You know that the return of Sandhill Cyclicals common shares is 1.6 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 4.10 percent and market risk premium is 5.71 percent, what is Sandhill Cyclicals’ cost of common equity capital?
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Answer
The answer and procedures of the exercise are attached in the image below.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Related Questions
Concord Corporation has 5400 shares of 6%, $50 par value, cumulative preferred stock and 108000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $14000 dividend in 2019. In 2020, $70000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?
Answers
Answer:
$18,400
Explanation:
For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:
= Number of shares × par value per share × dividend rate
= 5,400 shares × $50 × 6%
= $16,200
In 2019, the dividend was paid of $14,000
Remaining dividend left is $16,200 - $14,000 = $2,200
So, the total preference dividend in 2019 would be
= Yearly dividend + remaining dividend left
= $16,200 + $2,200
= $18,400
Which of the following statements is CORRECT? a. The cash budget and the capital budget are developed separately, and although they are both important to the firm, one does not affect the other. b. Since depreciation is a non-cash charge, it neither appears on nor has any effect on the cash budget. c. Shorter-term cash budgets, in general, are used primarily for planning purposes, while longer-term budgets are used for actual cash control. d. The typical cash budget reflects interest paid on loans as well as income from the investment of surplus cash. These numbers, as well as other items on the cash budget, are expected values; hence, actual results might vary from the budgeted amounts. e. The target cash balance should be set such that it need not be adjusted for seasonal patterns and unanticipated fluctuations in receipts, although it should be changed to reflect long-term changes in the firm's operations.
Answers
Answer:
e- The typical cash budget reflects interest paid on loans as well as income from the investment of surplus cash. These numbers, as well as other items on the cash budget, are expected values; hence, actual results might vary from the budgeted amounts.
Explanation:
Cash budgets are the budgets that are prepared to forecast the cashflows of the company. The amounts appearing in the Cash budget statement are the budgeted amounts measured by the company.
However, the interest to be paid on loans in the next year is a pre-determined value i.e. the rates of interest on loan are fixed and the return on investment is also fixed. Hence, these both values can be determined exactly. The other amounts appearing on the budget statement are forecasted amounts and the actual results may vary from the budgeted amounts.
You own 400 shares of Western Feed Mills stock valued at $51.20 per share. What is the dividend yield if your annual dividend income is $352? A. 1.68 percent B. 1.72 percent C. 1.83 percent D. 1.13 percent E. 1.21 percent
Answers
Answer:
option (B) 1.72%
Explanation:
Data provided in the question:
Number of shares owned = 400
Per share market value = $51.20
Market Value of stocks purchased = 400 × $51.20 = $20,480
Dividend income = $352
Now,
Dividend Yield = [ Dividend ÷ Market Value of share ] × 100%
= [ $352 ÷ $20,480 ] × 100%
= 0.0172 × 100%
= 1.72%
Hence,
The correct answer is option (B) 1.72%
Waterway Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2017. The insurance company which administers the pension plan provided the following selected information for the years 2017, 2018, and 2019.
Col1 Plan Assets (Fair Value $51000 $87300 $183130
Col2 Accumulated benefit obligation 45100 163400 290800
Col3 Projected benefit obligation 61000 203910 323900
Co4 lNet (gain) loss (for purposes of corridor calculation) 0 78700 81518
Col5 Employer’s funding contribution (made at end of year) 51000 61000 105800
There were no balances as of January 1, 2017, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company’s pension obligation was 13% in 2017, 11% in 2018, and 8% in 2019. The service cost component of net periodic pension expense amounted to the following: 2017, $61,000; 2018, $87,300; and 2019, $114,700. The average remaining service life per employee is 12 years. No benefits were paid in 2017, $29,800 of benefits were paid in 2018, and $18,700 of benefits were paid in 2019 (all benefits paid at end of year).Calculate the amount of net periodic pension expense that the company would recognize in 2017, 2018, and 2019.Pension Expense for 2017?Pension Expense for 2018?Pension Expense for 2019?Prepare the journal entries to record net periodic pension expense, employer’s funding contribution, and related pension amounts for the years 2017, 2018, and 2019.
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Answer
The answer and procedures of the exercise are attached in the following 4 images.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in the following 4 images.
On January 1, 2017, Seven Wonders Inc. signed a five-year noncancelable lease with Moss Company. The lease calls for five payments of $277,409.44 to be made at the end of each year. The leased asset has a fair value of $1,200,000 on January 1, 2017. Seven Wonders cannot renew the lease, there is no bargain purchase option, and ownership of the leased asset reverts to Moss at the lease end. The leased asset has an expected useful life of six years, and Seven Wonders uses straight-line depreciation for financial reporting purposes. Its incremental borrowing rate is 12%. Moss’s implicit rate of return on the lease is unknown. Seven Wonders uses a calendar year for financial reporting purposes. Both companies use ASC 840 to account for leases.
Answers
The question relates to Business, encompassing accounting and financial reporting under ASC 840, with a focus on leases, asset depreciation, and financial decision-making.
Explanation:The subject of this question is Business, specifically focused on accounting and financial reporting as per ASC 840. The question involves scenarios that include leasing agreements, purchase of assets, interest expenses, principal payments, and depreciation expenses related to business operations and financial decisions. These scenarios require an understanding of concepts such as present value calculations, depreciation methods, and lease accounting.
An example given within the context of the question is that of Treehouse, which purchased office furniture for $20,000 with a useful life of 10 years and a salvage value of $2,500. To calculate the annual depreciation expense using the straight-line method, we would subtract the salvage value from the cost of the furniture and divide by its useful life, resulting in ($20,000 \'96 $2,500) / 10 = $1,750 per year.
In finance and accounting, accurate recording and reporting are crucial for decision-making. Depreciation affects net income and therefore can impact financial decisions, such as whether Ms. Stein should purchase a tractor, based on projected returns and an interest rate of 7%.
On January 1, Year 3, Boxwood, Inc. issues 1,000 shares of $1 par value common stock for $30 per share. Later that year, the company issues 1,000 shares of $10 par value preferred stock for $80 per share. The company’s balance sheet as of December 31, Year 3, will show total paid-in capital of:
Answers
Answer:
total paid-in capital = $110,000
Explanation:
When investors or shareholders pay a lump sum money to a company to get the stock of the that company, it is called paid-in capital.
Here, the par value = $1, therefore, additional capital per stock = $30 - $1 = $29
For preferred stock,
Par value = $10, and additional paid-in capital per stock = $(80 - 10) = $70.
See images to get the explanation:
Suppose that demand for a product is Q = 1200 − 4P and supply is Q = −240 + 2P. Furthermore, suppose that the marginal external damage of this product is $12 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.
Answers
Answer: 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
Explanation:
Q=1200 - 4P and Q=-240 + 2P
In a free market quantity demand =quantity supplied
1200 -4P = -240 +2P
P =240
Sub P
Q* = 240
Socially optimal quantity is
Marginal social benefit (MSC)= marginal social cost(MSC), including external damage =MEC
MPC= marginal private cost =inverse of supply function
MPC = (1/2)*Q + 120
MEC=12
MSC =(MPC +MEC) = (1/2)Q +120 +12
MSC= MPB where MPB is marginal private benefit = inverse of demand functn
MPB = 300 -(1/4)Q
(1/2)Q + 132 =300 - (1/4)Q
Q° = 224
Difference btw Q* & Q° = 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
The original market equilibrium occurs at a quantity of 440 and a price of $15. However, when considering an external damage cost of $12 per unit, the supply curve shifts upwards leading to a new equilibrium at a price of $30 and quantity of 410. Thus, the market would produce 30 more units than is socially optimal, creating a deadweight loss.
Explanation:In this case, the demand for a product is represented by Q = 1200 − 4P and the supply by Q = −240 + 2P. The original equilibrium (before considering the external social costs of production) is found where the private supply curve intersects the demand curve. In this example, the original equilibrium occurs at a price of $15 and a quantity of 440.
When the marginal external damage of $12 per unit (possibly due to environmental impacts) is considered, the costs of production go up. Consequently, the supply curve shifts upwards, resulting in a new equilibrium at a higher price ($30) but lower quantity (410). The difference in quantities (440-410 = 30 units) represents the additional units that the free market would produce compared to the socially optimal level.
To calculate the deadweight loss associated with the externality, you would look at the discrepancy between the total costs and benefits to society and the private costs and benefits. Given the information provided, a specific calculation cannot be made, but the deadweight loss would be represented by the triangular area on a supply and demand graph that encompasses the quantity difference between the socially optimal level and the free market level.
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Gilberto lives in San Francisco and runs a business that sells guitars. In an average year, he receives $842,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this guitar business, he can work as an accountant, receive an annual salary of $48,000 with no additional monetary costs, and rent out his showroom at the $38,000 per year rate. No other costs are incurred in running this guitar business.
Answers
Answer:
Gilberto is NOT earning a normal profit
Explanation:
Salary Gilberto could earn = implicit.
Wholesale cost = explicit
wages and bills = explicit
rental income = implicit
Explicit cost = 45.200 + 301.000 = 753.000
Implicit cost = 38.000 + 48.000 = 86.000
revenue = 842.000
accounting profit = 842.000 -753.000 = 89.000
Economic profit = 89.000 - 86.000 = 3.000
Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 190,000 $ 0 Working capital investment required $ 0 $ 190,000 Annual cash inflows $ 28,000 $ 48,000 Salvage value of equipment in six years $ 8,900 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 15%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value of Project A. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.)
2. Compute the net present value of Project B. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.)
3. Which investment alternative (if either) would you recommend that the company accept?
Answers
Answer:
Please see attachment
Explanation:
Please see attachment
The Net Present Value (NPV) of each project is calculated using the given cash inflows, discount rates, and initial investments. The project with the higher NPV should be selected as it will generate the highest return for the company.
Explanation:The Net Present Value (NPV) is a formula that calculates the present value of cash inflows and outflows of an investment using a given discount rate. To calculate the NPV for Projects A and B, we multiply respective cash inflows by the discount factor and subtract the initial investment.
For Project A, the equation will be NPV = [($28,000*PVIFA 15%, 6)] - $190,000 + ($8,900*PVIF 15%,6). Using the provided tables for the Present Value Interest Factor for Annuity (PVIFA) and the Present Value Interest Factor (PVIF), we calculate the NPV.
For Project B, the formula is NPV = [($48,000*PVIFA 15%, 6)] - $190,000 + ($190,000*PVIF 15%,6). We populate the variables in the same way as Project A.
To decide which project to choose, Perit Industries should favor the one with the highest NPV, as this represents the project that promises the most wealth for the company. If both NPVs are negative, it means the projects will not provide an adequate return, and the funds should be allocated elsewhere.
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Consider the rate of return of stocks ABC and XYZ.Year rABC rXYZ1 20% 30%2 12 123 14 184 3 05 1 −10a. Calculate the arithmetic average return on these stocks over the sample period.b. Which stock has greater dispersion around the mean return?c. Calculate the geometric average returns of each stock. What do you conclude?d. If you were equally likely to earn a return of 20%, 12%, 14%, 3%, or 1% in each year (these are the five annual returns for stock ABC), what would be your expected rate of return?e. What if the five possible outcomes were those of stock XYZ?f. Given your answers to parts (d) and (e), which measure of average return, arithmetic or geometric, appears more useful for predicting future performance?
Answers
Answer:
Please see attachment
Explanation:
Please see attachment
PackMan Corporation has semiannual bonds outstanding with nine years to maturity and the bonds are currently priced at $754.08. If the bonds have a coupon rate of 7.25 percent, what is the after-tax cost of debt for PackMan if its marginal tax rate is 30 percent.
Answers
Answer:
8.23%
Explanation:
Since this bond pays semi-annual coupons, it means that the payments occur every 6 months; making it 2 periods per year. Using a Financial calculator; enter the following inputs. If using TI BA II plus, key in the number first, then the function.
Total duration; N = 9*2 = 18
Face Value ; FV = 1,000 (use 1,000 if the value is not given)
Present value or price ; PV = -754.08
Semiannual Coupon Payment; PMT = Semiannual coupon rate *Face value
Semiannual Coupon Payment; PMT = (7.25%/2) *1000 = 36.25
The Yield to maturity;YTM is the annual pretax I/Y which is the Pretax cost of debt in this case
therefore, CPT I/Y = 5.875% (note: semi-annual rate)
Next, convert the semiannual rate to annual rate i.e the YTM;
= 5.875%*2
Pretax cost of debt (YTM) = 11.75%
Aftertax cost of debt = Pretax cost of debt (1-tax)
= 0.1175% (1-0.30)
= 0.08225 or 8.23%
Complete the following sentences.
1. establish goals for the company’s sales and production personnel.
2. The is a set of interrelated budgets that constitutes a plan of action for a specified time period.
3. reduces the risk of having unrealistic budgets.
4. include the cash budget and the budgeted balance sheet.
5. The budget is formed within the framework of a .
6. contain considerably less detail than budgets.
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Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
The following sentences are completed.
helps align their efforts and focus toward achieving specific targets and objectives.The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period. The risk of having unrealistic budgets can be decreased through regular reviews of actual performance against the budget and ongoing monitoring.The financial budgets typically include the cash budget, which outlines the expected cash inflows and outflows, and the budgeted balance sheet.The budget is created under the constraints of a budgeting period, which is typically a predetermined time frame like a fiscal year or a particular quarter. Budgets that are extended into future periods and are continuously updated are called rolling budgets or continuous budgets.1. Establishing goals for the company's sales and production personnel helps align their efforts and focus toward achieving specific targets and objectives.
2. The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period. It typically includes individual budgets for sales, production, operations, marketing, and other relevant departments, all consolidated into a comprehensive plan.
3. The risk of having unrealistic budgets can be decreased through regular reviews of actual performance against the budget and ongoing monitoring. In order to keep the budget realistic and in line with shifting conditions, this enables the required changes and corrective actions to be performed.
4. The financial budgets typically include the cash budget, which outlines the expected cash inflows and outflows, and the budgeted balance sheet, which projects the financial position of the company at a specific point in time based on the budgeted activities and transactions.
5. The budget is created under the constraints of a budgeting period, which is typically a predetermined time frame like a fiscal year or a particular quarter. Planning, carrying out, and assessing the budgeted actions and outcomes have a time frame thanks to the budgeting period.
6. Budgets that are extended into future periods and are continuously updated are called rolling budgets or continuous budgets. The amount of information in these budgets is often far smaller than annual budgets, and they are regularly amended and altered to reflect shifting conditions, providing for greater adaptability and responsiveness in financial planning and control.
Thus, the mentioned above sentences are complete.
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Each unit of A is composed of one unit of B, two units of C, and one unit of D. C is composed of two units of D and three units of E. Items A, C, D, and E have on-hand inventories of 20, 10, 20, and 15 units, respectively. Item B has a scheduled receipt of 10 units in Period 1, and C has a scheduled receipt of 50 units in Period 1. Lot-for-lot (L4L) is used for Items A and B. Item C requires a minimum lot size of 50 units. D and E are required to be purchased in multiples of 95 and 55, respectively. Lead times are one period for Items A, B, and C, and two periods for Items D and E. The gross requirements for A are 30 in Period 2, 30 in Period 5, and 40 in Period 8. Note: To simplify data handling to include the receipt of orders that have actually been placed in previous periods, the following five-level scheme can be used. (A number of different techniques are used in practice, but the important issue is to keep track of what is on hand, what is expected to arrive, what is needed, and what size orders should be placed.) Find the planned order releases for all items. (Leave no cells blank - be certain to enter "0" wherever required.) Period 1 2 3 4 5 6 7 8 Item A OH = 20 LT = 1 SS = 0 Q = L4L Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item B OH = 0 LT = 1 SS = 0 Q = L4L Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item C OH = 10 LT = 1 SS = 0 Q = 50 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item D OH = 20 LT = 2 SS = 0 Q = 95 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases Item E OH = 15 LT = 2 SS = 0 Q = 55 Gross requirements Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases
Answers
This question is about the computation of planned order releases for an inventory system using Materials Requirements Planning (MRP). Starting from Item A, A's order releases are calculated based on the given gross requirements and the on-hand inventory. Items B, C, D, and E's order releases are accordingly calculated considering their compositions in A or C and existing inventories.
Explanation:This question involves the principles of inventory management, particularly in the areas of Materials Requirements Planning (MRP) and lot sizing methods. To solve this, we need to start off with Item A, as its gross requirements are given, and follow the bill of materials structure to determine the requirements, receipts, available balance, and planned order releases of the other items.
For Item A, the gross requirements given for period 2, 5, 8 are 30, 30, 40 respectively. Given that the on-hand inventory for A is 20, and considering the lead time of 1 period, the planned order release in period 1 would be 10 (30 requirements in period 2 - 20 on-hand inventory). Proceeding in a similar manner, the planned order releases for periods 4 and 7 would be 30 and 40 respectively.
Next, for Item B, since each unit of A requires one unit of B, the gross requirements for B would be the same as A's planned order releases i.e., 10 in period 1, 30 in period 4, and 40 in period 7.
For Item C, considering the composition of A and the scheduled receipt of 50 units in period 1, the planned order release of C would be the difference between the multiplied A's order releases and the on-hand inventory and the already scheduled receipts.
For Items D and E, considering their compositions in A and C and following a similar pattern of reasoning, their planned order releases could be calculated.
This is a simplified explanation and the real calculations could be more complex, involving consideration for safety stock and other factors.
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The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If order size was 1,000 kilograms of resin, what would be the length of an order cycle?
A. 0.05 daysB. 4 daysC. 16 daysD. 20 daysE. 50 days
Answers
Answer:
D. 20 days
Explanation:
Daily usage rate: 50 kg each day
Order size: 1,000 kg
lead time: 4 days
Since the question just wants to know the length of an order cycle, all of the monetary information can be disregarded.
The company must maintain a stock, at the time of order, big enough to supply production during the lead time. Minimum stock should be:
[tex]Min = 50\frac{kg}{day} * 4\ days\\Min = 200 \ kg[/tex]
Therefore, the company must reorder when stock reaches 200 kg. The length of the order cycle is the number of days for the company to reach minimum stock added to the order lead time:
[tex]C = \frac{1000 - 200}{50} +4\ days\\C= 20\ days[/tex]
One year ago, Norbert Wagner purchased 30 shares of DUX Inc., stock for $20 per share. During the last year, DUX Inc., experienced strong earnings and paid dividends of $0.50 per share. Norbert just sold the stock for $19 per share.Ignoring taxes, Norbert’s return from investing in DUX Inc., was"A. 7.50%B. -2.50%C. -5.00%D. 7.89%
Answers
Answer:
option (B) -2.50%
Explanation:
Data provided in the question:
Number is shares purchased = 30
Purchasing price = $20 per share
Dividend paid = $0.50 per share
Selling price of the shares = $19 per share
Now,
Total investment = 30 × $20
= $600
Total sales value = 30 × $19
= $570
Total dividend Received = 30 × $0.50
= $15
Thus,
Rate of Return from Investment
= [ { Sales - Investment + Dividend Received} ÷ Purchase Price] × 100%
= [ { $570 - $600 + $15 } ÷ $600] × 100 %
= [ -$15 ÷ $600 ] × 100 %
= - 2.50%
Hence,
The correct answer is option (B) -2.50%
Net present value:
1. is the best method of analyzing mutually exclusive projects.2. is less useful than the internal rate of return when comparing different sized projects.3. is the easiest method of evaluation for non-financial managers to use.4. is less useful than the profitability index when comparing mutually exclusive projects.5. is very similar in its methodology to the average accounting return.
Answers
Answer:
Explanation:
(A) Correct√
NPV is the best method of analyzing mutually exclusive projects. Mutually exclusive projects are projects from which one - the most valuable/profitable - is chosen. Net present value takes into consideration, the difference between the present and the future value of a current investment plan or project. For projects which can rightly replace one another (mutually exclusive projects), the best method of analyzing their value/return/profitability is the Net Present Value.
(B)
NPV is not less useful than IRR when comparing different sized projects
(C) Correct√
Net Present Value can be said to be the easiest method of project evaluation for nonfinancial managers because it is easy to understand and to calculate. The net present cash inflow and cash outflow, the discount rate, and the time are computed in the net present value.
(D)
NPV is not less useful than Profitability Index when comparing mutually exclusive projects
(E)
Net Present Value is similar but not VERY similar in methodology, to the AAR. The similarity is not deep because Average Accounting Return does not take into consideration, the time value of money!
The average annual return over the period 1926-2009 for small stocks is 21.2%, and the standard
deviation of returns is 21.2%. Based on these numbers, what is a 95% confidence interval for
2010 returns?
A) -10.6%, 31.8%
B) 0%, 42.4%
C) -21.2%, 42.4%
D) -21.2%, 63.6%
Answers
Answer:
The 95% confidence interval is between -21.2% and 63.6% (option D).
Explanation:
Hi, the empirical rule dictates that 95% of the data is found within +/- 2 standard deviations from the mean, therefore our interval can be found doing the following calculations.
[tex]L.Limit=Mean-2(S.D)[/tex]
That is:
[tex]L.Limit=0.212-2(0.212)=-0.212[/tex]
Now, the higher limit.
[tex]H.Limit=Mean+2(S.D)[/tex]
[tex]H.Limit=0.212+2*(0.212)=0.636[/tex]
So, the answer is D) -21.2%, 63.6%
Best of luck.
Consider the following information for a fictional firm. The change in profit is MR – MC, the difference one more unit sold makes to total profit.
Quantity produced (units)Change in profit (dollars)
3,000$3
5,000$0
7,000$1
The firm should produce_________ units, because that is the quantity of production where ___________ which maximizes _______________.
Complete the sentence with the following words:
a. 5000
b. 7000
c. 3000
d. market share
e. profit
f. marginal revenue is greater than marginal cost
g. marginal revenue is less than marginal cost
h. marginal revenue is equal marginal cost
Answers
Answer:
a. 5000
Explanation:
Please see attachment .
The firm should produce 5000 units to maximize profit, as this is the point where marginal revenue equals marginal cost.
The firm should produce 5000 units, because that is the quantity of production where marginal revenue is equal to marginal cost which maximizes profit. From the given information, producing 3000 units yields a change in profit of 3 (MR > MC), indicating potential for increased production. At 5000 units, the change in profit is 0, indicating MR = MC, the optimal point for maximizing profit. Producing 7000 units results in a change in profit of 1 (MR < MC), suggesting that production beyond 5000 units reduces profit per additional unit. Therefore, producing 5000 units is the optimal strategy for profit maximization, as it achieves the balance between marginal cost and marginal revenue.
A situation in which the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect material misstatements on a timely basis is referred to as a:A. Control deficiency.B. Material weakness.C. Reportable condition.D. Significant deficiency.
Answers
Answer: (A) Control deficiency
Explanation:
The control deficiency is the type of situation in which the operation and the designing of the control are not allowing the management and an employee performing the various type of assigned function.
The control deficiency process occur when the person are involving with the authority in the transaction cycle.
This situation is usually occur in an larger type of an organization. The deficiency may be on the financial report that control internally.
Therefore, Option (A) is correct.
Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a ___________ that gives the management group control over his shares.
A. Poison Pill,
B. Proxy,
C. Preemptive Right,
D. Corporate Charter
Answers
Answer:
The correct answer is B that is Proxy.
Explanation:
Proxy voting is the term which is described as the situation where the person holding some shares of the firm, does not sell the shares and gave the voting right to someone on behalf of his or her shareholding.
In this scenario, Larry does not want to sell the shares and gave the voting rights to the management. So, he must signed a proxy which gives the management control over the shares.Answer:
5. To advertise or not to advertise Suppose that Fizzo and Pop Hop are the only two firms that sell orange soda. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Pop Hop Advertise Doesn't Advertise Fizzo Advertise 8, 8 12, 4 Doesn't Advertise 4, 12 10, 10 For example, the upper right cell shows that if Fizzo advertises and Pop Hop doesn't advertise, Fizzo will make a profit of $12 million, and Pop Hop will make a profit of $4 million. Assume this is a simultaneous game and that Fizzo and Pop Hop are both profit-maximizing firms. If Fizzo decides to advertise, it will earn a profit ofmillion if Pop Hop advertises and a profit ofmillion if Pop Hop does not advertise. If Fizzo decides not to advertise, it will earn a profit ofmillion if Pop Hop advertises and a profit ofmillion if Pop Hop does not advertise. If Pop Hop advertises, Fizzo makes a higher profit if it chooses . If Pop Hop doesn't advertise, Fizzo makes a higher profit if it chooses . Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? Fizzo will choose to advertise and Pop Hop will choose not to advertise. Fizzo will choose not to advertise and Pop Hop will choose to advertise. Both firms will choose not to advertise. Both firms will choose to advertise.
Answers
Harriet and Harry Combs (both 37 years old) are married and both want to contribute to a Roth IRA. In 2019, their AGI before any IRA contribution deductions is $50,000. Harriet earned $46,000 and Harry earned $4,000. (Leave no answer blank. Enter zero if applicable.) a. How much can Harriet contribute to her Roth IRA if they file a joint return?
Contribution Roth IRA ?
b. How much can Harriet contribute if she files a separate return?
Contribution Roth IRA ?
c. How much can Harry contribute to his Roth IRA if they file separately?
Contribution Roth IRA ?
Answers
Harriet can contribute $6,000 to her Roth IRA if filing jointly, but her contribution may be limited if filing separately. Harry can contribute up to $4,000, his earned income, to his Roth IRA if they file separately and did not live together.
Explanation:The question pertains to the contributions that Harriet and Harry Combs can make to their Roth IRAs under different filing status conditions. Roth IRA contributions are subject to income limits and filing status requirements as determined by the Internal Revenue Service (IRS). For the year 2019, the maximum contribution amount is $6,000 for individuals under 50 years of age.
a. Harriet's Contribution with Joint Return
As Harriet and Harry's combined Adjusted Gross Income (AGI) is $50,000 and they are under the limit for Roth IRA contributions for married couples filing jointly, Harriet can contribute the maximum amount of $6,000 to her Roth IRA.
b. Harriet's Contribution with Separate Return
If Harriet files separately, she may be subject to a lower contribution limit or may not be able to contribute to a Roth IRA at all, as the income threshold for contributing to a Roth IRA is significantly lower for those filing separately. However, specific information for limits in 2019 is necessary to determine the exact contribution amount she is eligible for. When filing separately, if Harriet lives with her spouse at any time during the year and her income is $10,000 or more, she cannot contribute to a Roth IRA.
c. Harry's Contribution with Separate Return
If Harry files separately from Harriet, his contribution limit would also be affected by the same thresholds as Harriet's. Given his income of $4,000, Harry can contribute up to the amount he earned, so he can contribute the full $4,000 to his Roth IRA as long as they did not live together.
Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years. If Hector receives a $20,000 bonus during his first year of work and he completely smooths consumption over his lifetime, his marginal propensity to consume out of a transitory increase in income is
A. $67,500.
B. $75,000.
C. $80,000.
D. $111,111.
Answers
His marginal propensity to consume out of a transitory increase in income is [tex]\$67,500[/tex].
Explanation:
In financial aspects, the minimal penchant to expend (MPC) is a metric that measures actuated utilization, the idea that the expansion in close to home shopper spending (utilization) happens with an increment in discretionary cash flow (pay after expenses and moves).
The extent of extra cash which people spend on utilization is known as penchant to expend. MPC is the extent of extra pay that an individual expends.
For instance, if a family unit procures one additional dollar of discretionary cashflow, and the minor affinity to expend is 0.65, at that point of that dollar, the family unit will burn through 65 pennies and spare 35 pennies. Clearly, the family unit can't spend more than the additional dollar (without getting).
As indicated by John Maynard Keynes, minimal affinity to devour is short of what one.
On January 1, 2021, Canseco Plumbing Fixtures purchased equipment for $44,000. Residual value at the end of an estimated four-year service life is expected to be $8,000. The company expects the equipment to operate for 20,000 hours. The equipment operated for 2,900 and 3,700 hours in 2021 and 2022, respectively.Required:a. Calculate depreciation expense for 2021 and 2022 using straight line method.b. Calculate depreciation expense for 2021 and 2022 using double-declining balance method.c. Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated.
Answers
Answer:
a.
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b.
Depreciation expense for 2021: $18,000
Depreciation expense for 2022: $9,000
c.
Depreciation expense for 2021: $5,220
Depreciation expense for 2022: $6,660
Explanation:
a. Canseco Plumbing Fixtures uses Straight-line method
Annual Depreciation Expense = (Cost of asset − Residual value Value)/Useful Life = ($44,000 - $8,000)/4 = $9,000
Depreciation expense for 2021: $9,000
Depreciation expense for 2022: $9,000
b. Canseco Plumbing Fixtures uses Double-declining-balance method
Under the straight-line method, useful life is 4 years, so the equipment's annual depreciation will be 25% of the Depreciable cost.
Depreciable cost = Total asset cost - Residual value = $44,000-$8,000 = $36,000
Under the double-declining-balance method the 25% straight line rate is doubled to 50% - multiplied times the Depreciable cost's book value at the beginning of the year.
In 2021, depreciation expense = 50% x $36,000 = $18,000
At the beginning 2022, the Depreciable cost's book value is $36,000-$18,000 = $18,000
Depreciation expense in 2022 = 50% x $18,000 = $9,000
c. Canseco Plumbing Fixtures uses Units-of-activity method
The Units-of-activity depreciation method is calculated by using the following formula:
Depreciation Expense = [(Cost of asset − Residual value)/Life in Number of hours Operated]x Number of hours Operated] = Depreciation Expense per hour x Number of hours Operated
Depreciation Expense per hour = ($44,000-$8,000)/20,000 = $1.8
Depreciation expense each year = Actual hours Operated x Depreciation Expense per hour.
Depreciation expense for 2021 = 2,900 x $1.8 = $5,220
Depreciation expense for 2022 = 3,700 x $1.8 = $6,660
Using different methods - straight line, double declining, and units of production, the depreciation for Canseco Plumbing Fixtures' equipment was calculated for the years 2021 and 2022. Each method uses different calculations and factors thereby providing differing amounts of depreciation.
Explanation:
This question revolves around the concept of depreciation. Depreciation allows companies to reduce the value of an asset over time due to its usage, wear and tear.
For calculating the depreciation expense for 2021 and 2022, we would use three different methods as per the request.
Straight-Line MethodThe formula for Straight-Line Depreciation is (Cost - Residual Value) / Useful life. Plugging the values in, we get ($44,000 - $8,000) / 4 years = $9,000 per year. Hence, depreciation expense for both 2021 and 2022 is $9,000 per year.
Double Declining BalanceIn Double Declining Balance method, the depreciation rate is double the rate of straight line method. So the rate is 2 x 25% = 50%. For 2021, the depreciation is $44,000 x 50% = $22,000. For 2022, we depreciate the remaining book value, so the depreciation is ($44,000 - $22,000) x 50% = $11,000.
Units-of-ProductionIn Units of Production method, depreciation is based on the actual usage of the asset. First, calculate the depreciation per hour: ($44,000 - $8,000) / 20,000 hours = $1.80 per hour. For 2021, the depreciation is $1.80 x 2,900 hours = $5,220. For 2022, depreciation is $1.80 x 3,700 hours = $6,660.
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Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018? $0 $150,000 $250,000 $100,000
Answers
Answer:
$100000
Explanation:
Given: Total Dividend paid= $250000.
Preferred stock is 25000 shares of 6%, $100 par value.
First, lets calculate preferred stock.
Preferred stock= [tex][25000\times \$ 100\times 6%][/tex]
∴ Preferred stock= $150000
Now, calculating the amount of dividends received by common stockholder.
Dividend received by stockholder= [tex](Total\ Dividend\ paid \ by \ company - preferred\ dividend)[/tex]
Common stockholder´s dividend= ([tex](250000-150000)= \$ 100000[/tex]
∴ Common stockholder´s dividend is $100000.
Ben's Border Café is considering a project which will produce sales of $16,000 and increase cash expenses by $10,000. If the project is implemented, taxes will increase from $23,000 to $24,500 and depreciation will increase from $4,000 to $5,500. What is the amount of the operating cash flow using the top-down approach?
Answers
Answer:
the amount of the operating cash flow using the top-down approach is $4.500
Explanation:
operating cash flow using the top-down approach
operating cash flow =Sales- increase cash expenses -increase in tax
=16000-10000-(24500-23000)
=$ 4500
Note:increase cash expenses and increase in tax are cash outflow . Depreciation has not been considered as it is a non cash expenditure.
Final answer:
Using the top-down approach, the operating cash flow for Ben's Border Café's project is determined by subtracting cash expenses and the increase in taxes from sales, resulting in an operating cash flow of $4,500. The calculation excludes depreciation, as it does not affect cash.
Explanation:
To calculate the operating cash flow (OCF) using the top-down approach, we start with the sales revenue and then subtract the operating expenses and taxes, but do not consider depreciation since it does not involve a cash outflow. First, we have sales of $16,000. Second, the increase in taxes is from $23,000 to $24,500, thus the increase is $1,500. The calculation is as follows:
Sales: $16,000- Cash expenses: $10,000- Increase in taxes: $1,500Operating cash flow = Sales - Cash expenses - Increase in taxes
Operating cash flow = $16,000 - $10,000 - $1,500 = $4,500.
Suppose an investment will have an initial positive cash flow of $100,000 in year 0, followed by a negative cash flow of $110,000 in period 1. Thus, the IRR of the project is 10%. Should we accept or reject the project if the required return is 15%?
Answers
Answer: Reject the Project
Explanation:
If the required return (also known as hurdle rate) is 15% (which is above the Internal Rate of Return of 10%) then the project or investment is less profitable.
The required return is the minimum return that will repay initial investment and other input.
Since the actual or eventual rate of return (IRR) is less than this required minimum, the project should be rejected.
On the other hand, if the investor has no alternative project to invest in or if the investor no time constraints, he or she can wait to see the Internal Rate of Return in succeeding periods or years like Period 2, Period 3, etcetera.
Agawa Corporation is preparing its cash payments budget for next month, May. The following information pertains to the cash payments: Agawa Corporation is preparing its cash payments budget for next month, May. The following information pertains to the cash payments:a. Agawa pays for 55% of its direct materials purchases in the month of purchase and the remainder the following month. April's direct material purchases were $83,500, while the company anticipates $88,000 of direct material purchases in May.b. Direct labor for May is budgeted to be $30,500 and will be paid at the end of that month.c. Manufacturing overhead is estimated to be 140% of direct labor cost each month. All but $11,000 of these costs are paid in the month in which they are incurred.d. Monthly operating expenses for May are expected to be $44,150. All but $3,400 of these operating expenses are paid during the month in which they are incurred.e. Agawa Corporation will be making an estimated tax payment of $7,300 in May.Required:How much cash will be paid out in May?
Answers
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
You just gave an in-depth presentation on the company’s new marketing programs, intended for the specialists in the marketing department. The marketing manager then asked you to give a shorter version of the presentation to the company’s top executives. Generally speaking, how should you modify the scope of your presentation for this new audience?
Answers
When modifying the scope of the presentation for top executives, it's essential to focus on key strategic elements and high-level insights while condensing detailed information. Here are some general guidelines:
1. Executive Summary:
- Provide a concise executive summary upfront, highlighting the main objectives, key strategies, and expected outcomes.
2. Key Metrics and Results:
- Emphasize high-level metrics and results that directly impact the company's bottom line.
- Highlight key performance indicators (KPIs) relevant to overall business goals.
3. Strategic Impact:
- Clearly articulate how the marketing programs align with the company's broader strategic initiatives.
- Emphasize the impact on revenue growth, market share, and long-term business objectives.
4. Simplified Graphics:
- Use visually compelling charts and graphs to present complex data in a simplified manner.
- Focus on visuals that convey the most critical information for executive decision-making.
5. Time Efficiency:
- Keep the presentation concise and respect the executives' time. Aim for brevity while conveying essential information.
6. Risk and Mitigation:
- Address any potential risks associated with the marketing programs and present proactive mitigation strategies.
7. Opportunities and Innovation:
- Highlight innovative aspects of the marketing programs that contribute to the company's competitive edge and market positioning.
8. Question Anticipation:
- Anticipate and be prepared to address high-level questions that executives are likely to ask, demonstrating a thorough understanding of the business impact.
By adapting the presentation to focus on strategic, high-impact elements and presenting information in a streamlined and accessible manner, you can effectively communicate the value of the marketing programs to top executives who may be more concerned with overarching business outcomes.
Focus on key points, strategic impact, financial metrics, summarized data, time efficiency, risks and mitigations, and actionable recommendations.
When modifying the scope of your presentation for the company's top executives, consider the following adjustments:
1. Focus on Key Points: Highlight the main objectives, strategies, and expected outcomes of the new marketing programs. Avoid detailed explanations and technical jargon.
2. Emphasize Strategic Impact: Discuss how the marketing programs align with the company's overall goals and strategy. Show the potential impact on revenue, market share, and competitive positioning.
3. Include Financial Metrics: Provide clear and concise financial projections, such as ROI, cost-benefit analysis, and expected profit margins. Executives are keen on understanding the financial implications.
4. Summarize Data: Use high-level summaries and key takeaways instead of in-depth data analysis. Present charts and graphs that visually convey the most important information.
5. Time Efficiency: Keep the presentation brief and to the point. Executives have limited time and appreciate concise presentations that respect their schedules.
6. Address Risks and Mitigations: Outline potential risks and the measures in place to mitigate them. This demonstrates foresight and preparedness.
7. Actionable Recommendations: Conclude with clear, actionable recommendations or decisions that need to be made by the executives.
By focusing on these elements, you tailor your presentation to address the interests and priorities of the top executives, ensuring it is relevant and impactful.
McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought
McCoy stock for $47.00 on July 18, 2010, and sold it immediately after the dividend was paid for
$63.52 . What was your realized return from holding McCoy?
A) 4.24%
B) 6.36%
C) 33.91%
D) 42.38%
Answers
Answer:
option (D) 42.38%
Explanation:
Data provided in the question:
Dividend paid = $3.40
Purchase price of stock = $47.00
Selling price = $63.52
Now,
Realized Return
= [ Selling price - Purchase Price + dividend ] ÷ Purchase Price
= [ $63.52 - $47.00 + $3.40 ] ÷ $47.00
= [ $16.52 + $3.40 ] ÷ $47.00
= $19.92 ÷ $47
= 0.4238
or
= 0.4238 × 100%
= 42.38%
Hence,
The correct answer is option (D) 42.38%