Makai Metals Corporation has 9.4 million shares of common stock outstandin par value $1,000 each. The common stock currently sells for $42 per share a maturity and sell for 113 percent of par. The market risk premium is 8.2 perce rate is 35 percent. a. What is the firm's market value capital structure?
Answers
Answer:
Please see attachment
Explanation:
Please see attachment
Related Questions
2) A 10-year, 10% semiannual coupon bond selling for $1,135.90 can be called in 4 years for $1,050 (hint: par value is $1,000). Draw the Time line? Show your work What is its yield to maturity (YTM)? Show your work What s its current yield (CY)? Show your work What is its yield to call (YTC)? Show your work.
Answers
Answer
The answer and procedures of the exercise are attached in the following 2 images.
Explanation
FILE HOME INSERT DATA REVIEWVIEW Tell me what you wa fc 1 time to maturity years) 2 time to maturity(semi-annual) 3 coupon rate 4 par value 5 annual coupon 6 semiannual coupon 7 price 8 semiannual YTM 9 Annual YTM 10 call price 11 time untill call 12 time untill call(semi-annual) 13 semi-annual YTC 14 annual YTC 15 current yield 16 10 formulas 20 B1*2 1000 100 B3 B4 0 B5/2 1135.9 4% RATE(B2,B6,-B7,B4) 8.00% B8*2 1050 4 8 B11*2 3.57% RATE(B12,B6,-B7,B10) 7.14% B13"2 8.80% B5/B7
2) YTM = ANNUAL YTM
3) YTC = Annual YTC
Stock X has a beta value of 1. It pays annual dividends, of $5, starting one year from today. If the risk-free return is currently 2%, and the equity risk premium is 5%, what is the present value of the stock?
Answers
Answer:
$71.43%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Cost of equity = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
The (Market rate of return - Risk-free rate of return) is also known as equity risk premium
For computing the present value of the stock, first we have to compute the cost of equity which is shown below:
= 2% + 5 1 5%
= 2% + 5%
= 7%
Now the present value of the stock would be
= Annual dividend ÷ cost of equity
= $5 ÷ 7%
= $71.43%
Suppose there are 2,000 people who are unemployed as a result of cyclical unemployment and 1,000 people who are unemployed as a result of structural unemployment. How many people are unemployed as a result of frictional unemployment?
Answers
Answer:
1,000
Explanation:
Suppose the town of Boone has a total population of 50,000 people. Of those, 45,000 people are employed. There are 1,000 full-time students who are not employed or actively seeking work. The rest of the people are out of work but have been actively seeking work within the past four weeks.
This information is not given in the question.
For computing the frictional unemployment, first we have to determine the unemployed which is shown below:
Number of unemployed would be
= Total population - employed - full time students
= 50,000 - 45,000 - 1,000
= 4,000
Now the frictional unemployment would be
= Unemployed - cyclical unemployment - structural unemployment
= 4,000 - 2,000 - 1,000
= 1,000
Orange Corporation has budgeted sales of 26 comma 000 units, targeted ending finished goods inventory of 8 comma 000 units, and beginning finished goods inventory of 4 comma 000 units.
How many units should be produced next year?
A. 38 comma 000 units
B. 34 comma 000 units
C. 30 comma 000 units
D. 26 comma 000 units
Answers
Answer:
C. 30 comma 000 units
Explanation:
Inventory to be produced = Sales +ending inventory - Beginning inventory
= 26,000 + 8,000 -4,000
=30,000 Units (Answer is C. 30 comma 000 units ).
A reduction in U.S net exports would shift U.S. aggregate demand
a. rightward. In an attempt to stabilize the economy, the government could increase expenditures.
b. rightward. In an attempt to stabilize the economy, the government could decrease expenditures.
c. leftward. In an attempt to stabilize the economy, the government could increase expenditures.
d. leftward. In an attempt to stabilize the economy, the government could decrease expenditures.
Answers
Answer:
c. leftward. In an attempt to stabilize the economy, the government could increase expenditures.
Explanation:
When the economy of a country faces a recession, that country chooses not to make high imports. For example, if Canada faces a recession in its economy, the Canadian government will not import more to stabilize the economy. According to the Keynesian framework, as the income of people decreases, the net export will be reduced, and the aggregate demand curve will shift leftward.
The Southside City has $47 million of debt recorded in its Schedule of Changes in Long-term Obligations, made up of $30 million of general obligation debt, $1 million of compensated absences payable, $4 million claims and judgments, and $12 million of obligations under capital leases. The State limits the amount of general obligation debt that can be issued by a City to 20% of the assessed value of its taxable property. The assessed value of property in Southside City is $250 million. The legal debt margin for Southside City is
Answers
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 2 sheets with the formulas indications.
In about 2003, day spas, chain whitening franchises, and other businesses began to offer teeth whitening. Dentists began complaining to State Boards of Dental Examiners and wanted to have non-dentist teeth whitening prohibited. The dentists said that they were concerned about public health and safety in having non-licensed individuals performing teeth whitening. The State Boards are made up mostly of dentists and generally one or two consumer representatives. In North Carolina, the Board issued an order that shut down the non-dentist teeth whitening businesses. Which of the following statements is correct?
a. The dental board can take such action because the Noerr-Pennington doctrine protects them when the action is taken by a government body.
b. The health and safety argument is valid only if supported by evidence.
c. both b and c
d. The dental board’s actions were anticompetitive.
Answers
Answer: D
By the way, option C is equal to option B because there's no new information in C
Explanation:
This is business. Looking at the agitation of the Dentists and the Dental board, you can see that if the dentists didn't speak up they would have less number of patients or clients once the other business start offering teeth whitening services to people.
Dentists are medical practitioners, yes, but they earn from treating people with teeth problems or issues.
Statement D hence portrays the mindset of the dentists and the dental board
During the latest year, Sky Inc. had total sales of $500,000, net income of 30,000, and its year-end total assets were $250,000. The firm’s total debt to total assets ratio was 0.36. You can assume total debt is the same as total liabilities. What is firm's return on equity (ROE)?
Answers
Answer:
18.75%
Explanation:
Data provided in the question:
Total sales = $500,000
Net income = $30,000
Total assets = $250,000
Debt to total assets ratio = 0.36
Thus,
Total debt = 0.36 × $250,000
= $90,000
Shareholders equity = Total assets - Total debt
= $250,000 - $90,000
= $160,000
Now,
Return on equity = Net income ÷ Shareholders Equity
= [ $30,000 ÷ $160,000] × 100%
= 18.75%
If the actual price level increases beyond the long-run equilibrium price level, all of the following will tend to occur except A. an accumulation of unsold inventories. B. the price level falling. C. actual GDP exceeding total planned real expenditures. D. firms offering fewer services than people wish to purchase.
Answers
Answer:
The answer is letter D
Explanation:
All of the following tend to occur except firms offering fewer services than people wish to purchase.
Amazon, a successful online retailer, manages an extensive customer database that is used to determine which products are suggested to each customer. Some data are best collected from the customer; other data are best collected from the businesses where purchases are made. Which of the following customer data are best collected from the customer A. Publicity B. Personal Selling
Answers
Companies like Amazon collect extensive customer data, including information best sourced from the customers themselves, like Personal Selling and Publicity preferences. They use big data and customer feedback to personalize shopping experiences and improve marketing strategies. Businesses employ various methods to gather these data, ensuring a balance of directly engaging customers and analyzing their behaviors.
The customer data that are best collected from the customer include Personal Selling and Publicity preferences. Companies like Amazon gather massive amounts of big data which include details about purchasing habits, browsing history, and personal preferences. Such data practices assemble comprehensive profiles of customer interactions with their platform to offer tailored product suggestions and improve sales strategies.
To successfully manage these databases, businesses apply advanced data mining technology, as well as strategies like personalized follow-up emails when shopping carts are abandoned. Companies often rely on customer feedback directly obtained from their customers through mechanisms such as surveys, questionnaires, and direct customer engagement to refine their services and product offerings. This direct contact with customers provides invaluable insights that may not be easily discernible through passive data collection methods.
By focusing on customer data practices that leverage both business-collected data and customer-supplied information, companies like Amazon are able to maintain a competitive edge, ensuring that they address their customers' needs while optimizing their own sales and marketing efforts.
Joint Cost The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $430,000 for a standard production run that generates 195,000 gallons of Soft Skin and 120,000 gallons of Silken Skin. Additional processing costs beyond the split-off point are $1.40 per gallon for Soft Skin and $0.90 per gallon for Silken Skin. Soft Skin sells for $2.40 per gallon while Silken Skin sells for $3.9 per gallon.
Answers
Answer:
Soft Skin unit cost: 2.50
Silken Skin unit cost: 2.19
Explanation:
We have to allocate the common cost incurred of 430,000 dollars to Soft Skin and Silken Skin
For that we can consider the revenue generate for each product:
Soft: 195,000 x 2.40 = 468,000
Silken: 120,000 x 3.9 = 468,000
As both product generate the same revenue we allocate 50/50
Soft allocated common cost:
430,000 x 50% = 215,000
Unit cost: 215,000 / 195,000 = 1.1025641
+ further processing cost: 1.40
total unit cost: 2.50
Silken allocated common cost:
430,000 x 50% = 215,000
Unit cost: 215,000 / 120,000 = 1.7916667
+ further processing cost: 0.40
total unit cost: 2. 19
The joint costs for The Sun-Kissed Company are allocated based on the net revenue of each product. The net revenue method distributes the $430,000 joint costs to Soft Skin and Silken Skin proportionally. This detailed calculation ensures fair cost distribution and reflects the revenue contribution of each product.
Joint Cost Calculation for The Sun-Kissed Company
The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, through a joint process. The joint costs incurred are $430,000 for a production run, yielding 195,000 gallons of Soft Skin and 120,000 gallons of Silken Skin. To understand the overall cost allocation, we need to follow these steps:
Step-by-Step Calculation
Calculate Total Revenue: Revenue for Soft Skin = 195,000 gallons * $2.40 per gallon = $468,000 Revenue for Silken Skin = 120,000 gallons * $3.90 per gallon = $468,000 Total Revenue = $468,000 + $468,000 = $936,000Calculate Additional Processing Costs: Additional cost for Soft Skin = 195,000 gallons * $1.40 per gallon = $273,000 Additional cost for Silken Skin = 120,000 gallons * $0.90 per gallon = $108,000 Total Additional Processing Costs = $273,000 + $108,000 = $381,000Calculate Net Revenue: Net Revenue for Soft Skin = $468,000 - $273,000 = $195,000 Net Revenue for Silken Skin = $468,000 - $108,000 = $360,000 Total Net Revenue = $195,000 + $360,000 = $555,000Allocate Joint Costs: Joint Costs incurred = $430,000 Allocation based on Net Revenue (Soft Skin) = ($195,000 / $555,000) * $430,000 = $151,351.35 Allocation based on Net Revenue (Silken Skin) = ($360,000 / $555,000) * $430,000 = $278,648.65By following these steps, we have distributed the joint costs based on the net revenue generated by each product. This method ensures an equitable distribution of costs relative to the revenue each product creates.
A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing.
For the students of the college, the visual appearance of the campus is (non-rival/rival) and (non-excludable/excludable). Thus, the visual appearance would be classified as a public good.
Suppose the college administrators estimate that the beautification initiative will cost $8,160. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 490 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $17.
The benefit of the beatification initiative, as suggested by the survey, is $___. Because the estimated benefit is (less/greater) than the cost, the college administrators (should/should not) undertake the beautification initiative.
The calculation of the benefit of the beatification initiative relied on the ability of the administrators to accurately capture the true willingness-to-pay of each student.
Which of the following scenarios would cause the survey used by the college administrators to yield misleading willingness-to-pay data? Check all that apply.
_ Students are surveyed at random, using conventional survey and data-gathering methods.
_ Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.
Answers
Answer:
Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.
Explanation:
The visual appearance is both non rival and non excludable I.e. Pure public good
Benefit is 17*490=8.330
Benefit is greater than cost so college administrators should undertake the beautification initiative
The college administrators should undertake the beautification initiative as the estimated benefit is greater than the cost. The survey used may yield misleading data if students are surveyed randomly or if they believe the funds will not be used elsewhere.
Explanation:The benefit of the beautification initiative, as suggested by the survey, is calculated by multiplying the average willingness-to-pay ($17) by the number of students (490). Therefore, the benefit is $8,330. Since the estimated benefit is greater than the cost ($8,160), the college administrators should undertake the beautification initiative.
The survey used by the college administrators would yield misleading willingness-to-pay data if the students were surveyed at random, using conventional survey and data-gathering methods. This is because random sampling may not accurately capture the true willingness-to-pay of each student. Additionally, if the students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere, their willingness to pay may be lower, leading to misleading data.
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Machinery purchased for $67,200 by Coronado Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,480 at the end of that time. Depreciation has been entered for 5 years on this basis. 2021, it is determined that the total estimated life should be 10 years with a salvage value of $5,040 at the end of that time. Assume straight-line depreciation. Prepare the entry to record depreciation for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Machinery related account.)
Answers
Answer:
Entries need for recording depreciation given the change in estimation is:
Dr Depreciation expenses 4,592
Cr Accumulated depreciation 4,592
( to record depreciation expenses in the year of 2021, given depreciation estimate changes)
Explanation:
Relating to the change in depreciation estimate, the firm will not have to book any adjustment in previous depreciation expenses which is based on the old estimate, instead it will have to re-calculate depreciation expenses given the new estimate which are shown as below:
The net book value as at the beginning of 2021 is:
Purchase price - accumulate depreciation over 5 year
in which: purchase price = $67,200
accumulated depreciation over 5 year = depreciation expenses per yer x 5 = ( 67,200 - 4,480) /8 * 5 = $39,200
Thus, net book value at the beginning of 2021 is $28,000 which will be used to determine depreciation expense per year for the remaining 5 years of useful life, calculated as:
Depreciation per year: (28,000 - 5,040)/5 = $4,592.
Answer:
Dr Depreciation charge (Profit or loss) $4,592
Cr Accumulated depreciation (B/S) $4,592
Explanation:
The change in useful life of machinery is a change in accounting estimate and is treated prospectively. The depreciation charge with the useful life of eight years and $4,480 residual value was $7,840 per annum ($67,200-$4,480)/8.
After five years (end of 2020), the NBV of the machine is $28,000 with a residual value of $5,040. Thus the depreciation charge from 2021 onwards is $4,592 calculated as ($28,000-$5,040)/5.
Purchases in May were $58,000, while expected purchases for June and July are $72,000 and $85,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month. At what amount are June payments for purchases budgeted?
A. $97,600
B. $63,600
C. $86,000
D. $66,400
Answers
Final answer:
The June payments for purchases are budgeted at $63,600, which is the sum of 60% of May's purchases and 40% of June's purchases.
Explanation:
To calculate the June payments for purchases based on the given payment structure, we need to consider both the portion of purchases paid for in June that were made in May and the portion of purchases paid for in June that are made in June.
For May's purchases of $58,000, 60% is paid in June, which is $58,000 x 60% = $34,800.
For June's purchases of $72,000, 40% is paid in the month of purchase, which is $72,000 x 40% = $28,800.
Adding both amounts gives us the total June payments: $34,800 + $28,800 = $63,600.
Therefore, the budgeted payments for June is $63,600.
The risk premium of a stock is not affected by its ________.
A) undiversifiable risk
B) typical risk
C) systematic risk
D) unsystematic risk
Answers
Answer:
correct option is D) unsystematic risk
Explanation:
solution
risk premium of a stock is not affected by unsystematic risk because unsystematic risk affects single company or the even entire industry but it is not present in other industries and it is also danger when it relates to particular security but risk premium of a stock is not effected by it
only systematic risk that affects the risk premium
Unsystematic risk is also known as diversifiable risk or non systematic risk
so here correct option is D) unsystematic risk
The risk premium of a stock is not affected by its systematic risk. It is only affected by unsystematic risk, which can be diversified away.
Explanation:The risk premium of a stock is not affected by its systematic risk. Systematic risk is the risk that is inherent in the entire market or a particular segment of the market, and it cannot be eliminated through diversification. The risk premium is the additional return that investors require for taking on the risk of investing in a particular stock.
On the other hand, unsystematic risk refers to risks that can be diversified away by holding a diversified portfolio of assets. It is specific to a particular company or industry and can be reduced or eliminated through diversification.
Therefore, the risk premium of a stock is only affected by unsystematic risk, not systematic risk.
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8. PLC pays an annual dividend of $6.00. The company is expected to continue paying this dividend with no future growth in dividends. Investors require 11% rate of return on this investment. What is the current stock value of PLC?
Answers
Answer:
The current stock value of PLC: $54.55.
Explanation:
Please find the below for detailed explanations and calculations:
PLC's stock value should equal to the present value of its future dividends discounted at required rate of return which is given in the question at 11%.
The constant stream of PLC's annual dividend as described in the question forms a perpetuity of $6.00 dollar per year perpetually.
As explained above, by applying the formula for calculating the present value of the perpetuity, we have:
PLC's current stock value = 6/11% = $54.54.
The current stock value of PLC is calculated using the formula for the present value of a perpetuity, which yields a value of $54.55.
Explanation:
The question is asking for the current stock value of PLC based on its perpetual annual dividend of $6.00, with no future growth in dividends, and an investor's required 11% rate of return. This is a question generally covered in corporate finance and involves concepts such as dividend discount model or Gordon Growth Model. However, since the growth rate in this case is zero, we will be using the formula for the value of a perpetuity.
The formula for the present value of a perpetuity is PV (stock value) = D / r, where D is the constant annual dividend and r is the required rate of return. Here, D = $6.00 and r = 11% or 0.11.
Substituting the given values into the formula, we get:
Stock Value = $6.00 / 0.11 = $54.55
Therefore, the current stock value of PLC is $54.55.
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Bruce is a salaried nonexempt employee who earns $42,500 annually, paid semimonthly, plus a 0.25% commission on all regional sales, paid monthly on the first pay date of the following month. During the month of May, the regional sales were $103,500. What was his gross pay for the first half of June?
(Do not round intermediate calculations. Round final answer to 2 decimal places.)A. $2,029.58B. $1,770.83C. $1,634.62D. $1,893.37
Answers
Answer:
A. $2,029.58
Explanation:
The computation of the gross pay for the first half of June is shown below:
= Regional sales × commission percentage + earning × number of months ÷ total number of months in a year
= $103,500 × 0.25% + $42,500 ÷ 12 months × 2 months
= $258.75 + $1,770.83
= $2,029.58
Since it is given that semi monthly, so we take 24 months.
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's:
A. capital structure.
B. capital budget.
C. asset allocation.
D. working capital.
E. risk structure.
Answers
Answer: (A) Capital structure
Explanation:
The capital structure is basically refers to the overall financial operation in an organization for the growth of the company. The combination of the debt and the equity is basically known as capital structure.
The equity is basically refers to the common and the preferred stock and the debt is one of the form of bond issue.
Therefore, the mixture of 40 percent debt and the 60 percent of the equity is refers to capital structure.
Marigold Corp.can produce 100 units of a component part with the following costs:
Direct Materials $21000
Direct Labor 5500
Variable Overhead 19000
Fixed Overhead 11000
If Marigold Corp. can purchase the units externally for $50000, by what amount will its total costs change?
A. An increase of S4500
B. An increase of $50000
C. An increase of $15S00
D. A decrease of $11000
Answers
Answer:
A. An increase of $4,500
Explanation:
For computing the total cost change, first we have to determine the total cost which is shown below
= Direct Materials cost + Direct Labor costs + variable overhead costs
= $21,000 + $5,500 + $19,000
= $45,500
And, the outside purchase is $50,000
So, the total cost change would be
= $50,000 - $45,500
= $4,500 increase
Keesha Co. borrows $230,000 cash on December 1, 2017, by signing a 180-day, 10% note with a face value of $230,000.1. On what date does this note mature? (Assume that February has 28 days)A. May 25, 2018.B. May 26, 2018.C. May 27, 2018.D. May 28, 2018.E.May 30, 2018.
Answers
Answer:
option (E) May 30, 2018.
Explanation:
Data provided in the question:
Amount borrowed = $230,000
Date on which amount was borrowed = December 1, 2017
Maturity period = 180 days
Now,
Month number of days Days left
December (2017) 30 180 - 30 = 150
[note's issue date is omitted]
January (2018) 31 150 - 31 = 119
February (2018) 28 119 - 28 = 91
March (2018) 31 91 - 31 = 60
April (2018) 30 60 - 30 = 30
Hence,
The bonds will mature on 30 days after the month of April i.e on May 30, 2018
Hence,
The correct answer is option (E) May 30, 2018.
Your grandfather made an investment of $4,000 the day you were born, as such starting to earn returns immediately. His assumption is that by investing in the average market, the investment account will earn an annual rate of 6%, which is a historical average. He will continue to make 18 more annual $1,500 deposits into this account for you, assuming you will earn the average 6% every year. Based on the above assumptions, what will be the balance of this account after the initial investment and the 18 annual returns earning the hypothetical 6%?
Answers
Answer:
[tex]Acumulated value=57,775.84[/tex]
Explanation:
this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the future value of future payments affected by an interest rate.by definition the future value of an annuity is given by:
[tex]s_{n} =P*\frac{(1+i)^{n}-1 }{i}[/tex]
where [tex]s_{n}[/tex] is the future value of the annuity, [tex]i[/tex] is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid
But there is an special thing to keep in mind and is the initial payment so we must to calculate the 4,000 in the future so we have:
[tex]Acumulated value=s_{n} +P*(1+i)^{n}[/tex]
[tex]Acumulated value=1,500*s_{18} +4,000*(1+0.06)^{18}[/tex]
[tex]Acumulated value=57,775.84[/tex]
Andrew has decided to open an online store that sells home and garden products. After searching around, he chooses the software company Initech to provide the software for his website since their product required the least amount of specialized investments for him to use it. They agreed upon price of $6,000. To use Initech’s software, Andrew makes $1,800 in sunk capital investments and spends 45 hours learning how to use Initech’s software, which is very different from other software packages. Both Andrew and Initech view Andrew’s time as worth $30 per hour and Initech is fully aware of the investments Andrew must make to use their product. After Andrew’s investments were made, Initech came to Andrew and asked for more money. How much do you think they asked for?
Answers
Answer:$4650
Explanation:
The cost that is recoverable is $30 per hour that was agreed as the hour to be spent in learning the soft ware. The sunk cost it's an irrecoverable cost that does influence decision making. When the agreed leaning cost of $30 per hr for 45hr of $1350 is deducted from the asking price of $6000 we have the $4650
In this business scenario, Initech asked for an additional $4,200 from Andrew after their initial agreement.
In this scenario, **Initech** asked for an additional $4,200 from Andrew after their initial agreement of $6,000. This additional request was based on the investments Andrew made, including the sunk capital investments of $1,800 and his time spent learning the software, valued at $1,350 (45 hours x $30 per hour).
Knowledge Check 01 Identify the simplifying assumptions usually made in net present value analysis. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) All cash flows other than the initial investment occur at the end of periods. unchecked All cash flows generated by the investment project are immediately reinvested at a rate of return greater than the discount rate. unchecked All cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate. unchecked All cash flows occur at the beginning of the periods. unchecked The time value of money is ignored when evaluating investment proposals under the net present value analysis.
Answers
Answer:
All cash flows other than the initial investment occur at the end of periods.
All cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate.
Explanation:
Net present value method: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not.
In the net present value, the yearly cash flows other than the initial investment is occur at the end of the period as all the yearly cash flows are discounted at the present value factor.
And, the discount rate is equal to the rate of return
So, these two statements are correct.
In Net Present Value analysis, it is assumed that all cash flows occur at the end of periods, the cash flows are immediately reinvested at a rate equal to the discount rate, and the time value of money is considered.
Explanation:In a typical Net Present Value (NPV) analysis, certain simplifying assumptions are made. The first assumption is that all cash flows other than the initial investment occur at the end of periods. Secondly, it is assumed that all cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate. Lastly, the time value of money is considered and incorporated into the calculation, rather than being ignored. These assumptions are often applied to financial decision making such as stock and bond trading, or the evaluation of future benefits in comparison to present costs, with the goal of assessing the current value of a future stream of cash flows.
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The largest ________ in North America is the West Edmonton Mall in Alberta, Canada. It is home to more than 800 stores, the world’s largest indoor amusement park, more than 100 restaurants, a movie complex, and two hotels, all of which attract 30 million visitors each year.
Answers
Answer:
Regional Shopping Mall
Explanation:
A Shopping Mall is the one which is described as the agglomeration or group of different kind of stores, which are providing or offering numerous products, brands or services at one place or under a single roof.
Mall named West Edmonton is situated in Canada and in North America, it is the largest or biggest shopping mall . It has more than 800 shops, restaurants, amusement park and movie complex.
Gonzalez Company acquired $153,600 of Walker Co., 8% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $43,200 of the bonds for 98.Journalize entries to record the following in Year 1 (refer to the Chart of Accounts for exact wording of account titles):a. The initial acquisition of the bonds on May 1.b. The semiannual interest received on November 1.c. The sale of the bonds on November 1.d. The accrual of $1,300 interest on December 31.
Answers
Answer:
The Journal entries are as follows:
(i) On may 1,
Investment - Walker Co. A/c Dr. $153,600
To cash $153,600
(To record the initial acquisition of the bonds)
(ii) On November 1,
Cash A/c( $153,600 × 8% × 6/12) Dr. $6,144
To Interest revenue $6,144
(To record the semiannual interest received)
(iii) On November 1,
Cash A/c ($43,200 × 98%) Dr. $30,240
Loss on sale of investment A/c Dr. $12,960
To Investment - Walker Co. $43,200
(To record the sale of the bonds)
(iv) On December 31,
Interest receivable A/c Dr. $1,300
To Interest revenue $1,300
(To record the accrual of $1,300 interest)
The Flamingo Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash flow cycle. Last year, the company’s sales (all on credit) were $180,000 and it COGS were 85% of the sales. Inventory was turned around 8 times during the year and accounts receivable turnover was 10. Flamingo’s payables deferral period was 30 days. Calculate CCC. Compute the average balances in accounts receivables, accounts payable and inventory.
b. Interpret and analyze the CCC for this company. Why is CCC important?
Answers
Answer:
a. 52.125 days
b.CCC is important because it measure of company operational cash flow, it measures liquidity .Current 52.125 days is average ( actually it depends on industry)
Explanation:
Please see attachment .
During the year, Coronado Boat Yard has incurred manufacturing costs of $420,000 in building three large sailboats. At year-end, each boat is about 70 percent complete. How much of these manufacturing costs should be recognized as expenses in Coronado Boat Yard’s income statement for the current year?
Answers
Answer:
Please see attachment
Explanation:
Please see attachment
Final answer:
Since the three sailboats built by Coronado Boat Yard are only 70% complete and unsold, none of the $420,000 manufacturing costs should be recognized as expenses in the current year's income statement.
Explanation:
The student's question concerns the recognition of manufacturing costs in an income statement for partially completed goods. In the scenario described, Coronado Boat Yard has incurred $420,000 in manufacturing costs for building three large sailboats that are each 70 percent complete. According to the matching principle in accrual accounting, expenses should be matched with the revenues they helped generate in the same period.
Since the boats are not completed and not sold yet, the expenses attributed to them should not be fully recognized in the income statement. Instead, they should be capitalized as work in progress (WIP) in the balance sheet. To determine the costs that should be recognized as expenses, one needs to consider any expenses directly attributable to the goods sold or the fraction of costs that pertain to completed projects.
If by the end of the year, none of the boats have been sold, then none of the $420,000 would typically be recognized as expenses in the income statement the costs will reside on the balance sheet as WIP until the boats are completed and sold, at which point costs will be moved to the expenses in the income statement.
The following information is from the annual financial statements of Raheem Company. Compute its accounts receivableturnover for 2016 and 2017. Compare the two years’ results and give a possible explanation for any change (competitorsaverage a turnover of 11).20 1 7 201 6 2015Netsales $405,140 $335,280 $388,000Accounts receivable, net (year-end) . . . . . . . . . . . . . 44,800 41,400 34,800
Answers
Answer:
9.32 times and 9.40 times
Explanation:
The computation of the account receivable ratio for both years are shown below:
For 2016
Accounts receivable turnover ratio
= Credit sales ÷ average accounts receivable
where,
Average accounts receivable = (Opening balance of Accounts receivable + ending balance of Accounts receivable) ÷ 2
= ($34,800 + $41,400) ÷ 2
= $38,100
And, the net credit sale is $335,280
Now put these values to the above formula
So, the answer would be equal to
= $355,280 ÷ $38,100
= 9.32 times
For 2017
Accounts receivable turnover ratio
= Credit sales ÷ average accounts receivable
where,
Average accounts receivable = (Opening balance of Accounts receivable + ending balance of Accounts receivable) ÷ 2
= ($41,400 + $44,800) ÷ 2
= $43,100
And, the net credit sale is $405,140
Now put these values to the above formula
So, the answer would be equal to
= $405,140 ÷ $43,100
= 9.40 times
Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $600,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is A. $24,500B. $23,500C. $24,000D. cannot be determined
Answers
Answer:
C. $24,000
Explanation:
We assume that the company follows the percentage-of-sales method. In this method, the company ignored the previous balance of allowance for Doubtful Accounts
So, the amount of the adjusting entry to record the estimate of the uncollectible accounts would be
= Net credit sales × estimated percentage given
= $600,000 × 4%
= $24,000
All other information which is given is not relevant. Hence, ignored it
Clay met with his supervisor, Suri, to discuss that he was being given the same bonus as everyone else on his team at the end of each year, even though he had a Master’s degree, took on extra and more difficult projects, and finished well ahead of given deadlines. Because Suri is not able to change the bonus, she can expect Clay to respond in all of the following ways EXCEPT(A) ignoring his feeling of resentment.(B) transferring.(C) quitting(D) reducing his production(E) reducing his hours
Answers
Answer:
A) ignoring his feeling of resentment
Explanation:
Having in mind Vroom's expectancy theory and the motivation output of its formula, it is impossible for Clay to continue working with the same zeal and interest. Even though the expectancy and valence factors of the formula are high (he is self-confident in his work and bonuses are his preferred form of rewards), the instrumentality factor is critically low, since Clay does not receive the desired reward amount.
Therefore, it is highly likely for Clay to quit his job, transfer to another position or company on the one hand, or reduce his productivity and work hours on the other hand. Since he already stated his feeling of resentment regarding the bonus, it is impossible for him to become satisfied with it afterwards.