Answer:
Course cost netxt year: 919.8
Perpetuity fund at 6% return: 24,205.27
Perpetuity funds at 8% return: 15,858.63
Explanation:
1 student 300
3 student 900
it grows at 2.2% per year
the return on the fund will be of 6%
The cost of the couse for next year will be:
900 x (1+2.2%) = 900 x 1.022 = 919.8
The perpetuity will be calculate as follow:
[tex]\frac{cost}{return-growth} = Perpetuity[/tex]
[tex]\frac{919.8}{0.06-0.022} = Perpetuity[/tex]
Perpetuity fund: 24205.26316
Ifthe return is for 8% per year:
[tex]\frac{919.8}{0.08-0.022} = Perpetuity[/tex]
Perpetuity funds: 15858.62069
The cost for 3 students to take the finance course next year would be $919.8. The initial endowment needed would be $22,995. An 8% fund's rate of return would decrease the necessary endowment to $15,996.55.
Explanation:The main concern of the problem shared involves evaluating a financial endowment created for the purpose of sponsoring students for a finance course. This falls under the field of Financial Mathematics, particularly focusing on the concept of perpetuities.
The cost for 3 students to take the finance class next year would require accounting for a 2.2% increase on the current cost of $900. This would come out to $900 * 1.022 = $919.8. To calculate the endowment amount needs to cover the perpetuity, Marla's parents would need to determine the present value of a growing perpetuity. The equation PV = D / (r - g) could be used, where D is the cost of the class next year, r is the return rate of 6%, and g is the growth rate of 2.2%. Using these values, the endowment needed would be $919.8 / (0.06 - 0.022) = $22,995. If the university could earn 8% rather than 6% per year on the funds, the calculation would change slightly. Utilizing the same growing perpetuity formula would get an endowment amount of $919.8 / (0.08 - 0.022) = $15,996.55. Learn more about Endowment Funding here:
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Reinvestment" means:
A. new investment in new operations.
B. additional investment in existing operations.
C. new investment by new shareholders.
D. the reinvestment of earnings into new projects.
Answer: Option B
Explanation: The process under which the existing shareholders of a company uses their income from investment such as dividends interest etc to purchase the security again is called reinvestment. Sometimes the shareholders do no receive cash and straightly asks the company to compensate them in shares.
Hence, from the above we can conclude that the correct option is B.
Classify each cost of a paper manufacturer as either a product cost or a period cost: a. Salaries of scientists studying ways to speed forest growth. b. Cost of computer software to tract WIP Inventory. c. Cost of electricity at the paper mill. d. Salaries of the company's top executives. e. Cost of chemicals to treat the paper. f. Cost of TV ads. g. Depreciation on the manufacturing plant. h. Cost to purchase wood pulp. i. Life insurance on the CEO.
Answer:
Explanation:
Period costs and product costs are two classes of costs that are incurred in producing and selling a product or service.
Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have production costs that include: Direct labor, Raw materials, Manufacturing supplies Overhead that's directly tied to the production facility such as electricity.
Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business. Period costs are not attached to one particular product or the cost of inventory like product costs.
In this exercise:
Product cost:
Cost of electricity at the paper mill.
Cost of chemicals to treat the paper.
Depreciation on the manufacturing plant.
Cost to purchase wood pulp.
Period cost:
Salaries of scientists studying ways to speed forest growth.
Cost of computer software to track WIP Inventory.
Salaries of the company's top executives.
Cost of TV ads.
Life insurance on the CEO.
A "Name That Tune" contest has a grand prize of $500,000. However, the contest stipulates that the winner will receive just $200,000 immediately, and $30,000 at the end of each of the next 10 years. Assuming that one can earn 8% on their money, how much has the contest winner actually won?
(A) 1,302
(B) $201,302
(C) $401,302
(D) $500,000
(E) None of the above
Answer:
The correct answer is (C) $401,302
Explanation:
To get how much the contest winner actually won, we have to calculate the amount receive at the end of each year discounted at this moment. Then, we added all the payments.
For example, the first payment in $200,000 at this moment, so we add $200,000.
At the end of the first year we receive $30,000, and the rate of discount is 8%
The formula of discount is P=A/ (1+r)ⁿ
A=Final amount
P= Principal
r= interest rate
n= time
Year 1 = A/ (1+r)ⁿ =$30,000/1,08¹= 27777,77
Year 2 =$30,000/1,08²= 25720,16
Year 3=23814,96
Year 4=22050,89
Year 5=20417,49
Year 6=18905,08
Year 7=17504,71
Year 8=16208,06
Year 9=15007,46
Year 10=13895,80
Total 401302,44
Jane's, Peter's, Joshua's, and Austin's monthly incomes are $600, $550, $650, and $700, respectively. Since they live together, each of them is obliged to pay $100 for household expenses every month. In this scenario, who among the following is likely to be the most price sensitive among the four?
a. Jane
b. Austin
c. Joshua
d. Peter
Answer:
d. Peter
Explanation:
Price sensitivity: is the change in demand based on a price change. Because, after paying the rent Peter has the lowest income their price sensitivity will be higher.
His demand will change when the cost of a product or service change as the price occupies an important role in his purchasing criteria.
It will be willing to sacrifice quality in order to save price.
When computing the opportunity cost of attending a concert you should include Select one: a. the price you pay for the ticket and the value of your time. b. the price you pay for the ticket, but not the value of your time. c. the value of your time, but not the price you pay for the ticket. d. neither the price of the ticket nor the value of your time.
Answer: c. the value of your time, but not the price you pay for the ticket.
Explanation: The opportunity cost is the alternative cost we waive when we make a decision, including the benefits we could have obtained from choosing the alternative option. Saying this, the opportunity cost would be the time invested in the concert, since we could have gone to do other activities at that time.
Eric, the owner of a struggling business that supplies fresh product to restaurants, is faced with a decision that will mean either the collapse of his business or perhaps the success of his business: Should he fill customer orders for produce with some older produce mixed in with the fresh produce? This will save him enough money to keep going. Eric is faced with an ethical dilemma.
Answer:
Yes this is no doubt an ethical dilemma for him. But he should go for what is ethically correct.
Explanation:
In my opinion, he should not go for this decision. Unethical practices result in temporary success but they don't guarantee permanent achievements. He should focus on completing the orders on time with the fresh products(as it is his business goal to provide fresh products), he would make his good will in the market by providing as per his commitment and then gradually will be able to mark his business. This ethical decision in such tough time will make him stronger and will grow his business in future when people will like his products and commitment of providing fresh products.
Messana Corporation reported the following data for the month of August: Inventories: Beginning Ending Raw materials $36,000 $24,000 Work in process $23,000 $17,000 Finished goods $37,000 $55,000 Additional information: Raw materials purchases $69,000 Direct labor cost $94,000 Manufacturing overhead cost incurred $54,000 Indirect materials included in manufacturing overhead cost incurred $8,000 Manufacturing overhead cost applied to Work in Process $56,000 The cost of goods manufactured for August is: $227,000 $229,000 $219,000 $217,000
The cost of goods manufactured for August is $217,000.
The cost of goods manufactured for August is $217,000.
Calculate the total manufacturing costs: Direct materials used = Beginning raw materials + Raw materials purchases - Ending raw materials = $36,000 + $69,000 - $24,000 = $81,000.Calculate total manufacturing costs: Total manufacturing costs = Direct materials used + Direct labor + Manufacturing overhead applied = $81,000 + $94,000 + $56,000 = $231,000.Cost of goods manufactured: Cost of goods manufactured = Total manufacturing costs + Beginning work in process - Ending work in process = $231,000 + $23,000 - $17,000 = $217,000.The correct cost of goods manufactured for August is $237,000, calculated by adding raw materials used, direct labor, manufacturing overhead applied, and adjusting for the change in work in process inventory.
To determine the cost of goods manufactured for Messana Corporation for the month of August, we need to calculate the total manufacturing costs:
Starting with Raw materials, we calculate the total used: Beginning inventory plus purchases minus ending inventory gives us $36,000 + $69,000 - $24,000 = $81,000.
To the raw materials used, we add the direct labor cost of $94,000 and manufacturing overhead cost applied to work in process of $56,000. The indirect materials have already been included within the manufacturing overhead cost incurred, so we don't add them again.
We add these together to get total manufacturing costs before adjusting for work in process inventory which gives us $81,000 (Raw materials used) + $94,000 (Direct labor) + $56,000 (Manufacturing overhead applied) = $231,000.
To find the Cost of Goods Manufactured, we then adjust for the change in Work in Process inventory: $231,000 + $23,000 (Beginning Work in Process inventory) - $17,000 (Ending Work in Process inventory) = $237,000.
Therefore, none of the provided options are correct. The correct Cost of Goods Manufactured for August would be $237,000.
Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,900, and the company expects to sell 1,540 per year. The company currently sells 2,040 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,860 units per year. The old board retails for $22,800. Variable costs for both boards are 53 percent of sales, depreciation on the equipment to produce the new board will be $1,490,000 per year, and fixed costs are $1,390,000 per year. If the tax rate is 30 percent, what is the annual OCF for the project? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) OCF $ rev: 05_06_2019_QC_CS-167721
Answer:
operating cash flow: 11,752,938
Explanation:
new board sales: 1,540 x 26,900 = 41,426,000
decling in old board: (2,040 - 1,860) x 22,800 = (4,104,000)
net sales increase 37,322,000
proceeds after cost and taxes:
(sales x (1 -variable cost) - fixed cost) x (1-t)
(37,322,000 (1 - 0.53) - 1,390,000) (1-0.3) = 11.305.938
depreciation tax shield:
1,490,000 x 30% = 447,000
operating cash flow: 11,752,938
Required information [The following information applies to the questions displayed below.] Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct materials $ 6.30 Direct labor $ 3.80 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.30 Fixed administrative expense $ 2.00 Sales commissions $ 1.00 Variable administrative expense $ 0.50 13. If the selling price is $22.30 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Final answer:
The contribution margin per unit is calculated by subtracting all variable costs from the selling price per unit, resulting in $9.70.
Explanation:
To calculate the contribution margin per unit, we need to subtract the variable costs from the selling price per unit. The selling price provided is $22.30 per unit. Looking at the average costs per unit, we have direct materials at $6.30, direct labor at $3.80, variable manufacturing overhead at $1.50, and sales commissions at $1.00. The total variable cost per unit is the sum of these, which is $6.30 + $3.80 + $1.50 + $1.00 = $12.60. Therefore, the contribution margin per unit is $22.30 - $12.60 = $9.70.
in 2 hrs, Whitney can make 4 dozen cookies or 2 peach tarts. Her friend, Amy, can make 7 dozen cookies or 1 peach tart.
If Whitney, specializes in cookies and Amy specializes in peach tarts, total production of cookies will be __ dozen cookies , and total production of peach tarts will be __ peach tart.
Answer: 4 dozen cookies and 1 peach tart
Explanation:
Whitney can make:
4 dozen cookies or 2 peach tarts in 2 hours
Amy can make:
7 dozen cookies or 1 peach tart in 2 hours
Here, we assume that there is only 2 hours of production
Cookies:
If Whitney specialize in cookies and there is no production of tart but only the production of cookies by Whitney, then,
Total production of cookies = 4 dozen cookies
Tart:
If Amy specialize in peach tart and there is no production of cookies but only the production of peach tart by Amy, then,
Total production of peach tart = 1 peach tart
The following data were taken from the financial statements of The Amphlett Corporation, which is all equity financed. 2012 2013 Net sales $147,860 $163,585 Net income 26,765 30,340 Total assets 191,225 212,440 Shareholders' equity 101,975 121,165 Required Calculate the following ratios for 2012 and 2013: 2012 2013 a. Return on equity (round to one decimal place) Answer 0 % Answer 0 % b. Return on assets (round to one decimal place) Answer 0 % Answer 0 % c. Return on sales (round to one decimal place) Answer 0 % Answer 0 % d. Total assets to shareholders' equity (financial leverage) (round to two decimal places) Answer 0 Answer 0 e. Asset turnover (round to two decimal places) Answer 0 Answer 0
Answer:
2012 - 2013
a. Return on equity 26,2% - 25,0%
b. Return on assets 14,0% - 14,3%
c. Return on sales 18,1% - 18,5%
d. Total assets to shareholders' equity 1,88 - 1,75
e. Asset turnover 0,77 - 0,77
Explanation:
2012 2013
TOTAL ASSETS $191.225 $212.440
TOTAL EQUITY $101.975 $121.165
Income Statement 2012 2013
Sales $147.860 163.585
Net Income after Taxes $26.765 30.340
The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 5 percent less than that for preferred stock. Debt can be issued at a yield of 8.0 percent, and the corporate tax rate is 25 percent. Preferred stock will be priced at $52 and pay a dividend of $5.20. The flotation cost on the preferred stock is $3. a. Compute the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Compute the aftertax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
c. Based on the facts given above, is the treasurer correct?
Answer: (a) 6%
(b) 10.61%
(c) Yes
Explanation:
a) After tax cost of debt = Yield (1- tax)
= 8 ( 1 - 0.25)
= 8 × 0.75
= 6%
b) [tex]cost\ of\ preferred\ stock =\frac{dividend}{price-flotation\ cost}[/tex]
[tex]cost\ of\ preferred\ stock =\frac{5.20}{52-3}[/tex]
[tex]cost\ of\ preferred\ stock =\frac{5.20}{49}[/tex]
= 0.1061 or 10.61%
Note: Cost of preferred stock is not tax deductible
c),Yes the treasurer is correct ,The cost of debt is 5% less than cost of preferred stock [10.61 - 6 = 4.61%]
Advanced Health determines that services for $1,800 had been provided and the client had not paid at the time the services were performed. The transaction was not recorded during the year. Record the required adjusting entry related to the external journal entry.
Answer:
Debit to Accounts Receivable $1,800; Credit to Service Revenue $1,800
Explanation:
The debit is "Accounts Receivable" since Advanced Health is yet to collect payment from the client.
Now, the credit would be "Service Revenue" since Advanced Health had already provided the services.
In accrual accounting, whenever services have already been rendered, regardless of when it is collected, we have to record the revenue.
In this case it will be called "Service Revenue" since the company is rendering services.
Consider the following abbreviated financial statements for Parrothead Enterprises: PARROTHEAD ENTERPRISES PARROTHEAD ENTERPRISES 2014 and 2015 Partial Balance Sheets 2015 Income Statement Assets Liabilities & Owners’ Equity Sales 12,991 2015 2014 2015 2014 Costs 5,843 Current assets 931 946 Current liabilities 375 493 Depreciation 1,034 Net fixed assets 3,712 4,297 Long-term debt 2,099 2,126 Interest 146 If the tax rate is 32 percent, what is the cash flow from assets for the year?
Answer:
The cash flow from assets for the year is $3,522
Explanation:
Computation of the cash flow from assets for 2019 is shown below:
= Operating cash flow - net capital spending - changes in working capital
where,
Operating cash flow = EBIT + depreciation - income tax expense
The EBIT = Sales - cost - depreciation expense
= $12,991 - $5,843 - $1,034
= $6,114
And, the income tax expense = (EBIT - Interest) × tax rate
= ($6,114 - $146) × 32%
= $1,909.76
So, the operating cash flow = $6,114 + $1,034 - $1,909.76
= $5,238.24
Net capital capital = ending fixed assets - beginning fixed assets + depreciation
= $4,297 - $3,712 + $1,034
= $1,619
Changes in working capital = (ending balance of current assets - ending balance of current liabilities) - (beginning balance of current assets - beginning balance of current liabilities)
= ($946 - $493) - ($931 - $375)
= $453 - $356
= $97
Now put these values to the above formula
So, the value would equal to
= $5,238.24 - $1,619 - $97
= $3,522
Suppose that you are president of the student government, and you have to decide how to allocate a $20,000 fund for guest speakers for the year. Conan O’Brien and Will Ferrell each cost $10,000 per appearance, Stephen Colbert costs $20,000 per appearance, and former economic advisers to the government charge $1,000 per lecture. Explain the economic problem of choice and scarcity in this case. What issues would you consider in arriving at a decision?
Economic resources are scarce, making each consumer face an individual budget constraint. So consumers should make choices that maximize their satisfaction in the face of their budget constraints. To make the choices, consumers use their preferences. In this matter, the student organization resources available for hiring speakers is $ 20,000. That means their budget constraint is $ 20,000. Then, they should choose, from the speakers that cost up to this value, the one that generates the greatest benefit for the student group. This is a choice based on group preferences.
Match each of the financial statement items to its proper balance sheet classification. If the item would not appear on a balance sheet, use "Not Applicable." select a proper balance sheet classification Trademarks select a proper balance sheet classification Notes payable (current) select a proper balance sheet classification Interest revenue select a proper balance sheet classification Income taxes payable select a proper balance sheet classification Debt investments (long-term) select a proper balance sheet classification Unearned sales revenue select a proper balance sheet classification Inventory select a proper balance sheet classification Accumulated depreciation select a proper balance sheet classification Land select a proper balance sheet classification Common stock select a proper balance sheet classification Advertising expense select a proper balance sheet classification Mortgage payable (due in 3 years)
Answer:
The list is as follows:
Trademarks - Intangible Assets
Notes Payable (Current) - Current Liabilities
Interest Revenue - Not Applicable
Income Taxes Payable - Current Liabilities
Debt Investments (Long Term) - Long Term Investments
Unearned Sales Revenue - Current Liabilities
Inventory - Current Assets
Accumulated Depreciation - Property, Plant & Equipment
Land - Property, Plant & Equipment
Common Stock - Stockholders' Equity
Advertising Expense - Not Applicable
Mortgage Payable (due in 3 years) - Long Term Liabilities
Trademarks are classified as Intangible Assets, Notes payable (current) and Income taxes payable fit under Current Liabilities, while Common stock falls under Owners’ Equity on a balance sheet. Interest revenue and Advertising expense would not appear on a balance sheet, instead being listed on an Income Statement.
Explanation:The items on financial statements can be classified on a balance sheet as follows:
Trademarks - Intangible Assets Notes payable (current) - Current Liabilities Interest revenue - Not Applicable (it would be on an Income Statement) Income taxes payable - Current Liabilities Debt investments (long-term) - Long-Term Investments Unearned sales revenue - Current Liabilities Inventory - Current Assets Accumulated depreciation - Shown as a reduction to Property, Plant, and Equipment under Non-current Assets Land - Non-current Assets Common stock - Owners’ Equity Advertising expense - Not Applicable (it would be on an Income Statement) Mortgage payable (due in 3 years) - Non-current Liabilities Learn more about Balance Sheet Classification here:
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You are buying an investment product that costs $50,000 today. The annual interest rate is 5% and the investment period is 3 years. The investment will repay you $10,000 at the end of year 1 and $15,000 at the end of year 2. Based on economic equivalent value of the investment, how much should you receive at the end of year 3? Round the answer to the nearest integer. (e.g. round 10.25 to 10, round 10.78 to 11)
Answer:
cash flow third year: 23,212
Explanation:
the economic equivalent value means the third payment will make the project equal to 50,000 today at 5% discount rate.
It mill make both option equivalent.
So the present value of the three payment will be 50,000.
[tex]50,000 = PV_{year1}+PV_{year2}+PV_{year3}[/tex]
We will calculate each PV:
First year:
[tex]\frac{Nominal}{(1 + rate)^{time} } = PV[/tex]
Nominal: 10,000.00
time 1 year
rate 5% = 0.05
[tex]\frac{10000}{(1 + 0.05)^{1} } = PV[/tex]
PV 9,523.81
Second Year:
Nominal: 15,000.00
time 2 years
rate 0.05
[tex]\frac{15000}{(1 + 0.05)^{2} } = PV[/tex]
PV 13,605.44
Now, we go back to our previous formula:
[tex]50,000 = PV_{year1}+PV_{year2}+PV_{year3}[/tex]
50,000 = 9,523.81 + 13,605.44 + PV3
And solve for PV of third year:
PV3 = 26,870.75
Now we go into the formula for PV and solve for the nominal
Third Year:
Nominal: N
time 3 years
rate 0.05
PV 26,870.75
[tex]\frac{N}{(1 + 0.05)^{3} } = 26,870.75[/tex]
N = 23211.96415
The third year cash inflow should be for this amount to made the project economic equivalent
Requirement 1. Record the foregoing transactions in the journal of BoldBold Interiors using the gross method. (You do not need to make the cost of sales journal entries; assume that these entries will be made by the company when it makes its other adjusting entries at period end.) (Record debits first, then credits. Exclude explanations from any journal entries.) MarMar 2: Sold merchandise on account to Toby BothwellToby Bothwell, $ 1 comma 000$1,000, terms 22/10, n/30.
Answer:
account receivables 1,000 debit
sales revenues 1,000 credit
Explanation:
We will recognize the revenue as the sales is performed we can conclude the transfer of goods had occurred so it is correct to recognize revenue.
Because this sales were on account, we have a right to claim the invoice to Mr. Bothwell so we will debit an asset account, which represent this: account receivable
A relatively steep demand curve indicates that a. quantity demanded will not adjust to a price change. b. quantity demanded will adjust only slightly to a price change. c. quantity demanded will adjust significantly to a price change. d. the change in quantity demanded will exactly equal a change in price.
Answer:
there were extreme changes to their lives
Explanation:
Lucy Sportswear manufactures a specialty line of T-shirts using a job-order cost system. During March, the following costs were incurred in completing Job ICU2: direct materials, $13,700; direct labor, $4,800; administrative, $1,400; and selling, $5,600. Factory overhead was applied at the rate of $25 per machine hour, and Job ICU2 required 800 machine hours. If Job ICU2 resulted in 7,000 good shirts, the cost of goods sold per unit would be
Answer:
Unit cost= $5,5unit
Explanation:
Total manufacturing cost is the aggregate amount of cost incurred by a business to produce goods in a reporting period.
Generally accepted accounting principles require that the cost of goods sold shall consist of:
the cost of direct materials
the cost of direct labor
the cost of manufacturing overhead
Expenses that are outside of the manufacturing facilities, such as selling, general and administrative expenses, are not product costs. They are reported as expenses on the income statement in the accounting period in which they occur.
In this exercise:
Cost of goods manufactured:
Direct materials= $13700
Direct Labor=$4800
Factory overhead= 800hours*$25=$20000
Total= $38500
Unit cost= 38500/7000=$5,5unit
If Shawn can produce donuts at a lower opportunity cost than Sue, then ____
(A) Shawn has a comparative advantage in the production of donuts.
(B) Sue has a comparative advantage in the production of donuts.
(C) Shawn should not produce donuts.
(D) Shawn is capable of producing more donuts than Sue in a given amount of time
Answer:
(A) Shawn has a comparative advantage in the production of donuts.
Explanation:
Shawn renounce to less goods than Sue when producing donuts.
This meas, Shawn has a comparative advantage in the production of donuts as their cost from the economic point of view are lower.
This do not imply that Sue cannot outproduce Shawn, it means it cost her more than Shawn
For example, if Sue produce 10 Donuts, but to produce donuts resing to produce 20 of other goods, each donut has an opportunity cost of 2
While Shawn can produce 8 donuts and resing to produce 8 of other goods:
each donut has an opportunity cost of 1
Therefore, is better for the overall economy to Shawn produce donuts and trade with Sue for the other good.
As an equity analyst you are concerned with what will happen to the required return to Universal Toddler' stock as market conditions change. Suppose rRF = 3%, rM = 13%, and bUT = 1.2. Under current conditions, what is rUT, the required rate of return on UT Stock? Round your answer to two decimal places.
Answer:
The required rate of return on UT Stock is 18.60%
Explanation:
In this question, we use the Capital asset pricing model (CAPM) formula
To compute the required rate of return on UT Stock, we need to apply the formula which is presented below:
Required rate of return = rRF + (bUT × rM)
where,
rRF is a risk-free rate of return
bUT is a beta
rM is a market risk
Now put these values to the above formula
So, the answer would be equal to
= 3% + (1.2 × 13%)
= 3% + 15.6%
= 18.60%
The following information is from the Income Statement of the Cheyenne Laundry Service:
Revenues
Service Revenues $5720
Expenses
Salaries and wages expense $ 2160
Advertising expense 440
Rent expense 260
Supplies expense 180
Insurance expense 90
Total expenses 3130
Net income $2590
The entry to close the Income Summary includes a:
Answer:
Credited to the retained earning accounts by $2,590
Explanation:
The net income is come by subtracting the total expenses from the revenue account.
In mathematically,
= Sales revenue - total expenses
The journal entry for closing the Income Summary is shown below:
Income summary A/c Dr $2,590
To Retained earning A/c $2,590
(Being income summary account is closed)
The net income amount would be added to the retained earning account by $2,590
Burger Champ, a restaurant chain based in Zaneland, has a subsidiary in Arkadas. In this case, which of the following will be true if Burger Champ adopts a localization strategy?
a. It will include wine in the menu because wine is famous in Arkadas.
b. It will sell roast chicken burger as it is a signature dish of the restaurant chain.
c. It will include dishes that are familiar to the people of Zaneland.
d. It will introduce dishes that are new and different to the people of Arkadas.
Answer:
a. It will include wine in the menu because wine is famous in Arkadas.
Explanation:
Under the localization strategy, the company targets to get maximum satisfaction from local customers.
It gives a significant importance to the local people and culture of the organization.
In the given instance, the subsidiary of the Burger Champ restaurant is open now in Arkadas, as for practicing localization strategy, it will try to having everything on menu which is demanded by the local people of Arkadas.
Therefore, as wine is common for people in Arkadas, it will be the priority to add such item in the menu first.
Beverage International reports net credit sales for the year of $468,000. The company's accounts receivable balance at the beginning of the year equaled $24,000 and the balance at the end of the year equaled $34,000. What is Beverage International's receivables turnover ratio?
Answer:
The Beverage International's receivables turnover ratio is = 16,14
Explanation:
The accounting receivable turnover formula is :
Net credit sales / Average Accounts Receivable
So Net credit sales = $468,000
And Average Accounts Receivable = ($24,000 + $34,000)/2 = $29.000,00
The receivables turnover ratio is = $468,000 / $29.000,00 = 16,14
Norton Manufacturing expects to produce 2,800 units in January and 3,900 units in February. Norton budgets $45 per unit for direct materials. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is $37,950. Norton desires the ending balance in Raw Materials Inventory to be 60% of the next month's direct materials needed for production. Desired ending balance for February is $51,000. What is the cost of budgeted purchases of direct materials needed for January?
Answer:
Budgeted purchase= $193350
Explanation:
We need to calculate the cost of direct material during January. We need to know what are the purchase of direct material needed to produce the current month goods and for next month.
The unitary cost of material is $45, January's production 2800 units, February production 3900 units.
Direct material for Januarys production:
2800 units * $45= $126000
Direct material for February:
($45*3900)*0,60= $105300
Initial inventory= 37950
Budgeted purchase= 126000+105300-37950= $193350
What would be the net annual cost of the following checking accounts?
a. Monthly fee, $4.25; processing fee, 50 cents per check; assume checks written average to 16 per month.
b. Interest earnings of 5 percent with a $500 minimum balance; average monthly balance, $8000; monthly service charge of $12 for falling below the minimum balance, which occurs five times a year (no interest earned in these months).
Answer:
Option B is the better as it generates cash for 173 dollars rather than generating a cost $12.25
Explanation:
option A
monthly fee: 4.25
50 cent per check
total cost: 0.50x + 4.25
if 16 check are written per month:
0.50 (16) + 4.25 = 8 + 4.25 = 12.25
option b
the year has 12 months, during five months we will pay the service charge:
$12 x 5 month = $60
during the other 7 months, we accrued (earn) interest:
8,000 x 7 months x 5%
8,000 x 7/12 x 5% = 233,33
We receive 233 interest - 60 serive charge: 173 dollars
Option B is the better as it generates cash for 173 dollars rather than generating a cost $12.25
In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. Allen and Daniel agree that some of the inventory is obsolete. The inventory account is decreased before David is admitted. David invests $40,000 for a one-fifth interest. What is the amount of inventory written down?
A. $4,000
B. $20,000
C. $15,000
D. $10,000
Answer:
B. $20,000
Explanation:
40,000 = a fifth
so ther parthnership capital should equal to
40,000 / (1/5) = 200,000
But the current sum of the capital without adjustment is:
Capital 140,000 + 40,000 + 40,000 = 220,00
to make it balance, the inventory must has been written down by 20,000
this difference was taken by the prevous partner Allen and Daniel.
You wish to buy a cabin in 15 years. TODAY, the cabin costs $150,000. You believe the price of the cabin will inflate at 4% annually. You want to invest a single amount of money (lump sum) today and have the money grow to equal the future purchase price of the cabin 15 years from now. If you can earn 10% annually on your investments, how much do you need to invest NOW, in order to be able to purchase the cabin?
Answer:
I will need to invest 64,669.73 dollars now.
Explanation:
We will calcualte the future value of the cabin considering the inflation:
[tex]Principal \: (1+ inflation )^{time} = Amount[/tex]
Principal 150,000.00
time 15 years
inflation 0.04000
[tex]150000 \: (1+ 0.04)^{15} = Amount[/tex]
Amount 270,141.53
Then we calculate the present value of the lump sum at 15 years discounted at 10% which is the yield of the funds
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 270,141.53
time 15 years
rate 0.10
[tex]\frac{270141.53}{(1 + 0.1)^{15} } = PV[/tex]
PV 64,669.73
we would need to deposit 64,669.73 today to get enough cash to purchase the bcabin in 15 years.
You are considering two perpetuities which are identical in every way, except that perpetuity A will begin making annual payments of $P to you two years from today while the first $P payment for perpetuity B will occur one year from today. It must be true that the present value of perpetuity: A) A is greater than that of B by $P. B) B is greater than that of A by $P. C) B is equal to that of perpetuity A. D) A exceeds that of B by the PV of $P for one year. E) B exceeds that of A by the PV of $P for one year.
Answer:
E) B exceeds that of A by the PV of $P for one year.
Explanation:
A begins in 2 years in the future, while B starts one year into the future:
B:
[tex]\frac{perpetuity}{(1 + rate)^{1}} [/tex]
A:
[tex]\frac{perpetuity}{(1 + rate)^{2}} = [/tex]
The difference is this one year difference which, makes the return on A lower than B today. After the two years, past and both perpetuities begin, their value will be the same.