Answer:
$100,000 loss on disposal
Explanation:
The current value (V) of the plant asset is the original $375,000 subtracted by the accumulated depreciation until the end of the current year, $150,000:
[tex]V=\$375,000 -\$150,000 =\$225,000[/tex]
The gain or loss from this transaction is measured by the amount received in cash subtracted by the current value of the plant asset:
[tex]\$125,000-\$225,000 = -\$100,000[/tex]
Therefore, the company should recognize a $100,000 loss on disposal.
A manufacturing company has a beginning finished goods inventory of $28,800, cost of goods manufactured of $59,000, and an ending finished goods inventory of $28,100. The cost of goods sold for this company is
Answer:
The cost of goods sold for this company is $59,700
Explanation:
Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
In the company:
Beginning finished goods inventory: $28,800
Cost of goods manufactured: $59,000
Ending finished goods inventory: $28,100
Therefore,
Cost of goods sold = $28,800 + $59,000 - $28,100 = $59,700
Which of the following statements is CORRECT?
a. If an asset is sold for less than its book value at the end of a project's life, it will generate a loss for the firm, hence its terminal cash flow will be negative.
b. Only incremental cash flows are relevant in project analysis, the proper incremental cash flows are the reported accounting profits, and thus reported accounting income should be used as the basis for investor and managerial decisions.
c. Changes in net operating working capital refer to changes in current assets and current liabilities, not to changes in long-term assets and liabilities, hence they should not be considered in a capital budgeting analysis.
d. It is unrealistic to believe that any increases in net operating working capital required at the start of an expansion project can be recovered at the project's completion. Operating working capital like inventory is almost always used up in operations. Thus, cash flows associated with operating working capital should be included only at the start of a project's life.
e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Answer:
e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Explanation:
Answer to Question is Point E i.e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Because Book value is the Vaue of an assets recorded in the Balance sheet at the end of the Financial year. Book value is calculated by adjusting Original Cost for depreciation, amortization made for the asset. If the equipment is sold for a value more than its book value , it will result in profit. Despite the taxes on profit, the end of the cash flow will be greater.
As the Book value at the time of sale is calculated after giving effect of depreciation, amortisation.
The First Bank of Flagstaff has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 11.6 percent?
Final answer:
The current price of the First Bank of Flagstaff's perpetual preferred stock, with quarterly dividends of $1.65 and a required return of 11.6%, is calculated using the formula for perpetual cash flows and is $56.90.
Explanation:
The current price of the perpetual preferred stock issued by the First Bank of Flagstaff, which pays a quarterly dividend of $1.65 and has a $100 par value, can be estimated using the present discounted value (PDV).
The required rate of return is an annual rate of 11.6%, but since dividends are paid quarterly, we need to divide this by 4 to get the quarterly rate, which is 2.9%. The price of the stock is the present value of the perpetual stream of quarterly dividends, calculated as the dividend amount divided by the quarterly rate of return.
To find the current price of the stock:
Price = Dividend per quarter / Quarterly rate of return
Price = $1.65 / (0.116/4) = $1.65 / 0.029 = $56.90
This formula represents the price of a stock based on its expected future dividends and the required rate of return.
Shelton Co. purchased a parcel of land six years ago for $877,500. At that time, the firm invested $149,000 in grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $56,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $929,000. What value should be included in the initial cost of the warehouse project for the use of this land?
Answer:
The company should recognise $929,000 as the cost the land as this the fair value as at the date when management considers to build the warehouse.
Explanation:
Cost at date of purchase of land
The inital cost of the land is $1,026,500 (cost + grading cost); and since it was leased out, it will be accounted for in line with IAS 40 (Investment Property) to earn investment income (i.e. lease income).
Measurement of Investment property
An investment property can be measured at cost or fair value. The question didn't say that the land was depreciated, hence its assumed that it was measured at fair vale.
Measurement at date of commencement of constructing the warehouse
IAS 40 permits transferring investment property (e.g the land) to owner occupied property (i.e. the warehouse). Hence in determining the value of the land at this date we have measure the value in line with IFRS 13 (Fair Value Measurement).
Since we know the current market value of the asset at this date as $929,000. This would be recognised as the cost of the land.
Tara and Robert formed the TR Partnership four years ago. Because they decided the company needed some expertise in multimedia presentations, they offered Katie a 1/3 interest in partnership capital if she would come to work for the partnership. On July 1 of the current year, the unrestricted partnership interest (fair market value of $25,000) was transferred to Katie. How should Katie treat the receipt of the partnership interest in the current year?
Answer
The answer and procedures of the exercise are attached in the following image.
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.
Westville, a small developed country, is experiencing a very high rate of inflation. Roma Anderson, a market research analyst, thinks that the high level of inflation is due to an acute shortage of goods available in the economy. According to her, the government should use expansionary fiscal policies to boost the economy. Meanwhile, Robert Simpson, a member of the finance ministry, is of the opinion that the high level of inflation is the result of excessive household spending. He suggests that the government should increase personal income tax rates to curb consumption demand. Which of the following, if true, will strengthen Robert's claim that high consumer spending is the cause of high inflation? OA· The number of discouraged workers in Westville has increased this year. OB. One of Westville's leading trading partners was recently hit by a severe recession. Oc、 The gender wage gap in westville has increased substantially in the last few years. OD. Leading firms producing consumer durables have reported a decline in profits in recent times. OE. There is consensus among leading economists and industry experts that the output gap in Westville is currently negatuve
Answer:
There is consensus among leading economists and industry experts that the output gap in Westville is currently negative.
Explanation:
There are two different people who have two different views for the increasing inflation. Robert's claim that the reason behind high inflation is the high consumer spending will be strengthened if there is a consensus among leading economists and the industry experts that the output gap in Westville is negative. This means that the actual output is less than the potential output and so, the consumer spending will increase, leading to the inflation.
Robert's claim that high consumer spending is causing inflation in Westville could be strengthened by the evidence that leading consumer product firms are seeing declining profits, suggesting that demand is outstripping supply and hence driving up prices. However, a holistic approach is required to fully understand complex economic issues such as inflation.
Explanation:The debate revolving around the cause of high inflation in Westville can be strengthened by examining which claim aligns more closely with the symptoms observed in the economy. Inflation can be succinctly summarized as 'too many dollars chasing too few goods'. Bearing this definition in mind, Robert's argument that excessive household spending is at the root of the inflation problem would be reinforced if there is evident high demand meeting a lack of supply.
Going through the options provided, the one that would most strongly support Robert's claim would be if leading firms notably producing consumer durables have reported a decline in profits. A decline in corporate profits in consumer industries may indicate excessive spending. If people are buying more than these companies can produce, it would artificially inflate prices, contributing to a high inflation rate.
However, it's essential to note that economic indicators should not be evaluated in isolation and understanding economic trends generally requires a comprehensive view of various interrelated factors.
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__________ is a feature of job control unionism that threatens ___________________.A. Standardized wages tied to jobs; functional flexibilityB. Detailed systems of narrow job classifications; employment flexibilityC. Detailed, lengthy, legalistic union contracts; procedural flexibilityD. Restrictive work rules; wage flexibility
Answer:
The answer is letter C
Explanation:
Detailed, lengthy, legalistic union contracts; procedural flexibility.
Job control unionism is a form of labor unionism that uses detailed, lengthy, legalistic union contracts. These contracts provide procedural flexibility for union members but can be seen as a threat to employers who value flexibility in managing their workforce.
Explanation:C. Detailed, lengthy, legalistic union contracts; procedural flexibility
Job control unionism is a form of labor unionism that focuses on maintaining control over job assignments and work rules. One of its features is the use of detailed, lengthy, legalistic union contracts. These contracts outline specific job classifications, work processes, and procedures. While these contracts provide procedural flexibility for union members, they can be seen as a threat to employers who value flexibility in managing their workforce.
An airline has the following data about an airplane:
Annual lease cost $8,000,000
Lease term: 8 years
Useful life of airplane: 35 years
Fair market value of leased asset: $83 million
Present value of lease payments: $78 million
Bargain purchase option: None
Transfer to lessor at end of lease? Yes
Is this a capital or operating lease? Why?
A.
This is a capital lease because the leased asset cost exceeds $5 million.
B.
This is a capital lease because the substance of the transaction is a capital lease.
C.
This is a capital lease because it meets at least one of the four capital lease criteria.
D.
This is an operating lease. It fails all of the capital lease criteria.
Answer:
Option C). This is a capital lease because it meets at least one of the four capital lease criteria.
Explanation:
In the following situations, the lease transactions are called Finance Lease.
i) The lessee will get the ownership of leased asset at the end of the lease term.
ii) The lessee has an option to buy the leased asset at the end of lease term at price, which is lower than its expected fair value at the date on which option will be excercised.
iii) The lease term covers the major part of the life of asset.
iv) At the beginning of lease term, Present value of minimum lease rental covers substantially the initial fair value of the leased asset.
In the given question, Present value of minimum lease rental amounting to $ 78 million covers substantially 94 % portion of the initial fair value of leased asset. Accordingly, last condition / last situation mentioned above to treat lease as finance lease is satisfied in the given question. In other words, out of four capital lease criteria mentioned above, fourth criteria / fourth condition (At the beginning of lease term, Present value of minimum lease rental covers substantially the initial fair value of the leased asset) is satisfied in this given question.
Present value of minimum lease rental as a percentage of initial fair value of leased asset :-
= (78 Million / 83 Million ) * 100
= 0.94 * 100
= 94 % (approx).
Lease in given question is capital lease because it meets at least one of the four capital lease criteria.
The correct answer is D. This is an operating lease. It fails all of the capital lease criteria.
To determine whether the lease is a capital lease or an operating lease, we can use the criteria outlined by accounting standards. A capital lease is a lease that meets any one of the following four criteria:
The lease transfers ownership of the asset to the lessee at the end of the lease term.The lease contains a bargain purchase option.The lease term is equal to or greater than 75% of the estimated economic life of the leased property.The present value of the lease payments equals or exceeds 90% of the fair value of the leased property.In this case:
There is no bargain purchase option.The lease transfers the asset back to the lessor at the end of the term.The lease term (8 years) is less than 75% of the useful life of the airplane (35 years).The present value of the lease payments ($78 million) is less than 90% of the fair market value of the asset ($83 million).Blue Company reports the following costs and expenses in May.
Factory utilities $17,000
Direct labor $72,000
Depreciation on factory equipment 13,950
Sales salaries 47,500
Depreciation on delivery trucks 4,700
Property taxes on factory building 2,600
Indirect factory labor 49,900
Repairs to office equipment 1,900
Indirect materials 82,600
Factory repairs 2,350
Direct materials used 141,700
Advertising 15,500
Factory manager’s salary 8,300
Office supplies used 2,790
Required :
Determine the total amount of:
(a) Manufacturing overhead
(b) Product costs
(c) Period costs
Answer:
(a) Manufacturing overhead = $176,700
(b) Product costs = $390,400
(c) Period costs = $72,390
Explanation:
a. The computation of the manufacturing overhead is shown below:
= Factory utilities + Depreciation on factory equipment + Property taxes on factory building + Indirect factory labor + Indirect materials + Factory repairs+ Factory manager salary
= $17,000 + $13,950 + $2,600 + $49,900 + $82,600 + $2,350 + $8,300
= $176,700
b. The computation of the product cost is shown below:
= Direct materials used + Direct labor + manufacturing overhead
= $141,700 + $72,000+ $176,700
= $390,400
c. The computation of the period cost is shown below:
= Sales salaries + Depreciation on delivery trucks + Repairs to office equipment + Advertising + Office supplies used
= $47,500 + $4,700 + $1,900 + $15,500 + $2,790
= $72,390
The manufacturing overhead is $86,450, the product costs amount to $299,750, and the period costs are $75,390.
Explanation:(a) To calculate the manufacturing overhead, we need to add up all the costs and expenses that are indirectly related to the manufacturing process. These would include factory utilities, indirect factory labor, depreciation on factory equipment, property taxes on factory building, and factory repairs. Adding up these costs will give us the total manufacturing overhead which in this case is $86,450.
(b) Product costs consist of the direct materials used, direct labor, and manufacturing overhead. So, to find the product costs, we can add up these three costs which gives us a total of $299,750.
(c) Period costs include all the costs that are not directly related to the manufacturing of products. These would include sales salaries, repairs to office equipment, advertising, factory manager's salary, and office supplies used. Adding up these costs will give us the total period costs which in this case is $75,390.
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The Bridal Gift Shop, Inc. has 14 units in ending merchandise inventory on December 31. The units were purchased in November for $165 each. The price lists from suppliers indicate the current replacement cost of the item to be $171 each. What would be the amount reported as Merchandise Inventory on the balance sheet?
A. $2,394
B. $336
C. $4,704
D. $2,310
Answer:
D. $2,310
Explanation:
Ending inventory or Merchandise Inventory is the value of goods available for sale at the end of the accounting period valued at the lowest of total purchase cost or total replacement cost.
In this problem, total purchase cost (P) is:
[tex]P= \$165*14 = \$2,310[/tex]
Total replacement cost (R) is:
[tex]R= \$171*14 = \$2,394[/tex]
Since purchase cost is lower than replacement cost, the amount reported as Merchandise Inventory on the balance sheet should be $2,310
Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2017: direct materials costs, $710,000; direct labor costs, $3,600,000; and factory overhead costs applied, $2,520,000.
1. Determine the company’s predetermined overhead rate for 2017.
2. Assuming that the company’s $77,000 ending Work in Process Inventory account for 2017 had $26,000 of direct labor costs, determine the inventory’s direct materials costs.
3. Assuming that the company’s $550,000 ending Finished Goods Inventory account for 2017 had $329,000 of direct materials costs, determine the inventory’s direct labor costs and its overhead costs.
Answer:
Please see attachment
Explanation:
Please see attachment
California Gardens, Inc., prewashes, shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, OperationsVP, is considering a new Hi-Speed shredder to replace the oldmachine, referred to in the shop as "Clunker." Hi-Speed will have a fixed cost of $85,000 per month and a variable cost of$1.25 per bag. Clunker has a fixed cost of only $44,000 permonth, but a variable cost of $1.75. Selling price is $2.50 per bag.
a) What is the crossover point in units (point ofindifference) for the processes?
The crossover point is XX units. (Round your response to the nearest whole number.)
b) What is the monthly profit or loss if the company changes to the Hi-Speed shredder and sells 60,000 bags per month?
The monthly profit or loss if the company changes to theHi-Speed shredder and sells 60,000 bags per month is $ XX. (Round your response to the nearest dollar and include a minus sign if necessary.)
c) What is the monthly profit or loss if the company stays with Clunker and sells 60,000 bags per month?
The monthly profit or loss if the company stays with Clunker and sells 60,000 bags per month is $ XX. (Round your response to the nearest dollar and include a minus sign ifnecessary.)
Answer:
The answer is. Q is 82,000 units ,the company will make a loss of $ -10000 if the company changes to Hi speed, if the company stays with clunker it will make a profit of $1,000
Explanation:
a) Clunker. Hi speed
Fixed cost. $44,000. $85,000
Variable cost. 1.75. 1.25
Q (output in indifference point / cross over point) = FC of Hi speed - FC of Clunker/VC of Clunker - VC of Hi speed
FC of Clunker + VC of Clunker = FC of Hi speed + VC of Hi speed
44,000 + 1.75Q = 85,000 + 1.25Q
Collect like terms
1.75Q - 1.25Q = 85,000 - 44,000
0.5Q = 41,000
Q = 41,000/0.5
Q = 82,000 units
(b)
Since the sellingprice is $2.50 per bag, Revenue will be 2.50 × 60,000 = 150,000
Income Statement
Dr. Cr
$ $
Revenue. 150,000
Variable cost (1.25 × 60,000) 75,000
Add:Fixed cost 85,000
-------------
(160,000)
Profit/Loss. -10,000
---------------- --------------------
150,000. 150,000
-------------------- -----------------------
If the company changes to Hi speed, it will make a loss of $10,000
(c)
Dr. Cr
$ $
Revenue. 150,000
Variable cost (1.75 × 60,000) 105,000
Add: Fixed cost. 44,000
---------------
(149,000)
Profit /Loss. 1,000
------------------ ---------------------
150,000. 150,000
---------------------- -----------------------
If the company stays with clunker, it will make a profit of $1,000
Final answer:
The crossover point for the new Hi-Speed shredder and Clunker is at 82,000 units. Using the Hi-Speed shredder and selling 60,000 bags results in a loss of $10,000 per month, while continuing with Clunker results in a profit of $1,000 per month.
Explanation:
To calculate the crossover point where the total costs of both the new Hi-Speed shredder and the old machine Clunker are the same, we set up the following equation:
Total cost of Hi-Speed = Total cost of Clunker
Fixed cost of Hi-Speed + (Variable cost of Hi-Speed * Number of units) = Fixed cost of Clunker + (Variable cost of Clunker * Number of units)
85000 + 1.25x = 44000 + 1.75x
Solving for x gives us the crossover point:
85000 - 44000 = 1.75x - 1.25x
41000 = 0.5x
x = 82000 bags
To calculate the monthly profit or loss for selling 60,000 bags per month with the Hi-Speed shredder, we use the formula:
Profit = (Selling price per bag * Number of bags sold) - (Fixed cost + Variable cost per bag * Number of bags sold)
Profit = (2.50 * 60000) - (85000 + 1.25 * 60000)
Profit = $150000 - $160000 = -$10000
For the Clunker:
Profit = (2.50 * 60000) - (44000 + 1.75 * 60000)
Profit = $150000 - $149000 = $1000
The monthly profit or loss with the Hi-Speed shredder for selling 60,000 bags per month is -$10,000, and staying with Clunker would result in a $1000 profit.
Prepare the journal entries for the issuance of the bonds in both 1 and 2. Assume that both bonds are issued for cash on January 1, 2013.
1. Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to allocate interest expense.
2. Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 1/4 . The effective interest method is used to allocate interest expense.
Answer:
Explanation:
The journal entries are shown below:
1. Cash A/c Dr $218,750 ($250,000 × 0.875)
Discount on bonds payable A/c $31,250
To Bonds payable A/c 250,000
(Being bond is issued at a discount is recorded)
2. Cash A/c Dr $281,400 ($240,000 × 1.1725)
To Premium on bonds payable A/c $41,400
To Bonds payable A/c 240,000
(Being bond is issued at a discount is recorded)
Exercise 9-5 Sandhill Co. purchased a new machine on October 1, 2017, at a cost of $80,010. The company estimated that the machine has a salvage value of $7,280. The machine is expected to be used for 72,400 working hours during its 7-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end. (
Answer:
2017 = $2,598 and 2018 = $10,390
Explanation:
The computation of the depreciation expense for the second year is shown below:
= (Original cost - residual value) ÷ (useful life)
= ($80,010 - $7,280) ÷ (7 years)
= ($72,730) ÷ (7 years)
= $10,390
In this method, the depreciation is same for all the remaining useful life
For 2017, the depreciation expense would be
= $10,390 × 3 months ÷ 12 months
= $2,598
The three months is calculated from the October 1, 2017, to December 31, 2017
And, in 2018 it would be $10,390
A company has a beginning inventory of $ 20 comma 000 and purchases during the year of $ 130 comma 000. The beginning inventory consisted of 3 comma 000 units and 6 comma 000 units were purchased during the year. The company has 5000 units left at yearminusend. Under averageminuscost, what is Cost of Goods Sold? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)
Answer:
$66,680
Explanation:
The computation of the cost pf goods sold is shown below:
= Number of units sold × average cost per unit
where,
Number of units sold equals to
= Beginning inventory units + purchased units - ending inventory units units
= 3,000 units + 6,000 units - 5,000 units
= 4,000 units
Now the average cost per unit would be
= (Beginning inventory + purchases) ÷ (Beginning inventory units + purchased units)
= ($20,000 + $130,000) ÷ (3,000 units + 6,000 units)
= $16.67
Now put these values to the above formula
So, the value would equal to
= $4,000 units × $16.67
= $66,680
An economist discussing trade policy in the New Republic wrote: "One of the benefits of the United States removing its trade restrictions [is] the gain to U.S. industries that produce goods for export. Export industries would find it easier to sell their goods abroad—even if other countries didn’t follow our example and reduce their trade barriers."Which of the following statements is true about the effect of a reduction in restrictions of imports? Check all that apply.A. Exports will increase.B. The real exchange rate will remain unchanged.C. Imports will increase.D. Net exports at any given real exchange rate will increase.E. The demand curve for dollars will shift to the left.F. The equilibrium level of net exports will remain unchanged
Answer: The correct answers are "A. Exports will increase." , "C. Imports will increase.", "E. The demand curve for dollars will shift to the left." and "F. The equilibrium level of net exports will remain unchanged".
Explanation:
"A. Exports will increase." , "C. Imports will increase.", "E. The demand curve for dollars will shift to the left." and "F. The equilibrium level of net exports will remain unchanged". are TRUE.
B. The real exchange rate will remain unchanged. Is FALSE because the change in the demand curve for dollars leads to a decrease in the real exchange rate.
D. Net exports at any given real exchange rate will increase. is FALSE because net exports at any given real exchange rate will decrease.
Answer: the demand curve for dollars will shift to the left added to the above.
Explanation:
On January 1, 2015, Stronger Industries issued $480,000 of 9%, five-year bonds that pay interest semiannually on June 30 and December 31. They are issued at $499,483 and their market rate is 8% at the issue date. After recording the entry for the issuance of the bonds, Bonds Payable had a balance of $480,000 and Premium on Bonds Payable had a balance of $19,483. Stroger uses the effective interest bond amortization method. The first semiannual interest payment was made on June 30, 2015. Complete the necessary journal entry for the interest payment date of June 30, 2015 by selecting the account names an dollar amounts from the drop-down menus.
Final answer:
The journal entry for the interest payment date of June 30, 2015, involves the accounts: Interest Expense, Premium on Bonds Payable, and Cash. A portion of the interest payment is allocated to the reduction of the premium on Bonds Payable.
Explanation:
The journal entry for the interest payment date of June 30, 2015, will involve the following accounts: Interest Expense, Premium on Bonds Payable, and Cash. Since the bonds were issued at a premium, a portion of the interest payment will be allocated to the reduction of the premium. The specific amounts for each account can be calculated as follows:
Interest Expense: $480,000 (Bonds Payable) * 9% (interest rate) * 6/12 (6 months) = $21,600
Premium on Bonds Payable: $19,483 (balance) - $21,600 (interest expense) = -$2,117
Cash: $21,600 (interest payment)
Wriston Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $16,000. Budgeted cash disbursements are $79,500, while budgeted cash receipts are $85,600. Wriston Company wants to have an ending cash balance of $15,000. The excess (deficiency) of cash available over disbursements for the month would be _________?
Answer:
The excess (deficiency) of cash available over disbursements for the month would be $22.100
Explanation:
To calculate the excess cash, consider the following formula:
Excess cash = Beginning cash balance + budgeted cash receipts - budgeted cash receipts.
Excess cash = 16.000 + 85.600 - 79.500 = $22.100
You made an investment of $12,000 into an account that paid you an annual interest rate of 3.5 percent for the first 5 years and 7.9 percent for the next 15 years. What was your annual rate of return over the entire 20 years
Answer:
interest rate r = 6.78 %
Explanation:
given data
investment = $12,000
interest rate = 3.5 percent = 0.035
time = 5 year
interest rate = 7.9 percent = 0.079
time = next 15 year
to find out
What was your annual rate of return over the entire 20 years
solution
we get here interest rate as
interest rate r = [tex][(1+r)^{t1} * (1+r)^{t2}]^{\frac{1}{t1+t2}} - 1[/tex] ...................1
here t1 is time period for first 5 year and t2 is time i.e next 15 year and r1 and r2 is rate
now put here value we get
interest rate r = [tex][(1+)^{t1} * (1+r)^{t2}]^{\frac{1}{t1+t2}} - 1[/tex]
interest rate r = [tex][(1+0.035)^{5} * (1+0.079)^{15}]^{\frac{1}{5+15}} - 1[/tex]
interest rate r = 1.0678 - 1
interest rate r = 0.0678
interest rate r = 6.78 %
In today's global market, U.S. companies using traditional mass manufacturing methods are:A. More efficient and highly competitiveB. No longer competitiveC. As competitive as other methods of productionD. Rebounding and becoming more competitive again
Answer:
Letter B is correct. No longer competitive.
Explanation:
The post-Fordist model of the 1970s made labor relations more flexible and had a major impact on the most widely used administrative model in the highly competitive globalized world.
Pos Fordism is marked by the concept of '' just in time '' which proposes lean production that meets consumer demands and needs through personalization, brand value creation and cost overstocking and stock analysis. variant market trends in a globalized market.
Sunny Day Manufacturing Company has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $2.03 at the end of next year. The company's earnings' and dividends' growth rate are expected to grow at the constant rate of 8.70% into the foreseeable future. If Sunny Day expects to incur flotation costs of 5.00% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be Alpha Moose Transporters Co.'s addition to earnings for this year is expected to be $745,000. Its target capital structure consists of 50% debt, 5% preferred, and 45% equity. Determine Alpha Moose Transporters's retained earnings breakpoint
A. $1,903,889
B. $1,655,556
C. $1,738,334
D. $1,986,667
Answer:
Alpha Moose Transporters's retained earnings breakpoint is B. $1,655,556
Explanation:
Addition to retained earnings = $745,000
Weight of equity = 45%
Retained earnings breakeven = $745,000 / 45%
= $1,655,556.
Retained earnings breakeven is $1,655,556.
Answer:
Based on the data provided as 50% is the debt,but 5% is preferred and 45% is the equity,and the foreseeable future rate is 8.7% so the retained earnings will be $1,738,334,option C is correct.
A7X Corp. just paid a dividend of $2.30 per share. The dividends are expected to grow at 15 percent for the next eight years and then level off to a growth rate of 6 percent indefinitely. If the required return is 14 percent, what is the price of the stock today?
The price of a stock is calculated by discounting the value of all future dividends to the present using the required rate of return. In this case, the dividends for the next eight years grow at a rate of 15 percent and then level off at a 6 percent growth rate indefinitely. The discounted dividends are then summed to get the present value of the stock.
Explanation:To calculate the price of a stock today, you can use the Dividend Discount Model (DDM). The DDM is based on the expectation that the price of a stock is equivalent to the present value of all its future dividends. Dividends for the next eight years can be calculated individually considering the 15 percent dividend growth. This should be followed by calculating dividend value from year 9 onward, considering the indefinite 6 percent growth from then on. The cost of each future dividend should then be discounted to the present by the required 14 percent rate of return, and all these discounted dividends should be summed up to get the present stock value.
Here is a short example of how you can find the first two future dividends. The dividend in the next year (D1) would be the current dividend multiplied by 1.15 (15 percent growth), i.e., $2.30 * 1.15 = $2.645. The dividend in the second year (D2) would be the first year's dividend multiplied by 1.15 i.e., $2.645 * 1.15 = $3.04175. Then you would discount these by the required return and calculate the present value of each dividends.
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Most markets are not monopolies in the real world because
A. supply curves slope upward.
B. firms usually face downward-sloping demand curves.
C. firms usually equate price with marginal cost.
D. there are reasonable substitutes for most goods.
Answer:
D. there are reasonable substitutes for most goods.
Explanation:
A monopoly is when there is only one firm operating in the industry. There are also no subsituites for goods and services produced by the monopoly. The monopoly sets the price for his product and earns economic profit in the long and short run.
There aren't a lot of monopolies in the real world because most goods have substitutes. Therefore, consumers can substitute the monopoly product for another product and there isn't just one firm operating in the industry.
Most markets are not monopolies in the real world because there are reasonable substitutes for most goods, which allows consumers to choose similar products from different firms. The demand for a monopolist's product constrains its price, and a monopolist cannot require consumers to purchase its product.
Explanation:In the real world, most markets are not monopolies because there are reasonable substitutes for most goods. This means that consumers have options and can choose to purchase similar products from different firms if one firm raises its prices. While a monopolist can charge any price for its product, the demand for the firm's product constrains the price. No monopolist, even one that is thoroughly protected by high barriers to entry, can require consumers to purchase its product. Because the monopolist is the only firm in the market, its demand curve is the same as the market demand curve, which is downward-sloping.
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Your Way, Inc. Eric buys companies that are small or companies in financial trouble. He helps these companies turn around and develop a competitive advantage. The company that he recently purchased is called Your Way, Inc. The company sells men's clothing and accessories. Your Way keeps the sewing machines for clothes manufacturing at a separate production facility so that the store location space can be reserved for display and selling. After looking over the different products available, Eric realized that the company's previous owner was not aware of the product life cycle because the company kept items that were obviously too old and out of date. Also, because of the high turnover, employees did not have good knowledge of the different product lines and did not know the difference between a product line and a product mix. To move the company forward, Eric thought of the following two measures: first, developing a new product to incorporate into the product mix; and second, eliminating the out-of-date products. Refer to Your Way, Inc. If Eric wanted to develop a new product, he would begin with(A) concept testing.(B) screening.(C) product analysis.(D) idea generation.(E) marketing analysis.
Answer: Marketing analysis
Explanation:
Marketing analysis which is detemining market needs or demand is the first step in be able to get a good demand for a product. After the analysis a product can then be designed to meet the Market needs through idea generation, product analysis and testing the concept.
Malkind Hardware is adding a new product line that will require an investment of $ 1 comma 418 comma 000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $ 320 comma 000 the first year, $ 280 comma 000 the second year, and $ 240 comma 000 each year thereafter for eight years. Compute the payback period. Round to one decimal place.
Answer:
5.4 years
Explanation:
In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:
In year 0 = $1,418,000
In year 1 = $320,000
In year 2 = $280,000
In year 3 = $240,000
In year 4 = $240,000
In year 5 = $240,000
In year 6 = $240,000
In year 7 = $240,000
In year 8 = $240,000
In year 9 = $240,000
In year 10 = $240,000
If we sum the first 5 year cash inflows than it would be $1,320,000
Now we deduct the $1,320,000 from the $1,418,000 , so the amount would be $98,000 as if we added the six year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is $240,000
So, the payback period equal to
= 5 years + $98,000 ÷ $240,000
= 5.4 years
In 5.4 yeas, the invested amount is recovered.
The standard cost of product 5252 includes 1.90 hours of direct labor at $14.30 per hour. The predetermined overhead rate is $22.00 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $14.60 per hour and $80,100 of manufacturing overhead costs. It produced 2,000 units.
(a) Compute the total, price, and quantity variances for labor.
(b) Compute the total overhead variance.
Answer:
a) The total, price, and quantity variances for labor is $4,060 totally, $0.3 per direct labour, and 200 hours respectively
b) The total overhead variance is $36,100
Explanation:
The variance is the difference between actual figures and standard figures.
The actual hour taken for 1 unit in July is 2.0 hour, so the quantity variance for labor in per unit is 0.1 hour = 2.0 – 1.9; then the total quantity variance for 2,000 units produced in July is 200 hours = 0.1 x 2,000
The price variance for labor is $0.3 = $14.60 - $14.30
The total standard cost for labor in July is $54,340 = $14.3 x 1.9 hours x 2,000 units
The total actual cost for labor in July is $58,400 = $14.6 x 2.0 hours x 2,000 units
So the variance in total labor cost of July is $4,060 = $58,400 - $54,340
The standard overhead cost for 2,000 units is $44,000, while the actual overhead cost in July is $80,100. So the total overhead variance is $36,100
New Gadgets is growing at a very fast pace. As a result, the company expects to pay annual dividends of $0.55, 0.80, and $1.10 per share over the next three years, respectively. After that, the dividend is projected to increase by 5 percent annually. The last annual dividend the firm paid was $0.40 a share. What is the current value of this stock if the required return is 16 percent?
Answer:
= $8.50
Explanation:
First, calculate the dividend per year;
D1 = 0.55
D2= 0.80
D3= 1.10
D4= D3(1+g); 1.10(1.05)= 1.155
Next, find the PV of each dividend given a rate of 18%
PV (D1) =0.55 / (1.16) = 0.4741
PV (D2) = 0.80 / (1.16^2) = 0.5945
PV (D3) = 1.10 / (1.16^3) = 0.7047
PV(D4 onwards) = [tex]\frac{\frac{1.155}{0.16-0.05} }{1.16^{3} }[/tex] = 6.7269
Next, sum up the PVs to calculate the price;
=0.4741 + 0.5945 + 0.7047 + 6.7269
= 8.50
Therefore, the current value of this stock is $8.50
Benchmarking involves:
1. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.
2. checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with.
3. studying whether a company's resource strengths are more or less powerful than the resource strengths of rival companies.
4. studying how a company's competitive capabilities stack up against the competitive capabilities of selected companies known to have world-class competitive capabilities.
5. comparing the best practices in one industry against the best practices in another industry.
Answer:
1. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.
Explanation:
Benchmarking -
It is the method of comparing the business performance and the process like the cost , time and quality .
Benchmarking is also known as process benchmarking , or , best practice benchmarking .
It is the comparison among various companies , that how the company performs various value chain activities .
Hence , from the question , the correct statement for the given term is ( 1. ) .
Benchmarking involves comparing companies' performance, costs, and effectiveness of value chain activities, as well as comparing competitive capabilities and best practices across industries.
Explanation:Benchmarking involves comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities. It also includes studying how a company's competitive capabilities stack up against the competitive capabilities of selected companies known to have world-class competitive capabilities. Additionally, benchmarking involves comparing the best practices in one industry against the best practices in another industry.
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A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following.System 1 2 3 4 5PW of cost $1000 $4000 $4000 $10,000 $14,000PW of benefits $8000 $8000 $14,000 $16,000 $24,000Which sytem has the greatest B-C ratio?
Answer:
Design 1
Explanation:
Benefit-Cost ratio is used to determine the net benefit pre dollar invested in a project.
Benefit-Cost ratio formula = PW of benefits / PW of cost
Design 1; 8000/1000 = 8
Design 2; 8000/4000 = 2
Design 3; 14000/4000 = 3.5
Design 4; 16000/10000= 1.6
Design 5; 24000/14000= 1.7
Therefore, from the above calculations, design 1 has the greatest Benefit-Cost ratio.
Dream, Inc., has debt outstanding with a face value of $6 million. The value of the firm if it were entirely financed by equity would be $17.85 million. The company also has 350,000 shares of stock outstanding that sell at a price of $38 per share. The corporate tax rate is 35 percent. What is the decrease in the value of the company due to expected bankruptcy costs? (Assume that the market value of the debt is the same as the face value of the debt, because the debt has just been issued at today’s market interest rate, that the debt is perpetual, and that in this economy corporate taxes as well as financial distress costs exist.)
Answer:
$650,000
Explanation:
For computing the decrease in the expected bankruptcy costs, first we have to determine the total firm value in each case which is shown below:
Total firm value = Equity + Debt × corporate tax rate
= $17,850,000 + $6,000,000 × 0.35
= $17,850,000 + $2,100,000
= $19,950,000
Now the total firm value based on market share
= Equity + Debt
= 350,000 shares × $38 + $6,000,000
= $13,300,000 + $6,000,000
= $19,300,000
The difference would be
= $19,950,000 million - $19,300,000
= $650,000