Answer:
Dr Cash 56.1
Cr Premium on bonds payable 1.1
Cr Convertible bonds payable 55.0
Explanation:
Hoffman Corporation
Journal entry
Dr Cash 56.1
Cr Premium on bonds payable 1.1
Cr Convertible bonds payable 55.0
GAAP requires that the entire issue price of convertible bonds be recorded as debt, precisely the same way, as for nonconvertible bonds.
Therefore:
Cash (102% × $55 million) = $56.1 million
Final answer:
Hoffman Corporation records the issuance of $55 million of bonds at a 102% premium by debiting Cash for $56.1 million, and crediting Bonds Payable for $55 million and Premium on Bonds Payable for $1.1 million. This records the inflow of cash and the bond liability including the premium.
Explanation:
When Hoffman Corporation issues $55 million worth of 8%, 10-year bonds at 102, the company is borrowing money from bondholders and, in exchange, agreeing to pay interest as well as the principal amount after a set duration. Since the bonds are issued at a premium (102% of the face value), this means that for every $1,000 face value bond, the company receives $1,020. Therefore, the total cash received from the bond issuance is $56.1 million (which is $55 million x 102%).
The journal entry to record the issuance of the bonds would be:
Debit Cash $56.1 millionCredit Bonds Payable $55 millionCredit Premium on Bonds Payable $1.1 millionThis entry reflects the inflow of cash, the liability created by the bonds payable, and the additional premium accounts due to selling the bonds above their face value. The premium is essentially an additional amount that the company will amortize over the life of the bonds.
On the first day of the fiscal year, a company issues a $5,000,000, 7%, five-year bond that pays semiannual interest of $175,000 ($5,000,000 × 7% × ½), receiving cash of $5,400,000. Journalize the first interest payment and the amortization of the related bond premium. If an amount box does not require an entry, leave it blank.
Answer:
Dr Interest expense 135,000
Dr Bond premium 40,000
Cr Cash 175,000
Explanation:
Journal entry
Using the straight-line method
Premium =Cash proceeds - face value
5,400,000-5,000,000
=$400,000
The number of periods is:
=5 years * 2 since semi-annual
=10 periods
The amortization amount is thus:
400,000/10
=$40,000
Dr Interest expense (175,000-40,000) 135,000
Dr Bond premium 40,000
Cr Cash 175,000
Final answer:
The journal entries for the first interest payment and amortization of the bond premium are provided.
Explanation:
A company issues a $5,000,000, 7%, five-year bond and pays semiannual interest. The bond was issued at a premium, receiving $5,400,000. To journalize the first interest payment and the amortization of the bond premium, we need to take the following steps:
Record the semiannual interest payment.Calculate the premium amortization.Journalize the entries for both the interest payment and premium amortization.Journal Entries:
Interest Payment:
Nancy and Sheila are both loan officers who graduated from the same university with bachelors’ degrees in economics, and achieved similar performance reviews. Nancy started working one year before Sheila. If Nancy earns a higher annual salary than Sheila because she has more experience, the employer is
a. paying a compensating differential.
b. paying efficiency wages.
c. practicing discrimination.
d. rewarding increases in human capital.
Answer:
The correct answer is letter "D": rewarding increases in human capital.
Explanation:
Rewarding increases in human capital refers to providing prizes and incentives to employees after obtaining certain knowledge within their functions or when they have achieved certain goals in the company. It is one of the most common promotion methods used by firms after which employees earn raises or a different charge.
Entities motivating their human capital increase the chances of those individuals being more committed to the firm boosting their productivity.
Fiero Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:
a) materials, 70,000; conversion, 70,000.
b) materials, 70,000; conversion, 2,400.
c) materials, 72,400; conversion, 72,400.
d) materials, 82,000; conversion, 72,400.
e) materials, 82,000; conversion, 82,000.
Answer:
d) materials, 82,000; conversion, 72,400.
Explanation:
The computation of conversion cost is shown below:-
Material of Equivalent Units = Completed units during the year × 100% + Units in process at year end × 100%
= 70,000 × 100% + 12,000 × 100%
= 82,000 units
Conversion of Equivalent Units = Completed units during the year × 100% + Units in process at year end × Conversion cost percentage
= 70,000 × 100% + 12,000 × 20%
= 72,400 units
Suppose that, in year 1, an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year, the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each. The growth rate of nominal GDP from year 1 to year 2 is _____%.
Answer:
The growth rate in nominal GDP is 19.72%
Explanation:
Nominal GDP is the value of goods and services produced in an economy in a particular year and it is not adjusted for inflation.
Nominal GDP Year 1 = 100 * 3 + 75 * 8 = $900
Nominal GDP Year 2 = 110 * 3.25 + 80 * 9 = $1077.5
The growth rate in nominal GDP can be calculated by using the following formula,
Growth rate = (Nominal GDP Year 2 - Nominal GDP Year 1) / Nominal GDP Year 1
Growth rate in GDP = (1077.5 - 900) / 900 = 0.1972 or 19.72%
Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year.
Required:
a) what are the annual explicit costs for the firm described above?
b) what are the annual implicit costs for the firm described above?
c) what are the annual economic costs for the firm described above?
d) what is the accounting profit for the firm described above?
e) what is the economic profit for the firm described above?
Answer and Explanation:
The computations are shown below
a. For Annual explicit cost
= Wages and salaries + material cost + new equipment cost + rental property + interest cost in capital
= $200,000 + $75,000 + $30,000 + $20,000 + $35,000
= $360,000
We considered all the cost which are incurred with respect to material, wages and salaries, equipment, etc
b. For Annual implicit cost
= Income received
= $90,000
= $90,000
It includes the opportunity cost which could be earned by the individual or company
c. For annual economic cost
= Explicit cost + Implicit cost
= $360,000 + $90,000
= $450,000
It is a mix of both explicit cost and the implicit cost
d. For accounting profit
As we know that
Accounting profit = Total revenues - explicit costs + depreciation.
= $360,000 - $360,000
= $0
e. For economic Profit it is
= Total Revenues – Explicit Costs – Implicit Costs
= $360,000 - $360,000 - $90,000
= -$90,000
Final answer:
The annual explicit costs amount to $360,000, while the implicit costs are $90,000. The firm's accounting profit is $0, and its economic profit is -$90,000, indicating the firm is not economically successful.
Explanation:
Calculating Costs and Profits for a Firm
To determine the financial health of a firm, it's essential to calculate both the explicit costs and implicit costs, which in combination give the economic costs. Then, by subtracting these costs from the total revenues, we can determine the accounting profit and the economic profit of the business.
a) Annual Explicit Costs:
The explicit costs are the direct, out-of-pocket payments for factors of production made by the firm. For the firm described:
Wages and Salaries: $200,000Materials: $75,000New Equipment: $30,000Rented Property: $20,000Interest Costs: $35,000Total explicit costs = $200,000 (Wages and Salaries) + $75,000 (Materials) + $30,000 (New Equipment) + $20,000 (Rented Property) + $35,000 (Interest Costs) = $360,000
b) Annual Implicit Costs:
Implicit costs are the opportunity costs of factors of production the firm owns. They represent the income the owner/manager could have earned elsewhere:
Owner/Manager's Opportunity Cost: $90,000
Total implicit costs = $90,000
c) Annual Economic Costs:
Economic costs are the sum of explicit and implicit costs:
Total economic costs = $360,000 (Explicit) + $90,000 (Implicit) = $450,000
d) Accounting Profit:
Accounting profit is calculated by subtracting the total explicit costs from the total revenues:
Accounting profit = Total Revenues - Explicit Costs = $360,000 (Revenues) - $360,000 (Explicit Costs) = $0
e) Economic Profit:
Economic profit is total revenues minus all costs, both explicit and implicit:
Economic Profit = Total Revenues - Economic Costs = $360,000 (Revenues) - $450,000 (Economic Costs) = -$90,000
The Pecking Order Theory of capital structure implies that (a) high-risk firms will end up borrowing more. (b) firms prefer internal finance. (c) firms prefer internal finance and firms prefer debt to equity when external financing is required. (d) firms prefer debt to equity when external financing is required. (e) firms pursue a targeted debt-equity ratio.
Answer:
The correct answer is letter "D": firms prefer debt to equity when external financing is required.
Explanation:
According to the Pecking Order Theory, managers rely on three sources from where to obtain resources at the moment of investing. The order they select to choose between one or another is retained earnings, debt, and equity financing at last. This approach was spread by American Economy Professor Stewart Myers (born in 1940) and Chilean consultant Nicolas Majluf (born in 1945).
Therefore, debt is preferred to equity at the moment of financing the company's projects.
Problem 16-20 Using the payback period and unadjusted rate of return to evaluate alternative investment opportunities LO 16-4 Seth Fitch owns a small retail ice cream parlor. He is considering expanding the business and has identified an attractive investment opportunity. The investment involves purchasing a machine that would enable Mr. Fitch to offer frozen yogurt to customers. The machine would cost $8,040 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $6,110 and $860, respectively. Required Determine the payback period for the investment. (Round your answer to 2 decimal places.) Determine the investment's annual incremental net income assuming straightline depreciation for the machine. Determine the unadjusted rate of return for the investment. (Round your answer to 2 decimal places.)
Answer:
FITCH
PAYBACK PERIOD = Iniatial outlay / Annual cash flow
Annual cash flow = Cash revenue - Cash expenses
= $6,110 - $860 = $5,250
Payback period = $8,040/ $5,250 = 1.53years
Incremental Net Income = Cash revenue - Cash expenses - Depreciation
= $6,110 - $860- ($8,040/3)
= $6,110 - $860 - $2,680
= $2,570
Unadjusted Rate of Return = Average Profit/initial invesment
= $2,570/$8,040
= 31.97%
Explanation:
Interest-on-Interest Consider a $1,500 deposit earning 4 percent interest per year for 7 years. How much total interest is earned on the original deposit (excluding interest earned on interest)?
Answer:
Interest earned = $420
Explanation:
The total worth of the investment after the the investment period compounded at certain rate is called the Future Value.
Future Value= Principal + compounded interest i.e
FV = P × (1+r)^n
r- rate, FV- future value , n- period
FV = ? , P -1,500, r- 4%, n-7 years
FV = 1,500 ×1.04^(7)
FV = 1973.897669
Interest earned (compound intrest) = FV - Principal amount
= 1973.897669 - 1,500
= $473.89
Without interest earning interest.
The amount of interest earned will be computed on the principal only
Interest earned = $1,500× 4%× 7
= $420
Final answer:
Mary's stock basis ends at $0 after her AAA is reduced to $0. The $6,000 cash distribution exceeds her remaining stock basis after adjustments, and the excess $4,000 reduces her share of CarrollCo's AEP to $2,000.
Explanation:
The student is asking about the effects of various S corporation events on a shareholder's Adjusted Accumulated Earnings (AAA), her stock basis, and the corporation's Accumulated Earnings and Profits (AEP).
Mary's initial stock basis is $10,000, her share of the AAA is $2,000, and her share of corporate AEP is $6,000. During the year, she receives a $6,000 cash distribution and her share of S corporation items includes a $2,000 long-term capital gain and a $10,000 ordinary loss.
Mary's stock basis first increases by the long-term capital gain ($2,000), bringing it to $12,000. It then decreases by the ordinary loss ($10,000), but not below zero, so it becomes $2,000. The $6,000 distribution then reduces the stock basis to $0, as it cannot go negative.
The excess $4,000 of the distribution reduces her AEP. Her final AEP ($6,000 beginning - $4,000 excess distribution) is $2,000. The AAA is affected by the gain and the loss; the $2,000 capital gain increases the AAA to $4,000, but then the $10,000 loss decreases it. Since AAA cannot be negative, it stops at $0.
Sunland Consulting has year-end account balances of Sales Revenue $537,400, Interest Revenue $2,800, Salary and Wages Expense $240,200, Rent Expense $135,000, Administrative Expense $69,500, Income Tax Expense $37,600, and Dividends $34,200. Prepare the year-end closing entries. (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:
Dr. Sales Revenue $537,400
Dr. Interest Revenue $2,800
Cr. Income Summary $540,200
Dr. Income Summary $482,300
Cr. Salary and Wages Expense $240,200
Cr. Rent Expense $135,000
Cr. Administrative Expense $69,500
Cr. Income Tax Expense $37,600
Dr. Retained Earning $34,200
Cr. Dividends $34,200
Explanation:
All the revenue and Expenses account are closed in Income summary account. The revenue accounts have credit nature, to adjust these account we need to debit these account by the outstanding balances. The expense accounts have debit nature, to adjust these account we need to credit these account by the outstanding balances.
Balance in the Income summary account after posting all adjustments is transferred to owner's capital account.
Since it can cost five times as much to acquire a new customer than to service an existing one, it is important for salespersons to: exclusively focus on maximizing profits. generate as many leads as possible through cold calling. implement the endless chain approach. build and maintain long-term relationships
Answer:
Build and maintain long term relationship
Explanation:
A good way to manage the cost of acquiring a new customer is by building and maintaining a long term relationship with customers as this helps in winning their loyalty .
With this, a particular customer can keep patronizing you for a long period of time . This means that after the initial cost of acquiring the customer , the major expenses in respect of the customer is just the service cost , which is much smaller compared to the cost of acquiring a new customer.
Your question is not properly arranged, please let me assume this to be your question:
Since it can cost five times as much to acquire a new customer than to service an existing one, it is important for salespersons to:
A) Exclusively focus on maximizing profits.
B) Generate as many leads as possible through cold calling.
C) Implement the endless chain approach.
D) Build and maintain long-term relationships
ANSWER: The most correct option is D. Build and maintain long-term relationship.
Explanation: a salesperson is one that markets the companies product to persons that are assumed to be a prospective customer.
Convincing a prospect to buy the companies product is always a difficult task, when compared to the cost of servicing an existing customer. Due to this, a sales person has to hold its customer very tight, so as not to loss the customer to another company. The sales person can only achieve this if he/she has established a cordial relationship with the customer.
Long term relationship with customers is very important in achieving sales target, and increasing sales. Because the customers of today that are followed up are more likely to be the customers of tommorow.
The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $12,350. The bank statement indicated a balance of $15,930 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
Checks outstanding totaled $17,865.
A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.
The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.
A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.
A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.
Bank service charges for July amounted to $80.
Required:
1. Prepare a bank reconciliation.
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash.
3. If a balance sheet were prepared for Stone Systems on July 31, 20Y5, what amount should be reported as cash?
Answer:
1.
Balance at bank as per cash book $12,810
Add Unpresented Checks $17,865
Less Lodgements not yet credited ( $9,150)
Balance as per Bank Statement $21,525
The bank has to make corrections of the error it has made - a note should be sent
2.
J1
Cash $540 (debit)
Holland Co $540 (credit)
J2
Bank Charges $80 (debit)
Cash $80 (credit)
3. Cash Balance = $12,810
Explanation:
Step 1 First Bring the Cash Balance in the Cash Book Up to Date by doing the following :
Debit :
Balance as per Cash Book as at July 31, 20Y5 $12,350
Over stated Check - Holland Co 930-390 $540
Totals $ 12,890
Credit:
Bank service charges $80
Updated Cash Book - Cash Balance $12,810
Totals $ 12,890
Step 2 Prepare the Bank Reconciliation Statement as follows
Balance at bank as per cash book $12,810
Add Unpresented Checks $17,865
Less Lodgements not yet credited ( $9,150)
Balance as per Bank Statement $21,525
The bank has to make corrections of the error it has made - a note should be sent
J1
Cash $540 (debit)
Holland Co $540 (credit)
J2
Bank Charges $80 (debit)
Cash $80 (credit)
On January 1, 2010, Sunshine company issues bonds maturing in 10 years. The par value of the bonds is $500,000, the annual coupon rate is 4%, and the compounding period is annually. The market initially prices these bonds using market interest rate 6%. The market interest rate on December 31, 2010 was 7%.Were the bonds issued at par, at discount or at premium? Why? (3 points)
Calculate the issue price. (4 points)
Record journal entry on the date of issuance. (3 points)
Calculate the interest expense on Dec 31, 2010. (2 points)
Record journal entry on the interest expense on Dec 31, 2010. (3 points)
Will the interest expense increase or decrease over the years? Why? (3 point)
Record journal entry on Dec 31, 2019 for the final redemption (2 point)
Answer and Explanation:
a. The bonds is issued at a discount, since the coupon rate is lower than the interest rate on the market.
b. Par value = $500,000.
Annual coupon = Par value of bonds × Coupon rate
= $500,000 × 4 %
= $20,000
Interest rate = 6%
n = 10
Present value of an annuity 6%, n = 10 = ((1 - ( 1 ÷ 1.06 ) × 10) ÷ 0.06)
= 7.3601
Present value 6%, n = 10 = (1 ÷ 1.06) × 10
= 0.5584
Issue price of the bonds = Annual coupon × Present value of an annuity + Par value of bonds × Present value
= $20,000 × 7.3601 + $500,000 × 0.5584
= $147,202 + $279,200
= $426,402
3.The Journal entry is shown below:-
Cash Dr, 426,402
To Discount on Bonds Payable $73,598
To Bonds Payable $500,000
Being cash is recorded)
4. Interest expense for the year ended December 31, 2010 = Issue price of the bonds × Interest rate
= $426,402 × 7%
= $29,848.14
5. The Journal entry is shown below:-
Interest Expense Dr, 29,848
Discount on Bonds Payable Dr, 9,848
To Cash $20,000
(Being interest expenses is recorded)
6. Over the years the interest rate would rise as the bonds were issued at a discount.
The product life cycle defines the stages that new products move through as they enter, are established in, and ultimately leave the marketplace. In their life cycles, products pass through four stages: introduction, growth, maturity, and decline. The product life cycle offers a useful tool for managers to analyze the types of strategies that may be required over the life of their products. Even the strategic emphasis of a firm and its marketing mix (4Ps) strategies can be adapted from insights about the characteristics of each stage of the cycle.
Market Attribute Consumer Types
Introduction stage ___________ ___________
Growth stage ___________ ____________
Maturity stage ____________ ______________
Decline stage ___________ ____________
a. Opportunities increase
b. Winnie
c. Sylvie
d. Niche segment
e. Intense competition
f. Low sales
g. Francine
Answer:
Market Attribute – Introduction stage - Low sales
Market Attribute – Growth stage - Opportunities increase
Market Attribute – Maturity stage - Intense competition
Market Attribute – Decline stage - Niche segment
Consumer Types – Introduction stage - Sylvie
Consumer Types – Maturity stage - Winnie
Consumer Types – Decline stage - Francine
Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2017. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere. Beginning cash balance $38,340 Required minimum cash balance 31,950 Payment of income taxes (2nd quarter) 5,112 Professional salaries: 1st quarter 178,920 2nd quarter 178,920 Interest from investments (2nd quarter) 8,946 Overhead costs: 1st quarter 98,406 2nd quarter 127,800 Selling and administrative costs, including $2,556 depreciation: 1st quarter 63,900 2nd quarter 89,460 Purchase of equipment (2nd quarter) 63,900 Sale of equipment (1st quarter) 15,336 Collections from clients: 1st quarter 300,330 2nd quarter 485,640 Interest payments (2nd quarter) 256 Prepare a cash budget for each of the first two quarters of 2017.
Answer:
The closing cash balance in this question is $47,030. Which is over the minimum cash requirement the business hopes to have.
Explanation:
In preparing a cash budget, focus should be given to both real cash creating revenues/ income and cash creating expenses or acquisitions.
If there is no cash implication in the specified transaction it should be ignored. For example depreciation, or a transaction for which payment or receipt of cash occurs outside the budget period.
The closing cash balance in this question is $47,030. Which is over the minimum cash requirement the business hopes to have.
The breakdown of the budget is detailed in the attached file.
To prepare the cash budget, calculate the cash inflows and outflows for each quarter and determine the ending cash balance.
Explanation:To prepare the cash budget for the first two quarters of 2017, we need to calculate the cash inflows and outflows for each quarter. Cash inflows include collections from clients, sale of equipment, and interest from investments. Cash outflows include professional salaries, overhead costs, selling and administrative costs, payment of income taxes, purchase of equipment, and interest payments. By subtracting the cash outflows from the beginning cash balance and adding the cash inflows, we can determine the ending cash balance for each quarter.
Learn more about Cash budgeting here:https://brainly.com/question/14346729
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Consider the following cases and indicate for each case the direction and amount of changes in NX and NCO for the U.S. (e.g. NX decreases by $2, NCO increases by $3, etc.). Please circle your final numerical answers and explain how you arrived at the numerical answers. a. The U.S. government uses 500,000 U.S. dollar’s worth of previously obtained Chinese Yuan to buy 500,000 U.S. dollar’s worth of N-95 masks from a Chinese company.
Answer:
a)
NX increase by$500,000
NCO decrease by $500,000
b)
NX increase by $500,000
NCO decrease by $500,000
c)
NX increase by 1 million
NCO first increase then decrease by 1 million
Explanation:
Please kindly check attachment for the detailed step by step solution
the aggregate supply (AS) curve
1. In the 1990s, the technology revolution caused the wide-spread use of information technology in all areas of production, thus improving productivity and lowering costs; illustrate the effect of this by shifting the aggregate supply (AS) curve in the appropriate direction.
2. Suppose that a new labor law increases the minimum required number of paid vacation days for all full-time employees; illustrate the effect of this by shifting the aggregate supply (AS) curve in the appropriate direction.
Answer: Please refer to Explanation
Explanation:
1. In the 1990s, the technology revolution caused the wide-spread use of information technology in all areas of production, thus improving productivity and lowering costs.
As a result of higher productivity and lower costs, companies were able to produces more.
This led to an increase in supply which then shifted the Supply Curve TO THE RIGHT. See the first graph. This also led to a drop in price.
2. Suppose that a new labor law increases the minimum required number of paid vacation days for all full-time employees.
An increase in the minimum required number of paid vacation days would have the effect of increasing labor costs. Labor is an input in Production so that would mean that production is now more expensive. This would shift the Supply Curve TO THE LEFT as suppliers will react by producing less to maintain profitability. See the second graph.
If you need any clarification do react or comment.
Kings Department Store has 625 rubies, 800 diamonds, and 700 emeralds from which they will make bracelets and necklaces that they have advertised in their Christmas brochure. Each of the rubies is approximately the same size and shape as the diamonds and the emeralds. Kings will net a profit of $250 on each bracelet, which is made with 2 rubies, 3 diamonds, and 4 emeralds, and $500 on each necklace, which includes 5 rubies, 7 diamonds, and 3 emeralds. How many of each should Kings make to maximize its profit?
Answer:
129 bracelets and 59 necklaces will make profit of $61,750
Explanation:
Kings departments store wants to maximize profit by making a combination of its two products necklaces and bracelets. The King store should use a strategy so that it can generate maximum profit with its available rubies, diamonds and emeralds.
$250a + $500b = Maximum Profit
For rubies : 2a + 5b = 625
For Diamonds :3a + 7b = 800
For Emeralds: 4a + 3b = 700
Solving the equation we get maximum profit value of $61,750.
g You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Investment Beta Stock A $ 147,000 .92 Stock B $ 133,000 1.37 Stock C 1.52 Risk-free asset How much will you invest in Stock C
Answer:
I will invest $220,000
Explanation:
Let the Investment in Stock C x
Weightage of Investment C x / 500,000
Weightage beta of Investment C x (1.52) / 500,000
Total Weightage =
Total Weightage of Beta
Stocks Investment Weightage Beta Weighted beta
A $147,000 (147000/500,000) = 0.294 0.92 0.27
B $133,000 (133000/500,000) = 0.266 1.37 0.36
B $220,000 (220000/500,000) = 0.44 1.52 0.67
Total Beta 1.30
I need to know how to solve this question
Public policy toward monopolies Suppose that there is only one provider of a service in a state. Because this provider experiences economies of scale, the government does not want to break it into smaller pieces, but it does want the provider to supply the efficient quantity. Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?
a. Use antitrust laws to increase competition.
b. Turn the company into a public enterprise.
c. Do nothing at all.
d. Regulate the firm's pricing behavior.
Answer: d. Regulate the firm's pricing behavior.
Explanation:
One way the government can regulate monopolies is to protect the interests of the consumers who are usually the end users. The government have the market power to set prices higher than normal in a competitive market. Thjs can be achieved by Price capping or limiting price increases. As this helps Regulate the firm's pricing behavior.
Negative confirmation of accounts receivable is less effective than positive confirmation because:a. Some recipients may report incorrect balances.b. There is no way of knowing whether a non-response indicates agreement with the balance or a failure by the customer to return the form.c. The amount of the receivable may be immaterial.d. Only blank confirmations are permitted under GAAS for material accounts receivable balances.
Answer:
The answer is option C) Negative confirmation of accounts receivable is less effective than positive confirmation because the amount of the receivable may be immaterial
Explanation:
Negative confirmation of accounts is typically used when the accounting controls of a company have historically had very few errors and are thus considered to be strong. The company is asked to double-check the numbers and only confirm if there is a discrepancy.
Negative confirmation of accounts receivable is less effective than positive confirmation because if accounts receivable are immaterial, the use of confirmations would be ineffective since combined inherent risk and control risk are low.
Analytics or other substantive tests would detect any discrepancies or misstatements.
Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses. Group of answer choices management capabilities, competitive analysis market commonality, resource similarity speed of management decisions, management actions first-mover advantages, corporate size
Answer:
a. market commonality;
b. resource similarity
Explanation:
a. market commonality;
b. resource similarity
Gamegirl Inc., has the following transactions during August. August 6 Sold 58 handheld game devices for $140 each to DS Unlimited on account, terms 2/10, net 60. The cost of the 58 game devices sold, was $120 each. August 10 DS Unlimited returned three game devices purchased on 6th August since they were defective. August 14 Received full amount due from DS Unlimited. Required: Prepare the transactions for GameGirl, Inc., assuming the company uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
August 6: Accounts Receivable (DS Unlimited) Dr. $8,120; Sales Revenue Cr. $8,120
August 10: Sales Returns and Allowances Dr. $360; Accounts Receivable (DS Unlimited) Cr. $360
August 14: Cash Dr. $8,000; Accounts Receivable (DS Unlimited) Cr. $8,000
August 6: GameGirl, Inc. records the sale of 58 handheld game devices to DS Unlimited for $140 each on account, totaling $8,120, with cost of goods sold debited for $6,960 (58 * $120). August 10: DS Unlimited returns three defective devices, resulting in a $360 debit to Sales Returns and Allowances and a corresponding $360 credit to Accounts Receivable (DS Unlimited). August 14: GameGirl, Inc. receives full payment from DS Unlimited, resulting in a $8,000 debit to Cash and an $8,000 credit to Accounts Receivable (DS Unlimited), completing the transaction cycle.
The complete question is:
Gamegirl Inc., has the following transactions during August. August 6 Sold 58 handheld game devices for $140 each to DS Unlimited on account, terms 2/10, net 60. The cost of the 58 game devices sold, was $120 each. August 10 DS Unlimited returned three game devices purchased on 6th August since they were defective. August 14 Received full amount due from DS Unlimited. Required: Prepare the transactions for GameGirl, Inc., assuming the company uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Norris Co. has developed an improved version of its most popular product. To get this improvement to the market will cost $48 million but the project will return an additional $13.5 million for 5 years in net cash flows. The firm's debt-equity ratio is .25, the cost of equity is 13 percent, the pretax cost of debt is 9 percent, and the tax rate is 21 percent. All interest is tax deductible. What is the net present value of this proposed project
Answer:
$0.88 million
Explanation:
For computing the net present value first we have to determine the after cost of debt, cost of capital which is shown below:
After tax cost of debt is
= 9% × (1 - 0.21)
= 7.11%
As we know that
Cost of capital = (Weight of debt × after tax cost of debt) + (Weight of equity × cost of equity)
= (0.25 ÷ 1.25 × 7.11%) + (1 ÷ 1.25 × 13%)
= 1.422% + 10.4%
= 11.82%
Now the net present value is
Year Cash flows Discount rate 11.82% PV of cash inflows (in millions)
0 -$48 million 1 -$48.00 (B)
1 $13.5 million 0.8942944017 $12.07
2 $13.5 million 0.7997624769 $10.80
3 $13.5 million 0.7152231058 $9.66
4 $13.5 million 0.6396200195 $8.63
5 $13.5 million 0.5720086027 $7.72
Total present value $48.88 (A)
Net present value $0.88 million (A - B)
The discount rate is computed by
= 1 ÷ (1 + interest rate)^years
As of March 12, 2020 the yield to maturity on 30 year US Treasury Bonds was 1.44%. On the same date, the yield to maturity on 30 year TIPS (Treasury Inflation Protected Securities) was 0.31%. The latter can be viewed as a real interest rate. What forecast inflation rate is implied by these interest rates
Answer:
The forecast inflation rate is implied by these interest rates is 1.13%
Explanation:
when dealing with inflation, we have that:
(1 + nominal interest rate) = (1 + real interest rate) * (1 + inflation rate)
1.0144 = 1.0031 * ( 1 + inflation rate)
inflation rate = 1.0144/1.0031 - 1
= 1.13%
Therefore, The forecast inflation rate is implied by these interest rates is 1.13%
Alpha Electronics can purchase a needed service for $130 per unit. The same service can be provided by equipment that costs $100,000 and that will have a salvage value of 0 at the end of 10 years. Annual operating costs for the equipment will be $7,000 per year plus $25 per unit produced. MARR is 12%/year.
a) Whats the annual worth if the expected production is 90units/year? 510units/year?
b)Determine the breakeven value for annual production that will return MARR on the investment in the new equipment.
Answer:
a) Annual worth for 90 units/year = -7,550
Annual worth for 510 units/year = 36,550
b) The breakeven value for annual production that will return MARR on the investment in the new equipment is Q=235 units/year.
Explanation:
a) We can calculate the annual worth for any expected production substracting from the "purchased service" cost, the "equipment" costs. In the equipment cost, we considered a ten-year amortization of the equipment, that is 100,000/10=$10,000/year.
[tex]AW=C_1-C_2=(130Q)-(10,000+7,000+25Q)=105Q-17,000[/tex]
For Q=90, the annual worth is:
[tex]AW(90)=105*90-17,000=9,450-17,000=-7,550[/tex]
For Q=510, the annual worth is:
[tex]AW(510)=105*510-17,000=53,550-17,000=36,550[/tex]
b) We have to compare the two options (purchased service vs. equipment) in the same time span, so the two are evaluated over a 10 year period.
The purchased service option implies paying $130 per unit, so the cash flow each year is related linearly to the volume of production Q (units/year).
As the cash flow is constant for a certain level of production, we can use the annuity factor to calculate the present value PV.
The present value of this option is:
[tex]PV_1=\sum_{k=1}^{10}\dfrac{130Q}{(1+0.12)^k}=130Q*(\dfrac{1-(1+0.12)^{-10}}{0.12})\\\\PV_1=130Q*5.65=734.5Q[/tex]
The equipment option is more complex. We will consider the purchased in year 0 and the fixed and variable cost from year 1 to 10.
The present value is then:
[tex]PV_2=100,000+\sum_{k=1}^{10}\dfrac{7,000+25Q}{(1+0.12)^k}\\\\\\PV_2=100,000+(7,000+25Q)*(\dfrac{1-(1+0.12)^{-10}}{0.12})\\\\\\PV_2=100,000+(7,000+25Q)*5.65\\\\\\PV_2=100,000+7,000*5.65+5.65*25Q\\\\\\PV_2=100,000+39,550+141.25Q\\\\\\PV_2=139,550+141.25Q[/tex]
The breakeven value for annual production is the quantity for which both present values are equivalent:
[tex]PV_1=PV_2\\\\\\734.5Q=139,550+141.25Q\\\\(734.5-141.25)Q=139,550\\\\593.25Q=139,550\\\\Q=139,550/593.25=235.23\approx235[/tex]
A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean of μ = 100 and a standard deviation of σ= 50. Each unit costs $75 to manufacture and the introductory price is to be $125 to achieve this level of sales. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $25 each. It costs $10 to hold a unit in inventory for the entire season.
A.) What is the cost of overstocking (Co)?
B.)What is the cost of understocking (Cu)?
C.)What is the optimal cycle service level?
D.) How many units should be manufactured for sale?
Answer:Expected profit = $2657a
Explanation:
Based on the figures given, we can calculate the:
Cost of overstocking to be $60Cost of understocking to be $50Optimal service level to be 0.455Units to be produced to be 94Cost of overstocking is:
= Manufacturing cost + Holding costs - Disposal value
= 75 + 10 - 25
= $60
Cost of understocking:
= Selling price - Manufacturing cost
= 125 - 75
= $50
Optimal service level:
= Cost of understocking / (Cost of understocking + Cost of overstocking)
= 50 / (50 + 60)
= 0.455
Optimal units to be produced:
= Mean - Standard deviation x Z-value for optimal service level
= 100 - 50 x 0.1142
= 94
In conclusion, it is best to hold the optimal level of stock.
Find out more at https://brainly.com/question/16024591.
The market for tomatoes is A. monopolistically competitive because tomato farming has barriers to entry. B. an oligopoly because each tomato farmer produces a large share of the output. C. perfectly competitive because tomato farmers produce identical products. D. perfectly competitive because tomato farmers have market power. E. a monopoly because tomatoes have no close substitutes.
Answer: C. perfectly competitive because tomato farmers produce identical products.
Explanation: The market for tomatoes is perfectly competitive because tomato farmers produce identical products. A perfectly competitive market is a market structure where there are many buyers and sellers, with prices reflecting supply and demand. It is characterized by identical or undifferentiated products, no transaction costs, no barriers to entry and exit which ensures that capital and other resources are highly mobile, and perfect information about the market among others.
The market for tomatoes aligns with the characteristics of a perfectly competitive market, where many producers offer interchangeable products without individual market power.
The market for tomatoes is most accurately described as perfectly competitive. In a perfectly competitive market, numerous firms produce a largely homogeneous product, and entry and exit from the market are fairly easy. Additionally, there is good information about prices, allowing firms to act as price takers. In this scenario, tomato farmers produce a crop that other farmers also grow, making their product largely interchangeable. Consequently, perfect competition typically characterizes agricultural markets where produce, such as tomatoes, does not have substantial differentiation and where no single farmer has market power. Therefore, the correct answer is C. perfectly competitive because tomato farmers produce identical products.
If the selling price per unit is $42, the unit contribution margin is $15, and total fixed expenses are $570,000, what will the breakeven sales in units be? Group of answer choices 13,571 38,000 8,550,000 21,111
Answer:
The break even in units is 38000 units
Explanation:
The break even in sales in units is the number of units that need to be sold to earn enough total revenue where it equals the total cost and there is no profit and no loss. The break even in units is calculated as follows,
Break even in units = Fixed costs / Contribution margin per unit
Where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
Break even in units = 570000 / 15
Break even in units = 38000 units
Harry, Hermione, and Ron formed an S corporation called Dumbledore. Harry and Hermione both contributed cash of $25,000 to get things started. Ron was a bit short on cash but had a parcel of land valued at $60,000 (basis of $50,000) that he decided to contribute. The land was encumbered by a $35,000 mortgage. What tax bases will each of the three have in his or her or his stock of Bumblebee
Answer:
Harry's basis = $25,000
Hermione's basis = $25,000
Ron's basis = $15,000
Explanation:
Data provided
Basis = $50,000
Land Encumbered = $35,000
The computation of Ron's basis is shown below:-
Harry's basis is equal to cash contributed = $25,000
Hermione's basis is equal to cash contributed = $25,000
Ron's basis = Basis - Land encumbered
= $50,000 - $35,000
= $15,000
Therefore for computing Ron's basis we simply deduct the land from land encumbered.