information, the debt-to-equity ratio would be: 360,000 / 500,000 = 0.72. For Scott Company, the debt-to-equity ratio would be: 240,000 / 200,000 = 1.2. This means Pulaski Company uses 72% debt to every dollar of equity, while Scott Company uses 120% debt to every dollar of equity in its capital structure.
Learn more about Debt-to-Equity Ratio here:https://brainly.com/question/33201334
#SPJ3
Which of the following are the primary functions of all organizations?
Select one:
a. production/operations, marketing, and human resources
b. marketing, human resources, and finance/accounting
c. sales, quality control, and production/operations
d. marketing, production/operations, and finance/accounting
e. research and development, finance/accounting, and purchasing
Answer:
The correct answer is (D)
Explanation:
The structure of an organisation is made of the various components that make an advancement of correspondence and thoughts all through an organisation. The system of an organisation works in a concise manner where everyone has different set of duties. The main objective of organisations is to produce goods and services, sell those good and service through marketing and finance/accounting to calculate profits/revenue.
On small projects, the cost management plan may be as simple as ensuring accurate estimates are made, securing the funding, and developing cost reporting procedures to ensure that the money is spent correctly. True False
Answer:True
Explanation:
The first in a project is making an estimate of the project, a wrong estimate will lead to the failure of the project for this does not only determined the viability of the project but also help in providing adequate liquidity.
Availability of needed fund gives the optimism than the project will be completed and a follow up to ensure money spent adds value to the project as estimated will ensure successful completion of the project.
A fall in the price level: Multiple Choice reduces the value of money in peoples' pockets, so people buy less goods. reduces the value of money in peoples' pockets, so people buy more goods. increases the value of money in peoples' pockets, so people buy more goods. increases the value of money in peoples' pockets, so people buy less goods.
Answer:
increases the value of money in peoples' pockets, so people buy more goods.
Explanation:
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
If price level falls, the value of money rises as a consumer would be able to buy the same basket of goods at a reduced price. This would induce a consumer to buy more goods.
A rise in price levels reduces the value of money in peoples' pockets, so people buy less goods.
I hope my answer helps you.
Park & Company was recently formed with a $6,200 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,200 from a local bank, purchased $1,120 of supplies on account, and also purchased $6,200 of equipment by paying $2,120 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:
a) $14,600.
b) $12,400.
c) $11,520.
d) $9,400.
Final answer:
Park & Company's total assets, after accounting for all transactions, total $14,600. This is calculated by summing up the investment, loan, supplies on account, and the full value of equipment before subtracting the cash paid for the equipment.
Explanation:
The student asked about calculating the total assets for Park & Company based on several transactions. To find the total assets, we need to add up the value of everything the company owns. The initial investment by stockholders was $6,200 in exchange for common stock. The company borrowed $3,200 from a local bank. It purchased $1,120 of supplies on account (on credit), so this is an addition to assets without an immediate cash outflow. Lastly, the company bought $6,200 of equipment, paying $2,120 in cash with the rest on a promissory note, which means only $2,120 is subtracted from the company's cash, with the rest becoming a liability. Thus, to find the assets: $6,200 (from investors) + $3,200 (bank loan) + $1,120 (supplies on account) + $6,200 (equipment, without subtracting the note) = $16,720 in total assets. Now we subtract the cash payment for equipment: $16,720 - $2,120 = $14,600 in total assets, which corresponds to answer (a).
The Adkins Corporation’s December 31, 20x4, balance sheet had a Common Stock balance of $975,000 and a Retained Earnings balance of $535,000. The cash budget for 20x5 shows payment of dividends of $24,375 and purchase of $100,000 of the corporation’s own stock to be used for stock options for key employees. The budgeted income statement shows net income for 20x5 of $127,000. Determine the total stockholders’ equity on the budgeted balance sheet at December 31, 20x5.
Answer:
$1,512,625
Explanation:
The computation of the total stockholders’ equity is shown below:
= Common stock balance + retained earnings balance + net income - dividend paid - purchase of common stock
= $975,000 + $535,000 + $127,000 - $24,375 - $ $100,000
= $1,512,625
We added the Common stock balance, retained earnings balance, net income and deducted the dividend paid and purchase of common stock so that the accurate amount can come.
Walgreens Boots Alliance’s Sales, Cost of Goods Sold, and Gross Profit
The following information was summarized from the consolidated balance sheets of Walgreens Boots Alliance, Inc. and Subsidiaries (the company created with the combination of Walgreens and Boots Alliance) as of August 31, 2015 and 2014 and the consolidated statements of earnings for the years ended August 31, 2015 and 2014. All amounts are from Walgreens Boots Alliance’s 2015 Form 10-K.
(millions of dollars) 2015 2014
Accounts receivable, net $6,849 3,218
Cost of sales 76,520 54,823
Inventories 8,678 6,076
Net sales 103,444 76,392
1. Calculate the gross profit ratios for Walgreens Boots Alliance for 2015 and 2014 If required, round the percentage to one decimal place.
Walgreen's 2015 gross profit ratio: %
Walgreen's 2014 gross profit ratio: %
Answer:
a. 26%
b. 28.2%
Explanation:
Consider the following formula:
Gross profit ratio = Net sales - Cost of sales / Net sales
Walgreen's 2015 gross profit ratio: (103444-76520)/103444
26.0%
Walgreen's 2014 gross profit ratio: (76392-54823)/76392
28.2%
Final answer:
The gross profit ratio for Walgreens Boots Alliance was 26.0% for 2015 and 28.2% for 2014, calculated by subtracting the cost of sales from net sales and dividing by net sales for each respective year.
Explanation:
To calculate the gross profit ratio for Walgreens Boots Alliance for the years 2015 and 2014, we need to subtract the cost of sales from net sales for each year, and then divide the result by net sales. The formula is: Gross Profit Ratio = (Net Sales - Cost of Sales) ÷ Net Sales.
For 2015:
Gross Profit = Net Sales - Cost of Sales = $103,444 million - $76,520 million=$26,924 million.
Gross Profit Ratio = $26,924 million ÷ $103,444 million = 0.2602 or 26.0% (rounded to one decimal place).
For 2014:
Gross Profit = Net Sales - Cost of Sales = $76,392 million - $54,823 million=$21,569 million.
Gross Profit Ratio = $21,569 million ÷ $76,392 million = 0.2824 or 28.2% (rounded to one decimal place).
On January 1, last year, Randy was awarded 15,000 ISOs at an exercise price of $3 per share when the fair market value of the stock was equal to $3. On April 17, of the current year, Randy exercised all of his ISOs when the fair market value of the stock was $5 per share. At the date of exercise, what are the tax consequences to Randy?
Final answer:
When Randy exercised his ISOs on April 17, of the current year, the tax consequence to him is twofold: he will have to recognize ordinary income equal to the difference between the exercise price and the fair market value of the stock at the time of exercise, and he may also be subject to a capital gains tax if he sells the stock in the future.
Explanation:
When Randy exercised his ISOs on April 17, of the current year, the tax consequence to him is twofold: he will have to recognize ordinary income equal to the difference between the exercise price ($3) and the fair market value of the stock ($5) at the time of exercise, and he may also be subject to a capital gains tax if he sells the stock in the future.
For the ordinary income, Randy will have to recognize $15,000 as ordinary income on his tax return, calculated as (fair market value - exercise price) x number of ISOs exercised. This amount will be subject to both federal and state income tax, as well as Medicare and Social Security taxes.
If Randy decides to sell the stock in the future, he will be subject to a capital gains tax on any appreciation in the value of the stock since he exercised his ISOs. The capital gains tax rate will depend on how long Randy held the stock before selling it. If he holds the stock for at least one year, he will qualify for the long-term capital gains tax rate, which is generally lower than the ordinary income tax rate. If he sells the stock before one year, he will be subject to the short-term capital gains tax rate.
All of the following arguments are presented in favor of inflation targeting EXCEPT
(A) it would reduce the lags inherent in monetary policy.
(B) it would provide an anchor for inflationary expectations.
(C) it would draw attention to what the central bank can achieve in practice.
(D) it would promote accountability by providing a yardstick by which policy can be measured.
Answer:
The correct answer is letter "A": it would reduce the lags inherent in monetary policy.
Explanation:
Inflation targeting is a monetary policy in which the central bank sets a specific target for medium-term inflation and declares the target for inflation. The idea is that maintaining price stability is the best that monetary policy can do to support the economy in the long run.
James Company has 1,400 shares of $100 par preferred stock, which were issued at par. It also has 29,000 shares of common stock outstanding, and its total stockholders' equity equals $615,600. The book value per common share is:
Answer:
$16.4
Explanation:
Given: Preferred stock= 1400 shares of $100
Total share outstanding= 29000
Total shareholder´s equity= $615600.
Now, calculating the book value per shares.
Formula; Book value per shares= [tex]\frac{(Total\ equity-preferred\ equity)}{Total\ shares\ outstanding}[/tex]
Preferred stock= [tex]1400 shares \times \$ 100= \$ 140000[/tex]
∴ Preferred stock= $140000.
Book value per shares= [tex]\frac{(615600-140000)}{29000} = \frac{475600}{29000}[/tex]
∴ Book value per share= $16.4
The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in the tables below. Pepperland Price Qd Qs 60 230 180 70 200 200 80 170 220 90 150 240 100 140 250 Land of Submarines Price Qd Qs 60 430 310 70 420 330 80 410 360 90 400 400 100 390 440a) What would be the equilibrium price and quantity in each country in a world without trade? Pepperland: Price = $ , Quantity = Land of Submarines: Price = $ , Quantity = b) What would be the equilibrium price and quantity in each country if trade is allowed to occur? Price = $ , Quantity = c) How much steel will Pepperland export without a quota? units If the Land of Submarines imposes an anti-dumping import quota of 30, will it benefit or injure consumers and producers in each country. Land of Submarines: It will consumers and producers. Pepperland: It will consumers and producers. e) Will your answer to part d change if The Land of Submarines increases the import quota to 70? (Yes, No, or No effect)
Answer:
Please see attachment
Explanation:
Please see attachment
What is the function of a trial balance? Select one:
a. A trial balance has no function when a company uses the manual system.
b. A trial balance presents important graphs and notes to managers.
c. A trial balance shows all transactions in an account, which facilitates research.
d. A trial balance shows summarized balances by account, which facilitates analysis and financial statement compilation.
Answer:
d. A trial balance shows summarized balances by account, which facilitates analysis and financial statement compilation.
Explanation:
A trial balance shows balances of all ledger accounts in one place. These balances are used to enter data on the financial statements. Additionally, all ledger account balances in the trial balance makes preparation and analysis of financial statements easier. The debit side and the credit side must balance, however, it does not mean that it doesn't have any errors.
Last year, Pat spent $10 a day on miscellaneous things like downloading apps, buying music, and eating out. If Pat had invested that $3650 in a well-diversified investment paying a real return of 7 percent, compounded annually, how much would Pat have in 10 years?
Answer:
Pat would have $7,180.1 in 10 years
Explanation:
Data provided in the question:
Principal or amount of money deposited, P = $3650
Interest rate = 7%
Time, t = 10 years
for compounded annually, n = 1
Now,
The Future value (A) using compounding is given by the formula as:
[tex]A = P \left( 1 + \frac{r}{n} \right)^{\Large{n \times t}}[/tex]
on substituting the respective values, we get
Amount after 10 years = $3650 × (1 + 0.07)¹⁰
or
Amount after 10 years = $3650 × 1.967151
or
Amount after 10 years = $7,180.1
Pat would have $7,180.1 in 10 years
Using the compound interest formula, Pat's investment of $3650 at a 7% annual return, compounded annually for 10 years, would grow to approximately $7,225.22.
Explanation:If Pat had invested $3650 in a well-diversified investment with a real return of 7 percent, compounded annually, after 10 years, the investment would grow according to the formula for compound interest: A = P(1+r/n)^(nt), where P is the principal amount, r is the annual interest rate (in decimal form), n is the number of times that interest is compounded per year, t is the time the money is invested for in years, and A is the amount of money accumulated after n years, including interest.
In this case, Pat's initial investment (P) is $3650, the annual interest rate (r) is 7% or 0.07, the interest is compounded annually which makes n = 1, and the time frame (t) is 10 years. Substituting these values into the compound interest formula, we get: A = 3650(1 + 0.07/1)^(1*10).
This simplifies to: A = 3650(1.07)^10. Calculating the value, Pat's investment would grow to approximately $7,225.22 in 10 years.
Learn more about Compound Interest Calculation here:https://brainly.com/question/30955042
#SPJ3
In large, publicly traded corporations, typically the shareholders have little involvement in the day-to-day operations of the corporation, but rather the shareholders select a board of directors who hire officers and managers to operate the business True or False?
Answer: True
Explanation:
A publicly traded corporation is a type of corporation where shares are public traded. People who buy shares in the company are known as shareholders and are usually referred to as owners of the company.
The shareholders usually vote to elect board members usually through proxy voting.
The board of directors hire managers and oversee the running of the corporation.
Suppose an increase in the monetary base of $300,000 increases the quantity of money by $600,000. Calculate the money multiplier.
Answer:
Calculate the money multiplier.MM : 2
Explanation:
The money multiplier is the number of times that the monetary base is used in the economy, it's calculated as follows:
Money Supply = Monetary Base * Money Multiplier
Money Multiplier = Money Supply / Monetary Base
Money Multiplier = 600 / 300 = 2
The Money Supply is affected by the reserve of money that the banks keeps as required reserves and excess reserves, so, total reserves, it means less money to spent or lent.
The money multiplier used in this instance is 2.
What is Money Multiplier?
This refers to the number of times in which the monetary base is used in an economy,
Hence,e to find the money multiplier, we would:
Money Supply = Monetary Base * Money Multiplier Money Multiplier = Money Supply / Monetary Base Money Multiplier = 600 / 300 = 2Read more about money multiplier here:
https://brainly.com/question/4412587
An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a beta of 0.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investor’s portfolio?
Answer:
6.6%
Explanation:
For computing the required rate of return, first we have to determine the weights of stock A and stock B and portfolio beta which is shown below:
Stock A weighatge = Invested amount ÷ total amount
= $50,000 ÷ $75,000
= 0.66667
Stock B weighatge = Invested amount ÷ total amount
= $25,000 ÷ $75,000
= 0.333333
Total amount = $50,000 + $25,000 = $75,000
Now multiply the weighatge into its beta
= Stock A weighatge × stock A beta + Stock B weighatge × stock B beta
= 0.66667 × 1.50 + 0.333333 × 0.90
= 1 + 0.30
= 1.30
Now the required rate of return would be
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 4% + 1.30 × (6% - 4%)
= 4% + 1.30 × 2%
= 4% + 2.6%
= 6.6%
The required rate of return on the investor's portfolio can be calculated using weighted average of the individual stock returns, based on their betas and the return on the market.
Explanation:The required rate of return on an investor's portfolio can be calculated using the weighted average of the individual stock returns, based on their betas and the return on the market.
To calculate the portfolio return, we need to multiply the beta of each stock by the difference between the return on the market and the risk-free rate. Then, we multiply this by the amount invested in each stock, and sum up the results.
In this case, the required rate of return on the portfolio can be calculated as follows:
For stock A: Beta_A x (Return_Market - Risk-Free Rate) x Amount_Invested_A = 1.50 x (0.06 - 0.04) x $50,000 = $3,000For stock B: Beta_B x (Return_Market - Risk-Free Rate) x Amount_Invested_B = 0.90 x (0.06 - 0.04) x $25,000 = $900Finally, we add up the individual returns on each stock to get the required rate of return on the portfolio:
Required Rate of Return = $3,000 + $900 = $3,900
A portfolio of stocks can achieve diversification benefits if the stocks that comprise the portfolio are ________.
A) not perfectly positively correlated
B) perfectly correlated
C) susceptible to common risks only
D) both B and C
Answer:
Option A is the correct answer.
Explanation:
A portfolio can only achieve diversification benefits if the securities that make up the portfolio are negatively correlated. This is because non-performance of a stock does not affect other stocks negatively. Negatively corrected stocks are the best when it comes to portfolio selection. This will enable the investor to reduce unsystematic risk to the barest minimum.
A portfolio achieves diversification benefits when the stocks it comprises are not perfectly positively correlated, allowing for risk reduction as they react differently to market conditions. Perfect correlation does not allow for diversification benefits.
A portfolio of stocks can achieve diversification benefits if the stocks that comprise the portfolio are not perfectly positively correlated. Diversification strategies emphasize the importance of mixing a variety of investments as part of risk management. By holding various stocks that respond differently to market conditions, investors can reduce their total risk. Stocks that are not perfectly positively correlated do not move in unison, which means when one stock's value falls, another's may not, thereby preserving the portfolio's value to some extent.
On the other hand, if the components of a portfolio are perfectly correlated, they would move identically, and diversification would not offer any risk reduction. Also, if the stocks are susceptible only to common risks, then the risks are not truly diversified. Thus, an effective diversified portfolio contains assets that behave independently from each other, providing a smoothing effect on overall returns.