Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. Because current market rates for similar bonds are just under 12%, Warren can sell its bonds for $1 comma 050 each; Warren will incur flotation costs of $20 per bond. The firm is in the 22% tax bracket.A. CalCulate the bond's yield to maturity (YTM) to estimate the before-tax and after- tax cost of debt.
B. Use the approximation formula to estimate the before-tax and after-tax costs of debt.
Answers
Answer:
11.57% and 9.02%
Explanation:
For computing the before-tax and after- tax cost of debt we use the RATE formula i.e to be shown in the attachment below:
Given that,
Present value = $1,050 - $20 = $1,030
Future value or Face value = $1,000
PMT = 1,000 × 12% = $120
NPER = 15 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 11.57%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 11.57% × ( 1 - 0.22)
= 9.02%
Related Questions
Your finance textbook sold 52,500 copies in its first year. The publishing company expects the sales to grow at a rate of 16 percent each year for the next three years and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in years 3 and 4.
Answers
Answer:
The sales figure in year 3 is 81,947
The sales figure in year 4 is 90,142
Explanation:
The number of copies the publisher expects to sell in 3rd and 4th can be determined by computing the growth rate and increased sales from year 1 to year 4.
Year growth sales
1 52,500*(1+16%) 60,900
2 60900*(1+16%) 70,644
3 70644*(1+16%) 81,947
4 81,947*(1+10%) 90,142
The sales of finance books in year 3 and 4 are 81,947 and 90,142 respectively
Note that the growth rate is continuous that accounted for the need to apply the growth rate to the previous year sales in order to arrive at current year sales
In liability based on negligence, _____. a contractual relationship is involved and it does matter whether or not the buyer dealt directly with the manufacturer the manufacturer's duty of care extends to all persons who might foreseeably be injured if the manufacturer does not exercise its duty of care disclaimers in contracts are usually effective to shield a manufacturer or seller against liability for negligence to consumers the obvious danger rule can be used for complete defense
Answers
Answer:
the manufacturer's duty of care extends to all persons who might foreseeably be injured if the manufacturer does not exercise its duty of care
Explanation:
Negligence liability can apply to persons or organisations not explicitly interested in the accident at question — a term known as vicarious liability. Vicarious responsibility for negligence is also asserted to ensure that an accident victim can collect her or his compensation from an economically stable and properly protected party.
Small companies, associations, organisations and major corporations may also be held legitimately accountable in cases where they have failed to secure the health of everyone else adequately. Additionally, respondeat superior may also render an employer responsible for job-related injuries affecting his or her workers even though at the moment of the incident the employer had not been present.
Lauren is 19 and has never owned a credit card. She plans to move off campus next semester because she's tired of living in the dorm. The apartment complex she's inquiring about runs background checks and views the credit reports of all the prospective tenant. She knows her credit score is zero, and she's worried that will keep her from getting in the apartment complex.
1. What can Lauren do to improve her chances of getting a low rate at the apartment complex?
2. Is it a bad thing to have a credit score of zero? Why or why not?
3. Should Lauren open a credit card account so she can start establishing a credit score? Why or why not?
Answers
Answer:
Explanation:
1. Lauren should attempt to fix her credit report and build her credit profile by taking a secured credit card, by depositing an amount of money which will be the limit for the credit card, taking credit builder loans. In our savings account, the credit unions deposit a small loan, which has to be paid back within 6 months to 24 months. These payments are reported to the credit reporting companies and help build the credit profile for Laurel.
2. Owning no score simply means that Lauren has not yet proved her ability that she can quickly pay off the borrowed loans. Thus, she is credit invisible and she has an absence of a score. When we do not have a credit history, then the lenders simply do not know whether we will pay back the borrowed money. Thus, Lauren should apply for credit to introduce herself to the credit bureaus.
3. Yes, Lauren should open a credit card to prove her financial worthiness. Since she never has a credit history. So, she should apply for a secured credit card with a limit equal to the amount of money that she has secured with it. After applying for the credit card, she should pay her bills on time. She should be using only 30% of her limit.
Final answer:
The answer provides advice on improving chances at an apartment complex, discusses the implications of a zero credit score, and advises on opening a credit card account to establish credit.
Explanation:
How to Improve Chances at the Apartment Complex:
Establish Credit: Lauren can start by opening a secured credit card to begin building a credit history.Alternative References: Providing alternative references such as past landlords, employers, or a co-signer can also help.Communicate: Lauren can explain her situation to the apartment complex and show willingness to meet any additional requirements.Is Having a Credit Score of Zero Bad?
Yes, having a credit score of zero can be disadvantageous as it reflects a lack of credit history, making it difficult for lenders to assess creditworthiness.
Should Lauren Open a Credit Card Account?
Yes, it's advisable for Lauren to open a credit card account responsibly to start establishing a credit score, which will benefit her in various financial situations in the future.
Troy Engines, Ltd., Manufactures A Variety Of Engines For Use In Heavy Equipment. The Company Has Always Produced All Of The Necessary Parts For Its Engines, Including All Of The Carburetors. An Outside Supplier Has Offered To Sell One Type Of Carburetor To Troy Engines, Ltd., For A Cost Of $31 Per Unit. To Evaluate This Offer, Troy Engines, Ltd., ...
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Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $31 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally:
Per Unit 15,000 Units
Per Year
Direct materials $ 9 $ 135,000
Direct labor 11 165,000
Variable manufacturing overhead 2 30,000
Fixed manufacturing overhead, traceable 6* 90,000
Fixed manufacturing overhead, allocated 13 195,000
Total cost $ 41 $ 615,000
*40% supervisory salaries; 60% depreciation of special equipment (no resale value).
Required:
1a.
Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.)
Answers
Answer:
Total relevant cost for making the parts =$387,400
Total relevant cost for buying the parts = $465,000
Explanation:
The computation of total cost of making and buying the parts is shown below:-
Make Buy
Cost of purchasing 0 $465,000
(15,000 × $31)
Direct material $135,000 0
Direct labor $165,000 0
Variable manufacturing
overhead $30,000 0
Fixed manufacturing
overhead $57,240 0
Total relevant cost $387,400 $465,000
Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct materials $ 15.10 $ 11.00 $ 11.80 $ 11.40 Direct labor 20.20 28.20 34.40 41.20 Variable manufacturing overhead 5.10 3.50 3.40 4.00 Fixed manufacturing overhead 27.30 35.60 27.40 38.00 Unit product cost $ 67.70 $ 78.30 $ 77.00 $ 94.60 Additional data concerning these products are listed below. Products A B C D Grinding minutes per unit 4.60 6.10 5.10 4.20 Selling price per unit $ 76.90 $ 94.30 $ 88.20 $ 105.00 Variable selling cost per unit $ 3.00 $ 2.00 $ 4.10 $ 2.40 Monthly demand in units 4,800 4,800 3,800 2,800 The grinding machines are potentially the constraint in the production facility. A total of 54,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? Multiple Choice 82,500 54,400 19,480 60,420
Answers
Answer:
82,500
Explanation:
The computation of the minutes of grinding machine required to satisfy demand is shown below
= (4,800 units × 4.60 + 4,800 units × 6.10 + 3,800 × 5.10 + 2,800 × 4.20)
= 22,080 + 29,280 + 19,380 + 11,760
= 82,500
We simply multiplied the Grinding minutes per unit with the Monthly demand in units and the same is to be considered above
On December 28, 2021, Videotech Corporation (VTC) purchased 15 units of a new satellite uplink system from Tristar Communications for $26,000 each. The terms of each sale were 1/10, n/30. VTC uses the gross method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2022. Prepare the journal entries on December 28 and January 6 to record the purchase and paymen
Answers
Answer:
December 28, 2021
Merchandise $26,000 (debit)
Trade Payable $26,000 (credit)
January 6, 2022
Trade Payable $260 (debit)
Discount Received $260 (credit)
Being recognition of discount received
Trade Payable $25,740 (credit)
Cash $25,740 (credit)
Being settlement of an account
Explanation:
December 28, 2021
Recognise Liability and an Asset
January 6, 2022
Recognise Cash and an Income and also de-recognise a Liability
Answer:
December 28, 2021 Entry:
DR: Satellite uplink systems($26,000*15) $390,000
CR: Accounts Payable(Tristar Communication) $390,000
(To record purchase of Satellite uplink systems from Tristar Communication on credit)
Entry on January 6, 2022:
DR: Accounts Payable(Tristar Communication) $ 390,000
Cr: Cash Discount (390,000×1%) $3,900
Cr: Cash/Bank $ 386,100
Explanation:
On Dec 28, 2021 as the units were purchased on credit so a liability is recognized against the purchase of assets.
On Jan 6, 2022 there has been a cash discount received of 1% of invoice value if payment has been made with 10 days of invoice. As the payment has been made with in 10 days so a cash discount is received which is categorized as an income for the business.
Norma Company had 10,000 units in work in process at January 1 that were 50 percent complete. During January, 25,000 units were completed. At January 31, 6,000 units remained in work in process that were 80 percent complete. Using the average cost method, the equivalent units for January were:
a. 31,000.
b. 29,800.
c. 35,000.
d. 36,000.
Answers
Answer:
b. 29,800.
Explanation:
Number of units out in January = 25,000 units completed during month + 80% of 6,000 units completed at month end
= 25,000 + 4,800
= 29,800
Answer:
the equivalent units for January were: b. 29,800.
Explanation:
Equivalent units concept is the measurement of physical units of output in terms of their completion percentage on work done on them.
Calculation of equivalent units for January
Units were completed ( 25,000 units×100%) = 25,000
Units of ending work in process ( 6,000 units ×80%) = 4,800
Total = 29,800
Of the different IRT roles, the _______________ is head of the team and issues the ultimate call regarding how to respond to an incident, whereas the __________________ role is to monitor and document all the activity that unfolds during an incident. IRT coordinator, IRT manager's IRT manager, IRT coordinator's IRT manager, IRT support IRT officer, IRT manager's.
Answers
Answer:
IRT manager, IRT coordinator's
Explanation:
Interactive response technology is made up of interactive voice response and interactive web response. They allow a system to gather keypad inputs and web inputs.
IRT manager is head of the team and issues the ultimate call regarding how to respond to an incident, whereas the IRT coordinator's role is to monitor and document all the activity that unfolds during an incident.
"The correct fill-in-the-blanks for the given statement is: Of the different IRT roles, the IRT manager is head of the team and issues the ultimate call regarding how to respond to an incident, whereas the IRT coordinator's role is to monitor and document all the activity that unfolds during an incident.
In an Incident Response Team (IRT), each member has a specific role to play during the incident response process. The roles are structured to ensure that all aspects of the incident are addressed efficiently and effectively.
- The IRT Manager is the head of the team and is responsible for making the final decisions on how to respond to an incident. This role involves strategic planning, coordination among team members, and communication with external stakeholders if necessary. The IRT Manager ensures that the team's response aligns with the organization's policies and objectives.
- The IRT Coordinator's role is to handle the administrative and logistical aspects of the incident response. This includes monitoring the incident as it progresses, documenting all actions taken by the team, and ensuring that all team members have the resources they need to perform their duties. The IRT Coordinator acts as a central point of contact for the team and is crucial in maintaining a clear record of the incident response activities.
The other roles mentioned, such as IRT Support and IRT Officer, are also part of the IRT but do not fit the description provided in the question. IRT Support typically assists with technical tasks and may provide additional resources as needed, while an IRT Officer might be responsible for specific tasks assigned by the IRT Manager or IRT Coordinator.
Therefore, the IRT Manager is the head of the team and makes the ultimate decisions, while the IRT Coordinator is responsible for monitoring and documenting the incident response activities.
The Florida Investment Fund buys 70 bonds of the Gator Corporation through a broker. The bonds pay 8 percent annual interest. The yield to maturity (market rate of interest) is 10 percent. The bonds have a 20-year maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Answers
Answer:
The question requirement is found below:
a.Compute the price of a bond. (Do not round intermediate calculations and round your answer to 2 decimal places.)
b.Compute the total value of the 70 bonds. (Do not round intermediate calculations and round your answer to 2 decimal places.)
a. price of a bond is $829.73
b value of 70 bonds is $58,081.10
Explanation:
The price of the bond can be computed using the pv formula in excel as found below:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity on the bond which is 10% annually
nper is the number of annual coupon that the bond would pay before redemption,hence a 20 year bond would pay coupon interest 20 times before it is redeemed
pmt is the annual coupon,which is 8%*$1000=$80
fv is the face value of $1,000
=-pv(10%,20,80,1000)=$ 829.73
each bond is worth $829.73
70 bonds=70*$829.73 = $58,081.10
Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $8,300 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.
Answers
Answer:
Please find the journal entries in the explanation section
Explanation:
March 11
Dr Bad expense $8,300
Cr Accounts Receivable ---------------------------------------Leer Co. $8,300
(Being the write off of uncollectible accounts receivable)
March 29
Dr Accounts Receivable-- Leer Co $8,300
Cr Bad expense $8,300
(Being the reversal of the previous account write off)
March 29
Dr Cash $8,300
Cr Accounts Receivable------------------------------------------Leer Co$8,300
(Being cash receipt from the accounts receivable)
The question relates to accounting, specifically the direct write-off method and recovery of bad debts. Dexter Company will first write off the uncollected $8,300 from Leer Co., then record the subsequent unexpected payment from Leer Co.
Explanation:The subject of this question is the field of accounting, specifically related to the direct write-off method and recovery of bad debts. The direct write-off method, is a way businesses account for bad debts – amounts that customers fail to pay. The 'write-off' in this method refers to the action taken to remove such uncollectable amounts from the accounts receivable.
Let's look at the transactions for Dexter Company:
When Dexter determines it can't collect $8,300 from Leer Co. on March 11, the journal entry would be: Bad Debt Expense $8,300 (Debit), Accounts Receivable – Leer Co. $8,300 (Credit)Then, if Leer Co. unexpectedly pays its account in full to Dexter on the 29th, the entries would be: Accounts Receivable – Leer Co. $8,300 (Debit), Cash $8,300 (Credit)– to recognise receipt of cash, and Recovery of Bad Debts $8,300 (Debit), Bad Debt Expense $8,300 (Credit) – to reduce the previously recognized bad debt expense.Learn more about Direct Write-off Method here:https://brainly.com/question/31858400
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The ledger of Sage Hill Inc. at the end of the current year shows Accounts Receivable $78,000; Credit Sales $855,000; and Sales Returns and Allowances $36,000. (a) If Sage Hill uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Sage Hill determines that Matisse’s $750 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,150 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable.
Answers
Answer and Explanation:
The journal entries are shown below:
(a) Bad debt expense $750
To Accounts receivable $750
(Being the bad debt expense is recorded)
(b) Bad debt expense $5,870
To Allowance for doubtful accounts $5,870
(Being the allowance is recorded)
The computation is below:
Bad debt expense = Accounts receivable × estimated percentage - credit balance in allowance for doubtful accounts
= $78,000 × 9% - $1,150
= $5,870
(c) Bad debt expense $5,910
To Allowance for doubtful accounts $5,910
(Being the allowance is recorded)
The computation is below:
Bad debt expense = Accounts receivable × estimated percentage + debit balance in allowance for doubtful accounts
= $78,000 × 7% + $450
= $5,910
Anthony Inc. purchases a machine for $15,000. This machine qualifies as a 5-year recovery asset under MACRS with the fixed percentages as follows for years 1,2,3, and 4 respectively: 20%, 32%, 19.2% and 11.52%. The tax rate is 33%. If the machine is sold at the end of 4 years for $4,000, what is the cash flow from disposal?
Answers
Answer:
The correct answer is $3,535.36
Explanation:
According to the scenario, the computation of the given data are as follows:
First we calculate the book value,
So, Book value = $15,000 × ( 1 - 20% - 32% - 19.2% - 11.52%)
= $2,592
So, we can calculate the Cash flow from disposal by using following formula:
Cash flow from disposal = Sale proceeds - ( Gain on sales × Tax rate)
Where, Gain on sales = ($4,000 - $2,592 ) = $1,408
By putting the value, we get
= $4,000 - ( $1,408 × 33% )
=$3,535.36
A company wants to set up their headquarters in Spain where the corporate tax rates are as follows: 11% of first $40,000 profits, 22% of next $26,000, 39% of next $29,000, and 42% of everything over $110,000. Consultants estimate that they will have gross revenues of $350,000, total costs of $100,000, and $10,000 in allowable tax deductions. What is taxable income for the first year and how much should the company expect to pay in taxes?
Answers
Answer:
The correct answer is $240,000 and $76,030.
Explanation:
According to the scenario, the computation for the given data are as follows:
Total Revenue = $350,000
Total cost = $100,000
So, Profit = $350,000 - $100,000 = $250,000
Allowable tax deduction = $10,000
So,Taxable income = $250,000 - $10,000 = $240,000
Tax to pay:
11% on first $40,000 = ( 11% × $40,000) =$4,400
22% on next $26,000 = ( 22% × $26,000) = $5720
39% on next $29,000 = ( 39% × $29,000) = $11,310
42% on ($240,000 - $110,000) = ( 42% × $130,000) = $54,600
So, Total tax payable = $4,400 + $5,720 + $11,310 + $54600
= $76,030
Larry estimates that the costs of insurance, license, and depreciation to operate his car total $470 per month and that the gas, oil, and maintenance costs are 49 cents per mile. Larry also estimates that, on average, he drives his car 2,000 miles per month. Required: a. How much cost would Larry expect to incur during April if he drove the car 1,557 miles? (Round your answer to 2 decimal places.)
Answers
Answer:
The expected cost for the month of April is $1232.93
Explanation:
The total cost per month for Larry contains a fixed cost of $470 per month for insurance, licensing and depreciation along with a variable cost of $0.49 per mile multiplied by the number of miles drove during the month. Thus, the total cost per month for Larry can be written as,
Let x be the number of mile driven for the month.
Total cost per month = 0.49x + 470
Expected Cost for April will be = 0.49 * 1557 + 470 = $1232.93
Jarrett Baker is the founder of an enterprise software company. By looking at his income statements over the past three years, you see that its working capital has declined from $42,400 in 2015 to $17,900 in 2016 to $3,100 in 2017. If this trend continues, in what ways could it jeopardize the future of his business?
Answers
Final answer:
Decreasing working capital over three years could hamper Jarrett Baker's company's ability to finance daily operations, manage debt, invest in growth, and handle sudden costs, potentially leading to insolvency.
Explanation:
Declining working capital suggests that Jarrett Baker's enterprise may be facing financial challenges that could threaten its ongoing operations. If the trend of decreasing working capital continues, it may impair the company's ability to finance day-to-day operations, invest in expansion or new projects, and handle unexpected expenses. Since working capital is the difference between a company's current assets and current liabilities, a declining working capital over three consecutive years indicates the company's liquid assets are decreasing in relation to its short-term financial obligations.
A company with low or negative working capital may struggle to pay debts, purchase inventory, or cover payroll, all of which are critical for maintaining the regular flow of business. If this trend persists without corrective measures, it could eventually lead to insolvency, as the enterprise may not be able to meet its short-term liabilities and continue operating.
Bill Thompson, Chief Financial Officer of Garden Tools, Inc., suspects irregularities in the payroll system, and orders an inspection of "each and every payroll voucher issued since January 1, 1999." Five percent of the payroll vouchers contained material errors. This is an example of __________.
A. nonparametric statistics
B. nominal data
C. descriptive statistics
D. inferential statistics
Answers
Answer:
The correct answer is letter "C": descriptive statistics.
Explanation:
Descriptive Statistics is a term used for meaningful analysis of data. This usually means arranging or summing up vast volumes of data so that it can be understood more easily. Descriptive statistics do not necessarily serve to come to a conclusion or to support an inference. But they explain the data in a meaningful way. You may use descriptive statistics for a whole population or a sample.
Engineering Wonders reports net income of $56.0 million. Included in that number is building depreciation expense of $4.6 million and a gain on the sale of land of $1.4 million. Records reveal decreases in accounts receivable, accounts payable, and inventory of $1.6 million, $2.6 million, and $3.6 million, respectively.
What are Engineering Wonders' net cash flows from operating activities?
Answers
Answer:
Engineering Wonders' net cash flows from operating activities are $61.8 million
Explanation:
Net income from operating activities = net income - gain on the sale of land + building depreciation expense = $56.0 - $1.4 + $4.6 = $59.2 million
Engineering Wonders' net cash flows from operating activities = Net Income from operating activities + Decrease in Accounts Receivable + Decrease in Inventory - Decrease in accounts payable = $59.2 + $1.6 + $3.6 - $2.6 = $61.8 million
Answer:
The answer is attached;
Explanation:
The accounting depmiment at Aglaya Telecom records an average of 5,000 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 50,000 transactions. The firm's recovery point objective is therefore (by relying on redundant systems) ________.
Answers
Answer:
10 hours
Explanation:
A recovery point objective (RPO) is the maximum acceptable amount of data loss measured in time. It is the age of the files or data in backup storage required to resume normal operations if a computer system or network failure occurs. It helps system administrators to determine appropriate disaster recovery policies and procedures and decide which backup and recovery technologies to employ.
Worst case RPO = Maximum Acceptable Loss/Average Transactions per hour
Worst case RPO = 50,000 / 5000 = 10
The firm's recovery point objective is therefore 10 hours.
Suppose that the production function is qequalsUpper L Superscript 0.50Upper K Superscript 0.50. What is the average product of labor AP Subscript Upper L, holding capital fixed at ModifyingAbove Upper K with caret? A. AP Subscript Upper Lequalsq divided by Upper L. B. AP Subscript Upper LequalsUpper L Superscript negative 0.50ModifyingAbove Upper K with caret Superscript 0.50. C. AP Subscript Upper Lequals0.50Upper L Superscript negative 0.50ModifyingAbove Upper K with caret Superscript 0.50. D. Both a and b. E. All of the above.
Answers
Answer:
D. Both a and b
Explanation:
The average product of worker is a term of economy in which we identify the output per worker. This function enables to understand the output by each worker. The function can be written as
AP q/L
Where q is output and L is number of worker.
It enables to understand the average product of output over the input. The average product is useful to identify the production at specific level of input. This is a common measure for labor productivity.
An advantage of team diversity is that: a. diverse teams are much more challenging to manage. b. if speed and efficiency are important, a diverse team is appropriate. c. diverse team members are less creative and innovative over the long term. d. diverse team members possess more complementary information and expertise.
Answers
Answer: d. diverse team members possess more complementary information and expertise
Explanation:
Diverse team members are increasingly becoming welcome in the business world. Look at most Boards for instance, they don't usually solely comprise of people in the same industry but rather people from different industries and expertise. Why is that?
Simple. If you look at a problem from one angle alone, you can't completely fix it. This is why a diverse team is important. They bring different types of information and various angles that COMPLIMENT each other.
The expertise that people from various backgrounds can bring together can be very useful because again, they can compliment each other and more often than not, make the project way better than it could be if it was approached from one angle.
On January 1, a company borrowed cash by issuing a $300,000, 5%, installment note to be paid in three equal payments at the end of each year beginning December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
1- What would be the amount of each installment?
2- Prepare an amortization table for the installmet note.
3- Prepare the journal entry for the second installment payment.
Answers
Each annual installment of the note is roughly $114,005.68. The installment amount decreases as more of the loan principal becomes paid off, and less interest accrues. In the journal entry for the second payment, both the note liability and interest expense decrease.
Explanation:To answer this question, we need to use the concept of the Present Value of Annuity (PVA). An annuity is a series of equal payments over a specified period of time. The present value of an annuity is the current value of all those future payments.
The formula for the Present Value of an Annuity (PVA) is: PVA = Pmt × [(1-(1+r)⁻ⁿ)/r], where:
Pmt = Amount of each payment
r = Interest rate per period
n = Number of periods. In this case, r equals 5%/100 = 0.05 and n equals 3. The total PVA equals $300,000.
By rearranging the formula, we can solve for Pmt. Pmt = PVA/[(1-(1+r)¹⁻ⁿ)/r] which equals about $114,005.68. The amortization table shows the payment amount being split into principal and interest areas. The journal entry for the second installment payment would subtract the principal paid from the installment liability, and the interest from the expense of the business.
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By tying the salaries of top corporate managers to the price of the corporation's stock, corporations hope to avoid Select one: a. the principal-agent problem. b. corporate governance. c. conflict between the CFO and the CEO d. paying high salaries to their managers.
Answers
Answer:
the principal-agent problem.
Explanation:
The principal agent problem occurs when an agent who is entrusted with an asset is having conflicting interest with the principal (asset owner).
For example management of a company are the agents of the stockholders of the company.
The main goal of the stockholder is to make profit. So if the salaries of the top management is tied to price of the company's stock, the manager's will work to ensure stocks remain profitable.
This aligns the goals of the management and the shareholders thereby avoiding the principal agent problem.
Which of the following generate the type of externality previously described? Check all that apply. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends. A microbiology lab has published its breakthrough in swine flu research. Your roommate Jacques has bought a bird that keeps you up at night with its chirping. Darnell has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.
Answers
There are two types of externality that is:
The First is Positive externality
The Second is Negative externality
What is an externality?A positive externality is when the usefulness of economic activities to third parties exceeds the costs. An illustration of an activity that generates a positive externality is research.
Activities that generate positive externality are usually underproduced in the economy. For this explanation, the government usually gives a subsidy to motivate its production.
A negative externality is when the cost of movements to third detachments not interested in the activity is greater than its benefit. An example of an activity that induces a negative externality is pollution. Activities that induce negative externality are usually overproduced in the economy, so, the government imposes a tax on such activities to reduce its production.
In the above inquiry, the following activities that generate positive externalities are:
1. A microbiology lab has disseminated its breakthrough in swine flu examination
2. Darnell has planted several trees in his backyard that improve the beauty of the neighborhood, particularly during the fall foliage season.
In the above query, the subsequent activities generate negative externality:
1. The city where you live has awarded a permit to put a movie amphitheater in your neighborhood, forcing traffic jams at night and on weekends
2. Your roommate Jacques has purchased a bird that maintains you up at night with its chirping
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The type of externality described in the question is a negative externality. The movie theater being granted a permit in the neighborhood causes traffic jams at night and on weekends, which negatively affects the residents.
Explanation:The type of externality described in the question is a negative externality. A negative externality occurs when the actions of a person or entity impose costs on others.
In this case, the situation of a movie theater being granted a permit in a neighborhood causing traffic jams at night and on weekends is an example of a negative externality. The traffic jams negatively affect the residents of the neighborhood by increasing congestion and potentially causing inconvenience or delays.
Therefore, the correct options that generate this type of externality are:
The city granting a permit for the movie theaterThe movie theater causing traffic jams at night and on weekendsLearn more about Negative externality here:https://brainly.com/question/34051758
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Kubin Company’s relevant range of production is 13,000 to 18,000 units. When it produces and sells 15,500 units, its average costs per unit are as follows:Kubin Company’s relevant range of production is 13,000 to 18,000 units. When it produces and sells 15,500 units, its average costs per unit are as follows:
Cost per Unit $ 7.40 s 4.40 s 1.90 5.40 Direct labor Variable manufacturing overhead Fixed nanufacturing overhead 3.90 Fixed s 2.90 s 1.40 e.90 1. For financial accounting purposes, what is the total amount of product costs incurred to make 15,500 units? 2. For financial accounting purposes, what is the total amount of perlod costs incurred to sell 15,500 units? 3. For financial 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 13,000 units? accounting purposes, what is the total amount of product costs incurred to make 18.000 units?
Answers
Answer:
1. Total Amount of Product Costs $296,050
2. Total Amount of Period Costs Incurred $141,050
3. Total Amount of Product Costs $330,300
4. Total Amount of Period Costs $135,300
Explanation:
The computation is shown below:
1. For total product cost
Total Amount of Product Costs = Units × (Direct Material Per Unit + Direct Labor Per Unit + Variable Manufacturing Overhead + Fixed Manufacturing Overhead Per Unit)
= 15,500 units × ($7.40 + $4.40 + $1.90 + $5.40)
= $296,050
2. For total period cost
Total Amount of Period Costs = Units × (Fixed Selling Expense Per Unit + Fixed Administrative Expense Per Unit + Sales Commissions Per Unit + Variable Administrative Expense Per Unit)
= 15,500 units × ($3.90 + $2.90 + $1.40 + $.90)
= $141,050
3. For total amount of product cost incurred
Direct Material (18,000 units × $7.40) $133,200
Direct Labor (18,000 units × $4.40) $79,200
Variable Manufacturing Overhead (18,000 units × $1.90) $34,200
Fixed Manufacturing Overhead (15,500 units × $5.40) $83,700
Total Product Costs $330,300
4. For total amount of period cost incurred
Fixed Selling Expense (15,500 units × $3.90) $60,450
Fixed Administrative Expense (15,500 units × $2.90) $44,950
Sales Commissions (13,000 units × $1.40) $18,200
Variable Administrative Expense (13,000 units × $.90) $11,700
Total Period Costs $135,300
We simply applied the above formulas
and we know that the period cost includes the major portion of selling and admin expense while the product cost includes the direct labor, direct material, and the manufacturing overhead cost or we can say total manufacturing cost
You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company. UnderWater's stock price is $ 15 and it has 1.25 million shares outstanding.You believe that if you buy the company and replace its management, its value will increase by 35 %. You are planning on doing a leveraged buyout of UnderWater and will offer $ 18.75 per share for control of the company. a. Assuming you get 50 % control, what will happen to the price of non-tendered shares? b. Given the answer in part (a), will shareholders tender their shares, not tender their shares, or be indifferent? c. What will your gain from the transaction be?
Answers
Answer:
a. The shareholders will want to tender their shares.
c. The gain will be $25.31 million – $23.44 million = $1.87 million.
Explanation:
a. The value of the firm is 1.25 million shares* 15= $18.75 million.
Increase in value, 18.75*135% = $25.31 million, so now this is the value of the firm
If 50% of the shares are bought for $18.75 Million, you will buy 0.625 million shares, so the total amount that will be paid is $11.72 million.
Now, the money against shares will be borrowed as collateral. This means that the new value of the equity will be $25.31 million – $11.72 million = 13.59 million.
1.25 million shares are there so now the price of the share will be = $10.87 million ($13.59 million/$1.25 million = $ 10.87 million).
b.The price of the shares has decreased from $13.59 to $10.87 after the tender offer, everyone will want to tender their shares for $18.75.
c. Supposing everyone tenders the shares and you will buy at $18.75 per share, you will pay $23.44 (18.75 per share *1.25 million shares) to acquire the company and it will be worth $25.31 million.
The gain will be $25.31 million – $23.44 million = $1.87 million.
Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:
Selling price per unit on the intermediate market $43
Variable costs per unit $20
Fixed costs per unit (based on capacity) $6
Capacity in units 58,000
Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 9,000 speakers per year. It has received a quote of $35 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.
Required:
1. Assume that the Audio Division is now selling only 49,000 speakers per year to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 9,000 speakers from the Audio Division to the Hi-Fi Division?
No
Yes
d. From the standpoint of the entire company, should the transfer take place?
Transfer should take place.
Transfer should not take place.
2. Assume that the Audio Division is selling all of the speakers it can produce to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 9,000 speakers from the Audio Division to the Hi-Fi Division?
No
Yes
d. From the standpoint of the entire company, should the transfer take place?
Transfer should take place.
Transfer should not take place.
Answers
Answer and Explanation:
Sako Company's Audio Division
a. If Audio Division is currently selling only 49,000 speaker each year to outside customers at the stated $43 price, it means division is having spare capacity of 9000 speaker.
Lowest acceptable transfer price from the perspective of the audio Division = Variable cost per speaker
= $20
b. Highest acceptable transfer price from the perspective of the Hi-fi Division = marker price from outside supplier = $35 per speaker
c. Range of acceptable transfer prices (if any) between the two divisions = $20 to $35
Yes, the managers of the Audio and Hi-fi Divisions likely to voluntarily agree to a transfer price for 9,000 speakers.
d. Yes, from stand point of company also, this transfer should take place.
Solution 2:
a. If Audio Division can sell all of its speaker to outside customers for $43 per speaker, lowest acceptable transfer price from the perspective of the audio Division is selling price i.e. $43 per speaker
b. Highest acceptable transfer price from the perspective of the Hi-fi Division = marker price from outside supplier = $35 per speaker
c. Range of acceptable transfer prices (if any) between the two divisions - Range of acceptable transfer price cannot be established as lowest acceptable transfer price for audio division is higher than highest acceptable transfer price of Hifi division.
Manager of Audio and Hi -fi division is not likely to voluntarily agree to a transfer price for 9,000 speakers.
d. From stand point of the entire company also, this transfer should not take place.
NNR Inc.'s balance sheet showed total current assets of $1,875,000 plus $4,225,000 of net fixed assets. All of these assets were required in operations. The firm's current liabilities consisted of $475,000 of accounts payable, $375,000 of 6% short-term notes payable to the bank, and $150,000 of accrued wages and taxes. Its remaining capital consisted of long-term debt and common equity. What was NNR's total investor-provided operating capital?
Answers
Answer:
$5,475,000
Explanation:
The computation of the total investor provided operating capital is shown below:
Total investor provided operating capital = Long term Debt & Equity + short term note payable
where,
Long term debt & equity = Total assets - current liabilities
where,
Total assets = Current assets + net fixed assets
= $1,875,000 + $4,225,000
= $6,100,000
And, the current liabilities = Account payable + short term note payable + accrued wages and taxes
= $475,000 + $375,000 + $150,000
= $1,000,000
So, the long term debt & equity is
= $6,100,000 - $1,000,000
= $5,100,000
Now the total investor-provided operating capital is
= $5,100,000 + $375,000
= $5,475,000
We simply applied the above formula
Waterway Industries records purchases at net amounts. On May 5 Waterway purchased merchandise on account, $82000, terms 2/10, n/30. Waterway returned $7000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how much should the account payable be adjusted on May 31
Answers
Answer:
$1,500
Explanation:
The computation of the amount adjusted on May 31 is shown below:
= (Purchase value of the merchandise - returned goods) × discount rate
= ($82,000 - $7,000) × 2%
= $1,500
The terms 2/10, n/30 represent the 2% discount is given if the payment is made within 10 days and the net days provided is 30 days
So, the amount adjusted is $1,500
Employees at Clearwater Plumbing Supply, Inc. asked the management to hold an election to determine which radio station would be played on the warehouse public address (PA) system while they are working. The winning station was a Christian music station. After a few weeks of having exclusively Christian music played over the loudspeakers at work, some Muslim employees complained to the management that it was religious discrimination. The management stopped playing music on the PA system and allowed employees to wear headsets or have small radios at their workplace. An employee who is a devout Christian was extremely disappointed by this change and brought a complaint under Title VII.
(A) What is true of this scenario?
Answers
Answer:
Check the explanation
Explanation:
Going by the question we can derive a scenario whereby the employee cannot demonstrate disparate treatment since prohibiting a specific kind of music at work, even that which has been approved by a majority or popular employee vote, is not an unpleasant and adverse employment action.
Answer:
Explanation:
The employee cannot show disparate treatment because prohibiting a certain kind of music at work, even that which has been approved by a majority employee vote is not an adverse employment action.
A corporation purchases 35000 shares of its own $20 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders’ equity? Decrease by $700000. Decrease by $1050000. Decrease by $350000. Increase by $1050000.
Answers
Answer:
Decrease by $1,050,000
Explanation:
Data provided as per the question
Purchase shares = 35,000
Common stock per share = $30
The computation of total stockholders’ equity is shown below:-
Treasury stock = Purchase shares × Common stock per share
= 35,000 × $30
= $1,050,000
Shareholder's Equity will be reduced by $1,050,000. So, for calculating the shareholder equity we simply applied the above formula.