Answer: E.53
Explanation:
From the above information, the formula for due date is given below.
DUE DATE = Expected Completion Time + (Z * Standard Deviation)
A confidence level refers to the percentage of all possible samples that can be expected to contain the true population parameter. It is computed according to a random sample from the population and most times always associated with a certain confidence level that is a probability, usually presented as a percentage. The 90% says that 90% will include the true mean but 10% won't.
A Z-score is referred to as a numerical measurement that is made use of in statistics of a value's relationship to the mean (that is average) of a group of values, measured in terms of standard deviations away from the mean.
Expected time = 40
Confidence interval = 90 = Z VALUE of 1.282
Standard Deviation= 10
DUE DATE = 40 + (1.282 * 10) = 53days
= 40+ 12.82
=52.82
Approximately 53
Therefore,the time in days is 53 days.
Answer:
E- 53
Explanation:
FORMULA:
DUE DATE = EXPECTED COMPLETION TIME + (Z * STDEV)
Expected time = 40
CONFIDENCE INTERVAL = 90 = Z VALUE OF 1.282
STANDARD DEVIATION = 10
DUE DATE = 40 + (1.282 * 10) = 53
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct? a. The economy experienced inflation between 2004 and 2005 and between 2005 and 2006. b. The inflation rate was positive between 2004 and 2005, and it was negative between 2005 and 2006. c. The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005. d. All of the above are correct.
Answer:
Option (a) is correct.
Explanation:
Given that,
Price index in the year 2004 = 110
Price index in the year 2005 = 120
Price index in the year 2006 = 125
Inflation rate refers to the rate at which the prices of goods increases from one year to the other.
Consumer price index indicates the inflation in a particular year.
Inflation between 2004 and 2005:
= (Price index in the year 2005 - Price index in the year 2004) ÷ Price index in the year 2004
= (120 - 110) ÷ 110
= 10 ÷ 110
= 0.0909 or 9.09%
Inflation between 2005 and 2006:
= (Price index in the year 2006 - Price index in the year 2005) ÷ Price index in the year 2005
= (125 - 120) ÷ 120
= 5 ÷ 120
= 0.0417 or 4.17%
Therefore, the inflation between 2004 and 2005 is higher than the inflation between 2005 and 2006.
Final answer:
The economy indeed experienced inflation between 2004 and 2005 and between 2005 and 2006, making the correct answer option a.
Explanation:
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. The correct statement regarding this situation is: The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
Inflation denotes the increase in the price level over a period. Comparing the price indexes provided: from 110 in 2004 to 120 in 2005 indicates an increase in the price level, thus inflation. Similarly, the increase from 120 in 2005 to 125 in 2006 also signifies inflation. Therefore, option a is correct.
It is incorrect to assert that inflation was negative between any of the years mentioned, as the price index continuously rose, indicating positive inflation rates throughout the period. Moreover, the statement about the inflation rate being higher in one period compared to the other is not supported without calculating the specific yearly rates of inflation.
Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-market (LCM) basis in valuing inventories:
Product Cost Market
A $110,000 $120,000
B 80,000 76,000
C 155,000 162,000
If Alfalfa applies the LCM basis, the value of the inventory reported on the balance sheet would be:
a. $341,000.
b. $345,000.
c. $358,000.
d. $362,000.
Answer:
a. $341,000.
Explanation:
As we know that the inventory should be valued at cost or market value whichever is lower and the same is shown below:
Product Cost Market Lower value of cost or market
A $110,000 $120,000 $110,000
B $80,000 $76,000 $76,000
C $155,000 $162,000 $155,000
Value of the inventory $341,000
Use the following information from separate companies a through d: Net Income (Loss) Interest Expense Income Taxes a. $ 136,000 $ 55,760 $ 34,000 b. 130,600 50,934 47,016 c. 115,600 45,084 48,552 d. 139,100 6,955 66,768 Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?
Answer:
Company a. 4.05
Company b. 4.49
Company c. 4.64
Company d. 30.60
From the above, Company d. has the strongest ability to pay interest expense as it comes due with 30 times.
Explanation:
Times interest earned = Income before interest and tax ÷ Interest expenses
Company a. Times interest earned = ($136,000 + $55,760 + $34,000) ÷ $55,760 = 4.05 times
Company b. Times interest earned = ($130,600 + $50,934 + $47,016) ÷ $50,934 = 4.49 times
Company c. Times interest earned = ($115,600 + $45,084 + $48,552) ÷ $45,084 = 4.64 times
Company d. Times interest earned = ($139,100 + $6,955 + $66,768) ÷ $6,955 = 30.60 times
From the above, Company d. has the strongest ability to pay interest expense as it comes due with 30 times.
A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below. Complete the schedule of the company’s total and unit costs. (Round the per unit variable cost and fixed cost to 2 decimal places.)
Answer:
The below is missing from the question:
Units Produced & Sold
30,000 40,000 50,000
Total Costs
Variable Costs $153700 ? ?
Fixed Costs 370000 ? ?
Total Costs $523700 ? ?
Cost per Unit
Variable Cost ? ? ?
Fixed Cost ? ? ?
Total Unit per Cost ? ? ?
2.
Assume that the company produces and sells 43,000 units during the year at a selling price of $8.97 per unit. Prepare a contribution format income statement for the year.
Harris Company
Contribution Format Income Statement
Sales ?
Variable Expenses ?
Contribution Margin ?
Fixed Expense ?
Net Operating Income ?
This question is better answered using excel file.hence find attached.
Explanation:
Points to note:
Variable cost per unit $5.12
Hence total variable cost at each level of output, is that level of output multiplied by $5.12
Total fixed costs remain the same over the different level of output,however the higher the level of output the lower the fixed cost per unit as the same total fixed cost is absorbed by more output
Big Cure and Little Cure are both pharmaceutical companies. Big Cure presently has a potential "blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval. If approved, Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure. Little Cure has ten separate, less important drugs before the FDA waiting for approval. If approved, each of Little Cure's drugs would produce $50 million in net income. The probability of the FDA approving a drug is 50%. What is the expected payoff for Little Cure's ten drugs? (2 points)
A) $250 million
B) $50 million
C) $1 billion
D) $0
Answer:
Correct option is A.
$250 million
Explanation:
Probability of approval for each drug=50% and if approved, net income from each for Little Cure=$50 million.
So, expected payoff from ten drugs of Little Cure=50*0.5*10=$250 million
Each business day, on average, a company writes checks totaling $12,900 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $23,900. The cash from the payments is available to the firm after two days.
Calculate the company’s disbursement float, collection float, and net float
Answer:
A.Disbursement float: $51,600
Collection float:–$47,800
Net float $27,700
B.New collection float -23,900
New net float $27,700
Explanation:
A. The disbursement float can be defined as the average monthly checks written times the average number of days for the checks to clear.
Disbursement float = 4($12,900)
Disbursement float = $51,600
The collection float can be seen as the average monthly checks received times the average number of days for the checks to clear.
Collection float = 2(–$23,900)
Collection float = –$47,800
The net float can be defined as the disbursement float plus the collection float, so:
Net float = $51,600 – $47,800
Net float = $3,800
B. New collection float will be:
Collection float = 1(–$23,900)
Collection float = –$23,900
And the new net float will be:
Net float = $51,600 – 23,900
Net float = $27,700
A company is analyzing the replacement of a color copier. The old machine was purchased 3 years ago for $30,000; it falls into the MACRS 5-year class; and it has 2 years of remaining life and an $8,000 salvage value 2 years from now. The current market value of the old machine is $17,000. The new machine has a price of $40,000, plus an additional $2,000 for installation and modification and an additional $2,000 for transportation. The new machine falls into the MACRS 5-year class, has a 2-year economic life, and can be salvaged for $23,000. The new machine will require a $7,000 increase in inventory, and accounts payable is expected to increase by $4,000. The new machine is expected to increase revenue by $8,000 per year and decrease costs by $3,000 per year. The firm has an 11 percent cost of capital and a marginal tax rate of 25 percent. The MACRS 5-year class uses the following percentages: 20%, 32%, 19%, 12%, 11%, and 6% (in that order). (Round all CFs to the nearest dollar.) What is the total net cash outflow at Year 0
Answer:
E. Outflow of $32,075
Explanation:
At Year 0, the cash outflow is calculated as under:Year 1 Outflow = Investment in the New asset (Step1) + Net working capital required (Step2) - Sale Proceeds from the old machine (Step3) - Tax On the sale of old Machinery (Step4)
Year 1 Outflow = $44,000 + $3,000 - $17,000 + $2,075 = $32,075
Step 1: Investment in the New assetNow here:
Investment in the New Asset = New machine cost + Transportation of asset + Installation of asset
By putting values, we have:
Investment in the New Asset = 40000 + 2000 + 2000 = $44,000
Step 2: Net working capital requiredNow
Net working capital required = $7,000 Investment in Inventory - $4,000 Increase in payables = $3,000
Step 3: Sale Proceeds from the old machineFair Value of the Old Machine is $17000 which means this would be the sales proceeds on the old machinery's sales.
Step 4: Tax On the sale of old MachineryOld machine purchased 3 year ago at = $30,000
Depreciation schedule and book value of old machine are as follows:
Year 1 2 3 4 5 6
MACRS Rate 20% 32% 19% 12% 11% 6%
Depreciation 6000 9600 5700 3600 3300 1800
Acc. depre. 6000 15600 21300 24900 28200 30000
Book value 24000 14400 8700 5100 1800 0
Now
From the table we can see that the Book value of the asset at the end of the year 3 is $8,700.
Tax on the gain of the asset = ($17,000 - 8,700) * 25% = $2,075
Suppose an inventor is interested in the proportion of local consumers who would be interested in purchasing her new product. If she samples local residents at random and tests hypotheses regarding p, the population proportion, what should she do to reduce her risk of making a Type II error?
a. Increase the number of local consumers she will sample
b. Decrease the number of local consumers she will sample
c. Make sure her sample of local consumers is exactly 10
d. Decrease the significance level
Answer:
The answer is option A) To reduce her risk of making a Type II error, she should Increase the number of local consumers she will sample
Explanation:
A type II error is sometimes called a beta error because it confirms an idea that should have been rejected, claiming the two observances are the same, even though they are different. A type II error is essentially a false positive.
A type II error can be reduced by making more stringent criteria for rejecting a null hypothesis such as:
Increasing the the sample size used in the Test: this is a strategy used to increase the power of the test and reduce the error to a considerable amount.Increasing the significance level: choosing a higher level of significance is important for double checking and which increases accuracy.The correct option to reduce the risk of making a Type II error is a. Increase the number of local consumers she will sample.
To understand why increasing the sample size reduces the risk of a Type II error, one must consider the factors that influence the probability of committing a Type II error (denoted by β). These factors include:
1. The sample size (n): A larger sample size provides more information about the population, which reduces the variability of the sample statistic. This, in turn, increases the power of the test (1 - β), thereby reducing the probability of a Type II error.
2. The significance level (α): A lower significance level means that the test requires stronger evidence to reject the null hypothesis, which can increase the probability of a Type II error. Conversely, increasing the significance level decreases the probability of a Type II error but at the cost of increasing the probability of a Type I error.
3. The effect size (the difference between the null hypothesis and the alternative hypothesis): A larger effect size makes it easier to detect a difference, thus reducing the probability of a Type II error.
4. The variability in the population (Iƒ): Less variability in the population makes it easier to detect a difference, thus reducing the probability of a Type II error.
Given these factors, the inventor can control the sample size and the significance level. Decreasing the significance level (option d) would actually increase the risk of a Type II error, which is the opposite of what the inventor wants. Making sure her sample size is exactly 10 (option c) does not necessarily reduce the risk of a Type II error; it could be too small to detect a meaningful difference. Decreasing the number of local consumers she will sample (option b) would definitely increase the risk of a Type II error.
Therefore, the best course of action for the inventor to reduce the risk of making a Type II error is to increase the number of local consumers she samples (option a). This will increase the power of the test, making it more likely to detect a true effect if one exists.
Light Me Up Lamps has variable expenses of 40% of sales and monthly fixed expenses of $240,000. The monthly target operating income is $60,000.
What is the monthly margin of safety as a percentage of target sales in dollars?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Light Me Up Lamps has variable expenses of 40% of sales and monthly fixed expenses of $240,000. The monthly target operating income is $60,000.
We weren't provided with the selling price and unitary variable cost. Neither with the actual sales. But, I will provide the formulas and a small example to guide an answer.
Using the percentage of variable cost per sale, we can calculate the contribution margin ratio. The contribution margin ratio is the percentage of sales available to cover for fixed costs.
Contribution margin ratio= (1 -0.4=/1= 0.6
Now, we can calculate the break-even point in dollars with the desired profit:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= (240,000 + 60,000) / 0.6
Break-even point (dollars)= $500,000
Let's suppose actual sales of $750,000.
Margin of safety= (current sales level - break-even point)
Margin of safety= (750,000 - 500,000)
Margin of safety= $250,000
Margin of safety ratio= (current sales level - break-even point)/current sales level
Margin of safety ratio= 250,000/750,000= 0.33= 33%
The monthly margin of safety as a percentage of target sales in dollars for Light Me Up Lamps is 20%. This calculation involves finding the contribution margin ratio, the break-even sales, the target sales and subsequently the margin of safety.
Explanation:To calculate the monthly margin of safety as a percentage of target sales in dollars, we must first find the contribution margin ratio and the break-even sales.
First, since it's given that the company's variable expenses are 40% of sales, its contribution margin ratio becomes 60% (because 100% - 40% = 60%).
Secondly, the company's break-even sales are calculated by dividing its fixed expenses by the contribution margin ratio. Hence, $240,000 / 0.6 = $400,000.
Thirdly, we need to determine the company's target sales which is given by the equation: Fixed costs + target operating income divided by contribution margin ratio. This results in $240,000 + $60,000) / 0.6 = $500,000.
Finally, the margin of safety is calculated by subtracting break-even sales from target sales, then dividing the result by target sales and multiplying by 100% to turn it into a percentage. Hence, ($500,000 - $400,000) / $500,000 * 100% = 20%.
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The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises, A. the demand curve shifts leftward. B. there is a movement up along the demand curve to a smaller quantity demanded. C. there is a movement down along the demand curve to a larger quantity demanded. D. the demand curve shifts rightward.
Answer:
B. there is a movement up along the demand curve to a smaller quantity demanded.
Explanation:
Based on the laws of demand, if the price of the good rises the quantity demanded of that good would be reduced keeping other things constant and if the price of the good declines the quantity demanded of that good would be raised keeping other things constant.
It represents the inverse relation between the price and the quantity demanded of the good
Therefore the quantity demanded get decreased with the price
The law of demand states that when the price of a good rises, the quantity demanded decreases. Option B is the correct answer as it describes the movement along the demand curve to a smaller quantity demanded.
Explanation:The law of demand states that when the price of a good rises, the quantity demanded decreases. This means that as the price increases, people are less willing and able to purchase the good.
Option B is the correct answer. When the price of a good rises, there is a movement up along the demand curve to a smaller quantity demanded. This is because the higher price reduces the quantity that consumers are willing to buy.
For example, if the price of a pizza increases, people might choose to buy less pizza or substitute it with a different food item.
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Avril Company makes collections on sales according to the following schedule: 30% in the month of sale 66% in the month following sale 4% in the second month following sale The following sales have been are expected: Expected Sales January$130,000 February$150,000 March$140,000 Budgeted cash collections in March should be budgeted to be:
Answer:
Budgeted cash collections for March are $146200
Explanation:
Following the terms of the collection schedule, the budgeted cash collections for the month of March is expected to be as follows,
4% amount of January sales that is 0.04 * 130000 = $5200
66% amount of February's sales that is 0.66 * 150000 = $99000
30% amount of March's sales that is 0.3 * 140000 = $42000
Thus, the total budgeted cash collection for March will be,
Budgeted cash collection-March = 5200 + 99000 + 42000
Budgeted cash collections- March = 146200
Rose, who is obese, files a product liability suit against Burger Meal Corporation (BMC), alleging that BMC’s food is unhealthy because, as Rose knows, it contains high levels of cholesterol and saturated fat. BMC can most successfully assert the defense of preemption. assumption of risk. comparative negligence. knowledgeable user.
A. preemption.
B. assumption of risk.
C. comparative negligence.
D. knowledgeable user.
Answer:d
Explanation:
Sabor Inc. is a medical testing laboratory that performs several tests and analyses for hospitals in the area. Four of the tests that it performs require the use of a specialized machine that can supply 14,000 hours per year. Information on the four lab tests is as follows: Test A Test B Test C Test D Charging rate $65 $51 $48 $32 Variable cost $25 $18 $13 $8 Machine hours 3 2 1 0.5 What is the contribution margin per hour of machine time for Test A
Answer:
$13.33
Explanation:
Test A
Charging rate $65
Variable cost ($25)
Contribution margin $40
Contribution margin per machine hour $40/3=$13.33
The contribution margin per hour of machine time for Test A is $13.33.
The contribution margin per hour of machine time for Test A is calculated by subtracting the variable cost per unit from the charging rate per unit and then dividing by the machine hours required for Test A.
First, calculate the contribution margin for Test A:
Contribution Margin for Test A = Charging Rate for Test A - Variable Cost for Test A
Contribution Margin for Test A = $65 - $25
Contribution Margin for Test A = $40
Now, calculate the contribution margin per machine hour for Test A:
Contribution Margin per Machine Hour for Test A = Contribution Margin for Test A / Machine Hours for Test A
Contribution Margin per Machine Hour for Test A = $40 / 3 hours
Contribution Margin per Machine Hour for Test A = $13.33 per hour
Frankenstein Enterprises received two notes from customers for sales that Frankenstein made in 2013. The notes included:Note A: Dated 5/31/2013, principal of $ 132,000and interest due 3/31/2014.Note B: Dated 7/1/2013, principal of $220,000 and interest at 8% annually, due on 4/1/2014.Frankenstein had accrued interest receivable from these notes of $16,000 in its 12/31/2013 balance sheet. What is the annual interest rate on Note A?a) 8.00%b) 9.35%c) 9.95%d) 9.65%
Answer:
Option B ⇒ The annual interest rate on Note A is 9.35% .
Explanation:
Note B has an accrued interest for six months during 2013: $220,000 x .08 x 6/12 = $8,800.
The remainder of the accrued interest, $7,200 ($16,000 - $8,800) was from Note A, which was held for seven months in 2013.
Therefore, we have the following: $132,000 x annual interest rate x 7/12 = $7,200.
Thus, the annual interest rate on Note A would be ($7,200/132,000) x 12/7 = 9.35%.
Option B ⇒ 9.35% is the correct answer.
Predict weekly gross revenue (in dollars) for a week when $3,600 is spent on television advertising and $1,800 is spent on newspaper advertising. (Round your answer to the nearest cent.)
Answer:
Weekly gross revenue = $10,669
Explanation:
Regression equation for Showtime Movie Theatre is:
Y = 2.29018X1 + 1.30099X2 + 83.23009
Where
Y= weekly gross revenue
X1= television advertising
X2= newspaper advertising
Put X1 = 3600 and X2= 1800 in avove equation.
Y= (2.29018×3600) +(1.30099×1800) +83.23009
=8,244.648 + 2,341.782 + 83.23009
= 10,669
VelSad is contemplating the acquisition of Po, Inc. The values of the two companies as separate entities are $32 million and $16 million, respectively. VelSad estimates that by combining the two companies, it will reduce marketing and administrative costs by $560,000 per year in perpetuity. VelSad can either pay $20 million cash for Po or offer Po a 44% holding in VelSad. The opportunity cost of capital is 10%.What is the cost of the stock offer?
Answer:
7.58m
Explanation:
The VelSad is considering to acquire Po, Inc. by offer of 20 million cash or either 44% holding. The cost of acquisition refers to all cost incurred by a company to acquire another company. The benefit VelSad can get after acquiring Po, Inc is that it can save marketing and administrative cost by $560,000 every year. The cost of stock offer is 7.58 million. This is calculated by taking 44% of VelSad value and then discounting it at cost of capital which is 10%.
Alliance Company budgets production of 35,000 units in January and 39,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $3.50 per pound. Each month’s ending raw materials inventory should equal 30% of the following month’s budgeted materials. The January 1 inventory for this material is 42,000 pounds. What is the budgeted materials cost for January?
Answer:
$506,800
Explanation:
The calculation of budgeted materials cost is shown below:-
For computing the budgeted materials cost first we need to find out the total materials for production and materials to be purchased which is here below:-
Total materials for production = Budgeted production × Pounds of raw material per unit
= 35,000 × 4
= 140,000
Materials to be purchased = Total materials for production + Ending raw materials inventory - January 1 inventory
= 140,000 + (39,000 × 4 × 30%) - 42,000
= 140,000 + 46,800 - 42,000
= 186,800 - 42,000
= 144,800
Budgeted materials cost for January = Materials to be purchased × Cost per pound
= 144,800 × $3.50
= $506,800
Answer:
$506,800
Explanation:
Material cost is the cost of raw material used in the production for the period.
First we need to calculate the purchases in the January.
January
+Production (35,000 units x 4 pounds) 140,000 pounds
-Beginning Inventory 42,000 pound
+Ending Inventory 46,800 pounds
(39,000 x 30% x 4 pounds)
Material used 144,800 pounds
Cost of Material = Material used x Rate of material
Cost of Material = 144,800 x $3.50 per pound
Cost of Material = $506,800
Milo's Fashions recently paid a $2 annual dividend. The company is projecting that its dividends will grow by 20 percent next year, 12 percent annually for the two years after that, and then at 6 percent annually thereafter. Based on this information, how much should Milo's Fashions common stock sell for today if her required return is 10.5%
Answer:
Today the stock should sell for $59.16
Explanation:
The three stage growth model of Dividend discount model approach will be used to calculate the price of this stock today. The DDM bases the value of the stock today based on the present value of the expected future dividends that the stock will pay. The price per share today of this stock under the DDM model will be,
P0 = 2 * (1+0.2) / (1+0.105) + 2 * (1+0.2) * (1+0.12) / (1+0.105)^2 +
2*(1+0.2)*(1+0.12)^2 / (1+0.105)^3 +
[(2 * (1+0.2) * (1+0.12)^2 * (1+0.06) / (0.105-0.06)) / (1+0.105)^3 ]
P0 = $59.16
The following information relates to Kew Company's Vale Division for last year: sales .................................. $500,000 variable costs ......................... 300,000 fixed costs ............................ 50,000 return on investment ................... 25% minimum required rate of return ........ 6% Calculate the residual income reported by Vale Division last year.
Answer:
$114,000
Explanation:
The computation of the residual income is shown below:
As we know that
Residual Income = Net operating Income - Average Operating assets × Required rate of return
where,
Net Operating Income is
= Sales Revenue - Variable Costs - Fixed Costs
= $500,000 - $300,000 - $50,000
= $150,000
And,
Average operating Assets is
= Net Operating Income ÷ Return on Investment
= $150,000 ÷ 0.25
= $600,000
So, the residual income is
= $150,000 - $600,000 × 6%
= $150,000 - $36,000
= $114,000
Bankone issued $200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The exchange rate of U.S. dollars for Brazilian reals at the time of the transaction was $0.305/Br 1. (LG 9-5) Is Bankone exposed to an appreciation or depreciation of the U.S. dollar relative to the Brazilian real? What will be the percentage cost to Bankone on this CD if the dollar depreciates relative to the Brazilian real such that the exchange rate of U.S. dollars for Brazilian reals is $0.325/Br 1 at the end of the year? page 308 What will be the percentage cost to Bankone on this CD if the dollar appreciates relative to the Brazilian real such that the exchange rate of U.S. dollars for Brazilian reals is $0.285/Br 1 at the end of the year?
Answer:
A. The depreciation are been issued in reals and the interest as well as the principle are both being paid in reals. Although $ is actually the problem because that is where all the risk lies due to the fact that It will take more dollars to pay back compared to the real
B)
1.Brazilian = $69,225,000
2.Percentage cost -65.4%
C1. Brazilian $60,705,000
2)Percentage cost - 69.6%.
Explanation:
A. The depreciation are been issued in reals and the interest as well as the principle are both being paid in reals. Although $ is actually the problem because that is where all the risk lies due to the fact that It will take more dollars to pay back compared to the real.
B)
1.Brazilian 200M x (1.065) x 0.325
= $69,225,000
2.Percentage cost = ($69,225,000 - $200,000,000) / 200m
=-$130,775,000/$200,000,000
= -65.4%
C
1. Brazilian 200M x (1.065) x 0.285
= $60,705,000
2)Percentage cost = ($60,705,000 - $200,000,000) / $200M
=-$139,295,000/$200,000,000
= -69.6%.
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $21,500, whereas the gas-powered truck will cost $17,960. The cost of capital that applies to both investments is 13%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,860 per year and those for the gas-powered truck will be $4,600 per year. Annual net cash flows include depreciation expenses.
Calculate the NPV andIRR for each type of truck, and decide which to recommend.
Answer:
The fact that electric-powered forklift truck has a higher NPV and IRR means that it is more profitable and more value-adding, hence, the electric-powered forklift truck is highly recommended
Explanation:
The net present value of a project is the present value of its future cash flows discounted at the required rate of return of 13%.
The present value of each future cash flow can be determined as the future value multiplied by the discount factor
PV=FV*1/(1+r)^N
which can be rewritten thus:
PV=FV/(1+r)^N
FV=future cash flow
r=discount rate=13%
N=the year of cash flow(1 for year 1 cash flow,2 for year 2 cash flow and so on)
gas-powered forklift truck:
NPV=$4,600/(1+13%)^1+$4,600/(1+13%)^2+$4,600/(1+13%)^3+$4,600/(1+13%)^4+$4,600/(1+13%)^5+$4,600/(1+13%)^6-$17,960
NPV=$428.73
electric-powered forklift truck:
NPV=$6,860/(1+13%)^1+$6,860/(1+13%)^2+$6,860/(1+13%)^3+$6,860/(1+13%)^4+$6,860/(1+13%)^5+$6,860/(1+13%)^6-$21,500
NPV=$5,923.19
The internal rate of return is the discount rate at which the the present value of future cash flows is the same as the initial investment outlay, in essence, at IRR,NPV is zero
The IRR can be determined using excel IRR as shown below:
=IRR(values)
the values are the cash flows beginning with initial investment(negative cash flow) followed by future cash flows in subsequent years
Find attached
The NPV for the electric-powered truck is $12,285.04 with an IRR of 23.55%. The NPV for the gas-powered truck is $3,692.33 with an IRR of 18.20%. Therefore, the electric-powered truck is recommended.
To solve this problem, we need to calculate both the Net Present Value (NPV) and the Internal Rate of Return (IRR) for the electric-powered and gas-powered trucks.
Electric-Powered Truck:
Initial Cost: $21,500Annual Net Cash Flow: $6,860Life: 6 yearsCost of Capital: 13%Using the NPV formula:
NPV = Sum of (Cash Flow / (1 + discount rate)^year) - Initial Investment
NPV (Electric) = [tex]6,860 / (1 + 0.13)^1 + 6,860 / (1 + 0.13)^2 + 6,860 / (1 + 0.13)^3 + 6,860 / (1 + 0.13)^4 + 6,860 / (1 + 0.13)^5 + 6,860 / (1 + 0.13)^6 - 21,500[/tex]
= $12,285.04
Using a financial calculator, the IRR can be found as:
IRR (Electric) = 23.55%
Gas-Powered Truck:
Initial Cost: $17,960Annual Net Cash Flow: $4,600Life: 6 yearsCost of Capital: 13%Using the NPV formula:
NPV (Gas) = [tex]4,600 / (1 + 0.13)^1 + 4,600 / (1 + 0.13)^2 + 4,600 / (1 + 0.13)^3 + 4,600 / (1 + 0.13)^4 + 4,600 / (1 + 0.13)^5 + 4,600 / (1 + 0.13)^6 - 17,960[/tex]
= $3,692.33
Using a financial calculator, the IRR can be found as:
IRR (Gas) = 18.20%
Based on the NPV and IRR calculations, the electric-powered truck is recommended because it has a higher NPV and IRR.
Gall Manufacturing sells a product for $50 per unit. The fixed costs are $840,000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $200,000 and variable costs will be 50% of the selling price. The new break-even point in units is:
Answer:
The new break even point in units is 41600 units.
Explanation:
The break even point in units is the number of units that provide enough revenue to meet total costs and there is no profit and no loss as the total revenue equals total cost. The break even point in units is calculated as follows,
Break even in units = Fixed costs / Contribution margin per unit
Where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
The, new total fixed costs will be,
New fixed cost = 840000 + 200000 = $1040000
The new contribution margin per unit = 50 - (50 * 0.5) = $25 per unit
The new break even in units = 1040000 / 25 = 41600 units
Larry Nelson holds 1,000 shares of General Electric (GE) common stock. As a stockholder, he has the right to be involved in the election of its directors, who are responsible for managing the company and achieving the company's objectives
True or False: Larry will receive dividends after preferred stockholders.
a. False
b.True
Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $48.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $38.40 per share. Larry worries about the value of his investment. .
If the company issues new shares and Larry makes no ____ Larry's current investment in the company is additional purchase, Larry's investment will be worth
This scenario is an example of ____. Larry could be protected if the firm's corporate charter includes a provision
If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become _____.
Answer:
b.True
Preferred Stock as their name suggest comes first in the dividend distribution.
If it makes no purchase of the new shares then, their investment will decrease to $76,800 as the market value no longer is $48 per share
This is an example of dilution that is, the decrease in both, business participation and also, value of the investment as new shares are issued the older investor will take a hit in their participation if they don't purchase additional shares in the new issuances
Explanation:
2,000 shares x $38.40 = 76,800
Accrued Vacation Pay A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation pay is $106,800. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay.
Answer:
On Jan 31
Vacation pay expense Dr $8,900
To vacation payable $8,900
(Being the vacation expense is recorded)
Explanation:
The journal entry is as follows
On Jan 31
Vacation pay expense Dr $8,900
To vacation payable $8,900
(Being the vacation expense is recorded)
The computation is shown below:
= Estimated amount of the current year's vacation pay ÷ total number of months in a year
= $106,800 ÷ 12 months
= $8,900
For recording this transaction we debited the vacation expense as it increased the expenses while at the same time it also increased the liabilities so the vacation payable is credited
You are given the following probability distribution of returns for stock IN A probability of 2 that the return will be 12 a probability of 35 that the return will be 18 a probability of 3 that the return will be 10 and a probability of 15 that the return will be 10 What is the expected return of this stock
Correct Question
You are given the following probability distribution of returns for stock IN A probability of 0.2 that the return will be 12 a probability of 0.35 that the return will be 18 a probability of 0.3 that the return will be 10 and a probability of 0.15 that the return will be 10 What is the expected return of this stock
Answer:
expected return of this stock = 13.2%
Explanation:
The expected rate of return is the weighted average of all the possible returns associated with an investment decision. The returns are weighted using the probability associated with their outcomes.
Expected return = WaRa + Wb+Rb + Wn+Rn
W- weight of the outcome, R - return of the outcome
=(0.2× 12%) + (0.35× 18%) + (0.30×10%) + (0.15 × 10%)
= 13.2%
Maria Lorenzi owns an ice cream stand that she operates during the summer months in West Yellowstone, Montana. She is unsure how to price her ice cream cones and has experimented with two prices in successive weeks during the busy August season. The number of people who entered the store was roughly the same each week. During the first week, she priced the cones at $4.80 and 2,185 cones were sold. During the second week, she priced the cones at $5.30 and 1,750 cones were sold. The variable cost of a cone is $1.00 and consists solely of the costs of the ice cream and the cone itself. The fixed expenses of the ice cream stand are $2,030 per week. Required: 1. What profit did Maria earn during the first week when her price was $4.80
Answer:
The correct answer is $6,283 .
Explanation:
As per the data given in the question,
Sales = 2,185 × $4.8
= $10,488
Variable cost = 2,185 × $1.00
= $2,185
Contribution = Sales - Variable cost
= $10,488 - $2,185
= $8,303
Fixed cost = $2,030 per week
We can calculate the profit by using following formula:
Profit = Contribution - Fixed cost
By putting the value in the formula, we get
= $8,303 - $2,020
= $6,283
The master budget at Western Company last period called for sales of 235,000 units at $9.40 each. The costs were estimated to be $3.00 variable per unit and $270,000 fixed. During the period, actual production and actual sales were 240,000 units. The selling price was $9.50 per unit. Variable costs were $3.75 per unit. Actual fixed costs were $270,000. Required: Prepare a flexible budget for Western.
Answer:
Profit under flexible budget = $1,266,000 (please budget below)
Explanation:
Flexible budget is that which is that which recognizes the cost behavior and is used for control purpose. It is prepared based on the actual level of activity achieved using the assumptions of the static budget.
So we will prepare a flexible budget for Western Company for 240,000 units using the assumption of the static budget.
Flexible Budget
$
Sales Revenue (240,000× $9.40) = 2,256,000
Variable cost (240,000× $3.00) = ( 720,000 )
Contribution 1,536,000
Fixed cost (270,000)
Profit 1,266,000
A flexible budget adjusts with the volume of activity. For Western Company, based on 240,000 units sold at $9.50 each, factoring in costs, the operating income is $1,110,000.
Explanation:To prepare a flexible budget for Western, we need to remember that a flexible budget adjusts with the volume of activity (sales units in this case). Our budget will be based on the actual level of activity, which is 240,000 units.
Here's the step-by-step process:
First, multiply the actual units (240,000) by the actual selling price per unit ($9.50). This gives us actual revenue of $2,280,000.Second, multiply the actual units by the actual variable cost per unit ($3.75). This results in total variable costs of $900,000.The actual fixed costs need no adjusting; they remain at $270,000.Now, subtract both total variable costs and fixed costs from actual revenue to compute the flexible budget operating income. $2,280,000 - $900,000 - $270,000 equals $1,110,000.So based on these calculations, the flexible budget for Western Company is as follows: Total revenue of $2,280,000, total costs of $1,170,000 (including variable and fixed), and a resulting operating income of $1,110,000.
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At the end of the current year, the accounts receivable account has a debit balance of $1,095,000 and sales for the year total $12,420,000. The allowance account before adjustment has a debit balance of $14,800. Bad debt expense is estimated at 3/4 of 1% of sales. The allowance account before adjustment has a debit balance of $14,800. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,400. The allowance account before adjustment has a credit balance of $5,300. Bad debt expense is estimated at 1/2 of 1% of sales. The allowance account before adjustment has a credit balance of $5,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $44,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.
Answer and Explanation:
The computation is shown below:
a) Bad debt expense is
= $12,420,000 × 3 ÷ 4 of 1%
= $93,150
b) Bad debt expense is
= Estimated doubtful accounts + debit balance of allowance account
= $47,400 + $14,800
= $62,200
c) Bad debt expense is
= $12,420,000 × 1 ÷ 2 of 1%
= $62,100
d) Bad debt expense is
= Estimated doubtful accounts - credit balance of allowance account
= $44,000 - $5,300
= $38,700
We simply applied the above formulas
Horn Company is considering the purchase of a new machine for $108,000. The machine would replace an old piece of equipment that costs $41,830 per year to operate. The new machine would cost $25,720 per year to operate. The old machine currently in use can be sold for $9,500 if the new machine is purchased. The new machine would have a useful life of ten years with a $6,000 salvage value. Calculate the accounting rate of return on the machine that Horn Company is considering buying. Enter your answer as a number without the % symbol. For example, if your answer is 10%, simply enter 10 as your answer.
Answer:
Accounting rate of return is 6%
Explanation:
The new machine would cost $108,000 minus the trade-in value of the old machine i.e $108,000-$9500=$98,500.00
The annual profit =Savings of operational costs on the old machine-costs of operating the new machine-depreciation
Costs of operating the old machine is $41,830
Costs of operating the new machine is $25,720
annual depreciation on the new machine=($108,000-$6,000)/10=$10,200
annual profit=$41,830-$25,720-$10,200=$5,910
Accounting rate of return=annual profit/average operating assets
accounting rate of return=$5,910/$98,500=6%
Daniel believes that a chemical company is responsible for contaminating some land that he owns. He files suit against the chemical company. Rather than have the case go to court, the chemical company’s attorney suggests arbitration to resolve the legal dispute. Explain how arbitration would work in this case.
Answer:
Arbitration can work instead of the suit filed by Daniel against a chemical company is responsible for contaminating some land that he owns if they give him a worthy compensation.
Explanation:
Arbitration means to settle out of court.
This method is used in resolving disputes outside of court to avoid certain legal documents that might haunt the company in future.
During Arbitration, parties refer their disputes to an arbitrator who reviews the evidence, listens to the parties, and then makes a decision that is favorable to both parties. More like a win-win.
Arbitration clauses can be mandatory or voluntary, and the arbitrator's decision may be binding or nonbinding but for arbitration to work, the parties must arrive at a mutual compromise.