Answer:
The price per share of this stock is $13.20
Explanation:
Using the dividend discount model, we can calculate the price per share today of this stock. The DDM values a stock based on the present value of the expected future dividends of the stock discounted using the required rate of return on the stock. The price o=per share today for this stock is,
P0 = 0.18 * (1+1) / (1+0.1024) + 0.18 * (1+1)^2 / (1+0.1024)^2 +
0.18 * (1+1)^3 / (1+0.1024)^3 + 1.25 / (1+0.1024)^4 + 1.25 / (1+0.1024)^5 +
(1.60 / 0.1024) / (1+0.1024)^5
P0 = $13.20
The model of competitive markets relies on these three core assumptions: 1. There must be many buyers and sellers—a few players can't dominate the market. 2. Firms must produce an identical product—buyers must regard all sellers' products as equivalent. 3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry.
Answer:
A Perfectly competitive market
Explanation:
To answer the question above, the model of competitive market is called A Perfectly competitive market.
A perfectly competitive market is a hypothetical market where competition is at it's greatest possible level. Neo-classical economist argued that perfect competition would produce the best possible outcomes for consumers, and society.
An industry structure in which there are many firms, none large enough to influence the industry, producing homogeneous products. Firms are price takers. There are no barriers to entry . Agriculture comes close to being perfectly competitive.
Niles Company granted 111 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $22 per share on January 1, 2020, the grant date of the restricted stock award. When calculating diluted EPS at December 31, 2021, what will be the net increase in the weighted-average number of shares outstanding if the market price of the common shares averaged $22 per share during 2021?
Answer:
Net increase in the denominator will be equal to the new shares which Niles will issued to their executives.
Thus, increase in the denominator = 111 million
The Fortunato Corp.'s inventory at Dec 31, 2018, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on Dec 30, 2018, was received on Jan 5, 2019. Merchandise costing $22,000, shipped f.o.b. destination from a vendor on Dec 28, 2018, was received on Jan 3, 2019. Merchandise costing $38,000 was shipped to a customer f.o.b. destination on Dec 28, arrived at the customer's location on Jan 6, 2019. Merchandise costing $12,000 was being held on consignment by Brecht Inc.What amount should Fortunato report as inventory in its Dec 31, 2018, balance sheet
Answer:
$405,000
Explanation:
The computation of the ending inventory reported is shown below:
Inventory on December 31,2018 $325,000
Add: Goods purchased from a vendor i.e shipping point $30,000
Add: Goods sold FOB destination to customer $38,000
Add: consignment by Brecht Inc $12,000
Ending inventory reported $405,000
In the above cases, the added items indicates the ownership is transferred to buyer , received by buyer and remains with the buyer
Gray is a 50% partner in Fabco Partnership. Gray's tax basis in Fabco on January 1, year 4, was $5,000. Fabco made no distributions to the partners during year 4 and recorded the following: Ordinary income $20,000 Tax-exempt income 8,000 Portfolio income 4,000 What is Gray's tax basis in Fabco on December 31, year 4?
Answer:
$21000
Explanation:
To determine Gray’s tax basis for a 50% interest in the Fabco Partnership, The interest is increased by the partner’s distributive share of all partnership items of income and decreased by the partner’s distributive share of all loss and deduction items.
Gray’s beginning basis = $5,000
Gray’s 50% distributive share of ordinary income = 50% × $20000 = $10000
Gray’s 50% tax-exempt income= 50% × $8000 = $4,000 and
portfolio income = 50% × $4000 = $2,000
Therefore, the ending basis of Gray’s Fabco partnership interest = $5000 + $10000 + $4000 + $2000 = $21000
One result of asymmetric information about people's ability to repay a loan is that: a bank could make many loans to people who don't pay them back. lenders are better off than with perfect information. banks will not make loans. loans will only be made to people who don't pay them back.
Answer:
Option (a) is correct.
Explanation:
Asymmetric information refers to the situation in which one of two parties involved in the transaction having more information than the other party.
It is evident that an asymmetric information is associated with all types of economic transaction. It is mostly associated with the insurance industry and banking industry.
In our case, banks have less information about the borrower's loan repaying capability and could make many loans to the people who will be the defaulters.
There are two problems arises from the asymmetric information:
(i) Moral hazard
(ii) Adverse selection
Johanna Pye is a hair stylist at Mamon Salon. The salon's policy states that stylists receive 40 percent of the revenue they generate as their compensation. Johanna grew tired of sharing her income with the salon and decided she wanted to make more money. She continued seeing her existing clients at the salon, but when new clients called for an appointment, Johanna lied and told them the salon was completely booked for the next few months. She then offered to come to their homes and cut their hair for 10 percent less than what the clients would be charged at the salon. She did not report the house call appointments to the salon, and was therefore able to keep all the income she generated from these side clients. This is an example of what type of scheme
Answer:
Business diversion
Explanation:
The above scenario is an example of business diversion type of scheme whereby Johanna diverted her employer new client in order to generate her personal income, and it happens without the knowledge of her boss
Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,500 of direct materials and used $5,000 of direct labor. The job was not finished by the end of September, but needed an additional $4,000 of direct materials in October and additional direct labor of $7,500 to finish the job. The company applies overhead at the end of each month at a rate of 100% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?
Answer:
Total job costs added in October $ 19,000
Explanation:
Computations
Job costs added to Work in Process inventory for October
Direct materials $ 4,000
Direct labor $ 7,500
Overhead at 100 % of Direct Labor costs $ 7,500
Total job costs added in October $ 19,000
Final answer:
In October, job A3B had $4,000 in direct materials, $7,500 in direct labor, and $7,500 in overhead costs added to the Work in Process Inventory, totaling $19,000.
Explanation:
The job costs added to Work in Process Inventory during October for job A3B would include the additional direct materials and direct labor costs incurred in October, as well as the overhead applied based on the direct labor cost.
Since the company applies overhead at a rate of 100% of the direct labor cost, and the direct labor cost in October is $7,500, the overhead for October would also be $7,500.
Therefore, the total job costs added in October would be the sum of the additional direct materials of $4,000, the additional direct labor of $7,500, and the overhead of $7,500, resulting in a total of $19,000 added to the Work in Process Inventory.
Calculator Production Budget and Direct Materials Purchases Budgets Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows: Unit Sales Dollar Sales ($) January 80,000 176,000 February 50,000 110,000 March 40,000 88,000 April 46,000 101,200 Company policy requires that ending inventories for each month be 25% of next month's sales. At the beginning of January, the inventory of peanut butter is 33,000 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1. Required: 1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.
Answer:
Explanation:
Sales budget
$Revenue Unit
January 176,000 80,000
February 110,000 50,000
March 88,000 40,000
April 101,200 46,000
Ending inventory = 25% of next month sales
Ending inventory in December = 25% of next month sales.
Opening inventory in January = 33,000 units
January (80000-33000)+25% *50000 = 59,500 units
February = (50000 -12500) + 25%*40000 = 47,500 units
March = (40,000-10,000) +25%*46,000 = 41,500 units
April =46000-11,500= 34,500 units
Raw materials Peanut Jars
January 59,500 * 24 1,428,000 59,500
February 47,500*24 1,140,000 47,500
March 41,500 *24 996,000 41,500
April 34,500 *24 828,000 34,500
Company policy for production requires that ending inventory is 20% of next month production
Peanut production
January 1428000 + (20%* 1140000) = 1,656,000
February = (1140000-228000) + (20%*996,000) = 1,111,200
March = (996,000-199,200 ) + (20% * 828,000) =962,400
April 828,000- 165,500 = 662,400
Total peanut production = 4,392,000
Jars production
January = 59500 + (20% * 47,500)= 69,000
February = (47,500-9500) + (20% * 41,500) = 46,300
March = (41,500 - 8,300) + (20% * 34,500) 40,100
April = 34,500-6900 =27600
Total = 183,000
The production budget for Peanut Land Inc. for the first quarter requires producing 59,500 jars in January, 47,500 jars in February, and 41,500 jars in March, totaling 148,500 jars for the quarter.
Production Budget Calculation
To prepare a production budget for Peanut Land Inc., we'll need to calculate the required production to meet sales demands while maintaining the company's inventory policy. The policy states that ending inventory should be 25% of the next month's sales. The production budget can be calculated by adding the budgeted sales in units for each month to the desired ending inventory and then subtracting the beginning inventory.
For January, the company has an initial inventory of 33,000 jars and a sales forecast of 80,000 jars. February's sales forecast is 50,000 jars, meaning January's ending inventory must be 25% of this, which is 12,500 jars. Hence, January's required production is 80,000 (sales) + 12,500 (ending inventory) - 33,000 (beginning inventory) = 59,500 jars.
For February, the beginning inventory is January's ending inventory (12,500 jars). With a sales forecast of 50,000 jars and March's sales forecast at 40,000 jars, February's ending inventory should be 25% of March's sales, which is 10,000 jars. Therefore, production for February is 50,000 (sales) + 10,000 (ending inventory) - 12,500 (beginning inventory) = 47,500 jars.
For March, we use February's ending inventory as the starting inventory (10,000 jars). With sales forecasted at 40,000 jars, and April's sales at 46,000 jars, March's ending inventory should be 25% of April's sales, which is 11,500 jars. Thus, March's production is 40,000 (sales) + 11,500 (ending inventory) - 10,000 (beginning inventory) = 41,500 jars.
The total production for the first quarter is the sum of each month's production: 59,500 (January) + 47,500 (February) + 41,500 (March) = 148,500 jars.
Tasty Subs acquired a delivery truck on October 1, 2021, for $18,500. The company estimates a residual value of $1,700 and a six-year service life. It expects to drive the truck 140,000 miles. Actual mileage was 4,400 miles in 2021 and 17,800 miles in 2022. Required: Calculate depreciation expense using the activity-based method for 2021 and 2022, assuming a December 31 year-end. (Do not round your intermediate calculations.)
Answer:
2021 Depreciation expense is $528
2022 Depreciation expense is $2,136
Explanation:
Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.
It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset .
Depreciable value = $18,500 - $1,700
= $16,800
Depreciation expense using the activity-based method for
2021
= 4,400/140,000 * $16,800
= $528
2022
= 17,800/140,000 * $16,800
= $2,136
John Jones has both a cash account and an IRA account at your firm. Mr. Jones calls and asks that 2,000 shares of DEF stock be purchased at the market in his IRA account. The trade is executed, however the transaction was recorded in Mr. Jones' cash account. The proper procedure to correct this is to:
Answer:
FINRA requires that whenever there is a change of account name or designation relating to an executed order, this said change has to be put into writing. The process is called a "Cancel-Rebill" record. The branch manager or compliance officer in charge must be made aware of the reasons for the change and must tender an approval for the change in writing. This said record must be developed for any change of account designation - even for something as little as moving a trade from a customer's cash account to the same customer's IRA account.
Shehata Coffee Shop calculated the NET value of its accounts receivable as of December 31, 2019, to be $179,000, based on an aging schedule of accounts receivable. Shehata has also provided the following information: The gross accounts receivable balance on December 31, 2019 was $191,800. Actual uncollectible accounts receivable written off during 2019 totaled $13,400. The Allowance for Uncollectible Accounts balance on January 1, 2019 was $17,800.
Required: Part 1: What account(s) and for what $ value(s) would appear on the Balance Sheet?
Part 2: How much is Shehata's 2019 Bad Debt Expense? Show your detailed calculation for credit, 6 points:
a. 17,200
b. 12,800
c. 8,400
d. 4,400
e. None of the above
Answer:
1. The preparation of balance sheet is shown below:-
2. $8,400
Explanation:
1 Balance sheet
December 31, 2019
Assets Amount
Current assets
Accounts receivables $191,800
Allowance for uncollectible accounts ($12,800)
Net accounts receivables $179,000
Working note:-
Net accounts receivables = $179,000
Gross accounts receivables = $191,800
Allowance for uncollectible accounts, December 31, 2019 = Gross accounts receivables - Net accounts receivables
= $191,800 - $179,000
= $12,800
2. Bad debt expense = Allowance for uncollectible accounts, December 31, 2019 - (Allowance for uncollectible accounts, January 1, 2019 - Uncollectible accounts written off during 2019)
= $12,800 - ($17,800 - $13,400)
= $12,800 - $4,400
= $8,400
The data given below are from the accounting records of the Kuhn Corporation:
Net Income (accrual basis) $61,000
Depreciation Expense $17,000
Decrease in Accounts Payable $3,300
Decrease in Inventory $3,800
Increase in Bonds Payable $18,000
Sale of Common Stock for cash $31,600
Increase in Accounts Receivable $6,100
Based on this information, the net cash provided by (used in) operating activities using the indirect method would be:________
Answer:
$72,400
Explanation:
The preparation of the Cash Flows from Operating Activities - Indirect Method is presented below:
Cash flow from Operating activities - Indirect method
Net income $61,000
Adjustment made:
Add : Depreciation expense $17,000
Less: Increase in accounts receivable -$6,100
Add: Decrease in inventory $3,800
Less: Decrease in accounts payable -$3,300
Total of Adjustments $11,400
Net Cash flow provided Operating activities $72,400
The items in minus sign reflects the cash outflow and the items in plus sign shows the cash inflow
Obj. 2Waylander Coatings Company purchased waterproofing equipment on January 6 for $320,000. The equipment was expected to have a useful life 3 years or of four years, or 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours during Year 1, 6,400 hours in Year 2, 4,400 hours in Year 3, and 2,000 hours in Year 4. Instructions Show Me Now Excel Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (A) the straight-line method, (B) the units-of-activity method, and (C) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:
Answer:
Depreciation expense for Year 1 Year 2 Year 3 Year 4
Method: Straight-line $71,250 $71,250 $71,250 $71,250
unit-of-production $102,600 $91,200 $62,700 $28,500
Double-declining $160,000 $80,000 $40,000 $20,000
Total depreciation for the four years under:
straight-line is $285,000unit-of-production is $285,000double-declining is $300,000Explanation:
(A) Under straight-line method, depreciation expense is (cost - residual value) / Estimated useful life = ($320,000 - $35,000) / 4 years = $71,250 yearly depreciation expense.
Accumulated depreciation for 4 years is $71,250 x 4 years $285,000.
The net book value (NBV) of the asset (cost - accumulated depreciation) is at the end of Year 4: $320,000 - $285,000 = $35,000.
(B) The unit-of-production method is used when the asset value closely relates to the units of output it is able to produce. It is expressed with the formula below:
(Original Cost - Salvage value) / Estimated production capacity x Units/year
At Year 1, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 7,200 hours = $102,600/year
At Year 2, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 6,400 hours = $91,200/year
At Year 3, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 4,400 hours = $62,700/year
At Year 4, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 2,000 hours = $28,500/year
Accumulated depreciation for 4 years is $102,600 + $91,200 + $62,700 + $28,500 = $285,000.
Note that this depreciation method results in higher depreciation charge when the asset is heavily used, at this time, it was in Year 1.
The NBV under this method is is: $320,000 - $285,000 = $35,000.
(C) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:
Double declining method = 2 X SLDP X BV
SLDP = straight-line depreciation percentage
BV = Book value
SLDP is 100%/4 years = 25%, then 25% multiplied by 2 to give 50%
At Year 1, 50% X $320,000 = $160,000
At Year 2, 50% X $160,000 ($320,000 - $160,000) = $80,000
At Year 3, 50% X $80,000 ($160,000 - $80,000) = $40,000
At Year 4, 50% X $40,000 ($80,000 - $40,000) = $20,000
Accumulated depreciation for 4 years is $160,000 + $80,000 + $40,000 + $20,000 = $300,000.
The NBV under this method is is: $320,000 - $300,000 = $20,000.
At the beginning of the month, the Painting Department of Skye Manufacturing had 30,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $38,650, consisted of $32,400 of material costs and $6,250 of conversion costs. During the month the department started 125,000 units and transferred 135,000 units to the next manufacturing department. Costs added in the current month consisted of $282,240 of materials costs and $544,700 of conversion costs. At the end of the month, the department had 20,000 units in inventory, 40% complete as to materials and 15% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.
Answer:
Cost per equivalent unit of material = $2.20 per unit
Cost per equivalent unit of conversion = $4 unit
Explanation:
The computation of Cost per equivalent unit of material, Cost per equivalent unit of conversion is shown below:-
For computing the cost per equivalent first we need to find the equivalent unit of material which is below:-
= Transferred units + ( Department units × Material percentage)
= 135,000 + (20,000 × 40%)
= 135,000 + 8,000
= 143,000
So, the Cost per equivalent unit of material = (Beginning material cost + Current month material cost) ÷ Equivalent unit of material
= ($32,400 + $282,240) ÷ 143,000
= $314,640 ÷ 143,000
= $2.20 per unit
Now, For computing the Cost per equivalent unit of conversion first we need to find the equivalent unit of conversion cost which is below:-
= Transferred units + ( Department units × Conversion percentage)
= 135,000 + (20,000 × 15%)
= 135,000 + 3,000
= 138,000
So, the Cost per equivalent unit of conversion = (Beginning conversion cost + Current month conversion cost) ÷ Equivalent unit of conversion cost
= ($6,250 + $544,700) ÷ 138,000
= $550,950 ÷ 138,000
= 3.99
or $4 unit
The dollar-value LIFO method was adopted by Blue Corp. on January 1, 2020. Its inventory on that date was $390,700. On December 31, 2020, the inventory at prices existing on that date amounted to $369,600. The price level at January 1, 2020, was 100, and the price level at December 31, 2020, was 112.
Final answer:
The question involves applying the dollar-value LIFO inventory method to adjust the year-end inventory for inflation, ensuring accurate valuation. It requires calculating the adjusted value of inventory considering changes in price levels to determine real changes in inventory quantity. Additionally, accounting profit is mentioned as a basic calculation of revenue minus expenses.
Explanation:
The question asks about the dollar-value LIFO (Last-In, First-Out) method, a technique used in accounting to value inventory and measure changes in the cost of products due to inflation. Under this method, a company measures and reports changes in the value of its inventory considering the price level changes. The inventory value at the beginning is given as $390,700 with a price level index of 100. By the end of the year, the inventory value is reported as $369,600 with a price level index of 112. To adjust the ending inventory to compare it fairly with the beginning inventory, we must account for the inflation using the given price indices. This involves converting the ending inventory value to the base year's price level.
To do this, we calculate the inflation-adjusted inventory value by dividing the December 31, 2020, inventory value by the price level index for that date (112) and then multiplying by the base price level index (100). This calculation adjusts the inventory value to reflect what it would have been in the base year, allowing a fair comparison to determine whether there has been a real increase or decrease in inventory quantity. Using this method ensures that the inventory valuation is not inflated merely due to increased prices, thereby providing a more accurate measure of inventory levels for financial reporting and analysis.
Accounting profit is another important concept in business, often calculated as sales revenue minus expenses. For instance, if a firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be $50,000, which is the remaining amount after subtracting total expenses from sales revenue.
On September 1, 2017, Revsine Co. approved a plan to dispose of a segment of its business. Revsine expected that the sale would occur on March 31, 2018 , at an estimated gain of $375,000. The segment had actual and estimated operating profits (losses) as follows:
Answer:
Explanation:
Full question:
On September 1, 2011, Revsine Co. approved a plan to dispose of a segment of its business. Revsine expected that the sale would occur on March 31, 2012, at an estimated gain of $375,000. The segment had actual and estimated operating profits (losses) as follows:
Realized loss from 1/1/11 to 8/31/11 $(300,000)
Realized loss from 9/1/11 to 12/31/11 (200,000)
Expected profit from 1/1/12 to 3/30/12 400,000
Assume that the marginal tax rate is 30%
In its 2011 income statement, what should Revsine report as profit or loss from discontinued operations (net of tax effects)?
Answers:
Under, results of operations on an operating segment or component of an entity classified as held for sale are to be reported in discontinued operations in the periods in which they occur (net of tax effects). For Revsine, the loss from operations for the discontinued segment would be $375,000 determined as follows:
Loss from 1/1/11 to 8/31/11 ($300,000)
Loss from 9/1/11 to 12/31/11 ($200,000)
Total pre-tax loss ($500,000)
Tax benefit at 30% 150,000
Operating loss, net of tax effects ($375,000)
None of the expected profit from operating the segment or component for Revsine in 2012 or the estimated gain on sale is recognized in 2011. These amounts will be recognized in 2012 as they occur.
Assume the supply curve for cigars is a typical, upward-sloping straight line, and the demand curve for cigars is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for cigars is 1,000 per month when there is no tax. Then a tax of $0.50 per cigar is imposed. The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received by sellers falls from $1.50 to $1.40. The government's tax revenue amounts to $475 per month. Which of the following statements is correct? O The deadweight loss of the tax is $12.50. The demand for cigars is less elastic than the supply of cigars.O The tax causes a decrease in consumer surplus of $390 and a decrease in producer surplus of $97.50. All of the above are correct.
Answer:
The correct answer is The deadweight loss of the tax is $12.50.
Explanation:
According to the scenario, the computation of the given data are as follows:
First we calculate the quantity sold after tax
So, Quantity sold after tax = Tax revenue ÷ Tax
Quantity sold after tax= $475 ÷ 0.50
= 950 units
Equilibrium quantity before tax = 1,000 units.
After tax, the price to buyers increases from 1.50 to 1.90
And, the price which sellers receive decrease from 1.50 to 1.40.
So, we can calculate the dead weight loss by using following formula:
Dead weight loss= 1/2 × Change to buyers × Change to sellers
=0.5 × (1.90 - 1.40)×( $1000 - $950)
=0.5 × 0.50 × $50
=$12.50
The correct statement is that the deadweight loss of the tax is $12.50 and that the demand for cigars is less elastic than the supply of cigars.
Explanation:The correct statement is that the deadweight loss of the tax is $12.50 and that the demand for cigars is less elastic than the supply of cigars.
When a tax of $0.50 per cigar is imposed, the effective price paid by buyers increases from $1.50 to $1.90, while the effective price received by sellers falls from $1.50 to $1.40. The tax revenue is $475 per month. The deadweight loss of the tax is the difference between the quantity sold in the absence of the tax and the actual quantity sold after the tax is imposed, multiplied by the difference in the price received by sellers and the price paid by buyers. In this case, the deadweight loss is equivalent to (1,000 - 475) x (1.50 - 1.40) = $12.50.
In addition, the demand for cigars is less elastic than the supply because the increase in price for buyers is greater than the decrease in price for sellers. This means that buyers are less responsive to the change in price compared to sellers. The demand curve is steeper than the supply curve, indicating a less elastic demand.
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The weighted average cost of capital is ________. A. the cost of capital for the firm as a whole B. made up of three financing components: the cost of debt, the cost of preferred stock, and the cost of equity C. the average of the cost of each financing component, weighted by the proportion of each component D. All of the above
Answer:
The answer is D. All of the above
Explanation:
The Capital structure of most companies comprise equity, debt and/or preference shares. All these that made up capital structure has cost or let's say return. We have cost of capital, cost of debt, cost of preference shares.
Therefore, weighted average cost of capital is average of the cost of each financing component(cost of capital, cost of debt and cost of preference shares), weighted by the proportion of each component
All the options relates to the weighted average cost of capital(WACC).
The weighted average cost of capital (WACC) encompasses the cost of capital for the entire firm, including the cost of debt, equity, and preferred stock, weighted by their proportions in the total capital.
Explanation:The weighted average cost of capital (WACC) is D. All of the above. It is the cost of capital for the firm as a whole, made up of three financing components: the cost of debt, the cost of preferred stock, and the cost of equity. Additionally, it is the average of the cost of each financing component, weighted by the proportion of each component in the overall capital structure. WACC is a crucial metric for firms as it represents the minimum return that a company must earn on its existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere.
Michael operates his health food store as a sole proprietorship out of a building he owns. Based on the following information regarding Year 6, compute his net self-employment income (for SE tax purposes) for Year 6.
Gross receipts $100,000
Cost of Goods Sold 49,000
Utilities 6,000
Real estate taxes 1,000
Gain on sale of business truck 2,000
Depreciation expense 5,000
Section 179 expense 1,000
Mortgage interest on building 7,000
Contributions to Keogh retirement plan 2,000
Net operating loss (NOL) from Year 5 10,000
a. $24,000
b. $16,000
c. $31,000
d. $14,000
Answer:
c. $31000
Explanation:
Net self-employment income are gross income gotten from a trade or business, less allowable deductions attributable to the trade or business. When calculating self employment income, capital gains and losses, contributions for retirement, net operating losses are not considered.
Given that:
Gross receipts $100,000
Cost of goods sold $49,000
Utilities $6,000
Real estate taxes $1,000
Depreciation expense $5,000
Sec. 179 expense $1,000
Mortgage interest $7,000
Net self-employment income = Gross receipts - Cost of goods sold - Utilities - Real estate taxes - Depreciation expense - Sec 179 expense - Mort-age interest
Therefore, Net self-employment income = $100000 - $49000 - $6000 - $1000 - $5000 - $1000 - $7000 = $31000
Portfolio managers pick stocks for their clients’ portfolios based on the investment objective of the portfolio and several other factors. One key consideration is each stock’s contribution to portfolio risk and its statistical relationship with the portfolio’s other stocks.
ased on your understanding of portfolio risk, identify whether each statement is true or false.
1. Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations
2. The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio
3. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations, because diversification lowers the portfolio's risk.
Answer:
1. Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations FALSE, IT IS EXACTLY THE OPPOSITE, SINCE THE PORTFOLIO'S RISK IS LIKELY TO BE SMALLER DUE TO DIVERSIFICATION.
2. The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio TRUE, NEGATIVELY CORRELATED STOCKS ARE USED TO DECREASE A PORTFOLIO'S RISK
3. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations, because diversification lowers the portfolio's risk. TRUE, THIS STATEMENT IS JUST THE OPPOSITE OF STATEMENT 1 WHICH WAS FALSE.
Diversification helps to reduce the risk of a portfolio by spreading it across different assets.
Explanation:1. False. Due to the effects of diversification, the portfolio's risk is likely to be less than the average of all stocks' standard deviations. Diversification helps to spread the risk across different assets, reducing the overall risk of the portfolio.
2. True. By adding negatively correlated stocks to the portfolio, the unsystematic risk component of the total portfolio risk can be reduced. This is because negatively correlated stocks tend to move in opposite directions, offsetting each other's risks.
3. True. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations because diversification lowers the portfolio's risk. Diversification helps to reduce the impact of individual stock price movements on the overall portfolio.
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Based on predicted production of 37,000 units, a company anticipates $925,000 of fixed costs and $841,750 of variable costs. The flexible budget amounts of fixed and variable costs for 35,000 units are (Do not round intermediate calculations):
$875,000 fixed and $841,750 variable.
$796,250 fixed and $925,000 variable.
$925,000 fixed and $796,250 variable.
$925,000 fixed and $841,750 variable.
$875,000 fixed and $796,250 variable.
Answer:
Total variable cost= $796,250
Total fixed costs= $925,000
Explanation:
Giving the following information:
Based on predicted production of 37,000 units, a company anticipates $925,000 of fixed costs and $841,750 of variable costs.
The fixed costs does not vary to production, therefore, they will remain the same in the relevant range.
We need to calculate the unitary variable cost:
Unitary variable cost= 841,750/37,000= $22.75
Now, we can calculate the total variable cost for 35,000 units
Total variable cost= 22.75*35,000= $796,250
Total fixed costs= $925,000
The current controllable margin for Henry Division is $138000. Its current operating assets are $300000. The division is considering purchasing equipment for $90000 that will increase annual controllable margin by an estimated $5000. If the equipment is purchased, what will happen to the return on investment for Henry Division
Answer:
The correct answer is Decrease ROI by 9.33%.
Explanation:
According to the scenario, the computation of the given data are as follows:
First we calculate return on investment before purchase:
Return on investment = (Controllable Margin ÷ Operating assets ) × 100
= ($138,000 ÷ $300,000) × 100
= 46%
Controllable margin (New) = $138,000 + $5,000 = $143,000
Operating assets = $300,000 + $90,000 = $390,000
Return on investment (New) = ($143,000 ÷ $390,000) × 100
= 36.67%
So, change in ROI = 36.67 % - 46%
= - 9.33% ( Negative shows decrease )
Hence, Decrease ROI by 9.33%.
Sam and Sarah, husband and wife, both worked for an aluminum siding firm, doing similar work in production. Their co-worker, Ahmed, who was a Muslim, was systematically harassed by their supervisor, who called him a terrorist, denied him the right to pray, and generally made his life at work very difficult. Sarah spoke up on his behalf, and the supervisor demoted Sam, her husband. Which of the following statements is most correct
a. Ahmed has a cause of action against the employer for retaliation, but Sam does not
b. Sarah has a cause of action against the employer for retaliation, but Sam does not
c. Sam has a cause of action against the employer for retaliation
d. There are no causes of action arising from this set of facts
Answer:
Answer is C
Explanation:
Sam has a cause of action against the employer for retaliation.
Answer:
give this answer a "thanks " or i wont help
Explanation:
Shares of common stock of the Samson Co. offer an expected total return of 13.00 percent. The dividend is increasing at a constant 5.40 percent per year. The dividend yield must be: Multiple Choice 2.41% 13.00% 5.40% 7.60% 18.40%
Answer:
7.6%
Explanation:
The formula for calculating the Required return is:
Required return = Dividend yield + Capital Gain Yield
Hence,
13% = Dividend Yield + 5.40%
Dividend Yield = 7.60%.
Hope this helps.
Goodluck.
Mountain Sports, Inc., is a retailer that has engaged you to assist in the preparation of its financial statements at December 31, 2018. Following are the correct adjusted account balances, in alphabetical order, as of that date. Each balance is the "normal" balance for that account. (Hint: The "normal" balance is the same as the debit or credit side that increases the account.) Accounts payable $ 13,450 Accounts receivable 2,700 Accumulated depreciation: office equipment 12,100 Additional paid-in capital (common stock) 7,300 Bonds payable (due December 31, 2021) 23,400 Cash 14,400 Common stock (2,600 shares, $10 par value) 26,000 Cost of goods sold 109,000 Deferred income taxes 6,150 Depreciation expense: office equipment 2,600 Dividends declared 4,400 Income tax expense 7,990 Insurance expense 830 Land 39,200 Merchandise inventory 20,300 Notes payable (due December 31, 2019) 2,600 Office equipment 42,300 Office supplies 840 Office supplies expense 470 Preferred stock (300 shares, $20 par value) 6,000 Premium on bonds payable 2,100 Prepaid rent 1,200 Rent expense 5,800 Retained earnings (January 2018) 21,300 Salaries expense 87,620 Sales 226,500 Sales returns and allowances 1,900 Sales taxes payable 3,200 Treasury stock (400 common shares at cost) 4,500 Utilities expense 4,050 b. Prepare a statement of retained earnings for the year ending December 31, 2018.
Answer:
The financial statement of an enterprise consists usually of:
An income statement
A statement of retained earnings
A cash flow statement
And a statement of financial position.
This has been fully presented in the attached documents
To prepare a statement of retained earnings, start with the opening balance then adjust it for the net income or loss during the year and any dividends declared. Create the statement in three steps: sum up the revenue and expenses to determine net income, and then subtract any dividends from this.
Explanation:To create a statement of retained earnings for Mountain Sports Inc., we need to consider the opening balance in the retained earnings account, then adjust this for the net income or loss during the year and any dividends paid out.
Start with the retained earnings at the beginning of the year, which is $21,300. Then, determine the net income. The net income is calculated as sales of $226,500 minus expenses (cost of goods sold of $109,000, depreciation expense on office equipment of $2,600, insurance expense of $830, rent expense of $5,800, utilities expense of $4,050, office supplies expense of $470, and salaries expense of $87,620) and the income tax expense of $7,990. Sierra sales returns and allowances of $1,900 will also be subtracted from sales.
The final step is to subtract dividends declared of $4,400 to arrive at the retained earnings at year-end.
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The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a 3-month put option with an exercise price of $50 is $4. a. If the risk-free interest rate is 10% per year, what must be the price of a 3-month call option on C.A.L.L. stock at an exercise price of $50 if it is at the money
Answer:
Price of call option = $5.1772
Explanation:
given data
trading x = $50 per share
Current price So = $95
time = 3 month t = [tex]\frac{1}{4}[/tex] year
exercise price of $50, P = $4
risk-free interest rate r = 10%
solution
we use here formula from put-call parity for price of a 3-month call option on C.A.L.L. stock that is
Price of call option = P + So - \frac{x}{(1+r)^t} .....................1
put here value and we will get
Price of call option = $4 + $50 - \frac{50}{(1+0.10)^{1/4}}
Price of call option = $5.1772
Larry recorded the following donations this year: $510 cash to a family in need $2,410 to a church $510 cash to a political campaign To the Salvation Army household items that originally cost $1,210 but are worth $310. What is Larry's maximum allowable charitable contribution if his AGI is $60,100?
Answer:
$2,720
Explanation:
A charitable contribution can be defined as the way in which a person or an individual
try to donate his or her own money , goods or services to an organization thereby deducting the market value of this contribution from the person income tax return.
$2,410 to a church
Household items worth of $310
Total $2,720
Therefore Larry maximum allowable charitable contribution if his AGI is $60,100 is $2,720
The next dividend payment by Savitz, Inc., will be $1.72 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $33 per share, what is the required return
Answer:
9.21%
Explanation:
To calculate this, we use the formula for the dividend discount model as follows:
P = D/(r - g) ............................ (1)
Where,
P = current stock price = $33
D = Next dividend = $1.72
r = required return = ?
g = growth rate = 4% = 0.04
Substituting the values into equation (1) and solve for r, we have:
33 = 1.72/(r - 0.04)
33(r - 0.04) = 1.72
33r - 1.32 = 1.72
33r = 1.72 + 1.32
33r = 3.04
r = 3.04/33
r = 0.0921, or 9.21%
The owner of a car wash wants to see if the arrival rate of cars follows a Poisson distribution. In order to test the assumption of a Poisson distribution, a random sample of 150 ten-minute intervals was taken. You are given the following observed frequencies:
Number of Cars Arriving in a 10-Minute Interval Frequency
0 3
1 10
2 15
3 23
4 30
5 24
6 20
7 13
8 8
9 or more 4
150
The calculated value for the test statistic equals:_______
Answer:
4.832
Explanation:
See attached file
Hypothetical Country has $120 in currency, $280 in reserves, and $900 in deposits. There are no excess reserves. Use this information to answer the questions. Enter your answers in decimal form rounded to two decimal places. Calculate the money multiplier. money multiplier: Calculate the reserve ratio. reserve ratio: Calculate the currency drain ratio. currency drain ratio:
Answer:
Reserve ratio = 31.11%
Currency drain ratio = 13.33%.
Explanation:
Reserve ratio = Reserves/Deposits = $280/$900 = 0.3111, or 31.11%
Currency drain ratio = Currency/Deposits = $120/$900 = 0.1333, or 13.33%
Therefore, reserve ratio is 31.11%, and currency drain ratio is 13.33%.