Answer:
Correct Answer:
PRODUCT COST:
The following falls under direct material cost:
b. Power used by painting equipment
c. Instrument panel installed in the airplane cockpit
e. Turbo-charged airplane engine
f. Interior trim material used throughout the airplane cabin
l. Cost of electronic guidance system installed in the airplane cockpit.
p. Metal used for producing the airplane body
r. Hydraulic pumps used in the airplane’s flight control system
The following falls under direct labour cost:
j. Cost of paving the headquarters employee parking lot
t. Pre-built leather seats installed in the first-class cabin
y. Decals for cockpit door, the cost of which is immaterial to the cost of the final product
The following falls under factory overhead cost:
u. Depreciation on factory equipment.
PERIOD COST:
The following falls under selling expenses:
g. Cost of normal scrap from production of airplane body
h. Hourly wages of employees that assemble the airplane
i. Salary of the marketing department personnel
m. Salary of plant manager
n. Cost of miniature replicas of the airplane used to promote and market the airplane
o. Human resources department costs for the year
q. Annual fee to a celebrity to promote the aircraft
w. Oil to lubricate factory equipment
x. Masks for use by painters in painting the airplane body
z. Salary of chief financial officer
The following falls under an administrative expenses:
a. Salary of chief compliance officer of company
d. Annual bonus paid to the chief operating officer of the company
s. Yearly cost of the maintenance contract for robotic equipment
v. Special advertising campaign in Aviation Worldmagazine.
Explanation:
The risk-free rate is 5% and the tangency portfolio has 20% expected return and 40% return standard deviation. A risk-loving investor has $1000 of wealth and she seeks to attain 27.5% expected return. How much money does she need to borrow from the bank? A. 250 B. 500 C. 1500 D. 1000
Answer:
B. 500
Explanation:
Portfolio return = Weighted average return
Let the amount invested in portfolio is x and amount invested in risk free = 1000 - x
27.5% = 20%*x + 5%*(1000-x)
27.5% * 1,000 = 20%x + 50 – 5%x
0.275 * 1,000 = 15%x + 50
275 - 50 = 15%x
225 = 15%x
x = 225 / 0.15
x = $1,500
Hence, the amount of money borrowed = $1,500 - $1000
= $500
Ten years ago you put $150000.00 into an interest earning account. Today it's worth $275000. What is the effective annual interest earned on the account
Answer:
the effective annual interest earned on the account is 6.25%.
Explanation:
The effective annual interest earned on the account can be calculated as follows :
PV = - $150,000
N = 10
PMT = $0
P/yr = 1
FV = $275,000
R = ?
Using a Financial calculator, the effective annual interest, R, earned on the account will be : 6.2488 or 6.25%.
Lewis Company’s standard labor cost of producing one unit of Product DD is 3.20 hours at the rate of $12.50 per hour. During August, 42,600 hours of labor are incurred at a cost of $12.65 per hour to produce 13,200 units of Product DD.
A. Compute the total labor variance.
B. Compute the labor price and quantity variances.
C. Compute the labor price and quantity variances, assuming the standard is 3.5 hours of direct labor at $12.85 per hour.
Answer:
a. $10,890 Favorable
b. The labor price variance and quantity variance are $6,300 Favorable and $4,500 Favorable respectively.
c. The labor price and quantity variance is $8,520 Unfavorable and $46,260 Unfavorable respectively.
Explanation:
a. The computation of Total labor variance
= (Actual hours × Actual rate) - (Standard hours × Standard rate)
= (42,600 × $12.65) - ( 13,200 units × 3.2 × $12.5)
= $538,890 - $528,000
= $10,890F
b. The computation of the Labor price variance
= Actual hours × ( Actual rate - Standard rate)
= 42,600 × ( $12.65 - $12.5)
= 42,000 × $0.15
= $6,300 F
The computation of Labor quantity variance
= Standard rate × ( Actual hours - Standard hours)
= $12.5 per hour × ( 42,600 hours - 42,240 hours )
= $12.5 per hour × 360 hours
= $4,500 F
c. The computation of Labor price variance
= Actual hours × ( Actual rate - Standard rate)
= 42,600 × ( $12.65 - $12.85 )
= 42,600 × - $0.2
= $8,520 Unfavorable
The computation of Labor quantity variance
= Standard rate × ( Actual hours - Standard hours)
= $12.85 per unit × ( 42,600 hours - 46,200 hours)
= $12.85 per unit × - $3,600
= $46,260 Unfavorable.
The Discount on Bonds Payable account is: Multiple Choice A contra equity. A contra expense. A liability. A contra liability. An expense.
Answer:
Is a contra account to bonds payable
Explanation:
Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method: a. Increase in merchandise inventory b. Increase in prepaid expenses c. Depreciation of fixed assets d. Gain on disposal of fixed assets e. Amortization of patent f. Increase in notes payable due in 120 days to vendors g. Increase in accounts payable h. Decrease in wages payable i. Decrease in notes receivable due in 60 days from customers j. Decrease in accounts receivable k. Loss on retirement of long-term debt
Answer:
The answer is
A - Deducted
B - Deducted
C - Added
D - Deducted
E - Added
F - Added
G - Added
H - Deducted
I - Added
J- Added
K - Added
Explanation:
Rule:
Increase in liability will be added to net income while decrease in liability will deducted from net income.
Increase in asset will be deducted from net income while decrease in asset will be added to net income
A - Deducted
B - Deducted
C - Added
D - Deducted
E - Added
F - Added
G - Added
H - Deducted
I - Added
J- Added
K - Added
The Digby company will continue to train their existing workforce at their current level to help reduce turnover and improve productivity next year. Employee training costs have increased to $30 per hour. How much would their training costs per employee be to the nearest dollar
Answer:
$1,200
Explanation:
Data provided
Number of training hours = 40
Per unit cost = $30 per hour
According to the given situation, the computation of training costs per employee is shown below:-
Total cost = Number of hours × Per unit cost
= 40 × $30
= $1,200
Therefore for computing the training costs per employee we simply applied the above formula.
Answer:
$1200
Explanation:
The training cost per hour is $30 and if we see below in the Human Resources Summary, we can see that Digby Training Hours are 40 Hours.
This implies that:
Total Training Cost = 40 Hours * $30 per hour = $1200
Why do we need to deduct gain on sale of plant assets from net income to arrive at net cash flow from operating activities
Answer:
The money received from the sale of assets is included in the net cash flows from investing activities, that is why you must adjust net income by eliminating any gain or loss resulting from these transactions.
Explanation:
E.g. net income = $50,000, and it includes a gain of $5,000 resulting from the sale of a truck. The truck had a book value of $15,000, but was sold at $20,000.
Net cash flows from operating activities:
Net income $50,000
Adjustments to net income:
- Gain on sale of asset ($5,000)
Net cash flow provided by operating activities $45,000
Net cash flows from investing activities:
Sale of truck $20,000
Net cash flow provided by investing activities $20,000
Trevor Company discloses supplementary operating segment information for its three reportable segments. Data for 20X8 are available as follows:
Segment A Segment B Segment C
Sales $500,000 $300,000 $200,000
Traceable operating
expenses 250,000 120,000 90,000
Allocable costs for the year was $180,000. Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs. The 20X8 operating profit for Segment B was:_______.
A) $180,000.
B) $120,000.
C) $126,000.
D) $110,000.
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Segment A Segment B Segment C
Sales $500,000 $300,000 $200,000
Traceable operating expenses 250,000 120,000 90,000
Profit= 250,000 180,000 110,000 = 540,000
Allocable costs for the year was $180,000.
First, we need to allocate costs to Segment B:
Segment B= 180,000/540,000= 0.33
Allocate= 0.33*180,000= 60,000
Now, we can calculate the profit:
Segment B profit= 180,000 - 60,000= 120,000
dazzle, inc. produces beads for jewelry making use the journal entry to record production activities for direct labor usage is
Answer:
Debit Work in Process Inventory $180,000; credit Factory Wages Payable $180,000.
Explanation:
The journal entry to record the direct labor usage is shown belwo:
Work in process inventory Dr
To factory wages payable
(Being the direct labor usage is recorded)
For recording this we debited the work in process as it increased the assets and credited the factory wages payable as it also increased the liabilities
Moreover, when the wages is applied in the production level so the respective account is debited and credited
The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $400 per ton. The U.S. is a price-taker in the tomatoes market.
If trade in tomatoes is allowed, the United States:______
a) will experience increases in both consumer surplus and producer surplus.
b) may become either an importer or an exporter of tomatoes, but this cannot be determined.
c) will become an exporter of tomatoes.
d) will become an importer of tomatoes.
Answer:
d) will become an importer of tomatoes.
Explanation:
Consumer surplus would increase because the price at which they buy tomatoes would reduce while producer surplus would reduce because the price of tomatoes would reduce as a result of international trade.
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.Because the price of tomatoes in the US is greater than the price of tomatoes in the world, when the US begins international trade, it would import tomatoes because it is inefficient in the production of tomatoes.
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Use the following selected financial information for Wilcox Corporation to answer questions 11-20. Wilcox Corporation Income Statement For the Year Ended December 31, 20XX Net sales $2,870 Cost of goods sold 1,985 Gross profit $ 885 Operating expenses 620 Operating profit $ 265 Interest expense 40 Earnings before taxes $ 225 Income tax expense 80 Net profit $ 145 Wilcox Corporation Balance Sheet December 31, 20XX Assets Liabilities and stockholders' equity Current assets Current liabilities Cash $ 25 Accounts payable $ 85 Short-term investments 15 Accrued liabilities 45 Accounts receivable 70 Total current liabilities 130 Inventory 150 Long-term debt 240 Total current assets 260 Total liabilities 370 Long-term assets Stockholders' equity Net PPE 390 Common stock and PIC 80 Goodwill 210 Retained earnings 410 Total stockholders' equity 490 Total assets $860 Total liabilities and equity $860 WilcoxCorporation Statement of Cash Flow Information For the Year Ended December 31, 20XX Cash from operating activities $150 Investing activities: Capital expenditures $ 60 Acquisitions $ 10 Financing activities: Proceeds from long-term borrowing $ 50 Payments on long-term borrowing $ 25 Payments of cash dividends $ 20 Cash paid for interest $ 10 Cash paid for income taxes $ 75 Wilcox’s average collection period is:
Answer:
Wilcox’s average collection period is 9 days.
Explanation:
The average collection period can be described as how long it takes a company to get paid by the amount of money its clients are owing it in terms of accounts receivable (AR).
Average collection period can be calculated using the following formula:
ACP = (Accounts receivable / Net sales) * 365 days .............. (1)
Where, for this question;
ACP = Average collection period = ?
Accounts receivable = $70
Net sales = $2,870
Substituting the values into equation (1), we have:
ACP = ($70 / $2,870) * 365 days
ACP = 0.024390243902439 * 365 days
ACP = 8.90 days, or approximately 9 days
Therefore, Wilcox’s average collection period is 9 days.
Speedster Bicycles, Inc., collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If sales are budgeted to be $250,000 for March and $280,000 for April, what are the budgeted cash receipts from sales on account for April
Answer:
Total cash collection= $257,500
Explanation:
Giving the following information:
Sales:
March= $250,000
April= $280,000
Speedster Bicycles, Inc., collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.
Cash collection April:
Sales on account from April= 280,000*0.25= 70,000
Sales on account from March= 250,000*0.75= 187,500
Total cash collection= $257,500
In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items.
ITEM NUMBER ANNUAL USAGE ITEM NUMBER ANNUAL USAGE
1 $ 1,500 11 $ 13,000
2 12,000 12 600
3 2,200 13 42,000
4 50,000 14 9,900
5 9,600 15 1,200
6 750 16 10,200
7 2,000 17 4,000
8 11,000 18 61,000
9 800 19 3,500
10 15,000 20 2,900
a. What would you recommend Taylor do to cut back its labor cost? (Illustrate using an ABC plan.)
b. Item 15 is critical to continued operations. How would you recommend it beclassified?
Answer:
a) Taylor Industries can successfully cut back its labor cost in inventory stockrooms by counting only high-value items. These items are determined by reference to their Annual Usage values. The items' annual usage values should be used as the activity cost pool for accumulating and allocating labor cost in inventory stockrooms. Taylor Industries can establish a benchmark or cutoff point so that only the items meeting this benchmark are counted. For example, the items with annual usage value above $5,000 should be included in the items to be counted. This strategy will reduce the number of items to be counted and therefore the labor cost.
b) Since item 15 is critical to Taylor Industries' continued operations, it should be classified as a direct materials cost and not an overhead cost.
Explanation:
a) Data and Calculations:
a random sample of 20 of Taylor's items:
ITEM NUMBER ANNUAL USAGE ITEM NUMBER ANNUAL USAGE
1 $ 1,500 11 $ 13,000
2 12,000 12 600
3 2,200 13 42,000
4 50,000 14 9,900
5 9,600 15 1,200
6 750 16 10,200
7 2,000 17 4,000
8 11,000 18 61,000
9 800 19 3,500
10 15,000 20 2,900
Average annual usage value = $12,657.50
What is the yield to maturity of a bond that pays a 6% coupon rate with semiannual coupon payments, has a par value of $1,000, matures in 15 years, and is currently selling for $803
Answer:
Yield to Maturity = 8.11 %
Explanation:
The Yield to maturity is the discount rate that equates then price of the bonds to the present of cash inflows expected from the bond
The yield on the bond can be determined as follows using the formula below:
YTM = C + F-P/n) ÷ 1/2 (F+P)
YTM-Yield to maturity-
C- annual coupon
F- Face Value
P- Current Price
n- years to maturity
YTM-?, C- 6%× 1000 =60, Face Value - 1,000, P-803, n- 15
YTM = (60 + (1000-803)/15) ÷ ( 1/2× (1000 + 803) )
YTM = 0.0811 × 100 = 8.11 %
Yield to Maturity = 8.11 %
Michelle gives out a business card with an e-mail address on it. According to the comments that accompany the UETA, it may be reasonable to infer that Michelle has consented to
Answer:
Explanation:
transact business electronically.
3. “The International Monetary Fund (IMF) and the World Bank are two institutions that have outlived their usefulness”. Do you agree?
Answer:
“The International Monetary Fund (IMF) and the World Bank"
Have they outlived their usefulness?
No.
The IMF and the World Bank have not outlived their usefulness. They remain very useful and relevant to our world today. The problem they have experienced stem in part from the neglect of their purposes, because of the near-absence of the grassroot touch. They can refocus on their purposes and reduce elitistism, and then they continue to be useful.
But, they cannot rediscover and concentrate on their purposes without the cooperation of member-countries. Recalcitrancy does not allow any organized institutions without police power to function at their best. Member-countries must learn to cooperate with these bodies to achieve their purposes. There is still global poverty ravaging the world population, even among the rich and developed countries of the world.
In most developing countries, their national governments are traditionally entrenched as anti-developmental. While they make long and meaningless speeches at world fora, back home they do not walk their talk and so often renege on their promises. This is why it seems that the impact of these world bodies are not being felt. National governments must be able to show responsibility to allow the effects of monetary policies and agreements to benefit the poor and the vulnerable.
Explanation:
The World Bank is an international body of the United Nations with about 189 member-countries. It works with developing countries to reduce poverty, increase access to wealth, and promote global prosperity. The IMF is responsible for ensuring that the international monetary system is operational and stable to ginger sustainable global economic growth.
Liam had an extension built onto his home. He financed it for 48 months with a loan at % APR. His monthly payments were . How much was the loan amount for this extension?
Answer:
The loan is $31,694.73
Explanation:
The complete question is as follows;
Liam had an extension built onto his home. He financed it for 48 months with a loan at 5.75.7% APR. His monthly payments were $740. How much was the loan amount for this extension?
solution
We proceed as follows;
From the question, we have the following terms:
Rate = 5.7%
The monthly rate is thus;
Monthly rate = 5.7% / 12 = 0.475%
Mathematically;
Loan = Annuity * [1 - 1 / (1 + r)^n] / r
Loan = 740 * [1 - 1 / (1 + 0.00475)^48] / 0.00475
Loan = 740 * [1 - 0.796554] / 0.00475
Loan = 740 * 42.830712
Loan = $31,694.73
Bramble Corp. uses flexible budgets. At normal capacity of 19000 units, budgeted manufacturing overhead is: $57000 variable and $270000 fixed. If Stone had actual overhead costs of $328800 for 21000 units produced, what is the difference between actual and budgeted costs
Answer:
$4,200 Favorable
Explanation:
Given the above information,
Variable overhead rate
= $57,000 / 19,000 units
= $3 per unit
Overhead variance = Real - Allocated
= $328,800 - ($3 × 21,000 + $270,000)
= $328,800 - $333,000
= $4,200 Favorable
Builtrite has calculated the average cash flow to be $16,000 with a standard deviation of $4000. What is the probability of a cash flow being less than $9000? (Assume a normal distribution.)
Answer:
4%
Explanation:
For Builtrite, we can find the probability of cash flows by using the following formula:
Z = (X - C) / S
Average Cash Flow is $16000 which denoted by "C"
Standard Deviation is $4000 and is denoted by "S"
And
For cash flows that are less than $9000 which is denoted by X in the equation, "Z" can be calculated as under:
Z = (X - C) / S = ($9,000 - $16,000) / $4,000 = -1.75
As Z is less than -1.75, now we can see that the probability from the Z-table is 4% for -1.75.
Hence the probability of cash flow below $9,000 is 4%.
In Sammy's fast food restaurant, she produces sandwiches, soups, and other items for customers in her town. Which of the following is a fixed input for the production function at Sammy's restaurant?
a) the employees hired to help make the food.
b) the loaves of bread used to make sandwiches.
c) the cans of tomato sauce used to make soups.
d) the dining room where customers eat their meals
Answer:
d) the dining room where customers eat their meals
Explanation:
In the given situation, since it is mentioned there is a Sammy's fast food restaurant that generates the sandwiches, soups, and other items for customers
So based on the options given, the last option should be considered as a fixed input for the production function as the dining room is a fixed plus non-movable item so the same is to be considered
hence, the correct option is d.
Answer:
D
Explanation:
I would say D because you want to give a good impression on your customers so they want to come back and know that you will take good care of them.
The current price of a certain non-dividend-paying stock is $120.00. The future 2 pri ce is characterized by the following probability distribution:
EVENT PROBABILITY FUTURE PRICE P RETURN R
A 0.18 $180 ?
B 0.09 $108 ?
C 0.3 $90 ?
D 0.25 $81 ?
E ? $225
Calculate [i] the expected future price, [ii] the return in each of the five events, and [iii] Calculate l the expected return. Recall that for a stock which does not pay dividends, return is just ain divided by the initial price. Expected return can be calculated in two ways:
[a]: You could calculate the return to be realized in each of the five events, and then calculate the expected value of the return, or,
[b]: You could calculate the expected price first, and then use the possible fact that:
E(R) = E(P)/Po - 1
Answer:
Non-Dividend-Paying Stock
i) Calculation of the expected future price:
EVENT PROBABILITY FUTURE PRICE P RETURN R
A 0.18 $180 $32.40
B 0.09 $108 $9.72
C 0.3 $90 $27.00
D 0.25 $81 $20.25
E 0.18 $225 $40.50
Total 1.0 $129.87 $129.87
Future price = the expected returns = $129.87
ii) Calculation of the return in each of the five events:
EVENT PROBABILITY FUTURE PRICE P RETURN R
A 0.18 $180 $32.40
B 0.09 $108 $9.72
C 0.3 $90 $27.00
D 0.25 $81 $20.25
E 0.18 $225 $40.50
iii) Calculation of the expected return:
EVENT PROBABILITY FUTURE PRICE P RETURN R
A 0.18 $180 $32.40
B 0.09 $108 $9.72
C 0.3 $90 $27.00
D 0.25 $81 $20.25
E 0.18 $225 $40.50
Total 1.0 $129.87
Explanation:
a) Data & Calculations:
EVENT PROBABILITY FUTURE PRICE P RETURN R
A 0.18 $180 ?
B 0.09 $108 ?
C 0.3 $90 ?
D 0.25 $81 ?
E ? $225
If stock A does not pay dividend, it will attract capital appreciation which compensates for the unpaid dividends since the company has increased assets over liabilities. When the assets grow more than the liabilities from the reinvestment of the profits, the net value of the business which is the equity increases. This capital growth belongs to the stockholders and is distributable to them in the form of the future price of the stock, which appreciates with the capital growth.
During the year, Wright Company sells 500 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year. Date Transaction
Number of Units Unit Cost Total Cost
Jan. 1 Beginning inventory 60 $66 $3,960
May. 5 Purchase 280 69 19,320
Nov. 3 Purchase 230 74 17,020
570 $40,300
Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO.
Answer:
$5,180 and $35,120
Explanation:
The computation of the cost of goods sold and the ending inventory is shown below:
There are 500 unit sold so according to that the cost of goods sold is
Jan 1 60 units $66 $3,960
May 5 280 units $69 $19,320
Nov 3 160 units $74 $11,840
Cost of goods sold $35,120
Now the ending inventory is
Since there is a 70 ending inventory units i.e comes from
= 570 units - 500 units
= 70 units
So this should be at $74
i.e $5,180
A company had total sales of $840,000, net sales of $821,400, and an average accounts receivable of $111,000. Its accounts receivable turnover equals:
Answer:
7.4
Explanation:
accounts receivable turnover is ratio of total net sales and average account receivable.
accounts receivable turnover = total net sales/ average account receivable
Given
net sales = $821,400,
average accounts receivable = $111,000
accounts receivable turnover =$821,400/111,000 = 7.4 Answer
After analyzing its own resources and unique abilities, a company is now trying to determine what group of customers it can satisfy with a good or service. It is in the process of choosing a
Answer: target market
Explanation: A target market is simply a group of people whose needs and preferences match the product range of a company and to whom those products are marketed, often times actively. As such, when the resources and unique abilities of a firm has been analysed, and is now in the process of determining what group of customers it can satisfy with a good or service, then it is in the process of choosing a target market.
The cost of equity is ________. the interest associated with debt the rate of return required by investors to incentivize them to invest in a company the weighted average cost of capital equal to the amount of asset turnover
Answer:
If an = 3n - 2 , find a2
Explanation:
If an = 3n - 2 , find a2If an = 3n - 2 , find a2
The manager of a commercial building has many responsibilities in connection with the operation and maintenance of the structure. The manager would normally be considered the agent of
Answer:
agent of the building's owner
Explanation:
In such a scenario, the manager would normally be considered the agent of the building's owner. This is because the manager acts on behalf of the building owner since all of the tasks that they are responsible for have been specified by the owner and benefit the owner. Also, the manager deals with the building's tenants on behalf of the owner so that he does not have to take time out of his day to do so.
A firm has a total market value of $10 million while its debt has a market value of $4 million. What is the after-tax weighted average cost of capital if the before-tax cost of debt is 10%, the cost of equity is 15%, and the tax rate is 35%
Answer:
11.6%
Explanation:
A firm total market value is $10 million
Its debt has a market value of $4 million
The before-tax cost of debt is 10%
= 10/100
= 0.1
The cost of equity is 15%
= 15/100
= 0.15
The tax rate is 35%
= 35/100
= 0.35
Therefore, the after-tax weighted average cost of capital can be calculated as follows
WACC= 0.4(0.10)(1-0.35) + 0.6(0.15)
= 0.04(0.65) + 0.09
= 0.026 + 0.09
= 0.116×100
= 11.6%
Hence the after-tax weighted average cost of capital is 11.6%
NEED HELP ASAP!!
Which of the following is an example of a need? (1 point)
cell phone
television
vehicle
water**
Which of the following is a job that would supply a service that meets a want? (1 point)
grocer
doctor
hair stylist**
plumber
What is the term for something that is not necessary but makes your life easier and more enjoyable? (1 point)
businesses**
economics
needs
wants
Which of the following is an example of a job surplus? (1 point)
The demand for roofers is higher than the number of people willing to do roofing.**
Roofers demand more pay for the work they are doing.
The number of roofers is higher than the roofing jobs available.
There are more roofing materials being manufactured than there are houses that need them.
Answer: #1.Water #2.Doctor #3.Wants #4.There are more foofing materialsbeing manufactured than there are houses that need them.
Explanation:
Answer:
D.) Water
C.) Hair Stylist
D.) Want
A.) The demand for roofers is higher than the number of people willing to do roofing.
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $250,000. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7:
Year 1 $390,000
2 400,000
3 411,000
4 426,000
5 434,000
6 435,000
7 436,000
The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $400,000. This new equipment would require maintenance costs of $100,000 at the end of the fifth year. The cost of capital is 9%.
Instructions
Use the net present value method to determine whether Hillsong should purchase the new machine to replace the existing machine, and state the reason for your conclus
Answer:
NPV = 37,599 Negative
Explanation:
We can calculate the NPV of the new sewing machine by deducting the Present value of future cash inflows by Investment
Initial investment = Machine cost + Training cost - Salvage value
Initial investment = 2,450,000 + 85,000 - 250,000
Initial investment = 2,285,000
Year DF(9%) Present Value
1 Cash inflow 390,000 x 0.917 $357,798
2 Cash inflow 400,000 x 0.842 $336,672
3 Cash inflow 411,000 x 0.772 $317,367
4 Cash inflow 426,000 x 0.708 $301,789
5 Cash inflow 334,100 x 0.650 $217,077 (434,100 - 100,000)
6 Cash inflow 435,000 x 0.596 $259,376
7 Cash inflow 436,000 x 0.547 $238,507
7 Salvage value 400,000 x 0.547 $218,814
Present Value of cash inflow $2,247,401
Initial investment $2,285,000
NPV ($2,247,401 - $2,285,000) (37,599)
Conclusion: Hillsong should not purchase the new machine as the NPV of the machine is negative
Consider the following scenario analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 -5 % 14 %
Normal economy 0.60 15 8
Boom 0.20 25 4
Assume a portfolio with weights of .60 in stocks and .40 in bonds.
a. What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer:
a. Rate of Return on the portfolio in each scenario:
Scenario Analysis:
Rate of Return
Scenario Probability Stocks Bonds Return of Return
Recession 0.20 -5 % 14 %
= 0.20((-5% x 60%) + (14% x 40%)) = 0.0052 = 0.5%
Normal economy 0.60 15 8
= 0.60((15% x 60%) + (8% x 40%)) = 0.0732 = 7.3%
Boom 0.20 25 4
= 0.20((25% x 60%) + (4% x 40%) = 0.0332 = 3.3%
Weights 1.00 0.60 0.40
b. Expected rate of return =
Recession = 0.0052
Normal economy = 0.0732
Boom = 0.0332
Total expected returns = 0.1116 = 11.2%
Mean = 3.72% (11.2%/3)
Variance = 0.001168
Standard Deviation = 0.034 = 0.03
Explanation:
a) Data:
Scenario Analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 -5 % 14 %
Normal economy 0.60 15 8
Boom 0.20 25 4
Weights 1.00 0.60 0.40
b) The rate of return for each portfolio is derived by weighing the securities, adding the resultant figures and applying the scenario probability. The expected rate of return is the addition of the returns of all the portfolio under the three scenarios. The step for obtaining the standard deviation is to calculate the mean, the variance, and getting the square root of the variance.