Answer: (C.) $2,005
Explanation:
Given :
Money Co. made a cash outflow of $194,000 for the $200,000 loan Money gave to Home Co.
The book value of the loan is $194,000.
The stated rate is 11%.
Hence they will receive an effective interest rate of 12.4% on cash outflow.
∴
Income from the loan = Book value × Effective interest rate × No. of months of the year
= $194,000 × 0.124 × [tex]\frac{1}{2}[/tex]
= $2,004.67
Vista Seating Company is currently selling 2 comma 200 oversized bean bag chairs a month at a price of $75 per chair. The variable cost of each chair sold includes $40 to purchase the bean bag chairs from suppliers and a $9 sales commission. Fixed costs are $ 14 comma 000 per month. The company is considering making several operational changes and wants to know how the change will impact its operating income. Read the requirements LOADING.... Requirement 1. Prepare the company's current contribution margin income statement. (Use parentheses or a minus sign for an operating loss.) Vista Seating Company Contribution Margin Income Statement Sales revenue Variable expenses: Cost of goods sold Operating expenses Contribution margin Fixed expenses Operating income (loss) Requirement 2. Calculate the change in operating income that would result from implementing each of the following independent strategy alternatives. Compare each alternative to the current operating income as you calculated in Requirement 1. Consider each alternative separately. a. Alternative 1: The company believes volume will increase by 16% if salespeople are paid a commission of 15% of the sales price rather than the current $9 per unit. (Use parentheses or a minus sign for an operating loss.) Vista Seating Company Contribution Margin Income Statement Sales revenue Variable expenses: Cost of goods sold Operating expenses Contribution margin Fixed expenses Operating income (loss)
Answer:
Vista Seating Company Contribution Margin Income Statement
Sales Revenue 2,000 X $75 $150,000
Variable Expenses:
Cost of goods sold 2,000 x $40 ($80,000)
Operating Expenses 2,000 x $9 ($18,000)
Contribution margin $52,000
Fixed expenses: $14,000
Operating income $38,000
Evaluating Alternative 1
The company believes volume will increase by 16% if salespeople are paid a commission of 15% of the sales price rather than the current $9 per unit.
Vista Seating Company Contribution Margin Income Statement
Sales Revenue (2,000 X 116%) X $75 $174,000
Variable Expenses:
Cost of goods sold (2,000 X 116%) x $40 ($92,800)
Operating Expenses (2,000 X 116%) x $75 X 15% ($26,100)
Contribution margin $55,100
Fixed expenses: $14,000
Operating income $41,100
Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $1,050,000, 40%, and $21,000, respectively. The North Division’s contribution margin and contribution margin ratio are $154,000 and 44%, respectively. The South Division’s segment margin is $175,000. The company has $262,500 of common fixed expenses that cannot be traced to either division.Required:Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales
Answer:
North Division:
Sales 154,000 12.8%
Variables Cost 101,640 8.44%
Contribution Margin 52,360 4.39%
South Division:
Sales 1,050,000 87.20%
Variables Cost 630,000 52.33%
Contribution Margin 420,000 34.84%
Total Contribution 472,360 39.23%
Fixed Cost 262,500 21.18%
Net Income 209,860 17.43%
Explanation:
First we do the income statements
then we add both sales figures together:
154,000 + 1,050,000 = 1,204,000
And add the percentajeof sales for each line
If you deposit $6,100 at the end of each of the next 15 years into an account paying 11.3 percent interest, how much money will you have in the account in 15 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
Answer:
$214.972,22
Explanation:
The future value of an annuity of $6100 for 15 years at an 11,3% rate.
[tex]\frac{(1+0.113)^{15}-1 }{0.113} * 6,100 = 214,972.22[/tex]
Let's remember that an annuity is when a person deposits the same amount of cash for several periods. When trying to calculate the money at the end of the annuity, we are doing future value. If you are trying to get the value fo the annuity today, it will be the present value.
Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $1.79 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt-equity ratio of .85, a cost of equity of 11.9 percent, and an aftertax cost of debt of 4.7 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 2 percent to the cost of capital for such risky projects. What is the maximum initial cost the company would be willing to pay for the project?
Answer:
Maximum initial cost would be $58,116,883.12
Explanation:
1,790,000 increased at 3%
[tex]WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})[/tex]
Ke 0.119 + 0.02 = 0.139
ER 0.15
Kd(after-tax) Kd(1-t) = 0.047
DR 0.85
[tex]WACC = 0.139(0.15) + 0.047(.85)[/tex]
WACC 0.06080
Now that we have the rate, we calculate the present value using the gordon method
1,790,000 / (0.06080-0.03) = 58,116,883.12
The demand for labor curve shows:a. an inverse relationship between the real wage and the amount of laborhired.b. a positive relationship between the real wage and the amount of laborhired.c. an inverse relationship between the real wage and the number ofworkers who are willing to work.d. a positive relationship between the real wage and the number ofworkers who are willing to work.e. that real wages are constant.
Answer:
The correct answer here is d.
Explanation:
Real wage is the nominal wages adjusted for price changes. It reflects the purchasing power earned by the workers.
There will be a direct and positive relationship between real wages and number of workers who are willing to work. This means when there is an increase in the real wages, more workers will be willing to work because they will be earning more. Reverse will be the situation in case of reduced real wages.
Which of the following is a characteristic of a monopoly?A.a large number of sellersB.homogeneous productsC.larger barriers to entryD.price taking firms
Answer:
The correct option here is C) larger barriers to entry.
Explanation:
A monopoly is a form of market where the number of sellers won't be much, as much of the market share is with one company, a really good example of it is Microsoft owning windows operating system.
Here the firms are price makers not price takers , as in monopoly a firm can control both supply and price of goods and service, as if a firm decides to decrease the supply it can sell products at a high cost.
It is really difficult for a new firm to enter in to market if the monopoly has been established , since there would be large initial cost to be incurred for entering and also it will be difficult for the new firm top compete with old one in taking over market share, so that it can also achieve similar low costs as of old one ( monopolist one )
Arizona Tea is marketed by Vultaggio & Sons. Vultaggio & Sons took a basic drink and put it into unusual bottles with elaborate designs. The wide-mouthed, long-necked bottles are now considered to be trendsetters in the new age beverage industry, and customers often buy the tea just for the bottle. The success of Arizona Tea is based on: a. supply-demand curves b. reengineering c. a product differentiation competitive advantage d. a cost competitive advantage e. a heterogeneous marketing strategy
Answer: the correct answer is c product differentiation competitive advantage.
Explanation: Product differentiation is a marketing strategy that businesses use to distinguish a product from similar offerings on the market. For small businesses, a product differentiation strategy may provide a competitive advantage in a market dominated by larger companies.
The success of Arizona Tea can be attributed to the product differentiation competitive advantage strategy. This strategy is used when a company creates a product deemed unique in some way. For Arizona Tea, the unique element was the wide-mouthed, long-necked bottles with elaborate designs.
Explanation:The success of Arizona Tea seems to be based largely on c. a product differentiation competitive advantage. This strategy is where a company creates a product that is perceived as unique in some way, which makes it stand out from its competitors. Here, the uniqueness doesn't lie in the tea itself, but in the packaging.
Vultaggio & Sons took a basic drink and differentiated it on the market with the use of unusually designed bottles. The wide-mouthed, long-necked bottles with elaborate designs created a unique outlook for Arizona Tea that set it apart from other tea brands.
By doing so, they made the bottles trendy and desirable, so much so that customers buy the tea just for the bottle. This uniqueness has given them a competitive advantage over other sectors using the product differentiation strategy.
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Boxer Company owned 16,000 shares of King Company that were purchased in 2016 for $440,000. On May 1, 2018, Boxer declared a property dividend of 1 share of King for every 10 shares of Boxer stock. On that date, there were 50,000 shares of Boxer stock outstanding. The market value of the King stock was $22 per share on the date of declaration and $38 per share on the date of distribution. By how much is retained earnings reduced by the property dividend?
Answer:
By 110,000 the retained earnings reduced by the property dividend.
Explanation:
Retained Earnings: The retained earnings is that earnings which is left after all payments relating to the business expenses, shareholder dividend. The earnings which is to be retained so that it can come in use in near future.
For retained earning calculation, the stock market value is recorded when the date is declared not on distribution date.
So, the calculation is computed below:
As the 50,000 shares is given for every 10 shares. So, first we have to compute for 1 share which comes by dividing shares to number of shares i.e. 50,000 shares ÷ 10 shares = 5,000 for 1 share.
Now, multiply by market value which comes = 5,000 × $22 = $110,000.
So, by 110,000 the retained earnings reduced by the property dividend.
Paccar's current stock price is $75.10 and it is likely to pay a $3.29 dividend next year. Since analysts estimate Paccar will have a 14.2 percent growth rate, what is its required return? Multiple Choice 15.39 percent 17.94 percent 19.62 percent 18.58 percent
Answer:
18.58 percent
Explanation:
Using the growth model formula we have
P₀ = [tex]\frac{D1}{Ke-g}[/tex]
Here P₀ = Current market price = $75.10
D₁ = Dividend at year end = $3.29
Ke = Expected return = to be calculated
g = Growth rate = 14.2%
$75.10 = [tex]\frac{3.29}{Ke - 0.142}[/tex]
Ke - 0.142 = [tex]\frac{3.29}{75.10}[/tex]
Ke - 0.142 = 0.0438
Ke = 0.0438 + 0.142 = 0.1858 = 18.58%
Required rate of return = 18.58%
The required return for Paccar is 14.20%, calculated using the Gordon growth model which accounts for dividends and growth rate.
Explanation:To calculate the required return, we can use the Gordon growth model, which is used to value a stock based on its expected future dividends and growth rate.
First, we need to calculate the dividend yield, which is the dividend expected to be paid divided by the current stock price. In this case, it is $3.29/$75.10 = 0.0437 or 4.37%.Next, we can calculate the expected capital gains yield by subtracting the dividend yield from the expected growth rate. In this case, it is 14.2% - 4.37% = 9.83%.Finally, the required return is the sum of the dividend yield and the expected capital gains yield. In this case, it is 4.37% + 9.83% = 14.20%.Therefore, the required return for Paccar is 14.20%, which is closest to the option of 14.20%.
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Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company’s records show the following accounts and amounts for the month of August. Cash $ 25,310 C. Camry, Withdrawals $ 5,950 Accounts receivable 22,320 Consulting fees earned 26,960 Office supplies 5,200 Rent expense 9,500 Land 43,970 Salaries expense 5,560 Office equipment 19,960 Telephone expense 820 Accounts payable 10,700 Miscellaneous expenses 470 rev: 09_05_2018_QC_CS-135673 Use the above information to prepare an August statement of owner’s equity for Help Today. The owner’s capital account balance at July 31 was $0, and the owner invested $101,400 cash in the company on August 1.
Answer:
Equity at August 1st 0
adds: Carmen Camry Investment 101,4000
Net Income 5,410
Subtotal 106,810
Withdrawals -5,950
Carmen Camry capital account at the end of August 31th 100,860
Explanation:
We have to calculae the net income
Fees earned 26,960
office 5,200
rent expense 9,500
salaries expense 5,560
telephone expense 820
miscellaneous expenses 470
Total Expenses 21,550
Net Income 5,410
Then we do the equity stamtent:
beginning + investment + net income - withdrawals = ending
Equity at August 1st 0
adds: Carmen Camry Investment 101,4000
Net Income 5,410
Subtotal 106,810
Withdrawals -5,950
Carmen Camry capital account at the end of August 31th 100,860
Answer:
HELP TODAY
STATEMENT OF OWNER'S EQUITY
FOR THE YEAR ENDED 31 AUGUST xxxx
$
Camry: Opening Balance 0
Add : Investment contribution 101, 400
Net income 10, 610
Less: Drawings (5,950)
Camry: Closing Balance 106, 060
Explanation:
The statement of owner's equity shows changes that occurred in the capital account in a business classified as a sole proprietorship (a business owned and managed by one person). This statement comprises of any contributions by the owner plus any operating income generated less operating costs and drawings made by the owner. In order to arrive at the above valuation, net income should be calculated. This is done by subtracting all expenses ($16350) from the consulting fees revenue ($26,960) that was generated during August. The net income generated was $10, 610 ($26,960 - ($9500 + $5560 + 820 + 470)). The drawings amount and initial contribution were both given in the question.
Note: The office supplies are considered to be an asset in Help Today. However, if the office supplies were to be treated as an expense, then the net income would be reduced by $5200.
J & B Corp. is investing in a major capital budgeting project that will require the expenditure of $20 million. The money will be raised by issuing $5 million of bonds, $3 million of preferred stock, and $12 million of new common stock. The company estimates is after-tax cost of debt to be 5%, its cost of preferred stock to be 9%, the cost of retained earnings to be 13%, and the cost of new common stock to be 16%. What is the weighted average cost of capital for this project?a)12.20%b)11.90%c)10.75%d)10.00%
Answer:
a) WACC = 12.20%
Explanation:
Weighted average cost of capital is computed by allocating weights to different capitals.
Cost of bonds = Cost of debt = 5%
Cost of preferred stock = 9%
Cost of equity = 16%
As it is new issued and not from retained earnings.
With weights cost will be as follows
Bonds = 5% X $5/$20 = 1.25%
Preference share = 9% X $3/$20 = 1.35%
Equity = 16% X $12/$20 = 9.6%
WACC = 1.25 + 1.35 + 9.6 = 12.20%
Answer:
a) 12.20%
Explanation:
For calculating the WACC which is termed as weighted average cost of capital, will be calculated here by taking out weighted proportion of each bonds, preferred stock and new common stock and multiplying these weighted proportion by the cost of debt, cost of preferred stock and cost of new common equity respectively. And at last we will add all three of them.
WACC = weightage of debt x cost of debt
+
weightage of preferred stock x cost of preferred stock
+
weightage of common stock x cost of common stock
= 25% ( 5/20 x 100) x 5% + 15% x 9% + 60% x 16%
= .25 x .05 + .15 x .09 + .6 x .16
= .0125 + .0135 + .096
= .122 ( multiplying by 100 to make it in percentage)
= 12.2%
3. Joe Henry’s machine shop uses 10,000 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: (12 points) Annual demand 12,000 Holding cost per bracket per year $2.50 Order cost per order $60.00 Lead time 10 days Working days per year 250 a. Given the above information, what would be the economic order quantity (EOQ)? b. Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost? c. Given the EOQ, how many orders would be made each year? What would be the annual order cost? d. Given the EOQ, what is the total annual cost of managing the inventory? e. What is the time between orders? f. What is the reorder point (ROP)?
Answer:
a. 759 units
b. $948.75
c. 16 orders, $960
d. $1908.75
e. 16
f. 480
Explanation:
Economic order quantity (EOQ) is focus on the reducing the cost like - carrying cost, holding cost to produce additional number of a units in a company.
a. The economic order quantity (EOQ) is computed below.
= [tex]\sqrt{\frac{2\times \text{annual demand}\times \text{ordering cost}}{\text{carrying cost per order}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{12,000}\times \text{\$ 60}}{\text{2.50}}}[/tex]
= 759 units
b. Average inventory = Economic order quantity ÷ 2
= 759 ÷ 2
= 379.5
Annual inventory holding cost = Average inventory × holding cost per order
= 379.5 × $2.50
= $948.75
c. Number of orders each year = Demand ÷ Economic order quantity
= 12,000 ÷ 759 units
= 16 orders
Annual order cost = Number of orders × ordering cost
= 16 orders × $60.00
= $960
d. Annual cost = Annual inventory holding cost + Annual order cost
= $948.75 + $960
= $1908.75
e. Time between orders = Number of working days per year ÷ number of orders
= 250 ÷ 16
= 16
f. Reorder Point (ROP) = Daily demand × lead time + safety stock
= (12,000 ÷ 250) × 10
= 480
Thus,
a. 759 units
b. $948.75
c. 16 orders, $960
d. $1908.75
e. 16
f. 480
The Economic Order Quantity for Joe Henry's machine shop is 759 brackets per order. The average inventory is 380 brackets, with an annual holding cost of $950, and 16 orders are placed annually, resulting in an annual order cost of $960. The total annual inventory management cost is $1,910, with 16 days between orders and a Reorder Point of 480 brackets.
Explanation:The Economic Order Quantity (EOQ) model is used to determine the most cost-effective quantity of inventory to order. The EOQ formula is √(2DS/H), where D is annual demand, S is the order cost per order, and H is the holding cost per unit per year. Using the given values:
Annual demand (D) is 12,000 brackets.Order cost (S) is $60 per order.Holding cost (H) is $2.50 per bracket per year.Using these to compute EOQ: √((2 × 12,000 × 60) / 2.50) = √(1,440,000 / 2.50) = √576,000 = 758.77, which can be rounded up to 759 brackets per order.
The average inventory is half of the EOQ, so it would be 759 / 2 = 379.5, rounded to 380 brackets. The annual inventory holding cost is the average inventory multiplied by the holding cost, which is 380 × $2.50 = $950.
The number of orders per year is the annual demand divided by EOQ, which is 12,000 / 759 ≈ 15.81, rounded up to 16 orders per year. The annual order cost is the number of orders multiplied by the order cost, which is 16 × $60 = $960.
The total annual cost of managing inventory includes both the annual order cost and the annual holding cost. It would be $960 (order cost) + $950 (holding cost) = $1,910.
The time between orders, or the order cycle time, is the number of working days per year divided by the number of orders per year. The calculation would be 250 / 16 ≈ 15.62 days, which can be rounded to 16 days between orders.
The Reorder Point (ROP) is calculated as daily demand multiplied by the lead time. Daily demand is annual demand divided by the number of working days, which is 12,000 / 250 = 48 brackets per day. With a lead time of 10 days, the ROP is 48 × 10 = 480 brackets.
Poodle Corporation was organized on January 3, 2018. The firm was authorized to issue 98,000 shares of $5 par common stock. During 2018, Poodle had the following transactions relating to shareholders' equity: Issued 24,000 shares of common stock at $5.20 per share. Issued 30,000 shares of common stock at $8.50 per share. Reported a net income of $100,000. Paid dividends of $45,000. What is total Paid-in capital at the end of 2018?
Answer:
The total Paid-in capital at the end of 2018 is $384,600
Explanation:
The computation of total paid in capital is shown below:
Par value of First issue common stock = 24,000 × $5.20 = $124,800
Par value of Second issue common stock = 30,000 × $5 = $150,000
Add: Excess of paid in capital
First issue of common stock = 24,000 × ($5.20 - $5) = $4,800
Second issue of common stock = 30,000 × ($8.50 - $5) = $105,000
So, the total paid in capital = $124,800 + $150,000 + $4,800 + $105,000
= $384,600
Thus, The total Paid-in capital at the end of 2018 is $384,600
Mauro Products distributes a single product, a woven basket whose selling price is $12 per unit and whose variable expense is $10 per unit. The company’s monthly fixed expense is $2,400. Required: 1. Calculate the company’s break-even point in unit sales. 2. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Answer:
1200 BEPunits$14,400 BEP dollarssecond scenario 1200 BEPunits$14,400 BEP dollarsExplanation:
[tex]\frac{Fixed Cost}{contribution margin} = BEPunits[/tex]
contribution margin = Sales - Variable Cost
12 - 10 = 2 contribution margin
fixed expenses = 2,400
BEP = 2,400/2 = 1,200 units
Resuming: each unit contributes with $2 dollars therefore it needs to sale 1,200 untis to pay the fixed cost.
units x sales price = sales revenue
1,200 x 12 = 14,400 BEP in Dollars
Also it is posible to get this by using contribution margin ratio
in the BEP formula:
[tex]\frac{Fixed Cost}{Contribution Margin Ratio} = BEPdollars[/tex]
contribution margin/sales price = 2/12 = 1/6
fixed cost /contribution margin ratio = 2,400/(1/6) = 14,400
Scenario were fixed cost increase:
increase in fixed/contribution margin + previous BEP = BEPunits
increase in fixed/contribution margin ratio + previous BEP = BEPdollars
600 fixed cost /contribution margin = 600/2 = 300 more units to our prevous 1,200 total of 1,500
600 fixed cost /contribution margin ratio = 600/(1/6) = $3,600 more sales revenue to our prevous 14,400 total of 18,000
The break-even point in units is 1,200 units, and in dollar sales, it's $14,400. If fixed expenses increase by $600, the new break-even points would be 1,500 units and $18,000 in dollar sales, respectively.
To calculate the break-even point in unit sales for Mauro Products, we use the formula: Break-Even Point (units) = Fixed Costs /(Selling Price per Unit - Variable Cost per Unit). Applying the provided figures: Break-Even Point = $2,400 /( $12 - $10) = 1,200 units. This means the company needs to sell 1,200 units to cover all its expenses and not incur a loss.
To calculate the break-even point in dollar sales, we multiply the break-even point in units by the selling price per unit. Hence, Break-Even Point (dollars) = 1,200 units * $12 = $14,400. Therefore, Mauro Products needs to have $14,400 in sales to break even.
If the company's fixed expenses were to increase by $600, making the total fixed expenses $3,000, the new break-even point in unit sales becomes $3,000 / ($12 - $10) = 1,500 units. The new break-even point in dollar sales would then be 1,500 units * $12 = $18,000.
Economies of scale occur when a firm'sa. marginal costs are constant as output increases. b. long-run average total costs are decreasing as output increases. c. long-run average total costs are increasing as output increases. d. marginal costs are equal to average total costs for all levels of output.
Economies of scale occur when a firm's long-run average total costs are decreasing as output increases. This means that the business can achieve a cost advantage by increasing the production scale. Hence, the cost per unit of product decreases.
Explanation:Economies of scale occur when a firm's long-run average total costs decrease as output increases. This concept refers to the cost advantage that a business can achieve by increasing the scale of production, meaning producing more output. As the scale of production increases, the cost per unit of product decreases, which is the essence of economies of scale. For instance, a large manufacturing company may be able to produce goods at a lower cost per unit compared to a smaller company because it can buy raw materials in bulk at a cheaper price and distribute the fixed costs over a larger number of units. Therefore, the correct answer to your question is: b. long-run average total costs are decreasing as output increases.
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Economies of scale occur when a company's long-run average total costs decrease as output increases, due to operational efficiencies gained from increased production. This concept is represented by option 'b' in the question. Other options do not accurately illustrate economies of scale.
Explanation:The correct answer to the question is 'b. long-run average total costs are decreasing as output increases'. This statement is consistent with the concept of Economies of Scale. It refers to the economic concept where the average cost of production decreases as the quantity produced increases. It is often happening because of operational efficiencies and synergies when production volumes are increased.
Conversely, Diseconomies of Scale occur when long-run average costs start to increase as output increases. This increase in costs as the firm increases output might occur because the firm becomes too large and difficult to manage effectively, causing an increase in costs.
Moreover, other options such as option 'a', 'c' and 'd' do not accurately depict the concept of economies of scale. In particular, changes in marginal cost or total costs do not directly relate to or indicate the presence of economies of scale, which specifically refers to changes in long-run average total costs.
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An investment project provides cash inflows of $705 per year for eight years. a. What is the project payback period if the initial cost is $1,450? (Enter 0 if the project never pays back. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the project payback period if the initial cost is $3,600? (Enter 0 if the project never pays back. Round your answer to 2 decimal places, e.g., 32.16.) c. What is the project payback period if the initial cost is $5,800? (Enter 0 if the project never pays back. Round your answer to 2 decimal places, e.g., 32.16.)
Answer: A. 2.05 B. 5.10 C. 0
Explanation: Payback period can be defined as the period under which the profits or savings in an investment can recover the initial outlay invested in that investment. In simple words we can say that it is the time required by an investment to pay for itself.
Pay back period is computed as follows :-
[tex]=\:payback\:period=\frac{\:Initial\:cash\:outlay}{cash\:inflows}[/tex]
therefore,
A. [tex]=\:payback\:period=\frac{1450}{705}[/tex]=2.05years
B.[tex]=\:payback\:period=\frac{3600}{705}[/tex]=5.10years
C.[tex]=\:payback\:period=\frac{5800}{705}[/tex]=0
The payback period for an initial cost of $1,450 is approximately 2.06 years. For an initial cost of $3,600, it is about 5.11 years. For an initial cost of $5,800, the project never pays back within the 8-year period.
Explanation:The payback period is the time it takes for a project to recover its initial investment. To calculate it, you divide the initial investment by the annual cash inflows. For the first scenario with the initial cost of $1,450, the payback period is $1450/$705 = 2.06 years. For the second scenario with the initial cost of $3,600, the payback period is $3600/$705 = 5.11 years. Lastly, for the scenario with the initial cost of $5,800, since the project only provides cash inflows for eight years and the payback period is over 8 years, the project never pays back, so the answer is 0.
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Which of the following statements is CORRECT? a. Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation. b. There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small. c. It is usually easier to transfer ownership in a corporation than in a partnership. d. Corporate shareholders are exposed to unlimited liability. e. Corporations generally face fewer regulations than proprietorships.
Answer:
c. It is usually easier to transfer ownership in a corporation than in a partnership
Explanation:
(A) (D) Shareholders has limited liability. It is the partnership members which has unlimited liability.
(E) Corporations, because manage large sum of capital are more regulated.
(B) Corporation can lobby to get tax exemption, also the income tax scales with income, not with business legal form. There is no tax disadvantage
(C) In a Corporation you can sale your shares (right of ownership) any time in open market. While in a partnership there are restrictions from you leaving right away.
A college textbook is selling for (US) $140 in the United States. That same textbook sells in Canada for (CA) $150. The exchange rate is (CA) $1.10 = (US) $1.00. Shipping costs are (US) $5.00. Ignoring the shipping costs. What is the U.S. price of the textbook purchased in Canada? (US) $
Answer:
The U.S. price of the textbook purchased in Canada is of $135.
Explanation:
Assuming that the exchange rate is CA $1.10 = US $1.00, we can say that a Canadian Dollar is 10/11 or 0.90 of an American Dollar. As the textbook costs CA $150, we have to multiply 150 by the value of a Canadian Dollar with respect to an American Dollar: 150 x 0.90 = 135. Therefore, the U.S. price of the textbook purchased in Canada is of US $135.
Answer:
the reponse is answer 145$
A company used straight-line depreciation for equipment that cost $12,000, had a salvage value of $2,000, and a 5-year useful life. At the beginning of year 4 of its useful life, the estimate of the salvage value was reduced to $1,200 and its total useful life was increased to 6 years. The amount of depreciation that will be recorded during each of the remaining years of its useful life is:
Final answer:
The amount of depreciation that will be recorded during each of the remaining years of its useful life is $2,000 for the first three years, and $1,800 for the remaining years.
Explanation:
To calculate the amount of depreciation that will be recorded during each of the remaining years of the equipment's useful life, we need to calculate the annual depreciation expense for each year.
The straight-line depreciation method allocates an equal amount of depreciation expense for each year over the useful life of the equipment. To calculate the annual depreciation expense, subtract the salvage value from the initial cost and divide it by the useful life in years.
For the first three years, the annual depreciation expense is ($12,000 - $2,000)/5 = $2,000. For the remaining years, after adjusting the salvage value to $1,200 and increasing the useful life to 6 years, the annual depreciation expense is ($12,000 - $1,200)/6 = $1,800.
Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,540 per month plus $45 per boat. For the month of April, the company planned for activity of 59 boats, but the actual level of activity was 11 boats. The actual cleaning equipment and supplies for the month was $3,260. The activity variance for cleaning equipment and supplies in April would be closest to:
The activity variance for Pratte Boat Wash's cleaning equipment and supplies in April is the difference between the budgeted cost for 11 boats ($3,035) and the actual cost ($3,260), calculating to be closest to $225.
Explanation:The activity variance for cleaning equipment and supplies in April refers to the difference between the budgeted cost for the actual number of boats cleaned and the actual cost incurred. The budgeted cost for 11 boats is calculated by taking the fixed monthly cost plus the variable cost per boat times the number of boats, which is $2,540 + ($45 × 11 boats) = $2,540 + $495 = $3,035. Comparing this to the actual cost of $3,260, the activity variance is $3,260 - $3,035 = $225. Therefore, the activity variance for cleaning equipment and supplies in April would be closest to $225.
A firm has $2,000,000 in its common stock account and $20,000,000 in its paid-in capital account. The firm issued 500,000 shares of common stock. What is the par value of the common stock? Select one: a. $40 per share b. $44 per share c. $4 per share d. $3 per share e. None of the above
Answer: $4 per share
Explanation:
The par value of the common stock is given as:
= [tex]\frac{common stock account}{shares of common stock}[/tex]
= [tex]\frac{2000000}{500000}[/tex]
= $4 per share
Here;
Common stock denotes the shares entitling their holder to dividends that vary in amount .
Answer:
c. $4 per share
Explanation:
In order to calculate the amount of money that the per value of the common stock you need to divide the amount of money that is located in the common stock account and divide it by the number of shares of common stock that the company issued, in this case it would be 2,000,000/500,000=4
SO the per value of the common stock will be $4 dollars per share.
ConsGrough, Inc. has increased its annual common dividend by 3% in each of the years that the company has existed. If you believe that the company can continue to do so indefinitely, then what price would you be will to pay for ConsGrough if the required rate of return is 6% and the dividend that it paid yesterday was $5?
Answer: $171.67 would be the price of the security
Explanation: This problem relates to dividend growth model, which can be shown as follows :-
[tex]=\frac{D_{1}}{P_{0}}+\:G[/tex]
where'
d1 = expected dividend
p = price
g = growth rate
therefore,
[tex]=\frac{\$5\left ( 1+3\% \right )}{P_{0}}+\:3\%[/tex]
solving this we get
[tex]p_0=\$171.67[/tex]
Monica grows coconuts and catches fish. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of three coconuts. She gave Rachel 300 coconuts and 100 fish for helping her to harvest coconuts and catch fish, all of which were consumed by Rachel. In terms of fish, Monica's income would equal
Answer:
Moica's Net Income 900 fish
Explanation:
1500 coconuts/ 3 = 500 fish
+ 600 fish
gros income 1,100 fish
Rachel wage
300 coconuts (100) fish
(100) fish
total wages (200) fish
Moica's Net Income 900 fish
Final answer:
Monica's income after harvesting and compensating Rachel for help is 900 fish. This is calculated by determining the remaining coconuts and fish after the compensation and converting the value of the coconuts to fish based on the given value ratio.
Explanation:
The question asks how to calculate Monica's income in terms of fish after she has harvested 1500 coconuts and 600 fish, and then given Rachel 300 coconuts and 100 fish for her help. Considering that Monica values one fish as having the worth of three coconuts, we must first adjust the number of coconuts Monica has after giving some away to Rachel, then convert the remaining number of coconuts into the equivalent number of fish based on their given value ratio.
Calculating the Remaining Coconuts and Fish:
After giving Rachel 300 coconuts, Monica has 1500 - 300 = 1200 coconuts left. She also gives away 100 fish, which leaves her with 600 - 100 = 500 fish.Converting Coconuts into Fish:
Now, to calculate Monica's total income in terms of fish, we convert the 1200 coconuts into fish, using the ratio where 3 coconuts equal 1 fish: 1200 coconuts / 3 coconuts per fish = 400 fish.Finally, we add the 400 fish (value of coconuts) to the 500 fish she has left, which equals a total of 900 fish.Therefore, Monica's income in terms of fish, after accounting for the help she received from Rachel, is 900 fish.
"You purchased 350 shares of Organic Food Marketing stock for $3,350 one year ago. The company pays an annual dividend of $0.12 per share. Today, you sold all of your shares for $13.10 a share. What is your total percentage return on this investment?"
Answer:
38.1194% total return on investment
Explanation:
The return of the investment will be:
[tex]\frac{MarketValueSharesToday + Diviends}{PurchaseCost} - 1 = $total return on investment[/tex]
dividends = $0.12 per share x 350 shares = $42
share market value = $13.10 x 350 shares = $4,585
total return =$4,627
purchase cost = $3,350
$4,627/$3,350 - 1 = 0.381194 = 38.1194% total return on investment
A ratio between net income and investment is known as return on investment or return on costs. The return on the investment will be 38.1194%.
What is a return on investment?dividends = $0.12 per share x 350 shares = $42
Share market value = $13.10 x 350 shares = $4,585
total return =$4,627
purchase cost = $3,350
$4,627/$3,350 - 1 = 0.381194
= 38.1194% total return on investment
Your investments in the business are the time and money you devote to enhancing your enterprise. The profit you realize from your investments is the return. The ratio of net profit to the entire cost of the investment is how ROI is often defined.
The profit from an investment is divided by the investment's cost to determine the return on investment (ROI). When represented as a percentage, an investment with a profit of $100 and a cost of $100 would have an ROI of 1 or 100%.
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A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. This firm is earning $5.50 on every $50 invested by its founders.a. What is its percentage rate of return?b. Is the firm earning an economic profit? If so, how largec. Will this industry see entry or exit?d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
Answer:
(A) the percentage RoR is 11%
(B) Yes, it is the earning are higher than average rate by 600 points,
(C)this industry will see in. The yield is higher than average
(D)Once it reached long run equilibrium it will be industry average of 5.5%
Explanation:
5.5/50 = .11 = 11%
11% - 5% = 6%
Answer:
a. 11%
b. Yes, economic profit is 6%
c. This industry will see more entries.
d. 5%
Explanation:
a.
The percentage rate of return is calculated as percentage of earnings over investment from founders or 5.5/50 = 11%
b.
As the firm return is 11% while normal rate of profit in the economy is only 5%, the economic earning is 6% which is calculated as 11%-5% = 6%.
c.
As there are opportunities in the industry to earn a profit level large than the normal level of the economy as a whole, investors will move more of their funds to the industry to enjoy higher return.
d.
As there are more entries, supply of the industries' products will be increased while demand remains the same. Price is lowered down and industry's profit will decrease subsequently. Once the industry's profit reaches 5% which is the normal profit level of the economy, the industry get in long-run equilibrium as there is no incentives for newcomers to enter the market.
Which of the following statements about annuities are true? Check all that apply. An annuity due earns more interest than an ordinary annuity of equal time. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.
The statements that an annuity due earns more interests than an ordinary annuity, an annuity involves a series of equal payments at fixed intervals, and an annuity due makes payments at the beginning of each period are correct. The statement that ordinary annuities make payments at the beginning of each period is incorrect as they actually make payments at the end of each period.
Explanation:Among the statements provided about annuities, the first and second one are correct. An annuity due, indeed, earns more interest than an ordinary annuity of equal time because payments are made at the beginning of each period, allowing more time for interest accumulation. Also, it is correct to say that an annuity is a series of equal payments made at fixed intervals for a specified number of periods, which is the basic definition of any annuity. However, the third statement which suggests that ordinary annuities make fixed payments at the beginning of each period is incorrect. Ordinary annuities make their payments at the end of each period, unlike annuity due.
The fourth statement is also correct, as it correctly described an annuity due, which as per definition, is an annuity that makes a payment at the beginning of each period.
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Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $240,000, variable expenses of $135,000, and traceable fixed expenses of $31,000. During the same month, the West business segment had sales revenues of $910,000, variable expenses of $480,000, and traceable fixed expenses of $173,000. The common fixed expenses totaled $254,000 and were allocated as follows: $127,000 to the East business segment and $127,000 to the West business segment. The contribution margin of the West business segment is
Answer:
The contribution margin of the West business segment is $430,000
Explanation:
The contribution margin is the difference between the sales revenue and the variable expense. Other cost like - fixed expense, traceable fixed cost is irrelevant while calculating the fixed cost.
So,
Contribution margin for the West business :
= Sales revenue - Variable expense
= $910,000 - $480,000
= $430,000
Thus, the contribution margin of the West business segment is $430,000
You are considering two independent projects that have differing requirements. Project A has a required return of 12 percent compared to Project B’s required return of 13.5 percent. Project A costs $75,000 and has cash flows of $21,000, $49,000, and $12,000 for Years 1 to 3, respectively. Project B has an initial cost of $70,000 and cash flows of $15,000, $18,000, and $41,000 for Years 1 to 3, respectively. Given this information, you should:
1. accept both Project A and Project B.
2. accept Project A and reject Project B.
3. accept Project B and reject Project A.
4. reject both Project A and Project B.
5. accept whichever one you want but not both.
Answer:
4. reject both Project A and Project B.
their NPV are negative so are not profitable.
Explanation:
We have to calculate the present value of the projects at their return rate
Project A
Present value of the cash flow - investment = net present value
[tex]\frac{21,000}{(1.12)^{1} } = PV[/tex]
[tex]\frac{49,000}{(1.12)^{2} } = PV[/tex]
[tex]\frac{12,000}{(1.12)^{3} } = PV[/tex]
-75,000 + PV 21,000 + PV 49,000 + PV 12,000
-75,000 + 18,750 + 39062.5 + 8,541.36 = -8646.14
Project B
Present value of the cash flow - investment = net present value
-70,000 + PV 15,000 + PV 18,000 + PV 41,000
[tex]\frac{15,000}{(1.135)^{1} } = PV[/tex]
[tex]\frac{18,000}{(1.135)^{2} } = PV[/tex]
[tex]\frac{41,000}{(1.135)^{3} } = PV[/tex]
-70,000 + 13215.86 + 13972.71 + 28041.18 = -14770.25
San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin of $450,000 and have traceable fixed operating costs of $480,000. Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall by $370,000 and San Ruiz’ income will:
Answer:
If closed the operating income will decrease by 50,000
Is a better scenario to continue with the residential sercives
Explanation:
current scenario:
contribution margin 450,000
Fixed Cost 480,000
net loss 30,000
drop scenario:
contribution margin = 0
fixed cost 450,000-370,000 = 80,000
net loss (80,000)
What journal entry is made in a job-order costing system when $8,000 of materials are requisitioned for general factory use instead of for use in a particular job? (a) Work in Process $8,000 Manufacturing Overhead $8,000 (b) Work in Process $8,000 Raw Materials $8,000 (c) Manufacturing Overhead $8,000 Work in Process $8,000 (d) Manufacturing Overhead $8,000 Raw Materials $8,000
Answer:
(d) Manufacturing Overhead $8,000 Raw Materials $8,000
Explanation:
This will be an spending associate with the actual overhead.
These materials are indirect, so it should go in the factory overhead account.
They are not associate with any job in particular, so it cannot be capitalize through work in process.