Answer: change agent
Explanation:
A change agent is a person who dies something new in a company by utilizing anew process, adoption of new management structure or using an old model in a new way.
Since Best Buy’s new CEO and CFO will need to function as catalysts in helping the organization to deal with old problems in new ways. They will be known as change agents.
The CEO is termed as the person that is accountable for the overall company's performance. The role of the CEO is determined as the board of directors. Whereas, CFO is the person who manages the financial part of the company, and is accountable for the finance of the organization.
The correct answer is Change agent
A change agent is a person who dies something new in a company by utilizing a new process, adopting of new management structure, or using an old model in a new way. This is the person who acts as the agent of the company.
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Seadrill Engineering licenses software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides after sales consulting services and support to ensure smooth operation of the software over the license period of 5 years. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction on the date software is sold includes
Answer:
Dr Cash 420,000
Cr Sales Revenue (software) 300,000
Cr Unearned Service Revenue 120,000
Explanation:
software license $300,000
consulting services and support $120,000
total transaction cost $420,000
The recorded transaction should be:
Dr Cash 420,000
Cr Sales Revenue (software) 300,000
Cr Unearned Service Revenue 120,000
Cash account should be debited, since it's an asset. Sales revenue should be credited since it increases equity. Unearned revenue is a type of liability, so it should be credited.
Calculate the future value of an investment of $463 for 10 years earning an interest of 9%? (Round your answers to 2 decimal places.)
Answer:
$1,096.09
Explanation:
The computation of the future value by using the following formula is shown below:
As we know that
Future value = Present value × (1 + interest rate)^number of years
= $463 × (1 + 0.09)^10
= $463 × 2.367363675
= $1,096.09
We simply applied the above formula so that the future value could arrive and the same is to be considered
Which of the following is not one of the benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house? A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities. B. Streamlining company operations in ways that improve organizational flexibility and cut the time it takes to get new products into the marketplace. C. Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best. D. Helping a company assemble diverse kinds of expertise easily and efficiently. E. Improving a company’s ability to innovate.
Answer: A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities.
Explanation:
Outsourcing is the practice whereby organizations hire an outside party to help do certain functions wguvg could have been done by the workers in the organization but outsourced in order to focus on other production areas.
Out of the options given in the question, the one which is not a benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house is that "preventing a company from hollowing out its technical know-how, competencies, or capabilities".
Preventing a company from hollowing out its technical know-how, competencies, or capabilities is not benefits of outsourcing, hence option A is correct.
Outsourcing is the process of hiring an outside party to assist with some duties that might have been performed by employees within the firm but were outsourced in order to focus on other areas of production.
"Preventing a company from hollowing out its technical know-how, competencies, or capabilities" is not a benefit of outsourcing, whether domestically or internationally, value chain tasks now conducted in-house.
Thus, the option A is correct.
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Data pertaining to a company's joint production for the current period follows
Quantities produced 310 lbs. 260 lbs
Market value at split-off point . $10.2/lb. $20.4/lb
Compute the cost to be allocated to Product L for this period's $792 of joint costs if the value basis is used. (Do not round intermediate calculations.)
a. $295.81.
b. $49619.
c. $39600.
d. $2,926.00.
e. $962.19.
Answer: a. $295.81.
Explanation:
Using the value basis would mean that the product's share of the total market value will be used to determine it's share of the cost.
Total Market Value = Product L Market Value + Product M Market Value
= (310 lbs * 10.2) + ( 260 lbs * 20.4)
= 3,162 + 5,304
= $8,466
Product L's share of total market value
= 3,162/8,466
Product L's share of the $792 based on share of total market value
= (3,162/8,466) * 792
= $295.8072
= $295.81
Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant? a. The company's stock price hits a new low. b. An increase in costs incurred when filing for bankruptcy. c. An increase in the personal tax rate. d. The Federal Reserve tightens interest rates in an effort to fight inflation. e. An increase in the corporate tax rate.
Answer:
Option e: An increase in the corporate tax rate
Explanation:
Corporate income tax rate is used to know how much people are willing to invest their new capital and also where they will place that new capital.
An increase in it is likely to encourage a company to use more debt in its capital structure.
The lower the corporate tax rate, the more it drives or leads to growth in capital stock, wages, jobs and others while the higer(increase) in corporate income tax rate, the more it affects economic decisions.
An Increase in a company's debt ratio will therefore lead to an increase in the marginal cost of both debt and equity financing. Also this action may lower the company's WACC
True or False: The modern view of the Phillips curve indicates that to keep the unemployment rate low, policymakers should aggressively fight inflation to rapidly lower the inflation rate.
Answer:
False
Explanation:
False, the given statement is false because the Philips curve shows the inverse relationship between the inflation rate and unemployment. If the curve represents the inflation on the verticle axis and unemployment on the horizontal axis, then we can see that if the inflation rises, then unemployment falls. However, if inflation falls, then unemployment rises. Therefore, if the government wants to keep the unemployment low then it should fight with inflation.
Budgeted variable overhead for the year is $150,000. Expected activity is 30,000 standard direct labor hours. The actual hours worked were 15,000 and the standard hours allowed for actual production were 18,000. The variable overhead efficiency variance is:
Answer:
-$15,000 favorable variance
Explanation:
variable overhead efficiency variance = standard overhead rate x (actual hours - standard hours)
standard variable overhead rate = $150,000 / 30,000 = $5actual hours 15,000standard hours 18,000variable overhead efficiency variance = $5 x (15,000 - 18,000) = $5 x (-3,000) = -$15,000 favorable variance
Buckson Framing's cost formula for its supplies cost is $1,350 per month plus $18 per frame. For the month of June, the company planned for activity of 716 frames, but the actual level of activity was 713 frames. The actual supplies cost for the month was $14,820. The supplies cost in the flexible budget for June would be closest to:
Answer:
c. $ 14,238
Explanation:
Computation of costs in the flexible budget
Planned activity 716 units
Budgeted cost per unit $ 18 per frame
Total planned variable cost - 716 units * $ 18 $ 12,888
Fixed monthly cost $ 1,350
Total supplies cost in flexible budget for June $ 14,238
The other information regarding the actual costs and actual production are not required for determining the budgted cost for supplies.
Polychromasia Company sold inventory costing $30,000 to its subsidiary, Simply Colorful, for double its cost in 2009. Polychromasia owns 80% of Simply Colorful. Simply resold $50,000 of this inventory for $60,000 to outsiders in 2009. How much unrealized profit exists at the end of the year?
a) $20,000
b) $8,000
c) $10,000
d) $5,000
Answer:
D.
Explanation:
30000 x 2 = 60000
60000 - 50000 = 10000
10000/2
= 5000
Assume the government has a balanced budget and that the economy is experiencing a period of growth higher than predicted. The tax revenue collected by the government is likely to ________, which would lead to a ________.
The tax revenue that is collected by the government is likely to increase which would then lead to a budget surplus.
A budget reveals the expenditure and the revenue of the government for a particular fiscal year.
Since there is a balanced budget such that the revenue and the expenses for the given year is thesame, then due to the higher growth, there'll be an increase in the tax revenue.
The increase in tax revenue will then lead to a situation whereby the revenue is more than the expenditure, therefore this will lead to a budget surplus.
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Sell Inc.'s stock has a 25 percent chance of producing a 30% return, a 50 percent chance of producing a12% return, and a 25 percent chance of producing a 5% return. What is the firm's expected rate of return?
Answer:
r = 0.1475 or 14.75%
Explanation:
The expected rate of return or r is the average return that is expected from the stock. It is the expected rate of profit or loss that an investor can anticipate on an investment whose returns are known or anticipated.
The expected rate of return of can be calculated as follows,
r = pA * rA + pB * rB + ... + pN * rN
Where,
pA, pB and so on represents the probability of an event or return occuringrA, rB and so on are the return in different eventsr = 0.25 * 0.3 + 0.5 * 0.12 + 0.25 * 0.05
r = 0.1475 or 14.75%
What are the benefits and risks associated with social networks? Support your answers with relevant examples
Answer:
Explanation:
There are many benefits as well as risks to social networks. The greatest benefit is that they allow us to connect with individuals from anywhere in the world, at any distance, and in a seconds notice. This is incredibly powerful and opens the door for many opportunities in all types of markets. Social networks also come with risks, since everyone is on it people tend to share all of their information which can cause problems for that individual if it falls into the wrong hands. For example, an individual connects with a family member who lives in Brasil and has casual conversations with that family member every other day. A hacker may be able to access that information and extract all the valuable information needed to steal that individual's identity.
The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity? B) 6.92 percent D) 7.22 percent A) 6.97 percent C) 6.88 percent E) 7.43 percent
Answer:
The answer is D. 7.22 percent
Explanation:
Interest payments are being made semiannually, this means it is being paid twice in a year
N(Number of periods) = 16 periods ( 8 years x 2)
I/Y(Yield to maturity) = ?
PV(present value or market price) = $987
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 16; PV = -987 ; PMT = 35; FV= $1,000; CPT I/Y= 3.61
3.61 percent is the Yield-to-maturity for semiannual
Therefore, the Yield-to-maturity of the bond annually is 7.22 percent (3.61 percent x 2)
The Busby Corporation had a share price at the start of the year of $26.20, paid a dividend of $0.56 at the end of the year, and had a share price of $29.00 at the end of the year. Which of the following is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this period?
A) 5%
B) 7%
C) 9%
D) 13%
Answer:
D) 13%
Explanation:
Calculation for the percentage that is closest to the rate of return of investments
First step is to find the balance amount of the share price using this formula
Share price =(End of the year Share price + End of the year dividend)-Start of the year Share price
Let plug in the formula
Share price =($29.00+$0.56)-$26.20
Share price =$29.56-$26.20
Share price =$3.36
Second step is to find the rate of return of investments
Using this formula
Rate of return of investments= Share price/Start of the year Share price
Rate of return of investments
Let plug in the formula
Rate of return of investments=$3.36/$26.20
Rate of return of investments=0.13*100
Rate of return of investments=13%
Therefore the percentage that is closest to the rate of return of investments in companies with equal risk to The Busby Corporation for this perio will be 13%
Lay Outline, the advankage of income and expenditure account as amporal with recephe and payment accounts Clonks)
Answer:
One of the major advantage of this account that it helps the concern to know about its revenues. It gives the concern about their past records and the current trends. Moreover, it will provide the concern relevant information for their futuristic course of action.
Explanation:
What happens to the Purchasing Power of Money, Prices and the Nominal Rate of Interest in CASE 1: the case of an increasing supply of money and credit? CASE 2: the case of a decreasing supply of money and credit? CASE 3: the case of an increasing demand for money and credit? CASE 4: the case of a decreasing demand for money and credit?
Answer:
Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Explanation:
Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.
Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.
Morganton Company makes one product:The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,500, 16,000, 18,000, and 19,000 units what is the estimated cost of raw materials purchases for July?
Answer:
Missing information:
"The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound."
raw materials needs for July:
Units produced 16,000 x 4 = 64,000 pounds
ending inventory (18,000 x 4) x 10% = 7,200 pounds
- beginning inventory (16,000 x 4) x 10% = 6,400 pounds
total raw materials purchases 64,800 pounds
cost of raw materials for July = 64,800 x $2.50 = $162,000
On November 19, Nicholson Company receives a $25,800, 60-day, 10% note from a customer as payment on account. What adjusting entry should be made on the December 31 year-end
Answer:
adjusting entry should be :
Note Receivable $1,806 (debit)
Interest Income $1,806 (credit)
Explanation:
On Issuance of the note the entries recorded are :
Note Receivable $25,800 (debit)
Sales Revenue $25,800 (credit)
At year end, December 31, 42 days would have expired, thus the interest of 42 days accrues on the Note Receivable. Entries are as follows :
Note Receivable $1,806 (debit)
Interest Income $1,806 (credit)
Interest Calculation = $25,800 × 10% × 42/60
= $1,806
A division of a manufacturing company has a return on investment of 24%. The division has an opportunity to accept a project that is expected to earn a return on investment of 22%. The company’s hurdle rate is 20% which of the following statements is true?
a) A division reports the following figures: Profit margin =20% Investment turnover = 0.5. The division return on investment is
b) If a company has $2,000,000 invested in buildings, equipment, and other assets and desires to earn a return on investment of 30%, the company will need to earn a net income of $ .
Answer:
Return on Investment
The statement that is true is:
b) If a company has $2,000,000 invested in buildings, equipment, and other assets and desires to earn a return on investment of 30%, the company will need to earn a net income of $600,000 (30% of $2,000,000).
Explanation:
The company's Return on Investment is a financial performance measure that calculates the efficiency of the use of investment resources by dividing the returns generated by an investment by the cost of the investment during a period of time. It can be used to evaluate a divisional manager's performance based on the returns generated from the investments made in the division.
The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.
1. Issued 30,000 shares of capital stock in exchange for $300,000 in cash.
2. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
5. Paid $5,000 in rent on the warehouse building for the month of March.
6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2016.
7. Paid $70,000 on account for the merchandise purchased in 3.
8. Collected $55,000 from customers on account.
9. Recorded depreciation expense of $1,000 for the month on the equipment.
Required:
Analyze each transaction and classify each as a financing, investing, and/or operating activity (a transaction can represent more than one type of activity). In doing so, also indicate the cash effect of each. (Amounts to be deducted should be indicated with a minus sign. If there is no cash effect, leave cell blank.)
Answer:
1. Financing Activity : $300,000
2.Investing Activity : $10,000 and Non-cash Financing and Investing Activity : $30,000
3.Operating Activity : - $90,000
4.Operating Activity : $50,000
5.Operating Activity : -$5,000
6.Operating Activity : -$6,000
7.Operating Activity : -$70,000
8.Operating Activity : $55,000
9.Operating Activity : $1,000
Explanation:
Operating Activities involves the entity`s trading operation in ordinary course of business.
Investing Activities involves the entity`s sale or purchase of Investments.
Financing Activities involves the entity`s acquisition and sale of funds.
Average Rate of Return
Determine the average rate of return for a project that is estimated to yield total income of $148,500 over five years, has a cost of $300,000, and has a $30,000 residual value.
%
Answer:
22%
Explanation:
The formula to compute the accounting rate of return is shown below:
= Average net income ÷ average investment
where,
Average net income is
= Total income ÷ number of years
= $148,500 ÷ 5 years
= $29,700
And, the average investment would be
= (Cost - salvage value) ÷ 2
= ($300,000 - $30,000) ÷ 2
= $270,000 ÷ 2
= $135,000
Now put these values to the above formula
So, the rate would equal to
= $29,700 ÷ $135,000
= 22%
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Required:
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
3. Explain the reason for the difference in the amount of operating income reported in (1) and (2). Refer to the list of Labels and Amount Descriptions provided
Labels and Amount Descriptions
Labels
August 31
Cost of goods sold
Fixed costs
For the Month Ended
August 31
Variable cost of goods sold
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods manufactured
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Operating income
Inventory, August 31
Loss from operations
Manufacturing margin
Planned contribution margin
Sales
Sales mix
Selling and administrative expenses
Total cost of goods sold
Total fixed costs
Total fixed costs
Total variable cost of goods sold
Variable cost of goods manufactured
Variable selling and administrative expenses
Answer:
Kodiak Fridgeration Company
1. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00
Total manufacturing 8,940,000.00
Less Ending Inventory 894,000.00 8,046,000.00
Gross profit $2,214,000.00
Selling and administrative expenses:
Variable $972,000.00
Fixed 324,000.00 1,296,000.00
Net Income $918,000.00
2. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Total manufacturing 8,100,000.00
Less Ending Inventory 810,000.00 7,290,000.00
Gross profit $2,970,000.00
Fixed manufacturing cost 840,000.00
Selling and administrative expenses:
Variable 972,000.00
Fixed 324,000.00 2,136,000.00
Net Income $834,000.00
3. The reason for the difference in the amount of operating income reported in (1) and (2) are the cost of products assigned to cost of goods sold and ending inventory are not the same. The following reconciliation buttresses this point:
Net operating income as per absorption costing $918,000.00
less Ending inventory, ($149 - $135) x 6,000 84,000.00
Net operating income as per variable costing $834,000.00
Explanation:
a) Data and Calculations:
Units produced = 60,000
Units sold = 54,000
Ending inventory = 6,000
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Kodiak's absorption costing concept incorporates all production costs into the cost of products. This means that the cost of production includes all variable and fixed costs associated with production. Costs that are not related to production are treated as period costs. Whereas, with variable costing technique, only the variables costs of production are included in the costs of production. All fixed costs, including factory overheads are treated as period costs.
An investor has a $1,000,000 portfolio that is split evenly between "blue chip" stocks and Treasury securities. The current economic environment is characterized by low interest rates and flat stock prices - and this is expected to remain unchanged for a number of years. However, the residential and commercial real estate market is expected to be strong. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. Which of the following investment purchase recommendations would help achieve this objective?A. Mortgage REITsB. Mortgage BondsC. Equity REITsD. Fannie Mae Pass-Through Certificates
Answer:
Correct Answer:
B. Mortgage Bonds
Explanation:
Since residential and commercial real estate market is expected to be strong for a number of years, the best investment would be a mortage bond.
A mortgage bond is a bond in which holders have a claim on the real estate assets put up as its collateral. The lender might sell a collection of mortgage bonds to an investor, who then collects the interest payments on each mortgage until it's paid off. If the mortgage owner defaults, the bondholder gets her house.
Identify factors that could prevent an older, established company from effecting an enterprise-wide, customer-centric culture.
Answer:
A more established company may find it difficult to implement an enterprise-wide, customer-centric culture due to the following reasons:
A) Existence of a Multi-Product Business Model
A business entity that is well established with a lot of years under its belt will find it a tough challenge to shift from a product-oriented business model to a customer-oriented business model.
To be product-focused simply means that that a company has woven its organisational structure around products. For examples, a company that is into the gaming business may have teams for their Sports Betting Section, another for their online gaming section, game hardware section, gaming apps section etc.
First, for these various teams, their performance metric will largely depend on how functionally efficient their products are.
Second, techy or geeky staff are seldom efficient when it comes to emotional intelligence - a key requirement for being customer efficient.
One way to handle this is to ensure that there is a central Customer Relationship Management team that oversees the customers for each product.
B) Organisational Inflexibility
As direct to the point as it sounds, getting market intelligence for with the intention to use them for decision making is challenging. What is tougher is the ability to implement the insights from such intelligence to effect a turn around in the way customers perceive and respond to a company's offerings.
The ability to quickly take gather market intel, agree on a strategic direction based on same and execute can be referred to organisational agility.
The more bureaucratic and hierarchical an organisation is (this, by the way, characterises older and more established business systems) the less agile it is likely to be.
Cheers!
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32 % Bond fund (B) 9 % 23 % The correlation between the fund returns is 0.15. What is the Sharpe ratio of the best feasible CAL?
Answer:
0.296875
Explanation:
Given the following :
Probability distribution of risky funds :
- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)
Expected return - - - 15% - - - - - - - - - - 9%
Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%
Correlation between funds return = 0.15
Sure rate = 5.5%
To calculate the Sharpe ratio we use the formula :
Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment
For the stock fund :
Expected return = 15%
Risk free rate = market sure rate = 5.5%
Standard deviation = 32%
Sharpe ratio of stock fund :
(15% - 5.5%) / 32%
= 9.5% / 32%
= 0.296875
For Bond fund :
Expected return = 9%
Risk free rate = market sure rate = 5.5%
Standard deviation = 23%
Sharpe ratio of bond fund :
(9% - 5.5%) / 23%
= 3.5% / 23%
= 0.1521739
Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875
Read Eye on Fiscal Stimulus. How big was the fiscal stimulus package of 2008-2009, how many jobs was it expected to create, and how large was the multiplier implied by that expectation? Did the stimulus work?
Answer:
1. $787 billion
2. 650,000; 1.6
3. did not meet; the multiplier was much smaller than 1.6
Explanation:
The fiscal stimulus package of 2008-2009 was $787 billion. This is because, the United States government wanted to increase spending in order to have sufficient economic growth. Thus, the fiscal stimulus was expected to create 650,000 JOBS, in which the multiplier implied by that expectation is 1.6.
However, the stimulus did fiscal stimulus did not work, as it DID NOT MEET the expectations of the Obama administration, simply because "the multiplier was much smaller than 1.6"
Terry Dactel is considering the purchase of an asset having the following cash flows (in 000's):CF Prob.5 20%12 30%18 30%20 20%What is the asset’s standard deviation (in 000's)?
Answer: b. $5.4
Explanation:
First calculate the Expected return;
Expected cashflow = ∑ (Probability of cashflow * cashflow)
Expected cashflow = (5 * 0.2) + (12*0.3) + (18*0.3) +(20*0.2)
=$14
Standard deviation = √∑ [Probability * (CF - Expected CF)^2]
Standard deviation= √[(0.2*(5 - 14)^2) + (0.3*(12-14)^2) + (0.3*(18-14)^2) + (0.2*(20-14)^2)
Standard deviation = $5.4
if average demand for invenrory item is 200 units per day lead time is three days and safety stock is 1-- units the reorder point is
please do you mean 1 unit for safety stock or 100 units, will solve for both
Answer:when safety stock =1, Reorder point= 601 units
when safety stock =100, Reorder point= 700 units
Explanation:
Reorder Point (ROP), also called reorder level, is the point of inventoryset by a busness in which it replenishes its stock of items.
given:
Average demand= 200
lead time = 3
when safety stock =1
Reorder point= (Average demand X Delivery lead time ) + Safety stock
= (200 x 3 ) +1 = 601 units
when safety stock = 100
Reorder point= (Average demand X Delivery lead time ) + Safety stock
= (200 x 3 ) +100 = 700 units
The ABC Company is preparing its financial statements on December 31. During the year, they purchased IBM stock for $20,000. On December 31, the market value of the IBM stock is $8,000. The journal entry on December 31 will include a debit to:_______.
Answer:
Debit to unrealized loss for for $12,000
Explanation:
Based on the information given about ABC Company we were told that the company made a purchased of IBM stock for the amount of $20,000 in which the market value of the stock was the amount of $8,000 this means that the journal entry on December 31 will include a:
Debit to unrealized loss for for $12,000
Calculated as :
Unrealized loss=Market value - IBM stock
Unrealized loss=$8,000-$20,000
Unrealized loss=-$12,000
Shares in prince and nice have a beta of 0.9. The expected returns to the market are 10% and the risk free rate of return is 4%. What is the cost of equity capital for prince and nice?
Answer:
9.4%
Explanation:
using the CAPM formula, the cost of equity (Re) is:
Re = Rf + B(Rm - Rf)
Rf = risk free rate = 4%Rm = market risk = 10%B = beta = 0.9Re = 4% x [0.9 x (10% - 4%)] = 4% x (0.9 x 6%) = 4% x 5.4% = 9.4%
The cost of equity (Re) refers to the required rate of return that investors expect to receive from a certain investment, e.g. stocks or any particular project