Jean has an absolute advantage in both baking cakes and making pizzas. Vincent has a comparative advantage in baking cakes, while Jean has a comparative advantage in making pizzas.
Absolute and Comparative Advantage
To determine which cook has the absolute and comparative advantages in baking cakes and making pizzas, we first need to review their hourly production capabilities.
Vincent can bake 1010 cakes or make 55 pizzas.
Jean can bake 1212 cakes or make 88 pizzas.
Based on this information:
1. correct answer is option a. Jean - Jean can bake more cakes per hour (1212) compared to Vincent (1010).
2. correct answer is option c. Jean - Jean can make more pizzas per hour (88) compared to Vincent (55).
3. We calculate the opportunity cost:
Vincent: 1 cake = 55 pizzas divided by 1010 cakes ≈ 0.0545 pizzas per cake
Jean: 1 cake = 88 pizzas divided by 1212 cakes ≈ 0.0726 pizzas per cake
correct answer is option a. Vincent - Vincent has the lower opportunity cost in baking cakes (0.0545 < 0.0726).
4. We calculate the opportunity cost:
Vincent: 1 pizza = 1010 cakes divided by 55 pizzas ≈ 18.36 cakes per pizza
Jean: 1 pizza = 1212 cakes divided by 88 pizzas ≈ 13.77 cakes per pizza
correct answer is option c. Jean - Jean has the lower opportunity cost in making pizzas (13.77 < 18.36).
Complete question-
Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks' time. Vincent can bake 1010 cakes or make 55 pizzas in an hour. Jean can bake 1212 cakes or make 88 pizzas in an hour. Please answer the four questions.
1. Which cook has the absolute advantage in baking cakes?
a. Jean
b. Neither
c. Vincent
2. Which cook has the absolute advantage in making pizzas?
a. Neither
b. Vincent
c. Jean
3. Which cook has the comparative advantage in baking cakes?
a. Vincent
b. Jean
c. Neither
4. Which cook has the comparative advantage in making pizzas?
a. Vincent
b. Neither
c. Jean
A list of financial statement items for Chin Company includes the following: accounts receivable $14,000; prepaid insurance $2,600; cash $10,400; supplies $3,800; and debt investments (short-term) $8,200. Prepare the current assets section of the balance sheet listing the items in the proper sequence. (List current assets in order of liquidity.)
Final answer:
To prepare the current assets section of Chin Company's balance sheet, the assets are listed from most liquid to least liquid: cash, debt investments, accounts receivable, supplies, and prepaid insurance.
Explanation:
Preparation of the Current Assets Section
To prepare the current assets section of the balance sheet for Chin Company, we should list the assets in order of liquidity. Liquidity refers to how quickly an asset can be converted into cash without losing value. In the given list, cash is the most liquid asset, followed by cash equivalents and investments, then accounts receivable, and finally, the least liquid of the current assets are the prepaid expenses and supplies.
Here is how the current assets section would look:
Summing up these amounts, we have the total current assets. It's important to note that although supplies have a monetary value, they are not cash equivalents and are not as liquid as the other assets listed above, hence they are placed after accounts receivable.
Kansas Enterprises purchased equipment for $73,500 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $6,300 at the end of five years.
Using the straight-line method, the book value at December 31, 2018 would be:
A.$53,760.
B.$60,060.
C.$58,800.
D.$67,200.
Answer:
Using the straight-line method, the book value at December 31, 2018 would be $53.760
Explanation:
2018 2019 2020 2021 2022
Cost 67200 53.760 40.320 26.880 13.440
Dep-Acu 13.440 13.440 13.440 13.440 13.440
Book Value53.760 40.320 26.880 13.440 0
In a state of market equilibrium, the intrinsic value of the stock will be the market price of the stock. An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.’s stock should be $11.52 per share, but Mandalays Inc.’s stock is trading at $19.57 per share on the New York Stock Exchange (NYSE). Considering the analyst’s expectations, the stock is currently:
Answer:
overrated
Explanation:
The expected vale of the stock is below their current market value.
This means the expected earnings and dividends of the company are going to decrease in the following months. Or that other stocks semes more profitable, making this stock price going down:
This may occurs because, the price earings of this stock (times the Earings per share pays the market price is greater than other stock. Investor will move from a stock with a P/E of 20 to another which P/E is % as their return in investment will be higher.
Followers of the efficient market hypothesis believe thatA) very few investors actually analyze or evaluate stocks before they make a purchase decision.B) the needed information to assess the market is available only to corporate insiders.C) investors react quickly and accurately to new information.D) individual traders can have a significant impact on the price of a security.
Answer: Followers of the efficient market hypothesis believe that "C) investors react quickly and accurately to new information.".
Explanation: The efficient market hypothesis states that the current price of an asset in the market reflects all available information that exists (historical, public and private). It considers that any news or future event that may affect the price of an asset, will make the price adjust so quickly, that it is impossible to obtain an economic benefit from it.
This adjustment happens so fast because investors act quickly and accurately in the face of new information.
The efficient market hypothesis posits that investors react quickly and accurately to new information, implying all available information is already factored into stock prices. Thus, it suggests focusing on diverse investments to match the market's performance rather than attempting to beat it.
Explanation:Followers of the efficient market hypothesis believe that investors react quickly and accurately to new information (option C). This hypothesis suggests that the stock market is always correctly priced because it assumes all relevant information about each stock is already incorporated into its price, leaving no room for above-average, risk-adjusted returns through stock selection or market timing. This theory suggests that instead of trying to 'beat the market', investors should focus on creating a diversely balanced portfolio, such as through index funds, to match the market's performance. This removes the pressure of trying to predict which stocks will perform better than others.
A common visual representation of this theory is the random walk hypothesis, which depicts price changes in the stock market as a random walk and implies that the past movement or trend of a stock price or market cannot be used to predict its future movement.
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Lightwire Co. made the decision a decade ago to make the copper wires it needs for its products in house rather than outsourcing this need. As a consequence, Lightwire was stuck with relatively higher costs over the long term, and is currently in negotiations to be bought out. Where, in the context of supply chain management, did Lightwire go wrong?
a. Adaptability
b. Alignment
c. Adjustment
d. Agility
Answer: Option (A) is correct
Explanation:
Here in the given case, in the context of supply change, the corporation did go wrong on part of adaptability. Adaptability is known as a feature of a process or of a system. This term has been utilized in several different discipline and organization operations. According to Gronau and Andresen, adaptability in organizational management can be referred to as ability to bring changes to oneself or something in order to fit the changes occurring.
Araceli is a team member in a large corporation. She never speaks in team meetings because she has seen members talk behind each others' backs after the meetings. Members are constantly monitoring the other members' work and looking for mistakes to point out in a meeting. According to the information provided, which contextual factor is lacking in Araceli's team?A) adequate resourcesB) climate of trustC) team structureD) performance evaluationsE) leadership
Answer:
B) Climate of trust
Explanation:
The problem seems to be Climate of trust. This fundamental factor allows teams to perform better than the sum of the performance of each of its members. Through an environment of trust, each member is supported and coached by other team members making individual improvements and increasing synergies within the team. A climate of trust is not exempt from criticism, but this criticism is understood as a helping tool rather than an instrument of personal harm. Finally, a climate of trust allows that errors and mistakes become a useful source of learning.
The following information pertains to the August manufacturing activities of Griss Co.: Beginning work-in-progress (BWIP): $12,000 Ending work-in-progress (EWIP): $10,000 Cost of goods manufactured (COGM): $97,000 Direct materials issued to production: $20,000 Factory overhead is assigned at 150% of direct labor. What was the August direct labor?
Answer:
direct labor= $30000
Explanation:
With the following information we need to calculate the direct labor:
Beginning work-in-progress (BWIP): $12,000
Ending work-in-progress (EWIP): $10,000
Cost of goods manufactured (COGM): $97,000
Direct materials issued to production: $20,000
Factory overhead is assigned at 150% of direct labor.
We know that:
Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress
97000=12000 + 20000 + direct labor + 1,5*direct labor - 10000
direct labor= (97000-12000-20000+10000)/2,5
direct labor= 30000
Manufacturing overhead= 30000*1,5= 45000
Comprobation:
cost of manufactured goods= 12000+20000+30000+45000-10000=97000
Final answer:
The direct labor for Griss Co. in the month of August is calculated to be $12,000 by analyzing the relationship between factory overhead, which is 150% of direct labor, and other provided manufacturing costs.
Explanation:
To find the direct labor costs for the month of August for Griss Co., we need to understand that the factory overhead, which is 150% of direct labor, plays a significant role in this calculation. First, let's use the given formula to calculate the direct labor based on the information provided:
Beginning Work in Progress (BWIP): $12,000Ending Work in Progress (EWIP): $10,000Cost of Goods Manufactured (COGM): $97,000Direct Materials Issued to Production: $20,000We know that COGM is calculated as follows: BWIP + Total Manufacturing Costs - EWIP. The Total Manufacturing Costs include Direct Materials, Direct Labor, and Factory Overhead. Given the factory overhead is 150% of direct labor, let's denote Direct Labor as DL. Thus, Factory Overhead = 1.5 * DL.
Using the information and the formula for COGM, we can set up the following equation:
$97,000 = $12,000 + ($20,000 + DL + 1.5DL) - $10,000
Solving for DL, we get:
$97,000 = $22,000 + 2.5DL
DL = ($97,000 - $22,000) / 2.5 = $30,000 / 2.5 = $12,000
Therefore, the direct labor for the month of August was $12,000.
Which of the following statements is (are) TRUE? I. A firm with market power maximizes profit by producing so that P = MC or MR = MC. II. If marginal revenue exceeds marginal cost, the firm should expand output to increase profits. III. If a firm has no costs of production, it should continue producing until marginal revenue falls to zero.
Answer:
Statement II and III
Explanation:
For Statement I
We know that in a perfect competitive market the profit is maximum where either Marginal Revenue = Marginal Cost, or the Price + Marginal Cost is the point defining the profit.
Therefore, firm having to exercise maximum power in market will produce more up till Marginal Revenue > Marginal Cost.
Therefore, statement I is false.
Statement II
For the time till when the marginal revenue is more than the marginal cost, more and more goods shall be produced to increase the quantum of profit.
as this will assure no losses up to the time where MR>MC.
Thus, statement II is true.
Statement III
If there is no cost of production then entire amount received for a good will be profit, accordingly till the time the marginal revenue does not fall to 0 the goods shall be supplied to consumers, as the entire amount received will be profit with no cost associated.
Thus, statement III is also True.
You buy a share of The Ludwig Corporation stock for $21.70. You expect it to pay dividends of $1.00, $1.16, and $1.3456 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.15 at the end of 3 years.Calculate the growth rate in dividends. Round your answer to two decimal places. %Calculate the expected dividend yield. Round your answer to two decimal places. %Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return (assume market is in equilibrium with the required rate of return equal to the expected return)? Do not round intermediate calculations. Round your answer to two decimal places. %
Answer:
g = 16%
dividends yield:
Year 1 4.60%
Year 3: 4.78%
expected rate of return:
year 1 20.6%
year 3 20.78%
Explanation:
grow rate:
D1 /D0 = g
1.16/1.00 - 1 = 0.16
1.3456/1.16 - 1 = 0.16
the grow rate is 16%
dividend yield:
dividends/stock price = dividend yield
1/21.7 = 0,0460 = 4.60%
1.3456/28.15 = 0,04780 = 4.78%
expected rate of return:
dividend yield + grow rate
4.60% + 16% = 20.6%
4.78% + 16% = 20.78%
The growth rate in dividends is calculated to be 7.71% using the given dividends details. The expected dividend yield is found to be 4.61% by dividing the annual dividend payment by the stock’s price. Subsequently, the expected total return, which sums up the dividend yield and the dividend growth rate, is 12.32%.
Explanation:First off, to calculate the growth rate in dividends, we'd need to understand that it's the percentage increase in the amount of dividends from one year to the next. The average growth rate, g, is then calculated as: g = [(D2/D1)^(1/2)-1] * 100 where D2 is dividend in year 2, D1 is dividend in year 1. So, g = [($1.16/$1.00) ^ (1/2) - 1] * 100 = 7.71%.
To calculate the expected dividend yield, you take the annual dividend payment and divide it by the stock's price. Therefore, the dividend yield for the first year would be: Dividend yield = D1 / P = $1.00 / $21.70 = 4.61%.
Lastly, the expected total rate of return, often used to compare the performance of different investments, is the sum of the expected dividend yield and the dividend growth rate. So, in this case, Expected total return = Expected dividend yield + Dividend growth rate = 4.61% + 7.71% = 12.32%. As such, the expected total return is 12.32% if the market is in equilibrium.
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On December 31, 2015, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $43,000 and $1,250, respectively. During 2016, Coolwear wrote off $775 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,600 at December 31, 2016. Bad debt expense for 2016 would be:
Answer:
Bad debt expense $5.125
Explanation:
Initial Balance
Accounts Receivable $ 43.000
Allowance for Uncollectible Accounts $ 1.250
Entry
Allowance for Uncollectible Accounts $ 775
Accounts Receivable $ 775
New Balance
Accounts Receivable $ 42.225
Allowance for Uncollectible Accounts $ 475
Entry Adjustment
Bad debt expense $ 5.125
Allowance for Uncollectible Accounts $ 5.125
END Balance
Accounts Receivable $ 42.225
Allowance for Uncollectible Accounts $ 5.600
The correct answer is c. The bad debt expense for 2016 would be: $5125
To calculate the bad debt expense for 2016, we need to follow these steps:
1. Determine the beginning balance of the Allowance for Uncollectible Accounts:
- Beginning balance: $1,250
2. Account for the write-offs during the year:
- Accounts written off: $775
3. Determine the required ending balance of the Allowance for Uncollectible Accounts:
- Required ending balance: $5,600
4. Calculate the Bad Debt Expense:
- The bad debt expense is the amount needed to adjust the allowance account to the required ending balance after considering the beginning balance and the write-offs.
Step-by-Step Calculation:
1. Beginning Balance of Allowance for Uncollectible Accounts:
Beginning Balance = $1,250
2. Less: Write-offs during the year:
Write-offs = $775
3. Balance after write-offs:
Adjusted Balance = $1,250 - $775 = $475
4. Required Ending Balance:
Required Ending Balance = $5,600
5. Calculate the Bad Debt Expense:
Bad Debt Expense = Required Ending Balance - Adjusted Balance
Bad Debt Expense = $5,600 - $475 = $5,125
Therefore, the bad debt expense for 2016 would be: 5125
Therefore, the correct option is c. 5125 .
The complete question is:
On December 31, 2015, Coolwear Inc. had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $43,000 and $1,250, respectively. During 2016, Coolwear wrote off $775 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,600 at December 31, 2016. Bad debt expense for 2016 would be:
a. $7400
b. $2400
c. $5100
d. $950
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP) = 16%, σP = 26%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 6%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? (Do not round intermediate calculations. Round your answer to 2 decimal place.)
Answer:
What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset?
W1: Risky Porfolio = 17%
W2: Risk Free Asset = 83%
E(Rp): Rate of Return: 6%
E(Rp) = W1 *R1 + W2*R2
E(Rp) = 17%*16% + 83%*4% = 6%
Explanation:
To find the proportion of investment on each assets it''s necessary to applied the following equation:
E(Rp) = W1 *R1 + W2*R2
To find W2 we define it as (1-w1) and then then the equation it's solved.
Where :
E(Rp) = Expected Return
W1 : Proportion of Risky Portfolio
R1 : Expected return of Risky Portfolio
W2: Proportion of Risk Free Asset
R2 : Expected return of Risk Free Asset
a. The proportion she should invest in the risky portfolio P is 0.17, and the proportion in the risk-free asset is 0.83. b. Standard deviation of the portfolio of the rate of return on her portfolio is 0.0433. c. 1. First client is more risk averse.
Let's address each part of the question step by step.
Given information:
- Expected return of the risky portfolio, E([tex]r_P[/tex]) = 16%
- Standard deviation of the risky portfolio, [tex]\sigma_P[/tex] = 26%
- Risk-free rate, [tex]r_f[/tex] = 4%
- Required expected rate of return on the overall portfolio, [tex]E(r_{\text{portfolio}}) = 6\%[/tex]
- Standard deviation constraint for the second client, [tex]\sigma_{\text{portfolio}} \leq 23\%[/tex]
Part (a): Proportions to invest
Let x be the proportion invested in the risky portfolio P , and 1 - x be the proportion invested in the risk-free asset.
To achieve an expected return of 6% on the overall portfolio, we use the formula for the expected return of a portfolio:
[tex]E(r_{\text{portfolio}}) = x \cdot E(r_P) + (1 - x) \cdot r_f[/tex]
Substitute the given values:
[tex]0.06 = x \cdot 0.16 + (1 - x) \cdot 0.04[/tex]
Solve for x :
0.06 = 0.16x + 0.04 - 0.04x
0.06 - 0.04 = 0.12x
0.02 = 0.12x
[tex]x = \frac{0.02}{0.12}[/tex]
x = 0.1667
So, the proportion she should invest in the risky portfolio P is 0.17, and the proportion in the risk-free asset is 0.83.
Part (b): Standard deviation of the portfolio
To find the standard deviation [tex]\sigma_{\text{portfolio}}[/tex] of the overall portfolio:
[tex]\sigma_{\text{portfolio}} = \sqrt{x^2 \cdot \sigma_P^2}[/tex]
Substitute x = 0.1667 and [tex]\sigma_P[/tex] = 0.26 :
[tex]\sigma_{\text{portfolio}} = \sqrt{0.1667^2 \cdot 0.26^2} \\\\ \sigma_{\text{portfolio}} = \sqrt{0.02779} \\\\ \sigma_{\text{portfolio}} = 0.1667 \times 0.26 \\\\ \sigma_{\text{portfolio}} = 0.043342[/tex]
part (c): To determine which client is more risk-averse based on the given information, let's analyze the situation:
Given data:
- Expected return of the risky portfolio [tex]E(r_P) = 16\%[/tex]
- Standard deviation of the risky portfolio [tex]\sigma_P = 26\%[/tex]
- Risk-free rate [tex]r_f[/tex] = 4%
Client 1:
Client 1 wants an expected rate of return on the overall portfolio equal to 6%. This means the client will allocate part of their investment to the risky portfolio and part to the risk-free asset.
Let w be the proportion invested in the risky portfolio.
The expected return on the complete portfolio E([tex]r_c[/tex]) is given by:
[tex]E(r_c) = w \cdot E(r_P) + (1 - w) \cdot r_f[/tex]
Substituting the given values:
[tex]6\% = w \cdot 16\% + (1 - w) \cdot 4\%[/tex]
Solving for w :
0.06 = 0.16w + 0.04 - 0.04w
0.06 - 0.04 = 0.12w
0.02 = 0.12w
[tex]w = \frac{0.02}{0.12} \\\\ w = \frac{1}{6}[/tex]
So, Client 1 will invest [tex]\frac{1}{6}[/tex] or approximately 16.67% of their total investment budget in the risky portfolio.
Client 2:
Client 2 wants the highest possible return but with a constraint on the standard deviation of the portfolio, which should not exceed 23%.
Given the information provided, we know that Client 2 is willing to accept a maximum standard deviation of 23%.
Risk Aversion Comparison:
To determine which client is more risk-averse, we typically consider the preference for risk in relation to the expected return. Client 1 is satisfied with a lower expected return (6%) and will allocate a smaller portion of their investment to the risky portfolio compared to Client 2, who seeks the highest possible return but with a constraint on risk (standard deviation).
Since Client 1 is willing to accept a lower expected return (6%) and allocates a smaller portion to the risky portfolio, it indicates a higher level of risk aversion compared to Client 2, who seeks maximum return while maintaining a risk constraint.
Therefore, Client 1 is more risk-averse.
Based on the choices provided:
- First client (Client 1) is more risk averse.
The complete question is:
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP) = 16%, σP = 26%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 6%.
a. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? (Round your answers to 2 decimal places.)
b. What will be the standard deviation of the rate of return on her portfolio? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 23%. Which client is more risk averse? multiple choice. 1. First client 2. Second client
The following are data for an economy in billions of dollars: Net rental income 141 Depreciation 1,241 Compensation of employees 5,715 Personal consumption expenditures 6,728 Sales and excise taxes 762 Gross private domestic investment 1,767 Exports of goods and services 1,102 Imports of goods and services 1,466 Government purchases of goods and services 1,741 Net interest 532 Proprietors’ income 715 Corporate profits 876 Net factor income from rest of world -12 a. Compute GDP using the expenditure
Answer:
GDP= 9,872
Explanation:
The Expenditure Approach is a method of measuring GDP by calculating all spending throughout the economy including consumer consumption, investing, government spending, and net exports. This method calculates what a country produces, assuming that the finished goods and services of a country equals the amount spent in the country for that period.
The formula is:
GDP=C+I+G+/-NX
GDP: Gross Domestic Product
(C) consumer spending – this is the amount that all consumers spend on goods and services for personal use.
(I) investment – this is the amount that businesses or owners spend to invest in new equipment or expansions.
(G) government spending – this includes spending on new infrastructure like bridges and roads.
(NX) net exports – this includes spending on a country’s exports minus its spending on imports.
GDP= 6,728+1,767 +1,741+(1,102-1,466)
GDP= 9,872
In the initial Cournot duopoly equilibrium, both firms have constant marginal costs, m, and no fixed costs, and there is a barrier to entry. Show what happens to thebest-response function of firms if both firms now face a fixed cost of F.
Let market demand be
p=a-−bQ,
where a and b are positive parameters with 2 firms.
Let q1 and q2 be the amount produced by firm 1 and firm 2, respectively. Assuming it is optimal for the firm one to produce, its best-response function is
q1=??
Answer:
[tex]q_1=\frac{a-m}{2b}-\frac{q_2}{2}[/tex]
Explanation:
Note that Total Costs are given by fixed costs (F) and marginal costs (m) that depend on the production level of the firm
[tex]CT_i=F+mq_i[/tex]
for i=1,2. The market demand is given by
[tex]p=a-bQ[/tex]
where [tex]Q=q_1+q_2[/tex] is the total production, so it's the sum of each firms production
Firm 1 will maximize it's own profits
[tex]max\,\Pi_1=p=(a-b(q_1+q_2))q_1-F-mq_1[/tex]
The first order conditions (take derivative of the profit with respect to [tex]q_1[/tex] are given by
[tex]a-2 b q_1-b q_2-m=0[/tex]
Then the best-response function for Firm 1 will be
[tex]q_1=\frac{a-m}{2b}-\frac{q_2}{2}[/tex]
and the solution for Firm 2 would be symmetric.
Note that only marginal costs are relevant for getting the best-response function, so adding fixed costs (F) don't change the results
Is the statement below true or false? ▼ True False . (Select from the drop-down menu.) The cash surplus can be used for a variety of purposes. In the short-term, they may replace their car, buy better furniture, or more quickly pay off their home. Alternatively, they may purchase stocks and bonds, or increase their savings for future needs. Investments in the stock market are generally designed to increase an individual's future wealth, the purchase of bonds typically allows one to at least retain their purchasing power, while investment in savings accounts provide liquidity.
Answer:
true
Explanation:
Final answer:
True, the cash surplus can be used for short-term consumption needs or long-term investments. People choose various financial options like savings accounts, stocks, and bonds, weighing liquidity against potential returns to manage their finances and accumulate wealth.
Explanation:
The statement regarding the utilization of a cash surplus is true. Individuals and households can choose from various options to manage their finances depending on their goals, such as increasing future wealth, preserving purchasing power, or ensuring liquidity. For instance, they may opt to replace consumables or enhance their living standards in the short term. Alternatively, they can focus on financial investments like savings accounts, stocks, and bonds for long-term benefits.
In the context of wealth preservation and accumulation, individuals might consider the liquidity of checking accounts, the higher returns from bond market mutual funds, or investments in real assets. These choices reflect a balance between immediate accessibility of funds for everyday transactions or emergencies and the prospects of higher earnings through financial markets.
Ultimately, financial decisions are influenced by preferences for liquidity versus returns, and the potential uses of money - for consumption, investment, or saving - which can contribute to wealth accumulation over time.
Over the last 10 years four mutual funds all had the same mean rate of return, 12%. These mutual funds had different standard deviations. The standard deviations for Mutual Fund A 8%, Mutual Fund B 6%, Mutual Fund C 4%, Mutual Fund D 9%. Which mutual fund investment is the most consistent in rate of return?
(A) Together Fund
(B) All for One Fund
(C) Co-joined Investments
(D) Mutual Money
The mutual fund that has the lowest standard deviation also has the highest rate of return consistency. The solution is (C), thus.
The least unpredictable Mutual Fund C has a 4% standard deviation. This indicates that its returns are the most stable and least likely to change drastically.
Mutual Fund A, Mutual Fund B, and Mutual Fund D all have standard deviations of 8%, 6%, and 9%, respectively. As a result, the returns from all of these funds are more likely to fluctuate dramatically than those from Mutual Fund C.
Mutual Fund C is the mutual fund investment that has produced the highest consistent returns.
Hence, the correct option is C, Co-joined Investments.
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Mutual Fund C is the most consistent mutual fund investment in terms of rate of return as it has the lowest standard deviation, which indicates less variability in its returns.
Explanation:Among the four mutual funds (A, B, C, and D) that all had the same mean rate of return of 12% over the last 10 years, the mutual fund with the most consistent rate of return would be the one with the lowest standard deviation. The standard deviation is a measure of the dispersion of returns around the mean return, where a lower standard deviation indicates less variability and thus more consistency in the rate of return.
Therefore, Mutual Fund C, with the lowest standard deviation of 4%, is the most consistent in terms of rate of return. Comparatively, Mutual Fund D has the highest standard deviation of 9%, making it the riskiest in terms of return variability.
Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,700. There were 90 machine hours used on this job. The predetermined overhead rate is $32 per machine hour used. There were 179 direct labor hours worked on this job at a direct labor wage rate of $31 per hour. What is the total manufacturing cost of Job 551?
Answer:
Cost of goods manufactured= $16,129
Explanation:
Total manufacturing cost is the aggregate amount of cost incurred by a business to produce goods in a reporting period.
Generally accepted accounting principles require that the cost of goods sold shall consist of:
the cost of direct materials
the cost of direct labor
the cost of manufacturing overhead
In this exercise:
Cost of goods manufactured:
Direct materials= $7,700
Direct Labor=179hours * $31=$5,549
Factory overhead= $32*90 hours= $2,880
Total= $16,129
Financial information is presented below:
Operating expenses $ 32000
Sales returns and allowances 6000
Sales discounts 5000
Sales revenue 190000
Cost of goods sold 93000
Gross profit would be
Answer:
Gross profit would be $86.000
Explanation:
Gross Margin income statement
Sales $ 190.000
Sales Discount -$ 5.000
Sales Return & Allowances -$ 6.000
Cost of Goods -$ 93.000
Gross Profit $ 86.000
Gross Profit does not take operating expenses into account.
Draper Company sold $200,000 of extended warranties in 20X8. The warranty represents a separate performance obligation and covers any repairs needed over the next four years. The warranty takes effect on January 1, 20X9. Draper uses a straight‐line approach to recognize warranty revenue. What amounts of Warranty Revenue and Unearned Warranty Revenue, respectively, should Draper report in its December 31, 20X9, Income Statement and Balance Sheet?
Answer:
What amounts of
Warranty Revenue 50000
Unearned Warranty Revenue 150000
Explanation:
Cash 200000
Unearned revenue 200000
Sold warranty
Unearned Revenue 50000
Extended warranty 50000
Based on the warranty period, the warranty revenue will be $50,000 and the unearned warranty revenue will be $150,000.
What is the warranty revenue?This refers to the warranty for the year that wasn't claimed by customers.
This amount is:
= Total warranty / Number of years served
= 200,000 / 4
= $50,000
What is the unearned warranty revenue?This is the warranty left to be claimed:
= Total warranty - Warranty for 20X9:
= 200,000 - 50,000
= $150,000
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For each of the following questions, indicate which financial statement would most likely be used to provide the information. Use the following abbreviations: Income statement (I), Statement of retained earnings (R), Balance sheet (B), and Statement of cash flows (C). What were the company’s net sales for the year? What assets does the company have? How much cash was generated by operating activities? Why did the company’s retained earnings change during the year? How much in total debt does the company have? How well did the company perform during the year? Did the company declare a dividend during the year? How much cash did the company generate and spend during the year? What is the company’s financial position at the end of the year? LO 4
Answer:
1) Net sales: Income statement
2) Assets: Balance Sheet
3) Cash generated by operating activities: Cash flow statement
4) Retained earnings change: Retained earning statement
5) Total debt: Balance Sheet
6) Company performance: Income statement
7) Dividend: Retained earnings
8) Cash generation and spending: Cash flow statement
9) Financial position: Cash flow, Balance sheet, Income statement
A company issues $25300000, 7.8%, 20-year bonds to yield 8.0% on January 1, Year 17. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24799240. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, Year 17 balance sheet?
Answer:
Ans. The carrying value of this bond on Dec. 31/17 is $25,185,800.90
Explanation:
Hi, the carrying value of this debt depends on the unpaid coupons and its principal, and since 2 semi-annual coupons were already paid, we have to bring to present value (to Dec /17) the remaining coupons and the principal to be paid. The formula is as follows.
[tex]Carrying Value=\frac{Coupon((1+r)^{n-1}-1) }{r(1+r)^{n-1} } +\frac{FaceValue+Coupon}{(1+r)^{n} }[/tex]
Where:
[tex]Coupon=25,300,000*\frac{0.078}{2} =986,700[/tex]
[tex]Yield(semi-annual)=(1+0.08)^{\frac{1}{2} } -1=0.03923[/tex]
[tex]n=20years*2-2(paid coupons)=38[/tex]
[tex]Carrying Value=\frac{986,700((1+0.03923)^{37}-1) }{0.03923(1+0.03923)^{37} } +\frac{25,300,000+986700}{(1+0.03923)^{38} }[/tex]
[tex]Carrying Value=25,185,800.90[/tex]
Best of luck.
Golden Age Retirement Planners specializes in providing financial advice for people planning for a comfortable retirement. The company offers seminars on the important topic of retirement planning. For a typical seminar, the room rental at a hotel is $1,000, and the cost of advertising and other incidentals is about $10,000 per seminar. The cost of the materials and special gifts for each attendee is $60 per person attending the seminar. The company charges $250 per person to attend the seminar as this seems to be competitive with other companies in the same business. How many people must attend each seminar for Golden Age to break even
Answer:
Ans. the break even point is 58 people, or a ravenue of $14,500
Explanation:
Hi, first we need to add up all fixed costs and expenses (Room rental+Advertising) and find the contribution margin (Price - Variable costs). The math to this is as follows.
[tex]Break EvenPoint(units)=\frac{Fixed Costs}{(Price-VariableCost)}[/tex]
[tex]Break EvenPoint(units)=\frac{11000}{(250-60)}=58 people[/tex]
[tex]BreakEvenPoint(Dollars)=58persons*\frac{250}{person} =14500[/tex]
Based on the various costs to be incurred by Golden Age Retirement Planners, the breakeven number of people will be 58 people.
What will be the breakeven number of people?First find the fixed costs:
= Cost of room + Cost of advertising
= 1,000 + 10,000
= $11,000
The breakeven point is:
= Fixed costs / (Charge - Variable cost)
= 11,000 / (250 - 60)
= 57.9
= 58 people
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Antonio's makes the greatest pizza and delivers it hot to all the dorms around campus. Last week Antonio's supplier of pepperoni informed him of a 25% increase in price. Which variable determining the position of the supply curve has changed and what effect does it have on supply?
(A) future expectation; Supply decreases
(B) future expectation; Supply increases
(C) input prices; Supply decreases
(D) input prices; Supply increases
Answer:
(C) input prices; Supply decreases
Explanation:
The input prices are all the cost Anonio inccurs to produce a pizza.
The pepperoni will be part of his input price.
The lowest price at which Antonio can sale a pizza is determinate by his cost.
Now Antonio need to sell their pizzas for more cash. So this increase generated a supply decrease.
A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. LDC Sales (units) 100,080 20,500 Labor (hours) 19,880 14,880 Raw materials (currency) $ 19,600 19,880 (FC) Capital equipment (hours) 59,400 4,880 *Foreign Currency unit a. Calculate partial labor and capital productivity figures for the parent and subsidiary.
Answer:
The partial labor and capital productivity figures for the parent and subsidiary is 5.03 units per hour, 1.37 units per hour and, 1.68 units per hour, 4.20 units per hour
Explanation:
The computation of the partial labor for the parent and subsidiary is calculated by applying the formula which is shown below:
= Sales ÷ Labor (hours)
For U.S = 100,080 units ÷ 19,880 hours = 5.03 units per hour
For LDC = 20,500 units ÷ 14,880 hours = 1.37 units per hour
The computation of the capital productivity for the parent and subsidiary is calculated by applying the formula which is shown below:
= Sales ÷ Capital equipment (hours)
For U.S = 100,080 units ÷ 59,400 hours = 1.68 units per hour
For LDC = 20,500 units ÷ 4,880 hours = 4.20 units per hour
Which of the following is an example of structural unemployment? A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year. B. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up. C. Alan, a software engineer, lost his job when the internet startup he worked for went bankrupt. He interviewed with five companies in the area before taking a job with another firm in the industry. D. Jim had a job as an engineer, but quit when his wife was transferred to another state. He looked for a month before finding a new job that he liked.
Answer:
The correct answer is option A.
Explanation:
Structural unemployment is the type of unemployment that arises because of mismatch in skills that the workers possess and the skills that the employers want.
In the given example, Dora is unemployed because she does not have the skills required to work in industries other than a textile mill. This is an example of structural unemployment.
Marsha's case is an example of cyclical unemployment as it caused due to recession.
Alan and Jim's cases are examples of frictional unemployment. Both of them remained unemployed for a short time when moving from one job to another.
In the provided options, Dora's case where she lost her job when the textile mill closed and doesn't possess the skills for another industry, resulting in her being unemployed for over a year, is an example of structural unemployment. Structural unemployment is due to the mismatch of skills between unemployed individuals and those needed for available jobs.
Explanation:The example of structural unemployment in the options provided is: A. Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year.
Structural unemployment occurs when a labor market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed and the skills needed for the available jobs. In Dora's case, the industry she was employed in closed down, and she does not possess the skills necessary to secure another job in a different industry. This leads to a long term unemployment scenario because she can't transfer her skills to another industry or job. This is a classic example of structural unemployment.
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Which one of the following is least liquid?
A. Foreign currency
B. U.S. Treasury bonds
C. Real estate
D. Bank deposit
Answer: Real estate
Explanation: Liquidity refers to the ability of a security to be converted into cash without having a major change in its price. In other words, liquidity is the relationship between the speed of sale of a security and its change in price.
Real estate refers to the land or other housing facilities etc. These assets require huge amount for purchase. It takes to find a buyer willing to make such a big investment, thus, they are not liquid.
Hence from the above we can conclude that the right option is C.
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $750,000. It is estimated that Database can generate $2,150,000 in annual sales, with an 7 percent profit margin. What would net income and return on assets (investment) be for the year? (Input your return on assets answer as a percent rounded to 2 decimal places.)
Answer:
Net income = $ 150500
Return on assets = 20.07 %
Explanation:
Net income = (annual sales)*7%
= $ 2150000*7%
= $ 150500
return on assets = [net income*100]/[assets to support expansion]
= (150500)(100)/(750000)
= 20.07 %
Therefore, the Net income for the year is $ 150500 and the Return on assets for the year is 20.07 %.
The following data is available for Sampson Corporation. Sampson Corporation Accounts Item Amount Net income $200,000 Depreciation expense 60,000 Dividends paid 90,000 Loss on sale of land 15,000 Decrease in accounts receivable 30,000 Decrease in accounts payable 45,000 Net cash provided by operating activities is $Placeholder for missing word.
Answer:
cash flow provided by operation 260,000
Explanation:
net income 200,000
adjustment for non-monetary terms: (A)
depreciation expense 60,000
loss on sale of land 15,000
adjusted net income 275,000
Change in working capital:
decrease in AR 30,000
Decrease in AP (45,000) (B)
net change in WC: (15,000) (C)
cash flow provided by operation 260,000
(A) we must focus on cahs movement so the depreciation and loss on sale which are non-mentary term. This are not related to cash
(B) the decrease in account receivable means we colelct from our customer more.
(C) the decrease in accounts payable represent we use more cash to pay up the suppliers
⌛ Plan to spend approximately 30 minutes to complete this activity. The market value of the equity of Ginger, Inc., is $635,000. The balance sheet shows $39,000 in cash and $215,000 in debt, while the income statement has EBIT of $96,400 and a total of $168,000 in depreciation and amortization. What is the enterprise value–EBITDA multiple for this company? The market value of the equity of Ginger, Inc., is $635,000. The balance sheet shows $39,000 in cash and $215,000 in debt, while the income statement has EBIT of $96,400 and a total of $168,000 in depreciation and amortization. What is the enterprise value–EBITDA multiple for this company
Answer:
EBITDA Multiple = 3,067
Explanation:
The EBITDA multiple is a financial ratio that compares a company’s Enterprise Value to its annual EBITDA. This multiple is used to determine the value of a company and compare it to the value of other, similar businesses. The ratio takes a company’s enterprise value (which represents market capitalization plus net debt) and compares it to the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for a given period.
Formula:
EBITDA Multiple = Enterprise Value / EBITDA
To Determine the Enterprise Value and EBITDA:
Enterprise Value = (market capitalization + value of debt + minority interest + preferred shares) – (cash and cash equivalents)
EBITDA = Earnings Before Tax + Interest + Depreciation + Amortization
In this exercise:
Enterprise Value= market value + value of debt - cash= 635000+ 215000 - 39000=$811000
Ebitda= ebit + depreciation and amortization = 96400+168000= $264400
EBITDA Multiple = Enterprise Value / EBITDA=811000/264400=3,067
Rotweiler Obedience School's December 31, 2007, Balance Sheet showed Net Fixed Assets of $1.875 million, and the December 31, 2008, Balance Sheet showed Net Fixed Assets of $2.12 million. The company's 2008 Income Statement showed a Depreciation Expense of $220,000. What was Rottweiler's Net Capital Spending for 2008?
Answer:
Rottweiler's Net Capital Spending for 2008: $0,465 million.
Explanation:
December 31, 2007 Net Fixed Assets of $1.875
Dureing 2008 Depreciation Expense of -$0,220
December 31, 2008 Net Fixed Assets of $1.655
Net Capital Spending for 2008 $0,465 .
December 31, 2008 Net Fixed Assets of $2.120
Cass Corporation reported pretax book income of $10,840,000. During the current year, the reserve for bad debts increased by $170,000. In addition, tax depreciation exceeded book depreciation by $300,000. Cass Corporation sold a fixed asset and reported book gain of $73,500 and tax gain of $117,000. Finally, the company received $258,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company’s current income tax expense or benefit for 2010
Answer:
10,970,000 x 21% = 2,303,700 income tax expense
10,755,000 x 21% = 2,258,550 income tax payable
Explanation:
permanent difference:
sale of fixed asset (117,000-73,500) 43,000
tax-exempt life insurance proceeds. (258,000)
total (215,000)
temporary difference ( which generates tax liability or benefit )
170,000 bad debt expense
(300,000) higher tax depreciation
(130,000) deferred tax liability
The taxable income will be for
10,840,000
- 215,000 permanent difference
+ 130,000 temporary difference
10,755,000
Then, we apply the 21% corporate tax rate which is the income tax rate for 2019
10,755,000 x 21% = 2,258,550 income tax payable
The accounting income tax expense will be calculate based on the temporary difference only:
10,840,000 + 130,000 = 10,970,000 x 21% = 2,303,700 income tax expense