Answer:
$289000
Explanation:
Effective Gross Income (EGI): Effective Gross Income is calculated by deducting the Vacancy and collection (V&C) loss from Gross Potential Income (GPI).
First year gross potential income (PGI) is $340,000
Vacancy and collection (V&C) loss is 15% of gross potential income
Therefore, (V&C) allowance = [$340,000 15%]
= $51,000
Calculate Effective Gross Income (EGI) for the first year of operations:
Item
Amount
Potential gross income (PGI)
$340,000
Less: V&C allowance (at 15% of PGI)
($51,000)
Effective Gross Income ( EGI )
$289,000
Hence the EGI is $289,000
Al owned all of the outstanding stock of ABC Corporation. Al transferred a building, cash, and IBM stock to ABC Corporation. The adjusted basis and the fair market value of the assets transferred to ABC Corporation, and the amount remaining on the mortgage on the building transferred, were as follows. A building was transferred by Al to ABC Corporation that had an adjusted basis to Al of $20,000, a fair market value of $50,000, and a mortgage of $40,000, that was assumed by the corporation, cash in the amount of $10,000 was transferred, and IBM stock with an adjusted basis to Al of $15,000 and a fair market value of $12,000. In exchange for the assets transferred to ABC Corporation, Al received additional stock of ABC Corporation. How much gain did Al recognize as a result of this transaction
Answer: $10,000
Explanation:
I know this question looks like a lot but it isn't. It is simply asking how much gain was made in the cash that was exchanged.
Now we see that the company acquired the building for $50,000 but acquired the mortgage on it of $40,000 and hence paid off the balance of $10,000 to Al.
So the gain was,
Cash in the amount transferred = (fair market value - mortgage)
= $50,000) - $40,000
= $10,000
$10,000 is the gain that Al should recognize as a result of this transaction.
A bond has a par value of $1,000, a time to maturity of 20 years, a coupon rate of 10% with interest paid annually, a current price of $850, and a yield to maturity of 12%. Intuitively and without using calculations, if interest payments are reinvested at 10%, the realized compound yield on this bond must be
Answer:
The answer is:
Lower than 12%
Explanation:
The realized compound yield on this bond must lower than the initial yield of 12%
This lead to what will call reinvestment risk. Reinvestment risk is more likely when interest rates are declining(going down).
When interest rate declines, an investor loses money because the real value of the money or fund will be reduced. And reinvesting the money that was initially at 12 percent interest rate will be lower.
Final answer:
The realized compound yield on a bond, with reinvestment of interest at the coupon rate, will be between the coupon rate and the yield to maturity. Without precise calculations, it's not possible to give an exact number, but the yield will be closer to the coupon rate if the reinvestment rate matches the coupon rate.
Explanation:
The question at hand deals with the concept of bond pricing, yield to maturity (YTM), and investment returns. In the given scenario, a bond with a par value of $1,000, a coupon rate of 10%, and a current price of $850 is considered. Intuitively, if the interest payments are reinvested at the same rate as the coupon rate (which is 10%), the realized compound yield should be closer to the coupon rate than the YTM, since the reinvestment rate is not as high as the YTM (which is 12%).
However, because the YTM is higher than the reinvestment rate, the actual realized compound yield would be somewhere between the coupon and the YTM, but we can't provide a precise value without additional calculations. When it comes to the bonds market value, if the market interest rate is higher than the coupon rate, the bond's price will be below par value as investors would demand a higher return, making the current bond less attractive unless it is sold at a discount.
Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $136,000. The machine's useful life is estimated to be 10 years, or 120,000 units of product, with a $4,000 salvage value. During its second year, the machine produces 9,600 units of product. Determine the machines' second year depreciation under the units-of-production method. (Do not round intermediate calculations.)
Answer:
$10,560
Explanation:
For computing the depreciation expense for the second year first we have to find out the depreciation per unit which is shown below:
= (Original cost - salvage value) ÷ (estimated production units)
= ($136,000 - $4,000) ÷ (120,000 units)
= ($132,000) ÷ (120,000 units)
= $1.1 per unit
Now for the second year, the depreciation expense would be
= Production units in second year × depreciation per unit
= 9,600 units × $1.1
= $10,560
The machine's second-year depreciation under the units-of-production method is $10,560.
To determine the machine's second-year depreciation under the units-of-production method, we need to calculate the depreciation per unit and then multiply it by the number of units produced in the second year. Here's the calculation:
Depreciation per unit = (Cost - Salvage Value) / Total Units of Production
Depreciation per unit = ($136,000 - $4,000) / 120,000 units
Depreciation per unit = $132,000 / 120,000 units
Depreciation per unit = $1.10 per unit
Number of units produced in the second year = 9,600 units
Second-year depreciation = Depreciation per unit * Number of units produced in the second year
Second-year depreciation = $1.10 per unit * 9,600 units
Second-year depreciation = $10,560
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Break-even analysis for a service company
Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 60 million direct subscribers (accounts) that generated revenue of $33,347 million. Costs and expenses for the year were as follows (in millions):
Cost of revenue $14,958
Selling, general, and administrative expenses 7,994
Depreciation and amortization 8,150
Assume that 30% of the cost of revenue and 70% of the selling, general, and administrative expenses are fixed to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint’s break-even number of accounts, using the data and assumptions given?
million accounts
b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?
$ million per account
Answer:
I'm sorry hun! doesnt look like I know this one
Milano Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.50 direct labor-hours. The direct labor rate is $9.80 per direct labor-hour. The production budget calls for producing 6,400 units in October and 6,300 units in November. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months
Answer:
$62,230
Explanation:
The computation of the total combined direct labor cost for the two months is presented below:
Particulars October November
A. Budgeted units to be produced 6,400 units 6,300 units
B. Direct labor hour per unit 0.50 0.50
C. Direct labor rate per hour $9.80 $9.80
D. Direct labor cost for the month (A × B × C)
$31,360 $30,870
Therefore the total combined direct labor cost is
= $31,360 + $30,870
= $62,230
We simply multiplied the number of units produced with the direct labor per unit and the direct labor rate per hour so that the direct labor cost could arrive
Sludge Corporation has two bonds outstanding, each with a face value of $3.00 million. Bond A is a senior bond; bond B is subordinated. Sludge has suffered a severe downturn in demand, and its assets are now worth only $5.00 million. If the company defaults, what payoff can the holders of bond B expect
Answer:
The payoff for holders of Bond B is $2,000,000
Explanation:
The senior bond takes priority over the subordinated bond when it comes redeeming bondholders investment in the business.
The senior bond has a lower risk as it is paid first in the event of liquidation,though attracts a lower rate of return since return and risk are positive related.
The subordinated is ranked lower than the senior debt but may command a higher rate of return because of its high risk.
Assets worth $5,000,000
repayment of senior debt ($3,000,000)
Balance left for subordinated debt $2,000,000
Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $5,000. The division sales for the year were $1,052,000 and the variable costs were $862,000. The fixed costs of the division were $195,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:
Eliminating the mountain bike division will result in a loss of sales revenue, but also savings on variable and some fixed costs. The net impact is a further decrease in operating income by $131,500, making it less advantageous to eliminate the division.
Explanation:To determine the impact on operating income for Soar Incorporated when considering the elimination of its mountain bike division, we need to evaluate the cost savings against the revenue that the division currently generates. The operating loss of the mountain bike division is $5,000, with sales of $1,052,000 and variable costs of $862,000. The fixed costs are $195,000, of which 30% can be eliminated if the division is dropped. Therefore, the savings in fixed costs are 0.30 x $195,000 = $58,500. If the mountain bike division is eliminated, the company would no longer incur its variable costs nor its segment of fixed costs, but it would also lose the division's sales revenue.
The calculation of the operating income impact would be as follows:
Lost revenue from division elimination: $1,052,000Saved variable costs: $862,000Saved fixed costs (30% of $195,000): $58,500The net impact on operating income is thus: $862,000 (saved variable costs) + $58,500 (saved fixed costs) - $1,052,000 (lost revenue) = - $131,500. This implies that eliminating the mountain bike division would decrease operating income by $131,500 compared to the current loss of $5,000, therefore eliminating the division will not be advantageous based on these financials alone.
Convertible Preferred Stock, Convertible Bonds, and EPSFrancis Company has 24,000 shares of common stock outstanding at the beginning of 2016. Francis issued 3,000 additional shares on May 1 and 2,000 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are:Convertible preferred stock: 2,500 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted.Convertible bonds: Bonds with a face value of $250,000 and an interest rate of 5.5% were issued at par in 2015. Each $1,000 bond is convertible into 20 shares of common stock. To date, no bonds have been converted.Francis earned net income of $72,500 during 2016. The income tax rate is 30%.Required:1. Compute the number of shares of common stock that Francis should use in calculating basic earnings per share for 2016.Weighted average shares outstanding: shares2. Calculate basic earnings per share for 2016. If required, round your answer to two decimal places.Basic earnings per share: $3. Calculate diluted earnings per share for 2016 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to two decimal places.Diluted earnings per share: $Incremental earnings per shareBonds:$Preferred:$4a. Assume the same facts as above except that net income included a loss from discontinued operations of $18,000 net of income taxes. Compute basic EPS. You do not have to calculate diluted EPS for this case. If required, round your answer to two decimal places.Basic earning per share: $4b. Show how the basic EPS you calculated should be reported to shareholders. You do not have to calculate diluted EPS.Francis CompanyEPS ComputationsEPS Based on:Income from continuing operations$Loss from discontinued operations$Net income$
Answer:
1. weighted average number of outstanding common share
As at Jan 24,000
New issues :
May 1 3000*8/12 2000
Sep 30 2000*3/12 500
26,500
2. Basic Earnings per share for 2016 = Net income - Preferred dividend / weighted average number of outstanding shares
= ($72,500 - 10,625)/26,500
= $2.33
Preferred stock dividend = 8.5%*2,500 *$50 = $10,625
3. Diluted Earning per share for 2016 =( Net income + after tax income saved )/ weighted average number of outstanding common stock
Dilluted EPS = $82,125/39000 = $2.11
Incremental EPS :
Bond = $9,625/5000 = $1.93
Preferred stock = $10,625/7500 = $1.42
Workings
Earnings
Net Income = $72,500
After tax saved income:
Bond(100-30%)*250,000*5.5% = 9,625
82,125
Number of common stock from conversion
Preferred stock = 2500*3 = 7,500
Bond = ($250,000/$1,000)* 20 = 5,000
weighted average number of share outstanding = 26,500+ 7500+5000
= 39,000
4a. Basi Eraning per share = ( $72,500 + 18,000)/ 26,500
= $3.42
b. Basic EPS based on
Income form continuing operation = $90,500/26,500 = $3.42
Loss from discointinued operation = -$18,000/26,500 = -$0.68
Net Income = $72,500/26500 = $2.74
=
Explanation:
The number of shares of common stock that should be used in calculating basic earnings per share (EPS) for 2016 is 26,500. The basic EPS for 2016 is $2.74, while the diluted EPS, considering convertible preferred stocks and bonds, is $1.92 per share.
Explanation:To answer this question, let's first calculate the weighted average number of outstanding common stocks for 2016. The company began the year with 24,000 shares, then issued 3,000 more on May 1 (that's 8 months of contribution) and another 2,000 on September 30 (3 months of contribution).
The weighted average is therefore: 24,000 + (3,000 * 8/12) + (2,000 * 3/12) = 26,500 shares
Next, we calculate the basic EPS by dividing the net income by the average shares calculated above. The basic EPS is: $72,500 / 26,500 shares = $2.74 per share.
For diluted EPS, both the convertible preferred stocks and the convertible bonds need to be considered. So the potential additional shares are: (2,500 shares * 3) + (250,000 / $1,000 * 20) = 12,500. Therefore, the total shares including dilution would be 26,500 + 12,500 = 39,000 shares.
To calculate diluted EPS, we need to adjust net income by adding back after-tax interest expense on the convertible bonds. The total income will be $72,500 + (250,000 * 5.5% * (1-30%)) = $74,875. Now, the diluted EPS is $74,875 / 39,000 shares = $1.92 per share.
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The law firm of Barnes & Cohen purchased a new $17,600 copier. Copying costs will be shared by the purchasing, accounting, and information technology departments since those are the only departments that will have access to the machine. The company has decided to allocate the copying cost based on the number of copies made by each department. The sales person who sold the copier to the attorneys expects it will generate 1,000,000 copies. The manager of each department has estimated the number of copies that his or her department will make over the life of the copier:
Department CopiesPurchasing 150,000Accounting 450,000Information Technology 200,000How much overhead will be allocated each time a copy is made by the accounting department?A) 2.2 centsB) 3.9 centsC) 1.76 centsD) None of the above
Answer:
A. 2.2 cents
Explanation:
The computation of cost per copy for accounting department is shown below:-
Total copies = Purchase + Accounting + Information technology
= $150,000 + $450,000 + $200,000
= $800,000
Cost for accounting department = Accounting ÷ Total copies × New copier
= $450,000 ÷ $800,000 × $17,600
= $9,900
Now, Cost per copy = Cost for accounting department ÷ Accounting
= $9,900 ÷ $450,000
= 2.2 cents
Final answer:
The overhead allocated each time a copy is made by the accounting department of Barnes & Cohen's new copier is 1.76 cents, calculated based on the total cost of the copier and the total expected number of copies it will produce.
Explanation:
To calculate the overhead allocation for each copy made by the accounting department, we need to first understand the total cost of the copier and the total expected number of copies. The copier costs $17,600 and is expected to generate 1,000,000 copies over its lifespan. The overhead cost per copy can be calculated as the total cost divided by the total expected copies, which is $17,600 / 1,000,000 = $0.0176 or 1.76 cents per copy. Since the accounting department's copies are part of the total copies, the overhead allocated each time a copy is made by the accounting department is also 1.76 cents, matching option C).
Firms experience economies of scaleLOADING... for several reasons. What is one such reason? A firm might experience economies of scale because A. large firms may be required to purchase inputs at higher costs than smaller competitorslarge firms may be required to purchase inputs at higher costs than smaller competitors. B. managers become more specialized comma enabling them to become more productive comma as output expandsmanagers become more specialized, enabling them to become more productive, as output expands. C. managers begin to have difficulty coordinating the operation of the firm. D. as a firm expands comma it may have to borrow money at a higher interest rateas a firm expands, it may have to borrow money at a higher interest rate. E. a firm's technology may make it impossible to increase production without a larger proportional increase input usage.
Answer:
managers become more specialized, enabling them to become more productive
Explanation:
Economies of scale is defined as the benefit a company gains by producing at a larger scale. This can result in increased profit because of lower cost per unit input used, use of technology to increase productivity, borrowing of money at lower interest rate.
When a company increases scale of production managers tend to be more specialised and this increases their effiency and productivity in that aspect. This improves overall productivity in the company
In a macroeconomic context, choose the best definition for the term velocity. The rate at which the aggregate price level increases. The rate at which money circulates through an economy. The speed of capital accumulation. The rate at which GDP increases in a year. The rate at which the Federal Reserve increases or decreases the money supply.
Answer:
The rate at which money circulates through an economy.
Explanation:
In Macroeconomics, the term velocity refers to the speed at which money circulates in an economy, and it is a variable in a fundamental macroeconomic equation, the quantity theory of money equation:
M x V = P x T
Which states that the price of goods and services is equal to the amount of money in an economy, or its money supply (M) multiplied by the Velocity of circulation of money, which is in turn equal to price (P) multiplied by the number of transactions (T).
Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $48,000 and equipment with a cost of $177,000 and accumulated depreciation of $104,000. The partners agree that the equipment is to be valued at $68,500, that $3,600 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $22,000 and merchandise inventory of $44,500. The partners agree that the merchandise inventory is to be valued at $48,000.
Required:
Journalize the entries to record in the partnership accounts (a) Jesse’s investment and (b) Tim’s investment. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Check the explanation
Explanation:
Journal Entries to be recorded in the books of Partnership accounts
a)Jesse's Investment
Account Name Debit($) Credit($)
Accounts Receivable(48,000-3600) 44300
Equipment(Agreed Price) 68,500
Allowance for Doubtful Debts 2500
Jesse,Capital A/c(Balancing Figure) 110300
b.Tim's Investment
Account Name Debit($) Credit($)
Cash 22000
Inventory(At Agreed price) 48000
Tim Capital 70,000
The change in inventory value was created purely by accounting and exchange rate factors, because the subsidiary still has the same inventory and assets in place. However, this change would affect Streep’s consolidated financial statements and ratios. Assuming no other changes occurred, what effect would this have on Streep’s current ratio?
Answer:
It would decrease by $7,504.
Explanation:
The current ratio determines liquidity of a company. The current ratio is calculated by dividing total current assets from total current liabilities. The change in inventory will affect the current ratio of the company. In the consolidated financial statements the value of inventory is decreased due to exchange rate fluctuations. The change in value of inventory will affect the amount reported in the balance sheet of the parent and will ultimately result in reduction of current ratio.
Thomas brothers is expected to pay a$1.00 per share dividend at the end of the year. Dividend growth rate : 9% a year. The required rate of return on the stock is 17%. What is the stock’s current value per share?
Answer:
The correct answer is $12.5.
Explanation:
According to the scenario, the computation of the given data are as follows:
Dividend = $1
Growth rate = 9%
Rate of return = 17%
So, we can calculate the current value of stock by using following formula:
Current value of stock = Dividend ÷ ( Rate of return - Growth rate )
By putting the value, we get
Current value = $1 ÷ ( 17% - 9%)
= $1 ÷ 0.08
= $12.5
Wala Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.00 per unit. The budgeted fixed selling and administrative expense is $30,140 per month, which includes depreciation of $3,410. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 4,100 units are planned to be sold in July.Required:
Prepare the selling and administrative expense budget for July.
Answer:
$43,130
Explanation:
Wala Inc.
Cash disbursements = (Variable selling and administrative cost x Number of direct-labor hours) + (Fixed manufacturing overhead less depreciation)
= (4,100 x $4.00) + ($30,140 - $3,410)
=$16,400+$26,730
=$43,130
Abbott Landscaping purchased a tractor at a cost of $35,000 and sold it three years later for $17,500. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $2,000 residual value. Tractors are included in the Equipment account. 2. Assume the tractor was sold for $10,900 instead of $17,500. Record the sale
Answer:
Cash Dr $10,900
Accumulated depreciation $19,800
Loss on sale of equipment $4,300
To Equipment $35,000
(Being the sale is recorded)
Explanation:
The journal entry is shown below:
Cash Dr $10,900
Accumulated depreciation $19,800
Loss on sale of equipment $4,300
To Equipment $35,000
(Being the sale is recorded)
The computation is shown below:
= ($35,000 - $2,000) ÷ 5 years × 3 years
= $19,800
Since the sale is made so we debited the cash for $10,900 and along with it the accumulated depreciation is also debited plus the purchase value of equipment is credited and the balancing figure is transferred to the loss on sale of equipment
The operations of Knickers Corporation are divided into the Pacers division and the Bulls division. Projections for the next year are as follows: Pacers Bulls Division Division Total Sales revenue $420,000 $252,000 $672,000 Variable expenses 147,000 115,500 262,500 Contribution margin $273,000 $136,500 $409,500 Direct fixed expenses 126,000 105,000 231,000 Segment margin $147,000 $ 31,500 $178,500 Allocated common costs 63,000 47,250 110,250 Total relevant benefit (loss) $ 84,000 $(15,750) $ 68,250 Operating income for Knickers Corporation as a whole if the Bulls division were dropped would be: a.$84,000. b.$99,750. c.$36,750. d.$68,250.
Answer:
c.$36,750
Explanation:
If Bulls Division were dropped, then the total segment margin would be $147,000 and the total common cost would be $110,250, Then:
Operating income = Segment margin - Total cost
= $147,000 - $110,250
= $36,750
Therefore, The Operating income for Knickers Corporation as a whole if the Bulls division were dropped would be $36,750.
To find Knickers Corporation's operating income without the Bulls division, subtract the Bulls' segment margin from the current total operating income and add back any direct fixed expenses that would no longer be incurred. The calculated operating income without the Bulls division is $99,750.
Explanation:In determining the operating income for Knickers Corporation without the Bulls division, we must look at how the elimination of the division will impact the company's finances. Specifically, we should consider only the costs and revenues that will change if the Bulls division is discontinued. The allocated common costs would not be eliminated because these costs are typically corporate overhead and would still be incurred by the company even if the Bulls division was dropped.
The calculation is as follows: Operating income without the Bulls division would be the current total operating income minus the Bulls division's segment margin, but adding back the direct fixed expenses that would be avoided if the division were dropped. Therefore, the operating income without the Bulls division = $178,500 (current total operating income) - $31,500 (Bulls division's segment margin) + $105,000 (Bulls division's direct fixed expenses), resulting in an operating income of $252,000.
Thus, we can conclude that the correct answer would be:
Operating income for Knickers Corporation without the Bulls division = $252,000 - $152,250 (total current segment margin without Bulls' segment margin and adding back Bulls' direct fixed expenses) = $99,750.
What is one course of action available in every decision making process?
a. Respond in a way which will have only positive consequences
b. Respond in a way which will have no negative consequences
Choose to do nothing about the issue
d. None of the above
Please select the best answer from the choices provided
А
Answer:
Answer C
Explanation:
Final answer:
One course of action in every decision-making process is the option to do nothing about the issue. This is known as the default option. Decision-making also involves the analysis of pros and cons and contemplating the likely consequences, including the potential negatives of inaction.
Explanation:
When confronted by a situation and facing a decision-making process, one course of action available is to choose to do nothing about the issue. This is sometimes referred to as the default option or maintaining the status quo. Making a decision often involves analyzing the pros and cons, anticipating the likely consequences of each action, and considering ethical frameworks such as Utilitarianism, which focuses on the outcomes that would maximize overall happiness or minimize suffering.
However, it's important to note that choosing to do nothing can also have consequences, and this option should not be confused with having no negative consequences. According to the European Commission, ignoring uncertainty, which includes the potential consequences of inaction, may lead to suboptimal decision-making.
Joe's Taco Hut can purchase a delivery truck for $20,000 and he estimates it will generate a net income (after taxes, maintenance and operating costs) of $4,000 per year. His other option is to go to work for someone else earning net income of $3,000 per year. He should:
a) purchase the truck if the real interest rate is less than 15%.
b) not purchase the truck if the real interest rate is greater than 1%.
c) purchase the truck if the real interest rate is greater than 5%.
d) purchase the truck if the real interest rate is less than 5%.
Answer:
The correct answer is option (d).
Explanation:
According to the scenario, the given data are as follows:
Truck cost = $20,000
Net income from truck = $4,000
If work somewhere else, Net income = $3,000
If he work some where else he save $20,000.
If the interest rate is 5%, then,
Interest amount = 5% × $20,000 = $1,000
So, it means, if the interest rate is 5%, and he work some where else than his net income = $3,000 + $1,000 = $4,000.
So, If the real interest is less than 5% only than purchasing a truck is the right option.
Hence, purchase the truck if the real interest rate is less than 5% is correct.
Based on the information given, Joe should D. purchase the truck if the real interest rate is less than 5%.
When the interest rate is 5%, the interest amount will be:
= 5% × $20000
= 0.05 × $20000
= $1000
His net income after paying interest will be:
= $4000 - $1000 = $3000
When working for someone else, he'll earn a net income of $3,000 per year.
Therefore, it's better if he purchases the truck if the real interest rate is less than 5%.
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Teena, Isaiahand Bart form a general partnership to sell automobiles Teenawho is responsible for ordering inventory large sport utility vehicles (SUV) great quantities of gasoline. A war breaks out in the Middle East that interrupts the supply of to the United States The for large SUV drops , and cannot inventory Which of following statements is true?
c ) Teena is not liable because the duty of care was not breached.
Explanation:
Even Teena is responsible for ordering inventory for large sport utility vehicles which uses great quantities of gasoline. The war in the Middle East happens unexpectedly and that war interrupts the supply of gasoline (oil) to the United States.,this is the main reason for decreasing the demand of large sport utility vehicles.,
Middle east region is the main and largest suppliers of oil in the world ., Here The War is the main reason for the shortage of oil and creates problem to get inventory like gasoline to united states.,Prediction of sudden wars is not a possible one. So in this case Teena is not liable because the duty of care was not breached.
Holly took a prospective client to dinner, and after agreeing to a business deal, they went to the theater. Holly paid $350 for the meal and separately paid $226 for the theater tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
Answer: $175
Explanation:
Here we can see that the business discussion happened only at dinner.
After Dinner they went for entertainment at the Cinema so that amount is not deductible as a business Expense.
The only amount deductible is the $350 for the meal.
Meals with clients are considered to be 50% deductible so solving for that we have,
= 350 * 0.5
= $175
$175 is amount of the expenditures that Holly can deduct as a business expense.
Mr. and Mrs. Mitchell, the owners of a small secondhand store, attended an auction where they bought a used safe for $50. The safe, part of the Sumstad estate, had a locked compartment inside, a fact the auctioneer mentioned. After they bought the safe, the Mitchells had a locksmith open the interior compartment; it contained $32,000 in cash. The locksmith called the police, who impounded the safe, and a lawsuit ensued between the Mitchells and the Sumstad estate to determine the ownership of the cash. Who should get it, and why?
Answer:
Mr and Mrs Mitchell should get it
Explanation:
The reason is that during the Auctioning of the used safe, legal transfer of ownership have took place. The transfer of ownership which is legal and recognizable at law with some consideration with was the $50 has made the transactions successful. The court will call off the ensuing of Mr and Mrs Mitchell also due to be fact that they were not aware of such prior to their transaction of Aution.
However, the $32,000 can be return to the plaintiff if Mr and Mrs Mitchell wishes to do so.
It is not necessary and enforced by the law to return such money, it is at their own discretion.
Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Principal and Interest Payments for a Treasury Inflation Protected
Security
Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment
0 $1,000.00
1 3% $1,030.00 $51.50 0 $51.50
2 3% $1,060.90 $53.05 0 $53.05
3 1% $1,071.51 $53.58 $1,071.51 $1,125.08
Answer:
Second year :
Nominal rate = 8.15%
Real rate = 5%
Third year :
Nominal rate = 6.00%
Real rate = 4.95%
Explanation:
Nominal return =(Interest + price change) / initial price
Real rate of return = (1 + nominal rate) / (1 + inflation) - 1
Second year:
Nominal return = [53.05 + (1060.90 - 1030)]÷ 1030
(53.05 + 30.90) ÷ 1030 = 0.0815 = 8.15%
Real rate
[(1 + 0.0815) ÷ (1 + 0.03)] - 1
(1.0815 ÷ 1.03) - 1 = 0.05 = 5%
THIRD YEAR:
Nominal return = [53.58 + (1071.51 - 1060.90)]÷ 1060.90
(53.05 + 10.61) ÷ 1060.90 = 0.060 = 6.00%
Real rate
[(1 + 0.060) ÷ (1 + 0.01)] - 1
(1.060 ÷ 1.01) - 1 = 0.0495 = 4.95%
To calculate the real and nominal rates of return on the TIPS bond in the second and third years, divide the total payment in a particular year by the total payment in the previous year and subtract 1, then multiply by 100. The real rate of return is calculated by subtracting the inflation rate from the nominal rate of return.
Explanation:To calculate the real and nominal rates of return on the TIPS bond in the second and third years, we need to know the formula for the rates of return. The nominal rate of return can be calculated by dividing the total payment in a particular year by the total payment in the previous year, subtracting 1, and multiplying by 100. The real rate of return can be calculated by subtracting the inflation rate from the nominal rate of return.
For the second year, the total payment is $53.05 and the total payment in the previous year is $51.50, so the nominal rate of return is (($53.05 / $51.50) - 1) * 100 = 2.99%. Since the inflation rate is 3% for the second year, the real rate of return is 2.99% - 3% = -0.01%
For the third year, the total payment is $1,125.08 and the total payment in the previous year is $53.05, so the nominal rate of return is (($1,125.08 / $53.05) - 1) * 100 = 2,017.42%. Since the inflation rate is 1% for the third year, the real rate of return is 2,017.42% - 1% = 2,016.42%.
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Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill their capital requirements through means of short-term financing or long-term financing. Both methods have their advantages and disadvantages.
The following statement identifies a possible characteristic of short-term financing.
Consider this case:
Short-term loans usually have a lower cost than long-term loans.
Identify whether the preceding statement is true or false.
a. This statement is true and an advantage of short-term financing.
b. This statement is false and a disadvantage of short-term financing.
Answer:
a.true
b.false
Explanation:
The advantage of short-term financing is better seen when a capital project is financed by a non- current liability.Where the period of Investment is longer than the period the financial charge is applied to the firm
Animer Inc. provides the following information.
Corporate advertising costs = $825,000
Division A-
$4,900,000
Division B-
$7,800,000
Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division B?
A.
$518,269
B.
$53,593
C.
$318,307
D.
$ 506,693
Answer:
D . $506, 693.
Explanation:
The proper cost apportioning method to be used is ratio. ratio is an expression of two or more items in mathematical term expressing the proportional relationship between them
Corporate advertising cost - $825,000
Division A sales revenue -$4,900,000
Division B sales revenue - $ 7,800,000
Total revenue $12,700,000
Division Being the higher revenue earner = 7,800,000/12,700,000*825,000
= $506,693
consider an M/M/1 queue where customers arrive at rate 1/hour and the rate of service is 2/hour. At the exit each customer will receive 3 2 i dollars, where i is the number of people that the customer leaves behind in the system (i.e., number of people that are in the system upon departure). Find the long-term expected amount of money that a customer receives.
Answer:
Check the explanation
Explanation:
in solving the question above, we need to first calculate:
∡= 1/hour
∡= 2/hour
Server Utilization(\rho) = 1/2= 0.5
Average Number of people in the system
L= ∡/π-∡
= 1/2-1= 1 person in the system in an hour
Expected money in an hour the customer gets = 32* Number of customers in the system = 32*1= 32
Multiple Choice Question 64 Concord Company had the following department information about physical units and percentage of completion: Physical Units Work in process, May 1 (65%) 60800 Completed and transferred out 181000 Work in process, May 31 (35%) 50000 If all materials are added at the beginning of the production process, what is the total number of equivalent units for materials during May
Answer:
Total Equivalent Units Materials= 231,000
Total Equivalent Units Conversion Costs= 198500
Explanation:
Concord Company
Given
Physical Units
Work in process, May 1 (65%) 60800
Completed and transferred out 181000
Work in process, May 31 (35%) 50000
All materials are added at the beginning of the production process.
Particulars Units % of Completion Equivalent Units
Mat. Conversion Costs Mat. Conversion Costs
W. I. P, May 31 50,000 100 (35%) 50,000 17500
Completed and
transferred out 181000 100 100 181000 181000
Total Equivalent Units 231,000 198500
The equivalent units are calculated by either adding the beginning work in process and units started or by adding Ending Wip and completed and transferred units.
(Ignore income taxes in this problem.) Henscheid Roofing is considering the purchase of a crane that would cost $104,972, would have a useful life of 7 years, and would have no salvage value. The use of the crane would result in labor savings of $23,000 per year. The internal rate of return on the investment in the crane is closest to:
Answer:
IRR is 12%
Explanation:
The internal rate of return on the investment can be computed using the IRR formula in excel:
=IRR(values)
The values are the cash flows for the relevant years arranged as shown below:
Years Cash flows
0 -$104,972
1 $23,000
2 $23,000
3 $23,000
4 $23,000
5 $23,000
6 $23,000
7 $23,000
=irr(values from -$104,972-$23,000 in year 7)
irr=12%
Kindly find attached excel with the computation of IRR as well
The internal rate of return is the rate of return on investment where present value of cash inflows equal the initial investment
Lauren's salary decreases from $44,000 to $30,000 . She decides to reduce the number of outfits she purchases each year from 20 to 19. Use the midpoint method to calculate the income elasticity of demand for new outfits.Round your answer to two decimal places.income elasticity:This good isa normal good.an inferior good.a luxury good.
To calculate the income elasticity of demand using the midpoint method, we need to know the initial and final quantities of the good and the initial and final incomes. In this case, Lauren's initial salary is $44,000, and it decreases to $30,000. The initial quantity of outfits purchased is 20, and it decreases to 19. The income elasticity of demand for new outfits is -0.0076, indicating that outfits are an inferior good.
Explanation:To calculate the income elasticity of demand using the midpoint method, we need to know the initial and final quantities of the good and the initial and final incomes. In this case, Lauren's initial salary is $44,000, and it decreases to $30,000. The initial quantity of outfits purchased is 20, and it decreases to 19.
Using the midpoint method formula:
Income Elasticity = (Q2 - Q1) / [(Q1 + Q2)/2] / (I2 - I1) / [(I1 + I2)/2]
Substituting the values, we get:
Income Elasticity = (19 - 20) / [(20 + 19)/2] / ($30,000 - $44,000) / [($44,000 + $30,000)/2]
Simplifying the expression, we have:
Income Elasticity = -0.053 / $7,000 = -0.0076
Since the income elasticity is negative, it means that outfits are an inferior good for Lauren. The absolute value of the income elasticity is less than 1, indicating that outfits are a basic necessity rather than a luxury.
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Karim Corp. requires a minimum $8,800 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,200 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. July August September Cash receipts $ 24,800 $ 32,800 $ 40,800 Cash payments 29,200 30,800 32,800 Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)
Answer and Explanation:
The preparation of cash budget is given below:-
Cash Budget
Particulars July August September
Beginning cash balance $9,200 $8,800 $8,800
Cash receipt from customer $24,800 $32,800 $40,800
Total cash available $34,000 $41,600 $49,600
Cash payment (29,200) (30,800) ($32,800)
Interest on loan 1% (40) (20)
Preliminary cash balance $4,800 $10,760 $16,780
Loan repay $4,000 (1,960) (2,040)
Ending cash balance $8,800 $8,800 $14,740
Loan balance
At the beginning 0 $4,000 $2,040
Additional loan $4,000 (1,960) (2,040)
Loan balance at the end $4000 $2040 0
A cash budget for Karim Corp. for July, August, and September identifies the need for loans in July and August to maintain the company's minimum cash balance, followed by repayment of all loans in September due to an excess in cash.
Explanation:To create a cash budget for Karim Corp. for July, August, and September, we need to consider the company's cash balance, cash receipts, and cash payments, including any loans taken or repaid.
For July, the company begins with $9,200. After adding the cash receipts of $24,800 and subtracting the cash payments of $29,200, we end up with a balance of $4,800. However, this falls below the minimum cash balance required of $8,800, so a loan of $4,000 is taken out, costing an additional $40 in interest. So, the ending cash balance for July is $4,840.
Now, August. We start with the ending balance from July, $4,840. After adding cash receipts of $32,800 and subtracting cash payments of $30,800, the balance is $6,840. The company is still below the minimum balance, so it borrows $1,960. Including interest, the ending balance for August is $8,816.
For September, the beginning balance is that of August's ending balance, $8,816. Adding cash receipts of $40,800 and subtracting cash payments of $32,800, we get a cash balance of $16,816. The company is above the minimum balance, so it pays back all the loan, with the final balance for September at $16,816.
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