I think a: all cost charged to their sub unit
The correct option is C. Responsibility accounting holds managers responsible for only the costs that they can control. Accounting for responsibility holds managers accountable for the income and costs they are in charge of. Responsibility accounting is the practice of gauging top management's performance based on the choices made by lower-level managers.
What is responsibility accounting?Cost centers are accountability centers that only concentrate on costs. Responsibility centers that only concentrate on controllable costs are known as discretionary cost centers. Centers of responsibility with a revenue focus are revenue centers. Profit centers are accountability hubs that prioritize revenues and costs.
A type of management accounting called responsibility accounting is in charge of a company's internal accounting, budgeting, and management functions. The main goal of this accounting is to assist all of a company's planning, costing, and responsibility centers.
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A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $50.
a. True
b. False
Answer:
False
Explanation:
In a 4-for-1 stock split, for every 1 share held by shareholders, it is multiplied to 4.
if outstanding shares is 12,000, after the split the shares outstanding pictures becomes 12,000 x 4 = 48,000
Market value of shares outstanding = $150 / 4 = $37.50
Suppose the 2020 adidas financial statements contain the following selected data (in millions). Current assets $4,575 Interest expense $200 Total assets 9,000 Income taxes 178 Current liabilities 3,050 Net income 236 Total liabilities 5,670 Cash 800 Compute the following values. (a) Working capital. $ millions (b) Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) :1 (c) Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) % (d) Times interest earned.
Answer:
a. $1,525 million
b. 1.50 times
c. 29 %
Explanation:
Working capital = Current Assets - Current Liabilities
= $4,575 million - $3,050 million
= $1,525 million
Current Ratio = Current Assets ÷ Current Liabilities
= $4,575 million ÷ $3,050 million
= 1.50 times
Debt to Asset ratio = Interest bearing Debt / Total Assets × 100
= ($ 5,670 - $3,050) / $9,000 × 100
= 29 %
"Frank bought a house for $100,000. He put 20% down and borrowed the rest from the bank. However, the value of the house has now increased to $160,000 and he has paid off $20,000 of the bank loan. What is the equity that Frank has in his home
Answer:
$100,000
Explanation:
The computation of the equity in his home is shown below;
Given that
Increased in the value of the house = $160,000
And, the amount he has to paid is
= Borrowed amount - down payment
= $80,000 - ($100,000 × 20%)
= $80,000 - $20,000
= $60,000
So, the equity is
= $160,000 - $60,000
= $100,000
hence, the equity value is $100,000
Answer:
The equity that Frank has in his home is $100000
Explanation:
The purchase price of house = $100000
The down payment = 20% or $100000 ×20% = $20000
The remaining amount paid by bank = $80000
The increased value of house = $160,000
Payment of loan amount = $20000
The Value of house is $160000 and he pays $20000 to the bank as a part of loan payment so reaming amount that he has to pay the bank is ($80000-20000) = $60000.
Thus, his equity will be $100000.
The common stock of Eddie's Engines, Inc., sells for $37.13 a share. The stock is expected to pay a dividend of $3.10 per share next year. Eddie's has established a pattern of increasing their dividends by 5.2 percent annually and expects to continue doing so. What is the market rate of return on this stock?
Answer:
13.55%
Explanation:
The common stock of Eddies engines is sold at $37.13 per share
The stock is expected to make a payment of $3.10 per share next year
The growth rate is 5.2%
Therefore, the market rate of return on the stock can be calculated as follows
Market rate of return= Next dividend payment/stock price × growth rate
= $3.10/$37.13 + 5.2%
= 0.0835×100 + 5.2%
= 8.35%+5.2%
= 13.55%
Hence the market rate of return on this stock is 13.55%
Some managers use _____, which provides four indicators with which organizations can set goals and measure performance.
Answer:
balanced scorecard
Explanation:
The term that is being mentioned in this question is known as a balanced scorecard. This is a strategic management performance metric that is used to measure and provide feedback to a company's management by identifying and improving different internal business functions and their outcomes, usually in regards to the employees themselves. An example of a balanced scorecard can be seen in the attached photo.
Which of the following statements is true of the new product development process? Question 8 options: 1) Commercialization is the process of inviting broad communities of people such as customers, employees, and scientists into the new product innovation process. 2) The purpose of the idea screening stage is to create a large number of ideas. 3) The concept testing stage is the stage at which the product and its proposed marketing program are introduced into realistic market settings. 4) Under the business analysis stage, if the new product satisfies the company's objectives, the product then moves to the product development stage. 5) A product concept is the way consumers perceive an actual or potential product.
Answer: 4) Under the business analysis stage, if the new product satisfies the company's objectives, the product then moves to the product development stage.
Explanation:
The Business Analysis stage of the New Product Development Process is a more in-depth analysis of the product to find out the viability of the product in the market and what it means for the firm.
Here the big questions are asked such as;
The Cost of the product to produceIf adequate profit will be generatedProjected market demandExisting competitors etcOnce these questions have been answered and other analysis made and the company is satisfied, the product can then move to the Product Development Stage.
It is true that under the business analysis stage, if a new product satisfies the company's objectives, it moves to the product development stage.
In a New Product Development Process, the Business Analysis stage entails in-depth analysis of the product to find out the viability of the product in the market and what it means for the firm.
The questions asked in the Business Analysis stage includes:
The Cost of the product to produce If adequate profit will be generated Projected market demand Existing competitorsIn conclusion, it is true that under the business analysis stage, if a new product satisfies the company's objectives, it moves to the product development stage.
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Morgan Company issues 10%, 20-year bonds with a par value of $760,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.
Answer: $38,000
Explanation:
The company is supposed to pay bondholders an Interest of 10% per year according to the terms of the terms of the bond.
= 10% * 760,000
= $76,000
However, payments are to be made semi-annually which will be;
= 76,000 * 1/2
= $38,000
measures that can be taken to increase equilibrium level of income.
Answer:
the government directly affects the level of equilibrium in come into specific ways government purchase of goods and services (G) increase aggregate demand and taxes and transfer separate the relation between income (d) and disposal income (YD) while the income available for consumption and savings with the households.
Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $2 per pound) $12 Direct labor (2 hours at $12 per hour) $24 During the month of April, the company manufactures 300 units and incurs the following actual costs.
Direct materials purchased and used (1,850 pounds) $4,070
Direct labor (620 hours) $7,130
Compute the total, price, and quantity variances for materials and labor. Identify whether the variance is favorable or unfavorable?
Answer:
1. Actual Quantity = 1,850 pounds
Actual materials cost = $4,070
Standard rate per pound = $2
Standard Quantity = 6 pounds per unit * 300 units
Standard Quantity = 1,800
Standard materials cost = Standard Quantity * Standard rate per pound
Standard materials cost = 1,800 * $2
Standard materials cost = $3,600
1a. Total Materials Variance = Actual materials cost - Standard materials cost
Total Materials Variance = $4,070 - $3,600
Total Materials Variance = $470 Unfavorable
1b. Materials Price Variance = Actual materials cost - Actual Quantity * Standard rate per pound
Materials Price Variance = $4,070 - 1,850 * $2
Materials Price Variance = $370 Unfavorable
1c. Materials Quantity Variance = Standard rate per pound * (Actual Quantity - Standard Quantity)
Materials Quantity Variance = $2.00 * (1,850 - 1,800)
Materials Quantity Variance = $100 Unfavorable
2. Actual labor hours = 620
Actual labor cost = $7,130
Standard rate per hour = $12
Standard labor hours = 2 hours per unit * 300 units
Standard labor hours = 600
Standard labor cost = Standard labor hours * Standard rate per hour
Standard labor cost = 600 * $12
Standard labor cost = $7,200
2a. Total Labor Variance = Actual Labor cost - Standard Labor cost
Total Labor Variance = $7,130 - $7,200
Total Labor Variance = $70 Favorable
2b. Labor Price Variance = Actual Labor cost - Actual labor hours * Standard rate per hour
Labor Price Variance = $7,130 - 620 * $12
Labor Price Variance = $310 Favorable
2c. Labor Quantity Variance = Standard rate per hour * (Actual labor hours - Standard labor hours)
Labor Quantity Variance = $12.00 * (620 - 600)
Labor Quantity Variance = $240 Unfavorable
Tái chế không phải 1 phương pháp hoàn hảo để giải quyết vấn đề ô nhiễm mt
Answer:
ý thức về việc xả rác, ngưng xả rác , bỏ rác đúng nơi quy định
Consider a hypothetical closed economy in which households spend $0.65 of each additional dollar they earn and save the remaining $0.35. The marginal propensity to consume (MPC) for this economy is , and the spending multiplier for this economy is .
Answer:
Marginal propensity to consume or MPC = 0.65
Multiplier or k = 2.85714 rounded off to 2.86
Explanation:
The marginal propensity to consume (MPC) is the proportion of increased disposable income that consumers spend. It is a metric to quantify the induced consumption and how an increase in consumer spending occurs as a result of increase in income.
MPC is calculated as follows,
MPC = Change in consumer spending / change in income
MPC = 0.65 / 1
MPC = 0.65
To calculate the multiplier, we simply use the following formula,
Multiplier or k = 1 / (1 - MPC)
k = 1 / (1 - 0.65)
k = 2.85714 rounded off to 2.86
The marginal propensity to consume is a measure in economics that quantifies induced consumption, or the idea that private expenditure grows in tandem with disposable income.
The spending power is the amount of expendable cash spent on consumption by individuals.
The answers to the questions in the context are:
Marginal propensity to consume or MPC = 0.65
Multiplier or k = 2.85714 rounded off to 2.86
The proportion of extra discretionary income spent by the customer is defined as the level of consumption (MPC).
It's a statistic for measuring induced consumption, or how an increase in consumer spending occurs as a result of an increase in income.
MPC is calculated as follows,
MPC = [tex]\frac{\text{Change in consumer spending}}{\text{change in income}}[/tex]
MPC = 0.65 / 1
MPC = 0.65
To calculate the multiplier:
Multiplier or k = [tex]\frac{1}{1-MPC}[/tex]
k = [tex]\frac{1}{1-0.65}[/tex]
k = 2.85714 rounded off to 2.86
Therefore,
Marginal propensity to consume or MPC = 0.65
Multiplier or k = 2.85714 rounded off to 2.86
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At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting machine C is $60,000 with a probability of 75%
Answer:
Machine to select for maximum payoff:
Expected Outcomes:
A = $45,000 x 90% = $40,500
B = $80,000 x 50% = $40,000
C = $60,000 x 75 % = $45,000
C has the highest expected outcome of $45,000
Choose C.
Explanation:
Anticipated benefits:
A = $45,000 with pr = 90%
B = $80,000 with pr = 50%
C = $60,000 with pr = 75%
The expected benefit or outcome Machine A is obtained by multiplying the anticipated benefit with its probability of occurrence. This gives a value that has been weighed. The decision rule is to choose the machine with the highest outcome.
Mojo Mining has a bond outstanding that sells for $2,201 and matures in 21 years. The bond pays semiannual coupons and has a coupon rate of 7.38 percent. The par value is $2,000. If the company's tax rate is 40 percent, what is the aftertax cost of debt
Answer:
the after tax cost of debt is 3.90 %.
Explanation:
The Cost of debt is the rate required on the bond and this is calculated as follows :
PV = - $2,201
n = 21 × 2 = 42
PMT = ($2,000 × 7.38 %) ÷ 2 = $73.80
P/YR = 2
FV = $2,000
r = ?
Using a Financial Calculator, the Pre-tax Cost of debt, r is 6.4963% or 6.50 % (2 decimal places)
After tax cost of debt = Interest rate × (1 - tax rate)
= 6.50 % × (1 - 0.40)
= 3.90 %
Booker Corporation had the following comparative current assets and current liabilities: Dec. 31, 2019 Dec. 31, 2018 Current assets Cash $60,000 $30,000 Short-term investments 40,000 10,000 Accounts receivable 55,000 95,000 Inventory 110,000 90,000 Prepaid expenses 35,000 20,000 Total current assets $300,000 $245,000 Current liabilities Accounts payable $140,000 $110,000 Salaries payable 40,000 30,000 Income tax payable 20,000 15,000 Total current liabilities $200,000 $155,000 During 2019, credit sales and cost of goods sold were $750,000 and $400,000, respectively. Compute the following liquidity measures for 2019:
Answer:
1. 1.5 Times
2.$100,000
3.0.775 Times
4.$75,000
5.$100,000
Explanation:
Liquidity ratios can be found by just simply putting the given values in their appropriate formulas. All you have to memorize is the simple formulas
1.Current Ratio
CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES
CURRENT RATIO = $300,000/$200,000
CURRENT RATIO = 1.5 Times
2. Working Capital
WORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES
WORKING CAPITAL= $300,000 - $200,000
WORKING CAPITAL= $100,000
3. Acid ratio
ACID RATIO = CURRENT ASSETS - INVENTORY - PREPAID EXPENSES/CURRENT LIABILITIES
ACID RATIO = ($300,000 - $110,000 - $35,000)/$200,000
ACID RATIO = 0.775 Times
4. Receivable turnover
RECEIVABLE TURNOVER = CREDIT SALES/AVERAGE RECEIVABLE
RECEIVABLE TURNOVER = $750,000/$75,000
RECEIVABLE TURNOVER = 10 Times
Working
AVERAGE RECEIVABLE = (Opening receivables+Closing receivables)/2
AVERAGE RECEIVABLE = ($55,000 + $95,000) / 2 = $75,000
5. Inventory Turnover
INVENTORY TURNOVER = COST OF GOODS SOLD / AVERAGE INVENTORY
INVENTORY TURNOVER = $400,000 / $100,000
INVENTORY TURNOVER = 4 Times
Working
AVERAGE INVENTORY = (Opening inventories+Closing inventories)/2
AVERAGE INVENTORY = (110,000 + 90,000)/2
AVERAGE INVENTORY = $100,000
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Eleanor spends all of her money on paperback novels and mandarins. In 2012, she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable? Check all that apply. The price of a mandarin is 0.33 paperback novels in 2012. Eleanor's wage is 3 paperback novels per hour in 2012. The price of a mandarin is $3.00 in 2012. Which of the following give the real value of a variable? Check all that apply. The price of a paperback novel is $9.00 in 2012. Eleanor's wage is $27.00 per hour in 2012. The price of a paperback novel is 3 mandarins in 2012. Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $6.00. In 2017, the relative price of a paperback novel is . Between 2012 and 2017, the nominal value of Eleanor's wage , and the real value of her wage . Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.
Answer:
In 2012, she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable? Check all that apply.
The price of a mandarin is $3.00 in 2012.Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.
Which of the following give the real value of a variable? Check all that apply.
The price of a paperback novel is 3 mandarins in 2012.Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.
Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $6.00. In 2017, the relative price of a paperback novel is still 3 mandarins.
Between 2012 and 2017, the nominal value of Eleanor's wage doubled, and the real value of her wage remained constant.
Monetary neutrality is the proposition that a change in the money supply affects nominal variables and does not affect real variables.
Assume short-run production. Indicate whether the statement below is true (T) or false (F). nothing: The difference between the total cost and the total variable cost is a constant. nothing: When total cost or total variable cost is increasing, there are increasing marginal returns to the variable input. nothing: Changes in fixed costs do not affect the shape or placement of the total cost curve. nothing: The marginal cost is the slope of the total cost curve or the total variable cost curve. nothing: The average cost curve is everywhere above the average variable cost curve. nothing: The marginal cost at a particular output level is the slope of a line from the origin to the corresponding point on the cost curve.
Answer:
1. The difference between the total cost and the total variable cost is a constant. - TRUE
The difference between the 2 is indeed constant and is the Total Fixed cost which does not change throughout the production process.
2. When total cost or total variable cost is increasing, there are increasing marginal returns to the variable input. - FALSE
With only the total cost or total variable cost given, it is not possible to tell how the Marginal returns to the input is faring.
3. Changes in fixed costs do not affect the shape or placement of the total cost curve. - FALSE
Fixed costs are part of the total cost curve so if they change they will impart the total cost curve. An increase may not change the shape but it will definitely change the placement of the Total cost curve.
4. The marginal cost is the slope of the total cost curve or the total variable cost curve. - TRUE
The slope of either the Total cost or variable cost curves are the graphical representations of a change in either which is the definition of the Marginal cost.
5. The average cost curve is everywhere above the average variable cost curve. - TRUE
As the average cost is the sum of both the average fixed and average variable costs, it will always be higher than either so it is higher than the Average variable cost.
6. The marginal cost at a particular output level is the slope of a line from the origin to the corresponding point on the cost curve. - FALSE
Marginal cost measures the difference in cost from one unit to the next. A line from the origin to the corresponding point would have measured for all units produced making it the Average cost not Marginal Cost.
Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market’s required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund’s assets are as follows:(hint: market beta =1.0) Stock Investment Beta A $ 200,000 1.50 B 300,000 −0.50 C 500,000 1.25 D $1,000,000 0.75
Answer:
11.77%
Explanation:
total investment = $200,000 + $300,000 + $500,000 + $1,000,000 = $2,000,000
stock weight beta total
A $200,000 / $2,000,000 1.5 0.15
B $300,000 / $2,000,000 -0.5 -0.075
C $500,000 / $2,000,000 1.25 0.3125
D $1,000,000 / $2,000,000 0.75 0.375
Portfolio 0.7625
required rate of return = Rf + beta(Rm - Rf) = 7% + 0.7625(13.25% - 7%) = 11.7656% = 11.77%
A process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity is known as
Answer:
Bounded rationality.
Explanation:
This is explained to be a model that is been used in making choices between alternatives. Models of this kind brings about use of logic, analysis and objectivity always which appear over subjectivity and insight. In this particular model, approaches like Formulating of goal, decision making, identification of criteria for decision making, performing analysis etc are seen to make this model a better type of its kind. Here individuals who are seen to posses high cognitive ability are seen handling of decisions and making quality arrangements towards its actualization.
In a lot of cases, it is seen to not consider factors that cannot be quantified, such as ethical concerns or the value of altruism.
A customer sells short 100 shares of ABC at $17 as the initial transaction in a new margin account. The customer must deposit:_______.
A. $750.
B. $1,500.
C. $2,000.
D. $3,000.
Answer: $2,000
Explanation:
Regulation T which governs such actions in the investment market would only require that the customer deposit 50% of the total amount to be called which would be;
= 50% * (100 * 17)
= $850
However, as this is a new margin account, there is a set minimum that must be reached to enable it to be open. That minimum is $2,000.
3. Explain how the employees of an American organization and Bangladeshi organization will be culturally different in terms of power distance, uncertainty avoidance, and masculinity-femininity inde
Answer:
Explanation:
POWER DISTANCE : This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.
Bangladesh scores high on this dimension (score of 80) which means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat MASCULINITY : A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organisational life.
A low score (Feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A Feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine).
Bangladesh scores 55 on this dimension and can be considered a a Masculine society. In Masculine countries people “live in order to work”, managers are expected to be decisive and assertive, the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out. UNCERTAINTY AVOIDANCE : The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance.
Bangladesh scores 60 on this dimension and thus has an high score. Countries exhibiting high Uncertainty Avoidance maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas. In these cultures there is an emotional need for rules (even if the rules never seem to work) time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation.
Which of the following is a true statement about the limitation on business interest deductions? This limitation is not imposed on businesses with average annual gross receipts of $25 million of less for the prior three taxable years. A. Interest disallowed by this limitation is carried back three years and then forward five years B. The limitation is calculated as a percentage of the taxpayers total taxable income C. This limitation is not imposed on businesses with average annual gross receipts of $26 million or less for the prior three taxable years D. All of the choices are false E. All of the choices are true
Answer:
Limitation on Business Interest Deductions:
B. The limitation is calculated as a percentage of the taxpayers total taxable income
Explanation:
30% (or 50% for years 2019 and 2020, as amended by the CARES Act) of the adjusted taxable income of a business is the limit of business interest expense that is allowed by the IRS. The excess after this limitation may be carried forward by the tax paying organization to future tax years indefinitely until the interest expense is completely applied.
Following the CARES Act, "the business interest expense deduction limitation does not apply to certain small businesses whose gross receipts are $26 million or less, electing real property trades or businesses, electing farming businesses, and certain regulated public utilities. The $26 million gross receipts threshold, which applies for the 2020 tax year, is adjusted annually for inflation."
A portfolio with a 20% standard deviation generated a return of 10% last year when T-bills were paying 5.0%. This portfolio had a Sharpe ratio of ____. A. 0.45 B. 0.20 C. 0.25 D. 0.15
Answer:
0.25
Explanation:
A portfolio has a standard deviation of 20%
The portfolio also generated a return of 10%
T-bills were paying 5%
Therefore, Sharpe ratio of the portfolio can be calculated as follows
Sharpe ratio= 10-5.0/20
= 5/20
= 0.25
Hence the Sharpe ratio of the portfolio is 0.25
consider a bond that matures in 10 years it pay9% annual coupons and $100 at maturity is the required annual rate of return on the bond i s 8% then the bond will sell today for
Answer:
Bond Price today = $106.71008 rounded off to $106.71
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is an annual bond, the coupon payment, number of periods and r or YTM will be,
Coupon Payment (C) = 0.09 * 100 = $9
Total periods (n)= 10
r or YTM = 8% or 0.08
The formula to calculate the price of the bonds today is attached.
Bond Price = 9 * [( 1 - (1+0.08)^-10) / 0.08] + 100 / (1+0.08)^10
Bond Price = $106.71008 rounded off to $106.71
Your portfolio has a beta of 1.60. The portfolio consists of 16 percent U.S. Treasury bills, 36 percent Stock A, and 48 percent Stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of Stock B?
Answer: 2.58
Explanation:
Portfolio beta of 1.60 is weighted average of all the constituent betas.
US Treasury bills are riskless so beta is 0
Stock A has market risk so beta is 1.
1.60 = (0.16 * 0) + ( 0.36 * 1) + ( 0.48 * b)
1.60 = 0.36 + 0.48b
0.48b = 1.24
b = 2.58
You are given an annuity-immediate paying 10 for 10 years, then decreasing by one per year for nine years and paying one per year thereafter, forever. The annual effective rate of interest is 4%. Calculate the present value of this annuity.
Answer:
124.17
Explanation:
since the first payment is immediate, then this is an annuity due:
we must divide this annuity into 3 separate parts:
1) today plus 9 years = PV = 10 x 8.43533 (PV annuity due, 4%, 10 periods) = 84.3533
2) the second group of years where annuity decreases by $1
PV year 10 = 9/1.04¹⁰ = 6.08
PV year 11 = 8/1.04¹¹ = 5.20
PV year 12 = 7/1.04¹² = 4.37
PV year 13 = 6/1.04¹³ = 3.60
PV year 14 = 5/1.04¹⁴ = 2.89
PV year 15 = 4/1.04¹⁵ = 2.22
PV year 16 = 3/1.04¹⁶ = 1.60
PV year 17 = 2/1.04¹⁷ = 1.03
sum of PVs = 26.99
3) terminal value at year 17 = 1/0.04 = 25
PV of terminal value = 25/1.04¹⁷ = 12.83
now we add the three parts = 84.3533 + 26.99 + 12.83 = 124.17
Quality is primarily related to satisfaction viewpoint of:___________.
a. Customer Manufacturer
b. Service provider
c. General public
d. all of above
Answer: Consumer
Explanation:
Quality has to do with the standard by which a product is being compared with other similar products.
Quality is primarily related to satisfaction viewpoint of consumers. If consumers are not satisfied with a particular product, it will have a negative impact on the sale of the product hence the product quality must be taken into consideration in order to enable consumers to buy such product.
Delta Corporation has a higher times interest earned ratio than Gamma Corporation. From this information, we can assume that Delta is relatively better able to meet its interest payments.
a. True
b. False
Answer: True
Explanation:
The times interest earned ratio indicates how a company will be able to meet its debts obligations which is based on the current income of the company.
Since Delta Corporation has a higher times interest earned ratio than Gamma Corporation, it means that Delta is relatively better able to meet its interest payments.
Delta in its effective terms means the measurement of the rate of change in the premium whereas the gamma is meant as the measure of the movement of the risk. Delta is linked with the ranges of 0 and 1 and gamma is linked with the range of long and short-run in the market.
The correct answer is True
The time's interest earned ratio indicates how a company will be able to meet its debts obligations which are based on the current income of the company.
Since Delta Corporation has a higher times interest earned ratio than Gamma Corporation, it means that Delta is relatively better able to meet its interest payments.
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A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $102,105 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
Answer:
$3,289.5
Explanation:
The computation of the amount of recorded interest expense for the first semiannual interest period is shown below:-
Amortization of premium = Premium amount ÷ Number of semi-annual periods
where
Premium amount = Par value - issue price
= $102,105 - $100,000
= $2,105
Number of semi-annual periods = 5 × 2
= 10 periods
Amortization of premium = $2,105 ÷ 10
= 210.5
Semi-annual interest expense = Face value × Coupon rate × (6 ÷ 12)
= $100,000 × 7% × (6 ÷ 12)
= $3,500
First semi-annual interest expense = $3,500 - 210.5
= $3,289.5
Connie recently provided legal services to the Winterhaven LLC and received a 5 percent interest in the LLC as compensation. Winterhaven currently has $43,000 of accounts payable and no other debt. The current fair market value of Winterhaven’s capital is $270,000. (Leave no answer blank. Enter zero if applicable.)
a. If Connie receives a 5 percent capital interest only, how much income must she report and what is her tax basis in the LLC interest?
Income ______
Tax Basis ______
b. If Connie receives a 5 percent profits interest only, how much income must she report and what is her tax basis in the LLC interest?
Income ______
Tax Basis ______
c. If Connie receives a 5 percent capital and profits interest, how much income must she report and what is her tax basis in the LLC interest?
Income ______
Tax Basis ______
Answer and Explanation:
a. Connie registers $13,500 of ordinary revenue or 5% of the LLC's $270,000 property. Her LLC investment base is $13,500 as well.
b. Connie does not disclose any profits but will have an interest rate equal to her share of the LLC 's debt in the LLC. Since debt from the LLC is a non-recourse loan, it needs to be distributed to her through interest on earnings from Connie. Therefore her investment in the LLC is equivalent to $2,150 or 5% of the $43,000 accounts payable by the LLC.
c. Connie reports $13,500 of ordinary revenue or 5 percent of the $270,000 capital of the LLC. Her LLC interest base is $13,500, too. Her base in the LLC is $15,650 consists of the $13,500 benefit she accepts for earning her capital gain and her $2,150 non-recourse tax payable from the LLC.
Optimal order quantities exist when the curves for the order-processing cost per unit and inventory-carrying cost per unit ________.
Answer:intersect
Explanation:
The optimal order quantity is also referred to as the economic order quantity. It is used to know the optimal quantity that need to be ordered in order to avoid wastage and also reduce cost. It is a cost-effective strategy.
Optimal order quantities exist when the curves for the order-processing cost per unit and inventory-carrying cost per unit intersect.