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%
Your Way, Inc. Eric buys companies that are small or companies in financial trouble. He helps these companies turn around and develop a competitive advantage. The company that he recently purchased is called Your Way, Inc. The company sells men's clothing and accessories. Your Way keeps the sewing machines for clothes manufacturing at a separate production facility so that the store location space can be reserved for display and selling. After looking over the different products available, Eric realized that the company's previous owner was not aware of the product life cycle because the company kept items that were obviously too old and out of date. Also, because of the high turnover, employees did not have good knowledge of the different product lines and did not know the difference between a product line and a product mix. To move the company forward, Eric thought of the following two measures: first, developing a new product to incorporate into the product mix; and second, eliminating the out-of-date products. Refer to Your Way, Inc. If Eric wanted to develop a new product, he would begin with(A) concept testing.(B) screening.(C) product analysis.(D) idea generation.(E) marketing analysis.
Answer: Marketing analysis
Explanation:
Marketing analysis which is detemining market needs or demand is the first step in be able to get a good demand for a product. After the analysis a product can then be designed to meet the Market needs through idea generation, product analysis and testing the concept.
One criteria for deciding whether to have a server active all the time or have it start on demandusing a process server is how frequently the service provided is used. Can you think of any othercriteria for making this decision?
Answer:
The other criteria could be about the expected delay that is acceptable to customer in the processing time of the server.
Explanation:
If the customers are ready to accept a certain delay then it can help making the decision whether to keep the server permanently on, as it consumes high power.
Also if it is not used all the time then keeping it on all the time would be wastage of resources.
Thus, the scheduling of the expected time at which they use, and the acceptable delay would provide a proper criteria for this.
The following bond investment transactions were completed during 2016 by Starks Company:
Jan. 31 Purchased 75, $1,000 government bonds at 100 plus 30 days’ accrued interest. The bonds pay 6% annual interest on July 1 and January 1.
July 1 Received semiannual interest on bond investment.
Aug. 29 Sold 35, $1,000 bonds at 98 plus $350 accrued interest.
Required:
a. Journalize the entries for these transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year.
b. Provide the December 31, 2016, adjusting journal entry for semiannual interest earned on the bonds.
Answer:
31st Jan 2016
Dr Bond Receivable 75,000
Dr Interest Receivable 375
Cr Cash 75,375
(to record the bond purchase)
* working note: Bond proceed = 75 x 1,000 = 75,000; Interest receivable = 75,000 x 6% x 30/360 = 375)
1st Jul 2016
Dr Cash 2,250
Cr Interest Income 1,875
Cr Interest Receivable 375
(to record interest receipt on bonds holding, in which 5 months of it ( 75,000 x 6% x 5/12 is recorded as Income, the other one is recorded as collection of Income earned by the bond's seller)
29th Aug 2016
Dr Cash 34,650
Dr Loss on bond Investment 700
Cr Interest income 350
Cr Bond Receivable 35,000
( to record the Sold 35, $1,000 bonds at 98% plus $350 accrued interest = 35,000 x 98% + 350 = 34,650)
31st Dec 2016
Dr Interest Receivable 1,200
Cr Interest Income 1,200
( to record the interest earned on 40,000 bonds outstanding)
Explanation:
A company has 525 shares of $61 par value preferred stock outstanding. It also has 21,000 shares of common stock outstanding, and the total value of its stockholders' equity is $716,625. The company's book value per common share equals:
Answer:
$32.6
Explanation:
Please see attachment
An economist discussing trade policy in the New Republic wrote: "One of the benefits of the United States removing its trade restrictions [is] the gain to U.S. industries that produce goods for export. Export industries would find it easier to sell their goods abroad—even if other countries didn’t follow our example and reduce their trade barriers."Which of the following statements is true about the effect of a reduction in restrictions of imports? Check all that apply.A. Exports will increase.B. The real exchange rate will remain unchanged.C. Imports will increase.D. Net exports at any given real exchange rate will increase.E. The demand curve for dollars will shift to the left.F. The equilibrium level of net exports will remain unchanged
Answer: The correct answers are "A. Exports will increase." , "C. Imports will increase.", "E. The demand curve for dollars will shift to the left." and "F. The equilibrium level of net exports will remain unchanged".
Explanation:
"A. Exports will increase." , "C. Imports will increase.", "E. The demand curve for dollars will shift to the left." and "F. The equilibrium level of net exports will remain unchanged". are TRUE.
B. The real exchange rate will remain unchanged. Is FALSE because the change in the demand curve for dollars leads to a decrease in the real exchange rate.
D. Net exports at any given real exchange rate will increase. is FALSE because net exports at any given real exchange rate will decrease.
Answer: the demand curve for dollars will shift to the left added to the above.
Explanation:
Joe was trying to sell his home. He went out drinking with some buddies on Friday night and got really drunk. Saturday morning his realtor came by with a contract for the sale of his home. Joe looked over the contract, asked the realtor some questions about the date of the closing, asked the realtor what he thought about the contract, then signed the contract and went back to bed. When he woke up on Saturday afternoon he saw a copy of the contract and had a change of heart. The contract was for $10,000 less then what he originally wanted for the house.
1. Joe wants to disaffirm, claiming he was drunk when he signed. Can he?
Answer:
Yes. Joe can disaffirm the contract as he was drunk when he signed it.
Explanation:
According to law, a person who enters into a contract while intoxicated (either by alcohol or drugs) can make void, the terms of that contract if the person can prove he/she was sufficiently intoxicated and was therefore impaired, at the time the contract was signed.
Therefore Joe can disaffirm the contract by arguing that he got really drunk on Friday night and as such, his decision making was affected when he signed the contract on Saturday morning.
Answer:
Yes. Joe can disaffirm the contract as he was drunk when he signed it.
Explanation:
Apple hosts a large number of forums, which become customers' primary source of product information after warranties expire and are organized by product lines and type of user (consumer or professional). These forums are an example of ________.
Answer:
The answer is online communities.
Explanation:
Apple hosts a large number of forums, which become customers' primary source of product information after warranties expire and are organized by product lines and type of user (consumer or professional). These forums are an example of _online communities._______.
Conundrum Mining is expected to generate the above free cash flows over the next four years,after which they are expected to grow at a rate of 6% per year. If the weighted average cost ofcapital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 millionshares outstanding, what is Conundrumʹs expected terminal enterprise value?A) $413.4 millionB) $459.3 millionC) $505.3 millionD) $528.2 million
Answer:
B. 459.3 million
Explanation:
FCF5 = $26 million * (1 + 0.06) = 27.6 million
and to continue
V4 = $27.6 million / (0.12 - 0.06) = 459.3 million
The terminal enterprise value cannot be accurately calculated with the provided data because the free cash flow in the final projected year is missing, which is critical for calculating the terminal value in the Gordon Growth Model.
Explanation:The student is asking for the expected terminal enterprise value of Conundrum Mining. First, we calculate the present value of the free cash flows using the given discount rate of 12%. Given the free cash flows are $15 million, $20 million, and $25 million for the present, first, and second year respectively, we discount these by the weighted average cost of capital. The present values then become: $15 million, $20 million/(1+0.12) = $17.86 million, and $25 million/(1+0.12)² = $19.88 million. This gives a total present value of $52.74 million.
Next, we calculate the terminal value which is the present value of all future cash flows growing at a constant rate. This can be calculated using the formula: Terminal Value = (Cash Flow in Final Year * (1 + growth rate)) / (discount rate - growth rate). However, an important piece of information, the free cash flow in the last projected year, is missing in the question. Therefore, it's impossible to accurately calculate the terminal enterprise value with the provided data.
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GEICO, the number-two auto insurer with $15 billion in revenue last year, spent $0.9 billion on advertising that year and plans to continue spending the same percentage of sales on advertising next year. The average advertising-to-sales ratio for the insurance industry is 0.1 percent of sales. If GEICO projects $20 billion in sales next year, using the percentage-of-sales method of advertising budgeting, how much will the company budget for advertising of basing it on projected sales?
Based on the given percentage-of-sales method, if GEICO continues to allocate 0.1% of its sales to advertising, it should budget $20 million for advertising next year.
Explanation:The question is asking for the projected advertising budget for GEICO if it continues to Base its advertising expenses on its sales, a method known as the percentage-of-sales method. Given that the insurance industry's average advertising-to-sales ratio is 0.1 percent of sales, this is the percentage we'll apply to GEICO's projected sales to estimate its advertising budget.
To find out how much GEICO will spend on advertising next year based on the given percentage, we need to multiply the projected sales by the average advertising-to-sales ratio. So, GEICO's advertising budget will be: $20,000,000,000 × 0.001 = $20,000,000. This means that if GEICO continues to allocate 0.1% of its sales to advertising, it should budget $20 million for advertising next year.
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California Gardens, Inc., prewashes, shreds, and distributes a variety of salad mixes in 2-pound bags. Doug Voss, OperationsVP, is considering a new Hi-Speed shredder to replace the oldmachine, referred to in the shop as "Clunker." Hi-Speed will have a fixed cost of $85,000 per month and a variable cost of$1.25 per bag. Clunker has a fixed cost of only $44,000 permonth, but a variable cost of $1.75. Selling price is $2.50 per bag.
a) What is the crossover point in units (point ofindifference) for the processes?
The crossover point is XX units. (Round your response to the nearest whole number.)
b) What is the monthly profit or loss if the company changes to the Hi-Speed shredder and sells 60,000 bags per month?
The monthly profit or loss if the company changes to theHi-Speed shredder and sells 60,000 bags per month is $ XX. (Round your response to the nearest dollar and include a minus sign if necessary.)
c) What is the monthly profit or loss if the company stays with Clunker and sells 60,000 bags per month?
The monthly profit or loss if the company stays with Clunker and sells 60,000 bags per month is $ XX. (Round your response to the nearest dollar and include a minus sign ifnecessary.)
Answer:
The answer is. Q is 82,000 units ,the company will make a loss of $ -10000 if the company changes to Hi speed, if the company stays with clunker it will make a profit of $1,000
Explanation:
a) Clunker. Hi speed
Fixed cost. $44,000. $85,000
Variable cost. 1.75. 1.25
Q (output in indifference point / cross over point) = FC of Hi speed - FC of Clunker/VC of Clunker - VC of Hi speed
FC of Clunker + VC of Clunker = FC of Hi speed + VC of Hi speed
44,000 + 1.75Q = 85,000 + 1.25Q
Collect like terms
1.75Q - 1.25Q = 85,000 - 44,000
0.5Q = 41,000
Q = 41,000/0.5
Q = 82,000 units
(b)
Since the sellingprice is $2.50 per bag, Revenue will be 2.50 × 60,000 = 150,000
Income Statement
Dr. Cr
$ $
Revenue. 150,000
Variable cost (1.25 × 60,000) 75,000
Add:Fixed cost 85,000
-------------
(160,000)
Profit/Loss. -10,000
---------------- --------------------
150,000. 150,000
-------------------- -----------------------
If the company changes to Hi speed, it will make a loss of $10,000
(c)
Dr. Cr
$ $
Revenue. 150,000
Variable cost (1.75 × 60,000) 105,000
Add: Fixed cost. 44,000
---------------
(149,000)
Profit /Loss. 1,000
------------------ ---------------------
150,000. 150,000
---------------------- -----------------------
If the company stays with clunker, it will make a profit of $1,000
Final answer:
The crossover point for the new Hi-Speed shredder and Clunker is at 82,000 units. Using the Hi-Speed shredder and selling 60,000 bags results in a loss of $10,000 per month, while continuing with Clunker results in a profit of $1,000 per month.
Explanation:
To calculate the crossover point where the total costs of both the new Hi-Speed shredder and the old machine Clunker are the same, we set up the following equation:
Total cost of Hi-Speed = Total cost of Clunker
Fixed cost of Hi-Speed + (Variable cost of Hi-Speed * Number of units) = Fixed cost of Clunker + (Variable cost of Clunker * Number of units)
85000 + 1.25x = 44000 + 1.75x
Solving for x gives us the crossover point:
85000 - 44000 = 1.75x - 1.25x
41000 = 0.5x
x = 82000 bags
To calculate the monthly profit or loss for selling 60,000 bags per month with the Hi-Speed shredder, we use the formula:
Profit = (Selling price per bag * Number of bags sold) - (Fixed cost + Variable cost per bag * Number of bags sold)
Profit = (2.50 * 60000) - (85000 + 1.25 * 60000)
Profit = $150000 - $160000 = -$10000
For the Clunker:
Profit = (2.50 * 60000) - (44000 + 1.75 * 60000)
Profit = $150000 - $149000 = $1000
The monthly profit or loss with the Hi-Speed shredder for selling 60,000 bags per month is -$10,000, and staying with Clunker would result in a $1000 profit.
Sales $1,406,537 Operating Income $102,299 Total Assets (investment) $541,233 Target Rate of Return (Cost of Capital) 10% What is return on investment? Input your answer to 1 decimal place. For example if you calculate .1892 enter 18.9.
Answer:
18.90%
Explanation:
The formula to compute the return on investment is shown below:
= Operating income ÷ Total Assets (investment)
= $102,299 ÷ $541,233
= 18.90%
It shows a relationship between the operating income and the total assets i.e investment so that the accurate return on investment can be computed
All other information which is given is not relevant. Hence, ignored it
Answer:
18.9
Explanation:
ROI = Net Profit / Total Investment *100
ROI = ($102,299/$541,233)*100
ROI = 18.9
On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances:
Accounts Debit Credit
Cash $ 43,200
Accounts Receivable 45,500
Supplies 8,000
Equipment 69,000
Accumulated Depreciation $ 9,500
Accounts Payable 15,100
Common Stock, $1 par value 15,000
Additional Paid-in Capital 85,000
Retained Earnings 41,100
Totals $ 165,700 $ 165,700
During January 2018, the following transactions occur:
January 2 Issue an additional 2,000 shares of $1 par value common stock for $40,000.
January 9 Provide services to customers on account, $15,600.
January 10 Purchase additional supplies on account, $5,400.
January 12 Repurchase 1,200 shares of treasury stock for $17 per share.
January 15 Pay cash on accounts payable, $17,000.
January 21 Provide services to customers for cash, $49,600.
January 22 Receive cash on accounts receivable, $17,100.
January 29 Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 15,000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.)
January 30 Reissue 800 shares of treasury stock for $19 per share.
January 31 Pay cash for salaries during January, $42,500.
1. Record each of the transactions listed above.
a. Unpaid utilities for the month of January are $6,700.
b. Supplies at the end of January total $5,600.
c. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a service life of three years and a residual value of $10,500.
d. Accrued income taxes at the end of January are $2,500.
2. Record the adjusting entries on January 31, 2018 for the above transactions.
3. Prepare an adjusted trial balance as of January 31, 2018.
4. Prepare a multiple-step income statement for the period ended January 31, 2018.
5. Prepare a classified balance sheet as of January 31, 2018.
On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances: Accounts Debit Credit Cash $ 43,200 Accounts Receivable 45,500 Supplies 8,000 Equipment 69,000 Accumulated Depreciation $ 9,500 Accounts Payable 15,100 Common Stock, $1 par value 15,000 Additional Paid-in Capital 85,000 Retained Earnings 41,100 Totals $ 165,700 $ 165,700
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
The journal record is attached.
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.
The question requires an understanding of business accounting, transaction recording, creation of adjusting entries, and the preparation of financial statements. The application of double-entry system, accrual concepts, and financial statement structuring play a critical role in effectively answering this question.
Explanation:This question pertains to the analysis of business transactions related to accounts in a ledger, execution of transactions, adjusting entries, preparation of an adjusted trial balance, multiple-step income statement, and a classified balance sheet. Given the initial account balances and the series of transactions and adjustments that took place within the month of January, you are tasked with reflecting these in the company's accounts, preparing the trial balance, income statement, and balance sheet. This involves dealing with a variety of accounting concepts such as accumulated depreciation, accounts payable and receivable, treasury stock, dividends, etc.
The completion of these tasks requires an understanding of the double-entry system, accrual accounting concepts, as well as the proper structuring of financial statements. To give an example, for a transaction like 'Purchase additional supplies on account, $5,400', you would need to debit 'Supplies' and credit 'Accounts Payable', thus increasing both accounts.
On the other hand, for adjusting entries such as 'Unpaid utilities for the month of January are $6,700', you would need to debit 'Utilities Expense' and credit 'Utilities Payable' therefore recognizing the incurred expense and the liability. This entails following the accrual accounting concept where expenses are recognized when they are incurred rather than when they are paid.
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As the firm borrows more and debt becomes riskier, both stockholders and bondholders demand higher rates of return. Thus, by reducing the debt ratio we can reduce both the cost of debt and the cost of equity, making everybody better off.a. True b. False
Answer:True
Explanation:
The debt holders been entitled to return before the equity places, the equity holders at the risk of not getting a return when the debt level is high and this will make them to clamour for more returns when profit is made thereby making it more costly to manage the equity capital.
The higher the debt capital the lower the possibility of the firm meeting his debts obligations as regards interest and capital and the likely of defaults with consequent penalties, which makes it more costly to service the debt capital.
You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $40.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?
Answer:
The marginal revenue product has a property known as diminishing marginal return.
The property of diminishing marginal return tells us that theres an amount of input that maximizes revenue, and after this point is reached, additional units of input less addional revenue until diminishing it.
In this example, the Collection Agency is way past the maximum revenue point (located at $34.00 per worker). It needs to lay off employees until it goes from the current $40.00 marginal revenue product, until $34.00 marginal revenue product.
Frances had a wonderful product, but her salesforce frequently argued over sales tactics and territories. Conflicts arose over issues unrelated to the business, such as lifestyles and work start times. Which top reason for startup failures was represented in this scenario?a. not the right teamb. lost focusc. poor marketingd. no market need
Answer:
Letter a is correct. Not the right team.
Explanation:
The structuring of a team is a relevant step for a startup to succeed and survive in the market.
Research indicates that one of the main causes of startup failure is to develop teams whose individuals do not have sufficient competence to perform teamwork to establish consensus and experience to observe the current scenario to effectively align the management process with market needs.
York’s outstanding stock consists of 80,000 shares of cumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:
2015 $ 20,000
2016 28,000
2017 200,000
2018 350,000
Determine the amount of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also determine the total dividends paid to each class for the four years combined. (Round your "Dividend per Preferred Share" answers to 3 decimal places.)
Dividends paid to each class of stockholders can be calculated by multiplying the dividend rate and number of shares. Preferred stockholders receive a fixed dividend rate, while common stockholders receive the remaining dividends. The total dividends paid to the preferred stockholders over four years is $897,000, and the total dividends paid to the common stockholders is $309,000.
Explanation:The amount of dividends paid each year to each class of stockholders can be calculated by multiplying the dividend rate by the number of shares. For the preferred stock, the dividend rate is 7.5% of the par value of $5, yielding $0.375 per share. The total dividends paid to the preferred stockholders for each year are as follows: 2015 - $30,000, 2016 - $42,000, 2017 - $300,000, and 2018 - $525,000. The total dividends paid to the preferred stockholders for the four years combined is $897,000.
The common stockholders do not receive a fixed dividend rate like the preferred stockholders. Instead, they receive the remaining amount of dividends after the preferred stockholders are paid. To determine the dividends paid to the common stockholders, subtract the amount paid to the preferred stockholders from the total dividends declared each year. The total dividends paid to the common stockholders for each year are as follows: 2015 - $20,000, 2016 - $14,000, 2017 - $100,000, and 2018 - $175,000. The total dividends paid to the common stockholders for the four years combined is $309,000.
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LowFare is a no-frills airline that provides daily shuttle service in the northeast United States. Passengers are predominantly businesspeople who travel between New York and Boston for the day. Identify one measure in each of the four perspectives of the balanced scorecard that LowFare managers should monitor. Explain your reasoning for each.
Final answer:
LowFare should monitor measures such as Yield per Passenger Mile, On-time Arrival Rate, Aircraft Turnaround Time, and Employee Training Hours from the financial, customer, internal business process, and learning and growth perspectives of the balanced scorecard, respectively.
Explanation:
Key Performance Measures for LowFare Airline
To effectively manage a no-frills airline like LowFare that provides daily shuttle service primarily for businesspeople between New York and Boston, it is important to consider measures from each of the four perspectives of the balanced scorecard.
Financial Perspective:
Yield per Passenger Mile - This measure will help LowFare analyze the revenue obtained per mile from each passenger. It is crucial for understanding profitability, particularly when competing with larger airlines that may have more flexibility in pricing.
Customer Perspective:
On-time Arrival Rate - Business travelers value punctuality, making this a critical measure of customer satisfaction and a key differentiator in a competitive market.
Internal Business Process Perspective:
Aircraft Turnaround Time - Efficient turnaround times can lead to more flights per day and better asset utilization, which is vital for a no-frills carrier operating frequent shuttle services.
Learning and Growth Perspective:
Employee Training Hours - Regular training ensures employees are efficient, safety standards are met, and customer service is maintained at a high level, all of which are essential in a service-oriented industry like airlines.
LowFare should monitor revenue per seat mile for the financial perspective, customer satisfaction scores for the customer perspective, on-time rates for internal processes, and training hours for the learning perspective. These measures align with the airline's strategic goals and operational needs.
LowFare, a no-frills airline, can apply the balanced scorecard to monitor its performance across four perspectives. Here are the measures they should consider:
Financial Perspective: Measure the average revenue per seat mile (RASM). This helps track profitability and financial health by evaluating how much revenue is generated per seat mile.Customer Perspective: Monitor customer satisfaction scores through surveys. Business travelers value reliability and timeliness, so ensuring high customer satisfaction can lead to repeat business.Internal Business Processes Perspective: Track on-time departure and arrival rates. This measure reflects the efficiency of operational processes, crucial for business travelers who depend on punctual flights.Learning and Growth Perspective: Evaluate employee training hours. Continuous training ensures that employees are well-equipped to provide excellent service and manage operations efficiently.These measures help LowFare align its operational efficiency, customer satisfaction, financial performance, and employee development with its strategic goals.
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows. Budget ActualIndirect materials $14,200 $13,700Indirect labor 19,100 19,900Utilities 11,400 12,100Supervision 4,600 4,600
All costs are controllable by the department manager.
Prepare a responsibility report for April for the cost center
Final answer:
A responsibility report compares budgeted costs to actual costs, highlighting variances and assisting a manager in decision-making. For the Assembly Department of Hannon Company, the report shows favorable and unfavorable variances in indirect materials, labor, and utilities, with no variance in supervision.
Explanation:
To draft this report, one must compare the budgeted costs against the actual costs incurred. A simple table can be created that lists each cost category, the budgeted amount, the actual amount, and the variance between the two.
Responsibility Report for April 2017
Cost Category Budgeted Actual Variance
Indirect Materials $14,200 $13,700 $500 Favorable
Indirect Labor $19,100 $19,900 $800 Unfavorable
Utilities $11,400 $12,100 $700 Unfavorable
Supervision $4,600 $4,600 $0
The manager of the department can then use this responsibility report to understand where costs were higher or lower than expected and make decisions accordingly.
Which of the following statements is CORRECT?
a. If an asset is sold for less than its book value at the end of a project's life, it will generate a loss for the firm, hence its terminal cash flow will be negative.
b. Only incremental cash flows are relevant in project analysis, the proper incremental cash flows are the reported accounting profits, and thus reported accounting income should be used as the basis for investor and managerial decisions.
c. Changes in net operating working capital refer to changes in current assets and current liabilities, not to changes in long-term assets and liabilities, hence they should not be considered in a capital budgeting analysis.
d. It is unrealistic to believe that any increases in net operating working capital required at the start of an expansion project can be recovered at the project's completion. Operating working capital like inventory is almost always used up in operations. Thus, cash flows associated with operating working capital should be included only at the start of a project's life.
e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Answer:
e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Explanation:
Answer to Question is Point E i.e. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.
Because Book value is the Vaue of an assets recorded in the Balance sheet at the end of the Financial year. Book value is calculated by adjusting Original Cost for depreciation, amortization made for the asset. If the equipment is sold for a value more than its book value , it will result in profit. Despite the taxes on profit, the end of the cash flow will be greater.
As the Book value at the time of sale is calculated after giving effect of depreciation, amortisation.
On August 14, Park Avenue Bank lent $210,000 to City Coffee Shop on a 75 day, 4% note. What is the maturity value of the note? (Use a 365minusday year. Do not round intermediate calculations, and round your final answer to the nearest dollar.)
A. $218,400
B. $211,726
C. $211,750
D. $210,000
Final answer:
To calculate the maturity value of the note, we need to find the amount of interest accrued over the 75-day period. The formula for calculating the interest is: Interest = Principal x Rate x Time. Given the values, we can calculate the maturity value of the note to be approximately $211,095.89.
Explanation:
To calculate the maturity value of a note, we need to find the amount of interest accrued over the 75-day period. The formula for calculating the interest is:
Interest = Principal x Rate x Time
Given that the principal amount is $210,000, the interest rate is 4%, and the time period is 75 days, we can plug in these values into the formula:
Interest = $210,000 x 0.04 x (75/365)
After evaluating the formula, we find that the accrued interest is approximately $1,095.89.
To find the maturity value, we add the principal amount to the accrued interest:
Maturity Value = Principal + Accrued Interest
Maturity Value = $210,000 + $1,095.89
Therefore, the maturity value of the note is approximately $211,095.89. Rounded to the nearest dollar, the answer is C. $211,000.
The maturity value of the note is $211,726. The correct answer is option B. $211,726.
To calculate the maturity value of the note, we need to determine the interest accrued over the 75-day period and add it to the principal amount. The formula for calculating simple interest is:
[tex]\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \][/tex]
Where:
- Principal = $210,000
- Rate = 4% (or 0.04)
- Time = [tex]\(\frac{75 \, \text{days}}{365 \, \text{days/year}}\)[/tex]
Calculation:
1. Calculate the Time Fraction:
[tex]\[ \text{Time} = \frac{75}{365} \approx 0.20548 \, \text{years} \][/tex]
2. Calculate the Interest:
[tex]\[ \text{Interest} = 210,000 \times 0.04 \times 0.20548 \approx 1,726.03 \][/tex]
3. Calculate the Maturity Value:
[tex]\[ \text{Maturity Value} = \text{Principal} + \text{Interest} \][/tex]
[tex]\[ \text{Maturity Value} = 210,000 + 1,726.03 \approx 211,726 \][/tex]
Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $1.9 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. The firm has a target debt-equity ratio of .75, a cost of equity of 13 percent, and an aftertax cost of debt of 5.8 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 2 percent to the cost of capital for such risky projects. What is the maximum initial cost the company would be willing to pay for the project? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole dollar amount, e.g., 1,234,567.)
Answer:
Please see attachment .
Explanation:
Please see attachment .
Which of the following are ways that a firm could attempt to demonstrate product differentiation? Select all that apply:
through advertisement about its product's notable features
pricing the product differently for different customers
offering a warranty that is more generous than most competitors
running a sale on its product
Answer:
through advertisement about its product's notable features
offering a warranty that is more generous than most competitors
Explanation:
Product differentiation is basically aimed to make a product that is different from other products.
That the characteristics and features of the product are different from that are already present in the market.
Displaying notable features in the advertisement provides for product differentiation in the consumers.
Also providing extra warranty is a feature which will add to the product differentiation.
Final answer:
A firm can demonstrate product differentiation by advertising its product's notable features, using different pricing strategies, and offering a more generous warranty than competitors. These strategies make the product appear unique and enhance the perception of its value. Running a sale is not a typical method of differentiation, as it does not indicate the product is distinct, but rather offers a temporary price incentive.
Explanation:
The firm can demonstrate product differentiation by advertising the notable features of its product, pricing the product differently for different customers, and offering a more generous warranty than competitors. These approaches are designed to make the firm's product stand out in the marketplace and create a perception of uniqueness among consumers.
Advertising can help shape the intangible aspects of a product and influence consumer preferences by highlighting the unique features and benefits of the product. Offering a generous warranty is also an intangible aspect that not only adds value but also reinforces the product's quality and reliability, distinguishing it from competitors. Different pricing strategies can also signal to different customer segments that the firm's product has special qualities or offers unique value.
Furthermore, running a sale can often attract consumer attention and suggest a good deal, but it is not typically a method of product differentiation as it does not necessarily imply that the product is different; rather, it indicates a temporary price reduction. Therefore, running a sale is not as much about differentiation but more about pricing tactics to boost sales volume.
A pension plan is obligated to make disbursements of $2.5 million, $3.5 million, and $2.5 million at the end of each of the next three years, respectively. The annual interest rate is 8%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Final answer:
To allocate a pension plan's funds between one-year zero-coupon bonds and perpetuities, the present value of the plan's future liabilities is calculated using the annual interest rate. The one-year zero-coupon bond allocation is set to cover the first-year obligation's present value, while the rest is allocated to perpetuities to cover subsequent years' obligations.
Explanation:
The student is asking how to allocate funds between one-year zero-coupon bonds and perpetuities to immunize a pension plan against interest rate risk while meeting the plan's obligations. To solve this, we must first calculate the present value of the plan's liabilities given the annual interest rate of 8%. This is done using the present value (PV) formula for each disbursement, discounting them accordingly.
For the first-year disbursement:
PV = $2.5M / (1 + 0.08)^1
For the second-year disbursement:
PV = $3.5M / (1 + 0.08)^2
For the third-year disbursement:
PV = $2.5M / (1 + 0.08)^3
Once the total present value of liabilities is calculated, the portfolio allocation to one-year zero-coupon bonds should match the present value of the first-year obligation, since zero-coupon bonds fully mature in one year. The remainder of the portfolio should be allocated to perpetuities, which are infinite-lived assets, to fund the obligations for the subsequent years.
Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The investment requires a single payment of The return on the investment is % A. 4.195 B. 4.729 C. 5.361 D. 5.922 E. 6.961
Answer:
This question has a missing information. I have found the complete version and pasted it down below;
"Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The investment requires a single payment of $1,500 today. The return on the investment is % A. 4.195 B. 4.729 C. 5.361 D. 5.922 E. 6.961 "
Explanation:
This question requires you to find that discount rate given a single future cashflow. $2,000 is expected 5 years from today, hence the future value. $1,500 payment today is the dollar value today, hence the Present value.
Using a financial calculator, you will key in the following inputs;
Total duration; N = 5
Present value; PV = -1,500 (it's a cash outflow hence negative)
Recurring payment; PMT = 0
Future value; FV = 2,000
then find the rate by keying in CPT I/Y = 5.922%
Therefore, the return on the investment is 5.92%
Final answer:
Stocks have the potential for higher average returns over time compared to bonds and savings accounts. The return on the investment is D. 5.922
Explanation:
The question is asking which investment (stocks, bonds, or a savings account) has a higher average return over time. Each investment option has its own level of risk and potential return.
Using a financial calculator, you will key in the following inputs;
Total duration; N = 5
Present value; PV = -1,500 (it's a cash outflow hence negative)
Recurring payment; PMT = 0
Future value; FV = 2,000
then find the rate by keying in CPT I/Y = 5.922%
Therefore, the return on the investment is 5.92%
Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows: Standard tons of direct material (steel) per car 22 Standard cost per ton of steel $ 16.00$16.00 During the month of March, the company produced 1 comma 5001,500 cars. Related production data for the month follows: Actual materials purchased and used (tons) 7 comma 0007,000 Actual direct materials total cost $ 118 comma 000$118,000 What is the direct materials quantity variance for the month?
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The standards for the railroad cars are as follows: Standard tons of direct material (steel) per car 22 Standard cost per ton of steel $16.00 During March, the company produced 1,500 cars. Related production data for the month follows: Actual materials purchased and used (tons) 7,000 Actual direct materials total cost $118,000
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (33,000 - 7,000)*16= $416,000 unfavorable
Westville, a small developed country, is experiencing a very high rate of inflation. Roma Anderson, a market research analyst, thinks that the high level of inflation is due to an acute shortage of goods available in the economy. According to her, the government should use expansionary fiscal policies to boost the economy. Meanwhile, Robert Simpson, a member of the finance ministry, is of the opinion that the high level of inflation is the result of excessive household spending. He suggests that the government should increase personal income tax rates to curb consumption demand. Which of the following, if true, will strengthen Robert's claim that high consumer spending is the cause of high inflation? OA· The number of discouraged workers in Westville has increased this year. OB. One of Westville's leading trading partners was recently hit by a severe recession. Oc、 The gender wage gap in westville has increased substantially in the last few years. OD. Leading firms producing consumer durables have reported a decline in profits in recent times. OE. There is consensus among leading economists and industry experts that the output gap in Westville is currently negatuve
Answer:
There is consensus among leading economists and industry experts that the output gap in Westville is currently negative.
Explanation:
There are two different people who have two different views for the increasing inflation. Robert's claim that the reason behind high inflation is the high consumer spending will be strengthened if there is a consensus among leading economists and the industry experts that the output gap in Westville is negative. This means that the actual output is less than the potential output and so, the consumer spending will increase, leading to the inflation.
Robert's claim that high consumer spending is causing inflation in Westville could be strengthened by the evidence that leading consumer product firms are seeing declining profits, suggesting that demand is outstripping supply and hence driving up prices. However, a holistic approach is required to fully understand complex economic issues such as inflation.
Explanation:The debate revolving around the cause of high inflation in Westville can be strengthened by examining which claim aligns more closely with the symptoms observed in the economy. Inflation can be succinctly summarized as 'too many dollars chasing too few goods'. Bearing this definition in mind, Robert's argument that excessive household spending is at the root of the inflation problem would be reinforced if there is evident high demand meeting a lack of supply.
Going through the options provided, the one that would most strongly support Robert's claim would be if leading firms notably producing consumer durables have reported a decline in profits. A decline in corporate profits in consumer industries may indicate excessive spending. If people are buying more than these companies can produce, it would artificially inflate prices, contributing to a high inflation rate.
However, it's essential to note that economic indicators should not be evaluated in isolation and understanding economic trends generally requires a comprehensive view of various interrelated factors.
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Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows:
May 8 Spot rate: $ 1.25
May 31 Spot rate: $ 1.26
Jun. 7 Spot rate: $ 1.20
For what amount should Brisco's Accounts Payable be credited on May 8?
Answer:
$2,500,000
Explanation:
The computation of the amount which would be credited is shown below:
= Payment of foreign currency units (FC) is due in 30 days × exchange rate i.e spot rate on May 31
= 2,000,000 × $1.25
= $2,500,000
We simply multiply the payment with the spot rate so that the accurate value can come.
All other information which is given is not relevant. Hence, ignored it
At January 1, 2016, Sheffield Corp. has beginning inventory of 3000 surfboards. Sheffield estimates it will sell 11000 units during the first quarter of 2016 with a 12% increase in sales each quarter. Sheffield’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2016?
Answer:
budget sale revenue = $2,069,760
Explanation:
given data
beginning inventory = 3000
sell = 11000 units
sales = 12% increase
ending inventory = 25%
surfboard costs = $100
sold = $150
to find out
How much is budgeted sales revenue for the third quarter of 2016
solution
first we will get here budget sales unit for quarter 3 that is
budget sales unit = ( 11000 × 112% ) 112%
budget sales unit = $13798.4
and
selling price is here $150
so
budget sale revenue for 3rd quarter sale is = budget sales unit × selling price
budget sale revenue = $13798.4 × $150
budget sale revenue = $2,069,760
If Sheffield estimates it will sell 11000 units during the first quarter of 2016 with a 12% increase in sales each quarter. The amount of the budgeted sales revenue for the third quarter of 2016 is $2,069,760
First step is to estimate first quarter sales
Estimated first quarter sales= 11,000 units + (11,000 units x 12%)
Estimated first quarter sales=11,000 units +1,320 units
Estimated second quarter sales in units=12,320 units
Second step is to estimate second quarter sales
Estimated second quarter sales= 12,320 units + (12,320 units x 12%)
Estimated second quarter sales= 12,320 units + 1,478.4 units
Estimated second quarter sales= 13,798.4 units
Third step is to calculate how much is budgeted sales revenue for the third quarter of 2016 using this formula
Budgeted Sales for Third Quarter=Estimated second quarter sales × Selling price per unit
Let plug in the formula
Budgeted Sales for Third Quarter=13,798.4 units × $150
Budgeted Sales for Third Quarter=$2,069,760
Inconclusion if Sheffield estimates it will sell 11000 units during the first quarter of 2016 with a 12% increase in sales each quarter. The amount of the budgeted sales revenue for the third quarter of 2016 is $2,069,760
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Wilson has a 40 percent interest in the assets and income of the CC&W Partnership, and the basis in his partnership interest is $45,000 at the beginning of 2018. During 2018, the partnership's net loss is $60,000 and Wilson's share of the loss is $24,000. Also, Wilson receives a cash distribution from the partnership of $12,000 on June 30, 2018.
a. Indicate the amount of income or loss from the partnership that should be reported by Wilson on his 2018 individual income tax return.
b. Calculate Wilson's basis in his partnership interest at the end of 2018.
Answer:
a. $24,000
b. $9,000
Explanation:
a. The amount of income or loss from the partnership is limited to the share of the loss rather than its partnership interest
In the given case, the partnership interest is $45,000 and the share of his loss is $24,000
So, $24,000 is reported in his individual income tax return
b. The computation of the Wilson's basis in his partnership interest is shown below:
= Basis in his partnership interest - share of the loss - cash distribution received from the partnership
= $45,000 - $24,000 - $12,000
= $9,000
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $105 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $105 to $110.00, and the stock has paid a dividend of $17.00 per share.
a. What is the remaining margin in the account?
Remaining margin $
b-1. What is the margin on the short position? (Round your answer to 2 decimal places.)
Short margin %
b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?
Yes
No
c.
What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
Rate of return %
Answer:
a. $30,500
b1. 27.73%
b2. Yes because the 30% margin requirement is higher than 27.73% actual
c. -41.90%
Explanation:
a. Margin requirement at the beginning = 1,000 x 105 x 50% = $52,500
Payoff gained/(lose) from the short-sell position = ( Delivery price in the position - Market price - Dividend per stock ) x 1,000 = ( 105 - 110 - 17) x 1,000 = (22,000)
=> Remaining margin = Initial margin + Payoff from the short-sell position = 52,500 - 22,000 = $30,500
b1. Margin on the short position = Remaining margin / Values of underlying stocks in the position = 30,500 / 110,000 = 27.73%
b2. As the traders is in short position and the actual price is higher than the exercised price in the option, the margin on the short position lower than requirement ( 27.73% < 30%) will trigger a margin call.
c. Return on the investment equals to Pay-off from the position / initial margin requirement = -22,000 / 52,500 = 41.90%