Answer:
a.
WACC - Company = 10.94%
WACC - Project = 11.94%
b.
The maximum that the company will be willing to pay for this project is $61.0626 million
Explanation:
a.
To calculate the maximum cost that the company will be willing to pay today, we first need to find out the company and project WACC.
The WACC or weighted average cost of capital is the cost of a company's capital structure. It is calculated as follows,
WACC = wD * rD * (1 - tax rate) + wP * rP + wE * rE
Where,
d, p and e represents debt, preferred stock and common equityw represents the weight of each componentr represents the cost of each componentWeightage of debt and equity
Total assets = debt + equity
Total assets = 0.52 + 1 = 1.52
wD = 0.52/1.52
wE = 1/1.52
WACC - Company = 0.52/1.52 * 0.066 + 1/1.52 * 0.132
WACC - Company = 0.1094 or 10.94%
WACC of project is 1% more than WACC of company. So WACC of project is 10.94% + 1% = 11.94%
b.
The maximum that must be paid for this project can be calculated by calculating the present value of the cash flows provided in form of saving by this project.
Using the constant growth model of cash flow approach,
Present value = 5.3 * (1+0.03) / (0.1194 - 0.03)
Present value = $61.0626 million
Suppose Saron has 7 Birr to be spent on two goods: banana and bread. The unit price of banana is 1 Birr and the unit price of a loaf of bread is 4 Birr. The total utility she obtains from consumption of each good is given below. Table 3.2: Utility schedule for two commodities Income = 7 Birr, Price of banana = 1 Birr, Price of bread = 4 Birr Banana Bread Quantity TU MU MU/P Quantity TU MU MU/P 0 0 - - 0 0 - - 1 6 6 6 1 12 12 3 2 11 5 5 2 20 8 2 3 14 3 3 3 26 6 1.5 4 16 2 2 4 29 3 0.75 5 16 0 0 5 31 2 0.5 6 14 -2 -2 6 32 1 0.25
Answer:
Solution:
A.
p_x=3, G_x=\frac {100}{3}=33\frac{1}{3}p
x
=3,G
x
=
3
100
=33
3
1
p_y=5, G_y=\frac{100}{5}=20p
y
=5,G
y
=
5
100
=20
B.
100-0.25\times 100=75100−0.25×100=75
p_x=3, G_x=\frac {75}{3}=25p
x
=3,G
x
=
3
75
=25
p_y=5, G_y=\frac{75}{5}=15p
y
=5,G
y
=
5
75
=15
C.
p_x=6, G_x=\frac {100}{6}=16\frac{2}{3}p
x
=6,G
x
=
6
100
=16
3
2
D.
p_y=5, G_y=\frac{100}{4}=25p
y
=5,G
y
=
4
100
=25
2.
MU_x=68-60=8, p_x=2MU
x
=68−60=8,p
x
=2
MU_y=29-25=4, p_y-?MU
y
=29−25=4,p
y
−?
\frac {MU_x}{p_x}=\frac{MU_y}{p_y}
p
x
MU
x
=
p
y
MU
y
\frac{8}{2}=\frac {4}{p_y}
2
8
=
p
y
4
p_y=1p
y
=1
While making organizational decisions, managers should take into consideration the needs and interests of the employees, suppliers, and customers, who are the organization's _____.
Answer:
Stakeholders.
Explanation:
Stakeholders are the group of people who may be interested in the processes of a particular company. They are formed by the group of employees, suppliers and customers, who are the stakeholders in the organization.
Therefore, it is necessary that strategic actions and business processes are aimed at satisfying the interests and needs of stakeholders, who are the company's public, that is, the reason for the existence of a company.
It is important for the company to identify who its stakeholders are and how they directly impact the business, so that it can shape a strategy that is aligned with its interests and what they expect from the company.
Satisfying stakeholders and adopting corporate governance, contributes to the company having a strong market position and achieving several competitive and strategic advantages in the market, increasing its results and profitability.
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 18 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 990 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 990
Actual number of direct labor hours worked: 291 hours
Actual rate paid per direct labor hour: $16.00
Standard rate per direct labor hour: $15.00
Required:
a. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach.
b. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June.
c. Calculate the total direct labor variance for oil changes for June.
d. What if the actual wage rate paid in June was $14.00? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances would be below. If required, round your answers to the nearest cent.
Answer:
Guillermo's Oil and Lube Company
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance
a1. Direct labor rate variance (LRV) = Actual Labor Rate minus Standard Labor Rate multiplied by Actual hours worked
= $16 - $15 x 291
= $291 U
a2. Direct labor efficiency variance (LEV) = Standard hours minus Actual hours x Standard hourly rate
= 297 - 291 x $15
= $90 F
b1. Direct labor rate variance (LRV) = the difference between the actual wages paid and the standard wages
= (Actual labour rate x actual hours) - (standard rate x actual hours)
= ($16 x 291) - ($15 x 291)
= $4,656 - $4,365
= $291 U
b2. Direct labor efficiency variance = the difference between the actual number of direct labor hours worked and budgeted direct labor hours that should have been worked based on the standards
(291 x $15) - (297 x $15)
4,365 - 4,455
= $90 F
c. Total Direct labor rate variance (LRV) = Actual Wages minus Standard Wages
= (Actual labor rate x Actual hours) - (Standard labor rate x Standard hours)
= ($16 x 291) - ($15 x 297)
= $4,656 - $4,455
= $201 U
d. If actual wage rate paid in June was $14.00:
d1. Direct labor rate variance (LRV) = Actual Labor Rate minus Standard Labor Rate multiplied by Actual hours worked
= $14 - $15 x 291
= $291 F
d2. Direct labor efficiency variance (LEV) = Standard hours minus Actual hours x Standard hourly rate
= 297 - 291 x $15
= $90 F
d3. Total Direct labor rate variance (LRV) = Actual Wages minus Standard Wages
= (Actual labor rate x Actual hours) - (Standard labor rate x Standard hours)
= ($14 x 291) - ($15 x 297)
= $4,074 - $4,455
= $381 F
Explanation:
a) Data and Calculations
Actual number of oil changes performed: 990
Standard number of direct labor hours to for 990 oil changes = 990 x 0.3 hours (since 18 minutes = 0.3 hours or 18/60) = 297 hours
Actual number of direct labor hours worked: 291 hours
Actual rate paid per direct labor hour: $16.00
Standard rate per direct labor hour: $15.00
b) The impact on direct labor rate variance if the actual wage rate paid in June was $14 was to turn the unfavorable labor rate variance into a favorable variance of $291 and the total direct labor variance would have been a favorable variance $381 instead of an unfavorable variance of $201.
what is the various nation income meature
Explanation:
Concept of National Income
The National income is the total amount of income accruing to a country from economic activities in a year time. It includes payments made to all resources either in the form of wages, interest, rent, and profit.
A decline in the domestic real interest rate would cause a ________ in net exports and a ________ in the exchange rate.
Answer: fall; rise
Explanation:
The real interest rate is the rate of interest that is received by an investor, lender or after inflation has been taken into consideration.
The real interest rate is when the inflation rate is deducted from the nominal interest rate. A reduction in the domestic real interest rate would cause a fall in net exports and a rise in the exchange rate.
Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?
Complete Question:
Crossfire Company segments its business into two regions - East and West. The company prepared a contribution format segmented income statement as shown below:
Total Company East West
Sales $900,000 $600,000 $300,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 225,000 120,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $84,000 $70,000 $14,000
Common Fixed Expenses 59,000
Net Operating Income $25,000
Instructions: (As given).
Answer:
Crossfire Company1. Computation of the companywide break-even point in dollar sales:
Break-even point in dollar sales
= Sales = Total costs
Sales = $816,000
Total costs = Variable costs + Traceable fixed costs
= $675,000 + $141,000
= $816,000
2. Computation of the break-even point in dollar sales for the East region:
Break-even point in dollar sales
= Sales = Total costs
= $530,000
Total costs = $530,000 ($480,000 + 50,000)
3. Computation of the break-even point in dollar sales for the West region:
Break-even point in dollar sales
= Sales = Total costs
= $286,000
Total costs = $286,000 ($195,000 + 91,000)
4. A new segmented income statement based on the break-even dollar sales that are computed in requirements 2 and 3:
Total Company East West
Sales $816,000 $530,000 $286,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 141,000 50,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $0 $0 $0
Common Fixed Expenses 59,000
Net Operating Income/(loss) ($59,000)
Crossfire's net operating income (loss) in the new segmented income statement is: $59,000
5. I think that Crossfire should allocate the common fixed expenses to the East and West regions when computing the break-even points for each region.
This ensures that Crossfire does not run into net operating loss, company-wide. The segmented sales revenues for the regions can be used to allocate the common fixed expenses. Other suitable bases are traceable fixed expense, number of sales and administrative staff, or activity cost pools, using activity-based costing technique.
Explanation:
a) Break-even point in sales dollars is the sales point at which Crossfire's sales revenue will be equal to the total costs. At this point, Crossfire will not make any profit or incur any loss.
briefly state and explain 6 major roles of CEO in an organisation
Answer:
A chief executive officer (CEO) is the highest-ranking executive in a company, whose primary responsibilities include making major corporate decisions, managing the overall operations and resources of a company, acting as the main point of communication between the board of directors (the board) and corporate .
erekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,200 machine-hours Variable overhead costs: Supplies $ 16,640 Indirect labor 29,120 Fixed overhead costs: Supervision 15,400 Utilities 6,600 Depreciation 7,600 Total overhead cost $ 75,360 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 3,100 machine-hours rather than 3,200 machine-hours
Answer:
Variable overhead= $44,330
Fixed overhead= $29,600
Total overhead= $73,930
Explanation:
Giving the following information:
Total variable overhead= $45,760
Total fixed overhead= $29,600
Total overhead cost= $75,360
First, we need to calculate the variable predetermined overhead rate:
Variable predetermined overhead rate= 45,760/3,200= $14.3 per machine hour
Now, for 3,100 hours:
Variable overhead= 14.3*3,100= $44,330
Fixed overhead= $29,600
Total overhead= $73,930
Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.9 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $10.7 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $21.9 million to build, and the site requires $940,000 worth of grading before it is suitable for construction.
Required:
What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Answer:
$33,540,000
Explanation:
initial investment:
opportunity cost of land (resale price of land) = $10,700,000building cost of the facilities = $21,900,000other expenses related to the site (grading) = $940,000total $33,540,000The purchase cost of the land is considered a sunk costs, since it is not relevant now. What is relevant is the price at which the land could be sold at the moment of starting the project.
A $10,000 municipal bond with 10 years to maturity is purchased in the primary market at 105. The bond is sold after 2 years at 105. The taxable gain or loss is a:
Answer: B. a 2 point capital gain
Explanation:
Municipal Bonds have to be amortized using the straight-line method and this applied to both newly issued or bonds being traded at a premium.
The bond in question is trading at 105 and so has a 5 point premium which needs to be amortized at 1 point a year for 5 years. As it was bought after two years, the amortization was 2 points which means the cost of the bond should be;
105 - 2 = 103
Yet it was sold for 105. The gain is therefore
= 105 - 103
= 2 point capital gain
On October 10, the stockholders' equity of Sherman Systems appears as follow:
Common stock—$10 par value, 85, 000 shares authorized, issued, and outstanding $720,000
Paid—in capital in excess of par value, common stock 216,000
Retained earnings 864,000
Total stockholders' equity $1,800,000
1. Prepare journal entries to record the following transactions for Sherman Systems.
a. Purchased 6,300 shares of its own common stock at $38 per share on October 11.
b. Sold 1,325 treasury shares on November 1 for $44 cash per share.
c. Sold all remaining treasury shares on November 25 for $33 cash per share.
2. Explain how Sherman's equity section changes after the October 11 treasury stock purchase, and prepare the revised equity section of its balance sheet at that date.
Answer:
Sherman Systems
1. Journal Entries:
a. October 11:
Debit Treasury Stock $63,000
Debit Paid-in In Excess of Par $176,400
Credit Cash Account $239,400
To record the purchase of 6,300 shares at $38 per share.
b. November 1:
Debit Cash Account $58,300
Credit Treasury Stock $13,250
Credit Paid-in In Excess of Par $45,050
To record the resale of 1,325 treasury shares for $44
2. Sherman's equity section will reduce by $239,400 after the October 11 purchase of treasury stock with a direct reduction of $63,000 in the outstanding shares value and the balance in the Paid-in In Excess of Par account:
Revised Equity section as at October 11:
Stockholders' Equity
Common stock—$10 par value,
85, 000 shares authorized
Issued $720,000
less Treasury Stock -$63,000
Outstanding $657,000
Paid—in capital in excess of par
value, common stock 216,000
less Treasury Stock 176,400 39,600
Retained earnings 864,000
Total stockholders' equity $1,560,600
Explanation:
a) Data and Calculations:
Stockholders' Equity
Common stock—$10 par value,
85, 000 shares authorized
Issued and outstanding $720,000
Paid—in capital in excess of par
value, common stock 216,000
Retained earnings 864,000
Total stockholders' equity $1,800,000
b) Sherman Systems can choose from two methods on how to record its Treasury Stock transactions. One method is the costing method that records every transaction in the Treasury Stock and the par value method which records the differences in the par value for Treasury Stock in the Paid-in In Excess of Par account.
If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased? Borrowing will decrease. Investing will decrease. Inflation will increase. Liquidity will increase.
Answer:
The answer is: interest rates will decrease
Explanation:
Just got correct on edge
If there is an increase in the interest rate, then borrowing will decrease.
The term "domino effect" refers to the cumulative effect that is produced by one event that eventually leads to the same effect on others. In other words, the domino effect is when one disaster affects or brings destruction or disruption to others, leading to similar events.
One result will lead to a chain reaction in this event, affecting the rest of the cycle. This means that like one domino's downfall brings the next domino down, one destruction will lead to the fall of the next, taking the cycle to the end until all falls. In this scenario, if the interest rates are being increased, then it will lead to a decreased rate of borrowing. A change in the money supply will increase the interest rate. This will only leave the customers looking for a way out, which means there will be a lower rate of borrowing.In a domino effect, one event will bring the fall of the other. Therefore, if the interest rates increase, there will only be more problems for the customers. This will leave them reducing or decreasing the borrowing rate in the market. Thus, the correct answer is the first option.
Learn more about "domino theory" here:
brainly.com/question/12039657
All of the following securities can be sold by both an individual holding a Series 7 General Securities License and an individual holding a Series 6 Investment Companies / Variable Annuities registered representative's license EXCEPT:
a. Unit Investment Trusts
b. Mutual Funds
c. Initial Public Offerings of
d. losed End Funds
e. Real Estate Investment Trusts
Answer:
e. Real Estate Investment Trusts
Explanation:
An individual that holds Series 6 Investment Companies / Variable Annuities initially is allowed only to sell mutilate bonds, initial public entry of closed end bonds of which which these cannot be traded by the person unless series 7 is passed generally that is unit investment trust and variable annuities. to sell securities like real estate investment trust, the broader or wider Series 7 General Securities License is needed.
Real estate investment trust (REITs) usually gives or issue shares of beneficial interest which trade like other stocks, either on stock exchanges or over-the-counter. These securities are not redeemable.
A three-year annuity-immediate will be issued a year from now with annual payments of 5,000. Using the forward rates, calculate the present value of this annuity a year from now.
Answer:
13,152.5
Explanation:
Given the the above parameters as mentioned in the question
To calculate the PV (Present Value)
We have PV = 5000 * 1.05 * [ 1/(1.0575)² + 1/(0.625)³ + 1/(1.065)⁴]
PV = 5000 * 1.05 * (0.8942094350 + 0.8337064929 + 0.7773230908) =
=> PV = 5000 * 1.05 * 2.5052390187
= 13,152.50
Therefore, in this case, using the forward rates, the present value of this annuity a year from now is 13,152.50
A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 10000 units of product were produced last month and 31250 pounds of direct materials were used, the direct materials quantity variance was
Answer:
Direct material quantity variance= $6,250 unfavorable
Explanation:
Giving the following information:
Standard:
3 pounds of direct materials at $5 per pound.
10,000 units of product were produced last month and 31,250 pounds of direct materials were used.
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (3*10,000 - 31,250)*5
Direct material quantity variance= $6,250 unfavorable
Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,500 units at $212 per unit. The equipment has a cost of $418,500, residual value of $31,500, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $36.00 Direct materials 140.00 Factory overhead (including depreciation) 24.00 Total cost per unit $200.00 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. 18 %
Answer:
24%
Explanation:
The computation of the average rate of return is shown below;
As we know that
The Average rate of return = Net income ÷ Average investment
where,
Net income is
= (Selling price per unit - totat cost per unit) × additional units sales
= ($212 - $200) × $4,500 units
= $54,000
And, the average investment is
= (cost price + equipment) ÷ 2
= ($418,500 + $31,500) ÷ 2
= $225,000
So, the average rate of return is
= $54,000 ÷ $225,000 × 100
= 24%
Answer:
Galactic Inc.
Average Rate of Return: = Annual Net Income/Average Investment cost
= $54,000/$225,000 x 100
= 24%
Explanation:
Galactic Inc. Income Statement:
Sales Revenue, 4,500 x $212 = $954,000
Cost, 4,500 x $200 = 900,000
Annual Net Income = $54,000
Average Investment in equipment = $225,000 ($418,500 + 31,500)/2
b) Galactic Inc.'s average rate of return (ARR) on the equipment is average (annual) net income that the equipment generates divided by the average cost of the investment, and then multiplied by 100. The average cost of the investment equals the (initial book value + the residual value)/2. The ARR also known as the Accounting Rate of Return does not take into consideration the time value of money. As such, the net income is not discounted to the present value before the computation of the ratio.
Abby had a checkbook balance of $1,002.45. She paid $76.98 to the electric company and $254.34 to the water company. What is Abby’s current checkbook balance?
Answer:
$671.13
Explanation:
Abby had a checkbook balance of $1,002.45
$76.98 was paid to the electric company
$254.34 was paid to the water company
Therefore the current checkbook balance can be calculated as follows
=$1,002.45-($76.98+$254.34)
= $1,002.45-$331.32
= $671.13
Hence Abby's current checkbook balance is $671.13
Which of the following is not a situation in which strict liability applies? Multiple Choice Aimee manufactures snack cakes that are sold in small grocery stores. Faye owns a business in which she regularly uses explosives. Amanda owns a pet tiger that she keeps in her home in a suburban neighborhood. T.J. manufactures cheap clothing that falls apart after minimal use.
Answer:
The correct answer is the last option: T.J. manufactures cheap clothing that falls apart after minimal use.
Explanation:
To begin with, the term known as "Strict Liability", in criminal and civil law, refers to the situation in which a person is legally responsible for the consequences flowing from an activity that it also applies even in those cases where there is an absence of fault or criminal intent from the figure of the defendant under court. Therefore that in the situations that are presented the one in where the strict liability does not applies is the case of T.J manufacturing cheap clothes because the person knows what the product is worth.
The following is not a situation in which strict liability applies is :
D) T.J. manufactures cheap clothing that falls apart after minimal use.
Strict Liability AppliesThe following is not a situation in which strict liability applies is that T.J. manufactures cheap clothing that falls apart after minimal use.
The strict liability exists when a litigant is at risk for committing an activity, notwithstanding of what his/her aim or mental state was when committing the activity.
In criminal law, ownership violations and statutory assault are both cases of strict risk offenses.
Therefore, that in the circumstances that are displayed the one in where the strict obligation does not applies is the case of T.J fabricating cheap dress since the individual knows what the item is worth.
Learn more about "Liability":
https://brainly.com/question/10934939?referrer=searchResults
E Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 44,000 units per month is as follows:
Per Unit
Direct materials $44.60
Direct labor $8.50
Variable manufacturing overhead $1.50
Fixed manufacturing overhead $18.10
Variable selling & administrative expense $2.60
Fixed selling & administrative expense $12.00
The normal selling price of the product is $94.10 per unit. An order has been received from an overseas customer for 2,400 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.60 less per unit on this order than on normal sales.
Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $80.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:_______
Answer:
financial advantage for accepting special order = $59,520
Explanation:
relevant production costs for special order (2,400 units):
direct materials $44.60
direct labor $8.50
variable manufacturing overhead $1.50
variable selling & administrative expense $1
total costs per unit = $55.60
total revenue from special order = 2,400 x $80.40 = $192,960
relevant costs associated to special order = 2,400 x $55.60 = ($133,440)
financial advantage for accepting special order = $59,520
MV Corporation has debt with market value of million, common equity with a book value of million, and preferred stock worth million outstanding. Its common equity trades at per share, and the firm has million shares outstanding. What weights should MV Corporation use in its WACC?
Answer:
The Weighted Average cost of capital measures the cost to the company of its current capital structure by using the weights of the various capital measures. WACC usually uses market values so;
Total amount = Debt + Preferred stock + common equity
= 100 million + 20 million + ( 50 * 6 million)
= $420 million
Proportions.
Debt
= 100/420
= 24%
Preferred Stock
= 20/420
= 5%
Common Equity
= 300/420
= 71%
York's outstanding stock consists of 80,000 shares of noncumulative 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 total cash dividends $20,000 ; 2016 total cash dividends 28,000 ; 2017 total cash dividends 200,000 ; 2018 total cash dividends 350,000. Please explain how to journal this.
Answer:
dividends paid during 2015:
preferred stock dividends = $20,000, dividend per preferred stock = $0.25
common stock dividends = $0, dividend per common stock = $0
dividends paid during 2016:
preferred stock dividends = $28,000, dividend per preferred stock = $0.35
common stock dividends = $0, dividend per common stock = $0
dividends paid during 2017:
preferred stock dividends = $30,000, dividend per preferred stock = $0.375
common stock dividends = $170,000, dividend per common stock = $0.85
dividends paid during 2018:
preferred stock dividends = $30,000, dividend per preferred stock = $0.375
common stock dividends = $320,000, dividend per common stock = $1.60
Since the preferred stocks are not cumulative, any preferred dividends that are not paid during a year will not be paid in future years.
Suppose an item sells for $125 in the United States and for 62,500 pesos in Chile. According to the law of one price, the nominal exchange rate (pesos/dollar) should be ________.
Answer:
$1 = 500 Pesos
1 Pesos = $0.002
Explanation:
$125 = 62,500 Pesos
$1 = 62,500 / 125
$1 = 500 Pesos
$1 = 500 Pesos
1 Pesos = $1 / 500
1 Pesos = $0.002
The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability: Year Income from Operations Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 5 10,000 120,000 The average rate of return for this investment is a.58% b.16% c.10% d.18%
Answer:
The average rate of return of this investment is 8%.
Note: Based on the information provided in the question, the average rate of return of this investment is 8% but it is not included in the option. Kindly confirm this from your teacher.
Explanation:
Note: The data in the question are merged and they therefore first sorted before answering the question as follows:
Year Income from Operations Net Cash Flow
1 $100,000 $180,000
2 40,000 120,000
3 40,000 100,000
4 10,000 90,000
5 10,000 120,000
The explanations to the answer is now given as follows:
Calculation of the average rate of return for this investment
Average rate of return (ARR) is a financial ratio that is used to determine the rate of return that is expected from an asset over its lifetime. ARR is calculated as the total income from the assets divided by the initial investment on the assets.
The average rate of return for this investment can be calculated as follows:
Total income form operations over five years = $100,000 + $40,000 + $40,000 $ $10,000 + $10,000 = $200,000
Average income = Total income form operations over five years / Number of years = $200,000 / 5 = $40,000
Average rate of return for this investment = Average income / Cost of Machine = $40,000 / $490,000 = 0.08, or 8%
Therefore, the average rate of return is 8%.
The bond has a 12% annual coupon rate, a $1,000 par value, it matures in 15 years and pays coupon quarterly. The current bond price is $900. What is the bond’s annual yield? A. 14.28% B. None of the answers is correct C. 13.60% D. 12.85%
Answer:
A. 14.28%
Explanation:
As per Approximation formula,
Quarterly yield = (A + B / C) * 100
A = Quarterly coupon = 12% of 1,000 / 4 =30
B = (Redemption - Price value / Number of coupon) = (1,000 - 900) / (15 * 4)
= 1.667
C= (Redemption value + Price / 2) = 1,000 + 900 / 2 = 1,900 /2 = 950
Quarterly yield = 30 + 1.66667 / 950 = 31.6667 / 950 = 0.03333
Quarterly yield = 3.33%
Using the calculator, we get exact Ytm quarterly = 3.3925%
Effective amount yield = {(1 + 0.033925)^4 - 1} * 100
Effective amount yield = 0.142762 * 100
Effective amount yield = 14.2762%
Effective amount yield = 14.28%
Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 75,000 shares of preferred 1% stock, $70 par and 450,000 shares of $15 par common stock. The following selected transactions were completed during the first year of operations:
Journalize the transactions.
Feb. 5. Issued 95,000 shares of common stock at par for cash.
Feb. 5. Issued 400 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
Apr. 9. Issued 15,500 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $42,000, $231,000, and $52,500, respectively
June 14. Issued 23,000 shares of preferred stock at $80 for cash.
Answer and Explanation:
The journal entries are shown below:
On Feb-05
Cash Dr (95,000 shares × $15) $1,425,000
To Common Stock $1,425,000
(Being the issuance of the common stock is recorded)
On Feb-05
Legal Fees (400 shares × $15) $6,000
To Common Stock $6,000
(Being the Issuance of the common share for legal Fees is recorded)
On Apr-09
Land $42,000
Building $231,000
Equipment $52,500
To Common Stock (15,500 shares × $15) $232,500
To Paid in capital excess of par value $93,000
(being the issued of the common stock in exchange of assets is recorded)
On Jun-14
Cash (23,800 shares × $80) $1,904,000
To preferred Stock (23,800 shares × $70) $1,666,000
To Paid in capital excess of par value $238,000
(Being the issuance of the preferred stock is recorded)
,
Tax Services prepares tax returns for senior citizens. The standard in terms of (direct labor) time spent on each return is hours. The direct labor standard wage rate at the firm is per hour. Last month, direct labor hours were used to prepare tax returns. Total wages were .
Answer:
Tax Services
Total wages were:
= hourly wage rate * total hours spent on returns for the month
For example, if the hourly wage rate is $50 and the total hours spent on the returns equal 560 hours, the total wages will be equal to $28,000 ($50 x 560).
Explanation:
The Tax Services' total wages will be equal to the hourly wage rate multiplied by the total hours spent on returns during the month. The total hours spent on the returns for the month is obtained by adding up the hours spent on all the returns. The total wages depend on the hours worked and the standard wage rate that has been established in the firm.
Your friend just emailed you the two photos above asking for your advice about which one looks more appealing. They plan to use it as a professional profile picture on LinkedIn, where they hope to make professional job contacts. Based on these two pictures what advice do you give your friend
Answer:
Choose the picture that demonstrates professionalism
Explanation:
Here in the attachment as we can see that there are two pictures one is unprofessional and the second one is professional.
So in order to use as a professional profile picture on Linkedin, the friend should choose the professional picture as it represents the personality, dressing, attitude, appearance, etc that helps in making the professional job contacts through which the chances of getting a better job could be more
Following are financial data from year-end financial statements of Portland Company for 2017, 2016 and 2015.
2017 2016 2015
Accounts receivable $136,125 $144,576 $132,000
Cost of goods sold 1,023,750 864,000 960,000
Current assets 450,000 360,000 405,000
Current liabilities 300,000 250,000 310,000
Inventory 225,000 165,000 195,000
Sales 1,642,500 1,752,000 1,200,000
Required:
Compute the following financial ratios for 2016 and 2017.
Answer:
Answers are calculated below
Explanation:
Financial ratios can be calculated according to their formulas. Both formulas and calculation are as follows
CURRENT RATIO
Current ratio = Current assets/current liabilities
Current ratio (2016) = $360,000/$250,000
Current ratio (2016) = 1.44
Current ratio (2017) = $450,000 / $300,000
Current ratio (2017) = 1.50
ACID RATIO
Acid ratio = (Current asset - inventory)/current liabilities
Acid ratio (2016) = (360,000 - 165,000)/250,000
Acid ratio (2016) = 0.78
Acid ratio (2017) = (450,000-225,000)/300,000
Acid ratio (2017) = 225,000/300,000
Acid ratio (2017) = 0.75
INVENTORY TURNOVER RATIO
Inventory turnover ratio = cost of good Sold / Average inventory
Inventory turnover ratio (2016) = 864,000/(360,000 ÷2)
Inventory turnover ratio (2016) = 864,000/180,000
Inventory turnover ratio (2016) = 4.80
Inventory turnover ratio (2017) = 1,023,750 / ( 390,000 ÷ 2)
Inventory turnover ratio (2017) = 1,023,750 / 195,000
Inventory turnover ratio (2017) = 5.25
DAYS SALE IN RECEIVABLE
Days sale in receivable = 365/Average receivable turnover ratio
Days sale in receivable (2016) = 365/ 12.67(w1)
Days sale in receivable (2016) = 28.81 days
Days sale in receivable (2017) =365/11.7(w1)
Days sale in receivable (2017) = 31.20 days
Working 1
Account receivable turnover ratio = Sales/ Average receivable
Account receivable turnover ratio (2016) = 1,752,000/138,288(w2)
Account receivable turnover ratio = 12.67 times
Account receivable turnover ratio (2017) = 1,642,500/140,351(w2)
Account receivable turnover ratio (2017) = 11.7 times
Working 2
Average receivable = (Opening + Closing) /2
Average receivable (2016) = (132,000 + 144,576) /2
Average receivable (2016) = 138,288
Average receivable (2017) = (144,576 +136,125 ) /2
Average receivable (2017) = 140,351
Gross Corporation adopted the dollar-value LIFO method of inventory valuation on Dec 31, 2016. Its inventory at that date was $1,100,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
Date Inventory at Current Prices Current Price Index
December 31, 2017 $1,284,000 107
December 31, 2018 $1,450,000 125
Deceber 31, 2019 $1,625,500 130
1. What is the cost of ending inventory December 31, 2017 under Dollar-value LIFO method?
2. What is the cost of ending inventory December 31, 2018 under Dollar-value LIFO method?
3. What is the cost of ending inventory December 31, 2019 under Dollar-value LIFO method?
Answer:
1. $1,207,000
2. $1,164,200
3. $1,281,701
Explanation:
To calculate ending inventory under the dollar value LIFO method, the steps below shall be followed.
Step 1
Y = Current price at year end / Price index at that time
Step 2
Ending inventory = Opening inventory value + ( Y - Opening inventory value ) × Index value.
Gross corporation
Ending inventory
2016 1,100,000
1. Cost of ending inventory at 31, December 2017, under dollar value LIFO
= 1,284,000 / 1.07
= $1,200,000
Ending inventory
= $1,100,000 + ( $1,100,000 - $100,000 ) × 1.07
= $1,207,000
2. Cost of ending inventory at 31, December 2018, under dollar value LIFO
= $1,450,000/1.25
= $1,160,000
Ending inventory
= $1,100,000 + ( $1,160,000 - $1,100,000) × 1.07
= $1,164,200
3. Cost of ending inventory at 31, December 2019, under dollar value LIFO
= $1,625,500/1.30
= $1,250,385
Ending inventory
= $1,164,200 + $90,385 × 1.30
= $1,281,701
The IMF policies that accompany most IMF loans are typically: Multiple Choice expansionary in the short run. procyclical in the long run. contractionary in the long run. contractionary in the short run.
Answer:
contractionary in the long run
Explanation:
contractionary fiscal policy reduces spending and raises taxes. it contract the economy by reducing the amount of money that is available for businesses and for people to spend. it could reduce government expenditure or increase taxes or in other times do both. useful during inflation