Answer:
5.34%
The correct option is C,5.60%
Explanation:
The are two requirements here,the first is after cost of debt for the first part of the case study and after tax cost of debt for the second part of the scenario:
1.after tax cost of debt=pretax cost of debt*(1-t)
pretax cost of debt is 9.7%
t is the tax rate at 45% or 0.45
after tax cost of debt=9.7%*(1-0.45)=5.34%
2.
The pretax cost of debt here is computed using the rate formula in excel:
=rate(nper,pmt,-pv,fv)
nper is the number of times the bond pays coupon interest which is 15
pmt is the annual coupon interest receivable by investors i.e $1000*12%=$120
pv is the current market price of the bond which is $1,136.50
fv is the face value of the bond at $1000
=rate(15,120,-1136.50,1000)
rate =10.19%
after tax cost of debt=10.19% *(1-0.45)=5.60%
The after-tax cost of debt for Andalusian Limited (AL), assuming an interest rate of 9.70% and a tax rate of 45%, would be 5.33%, rounded to two decimal places. This calculation reflects the cost of new debt financing for the company based on current market conditions and the company's creditworthiness, not the terms of its existing bonds.
Explanation:The original question asks for the after-tax cost of debt for Andalusian Limited (AL). The after-tax cost of debt is calculated as the interest rate on new debt multiplied by (1 - Tax Rate). In AL's case, the interest rate is 9.70% and the tax rate is 45%.
Therefore, we calculate the after-tax cost of debt as follows: 9.70% * (1 - 0.45) = 5.33%. Thus, if the firm wants to issue new debt, a reasonable estimate of the after-tax cost of debt would be 5.33%, rounded to two decimal places.
The given example of the $1,000 bond selling at a market price of $1,136.50, with a 12% annual coupon rate, does not affect the calculation of the after-tax cost of new debt financing. This is because the cost of new debt financing for a corporation is determined by the current market conditions and the creditworthiness of the company, not by the terms of its existing outstanding bonds.
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The Rule of 70 applies in any growth rate application. Let’s say you have $1000 in savings and you have three alternatives for investing these funds.
A savings account earning 1% interest per year.
A U.S. Treasury bond mutual fund earning 3% interest per year.
A stock market mutual fund earning 8% interest per year.
How long would it take to double your savings in each of these 3 accounts?
Using the Rule of 70, it would take approximately 70 years for savings to double at a 1% interest rate, about 23.33 years at a 3% rate, and about 8.75 years at an 8% rate.
The Rule of 70 is a simple way to estimate the number of years it will take for an investment to double at a given interest rate. By dividing 70 by the interest rate, you get the approximate time in years for the money to double due to compound interest. Let's apply the Rule of 70 to the three investment options provided:
A savings account earning 1% interest per year: 70 / 1 = 70 years
A U.S. Treasury bond mutual fund earning 3% interest per year: 70 / 3 = approximately 23.33 years
A stock market mutual fund earning 8% interest per year: 70 / 8 = 8.75 years
The results show that the stock market mutual fund offers the quickest growth with the savings account being the slowest. It's important to note that actual interest may vary and investments come with varying levels of risk.
On January 2, 2018, Bonita Industries issued at par $2020000 of 5% convertible bonds. Each $1000 bond is convertible into 10 shares of common stock. No bonds were converted during 2018. Bonita had 197000 shares of common stock outstanding during 2018. Bonita’s 2018 net income was $902000 and the income tax rate was 25%. Bonita’s diluted earnings per share for 2018 would be (rounded to the nearest penny
Answer:
Bonita’s diluted earnings per share for 2018 would be $3,80
Explanation:
Step 1 Calculate the Basic Earnings Per Share
Basic Earnings Per Share = Income Attributable to Common Stockholders / Weighted Average Number of Common Stocks
Income Attributable to Common Stockholders
Net income $902000
less Interest on bonds ($2020000×5%)×75% ($75,750)
Income Attributable to Common Stockholders $826,250
Basic Earnings Per Share =$826,250 / 197000
=$4,19
Step 1 Calculate the Diluted Earnings Per Share
Diluted Earnings Per Share =Adjusted Income Attributable to Common Stockholders / Adjusted Weighted Average Number of Common Stocks
Adjusted Income Attributable to Common Stockholders
Income Attributable to Common Stockholders $826,250
Add Interest on bonds ($2020000×5%)×75% ($75,750)
Income Attributable to Common Stockholders $826,250
Adjusted Weighted Average Number of Common Stocks
common stock outstanding 197000
add convertible bond ( $2020000/$1000×10 shares) 20200
Weighted Average Number of Common Stocks 217200
Diluted Earnings Per Share = $826,250/217200
= $3,80
_____ Sanderson sells a single product for $50 that has a variable cost of $30. Fixed costs amount to $5 per unit when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume, profit will be:A. $15.B. $20.C. $50.D. an amount that cannot be derived based on the information presented.E. an amount other than those in choices "A," "B," and "C", but one that can be derived based on the information presented.
Answer:
$20.
Explanation:
Given that
Selling price per unit is $50
Variable cost per unit is $30
And, the fixed cost per unit is $5
As we know that the profit would be
= Selling price per unit - variable cost per unit - fixed cost per unit
It is given that if the company sells one unit extra so the profit would remain the same i.e $20 because the fixed cost remains the same
Hence, the correct option is B
Final answer:
The profit for selling one unit in excess of the break-even volume, given the costs and sales price provided, is $15.
Explanation:
If Sanderson sells a single product for $50 that has a variable cost of $30, and fixed costs amount to $5 per unit when anticipated sales targets are met, we can calculate the profit for selling one unit in excess of the break-even volume. First, let's determine the profit per unit.
The selling price minus the variable cost gives us a contribution margin of $20 per unit ($50 - $30). When one unit is sold beyond the break-even point, fixed costs are already covered, so the profit for that extra unit would simply be the contribution margin minus the fixed cost per unit. Thus, profit = $20 (contribution margin) - $5 (fixed cost per unit) = $15.
Cycle Wholesaling sold merchandise on account, with terms n/60, to Sarah’s Cycles on February 1 for $1,250 (cost of goods sold of $725). On February 9, Sarah’s Cycles returned to Cycle Wholesaling one-quarter of the merchandise from February 1 (cost of goods returned was $195). Cycle Wholesaling uses a perpetual inventory system, and it allows returns only within 15 days of initial sale. Required: 1. to 3. Prepare the journal entry to record the sales, Goods returned on February 9 and Cash collected on March 2. 4. Calculate the gross profit percentage for the sale to Sarah’s Cycles.
Answer and Explanation:
Cycle Wholesaling
1. Journal entry
Dr Accounts receivable 1,250
Cr Sales revenue 1,250
Dr Cost of goods sold 725
Cr Inventory 725
2. Journal entry
Dr Cash 1,225
(98%×1250)
Dr Sales discounts 25
(2%×1250)
Cr Accounts receivable 1,250
3.
Dr Cash 1,250
Cr Account receivable 1,250
4.
Gross profit
percentage /Net sales *100
500/1,225*100
=40.81
Gross profit percentage 40.81 %
$1,250– 725– (2% × $1,250) =500
= $1,250 – (2% × $1,250) = 1,225
Final answer:
Cycle Wholesaling's journal entries would reflect the sale, the return of goods, and the collection of cash. Additionally, the gross profit percentage is calculated by subtracting the adjusted cost of goods sold from sales revenue after the return and dividing by the final sales revenue, then multiplying by 100.
Explanation:
When Cycle Wholesaling sold merchandise to Sarah’s Cycles on February 1 for $1,250, the journal entry to record the sale on account with terms n/60 would debit Accounts Receivable and credit Sales Revenue. On February 9, when one-quarter of the merchandise was returned, the entry would debit Sales Returns and Allowances and credit Accounts Receivable to reflect the return. For cash collected on March 2, the entry would debit Cash and credit Accounts Receivable for the amount received after the return.
The merchandise returned had a cost of $195, which is one-quarter of the original cost ($725), indicating that the cost of goods sold originally was correctly reduced by the cost of goods returned. To calculate the gross profit percentage for the sale to Sarah’s Cycles, take the gross profit (sales revenue minus cost of goods sold after return) divided by the final sales revenue (after return) and multiply by 100 to get the percentage.
Jaycee Auto Repair has the following budgeted costs for the next year: Time Charges Material Charges Shop employees’ wages and benefits $120,000 $- Parts manager’s salary and benefits - 45,000 Office employee’s salary and benefits 30,000 15,000 Other overhead 15,000 40,000 Invoice cost of parts and materials - 400,000 Total budgeted costs $165,000 $500,000 The materials loading charge is 65% and the labor charge per hour is $47. Jaycee estimates that the repairs to a Cadillac Escalade damaged in an accident will take 45 hours of labor and $3,500 in parts and materials. The total cost of the repairs is
Answer:
Explanation:
Total cost of repairs:
Material = 3,500
Material loading charge = 3,500 * 65% = 2,275
Labor (45hrs* $47per hr) = 2,115
Thus, total cost =(3500 + 2275 + 2115) = $7,890
The total cost of the repairs is $7,890.
The calculation is as follows:Given that,
Material = 3,500
So,
Material loading charge is
= 65% of $3,500
= 2,275
And,
Labor (45hrs × $47per hr) = 2,115
Thus, total cost is
= $2,275 + $3,500 + $2,115
= $7,890
Therefore we can conclude that The total cost of the repairs is $7,890.
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An enterprising student has set up an internship clearinghouse for business students. Each student who uses the service fills out a form and lists up to 10 companies that he or she would like to have contacted. The clearinghouse has a choice of two methods to use for processing the forms. The traditional method requires about 20 minutes to review the form and arrange the information in the proper order for processing. Once this setup is done, it takes only two minutes per company requested to complete the processing. The other alternative uses an optical scan/retrieve system, which takes only a minute to prepare but requires five minutes per company for completing the processing. If it costs about the same amount per minute for processing with either of the two methods, when should each be used?
Answer:
If it costs about the same amount per minute for processing with either of the two methods,
The traditional method should be used when there is enough time since it requires 20 minutes to process the information for 10 companies.
The other alternative uses an optical scan/retrieve system should be used in emergencies since it takes just one minute to prepare.
Explanation:
Based on the variables provided, The traditional method involves less time in total because it took longer for the alternative method to complete the processing
The traditional method duration is summarized as follows
20 minutes to review the form and arrange the information in the proper order for processing.
2 minutes per company to complete the processing (2 x 20)
bringing the total duration for review and processing to 40 minutes.
The alternative method which uses an optical scan/retrieve system, which takes only
1 minute to prepare
5 minutes per company for completing the processing (5 x 10)
bringing the total duration to 51 minutes.
The traditional method should be used when a student lists 6 or fewer companies, and the optical scan/retrieve method should be used when a student lists 7 or more companies. This conclusion is reached by calculating the break-even point.
Explanation:To determine when to use each method, you need to find the break-even point; this is when the time it takes for both methods is the same. Let's denote the number of companies as 'n'.
For the traditional method, the time required is 20 minutes for form review plus 2 minutes per company: T1 = 20 + 2n minutes.
For the optical scan, the time required is 1-minute preparation and 5 minutes per company: T2 = 1 + 5n minutes.
To find the break-even point, set T1 equal to T2, and solve for 'n':
20 + 2n = 1 + 5n.
By solving this equation, we find that 'n' equals 6.33. This means that the traditional method should be used when a student lists 6 or fewer companies, and the optical scan/retrieve method should be used when a student lists 7 or more companies.
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: On January 1, 2012, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a historical cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net income of $28,000 for 2012 and 2013, respectively. Prepare the consolidation entries related to the equipment for year 2012 and year 2013
Answer:
See the explanation below
Explanation:
Net book value (NBV)) = $120,000 - $48,000 = $72,000
Unrealized profit on sales of equipment = Selling price - NBV = $84,000 - $72,000 = $12,000
Annual depreciation = $120,000/10 = $12,000
Overcharged depreciation included = $12,000 * 10% = $1,200
Consolidation entries in 2012:
Details Dr ($) Cr ($)
Depreciation expenses 1,200
Reserve account 10,800
Equipment 12,000
Being the unrealized profit on equipment
Accumulated depreciation 12,000
Depreciation expenses 12,000
Being the depreciation charge for the year 2012
Consolidation entries in 2013:
Details Dr ($) Cr ($)
Accumulated depreciation 12,000
Depreciation expenses 12,000
Being the depreciation charge for the year 2013
Narrative 1: Freshplace Grocery At Freshplace Grocery, customers give their purchases to a sales clerk along with cash. The sales clerk enters the sale in a cash register and puts the money in the register drawer. At the end of the day, the sales clerk gives the cash and the register tape to the cashier. The cashier reconciles the cash and the tape to make sure all of the cash is present.
Create a physical DFD based on the narrative
Answer:
See the attaches file for the DFD
Explanation:
A data flow diagram (DFD) is a graphical representation of the flow of information through a system or an organisation. An information can well be represented using a data flow diagram.
See the attached file for the DFD
Dab Corporation was organized on January 1, Year 1. During Year 1, Dab had the following transactions relating to shareholders' equity:Issued 28,000 shares of common stock in exchange for cash of $442,400Reported net income of $98,000Reported net holding gains on available-for-sale investments in debt securities of $1,000Paid dividends of $54,000What is total shareholders’ equity at the end of Year 1?please explain how/show work,
Answer:
$487,400
Explanation:
Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.
The total shareholders’ equity at the end of Year 1
= $442,400 + $98,000 + $1,000 - $54,000
= $487,400
Common stock, net gain on available-for-sale investments in debt securities and report net profit increases the shareholder's equity while dividend paid reduces it hence the signs assigned.
The centralized computer technology department of Hardy Company has expenses of $78,400. The department has provided a total of 11,200 hours of service for the period. The Retail Division has used 9,856 hours of computer technology service during the period, and the Commercial Division has used 1,344 hours of computer technology service. How much should each division be charged for computer technology department services
How much should each division be charged for computer technology department services?
Answer:
Expenses to be apportioned to Retail Division $68,992
Expenses apportion to Commercial Division
$9,408
Total Expenses $ 78,400
Explanation:
Hardy Company Computer Technology Dept. expenses to be apportioned to Retail Division and Commercial Division.
Total Expenses $ 78,400
Hours used by Retail Division 9,856
Hours used by Commercial Division 1,344
Total hours put in by Computer Tech Dept. 11,200 Hours
Therefore, expenses to be apportioned to Retail Division
= 9,856/11,200 X $ 78,400
= $68,992
Expenses apportion to Commercial Division
= 1,344/11,200 X $78,400 = $9,408
Total Expenses $ 78,400
On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: Sales, January 1 through July 8 $ 695,000 Inventory, January 1 140,000 Purchases, January 1 through July 8 655,000 Gross profit ratio 30 % What is the estimated inventory on July 8 immediately prior to the fire
Answer:
$308,500
Explanation:
The computation of estimated inventory is given below:-
Cost of Goods Available = Beginning Inventory + Net Purchases
= $140,000 + $655,000
= $795,000
Cost of goods Sold = (100 - 30) ÷ 100 × $695,000
= $486,500
Ending Inventory = Cost of goods available - Cost of good sold
= $795,000 - $486,500
= $308,500
Therefore for computing the ending inventory we simply deduct the cost of goods sold from cost of goods available.
Direct Materials Purchases Budget Anticipated sales for Safety Grip Company were 42,000 passenger car tires and 19,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows: Passenger Car Truck Rubber 35 lbs. per unit 78 lbs. per unit Steel belts 5 lbs. per unit 8 lbs. per unit The purchase prices of rubber and steel are $1.20 and $0.80 per pound, respectively. The desired ending inventories of rubber and steel belts are 40,000 and 10,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 46,000 and 8,000 pounds, respectively. Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9. Safety Grip Company Direct Materials Purchases Budget For the Year Ending December 31, 20Y9 Rubber Steel Belts Total Pounds required for production: Passenger tires lbs. lbs. Truck tires Total pounds available lbs. lbs. Total units purchased lbs. lbs. Unit price x $ x $ Total direct materials to be purchased $
Answer and Explanation:
The preparation of direct materials purchases budget is shown below:-
Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 2019
Rubber Steel Belts
Pounds required for production
Passenger tires $1,470,000 210,000
(42,000 × 35 lbs) (42,000 × 5 lbs)
Truck tires 1,482,000 1520,00
(19,000 × 78 lbs) (42,000 × 8 lbs)
Add: Desired ending inventory 40,000 10,000
Total 2,992,000 372,000
Less: Estimated beginning
inventory 46,000 8,000
Total units purchased 2,946,000 364,000
Unit price $1.20 $0.80
Total direct materials to be
purchased $3,535,200 $291,200
(2,946,000 × $1.20) (364,000 × $0.80)
Therefore by above we have prepared the direct materials purchases budget.
In each of the following situations, state whether the bonds will sell at a premium or discount. Required a. Valley issued $300,000 of bonds with a stated interest rate of 7 percent. At the time of issue, the market rate of interest for similar investments was 6 percent. Premium Discount b. Spring issued $220,000 of bonds with a stated interest rate of 5 percent. At the time of issue, the market rate of interest for similar investments was 6 percent. Discount Premium c. River Inc. issued $150,000 of callable bonds with a stated interest rate of 5 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 6 percent for similar investments. Discount Premium
Answer:
a. Premium
b. Discount
c. Discount
Explanation:
a. Valley issued $300,000 of bonds with a stated interest rate of 7 percent. At the time of issue, the market rate of interest for similar investments was 6 percent.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 7% - 6% = 1% premium
Therefore, Valley's bond will sell at a premium.
b. Spring issued $220,000 of bonds with a stated interest rate of 5 percent. At the time of issue, the market rate of interest for similar investments was 6 percent.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 5% - 6% = -1% discount
Therefore, Spring's bond will sell at a discount.
c. River Inc. issued $150,000 of callable bonds with a stated interest rate of 5 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 6 percent for similar investments.
Premium (discount) = Bond's stated interest rate - Market rate of interest for similar investments = 5% - 6% = -1% discount
Therefore, River Inc.'s bond will sell at a discount.
Valley's bonds sell at a premium, while Spring's and River Inc.'s bonds sell at a discount.
The valuations of the bonds issued by Valley, Spring, and River Inc. depend on whether the stated interest rates are higher or lower than the market rates. Bonds sell at a premium when the stated interest rate is higher, and at a discount when lower.
When determining whether bonds will sell at a premium or discount, the relationship between the stated interest rate on the bond and the market interest rate is crucial.
Valley issued $300,000 of bonds with a stated interest rate of 7 percent. At the time of issue, the market rate of interest for similar investments was 6 percent. The bonds will sell at a premium because the stated interest rate is higher than the market rate.Spring issued $220,000 of bonds with a stated interest rate of 5 percent. At the time of issue, the market rate of interest for similar investments was 6 percent. The bonds will sell at a discount because the stated interest rate is lower than the market rate.River Inc. issued $150,000 of callable bonds with a stated interest rate of 5 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 6 percent for similar investments. The bonds will sell at a discount because the stated interest rate is lower than the market rate.Premium and Discount Definition
Premium: Bonds sell at a premium when the stated interest rate is higher than the market rate because they offer higher returns.
Discount: Bonds sell at a discount when the stated interest rate is lower than the market rate because they offer lower returns.
Jim buys a new car in February 2020 for $35,000. The car had been produced in the U.S. in January 2020. However, because of some financial problems, he sells it back to the dealer for $20,000 in March 2020. The dealer then sells the same car to another buyer for $25,000 in April 2020. What dollar amount will the national income accountants include in the nominal GDP of 2020 as a result of these transactions.
Answer: $35,000
Explanation:
Nominal GDP is the total amount of final goods and services produced in an economy over a period of time which is usually a year reflected in the current market prices of that year.
For GDP to be effective there are certain measures that are put in place. Such as the Avoidance of DOUBLE COUNTING. This is can be either when intermediate goods such as iron are included in GDP as well as the steel they made. This will overestimate GDP. It can also happen if the same good is sold over and over again as is the case in this scenario. In that case only the first sale in that year is taken into account.
For this reason, $35,000 is the amount to be included in the Nominal GDP. If any other figure is put in as well then Double Counting will occur.
Doyle Company issued $360,000 of 10-year, 8 percent bonds on January 1, Year 2. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $53,500 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 2.
Organize the transaction data in accounts under the accounting equation for Year 2 and Year 3.
Answer:
The balance of the equation at end of year 2 is$388,800
The balance of the equation at end of year 3 is $417,600
Explanation:
Assets =Liabilities +shareholders' equity
Land +cash Bonds payable retained earnings
1/1/year 2 $360,000 =$360,000
1/1/year 2 $360,000 ($360,000)
31/12/year2 $53,500 = $53,500
31/12/year2 ($28,800) = ($28,800)
Balance $388,800 = $388,800
Opening balance $388,800= $388,800
31/12/year3 $53,500= $53,500
31/12/year3 ($28,800)= ($28,800)
Balance $ 417,600 $417,600
The interest on bond=$360,000*8%=$28,800
Postponement is:
a. not very effective if a small fraction of demand comes from a single product.
b. effective even if a large fraction of demand comes from a single product.
c. only effective if a large fraction of demand comes from a single product.
d. not very effective if a large fraction of demand comes from multiple products.
Answer:
A. Not very effective if a small fraction of demand comes from a single product.
Explanation:
Postponement is known to be a business strategy that maximizes possible benefits and minimizes possible risks by holding on or delaying in n investment.
Its concept entails in supply chain management where the manufacturer produces a generic product, which can be modified at the later stages before the final transport to the customer.
"Moccasin Company manufactures cotton shirts. 12,000 shirts are produced during the first week of July. The unit quantity standard is 6 meters cloth per shirt and the actual quantity used was 0.50 meters per shirt. Determine the quantity of cloth that should be used for the actual output of 12,000 shirts."
Answer:
The answer is 72,000 Meters.
Explanation:
From the question given, let us recall:
Moccasin Company produces cotton shirts. =12,000
The unit quantity standard = 6 meters
The quantity used actually was = 0.50 meters per shirt
The next step is to determine the quantity of cloth that should be used for the actual output of 12,000 shirts.
Quantity of cloth that should be used
= 12,000 * 6 meters cloth per shirt
= 72,000 Meters
How much are you willing to pay for one share of stock if the company just paid an annual dividend of $1.03, the dividends increase by 3 percent annually, and you require a rate of return of 15 percent?
Answer:
The fair price of the stock today is $8.84 and that is the maximum that should be paid for the stock today.
Explanation:
The price of the stock today can be calculated using the constant growth model of DDM. The DDM values the stock based on the expected future dividends from the stock. The price per share can be calculated as,
P0 = D0 * (1+g) / (r - g)
Where,
D0 * (1+g) is the dividend next year or D1r is the required rate of returng is the growth rate in dividendsP0 = 1.03 * (1+0.03) / (0.15 - 0.03)
P0 = $8.84
To calculate the value of a share of stock, you can use the formula for the present value of future dividends. In this case, the company just paid an annual dividend of $1.03, the dividends increase by 3% annually, and you require a rate of return of 15%. Using these values, you should be willing to pay $6.87 for one share of stock.
Explanation:To calculate the value of a share of stock, we can use the formula for the present value of future dividends. In this case, the company just paid an annual dividend of $1.03, and the dividends increased by 3% annually. We also know that you require a rate of return of 15%. Using these values, we can calculate the present value of the dividends and then determine the price you should be willing to pay for one share of stock.
We can calculate the present value of the future dividends using the formula:
PV = D / (r - g)
Where PV is the present value of the dividend, D is the dividend amount, r is the required rate of return, and g is the growth rate of the dividends. Plugging in the values, we have:
PV = $1.03 / (0.15 - 0.03) = $6.87
Therefore, you should be willing to pay $6.87 for one share of stock.
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A company incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office building: Purchase price of the land $ 570,000 Sale of salvaged parts already on land $ 23,000 Demolition of the old building $ 33,000 Ground-breaking ceremony (food and supplies) $ 2,100 Land preparation and leveling $ 7,300 What amount should be recorded for the purchase of the land
Answer:
$582,100
Explanation:
Cost of land $570,000
Less;Salvage parts sold ($23,000)
Demolition of old building $33,000
Land preparation and leveling $2,100
Total cost of land $582,100
The ground breaking ceremony expenses are not capital expenditures therefore ignored in above working.
Oak Inc. has the following information regarding its assets: Book Value Estimated Undiscounted Cash Flows Fair Value Equipment $ 48,000 $ 43,000 $ 40,000 Building $ 81,000 $ 83,000 $ 78,000 Patent $ 43,000 $ 47,000 $ 45,000 What amount of loss should be recorded due to asset impairments
Answer:
$8,000
Explanation:
Given that,
Equipment:
Book value = $48,000
Estimated Undiscounted Cash Flows = $43,000
Fair value = $40,000
Building:
Book value = $81,000
Estimated Undiscounted Cash Flows = $83,000
Fair value = $78,000
Patent:
Book value = $43,000
Estimated Undiscounted Cash Flows = $47,000
Fair value = $45,000
From the above information, we can conclude that only the equipment is impaired as it is the only asset whose estimated future cash flows are less than its book value.
The impairment loss obtained from the asset is determined as the difference between the fair value and the book value.
Amount of loss should be recorded due to asset impairments:
= Book value - Fair value
= $48,000 - $40,000
= $8,000
NewKirk Inc.., is an unlevered firm with expected annual earnings before taxes of $21 million in perpetuity. The current required return on the firm's equity is 16 percent, and the firm distributes all of its earnings as dividends at the end of each year. The company has 1.3 million shares of common stock outstanding and is subject to a corporate tax rate of 35 percent. The firm is planning a recapitalization under which it will issue $30 million of perpetual 9 percent debt and use the proceeds to buy back shares. What is cash flows available to equity holders after recapitalization?
Answer:
$11,895,000
Explanation:
Expected annual earnings before tax = $21,000,000
Debt issue = $30,000,000
Interest rate = 9%
Annual Interest expenses = $30,000,000 × 9%
= $2,700,000
EBT = EBIT - Interest expenses
= $21,000,000 - $2,700,000
= $18,300,000
Net income = $18,300,000 × (1 - 35%)
= $11,895,000
Cash flows available to equity holders after recapitalization will be $11,895,000.
Assume a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approxi-mated their recorded book values except for a patent, which had a fair value of $200,000 and no recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent com-pany amortizes its intangible assets using straight line amortization. During the year ended December 31, 2019, the subsidiary recorded sales to the parent in the amount of $240,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2019. The following summarized pre-consolidation financial state-ments are for the parent and the subsidiary for the year ended December 31, 2019:
Answer:
Explanation:
The file attached shows the full question
The picture attached shows the solution to the problem
Delta Corporation has a bond issue outstanding with an annual coupon interest rate of 7 percent and 4 years remaining until maturity. The par value of the bond is $1,000. Determine the current value of the bond if present market conditions justify a 14 percent required rate of return. The bond pays interest annually.
Answer:
The current value of the bond is $796.04
Explanation:
The current value of a bond is the present value of all the cash inflows expected from the bond in the form of an annuity of interest payments and the term end face value payment discounted by the required rate of return or market interest rates. Thus, the current price of this bond will be,
Interest payment from the bond per year = 1000 * 0.07 = $70
The present value of ordinary annuity formula is attached in the answer.
Price = 70 * [ (1 - (1+0.14)^-4) / 0.14 ] + 1000 / (1.14)^4
Price of the bond = $796.04
According to GAAP, the disclosure of accounting policies adopted by a reporting entity is important to financial statement readers in determining whether accounting policies are consistently applied from year to year. net income for the year. the value of obsolete items included in ending inventory. whether the working capital position is adequate for future operations.
Answer:
A. whether accounting policies are consistently applied from year to year.
Explanation:
Accounting policies need to be disclosed to ensure proper understanding of financial statements, it is necessary that all significant accounting policies adopted in the preparation and presentation of financial statements must be disclosed. Any change in an accounting policy that has a significant effect should be disclosed. Also to disclose significant accounting policies; Such disclosure helps users of financial statements (e.g., investors, creditors, vendors) to understand how particular accounting principles were used in preparing the company's financial statements.
Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 2,000 units. His cost to carry one unit is $105 per year per unit, and he has estimated that each order costs $35 to place. Using the EOQ model, how many should Ray order each time
Answer:
The EOQ is 37 units that is rounded off to the nearest whole unit.
Explanation:
The economic order quantity or EOQ is the number of units that should be ordered each time to minimize the cost of ordering and holding the inventory. The EOQ can be calculated using the following formula,
EOQ = √(2 * D * O) / H
Where,
D is the annual demand in unitsO is the ordering cost per orderH is the holding cost per unit per yearEOQ = √(2 * 2000 * 35) / 105
EOQ = 36.51 units rounded off to 37 units
There are many roles and responsibilities entailed in the management and identification of risks and the enforcement of policies related to information security. One such role is ________________, which has the responsibility of enforcing policies at the employee level.
Answer:
front-line manager/supervisor
Explanation:
Front-line manager-
It refers to the person responsible to look after the primary production activities of the company, is referred to as a front line manger or supervisor.
They helps the other employees by motivating other people to perform the given task with utmost sincerity and hard work, which helps to produce more production, which helps the company to grow and flourish.
From the given question,
As there are various task and activity which need to be done by the company, the front-line manger helps to perform the duties at the employee level.
The Information System Security Officer (ISSO) is responsible for enforcing policies at the employee level related to information security. This role includes mandatory compliance, training, dealing with the user domain, and balancing security with privacy concerns. The ISSO has a critical part in establishing a secure environment within the company.
The role responsible for enforcing policies at the employee level within an organization is often referred to as the Information System Security Officer (ISSO) or a similar position. This role is crucial in managing and identifying risks associated with information security by collecting important data, ensuring compliance with company policies, and overseeing training programs for both new hires and existing employees. The ISSO is also tasked with maintaining the balance between enforcing security policies and minimizing regulatory burdens or privacy intrusions. Moreover, employees are expected to play an active part in maintaining security and safety by adhering to professional and ethical communication protocols and reporting incidents or unsafe conditions. Therefore, the ISSO's responsibilities extend to creating an environment where employees understand their role in the security posture of the company.
An essential aspect of the ISSO's job is to work with the user domain, which includes all employees and users who have access to organizational systems. The ISSO has to educate and manage these individuals to protect the company against threats that may arise from user actions or negligence. Additionally, ISSO must guide the organization in implementing workplace harassment policies, safety training, and other strategic policies that target overall organizational security.
David Desgro hired Paul Pack to inspect a house that Desgro wanted to buy. Pack had Desgro sign a standard-form contract that included a twelve-month limit for claims based on the agreement. Pack reported that the house had no major problems, but after Desgro bought it, he discovered issues with the plumbing, insulation, heat pump, and floor support. Thirteen months after the inspection, Desgro filed a suit in a Tennessee state court against Pack. Was Desgro’s complaint filed too late, or was the contract’s twelve-month limit unenforceable? Discuss. [Desgro v. Pack, 2013 WL 84899 (Tenn.App. 2013)] (See Adhesion Contracts and Unconscionability.) Miller, Roger LeRoy. Business Law: Text & Cases - The First Course - Summarized Case Edition (p. 274). Cengage Learning. Kindle Edition.
Answer:
Desgro’s complaint was filed too late. With this being stated, the suit would be dismissed because the contract explicitly states that complaints have to be within the 12 month timespan.
Explanation:
Desgro’s complaint was filed too late. With this being stated, the suit would be dismissed because the contract explicitly states that complaints have to be within the 12 month timespan due to the fact that Desgro discovered issues with the plumbing, insulation, heat pump, and floor support after buying the house in which he decided to filled a suit in a Tennessee state court against Pack after Thirteen months which was after the inspection and after signing the standard-form contract that included a twelve-month limit for claims based on the agreement which is why the suit would be dismissed because the contract explicitly states that complaints have to be within the 12 month timespan which Desgro failed to comply with.
Final answer:
The case of Desgro v. Pack revolves around the enforceability of a contract clause limiting the time for filing claims. Contracts can include terms that restrict rights, but courts can deem such terms unenforceable if they're unreasonable or unconscionable. Understanding contract terms is crucial for legal protection.
Explanation:
The legal issue at hand involves whether David Desgro's complaint against Paul Pack for inspection deficiencies was filed too late, based on a twelve-month claim limit in their contract. In Desgro v. Pack, the court had to determine the enforceability of a standard-form contract's clause that limited the time for filing claims. Contracts, especially standard-form contracts, can include clauses that seem to restrict rights; however, the enforceability of such clauses can be challenged on grounds such as unconscionability or being against public policy.
In general, parties to a contract are bound by its terms, including any limitations on the time to file a lawsuit. However, if such a limitation is found to be unreasonable or unconscionable, or if it significantly undermines the rights of one party, a court may deem it unenforceable. The background of this question underscores the importance of understanding contract terms thoroughly before agreement and the legal protections that can come into play when a party feels aggrieved under a contract.
A risk exposure is defined as the impact to the organization when a situation transpires. The widely accepted formula for calculating exposure is as follows: Risk exposure =________________ the event will occur + ____________ if the event occurs where, outcome likelihood, impact how, impact likelihood, cost
Answer:
Likelihood, impact
Explanation:
Risk exposure is defined as an estimation of future loss that can be experienced when a particular line of action is taken. There is ranking of risks according to the likelihood of them occuring multiplied by potential loss if the risk occurs.
The formula for risk exposure is the likelihood that an event will occur plus impact if the event occurs.
For example if an investor invests $1,000 in a high risk investment, he stand s the chance of losing the whole of the capital invested.
Final answer:
The formula for risk exposure is the sum of the likelihood that an event will occur and the impact if it does. Risk exposure = likelihood the event will occur + impact if the event occurs
Explanation:
The widely accepted formula for calculating risk exposure is as follows: Risk exposure = likelihood the event will occur + impact if the event occurs. In the context of public health and epidemiology, relative risk is calculated by dividing the incidence of the health event for the exposed group by the incidence of the health event in the unexposed group:
RR = incidence of outcome in exposed group / incidence of outcome of non-exposed group
An RR value greater than one indicates an increased risk associated with exposure to the risk factor. For example, a RR of 3.25 means the exposed group is 3.25 times more likely to have the health event than the non-exposed group.
Risk management often includes assessing different types of investment risks such as default risk and interest rate risk which can affect the expected rate of return. A high-risk investment will have actual returns that fluctuate significantly from the expected rate, whereas a low-risk investment typically yields returns closer to the expected rate annually.
The ending inventory has 83,000 units, which are 100 percent complete for Department R costs. Required: a. Assume that Saline Solutions used weighted-average process costing and that the cost per equivalent unit for May for materials in Department S is $6.40 and for conversion costs it is $2.40. Prepare a production cost report for Saline Solutions' Department S for the month of May. b. What is the cost of product transferred out of Department S for May
Answer:
Total unit cost $8.80
Total Costs Transferred out $730,400
Explanation:
In Process Costing we find the individual unit costs and total costs transferred by multiplying it with the equivalent no of units.
As the units are 100 percent complete the Equivalent units are 83,000 units for both materials and conversion.
Saline Solutions
Weighted-Average Process
Materials in Department S $6.40
Conversion costs Department S $2.40
Total unit cost $8.80
Total No of units 83,000
Total Costs $8.80
Total Cost Transferred Out $730,400
Total Costs Transferred to Materials = $ 6.4 * 83,000=$ 531200
Total Costs Transferred to Conversion = $ 2.4 * 83,000=$ 199200
Total Costs Transferred= $ 531200+$ 199200= $ 730400
Ben and John formed BCD Inc., a corporation, in 2013. Ben received 80% of the voting common stock, the only class of stock and John received the remaining 20% of the stock. In 2014, Ben transferred additional property to BCD Inc. The property had an adjusted basis to Ben of $40,000 and a fair market value of $50,000 on the date of the transfer. On the same day, and in exchange for the property he transferred to BCD Inc., Ben received cash of $15,000 and additional stock worth $35,000. How much gain was recognized by Ben as a result of this transaction
Answer:
Gain recognized by Ben = $10,000
Explanation:
Given Data:
Adjusted basis of property=$40000
Cash received = $15000
Additional stock received = $35000
Total received = Cash received + Additional stock received
= $35000 + $15000
= $50000
Gain recognized by Ben = Total received - Adjusted basis of property
=$50,000 -$40,000
= $10,000
Therefore, gain recognized by Ben = $10,000