Answer:
The market price of the security will be $42.86 when the Beta doubles and all other variables remains constant.
Explanation:
Given information - Current market price = $60
Risk free rate = 6%
Expected rate of return = 10%
Market risk premium = 8%
In this question we have to find the market price of the security when beta doubles it self, the formula which we can use to take out the market price is,
\frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}
But here we have to first find out both the dividend and new expected rate of return and it is also told here that beta doubles itself but we don't know what the initial beta is, so lets take out what beta is , using formula for expected rate of return
Expected rate of return = Risk free rate + Beta x Market risk premium
10% = 6% + Beta x 8%
4% = Beta x 8%
Beta = 4% / 8%
Beta = 1% / 2% = .01 / .02 = .5
Now doubling the beta = .5 x 2 = 1
Putting this value of beta in the expected rate of return formula to calculate the new expected rate of return,
New expected rate of return = 6% + 1 x 8%
= 14%
Now we just have to find the dividend , which we can by using formula of
Market price = \frac{DIVIDEND}{\:EXPECTED\:RATE\: OF\: RETURN}
$60 = Dividend / 10% (10% = .1)
$60 x .1 = Dividend
$6 = Dividend
Now we have both dividend and new market rate of return and we just have to put these values in the formula
\frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}
New market price = $6 / 14% (14% = .14)
= $6 / .14
= $42.86
Answer: $42.85 per share
Explanation:
Given that,
The market price of a security(P) = $60 per share
expected rate of return(ERR) = 10%
the market risk premium(MRP) = 8%
risk-free rate(RFR) = 6%
ERR = RFR + Beta × (MRP)
10 = 6 + Beta(8)
Beta = [tex]\frac{4}{8}[/tex]
= 0.5
In this question, it is given that constant dividend paid in perpetuity
current market price per share, P = [tex]\frac{DPS}{ERR}[/tex]
Where, DPS - dividend per share
60 × 0.1 = DPS
$6 per share = DPS
If beta doubles then,
Beta = 0.5 × 2
= 1
∴ Required rate of return = 6 + 1 × 8
= 14%
So, market price of security = [tex]\frac{DPS}{Required rate of return}[/tex]
= [tex]\frac{6}{0.14}[/tex]
= $42.85 per share
In preparing a company's statement of cash flows for the most recent year, Ransom Corp. reported the following information: Repayment of outstanding bonds $107,000 Purchase of treasury stock $62,000 Issuance of common stock $46,000 Payment of cash dividends $15,000 Net cash flows from financing activities for the year were_________.
Answer: In preparing a company's statement of cash flows for the most recent year, Ransom Corp. reported the following information: Repayment of outstanding bonds $107,000 Purchase of treasury stock $62,000 Issuance of common stock $46,000 Payment of cash dividends $15,000 Net cash flows from financing activities for the year were $138,000.
Explanation:
Repayment of outstanding bonds ($107,000)
Purchase of treasury stock (62,000)
Issuance of common stock 46,000
Payment of cash dividend (15,000)
Net cash used by financing activities = $107,000 plus $62000 minus $46,000 plus $15,000 equals $138,000.
Cleo is given the responsibility of gathering information about the countries where sales of cameras have been high and the reason behind customers' preference of certain cameras to others in the market. In this scenario, Cleo will need to perform the _____ role of marketing research.
Answer:
In this scenario, Cleo will need to perform the descriptive role of marketing research.
Explanation:
As in this scenario, the Cleo has given the responsibility of gathering information about the countries which represent demographics of the countries . Also, the preference is given to the high sales and find the reasons of customer's preferences towards other markets.
The descriptive marketing research help the company to do detail analysis about any particular thing whether it will minor or major. It includes surveys, methods, etc. In the given example it highlight the countries analysis, high sales, etc.
Thus, In this scenario, Cleo will need to perform the descriptive role of marketing research.
Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Variances Budget Price Efficiency Material A $ 50 comma 000 $ 1 comma 100F $ 3 comma 600U Material B 69 comma 000 400U 1 comma 100F Direct manufacturing labor 87 comma 000 500U 2 comma 900F The most likely explanation of the above variances for Material A is that ________.
Answer
The most likely explanation is that company purchase a lower quality materials. The cost per unit of materials was lower, but more materials were needed.
Explanation:
Material A
favorable price variance
and unfavorable efficiency variance
The most likely explanation is that company purchase a lower quality materials. The cost per unit of materials was lower, but more materials were needed.
After the December 31, 2019 adjusting journal entries have been posted, Sinclair Enterprises has the following account balances (all accounts have normal balances) are: Account Title Account Balance Accounts Receivable $159,000 Allowance for Bad Debts $4,600 Bad Debts Expense $8,200 What is the net realizable value as of December 31, 2019?
Answer:
NET Account Receivable 154,400
Explanation:
Account Receivable 159,000
Allowance for Bad debts (4,600)
NET Account Receivable 154,400
The allowance is the contra-assets account which adjust account receivable.
the bad debt expense is an expense, it doesn't go in the balance sheet.
Answer:
$154,400
Explanation:
net realizable value = accounts receivable - allowance for bad debts
net realizable value = $159,000 - $4,600 = $154,400
The allowance for bad debts account is a contra asset account that reduces accounts receivables account since it adjusts debts that are not expected to be paid.
Ace Industries has current assets equal to $9 million. The company's current ratio is 2.0, and its quick ratio is 1.5. Do not round intermediate calculations. Round your answers to the nearest dollar. What is the firm's level of current liabilities? $ What is the firm's level of inventories?
Answer: current liability = 4.5 million
inventory = 2.25 million
Explanation: Current ratio can be defined as a liquidity ratio that is used to analyze whether the company has enough resources to fulfill its short term obligations. It is computed as follows :-
[tex]current\:ratio\:=\frac{current\:assets}{current\:liability}[/tex]
[tex]current\:ratio\:=\:\frac{9million}{current\:liabilities}[/tex]
therefore,
current liabilities= [tex]\frac{9\million}{2}[/tex]
= 4.5 million
.
Quick ration is more stringent liquidity ratio. It is computed as follows :-
[tex]quick\:ratio\:= \frac{current\:assets\:-\:inventories}{current\;liabilities}[/tex]
[tex]1.5\:=\frac{9}{4.5}[/tex]
solving this equation we get
inventory = 2.25 million
Answer:
The correct answer is current liabilities is equal to $4.5 million and firm's level of inventory is $2.25 million.
Explanation:
Both current ratio and quick ratio are know as liquidity ratio which tells about the ability of a firm to meet its short term obligations.
The only difference between these two ratio is of taking inventory and prepaid expenses in to account, as while calculating the quick ratio we don't take inventory and prepaid expenses in to account.
Formula for current ratio = [tex]\frac{CURRENT ASSET}{CURRENT LIABILITIES}[/tex]
Where the current ratio is 2.0 and current assets is equal to $9 million,
[tex]\frac{\$9\ million}{CURRENT\ LIABILITIES}= 2.0[/tex]
CURRENT LIABILITIES = $4.5 MILLION
Formula for quick ratio = [tex]\frac{QUICK ASSETS}{CURRENT LIABILITIES}[/tex]
Here current liabilities = $4.5 million,
Quick asset = current assets - inventory
[tex]\frac{\$9\ MILLION - INVENTORY}{\$4.5\ MILLLION}= 1.5[/tex]
INVENTORY = $9 MILLION - $6.75 MILLION
INVENTORY = $2.25 MILLION
Cost standards for one unit of product no. C77: Direct material 3 pounds at $2.50 per pound $ 7.50 Direct labor 5 hours at $7.50 per hour 37.50 Actual results: Units produced 7,800 units Direct material purchased 26,000 pounds at $2.70 $ 70,200 Direct material used 23,100 pounds at $2.70 62,370 Direct labor 40,100 hours at $7.30 292,730 Assume that the company computes variances at the earliest point in time. The standard hours allowed for the work performed are:
Answer:
Standard hours for Job C77 39,000 HOURS
Explanation:
We are asked for Direct labours, so everything else is irrelevant for now.
In the first sentence we got the stadard values for 1 units of product:
Cost Standard DL 5 hours at $37.5 for 1 unit of product
Now let's check how many units were done on job C77
Job C77 Unit Produced 7,800 units
If each units standard is 5 hours, then multiplying we get the standard hours for job C77
Standard hours for the work:
[tex]Actual units * StandardHours =$Standard Units JOB C77[/tex]
[tex]7,800 * 5= 39,000[/tex]
Concord Corporation reported net income of $177,200 for 2017. Concord Corporation also reported depreciation expense of $35,230 and a loss of $4,920 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $14,160 for the year, a $17,220 increase in accounts payable, and a $4,190 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method
Answer
Net income 177,200
+35230 depreciation
+4,920 loss on disposal
217,350 adjusted net income (a)
↑↓
↑AR -14,160
↑Prepaid -4,190
↑AP 17,220
Change in working Capital -1,130(b)
Cash Flow generated from operating activities 216,220
Explanation:
(a) we must remove the non-monetary account from the income statement
This means add the non-monetary expenses and losses
Subtract the non monetary revenue and gains
(b)
The increase in assets account have a negative meaning, because it is assumed the company used cash to adquire it.
Whiel increase in liabilities are positive, because the company receive aah or delay the payment of cash.
To prepare the operating activities section of the statement of cash flows using the indirect method, start with the net income and make adjustments for non-cash expenses, gains and losses, and changes in working capital. In this case, the net cash provided by operating activities for 2017 is $216,220.
Explanation:To prepare the operating activities section of the statement of cash flows using the indirect method, we start with the net income and adjust it with non-cash expenses, gains and losses, and the changes in working capital. Here's a step-by-step guide:
Start with Net Income: $177,200Add Depreciation Expense: Depreciation expense is a non-cash expense, so we add it back to the net income. This gives us $177,200 + $35,230 = $212,430Add Loss on Disposal of Plant Assets: The loss on disposal of plant assets is a non-cash loss, so we add it back. This gives us $212,430 + $4,920 = $217,350Adjust for Changes in Working Capital: Subtract the increase in accounts receivable (a use of cash), add the increase in accounts payable (a source of cash), and subtract the increase in prepaid expenses (a use of cash). This gives us $217,350 - $14,160 + $17,220 - $4,190 = $216,220So, the net cash provided by operating activities for 2017 is $216,220.
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A cement manufacturer has supplied the following data: Tons of cement produced and sold 225,000 Sales revenue $ 1,035,000 Variable manufacturing expense $ 421,000 Fixed manufacturing expense $ 280,000 Variable selling and administrative expense $ 29,000 Fixed selling and administrative expense $ 220,000 Net operating income $ 85,000 What is the company's unit contribution margin?
Answer: $2.6
Explanation: As we know that, contribution is the difference between the selling price and the variable cost. Thus, contribution margin is the per unit contribution so it will be computed as follows -
[tex]contribution\:margin\:=\frac{\:selling\:price-variable\:cost}{total\:unit\:sales}[/tex]
[tex]contribution\:margin\:=\frac{\:1,035,000-\left ( 421,000+29,000 \right )}{225,000}[/tex]
$2.6
The unit contribution margin is calculated by subtracting the combined variable expenses per unit from the sales revenue per unit. For the given cement manufacturer, the unit contribution margin is $2.60 per ton.
To find the unit contribution margin, we have:
Sales revenue: $1,035,000Variable manufacturing expense: $421,000Variable selling and administrative expenses: $29,000Tons of cement produced and sold: 225,000 tonsThe combined variable expenses are the sum of the variable manufacturing expense and the variable selling and administrative expense, which equals $421,000 + $29,000 = $450,000.
Now, we calculate the revenue per unit:
Sales revenue / Quantity = $1,035,000 / 225,000 tons = $4.60 per ton
Next, calculate the variable cost per unit:
Combined variable expenses / Quantity = $450,000 / 225,000 tons = $2.00 per ton
Then, the unit contribution margin is calculated as:
Revenue per unit - Variable cost per unit = $4.60 - $2.00 = $2.60 per ton
By shutting down, a firm A. stops receiving revenue and is stuck with its fixed costs. B. can avoid paying taxes on its previously earned profits. C. stops receiving revenue but continues to pay variable costs. D. avoids its sunk costs as well as its variable costs. g
Answer:
option A
Explanation: A firm cannot avoid paying taxes on previous profits as these profits were earned before the shutting down period and generally the taxes on profits for current period are paid at a later period. Thus option B is incorrect.
.
Revenue is the total income that a business gets from its normal operations and variable cost is the cost that changes with the level of output. Thus, there will be no revenue and also variable cost. Hence option C is incorrect.
.
Sunk cost are the costs that cannot be recovered and are already been incurred.So a company can avoid its variable cost by shutting down but not its sunk cost. Hence option D is incorrect.
.
Fixed costs are the costs that are independent of the level of output. Therefore, a company after shutting down will not receive revenue but will have to bear fixed cost. Hence option A is correct.
A company desires to sell a sufficient quantity of products to earn a profit of $400000. If the unit sales price is $16, unit variable cost is $12, and total fixed costs are $800000, how many units must be sold to earn net income of $400000?
Answer:
300,000 units
Explanation:
In the given question we need to calculate break even point with given profit, i.e. Fixed cost + desired profit = $800,000 + $400,000 = $1,200,000
Contribution per unit = Selling price - Variable cost = $16 - $12 = $4
Break Even Point with profit in units = (Fixed Cost + Profit)/Contribution per unit
= $1,200,000/$4 = 300,000 units.
Total units to be sold = 300,000 units.
To find the number of units needed to earn a net income of $400000, use the formula: Profit = (Unit Sales Price - Unit Variable Cost) x Quantity - Total Fixed Costs.
Explanation:The company's desired profit can be calculated using the formula:
Profit = (Unit Sales Price - Unit Variable Cost) x Quantity - Total Fixed Costs
Substitute the given values:
Profit = ($16 - $12) x Quantity - $800000 = $400000Solve for Quantity to find out how many units must be sold to earn a net income of $400000.
At the beginning of 2018, Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 6% of net sales. Net sales made under warranty in 2018 were $193 million. Fifteen percent of the units sold were returned in 2018 and repaired or replaced at a cost of $5.00 million. The amount of warranty expense on Angel's 2018 income statement is:
Answer:
The amount of warranty expense on Angel's 2018 income statement is $11.58 million.
Explanation:
Income statement : The income statement is that statement which represents the income for the particular year.
The income is calculated by subtracting all types of costs from sales revenue.
The motive behind the preparation of income statement is to examine the company profitability, financial performance, etc.
The amount of warranty expense on Angel's 2018 income statement is calculated below
= Net sales × cost of warranty program
= $193 million × 6%
= $11.58 million
The other cost like repairing cost or replacement cost is not considered while calculating the warranty expense
Hence, the amount of warranty expense on Angel's 2018 income statement is $11.58 million.
The Fly-By-Night Corp. paid a dividend of $2.85 last year and the dividend is expected to grow at 5% per year for the foreseeable future. The company’s stock is currently selling for $38 per share. What are the expected dividend yield, capital gains yield, and total expected return for Fly-By-Night.
Answer: Dividend yield is 7.875%,
Capital gain yield is 5%
Total yield is 12.875%
Explanation:
Dividend last year= 2.85
Growth rate = 5% or 0.05
∴ Dividend next year [tex]D_{1} = D_{0}\times(1+g)[/tex]
=2.85×(1+0.05)
=2.9925
Stock price = $38
Required Return = [tex]\frac{D_{1}}{P_{0} }[/tex] + Growth rate
= (2.9925/38 ) + 0.05
= 0.12875
[tex]P_{1}= P_{0}\times(1+Growth)[/tex]
= 38×(1+0.05)
= 39.9
Dividend yield = [tex]\frac{D_{1}}{P_{0} }[/tex]
= 2.9925÷38
= 0.07875 or 7.875%
Capital gain yield = [tex]\frac{(P_{1} -P_{0} ) }{P_{0} }[/tex]
= [tex]\frac{(39.9 - 38)}{38}[/tex]
= 0.05 or 5%
Total Expected Return = Dividend yield + Capital gain yield
= 0.07875 + 0.05
= 0.12875 or 12.875%
∴ Dividend yield is 7.875%,
Capital gain yield is 5%
Total yield is 12.875%
Which of the following is not characteristic of the typical limited liability company? Death of a member (owner) causes it to dissolve unless the remaining members decide to continue the business. All members (owners) are allowed by law to participate in the management of the firm. The company has, legally, a perpetual existence. All members (owners) have limited liability.
Answer:
Death of a member does not cause the LLC to dissolve unless the rest of the members want to continue. It is not a characteristic of a limited liability company.
Explanation:
An LLC or limited liability company is a kind of hybrid corporate structure which combines the characteristics of a corporation and sole proprietorship or partnership. The company has a separate legal existence apart from its members. The members have a limited liability. There is flexibility in taxation. All the members are allowed to participate in management, there is no board of directors for management.
The manufacturer of eComputers, an economy-priced computer, recently completed the design for a new laptop model. eComputer’s top management would like some assistance in pricing the new laptop. Two market research firms were contacted and asked to prepare a pricing strategy. Marketing-Gets-Results tested the new eComputers laptop with 50 randomly selected consumers who indicated they plan to purchase a laptop within the next year. The second marketing research firm, called Marketing-Reaps-Profits, test-marketed the new eComputers laptop with 200 current laptop owners. Which of the marketing research companies' test results will be more useful
Answer: Marketing-reaps-profits
Explanation: Among the two firms, the second one named marketing reaps will be more useful to e computers manufacturers than marketing get results. As marketing reaps has tested the new computers on 200 users as compared to marketing get results with 50 the sample size of the reaps is greater than marketing get resulting in narrowing of confidence intervals and more precise and close to reality results.
Due to an error in computing depreciation expense, Prewitt Corporation overstated accumulated depreciation by $20 million as of December 31, 2018. Prewitt has a tax rate of 35%. Prewitt's retained earnings as of December 31, 2018, would be (Round million answer to 2 decimal places.):
Answer:
Retained earnings will be less by $13 million than actual retained earnings.
Explanation:
Since there is an error in depreciation as on December 31, 2018
Where it is overstated by $20 million, and therefore net retained earnings of the year 2018 will be understated as because of overstatement of expenses.
Net effect of taxes will be that, $20 million X 35% tax = $7 taxes saved.
Reduced balance of retained earnings by = $20 - $7 = $13 million.
A company has two products: standard and deluxe. The company expects to produce 36,375 standard units and 62,240 deluxe units. It uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each of its three activity cost pools.Budgeted Activity ofCost DriverActivity Cost Pool Budgeted Cost Standard DeluxeActivity 1 $ 93,000 2,500 5,250Activity 2 $ 92,000 4,500 5,500Activity 3 $ 87,000 3,000 2,800Required:1. Compute overhead rates for each of the three activities.2. What is the expected overhead cost per unit for the standard units?3. What is the expected overhead cost per unit for the deluxe units?
Answer:
A1 = $12 A2 = $9.20 A3 = $1.50Total Overhead for Standart Product $267.16Total Overhead for Deluxe Product $163.48Explanation:
First we will Calculate the rates:
This is done by adding the two product activity use to get the total cost driver.
Then we divide by the activity cost to get the rate:
[tex]\left[\begin{array}{cccc}activity&cost&driver&rate\\1&93,000&7,750&12\\2&92,000&10,000&9,2\\3&8,700&5,800&1,5\\\end{array}\right][/tex]
Next we check the overhead per unit:
units/ activity use x rate = overhead for activity
Standart Product Manufacturing Overhead
36,375units /2,500 Use Activity 1 x $12 = $174.60
36,375units /4,500 Use Activity 2 x $9.20 = $74.37
36,375units /3,000 Use Activity 3 x $1.50= $18.19
Total Overhead for Standart Product $267.16
Deluxe Product Manufacturing Overhead
62,240units /5,250 Use Activity 1 x $12 = $83,14
62,240units /5,500 Use Activity 2 x $9.20 = $60,85
62,240units /2,800 Use Activity 3 x $1.50= $19,49
Total Overhead for Deluxe Product $163.48
Jason is developing a research design for a study of wine drinkers. The target population is widely dispersed. Jason needs to collect data on past consumption behavior and intentions for future behavior. Which type of data collection method is most appropriate for Jason's project? A. CommunicationB. ObservationC. MonitoringD. ExperimentalE. Causal
Answer:
The type of data collection which is most appropriated here is A) communication.
Explanation:
For Jason to collect the data for his study on wine drinkers , he needs to communicate the people who have tasted the wine, he needs to listen to those peoples stories , their evaluation about the wine , do they like it or not . Jason needs to meet those people to understand their communication characteristics, it will be really important on the Jason's part to get an insight in to what these people think about wine and enact their realities.
Final answer:
For Jason's study of wine drinkers' behavior with a dispersed target population, survey research is the most suitable data collection method because it allows for the efficient collection of self-reported data from a large number of respondents.
Explanation:
Jason is conducting a research study on wine drinkers' past consumption behavior and intentions for future behavior within a widely dispersed target population. Considering the need to collect self-reported data over a broad geographical area, the most appropriate data collection method for Jason's project is survey research. Surveys are generally efficient for collecting data from large samples, which makes them suitable for studies where participants are dispersed. As a result, survey research allows for generalization to the larger population, but one must be cautious of potential biases related to self-reported data. In this case, Jason will likely design a questionnaire that wine drinkers across various locations can complete, perhaps through online platforms, mail, or telephone interviews. This approach will enable him to gather the necessary information on consumption habits and future intentions without the need to observe behavior directly or conduct controlled experiments, which may not be feasible given the geographic dispersion of the population.
Karlik Enterprises distributes a single product whose selling price is $15.70 and whose variable expense is $10.30 per unit. The company’s monthly fixed expense is $21,060. Required: 2. Calculate the company’s break-even point in unit sales.
Answer: Company’s break-even point in unit sales is 3900 units
Explanation:
Given :
Selling Price (SP) = $ 15.70
Variable expense per unit (VC) = $10.30
Fixed expense = $21,060
Now,
Contribution per unit = SP - VC = $15.70 - $10.30 = $5.40
Break-even point in unit sales is given as :
= [tex]\frac{Fixed expense}{Contribution per unit }[/tex]
= 21060/5.40
=3900 units
" The answer is: 3900."
The company's break-even point in unit sales can be calculated using the formula:
[tex]\[ \text{Break-even point in units} = \frac{\text{Fixed expenses}}{\text{Selling price per unit} - \text{Variable expense per unit}} \][/tex]
Given the selling price per unit ($P$) is $15.70 and the variable expense per unit ($V$) is $10.30, and the fixed expenses ($F$) are $21,060, we can plug these values into the formula:
[tex]\[ \text{Break-even point in units} = \frac{F}{P - V} \][/tex]
[tex]\[ \text{Break-even point in units} = \frac{\$21,060}{\$15.70 - \$10.30} \][/tex]
[tex]\[ \text{Break-even point in units} = \frac{\$21,060}{\$5.40} \][/tex]
[tex]\[ \text{Break-even point in units} = 3,900 \][/tex]
Therefore, Karlik Enterprises needs to sell 3,900 units to break even.
[tex]\[ \boxed{3900} \[/tex]
On December 1, 2016, Acme Company places a new asset into service. The cost of the asset is $50,000 with an estimated five-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Acme Company uses the straight-line method of depreciation?
Answer: $8000
Explanation: Under straight line method of depreciation, the book value of an asset is spread over its useful life . It can be computed using following formula :-
[tex]=\:\frac{Initial cost\:-\:salvage\:value}{useful\:life}[/tex]
putting the values into equation we get,
[tex]=\:\frac{50,000\:-\:10,000}{5}[/tex]
therefore,
depreciation expense = $8000
Suppose you know that a company’s stock currently sells for $56 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Current dividend per share =$2.67
Explanation:
[tex]Total Return = Div yield + Capital gain yield = 10%\\[/tex]
But from the question
[tex]Dividend yield = Capital gains yield[/tex]
therefore [tex]Dividend yield =\frac{0.1}{2} = 0.05[/tex]
[tex]Dividend yield = \frac{D1}{P0}[/tex]
therefore: [tex]D1=P0*Dividend yield = 56*0.05=$2.80\\[/tex]
the question however is not asking for D1 but D0.
and [tex] D1= D0(1+g)[/tex]
[tex]g=ke-\frac{D1}{P0} = 0.1 - \frac/{2.8}{56} = 0.05[/tex]
therefore [tex]D0=\frac{2.8}{1.05} = $2.67[/tex]
Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. Car Rental Truck Rental Number of Vehicles in fleet 840 470 Number of employees 135 65 Sales $ 720 comma 000 $ 400 comma 000 If administrative expense of $ 62 comma 100.00 is allocated on the basis of number of employees, the cost per cost driver rate would be ________.
Answer:
310.5 activity rate per employee
Explanation:
Number of employees:
135 Car Rental
65 TruckRental
200 total
[tex]\frac{Activity\: Cost}{Pool}= Activity\:Rate[/tex]
We have to distribute the total cost over the cost driver, in this case numebr of employee
62,100/200 = 310.5 activity rate
West Corp. purchased a piece of equipment in January 2014. The accountant of West Corp. decided to use double declining balance method to depreciate this equipment. For 2014, compared with using straight-line depreciation method, the company will have: (a) A higher net income and a higher accumulated depreciation. (b) A lower net income and a higher accumulated depreciation. (c) A higher net income and a lower accumulated depreciation. (d) A lower net income and a lower accumulated depreciation.
Answer:
(b) A lower net income and a higher accumulated depreciation.
Explanation:
[tex]straight-line \: depreciation \times 2 = double-declining \: depreciation[/tex]
The depreciation expense is higher the first periods using double-declining method. This generates a lower net income because the depreciation expense under DD method is greater.
Also, because the DD depreciation expense is greater the accumulated depreciation will be higher than striaght-line method.
Iridium Corp. has spent $ 3.2 billion over the past decade developing a satellite-based telecommunication system. It is currently trying to decide whether to spend an additional $ 352 million on the project. The firm expects that this outlay will finish the project and will generate cash flow of $ 15.1 million per year over the next 5 years. A competitor has offered $ 460 million for the satellites already in orbit. Classify the firm's outlays as sunk costs or opportunity costs, and specify the incremental cash flows.
Answer:
1. Sunk costs : $3.2 billion is a sunk cost as it is already incurred.
2. Opportunity costs: $352 million investment for finishing project is an Opportunity cost. However it will yield $15.1 million per annum for next 5 Yrs.
So Present Value of this CF is less than $15.1 [tex]\times[/tex] 5=$75.5 million.
So Net Present Value = CF0 + CF1 + ......+ CF5 = -352 + Less than 75 = Negative.
So another Opportunity of selling the Satellite for $460 million is a better option.
3. Specify the relevant cash flows.
If additional $352 million investment is undertaken,
$352 million will be Cash outflow in Y(0). It will result in Annual CF of $15.1 million for next 5 yrs.
_____________________ that are issued by government agencies are a form of validation that a worker has completed a certain type of education or passed a certain test.
Answer:
Occupational licences are issued by government agencies
Explanation:
Occupational licensing, a type of government regulation, which requires a valid license to practice a particular profession. It is a proof that an individual has successfully completed a course or passed a test and is eligible to pursue an occupation.
Such a license is issued by a government agency. It is a necessity for practicing certain professions that have a large effect on the citizens. Examples of such professions are doctors, engineers, lawyers etc.
Ford conducted research that gave them insights into characteristics of Gen Z. Although Ford finds the information important, they aren't currently developing a specific feature in their vehicles to address the Gen Z characteristics. The R&D completed could then be characterized as:
Answer:
The answer is basic research.
Explanation:
The research and development department conducted managed to answer the research question which was conceptualized in the beginning of research, as implied in the question. However, no further research was conducted for the purpose of designing a product that can be sold to the Gen Z market segment, based on the findings from the previous ones. Thus, we can conclude that the intention of the research was just to discover previously unknown information about Gen Z’s characteristics, which meant the conducted research was only a basic research.
What Ford did was basic research
Further explanation
Basic research or can be called pure research is research intended for the development of science and directed at developing existing theories or discovering new theories.
The objectives of basic research are:
to increase knowledge with basic principles and scientific laws, and to improve scientific search and methodology.
Pure research is not overshadowed by the consideration of the use of these findings for the public. The main concern is the continuity and integrity of science and philosophy. Pure research can be directed anywhere, without thinking about whether there is any connection with events that are needed by the community. The researcher's thought process can take him anywhere, without thinking about what direction and which direction to go.
Examples of basic research include the following: a study of the existence of a halfway house to increase legal awareness of street children, the behavior of rural women in developing small industrial centers, scavenger behavior in terms of sociological aspects, identification of RRM protein characteristics of dengue-3 virus isolates, and others so.
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Class: College
Subject: Business
Keywords: Research, Pure, Basic
On June 1, 2018, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $560,000 and a discount rate of 5%. Assuming straight-line amortization of the discount, what is the carrying value of the note as of September 30, 2018?
Answer:
PV 550,506.64
Explanation:
[tex]Nominal \times (1 - \: discount \: rate)^{time} = \: Present \: Value[/tex]
[tex]560,000 \times \: (1-0.05)^{4/12} = PV[/tex]
PV = 550,506.64
We can convert the discount rate to interest rate and reach the same value:
[tex]i= \frac{d}{1-d} = 0.05/0.95 = 0.052631578[/tex]
[tex]\frac{Nominal}{(1+rate)^{time}} = PV[/tex]
[tex]\frac{560,000}{(1+0.052631578)^{1/3}} = PV[/tex]
PV = 550,506.64
Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 3,500,000 Cost of sales: Direct Material $ 500,000 Direct labor 250,000 Variable Overhead 275,000 Fixed Overhead 600,000 1,625,000 Gross Profit $ 1,875,000 Selling and General & Admin. Exp. Variable 750,000 Fixed 250,000 1,000,000 Operating Income $ 875,000 For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in all variable costs, and a $45,000 increase in fixed costs. The operating profit for next year would be:
Answer:
Operating Profit for next year will be $432,500
Explanation:
Particulars Current Year Next Year
Sales $3,500,000 $3,500,000 X 95%
= $3,325,000
Less: Costs
Material $500,000 $500,000 X 110%
= $550,000
Labor $250,000 $250,000 X 110%
= $275,000
Overhead $275,000 $275,000 X 110%
= $302,500
Fixed OH $600,000 $600,000 + $45,000
= $645,000
Gross Profit $1,875,000 $1,552,500
Less:
Selling & Administrative $750,000 $750,000 X 110%
= $825,000
Fixed Selling $250,000 $250,000 + $45,000
= $295,000
Operating Income $875,000 $432,500
Operating Profit for next year will be $432,500
To calculate Evergreen Corporation's operating profit for the next year, anticipate a 5% decrease in sales, a 10% increase in variable costs, and a $45,000 increase in fixed costs. The projections result in an estimated operating profit of $477,500 for the coming year. The option (A) is correct.
To calculate the operating profit for the next year, the following steps should be taken:
Calculate the expected decrease in sales: $3,500,000 x (1 - 0.05) = $3,325,000.Calculate the new variable costs by increasing each by 10%:Direct Material: $500,000 x 1.10 = $550,000Direct Labor: $250,000 x 1.10 = $275,000Variable Overhead: $275,000 x 1.10 = $302,500Variable Selling and G&A: $750,000 x 1.10 = $825,000Sum the new variable costs: $550,000 + $275,000 + $302,500 + $825,000 = $1,952,500.Add the increase in fixed costs to the existing fixed costs: $600,000 + $250,000 + $45,000 = $895,000.Subtract the total new variable and fixed costs from the new sales to find the operating profit: $3,325,000 - $1,952,500 - $895,000 = $477,500.Therefore, the operating profit for the next year is projected to be $477,500.
This question is not complete, Here I am attaching the complete question:
Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 3,500,000 Cost of sales: Direct Material $ 500,000 Direct labor 250,000 Variable Overhead 275,000 Fixed Overhead 600,000 1,625,000 Gross Profit $ 1,875,000 Selling and General & Admin. Exp. Variable 750,000 Fixed 250,000 1,000,000 Operating Income $ 875,000 For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in all variable costs, and a $45,000 increase in fixed costs. The operating profit for next year would be:
(A) $477,500
(B) $677,500
(C) $477,000
(D) $977,500
Musashi and Rina are building their portfolios. Musashi purchases shares in a mutual fund and pays fees to a manager who actively manages the mutual fund's portfolio. He does so because he believes that the manager can identify inexpensive stocks that will rise in value. Rina is not convinced. She buys shares in an index fund—a type of mutual fund that simply buys all of the stocks in a given stock index rather than actively managing a portfolio.
Rina builds her portfolio based on the notion that:
A) All stocks are overvalued.
B) The stock market exhibits informational efficiency.
C) Stock analysts can use fundamental analysis to identify undervalued stocks.
Rina builds her portfolio with an index fund based on the belief that the stock market exhibits informational efficiency, suggesting that all known information is already reflected in stock prices, making it difficult to outperform the market consistently.
Explanation:Musashi and Rina are exploring different strategies in building their investment portfolios. Musashi opts for a mutual fund with active portfolio management, hoping to capitalize on undervalued stocks that will grow in value. Rina, on the other hand, chooses an index fund, a type of mutual fund that mirrors the performance of a specific stock index, such as the S&P 500. Rina's decision is based on her belief in the stock market's informational efficiency, which suggests that all available information about investment securities, such as stocks, is already reflected in their prices, making it difficult for any investor or fund manager to consistently outperform the market.
The contrast between Musashi's and Rina's choices highlights two fundamental approaches to investing: active management and passive management. Active management, as chosen by Musashi, involves selecting stocks in an attempt to beat market returns. Passive management, exemplified by Rina's choice, is based on the assumption that it's difficult to beat the market, so it's better to match market returns at a lower cost. This debate touches on key concepts in investment strategies, including diversification, risk, and the costs of transacting. Both investors seek to create diversified portfolios to minimize risk, but they diverge in their beliefs about market efficiency and the ability of active management to add value over time.
Which of the following is not true? As long as most of the links are strong, one or two weak links won't adversely affect the chain. The customer is at the end of the supply chain. A supply chain is fluid and constantly changing. Good supply chain management can improve efficiencies among all components of the production and distribution process. Supply chain management can help companies reduce their carbon footprints.
Answer: Option A
Explanation: In simple words the management of flow of good or services is called supply chain management. It is the chain of processes transforming raw materials into final product and then distributing to customers.
a. In a supply chain management every step is dependent on one other thus one weak link will adversely effect every other step.
b. Distribution of final product to customer is the last step.
c. Effective supply chain management can improve the operations of firm altogether.
d. An effective supply chain management can result in reduction of waste and less use in energy etc., thus, reducing carbon footprints.
Therefore, option a is correct.
The statement "As long as most of the links are strong, one or two weak links won't adversely affect the chain" is not true in supply chain management. Even one or two weak links can disrupt the entire process. Other statements regarding the supply chain are true.
The statement "As long as most of the links are strong, one or two weak links won't adversely affect the chain" is not true. In supply chain management, even one or two weak links can significantly negatively impact the entire chain.
This is because the efficiency and performance of the entire chain are interdependent, and bottlenecks or failures in any part can disrupt the process and affect the final outcome.
Conversely, the other statements are true. The customer is indeed at the end of the supply chain; the supply chain is fluid and constantly changing; good supply chain management can improve efficiencies among all components, and it can also help companies reduce their carbon footprints.
the cost of lawn maintenance varies directly with the size of the lawn. If the monthly maintenance on a 4000-square foot lawn is $280 then what is the maintenance for a 6000 square foot lawn
Answer: The cost of maintenance for a 6000 square foot lawn is $420.
Explanation:
Since we have given that
Cost of monthly maintenance on a 4000 square foot lawn = $280
We need to find the cost of monthly maintenance on a 6000 square foot lawn.
Since the cost of lawn maintenance varies directly with the size of the lawn.
So, it becomes,
[tex]\dfrac{4000}{280}=\dfrac{6000}{x}\\\\\dfrac{100}{7}=\dfrac{6000}{x}\\\\x=\dfrac{6000\times 7}{100}\\\\x=\$420[/tex]
Hence, the cost of maintenance for a 6000 square foot lawn is $420.
The maintenance cost for a 6000-square foot lawn is $420, calculated by multiplying the original cost for a 4000-square foot lawn by the factor of increase which is 1.5.
The cost of lawn maintenance varies directly with the size of the lawn. Using the provided information, if a 4000-square foot lawn costs $280 for maintenance, we can determine the cost for a 6000-square foot lawn by setting up a proportion. Since the size of the lawn increases by a factor of 1.5 (from 4000 to 6000), the cost for maintenance will also increase by this factor. Therefore, we multiply the original cost by this factor to determine the new cost of maintenance:
Original cost for 4000 sq ft: $280
Factor of increase: 6000 sq ft / 4000 sq ft = 1.5
New cost for 6000 sq ft: $280 imes 1.5 = $420
Thus, the maintenance for a 6000-square foot lawn is $420.