Answer:
The dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.
Explanation:
A money market hedge refers to a method that employed to to preserve the value of a foreign currency transaction in the domestic currency of a company in order to reduce the exchange rate or currency risk that is associated with business transactions with a foreign company.
For this question, the dollar cost of using a money market hedge can be calculated as follows:
Amount needed to invest in British pounds = Amount needed to hedge / (1 + British interest rate) = £200,000 / (1 + 0.05) = £190,476.19
Since this is in British pounds, we have to convert to the US dollars to obtain the amount of the US dollars that is needed to exchange as follows:
Amount needed to invest in the US dollars = Amount needed to invest in British pounds * Spot rate of the pound = £190,476.19 * $2.02 = $384,761.90
We can now calculate the amount needed to repay loan after 180-day as follow:
Amount needed to repay loan after 180-day = Amount needed to invest in the US dollars * (1 + U.S. interest rate) = $384,761.90 * (1 + 0.04) = $400,152.38
Therefore, the dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.
TB MC Qu. 6-63 Creswell Corporation's fixed monthly expenses ... Creswell Corporation's fixed monthly expenses are $23,000 and its contribution margin ratio is 63%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $78,000
Answer:
Net operating income= $26,140
Explanation:
Giving the following information:
Fixed costs= $23,000
The contribution margin ratio is 63%.
Sales= $78,000
First, we need to calculate the contribution margin:
Contribution margin= contribution margin ratio*sales
Contribution margin= 0.63*78,000
Contribution margin= 49,140
Net operating income= 49,140 - 23,000= $26,140
A customer owns a long-term negotiable CD. If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that:
Complete Question:
A customer owns a long-term negotiable CD. If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that:
A. a prepayment penalty will be charged
B. he or she will receive par value of the principal plus accrued interest
C. the CD may not be redeemed prior to maturity
D. the customer will receive the market value plus accrued interest
Answer:
D. the customer will receive the market value plus accrued interest.
Explanation:
In this scenario, a customer owns a long-term negotiable certificate of deposit (CD). If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that the customer will receive the market value plus accrued interest.
Generally, in the stock markets when a customer wishes to withdraw his or her funds on any brokered CD, there are no penalties for such actions or choice. The registered representative should pro-rate the amount of interest earned by the customer over the period of time for the deposit.
Under the principles of agency law, any sale of goods by a salesperson in a store to a customer can be binding on the owner of the store. True False
Answer: True
Explanation:
Under Agency Law in relation to employment, the salesperson is acting as an agent of the owner of the store and as such is their representative. As their representative, it is assumed that whatever they are selling is from the Owner whom they represent and as such can be binding on the owner.
This is why the Agent must act in the best interest of the owner because the owner could be held negligent for the actions of their agents. For instance, a salesperson will not be sued for a faulty equipment that caused harm but the store can.
If someone received cash 2 700 for sold goods, which journal account should be created?
Answer:
cash a/c dr
To sales a/c
( being goods sold in cash )
The following information pertains to J Company's outstanding stock for 2021:
Common stock, $1 par
Shares outstanding, 1/1/2021 10,000
2 for 1 stock split, 4/1/2021 10,000
Shares issued, 7/1/2021 5,000
Preferred stock, $100 par, 7% cumulative
Shares outstanding, 1/1/2021 4,000
What is the number of shares J should use to calculate 2018 basic earnings per share?
a. 20,000.
b. 22,500.
c. 25,000 .
d. 27,000.
Answer: b. 22,500
Explanation:
J should use the total number of outstanding common stock at end of year to calculate 2018 basic earnings.
As a result of the Stock-split, the shares are split into 2 for 1.
There were 10,000 shares split so;
= 10,000 * 2
= 20,000
On the 1st of July, 5,000 shares were issued. This means that up till December 2021, the stock was outstanding for 6 months.
This will reflected by;
= 5,000 * 6/12
= 2,500 shares
Total shares = 20,000 + 2,500
= 22,500 shares
Sudoku Company issues 17,000 shares of $8 par value common stock in exchange for land and a building. The land is valued at $230,000 and the building at $372,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
Debit Land for $230,000
Debit Building for $372,000
Credit Common Stock (w.1) for $136,000
Credit Paid in capital in excess of per value (w.2) for $466,000
Explanation:
The journal entry will look as follows:
Account Name Dr ($) Cr ($)
Land 230,000
Building 372,000
Common Stock (w.1) 136,000
Paid in capital in excess of per value (w.2) 466,000
(To record issuance of stock in exchange for the land and building.)
Workings:
w.1: Common stock = Number of shares issued * Price per share = 17,000 * $8 = $136,000
w.2: Paid in capital in excess of per value = Value of land + Value of building - Common stock = $230,000 + $372,000 - $136,000 = $466,000
1) Compute cash flows from financing activities using the above company information.
Addtional Short-Term Borrowings $20,000
Purchase of short term investments $5000
Cash Dividends Paid 16000
Interest Paid 8000
2) Compute cash flows from investing activities using the above company information.
Sale of short term investments $6000
Cash Collections from Customers $16,000
Purchase of used equipment $5000
Depreciation Expense $2000
Answer:
$4,000$1,000Explanation:
1. Financing Cashflows relate to cash spent or received for the capital used in the company. These include Equity, Long term borrowings and dividends. Interest payments go to the Operating Cashflow and investments go to the Investing cashflow.
Financing Cashflow is;
= Inflow - Outflow
= +20,000 - 16,000
= +$4,000
2. Investing Cashflows related to cash spent or received from fixed assets as well as the securities of other companies. Cash collections does not fall here but rather under Operating cashflows along with depreciation.
Investing Cashflow is;
= Inflow - Outflow
= +6,000 - 5,000
= $1,000
You are the newly assigned project manager to a major IT upgrade project in your global company. How will you determine the risk tolerances associated with your project
Answer:
I have to identify the risk factors in the project and then gauge the willingness of the company to take such risks.
Explanation:
Risk tolerance is the willingness of an organization or an individual to take certain risks. The risk tolerance level of a person or organization can be classified as either high or low. For a project manager who wants to determine the risk tolerances associated with his project, he has to first identify the risk factors, and then try to know the risk level and if indeed this level is acceptable within the organization's culture and standard.
The project manager would do well to plot a graph that would show the probability of a risky action happening or not. A risk tolerance line is now obtained from where the project manager can know if that risk is tolerable by organization standards. The extent of job security would also help in determining the amount of risk a manager can take. However, they are still expected to stay within the standards of the organization.
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is:_______.
a. Debit Depletion Expense $93,750; credit Natural Resources $93,750.
b. Debit Cash $112,500; credit Natural Resources $112,500.
c. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750.
d. Debit Cash $93,750; credit Accumulated Depletion $93,750.
e. Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500.
Answer:
Option c is the correct answer.
Explanation:
The depletion expense or charge for the period can be calculated using the following formula,
Depletion expense = [(Cost - Salvage Value) / Total units expected to be mined] * Units mined during the period
Depletion expense = [(1500000 - 250000) / 2000000] * 150000
Depletion expense = $93750
The entry to record the expense is,
Depletion expense 93750 Dr
Accumulated depletion 93750 Cr
So, option c is the correct answer.
IOP Company purchased a machine on 1/1/22 costing $500. Estimated life was 5 years; estimated salvage value was $100. In 2025, IOP discovered that the bookkeeper correctly used straight-line depreciation, but erroneously used an estimated life of 8 years in computing depreciation for the first 3 years of life. The Prior Period Adjustment to be recorded in 2025 will be:
Answer:
The Prior Period Adjustment to be recorded in 2025 will include a $90 debit as adjustment to Retained Earnings
Explanation:
Correct depreciation would have been = ($500-$100)/5 = $80
Depreciation charged wrongly as ($500-$400)/8 = $50
Therefore depreciation has been charged short by $30 for three years, thereby reflecting income greater by $30 each year for 3 years.
Since due to wrong depreciation retained earnings is higher by $90, therefore we have to debit retained earnings by $90
When marginal cost is greater than average cost, average cost must be:_________.
a. rising.
b. falling.
c. constant.
d. The direction of change in marginal cost cannot be determined from this information.
Answer:
A
The average cost will be rising
A negative supply shock, such as the OPEC oil price increases of the early 1970s, can be illustrated by a shift to the ______________ of the short-run aggregate supply curve and a shift _________________ of the short-run Phillips curve.
Answer: Leftward; upwards.
Explanation: A Supply shock is a term used to describe the sudden and unexpected change in the supply of a given product or commodity usually indicated by the leftward shift if the shock is negative in the aggregate supply curve and an upward change in direction in the Phillips curve both on the short run. Both curves are used to demonstrate graphically the impacts of shifts in supply for a given product or commodity.
Sonic, Inc. is planning to produce 2,500 units of product in 2016. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.
Required:
a. Compute the budgeted amounts for 2016 for direct materials to be used, direct labor, and applied overhead.
b. Compute the standard cost of one unit of product.
Answer:
Results are below.
Explanation:
Giving the following information:
Production= 2,500
Each unit requires 3 pounds of materials at $6 per pound and 0.5 of labor at $16 per hour. The overhead rate is 75% of direct labor.
First, we need to calculate the total cost for direct material, direct labor, and manufacturing overhead:
Direct material= (3*2,500)*6= $45,000
Direct labor= (0.5*2,500)*16= $20,000
Manufacturing overhead= 20,000*0.75= $15,000
Total cost= $80,000
Now, the unitary cost:
unitary cost= 80,000/2,500= $32
Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of 0.6. Which of the following statements is most accurate? The equilibrium expected rate of return is higher for Kaskin than for Quinn. The stock of Kaskin has more total risk than Quinn. The stock of Quinn has more systematic risk than that of Kaskin.
Answer:
The equilibrium expected rate of return is higher for Kaskin than for Quinn.
Explanation:
Option A “The equilibrium expected rate of return is higher for Kaskin than for Quinn” is more accurate because the expected return is calculated by multiplying the risk premium with beta value and then adding with risk-free return. However, if the beta value is high, then the magnitude after multiplying with the risk premium will be high. Moreover, is magnitude will be added to risk-free return to find the expected return. Thus, it can be seen that Kaskin has high beta 1.2 as compared to Quinn’s beta value 0.6. So, the Kaskin has a higher expected return.
Based on the following information, what is the expected return? State of Probability of State Rate of Return if Economy of Economy State Occurs Recession .29 − 9.70% Normal .40 11.20% Boom .31 21.40% Multiple
Answer:
g
Explanation:
g
Suppose a relative has promised to give you $1,000 as a wedding gift the day you get engaged. Assuming a constant interest rate of 5%, consider the present and future values of this gift, depending on when you become engaged. Complete the first row of the table by determining the value of the gift in one and two years if you become engaged today. Present Value Value in One Year Value in Two YearsDate Received (Dollars) (Dollars) (Dollars)Today 1,000.00 ? ?In 1 year ? 1,000.00 In 2 years ? 1,000.00Complete the first column of the table by computing the present value of the gift if you get engaged in one year or two years.The present value of the gift is _________ if you get engaged in two years than it is if you get engaged in one year.
Answer:
Date Received Present Value Value in 1 Year Value In 2 Years
today $1,000 $1,050 $1,102.50
in 1 year $952.38 $1,000 $1,050
in 2 years $907.03 $952.38 $1,000
The present value of the gift is LOWER (BY $45.35) if you get engaged in two years than it is if you get engaged in one year.
Explanation:
to determine future value:
future value = present value x (1 + interest rate)ⁿ
to determine present value:
present value = future value / (1 + interest rate)ⁿ
22. On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Princess Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, how much interest revenue will Princess record in 2022 on this lease
Answer:
$293,980.13
Explanation:
Calculation of how much of the interest revenue Princess will record in 2022 on the lease
First Step is to find the interest for year 2021
Present Value January 1, 2021 $3,961,183
Less Payment January 1, 2021 (675,000)
=$3,286,183
Hence,
2021 Interest =$3,286,183× 10%
2021 Interest = $328,618.3
Second Step
Second Payment $675,000
Less Interest (328,618.3)
Reduced balance $346,381.7
Third Step is to find the how much interest revenue will Princess record in 2022 on the lease
2021 $3,286,183
Less Reduced balance (346,381.7)
January 1 2022 Liability = $2,939,801.3× 10%
2022 Interest Revenue =$293,980.13
Therefore the amount of interest revenue that Princess will record in 2022 on the lease will be $293,980.13
Treasury bonds paying an 8% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have to pay in order to sell at par if they paid their coupons annually? (Hint: What is the effective annual yield on the bond?)
Answer:
8.16%
Explanation:
current yield = bond's value x (1 + semiannual interest rate)ⁿ
in this case:
bond's value = $1,000 (we choose the value)semiannual interest rate = 8% / 2 = 4%n = 2 semiannual couponscurrent yield = $1,000 x (1 + 4%)² = $1,000 x 1.0816 = $1,081.60
in order for a bond that pays an annual coupon to be sold at the same value, it must yield the same return = ($1,081.60 - $1,000) / $1,000 = 8.16%
A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8% and face value $1,000. Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life.
Answer:
First Year $ 17.17
Second Year $ 18.53
Last Year $ 74.08
Explanation:
Computation to Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life
Imputed Interest
First step
Using this formula
Imputed interest=(Present Value /1+Yield to maturity)^Numberd of years
Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n
0 20 (1/1.08)^20= $ 214.54
1 19 (1/1.08)^19=$ 231.71
2 18 (1/1.08)^18=$ 250.24
19 1 (1/1.08)^1=$ 925.92
20 0 (1/1.08)^0=$ 1,000
Second step is to find the Imputed interest for the first year, second year; and the last year of the bond’s life
Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n =Imputed Interest
0 20 $ 214.54
1 19 $ 231.71 $17.17
($231.71-$214.54)= $17.17
2 18 $ 250.24 $18.53
($250.24-$231.71)=$18.53
19 1 $ 925.92
20 0 $ 1,000 $74.08
($1,000-$925.92) =$74.08
Therefore the imputed interest will be:
First Year $ 17.17
Second Year $ 18.53
Last Year $ 74.08
On January 2 2018, Maxwell Furniture purchased display shelving for $8,100 cash, expecting the shelving to remain in service for five years. Maxwell depreciated the shelving on a double-declining-balance basis, with $1,800 estimated residual value. On October 31, 2019, the company sold the shelving for $2,700 cash.
Requirement:
Record both the depreciation expense on the shelving for and its sale in . Also show how to compute the gain or loss on the disposal of the shelving.
Answer: Please find answers in explanation column
Explanation:
Double declining depreciation rate = 1/n x 2
= 1/5 x 2= 2/5 = 0.4 x 100 = 40 %
Carrying value = if depreciation rate = 40 % , then begining value = 100-40=60%
Depreciation expense for 2019 = Carrying value x depreciation nrate x period(jan- oct) = $8,100 x 60% x 40% x 10/12 = $1,620
Journal entry to record Depreciation expense
Accounts Debit Credit
Depreciation expense $1,620
Accumulated depreciation--Display shelving $1,620
Carrying value / Ending balance of shelving at October, 2019= cost - depreciation
8,100 - 8,100 x 40% + 1620 = 8,100 - 4,860= $3240
Gain/ Loss = Sale - the ending balance of the carrying value of the asset
$2700 - $3240= -540= $540 loss
Journal to record shelving for and its sale in .
Accounts Debit Credit
Cash $2700
Accumulated depreciation--
Display shelving (3240 +1620) $4860
loss on sale of asset $540
Shelving $8,100
Sam was out hunting in the woods one day when he stumbled upon a baby fox. Sam was able to capture the fox and brought him home. He went and bought the fox a cage, feeding dishes, a leash, and a name tag. He decided to call the fox Rocky, and made sure to include a phone number on the tag in case he was lost. He took Rocky for a walk, but Rocky did not seem to like the leash around its neck. Sam's wife Ellie did not seem to care for the fox. A week later, Rocky escaped from his cage and wandered away. That same day Harold saw the fox wandering on his property, but was unable to catch it. Eventually, Rocky returned to the woods. Who owns the fox?
a. Sam
b. No one
c. Harold
d. Sam and Ellie
e. Ellie
Answer:
No one
Explanation:
This is because no one legally owned him and the fox escaped anyways.
ABC Corporation has the following information: Total market value of a company’s stock: $650 million Total market value of the company’s debt: $150 million Cost of Equity: 10% Cost of Debt: 8% Corporate tax rate is 35 percent What is the WACC of ABC Corporation?
Answer:
WACC of ABC Corporation is 91%
Explanation:
WACC = Kd * (1+T) * Debt/Debt+Equity + Ke * Debt/Equity
Kd = Cost of debt
T = Corporate tax rate
WACC = 0.08*(1-0.35)*(150m/150m+650m) + 0.10*(650m/150m+650m)
WACC = 0.08 *0.65*0.1875 + 0.10*0.8125
WACC = 0.00975 + 0.08125
WACC = 0.091
WACC = 91%
Therefore, the WACC of ABC Corporation is 91%
The debt-to-equity ratio for your small business was 1.40 at the end of last year and 1.25 at the end of this year. Your debt-to-equity ratio is:_________
Answer:
debt-to-equity ratio is 1.33 .
Explanation:
Given the debt equity ratio at the beginning and at end of the year, we can estimate the debt equity ratio of a company as the average of the two.
Average debt-to-equity ratio = (1.40 + 1.25) ÷ 2
= 1.325 or 1.33
Messing Company has their own credit card and makes a credit sale on February 1 to one of its customers for $5,000. Prepare the February 1 journal entry for Messing Company by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
February 1
DR Accounts Receivable.......................................$5,000
CR Sales........................................................................................$5,000
(To record sales on credit)
The credit card was that of Messing company itself.
You purchased a machine for $1.19 million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 40%. If you sell the machine today (after three years of depreciation) for $724,000, what is your incremental cash flow from selling the machine?
Answer:
The incremental cash flow is $706,400
Explanation:
Calculation of Depreciation for 3 years
Depreciation = Cost / Useful years
= $1,190,000/7
= $170,000
Depreciation up to 3 years = $170,000 * 3
= $510,000
Calculation of Book value
Book value = Cost - Deprciation up to 3 years
= $1,190,000-$510,000
= $680,000
Profit on sale of assets = Sales value - Book value
= $724,000 - $680,000
= $44,000
Incremental Cash flow = Sales value - (Profit on sales of asset * Tax rate)
= $724,000 - $44,000 * 40%
= $724,000 - $17,600
= $706,400
Therefore, the incremental cash flow is $706,400
On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 1/10, n/30. Flores uses the gross method of accounting for cash discounts. What is the correct entry for Flores on November 10
Answer:
Nov 10,
DR Accounts Receivable .........................$8,000
CR Sales ......................................................................$8,000
(To record credit sale)
Explanation:
On the day that Flores Mills sold the carpet, they are to record this as a credit sales as cash was not paid. The correct entry would be to debit Accounts receivable and credit Sales.
The discount will only be applied if/when the customer settles the account.
If you were given a personality test as part of an employment application process, would you answer the questions honestly or would you attempt to answer the questions based upon your image of "correct" way to answer? what implications does your response has for the validity of personality testing?
Explanation:
Personality tests are sold on the promise that they are valid (they measure what they say they will measure) and reliable (they produce consistent results). “Many studies over the years have proven the validity of the MBTI instrument,” says the Myers & Briggs FoundationPsychologists seek to measure personality through a number of methods, the most common of which are objective tests and projective measures.Objective tests, such as self-report measures, rely on an individual's personal responses and are relatively free of rater bias.Hope it will help you.I would answer some questions honestly but if there are some questions which i can't tell the truth i will tell some lies. because if u really like this job and don't want to loose it, it's ok to give wrong answers just for once! That's my opinion. :p. But be careful u might get in trouble if they find out ur lying!
Which of the following is an external driver of change? A. talent shortages B. budget changes C. top management D. deregulation
answer.
the answer is b.budget changes.because the external driver of changes is something that drives changes to business.
Crane Company distributes to consumers coupons which may be presented (on or before a stated expiration date) to grocers for discounts on certain products of Crane. The grocers are reimbursed when they send the coupons to Crane. In Crane's experience, 50% of such coupons are redeemed, and generally one month elapses between the date a grocer receives a coupon from a consumer and the date Crane receives it. During 2018 Crane issued two separate series of coupons as follows:
Issued On Total Value Consumer Expiration Date Amount Disbursed as of 12/31/18
1/1/18 $510000 6/30/18 $234000
7/1/18 830000 12/31/18 355000
The only journal entry recorded to date is: debit to coupon expense and credit to cash of $817000. The December 31, 2018 balance sheet should include a liability for unredeemed coupons of:__________
a. $0.
b. $70,000.
c. $184,000.
d. $420,000.
Answer:
Liability of un-redeemed coupons Pending on December 31, 2018 is $60,000
Explanation:
Coupon already expired issued on Jan 01, 2018
Coupon issued on 07/01/2018 $830,000
Estimated redeemable coupon value - 50% $415,000
($830,000 * 50%)
Less : Disbursed $355,000
Liability pending on Dec. 31, 2018 $60,000
IBM just paid a dividend of and expects these dividends to grow at % a year. The price of IBM is per share. What is IBM's cost of equity capital?
Question
The question is incomplete. The complete version is given below:
IBM just paid a dividend of $3.5 and expects these dividends to grow at 7% a year. The price of IBM is $100 per share. What is? IBM's cost of equity? capital?
Answer:
Cost of equity = 10.7%
Explanation:
Cost of equity can be ascertained using the dividend valuation model. The dividend valuation model states that the price of a stock is the present value of future dividends discounted at the required rate of return. The required rate of return is the cost of equity.
The cost is the minimum rate of return that ordinary shareholders are willing to accept considering the opportunity cost of their capital
Cost of equity (Ke) =( Do( 1+g)/P ) + g
DATA
Ke- ?
D0- 3.5
P-100
g-7%
Ke= 3.5×(1.07)/100 + 0.07 = 0.10745
Ke- 0.10745 × 100 = 10.7%
Cost of equity = 10.7%