Answer:
$1,003,000
Explanation:
Market Value of firm=Market value of equity+ market value of debt
=684,000+319,000
=$1,003,000
. Understanding how shirking decreases team output Caroline sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Caroline realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Antonio and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Caroline knows that if they both work hard, Antonio will earn $90 on the beach and Caroline will earn $180 at her stand, so they will each take home half of their total revenue: . If Antonio shirks, he'll generate only $50 in earnings. Caroline does not know that Antonio estimates his personal cost (or disutility) of working hard as opposed to shirking at $25.
Once out of Caroline's sight, Antonio faces a dilemma: work hard (put in full effort) or shirk (put in low effort).
In terms of Antonio's total utility, it is better for him to (shirk or work hard?)
Taking into account the loss in utility that working hard brings to Antonio, Caroline and Antonio together (are/ are not) ff if Antonio works hard instead of shirking.
Caroline knows Antonio will shirk if unsupervised. She considers hiring her good friend Carrie, who happens to be free on that day, to keep an eye on Antonio. The most Caroline should be willing to pay Carrie to supervise Antonio, assuming supervision is sufficient to encourage Antonio to work hard, is (25, 20, 45, 15)
Caroline knows Antonio will shirk if unsupervised, but she could not find a reliable person to watch him. Which of the following arrangements will ensure that Antonio works hard without making Caroline any worse off than she is when Antonio shirks?
Allow Antonio to keep 73% of the revenue from the bottles of water he sells instead of 50%
Make Antonio promise to work hard Pay Antonio $70, regardless of how many bottles of water he sells
Allow Antonio to keep 70% of the revenue from the bottles of water he sells instead of 50%
Answer:
Check the explanation
Explanation:
a) In terms of Antonio's total utility, its worse for him to work.
Increase in income from shirking = $60/2 = $30
Increase in income from working = $110/2 - $30 = $25
b) Taking into account the loss in utility that working hard brings to Antonio, Caroline and Antonio together are not better off Antonio shirks instead of working hard.
Increase in combined income from shirking = $60
Increase in combined income from working = $110 - $30 = 80
c) Caroline will be willing to pay carry at most $25 yo Carrie.
Increase in Caroline's income from working vs shirking =( $110 - $60)/2 = $25
d) Allow Antonio to keep 75% of the revenue from the bottles of water he sells instead of 50%
Explanation:
Antonio
Increase in income from shirking = $60 x .75 = $45
Increase in income from working =( $110 x .75) - $30 = $52.5
Hence, Antonio would have incentive to work hard.
The next dividend payment by Dizzle, Inc., will be $2.48 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for $39.85 per share, what is the required return
Answer:
Cost of equity = 10.7%
Explanation:
According to the dividend valuation, the value of a stock is the present value of expected future dividends discounted at the required rate of return.
The model can me modified to determined the cost of equity as follows:
Cost of equity = D/P + g
d- dividend payable next period, p- price of stock ,, - g- growth rate
D- 4.5%, p- $2.48 , g -4.5%
Cost of equity = (2.48 /39.85) + 0.045
= 10.7%
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.
During 2018, Janice reported the following income and expense items connected with her business.
Income from sale of articles $85,000
Rent 16,500
Utilities 7,900
Supplies 1,800
Insurance 5,000
Travel (including meals of $1,200) 3,500
Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under $ 179, if possible.
Furniture and fixtures (new) costing $21,000 on January 10.
Computer equipment (new) costing $12,400 on July 28.
Janice’s itemized deductions include:
State income tax $2,950
Home mortgage interest paid to First National Bank 6,000
Property taxes on home 2,500
Charitable contribution to her alma mater, State College 1,200
Janice did not keep a record of the sales tax she paid. The amount from the sales tax table is $437.
Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. She made estimated tax payments of $3,000 for 2018.
Required:
a. Compute Janice Morgan’s 2018 Federal income tax payable (or refund due) by providing the following information that would be reported on Form 1040 and Schedules A, B, C, and SE.
When computing the tax liability, do not round your immediate calculations.
If required, round your final answers to the nearest dollar.
Provide the following that would be reported on Janice's Form 1040:
1. Filing status: The taxpayers' filing status:
2. Calculate taxable gross income.
$ ________
3. Calculate the total adjustments for AGI.
$ _________
4. Calculate adjusted gross income.
$ _________
5. Calculate the greater of the standard deduction or itemized deductions.
$ _________
6. Calculate the qualified busies income deduction.
$ _________
7. Calculate total taxable income.
$ _________
8. Calculate the income tax liability.
$ _________
9 Calculate SE taxes due.
$ _________
Answer:
Pls refer to attached handwritten document for answer
Explanation:
Janice Morgan's filing status is Single. Her taxable gross income is $89,000, total adjustments for AGI are $33,400, resulting in an AGI of $55,600. She should take $12,087 as the itemized deduction, QBI deduction is $10,060, yielding total taxable income of $33,453. Her income tax liability will depend on the tax table for that year, and her SE taxes due are around $7,111.
Explanation:Let's compute Janice Morgan's 2018 Federal income tax in detail.
1. Janice's filing status is Single.
Jance's taxable gross income is her business income ($85,000) plus her interest income ($4,000), which totals $89,000.The total adjustments for AGI are her business expenses ($21,000 furniture + $12,400 equipment), which total $33,400.Subtracting the total adjustments ($33,400) from the taxable gross income ($89,000) will result in the adjusted gross income of $55,600.The standard deduction for a single taxpayer in 2018 was $12,000. Janice’s itemized deductions total $12,087 ($2,950 + $6,000 + $2,500 + $1,200 - $437). Janice should take the greater of these two, so she should take the itemized deductions of $12,087.The qualified business income deduction, given that she's a freelance writer, is 20% of qualified business income. However, she cannot exceed 20% of her taxable income (known as net business income) which is [$85,000(business income) - $34,700(total expenses) = $50,300] So, the deduction amounts to $10,060.Janice’s total taxable income is her adjusted gross income ($55,600) subtract her itemized deductions ($12,087) and QBI deduction ($10,060), which is $33,453.The income tax liability can be calculated from the tax table based on her taxable income, which must be manually done and will vary slightly.Finally, Janice’s self-employment (SE) taxes due can be found by finding 92.35% of her net business income $50,300, which is $46,477, and then taking 15.3% of that value to find the actual Self-Employment tax, which is approximately $7,111.Learn more about Federal Income Tax here:https://brainly.com/question/2899991
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Income multipliers:
a. Are useful as a preliminary analysis tool to weed out obviously unacceptable investment opportunities.
b. Are adequate as the sole indication of a property's investment worth.
c. Relate the property's price or value to after tax cash flows
d. None of the above.
Answer:
option a
Explanation:
Throughout the macroeconomic environment, the influence of a income multiplier applies to the assumption that capital can be re-used and that a dollar will potentially produce more than one dollar for economic growth. Multipliers of profits in real estate transactions are assessment devices.
Some of the core theories of Keynesian is really the idea of a income amplifier. This relates to the idea that perhaps a dollar invested becomes additional income.
Goodwin Technologies, a relatively young comply, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $1.5000 dividend at that time (D3 = i 1.5000) and believes that the dividend will grow by 7.80% for the following two years (D4 and D5). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 3.42% per year. Goodwin's required return is 11.40%. Fill in the following chart to determine Goodwin's horizon value at the horizon date-when constant growth begins-and the current intrinsic value.
Horizon Value _____
Current Intrinsic Value _____
To increase the accuracy of your calculations, carry the dividend values to four decimal places.
Answer:
Horizon value is $22.59
Intrinsic value is $16.32
Explanation:
D3=1.5000
D4=1.5000*(1+7.8%)
D4=1.6170
D5=1.6170 *(1+7.8%)
D5=1.7431
D6=1.7431 *(1+3.42%)
D6=1.8027
horizon value is the same as the price of the stock(the terminal value) using the dividend in year 6
P=D5*(1+g)/(r-g)
D5=$1.7431
g is the constant growth rate of 3.42%
r is the required rate of return of 11.40%
P=$1.7431*(1+3.42%)/(11.40%-3.42%)
P=$1.8027/0.0798 =$22.59
Goodwill Technologies share price is $22.59
Current intrinsic value is the dividends payable in relevant years plus the horizon value discount to present value as follows:
Present value of D3 =1.5000/(1+11.40%)^3=$1.0850
present of value of D4 =1.6170 /(1+11.40%)^4=$1.0500
present value of D5 =1.7431 /(1+11.40%)^5=1.0160
present value of horizon value=$22.59/(1+11.40%)^5=13.1671
Total present values $16.32
The Horizon Value of Goodwin Technologies is $27.3244, and the Current Intrinsic Value is $20.5553.
To calculate the Horizon Value and the Current Intrinsic Value, we will follow the steps outlined below:
1. Calculate the dividends for years 4 and 5 using the growth rate of 7.80%.
- D4 = D3 * (1 + g) = $1.5000 * (1 + 0.0780) = $1.6170
- D5 = D4 * (1 + g) = $1.6170 * (1 + 0.0780) = $1.7409
2. Calculate the Horizon Value (V5), which is the present value of all future dividends beyond year 5, assuming a constant growth rate of 3.42%.
- V5 = D5 * (1 + g) / (r - g)
- V5 = $1.7409 * (1 + 0.0342) / (0.1140 - 0.0342)
- V5 = $1.7409 * 1.0342 / 0.0798
- V5 = $27.3244
3. Calculate the Current Intrinsic Value (V0) by discounting the dividends for years 3, 4, and 5, and adding the Horizon Value (V5) discounted back to the present.
- [tex]V0 = D3 / (1 + r)^3 + D4 / (1 + r)^4 + D5 / (1 + r)^5 + V5 / (1 + r)^5[/tex]
- [tex]V0 = $1.5000 / (1 + 0.1140)^3 + $1.6170 / (1 + 0.1140)^4 + $1.7409 / (1 + 0.1140)^5 + $27.3244 / (1 + 0.1140)^5[/tex]
- V0 = $1.5000 / 1.4227 + $1.6170 / 1.6986 + $1.7409 / 1.8971 + $27.3244 / 1.8971
- V0 = $1.0543 + $0.9519 + $0.9171 + $14.3960
- V0 = $20.5553
Therefore, the Horizon Value of Goodwin Technologies when constant growth begins is $27.3244, and the Current Intrinsic Value is $20.5553.
During 2016 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows: Net sales Actual warranty expenditures2016 $ 45,000 $ 1,000 2017 120,000 3,500 At December 31, 2017, Green Thumb should report as a warranty liability of:Multiple Choice$900$1,250$3,750$4,500
Answer:
$3,750
Explanation:
Data given
Net sales of 2016 = $45,000
After-sale percentage = 3%
Net sales of 2017 = $120,000
Year of sale percentage = 2%
The computation of warranty liability is shown below:-
Warranty liability = (Net sales of 2016 × After-sale percentage) + (Net sales of 2017 × Year of sale percentage)
= ($45,000 × 3%) + ($120,000 × 2%)
= $1,350 + $2,400
= $3,750
Therefore for computing the warrant liability we simply applied the above formula.
You have been asked to check EOQ figures. You have been given the following data: demand is 16,761 units per quarter, S = $120 per setup, P = $5 per unit, and H = $1.25 per unit per year, They typically order Q= 3,588 units every time an order is placed. Calculate total annual inventory costs including setup, holding and product cost using their current ordering plan.
Answer:
Total cost =$339,704.55
Explanation:
Annual inventory demand = quarterly demand × 4
= 16,761 ×4 = 67044
Purchase cost
= cost per unit × annual demand
= 67044 × $5 = $335,220.00
Annual set-up cost
= set up cost r × no of set-up
=( 67044/ 3,58) × $120= 2242.274247
Annual holding cost
= Holding cost × average inventory
(3,588/2 )× $5 = $2242.5
Total annual inventory cost
= 2242.27+ $2242.5 + 335,220
= $339,704.55
Yes, the EOQ is correct because the annual set-up cost = Annual holding cost
Calls arrive at Lynn Ann Fish’s hotel switchboard at a rate of 2 per minute. The average time to handle each is 20 seconds. There is only one switchboard operator at the current time. The Poisson and negative exponential distributions appear to be relevant in this situation
a) What is the probability that the operator is busy?
b) What is the average time that a customer must wait before reaching the operator?
c) What is the average number of calls waiting to be answered?
Answer:
Part A. Compute the probability that operator of the hotel is busy.
The call arrives at Lynn Ann Hotel at the rate of 2/min.
Therefore, 2 min = 120 customers per hour
Thus, the call is serviced by the operator at a rate of 20 seconds per customer.
Therefore,
P = 180 customers per hour
Probability that the operator will be busy:
P = λ / µ
P= 120 / 180
P = 0.67
Therefore, the probability that the hotel operator is busy is 0.67 hours
Part B. Determine the average time customer must wait:
[tex]W_{q}[/tex] = λ / µ (µ - λ)
[tex]W_{q}[/tex] = 120 / 180(180 - 120)
[tex]W_{q}[/tex] = 120 / 180(60)
[tex]W_{q}[/tex] = 120 / 10,800
[tex]W_{q}[/tex] = 0.011
Thus, the average wait time for the customer is 0.011 hours
Part C. Determine the average number of call waiting:
[tex]L_{q}[/tex] = λ^2 / µ (µ - λ)
[tex]L_{q}[/tex] = 120^2 / 180 (180 - 120)
[tex]L_{q}[/tex] = 14,400 / 180 (60)
[tex]L_{q}[/tex] = 14,400 / 10,800
[tex]L_{q}[/tex] = 1.33
Thus, the average waiting call to be answered is 1.33 hours
Tharaldson Corporation makes a product with the following standard costs:
Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct materials 5.8 ounces $ 3.00 per ounce $ 17.40
Direct labor 0.9 hours $ 12.00 per hour $ 10.80
Variable overhead 0.9 hours $ 5.00 per hour $ 4.50
The company reported the following results concerning this product in June.
Originally budgeted output 3,800 units
Actual output 3,400 units
Raw materials used in production 20,800 ounces
Purchases of raw materials 21,900 ounces
Actual direct labor-hours 6,500 hours
Actual cost of raw materials purchases $ 42,500
Actual direct labor cost $ 13,800
Actual variable overhead cost $ 3,900
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.Required:a. The materials quantity variance for June is ____________.
Answer:
Material Quantity Variance= $ 3240 Unfavorable
Explanation:
Given
Standard Quantity Direct materials 5.8 ounces
Standard Price$ 3.00 per ounce * 5.8= $ 17.40
Actual output 3,400 units
Raw materials used in production 20,800 ounces
Purchases of raw materials 21,900
Working
Standard Material required for 3,400 units *5.8= 19720 ounces.
Standard Price for 19720 ounces* 3= $ 59160
Material Quantity Variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)
Material Quantity Variance= 3*20,800 - (3* 19720)
Material Quantity Variance= $62400- $ 59160= $ 3240 Unfavorable
It is unfavorable because the actual quantity used is more than the standard usage.
The materials quantity variance for June is $ 3240 Unfavorable
Standard costsGiven to information following are:
The Standard Quantity Direct materials are 5.8 ounces
Then the Standard Price$ 3.00 per ounce * 5.8= $ 17.40
Actual output 3,400 units
Raw materials employed in production 20,800 ounces
Purchases of raw materials 21,900
Working note
Standard Material required for 3,400 units [tex]*5.8= 19720[/tex]ounces.
Standard Price for 19720 ounces* 3= $ 59160
Then the Material Quantity Variance is= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)
After that Material Quantity Variance is= 3*20,800 - (3* 19720)
Now the Material Quantity Variance is = $62400- $ 59160= $ 3240 Unfavorable
Although It is unfavorable because the particular quantity used is quite the quality usage.
Thus, The materials quantity variance for June is $3240 Unfavorable
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Choose three farm products and determine whether their prices (as measured by "prices received by farmers") have generally increased, decreased, or stayed the same over the past three years. In which of the three cases, if any, do you think that supply has increased more rapidly than demand? In which of the three cases, if any, do you think that demand has increased more rapidly than supply? Explain your reasoning.
Answer:
For milk and cotton, supply has increased more than demand because customers are not buying much of it. for hogs, the demand has increased more than supply because more customers are buying much of it than meats that are expensive in the market.
Explanation:
For this question, i will use the cotton, hogs and milk as the case study.
According to USDA data, cotton prices has fallen approximately $0.10 per round. the hog prices has increased rapidly $10 per hundredweight, and the milk has fallen to $2 per hundredweight in the past three years.
In the case of hogs, I think the demand has increased more better than supply, because many customers are probably substituting to pork from more expensive meat like steak in this economic period.
In the case of milk and cotton, i think the supply has increased more than demand, because customers may be trying to purchase less of these goods.
Crane Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $122$112$97$92$112$92 Cost 778282825137 Cost to complete 313126363131 Selling costs 101810201020 Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2020, for each of the inventory items above.
Answer:
D $77
E $63
F $61
G $36
H $51
I $37
Explanation:
LCNRV means use the lower-of-cost-or-net-realizable-value method to value the closing items of inventory which are products D,E,F,G,H and I
Cost implies the original invoice price of the items of inventory
NRV is the estimated selling price less costs to sell and costs to complete as computed in the attached excel file.
Finally I chose as a unit value for each product the lower of cost and NRV
Comparing Costs of Credit Using Three Calculation Methods. You have been pricing a compact disk player in several stores. Three stores have the identical price of $300. Each store charges 18 percent APR, has a 30-day grace period, and sends out bills on the first of the month. On further investigation, you find that store A calculates the finance charge by using the average daily balance method, store B uses the adjusted balance method, and store C uses the previous balance method. Assume you purchased the disk player on May 5 and made a $100 payment on June 15. What will the finance charge be if you made your purchase from store A? From store B? From store C? (Obj. 2)
Answer:
Store A = 3.4521
Store B = 2.9589
Store C = 4.4384
Explanation:
Store A charges ADB method
purchase made on 5th first payment on 15th of 100
so from 5th to 15th Average daily balance =300 for 10 days
then from 15th to 4th for remaining 20 days average daily balance = 200
Average Daily Balance = (300*10+200*20)/30
Total finance charge = ADB*(APR*(Days/365))
=300*((0.18)*(10/365))+200*((0.18)*(20/365))
= 1.4795+1.9726=3.4521
Store B
Adjusted Balance Method uses adjusted balance to calculate the charges
Adjusted balance=Starting balance adjusted for credit and debit
Adjusted balance =300-100=200
Financial Charges = 200*(.18*(30/365))=2.9589
Store C
Previous Balance Method the interest is calculated on amount of balance carried from previous billing cycle
Balance Carried = 300
Charges =300*(.18*(30/365))= 4.4384
Answer:
Store A finance charge = $140.625
Store B finance charge = $90
Store C finance charge = $202.5
Explanation:
Store A
Average daily balance Finance Charge
(300*200)/2 = $250 3.75(250*0.15) = $140.625
Store B
Adjusted balance method
(300-100) = $200 3.00*(200*0.15) = $90
Store C
Previous balance method
300 - 0 = $300 4.50(300*0.15) = $202.5
Explain how each of the following events affects the AS curve. a. The Fed increases the money supply. Aggregate supply is unchanged Aggregate supply shifts to the left Aggregate supply shifts to the right b. Oil prices drop sharply. Aggregate demand shifts to the right Aggregate demand shifts to the left Aggregate supply shifts to the right Aggregate supply shifts to the left
Answer:
A) When the Feds increase money supply, Aggregate supply shifts to the right.
B) When oil prices drop sharply, Aggregate demand shifts to the right
Explanation:
When Fed increases the money supply, aggregate supply shifts to the right.
This is one of the activity in the open market operation used by government to control the supply of money.
The Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth.
And when oil prices drop sharply, Aggregate demand shifts to the right as an indicator of increase in consumption.
Oil price drop will reduce energy bill and raise consumers' real income which leads to an increase in aggregate demand.
Increasing the money supply by the Fed does not affect the Aggregate Supply curve, which remains unchanged. However, when oil prices drop sharply, this reduces production costs and can cause the Aggregate Supply curve to shift to the right, indicating lower inflation, higher output, and lower unemployment.
Explanation:The question pertains to how certain events affect the Aggregate Supply (AS) curve in the context of the aggregate demand/aggregate supply (AD/AS) model. Specifically, the student has asked about the effects of an increase in the money supply by the Federal Reserve (the Fed) and a sharp drop in oil prices on the AS curve.
Firstly, if the Fed increases the money supply, this action does not directly affect the AS curve. It predominantly influences Aggregate Demand. Therefore, in response to part (a), Aggregate supply is unchanged.
Secondly, for part (b), when oil prices drop sharply, this is likely to reduce the cost of production for many companies. Lower input costs can lead to an increase in aggregate supply since production becomes more profitable. Hence, Aggregate supply shifts to the right.
Moving the AS curve to the right implies a potential combination of lower inflation, higher output, and lower unemployment, whereas a shift to the left can cause stagflation. Changes in the AS curve impact the economy's equilibrium output, price level, and employment.
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If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see 95% of the time? Base your answer on the information below. Small Stocks S&P 500 Corporate Bonds T-Bills Average Return 18.83% 11.44% 6.81% 3.84% Standard Deviation of returns 38.81% 20.07% 6.69% 3.25%
Answer: Between -28.7% and 51.58%
Explanation:
95% of the time would mean a 95% interval which would mean that it is between -2 and +2 standard deviation as it is Normally distributed.
We can therefore use the following formula to find the confidence interval,
= Average return + (2 * standard deviation) and,
= Average - return (2 * standard deviation)
= 11.44% + (2*20.07%)
= 0.5158
= 51.58%
and
= 11.44% - (2*20.07%)
= -0.287
= -28.7%
Between -28.7% and 51.58% is the range of returns expected to be seen 95% of the time.
If you need any clarification please feel free to react or comment.
a set of cash flows begins at 20000 the first year with a decrease of $2000 each year until n = 10. With an interest rate of 7%, what is the equivalent uniorm annual cash flow
Answer:
Explanation:
Present value (PV) is sum of all cash flows discounted at 7%.
(a) Annual decrease = $2,000
PV is computed as follows.
Year Cash Flow ($) PV Factor at 7% Discounted Cash Flow ($)
(A) (B) (A) x (B)
1 20,000 0.9346 18,692
2 18,000 0.8734 15,722
3 16,000 0.8163 13,061
4 14,000 0.7629 10,681
5 12,000 0.7130 8,556
6 10,000 0.6663 6,663
7 8,000 0.6227 4,982
8 6,000 0.5820 3,492
9 4,000 0.5439 2,176
10 2,000 0.5083 1,017
PV ($) = 85,041
The Sisyphean Company has a bond outstanding with a face value of $ 5 comma 000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then the price that this bond trades for will be closest to?
Answer:
$4,575.60
Explanation:
For computing the price of the bond we have to use the present value formula that is to be reflected in the attached spreadsheet which is presented below:
Given that,
Future value = $5,000
Rate of interest = 10.6% ÷ 2 = 5.3%
NPER = 8 years × 2 = 16 years
PMT = $5,000 × 9% ÷ 2 = $225
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the formula the price of the bond is $4,575.60
Salvia Company recently purchased a truck. The price negotiated with the dealer was $48,000. Salvia also paid sales tax of $3,600 on the purchase, shipping and preparation costs of $4,600, and insurance for the first year of operation of $5,600. At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense
Answer:
The amount at which the truck should be recorded in the books is $56200
Explanation:
The cost of an a fixed asset to be recorded should include the cost incurred to purchase the asset along with any costs incurred to bring the asset to the location and in the condition necessary for use as intended by the management. The costs that are capitalized along with the purchase costs are usually of non recurring nature.
The cost at which the truck should be recorded is,
Purchase Price $48000
Sales Tax paid $3600
Shipping & preparation cost $4600
Total cost $56200
The sales tax, if it is not refundable, should be capitalized.
The transportation and site preparation costs are necessary to bring the asset to the location and condition necessary for use as intended by management. Thus, it should be capitalized.
The insurance is a revenue and recurring expenditure and asset can be used without it. Thus, it is not recorded.
Dulce Corporation had 220,000 shares of common stock outstanding during the current year. There were also fully vested options for 10,500 shares of common stock were granted with an exercise price of $20. The market price of the common stock averaged $25 for the year. Net income was $4.5 million. What is diluted EPS? (Round your answer to 2 decimal places.)
Answer:
$20.26
Explanation:
The computation of diluted Earning per share is shown below:-
Shares for vested options = (Vested options × Exercise price) ÷ Common stock average
= (10,500 × $20) ÷ $25
= 8,400
Now,
Diluted Earning per share = Net income ÷ (Common stock shares + (Vested options - Shares for vested options))
= $4,500,000 ÷ (220,000 + (10,500 - 8,400)
= $4,500,000 ÷ (220,000 + 2,100)
= $4,500,000 ÷ 222,100
= $20.26
So, for computing the diluted Earning per share we simply applied the above formula.
Teradene Corporation purchased land as a factory site and contracted with Maxtor Construction to construct a factory. Teradene made the following expenditures related to the acquisition of the land, building, and equipment for the factory: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):vc
Purchase price of the land $ 1,290,000
Demolition and removal of old building 89,000
Clearing and grading the land before construction 195,000
Various closing costs in connection with acquiring the land 51,000
Architect's fee for the plans for the new building 59,000
Payments to Maxtor for building construction 3,340,000
Equipment purchased 905,000
Freight charges on equipment 41,000
Trees, plants, and other landscaping 54,000
Installation of a sprinkler system for the landscaping 5,900
Cost to build special platforms and install wiring for the equipment 21,000
Cost of trial runs to ensure proper installation of the equipment 7,900
Fire and theft insurance on the factory for the first year of use 33,000
In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $25,000 cash and signed a noninterest-bearing note requiring the payment of $79,000 in one year. An interest rate of 6% properly reflects the time value of money for this type of loan.
Required:
Determine the initial valuation of each of the assets Teradene acquired in the above transactions.
Land:
Building:
Equipment:
Land Improvements:
Fork Lifts:
Prepaid Insurance:
Answer:
Teradene:
Initial valuation of each of the assets acquired in the above transactions.
Land: $1,290,000+89,000+195,000+51,000 = $1,625,000
Building: $59,000+3,340,000 = $3,399,000
Equipment: $905,000+41,000+21,000+7,900 = $974,900
Land Improvements: $54,000+5,900
Fork Lifts: $25,000+74,528.30 = $99,528.30
Prepaid Insurance: $33,000
Explanation:
a) Fixed assets are tangible items or resources, e.g. plant and land, that are used to earn income. As capital assets, they appear on the balance sheet as property, plant and equipment (PP&E). The company is expected to hold onto them for more than a year.
b) Prepaid Insurance is not regarded as a fixed asset unlike other assets above. Prepaid Insurance is a current asset, since it is for one year and not above.
c) The Fork Lifts' value was determined by calculating the present value of the note payable of $79,000 with an interest rate of 6% in order to reflect the time value of money, and then adding this to the initial cash payment of $25,000.
McFann Co. has two divisions, L and H. Division L is the company's low-risk division and would have a WACC of 8% if it were operated as an independent company. Division H is the company's high-risk division and would have a WACC of 14% if it were operated as an independent company. Because the two divisons are the same size, the company has a composite WACC of 11%. Division H is considered a project with an expected return of 12%. Should McFann Co. accept or reject the prject?
A. Accept
B. Reject
On what grounds do you base your accept-reject decision?
A. Division H's project should be accepted, because its return is greater than the risk-based cost of capital for the divison.
B. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Answer:
B. Reject
B. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Explanation:
As we can see that the project H Weighted average cost of capital is 14% and the expected rate of return is 12%
So based on this its expected rate of return is less than the cost of capital i.e Weighted average cost of capital
Therefore, the project should be rejected as we compared the Weighted average cost of capital and the expected rate of return
The treasurer of a large corporation wants to invest $24 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.87 percent; that is, the EAR for this investment is 3.87 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 98 days, what is the percentage discount yields on this investment
Answer: 3.73%
Explanation:
We are given an EAR so first we'd have to convert it to an APR.
We do so by the following formula,
APR = [(Ear + 1)^(1/n) - 1 ] x n
APR = ((3.87% + 1) ^ (1/365/98) - 1) x 365/98
APR = ((1.0387) ^ (98/365) - 1) x 365/98
APR = 3.816%
Now that we have the APR, we get the percentage discount yields by,
= ( [360(.03816)] / [365 + (98)(.03816))
= 3.73%
The percentage discount yields on this investment is 3.73%
Finch Painting Company is considering whether to purchase a new spray paint machine that costs $2,000. The machine is expected to save labor, increasing net income by $300 per year. The effective life of the machine is 15 years according to the manufacturer’s estimate. Required Determine the unadjusted rate of return based on the average cost of the investment
Answer:
13.9%
Explanation:
Given that:
Cost of the machine: $2,000
Net income increasing: $300
Number of years: 15 => depreciation per year: $2,000 /15 =$133
=> Average Return: $300 - $133 = $167
As we know:
Average investment (Assuming no salvage value:)
= (beginning investment + ending investing)/2
(2000 + 0 )/ 2 = 1,200
So, the unadjusted rate of return based on the average cost of the investment:
= [tex]\frac{average \: return}{average \: investment}[/tex]
= $167 / $1,200
= 0.139
= 13.9%
To calculate the unadjusted rate of return based on the average cost of the investment for the spray paint machine, divide the annual increase in net income by the average cost of the investment. The average cost is obtained assuming straight-line depreciation over the effective life of 15 years. In this case, the unadjusted rate of return is 30%.
The student is asking about how to determine the unadjusted rate of return on a new potential investment in a spray paint machine, based on the average cost of the investment. The unadjusted rate of return is calculated by taking the expected annual increase in net income and dividing it by the average cost of the investment. If the spray paint machine costs $2,000 and increases net income by $300 per year with an effective life of 15 years, the unadjusted rate of return calculation would be as follows:
Annual Increase in Net Income: $300
Initial Cost of the Machine: $2,000
Effective Life of the Machine: 15 years
Average Cost of Investment: ($2,000 / 2) = $1,000 (assuming straight-line depreciation)
Unadjusted Rate of Return = ($300 / $1,000) * 100 = 30%
Therefore, the unadjusted rate of return on the spray paint machine is 30%.
"Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 106,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements. (If no entry is required for a transaction/event, select "" No journal entry required"" in the first account field.) 4 journal entries"
Question. The exchange rate was not added to your question. Below is the exchange rate used to answer this question.
September 15 $ 0.60
September 30 $0.66
October 15 $0.62
Answer: See the explanation for the prepared journal entry.
Explanation:
Date Account title/Explanation Debit Credit
Sept 15 Account receivable (106,000*0.6) 63600
Sales 63600
(To record the sales)
Sept 30 Account receivable(106,000*(0.66-0.6) 6360
Foreign exchange gain 6360
[ To record the adjustment of forex gain/loss]
Oct. 15 Foreign exchange gain/loss
(106000*(0.66-0.62) 4240
Account receivable 4240
[ To record the entry for changes
in the exchange rate]
Oct 15 Cash (106,000*0.62) 65720
account receivable 65720
[ To record the entry for receipt of payment]
Note; No journal entry require for 3rd entry.
Grommit Engineering expects to have net income next year of $ 40.13 million and free cash flow of $ 22.34 million. Grommit's marginal corporate tax rate is 30 %. a. If Grommit increases leverage so that its interest expense rises by $ 16.1 million, how will net income change? b. For the same increase in interest expense, how will free cash flow change?
Answer:
A.
If Grommit increases leverage so that its interest expense rises by $16.1M its net income will therefore fall by the after-tax interest expense.
B.
For the same increase in interest expense the free cash flow will not be affected.
Explanation:
A.
If Grommit increases leverage so that its interest expense rises by $16.1M its net income will therefore fall by the after-tax interest expense.
40.13M -16.1*(1-0.30)
=40.13M-15.8
=$24.33M
B.
For the same increase in interest expense the free cash flow will not be affected.
Sam buys fuel for his construction vehicles from the local distributer. He uses 8,500 gallons a month. The local distributor charges him $20.50 per order when he orders and it costs him $9.00 per gallon per year to store the gas at his farm. The distributer can arrive within an hour of his order and we have a 500 gallon tank he can fill. From a logical and reasonable standpoint, how much fuel should Sam order when he calls the distributer? (Remember how big the tank for his gas is)
Answer:
He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.
Explanation:
According to the given data we have the following:
h = handling cost per unit = $ 9
S = Ordering cost per order = $20.5
He uses 8,500 gallons a month, therefore, the annual demand D= 8,500*12 = 102,000 gallons .
Therefore, the optimal ordering quantity would be= [ (2*D*S) / h ]1/2
=681.66 units
He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.
On January 1, 2022, Ivanhoe Creek Country Club purchased a new riding mower for $15,400. The mower is expected to have a 10-year life with a $2,700 salvage value.What journal entry would Ivanhoe Creek make on December 31, 2022, if it uses straight-line depreciation? (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 0 for the amounts.)
Answer and Explanation:
The Journal entry is shown below:-
Depreciation expense Dr, $1,270
To Accumulated depreciation $1,270
(Being depreciation expenses is recorded)
Working note
Depreciation per year using SLM = (Cost - Salvage value) ÷ Useful life
= ($15,400 - $2,700) ÷ 10
= $12,700 ÷ 10
= $1,270
For recording the depreciation expenses we simply debited the Depreciation expense and credited the accumulated expenses.
Final answer:
The annual depreciation expense for the new riding mower using the straight-line method is $1,270, resulting in a journal entry with a debit to Depreciation Expense and a credit to Accumulated Depreciation - Riding Mower for the same amount.
Explanation:
To calculate the annual depreciation expense for Ivanhoe Creek Country Club's new riding mower using the straight-line depreciation method, we subtract the salvage value from the cost and then divide by the useful life of the asset:
Cost of the new riding mower = $15,400
Salvage value at the end of useful life = $2,700
Useful life = 10 years
Depreciation expense per year = ($15,400 - $2,700) / 10 = $1,270
Therefore, the journal entry on December 31, 2022, would be:
Debit: Depreciation Expense $1,270
Credit: Accumulated Depreciation - Riding Mower $1,270
This entry records the annual depreciation for the riding mower.
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: SubscribersService calls (per subscriber) March 600 0.6 April 700 0.9 May 1,400 1.5 June 1,600 2.5 July 1,600 3.0 August 1,500 2.4 The average price charged for a service call is $80. Of the service calls, 30 percent are paid in the month the service is rendered, 60 percent in the month after the service is rendered, and 8 percent in the second month after. The remaining 2 percent is uncollectible. Varmit-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber should decrease by an estimated 20 percent. The following information is available for costs incurred in August. All costs except depreciation are paid in cash.
Service costs
Variable costs $ 24,000
Maintenance and repair 22,000
Depreciation (fixed) 42,000
Total $ 88,000
Marketing and administrative costs
Marketing (variable) $ 14,500
Administrative (fixed) 55,000
Total $ 69,500
Total costs $ 157,500
Variable service and marketing costs change with volume. Fixed depreciation will remain the same, but fixed administrative costs will increase by 5 percent beginning September 1. Maintenance and repair are provided by contract, which calls for a 1 percent increase in September.
Required:
Prepare a budgeted income statement for September.
Answer:
VARMIT B-GONE
BUDGETED INCOME STATEMENT
sales revenue ( 90%*1500*2.4*80%*$80) $207,360
Service cost :
variable cost $17280
Maintenance and repair 15,998
Depreciation 42,000 75,278
Gross profit 132,082
marketing and administrative cost :
Marketing (variable ) 10,440
administrative (fixed)(55,000*105%) 57,750
bad debt( 2%*207360) 4,147 72,337
net income 59,745
Explanation:
service cost :
variable cost = (24,000/3600)*2592 = $17,280
maintenance and repairs = (22,000/3600)*2592 *101% = $15,998
Marketing cost = ($14,500/3600)*2592 = $10,440
Assume that it is now November 30th, your client has an Accounts Receivable balance of $4,500 and an Allowance for Uncollectible Accounts balance of $75 (assume the normal balance for both accounts). November Sales totaled $15,000. The estimate for the uncollectible amount is based on November Sales, and the estimate is $450. What would be the allowance transaction AMOUNT?
Answer:
$375
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Allowance transaction amount
= $450 - $75
= $375
7. Preparing Additional Employment Documents Although the résumé and cover message are the major tasks during your employment search, you may be required to write other employment documents and follow-up messages. These documents reflect on you and your communication skills and may subtly influence your chances for employment, so follow guidelines and instructions carefully. What information will help you fill out a job application? Check all that apply. A list of graduation dates A document containing your research on the target company A selection of interview questions A list of beginning and ending dates of employment A card with any vital statistics that are not on your résumé
Answer:
A list of graduation dates
A list of beginning and ending dates of employment
A card with any vital statistics that are not on your résumé
Explanation:
When providing additional information in the recruitment process, accurate and relevant information shows you are professional and have good communication skills. Making your chances of landing the job better.
Relevant information includes accurate dates of graduation and previous employment. Ensure these records are consistent accross all documents presented. Disparity will be perceived as lack of transparency.
Also a card with vital statistics not on your resume should be prepared. These can include achievements in past job roles. For example: I introduced a software that automated inquiry process and reduced cost by 30%.
A company identified the following estimated data in its two production departments. During the current month, Assembly used 200 direct labor hours and 300 machine hours and Finishing used 300 hours direct labor hours and 200 machine hours. If the company uses a departmental overhead rate based on machine hours, how much overhead cost is assigned to Finishing this month?
Answer:
$9,000
Explanation:
1.Finishing’s departmental rate based on MH
= Finishing’s costs/Finishing’s machine hours
= $90,000/2,000 = $45 per MH
2.Cost assigned to Finishing based on MH
= Finishing’s departmental rate based on MH * Finishing’s currently used machine hours
= $45 per MH * 200 MH = $9,000
Therefore If the company uses a departmental overhead rate based on machine hours, $9,000 overhead cost will be assigned to Finishing this month