Answer:
C) $108.57
Explanation:
Given data:
Capital gains yield (CGY) = 5%
Dividend yield = 0%
Sale price (S) = $114 per share
Capital gains yield is defined as a function of initial investment (I) and sale price (S) as follows:
[tex]CGY= \frac{S-I}{I}\\ 0.05 = \frac{114-I}{I} \\I=\frac{114}{1.05} \\I= \$ 108.57[/tex]
The initial cost of the investment was $108.57.
Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 4.5% charge on sales for using its card. On May 26, Brinker had $5,000 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit
A)On July 9, Mifflin Company receives a $8,900, 90-day, 12% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note. (Use 360 days a year.)
B)On November 1, Orpheum Company accepted a $11,300, 90-day, 12% note from a customer to settle an account. What entry should be made on the November 1 to record the note acceptance
C)Jervis sells $2,700 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 4% factoring fee. What entry should Jervis make to record the transaction
D) Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $142,500, allowance for doubtful accounts of $1,045 (credit) and sales of $1,115,000. If uncollectible accounts are estimated to be 8% of accounts receivable, what is the amount of the bad debts expense adjusting entry?
E) On February 1, a customer's account balance of $4,200 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method
F) On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $98,100; Allowance for Doubtful Accounts, credit balance of $1,051. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible
Answer:
Dr Cash $4,775
Dr Credit Card Expense 225
Cr Credit Sales 5,000
Explanation:
5,000 x 4.5% = $225 credit card expense
5,000 - 225 = $4,775 debit to cash
Dr Cash $4,775
Dr Credit Card Expense 225
Cr Credit Sales 5,000
A) $8,900 * (90/360) * (12/100) = $267
= $8,900 + $267
= $9,167
B) Dr Note Receivable $11,300;
Cr Accounts Receivable $11,300.
C) Dr cash $2,592;
Dr factoring fee expense $108;
Cr Accounts receivable $2,700
D) $142,500 x 8/100 = 11,400.00
= $11,400.00 + $1,045
= $12,445.00
E) Dr Allowance for doubtful debt - $4,200
Cr Account Receivable - $4,200
F) $98,100 x 4/100 = $3,924.00
= $3,924.00 - $1,051
= $2,873.00
__________ is when vendors ship merchandise prepackaged in the quantity required for each store to the distribution center.A. Traditional shippingB. Vertical merchandisingC. Combination warehousingD. Cross-dockingE. Horizontal merchandising
Answer:
D. Cross - docking
Explanation:
Cross - docking -
It is the method by which unloading of the materials takes place from the any car or semi - trailer trucks and then loading the respective materials directly into the rail cars , trailers , trucks , having very little or no storage between them , is known as cross - docking .
From the question , the correct term for the given statement is cross - docking .
Saphire Company budgeted the following production in units for the second quarter of the year:April45,000May38,000June42,000Each unit requires one pound of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory.A) Raw materials purchases budgeted for May in pounds equal:a) 39,200b) 45,600c) 50,600d) 42,900B) Desired beginning inventory for June in pounds equals:a) 9,575b) 12,600c) 10,500d) 11,400
Answer:
Option (a) is correct
Option (b) is correct.
Explanation:
In April:
Total raw material needed for production:
= Production units × raw material required for one unit of FG pound
= 45,000 × 1
= 45,000 pounds
Closing raw material to be maintained = 30% of 38,000
= 11,400
In May:
Total raw material needed for production:
= Production units × raw material required for one unit of FG pound
= 38,000 × 1
= 38,000 pounds
Raw material to be purchased:
= Total raw material needed for production + Closing raw material to be maintained - Opening raw material
= 38,000 + (42,000 × 30%) - 11,400
= 38,000 + 12,600 - 11,400
= 39,200 pounds
In June:
The Desired beginning inventory for June is equal to the closing inventory of May, i.e, 12,600 pounds.
A shirt manufacturer buys cloth by the 100-yard roll from a supplier. For setting up a control chart to manage the irregularities (e.g., loose threads and tears), the following data were collected froma sample provided by the supplier.Sample: 1 2 3 4 5 6 7 8 9 10Irregularities: 3 5 2 6 5 4 6 3 4 5(a) Using these data, set up a c-chart with z = 2.(b) Suppose the next five rolls from the supplier had three, two, five, three, and seven irregularitiies. Is the supplier process under control?
Answer:
Please see attachment
Explanation:
Please see attachment
To set up a c-chart, calculate the average number of irregularities and control limits. The supplier process is under control if the number of irregularities falls within the control limits.
Explanation:To set up a c-chart, we need to calculate the average number of irregularities in the sample and the control limits. The average number of irregularities in the sample is obtained by summing up the number of irregularities and dividing by the sample size. The control limits are calculated using the formula:
UCL = average number of irregularities + z(sqrt(average number of irregularities))
LCL = average number of irregularities - z(sqrt(average number of irregularities))
Using the given data, the average number of irregularities is 4.4. With z = 2, the control limits are UCL = 4.4 + 2(sqrt(4.4)) = 8.12 and LCL = 4.4 - 2(sqrt(4.4)) = 0.68. So, the control chart is set up.
To determine if the supplier process is under control, we need to check if the number of irregularities in the next five rolls falls within the control limits. The number of irregularities in the next five rolls is 3, 2, 5, 3, and 7. All of these values fall within the control limits, so the supplier process is considered to be under control.
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Financial information for Forever 18 includes the following selected data: ($ in millions except share data) 2021 2020 Net income $ 182 $ 164 Dividends on preferred stock $ 34 $ 25 Average shares outstanding (in millions) 200 200 Stock price $ 11.27 $ 10.22 2-a. Calculate the price-earnings ratio in 2020 and 2021.
The price-earnings ratio for Forever 18 in 2020 is 14.7 and in 2021 is 15.2. These ratios were calculated using the provided net income, dividends on preferred stock, average shares outstanding, and stock price.
Explanation:Calculating the price-earnings ratio, also known as the P/E ratio, simply involves taking the market value per share (stock price) and dividing it by the earnings per share (EPS). Here, EPS is calculated as (Net income - Dividends on preferred stock) divided by the Average number of shares outstanding.
So for 2020, the EPS would be ($164 million - $25 million)/200 million = $0.695 per share. Thus, the P/E ratio equals $10.22/$0.695 = 14.7.
For 2021, the EPS would be ($182 million - $34 million)/200 million = $0.74 per share. Therefore, the P/E ratio = $11.27/$0.74 = 15.2.
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After evaluating Null Company’s manufacturing process, management decides to establish standards of 2 hours of direct labor per unit of product and $15.50 per hour for the labor rate. During October, the company uses 11,500 hours of direct labor at a $180,550 total cost to produce 6,100 units of product. In November, the company uses 22,500 hours of direct labor at a $355,500 total cost to produce 6,500 units of product. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months. Classify each variance as favorable or unfavorable.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
After evaluating Null Company’s manufacturing process, management decides to establish standards of 2 hours of direct labor per unit of product and $15.50 per hour for the labor rate. During October, the company uses 11,500 hours of direct labor at a $180,550 total cost to produce 6,100 units of product. In November, the company uses 22,500 hours of direct labor at a $355,500 total cost to produce 6,500 units of product.
October:
Direct labor efficiency variance= (SQ - AQ)*standard rate
Direct labor efficiency variance= (12,200 - 11,500)*15.50= 10,850 favorable
Direct labor price variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor price variance= (15.5 - 15.7)*11,500= 2,300 unfavorable
Total variation= 10,850 - 2,300= 8,550 favorable
November:
Direct labor efficiency variance= (SQ - AQ)*standard rate
Direct labor efficiency variance= (13,000 - 22,500)*15.5= 147,250 unfavorable
Direct labor price variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor price variance= (15.5 - 15.8)*22,500= 6,750
Total variation= 154,000 unfavorable
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?
A. Shut down immediately, as the firm is not able to cover all of its variable costs.
B. Produce as much as possible so as to maximize the difference between the wage paid to collection agents and their marginal revenue product.
C. Hire five collection agents so as to minimize the amount of money the firm will lose.
D. Increase the wage rate paid to collection agents so that their marginal revenue product will increase.
Answer:
A. Shut down immediately, as the firm is not able to cover all of its variable costs.
Explanation:
Unfortunately, the company contribution is negative. Even at maximum revenue it cannot cover the variable cost needed to produce this revenue. Therefore, is not possible to make a gross profit to afford the rest of the cost. Currently, the company has their fixed cost and the loss from operations.
If it shut down, it will stop the loss from operations and only leave the fixed cost.
Marketing Inc. offers to create a campaign to increase N'Ice Creamery, Inc.'s online business. N'Ice agrees to pay for the service.
These parties have :
a. no contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
Answer:
B) express contract
Explanation:
A contract exist when there is an OFFER and ACCEPTANCE. Marketing Inc made an offer, while N'Ice Creamery made an acceptance. This is an agreement with clear terms of service and payment, their discussion is binding because they have stated their conditions. Payment will be made once service is done.
Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $53,000 but that employee income taxes totaling $7,600 and FICA taxes totaling $2,775 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. Assume Lightning Electronics also must pay $280 of unemployment taxes for this pay period. Prepare the journal entry or entries that Lightning would use to record the payroll. Include both employee and employer taxes. (If no entry is required for a transactio
Final answer:
To record the payroll, Lightning Electronics would debit Wages Expense for total wages, credit withholdings for income and FICA taxes, and credit Cash for net pay. They would also record the employer's payroll taxes including their share of FICA and unemployment taxes as additional payroll expenses.
Explanation:
When Lightning Electronics is recording its payroll, it should make the following journal entries to account for the wages, employee withholdings, employer taxes, and net pay:
Debit Wages Expense for the total wages ($53,000).Credit Employee Income Taxes Payable for the total income taxes withheld ($7,600).Credit FICA Taxes Payable for the total FICA taxes withheld ($2,775).Credit Cash for the amount of net pay deposited to employees' bank accounts ($42,625).Debit Payroll Tax Expense for the total employer payroll taxes (FICA and unemployment taxes).Credit FICA Taxes Payable for the employer's share of FICA taxes ($2,775).Credit Unemployment Taxes Payable for the unemployment taxes ($280).The employer is responsible for matching the employee's FICA tax contribution and for paying additional employer taxes like the unemployment tax. The net pay represents the money you have left when your paycheck makes its way to you after all required taxes are taken out.
The dollar value of the marginal product of labor is the:A.amount of output produced by the first unit of labor hired by a firm.B.extra output that is produced by hiring an additional unit of labor.C.value of the output produced by all the workers in a firm.D.contribution of an additional unit of labor to a firm's revenue.
Answer:
The answer is letter D.
Explanation:
The dollar value of the marginal product of labor is the contribution of an additional unit of labor to a firm's revenue.
You are a bidder in an independent private values auction, and you value the object at $4,000. Each bidder perceives that valuations are uniformly distributed between $1,000 and $7,000
Determine your optimal bidding strategy in a first-price, sealed-bid auction when the total number of bidders (including you) is:
a. 2 bidders.
b. 10 bidders.
c. 100 bidders.
Answer:
Please see attachment
Explanation:
Please see attachment
Final answer:
In a first-price, sealed-bid auction, the optimal bidding strategy with independent private values suggests bidding a fraction of your valuation, with the fraction being (n-1)/n where n is the number of bidders. For 2 bidders, bid $2,000; for 10 bidders, bid $3,600; for 100 bidders, bid $3,960.
Explanation:
In a first-price, sealed-bid auction, bidders submit one bid without knowing the others' bids, and the highest bidder wins but pays their bid amount. The optimal bidding strategy depends on the number of bidders, as it influences the probability of winning. According to auction theory, under the assumption of independent private values where bidders' valuations are uniformly distributed, the equilibrium strategy recommends bidding a fraction of your valuation, determined by the formula (n-1)/n, where n is the number of bidders.
With 2 bidders, the fraction is 1/2, so the bid should be $4,000 * (1/2) = $2,000.
With 10 bidders, the fraction is 9/10, so the bid should be $4,000 * (9/10) = $3,600.
With 100 bidders, the fraction is 99/100, the bid should be $4,000 * (99/100) = $3,960.
The strategy evolves as the number of bidders increases; with more competitors, one should bid closer to the valuation since the winning bid is likely to be higher. Additionally, due to statistical independence and revenue equivalence, the strategy to bid a fraction of valuation also ensures that on average, the revenue the seller obtains from any auction type remains the same.
Onslow Co. purchased a used machine for $178,000 cash on January 2. On January 3, Onslow paid $2,840 to wire electricity to the machine and an additional $1,160 to secure it in place. The machine will be used for six years and have a $14,000 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.
Required:
1. Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
Answer:
2nd January
Dr Machinery $178,000
Cr Cash $178,000
( to record the purchase of used machine)
3rd January
Dr Machinery $4,000
Cr Cash $4,000
(to capitalized the cost of wire electricity and installation to put the purchased machine in a ready-to-use stage).
Explanation:
- According to the information, all the expenses relating to the purchase of used machine are in cash. Thus, Cash is credited at the total amount of $182,000, in which $178,000 is credited in 2nd January to record the purchased price and the other $4,000 (2,840 + 1,160) is credited in 3rd January.
- Under GAAP, the recorded costs of a purchased fixed asset should included all the costs incurred which are necessary to bring the fixed asset to a ready-to-use stage. As wire electricity cost & cost for securing the machine in its position are all necessary for the machine's operation, these costs should be capitalized.
The purchase and installation of the machine requires journal entries for capitalization of the equipment. This includes debiting Equipment and crediting Cash for the purchase cost as well as additional costs for wiring and installation, resulting in a total capitalized cost of $182,000.
Explanation:When recording the purchase of the machine and the subsequent expenses related to readying and installing it, we must capitalize all amounts that are necessary to get the machine ready for use. This includes the purchase price of the machine and costs associated with installation and setup. Below is the journal entry required to capture these transactions:
Dr. Equipment $178,000
Cr. Cash $178,000
This entry records the purchase of the machine, where Equipment is debited for the cash outflow, and Cash is credited.
Dr. Equipment $2,840
Cr. Cash $2,840
This captures the cost to wire electricity to the machine.
Dr. Equipment $1,160
Cr. Cash $1,160
This captures the cost to secure the machine in place.
The machine's total capitalized cost is $178,000 (purchase price) + $2,840 (wiring) + $1,160 (installation) = $182,000.
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Embassy Club Condominium, located on the west coast of Florida, is undertaking a summer renovation of its main building. The project is scheduled to begin May 1, and a September 1 (17-week) completion date is desired. The condominium manager identified the following renovation activities and their estimated times:
Draw a project network. What are the critical activities? What activity has the most slack time? Will the project be completed by September 1?
Answer
The answer and procedures of the exercise are attached in the following 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 two sheets with the formulas indications.
Critical activities are those with zero slack time in a project. Slack time is task flexibility and the task with most slack time has the greatest difference between earliest and latest start times. Whether a project finishes by a certain date depends on if the longest path (critical path) is equal to or less than the total available project time.
Explanation:The scenario described pertains to project management, a topic within business studies, specifically focusing on project scheduling and network analysis. The specific instance involves the Embassy Club Condominium's renovation project. To solve this we first create a project network from the activities and their estimated times, then identify the critical activities (those with zero slack time), which are steps in the project that cannot be delayed without delaying the entire project. Slack time is the total time that you can delay a task without delaying the project. More slack time means that project scheduling is more flexible.
However, without the specific activity list and their estimated times, I can't provide a detailed solution. But in general, to identify which activity has the most slack time, you would look for the task with the greatest difference between its earliest and latest start times.
Finally, if the longest path (the critical path) through the network is shorter than or equal to the total project time available (17 weeks in this scenario), the project can be completed by the desired date (September 1). If it's longer than the available time, the project won't be completed by the desired date without changes to the project plan.
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Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario. He will borrow $2 comma 000 from Wendy, who will charge him 6% on the loan. He will also borrow $1 comma 500 from Bebe, who will charge him 8% on the loan, and $800 from Shelly, who will charge him 14% on the loan. What is the weighted average cost of capital for Eric?
Answer:
Cost of Capital = 8.186
Explanation:
given data
borrow $2,000
charge = 6%
borrow = $1,500
charge = 8%
borrow = $800
charge = 814%
to find out
weighted average cost of capital for Eric
solution
we get first Total Capital value that is
Total Capital value = Value of Wendy + Value of Bebe + Value of Shelly
Total Capital value =$ 2000 + $1500 + $800
Total Capital value = $4300
and
Weight of Wendy will be = Value of Wendy ÷ Total Capital Value
Weight of Wendy = [tex]\frac{2000}{4300}[/tex]
Weight of Wendy =0.4651
and
Weight of Bebe will be = Value of Bebe/Total Capital Value
Weight of Bebe = [tex]\frac{1500}{4300}[/tex]
Weight of Bebe = 0.3488
and
Weight of Shelly will be = Value of Shelly/Total Capital Value
Weight of Shelly = [tex]\frac{800}{4300}[/tex]
Weight of Shelly = 0.186
so
Cost of Capital is here = Weight of Wendy × Cost of Wendy + Weight of Bebe × Cost of Bebe + Weight of Shelly × Cost of Shelly
put here value
Cost of Capital = 6 × 0.4651 + 8 × 0.3488 + 14 × 0.186
Cost of Capital = 8.186
The weighted average cost of capital (WACC) is calculated based on the proportion of each loan and its respective interest rate. In this scenario, Eric borrows money from three sources at different interest rates. The WACC for Eric's funding is 8.19%.
Explanation:The weighted average cost of capital (WACC) is used to calculate the average cost of capital for a company. In Eric's scenario, he is borrowing money from three different sources, each with a different interest rate. To calculate the WACC, we need to determine the proportion of each loan and multiply it by the respective interest rate.
Let's calculate:
Loan from Wendy: $2,000 at 6% = $120Loan from Bebe: $1,500 at 8% = $120Loan from Shelly: $800 at 14% = $112Next, we sum up the total amount borrowed: $2,000 + $1,500 + $800 = $4,300. The weighted average cost of capital is then the total interest paid divided by the total amount borrowed:
Total interest paid = $120 + $120 + $112 = $352
WACC = $352 / $4,300 = 8.19%
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Olivia is single, 66 years old, and not blind.
She paid all the cost of keeping up her home. She earned $55,000 in wages for 2019.
Olivia provided all the support for her two grandchildren who lived with her all year. Cora is 11 years old and Jack is 15 years old.
She does not have enough deductions to itemize.
Olivia, Cora, and Jack are all U.S. citizens with valid Social Security numbers.
2. The maximum amount of child tax credit that Olivia is able to claim per qualifying child for 2019 is:
A. $500
B. $1,000
C. $1,400
D. $2,000
Option D, The maximum amount of child tax credit that Olivia is able to claim per qualifying child for 2019 is $2000
Explanation:
The child's tax credit amounts to up to $2,000 for each child qualified and $500 for each qualifying worker. It is one of three children-oriented federal tax credits that make your tax bill the most effective.
The child's additional tax credit was the reimbursable part of the child's tax debt. Families who pay to the Treasury less than Child Tax Credit sum will assert it. Because the child tax credit was not refundable, the extra child tax credit has been reimbursed to the taxpayer to repay a proportion of the withheld child tax credit.
For 2018 to 2025, the 2019 tax bill abolished this provision the present credit for Child Tax does; however, include a small amount of the refundable credit clause.
Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.
1) Compute the unit sales to earn the target income.
2) Compute the dellar sales to earn the target income?
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.
A) Break-even point= (fixed costs + profit)/ contribution margin
Break-even point= (879,200 + 1,400,000)/(280 - 224)= 40,700 units
B) Break-even point (dollars)= (fixed costs + profit)/ contribution margin ratio
Break-even point (dollars)= 2,279,200/ (56/280)= $11,396,000
Suppose you invested $60 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a
dividend of $0.63 today and then you sold it for $65. What was your return on the investment?
A) 6.57%
B) 7.51%
C) 9.38%
D) 10.32%
Answer:
Return on investment will be 9.38 %
So option (c) will be correct option
Explanation:
We have given purchase price = $60
Dividend received = $0.63
Selling price = $65
We have to find the return on investment
We know that return on investment is given by
Return in investment [tex]=\frac{selling\ price-purchase\ price+dividend\ received]}{purchase\ price}=\frac{65-60+0.63}{60}=0.0938=9.383[/tex] %
So return on investment will be 9.38 %
So option (c) is the correct option
You invest 60% of your financial assets in Standard & Poor’s Depository Receipts with an expected return of 10% and a standard deviation of 20% and 40% of your financial assets in MSCI EAFE Index Fund with an expected return of 12% and a standard deviation of 30%. The correlation between the two investments is 35%. What are the expected return and the standard deviation of your portfolio?
Answer:
Expected Return = 10.80%
Standard Deviation = 19.72%
Explanation:
Amount invested in Standard & Poor’s Depository Receipts = 60%
Expected return of Standard & Poor’s Depository Receipts = 10%
standard deviation of Standard & Poor’s Depository Receipts = 20%
Amount invested in MSCI EAFE Index Fund = 40%
Expected return of MSCI EAFE Index Fund = 12%
Standard deviation of MSCI EAFE Index Fund = 30%
Correlation between the two investments = 35%
Now,
Expected Return = ∑(Amount invested × Expected rate of return)
= 0.60 × 0.10 + 0.40 × 0.12
or
= 10.80%
Standard Deviation = √(∑(Amount invested × Standard deviation))²
= √[(0.60)²(0.20)² + (0.40)²(0.30)² + 2(0.60)(0.40)(0.20)(030)(0.35)]
or
Standard Deviation = 19.72%
The expected return of your portfolio is 10.8% and the standard deviation is 19.72%. These values are derived based on weighted averages and the combined risk metrics of the individual investments.
Expected Return and Standard Deviation of the Portfolio
To calculate the expected return of your portfolio, you need to take the weighted average of the expected returns of the individual investments.
Expected Return of SPDR: 10%Expected Return of MSCI EAFE: 12%Weight of SPDR: 60%
Weight of MSCI EAFE: 40%
Expected Return of Portfolio:
0.60 * 10% + 0.40 * 12% = 10.8%
Calculating Standard Deviation
The formula for the standard deviation of a two-asset portfolio is:
σp = √[ (w1² × σ1²) + (w2² × σ2²) + 2 × w1 × w2 × σ1 × σ2 × ρ12 ]
Where:
w1 = weight of SPDR = 0.60
w2 = weight of MSCI EAFE = 0.40
σ1 = standard deviation of SPDR = 20%
σ2 = standard deviation of MSCI EAFE = 30%
ρ12 = correlation between SPDR and MSCI EAFE = 35% = 0.35
Plugging in the values:
σp = √[ (0.60² × 0.20²) + (0.40² × 0.30²) + 2 × 0.60 × 0.40 × 0.20 × 0.30 × 0.35 ]
= √[ 0.0144 + 0.0144 + 0.01008 ]
= √[ 0.03888 ]
= 0.1972 or 19.72%
The **expected return** of your portfolio is 10.8% and the **standard deviation** is 19.72%.
On August 1, 1958, first-class postage for a 1-ounce envelope was 4 cents. On August 1, 2007, a first-class stamp for the same envelope cost 41 cents. What was the annual compound increase in the cost of first-class postage during the 49-year period?
Answer:
4.86%
Explanation:
Given that,
First-class postage for a 1-ounce envelope = 4 cents
On August 1, 2007
A first-class stamp for the same envelope cost = 41 cents
Period, n = 49 years
[tex]F=P(1+i)^{n}[/tex]
[tex]41=P(1+i)^{49}[/tex]
[tex]\frac{41}{4}=(1+i)^{49}[/tex]
[tex]10.25\ cents=(1+i)^{49}[/tex]
[tex]1.0486=(1+i)[/tex]
i = 1.0486 - 1
= 0.0486 or 4.86%
Therefore, the interest rate is 4.86%.
The annual compound increase in the cost of first-class postage during the 49-year period was approximately 4.57%.
Explanation:To calculate the annual compound increase in cost, we can use the compound interest formula. The formula is:
A = P(1 + r/n)^(nt)
Where:
A is the final amountP is the initial amount (4 cents in 1958)r is the annual interest raten is the number of times interest is compounded per year (1)t is the number of years (49)In this case, the initial amount is 4 cents and the final amount is 41 cents, so we need to solve for r. Rearranging the formula, we get:
r = (A/P)^(1/nt) - 1
Substituting the given values, we have:
r = (41/4)^(1/(1*49)) - 1
Calculating this expression gives us r = 0.0457, or 4.57%.
Therefore, the annual compound increase in the cost of first-class postage during the 49-year period was approximately 4.57%.
Foutz Corporation has entered into a 8 year lease for a piece of equipment. The annual payment under the lease will be $3,600, with payments being made at the beginning of each year. If the discount rate is 17%, the present value of the lease payments is closest to: (Round to nearest dollar)
Answer:
$17,721
Explanation:
The computation of the Net present value is shown below
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
where,
rate is 17%
Year = 0,1,2,3,4 and so on
Discount Factor:
For Year 1 = 1 ÷ 1.17^0 = 1
For Year 1 = 1 ÷ 1.17^1 = 0.8547
For Year 2 = 1 ÷ 1.17^2 = 0.7305
For Year 3 = 1 ÷ 1.17^3 = 0.6244
For Year 4 = 1 ÷ 1.17^4 = 0.5377
For Year 5 = 1 ÷ 1.17^5 = 0.4561
For Year 6 = 1 ÷ 1.17^6 = 0.3898
For Year 7 = 1 ÷ 1.17^7 = 0.3332
So, the calculation of a Present value of all yearly cash inflows are shown below
= Year 0 cash inflow × Present Factor of Year 0 + Year 1 cash inflow × Present Factor of Year 1 + Year 2 cash inflow × Present Factor of Year 2 + Year 2 cash inflow × Present Factor of Year 2 + Year 3 cash inflow × Present Factor of Year 3 + Year 4 cash inflow × Present Factor of Year 4 + Year 5 cash inflow × Present Factor of Year 5 + Year 6 cash inflow × Present Factor of Year 6 + Year 7 cash inflow × Present Factor of Year 7
= $3,600 × 1 + $3,600 × 0.8547 + $3,600 × 0.7305 + $3,600 × 0.6244 + $3,600 × 0.5377 + $3,600 × 0.4561 + $3,600 × 0.3898 + $3,600 × 0.3332
= $3,600 + $3,077 + $2,630 + $2,248 + $1,921 + $1,642 + $1,403 + $1,200
= $17,721
We take the first four digits of the discount factor.
To calculate the present value of the lease payments, use the formula for the present value of an annuity. Plug in the values of the annual payment, discount rate, and number of years. Solve the equation to find the present value.
Explanation:To calculate the present value of the lease payments, we need to discount each payment to its present value using the discount rate. In this case, the annual payment is $3,600, and the discount rate is 17%. We can use the formula for the present value of an annuity to calculate the present value of the lease payments. The formula is:
PV = PMT × (1 - (1 + r)^-n) / r
where PV is the present value, PMT is the annual payment, r is the discount rate, and n is the number of years.
Plugging in the values, we have:
PV = $3,600 × (1 - (1 + 0.17)^-8) / 0.17
Solving this equation will give us the present value of the lease payments closest to the nearest dollar.
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Most fraud investigators utilize the fraud triangle theory. A new theory called the fraud diamond has been proposed. Which of the following is an element of the fraud diamond and is not an element of the fraud triangle? Motive Opportunity Capability Liquidity
Answer:
C. Capability.
Explanation:
The fraud triangle consist of opportunity, incentive, and rationalization. However, there's not a single mention of capability of being a part of it.
Southern Hydraulic Supply is undertaking a review of their inventory policies. A typical product is a small hydraulic fitting. Currently, Southern orders 1,000 of these fittings at a time from their supplier. The demand for the fittings is 52,000 per year, the ordering cost is $50 per order, and the cost to hold one fitting in inventory for one year is $1.25. Each unit costs $8. What is the total annual cost of Southern’s current inventory policy? Group of answer choices $2039 $300,000 $418,550 $419,225
Answer:
$418,550
Explanation:
Steps are shown below:
a. The computation of the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{52,000}\times \text{\$50}}{\text{\$1.25}}}[/tex]
= 2,040 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $52,000 ÷ 2,040 units
= 25.49 orders
c. The average inventory would equal to
= Economic order quantity ÷ 2
= 2040 units ÷ 2
= 1,020 units
d. The total cost of ordering cost and carrying cost equals to
Ordering cost = Number of orders × ordering cost per order
= 25.49 orders × $50
= $1,275
Carrying cost = average inventory × carrying cost per unit
= 1,020 units × $1.25
= $1,275
So, the total annual cost would be
= Purchase cost + ordering cost + carrying cost
= $416,000 + $1,275 + $1,275
= $418,550
Purchase cost = Annual demand × cost per unit
= 52,000 × $8
= $416,000
Suppose you make a £550,000 sale to a British customer who has 60 days to pay you in cash.
The customer will pay you in British pounds, but your company is based in the United States, so you are most concerned with the dollar value of the payment.
If the customer pays you £550,000 today, how much is that worth in dollars?
Answer:
$707,379.75 USD
Explanation:
Each Pound sterling is worth $1.29 USD
The value in dollars of a £550,000 payment depends on the exchange rate between the British pound and the US dollar on the day of payment, and without knowing the exchange rate we can't determine the exact value.
Explanation:The payment's dollar value will be determined by the exchange rate between the British pound and the US dollar on the payment date. Without the exchange rate provided, I cannot give a definitive figure. For example, if the exchange rate on the day of payment is 1.3 dollars to the pound, then the payment would be worth $715,000 (1.3 * £550,000). But if the exchange rate was 1.4 dollars to the pound, the payment would be worth $770,000. Therefore the value can fluctuate greatly depending on the day's exchange rate.
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Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $100,000 of business income from WCC for the year. Jacob's marginal income tax rate is 37%. The business allocation is subject to 2.9% of self-employment tax and 0.9% additional Medicare tax.A) What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income?B) What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI duduction?
Answer:
A) $40,014
(B) $32,614
Explanation:
Pleaase see attachment .
Jacob's total tax liability on the $100,000 business income allocation from the LLC would be $40,800 if the income is not QBI and $33,400 if it is QBI assuming he qualifies for the full 20% deduction. Calculations include income tax, self-employment tax, and additional Medicare tax.
Explanation:When calculating the taxes on business income for a self-employed individual such as Jacob, we consider several different types of taxes. In the scenario where the income is not qualified business income (QBI), Jacob would owe income tax based on his marginal rate as well as self-employment tax, which includes the Social Security and Medicare components.
The income tax on $100,000 at a marginal rate of 37% would be $37,000.Self-employment tax is calculated as 2.9% for Medicare, which amounts to $2,900.The additional Medicare tax of 0.9% on the $100,000 would be $900.Therefore, if the income is not QBI, the total tax would be the sum of the income tax, self-employment tax, and additional Medicare tax: $37,000 + $2,900 + $900 = $40,800.
If the $100,000 is considered Qualified Business Income and Jacob qualifies for the full QBI deduction (20%), the calculation would change. With the QBI deduction, only 80% of the business income would be subject to income tax. Here's the math for scenario B:
QBI deduction: 20% of $100,000 = $20,000, reducing taxable income to $80,000.Income tax on $80,000 at a 37% marginal rate would be $29,600.Self-employment tax (2.9%) on $100,000 remains at $2,900, as it is calculated on the full amount.The additional Medicare tax (0.9%) also remains at $900.In this case, the total tax Jacob would owe with the QBI deduction would be $29,600 + $2,900 + $900 = $33,400.
Ayayai Corp. issued 3,200 5%, 5-year, $1,000 bonds dated January 1, 2022, at face value. Interest is paid each January 1.
(a) Prepare the journal entry to record the sale of these bonds on January 1, 2022.
Answer:
Explanation:
The journal entry is shown below:
On January 1, 2022
Cash A/c Dr $3,200,000 (3,200 shares × $1,000)
To Bonds payable A/c $3,200,000
(Being the sale of the bond is recorded)
While recording the sale of the bond we debited the cash account as cash is received and credited the bond payable account as bond is sold.
The interest rate is ignored
Indigo Inc. owns land that it purchased on January 1, 2000, for $418,200. At December 31, 2017, its current value is $679,700 as determined by appraisal. At what amount should Mickelson report this asset on its December 31, 2017, balance sheet?
Answer:
$679,700
Explanation:
I believe Mickelson is the person preparing the books for Indigo Inc.
This question tests your knowledge of revaluation and its application to financial statements. It indirectly checks your knowledge of depreciation also.
A quick definition of terms would make it clearer.
Depreciation is the systematic allocation of the price of an asset over its useful life. That is once an asset (non-current) is purchased, it cannot be used up immediately in one financial year, hence accountants usually want to spread the use of the asset and match it with whatever revenue they get from the use of the asset (an application of prudence concept).
But land does not depreciate, rather it appreciates over time. Due to the fact that land appreciates over time, it would be misrepresentation on the part of Mickelson to report the value of the asset in December 2017 at the price in which the land was purchased in 2000.
Because land appreciates over time, a revaluation is more appropriate. this revaluation compares the carrying value of the land with the fair value on the land as at the date of revaluation (comparing $418,200 with $679,700) and the higher is used.
Hence to faithfully represent the current details of the status of the land, the IFRS (International Financial Reporting Standards) states that the entity should record the value of land at fair value.
I hope this is clear and easy to understand.
Other concepts you might want to check out are;
depreciation
carrying amount
revaluation surplus
fair value
Rihanna Company is considering purchasing new equipment for $507,300. It is expected that the equipment will produce net annual cash flows of $57,000 over its 10-year useful life. Annual depreciation will be $50,730. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)
Answer:
8.9 years
Explanation:
The formula to compute the payback period is shown below:
= Initial investment ÷ Net cash flow
where,
Initial investment is $263,000
And, the annual net cash flow is $57,000
Now put these values to the above formula
So, the value would equal to
= ($507,300) ÷ ($57,000)
= 8.9 years
The depreciation expense is ignored
Final answer:
The cash payback period for Rihanna Company's new equipment, with an initial cost of $507,300 and net annual cash flows of $57,000, is approximately 8.9 years.
Explanation:
To compute the cash payback period, we need to determine how long it will take for the equipment to generate enough cash flow to cover its cost. Here, we have an initial investment of $507,300 and annual net cash flows of $57,000.
The calculation is straightforward: divide the initial investment by the annual cash flow:
Payback Period = Initial Investment / Annual Cash Flows
Payback Period = $507,300 / $57,000
Payback Period ≈ 8.9 years
We round the result to one decimal place, which gives us a cash payback period of 8.9 years.
Emma Peterson is a worker for ABC Inc. She has an effort cost function of C = 2e^2 and a monthly reservation wage of $3,500. Her wage function is W = 3,500 + 0.4Q. If the incentive coefficient is equal to 0.4 then Q = 400e. Q is Emma’s output. Assume that the incentive coefficient increases from 0.4 to 0.5 and Emma’s base salary decreases from $3,500 to $3,000.
a. What will happen to her level of effort?
b. How will this change XYZ Company’s profits?
Answer:
a.If p=1 ,the profit of ABC company = 6100
b. The profit of ABC company increased because the effort level increased and the wage rate also increased but the output increased faster than the wage rate .
Explanation:
Please see attachment
Adrienne worked 88 hours during a biweekly period. Her standard workweek comprises 38.5 hours and company policy states that employees may receive overtime or compensatory time for hours worked in excess of 38.5. She has requested compensatory time in lieu of overtime, in keeping with company policy. She must receive _____________ hours of compensatory time.
Answer:
She must receive 11 hours of compensatory time
Explanation:
Company policy pays overtime if workers exceed 38.5 hours per week.
38.5 X 2 weeks = 77 hours
Adrienne worked 88 hours, therefore:
88 hours worked - 77 non overtime hours = 11 overtime hours
Bronson Industries reported a deferred tax liability of $8 million for the year ended December 31, 2017, related to a temporary difference of $20 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $30 million. Required: 1. & 2. Determine the type of accounting change and prepare the appropriate journal entry to record Bronson's income tax expense in 2018 and adjustment, if any, is needed to revise retained earnings as a result of the change.
Answer:
Please see attachment
Explanation:
Please see attachment