Answer:
10%
Explanation:
The actual return that an investor earn on a bond until its maturity is called the Yield to maturity. It is a long term return which is expressed in annual rate.
According to given data
It is assumed that face value of the bond is $1,000
Coupon Payment = C = $1,000 x 10.3% = $103 annually = $51.5 semiannually
Price of the Bond = P = $1,000 x 102% = $1,020
Numbers of period = n = (17-2) years x 2 = 30 periods
Use Following Formula to calculate YTM
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $51.5 + ( $1,000 - $1,020 ) / 30 ] / [ ($1,000 + $1,020 ) / 2 ]
Yield to maturity = $50.83 / $1,010 = 0.0503 = 5.03% = 5% per Semiannual
Yield to maturity = 5% x 2 = 10% annually
Yield to maturity = 3.56% semiannually OR 7.12% annually
Answer:
The answer is 10.04%
Explanation:
Yield-to-maturity (YTM) is the of return an investor is expecting from its bonds.
The payment is semiannual.
Number of years, N is 30 years[(7 years - 2 years) x 2]
YTM = ?
Present Value(PV) = $102(102% of $100)
Coupon payment (PMT) = $5.15[(10.3percent ÷ 2) x $100]
Future Value(FV) = $100
Using Financial calculator, we have:
5.02percent
This is for semiannual
Therefore, annual YTM will be:
5.02 percent x 2
10.04%
Petra's basis was $50,000 in the PAM Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of $40,000, fair market value of $60,000) and inventory (basis of $40,000, fair market value of $40,000). After the distribution, Petra's bases in the land and inventory, respectively, are:a.$40,000 and $0.
b.$10,000 and $40,000.
c.$25,000 and $25,000.d.$40,000 and $10,000.
e.$40,000 and $40,000.
Answer:
b.$10,000 and $40,000.
Explanation:
Under the ordering rules for distributions, cash is distributed first, then followed by unrealized receivables and inventory; other assets are distributed last.
For Petra, the inventory is distributed first and takes a carryover basis of $40,000.
This reduces Petra's basis to $10,000. The land is distributed next and takes the $10,000 remaining basis
$50,000 (partnership interest) – $40,000 (inventory) = $10,000 (land distribution)
Madrid Company plans to issue 9% bonds with a par value of $5,300,000. The company sells $4,770,000 of the bonds at par on January 1. The remaining $530,000 sells at par on July 1. The bonds pay interest semiannually on June 30 and December 31. 1. Record the entry for the first interest payment on June 30. 2. Record the entry for the July 1 cash sale of bonds.
Answer and Explanation:
The journal entry are as follows
1. Interest expense $214,650
To Cash $214,650
(Being the first interest payment is recorded)
The computation is shown below
= $4,770,000 × 9% × 6 months ÷ 12 months
= $214,650
For recording this we debited the interest expense as it increased the expenses while on the other hand the cash is paid which reduced the cash balance so it is credited
2. Cash $530,000
To Bond payable $530,000
(Being the cash sale of bond is recorded)
For recording this we debited the cash as cash is received that increased the cash balance and at the same time we credited the bond payable
Suppose that the total utility from consuming one unit of good Z is 220 utils, the total utility from consuming two units of good Z is 320 utils, and the total utility from consuming three units of good Z is 400 utils. The marginal utility received from consuming the third unit of good Z is ____________.
Answer:
80 utils
Explanation:
Marginal utility (MU) is the extra or additional utility received from consuming an additional unit of a good.
From the question, we have:
MU from consuming the third unit of Z = Total utility from consuming three units of good Z - Total utility from consuming two units of good Z = 400 - 320 = 80 utils
Therefore, the marginal utility received from consuming the third unit of good Z is 80 utils.
Identify the type of responsibility center.
1. The 3M Company manufactures and distributes products under the Post-it, Scotch, Nexcare, and Thinsulate brand names.
2. The J.M. Smucker Company Store and Café is located in Orrville, Ohio. The store sells a variety of company products, while the café offers items made with ingredients from the Smucker's brands.
3. The Fairmont Chicago, The Fairmont Royal York in Toronto, and The Fairmont Orchid in Hawaii are all hotels owned by their parent corporation, Fairmont Hotels & Resorts.
A. Cost
B. Investment
C. Profit
D. Revenue
Answer:
1. The 3M Company manufactures and distributes products under the Post-it, Scotch, Nexcare, and Thinsulate brand names. B. Investment
2. The J.M. Smucker Company Store and Café is located in Orrville, Ohio. The store sells a variety of company products, while the café offers items made with ingredients from the Smucker's brands. C. Profit
3. The Fairmont Chicago, The Fairmont Royal York in Toronto, and The Fairmont Orchid in Hawaii are all hotels owned by their parent corporation, Fairmont Hotels & Resorts. A. Cost
Explanation:
An investment is the allocation of the money for some benefits n the future and a benefit form the investment is return and includes the sales of the property like the products and brand names etc. Profits are the benefits or the advantages that are earned in buying and spending or profit of something like the sales of the company products etc. A cost is an expense that is associated with the group or the individual or the owner of the assets such as to hotels and the corporations.Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested $4.50 million in a plastic injection molding machine (which can be sold for $4 million immediately) and $300,000 in plastic injection molds specifically for the toy (not valuable to anyone else). The cost of labor and materials necessary to make each truck runs about $4. This year, a competitor has developed a similar toy, significantly reducing demand for the toy truck. Now, the original manufacturer is deciding whether it should continue production of the toy truck. If the estimated demand is 100,000 trucks, the break-even price is $ per truck.
Answer:
Break-even price = $7
Explanation:
The break-even price is the price at which the the total contribution from the sale is equal to the fixed cost of $300,000.
(x- 4)× 100,000 = 300,000
100,000X - 400,000 = 300,000
100,000X = 300,000 + 400,000
x= 700,000/100,000
X = $7
Break-even price = $7
The break-even price per truck is $48.
Explanation:In order to determine the break-even price per truck, we need to calculate the total cost of production and divide it by the estimated demand. The total cost of production includes the cost of the plastic injection molding machine, the plastic injection molds, and the cost of labor and materials for each truck.
The total cost of production would be the sum of the initial investment in the machine ($4.5 million) minus the immediate resale value of the machine ($4 million), plus the cost of the molds ($300,000), and the cost of labor and materials for 100,000 trucks ($4 per truck * 100,000 trucks). This gives us a total cost of production of $4.8 million.
Dividing the total cost of production by the estimated demand of 100,000 trucks, we get a break-even price of $48 per truck.
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Multiple Choice Question 92 Conversion cost per unit equals $9.00. Total materials costs are $81300. Equivalent units of production for materials are 27100. How much is the total manufacturing cost per unit? $12.00. $6.00. $9.00. $3.00.
Answer:
$3.00
Explanation:
Manufacturing cost per unit= Total material cost/Equivalent unit
Cost per Unit= $81300/$21700
Cost per unit = $3.00
Answer:
$ 12
Explanation:
Conversion cost per unit equals $9.00.
Total materials costs are $81300
Equivalent units of production for materials are 27100
MAterial Costs per unit = Total materials costs /Equivalent units of production
Material Costs per unit =$81300/ 27100= $ 3 per unit
Total manufacturing cost per unit= Conversion cost per unit +Material Costs per unit = $ 9+ $3= $ 12
We find the material costs per unit and add it with the conversion cost per unit to get the total manufacturing cost per unit
On January 2, 2009, L Co. issued at par $20,000 of 4% bonds convertible in total into 1,000 shares of L's common stock. No bonds were converted during 2009. Throughout 2009, L had 1,000 shares of common stock outstanding. L's 2009 net income was $2,000. L's income tax rate is 50%.No potential common shares other than the convertible bonds were outstanding during 2009.L's diluted earnings per share for 2009 would be :A. $1.00.B.$1.20.C. $1.40.D. $2.00.
Answer:
The correct answer is $1.2 per share.
Explanation:
According to the scenario, the computation of the given data are as follows:
Interest expense of Bonds = $20,000 × 4% = $800
Now, Interest expense of Bond, After tax = $800 × ( 1 - 50%) = $800 × 0.50
= $400
So, we can calculate the diluted earning by using following formula:
Diluted Earning = (Net income + Interest expense after tax) ÷ Total outstanding shares outstanding
Where, Total outstanding shares = 1,000 shares + 1,000 shares = 2,000 shares
By putting the value, we get
Diluted earning = ($2000 + $400 ) ÷ 2,000
= $1.2 per share
has $ 8 comma 400 cash on hand on October 1. The company requires a minimum cash balance of $ 7 comma 300. October cash collections are $ 548 comma 310. Total cash payments for October are $ 578 comma 140. Prepare a cash budget for October. How much cash, if any, will Howard need to borrow by the end of October?
Answer:
Borrowing of $29,040
Explanation:
Whether or not Howard needs to borrow at end of October can be ascertained by computing the cash excess or shortfall a shown below:
Opening cash balance $8,400
Cash collections $548,000
Cash available $556,400
Cash payments ($578,140)
Desired cash balance ($7,300)
Cash shortfall ($29,040)
The company has to borrow $29,040 in order to be able to make the desired cash payment and still have the desired cash closing balance of $7,300 at end of October
During 2016 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows:
Net
sales Actual warranty expenditures
2016 $ 45,000 $ 1,000
2017 120,000 3,500
At December 31, 2017, Green Thumb should report as a warranty liability of:
a.$900
b.$1,250
c.$3,750
d.$4,500
Answer:
c. $3,750
Explanation:
Green Thumb Company provides two years warranty for any product defect. The provision needs to be made for the warranty expense and it should be reported in the balance sheet as warranty liability. The company budgets the warranty expense to be 2% in year of sales which is $2,400 ($120,000 * 2%) and 3% in the year after sale which is $1,350 ($45,000 * 3%). The total warranty liability for the year 2017 which will be reported at December 31, 2017 is $3,750.
Imagine that your boss is someone whom you and your coworkers have very little respect for, but you and others continue to do what s/he asks because s/he has control over allocating year-end bonuses, promotions, etc. Presuming that your boss is aware of this-i.e., s/he feels disrespected but is aware of his/her formal position-how is your boss likely to respond/behave?
A. Minimize contact with his/her peers
B. Behave in an authoritarian way
C. Spend a lot of time politicking
D. Place excessive restrictions on employees
E. Hold back talented employees
F. Focus on promoting conflict
Answer:
The correct answer is letter "B" and "E": Behave in an authoritarian way.; Hold back talented employees.
Explanation:
Disrespected bosses tend to use their authority to let others know their ideas since they transmit no inspiration because of who they are. It is the only form they can get subordinates' attention. Besides, when subordinates start to show leadership skills or special talents, the disrespected boss would minimize that individual in an attempt to keep his or her power and not to be replaced by that subordinat
During the current year, Mr. Jones made gifts to his son of the following items: A minivan with an adjusted basis of $13,000 and fair market value of $15,000. Bonds with an adjusted basis of $6,000 and fair market value of $18,000. Antique furniture with an adjusted basis of $12,000 and a fair market value of $35,000. An interest-free $10,000 loan on January 1, to buy a boat for his personal pleasure. His son repaid the loan in full on December 31. The applicable federal interest rate was 10%. Mr. and Mrs. Jones elect gift-splitting. What is the total amount of their taxable gifts to their son in the current year
Answer:
$38,000
Explanation:
Since the Jones elected gift splitting, each spouse will may give $15,000 worth of gifts to their son without paying taxes:
the total value of the gifts (must use fair market value) = $15,000 (minivan) + $18,000 (bonds) + $35,000 (furniture) = $68,000
taxable amount = $68,000 - $30,000 (combined tax free gifts) = $38,000
Alpha Division had the following information: Average operating asset base in Alpha Division $500,000 Operating income in Alpha Division $60,000 Cost of capital 14% Target return on investment (ROI) 16% Margin for Alpha Division 21% If the asset base is decreased by $120,000, with no other changes, what will Alpha Division's return on investment be
Answer:
15.79%
Explanation:
Current Average operating asset = $500,000
Decrease in asset base will make average operating asset $380,000 [500000 - 120000]
ROI = Operating Income / New operating asset base
=$60,000 / $380,000
= 15.78947...% = 15.79%
Hence, the correct answer is 15.79%
A quality inspector for Alpha-Beta Co. is concerned about the quality of the batch of several thousand blank DVD disks which his company produced this week and is preparing to ship. If the cost of replacing a defective DVD disk once it has been shipped is $2.50, while the cost for 80% inspection prior to shipment is $0.32 each, while the cost of 100% inspection prior to shipment is $0.40 each, at what point is she indifferent between 100% inspection and shipment without inspection?
Answer:
at point of 25% she indifferent between 100% inspection and shipment without inspection.
Explanation:
Let say x be the number of defects
N be units shipped
At no sampling the replacement cost is equal to inspection cost is:
2.50x = 0.4N
x/N = 0.4/2.50
= 0.16
The defect% is then given by:
= x/N*100
= 0.25*100
= 25%
Therefore, at point of 25% she indifferent between 100% inspection and shipment without inspection.
Jerry knows that Lucy has coveted his classic car for quite some time. Finally willing to sell it, he sends a letter to Lucy offering to sell the car for $15,000. Lucy responds by saying she needs time to arrange financing. Lucy offers Jerry $100 to keep the offer open for two weeks. Jerry agrees, taking the $100. Three days later, Roberta contacts Jerry saying she is interested in buying the car and has the cash to buy it outright. Jerry is concerned that if he doesn't sell the car to Roberta now, she may not be interested later. Furthermore, Lucy may never be able to arrange financing. Jerry is afraid he may end up with no buyer at all. He comes to you for advice. What do you advise
Answer:
Explanation:
Despite the fact that it seems jerry can easily take a bow of the discussion with Lucy and forge ahead in selling the car to Roberta, he had certain restrictions that he should respect. Accepting $100 from Lucy, Jerry entered into what we know as an “Option” contract, giving an option to Lucy to buy the car in the next two weeks.
Irrespective of Lucy’s financial status, jerry should respect the contract that he has entered into. As a back-up, he can hold discussions with Roberta and can request her to wait for 2 weeks when the option period expires and he can sell the car to her at an outright payment
Jerry is bound by an option contract with Lucy which prevents him from selling the car to anyone else for two weeks, despite receiving a better offer from Roberta in the interim.
Jerry finds himself in a contractual predicament due to an agreement to sell his classic car. When Lucy offers Jerry $100 to keep the offer open for two weeks, and he accepts it, they enter into what is known as an option contract. This means Jerry is legally obligated to keep the offer open for the agreed period and cannot sell the car to someone else during that time, regardless of any other offers he receives or concerns about Lucy's ability to secure financing.
In this scenario, the ethical and legal course of action for Jerry would be to inform Roberta that he is currently bound by the terms of his contract with Lucy and thus unable to accept her immediate offer. Jerry can explain to Roberta that if Lucy does not complete the purchase within the two-week period, he would then be free to negotiate with Roberta or any other potential buyers.
While it may not be possible to make the receiver happy when you deliver bad news, you can reduce bad feelings by structuring your message in a sensitive way. Most negative messages take an indirect approach, using a buffer, providing reasons, delivering the bad news with empathy, and closing pleasantly.
What buffering technique are you using if you show in your opening that you care and are concerned?
A. Best news
B. Understanding
C. Facts
Answer:
C. Facts
Explanation:
When offering bad news to a person it is important to reduce the negative effect of the news.
Buffering is the method by which effect of bad news is communicated without causing a negative reaction.
In opening the best technique is to present facts. This makes the receiver reason with the logic of the bad news.
For example if a staff is to be laid off. A good opening can be to state the need for the business to reduce staff in order to survive a trying economic climate.
A homeowner sued a plumber for damages resulting from the plumber's allegedly faulty installation of water pipes in her basement, which caused flooding. At trial, the homeowner was prepared to testify that when she first detected the flooding, she turned off the water and called the plumber at his emergency number for help and that the plumber responded, "I'll come by tomorrow and redo the installation for free."
(A) Is the homeowner's testimony regarding the plumber's response admissible?
Answer: The correct answer is YES it is admissible as evidence of the plumber's fault.
Explanation: An Evidence has probative value if it tends to prove an issue. The testimony of the homeowner of the regarding the plumber's response is a party admission. It is admissible as a hearsay exemption under Rule 801(d)(2)(A) which explains that a statement or statemens made by a party in a case cannot be excluded as hearsay when offered against him by the opponent. As such, the statement is a probative evidence.
Yes, the homeowner's testimony regarding the plumber's response could be admissible evidence in a trial as it can be seen as a tacit admission of negligent work by the plumber. However, rules for admissibility of evidence can vary, hence a consultation with a legal expert is advised.
Explanation:The subject matter pertains to the admissibility of evidence in a legal proceeding or trial. Specifically, it pertains to whether the homeowner's testimony regarding the plumber's response is admissible.
In most court rooms, an admission of defective installation can be a potential evidence to be used in court against the defendant, in this case, the plumber. In this situation, the plumber's admission of his fault and the promise to fix it can be seen as a tacit admission of negligent work. This can be interpreted as the acceptance on his part that the installation he did was faulty. Hence, the homeowner's testimony regarding the plumber's response can be considered admissible in a trial, subject to other evidentiary rules.
The rules for admissibility of evidence can vary depending on the jurisdiction and certain other factors, though. Therefore, a consultation with a legal expert is necessary for specifics of the case.
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Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $169,000 Credit sales, $469,000 Selling and administrative expenses, $129,000 Sales returns and allowances, $49,000 Gross profit, $509,000 Accounts receivable, $295,000 Sales discounts, $33,000 Allowance for doubtful accounts credit balance, $3,100 Flyer prepares an aging of accounts receivable and the result shows that 3% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded
Answer:
$5,750
Explanation:
The computation of the balance in the allowance for doubtful accounts after bad debt expense is shown below:
= Account receivable × estimated percentage - credit balance of Allowance for doubtful accounts
= $295,000 × 0.03 - $3,100
= $8,850 - $3,100
= $5,750
By deducting the credit balance from the estimated amount we can find out the balance in the allowance for doubtful accounts
Choose the appropriate stage of the venture life cycle in which the following activities would occur.
Transition from one-person leadership to team management leadership
New-product development
Search for capital Increased competition
Venture assessment Attempts to acquire other firms
Consumer indifference to the entrepreneur's goods or services
Accumulation of resources
Major changes in entrepreneurial strategy
Development of an effective entrepreneurial team
Answer:
Transition from one-person leadership to team management leadership - GrowthNew-product development - Innovation or declineSearch for capital - Start-upIncreased competition - StabilizationVenture assessment - New-Venture DevelopmentAttempts to acquire other firms - Innovation or declineConsumer indifference to the entrepreneur's goods or services - StablizationAccumulation of resources - New-Venture DevelopmentMajor changes in entrepreneurial strategy - GrowthDevelopment of an effective entrepreneurial team - Start-upThe following information has been provided to you by Watts Corporation: Net income $ 175,300 Increase in accounts payable 18,500 Increase in inventory 17,500 Increase in accounts receivable 9,700 Increase in bonds payable 75,000 Amortization of bond premium 5,400 Depreciation expense 21,300 Decrease in income taxes payable 7,300 What is Watts Corporation’s net cash flow from operating activities?
Answer:
$186,000
Explanation:
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Cash flows from operating activities
Net Income $175,300
Add: Non cash Expense Adjustments:
Depreciation expense $21,300
Amortization of bond premium $5,400
$26,700
Change in Working Capital:
Increase in inventory ($17,500)
Increase in accounts receivable ($9,700)
Increase in accounts payable $18,500
Decrease in income taxes payable ($7,300)
($16,000)
Net Operating Cash flow $186,000
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Depreciation and amortization are non cash expenses which was deducted in the calculation of Net income.
Increase in Liability will provide the cash and increase in assets will use the cash.
Increase in Bond Payable is the change in long term liability which is not included in the working capital and it is the part of the cash flow from financing activities.
This line consists of single-machine stations and is almost balanced (i.e. station rates are nearly equal). A manufacturing engineer has estimated the bottleneck rate of the line to be 1,000 fans per 20-hour day and the raw process time to be 50 minutes. The line has averaged 850 fans per 20-hour day, and the cycle time has averaged 2.8 hours. What would you estimate the WIP level to be
Answer:
119 fans
Explanation:
The computation of the estimated WIP is shown below:
= Average fans per hour × average hours
where,
Average fans per hour is
= 850 fans ÷ 20 hours
= 42.5 fans
And, the average hours is 2.8
So, the estimated WIP is
= 42.5 × 2.8
= 119 fans
We assume we have to find out the average estimated WIP level
Garcia Co. owns equipment that cost $81,200, with accumulated depreciation of $43,000. Garcia sells the equipment for cash. Record the sale of the equipment under the following three separate cases assuming Garcia sells the equipment for (1) $50,300 cash, (2) $38,200 cash, and (3) $33,100 cash.
Answer and Explanation:
The journal entries are as follows
1. For sale of equipment at $50,300
Cash Dr $50,300
Accumulated depreciation $43,000
To Equipment $81,200
To Gain on sale of equipment $12,100
(Being the sale of equipment is recorded)
Since the equipment is sold for $50,300 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited plus the balancing figure is transferred to gain on sale of equipment because the sale value is more than the book value
2. For sale of equipment at $38,200
Cash Dr $38,200
Accumulated depreciation $43,000
To Equipment $81,200
(Being the sale of equipment is recorded)
Since the equipment is sold for $38,200 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited
The book value and the sale value is equal so there is no loss or no gain recognized in this case
3. For sale of equipment at $33,100
Cash Dr $33,100
Accumulated depreciation $43,000
Loss on sale of equipment $5,100
To Equipment $81,200
(Being the sale of equipment is recorded)
Since the equipment is sold for $$33,100 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited plus the balancing figure is transferred to loss on sale of equipment because the sale value is less than the book value
Polo Publishers purchased a multi-color offset press with terms of $40,000 to be paid at the date of purchase, and a noninterest-bearing note requiring payment of $30,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
Answer:
$150,876.91
Explanation:
To calculate, the present value of an ordinary annuity formula is used as follows:
PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (1)
Where;
PV = Present value of the payments =?
P = yearly payment = $30,000
r = interest rate = 11% = 0.11
n = number of years = 5
Substitute the values into equation (1) to have:
PV = $30,000 × [{1 - [1 ÷ (1+0.11)]^5} ÷ 0.11] = $110,876.91
Amount to record = $40,000 + $110,876.91 = $150,876.91
Final answer:
To calculate the recording price of the multi-color offset press purchased by Polo Publishers, we add the initial payment to the present value of the annuity payments, discounted using the implicit 11% interest rate.
Explanation:
The valuation of Polo Publishers' multi-color offset press purchase involves recording the acquisition by calculating the present value of the noninterest-bearing note payments at the implicit interest rate of 11%. The purchase includes a cash payment of $40,000 at the time of purchase and a series of five annual payments of $30,000 each. To record the asset, we need to discount these future payments back to their present value using the implicit interest rate of 11%.
Using present value tables or a financial calculator, each $30,000 payment will be multiplied by the present value factor for an annuity at 11% for five years. This sum, plus the initial $40,000 cash payment, will give us the total recording price of the asset. For instance, if the present value factor at 11% for five years is 3.696, the calculation for the note would be $30,000 x 3.696 = $110,880. Adding the initial $40,000 payment gives us a total of $150,880 as the recording price for the asset.
The operations manager at a chemical company that produces insecticide for use in commercial applications is attempting to set a safety stock level for a key ingredient that is used in their most powerful product. She believes that demand during lead time for this ingredient is normally distributed based on past data. In addition, she believes that future use is accurately depicted by these historical demand-duringlead-time data (in gallons): 55, 75, 75, 70, 80, 60, 50, 70, 60, and 85. She estimates the standard deviation of demand during the lead time to be 8.5 gallons.
a. What is the average demand during the lead time for this key ingredient?
b. What is the safety stock they need to provide a 95% service level?
c. What is the order point the company should use?
Answer:
a) Average demand during the lead time = Sum of all the historical demand during lead time / Number of periods
= (55+75+75+70+80+60+50+70+60+85) / 10
= 680 / 10
= 68 gallons
b) Standard deviation of demand during lead time(\sigmadL) = 8.5 gallons
At 95% service level,value of Z = 1.65
Safety stock = Z(\sigmadL) = 1.65(8.5) = 14.03 gallons
c) Reorder point = Average demand during the lead time + Safety stock
= 68 + 14.03
= 82.03 gallons
Present value of an ordinary annuity: Dynamics Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $22,500 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment
Answer:
$75,423.49
Explanation:
Present value is the sum of discounted cash flows.
Present value can be calculated using a financial calculator.
Cash flow each year from year one to five = $22,500
I = 15%
Present value = $75,423.49
To find the PV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
The present value of the investment is approximately $74,789.01.
Explanation:To calculate the present value of the investment, we need to use the formula for the present value of an ordinary annuity. The formula is: PV = CF x (1 - (1 + r)^-n) / r, where PV is the present value, CF is the cash flow per period, r is the discount rate, and n is the number of periods.
In this case, the cash flow is $22,500 per year, the discount rate is 15% (or 0.15), and the number of periods is 5 years. Plugging these values into the formula, we get: PV = $22,500 x (1 - (1 + 0.15)^-5) / 0.15 = $74,789.01 (rounded to two decimal places).
Therefore, the present value of this investment is approximately $74,789.01.
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Suppose that in the last year the variation in the real exchange rate was −5% and that all this variation was due to the imposition of a tariff by the US to the imports of Chinese manufacturing goods. Assume that, absent the tariff, the law of one price held for both goods:_______
Answer:
Country with fallen exchange rate (fall - 5%) , will face domestic Inflation.
Explanation:
Law of One price suggests that goods cost same in two countries, when their prices are converted into common currency based on exchange rate.
International Price of a good = Domestic Price x Exchange Rate
So maintaining 'Law of one price' : Fall in exchange rate is accompanied by Increase in domestic prices (Inflation). And, Increase in exchange rate is accompanied by Decrease in domestic prices (Deflation).
Given : Fall in real exchange rate by 5%. So, corresponding domestic currency prices will inflate.
According to the textbook, it is useful to think of the firm as a(n) _____ composed of a series of distinct activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure. A. functional stream B. momentum machine C. inertia chain D. value chain
Answer:
D. value chain
Explanation:
Value chain comprises of the activities that a firm in an industry performs to deliver a product as goods and services for the market this concept has been developed by the porter. At the form level, the value chain is a business unit that states the product pass through distinct activities in order to gain some value. The primary activities include the inbound operations, marketing, and sales functions of the form. While the supporting includes the infrastructure, technology development, human resource management, and procurement of goods and services.Minder Industries stock has a beta of 1.08. The company just paid a dividend of $.65, and the dividends are expected to grow at 4 percent. The expected return on the market is 10.5 percent, and Treasury bills are yielding 3.4 percent. The most recent stock price for the company is $72. a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations and enter your answer as a percent rounded to
Answer:
a. Under DCF method, the cost of equity is 4.945
b. The cost of equity under SML is 11.07%
Explanation:
a.
The DCF method values the stock based on the present value of the future expected dividends. The price per share for a stock whose dividends are expected to grow at a constant rate is calculated as follows,
P0 = D0 * (1+g) / r - g
We, know the price today, the growth rate in dividends and D0. Plugging in these values in the formula, we calculate r to be,
72 = 0.65 * (1+0.04) / (r- 0.04)
72 * (r-0.04) = 0.676
72r - 2.88 = 0.676
72r = 0.676 + 2.88
r = 3.556 / 72
r = 0.04938 or 4.938% rounded off to 4.94%
b.
The SML approach is used to calculate the required rate of return or cost of equity of a stock based on the stock's beta, the risk free rate and the market risk premium. The formula for r under this method is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate or t bills raterM is the expected return on marketr = 0.034 + 1.08 * (0.105 - 0.034) = 0.11068 or 11.068% rounded off to 11.07%
Yakov lives in San Diego and runs a business that sells boats. In an average year, he receives $704,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $404,000; he also pays wages and utility bills totaling $286,000. He owns his showroom; if he chooses to rent it out, he will receive $3,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Yakov does not operate this boat business, he can work as an accountant and receive an annual salary of $20,000 with no additional monetary costs. No other costs are incurred in running this boat business. Identify each of Yakov's costs in the following table as either an implicit cost or an explicit cost of selling boats. Complete the following table by determining Yakov's accounting and economic profit of his boat business. If Yakov's goal is to maximize his economic profit, he stay in the boat business because the economic he would earn as an accountant would be __________
Answer:
Yakov's explicit costs are the monetary costs that he pays while running his business:
Payment to manufacturer: $404,000
Wages and utility bills: $286,000
Total explicit costs: $690,000
Yakov's implicit costs are his opportunity costs, in other words, the things he gives up in order to run his business:
Rent he would get for his showroom: $3,000
Wage he would get as an accountant: $20,000
Total implicit costs: $23,000
Yakov's accounting profit is equal to revenue minus total explicit costs:
Accounting profit = $704,000 - $690,000
= $14,000
Yakov's economic profit is equal to revenue minus total costs (the sum of implic costs and explicit costs)
Economic profit = $704,000 - $713,000
= ($9,000)
Despite the fact that Yakov is not earning an economic profit selling boats, as an accountant, he would give up on the $704,000 that he is been making from selling boats. For that reason, he should keep the boat selling business.
Yakov's costs can be classified as explicit or implicit. Accounting profit is calculated by subtracting explicit costs from sales revenue, while economic profit considers both explicit and implicit costs. Yakov would have a negative economic profit if he worked as an accountant instead of running his boat business.
Explanation:Yakov's costs can be classified as either explicit costs or implicit costs. Explicit costs are direct monetary expenses that Yakov incurs in running his boat business, such as the wholesale cost of boats, wages, utility bills, and the rental cost of the showroom. On the other hand, implicit costs are opportunity costs associated with forgoing alternative opportunities. In this case, Yakov's implicit cost is the salary he would earn as an accountant if he didn't operate the boat business.
To calculate Yakov's accounting profit, subtract the explicit costs from the sales revenue. Accounting profit = sales revenue - explicit costs. Economic profit, on the other hand, considers both explicit and implicit costs. To calculate economic profit, subtract both the explicit and implicit costs from the sales revenue. Economic profit = sales revenue - explicit costs - implicit costs.
If Yakov's goal is to maximize his economic profit, he should stay in the boat business because the economic profit he would earn as an accountant would be negative (-$10,000 per year).
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Assume that you purchased 140 shares of Misty Company stock for $78 a share, that you received an annual dividend of $1.60 a share, and that you sold your Misty Company stock for $90 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question.)
Answer:
Return (%) = 17.43%
Explanation:
The return on investment is the sum of the dividends earned and capital gains made during the holding period of the investment.
Dividend is the proportion of the profit made by a company which is paid to shareholders.
Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal.
Therefore, we can can compute the return on the investment as follows:
Dividend= ($1.60× 140)= $224
Capital gains= (90-78) × 140= $1680
Total dollar return on Investment = $224+ $1680= $1904
Total return in (%) = Return/ cost of shares × 100
= 1904/ (140 × 78) × 100
= 17.43%
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13 Wrote off account of Dean Sheppard, $6,530. May 15 Received $3,270 as partial payment on the $8,680 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27 Received $6,530 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $4,380 Duane DeRosa 3,270 Teresa Galloway 1,960 Ernie Klatt 2,740 Marty Richey 980 Dec. 31 If necessary, record the year-end adjusting entry for the uncollectible accounts. For those amount boxes in which no entry is required, leave the box blank. If an entry is not required, select "No entry" from the dropdown box(es).
Answer:
The year-end adjusting entries for the uncollectible accounts will be:
April 13:
Debit Allowance for doubtful accounts $6,530
Credit Accounts receivable $6,530
(To record write-off of accounts receivable - Dean Sheppard)
May 15:
Debit Cash $3,270
Credit Accounts receivable $3,270
(To record collection on account - Dan Pyle)
Debit Allowance for doubtful accounts $5,410
Credit Accounts receivable $5,410
(To record write-off of accounts receivable - Dan Pyle)
July 27:
Debit Accounts receivable $6,530
Credit Allowance for doubtful accounts $6,530
(To re-establish accounts receivable from Dean Sheppard)
Debit Cash $6,530
Credit Accounts receivable $6,530
(To record collection on account - Dean Sheppard)
December 31:
Debit Allowance for doubtful accounts $13,330
Credit Accounts receivable $13,330
(To record write-off of accounts receivable - Miscellaneous)
Explanation:
April 13: Shipway Company wrote-off account of Dean Sheppard, this means there would be a reduction in both allowance for doubtful accounts and accounts receivable.The receipt on May 15 of $3,270 reduced the accounts receivable but increased cash. However, the write-off of $5,410 caused a reduction in both the allowance account and accounts receivable.When there was a receipt of $6,530 on July 27, the accounts receivable would be reinstated and then adjusted for the cash receipt.Lastly, the write-off of the uncollectible accounts from miscellaneous customers were added up to arrive at $13,330.