Answer:
a. Marginal revenue exceeds marginal cost.
Explanation:
Note: The words "profit is not maximized" have been interpreted as, "the firm at current level of output earns profits, but not maximum profits it can earn." The answer provided herein is based upon this assumption.
Marginal revenue (MR) refers to the addition to total revenue when an additional unit of output is sold.
Similarly, marginal cost (MC) refers to the addition to total cost of production, when an additional unit is produced.
For an optimal level of production, and as a condition for profit maximization under perfect competition,
MR = MC and the marginal cost should increase post the level of output at which MR = MC.
If a competitive firm operates at a level wherein profits are not maximized, but the firm does earn profits, it indicates the stage of production wherein the marginal revenue exceeds the marginal cost.
Thus, as firm produces more and more units of output, it would reach a stage wherein marginal revenue would equal marginal costs and profits shall be maximized.
merican Products is concerned about managing cash efficiently. On the average, inventories have an age of 9090 days, and accounts receivable are collected in 6060 days. Accounts payable are paid approximately 3030 days after they arise.
The firm’s operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million.
a. Calculate the firm’s operating cycle.
b. Calculate the firm’s cash conversion cycle.
c. Calculate the amount of resources needed to support the firm’s cash conversion cycle.
d. Discuss how management might be able to reduce the cash conversion cycle.
Answer:
a. operating cycle = 150 days
b. cash conversion cycle = 120 days
c. $9 863 013.70
d. decrease the period that stock stays on hand. Decrease the time debtors pay back debt. Increase time firm takes to pay off debts.
Explanation:
a. Operating cycle = inventory period + accounts receivable period
= 90 days + 60 days
= 150 days
it takes almost 5 months.
b. cash conversion cycle = number of days of inventory + number of days of receivables – number of days of payables
= 90 days + 60 days – 30 days
= 120 days
This cycle is 3 months long.
c. Amount needed to support the cash conversion cycle
= (annual sales / 365) * cash conversion cycle
= ($30 million / 365 ) * 120 days
= $82191.78082* 120 days
= $9 863 013.70
d. there are at least 3ways that a business can decrease its cash conversion cycle.
1. collect receivables faster by offering discounts to debtors who repay early
2. decrease number of days inventory on hand by having sales and discounts on stock
3. extend the payables period by having a good relationship with suppliers
Jones Company found the following information about delivery to customers. Late deliveries were made for 8 % of the orders. Early arrivals, which are unacceptable to customers, occurred 2 % of the orders. The company also experienced a 1.5% damage rate during delivery. It also had incorrect information on 3% of the invoices billed to customers. Based on this information, what was the approximate perfect order performance at Jones Company
Mary's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. The company keeps no work−in−process inventory. What amount of sales revenue will be reported on the 2019 budgeted income statement? Question 4 options: $130,000 $150,000 $110,000 $170,000
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Mary's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each.
Sales revenue is the result of multiplying the number of units sold for the selling price per unit:
Sales= 30,000*5= $150,000
Answer:
The sales revenue that will be reported is $150000
Explanation:
As the beginning and ending target inventory is the same, the units sold by Mary's Baskets will remain at 30000 baskets.
Sales = Opening inventory in units + Production - Closing Inventory
Sales in units = 4000 + 30000 - 4000 = 30000 units
The revenue is a function of Sales quantity multiplied by the selling price. The selling price is $5 per unit.
Sales revenue = 30000 * 5 = $150000
A lottery claims its grand prize is $15 million, payable over 5 years at $3000000 per year. If the first payment is made immediately, what is the grand prize really worth? Use an interest rate of 8%.
Answer:
$ 11, 978,133.75
Explanation:
The grand prize of 15,000,000 is worth the present value of the prize at an 8% interest. The prize is paid every year, meaning its an annuity case.
The present value of an annuity is calculated using the formula
PV = P × 1 − (1+r)−n
r
Where
P $3,000,000
r is 8% 0r 0.08
n is 5
PV = $3,000,000 x 1-(1+0.08) - 5
0.08
PV =$3,000,000 x 1 - 0. 6805831
0.08
PV = $ 3,000, 000 x 3.99271
PV = 11, 978,133.75
The grand prize of $15 million, payable over 5 years at $3,000,000 per year with the first payment made immediately, is calculated by determining the present value of each payment using an interest rate of 8%, and summing them together.
To determine what the grand prize of $15 million, payable over 5 years at $3,000,000 per year, is really worth when the first payment is made immediately, we need to calculate the present value of the annuity. Since the first payment is immediate, it retains its full value of $3,000,000. The remaining four payments need to be discounted back to their present value using the interest rate of 8%.
Using the formula for present value of an ordinary annuity, where PV is the present value, PM is the periodic payment, r is the interest rate per period, n is the number of periods, and considering that the first payment has no discount, the calculation is:
PV = PM + PM/(1+r) + PM/(1+r)² + PM/(1+r)³ + PM/(1+r)⁴
We substitute the known values:
PV = $3,000,000 + $3,000,000/1.08 + $3,000,000/1.08² + $3,000,000/1.08³ + $3,000,000/1.08⁴
The grand prize is the sum of these present values. After calculating each term and summing them up, we'd find out the actual worth of the $15 million prize.
Russ Belmont is a staff accountant at a bank in the downtown Phoenix area. Belmont commutes to the bank each day from his suburban home in Mesa - a distance of 19 miles each way. Belmont's working hours are 8:00 AM to 5:00 PM and he commutes from 7:15 AM until he reaches the bank's parking garage between 7:45 and 8:00 (depending upon the traffic). If Russ is in an accident while on the freeway at 7:30 AM: a. the bank will be liable for any injuries to third parties. b. the bank will not be liable for any injuries to third parties. c. Belmont is an independent contractor and the bank will have no liability for injuries or damages in the accident. d. none of the above
Answer:
Answer b
Explanation:
One of the main principles of employer's liabilities for any damages to third party by employee is often referred to as Respondent Superior rule. Under this rule employer is liable for any damages employee did while performing his/her job according to the instructions given by the employer. Since Russ was involved in an accident while still not at work or not performing his duties, bank shouldn't be liable for injuries to third parties.
Final answer:
Based on the 'going and coming rule', the bank is likely not liable for accidents occurring during an employee's commute, hence the bank would not be liable for third-party injuries in Russ Belmont's freeway accident.
Explanation:
In the scenario provided, the answer to whether the bank would be liable for any injuries to third parties if Russ Belmont is in an accident on his way to work depends on multiple factors. Generally, an employer might not be held liable for accidents that occur during an employee's commute to and from work.
This is based on the going and coming rule which typically exempts employer liability for torts committed by employees while on their way to or from the workplace, as this is considered outside of their employment duties. However, there can be exceptions to this rule, such as when the employee is running an errand for the employer or if the travel is a significant part of the employee's service to the employer. Without additional information indicating such exceptions, the most likely legal interpretation is that in this case, the bank would not be liable for any injuries to third parties (Option B).
The Horizon Company will invest $65,000 in a temporary project that will generate the following cash inflows for the next three years. Year Cash Flow 1 $ 24,000 2 37,000 3 34,000 The firm will also be required to spend $17,000 to close down the project at the end of the three years. a. Compute the net present value if the cost of capital is 12 percent.
Answer:
NPV = $-1,974.99
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Net present value can be calculated using a financial calculator
Cash flow in year 0 = $-65,000
Cash flow in year 1 = $ 24,000
Cash flow in year 2 = $37,000
Cash flow in year 3 = $34,000 - $17,000 = $17,000
I = 12%
NPV = $-1,974.99
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the total cost of ordering and holding sugar
Answer:
the total cost of ordering and holding sugar is $1,000 per year
Explanation:
Step 1 Calculate the Economic Order Quantity(EOQ).
EOQ = √(2×Total Demand×Ordering cost)/ Holding Cost per Unit
= √(2×250×20×5)/20
= 50
Step 2 Calculate the total cost of ordering and holding sugar
Total cost = Ordering Cost + Holding Cost
= (250×20)/50 × $5 + 50/2 × $20
= $500+$500
= $1,000
Therefore, the total cost of ordering and holding sugar is $1,000 per year
The total cost of ordering and holding sugar for the bakery each year is $101,670, including both the carrying costs and ordering costs.
Explanation:The total cost of ordering and holding sugar can be calculated using these provided numbers. First, we calculate the annual carrying cost by multiplying the number of bags by the carrying cost per bag; that gives us, 5000 * $20 = $100,000. Next, to get the annual ordering cost, we must determine the total number of orders made in the year. Since the bakery uses 20 bags a day for 250 days, it means they order 5000 bags a year.
If each order delivers 15 pounds, then the bakery places around 334 orders a year (5000 divided by 15). Therefore, annual ordering costs would be 334 * $5 = $1,670. The total annual cost considering both the carrying costs and ordering costs would then be $100,000 + $1,670 = $101,670.
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Acme Manufacturing is producing $4,000,000 worth of goods this year and expects to sell its entire production. It also is planning to purchase $1,500,000 in new equipment during the year. At the beginning of the year, the company has $500,000 in inventory in its warehouse. Find actual investment and planned investment if:a) Acme actually sells $3,850,000worth of goods. b) Acme actually sells $4,000,000worth of goods. b) Acme actually sells $4,200,000worth of goods. Assuming that Acme's situation is similar to that of other firms, in which of these three cases is output equal to short run equilibrium output?
Answer:
a.$1,650,000 $1,500,000
b. $1,500,000 $1,500,000
c.$1,300,000 $1,500,000
Assuming that Acme’s situation is similar to that of other firms, output will equal to short-run equilibrium output in CASE B
Explanation:
Actual Investment, Planned investment
a.$1,650,000 $1,500,000
b. $1,500,000 $1,500,000
c.$1,300,000 $1,500,000
Assuming that Acme’s situation is similar to that of other firms, output will equal to short-run equilibrium output in CASE B
Acme’s planned investment in every case is $1,500,000.
Therefore the key to this problem is to find the amount of unplanned inventory investment Acme makes then add this to their planned investment to find Acme’s actual investment
a. If Acme sells $3,850,000 worth of goods, it has unplanned inventory investment of $150,000 and total actual investment of $1,650,000.
$4,000,000-$3,850,000=$150,000
$1,500,000+$150,000=$1,650,000
b. If Acme sells $4,000,000 worth of goods as it planned, its actual investment of $1,500,000 isequal to its planned investment
$4,000,000-$4,000,000= $0
$0+$1,500,000=$1,500,000
c. If Acme sells $4,200,000 worth of goods, it must draw down $200,000 worth of goods from itsexisting inventory, implying that inventory investment is –$200,000.
$4,000,000-$4,200,000= -$200,000
Acme’s actual investment in this case is $1,500,000 – $200,000 = $1,300,000.
Output equals short-run equilibrium output in CASE B , so planned spending and actual spendingare equal.
The planned investment of Acme is $2,000,000 in all cases, while their actual investment differs based on the actual sales. When Acme sells $3,850,000 worth of goods, the actual investment is $2,150,000. If Acme sells exactly $4,000,000 worth of goods, the planned and actual investment are equal at $2,000,000, showing a short run equilibrium output. When Acme sells $4,200,000 worth of goods, the actual investment decreases to $1,800,000.
Explanation:To calculate the actual and planned investments, we first need to clarify what they are. Planned investment includes a company's planned capital expenditures like new equipment (in Acme's case $1,500,000) and changes in inventory. Actual investment comprises these factors as well, but takes into account deviations between expected and actual sales.
For scenario a) where Acme sells $3,850,000 worth of goods, they must retain $150,000 ($4,000,000 - $3,850,000) of the goods as unsold inventory. Hence, their planned investment of $2,000,000 ($1,500,000 for equipment and $500,000 for inventory expansion) will be different from their actual investment which would be $2,150,000 (adding the unexpected increase in inventory of $150,000).
For scenario b) where Acme sells all $4,000,000 worth of goods, the planned and actual investments are equal at $2,000,000. There is no unexpected change in inventory.
For the second scenario b) where Acme sells $4,200,000 of goods, they actually managed to reduce their inventory by $200,000. Thus, their actual investment falls to $1,800,000 ($1,500,000 for equipment and $300,000 reduction in inventory). Their planned investment remained at $2,000,000.
Short run equilibrium output occurs where planned investment equals actual investment. Therefore, this is the case where Acme sells exactly $4,000,000 worth of goods, matching their production.
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The Sugar Cookie Company just paid its annual dividend of $.45 a share. The stock has a market price of $21 and a beta of.88. The return on Treasury bills is 4.2 % and the market has an 11.8 % rate of return. What is the cost of equity for the Cookie Company?
Answer:
The cost of equity based on the CAPM is 10.888%
Explanation:
The cost of equity of the stock or the required rate of return (r) is the minimum return required by investors to invest in a stock. The CAPM approach provides an equation to calculate the required rate of return (r) based on the risk free rate, stock's beta and the market risk premium. The formula for r is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate or rate on T billsrM is the expected return on marketr = 0.042 + 0.88 * (0.118 - 0.042)
r = 0.10888 or 10.888%
Answer:
Cost of equity is 10.9%
Explanation:
Cost Asset Pricing model will be used for the calculations of cost of equity.
Capital asset pricing model measure the expected return on an asset or investment. It is used to make decision for addition of specific investment in a well diversified portfolio.
In this Question the 4.2% of return on Treasury is Risk free rate, market return is 11.8% ans associated beta is 0.88.
Formula for CAPM
Expected return = Risk free rate + beta ( Market return - Risk free rate )
Expected return = 4.2% + 0.88 ( 11.8% - 4.2% )
Expected return = 4.2% + 6.688%
Expected return = 10.888% = 10.9%
It costs Waterway Industries $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3600 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Waterway has sufficient unused capacity to produce the 3600 scales. If the special order is accepted, what will be the effect on net income
Answer:
Effect on income= $7,200 increase
Explanation:
Giving the following information:
It costs Waterway Industries $12 of variable
A foreign wholesaler offers to purchase 3600 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted.
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Effect on income= 3,600*(15 - 13)= $7,200 increase
A ________________ is a technological term used in security policy to describe a future state in which specific goals and objectives have been achieved and which processes, resources, and tools are needed to achieve those goals and objectives.
Answer: Target state
Explanation: A business' security policy is a continuously updated document that stipulates how a firm intends to protect both its physical and technological assets from competition and threats. The target state is simply a measurement of all efforts that addresses the question of where an organization would want to be. Thus it describes this future state with objectives and goals met, and the processes, resources and policies etc. that are needed to get to this future state.
The target state architecture is a tool used in IT and business solutions and works on the basis of IT capabilities.
The fill form of the target state is the enterprise transformation and change. The target state involves the values, position, strategies and objectives plus strategies. The target options include the idealized architecture, state, stretchered architecture state and a realistic and achievable state.Hence the target state.
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Salvia Company recently purchased a truck. The price negotiated with the dealer was $40,500. Salvia also paid sales tax of $2,100 on the purchase, shipping and preparation costs of $3,100, and insurance for the first year of operation of $4,100. At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense?
Answer:
The cost at which the truck will be recorded is $45700
Explanation:
The cost at which an asset should be recorded in the books of a business includes the all the costs that are incurred to purchase the asset and bring it to the location and condition necessary for use at it was intended. These costs are usually non recurring in nature.
The truck should be recorded at,
Purchase price 40500
Sales tax paid 2100
Shipping & Preparation 3100
Total cost 45700
The sales tax will be capitalized if it is not refundable.
The shipping and preparation cost are necessary for the truck to bring it to the location and condition necessary for it to use.
The insurance is a recurring expense and is not necessary cost to bring the truck to the location and condition necessary for it to use.
Answer:
Cost of truck = $45,700
Explanation:
According to International Accounting Standards (IAS) 16, property plants and equipment, the cost of an assets includes all of the cost necessary to bring and make it ready for the intended use.
These costs include purchase cost, fees and commission associated with the purchase of the asset.
Cost of the truck for record =40,500 + 2,100 + 3,100
= $45,700
The insurance cost was incurred after the purchase and is not a cost necessary to bring the truck to for its intended use
Accounts receivable turnover and days’ sales in receivables For two recent years, Robinhood Company reported the following: 20Y9 20Y8 Sales $7,906,000 $6,726,000 Accounts receivable: Beginning of year 600,000 540,000 End of year 580,000 600,000 a. Determine the accounts receivable turnover for 20Y9 and 20Y8. Round answers to one decimal place. 20Y8: 20Y9: b. Determine the days’ sales in receivables for 20Y9 and 20Y8. Use 365 days and round all calculations to one decimal place. 20Y8: days 20Y9: days c. Are the changes in the accounts receivable turnover and days’ sales in receivables from 20Y8 to 20Y9 favorable or unfavorable?
The accounts receivable turnover for Robinhood Company increased from 11.8 in 20Y8 to 13.4 in 20Y9, while the days' sales in receivables decreased from 30.9 days in 20Y8 to 27.2 days in 20Y9. This indicates an improvement in the company's ability to collect receivables and convert them into cash quickly.
To determine the accounts receivable turnover for Robinhood Company for the years 20Y8 and 20Y9, we use the formula Accounts Receivable Turnover = Sales / Average Accounts Receivable. The average accounts receivable is calculated by summing the beginning and end of year receivables, then dividing by two.
For 20Y8: (540,000 + 600,000) / 2 = 570,000
For 20Y9: (600,000 + 580,000) / 2 = 590,000
Now, we can calculate the turnover:
20Y8 turnover: 6,726,000 / 570,000 = 11.8
20Y9 turnover: 7,906,000 / 590,000 = 13.4
For the days' sales in receivables, we use the formula Days' Sales in Receivables = (365 days / Accounts Receivable Turnover).
For 20Y8 days: 365 / 11.8 = 30.9 days
For 20Y9 days: 365 / 13.4 = 27.2 days
The changes from 20Y8 to 20Y9 are favorable as the accounts receivable turnover increased, indicating that the company is collecting receivables more quickly, and the days' sales in receivables decreased, indicating that the company is taking fewer days to turn receivables into cash.
Ricardo pays the following taxes during the year: Ricardo's Taxes Taxes Amounts Real estate taxes on his personal residence $2,500 Real estate taxes on rental property 2,000 State sales tax 600 State income taxes 4,000 City income taxes 1,000 Federal income taxes 5,400 What is the amount Ricardo can deduct for taxes as an itemized deduction for the year?
Ricardo can deduct $15,500 for taxes as itemized deductions for the year.
The amount Ricardo can deduct for taxes as an itemized deduction for the year is $15,500.
To calculate this, we sum up the real estate taxes on his personal residence ($2,500), real estate taxes on rental property ($2,000), state sales tax ($600), state income taxes ($4,000), city income taxes ($1,000), and federal income taxes ($5,400).
Delaware Corp. prepared a master budget that included $18,225 for direct materials, $28,800 for direct labor, $15,400 for variable overhead, and $39,300 for fixed overhead. Delaware Corp. planned to sell 4,050 units during the period, but actually sold 4,320 units. What would Delaware’s direct materials cost be if it used a flexible budget for the period based on actual sales? (Do not round your intermediate calculations.)
Answer:
$19,440
Explanation:
The computation of the direct material cost is shown below:
But before that first we have to determine the per unit which is given below
= Total direct material cost ÷ planned selling units
= $18,225 ÷ 4,050 units
= $4.5
And, the actually selling units is 4,320 units
So, the direct material cost is
= Per unit cost × actually selling units
= $4.5 × 4,320 units
= $19,440
We simply multiplied the per unit with the actually selling units so that the direct material cost could come
The actual cost of direct materials is $10.50 per pound. The standard cost per pound is $11.75. During the current period, 10,000 pounds were used in production and 11,500 pounds were purchased. The standard quantity for actual units produced is 9,900 pounds. How much is the direct materials price variance, assuming it is recorded at purchase point
Answer:
$14,375 F
Explanation:
The standard cost per pound $11.75
Less actual cost of direct materials $10.50 per pound
Balance $1.25
Hence;
Purchased pound 11,500 × $1.25
= $14,375 F
Therefore the direct materials price variance, assuming it is recorded at purchase point will be $14,375 F
Matthew owns a warehouse that is used in business while Pamela owns land. Matthew exchanges the warehouse for the land, which will be held for investment. The FMV of the warehouse is $200,000 (basis $120,000) and the warehouse is subjected to a mortgage of $40,000, which is assumed by Pamela. Matthew receives $10,000 cash and the land, which has a FMV of $150,000 (basis of $130,000 to Pamela). What is the amount of Pamela's recognized gain or loss?
Answer:
Paloma gains $80,000
Explanation:
From the question,
Property received :
Land = 150,000
Cash = 10,000
Debt assumed by Pamela = 40,000
Total = 200,000
From the Warehouse she give out
= 120,000
Therefore 200,000 - 120, 000 = 80,000.
Hence $80,000 is the gain she realised.
Why is it better to underestimate your income instead of overestimating when creating a budget?
Underestimating income in a budget promotes financial prudence, reduces stress, and builds a safety net, encouraging realistic planning, savings, and responsible spending, preventing over commitment, and fostering financial discipline.
Underestimating income when creating a budget offers several advantages. It promotes financial prudence by setting a conservative estimate, helping to avoid stress caused by falling short of budgeted expenses. This approach builds a financial safety net, as unspent funds can be used for emergencies or savings.
By presenting a more realistic financial picture, underestimating income encourages responsible planning. It acknowledges that unforeseen costs can arise and encourages prudent spending decisions. Overestimating income, on the other hand, might lead to financial strain, overcommitment to unsustainable expenses, and a lack of funds for emergencies. In summary, underestimating income fosters financial discipline, encourages savings, and ensures that your budget is adaptable and sustainable.
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The income statement for the Clothing Division of Tom Ron Surf Company is as follows: Sales $445,000 Operating expenses 270,000 Net operating income 175,000 Interest expense 35,000 Earnings before taxes 140,000 Income tax expense (30%) 42,000 Net income $ 98,000 How much is net operating profit after taxes
Answer:
78000
Explanation:
To find the net operating profit after taxes, subtract the income tax expense from the net operating income, resulting in $133,000.
The net operating profit after taxes can be calculated by subtracting the income tax expense from the net operating income. In this case, it would be:
Net Operating Profit After Taxes = Net Operating Income - Income Tax Expense
Net Operating Profit After Taxes = $175,000 - $42,000
Net Operating Profit After Taxes = $133,000
The Crash, Inc. has an ROE of 12%, a payout ratio of 60%, earnings next year of $8 per share, a required return of 18%, and a current price of $36.36 Find the Present Value of Growth Opportunities for Crash.
Final answer:
The Present Value of Growth Opportunities (PVGO) for Crash, Inc. is $29.25 per share, calculated by subtracting the no-growth stock price from the current stock price, with the no-growth price derived from next year's earnings, payout ratio, and required return.
Explanation:
To find the Present Value of Growth Opportunities (PVGO) for Crash, Inc., we must understand that PVGO represents the portion of the company's stock price that is attributable to future growth. The formula to calculate stock value in this case is:
Stock Price = EPS x (1 - Payout Ratio) ÷ (Required Return - Growth Rate) + PVGO
Crash, Inc. has provided the following information:
Earnings per share (EPS) for next year: $8
Payout ratio: 60%
Required return: 18%
Return on Equity (ROE): 12%
Current stock price: $36.36
First, we need to calculate the Growth Rate using the retention rate and ROE, which is given by:
Growth Rate = ROE x (1 - Payout Ratio)
Substituting the known values:
Growth Rate = 0.12 x (1 - 0.60) = 0.048 or 4.8%
The company's stock price without growth (No-Growth Price) can be found by:
No-Growth Price = EPS x (1 - Payout Ratio) ÷ Required Return
Substituting the known values:
No-Growth Price = $8 x (1 - 0.60) ÷ 0.18 = $7.11
Now we can determine PVGO by rearranging the stock price formula and subtracting the No-Growth Price from the current stock price:
PVGO = Current stock price - No-Growth Price
PVGO = $36.36 - $7.11 = $29.25
Therefore, the Present Value of Growth Opportunities for Crash, Inc. is $29.25 per share.
Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 40,000 units at $19 a unit, production costs at 40% of sales price, annual fixed costs for production at $150,000 and straight-line depreciation expense of $250,000per year. The company tax rate is 40%. What is the annual operating cash flow of the new GPS system
Answer:
$283,600
Explanation:
Sales revenue = 40,000 * $19 = $760,000
Production cost = $760,000 * 40% = $304,000
Total cost = Production cost + Annual fixed production cost = $304,000 + $150,000 = $454,000
Annual depreciation expense = $250,000
Income before tax = $760,000 - $454,000 - $250,000 = $56,000
Tax = $56,000 * 40% = $22,400
Operating cash flow = Income before tax + Depreciation - Tax = $56,000 + $250,000 - $22,400 = $283,600
Therefore, the annual operating cash flow of the new GPS system is $283,600.
To compute the annual operating cash flow, calculate the company's earnings before interest and taxes, subtract the tax from this amount, and add back the depreciation expense. The operating cash flow for Grady Precision Measurement Tools would be $313,600 per year.
Explanation:To calculate the annual operating cash flow (OCF), we first need to compute the company's earnings before interest and taxes (EBIT). Start with the annual sales revenue, which is 40,000 units x $19 per unit = $760,000. Subtract the production costs, which are 40% of the sales amount, and the fixed production costs, and the depreciation expense.
Then, compute EBIT: $760,000 - (0.40 x $760,000) - $150,000 - $250,000 = $106,000. Finally, calculate OCF by subtracting the tax expense from EBIT and adding back depreciation (taxes = 40% of EBIT), therefore OCF = (1 - 0.40) x $106,000 + $250,000 = $63,600 + $250,000 = $313,600.
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"Guardino Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000."
Prepare the journal entry to record the flow of cost in department 1 during the period of factory.
Answer:
See the explanation below.
Explanation:
Guardino Company
Journal Entries
Details Dr ($) Cr ($)
Work in P - Cost flow 375,000
Direct materials 100,000
Direct labor 125,000
Applied factor overhead 150,000
To record the flow of cost in department 1.
Flow of cost 375,000
Beginning work in process 75,000
Ending work in process 60,000
Goods transferred to Dept 2 390,000
To record cost of goods transferred to Department 2
Santana Corporation has 400,000 shares of common stock outstanding throughout 2021. In addition, the corporation has 5,000, 20-year, 9% bonds issued at par in 2019. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/22. During the year 2021, the corporation earned $900,000 after deducting all expenses. The tax rate was 30%.
Answer:
Required: Compute the Basic and Diluted Earning per share for 2021
Explanation:
The answer are attached for easy understanding
What is brand awareness
Answer:
the extent to which consumers are familiar with the distinctive qualities or image of a particular brand of goods or services.
Explanation:
Answer:
C. how well a brand is recognized by potential customers
Explanation:
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4) Kelsea Co. started 2018 with $107,000 of merchandise inventory on hand. During 2018, $420,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. The company paid freight charges of $8200. Merchandise with an invoice amount of $4900 was returned for credit. Cost of goods sold for the year was $370,000. The company uses a perpetual inventory system. What is ending inventory assuming the company uses the gross method to record purchases
Answer:
Ending inventory = 156,149
Explanation:
Discount received = ($420,000 - $4900) × 1% = $4,151
Net purchases = Purchases + Freight charges - Merchandise return - Discount received = $420,000 + $8200 - $4900 - $4,151 = $419,149
Cost of good sold = Beginning inventory + Purchases - Ending inventory
Therefore, we have:
$370,000 = $107,000 + $419,149 - Ending inventory
$370,000 - $107,000 - $419,149 = - Ending inventory
- 156,149 = - Ending inventory
Ending inventory = 156,149
Owners of the restaurant in A. anticipate that in one year their demand will double as long as they can provide good service to their customers. How much will they have to increase their service capacity to stay out of the critical zone?
To avoid the critical zone when demand doubles due to elastic demand for restaurant meals, the restaurant in question should aim to double its service capacity.
Explanation:The question revolves around a restaurant's service capacity and how it should be adjusted to meet an anticipated doubling of demand. To stay out of the critical zone when demand for restaurant meals is elastic, the restaurant should increase its capacity to match the demand increase. This means if demand doubles, the restaurant should aim to double its service capacity. This could involve various strategies, such as increasing the number of seats, hiring more staff, expanding business hours, or optimizing service workflows to handle more customers without decreasing service quality.
In practical terms, as the demand for restaurant meals is more price-sensitive and elasticity of demand is higher compared to inelastic goods like housing, a significant change in the quantity demanded can occur with price changes. Therefore, a restaurant anticipating such changes in demand should prepare by scaling their service capacity to ensure customer satisfaction and efficient service provision.
Suppose the following transactions occur during the current year:1. Clancy orders 40 bottles of wine from a French distributor at a price of $30 per bottle.2. A U.S. company sells 200 spark plugs to a Korean company at $5.00 per spark plug.3. Hubert, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company).Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year.Hint: Be sure to enter a "0" if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative.
Answer:
a) Consumption = $1,800
b) Imports = $1,200
c) Exports = $1,000
d) Net Export = -$200
e) GDP = $1,670
Explanation:
Consumption is the purchase of a domestic company.
Consumption = 670 + (40 × 30)
= 670 + 1,200
= $1,800
There no investment or government purchases, therefore they are zero "0"
Imports: the amount spent on purchases of foreign goods.
Imports = Quality of orders × Price
= 40 × 30
= $1,200
Exports: the amount spent by foreigners on domestic goods
Exports = Quality exported × Price
= 200 × 5
= $1,000
Net exports = Exports - Imports
= 1,000 - 1,200
= -$200
Gross Domestic Product = C + I + G + (X - M)
GDP = 1,870 + 0 + 0 + (1,000 - 1,200)
= 1,870 + (-200)
= 1,870 - 200
= $1,670
Based on the information given, the imports and exports will be $1200 and $1000 respectively.
The imports for the bottles of wine will be:
= Quality of orders × Price
= 40 × 30 = $1,200
The exports for the bottles of wine will be:
Exports = Quality exported × Price
= 200 × 5 = $1,000
The consumption will be:
= 670 + 1200 = 1870
Net export will be:
= Export - Import
= 1000 - 1200
= -$200
In conclusion, the government purchases and investment will be $0.
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PowerBright must decide between two locations on which to build a new power station to provide 60 megawatt hours of electricity a month. Location A would have a variable cost of $1,000 per megawatt hour and Location B would have a variable cost of $1,500 per megawatt hour. A power station at Location A would also require a fixed cost of $70,000 a month, although an estimate of the monthly fixed cost at Location B has not been made available yet, due to ongoing negotiations with a land owner there. At what fixed cost for Location B would PowerBright be indifferent to the choice of either of these two locations?
Answer:
Fixed cost of B = $40000
Explanation:
To identify the indifference point,
Fixed cost of A + Variable cost of A = Fixed cost of B + Variable cost of B
$70000 + $1000 x = Fixed cost of B + $1500 X
The value of x is 60
$70000 +$1000(60) = Fixed cost of B +$1500(60)
$70000+$60000 = Fixed cost of B + $90000
Fixed cost of B = $130000 -$90000
Fixed cost of B = $40000
The International Disc Jockey's Union has a wage contract that stipulates a yearly wage increase based on the Consumer Price Index. If this year's wage is $ 28.00 , the current CPI is 180 , and the contract was first signed in the base year, what was the original salary the first year of the contract? Round your answer to two decimals. original salary: $
Answer:
Salary in base year = $15.56
Explanation:
Consumer Price Index(CPI ): This is the weighted average price of a basket of goods and services consumed by a typical consumer. It is used to measure the rate of inflation.
The increase in the CPI is taken to be the rate of inflation. For example, if the CPI rose to 110 from 100, this implies an inflation rate of 10% within the time period in focus.
To preserve the purchasing power of workers income, employment contracts usually allow for wages and salaries to be adjusted for inflation.
The wage or salary in the current year is $28, this figure can be adjusted for using the CPI to arrive at the wage in the base year (i.e salary before the inflation). This is done as follows:
Salary in the base year
= Salary in the current year× (CPI base year/ CP1 in current year)
The CPI in the base year is taken to be 100
Salary in base year = 100/180× 28
= $15.56
Final answer:
The original salary of the International Disc Jockey's Union member in the first year of the contract was $15.56, after adjusting the current wage for inflation using the CPI.
Explanation:
The question is asking to calculate the original salary of the International Disc Jockey's Union member at the start of their contract using the current salary, the current CPI, and knowing it was the base year. To do this, we will use the relationship between nominal wage, real wage, and the Consumer Price Index (CPI).
Given:
Current nominal wage = $28.00
Current CPI = 180
Since the contract was signed in the base year, the CPI at that time would be set to 100. Therefore, to find the original salary, also known as the nominal wage in the base year:
Original salary = Current salary \/ (Current CPI \/ Base year CPI) = $28.00 \/ (180 \/ 100) = $28.00 \/ 1.8 = $15.56
Rounded to two decimals, the original salary was $15.56.
What does it mean when a manager takes a systems view? A. To ensure a firm has no carbon footprint B. To focus on common resources such as sunshine, air, and airspace C. To maximize the triple bottom line D. To look at a product's life from design to disposal, including all the resources required
Answer: D. To look at a product's life from design to disposal, including all the resources required
Explanation: To take a systems view is to look at a product's life from design to disposal, including all the resources required. It means that the manager is taking a step back to examine the entire scope of the project in order to understand all the operations involved the project including function. In simpler terms, it means taking a holistic view of the project and how it relates to the larger organization. Taking a systems view can lead to better assessments of the product, the resources that are required in making the product, the entire design process among others thereby providing a way of examining the potential consequences of actions, minimize risks, recognize the impact of time delays and feedback.