Answer:
The flexible budget performance report gives Net Income of $87,719 for the month of march 2017.
Explanation:
March 2017
Sales Revenue $166,100
Less: Variable Expenses
Sales Commission $13,288 (=Sales Revenue x 8%)
Advertising $9,966 (=Sales Revenue x 6%)
Travel $8,305 (=Sales Revenue x 5%)
Delivery $3,322 (=Sales Revenue x 2%)
Contribution $131,219 (=Sales Revenue - Variable Expenses)
Less: Fixed Expenses
Sales Salaries $35,000
Depreciation $7,200
Insurance $1,300
Net Income $87,719 (=Contribution - Fixed Expenses)
*Excel file is attached for your reference.
To prepare a flexible budget performance report for March 2017, follow these steps: calculate the flexible budget for variable and fixed expenses, compare it with the actual expenses, and calculate the performance variance. The actual expenses incurred by the Fallon Company can be compared with the flexible budget to determine the performance variance. In this case, the actual expenses were lower than the budgeted expenses, resulting in a negative performance variance.
Explanation:To prepare a flexible budget performance report for the month of March 2017, we need to calculate the flexible budget for variable expenses and fixed expenses, and then compare those with the actual expenses incurred by the Fallon Company. The variable expenses are calculated as a percentage of sales, while the fixed expenses remain the same. Once the flexible budget is prepared, we can compare it with the actual expenses to determine the performance variance.
Step-by-step:
Calculate the variable expenses using the given percentage relationships to sales:Sales commissions: 8% of $166,100 = $13,288Advertising: 6% of $166,100 = $9,966Travel: 5% of $166,100 = $8,305Delivery: 2% of $166,100 = $3,322Calculate the fixed expenses:Sales salaries: $35,000Depreciation on delivery equipment: $7,200Insurance on delivery equipment: $1,300Prepare the flexible budget by adding up the variable and fixed expenses:Total variable expenses: $13,288 + $9,966 + $8,305 + $3,322 = $34,881Total fixed expenses: $35,000 + $7,200 + $1,300 = $43,500Flexible budget (total expenses): $34,881 + $43,500 = $78,381Compare the flexible budget with the actual expenses, which are given:Actual variable expenses: $14,178Actual fixed expenses: $35,000 + $7,200 + $1,300 = $43,500Actual expenses (total): $14,178 + $43,500 = $57,678Calculate the performance variance:Performance variance = Actual expenses - Flexible budgetPerformance variance = $57,678 - $78,381 = -$20,703The flexible budget performance report for March 2017 shows a negative performance variance of -$20,703, indicating that the actual expenses were significantly lower than the budgeted expenses.
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Woodpecker Co. has $299,000 in accounts receivable on January 1. Budgeted sales for January are $939,000 Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are Oa, $840,160 b. $1,349,200 OC. $630,120 d. $1,050,200
Answer:
D. $1,050,200
Explanation:
The January cash collections from sales are
Total Budgeted sales for January are $939,000
Cash sales = $939,000 x 0.20 = $187,800
Cash from customers for January sales = $939,000 x 0.80 x 0.75 = $563,400
Cash from december sales = $299,000
Total January cash collections from sales are = $187,800 + $563,400 + $299,000 = $1,050,200
A bank features a savings account that has an annual percentage rate of 3.4% with interest compounded quarterly. Ashley opens one of these brand new savings accounts and deposits $2,000 into the account. What is her account balance after 4 years, rounded to the nearest cent?
Answer:
$2,290.05
Explanation:
Principle, P = $2,000
Rate of interest, r = 3.4%
Time period, t = 4 years
n = 4
Therefore,
[tex]Amount=P(1+\frac{r}{n})^{nt}[/tex]
[tex]Amount=2,000(1+\frac{3.4}{400})^{4\times 4}[/tex]
[tex]Amount=2,000(1+\frac{3.4}{400})^{16}[/tex]
= $2,290.05
Hence, account balance after 4 years is $2,290.05.
You plan to work for 40 years and then retire using a 25-year annuity. You want to arrange a retirement income of $4500 per month. You have access to an account that pays an APR of 7.2% compounded monthly. What size nest egg do you need to achieve the desired monthly yield?
What montly deposits are required to achieve the desired monthly yield at retirement?
To achieve a retirement income of $4500 per month for 25 years, you would need a nest egg of approximately $625,357.24, and you would need to make monthly deposits of approximately $225.19 during your working years.
To calculate the size of the nest egg needed to achieve a desired monthly yield during retirement, as well as the monthly deposits required, we can use the present value of an annuity formula.
1. Size of the Nest Egg (Present Value, PV):
The formula for the present value of an annuity is given by:
[tex]P V=P M T \times\left(\frac{\left(1-(1+r)^{-n t}\right)}{r}\right)[/tex]
Where:
PV is the present value of the annuity (the size of the nest egg),
PMT is the periodic payment (monthly income during retirement),
r is the periodic interest rate, and
nt is the total number of periods.
In this case:
PMT = $4500 (desired monthly income during retirement),
[tex]r=\frac{7.2 \%}{12}[/tex] = 0.006 (monthly interest rate), and
nt=12×25 = 300 (monthly payments for 25 years during retirement).
Plug in these values and calculate PV.
[tex]P V=4500 \times\left(\frac{1-(1+0.006)^{-300}}{0.006}\right)[/tex]
First, calculate the value within the parentheses:
[tex]\left(1-(1+0.006)^{-300}\right)[/tex] ≈0.83380
Substitute this value back into the formula:
[tex]P V=4500 \times\left(\frac{0.83380}{0.006}\right)[/tex]
Calculate the expression within the parentheses:
[tex]\left(\frac{0.83380}{0.006}\right)\\[/tex] ≈ 138.968
Multiply by the monthly payment:
PV = 4500 x 138.968
The result is approximately PV ≈ 625,357.24
2. To find the monthly deposits required, we can use the future value of an annuity formula:
[tex]F V=P M T \times\left(\frac{\left((1+r)^{n t}-1\right)}{r}\right)[/tex]
Where:
FV is the future value (the size of the nest egg),
PMT is the periodic payment (monthly deposit),
r is the periodic interest rate, and
nt is the total number of periods.
In this case:
FV= the size of the nest egg calculated in step 1,
[tex]r=\frac{7.2 \%}{12}[/tex] = 0.006 (monthly interest rate), and
nt = 12×40 = 480 (monthly deposits for 40 years).
Plug in these values and calculate PMT:
[tex]P M T=\frac{\mathrm{PV}}{\left(\frac{\left((1+0.006)^{480}-1\right)}{0.006}\right)}[/tex]
[tex]\frac{\left((1+0.006)^{480}-1\right)}{0.006}[/tex] ≈ 2776.938
Divide PV by this value:
625,357.24 / 2776.938 ≈ 225.19
To achieve a $4500 monthly yield in retirement, a nest egg of approximately $404,035.5 is needed. The monthly deposits required to achieve this nest egg are approximately $32,850.3.
Size of Nest Egg (Future Value of Annuity):
The formula for the future value (FV) of an annuity is:
Future Value (FV) = Monthly Payment (P) × [(1 - (1 + Monthly Interest Rate)^(-Number of Payments)) / Monthly Interest Rate]
Given:
Monthly Payment (P) = $4500
Monthly Interest Rate = Annual Percentage Rate (APR) / 12 = 7.2% / 12
Number of Payments = 12 payments per year × 25 years
Calculating this gives us the size of the nest egg needed, which is approximately $404,035.5.
Monthly Deposits Required:
To find the monthly deposits required, we rearrange the annuity formula:
Monthly Payment (P) = [Nest Egg Size (FV) × Monthly Interest Rate] / [(1 - (1 + Monthly Interest Rate)^(-Number of Payments))]
Given:
Nest Egg Size (FV) = $404,035.5
Monthly Interest Rate = 7.2% / 12
Number of Payments = 12 payments per year × 40 years
Calculating this gives us the monthly deposits required, which is approximately $32,850.3.
Rational investors ________ fluctuations in the value of their investments.
A) are averse to
B) prefer
C) are indifferent to
D) are in favor of
Answer:
The correct answer is (A)
Explanation:
According to economics, consumers are rational; they spend money where they feel they can grow profits. A market where there is fluctuations in investment, a rational consumer will not prefer to invest in such markets and a rational investors are averse to fluctuations in the value of their investment. A person who is a risk lover who wants to gain a high return by bearing high risk will only be in favour of such investment.
A term that describes a company that customizes its products and services based on data generated through interactions between the customer and the company would be described as being ______.
a. customer-centric
b. organization-centric
c. employee-centric
d. business-centric
Answer:
The correct answer is (A)
Explanation:
Customer driven, otherwise called customer-centric, is a way to deal with working together that spotlights on making a positive encounter for the client by amplifying administration as well as item contributions and building connections. A customer-centric method for working together is a way that gives a positive client experience when the deal so as to drive rehash business, upgrade client commitment and improve business development.
Final answer:
The term that best describes a company tailoring its services and products based on customer interactions and preferences is "customer-centric". This approach is exemplified by companies in the hospitality industry like Four Seasons and Ritz-Carlton, which keep detailed customer records to personalize services and enhance guest experiences.
Explanation:
A term that accurately describes a company which customizes its products and services based on customer-generated data, to better meet their preferences during interactions, is customer-centric. This approach is exemplified in the hospitality industry, where companies like Four Seasons Hotels Ltd. and the Ritz-Carlton Company LLC keep detailed records of customer preferences to enhance service quality. For instance, noting a guest's favorite newspaper or pillow type and greeting returning guests with personalized touches are practices that highlight a customer-centric approach. These actions are grounded in a culture that emphasizes detail and precision, leveraging customer data to tailor experiences and foster loyalty.
Manufacturing overhead has an overallocated balance of $7, 500; raw materials inventory balance is $62.000, work in process inventory is $34,000; finished goods inventory is $25,000; and cost of goods sold is $ 135.000 After adjusting for the overallocated manufacturing overhead, what is cost of goods sold?
a. $135,000
b. $142, 500
c. $7, 500
d. $127, 500
Answer:
Option (b) is correct.
Explanation:
Manufacturing overhead has an overallocated balance = $7,500
Cost of goods sold = $135,000
The overallocated manufacturing overhead will be simply added to the cost of goods sold.
After adjusting for the overallocated manufacturing overhead,
Cost of goods sold:
= cost of goods sold + overallocated balance of manufacturing overhead
= $135,000 + $7,500
= $142,500
Which of the following terms best describes a company that has operations in various countries, follows policies to develop local R&D to tailor products to markets, lets plants set their own rules, and aims at being a good corporate citizen in every country?
Answer: Multinational company
Explanation:
A multinational company has operations in various companies however the rules of the parent company country of residence are not allowed to interfere negatively on other countries of operations. All other company units in there various domiciliation are allowed to develop research towards tending products to local markets and ensuring adherence to rules various country of domiciliation.
develop a product service idea.
A. Describe the product/service including the benefits of using the product/service
B. Discuss the potential customers for this product/service
2. Based on the nature of the product/service, recommend at least 3 possible social media to use in marketing the product/service. Describe your recommendations and discuss the advantages and disadvantages of each.
Answer:
Read the following explanation.
Explanation:
1a- My products idea is the auto-home temperature control system which will benefit the customers to control the temperature of their home in winter time. this product is both automatic means customer can control this system with remote and use of internet as well as manually by changing its settings.
b- The potential customers for this product are based on geographic segmentation in which customers who live in cold countries like Canada, America, Atlanta, Russia will be targeted.
another potential custome segmentation will be based on demographic in which customers who are professionals like doctors, lawyers, or job doers and having average to high income level will be targeted like income level from $50000-above $150000.
2-the three possible way to market my product are-
a-Use of google in which customers will type the name of my product and it will list on top because of SEO and i will rank my product on top list so that customers can click and read about my product on my website easily.
the pro of this that customers will get information easily and place order. this will help to build good image of my product being top at google list.
the con is that this may cost more to put my product on top of search engine list.
b- The use of social media like Fb post, instagram etc in which my product will get advantage of being marketed to wide range of audience at low cost. also there are billions of users on social media so we can reach to them in less time.
the con of this is that use of social media involves other big brands and products already so customers tend to ignore such ads.
c- the third would be use of TV commercials in which we would use celebrity influenece to market my products. the advantage of this is that Customers will be influneced by celebrity power and will order the product. Tv commercials will have customers who are ignored by social media.
the con of this is that this may cost extra to hire celebrity also customers who are to watch Tv shows or movies tend to skip ads.
Assume that a $1,000 bond issued in 2015 pays $100 in interest each year. What is the current yield on the bond if it can be purchased for $1,200? Enter your answer in percent form and to one decimal place. For example, if your answer is 0.034 (3.4%) then enter 3.4
Answer:
8.33%
Explanation:
Current yield of a bond is used to determine the annual rate of return of a bond that an investor holds. The formula for calculating it is as follows;
Current yield of a bond = annual coupon payment/ current price
Annual coupon payment = interest payment = $100
Current price = $1,200
Next, plug in the numbers to the above formula;
Current yield = 100/ 1,200
= 0.0833
As a percentage, multiply 0.0833 by 100;
=0.0833 *100
= 8.33%
Therefore, the current yield on the bond is 8.3% (to one decimal place.)
You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $745.14. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions.What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate?
Answer:
8.75%
Explanation:
Find the YTM which is the pretax cost of debt.
Using a financial calculator, input the following and adjust the coupon payment, time and interest rate to semi-annual basis.
Maturity of the bond; N= 14*2 = 28
Face value : FV = 1000
Price of the bond ; PV = -745.14
Semiannual Coupon payment; PMT = semiannual coupon rate* Face value
Semiannual Coupon payment; PMT = (8.6%/2)*1000 = 43
then compute the semiannual rate; CPT I/Y = 6.25%
Annual rate; YTM ; pretax cost of debt = 6.25*2 = 12.5%
Next, find aftertax cost of debt;
Aftertax cost of debt = pretax cost of debt (1-tax)
= 0.125 (1 -0.30)
= 0.0875 or 8.75% as a percentage
Therefore; aftertax cost of debt = 8.75%
Final answer:
The after-tax cost of debt is calculated by finding the bond's yield to maturity and adjusting it for the firm's tax rate. Without the actual calculation or a financial calculator, it's not possible to provide the exact YTM in this response. Once the YTM is found, the after-tax cost is YTM * (1 - Tax Rate), with a 30% tax rate in this scenario.
Explanation:
To calculate the after-tax cost of debt for the firm, we need to determine the yield to maturity (YTM) of the bond and then adjust it for the firm's tax rate. The bond in question has an 8.6 percent coupon rate, pays semiannually and is selling at a price of $745.14. We must use the present value of annuities formula to find the YTM, which is the interest rate that equates the present value of the future cash flows of the bond (interest payments and face value) to the current price of the bond. Once we find the YTM, we apply the tax rate to get the after-tax cost of debt.
Unfortunately, without a financial calculator or spreadsheet software, it's impractical to solve for the YTM in this response. Generally, the process involves using the present value formula:
PV = C * (1 - (1 + r)⁻ⁿ) / r + F / (1 + r)
Where PV is the current price of the bond ($745.14), C is the annual coupon payment, r is the YTM, n is the number of periods until maturity, and F is the face value of the bond. Once YTM is found, the after-tax cost of debt is calculated using the formula:
After-tax cost of debt = YTM * (1 - Tax Rate)
Given a 30 percent tax rate, the after-tax cost of debt would be
After-tax cost of debt = YTM * (1 - 0.30)
This reflects the actual cost to the firm of borrowing funds through the bond.
Ren offers to pay Sara to pick up and deliver certain business documents within thirty minutes. Sara can accept the offer only by completing the task within the deadline.
If she does, Ren and Sara will have :
a. a bilateral contract.
b. a unilateral contract.
c. a void contract.
d. an executive contract.
Answer:
The correct answer is (B)
Explanation:
A unilateral contract is an agreement made by an offer that must be acknowledged by execution. To frame the agreement, the party making the offer makes a guarantee in return for the demonstration of execution by the other party. The offer must be acknowledged when the other party totally plays out the mentioned activity. The easy method to recollect this is to concentrate on "one-sided." "Uni" signifies one so one-sided contract enable just a single individual to settle on a guarantee or understanding.
arry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company’s stock currently is valued at $50.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $40.00 per share. Larry worries about the value of his investment. Larry's current investment in the company is _____
Answer:
$100,000
Explanation:
Data provided in the question:
Number of shares held by Larry = 2,000
Shares outstanding = 20,000
Current value of stock = $50.00 per share
Number of shares to be issued = 5,000
Issuing price = $40.00 per share
Now,
Larry's current investment in the company
= Number of shares held by Larry × Current value of stock
= 2,000 shares × $50.00 per share
= $100,000
BEG-5 Andrew and Emma Garfield invested $8,000 in a savings account paying 5% annual interest when their daughter, Angela, was born. They also deposited $1,000 on each of her birthdays until she was 18 (including her 18th birthday). How much was in the savings account on her 18th birthday (after the last deposit)
Answer:
$47,385.34
Explanation:
In this question, we use the future value formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $8,000
Rate of interest = 5%
NPER = 18 years
PMT = $1,000
The formula is shown below:
= -FV(Rate;NPER;PMT;PV;type)
So, after solving this, the answer would be $47,385.34
The sum in the savings account on Angela's 18th birthday would be a total of initial deposit plus interest and the sum of each birthday deposit with its respective compounded interest. This includes basic mathematical operations and the application of simple interest and future value of a series formulas.
Explanation:In order to calculate the total sum, we need to add the initial deposit with interest, and the sum of each birthday deposit with its respective compounded interest. The amount in the account after the initial deposit of $8,000 would be calculated using simple interest formula, A = P(1+rt), where P is principal amount, r is the rate, and t is the time (A = $8000*(1+0.05*18). For the birthday deposits, since they're deposited annually, we should use the formula for future value of a series (or an annuity), since the amount of each deposit and the interval between deposits are the same. The future value of an annuity formula is: A = PMT * (((1 + r)^t - 1) / r), where PMT is the amount deposited per period, r is the interest rate per period, and t is the number of periods.
Birthday deposits: PMT is $1,000, r is 0.05, and t is 1 to 18 years, calculated separately and summed up since every year has different compound period until their daughter turns 18.
Initial deposit: A = $8000*(1+0.05*18).
The total amount in the account is the sum of these two amounts.
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Asset A has an expected return of 20% and a standard deviation of 25%. The risk-free rate is 10%. What is the reward-to-volatility ratio?
Answer:
0.4 or 40%
Explanation:
The reward-to-volatility ratio, also known as the Sharpe ratio, is defined as the difference between the expected return rate and the risk-free rate divided by the standard deviation.
Expected return = 0.2
Risk-free rate = 0.10
Standard deviation = 0.25
[tex]S=\frac{0.2-0.1}{0.25}\\S=0.4= 40\%[/tex]
The reward-to-volatility ratio is 0.4 or 40%
Braxton Corp. has no debt but can borrow at 6.7 percent. The firm’s WACC is currently 8.5 percent, and the tax rate is 35 percent.
a. What is the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
b. If the firm converts to 20 percent debt, what will its cost of equity be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
c. If the firm converts to 40 percent debt, what will its cost of equity be?
d. If the firm converts to 20 percent debt, what is the company’s WACC?
e. If the firm converts to 40 percent debt, what is the company’s WACC?
WACC___%.
Answer
The answer and procedures of the exercise are attached in the image below.
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.
Final answer:
Braxton Corp's initial cost of equity is 8.5%. If Braxton Corp takes on 20% debt, the new cost of equity will be 9.54%, and with 40% debt, it will be 11.12%. At 20% debt, the company's WACC and cost of equity for 40% debt need additional calculations involving the WACC formula with the given tax rate and cost of debts.
Explanation:
To answer the student's questions regarding Braxton Corp., we start with the information that the corporation currently has no debt and its Weighted Average Cost of Capital (WACC) is 8.5%, with a tax rate of 35%. Initially, the company's cost of equity is the same as its WACC since it has no debt, so it is 8.5%.
To calculate the new cost of equity after introducing debt, we can use the Modigliani-Miller proposition II with taxes, which identifies that the cost of equity increases with leverage due to the increased risk perceived by equity holders. The formula for the cost of equity when there is debt in the capital structure is:
Cost of equity = cost of equity with no leverage + (debt-to-equity ratio * (cost of equity with no leverage - after-tax cost of debt)).
To find the after-tax cost of debt, we use the formula: After-tax cost of debt = interest rate on debt * (1 - tax rate).
For Braxton Corp, the after-tax cost of debt = 6.7% * (1 - 0.35) = 4.355%.
Let's now calculate the new cost of equity if the firm converts to 20% and 40% debt:
20% Debt: The debt-to-equity ratio = 0.20 / (1 - 0.20) = 0.25
40% Debt: The debt-to-equity ratio = 0.40 / (1 - 0.40) = 0.6667
Using these debt-to-equity ratios, we can calculate the new cost of equity as follows:
At 20% debt:
Cost of equity = 8.5% + (0.25 * (8.5% - 4.355%)) = 9.53625% (rounded to 9.54%)
At 40% debt:
Cost of equity = 8.5% + (0.6667 * (8.5% - 4.355%)) = 11.11523% (rounded to 11.12%)
Lastly, to calculate the WACC for 20% and 40% debt scenarios, we use the WACC formula:
WACC = ((E/V) * Re) + ((D/V) * Rd * (1 - Tc)), where E is the market value of equity, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, V is the total market value of the firm's financing (E + D), and Tc is the corporate tax rate.
Dallas Star Inc. 's stock has a 35% chance of producing a 10% return, and a 60% chance of producing a 15% return. What is the firm's expected rate of return? What is the firm's Standard Deviation? What is the firm's Coefficient of Variation? Part 2: Calculate the required rate of return for Dallas Star Inc., assuming that (1) investors expect a 3.0% rate of inflation in the future, (2) the nominal risk-free rate is 5.0%, (3) expected market return is 11% and (4) the firm has a beta of 1.50. (Hint: You need to find out market risk premium first.)
Answer:
1.The expected return is the profit or loss that the investor anticipates on the investment =0.125 that is 12.5%
2. RRR (Required rate of return) =11%.
Explanation:
Please also refer to the attachment .
The firm's expected rate of return is 12.5%. The firm's standard deviation is 2.44%. The firm's coefficient of variation is 19.5%. The required rate of return for Dallas Star Inc. is 14.0%.
Explanation:To find the firm's expected rate of return, we can use the formula:
Expected Rate of Return = (Probability of Return 1 x Return 1) + (Probability of Return 2 x Return 2)
Expected Rate of Return = (0.35 x 0.10) + (0.60 x 0.15)
Expected Rate of Return = 0.035 + 0.09
Expected Rate of Return = 0.125 or 12.5%
To calculate the firm's standard deviation, we need to use the formula:
Standard Deviation = √((Probability of Return 1 x (Return 1 - Expected Rate of Return)²) + (Probability of Return 2 x (Return 2 - Expected Rate of Return)²))
Standard Deviation = √((0.35 x (0.10 - 0.125)²) + (0.60 x (0.15 - 0.125)²))
Standard Deviation = √((0.35 x (-0.025)²) + (0.60 x 0.025)²)
Standard Deviation = √((0.35 x 0.000625) + (0.60 x 0.000625))
Standard Deviation = √(0.00021875 + 0.000375)
Standard Deviation = √0.00059375
Standard Deviation = 0.02437 or 2.44%
The coefficient of variation is calculated by dividing the standard deviation by the expected rate of return and multiplying by 100.
Coefficient of Variation = (Standard Deviation / Expected Rate of Return) x 100
Coefficient of Variation = (0.02437 / 0.125) x 100
Coefficient of Variation = 0.19496 x 100
Coefficient of Variation = 19.5%
For the second part of the question, we need to calculate the market risk premium first.
Market Risk Premium = Expected Market Return - Risk-Free Rate
Market Risk Premium = 11.0% - 5.0%
Market Risk Premium = 6.0%
The required rate of return can be calculated using the formula:
Required Rate of Return = Risk-Free Rate + Beta x Market Risk Premium
Required Rate of Return = 5.0% + (1.50 x 6.0%)
Required Rate of Return = 5.0% + 9.0%
Required Rate of Return = 14.0%
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Camille, a college student, feels that now is a good time to buy stocks. However, because she doesn't have any savings, she decides to borrow $15,000 at an annual interest rate of 8 percent. She must make an interest-only payment each year for five years plus repay the entire principal in year five. On August 1, 2018 when Camille obtained the loan, Camille invested $10,000 in several individual stocks and used the remaining $5,000 to pay her tuition for the year. Assuming Camille's investment income this year is greater than her investment interest expense this year, how much investment interest expense can she deduct in 2018?
Answer:$1200
Explanation:
The maximum interest payable for year one of 2018 is 8% of $15000 which gives $1200.
If the investment income is greater than investment interest expenses of $1200 . The amount of investment interest expenses she can deduct is $1200.
On January 2, Year 3, Lake Mining Co.’s board of directors declared a cash dividend of $400,000 to shareholders of record on January 18, Year 3, payable on February 10, Year 3. The dividend is permissible under law in Lake’s state of incorporation. Selected data from Lake’s December 31, Year 2 balance sheet are as follows: Accumulated depletion $100,000 Capital stock 500,000 Additional paid-in capital 150,000 Retained earnings 300,000 The $400,000 dividend includes a liquidating dividend of
A) $0
B) $100,000
C) $150,000
D) $300,000
Answer:
I think the answer to this question is c
Suppose that a monopoly firm finds that its MR is $50 for the first unit sold each day, $49 for the second unit sold each day, $48 for the third unit sold each day, and so on. Further suppose that the first worker hired produces 5 units per day, the second 4 units per day, the third 3 units per day, and so on.
a. What is the firm’s MRP for each of the first five workers?
Worker MRP Unregulated
1 ----------------
2 ----------------
3 ----------------
4 ----------------
5 ----------------
Answer:
$240
$174
$120
$75
$36
Explanation:
MRP = Change in revenue/Change in Labour
1. The first worker;
From the question, the first worker has 5 units
So, his change in revenue is 50+49+48+47+46 for the 5 units
Change in Revenue = $240
Since the worker remains the same and available all through,the change in Labour = 1 worker
MRP = $240/1
MRP = $240
2.The second worker;
The second worker has 4 units(starting from where the first worker stopped)
So, his change in revenue is 45+44+43+42 for the 4 units
Change in Revenue = $174
Since the worker remains the same and available all through,the change in Labour = 1 worker
MRP = $174/1
MRP = $174
3.The third worker;
The third worker has 3 units(starting from where the second worker stopped)
So, his change in revenue is 41+40+39 for the 3 units
Change in Revenue = $120
Since the worker remains the same and available all through,the change in Labour = 1 worker
MRP = $120/1
MRP = $120
4.The fourth worker;
The second worker has 2 units(starting from where the third worker stopped)
So, his change in revenue is 38+37 for the 2 units
Change in Revenue = $75
Since the worker remains the same and available all through,the change in Labour = 1 worker
MRP = $75/1
MRP = $75
5.The fifth worker;
The second worker has 1 units(starting from where the fourth worker stopped)
So, his change in revenue is 36 for the 1 unit
Change in Revenue = $36
Since the worker remains the same and available all through,the change in Labour = 1 worker
MRP = $36/1
MRP = $36
Suppose that nominal GDP was $10000000.00 in 2005 in Orange County California. In 2015, nominal GDP was $12000000.00 in Orange County California. The price level rose 1.50% between 2005 and 2015, and population growth was 3.50%. Calculate the following figures for Orange County California between 2005 and 2015. a. Nominal GDP growth was %.
Answer:
50%
Explanation:
Here is important to know that when we have the inflation rate (1,50% in this case) this indicator is enough to get the effect of the prices in an economy and get the nominal GDP affected by prices, so if the price level is 1,50% after the comma we have the average of the growth.
The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 units. The company has provided the following data concerning the formulas to be used in its budgeting:
Fixed element per month Variable element per tenant-day
Revenue $39.20
Direcr Labor $0 $5.40
Direct Materials $0 13.20
Manufacturing Overhead $45,800 1.70
Selling and Administrative Expenses $22,800 0.50
Total Expenses $68,600.00 $20.80The direct materials in the flexible budget for October would be closest to:
Answer:
Direct material= $67,188
Explanation:
Giving the following information:
During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 units. The company has provided the following data concerning the formulas to be used in its budgeting:
Direct Materials $13.20
Direct material= 5,090*13.20= $67,188
Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product: lead time is normally distributed with an average of 6 weeks and a standard deviation of 2 weeks. Demand is also a variable and normally distributed with a mean of 200 cigars per week and a standard deviation of 25 cigars.
a) For a 90% service level, what is the ROP?
b) What is the ROP for a 95% service level?
c) Explain what these two service levels mean. Which is preferable?
Answer:
Please see attachment
Explanation:
Please see attachment
Final answer:
For a 90% service level, the ROP is approximately 1207.23 cigars. For a 95% service level, the ROP is approximately 1208.21 cigars. The service level represents the probability of satisfying demand during the lead time, with a higher service level indicating a lower risk of stockouts and unmet customer demand.
Explanation:
a) For a 90% service level, the ROP can be calculated using the formula:
ROP = (Demand × Lead time) + Z × √(Demand Variance × Lead time Variance)
where Z is the Z-score corresponding to the desired service level. For a 90% service level, Z is approximately 1.28. Plugging in the values, we have:
ROP = (200 cigars/week × 6 weeks) + 1.28 × √(25 cigars^2/week × 2 weeks^2) = 1200 cigars + 7.23 cigars = 1207.23 cigars
b) For a 95% service level, we use Z = 1.645 (corresponding to a 95% confidence interval). Plugging in the values as before:
ROP = (200 cigars/week × 6 weeks) + 1.645 × √(25 cigars^2/week × 2 weeks^2) = 1200 cigars + 8.21 cigars = 1208.21 cigars
c) The service level represents the probability that demand will be satisfied during the lead time. A higher service level indicates a lower risk of stockouts and unmet customer demand. In this case, the 95% service level is preferable as it provides a higher degree of confidence in satisfying customer demand.
Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $24,000; Year 2, $48,000; Year 3, $108,000; Year 4, $132,000; Year 5, $168,000; and Year 6, $216,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative preferred 3% stock, $100 par, and 100,000 shares of common stock, $15 par.1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
Answer:
Please see attachment
Explanation:
Please see attachment
The table summarizes the total and per-share dividends declared on each class of stock for each year, focusing on preferred and common stock.
Explanation:To determine the total dividends and per-share dividends declared on each class of stock for each of the six years, we need to calculate the dividends for the preferred stock and common stock separately. For the preferred stock, we multiply the number of preferred shares by the dividend rate. For the common stock, we divide the remaining dividend amount after paying the preferred stock dividends by the number of common shares.
The table below summarizes the data:
Year Total Dividends Pref. Dividends per Share Common Dividends per Share Year 1$24,000.00$1.20$0.20Year 2$48,000.00$2.40$0.40Year 3$108,000.00$5.40$0.90Year 4$132,000.00$6.60$1.10Year 5$168,000.00$8.40$1.40Year 6$216,000.00$10.80$1.80
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An investment offers a total return of 15 percent over the coming year. Janet Jello thinks the total real return on this investment will be only 7.7 percent.
What does Janet believe the inflation rate will be over the next year?
Answer:
6.78%
Explanation:
Data provided in the question:
Total return i.e nominal rate = 15% = 0.15
Real return = 7.7% = 0.077
Now,
Inflation rate = [tex]\frac{\textup{1 + Nominal rate}}{\textup{1 + Real return }}[/tex] - 1
on substituting the respective values, we get
Inflation rate = [tex]\frac{\textup{1 + 0.15}}{\textup{1 + 0.077}}[/tex] - 1
or
Inflation rate = [ 1.15 ÷ 1.077 ] - 1
or
Inflation rate = 0.0678
or
Inflation rate = 0.0678 × 100% = 6.78%
Janet Jello expects the inflation rate to be 7.3 percent over the next year if the investment has a nominal return of 15 percent and she anticipates a real return of 7.7 percent.
The question asks us to figure out the expected inflation rate if an investment returns a nominal interest rate of 15 percent and the anticipated real return rate is 7.7 percent. To find this, we use the formula:
Nominal Interest Rate - Inflation Rate Equals Real Interest Rate
If the real return is expected to be 7.7 percent and the nominal return is 15 percent, we can rearrange the formula to solve for the inflation rate:
7.7% = 15% - Inflation Rate
By subtracting 7.7 percent from both sides, we find that:
Inflation Rate = 15% - 7.7%
Thus, Janet believes the inflation rate will be:
Inflation Rate = 7.3 percent.
Inventory at the beginning of the period had a debit balance of $7,000, and a debit balance of $10,000 at the end of the period. Using the indirect method, this will be reported in the operating section of the statement of cash flows as: Click the answer you think is right. a decrease of $3,000 which will be added to net income a decrease of $3,000 which will be subtracted from net income an increase of $3,000 which will be subtracted from net income an increase of $3,000 which will be added to net income Read about this Do you know the answer?
Answer:
an increase of $3,000 which will be subtracted from net income
Explanation:
an increase of $3,000 which will be subtracted from net income .Increase in Inventory = 10000-7000 = $3000 .Increase in Inventory is reported as a decrease and subtracted from net income .an increase of $3,000 which will be subtracted from net income
In a recent Sweetgreen survey about new menu items, one question is, "How much do you like the new seasonal salad on the menu? Check one: dislike, dislike slightly, do not dislike or like, like slightly, like a great deal." This is an example of a(n) ____ question.
a. open-ended
b. double-barreled
c. dichotomous
d. fixed-alternative response
e. Both a and d.
Answer:
I think the answer is D.
Explanation:
Asset Management Ratios Mr. Husker’s Tuxedos Corp. ended the year 2015 with an average collection period of 32 days. The firm’s total sales for 2015 were $56.1 million. What is the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos?
To calculate Mr. Husker's Tuxedos year-end 2015 balance in accounts receivable, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can calculate the year-end balance in accounts receivable by multiplying the average daily sales by the average collection period.
Explanation:To calculate the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can use this ratio to estimate the accounts receivable balance.
To calculate the average daily sales, we divide the total sales by the number of days in a year. Then, we multiply the average daily sales by the average collection period to calculate the year-end balance in accounts receivable.
In this case, the average collection period is 32 days and the total sales for 2015 are $56.1 million. Let's calculate the year-end 2015 balance in accounts receivable:
Average daily sales = Total sales / Number of days in a year = $56,100,000 / 365 = $153,698.63
Year-end balance in accounts receivable = Average daily sales × Average collection period = $153,698.63 × 32 = $4,911,156.16
Which relationship might suggest a heightened risk of fraud in the acquisition and payment cycle? a. Unexpected increases in the number of suppliers. b. Sales expenses growing in proportion to sales revenue. c. A reduction in raw material costs. d. Maturing capital assets with no plan for rep
Answer:
The correct answer is letter "A": Unexpected increases in the number of suppliers.
Explanation:
Frauds or money cleansing usually requires the help of a network of different business interconnected to clear the illegal funds with the excuse of having made commercial activities that never took place. In most cases, accounting documents are faked so that the proceeds of the questionable funds may seem as legal as possible.
In that case, if a company counts with more suppliers and fraud is taking place in the organization, they will have the excuse of making more payments so more funds can go out of the company.
Johansen Corporation has a target capital structure of 60 percent common stock and 40 percent debt. Its cost of equity is 14 percent, and the cost of debt is 8 percent. The relevant tax rate is 30 percent.What is the company's WACC?
Answer:
10.64%
Explanation:
The computation of the WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)
= (0.40 × 8%) × ( 1 - 30%) + (0.60 × 14%)
= 2.24% + 8.4%
= 10.64%
Simply we multiply the weightage with its capital structure so that the Accurate weighted cost of capital can be calculated
Answer the questions about Keynesian theory, market economics, and government policy.
Keynes believed that there were "sticky" wages and that recessions are caused by
A. decreases in aggregate demand (AD).
B. increases in unemployment.
C. increases in prices.
D. decreases in supply.
Answer: The correct answer is "A. decreases in aggregate demand (AD).".
Explanation: Keynes believed that there were "sticky" wages and that recessions are caused by decreases in aggregate demand (AD).
Keynes wondered how it was possible that having too many resources there were crises. What was your solution so that there was no excess of resources? Stimulate the demand for those excess resources to be consumed.
Keynesianism is based on state interventionism, defending economic policy as the best tool to get out of an economic crisis. Its economic policy is to increase public spending to stimulate aggregate demand and thus increase production, investment and employment.
Keynesian theory posits that recessions are caused by decreases in aggregate demand (AD), with wage and price 'stickiness' leading to unemployment. Government policy, according to Keynes, should either stimulate or contract the economy through fiscal measures to maintain stability.
Explanation:According to Keynesian theory, recessions are primarily caused by decreases in aggregate demand (AD), which is answer choice A. Keynesian economics is built on the premise that aggregate demand is often the main driver of economic events, such as recessions, in the short run. Additionally, the theory highlights that wages and prices can be sticky, meaning they do not adjust quickly to decreases in demand. This stickiness can result in increased unemployment during economic downturns, as firms are less able to reduce wages and thus resort to laying off workers instead. Keynesians also believe in the concept of the expenditure multiplier, where an initial change in spending leads to a larger change in overall economic output (GDP).
Moreover, Keynesian policy advocates for government intervention to stabilize the economy. In times of recession, expansionary fiscal policy, such as tax cuts or increased government spending, is recommended to shift the aggregate demand curve to the right. Conversely, during periods of high economic output above potential GDP, the prescription is contractionary fiscal policy, with higher taxes or reduced government spending, to control inflation and shift aggregate demand to the left. This reflects a Keynesian perspective on market forces and the role of government policy in economic stabilization.