Answer:
24 million shares ; $16 million
Explanation:
The computation of the weightage number of treasury shares are shown below:
Number of shares Price Total
2 $22 $44 million
1 $28 $28 million
Total 3 $72 million
So, the weighted average number of shares would be
= $72 ÷ 3 = 24 million shares
Now the journal entry would be
Cash A/c Dr $64 million (2 million treasury shares × $32)
To Paid in capital - share repurchase A/c $16 million
To Treasury stock $48 million (24 million treasury shares × $2)
(Being the treasury shares are sold)
Crater HVAC Systems is preparing its statement of cash flows (indirect method) for the year ended March 31, 2018. To follow, in no particular order, is a list of items that will be used in preparing the company's statement of cash flows. Identify each item as an operating activity addition to net income; an operating activity subtraction from net income; an investing activity; a financing activity; or an activity that is not used to prepare the cash flows statement.
Answer:
a. an operating activity subtraction from net income
b. a financing activity
c. an operating activity subtraction from net income
d. an operating activity addition to net income
e. an operating activity addition to net income
f. Direct cash flow method - an operating activity addition to net income
g. Investing activity
h. not used to prepare the cash flows statement.
i. Financing activity
j. an operating activity addition to net income
k. an operating activity addition to net income
l. an operating activity subtraction from net income
m. an operating activity addition to net income
n. an operating activity addition to net income
Explanation:
Requirement A
a. Increase in inventory:
Inventory requires in day to day to activities. Therefore, it is related to operating activities despite being a balance sheet item. However, as it is similar to working capital, also that is required to deduct from net income. Hence, it is an operating activity item that needs subtraction from net income.
Requirement B & C
b. Issuance of common stock:
As the common stock is the capital of shareholders'. Shareholders finance it. Therefore, a new stock issuance means the company finances it.
c. Decrease in Accrued liabilities
The decrease in current liability means the firm pays cash to its payable. It means there is a cash outflow. Therefore, it will be deducted from net income in the operating activity section.
Requirement D
d. Net income
After deducting the operating expenses, other income/expenses, and interest & taxes from Gross profit, we get net income. As cash flow cannot be found directly from net income, we need to adjust the net income. The cash flow statement starts with the net income, and all the items are adjusted with the net profit.
Requirement E
e. Decrease in prepaid expenses
When we pay cash in advance for any expenses, it is prepaid expenses. When the time becomes over for that increases, it becomes a reasonable expense. Therefore, the cash outflow becomes an average balance. As there will be no cash outflow, it will add to the net income under the operating activities.
Requirement F & G
f. collection of cash from customers
It is an operating activity. However, in the direct method of cash flow statement, it is required. Therefore, it is added back to the net income as there is cash inflow.
g. purchase of equipment with cash
The cash is outflown when purchasing a piece of equipment with money. As the company uses the machine for many years, it is an investing activity for a firm.
Requirement H & I
h. retained earnings
It is only required to determine the dividend. It is not necessary to prepare the cash flow statement.
i. Payment of dividends
If a firm pays dividends, the cash is decreasing. Again, as the shareholders' get a bonus, and they are the company owners, paying a dividend to them will go to the finance section. Therefore, it is a financing activity with cash outflow.
Requirement J & K
j. increase in accounts payable
The increase in accounts payable means the cash is not disbursed to them. Therefore, it will be added to net income under operating activity.
k. decrease in accounts receivable
The decrease in accounts receivable mean they have paid us the amount. Therefore, there is a cash in-flow. So, it will be added to the net income under operating activity.
Requirement L
l. Gain on sale of a building
When we sale any non-current assets, we have to measure its book value or market value. If the sale exceeds the book value, there is an additional profit from the sale. It will be subtracted from the net income under the operating activity because the income is already added during the preparation of the income statement.
Requirement M & N
m. Loss on sale of land
When the book value of the land exceeds the sale value, there exists a loss. The loss will be added back to the net income under the operating activity.
n. Depreciation expense
It is a non-cash item that is subtracted in the income statement. Any non-cash item should be added to net income during the preparation of the cash flow statement as those items cannot generate cash.
What is commonly presented or described in the Cash Flow Statement includes the amount of cash received, such as cash income and cash investment from the owner as well as the amount of cash issued by the company, such as expenses to be incurred, debt payments, and taking prives.
Further Explanation
Cash flow statement has the meaning as a financial statement that presents information about cash receipts and disbursements of a company during a period.
In the cash flow financial statements both in goods and services companies, there are 3 parts, namely:
Cash operating activities
Examples of cash operating activities are payment and receivable income, payment of salaries, operating expenses, and so forth. The statements of cash from operating activities consist of the main activities or operations of a company which directly impacts cash.
Cash investing activities
It is a financial cash statement relating to the acquisition of the sale and purchase of fixed assets or permanent assets.
Cash funding activities
Cash flow financial statements relating to the owner's investments, lending funds, and taking money by the owner.
In general, there are five steps that can be used as a way to prepare cash flow financial statements, namely:
Calculate the increase/decrease that occurred on cash Calculate and report net cash used in operating activities, using the direct method or indirect method. Calculate and report net cash used in investment activities Calculate and report net cash used by funding activities Calculate the flow and add up the net cash from the combined net cash used by operating, investing and financing activities with the initial cash balance (as proof of similarity to the ending cash balance).
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Detail
Class: College
Subject: Business
Keyword: Cash, Flows, Invest
Leo received $7,500 today and will receive another $5,000 two years from today. He will invest these funds when he receives them and expects to earn a rate of return of 11.5 percent. What value does he expect his investments to have five years from today?
Answer:
Value of Investment= Principal (1+Rate of return)^Number of periods
For the first investment the principal is 7,500, the rate of return is 11.5% and the number of periods are 5 so the value of the investment will be
7,500 (1+0.115)^5=12,925
For the second investment the principal is 5,000, the rate of return is 11.5 and the number of periods are 3 as the 5,000 is invested two years from today.
5,000*(1+0.115)^3=6,931
Total value of investments = 12,925 +6,931 = $19,856
Final answer:
Leo's total investment after five years, with the $7,500 invested for the full duration and the $5,000 invested after two years, both at an 11.5% interest rate, is calculated by finding the future value of each amount separately and summing them.
Explanation:
Leo received an amount of $7,500 today, and he will receive another $5,000 two years from today. He intends to invest these amounts immediately upon receipt at an annual interest rate of 11.5%. We need to calculate the future value of these investments five years from today.
For the initial $7,500 investment, it will be invested for the entire five years. The future value (FV) of this investment can be found using the formula FV = PV *[tex](1 + r)^t[/tex], where PV is the present value, r is the annual interest rate, and t is the number of years.
FV of $7,500 after 5 years = $7,500 * [tex](1 + 0.115)^5[/tex]
Next, for the $5,000 he will receive two years from today, this amount will only be invested for three years (since it's received two years from today and we want the value five years from today). So we calculate:
FV of $5,000 after 3 years = $5,000 * [tex](1 + 0.115)^3[/tex]
Lastly, we add both future values together to determine the total future value of Leo's investments after five years.
The future value of the $7,500 invested for five years and the $5,000 invested for three years, both at the annual interest rate of 11.5%, will be the sum total of both individual future values.
What is the implied service rate per service counter employee at an airport automobile rental counter if customer demand is 36 customers per hour, two service counter employees are on duty, and the labor utilization is 75 percent? a. 18 customers per hour b. 26 customers per hour c. 20 customers per hour d. 24 customers per hour
The implied service rate per service counter employee at an airport automobile rental counter can be calculated using Little's Law. In this case, the implied service rate is 18 customers per hour.
Explanation:The implied service rate per service counter employee at an airport automobile rental counter can be calculated using Little's Law, which states that the average number of customers in a system is equal to the average arrival rate multiplied by the average time spent in the system. In this case, the customer demand is 36 customers per hour, there are two service counter employees on duty, and the labor utilization is 75 percent.
The average arrival rate can be calculated by dividing the customer demand by the number of service counter employees, which is 36 customers per hour / 2 employees = 18 customers per hour.
Therefore, the implied service rate per service counter employee is 18 customers per hour.
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Rodriguez Company pays $325,000 for real estate plus $17,225 in closing costs. The real estate consists of land appraised at $240,000; land improvements appraised at $96,000; and a building appraised at $144,000. Required: 1. Allocate the total cost among the three purchased assets. 2. Prepare the journal entry to record the purchase.
Answer:
1. Allocated cost to three purchased assets as followed:
Land: $171,112.5
Land improvements: $68,445
Building: $102,667.5
2. The entry to record the purchase:
Dr Land $171,112.5
Dr Land improvements $68,445
Dr Building $102,667.5
Cr Cash $342,225
Explanation:
Working note on the allocation of cost to purchased asset:
- Total cost of asset : 325,000 + 17,225 = $342,225
- Percentage of value of each assets in the three assets:
+ Land = 240,000 / (240,000 + 96,000 + 144,000) = 50%; Land improvement : 96,000 / (240,000 + 96,000 + 144,000) = 20% ; Building: 144,000 / (240,000 + 96,000 + 144,000) = 30%.
- Allocation of cost will be based on the percentage of value of each asset as followed:
Land = 342,225 x 50% = $171,112.5; Land Improvements = 342,225 x 20% = $68,445; Building : 342,225 x 30% = $102,667.5.
Your uncle will sell you his bicycle shop for $250,000, with "seller financing," at a 6.0% nominal annual rate. The terms of the loan would require you to make 12 equal end-of-month payments per year for 4 years, and then make an additional final (balloon) payment of $50,000 at the end of the last month. What would your equal monthly payments be?
$4,029.37
$4,241.44
$4,464.67
$4,699.66
$4,947.01
Answer:
$4,947.01
Explanation:
In this question, we use the present value formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Future value = $50,000
Present value = $250,000
Rate of interest = 6% ÷ 12 months = 0.5 months
NPER = 4 years × 12 months = 48 months
The formula is shown below:
= PMT(Rate,NPER,PV,-FV,type)
The future value comes in negative
So, after solving this, the answer would be $4,947.01
Assuming you make an additional final (balloon) payment of $50,000 at the end of the last month, your monthly payments is:$4,947.01.
Monthly paymentBased on the given information we would make use of financial calculator to find the PMT by inputting the below data
PMT(Rate,NPER,PV,-FV,type)
Where:
Future value= $50,000
Present value= $250,000
Interest rate= 6%/12 = 0.5%
Nper= 4 years × 12= 48 months
Hence;
PMT=$4,947.01
Inconclusion your monthly payments is:$4,947.01.
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Whitewall Tire Co. just paid an annual dividend of $1.70 on its common shares.
If Whitewall is expected to increase its annual dividend by 2.10 percent per year into the foreseeable future and the current price of Whitewall's common shares is $20.44, what is the cost of common stock for Whitewall?
Answer:
10.59%
Explanation:
First, find next year's dividend using dividend discount model formula;
D1 = D0 (1+g)
D0 = current dividend paid = 1.70
D1 = expected next year's dividend
g = growth rate = 2.10% or 0.0210 as a decimal
therefore. D1 = 1.70 (1+0.0210)
D1 = 1.70 *1.0210
D1 = 1.7357
With the current price of $20.44, find the cost of stock (r) ;
r = [tex]\frac{D1}{P0} + g[/tex]
P0 = Current price
r = [tex]\frac{1.7357}{20.44} + 0.0210\\ \\ =0.0849 +0.0210\\ \\ =0.1059[/tex]
As a percentage, the cost of stock is 10.59%
Standard Olive Company of California has a $1,000 par value convertible bond outstanding with a coupon rate of 8 percent and a maturity date of 20 years. It is rated Aa, and competitive, nonconvertible bonds of the same risk class carry a 18 percent yield. The conversion ratio is 30. Currently the common stock is selling for $30 per share on the New York Stock Exchange.
a. What is the conversion price? (Round your answer to 2 decimal places.)
b. What is the conversion value? (Round your answer to 2 decimal places.)
c. Compute the pure bond value. (Use semiannual analysis.) Use Appendix B and Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
d. Calculate the crossover point at which the pure bond value equals conversion value. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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 two sheets with the formulas indications.
You purchased 1,000 shares of the New Fund at a price of $39 per share at the beginning of the year. You paid a front-end load of 3.4%. The securities in which the fund invests increase in value by 8% during the year. The fund's expense ratio is 1.4%. What is your rate of return on the fund if you sell your shares at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
2.97%
Explanation:
cost of shares = (NAV0 × shares) ÷ (1 - FL)
= ($39 × 1,000) ÷ (1 - 0.034)
= 40,372.67
NAV1 = NAVo (1 + investment return - expense ratio)
= $39 × (1 + 0.08 - 0.014)
= 41.574
value of shares = NAV1 × Shares
= 41.574 × 1,000
= 41,574
Return = (value of shares ÷ cost of shares) - 1
= (41,574 ÷ 40,372.67) - 1
= 2.97%
Basile Enterprises owns machinery with a book value of $467,000. The machinery is expected to generate future net cash flows of $525,000. The machinery has a fair value of $416,000. Basile should recognize a loss on impairment of
Answer:
Zero
Explanation:
In this case, the sum of future cash flows is exceeded than the book value. So, no impairment loss would be recognized
If the book value is more than the generated future cash flows so book value cannot be recovered. In this case, the generated future cash flows are ignored
In this scenario, we compare the values between book value and the fair value of machinery, the difference would be the loss on impairment of the asset
In mathematically,
= Book value - fair value
One major difference between a merchandiser’s master budget and a manufacturer’s master budget is that A : a merchandiser does not include direct materials, direct labor, and manufacturing overhead budgets, whereas a manufacturer does. B : a merchandiser does not include a sales budget, whereas a manufacturer does. C : a manufacturer does not include a sales budget, whereas a merchandiser does. D : a manufacturer does not include direct materials, direct labor, and merchandising overhead budgets, whereas a merchandiser does.
Answer:
A
Explanation:
A merchandise prepares a budget in line with the Trading profit and loss Account, while a Manufacturer prepares a budget in line with the Manufacturing and profit and loss account.. under the Manufacturing account we have prime cost which consist of direct labor, direct material and direct expenses. then add it to Manufacturing overheads.
Naples, Inc. recorded operating data for its shoe division for the year. Sales $750,000 Contribution margin 135,000 Total fixed costs 90,000 Average total operating assets 300,000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?
Answer:
25%
Explanation:
New contribution margin = Old contribution margin + Increase
= 135,000 + 30,000
= 165,000
Net Income = Contribution margin - Total fixed expense
= $165,000 - $90,000
= $75,000
ROI = Net income ÷ Average operating assets
= 75,000 ÷ 300,000
= 25%
On February 15, 2011, Spring Hope Corporation repurchases 1,200 shares of its outstanding common stock for $7 per share. On March 1, 2011, Spring Hope sells 300 shares of treasury stock for $11 per share. On May 18, 2011, Spring Hope sells the remaining 900 shares of its treasury stock for $4 per share. Prepare the journal entries to record these transactions: To record repurchase: Debit: Credit: To record sale on March 1 Debit Credit Credit
Answer:
hhhhhhmmmmmm not sure
Write short notes (i.e. 3-5 sentences and use relevant examples and graphs to illustrate these concepts) on the following concepts:
(a) Total Variable Cost
(b) Production Function
(c) Binding Price Ceilings
(d) Producers’ Surplus
(e) Demand Schedule
(f) A movement along a demand curve
(g) Explicit Cost
(h) Intellectual Property Rights
(i) Normal Profit
(j) Relatively Inelastic Supply
(k) Economic Profit
(l) Accounting Profit
Answer: a. This is all the cost associated with production of an item.
B. This is the relationship between physical input and quantities of output q=f(l, k).
C. This the price of a product below the equilibrium price.
D.difference between marginal feel accepted by producer for a product and how much can be received for selling at market price.
E. This is a table showing different quantity demand at different prices.
F. A movement along a demand curve occurs when a change in demand occurs because of change in price.
G. Direct payment injured while running a business that is wages, rent and materials.
H. These are new invention made by people in art, science, literature.
I. This is when total revenue balances with the total cost of carrying out production in a competitive market.
J. This is when a small change in product price cause large change in quantity of production of item.
K. Difference between revenues accrued from sales and cost of all inputs used with opportunity cost.
L. Difference between total monetary revenue and total monetary cost.
Explanation:the graphs attached gives the thorough explanation of a, b, c, d, e
G. Examples of intellectual property are trademarks, copyright and trademark secret.
L. The Answer: a. This is all the cost associated with production of an item.
B.q=f(l, k)
Juhasz Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity Standard Price or Hours or Rate Direct labor 0.70 hours $ 37.00 per hour Variable overhead 0.70 hours $ 5.70 per hour In August the company produced 9,600 units using 6,850 direct labor-hours. The actual variable overhead cost was $36,990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for August is:a. $702 Ub. $741 Uc. $702 Fd. $741 F
Answer:
741 U
Explanation:
Please see attachment
Final answer:
The variable overhead efficiency variance for Juhasz Corporation in August is $741 Unfavorable (U) because more hours were worked than were allowed by the standard.
Explanation:
To calculate the variable overhead efficiency variance, we need to compare the standard quantity of variable overhead hours for the actual production with the actual hours worked, multiplied by the standard variable overhead rate. First, we determine the standard quantity of hours allowed for the actual production, which is 9,600 units × 0.70 hours/unit = 6,720 hours. The difference between the standard hours allowed and the actual hours worked is 6,720 hours - 6,850 hours = -130 hours, indicating that more hours were worked than were allowed, which is inefficient. We determine the variance by multiplying the difference in hours by the standard variable overhead rate of $5.70/hour: -130 hours × $5.70/hour = -$741. Therefore, the variable overhead efficiency variance for August is $741 Unfavorable (U), because the actual hours spent on production were greater than the standard hours allowed for the actual production.
Today's consumers do not need to rely on marketer-supplied information about products and services because they can use ________ to seek out a wealth of information.
A) push strategies
B) direct and digital marketing
C) the Internet
D) personal selling
E) public relations
Answer:
The answer to the question would be C
Explanation:
Without a doubt, the economic crisis has changed the way consumers approach the market for goods and services. In this new era, austerity, discounts and the search in different channels of the best price / benefit ratio dominate.
Of course, technology and the Internet are the best allies of the consumer who wants to be informed: thanks to smartphones, bar scanners, social networks or websites that compare prices or offer discounts, we are the buyers with more prior information on what we want or need to acquire.
The consumer should not believe so here the internet should be used.
What is internet?Prior to the decade, people visit different kind of markets for gathering information related to a particular product. It needs time, effort etc. But in today situation everyone prefer online shopping by using the internet where the consumer easily compared the products with terms of price, quality, quantity, etc.
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The XYZ Company has just hired you as Production Manager of their North American Fabrication Facility. Your first job is to use the MRP methodology to schedule production for the next nine weeks. The XYZ Company has given you the following information to work with: Bill of Materials and Current Inventory Records:
Item
Parent
Leadtime (in weeks)
Lotsize
Inventory Currently On-hand
A
none
1
Lot-for-Lot
0
B
A
2
Lot-for-Lot
0
C
A
3
100
52
Master Production Schedule:
Item
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
A
0
0
0
15
0
60
0
36
75
You may assume one-to-one parent/child requirements when assembling this particular product structure. Which of the following are true statements about Week 3 of your plan?
I. An order of 15 of Item B will be received.
II. An order for 60 of Item B will be placed (planned order release).
III. There will be 66 of Item C in inventory at the end of Week 3.
Answer:
Sentence 2 is true
You didn´t post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.
Explanation:
Because A has 1 week lead time, so B will recieve gross requireement of 60 on week 5. but B has lead time of 2 weeks. so B will release order on week 3.
There will be 66 of Item C in inventory at the end of Week 3. Hence the correct option is 3.
In Week 3 of the production plan, the statement "III. There will be 66 of Item C in inventory at the end of Week 3" is true. This conclusion is derived from the Master Production Schedule, which indicates that 100 units of Item C were scheduled for production in Week 3. Since the current inventory of Item C is 52 units, subtracting the scheduled production (100 units) results in an anticipated inventory level of 66 units at the end of Week 3.
This calculation considers the Lot-for-Lot ordering policy for Item C, where the order quantity matches the net requirements for that week, ensuring that the inventory is just enough to cover the demand and maintain efficient production planning. The other statements, regarding orders for Item B, are not supported by the given information for Week 3.
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Which of the following statements is FALSE?
A) The geometric average return is a better description of the long-run historical performance
of an investment.
B) The geometric average return will always be above the arithmetic average return, and the
difference grows with the volatility of the annual returns.
C) The compounded geometric average return is most often used for comparative purposes.
D) We should use the arithmetic average return when we are trying to estimate an
investmentʹs expected return over a future horizon based on its past performance.
Answer:
The answer is letter B
Explanation:
The false statement is letter B, The geometric average return will always be above the arithmetic average return, and the difference grows with the volatility of the annual returns.
Because the geometric average return will always be bellow the arithmetic average return, and the difference grows with the volatility of the annual returns.
It is important to identify and use only incremental cash flows in capital investment decisions:A) because they are the simplest to identify.B) only when the stand-alone principle fails to hold.C) because ultimately it is the change in a firm's overall future cash flows that matter.D) in order to accommodate unforeseen changes that might occur.E) whenever sunk costs are involved.
Answer:
C) because ultimately it is the change in a firm's overall future cash flows that matter.
Explanation:
Under capital budgeting decisions, decisions are made with respect to addressing the questions like what is the benefit of selecting the project and investing on it.
If the answer to above question is raised income, then the project is selected. Accordingly the raised income in cash terms will be measured by increase in cash flows, that is incremental cash flows.
In simplest terms additional cash flows.
Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.4 ounces of aluminum per can. During the month of April, 304,000 cans were produced using 1,243,000 ounces of aluminum. The actual cost of aluminum was $0.17 per ounce and the standard price was $0.07 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable. Materials Price Variance $ Material Usage Variance
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Production of 12-ounce cans has a standard unit quantity of 4.4 ounces of aluminum per can. During April, 304,000 cans were produced using 1,243,000 ounces of aluminum. The actual cost of aluminum was $0.17 per ounce and the standard price was $0.07 per ounce.
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= ( 0.07 - 0.17)*1,243,000= $124,300 unfavorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (1,337,600 - 1,243,000)*0.07= $6,622 favorable
Let X1,X2,...,X144 be independent and identically distributed random variables, each with expected value ?= E[Xi] = 2 and variance \sigma ^2 = Var(Xi) = 4. Find an upper bound for P(X1+X2+···+X144 >144) using the following steps:
(a) Let Z=X1+ X2+...+X144, and use rules of Expectation and Variance to find E[Z]and Var[Z].
(b) Let a be the difference between 144 and E[Z].
(c) Apply Chebychev's Inequality to Z using the number a.
(d) Use the fact that Z is symmetrically distributed about its mean to connect your answer to (c) to the original question. (Hint: Draw a symmetric density curve for Z, and mark the values E[Z], (E[Z]+a) and (E[Z]?a.)
Label regions in the graph with their corresponding probabilities.)
Answer:
The procedures are below
Explanation:
Let X1,X2,...,X144 be independent and identically distributed random variables, each with expected value μ= E[Xi] = 2 and variance \sigma ^2= Var(Xi) = 4.
(a) Let Z=X1+ X2+...+X144, and use rules of Expectation and Variance to find E[Z]and Var[Z].
E(Z) = 144*E(xi) = 144*2 = 288
Var(Z) = 144*Var(Xi) = 144*4 = 576
sd (Z) = sqrt(576) = 24
(b) Let a be the difference between 144 and E[Z].
a = 144 - 288 = -144
(c) Apply Chebychev's Inequality to Z using the number a.
Statement of CHebyshev's inequality :
Let X (integrable) be a random variable with finite expected value μ and finite non-zero variance σ2. Then for any real number k > 0,
P(|X-mu| >=k*sigma) < = 1/k^2
Now we have to use this theorem for Z.
P(|Z-mu| >= k*24) < = 1/k^2
COmpare k*24 with 144
k*24 = 144
k = 144/24 = 6
P(|Z - 288| >= 144) <= 1/6^2
P(|Z - 288| >= 144) <= 0.0278
Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided a 7 percent yield at the time of issue. The preferred stock is now selling for $63. What is the current yield or cost of the preferred stock? (Disregard flotation costs.) (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Answer: kp = D/Po
D = 0.07 X $100 = $7
kp = 7/63
kp = 11.11%
Explanation: The dividend paid on the preferred stock is 7 percent of the par value and the current market price is $63. Thus, the cost of preferred stock can be obtained by dividing the dividend paid by the current market price of the preferred stocks.
The current yield or cost of the preferred stock is 11.11%.
What is a Preferred stock?Preferred stock is frequently purchased by speculators who want to hold stocks without overexposing their portfolio to risk. Preferred stock also has attractive incentive status; as a result, financial firms and big businesses.
The stock is issued at a par value of $100.
The preferred stock was issued 10 years ago.
At the time of issue, the stock had a 7% yield.
The selling price at this point in time is $63.
The current yield or cost of the preferred stock is 11.11%.
current yield = stock yield/stock at par value
= 0.07 X $100
= $7
This will be taken with respect to the selling price of the commodity:
= 7/63
= 11.11%
The market price of said preferred stock is currently $63, and the dividend is 7 percent of said par value. As a result, the value of the preferred stock could be calculated by dividing each dividend payout by the preferred stock's current market price.
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Addison company will issue a zero-coupon bond this coming month. The projected yield for the bond is 7%. If the par value of the bond is $1,000, what is the price of the bond using a semiannual convention if:
a. the maturity is 20 years
b. the maturity is 30 years
c. the maturity is 50 years
d. the maturity is 100 years
Answer:
If the bond is zero coupon then there only be one lump sum payment at the end of the bond period and we will have to discount is back using the yield of the bond to find its present value or price. Because the convention is semi annual we will divide interest by 2 to find the semi annual interest rate and to number of periods we will multiply years by 2 because of semi annual convention.
Yield= 7/2= 3.5%
a. the maturity is 20 years
We have to discount 1,000 20 years back which means 40 periods back as 20*2= 40
1,000/1.035^40=252.5725
The present value of a zero coupon $1000 bond will be $252.5725 when the yield is 7% and maturity is 20 years.
b. the maturity is 30 years
We have to discount 1,000 30 years back which means 60 periods back as 30*2= 60
1000/1.035^60=126.93
The present value of a zero coupon $1000 bond will be 126.93 when the yield is 7% and maturity is 30 years.
c. the maturity is 50 years
We have to discount 1,000 50 years back which means 100 periods back as 50*2= 100
1000/1.035^100= 32.06
The present value of a zero coupon $1000 bond will be $32.06 when the yield is 7% and maturity is 50 years.
d. the maturity is 100 years
We have to discount 1,000 100 years back which means 200 periods back as 50*2= 200
1000/1.035^200= 1.02
The present value of a zero coupon $1000 bond will be $1.02 when the yield is 7% and maturity is 100 years.
Explanation:
Final answer:
To find the price of a zero-coupon bond, you calculate the present value of its par value using the formula for the present value of a single future cash flow. The zero-coupon bond prices depend on the yield and number of periods until maturity, with longer maturities resulting in lower bond prices at the same yield.
Explanation:
To calculate the price of a zero-coupon bond using a semiannual convention, we apply the formula for the present value of a single future cash flow, which in this case is the par value of the bond that will be received at maturity. The formula is: Present Value = Future Value / (1 + r)n, where 'r' is the yield (or discount rate) per period, and 'n' is the total number of periods until maturity.
For a bond with a yield of 7% per annum compounded semiannually, the period rate r is 7% divided by 2, which is 3.5% or 0.035. For each maturity scenario, we must calculate the number of semiannual periods (n) involved.
For a 20-year maturity, there are 40 semiannual periods (20 years x 2).
For a 30-year maturity, there are 60 semiannual periods (30 years x 2).
For a 50-year maturity, there are 100 semiannual periods (50 years x 2).
For a 100-year maturity, there are 200 semiannual periods (100 years x 2).
Plugging into the formula, calculate the price (Present Value) of the bond for each maturity:
a. 20-year maturity bond price: PV = $1,000 / (1 + 0.035)40
b. 30-year maturity bond price: PV = $1,000 / (1 + 0.035)60
c. 50-year maturity bond price: PV = $1,000 / (1 + 0.035)100
d. 100-year maturity bond price: PV = $1,000 / (1 + 0.035)200
Using a calculator, we find:
a. 20-year bond price: $258.42
b. 30-year bond price: $159.10
c. 50-year bond price: $65.85
d. 100-year bond price: $4.34
On January 1, 2017, Hannigan Company issued bonds with a face value of $600,000. The bonds carry a stated interest of 7% payable each January 1. 1. Prepare the journal entry for the issuance assuming the bonds are issued at 97. 2. Prepare the journal entry for the issuance assuming the bonds are issued at 102.
Answer:
Explanation:
The journal entries are shown below:
Cash A/c Dr $582,000 ($600,000 × 0.97)
Discount on Bonds Payable A/c Dr $18,000
To Bonds payable A/c $600,000
(Being the issuance of the bond is recorded and the remaining balance is debited to the discount on bond payable account)
Cash A/c Dr $612,000 ($600,000 × 1.02)
To Bonds payable A/c $600,000
To Premium on bonds payable A/c $12,000
(Being the issuance of the bond is recorded and the remaining balance is credited to the premium on bond payable account)
Final answer:
Journal entries for bond issuance at different prices must reflect the sale at either a discount or premium. For a bond sold at a discount, the company records the cash received and a debit to Discount on Bonds Payable. When issued at a premium, the entry includes the cash received and a credit to Premium on Bonds Payable.
Explanation:
When dealing with the issuance of bonds by a company, it's important to understand the accounting treatment for the sale of bonds at different prices, whether at a discount or a premium. The issuance at a discount (at 97) or at a premium (at 102) affects the journal entries made by the company.
Issuance at a Discount
1. If the bonds are issued at 97, the company receives only 97% of the face value. The journal entry to record this transaction would be:
Debit Cash $582,000 (600,000 x 0.97)
Debit Discount on Bonds Payable $18,000 (Face value - Cash received)
Credit Bonds Payable $600,000 (Face value of the bonds)
Issuance at a Premium
2. If the bonds are issued at 102, the company receives more than the face value. The journal entry to record this transaction would be:
Debit Cash $612,000 (600,000 x 1.02)
Credit Bonds Payable $600,000 (Face value of the bonds)
Credit Premium on Bonds Payable $12,000 (Cash received - Face value)
For illustrative purposes, imagine a local water company issued a $10,000 bond with a 6% rate. If you consider buying this bond a year before maturity when the market rate is 9%, you would expect to pay less than the face value because the interest rate is lower than the market rate. To calculate the price to pay, you would discount the bond's future cash flows, which consist of one year of interest plus the principal at the new interest rate of 9%.
A corporation evaluates all capital investments using a 12% annual rate of return before taxes. The corporation must purchase a new tangent scanner.
The following estimates pertain to the two models available.
Scanx Holo-Scan initial cost ($) 90,000 170,000 life (yr) 5 5 salvage value ($) 15,000 50,000 annual cost ($) 44,000 70,000 generated annual income ($) 100,000 160,000
The present worth of costs and income for the two models indicates that Holo-Scan is worth about how much more than Scanx?
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
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 single sheet with the formulas indications.
The Steel Factory is considering a project that will produce annual cash flows of $36,800, $45,500, $56,200, and $21,800 over the next four years, respectively. What is the internal rate of return if the initial cost of the project is $135,000?
Answer:
rate of return is 7.56 %
Explanation:
given data
annual cash flows C1 = $36,800
annual cash flows C2 = $45,500
annual cash flows C3 = $56,200
annual cash flows C4 = $21,800
initial cost = $135,000
to find out
internal rate of return
solution
we will apply here initial cost formula for all annual cash flow that is express as
initial cost = [tex]\frac{C1}{(1+r)} +\frac{C2}{(1+r)^2} +\frac{C3}{(1+r)^3} +\frac{C4}{(1+r)^4}[/tex] .......................1
here C is annual cash flow and r is rate of return
put here value and we get r
initial cost = [tex]\frac{C1}{(1+r)} +\frac{C2}{(1+r)^2} +\frac{C3}{(1+r)^3} +\frac{C4}{(1+r)^4}[/tex]
135000 = [tex]\frac{36800}{(1+r)} +\frac{45500}{(1+r)^2} +\frac{56200}{(1+r)^3} +\frac{21800}{(1+r)^4}[/tex]
solve it and we get
r = 0.0756
so rate of return is 7.56 %
Assume that an investment is forecasted to produce the followingâ returns:
-aâ 10% probability of aâ $1,400 return;
-aâ 50% probability of aâ $6,600 return;
-aâ 40% probability of aâ $1,500 return.
What is the expected amount of return this investment willâ produce?
Answer:
$4,040
Explanation:
The formula to compute the expected rate of return is shown below:
Expected rate of return = (Probability 1 × Possible Returns 1) + (Probability 2 × Possible Returns 2) + (Probability 3 × Possible Returns 3)
= (0.10 × $1,400) + (0.50 × $6,600) + (0.40 × $1,500)
= $140 + $3,300 + $600
= $4,040
Simply we multiplied the probabilities with this return so that the correct amount of return would be come
Reducing the complexity of a product and improving a product's maintainability are activities of: Select one: a. product lifecycle management (PLM). b. product-by-value analysis. c. manufacturability and value engineering. d. organizing for product development. e. design for destruction (DFD).
Answer: Option C
Explanation: In simple words, manufacturability and value engineering refers to the process under which an organisation thoroughly studies its existing product for the objective of making changes that leads to increased sales.
The value under such method can be increased either by reducing the cost or by improving the quality of that product and quality of a product can be increased by making it less complex, user friendly and highly durable.
Hence the correct option is C.
Reducing the complexity of a product and improving its maintainability are activities of manufacturability and value engineering, focusing on simplicity, sustainability, and cost-effectiveness. This approach embraces technological innovation and life-cycle assessment to minimize environmental impacts and enhance product longevity.
The activities of reducing the complexity of a product and improving a product's maintainability can best be associated with c. manufacturability and value engineering. Manufacturability and value engineering focus on designing products to simplify manufacturing processes, reduce costs, and ensure ease of maintenance. This approach often involves technological innovation, optimizing design for better lifecycle performance, including sustainability and efficiency during use and end-of-life disposal. The ultimate goal is to create products that are not only less complex to manufacture but also easier and less costly to maintain, aligning with the principles of reducing environmental impact and enhancing product longevity.
Life-cycle assessment is a critical component in understanding and minimizing the environmental footprint of a product from conception through disposal. It encompasses analyzing the consumption of material and energy, the release of wastes, and the potential for recycling or reusing components. This comprehensive view allows for the identification of opportunities to use materials which have lower environmental impacts and are easier to recover at the end of the product's life, thereby contributing to the overall reduced material diversity in products.
The tiny South Pacific island country of Maroji produces a lot of milk and milk-based products.
To protect this industry, Maroji mandates that only designated trading companies can import cheese, each of which is allocated the right to import a maximum number of pounds of cheese each year.
By doing this, Maroji controls the amount of imported cheese. This is an example of a(n) :a. import quotab. import dutyc. import tariffd. subsidye. local content requirementPlease explain answer.
Answer:
It is an example of an import quota
Explanation:
An import quota is a ceiling on the physical or monetary amount of a product that a firm can import.
In this question, only a few firms can import cheese, and each firm has a ceiling on the amount of cheese they can import per year. The limit is expressed in physical terms (pounds of cheese). The logic behind import quotas is protect local industries, however, they oftern result either in shortages or in higher prices for consumers.
In the perfectly competitive gadget industry there are 10 firms with identical costs given by C = 500 + 20q + q2, none of which believes it can alter price. Marginal cost is given by the function MC=20 + 2q. a. Find the shutdown point of one of these firms. Be sure to explain what you are doing. (5 points)
Answer:
The explanation is below
Explanation:
A. Shutdown point is achieved when price equal AVC. when price lowers than the AVC, firm shutdown.
VC = q^2
AVC = q
So,
P = q is the shutdown point.
B. For profit maximizing level of output,
P = MR = MC
500 = 20 + 2q
q = 240 units
So, profit maximization level of output = 240 units
C. Firm level supply curve = MC curve above the shutdown point
Number of firms = 5
So,
Industry supply curve = 10*MC = 200+20Q
Industry supply curve = 200+20Q
It shows that MC curve above the shutdown point is supply curve.
Blue Spruce Corp. reported income tax expense of $356,459,000 on its 2020 income statement and income taxes payable of $280,361,000 at December 31, 2019, and $517,665,000 at December 31, 2020. What amount of cash payments were made for income taxes during 2020?
Answer:
$119,155,000
Explanation:
The computation of the cash payments were made for income taxes during 2020 is shown below:
= Income tax expense + income tax payable at December 31, 2019 - income tax payable at December 31, 2020
= $356,459,000 + $280,361,000 - $517,665,000
= $119,155,000
We added the previous year income tax payable and added the current year income tax payable to the income tax expense so that the accurate amount can come.