Answer:
B) systematic risk
Explanation:
Federal Reserve changes in monetary policies affect the entire securities market hence considered a Systematic risk. It is also known as the Non-diversifiable risk ; it cannot be diversified away unlike stock specific or industry specific risk(unsystematic ) which can be eliminated through diversification.
Systematic risk is unavoidable and may be difficult to predict. Other examples include increase in long term interest rates, recessions or wars. Additionally, Investors are only compensated for systematic risk and not for diversifiable risk.
TexLine Corporation had $700,000 in average total invested assets, net sales of $875,000, income from operations amounting to $35,000, and a desired minimum rate of return of 6%. The rate of return on investment for Texline is: Group of answer choices
The rate of return on investment for TexLine Corporation is 5%. Hence the correct answer is option b.
The rate of return on investment for TexLine Corporation can be calculated using the following formula:
Rate of Return on Investment = (Income from Operations / Average Total Invested Assets) x 100
Given
Average total invested assets = $700,000
net sales = $875,000
Income from operations = $35,000
minimum rate of return = 6%
Plugging in the given values:
Rate of Return on Investment = ($35,000 / $700,000) x 100
Rate of Return on Investment = 0.05 x 100
Rate of Return on Investment = 5%
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The given question is incomplete. The complete question is:
TexLine Corporation had $700,000 in average total invested assets, net sales of $875,000, income from operations amounting to $35,000, and a desired minimum rate of return of 6%. The rate of return on investment for Texline is:
a. 80%
b. 5%
c. 4%
d. 6%
You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.6 percent indefinitely. The company just paid a dividend of $3.35 and you feel that the required return on the stock is 10.8 percent. What is the price per share of the company's stock?
Answer:
$56.52
Explanation:
Using dividend discount model; the formula for finding the price of a stock is ;
[tex]\frac{D0(1+g)}{(r-g)}[/tex]
r= required return = 10.8%
D0 = Recently paid dividend = 3.35
g = growth rate
Price = [tex]\frac{3.35(1.046)}{0.108-0.046} \\ \\ = \frac{3.5041}{0.062} \\ \\ =56.5177[/tex]
Price per share is therefore $56.52
Using the Gordon Growth Model, with a dividend growth rate of 4.6 percent and a required return of 10.8 percent, the price per share of Canyon Echo's stock is calculated to be approximately $56.45.
Explanation:You are considering purchasing stock in Canyon Echo and want to know the price per share of the company's stock given a dividend growth rate of 4.6 percent and a required return of 10.8 percent. The company just paid a dividend of $3.35. To find the price per share, you can use the Gordon Growth Model (also known as the Dividend Discount Model for a perpetuity) which calculates the price of a stock by dividing the dividend per share expected to be received next year by the difference between the required return and the growth rate in dividends.
Price per share = D1 / (k - g)
Where:
D1 = next year's dividend = $3.35 * (1 + 0.046) = $3.50 approximatelyk = required return = 10.8%g = growth rate = 4.6%Substituting the values:
Price per share = $3.50 / (0.108 - 0.046) = $3.50 / 0.062 = approximately $56.45
Therefore, the price per share of Canyon Echo's stock, based on these assumptions, is approximately $56.45.
Royal Technology Company uses a job order cost system. The following data summarize the operations related to production for March:Mar. 1 Materials purchased on account, $770,000.2 Materials requisitioned, $680,000, of which $75,800 was for general factory use.31 Factory labor used, $756,000, of which $182,000 was indirect.31 Other costs incurred on account for factory overhead, $245,000; selling expenses, $171,500; and administrative expenses, $110,600.31 Prepaid expenses expired for factory overhead were $24,500; for selling expenses, $28,420; and for administrative expenses, $16,660.31 Depreciation of factory equipment was $49,500; of office equipment, $61,800; and of office building, $14,900.31 Factory overhead costs applied to jobs, $568,500.31 Jobs completed, $1,500,000.31 Cost of goods sold, $1,375,000.Journalize the entries to record the summarized operations. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
To Determine
Job order costing
Job order cost system provides a separate record of each particular quantity of product that passes through the factory. Each quantity that is manufactured in the business is known as job. Job order costing is used when the product produced are significantly different from each other.
To record: the journal entry to record all the summarized operations.
View image for journalized entry.
McKinnon Inc. reports in its 2013 annual report 10-K, sales of $2,045 million and cost of goods sold of $818 million. For next year, you project that sales will grow by 5% and that cost of goods sold percentage will be 2 percentage points higher.
Projected cost of goods sold for 2014 will be:
A) $834 million
B) $902 million
C) $859 million
D) $861 million
Answer:
B) $902 million
Explanation:
For computing the projected cost of goods sold, first we have to determine the percentage for costs of goods sold which is shown below:
Percentage = Costs of goods sold ÷ sales
= $818 million ÷ $2,045 million
= 40%
The costs of goods sold now is 42%
Now , the sales would be = $2,045 million × 1.05 = $2,147.25 million
Now the projected cost of goods sold would be
= $2,147.25 million × 42%
= $902 million
A high-precision programmable router for shaping furniture components is purchased by Henredon for $205,000. It is expected to last 12 years and have a salvage value of $5,000. Calculate the depreciation deduction and book value for each year.
Answer:
Depreciation will be equal to $16666.666
Explanation:
We have given that Henredon purchased for $205000
Total time is given t = 12 years
Salvage value = $5000
We have to find the depreciation
We know that depreciation is given by
Depreciation [tex]=\frac{cost-salvage\ value}{time}=\frac{$205000-$5000}{12}=$16666.666[/tex]
Thus the depreciation will be equal to $16666.666
Final answer:
To calculate the annual depreciation expense for the router, subtract the salvage value from the purchase cost and divide by the useful life, which results in $16,666.67 per year. The book value is then determined by subtracting the cumulative depreciation from the purchase cost for each year.
Explanation:
The subject of the question is calculating the depreciation of a high-precision programmable router using the straight-line method. Using the information provided, we can determine the annual depreciation expense and the book value for each year of the router's life.
The cost of the router is $205,000, and it has a salvage value of $5,000 with a useful life of 12 years. To calculate the annual depreciation expense, we subtract the salvage value from the purchase cost and then divide this by the useful life of the asset:
Annual Depreciation Expense = (Purchase Cost - Salvage Value) / Useful Life
(Annual Depreciation Expense = ($205,000 - $5,000) / 12
(Annual Depreciation Expense = $200,000 / 12
(Annual Depreciation Expense = $16,666.67 per year (rounded to the nearest cent)
The book value for each year is calculated by subtracting the cumulative depreciation from the purchase cost. So for each subsequent year, the book value decreases by the annual depreciation expense.
For example, after one year, the book value would be:
(Book Value after Year 1 = Purchase Cost - (Annual Depreciation Expense ×Number of Years)
(Book Value after Year 1 = $205,000 - ($16,666.67 ×1)
(Book Value after Year 1 = $188,333.33
This process continues until the end of the router's useful life, at which point the book value would match the salvage value.
You form a collar by buying a put with an exercise price of X1 = $43 and a premium of P = $6, and selling a call with an exercise price of X2 = $85 and a premium of C = $3. Both options mature in 6 months, and both have the same underlying asset. In addition, you buy the underlying asset for its current spot price of S = $63. Find the profit of this collar at expiration if the ending price of the underlying asset is ST = $60. Do NOT use the $ symbol in your answer; just write a numerical value. Of course, include the negative sign if the answer is negative; but do not include the positive sign if the answer is positive.
Answer:
Total profit of collar = -$22
Explanation:
Payoff of a short call option = P - Max[0, S-X]
Payoff of a long put option = Max[X-S, 0] - P
S = underlying price at expiry,
X = strike price
P = premium paid or received (long options involve paying premium, and short options receive premium)
Payoff of short call option = $3- Max[0, $60 - $85]
Payoff of short call option = $4 - (- $25)
Payoff of short call option = $29
Payoff of long put option = Max[$43 - 60, 0] - $5
Payoff of long put option = -$17 - $5
Total profit of collar = -$22
Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:Selling price per circuit board $125Variable cost per circuit board $90Number of circuit boards:Produced during the year 20,000Sold to outside customers 16,000Sold to Division B 4,000Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division. (one board per instrument). Division B incurred $100 in additional variable cost per instrument and then sold the instruments for $300 each.Prepare income statements for Division A, Division B, and the company as a whole:Division A Division B Total CompanySales $ $ $Expenses:Added by the divisionTransfer price paidTotal expensesNet operating income
Answer
The answer and procedures of the exercise are attached in the following images.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a two sheets with the formulas indications.
To prepare income statements for Division A, Division B, and the company as a whole, calculate the sales revenue and expenses for each division. Subtract the expenses from the sales revenue to calculate the net operating income for each division. Add the sales revenue and subtract the total expenses to calculate the net operating income for the company as a whole.
Explanation:To prepare income statements for Division A, Division B, and the company as a whole, we need to calculate the sales revenue and expenses for each division.
For Division A: Sales revenue is calculated by multiplying the number of circuit boards sold to outside customers (16,000) by the selling price per circuit board ($125), which equals $2,000,000. Expenses include the variable costs per circuit board ($90) multiplied by the number of circuit boards sold to outside customers (16,000), which equals $1,440,000. Thus, the net operating income for Division A is calculated by subtracting the expenses from the sales revenue.
For Division B: Sales revenue is calculated by multiplying the number of instruments sold (4,000) by the selling price per instrument ($300), which equals $1,200,000. The transfer price paid to Division A is calculated by multiplying the number of circuit boards purchased (4,000) by the selling price per circuit board ($125), which equals $500,000. Expenses include the transfer price paid plus the additional variable cost per instrument ($100) multiplied by the number of instruments sold (4,000), which equals $900,000. Thus, the net operating income for Division B is calculated by subtracting the expenses from the sales revenue.
For the company as a whole: Add the sales revenue for Division A and Division B to get the total sales revenue. Add the expenses for Division A and Division B to get the total expenses. Subtract the total expenses from the total sales revenue to get the net operating income.
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Calculate the overapplied or underapplied overhead for the year and Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods SoldThe following information pertains to Paramus Metal Works for the year just ended. Budgeted direct-labor cost: 75,000 hours (practical capacity) at $16 per hour Actual direct-labor cost: 80,000 hours at $17.50 per hour Budgeted manufacturing overhead: $997,500Budgeted selling and administrative expenses: $435,000Actual manufacturing overhead:Depreciation $ 233,000 Property taxes 22,000 Indirect labor 82,000 Supervisory salaries 201,000 Utilities 57,000 Insurance 32,000 Rental of space 302,000 Indirect material (see data below) 79,000 Indirect material: Beginning inventory, January 1 47,000 Purchases during the year 95,000 Ending inventory, December 31 63,000 I calculated the cost driver is 13.30 , can someone help me with the following-1. Calculate the overapplied or underapplied overhead for the yea2.Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold
Answer:
Explanation:
1) Calculate the over-applied or under-applied overhead for the year.
Applied overhead =
Actual manufacturing overhead −Applied manufacturing overhead
=$1,008,000−($13.3×80,000)
=$1,008,000−$1,064,000
=−$56,000 (Over−applied)
Therefore, the over-applied overhead for the year is $56,000.
Working notes:
Calculate the pre-determined overhead rate:
Pre−determined overheadrate =
Budgeted manufacturing overhead / ( Budgeted direct−labor hours)
= $997,500 / 75,000
=$13.3perhour
Therefore, the pre-determined overhead rate is $13.3 per hour.
Calculate the actual manufacturing overhead (check the image attached)
2. The journal entry is attached as a image too
The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $4,090,000 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles.(A) $34,356,000(B) $38,446,000(C) $36,810,000(D) $38,173,333
Answer:
(B) $38,446,000
Explanation:
Assuming a linear depreciation model, depreciation will occur at the same rate each year. Since the total after 15 years is 90% of the original value, the percentage depreciated per year is given by:
[tex]P= \frac{90\%}{15} \\P=6\%[/tex]
The book value (V) of this purchase after the first year will be:
[tex]V=\$40,900,000*(1-0.06)\\V=\$38,446,000[/tex]
Therefore, the answer is (B) $38,446,000
ABC Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales $ 18,150,000 Net operating income $ 1,125,300 Average operating assets $ 4,900,000 The division's return on investment (ROI) is closest to:
Answer:
ROI will be 22.94 %
Explanation:
We have given that sales = $18150000
Average operating asset = $4900000
Net income = $1125300
We know that turnover is given as
Turnover [tex]=\frac{sales}{average\ operating\ asset}=\frac{18150000}{4900000}=3.70times[/tex]
Now profit margin is given as
Profit Margin [tex]=\frac{net\ operating\ income}{sales}\times 100=\frac{1125300}{18150000}\times 100=6.2[/tex] %
Now we know that ROI is given as
ROI = turnover × profit margin
ROI = 3.70 × 6.2%
ROI = 22.94%
Krista owns a hair salon. She wants to increase the number of clients she serves each month, so she knows she needs to acquire more resources. Which of the following actions would represent an increase in the human capital resource at her hair salon?
a. buying more chairs and hair dryers
b. hiring more stylists
c. moving into a larger salon
d. purchasing better-quality shampoo
e. buying more scissors and combs
Answer:
b. hiring more stylists
Explanation:
Human capital is one of the factors of production. It refers to the skills and knowledge of individuals that can be used to create economic value. Human capital is the people working to produce goods and services.
In a hair salon, hiring more stylist increases the human capital resources.
Salon Company originally issued 4,000 shares of $10 par value common stock for $120,000 ($30 per share). Salon subsequently purchases 400 shares of treasury stock for $27 per share and resells the 400 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a
(A) credit to Common Stock for $10,800.
(B) credit to Treasury Stock for $4,000.
(C) debit to Paid-In Capital in Excess of Par of $12,000.
(D) credit to Paid-In Capital from Treasury Stock for $800.
Answer:
(D) Credit to Paid-In Capital from Treasury Stock for $800.
Explanation:
Please see attachment
A stock has a beta of 1.15, the expected return on the market (rm) is 10.3 percent, and the risk-free rate is 3.1 percent. What is rE for this stock? (Do not round intermediate calculations and do not enter your answer as a percent. Round your answer to 3 decimal places, e.g., 0.315 instead of 31.5%.)
Answer:
0.114
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 3.1% + 1.15 × (10.3% - 3.1%)
= 3.1% + 1.15 × 7.2%
= 3.1% + 8.28%
= 0.114
The (Market rate of return - Risk-free rate of return) is also known as market risk premium
The expected return for a stock, based on its beta of 1.15, a risk-free rate of 3.1%, and an expected market return of 10.3%, would be 11.5%. This answer is derived from the Capital Asset Pricing Model (CAPM), which helps investors anticipate the return on an investment given a certain level of risk.
Explanation:The subject of this question pertains to finance, specifically the Capital Asset Pricing Model (CAPM). In this context, 'rE' represents the expected return on equity, or the return an investor can expect from a specific equity investment. This can be calculated using the formula: rE = risk-free rate + Beta * (expected return on market - risk-free rate).
Substitute the given values into the formula like so: rE = 0.031 + 1.15 * (0.103 - 0.031). This simplifies to rE = 0.031 + 1.15 * 0.072. Finally, the calculation concludes to rE = 0.115 or 11.5 percent.
The number represents the return an investor should expect from this stock, given its relative risk (Beta), the risk-free rate (the return from a hypothetical riskless investment), and the expected return on the market(capital gains and dividends expected from the overall market).
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Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accounting for cash discounts.
Required:
1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018.
2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2018.
Record the sale of 1,000 tires for $50 each with a term of 2/10, n/30 under the gross method of accounting for cash discounts.
Answer:
Explanation:
The journal entries are shown below:
1. On July 15
Accounts receivable A/c Dr $50,000 (1,000 tires × $50)
To Sales revenue A/c $50,000
(Being service provided is recorded)
On July 23
Cash A/c Dr $49,000
Sales Discount A/c Dr $1,000
To Accounts receivable $50,000
(Being cash received recorded)
The discount would be
= Accounts receivable × percentage given
= $50,000 × 2%
= $1,000
The remaining amount would be credited to the cash account.
2. On July 15
Accounts receivable A/c Dr $50,000 (1,000 tires × $50)
To Sales revenue A/c $50,000
(Being service provided is recorded)
On August 15
Cash A/c Dr $50,000
To Accounts receivable A/c $50,000
(Being cash collected is recorded)
Sales journal entries, also known as revenue journal entries, are records of a customer purchase made with cash or on credit. Additionally, these entries represent any alterations to accounts, such as costs of products sold, inventories, and sales tax payable accounts.
The following are the required journal entries for the given transactions.
1.
July 15
Accounts Receivable 50,000
Sales Revenue 50,000
(To record the sale of 1,000 tires to Nixon Car Company)
July 23
Cash 49,000
Sales Discount 1,000
Accounts Receivable 50,000
(To record the collection of cash, taking advantage of the 2% on 50,000 discount)
2.
July 15, 2018:
Accounts Receivable 50,000
Sales Revenue 50,000
(To record the sale of 1,000 tires to Nixon Car Company)
August 15, 2018
Cash 50,000
Accounts Receivable 50,000
(To record the collection of the full amount without taking the discount)
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Which of the following statements regarding "Six Sigma" is TRUE?
A. The term has two distinct meanings–one is statistical; the other is a comprehensive quality system.
B. Six Sigma means that about 94 percent of a firm's output is free of defects.
C. The Six Sigma program was developed by Toyota in the 1970s.
D. The Six Sigma program is for manufacturing firms and is not applicable to services.
Answer:A. The term has two distinct meaning one is statistical; and the other is a comphrensive quality system.
Explanation:
Six sigma is statical in that it try to limit the number of defects in a manufactured product to a minimal level and confirmed it through stastical inference . It works to ensure quality through the principles of definition, measurements, analyse, improve and control.
Though it does not give assurance of percentage of defects free product but it worked with the goals of eliminating defects to the lowest minimum, it was not devoloped by Toyota though it's mainly used manufacturing but it can equally be used in service industry.
Six Sigma means that about 94 percent of a firm's output is free of defects.
Explanation:The true statement regarding Six Sigma is option B: Six Sigma means that about 94 percent of a firm's output is free of defects. Six Sigma is a methodology that aims to improve the quality and efficiency of processes by reducing defects and variability. It uses statistical tools and techniques to identify and minimize defects, ultimately aiming for a level of quality where only 3.4 defects per million opportunities are present. This translates to a 99.99966% defect-free rate, or about 94 percent of output being free of defects.
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4. Winners and losers from free trade Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $32. Suppose that the world price for a meeker is $24. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. If Meekertown allows free trade, then it will meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertownian consumers are better off under free trade than they were before. Meekertownian producers are better off under free trade than they were before. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False
Answer:
Meekertownian consumers are better off under free trade than they were before : True. It is because consumers can enjoy lower price for a similar product since the world price of meeker is lower than its domestic price, world suppliers can approach the Meekertown market and sell at a lower than domestic price to gain market share and enjoy higher margin comparing to the world market.
Meekertownian producers are better off under free trade than they were before: False. It is because their selling price is far above the world price, free trade will force them to either find ways to improve its products, reduce cost to maintain a more appropriate price level to compete with world supplier or to simply exit the market.
When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade: False. In fact, a country will increase its total surplus when it allows free trade regardless of its relative impact to the world economy. Through free trade, it helps the country to re-allocate it resources to make goods and services more efficiently in the way that the country may exploit its competitive advantages over other countries in the world.
Explanation:
Stew Leonard's uses an annual employee survey to determine what the company does well for its employees and what could be improved. The survey covers topics such as jobs, benefits, schedules, and growth potential. What does this indicate about Stew Leonard's?
Answer:
The correct answer is: Stew Leonard's uses an integrated talent management system.
Explanation:
An integrated talent management system allows companies to handle information across Human Resources, payroll, and benefits administration. This system requires the collaboration of employees in an organization usually through surveys so the worker's point of view on benefits and management can be considered by high-rank executives.
Suppose the economywide demand for money is given by: M = P(0.2Y – 25,000i). The price level P equals 3, and real output Y equals 10,000.
a. At what value should the Fed set the nominal money supply if it wants to set the nominal interest rate at 4 percent?
The nominal money supply should be set at $ .
b. At what value should the Fed set the nominal money supply if it wants to set the nominal interest rate at 6 percent?
The nominal money supply should be set at $ .
Answer:
$3,000; $1,500
Explanation:
Demand for money: M = P(0.2Y – 25,000i)
Price level P = 3
Real output Y = 10,000
(i) If Fed wants to set the nominal interest rate at 4 percent, then
Nominal money supply = P(0.2Y – 25,000i)
= 3 ×[0.2(10,000) - 25,000(4%)]
= 3 ×[2,000 - 1,000]
= $3,000
Therefore, the nominal money supply should be set at $3,000.
(ii) If Fed wants to set the nominal interest rate at 6 percent, then
Nominal money supply = P(0.2Y – 25,000i)
= 3 ×[0.2(10,000) - 25,000(6%)]
= 3 ×[2,000 - 1,500]
= $1,500
Therefore, the nominal money supply should be set at $1,500.
To determine the nominal money supply, the equation M = P(0.2Y - 25,000i) is used. For a nominal interest rate of 4 percent, the nominal money supply should be set at $3,000. If the nominal interest rate is to be set at 6 percent, the nominal money supply should be set at $1,500.
Explanation:The economywide demand for money in the given equation is M = P(0.2Y - 25,000i). Here, M is the nominal money supply, P is the price level, Y is the real output, and i is the nominal interest rate.
To calculate the value at which the Fed should set the nominal money supply if it wants to set the nominal interest rate at 4 percent, we plug in the given values for P, Y, and i into the equation. So, M = 3(0.2*10,000 - 25,000*0.04), which simplifies to M = 3(2,000 - 1,000) = 3,000. Therefore, if the nominal interest rate is to be set at 4 percent, the nominal money supply should be set at $3,000.
If the Fed wants to set the nominal interest rate at 6 percent, we plug in the values for P, Y, and i into the equation again. This gives us M = 3(0.2*10,000 - 25,000*0.06), which simplifies to M = 3(2,000 - 1,500) = 1,500. So, if the nominal interest rate is to be set at 6 percent, the nominal money supply should be set at $1,500.
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In an oligopoly situation, a wise marketing manager will probably set the firm's price level:
A. at the competitive level.
B. on a negotiated basis—that is, customer by customer.
C. above competitors' prices.
D. at least 10 percent below the price leader's price.
E. below competitors' prices.
Answer:
Letter A is correct. At the competitive level.
Explanation:
An oligopoly is a marketing structure that occurs when some companies come together to determine the supply of products or services.
In this type of market there is imperfect competition, where market control is exercised by few companies, capable of regulating the behaviors and market decisions of other companies.
Therefore in an oligopoly situation the ideal is that the price level of a company be defined at a competitive level, since the goods produced are homogeneous and the degree of differentiation occurs in the variables of service, quality, image and not so much in the variation of prices. price.
Tucker Company makes chairs. Tucker has the following production budget for January - March. January February March Units Produced 10,064 11,918 8,277 Each chair produced uses 5 board feet of wood. Management wants ending inventory levels of raw materials to equal 20% of the production needs (in wood) for the next month. How many board feet of wood does Tucker need to purchase in February? Round your answer to the nearest whole number. Don't round any intermediate calculations.
Tucker Company needs to purchase approximately 55,949 board feet of wood in February to meet its production needs and desired inventory levels, when rounded to the nearest whole number.
Explanation:To solve this problem, we need to first calculate the number of board feet of wood required for production in each month, and then consider the ending inventory levels desired by management.
Let's first calculate the amount of wood required for production each month. For each chair, Tucker requires 5 board feet of wood. Thus, for January, February, and March, they respectively require 10,064*5, 11,918*5 and 8,277*5 board feet, which equals 50,320, 59,590 and 41,385 board feet. Next, we need to calculate the ending inventory of raw materials for February. Management wants this to be 20% of the production needs for March, or 0.20*41,385 = 8,277 board feet. Now, to find the Raw Material to Purchase in February, you need to add the production needs for February and the desired ending inventory for February, then subtract the beginning inventory for February. The beginning inventory would be the ending inventory of January. As the ending inventory of January equals to 20% of February's needs, we have 0.20*59,590 = 11,918 board feet(same as the units produced in February). Thus, the board foot of wood Tucker needs to purchase in February is: 59,590 (needs for February) + 8,277 (ending inventory for February) - 11,918 (beginning inventory for February) = 55,949 board feet.So in answer to the question, Tucker needs to purchase approximately 55,949 board feet of wood in February (to the nearest whole number).
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1. The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 10.5 percent on the company’s stock, what is the current price? What will the price be in three years? In 15 years?
Answer:
1.$34.4
2.$38.70
3.$61.95
Explanation:
1. Current price=D1/ (Required return-Growth rate)
= (2.15*1.04)/ (0.105-0.04) =$34.4
Therefore the answer is $34.4
We use the following formula:
A=P (1+r/100) ^n
where
A=future value
P=present value
r=rate of interest
n=time period.
2. A=$34.4*(1.04) ^3
=$38.70(Approximately).
Therefore the answer is 38.70
3. A=$34.4*(1.04) ^15
=$61.95(Approximately).
Therefore the answer is $61.95
You manage a project with 10 activities. Activities A1, A3, A5, A9 form the critical path. As you have a large budget for the project, you are considering crashing activity A2, which has the potential to shorten the time of A2 by 3 days.
What do you think about this opportunity?
O A good idea, it will reduce the project duration by 3 days.
O A bad idea, as A2 is not on the critical path.
Answer:
A bad idea, as A2 is not on the critical path.
Explanation:
Critical path is a path which is the shortest path of doing the activity.
When an activity is in critical path, then there is a benefit of crashing it. Or if it is not the part of critical path then the benefit is to crash the activity and then apply the spare resources in some activity which is a part of critical path.
Thus, crashing A2 which is not a part of critical path and then not deploying the resources on to the activities of critical path will not provide for any benefit.
It is ultimately not a wise idea.
Dora Inc. reported the following on the company's cash flow statement for 20Y6: Net cash flow from operating activities $350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Sixty percent of the cash flow used for investing activities was used to purchase property, plant, and equipment. What is the free cash flow for 20Y6?
Answer:
The free Cash Flow for the year 20Y6 amounts to $290,000
Explanation:
The free cash flow for the year 20Y6 is computed as:
Free Cash Flow for the year 20Y6 = Net cash flow from operating activities - Cash used to purchase the equipment, property and plant
= $350,000 - $60,000
= $290,000
where
Net cash flow from operating activities is $350,000
Cash used to purchase the equipment, property and plant is computed as:
Cash used to purchase the equipment, property and plant = 60% × Net cash flow used for the investing activities
= $100,000 × 60%)
= $60,000
Suppose that Second Republic Bank currently has $150,000 in demand deposits and $97,500 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%.Reserves=Required Reserves=Excess Reserves=
Answer:
Please see attachment .
Explanation:
Please see attachment .
The Second Republic Bank, subject to a 10% reserve requirement set by the Federal Reserve, must keep $15,000 as required reserves. After accounting for $97,500 in outstanding loans, the bank has excess reserves of $37,500.
Explanation:In this case, the Second Republic Bank has total deposits of $150,000. Given that the Federal Reserve has set the reserve requirement at 10%, the bank must hold $15,000 (10% of $150,000) as required reserves. This is the minimum amount of reserves the bank should keep on hand as mandated by the Federal Reserve. These required reserves serve as a safety net for the depositor's funds. Now, seeing as how the total amount of outstanding loans is $97,500, this would mean that the bank has remaining or excess reserves of $37,500 ($150,000 total deposits - $15,000 required reserves - $97,500 outstanding loans).
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1.) The Korean steel company PoSCO trades in the US on the NYSE as an ADR with the symbol PKX. The price of an ordinary share on the Seoul stock exchange is Korean won (KRW) 500,000 and the price of the ADR is US$100. The current exchange rate is KRW1,250/$. You have $100,000 to invest. It takes 4 ADRs to buy 1 ordinary share. Six months from today the local currency price is KRW525,000 and the exchange rate is KRW1,000/. a.) What is your rate of return measured in dollars? b.) Suppose 3 ADRs buy 1 ordinary share. What is your return measured in dollars?
Answer:
a) 31.25%
b) 74.83%
Explanation:
You need to take below steps in the investment circle:
(1) You have $100,000 to invest and the price of the ADR is $100; so you can buy 1,000 ADRs = $100,000/ $100
(2) It takes 4 ADRs to buy 1 ordinary share; so with 1,000 ADRs you can buy 250 ordinary shares = 1,000 ADRs / 4 ADRs
Six months from today, price for 1 ordinary share is KRW525,000 and the exchange rate is KRW1,000/$.
(3) If you sell 250 ordinary shares, you can get KRW131,250,000 = 250 shares x KRW525,000
(4) Then you sell KRW131,250,000 to get $131,250 = KRW131,250,000/ exchange rate KRW1,000/$
So the profit after 6 months is $31,250 = $131,250 - $100,000
The rate of return is 31.25% = $31,250/$100,000 x 100%
Suppose 3 ADRs buy 1 ordinary share, then some steps changed as below:
(1) same as above
(2) you can buy 333 ordinary shares = 1,000 ADRs / 3 ADRs
(3) If you sell 333 ordinary shares, you can get KRW174,825,000 = 333 shares x KRW525,000
(4) Then you sell KRW174,825,000 to get $174,825 = KRW174,825,000/ exchange rate KRW1,000/$
So the profit after 6 months is $74,825 = $174,825- $100,000
The rate of return is 74.83% = $74,825/$100,000 x 100%
Everything else held constant, an increase in the interest rate paid on checkable deposits will cause ________ in the amount of checkable deposits held relative to currency holdings and ________ in the currency ratio. a. an increase; an increase b. a decrease; an increase c. a decrease; a decrease d.an increase; a decrease
Answer:
The answer is letter D
Explanation:
Everything else held constant, an increase in the interest rate paid on checkable deposits will cause _an increase_______ in the amount of checkable deposits held relative to currency holdings and _a decrease_______ in the currency ratio.
After receiving the explanations offered in number 2 and 3, Ricardo said, "Forget that I had the Costco order. I had an even bigger order from Lands' End. It was for 500,000 units and would e filled the plant completely. I told my mother I'd settle for no commission ping and would not get any advertising allowances. been no selling and administrative costs whatsoever because Lands' End would pay for the ship Lands’ End offered $8.70 per unit. Our fixed manufacturing costs would have been spread over 2.5 million instead of 2 million units. Wouldn’t it have advantageous to accept the order? Our old fixed manufacturing costs were $2.00 per unit. The added volume would reduce the cost more than our loss on our variable costs per unit. Am I correct? What would have been the impact on total operating income if we had accepted the order?"
Answer:it is advantageous not to accept the order, the added volume will not reduce the cost, the operating income will reduce from $1,350,000 to $850,000
Explanation:
Profit statement
Accept order
$
Sales (8.70×500,000) 4,350,000
Less: variable cost. 2,500,000
------------------
Contribution 1,850,000
Less fixed cost. (2.00 × 500,000) ( 1,000,000)
--------------------
Profit 850,000
------------------
Do not accept the order
$
Sales. ( 8.70×500,000) 4,350,000
Less Variable cost. 2,000,000
------------------------
Contribution. 2,350,000
Less fixed cost. (1,000,000)
-----------------------
Profit. 1,350,000
-------------------------
It is advantageous not to accept the order, The added volume will not reduce the cost
The impart on total operating income if the order had been accepted is a reduction in profit from $1,350,000 to $850,000
The proper discount rate when using the dividend discount valuation model is the:
A) Weighted average cost of capital
B) Cost of equity capital
C) Cost of debt capital
D) Average borrowing rate
Answer:
B) Cost of equity capital
Explanation:
Dividend discount model is used to find the Price of a given stock by calculating the present value of expected future dividends.
The dividend discount formula for finding price(assuming zero growth rate);
P0 = D1/r
The rate; r is the discount rate which is the cost of equity since dividends are paid on equity capital.
Weighted average cost of capital (WACC) is used to discount free cashflows of potential projects.
Final answer:
The correct discount rate for the dividend discount valuation model is the cost of equity capital. This interest rate reflects the expected return for equity investors, based on the present value of anticipated dividends. The concept of present discounted value applies to bonds differently, taking into account the impact of changing interest rates on bond pricing.
Explanation:
The proper discount rate when using the dividend discount valuation model is the cost of equity capital. This is because the dividend discount model is used to estimate the value of a company's stock based on the hypothesis that the value equals the present value of all future dividend payments.
When valuing stocks or bonds, it is essential to choose the correct interest rate for discounting future payments to their present value. For a stock, this would typically reflect the cost of equity, which includes the expected rate of return for equity investors, as dividends are paid out of the company's profits which are attributable to shareholders.
When applying the concept of Present Discounted Value (PDV) to a bond, the investor needs to consider future interest rates, as these will directly affect the bond's price and yield. If interest rates fall after a bond is issued, the bond's price increases above face value, and if interest rates rise, the bond's price falls below face value. With stocks, expected future profits play a key role in determining their PDV, including potential capital gains and dividend payments.
On January 1, 2015, Brooks Inc. borrows $90,000 from a bank and signs a 5% installment note requiring four annual payments of $25,381. Click here to see payment schedule. Record the first installment payment on December 31, 2015. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. If more than one account needs to be debited or credited, enter the account titles alphabetically.
Answer:
The journal entry which is to be recorded for the first installment payment on the note is shown below:
Explanation:
The journal entry is as on December 31, 2015
Interest Expense A/c.................Dr $4,500
Notes Payable A/c.......................Dr $20,881
Cash A/c..............................Cr $25,381
Working Note:
Interest expense = Borrowed amount × 5%
= $90,000 × 5%
= $4,500
Note Payable = Cash - Interest expense
= $25,381 - $4,500
= $20,881
Domino's Pizza was 50 years old in 2010. Visit the company's business-related website (www.dominosbiz) and read the company profile under the "Investors" tab. Does the firm focus on the economic, accounting, or shareholder perspective in the describing its competitive advantage in the profile. Defend/explain your answer.
Answer:
Consider the following paragraph I wrote
Explanation:
I think the firm focuses on the economic perspective in describing its competitive advantage. In the economic perspective, a firm focuses on how much economic value it creates through its competitive advantage.
In the company profile, Domino's focuses on how much economic value it creates for its sub-franchisees, franchisees and the parent company. It focuses more on the chain which creates economic value for the entire Domino's ecosystem consisting of the parent company, franchisees, and the sub-franchisees. So, I think the firm focuses on economic perspective in describing its competitive advantage.