Troy owns 600 of the 1,000 outstanding shares of Oiler Corporation. His adjusted basis in the Oiler stock at the beginning of the current year is $88,000. Oiler Corporation is organized as an S corporation (conduit) and reports the following results for the current year: Operating Income before Special Items $58,000 Charitable Contributions 8,000 Nondeductible Expenses 9,000 Cash Dividends Paid 22,000 a. What is Troy's adjusted basis in the Oiler Corporation stock at the end of the current year? b. What is the amount of Troy's gain or loss if he sells the 600 shares for $100,000 to an unrelated person at the beginning of next year?
Answers
Find the solution in the attachment
a. Troy's adjusted basis in the Oiler Corporation stock at the end of the current year is $115,000. b. If Troy sells the 600 shares for $100,000 at the beginning of next year, he will incur a loss of $15,000.
Explanation:a. To calculate Troy's adjusted basis in the Oiler Corporation stock at the end of the current year, we need to consider the different transactions. First, we deduct the cash dividends paid from the adjusted basis at the beginning of the year: $88,000 - $22,000 = $66,000. Next, we add the operating income before special items and subtract the nondeductible expenses: $66,000 + $58,000 - $9,000 = $115,000. Therefore, Troy's adjusted basis in the Oiler Corporation stock at the end of the current year is $115,000.
b. To calculate Troy's gain or loss if he sells the 600 shares for $100,000 to an unrelated person at the beginning of next year, we need to subtract the adjusted basis at the end of the current year from the selling price: $100,000 - $115,000 = ($15,000) or a loss of $15,000.
Related Questions
An oil company has agreed to buy oil from Russia at 1,800 Rubles per barrel. Have it shipped to Amsterdam by a Norwegian shipping line for 20 Kroner per barrel. The oil will be refined in Rotterdam for 20 Euros per barrel. Finally, a Philippine shipping line will bring gasoline to Miami for 200 Philippine pesos per barrel. What is the landed cost in dollars of this four-part transaction
Answers
Answer:
Landing cost = 56.49 dollars per barrel.
Explanation:
Buying Cost of oil barrel = 1,800 Rubles, which is equal to 27.50 USD per barrel.
Shipping Cost = 20 Krones, which is equal to 2.35 USD per barrel.
Refining Cost = 20 Euros, which is equal to 22.82 USD per barrel.
Transportation Cost = 200 Philippine peso, which is equal to 3.82 USD per barrel.
Therefore, to find landing cost of the above mentioned transaction = 27.50 + 2.35 + 22.82 + 3.82 = 56.49 USD per barrel.
A tornado struck the only manufacturing plant of Toledo Farm Implements (TFI) on June 1. All work-in-process inventory was destroyed, but a few records were salvaged from the wreckage and from the company's headquarters. If acceptable documentation is provided, the loss will be covered by insurance. The insurable value of work-in-process inventory consists of direct materials, direct labor, and applied overhead. The following information about the plant appears on the April financial statements at the company's downtown headquarters: Materials inventory, April 30 $ 98,000 Work-in-process inventory, April 30 172,400 Finished goods inventory, April 30 64,000 Cost of goods sold through April 30 697,200 Accounts payable (materials suppliers), April 30 43,200 Manufacturing overhead through April 30 369,800 Payroll payable, April 30 0 Withholding and other payroll liabilities, April 30 19,400 Overhead applied through April 30 359,200 A count of the inventories on hand May 31 shows the following: Materials inventory $ 86,000 Work-in-process inventory
Required:
Determine the cost of the work-in-process inventory lost in the disaster.
Answers
Calculating the lost WIP inventory involves starting with the April 30 WIP value, adding May's manufacturing costs, and subtracting any remaining inventory. Without complete data, an exact calculation isn't possible, and TFI must work with their insurer to estimate the loss.
Explanation:To determine the cost of the work-in-process (WIP) inventory lost in the disaster at Toledo Farm Implements (TFI), we need to calculate the WIP as of May 31. This is done by adding the beginning WIP inventory to the total manufacturing costs incurred during the month (materials used, direct labor, and overhead applied) and then subtracting the ending WIP inventory (if any).
Starting with the WIP inventory as of April 30, which was $172,400, we then add the costs of materials used, direct labor, and manufacturing overhead applied during May. The value of materials used can be calculated by taking the beginning materials inventory, adding purchases (which can be calculated by the change in accounts payable if that represents solely material purchases), and then subtracting the ending materials inventory. The exact amount of materials purchased is not provided, but if we assume all accounts payable were for materials, purchases would be the change in accounts payable plus the materials used during May. We need additional data for direct labor costs and actual overhead costs for May to make a complete calculation, but we know the applied overhead figure is $359,200 as of April 30.
The missing figures make it impossible to calculate the exact loss without assumptions or additional data. If such data is unattainable, TFI should consult with their insurer on an estimation method acceptable for the insurance claim.
Assume we have a firm's per-day production data: one person can produce 8 units, 2 people can produce 15 units, 3 people can produce 18 units, and 4 people can produce 20 units. If the per-unit price of the good produced is $5 and daily per-person wages are $27, how many people should the firm hire?
Answers
Answer:
1 person.
Explanation:
For one person;
Wage =$27
Total Cost of units = 8×5 = $40
Per unit profit = (40-27)/8 = $1.625 per unit
For two people;
Wage =$27 × 2 = $54
Total Cost of units = 15×5 = $75
Per unit profit = (75-54)/15 = $1.4 per unit
For three people;
Wage =$27 × 3 = $81
Total Cost of units = 18×5 = $90
Per unit profit = (90-81)/18 = $0.5 per unit
For four people;
Wage =$27 × 4 = $108
Total Cost of units = 20×5 = $100
Per unit profit = (100-108)/20 = -$0.4 per unit
Therefore, for the four cases the maximum profit per unit is $1.625, with one person. And since there is no production limits (minimum). So, the firm should hire 1 person.
The major prediction of the lemons model is that:
a. asymmetric information reduces the average quality of goods offered for sale.
b. a used car in good condition can be sold for a higher-than-average price.
c. people will generally choose "low-hanging fruit".
d. used cars offered for sale are generally in better-than-average condition.
Answers
Answer:
A) asymmetric information reduces the average quality of goods offered for sale.
Explanation:
The lemons model or problem refers to investing or purchase related problems due to the fact that investors/buyers have different information about securities/products than the sellers.
Since investors/buyers know that there are lemons (bad products) up for sale, but do not know which of them are actually bad, they will be willing to pay a lower price for high quality investments/goods than if only high quality investments/goods were sold without any lemons mixed with them.
On January 1 st 2012, Everhart Corporation, a calendar year company issues $100,000, 5%, 5-year bonds dated January 1, 2012. The bond pays interest semiannually on January 1 and July 1 . The bonds are issued to yield 6%. 2.50% 3.00% 5.00% 6.00% Present value of a single sum for 5 periods 0.88385 0.86261 0.78353 0.74726 Present value of a single sum for 10 periods 0.78120 0.74409 0.61391 0.55839 Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236 Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009 If Everhart Corporation uses the effective interest method to amortize any premiums or discounts on their
outstanding bonds, what will be the journal entries to record interest expense for calendar year 2013?
Answers
Answer:
Interest expense 2894.7 debit
discount on Bonds Payable 394.7 credit
cash 2500 credit
Interest expense 2906.55 debit
discount on Bonds Payable 406.55 credit
interest payable 2500 credit
Explanation:
We have to solve for the 2013 year which is one year after the issuance ofthe bonds.
We solve for the bond issuance price and then, we construct the bonds schedule and take the numbers from period 3 and 4.
Issuance proceeds: present value fo the coupon payment and maturity at market rate:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 2,500.000
time 10
rate 0.03
[tex]2500 \times \frac{1-(1+0.03)^{-10} }{0.03} = PV\\[/tex]
PV $21,325.5071
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 100,000.00
time 10.00
rate 0.03
[tex]\frac{100000}{(1 + 0.03)^{10} } = PV[/tex]
PV 74,409.39
PV c $21,325.5071
PV m $74,409.3915
Total $95,734.8986
Now we will calcautlethe interest expense by multiplying carrying value by the market value and sutract from the cash outlay to determinate the amortization on the bonds.
there are a 140 pounds of flour in inventry on october 1. 1400 loaves are to be produced in october and 1500 loaves in november. flour costs $3 per pound and 1/2 pound is used per loaf. with the policy of 20% of next month's needs being in ending inventory, what is the budget for flour purchases in october
Answers
Answer:
The budgeted floor purchases for October is 710 pounds and the cost of 710 pounds of flour is $2130
Explanation:
The flour needed to meet the October's production requirement for loaves is,
1400 * 1/2 = 700 pounds
The desired ending inventory of flour in October = 1500 * 1/2 * 0.2 = 150 pounds
The purchases for October should be enough to meet the desired ending inventory for October and the remaining Production requirement for October after adjusting for opening inventory .
Purchases = Closing Inventory + Production - Opening Inventory
Purchases = 150 + 700 - 140 = 710 pounds
The cost of purchases = 710 * 3 = $2130
The planned flour purchases for October are 710 pounds and the cost for total flour is $2130.
Given that,
Opening stock is 140 pounds.Flour cost $3 per pound and 1/2 pound is used per loaf.In October, production are 1400 loaves and in November, production will be 1500 loaves.Safety stock of 20% of next month needs to be maintained.According to the scenario, computation of given data are as follows,
Flour needs for October production = 1,400 loaves [tex]\times[/tex] 1/2 pound
= 700 pounds
Flour needs for 20% of November production = (1,500 loaves [tex]\times[/tex] 1/2 pounds) [tex]\times[/tex] 20%
= 150 pounds
So, total purchase of flour in October will be as follows,
Purchases = 20% Inventory of Nov. + Current month production - Opening stock
By putting the value, we get,
Purchases = 150 Pounds + 700 pounds - 140 Pounds
= 710 pounds
So, cost of 710 pound flour purchases = 710pounds [tex]\times[/tex] $3
= $2,130
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The asset account "office supplies" has a balance of $800 at the beginning of the year. The amount on hand at the end of the year is $500. The company has calculated the Office Supplies expense for the year to be $3,500. Based on this information, what amount of office supplies was purchased during the year
Answers
Answer:
Purchases= $3,200
Explanation:
Giving the following information:
The asset account "office supplies" has a balance of $800 at the beginning of the year. The amount on hand at the end of the year is $500. The company has calculated the Office Supplies expense for the year to be $3,500.
To calculate the number of purchases, we need to use the following formula:
Purchases= expense of the year + ending balance - beginning balance
Purchases= 3,500 + 500 - 800= $3,200
Photo Framing's cost formula for its supplies cost is $1,080 per month plus $18 per frame. For the month of November, the company planned for activity of 618 frames, but the actual level of activity was 608 frames. The actual supplies cost for the month was $12,550. The spending variance for supplies cost in November would be closest to:
Answers
Answer:
$526 was the spending variance in November
Explanation:
The spending variance in the month involves knowing the difference between actual supplies cost incurred in the month and the budgeted supplies cost based on actual activity
Budgeted supplies cost based on actual activity of 608 frames=$1080+(608*$18)
Budgeted supplies cost based on actual activity of 608 frames=$1080+$10,944=$12,024
Spending variance=$12,550-$12.024 =$526
The actual spend was $526 more than the budgeted spend based on actual activity,hence an unfavorable variance was recorded
The following information is for a collateralized mortgage obligation (CMO). Tranche A of $50 million receives quarterly payments at 9 percent per year, tranche B of $100 million receives quarterly payments at 10 percent per year, and tranche C of $50 million receives quarterly payments at 11 percent per year.If at the end of the first quarter, the CMO trustee receives total cash flows of $8 million, how are they distributed among the three tranches? (0.2 points)5. What is the principal outstanding on Tranche A, Tranche B, and Tranche C after the end of year payment in the previous question? (0.2 points)
Answers
The net income for Martinez Company for 2020 was $305,900. During 2020, depreciation on plant assets was $120,200, amortization of patent was $39,400, and the company incurred a loss on sale of plant assets of $23,500. Compute net cash flow from operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answers
Answer:
$489,000
Explanation:
Martinez Company
Computation of net cash flow from operating activities for 2010
Details Amount ($)
Net income 305,900
Non-cash expenses adjustment:
Plant depreciation 120,200
Patent amortization 39,400
Loss on sale of plant assets 23,500
Net cash flow from operating activities 489,000
Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pound per unit; $ 12 per pound Direct labor: 4 hours per unit; $ 19 per hour Oceanside produced 3 comma 000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7 comma 500 pounds of direct materials and actual total materials costs were $ 99 comma 300. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) A. $ 3 comma 720 Unfavorable B. $ 9 comma 300 Unfavorable C. $ 3 comma 720 Favorable D. $ 9 comma 300 Favorable
Answers
Answer:
B. $9 comma 300 Unfavorable
Explanation:
To calculate the direct material cost variance we use formula :
Cost variance : (Actual cost - Standard cost ) * Actual quantity
Actual cost : Actual total direct material cost / Actual direct material used in pounds
$99,300 / 7500 pounds = $13.24
$13.24 - $12 * 7,500 pounds = $9,300
The actual cost is higher than the standard cost therefore the variance is unfavorable.
The 2016 financial statements of CVS Health Corporation reported the following information (in millions): 2016 2015 Net sales $177,526 $153,290 Cost of sales 148,669 126,762 Inventories, net 14,760 14,001 The inventory turnover ratio for 2016 is: A. 9.22 B. 11.48 C. 9.33 D. 10.34 E. None of the above
Answers
Answer:
D. 10.34
Explanation:
The computation of inventory turnover ratio is shown below:-
For computing the inventory turnover ratio first we need to find out the average inventory
Average inventory = (Opening stock + Closing stock) ÷ 2
= ($14,760 + $14,001) ÷ 2
= 14380.50
Inventory turnover ratio = Cost of goods sold ÷ Average inventory
= $148,669 ÷ 14380.50
= 10.34
Michael's, Inc., just paid $2.00 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 4.4 percent. If you require a rate of return of 8.6 percent, how much are you willing to pay today to purchase one share of the company's stock?
Answers
Answer:
$49.71
Explanation:
The computation of the willing to pay for the company stock is shown below:
= Next year dividend ÷ (Required rate of return - growth rate)
where,
Next year dividend is
= $2 + $2 × 4.4%
= $2 + 0.088
= $2.088
The required rate of return is 8.6% and the growth rate is 4.4%
So, the price of one share of the company stock is
= $2.088 ÷ (8.6% - 4.4%)
= $2.088 ÷ 4.2%
= $49.71
We simply applied the above formula
Listed below are selected transactions from a Loudon County Debt Service Fund (all amounts are in thousands of dollars).
1. The remaining funds of a Capital Projects Fund, $2,000, were transferred to the Debt Service Fund to be used in the repayment of debt and interest on that debt that was issued to finance and expansion of the transit system.
2. The county General Fund transferred $9,200 to the Debt Service Fund to provide financing for principal, interest, and fiscal agent fees for debt service transactions during the year. $6,700 of the transfer from the General Fund and all of the transfer from the CPF were invested.
Record the above transactions in the Debt Service Fund.
Answers
Answer:
LOUDON DEBT SERVICE FUND
Debit Service Fund Account
Capital project fund $2,000,000
County General fund 9,200,000
Investment 6,700,000
Balance c/d 4,500,000 -
11,200,000 11,200,000
Explanation:
g Alphabet Co. uses activity-based costing. The company manufactures two products, Product A and Product B. There are three activity cost pools, with estimated costs and expected cost driver quantities as follows: Activity 1 cost pool has estimated overhead of $18,000. The expected cost driver quantity of Product A is 500 and Product B is 400. Activity 2 cost pool has estimated overhead of $21,000. The expected cost driver quantity is 1,000 for Product A and 500 for Product B. Activity 3 cost pool has estimated overhead of $32,000. The expected cost driver quantity is 300 for Product A and 200 for Product. What is the pool rate for Activity 1
Answers
Answer:
Activity 1 rate driver= $20 per driver
Explanation:
Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.
Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.
Activity rate per driver is calculated as:
Activity overhead for the period / Total cost drivers for the period
Activity 1 overhead = $18,000
Total expected cost drivers for activity 1 = 500 +400 = 900
Overhead rate per cost driver
= $18,000/900 hours
= $20 per driver
You are considering upgrading from your current inkjet printer to a laser printer. Your old printer cost $350. The new printer costs $600. Print cartridges for the old printer cost $80 each, and print cartridges for the new printer cost $120 each. Cartridges for both printers last for approximately 500 sheets of printing. Your roommate has offered to purchase your old printer for $50. Which cost is a sunk cost
Answers
Answer:
$300 i.e irrecoverable cost of old printer
Explanation:
Sunk costs refer to those costs incurred in the past which can no longer be recovered. Such costs are considered as irrelevant in decision making process since they have no current or future implications.
For example, research and development costs incurred by an enterprise in the past represent sunk costs since those costs can no longer be recovered and secondly have no current or future implications w.r.t investment decisions.
In the given case, the cost incurred in purchase of old printer is a sunk cost, incurred in the past. The irrecoverable part of the said cost i.e $350 less $50 i.e $300 represents sunk cost. Also, the expenditure on old printer's cartridges which costed $80 apiece would be regarded as a sunk cost.
This cost of $300 cannot be recovered and would be considered irrelevant w.r.t the decision of purchasing a new advanced printer.
Baker Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work-in-process inventory that were 90% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 11,000 units in the ending work-in-process inventory of the Assembly Department that were 90% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Assembly Department for the month
Answers
Answer:
the equivalent units of production for conversion costs in the Assembly Department for the month are 101,900
Explanation:
Step 1 Calculate the Units Completed and Transferred to Finished Goods
Units Completed and Transferred to Finished Goods = units in beginning work-in-process inventory+ units were transferred in from the prior department-units in the ending work-in-process inventory
therefore, Units Completed and Transferred to Finished Goods = 8,000+95,000-11,000 = 92,000
Step 2 Calculate the equivalent units of production for conversion costs
Note : work-in-process inventory of the Assembly Department that were 90% complete with respect to conversion costs
Work-in-process inventory (11,000× 90%) = 9,900
Units Completed and Transferred Out (92,000× 100%) = 92,000
Total equivalent units of production = 101,900
Answer:
Equivalent unit of production = 101,900 units
Explanation:
Calculating the unit transfer to next department using the formula;
Unit transfer to next department = unit in beginning work in progress+unit started into production -unit in ending work in progress
Unit transfer to next department = 8000+95000-11000
= 92,000
Calculating the conversion unit, we have;
Conversion = 11,000*90%
= 9900
Therefore,
Equivalent unit of production = Unit transfer to next department + Conversion
= 92,000+9900
= 101,900 units
Equivalent unit of production = 101,900 units
On October 5, Cullumber Company buys merchandise on account from Marin Company. The selling price of the goods is $6,650, and the cost to Marin Company is $3,010. On October 8, Cullumber returns defective goods with a selling price of $840 and a scrap value of $430. Record the transactions on the books of Marin Company, assuming a perpetual approach.
Answers
Answer:
October 5 entries
Debit Accounts receivable $6,650
Credit Sales Revenue $6,650
To record sales
Debit Cost of goods sold $3,010
Credit Inventory $3,010
To record the cost of sales
October 8 entries
Debit Sales return $840
Credit Accounts receivable $840
To record sales reversal due to sales return
Debit Inventory $430
Credit Cost of goods sold $430
Explanation:
The perpetual inventory system is the one that ensures that the book balance for inventory is adjusted for every purchase, sale or return of inventory.
When inventory is sold on account, the entries required are debit accounts receivable and credit revenue then Debit cost of goods sold and credit inventory.
Tano issues bonds with a par value of $180,000 on January 1, 2016. The bonds' annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $170,862. 1. What is the amount of the discount on these bonds at issuance
Answers
Answer:
The discount on the bonds issuance is $9,138.00
Explanation:
discount on bonds at issuance=bonds face value-bonds cash proceeds
bonds face value is $180,000
bonds cash proceeds =$170,862
Discount on bonds at issuance=$180,000-$170,862
Discount on bonds at issuance=$9,138.00
The necessary journal entries to record the bonds issuance are follows:
Dr Cash $170,862.00
Dr discount on bonds issue $9,138.00
Cr Bonds payable $180,000
The discount on the bonds would amortized over relevant years
Issuing bonds is termed as the way for companies to raise the funds for the company. It is referred to as the broad function between the investor and the firm or the corporate. The investor agrees to invest some amount of money in the firm with the guarantee to get a fixed interest in return.
The discount on issuance of the bonds is $9,138.00
Discount on bonds at issuance=bonds face value-bonds cash proceeds
bonds face value is $180,000
bonds cash proceeds =$170,862
[tex]\text{Discount on bonds at issuance}=\$180,000-\$170,862[/tex]
Discount on bonds at issuance=$9,138.00
The necessary journal entries to record the issuance of the bonds have been attached below.
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Savvy Styles, your salon business, is starting to turn a solid profit. Since you have been operating out of a shared space, you decide it is time to move to a larger salon space of your own and purchase some new chairs and equipment. You get a small business loan from your local bank. Now you should plan to:___________
a. Repay the loan, including interest, over a predetermined amount of time
b. Write the bank a thank you note and put a positive review on Yelp
c. Pay the total interest upfront
d. Pay the minimum payment on the loan to the bank each month
Answers
Answer:
I would choose A.
Explanation:
Savvy styles after getting a small business loan from a local bank should plan to repay the loan, including interest, over a predetermined amount of time. Therefore option a is correct.
What is an amortized loan?An amortized loan can be defined as a type of loan that is with scheduled and periodic patents applied to the loan's both principal amount and interest accrued. Here the interest portion of the payments in this type of loan decreases while the principal portion increases.
At first, it pays the relevant interest expense for that particular period and then after that, the remainder of the payment is put toward curtailing the principal amount.
Generally, amortized loans are normally paid off over an extended period with equal amounts paid for each payment period. But there is another option, a person can pay more which further leads to reducing the principal amount they owe.
Types of amortized loans are home loans, auto loans, and personal loans for small projects.
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A stock is expected to pay dividends of $1.00, $0.75 and $2.00 for the next 3 years, respectively. After that time, dividends are expected to grow at a constant rate of 6% indefinitely. The required return on the stock is 10% during the non-constant growth period and 8% afterwards. Compute the fair market value of the stock today.
Answers
Answer:
The fair market value of the stock today is $82.67
Explanation:
The fair value of the stock can be calculated using the dividend discount model which bases the value or fair price of a stock today based on the present value of the expected future dividends from the stock. The dividends are discounted to the present value using an appropriate discount rate.
When the dividend growth rate of a stock becomes constant, we calculate the terminal value of the stock and discount it back too. The terminal value of the stock will be calculated at the end of year 3 using the required rate of return of 8% and will be discounted back 3 years to present value using the rate of 10%.
Thus, the price today of the given stock will be,
P0 = 1 / (1+0.1) + 0.75 / (1+0.1)^2 + 2 / (1+0.1)^3 +
[ (2 * (1+0.06) / (0.08-0.06)) / (1+0.1)^3 ]
P0 = $82.67
To compute the fair market value of the stock today, calculate the present value of the future dividends and the present value of the future stock price. The fair market value of the stock today is the sum of the present value of the dividends and the present value of the future stock price. The fair market value of the stock today is $82.7034.
Explanation:To compute the fair market value of the stock today, we need to calculate the present value of the future dividends and the present value of the future stock price. First, let's calculate the present value of the dividends for the next 3 years:
Year 1 dividend: $1.00 / (1 + 0.10)^1 = $0.9091Year 2 dividend: $0.75 / (1 + 0.10)^2 = $0.6198Year 3 dividend: $2.00 / (1 + 0.10)^3 = $1.5089Next, let's calculate the present value of the future stock price using the constant growth rate formula:
Future stock price = Year 4 dividend / (required return - growth rate) = $2.00 / (0.08 - 0.06) = $100
Finally, let's calculate the present value of the future stock price:
Present value of future stock price = $100 / (1 + 0.08)^3 = $79.6656
The fair market value of the stock today is the sum of the present value of the dividends and the present value of the future stock price:
Fair market value of the stock today = $0.9091 + $0.6198 + $1.5089 + $79.6656 = $82.7034
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Suppose labor productivity is $110,000 per worker in 2015. Calculate the value of labor productivity in 2035 (20 years later) if: Instructions: Enter your responses rounded to the closest $100. a. Productivity continues to grow by 2.6 percent per year. U.S labor productivity in 2035 would be $ 183,798 183,798 Correct per worker. b. Productivity falls to 2.0 percent per year (the average productivity growth between 1970 and 2009). U.S. labor productivity in 2035 would be $ 163,454 163,454 Correct per worker. c. How much lager would labor productivity per worker be in 2035 with the higher growth rate compared to the lower growth rate. Instructions: Enter your responses rounded to two decimal places. 1.12
Answers
Answer:
A. Based on a 2.6% productivity growth per year labor productivity will be $183,798 in 2035 (that is $73,798 improvement over 20 years)
B. Based on a 2.0% productivity growth per year labor productivity will be $163,454 in 2035 (that is $53,454 improvement over 20 years)
C. The difference between both growth scenarios is $20,343
Explanation:
A detailed presentation can be found attached.
The labor productivity in 2035 is estimated to be $183,798 per worker with a 2.6% annual growth rate and $163,454 per worker with a 2.0% annual growth rate. The difference between these two rates is 1.12 times larger at a growth rate of 2.6% than 2.0%.
Explanation:The question asks to calculate the value of labor productivity in 2035, given certain growing rates. In this scenario:
If productivity continues to grow by 2.6 percent per year, from a labor productivity of $110,000 in 2015, the estimation for 2035 predicts a U.S labor productivity of $183,798 per worker. If productivity falls to 2.0 percent per year (average productivity growth between 1970 and 2009), from the same initial labor productivity of $110,000 in 2015, U.S labor productivity in 2035 will be estimated to be $163,454 per worker. The difference in labor productivity per worker in 2035 with the higher growth rate compared to the lower growth rate is 1.12 times larger at a growth rate of 2.6% versus 2.0%.Learn more about Labor Productivity Calculation here:
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1. What are the three stages in strategic management? Which stage is more analytical? Which relies most on empowerment to be successful? Which relies most on statistics?
Answers
Answer:
strategic management: strategy formulation, strategy implementation, and evaluation and control.
1. The three stages in strategic management are strategy formulation, strategy implementation, and strategy evaluation. 2. Strategy formulation is the most analytical. 3. Strategy implementation relies most on empowerment for success. 4. Strategy formulation relies heavily on statistics.
1. Strategic management consists of three main stages:
Strategy Formulation: This involves the development of a vision and mission, identifying the organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.Strategy Implementation: This is the process through which strategies and policies are put into action via the development of programs, budgets, and procedures. It often requires changes within the organization and relies heavily on leadership and communication.Strategy Evaluation: The final stage involves monitoring and controlling the strategies to ensure that they are moving the organization towards its goals. It involves the review of internal and external factors, performance measurements, and corrective actions if needed.2. Most Analytical Stage:
Strategy Formulation is the most analytical stage as it involves extensive research, data analysis, and the use of strategic planning models to assess the internal and external environment.
3. Stage Relying on Empowerment:
Strategy Implementation relies most on empowerment as it requires employees at all levels to take initiative and align their actions with the strategic objectives. Successful implementation depends on effective empowerment and leadership.
4. Stage Relying on Statistics:
Strategy Formulation also relies most on statistics as it involves the analysis of market data, trends, financial data, and other quantitative assessments to make informed decisions.
The complete question is:
1. What are the three stages in strategic management?
2. Which stage is more analytical?
3. Which relies most on empowerment to be successful?
4. Which relies most on statistics?
Petrus Framing's cost formula for its supplies cost is $1,750 per month plus $9 per frame. For the month of March, the company planned for activity of 615 frames, but the actual level of activity was 622 frames. The actual supplies cost for the month was $7,850. The activity variance for supplies cost in March would be closest to: Multiple Choice $63 U $565 U $565 F
Answers
Answer:
$ 565 Unfavorable
Explanation:
The actual supplies cost for the month was $7,850
The planned cost supplies for the month would be = $1750 + 9(615)= $1750 +5535= $ 7285
Activity Variance= Actual Supplies Cost- Planned Supplies Cost
Activity Variance= $7,850-$ 7285= $ 565 Unfavorable
An activity variance is a measure of the difference in the planned budget amounts and actual amounts. It is calculated for different activity levels.
Which statement is true regarding a foreign currency option? Multiple Choice A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to only sell foreign currency in the future. A foreign currency option gives the holder the obligation to only buy foreign currency in the future. A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future at the spot rate on the future date.
Answers
Answer: A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future
Explanation:
A currency option which is also referred to as the forex option is a contract which gives the buyer the right, but not obligated to purchase or sell a particular currency at an exchange rate on or before a particular date.
Currency options is a common way for individuals, corporations, or financial institutions to curtail adverse movements in the exchange rates.
BCD Partnership plans to distribute cash of $20,000 to partner Brad at the end of the taxyear. BCD reported a loss for the year, and Brad’s share of the loss is $10,000. At thebeginning of the tax year, Brad’s basis in his partnership interest, including his share ofpartnership liabilities, was $15,000. BCD expects to report substantial income in futureyears.• What rules are used to calculate Brad’s ending basis in his partnership interest?• How much gain or loss will Brad report for the tax year?• Will the deduction for the $10,000 loss be suspended?• Could any planning opportunities be used to minimize any negative taxramifications of the distribution
Answers
Answer:
The rules used to calculate brad's ending basis in his partnership interest is called Ordering rules., and his gain for the tax year report is $ 5,000. the loss for $10,000 can be suspended or put on hold.
Explanation:
From the above question, we resolve the following.
Question 1: What rules are used to calculate Brad’s ending basis in his partnership interest
Explanation: The rules used here is called the Ordering rules. or refers to reduce basis by distributions; increase basis by income items and contributions; and then losses deducted to the extent of remaining basis
Question 2: How much gain or loss will Brad report for the tax year
Explanation: For he tax year report the gain is $ 5,000 gain
Question 3: Will the deduction for the $10,000 loss be suspended
Explanation: Yes loss of $ 10,000 is to be suspended because losses cannot be deductible to pay off shareholders.
Question 4: Could any planning opportunities be used to minimize any negative tax ramifications of the distribution
Explanation: Yes there are planning opportunities to minimize negative tax ramifications of the distribution are as under tax diversification: which means diversifying investments in different types of accounts can diversify tax risk and create more flexibility to optimally select the most tax efficient method of liquidating assets.
At the beginning of a year, a company predicts total direct materials costs of $1,020,000 and total overhead costs of $1,300,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate it should use during the year?
Answers
Answer:
127.45%
Explanation:
Data provided
Total overhead cost = $1,300,000
Total direct material cost = $1,020,000
The calculation of predetermined overhead rate is given below:-
Predetermined Overhead rate = Total overhead cost ÷ Total direct material cost × 100
= $1,300,000 ÷ $1,020,000 × 100
= 127.45%
So, for calculating the predetermined overhead rate we simply applied the above formula.
Assume that the standard deviation of the U.S. market portfolio is 18.2%, the standard deviation of the world portfolio is 17.1%, and the correlation between the U.S. and nonU.S. market portfolios is .47. Suppose you invest 25% of your money in the U.S. stock market and the other 75% in the nonU.S. portfolio. What is the standard deviation of your portfolio?
Answers
Answer:
15.5%
Explanation:
The computation of the standard deviation of your portfolio is shown below:
Standard deviation of portfolio = weight of US Market portfolio ^2 × Standard deviation of US Market portfolio ^2 + weight of Non US Market portfolio^ 2 × Standard deviation of Non US Market portfolio^2 + 2 × weight of US Market portfolio × weight of Non US Market portfolio × Standard deviation of US Market portfolio × Standard deviation of Non US Market portfolio × correlation
= [0.25^2 × 18.2^2 + 0.75^2 × 17.1^ 2 + 2 × 0.25 × 0.75 × 18.2 × 17.1 × 0.47]
= (0.0625 × 331.24 + 0.5625 × 292.41 + 54.852525
= 20.7025 + 164.480625 + 54.852525
= 240.03565
Now take the square root of 240.03565 i.e 15.5%
We simply applied the above formula
b) The standard deviation of the portfolio is approximately 15.5%.
To find the standard deviation of a portfolio with multiple assets, you can use the formula for the standard deviation of a two-asset portfolio:
σp = √[(w₁² × σ₁²) + (w₂² × σ₂²) + (2 × w₁ × w₂ × σ₁ × σ₂ × ρ₁₂)]
Where: σp = standard deviation of the portfolio, w₁ and w₂ = weights of the assets in the portfolio, σ₁ and σ₂ = standard deviations of the assets, and ρ₁₂ = correlation between the assets.
Given: σ₁ (U.S.) = 18.2%, σ₂ (Non-U.S.) = 17.1%, ρ₁₂ = 0.47, w₁ = 0.25, w₂ = 0.75
Plugging in the values:
σp = √[(0.25² × 18.2²) + (0.75² × 17.1²) + (2 × 0.25 × 0.75 × 18.2 × 17.1 × 0.47)]
= √[(0.0625 × 331.24) + (0.5625 × 292.41) + (2 × 0.25 × 0.75 × 18.2 × 17.1 × 0.47)]
= √[20.7025 + 164.10525 + 54.78585]
= √[239.5936]
≈ 15.48%
Therefore, the standard deviation of the portfolio is approximately 15.5% (closest to option b).
Complete question
Assume the standard deviation of the U.S. market portfolio is 18.2%, the standard deviation of the non-U.S. portion of the world portfolio is 17.1%, and the correlation between the U.S. and non-U.S. market portfolios is .47. Suppose you invest 25% of your money in the U.S. stock market and the other 75% in the non-U.S. portfolio. What is the standard deviation of your portfolio?
a) 16.7%
b) 15.5%
c) 17.1%
d) 18.6%
Your company's human resource manager is away from the office on vacation, and you have four open positions to fill in your department. Which of the following tests should you choose if you want to engage applicants in a conversation to determine if they have good communication skills?a. An employment testb. An online checkc. An interviewd. An application form
Answers
Answer:
An interview
Explanation:
Job interviewing is one of the most common methods companies use to recruit new candidates. The interview involves a conversation between prospective candidates and recruiting firm members, usually one candidate at a time. However, there may be one or more members of the interview panel. Through the interview, the candidate's communication skills can be tested as there is an interaction between the interviewer and the interviewerOn November 30, Petrov Co. has $105,400 of accounts receivable and uses the perpetual inventory system. Dec. 4 Sold $6,505 of merchandise (that had cost $4,163) to customers on credit, terms n/30. 9 Sold $14,756 of accounts receivable to Main Bank. Main charges a 2% factoring fee. 17 Received $3,578 cash from customers in payment on their accounts. 27 Borrowed $8,432 cash from Main Bank, pledging $10,962 of accounts receivable as security for the loan. (1) Prepare journal entries to record the above transactions. (2) Which transaction would most likely require a note to the financial statements?
Answers
Answer:
1)Journal Entries are given below
2) November 27 requires notes to Financial Statements
Explanation:
1) Journal Entries :
DEBIT CREDIT
Nov-04 A/C RECEIVABLES 6505
SALES/REVENUE 6505
COST OF GOODS SOLD 4163
INVENTORY 4163
Nov-09 FEE EXPENSE FACTORING 295
CASH 14461
A/C RECEIVABLES 14756
Nov-17 CASH 3578
A/C RECEIVABLES 3578
Nov-27 CASH 8432
NOTES PAYABLES 8432
Nov-27 NO JOURNAL ENTRY REQUIRED
2) NOTES TO FINANCIAL STATEMENTS
AN AMOUNT OF $ 10962 OF A/C Receivable IS PLEDGED AS SECURITY FOR LOAN.