The share price for the merged firm is $48.09. Therefore, the correct option is C
Explanation:
(a)-Net Present Value (NPV)
Net Present Value (NPV) = Market Value of the Target Firm + synergistic benefit – Acquisition Value
= [3600 Shares multiply $19] plus $16700 minus [3600 Shares multiply $21]
= $68400 plus 16700 minus 75600
= $9500
“Net Present Value (NPV) = $9500
(b) Share Price
Share price = [Market Value of the Bidding firm + NPV] / Number of shares of the Bidding firm
= [( 8700Shares multiply $47) plus $9500] / 8700 Shares
= [$408900 + 9500] / 8700 Shares
= $48.09 per share
“Share Price = $48.09 per share”
A student makes the following observation: "The Dow Jones Industrial Average currently has a value of 13,500, while the S&P 500 has a value of 1,500. Therefore, the prices of the stocks in the DJIA are nine times as high as the price of the stocks in the S&P 500." Is the student's observation correct
Answer: No, these indexes are averages of stock prices and indicate the overall performance of the stock market.
Explanation:
GIVEN the following ;
Dow Jones industrial average = $13,500
S&P 500 Industrial average = $1,500
Prices of stock in the DIJA are not nine times as high as the price of stocks in the S&P 500, the indexes displayed are only used as a measure of performance obtained from large companies listed on the United States stock exchange market. The measurement of the Dow Jones industrial average takes 30 large companies into cognizance while the S&P 500 averages stocks from 500 large companies.
The annual demand for a product is 14,500 units. The weekly demand is 279 units with a standard deviation of 85 units. The cost to place an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.20 per unit. a. Find the reorder point necessary to provide a 95 percent service probability. (Round your answer to the nearest whole number.) Reorder point b. Suppose the production manager is asked to reduce the safety stock of this item by 55 percent. If she does so, what will the new service probability be?
Answer:
a) 2082 units
b) 0.6923
Explanation:
a) Recorder point
Lead time = 6 weeks
Expected demand during this time is 6*279 = 1674 units
Standard deviation = 85 units
Standard deviation for the 6 week period is 85 units* 6^0.5 = 208 units
At the 95% probability level, the z-score is 1.96 (look up on table)
Safety Stock = 1.96×208 units = 408 units
Recorder point = Safety stock + expected demand during the time period so,
1674 + 408 = 2082 units
b) 45% of 408 is about 184, so using the safety stock formula:
Safety Stock = X*180 = 184
X is your z-score which comes out to about 1.02. Look up on your table and correspond to the probability value.
p-value = 0.6923
Joey realizes that he has charged too much on his credit card and has racked up $4,000 in debt. If he can pay $125 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt
Answer:
it take him 43.92 months to pay off the debt
Explanation:
Use financial calculator to find the number of months to pay off the debt
PV = -4000 is the value of credit card debt in present value
FV = 0 as loan is zero at the end of the period
PMT = 125 per month payment
1 / Y = 18% /12 = 1.5% per month interest rate
Click CPT
Click N = 43.92 months
An engineer bought a $1000 bond of an American airline for $875 just after an interest payment had been made. The bond paid a 6% coupon interest rate semiannually. What nominal rate of return did the engineer receive from the bond if he held it 13.5 years until its maturity
Answer:
Number of coupon payments = 13.5*2= 27
Coupon = 6%*1000/2= 30
Let rate be r
Present value of all future payments = $87
875 = 30*(1-1/(1+r)^27)/r + 1000/(1+r)^27
R= 3.74%
Nominal rate = 3.74%*2 = 7.49%
1. The monthly market shares of General Electric Company for 12 consecutive months follow. Develop three-month and four-month moving averages for this time series. Comparing the three-month and the four-month moving average, which one provide the better forecasts based on MSE? Explain your reasoning.
Answer:
MSE for 3-month MA = 0.0790
for 4-month, it is 0.066
Hence, 4-month MA is better.
Explanation:
In statistics, the mean squared error, MSEor mean squared deviation (MSD) of an estimator that is of a procedure for estimating an unobserved quantity, measures the average of the squares of the errors, that is, the average squared difference between the estimated values and the actual value.
This is used to ascertain the preferred or better forecast from 2 or more given parameters.
Kindly check the attachment for the step by step explaination of the MSE forecast.
Final answer:
The question involves calculating the three-month and four-month moving averages for General Electric Company's monthly market shares and determining which average provides better forecasts by comparing their Mean Square Errors.
Explanation:
The question involves applying moving averages, a statistical technique used extensively in time series analysis, to the monthly market shares of General Electric Company. To start, three-month and four-month moving averages will be calculated by taking the average of every three and four consecutive months respectively. This method smooths out short-term fluctuations and highlights longer-term trends or cycles. Calculating these moving averages and then comparing their Mean Square Error (MSE) will help in determining which moving average provides a better fit or more accurate forecast of the data. The MSE is calculated by taking the average of the squares of the errors, which are the differences between the actual values and the values predicted by the model. A lower MSE indicates a better fit to the data. Without the actual data provided in the question, specific calculations cannot be performed in this response.
In essence, if one aims to remove or reduce the impact of seasonal variations and better understand underlying trends in time series data, moving averages can be a powerful tool. The decision between using a three-month or four-month moving average would depend on which provides a lower MSE, indicating it is better at forecasting or smoothing the data while minimizing the error between the predicted and actual values.
Bubbles Inc. produces gummy bears. The company purchases raw materials, stores them in warehouse, and then runs them through two processes: production and packaging. During September, the production process incurred the following costs in processing 20,000 gummy bears Wages of workers operating production equipment$56,500 Manufacturing overhead allocated to the production department Direct materials 8,500 135,000.
Use the FIFO method to compute the September conversion costs in the Production Department.
A) $8,500
B) $200,000
C) $56,500
D) $65,000
Answer:
D. $65,000
Explanation:
Data provided
Direct labor = $56,500
Manufacturing overhead = $8,500
The computation of Conversion costs is shown below:-
Conversion costs = Direct labor + Manufacturing overhead
= $56,500 + $8,500
= $65,000
Therefore for computing the conversion cost we simply add the direct labor with manufacturing overhead.
Final answer:
The conversion costs for Bubbles Inc. in September, calculated as the sum of labor ($56,500) and manufacturing overhead ($135,000), total $191,500. This answer does not match any of the given options.
Explanation:
To calculate September's conversion costs in the Production Department we will use the FIFO method for Bubbles Inc., which produces gummy bears. Conversion costs include labor and manufacturing overhead costs but do not include direct materials. In this case, the conversion costs would be the sum of the wages of workers operating production equipment ($56,500) and the manufacturing overhead allocated to the production department ($135,000).
To find the total conversion costs, we simply add these two amounts together:
Wages of Workers: $56,500Manufacturing Overhead: $135,000Total Conversion Costs = $56,500 + $135,000 = $191,500.
Based on the information provided and the typical definition of conversion costs, the correct calculation of conversion costs is not listed among the options A) $8,500, B) $200,000, C) $56,500, D) $65,000.
Suppose you found out that the Japanese are on the verge of introducing their own mayonnaise substitute next month. Sam does not know this and has just turned down your final offer for the insurance. Assume that Sam tells you SCAM is only six months away from perfecting its mayonnaise substitute and that you know what you know about the Japanese. Would you raise or lower your policy premium on any subsequent proposal to Sam? Based on his information, would Sam accept? A. You would raise your policy premium substantially and Sam would not accept because he doesn't know about the Japanese. B. You would raise your policy premium substantially and Sam would accept because the higher premium would signal there was a greater chance of a loss. C. You would not offer Sam a policy at any premium because given the new information, Sam will almost certainly sustain a loss.
Answer: A. You would raise your policy premium substantially and Sam would not accept because he doesn't know about the Japanese.
Explanation:
In such a scenario as the one described above, the best option as an Insurance Agent is indeed to raise premiums substantially.
As the Japanese will most probably get to market first with the new Mayonnaise Substitute, they will have the rights to it's invention and could even patent it.
This means that Sam and SCAM will most likely suffer a loss as a result of this.
As there is such a high chance of loss, charging a substantially higher premium to enable coverage is only logical and makes business sense.
Sam does not know however that the Japanese are so far ahead and having rejected a substantially lower offer, will reject the newer, substantially higher one as well.
If the pound sterling appreciates against the U.S. dollar, England buys _____ U.S. goods, causing the U.S. aggregate demand curve to shift to the _____. more; left fewer; right fewer; left more; right
Answer: More, Right
Explanation:
Appreciaton of a currency means the value of the currency has increased. When the pound sterling appreciates against the United States dollar, England will buy more of the products in the United States because the goods are cheaper when compared to their own currency.
Due to the increase in the United States product bought by England, the aggregate demand curve of the United States shifts to the right. The shift to the right of the aggregate demand curve shows that there is an increase in demand.
Below are a number of transactions that took place in Willie Corporation during the past year:
Indicate how each of them would be classified on a statement of cash flow by selecting the appropriate option from the dropdown provided under Activity and Cash inflow/Outflow. (If no option is suitable, select option "None".)
Options for Activity: Financing, Investing, None, or Operating
Options for Cash Inflow / Outflow: Cash Inflow, Cash Outflow, or None
ACTIVITY CASH INFLOW/OUTFLOW
A.) Common stock was sold for cash:
B. Equipment was sold for cash
C. A long term loan was made to a subsidiary
D. Interest was received on loan to subsidiary
E. Interest Payable, a curren liability, was reduced
F. A stock dividend was declared and issued on common stock
G. A building was acquired by issuing shares of common stock
H. Accrued Income Taxes, a current liability account, was reduced
I. Long term investments were sold
J. Cash dividends were declared and paid.
K. Preferred stock was sold for cash
L. Bonds were retired
M. Dividends were received on an investment
N. Equipment was purchased by giving a long term note to the seller
Answer:
A. Common stock was sold for cash: Financing
B. Equipment was sold for cash Investing
C. A long term loan was made to a subsidiary Investing
D. Interest was received on loan to subsidiary Investing
E. Interest Payable, a current liability, was reduced Operating
F. A stock dividend was declared and issued on common stock None
G. A building was acquired by issuing shares of common stock None
H. Accrued Income Taxes, a current liability account, was reduced Operating
I. Long term investments were sold Investing
J. Cash dividends were declared and paid. Financing
K. Preferred stock was sold for cash Financing
L. Bonds were retired Financing
M. Dividends were received on an investment Investing
N. Equipment was purchased by giving a long term note to the seller None
Sheffield Corp. sold some of its plant assets during 2021. The original cost of the plant assets was $904000 and the accumulated depreciation at date of sale was $843000. The proceeds from the sale of the plant assets were $90800.
The information concerning the sale of the plant assets should be shown on Sheffield's statement of cash flows (indirect method) for the year ended December 31, 2021, as a(n):
A) subtraction from net income of $29,800 and a $61,000 increase in cash flows from financing activities.
B) addition to net income of $29,800 and a $90800 increase in cash flows from investing activities.
C) subtraction from net income of $29,800 and a $90800 increase in cash flows from investing activities.
D) addition of $90800 to net income.
Answer:
The correct answer is Option C.
Explanation:
In the indirect cash flows statement, there are 3 sections, namely: net cash flows from operating activities, net cash flows from investing activities and net cash flows from financing activities.
The items in the question only affect the first two. Under the net cash flows from operating activities, we need to subtract the gain realized from the disposal of the plant assets from net income, which is Sales proceed minus Net book value, i.e., $90,800 - ($904000- $843000) = $29,800.
The sales proceed is $90,800. This would be recognized as cash inflow under net cash flows from investing activities.
Johanna Springer, who works as a sales executive at Pascal's Bank, is upset at the way her manager, Emma Womack, always calls her in for one-on-one meetings to discuss her underperformance. Though Springer makes a higher number of sales calls and works longer hours than last year, her sales figures are still low. She knows that the main reason behind her underperformance is the recent economic meltdown in the country. However, her manager feels that Springer's underperformance is the result of her laid-back attitude and has nothing to do with external factors. In this situation, Womack's behavior is characterized by a(n) ____.
A. anchoring bias
B. contrast effect
C. fundamental attribution error
D. self-fulfilling prophecy
E. Pygmalion effect
Answer:
The correct answer is letter "C": fundamental attribution error.
Explanation:
The fundamental attribution error is a judgment individuals make about others in which they focus more on the others' inner characteristics than external situations at the moment of qualifying their behavior. The judgment is biased in such a case since it does not consider all the possible variables that can affect people's actions.
This judgment values more the type of person an individual could be rather than the environmental events that can influence on that individual.
Jebali Corporation, a calendar year taxpayer utilizing the completed contract method of accounting, constructed a building for Samson, Inc., under a long-term contract. The gross contract price was $2,300,000. Jebali finished construction in 2019 at a cost of $2,100,000. However, Samson insisted that Jebali redo the doorway; otherwise, the contract price would be reduced. The estimated cost of redoing the doorway is $80,000. In 2020, the dispute is settled and Jebali fixed the doorway at a cost of $65,000. a. How much must Jebali include in gross income
Answer:
Jabeli must include = $2,220,000
Explanation:
As per the data given in the question,
Gross Income in 2019 = $2,300,000 - $80,000
= $2,220,000
So, Jabeli should include $2,220,000 in gross income and Jabeli is allowed to deduct $2,100,000 in 2019
In completed contact method of accounting :
Till the contract is completed and accepted, no revenue from the contract is recognized
In this case the purchaser may desire additional work to be done on a long term contract.
The regulations do not provide any amount of income(or loss) until the dispute is resolved.
Joan, is a jewelry designer who had created a unique new jewelry piece called a neacklet. It can be either a necklace or a bracelet. She would like to start her own business, but is not sure which form would suit her needs. She is very concerned about keeping control of her designs but has no capital except a small business loan. An older gentleman who owns his own jewelry store is eager to retire but has no buyers for his business. He has offered Joan a partnership with a chance for her to buy him out later. NewJewelry a large jewelry franchise who sells to the Home Shopping Network has offered Joan a chance to buy into their franchise and they will trademark and patent her design as part of their jewelry line. Joan comes to you to ask your advice. What would you tell her and why? Make sure that you explain the advantages and disadvantages of every business opportunity.
Answer and explanation:
In Joan's case, a general partnership will provide her control over her business that will be shared with the older gentleman who owns a jewelry store. Profits would be distributed evenly regardless of the contribution of each partner in the business. However, the older gentleman has offered Joan the chance of purchasing his share later on which would provide her the total control of the business and the patent of her creation.
The other option Joan has available is purchasing a franchise. This will allow Joan to avoid the initial costs of introducing her products to the market and the risks of not having enough consumers since her brand name is new. Though she will lose access to the patent of her creation and periodically Joan will need to pay NewJewelry a fee for using its name.
Therefore, as Joan prefers to have control over her designs, it would be more convenient for her to choose the general partnership.
Pease Answer ASAP. I need help with sources to answer the following question:
Does having a collage degree give you a higher income classification?
Answer:
No, a college degree can help you earn a better salary but nothing is guaranteed. For example, someone with a college degree earns on average around $50,000 per year, while those with only a high school degree earn around $28,000 (that is almost half of a college graduate).
But the salary you earn is not guaranteed, it might be much higher or it might be zero. If you work hard you might get a raise pretty soon or you can get promoted, but if you are lazy then you can get fired.
The income classification is based on income, not on education. There are people who never graduated from college that are extremely rich, e.g. Bill Gates, Mark Zuckerberg, but they are not the majority. That is why they serve as examples so often. Most rich people actually do have a college degree, but they are rich not because of their college degree, but because of their work.
M Company has the following information available before recording the adjustment at the end of the year: Accounts Receivable $800,000 Allowance for doubtful accounts per books before adjustment $50,000 credit Bad Debt Expense calculated using percentage of receivables method $15,000 The cash (net) realizable value of the accounts receivable at the end of the year after adjustment is Select one: a. None of the above b. $735,000 c. $685,000 d. $750,000 e. $800,000
Answer:
b. $735,000
Explanation:
Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance.
Allowance for Doubtful Accounts balance before adjustment = $50,000 Credit
Bad Debt expense based on percentage of receivables = $15,000
This adjustment will added to the balance of $50,000 to make Allowance for Doubtful Accounts ending balance equals to $65,000 ( $50,000 + $15,000 ).
Net realizable value of account receivable is the net value of Allowance for Doubtful Accounts and Account receivable.
Net Realizable value of the accounts receivable = $800,000 - $65,000 = $735,000
Using the information below, calculate net cash flows from financing activities. Net income $ 120,000 Receive cash from issuing stock 80,000 Pay cash for equipment 90,000 Increase in accounts receivable 10,000 Depreciation expense $ 30,000 Increase in accounts payable 5,000 Receive cash from sale of land 75,000 Pay cash dividends 20,000 Multiple Choice $60,000. $80,000. $100,000.
Final answer:
To calculate net cash flows from financing activities, we add up the cash inflows and subtract the cash outflows related to financing activities.
Explanation:
To calculate net cash flows from financing activities, we need to consider the cash inflows and outflows related to financing activities. In this case, the cash inflows include the cash received from issuing stock and the cash received from the sale of land, which amount to $80,000 and $75,000 respectively. The cash outflows include the cash paid for equipment and the cash paid as dividends, which amount to $90,000 and $20,000 respectively.
Therefore, the net cash flows from financing activities can be calculated as follows:
(Cash inflows - Cash outflows) = ($80,000 + $75,000) - ($90,000 + $20,000) = $145,000 - $110,000 = $35,000.
Hence, the correct answer is $35,000.
The elasticity of output with respect to capital Group of answer choices is the inverse of the elasticity of output with respect to labor. is the increase in output resulting from an increase in the capital stock. is the percentage increase in output resulting from a 1 % increase in the capital stock. is always greater than one.
Answer:
cc
Explanation:
What is the purpose of a study
Answer:
Stephen Kim, a Korean-American highschool student says, "The purpose of studying is 50% for survival and 50% out of interest, passion, and curiosity."
Explanation:
No study = poor paying job or no money. No money = no food, water because money is your trading token to get anything in this world.
The world is based off of money and the ammount of money you make is from your educaiton. It sucks but what are you going to do about it?
What's the purpose of living without happienss? That's why you study 50% because of passion, curisoity, or etc. What would happen if I go inside the black hole? Study science and build something and get in there.
What is North Korea like? Study politics and econmoics and go undercover to see what's it's like.
I want an ironman suit to fight crime and protect this world against violent people. Study engineering and physics and build one.
You study half for survival and half out of curisity, interest, and passion.
Identify which control activity is violated in each of the following situations. Control Activity 1. Once a month, the sales department sends sales invoices to the accounting department to be recorded. 2. Leah Hutcherson orders merchandise for Rice Lake Company; she also receives merchandise and authorizes payment for merchandise. 3. Several clerks at Great Foods use the same cash register drawer.
Answer:
The control activity violated in each
situation is given below in the explanation
Explanation:
1). Once a month, the sales department sends sales invoices to the accounting department to be recorded---- Control activity violated is the Documentation procedures
Because Documents provide evidence that transactions have occurred.And since this occurs constantly in a buisness, Source documents for accounting entries should not be done only one a month but be promptly sent to the accounting department to ensure timely recording of all transactions
2) Leah Hutcherson orders merchandise for Rice Lake Company; she also receives merchandise and authorizes payment for merchandise---- Control activity violated is in the Segregation of duties.
Here, the responsibility for related activities should be assigned to different individual to prevent errors and irregularities. The responsibility for record keeping for ordering merchandise should be separate from the authorization of payment of the merchandise.
3. Several clerks at Great Foods use the same cash register drawer.-------Control activity violated is in the
Establishment of responsibility.
-----Establishment of Responsibility is a very important characteristic of buisness and therefore should be assigned to specific individual not many people at once especially in the authorization of transaction or handling of cash registers.
10. Dixon Construction Company was awarded a contract to construct an interchange at the junction of U.S. 94 and Highway 30 at a total contract price of $15,000,000. The estimated total costs to complete the project were $12,000,000. (a) Make the entry to record construction costs of $7,200,000, on construction in process to date. (b) Make the entry to record progress billings of $4,000,000. (c) Make the entry to recognize the profit that can be recognized to date, on a percentage-of- completion basis.
Answer:
Journal Entry
Explanation:
Books of (Dixon Construction Company)
Journal Entry
Date Account Title and Explanation Debit Credit
A. Construction in process A/c Dr. $7,200,000
Cash / Accounts payable A/c $7,200,000
(Being construction cost paid)
B. Accounts receivables A/c Dr. $4,000,000
Billing in progress A/c $4,000,000
(Being record of billing in progress)
C. Construction expenses A/c Dr. $7,200,000
Construction in process A/c Dr. $1,800,000
Revenue from construction A/c $9,000,000
(Being income generate from contract)
Note:
Revenue from construction = Total contract(Construction in process / estimated total costs to complete)
Revenue from construction = $15,000,000($7,200,000 / $12,000,000)
Revenue from construction = $9,000,000
Construction in process = Revenue from construction - Construction expenses
Construction in process = $9,000,000 - $7,200,000
Construction in process = $1,800,000
The journal entries involved will record the construction costs, billings progress, and recognising of profits by debiting and crediting the appropriate accounts. The profit is recognised on a percentage-of-completion basis, which involves calculating the percentage completion first.
Explanation:The subject is related to accounting process and entries in construction companies. The question involves distinct steps:
(a) To record construction costs of $7,200,000 on construction in process to date, an entry should be made debiting 'Construction In Process' account and crediting 'Cash' or 'Accounts Payable' by $7,200,000.
(b) To record progress billings of $4,000,000, an entry should be made debiting 'Accounts Receivable' and crediting 'Billings on Construction in Process' by $4,000,000.
(c) To recognize the profit on a percentage-of-completion basis, calculate the percentage completion first which is current year costs of $7,200,000 divided by total estimated costs of $12,000,000, which equals 60%. Then, calculate the total revenue recognised to date, which is 60% of total contract price ($15,000,000), equals $9,000,000. The journal entry would be to debit 'Construction in process' and credit 'Sales Revenue' for $9,000,000, and then to credit 'Costs of goods sold' and debit 'Construction in process' for $7,200,000.
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On January 2, 2020, a calendar-year corporation sold 8% bonds with a face value of $2510000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2316000 to yield 10%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2020
Answer:
$231,600
Explanation:
In effective interest rate method, the interest expense is calculated on the the beginning Book value of the bond and market interest rate. Deducting the coupon payment from this value we get the amortization value of discount given on the issuance of bond
Interest Expense = Book value of the bond x Market rate = $2,316,000 x 10% = $231,600
Coupon Payment = Face value x coupon rate = $2,510,000 x 8% = $200,800
Discount Amortization = Interest Expense for the period - Coupon Payment = $231,600 - $200,800 = $30,800
$200,800 interest will be paid, Discount will be amortized by $30,800, and total expense of $231,600 will be charged as interest expense.
In 2020, Sheridan Company, issued for $102 per share, 94000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Sheridan's $25 par value common stock at the option of the preferred stockholder. In August 2021, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
Answer:
$2,538,000
Explanation:
Paid in capital in excess of par-common stocks= $102*94,000-94000*3*25=$2,538,000
The preference shares were valued at $102*94,000 less the amount of common stocks issued at par (94,000*3*25) for conversion of preference stocks to common stocks will give paid in capital in excess of par for common stocks.
The excess amount is also called share premium paid.
Your professor moonlights to make ends meet during the summer months and has a knack for painting houses. You agree to pay $500 over whatever the materials and equipment rental cost for the job and delight in sipping lemonade in the shade watching your poor professor perform under a(n) ________.
A) Time and material contract.
B) Fixed wage contract.
C) Cost-plus contract.
D) Lump-sum contract.
Answer: Cost plus contact
Explanation:
A cost-plus contract is a form of contract whereby the contractor is paid for all of its allowed expenses including additional payments in order to allow for a profit.
A cost plus contract is usually used when the quality, delivery time and performance is of more importance than the cost. In cost plus contract, the final cost may be smaller than the fixed cost because the contractors don't usually inflate price and also as a result of lesser price competition.
A cost price contract also gives more room for control and oversight over a contractors work and is also flexible which gives room for specification changes.
The correct answer is a Cost-plus contract, where the customer pays an amount over the actual costs of materials and labor. This type of contract provides flexibility and compensates for unpredictable expenses in a project. Hence the correct option is C.
Cost-plus contract. In a cost-plus contract, the customer agrees to pay the contractor an amount over the actual cost of materials and labor. In the scenario described, you are paying your professor $500 over the cost of materials and equipment rental, which is a typical arrangement in a cost-plus contract agreement. The professor's payment is not fixed (which rules out B and D) and does not solely depend on the time and materials without the additional fixed sum (which rules out A). Cost-plus contracts are common in situations where it's difficult to estimate the total cost of a project ahead of time. They offer a degree of flexibility for the contractor, as they can be reimbursed for all legitimate expenses on the job, plus an agreed-upon fee that represents their profit. Such a format is beneficial when specific details or potential complications of a job cannot be predicted in advance.
Rick and his wife Michonne are building their dream home in Alexandria, VA. The couple have designed a two-story craftsman style house, complete with a samurai style training dojo and shooting range on the edge of their property. They have hired Walker Construction LLC, owned and operated by Negan Walker to complete the construction of their home. Negan has agreed to complete their home in four months. The contract has no provisions specifically dealing with payments. Rick and Michonne would like to pay Negan when the house is completed, however Negan is insisting on being paid as he works. Based on the information obtained chapter 17, structure a payment schedule that takes into account the needs of both owner and contractor. You can refer to the sample AIA Form of Agreement Between Owner and Architect on page D-2 for inspiration. However I am looking your own ideas based on the reading.
Answer:
Pay as you earn, P.A.Y.E
Explanation:
The best method to be adopted here is pay as you earn, P. A. Y. E.
Pay -as-you -earn is a type of payment, whereby the worker is being paid as per the amount, hour, day, week or month he used to work.
Most times, it is always based on daily basis.
In this aspect, Michonne and Negan should agree on P. A. Y. E method of payment. Because, it is the only method that will satisfy both parties.
To structure a payment schedule that meets the needs of both the owner and contractor, consider a milestone-based payment system.
Explanation:In order to structure a payment schedule that meets the needs of both the owner and contractor, Rick and Michonne could consider a milestone-based payment system. This would involve breaking the project down into specific milestones or phases, and making payments to Negan Walker upon the completion of each milestone. For example, they could agree to pay Negan a certain percentage of the total contract price upon the completion of the foundation, another percentage upon the completion of the framing, and so on until the project is finished. This would allow Rick and Michonne to pay Negan as the work progresses while also ensuring that Negan is paid for the work he has completed.
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The Chem-Tex Chemical company is considering two additives for improving the dry-weather stability of its low-cost acrylic paint. Additive A will have a first cost of $110,000 and an annual operating cost of $60,000. Additive B will have a first cost of $175,000 and an annual operating cost of $35,000. If the company uses a three-year recovery period for paint products and a MARR of 20% per year, which process is favored on the basis of an incremental rate of return analysis?
Answer:
The preferred process is that with lower cost which is Additive A with a PV cost of $236,388.89
Explanation:
To determine the preferred process , we compare the present value of the two alternatives and select the lower of the two two cost.
This will be done as follows
Alternative one
Total PV = First payment + PV of annual operating cost
PV of Annuity =A × (1-(1+r)^(-n)/r
A- annual operating cost, r- 20%, n=3
PV of operating cost
= 60,000 × (1- 1.2^(-3))/0.2
= $126,388.89
Total PV = $110,000 + $126,388.89
= $236,388.89
Alternative Two
PV of operating cost
= 35,000 × (1-1.2^(-3))/0.2
= 73,726.85
Total PV = $175,000 + $73,726.85
= $248,726.85
The preferred process is that with lower cost which is Additive A with a PV cost of $236,388.89
IDS false alarms cause ________. 1. companies to ignore IDS alerts 2. companies to install multiple IDSs using different methods 3. Both companies to ignore IDS alerts and companies to install multiple IDSs using different methods 4. Neither companies to ignore IDS alerts nor companies to install multiple IDSs using different methods
Answer:
The correct answer is letter (1): companies to ignore IDS alerts.
Explanation:
An Intrusion Detection System (IDS) is a software destined for the detection of unauthorized access in devices or a network. The systems administrator can manage the recognition of an intruder thanks to an alert that is activated when such a thing happens.
The problem comes when false IDS alarms are repeated constantly. At a certain point, the system administrator might ignore the IDS alert but it is recommended that every single alarm be analyzed for a real or false possible threat.
Intrusion Detection Systems (IDS) false alarms can make companies ignore alerts due to frequent non-threat alerts (alarm fatigue) or compel them to install multiple IDSs using varied methods to reduce the occurrence of false alarms.
Explanation:IDS (Intrusion Detection Systems) false alarms can often lead to 1. companies ignoring IDS alerts, and 2. companies installing multiple IDSs using different methods. This is because false alarms can cause alarm fatigue, where the frequent occurrence of false alerts leads to complacency, making companies less likely to respond to genuine threats. On the other hand, in attempts to reduce the number of false alarms, companies could use various detection methods and opt for multiple IDS systems.
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Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $250,000 and have a useful life of five years. The system yields an incremental after-tax income of $72,115 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. A machine costs $170,000, has a $13,000 salvage value, is expected to last eleven years, and will generate an after-tax income of $39,000 per year after straight-line depreciation.
Answer:
The operating system has payback of 3.47 years
The machine has a payback of 4.36 years
Explanation:
Payback period is the length of time taken for the initial investment to repay itself.
The project after the payback period would begin to yield returns on the investment.
Payback period=Initial investment/after-tax income per year
For the operating system the initial investment is the cost of $250,000
after-tax income is the incremental amount of $72,115
payback period=$250,000/$72,115=3.47 years
The machine has an initial capital outlay of $170,000
after tax income of $39,000
payback period=$170,000/$39,000=4.36 years
A company has some bottling equipment which cost $8.2 million, has a net book value of $3.8 million, estimated future cash flows of $3.55 million, and a fair value of $2.95 million. How much is the asset impairment loss
Answer:
The impairment loss of assets amounts to $0.85 million
Explanation:
Asset impairment incur when there is decrease or fall in the fair value of the asset below the recorded cost or net book value of the assets. It is the difference among the assets carrying value and fair value.
The impairment loss of assets is computed as:
Impairment loss of assets = Net book value of asset - Fair value of the asset
where
Net book value of asset amounts to $3.8 million
Fair value of the asset amounts to $2.95 million
So, putting the values above:
Impairment loss of assets = $3.8 million - $2.95 million
Impairment loss of assets = $0.85 million
Many factors determine how much debt a firm takes on. Chief among them ought to be the effect of the debt on the value of the firm. Does borrowing create value? If so, for whom? If not, then why do so many executives concern themselves with leverage?
Answer: Yes, borrowing creates value for equity shareholders. This is mainly as a result of tax benefits of interests paid on borrowings
Explanation:
Yes, borrowing does create value for the equity shareholders, this is mainly as a result of tax benefit of interests paid on borrowings.
If leverage causes changes, then it should lead to changes in either the discount rate of the firm(which is weighted-average cost of capital) or changes in the cash flows of the firm.
Leverage causes changes in both discount rate (WACC) and not on the cash flows to the firm. Since, WACC is known as the weighted average of cost of debt and cost of equity and since the cost of debt is usually less than the cost of equity, the WACC decreases with increase in borrowings, when the equity beta does not change. Furthermore, as the cash flows to firm is calculated before the interests paid on borrowings, the increased borrowings wont affect the Value of asset (FCFF) .
Cash flow is discounted at the rate that is consistent with the risk of those cash flow. At the cost of capital for the unlevered firm, pure businesses should be discounted. Financing flow needs to be discounted at the rate of return required by the provider of debts.
Answer:
Borrowing creates value for the firm. The use of borrowed funds can affect the firm positively or negatively, because of the higher level of risk, therefore it is imperative that the executives concern themselves.
Explanation:
The use of financial leverage can make or break the company as there are many risks involved, one being the repayment of the principal amount with interest, regardless of whether the firm made a profit or not by using those funds. Value is created by the firm if they use financial leverage as funds are used to pay for operations and generate an income, and, if successful – make a profit. “At an ideal level of financial leverage, a company’s return on equity increases because the use of leverage increases stock volatility, increasing its level of risk which in turn increases returns. If earnings before interest and taxes are greater than the cost of financial leverage than the increased risk of leverage will be worthwhile.” (Lumen Boundless Finance, 2020)
The liquidity (ability to pay for short term debts) and solvency (ability to pay for all debts) of a company is measured by the company’s use of leverage and its survival after that. This is why shareholders and management must check these ratios often and keep them at a positive position.
On December 31, 2019, Marigold Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1, $1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,800,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,920,000 2. March 1, 2020, expenditure included land costs of $180,000 3. Interest revenue earned in 2020 $58,800 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest ____________$ Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit Date Account Titles and Explanation December 31, 2020
Answer:
Interest on borrowed = $237,900
Actual interest paid = $1,351,200
Explanation:
As per the data given in the question,
Marigold Inc. borrowed = $3,600,000 at 13 % payable annually
Expenditure related to the building :
March 1 = $432,000
June 1 = $720,000
July 1 = $1,800,000
December 1 = $1,800,000
As per the formula,
Weighted avg = (Amount × no. of months ) ÷ months in a year
Amounts no. of months months in a year weighted avg
Mar 1 $432,000 10 12 $360,000
June 1 $720,000 7 12 $420,000
July 1 $1,800,000 6 12 $900,000
Dec 1 $1,800,000 1 12 $150,000
Total weighted avg = $1,830,000
Interest on borrowed = $1,830,000 × 13%
= $237,900
Actual interest paid :
$3,600,000 × 13% = $468,000
$4,800,000 × 14% = $672,000
$1,920,000 × 11% =$211,200
So, total Actual interest paid = $1,351,200
Final answer:
To determine the amount of interest capitalized in 2020 for the construction of the building, calculate the weighted-average accumulated expenditures and multiply by the interest rate. The amount of interest to be capitalized is $394,500. The journal entry to record the capitalization of interest and recognition of interest expense is provided.
Explanation:
In order to determine the amount of interest capitalized in 2020 in relation to the construction of the building, we need to calculate the weighted-average accumulated expenditures for the period. The formula to calculate the weighted-average accumulated expenditures is:
Weighted-Average Accumulated Expenditures = (Expenditure 1 x Time 1) + (Expenditure 2 x Time 2) + ... + (Expenditure n x Time n)
Once we have the weighted-average accumulated expenditures, we can calculate the amount of interest to be capitalized using the formula:
Interest to be Capitalized = Weighted-Average Accumulated Expenditures x Interest Rate
Based on the given information, the amount of interest to be capitalized in 2020 in relation to the construction of the building is $394,500.
The journal entry to record the capitalization of interest and the recognition of interest expense at December 31, 2020, would be:
Date Account Titles and Explanation
December 31, 2020 Building-in-Progress $394,500
Interest Payable $394,500