Answer:
The correct answer is (d)
Explanation:
The Fed doesn't have exact power over the cash supply on the grounds that the multiplier connecting the fiscal base and the cash supply isn't exceptionally steady or unsurprising, particularly in the short run. The cash supply is at last constrained by people in general, the banks, and the Fed. People in general chooses the amount of the fiscal base they will store in banks and the amount they will hold as money in the hands of the general population.
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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You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.6 percent indefinitely. The company just paid a dividend of $3.35 and you feel that the required return on the stock is 10.8 percent. What is the price per share of the company's stock?
Answer:
$56.52
Explanation:
Using dividend discount model; the formula for finding the price of a stock is ;
[tex]\frac{D0(1+g)}{(r-g)}[/tex]
r= required return = 10.8%
D0 = Recently paid dividend = 3.35
g = growth rate
Price = [tex]\frac{3.35(1.046)}{0.108-0.046} \\ \\ = \frac{3.5041}{0.062} \\ \\ =56.5177[/tex]
Price per share is therefore $56.52
Using the Gordon Growth Model, with a dividend growth rate of 4.6 percent and a required return of 10.8 percent, the price per share of Canyon Echo's stock is calculated to be approximately $56.45.
Explanation:You are considering purchasing stock in Canyon Echo and want to know the price per share of the company's stock given a dividend growth rate of 4.6 percent and a required return of 10.8 percent. The company just paid a dividend of $3.35. To find the price per share, you can use the Gordon Growth Model (also known as the Dividend Discount Model for a perpetuity) which calculates the price of a stock by dividing the dividend per share expected to be received next year by the difference between the required return and the growth rate in dividends.
Price per share = D1 / (k - g)
Where:
D1 = next year's dividend = $3.35 * (1 + 0.046) = $3.50 approximatelyk = required return = 10.8%g = growth rate = 4.6%Substituting the values:
Price per share = $3.50 / (0.108 - 0.046) = $3.50 / 0.062 = approximately $56.45
Therefore, the price per share of Canyon Echo's stock, based on these assumptions, is approximately $56.45.
In an oligopoly situation, a wise marketing manager will probably set the firm's price level:
A. at the competitive level.
B. on a negotiated basis—that is, customer by customer.
C. above competitors' prices.
D. at least 10 percent below the price leader's price.
E. below competitors' prices.
Answer:
Letter A is correct. At the competitive level.
Explanation:
An oligopoly is a marketing structure that occurs when some companies come together to determine the supply of products or services.
In this type of market there is imperfect competition, where market control is exercised by few companies, capable of regulating the behaviors and market decisions of other companies.
Therefore in an oligopoly situation the ideal is that the price level of a company be defined at a competitive level, since the goods produced are homogeneous and the degree of differentiation occurs in the variables of service, quality, image and not so much in the variation of prices. price.
Suppose that Second Republic Bank currently has $150,000 in demand deposits and $97,500 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%.Reserves=Required Reserves=Excess Reserves=
Answer:
Please see attachment .
Explanation:
Please see attachment .
The Second Republic Bank, subject to a 10% reserve requirement set by the Federal Reserve, must keep $15,000 as required reserves. After accounting for $97,500 in outstanding loans, the bank has excess reserves of $37,500.
Explanation:In this case, the Second Republic Bank has total deposits of $150,000. Given that the Federal Reserve has set the reserve requirement at 10%, the bank must hold $15,000 (10% of $150,000) as required reserves. This is the minimum amount of reserves the bank should keep on hand as mandated by the Federal Reserve. These required reserves serve as a safety net for the depositor's funds. Now, seeing as how the total amount of outstanding loans is $97,500, this would mean that the bank has remaining or excess reserves of $37,500 ($150,000 total deposits - $15,000 required reserves - $97,500 outstanding loans).
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Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is 3 days, and the pepperoni itself costs $3 per pound. .If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle?
A. 4 days
B. 5 days
C. 3 days
D. 0 days
E. 25 days.
Answer: The correct answer is "A. 4 days.".
Explanation: Four days would be the lenght of an order cycle because the quantity of the order must be divided on the demand rate, that is,
80 (quantity of the order to be ordered) / 20 (normal demand rate) = 4 days.
Salon Company originally issued 4,000 shares of $10 par value common stock for $120,000 ($30 per share). Salon subsequently purchases 400 shares of treasury stock for $27 per share and resells the 400 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a
(A) credit to Common Stock for $10,800.
(B) credit to Treasury Stock for $4,000.
(C) debit to Paid-In Capital in Excess of Par of $12,000.
(D) credit to Paid-In Capital from Treasury Stock for $800.
Answer:
(D) Credit to Paid-In Capital from Treasury Stock for $800.
Explanation:
Please see attachment
Everything else held constant, an increase in the interest rate paid on checkable deposits will cause ________ in the amount of checkable deposits held relative to currency holdings and ________ in the currency ratio. a. an increase; an increase b. a decrease; an increase c. a decrease; a decrease d.an increase; a decrease
Answer:
The answer is letter D
Explanation:
Everything else held constant, an increase in the interest rate paid on checkable deposits will cause _an increase_______ in the amount of checkable deposits held relative to currency holdings and _a decrease_______ in the currency ratio.
Suppose the economywide demand for money is given by: M = P(0.2Y – 25,000i). The price level P equals 3, and real output Y equals 10,000.
a. At what value should the Fed set the nominal money supply if it wants to set the nominal interest rate at 4 percent?
The nominal money supply should be set at $ .
b. At what value should the Fed set the nominal money supply if it wants to set the nominal interest rate at 6 percent?
The nominal money supply should be set at $ .
Answer:
$3,000; $1,500
Explanation:
Demand for money: M = P(0.2Y – 25,000i)
Price level P = 3
Real output Y = 10,000
(i) If Fed wants to set the nominal interest rate at 4 percent, then
Nominal money supply = P(0.2Y – 25,000i)
= 3 ×[0.2(10,000) - 25,000(4%)]
= 3 ×[2,000 - 1,000]
= $3,000
Therefore, the nominal money supply should be set at $3,000.
(ii) If Fed wants to set the nominal interest rate at 6 percent, then
Nominal money supply = P(0.2Y – 25,000i)
= 3 ×[0.2(10,000) - 25,000(6%)]
= 3 ×[2,000 - 1,500]
= $1,500
Therefore, the nominal money supply should be set at $1,500.
To determine the nominal money supply, the equation M = P(0.2Y - 25,000i) is used. For a nominal interest rate of 4 percent, the nominal money supply should be set at $3,000. If the nominal interest rate is to be set at 6 percent, the nominal money supply should be set at $1,500.
Explanation:The economywide demand for money in the given equation is M = P(0.2Y - 25,000i). Here, M is the nominal money supply, P is the price level, Y is the real output, and i is the nominal interest rate.
To calculate the value at which the Fed should set the nominal money supply if it wants to set the nominal interest rate at 4 percent, we plug in the given values for P, Y, and i into the equation. So, M = 3(0.2*10,000 - 25,000*0.04), which simplifies to M = 3(2,000 - 1,000) = 3,000. Therefore, if the nominal interest rate is to be set at 4 percent, the nominal money supply should be set at $3,000.
If the Fed wants to set the nominal interest rate at 6 percent, we plug in the values for P, Y, and i into the equation again. This gives us M = 3(0.2*10,000 - 25,000*0.06), which simplifies to M = 3(2,000 - 1,500) = 1,500. So, if the nominal interest rate is to be set at 6 percent, the nominal money supply should be set at $1,500.
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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.)
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
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
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.
A high-precision programmable router for shaping furniture components is purchased by Henredon for $205,000. It is expected to last 12 years and have a salvage value of $5,000. Calculate the depreciation deduction and book value for each year.
Answer:
Depreciation will be equal to $16666.666
Explanation:
We have given that Henredon purchased for $205000
Total time is given t = 12 years
Salvage value = $5000
We have to find the depreciation
We know that depreciation is given by
Depreciation [tex]=\frac{cost-salvage\ value}{time}=\frac{$205000-$5000}{12}=$16666.666[/tex]
Thus the depreciation will be equal to $16666.666
Final answer:
To calculate the annual depreciation expense for the router, subtract the salvage value from the purchase cost and divide by the useful life, which results in $16,666.67 per year. The book value is then determined by subtracting the cumulative depreciation from the purchase cost for each year.
Explanation:
The subject of the question is calculating the depreciation of a high-precision programmable router using the straight-line method. Using the information provided, we can determine the annual depreciation expense and the book value for each year of the router's life.
The cost of the router is $205,000, and it has a salvage value of $5,000 with a useful life of 12 years. To calculate the annual depreciation expense, we subtract the salvage value from the purchase cost and then divide this by the useful life of the asset:
Annual Depreciation Expense = (Purchase Cost - Salvage Value) / Useful Life
(Annual Depreciation Expense = ($205,000 - $5,000) / 12
(Annual Depreciation Expense = $200,000 / 12
(Annual Depreciation Expense = $16,666.67 per year (rounded to the nearest cent)
The book value for each year is calculated by subtracting the cumulative depreciation from the purchase cost. So for each subsequent year, the book value decreases by the annual depreciation expense.
For example, after one year, the book value would be:
(Book Value after Year 1 = Purchase Cost - (Annual Depreciation Expense ×Number of Years)
(Book Value after Year 1 = $205,000 - ($16,666.67 ×1)
(Book Value after Year 1 = $188,333.33
This process continues until the end of the router's useful life, at which point the book value would match the salvage value.
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
Dora Inc. reported the following on the company's cash flow statement for 20Y6: Net cash flow from operating activities $350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Sixty percent of the cash flow used for investing activities was used to purchase property, plant, and equipment. What is the free cash flow for 20Y6?
Answer:
The free Cash Flow for the year 20Y6 amounts to $290,000
Explanation:
The free cash flow for the year 20Y6 is computed as:
Free Cash Flow for the year 20Y6 = Net cash flow from operating activities - Cash used to purchase the equipment, property and plant
= $350,000 - $60,000
= $290,000
where
Net cash flow from operating activities is $350,000
Cash used to purchase the equipment, property and plant is computed as:
Cash used to purchase the equipment, property and plant = 60% × Net cash flow used for the investing activities
= $100,000 × 60%)
= $60,000
Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accounting for cash discounts.
Required:
1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018.
2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2018.
Record the sale of 1,000 tires for $50 each with a term of 2/10, n/30 under the gross method of accounting for cash discounts.
Answer:
Explanation:
The journal entries are shown below:
1. On July 15
Accounts receivable A/c Dr $50,000 (1,000 tires × $50)
To Sales revenue A/c $50,000
(Being service provided is recorded)
On July 23
Cash A/c Dr $49,000
Sales Discount A/c Dr $1,000
To Accounts receivable $50,000
(Being cash received recorded)
The discount would be
= Accounts receivable × percentage given
= $50,000 × 2%
= $1,000
The remaining amount would be credited to the cash account.
2. On July 15
Accounts receivable A/c Dr $50,000 (1,000 tires × $50)
To Sales revenue A/c $50,000
(Being service provided is recorded)
On August 15
Cash A/c Dr $50,000
To Accounts receivable A/c $50,000
(Being cash collected is recorded)
Sales journal entries, also known as revenue journal entries, are records of a customer purchase made with cash or on credit. Additionally, these entries represent any alterations to accounts, such as costs of products sold, inventories, and sales tax payable accounts.
The following are the required journal entries for the given transactions.
1.
July 15
Accounts Receivable 50,000
Sales Revenue 50,000
(To record the sale of 1,000 tires to Nixon Car Company)
July 23
Cash 49,000
Sales Discount 1,000
Accounts Receivable 50,000
(To record the collection of cash, taking advantage of the 2% on 50,000 discount)
2.
July 15, 2018:
Accounts Receivable 50,000
Sales Revenue 50,000
(To record the sale of 1,000 tires to Nixon Car Company)
August 15, 2018
Cash 50,000
Accounts Receivable 50,000
(To record the collection of the full amount without taking the discount)
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Zisk Co. purchases raw materials on account. Budgeted purchase amounts are April, $80,000; May, $110,000; and June, $120,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is $22,000.Prepare a schedule of budgeted cash payments for Apri, May, and June.
Answer:
A schedule of cash payments for April, May, and June is prepared.
Explanation:
The following image shows the calculation and explanation of the cash payment schedule.
Zisk Co.'s budgeted cash payments are $62,600 for April, $101,000 for May, and $117,000 for June, which is worked out by making 70% of payments for the current month's purchases and the remaining 30% of the last month's purchases.
Explanation:To calculate the budgeted cash payments for Zisk Co. in each month, we need to consider both the purchases made in that month and the remaining payments for the previous month's purchases. The payments are split as follows: 70% is paid in the same month the purchases are made, and the remaining 30% is deferred to the following month.
For April, they will make payments for April purchases and the remaining amount from March. That will be (70% * $80,000) + 30% * $22,000 = $56,000 + $6,600 = $62,600.
For May, they will make payments for May purchases and the remaining amount from April. That will be (70% * $110,000) + 30% * $80,000 = $77,000 + $24,000 = $101,000.
For June, they will make payments for June purchases and the remaining amount from May. That will be (70% * $120,000) + 30% * $110,000 = $84,000 + $33,000 = $117,000.
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You manage a project with 10 activities. Activities A1, A3, A5, A9 form the critical path. As you have a large budget for the project, you are considering crashing activity A2, which has the potential to shorten the time of A2 by 3 days.
What do you think about this opportunity?
O A good idea, it will reduce the project duration by 3 days.
O A bad idea, as A2 is not on the critical path.
Answer:
A bad idea, as A2 is not on the critical path.
Explanation:
Critical path is a path which is the shortest path of doing the activity.
When an activity is in critical path, then there is a benefit of crashing it. Or if it is not the part of critical path then the benefit is to crash the activity and then apply the spare resources in some activity which is a part of critical path.
Thus, crashing A2 which is not a part of critical path and then not deploying the resources on to the activities of critical path will not provide for any benefit.
It is ultimately not a wise idea.
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.
The proper discount rate when using the dividend discount valuation model is the:
A) Weighted average cost of capital
B) Cost of equity capital
C) Cost of debt capital
D) Average borrowing rate
Answer:
B) Cost of equity capital
Explanation:
Dividend discount model is used to find the Price of a given stock by calculating the present value of expected future dividends.
The dividend discount formula for finding price(assuming zero growth rate);
P0 = D1/r
The rate; r is the discount rate which is the cost of equity since dividends are paid on equity capital.
Weighted average cost of capital (WACC) is used to discount free cashflows of potential projects.
Final answer:
The correct discount rate for the dividend discount valuation model is the cost of equity capital. This interest rate reflects the expected return for equity investors, based on the present value of anticipated dividends. The concept of present discounted value applies to bonds differently, taking into account the impact of changing interest rates on bond pricing.
Explanation:
The proper discount rate when using the dividend discount valuation model is the cost of equity capital. This is because the dividend discount model is used to estimate the value of a company's stock based on the hypothesis that the value equals the present value of all future dividend payments.
When valuing stocks or bonds, it is essential to choose the correct interest rate for discounting future payments to their present value. For a stock, this would typically reflect the cost of equity, which includes the expected rate of return for equity investors, as dividends are paid out of the company's profits which are attributable to shareholders.
When applying the concept of Present Discounted Value (PDV) to a bond, the investor needs to consider future interest rates, as these will directly affect the bond's price and yield. If interest rates fall after a bond is issued, the bond's price increases above face value, and if interest rates rise, the bond's price falls below face value. With stocks, expected future profits play a key role in determining their PDV, including potential capital gains and dividend payments.
Which of the following statements regarding "Six Sigma" is TRUE?
A. The term has two distinct meanings–one is statistical; the other is a comprehensive quality system.
B. Six Sigma means that about 94 percent of a firm's output is free of defects.
C. The Six Sigma program was developed by Toyota in the 1970s.
D. The Six Sigma program is for manufacturing firms and is not applicable to services.
Answer:A. The term has two distinct meaning one is statistical; and the other is a comphrensive quality system.
Explanation:
Six sigma is statical in that it try to limit the number of defects in a manufactured product to a minimal level and confirmed it through stastical inference . It works to ensure quality through the principles of definition, measurements, analyse, improve and control.
Though it does not give assurance of percentage of defects free product but it worked with the goals of eliminating defects to the lowest minimum, it was not devoloped by Toyota though it's mainly used manufacturing but it can equally be used in service industry.
Six Sigma means that about 94 percent of a firm's output is free of defects.
Explanation:The true statement regarding Six Sigma is option B: Six Sigma means that about 94 percent of a firm's output is free of defects. Six Sigma is a methodology that aims to improve the quality and efficiency of processes by reducing defects and variability. It uses statistical tools and techniques to identify and minimize defects, ultimately aiming for a level of quality where only 3.4 defects per million opportunities are present. This translates to a 99.99966% defect-free rate, or about 94 percent of output being free of defects.
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You form a collar by buying a put with an exercise price of X1 = $43 and a premium of P = $6, and selling a call with an exercise price of X2 = $85 and a premium of C = $3. Both options mature in 6 months, and both have the same underlying asset. In addition, you buy the underlying asset for its current spot price of S = $63. Find the profit of this collar at expiration if the ending price of the underlying asset is ST = $60. Do NOT use the $ symbol in your answer; just write a numerical value. Of course, include the negative sign if the answer is negative; but do not include the positive sign if the answer is positive.
Answer:
Total profit of collar = -$22
Explanation:
Payoff of a short call option = P - Max[0, S-X]
Payoff of a long put option = Max[X-S, 0] - P
S = underlying price at expiry,
X = strike price
P = premium paid or received (long options involve paying premium, and short options receive premium)
Payoff of short call option = $3- Max[0, $60 - $85]
Payoff of short call option = $4 - (- $25)
Payoff of short call option = $29
Payoff of long put option = Max[$43 - 60, 0] - $5
Payoff of long put option = -$17 - $5
Total profit of collar = -$22
Azure Company uses the multiplier method to estimate hidden quality costs. The multiplier is determined to be 3, based on experience. Accounting records show that the measured external failure costs are $330,000. Which of the following is the total external failure cost?
a. $110,000b. $330,000c. $339,900d. $990,000
Answer:
d. $990,000
Explanation:
The multiplier method assumes that the total external failure cost is a multiple of the measured external failure costs. In this case, based on experience, the company determined that the measured value must be multiplied by a factor of 3:
[tex]C=3* \$330,000\\C= \$990,000[/tex]
Therefore, Azure Company's total external failure cost is $990,000
1. The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 10.5 percent on the company’s stock, what is the current price? What will the price be in three years? In 15 years?
Answer:
1.$34.4
2.$38.70
3.$61.95
Explanation:
1. Current price=D1/ (Required return-Growth rate)
= (2.15*1.04)/ (0.105-0.04) =$34.4
Therefore the answer is $34.4
We use the following formula:
A=P (1+r/100) ^n
where
A=future value
P=present value
r=rate of interest
n=time period.
2. A=$34.4*(1.04) ^3
=$38.70(Approximately).
Therefore the answer is 38.70
3. A=$34.4*(1.04) ^15
=$61.95(Approximately).
Therefore the answer is $61.95
TexLine Corporation had $700,000 in average total invested assets, net sales of $875,000, income from operations amounting to $35,000, and a desired minimum rate of return of 6%. The rate of return on investment for Texline is: Group of answer choices
The rate of return on investment for TexLine Corporation is 5%. Hence the correct answer is option b.
The rate of return on investment for TexLine Corporation can be calculated using the following formula:
Rate of Return on Investment = (Income from Operations / Average Total Invested Assets) x 100
Given
Average total invested assets = $700,000
net sales = $875,000
Income from operations = $35,000
minimum rate of return = 6%
Plugging in the given values:
Rate of Return on Investment = ($35,000 / $700,000) x 100
Rate of Return on Investment = 0.05 x 100
Rate of Return on Investment = 5%
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The given question is incomplete. The complete question is:
TexLine Corporation had $700,000 in average total invested assets, net sales of $875,000, income from operations amounting to $35,000, and a desired minimum rate of return of 6%. The rate of return on investment for Texline is:
a. 80%
b. 5%
c. 4%
d. 6%
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
The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $4,090,000 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? Use generally accepted (FASB) accounting principles.(A) $34,356,000(B) $38,446,000(C) $36,810,000(D) $38,173,333
Answer:
(B) $38,446,000
Explanation:
Assuming a linear depreciation model, depreciation will occur at the same rate each year. Since the total after 15 years is 90% of the original value, the percentage depreciated per year is given by:
[tex]P= \frac{90\%}{15} \\P=6\%[/tex]
The book value (V) of this purchase after the first year will be:
[tex]V=\$40,900,000*(1-0.06)\\V=\$38,446,000[/tex]
Therefore, the answer is (B) $38,446,000
Domino's Pizza was 50 years old in 2010. Visit the company's business-related website (www.dominosbiz) and read the company profile under the "Investors" tab. Does the firm focus on the economic, accounting, or shareholder perspective in the describing its competitive advantage in the profile. Defend/explain your answer.
Answer:
Consider the following paragraph I wrote
Explanation:
I think the firm focuses on the economic perspective in describing its competitive advantage. In the economic perspective, a firm focuses on how much economic value it creates through its competitive advantage.
In the company profile, Domino's focuses on how much economic value it creates for its sub-franchisees, franchisees and the parent company. It focuses more on the chain which creates economic value for the entire Domino's ecosystem consisting of the parent company, franchisees, and the sub-franchisees. So, I think the firm focuses on economic perspective in describing its competitive advantage.
Calculate the overapplied or underapplied overhead for the year and Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods SoldThe following information pertains to Paramus Metal Works for the year just ended. Budgeted direct-labor cost: 75,000 hours (practical capacity) at $16 per hour Actual direct-labor cost: 80,000 hours at $17.50 per hour Budgeted manufacturing overhead: $997,500Budgeted selling and administrative expenses: $435,000Actual manufacturing overhead:Depreciation $ 233,000 Property taxes 22,000 Indirect labor 82,000 Supervisory salaries 201,000 Utilities 57,000 Insurance 32,000 Rental of space 302,000 Indirect material (see data below) 79,000 Indirect material: Beginning inventory, January 1 47,000 Purchases during the year 95,000 Ending inventory, December 31 63,000 I calculated the cost driver is 13.30 , can someone help me with the following-1. Calculate the overapplied or underapplied overhead for the yea2.Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold
Answer:
Explanation:
1) Calculate the over-applied or under-applied overhead for the year.
Applied overhead =
Actual manufacturing overhead −Applied manufacturing overhead
=$1,008,000−($13.3×80,000)
=$1,008,000−$1,064,000
=−$56,000 (Over−applied)
Therefore, the over-applied overhead for the year is $56,000.
Working notes:
Calculate the pre-determined overhead rate:
Pre−determined overheadrate =
Budgeted manufacturing overhead / ( Budgeted direct−labor hours)
= $997,500 / 75,000
=$13.3perhour
Therefore, the pre-determined overhead rate is $13.3 per hour.
Calculate the actual manufacturing overhead (check the image attached)
2. The journal entry is attached as a image too
On January 1, 2015, Brooks Inc. borrows $90,000 from a bank and signs a 5% installment note requiring four annual payments of $25,381. Click here to see payment schedule. Record the first installment payment on December 31, 2015. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. If more than one account needs to be debited or credited, enter the account titles alphabetically.
Answer:
The journal entry which is to be recorded for the first installment payment on the note is shown below:
Explanation:
The journal entry is as on December 31, 2015
Interest Expense A/c.................Dr $4,500
Notes Payable A/c.......................Dr $20,881
Cash A/c..............................Cr $25,381
Working Note:
Interest expense = Borrowed amount × 5%
= $90,000 × 5%
= $4,500
Note Payable = Cash - Interest expense
= $25,381 - $4,500
= $20,881