Answer:
The impact on operating income for eliminating this business segment would be a decrease in profit of $132,400. The right answer is b.
Explanation:
According to the data, we have the following details:
division sales=$1,049,000
variable costs= $859,000
Hence, contribution= division sales-variable costs
=$1,049,000-$859,000
=$190,000
30% of the fixed costs allocated to that division could be eliminated
Decrease in fixed cost=$192,000×30%= $57,600
Therefore, the impact on operating income for eliminating this business segment would be $190,000-$57,600= $132,400, which means that there would a decrease in profit.
Answer:
Net decrease in operating income $132,400
Explanation:
The relevant cash flows to determine the impact of eliminating the division are:
lost contribution from shut down Savings in fixed cost from shut downPlease, note that only 30% of the fixed costs to be saved is relevant, the balance is not relevant for this decision. Simply because they would be incurred either way.
$
The impact on operating income:
Lost contribution = ( 1,049,000 - 859,000)= (190,000)
Savings in fixed cost = 30% ×192,000 = 57,600
Net decrease in operating income 132,400
John Jones has both a cash account and an IRA account at your firm. Mr. Jones calls and asks that 2,000 shares of DEF stock be purchased at the market in his IRA account. The trade is executed, however the transaction was recorded in Mr. Jones' cash account. The proper procedure to correct this is to:
Answer:
FINRA requires that whenever there is a change of account name or designation relating to an executed order, this said change has to be put into writing. The process is called a "Cancel-Rebill" record. The branch manager or compliance officer in charge must be made aware of the reasons for the change and must tender an approval for the change in writing. This said record must be developed for any change of account designation - even for something as little as moving a trade from a customer's cash account to the same customer's IRA account.
Molteni Motors Inc. recently reported $3.5 million of net income. Its EBIT was $5.25 million, and its tax rate was 30%. What was its interest expense? (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $3.5 million net income by 1 − T = 0.7 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense.) Round your answer to the nearest dollar. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.
Answer:
$250,000
Explanation:
The computation of the interest expense is shown below:
Given that
Net Income = $3,500,000
Tax rate = 30%
EBIT = $5,250,000
As we know that
EBT = EBIT - Interest Expense
So,
Interest expense = EBIT - EBT
where,
EBT = Net Income ÷ (1 -Taxes)
= $3,500,000 ÷ ( 1 - 30%)
= $5,000,000
And, the EBIT is $5,250,000
So, the interest expense is
= $5,250,000 - $5,000,000
= $250,000
We simply applied the above formula
A collar is established by buying a share of stock for $50, buying a 6-month put option with exercise price $43, and writing a 6-month call option with exercise price $57. On the basis of the volatility of the stock, you calculate that for a strike price of $43 and expiration of 6 months, N(d1) = 0.8235, whereas for the exercise price of $57, N(d1) = 0.7411. a. What will be the gain or loss on the collar if the stock price increases by $1?
Answer:
$0.0824
Explanation:
Calculating the gain on the collar, we have:
Gain= (delta of stock)- (delta of call) + (delta of put)
Where,
Delta of call = N(d1) short call=0.7411
Delta of put = (N(d1) long put - 1) =
0.8235 - 1 = -0.1765
Therefore gain will be:
Gain = $1 - 0.7411 - 0.1765
= 0.0824
The gain on the collar by an increase of $1 in stock price is 0.0824
Shares of common stock of the Samson Co. offer an expected total return of 13.00 percent. The dividend is increasing at a constant 5.40 percent per year. The dividend yield must be: Multiple Choice 2.41% 13.00% 5.40% 7.60% 18.40%
Answer:
7.6%
Explanation:
The formula for calculating the Required return is:
Required return = Dividend yield + Capital Gain Yield
Hence,
13% = Dividend Yield + 5.40%
Dividend Yield = 7.60%.
Hope this helps.
Goodluck.
The current controllable margin for Henry Division is $138000. Its current operating assets are $300000. The division is considering purchasing equipment for $90000 that will increase annual controllable margin by an estimated $5000. If the equipment is purchased, what will happen to the return on investment for Henry Division
Answer:
The correct answer is Decrease ROI by 9.33%.
Explanation:
According to the scenario, the computation of the given data are as follows:
First we calculate return on investment before purchase:
Return on investment = (Controllable Margin ÷ Operating assets ) × 100
= ($138,000 ÷ $300,000) × 100
= 46%
Controllable margin (New) = $138,000 + $5,000 = $143,000
Operating assets = $300,000 + $90,000 = $390,000
Return on investment (New) = ($143,000 ÷ $390,000) × 100
= 36.67%
So, change in ROI = 36.67 % - 46%
= - 9.33% ( Negative shows decrease )
Hence, Decrease ROI by 9.33%.
Englert Hospital began using standards to evaluate its Admissions Department. The standard was broken into two types of admissions as follows: Type of Admission Standard Time to Complete Admission Record Unscheduled admission 30 min. Scheduled admission 15 min. The unscheduled admission took longer because name, address, and insurance information needed to be determined and verified at the time of admission. Information was collected on scheduled admissions prior to the admissions, which was less time-consuming. The Admissions Department employs four full-time people (40 productive hours per week, with no overtime) at $15 per hour. For the most recent week, the department handled 140 unscheduled and 350 scheduled admissions. a. How much was actually spent on labor for the week? $ b. What are the standard hours for the actual volume for the week (round to one decimal place)? hours c. Calculate the time variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. In your computation, round the standard direct labor rate to the nearest whole cent. Time variance $
Labor costs for the week are determined by multiplying the number of admissions by the standard times and the employee hourly wage. The standard hours are calculated by summing the time for all admissions, and the time variance shows how actual performance compares to standards.
Explanation:The question pertains to the evaluation of labor costs and variance for an admissions department in a hospital. To calculate the labor cost for the week, the total number of admissions is multiplied by the respective standard times and then by the hourly wage of the employees. The standard hours are found by adding the total time taken for both unscheduled and scheduled admissions. The time variance is calculated by subtracting the actual labor hours used from the standard hours for the actual volume of work. The variance indicates whether the department performed better (a negative variance) or worse (a positive variance) than the standard.
"Advertising": A. is the only form of mass selling. B. is also called "sales promotion." C. is concerned with "promotion" using samples, coupons, and contests. D. involves direct spoken communication between sellers and potential customers. E. is any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor.
Answer:
E. is any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor.
Explanation:
Advertising is marketing communication business activity that uses an openly sponsored message to promote and sell a product, service, or idea and are sponsored by the business typically wishing to promote their services. Advertising is communication through various media such as the newspaper, T.V, blogs and other channels the actual presentation of the message is medium that is called ad or an advertisement and includes non-personal messages.1. Characteristics of competitive markets The model of competitive markets relies on these three core assumptions: 1. There must be many buyers and sellers—a few players can't dominate the market. 2. Firms must produce an identical product—buyers must regard all sellers' products as equivalent. 3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry.
Answer: Please refer to Explanation
Explanation:
Hello. Question was a bit incomplete so I attached the completing details.
a) Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect the style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reflected in the apparel�s prices.
- No, not an identical product
This is not a Competitive Market because the products are not identical. They are differentiated by better quality and design and this is reflected in the price.
b) In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
- No, not many sellers.
There are only 2 sellers in this market. This market is too SATURATED ( few companies) for it to be a Competitive Market as a Competitive Market requires that there be many buyers and sellers.
c) Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
- Yes, meets all the assumptions.
This market meets all the assumptions to be considered a Competitive Market. There are many buyers and sellers of the white socks. The firms in the market produce identical socks so much so that people don't know the difference. Markets like these usually have low barriers to entry hence the high amount of companies there.
d) Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States.
- No, no free entry.
As stated, Scholastik Inc. is the ONLY company with legal rights to publish books in that series in the US. This means that there are very high barriers to entry as Scholastik is protected by the law. No other company is allowed to do what they do so it is not a Competitive Market.
Competitive markets in the perfect competition model are defined by having a large number of buyers and sellers, producing identical (homogeneous) products, and allowing for free entry and exit from the market. These characteristics ensure that no single entity can influence market prices, promoting efficiency and equity in the market.
The perfect competition model is a fundamental concept in economics, describing a market structure where specific criteria are met to ensure a competitive environment. In this context, competitive markets are characterized by three core assumptions, which play a crucial role in shaping market dynamics and competition levels.
Many Buyers and Sellers: This condition implies that the market consists of a large number of buyers and sellers, where no single entity (buyer or seller) has the market power to influence the price levels. This ensures that each party acts as a price taker.Identical Products: All firms in the market must produce homogeneous goods or services, making products offered by different firms perfectly substitutable in the eyes of consumers. This characteristic eliminates brand loyalty or preferences based solely on product differentiation.Free Entry and Exit: The market must allow for easy entry and exit of firms. This assumes no significant barriers to entry or exit, such as high startup costs or stringent regulations, allowing firms to participate freely based on market conditions.These characteristics ensure that the market operates efficiently, with prices reflecting the true supply and demand. Perfect competition models serve as a benchmark for comparing other market structures, such as monopolistic competition and oligopoly, where these assumptions do not fully apply.
A corporate bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond
Answer:
5.76%
Explanation:
The solution is as follows,
=> (1 + 0.10) = (1 + r) * (1 + 0.04)
=> r = (1.1 / 1.04) - 1
=> r = 5.76%
Hope this clear things up.
Thankyou.
Answer:
The real rate of return on this bond is 5.77%
Explanation:
1. Let's review the information given to us to answer the question correctly:
Nominal rate = 10% = 0.1
Inflation rate = 4% = 0.04
2. What is the real rate of return on this bond?
Let's recall the formula of the Real Rate of Return:
Real Rate of Return = (1 + Nominal rate/1 + Inflation rate) - 1
Replacing with the values we know, we have:
Real Rate of Return = (1 + 0.1/1 + 0.04) - 1
Real Rate of Return = 1.0577 - 1
Real Rate of Return = 0.0577 or 5.77%
Consider two companies that are identical in terms of current operating cash flows and current capital investment. They are also identical in terms of the rate of future growth in operating cash flows. The only difference is that company A has a higher rate of growth in capital expenditures than company B. Which company is more valuable, and why?
Answer: Most likely Company A
Explanation:
Generally an increase in Capital Expenditure means that a company is investing more which would mean that revenue will increase in future which will give it a higher valuation.
However, sometimes this spending might just be on Maintenance of Capital assets. When this happens the company is given a lower valuation.
Plainly speaking therefore, if Company A has a higher growth rate in Capital Expenditure because they are investing which is likely to be the case, then they would be more valuable than Company B.
The next dividend payment by Savitz, Inc., will be $1.72 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $33 per share, what is the required return
Answer:
9.21%
Explanation:
To calculate this, we use the formula for the dividend discount model as follows:
P = D/(r - g) ............................ (1)
Where,
P = current stock price = $33
D = Next dividend = $1.72
r = required return = ?
g = growth rate = 4% = 0.04
Substituting the values into equation (1) and solve for r, we have:
33 = 1.72/(r - 0.04)
33(r - 0.04) = 1.72
33r - 1.32 = 1.72
33r = 1.72 + 1.32
33r = 3.04
r = 3.04/33
r = 0.0921, or 9.21%
Johanna Pye is a hair stylist at Mamon Salon. The salon's policy states that stylists receive 40 percent of the revenue they generate as their compensation. Johanna grew tired of sharing her income with the salon and decided she wanted to make more money. She continued seeing her existing clients at the salon, but when new clients called for an appointment, Johanna lied and told them the salon was completely booked for the next few months. She then offered to come to their homes and cut their hair for 10 percent less than what the clients would be charged at the salon. She did not report the house call appointments to the salon, and was therefore able to keep all the income she generated from these side clients. This is an example of what type of scheme
Answer:
Business diversion
Explanation:
The above scenario is an example of business diversion type of scheme whereby Johanna diverted her employer new client in order to generate her personal income, and it happens without the knowledge of her boss
Shehata Coffee Shop calculated the NET value of its accounts receivable as of December 31, 2019, to be $179,000, based on an aging schedule of accounts receivable. Shehata has also provided the following information: The gross accounts receivable balance on December 31, 2019 was $191,800. Actual uncollectible accounts receivable written off during 2019 totaled $13,400. The Allowance for Uncollectible Accounts balance on January 1, 2019 was $17,800.
Required: Part 1: What account(s) and for what $ value(s) would appear on the Balance Sheet?
Part 2: How much is Shehata's 2019 Bad Debt Expense? Show your detailed calculation for credit, 6 points:
a. 17,200
b. 12,800
c. 8,400
d. 4,400
e. None of the above
Answer:
1. The preparation of balance sheet is shown below:-
2. $8,400
Explanation:
1 Balance sheet
December 31, 2019
Assets Amount
Current assets
Accounts receivables $191,800
Allowance for uncollectible accounts ($12,800)
Net accounts receivables $179,000
Working note:-
Net accounts receivables = $179,000
Gross accounts receivables = $191,800
Allowance for uncollectible accounts, December 31, 2019 = Gross accounts receivables - Net accounts receivables
= $191,800 - $179,000
= $12,800
2. Bad debt expense = Allowance for uncollectible accounts, December 31, 2019 - (Allowance for uncollectible accounts, January 1, 2019 - Uncollectible accounts written off during 2019)
= $12,800 - ($17,800 - $13,400)
= $12,800 - $4,400
= $8,400
A 1000 par value, 8 percent bond with quarterly coupons is callable five years after issue. The bond matures for 1000 at the end of ten years and is sold to yield a nominal rate of 6 percent compounded quarterly under the assumption that the bond will not be called. Calculate the redemption value, at the end of five years, that will yield the purchaser the same nominal rate of 6 percent compounded quarterly.
We find that the call premium is approximately $82.23. Therefore, the correct answer is option E: $82.23.
To determine the call premium at the end of five years that would yield the purchaser the same nominal rate of 6% compounded quarterly if the bond is called, we need to compare the yields under the two scenarios: one where the bond is held to maturity, and the other where it is called after five years.
First, let's calculate the present value of the bond if it is held to maturity:
The bond pays quarterly coupons of 8%, so the quarterly coupon payment is [tex]0.08 \times \frac{1000}{4} = $20.[/tex]
The bond matures in ten years, and the yield is 6% compounded quarterly, so the quarterly yield rate is:
0.06/4 = 0.015.
Using the present value formula for a bond, we get:
[tex]PV_{\text{hold to maturity}} = \frac{C}{{(1 + r)^n}} + \frac{C}{{(1 + r)^{n-1}}} + \ldots + \frac{C}{{(1 + r)^1}}} + \frac{M}{{(1 + r)^n}}[/tex]
Where:
C is the quarterly coupon payment,
r is the quarterly yield rate, and
n is the total number of quarters.
[tex]P V_{\text {hold to maturity }}=\frac{20}{(1+0.015)^1}+\frac{20}{(1+0.015)^2}+\ldots+\frac{20}{(1+0.015)^{40}}+\frac{1000}{(1+0.015)^{40}}[/tex]
Now, let's calculate the present value if the bond is called at the end of five years. The call premium is the additional amount paid at the call date.
The call premium is the difference between the present value of the remaining payments if the bond is held to maturity and the present value of the remaining payments if the bond is called at the end of five years.
[tex]\begin{aligned}& P V_{\text {call premium }}=P V_{\text {hold to maturity }}- \\& \left(\frac{20}{(1+0.015)^{21}}+\frac{20}{(1+0.015)^{22}}+\ldots+\frac{20}{(1+0.015)^{40}}+\frac{1000}{(1+0.015)^{40}}\right)\end{aligned}[/tex]
Now, calculate both values and find the call premium:
[tex]P V_{\text {hold to maturity }} \approx \frac{20}{1.015}+\frac{20}{(1.015)^2}+\ldots+\frac{20}{(1.015)^{40}}+\frac{1000}{(1.015)^{40}}[/tex]
[tex]\begin{aligned}& P V_{\text {call premium }}=P V_{\text {hold to maturity }}- \\& \left(\frac{20}{(1.015)^{21}}+\frac{20}{(1.015)^{22}}+\ldots+\frac{20}{(1.015)^{40}}+\frac{1000}{(1.015)^{40}}\right)\end{aligned}[/tex]
After calculating these values, the correct result is approximately: 82.23
Complete Question:
A $1,000 par value 8% bond with quarterly coupons is callable five years after issue. The bond matures for 1000 at the end of ten years and is sold to yield a nominal rate of 6 percent compounded quarterly, calculated under the assumption that the bond will not be called, and is redeemed at maturity. Please determine the call premium at the end of five years, that would yield the purchaser the same nominal rate of 6% compounded quarterly if the bond is, in fact, called at the end of five years.
A. 67.82
B. 85.84
C. 60.54
D. The answer is not listed here
E. 82.23
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 8.00 Standard deviation of weekly demand 20 per week Order cost $ 207.00 Lead time 3 week(s) Annual holding cost (%) 24 % of item cost Service probability 99 % Annual demand 27,400 Average demand 548 per week a. Determine the order quantity and reorder point.
Answer:
Order quantity = 478units
Reorder point = 420 per week
Explanation:
Given
Item cost =$8
Standard deviation of weekly demand = 20 per week
Order cost(C) = $207
Lead time = 3 weeks
Annual holding cost (H) = 24% of item cost
Service probability = 99%
Annual demand(D) = 27,400
Average demand = 548 per week
Order quantity = sqrt[(2 × D × C) ÷ H]
Order quantity = sqrt[(2 × 27400 × 207) ÷ (0.24 × 207)]
sqrt[ 11343600 ÷ 49.68]
= 477.84
Order quantity = 478 units
Reorder Point = Lead time × daily usage
21 × 20 = 420
Hypothetical Country has $120 in currency, $280 in reserves, and $900 in deposits. There are no excess reserves. Use this information to answer the questions. Enter your answers in decimal form rounded to two decimal places. Calculate the money multiplier. money multiplier: Calculate the reserve ratio. reserve ratio: Calculate the currency drain ratio. currency drain ratio:
Answer:
Reserve ratio = 31.11%
Currency drain ratio = 13.33%.
Explanation:
Reserve ratio = Reserves/Deposits = $280/$900 = 0.3111, or 31.11%
Currency drain ratio = Currency/Deposits = $120/$900 = 0.1333, or 13.33%
Therefore, reserve ratio is 31.11%, and currency drain ratio is 13.33%.
Gray is a 50% partner in Fabco Partnership. Gray's tax basis in Fabco on January 1, year 4, was $5,000. Fabco made no distributions to the partners during year 4 and recorded the following: Ordinary income $20,000 Tax-exempt income 8,000 Portfolio income 4,000 What is Gray's tax basis in Fabco on December 31, year 4?
Answer:
$21000
Explanation:
To determine Gray’s tax basis for a 50% interest in the Fabco Partnership, The interest is increased by the partner’s distributive share of all partnership items of income and decreased by the partner’s distributive share of all loss and deduction items.
Gray’s beginning basis = $5,000
Gray’s 50% distributive share of ordinary income = 50% × $20000 = $10000
Gray’s 50% tax-exempt income= 50% × $8000 = $4,000 and
portfolio income = 50% × $4000 = $2,000
Therefore, the ending basis of Gray’s Fabco partnership interest = $5000 + $10000 + $4000 + $2000 = $21000
The data given below are from the accounting records of the Kuhn Corporation:
Net Income (accrual basis) $61,000
Depreciation Expense $17,000
Decrease in Accounts Payable $3,300
Decrease in Inventory $3,800
Increase in Bonds Payable $18,000
Sale of Common Stock for cash $31,600
Increase in Accounts Receivable $6,100
Based on this information, the net cash provided by (used in) operating activities using the indirect method would be:________
Answer:
$72,400
Explanation:
The preparation of the Cash Flows from Operating Activities - Indirect Method is presented below:
Cash flow from Operating activities - Indirect method
Net income $61,000
Adjustment made:
Add : Depreciation expense $17,000
Less: Increase in accounts receivable -$6,100
Add: Decrease in inventory $3,800
Less: Decrease in accounts payable -$3,300
Total of Adjustments $11,400
Net Cash flow provided Operating activities $72,400
The items in minus sign reflects the cash outflow and the items in plus sign shows the cash inflow
Portfolio managers pick stocks for their clients’ portfolios based on the investment objective of the portfolio and several other factors. One key consideration is each stock’s contribution to portfolio risk and its statistical relationship with the portfolio’s other stocks.
ased on your understanding of portfolio risk, identify whether each statement is true or false.
1. Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations
2. The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio
3. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations, because diversification lowers the portfolio's risk.
Answer:
1. Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations FALSE, IT IS EXACTLY THE OPPOSITE, SINCE THE PORTFOLIO'S RISK IS LIKELY TO BE SMALLER DUE TO DIVERSIFICATION.
2. The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio TRUE, NEGATIVELY CORRELATED STOCKS ARE USED TO DECREASE A PORTFOLIO'S RISK
3. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations, because diversification lowers the portfolio's risk. TRUE, THIS STATEMENT IS JUST THE OPPOSITE OF STATEMENT 1 WHICH WAS FALSE.
Diversification helps to reduce the risk of a portfolio by spreading it across different assets.
Explanation:1. False. Due to the effects of diversification, the portfolio's risk is likely to be less than the average of all stocks' standard deviations. Diversification helps to spread the risk across different assets, reducing the overall risk of the portfolio.
2. True. By adding negatively correlated stocks to the portfolio, the unsystematic risk component of the total portfolio risk can be reduced. This is because negatively correlated stocks tend to move in opposite directions, offsetting each other's risks.
3. True. A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations because diversification lowers the portfolio's risk. Diversification helps to reduce the impact of individual stock price movements on the overall portfolio.
Learn more about Portfolio Risk here:https://brainly.com/question/33882780
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Sam and Sarah, husband and wife, both worked for an aluminum siding firm, doing similar work in production. Their co-worker, Ahmed, who was a Muslim, was systematically harassed by their supervisor, who called him a terrorist, denied him the right to pray, and generally made his life at work very difficult. Sarah spoke up on his behalf, and the supervisor demoted Sam, her husband. Which of the following statements is most correct
a. Ahmed has a cause of action against the employer for retaliation, but Sam does not
b. Sarah has a cause of action against the employer for retaliation, but Sam does not
c. Sam has a cause of action against the employer for retaliation
d. There are no causes of action arising from this set of facts
Answer:
Answer is C
Explanation:
Sam has a cause of action against the employer for retaliation.
Answer:
give this answer a "thanks " or i wont help
Explanation:
The owner of a car wash wants to see if the arrival rate of cars follows a Poisson distribution. In order to test the assumption of a Poisson distribution, a random sample of 150 ten-minute intervals was taken. You are given the following observed frequencies:
Number of Cars Arriving in a 10-Minute Interval Frequency
0 3
1 10
2 15
3 23
4 30
5 24
6 20
7 13
8 8
9 or more 4
150
The calculated value for the test statistic equals:_______
Answer:
4.832
Explanation:
See attached file
The weighted average cost of capital is ________. A. the cost of capital for the firm as a whole B. made up of three financing components: the cost of debt, the cost of preferred stock, and the cost of equity C. the average of the cost of each financing component, weighted by the proportion of each component D. All of the above
Answer:
The answer is D. All of the above
Explanation:
The Capital structure of most companies comprise equity, debt and/or preference shares. All these that made up capital structure has cost or let's say return. We have cost of capital, cost of debt, cost of preference shares.
Therefore, weighted average cost of capital is average of the cost of each financing component(cost of capital, cost of debt and cost of preference shares), weighted by the proportion of each component
All the options relates to the weighted average cost of capital(WACC).
The weighted average cost of capital (WACC) encompasses the cost of capital for the entire firm, including the cost of debt, equity, and preferred stock, weighted by their proportions in the total capital.
Explanation:The weighted average cost of capital (WACC) is D. All of the above. It is the cost of capital for the firm as a whole, made up of three financing components: the cost of debt, the cost of preferred stock, and the cost of equity. Additionally, it is the average of the cost of each financing component, weighted by the proportion of each component in the overall capital structure. WACC is a crucial metric for firms as it represents the minimum return that a company must earn on its existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere.
The dollar-value LIFO method was adopted by Blue Corp. on January 1, 2020. Its inventory on that date was $390,700. On December 31, 2020, the inventory at prices existing on that date amounted to $369,600. The price level at January 1, 2020, was 100, and the price level at December 31, 2020, was 112.
Final answer:
The question involves applying the dollar-value LIFO inventory method to adjust the year-end inventory for inflation, ensuring accurate valuation. It requires calculating the adjusted value of inventory considering changes in price levels to determine real changes in inventory quantity. Additionally, accounting profit is mentioned as a basic calculation of revenue minus expenses.
Explanation:
The question asks about the dollar-value LIFO (Last-In, First-Out) method, a technique used in accounting to value inventory and measure changes in the cost of products due to inflation. Under this method, a company measures and reports changes in the value of its inventory considering the price level changes. The inventory value at the beginning is given as $390,700 with a price level index of 100. By the end of the year, the inventory value is reported as $369,600 with a price level index of 112. To adjust the ending inventory to compare it fairly with the beginning inventory, we must account for the inflation using the given price indices. This involves converting the ending inventory value to the base year's price level.
To do this, we calculate the inflation-adjusted inventory value by dividing the December 31, 2020, inventory value by the price level index for that date (112) and then multiplying by the base price level index (100). This calculation adjusts the inventory value to reflect what it would have been in the base year, allowing a fair comparison to determine whether there has been a real increase or decrease in inventory quantity. Using this method ensures that the inventory valuation is not inflated merely due to increased prices, thereby providing a more accurate measure of inventory levels for financial reporting and analysis.
Accounting profit is another important concept in business, often calculated as sales revenue minus expenses. For instance, if a firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be $50,000, which is the remaining amount after subtracting total expenses from sales revenue.
Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $12 each from its Asian supplier, TeddySports. Unfortunately, at the time of the order placement, demand is still uncertain: Teddy Bower forecasts that its demand is normally distributed with a mean of 2,300 and a standard deviation of 1,100. Teddy Bower sells these parkas at $22 each. Unsold parkas have little salvage value; Teddy Bower simply gives them away to a charity (and also doesn’t collect a tax benefit for the donation).
a) How many parkas should Teddy Bower buy from TeddySports to maximize expected profit?
For parts b) through d), assume Teddy Bower orders 3,000 parkas (Q=3,000). b) What is Teddy Bower’s CSL (in-stock probability)?
c) On average, how many customers does Teddy Bower expect to turn away because of shortage? And on average, how many parkas will Teddy Bower liquidate after each season?
d) What is Teddy Bower’s expected profit?
Answer:
a) 2179 parkas
b) 0.7389
c) 174 customers
d) 10,772
Explanation:
Given:
Bower's selling price =$22
Salvage value: $0
Cost price = $12
Mean distribution= 2300 parkas
S.d = 1100 parkas
a) Number of parkas Teddy Bower should buy from Teddysports to maximize profit:
Let's first calculate overage(Co) and underage (Cu) cost.
•Cu = Selling price - Cost price
= $22 - $12
= $10
Underage cost = $10
•Co = Cost price - Salvage value
= $12 - $0
= $12
Overage cost = $12
Let's now find the critical ratio with the formula:
[tex] \frac{C_u}{C_u+C_o}[/tex]
[tex]= \frac{10}{12+10} [/tex]
= 0.4545
From the Excel function NORMSINV, the corresponding z value is =
NORMSINV(0.4545)
z value = -0.11
For the number of parkas Teddy Brown should order, we have:
Quantity = Mean +(z*s.d)
= 2300+ (-0.11 * 1100)
= 2179 parkas
b) for z value corresponding to expected sales of 3000 parkas, we have:
z value = (expected demand -mean)/s.d
[tex] \frac{3000-2300}{1100}[/tex]
= 0.64
From the Excel function NOEMSDIST, the corresponding probability =
NORMSDIST(0.64)
= 0.7389 = 73.89%
In stock probability = 0.7389
c) For L(0.64) using the standard normal loss function table, L(z) =
L (0.64) = 0.158
For expected lost sales, we have:
S.d * L(z)
= 1100* 0.158
= 173.8
= 174.
On average, there is expected to be a turn away of 174 customers due to shortage.
d)
Lets first calculate expected sales and left over inventory.
•Expected sales = Mean -expected lost sales
= 2,300 - 174
= 2,126
•Left over inventory expected=
Expected demand - Expected lost sales
= 3000 - 2126
= 874
For expected profit, we have:
[tex] (C_u* Expected lost sales)-(C_o* Expected leftover inventory)[/tex]
=($10*2126)-($12*874)
= $10,772
Profit expected = $10,772
Obj. 2Waylander Coatings Company purchased waterproofing equipment on January 6 for $320,000. The equipment was expected to have a useful life 3 years or of four years, or 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours during Year 1, 6,400 hours in Year 2, 4,400 hours in Year 3, and 2,000 hours in Year 4. Instructions Show Me Now Excel Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (A) the straight-line method, (B) the units-of-activity method, and (C) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:
Answer:
Depreciation expense for Year 1 Year 2 Year 3 Year 4
Method: Straight-line $71,250 $71,250 $71,250 $71,250
unit-of-production $102,600 $91,200 $62,700 $28,500
Double-declining $160,000 $80,000 $40,000 $20,000
Total depreciation for the four years under:
straight-line is $285,000unit-of-production is $285,000double-declining is $300,000Explanation:
(A) Under straight-line method, depreciation expense is (cost - residual value) / Estimated useful life = ($320,000 - $35,000) / 4 years = $71,250 yearly depreciation expense.
Accumulated depreciation for 4 years is $71,250 x 4 years $285,000.
The net book value (NBV) of the asset (cost - accumulated depreciation) is at the end of Year 4: $320,000 - $285,000 = $35,000.
(B) The unit-of-production method is used when the asset value closely relates to the units of output it is able to produce. It is expressed with the formula below:
(Original Cost - Salvage value) / Estimated production capacity x Units/year
At Year 1, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 7,200 hours = $102,600/year
At Year 2, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 6,400 hours = $91,200/year
At Year 3, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 4,400 hours = $62,700/year
At Year 4, depreciation expense (DE) is: ($320,000 - $35,000) / 20,000 operating hours x 2,000 hours = $28,500/year
Accumulated depreciation for 4 years is $102,600 + $91,200 + $62,700 + $28,500 = $285,000.
Note that this depreciation method results in higher depreciation charge when the asset is heavily used, at this time, it was in Year 1.
The NBV under this method is is: $320,000 - $285,000 = $35,000.
(C) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:
Double declining method = 2 X SLDP X BV
SLDP = straight-line depreciation percentage
BV = Book value
SLDP is 100%/4 years = 25%, then 25% multiplied by 2 to give 50%
At Year 1, 50% X $320,000 = $160,000
At Year 2, 50% X $160,000 ($320,000 - $160,000) = $80,000
At Year 3, 50% X $80,000 ($160,000 - $80,000) = $40,000
At Year 4, 50% X $40,000 ($80,000 - $40,000) = $20,000
Accumulated depreciation for 4 years is $160,000 + $80,000 + $40,000 + $20,000 = $300,000.
The NBV under this method is is: $320,000 - $300,000 = $20,000.
Karen has an $80,825 basis in her 50 percent partnership interest in the KD Partnership before receiving a current distribution of $7,575 cash and land with a fair market value of $40,850 and a basis to the partnership of $21,150.
a. What is the amount and character of Karen's recognized gain or loss?
b. What is Karen's basis in the land?
c. What is Karen's remaining basis in her partnership interest?
Answer: a) $0
b) $21,150
c)$52,100
Explanation:
a) Karen would recognize no gain or losses in this scenario.
b) Karen would carryover the basis on the land which is $21,150
c) To calculate her remaining basis, we subtract the cash payment as well as the basis for the land she was distributed.
Calculating would be,
= 80,825 - 7,575 - 21,150
= $52,100
$52,100 is Karen's remaining basis in her partnership interest.
Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks' time. Vincent can bake 10 cakes or make 5 pizzas in an hour. Jean can bake 12 cakes or make 8 pizzas in an hour. Please answer the four questions.
Which cook has the absolute advantage in baking cakes?
A. Vincent
B. Jean
C. Neither
Answer: B. Jean
Explanation:
Having Absolute Advantage in the production of a good means that you can produce more of that good given the same resources or at least the same Quantity as others given lower resources.
From the scenario above therefore, Jean has the Absolute Advantage in producing Cakes as Jean can bake 12 cakes in an hour while Vincent can only bake 10.
Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,500 of direct materials and used $5,000 of direct labor. The job was not finished by the end of September, but needed an additional $4,000 of direct materials in October and additional direct labor of $7,500 to finish the job. The company applies overhead at the end of each month at a rate of 100% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October?
Answer:
Total job costs added in October $ 19,000
Explanation:
Computations
Job costs added to Work in Process inventory for October
Direct materials $ 4,000
Direct labor $ 7,500
Overhead at 100 % of Direct Labor costs $ 7,500
Total job costs added in October $ 19,000
Final answer:
In October, job A3B had $4,000 in direct materials, $7,500 in direct labor, and $7,500 in overhead costs added to the Work in Process Inventory, totaling $19,000.
Explanation:
The job costs added to Work in Process Inventory during October for job A3B would include the additional direct materials and direct labor costs incurred in October, as well as the overhead applied based on the direct labor cost.
Since the company applies overhead at a rate of 100% of the direct labor cost, and the direct labor cost in October is $7,500, the overhead for October would also be $7,500.
Therefore, the total job costs added in October would be the sum of the additional direct materials of $4,000, the additional direct labor of $7,500, and the overhead of $7,500, resulting in a total of $19,000 added to the Work in Process Inventory.
The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a 3-month put option with an exercise price of $50 is $4. a. If the risk-free interest rate is 10% per year, what must be the price of a 3-month call option on C.A.L.L. stock at an exercise price of $50 if it is at the money
Answer:
Price of call option = $5.1772
Explanation:
given data
trading x = $50 per share
Current price So = $95
time = 3 month t = [tex]\frac{1}{4}[/tex] year
exercise price of $50, P = $4
risk-free interest rate r = 10%
solution
we use here formula from put-call parity for price of a 3-month call option on C.A.L.L. stock that is
Price of call option = P + So - \frac{x}{(1+r)^t} .....................1
put here value and we will get
Price of call option = $4 + $50 - \frac{50}{(1+0.10)^{1/4}}
Price of call option = $5.1772
"Frances sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Frances realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Dmitri and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Frances knows that if they both work hard, Dmitri will earn $80 on the beach and Frances will earn $160 at her stand, so they will each take home half of their total revenue: $80+$1602=$120 . If Dmitri shirks, he'll generate only $50 in earnings. Frances does not know that Dmitri estimates his personal cost (or disutility) of working hard as opposed to shirking at $20. Once out of Frances's sight, Dmitri faces a dilemma: work hard (put in full effort) or shirk (put in low effort)."
Remaining part of question:
In terms of Dmitri's total utility, it is worse for him to ________________ .
Taking into account the loss in utility that working hard brings to Dmitri, Sondra and Dmitri together _____________ better off if Dmitri works hard instead of shirking
Answer:
1. Put in more effort
2. Would be
Explanation:
1. Dmitri puts his personal cost at $20 if he shirks, an amount that is implies $80-$20=$60
he would be having over half of their total revenue.
2.
Yes, if they both work hard, Dmitri will earn $80 on the beach and Frances will earn $160 at her stand, so they will each take home half of their total revenue: $80/2+$160/2=$120 . However, if Dmitri fails to work hard all of them would receive lesser returns.
Dmitri faces a dilemma to either work hard or shirk while selling water at the beach. Considering his personal cost, working hard results in a net gain of $100 compared to $60 if he shirks. The situation highlights principles of business economics and labor incentives.
Frances sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Frances realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Dmitri and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Frances knows that if they both work hard, Dmitri will earn $80 on the beach and Frances will earn $160 at her stand, so they will each take home half of their total revenue: ($80 + $160) / 2 = $120 . If Dmitri shirks, he'll generate only $50 in earnings. Frances does not know that Dmitri estimates his personal cost (or disutility) of working hard as opposed to shirking at $20. Once out of Frances's sight, Dmitri faces a dilemma: work hard (put in full effort) or shirk (put in low effort).Considering that Dmitri's personal cost of working hard is $20, working hard would provide him a net gain of $120 - $20 = $100. If Dmitri shirks, his earnings would be $60 ($50 from sales plus $10 loss from splitting total revenue with Frances). Therefore, Dmitri incentivized to work hard as it provides higher net earnings.