Answer:
$125,000
Explanation:
Given the following resorted data from the question:
Spot Rate Forward Rate for
March 16, 2020 Delivery
November 16, 2019 $1.250 $ 1.248
December 31, 2019 1.260 1.255
March 16, 2020 1.265 1.265
The applicable rate to use to calculate the amount the company will report sales revenue on its 2019 income statement is the spot rate ruling on the date the company made the sale to the customer in Germany, i.e. $1.250 on November 16, 2019.
Therefore, we have:
Sales revenue = €100,000 * $1.250 = $125,000.
Therefore, the amount the company will report sales revenue on its 2019 income statement is $125,000.
There is a 3 percent error rate at a specific point in a production process. If an inspector is placed at this point, all the errors can be detected and eliminated. However, the inspector is paid $8 per hour and can inspect units in the process at the rate of 30 per hour. If no inspector is used and defects are allowed to pass this point, there is a cost of $10 per unit to correct the defect later on. Should an inspector be hired?
To determine if an inspector should be hired, compare the costs of fixing defects with and without the inspector. If the cost of hiring is less than the cost of fixing defects, then an inspector should be hired.
Explanation:To determine whether an inspector should be hired or not, we need to compare the cost of fixing defects with and without an inspector. With a 3 percent error rate, without an inspector, the cost of fixing a defect later on is $10 per unit. However, if an inspector is placed and all errors are detected and eliminated, the cost can be avoided. The inspector is paid $8 per hour and can inspect 30 units per hour. So, the cost of hiring the inspector is $8 per 30 units, which is $0.27 per unit. If $0.27 is less than $10, it is more cost-effective to hire an inspector.
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Hiring an inspector is more cost-effective because the inspection cost per unit ($0.27) is lower than the expected cost to fix defects later ($0.30 per unit) given the 3 percent error rate.
The student is asking whether it is cost-effective to hire an inspector for quality control in a production process with a known error rate of 3 percent. The cost to hire an inspector is $8 per hour, and the inspector can inspect 30 units per hour. If a defect passes through without inspection, it will later incur a correction cost of $10 per unit.
To decide whether to hire the inspector, we must compare the cost of inspection versus the cost of defects. Inspecting 30 units in an hour at $8 per hour costs approximately $0.27 per unit ($8 divided by 30 units). Since 3% of units are defective, the expected cost to fix these defects without an inspector is $0.30 per unit (3% of units times $10 per unit correction cost). Therefore, it is cheaper to hire the inspector to detect and eliminate errors immediately, rather than fixing defects later on.
Two firms compete by advertising. Given the payoff matrix to this advertising game, identify each firm's best response to its rival's possible actions. If Firm 2 does not advertise, then Firm 1 should ▼ advertise not advertise and if Firm 2 advertises, then Firm 1 should ▼ not advertise advertise . If Firm 1 does not advertise, then Firm 2 should ▼ not advertise advertise and if Firm 1 advertises, then Firm 2 should ▼ not advertise advertise . Does either firm have a dominant strategy? Firm 1's dominant strategy is to ▼ not advertise advertise and Firm 2's dominant strategy is to ▼ not advertise advertise . What is the Nash equilibrium? A. The Nash equilibrium is for both firms to advertise. B. The Nash equilibrium is for Firm 1 to advertise and Firm 2 to not advertise. C. This game has no Nash equilibria. D. The Nash equilibrium is for both firms to not advertise. E. The Nash equilibrium is for Firm 1 to not advertise and Firm 2 to advertise.
Answer:
If Firm 2 does not advertise, Firm 1 should advertise
If Firm 2 advertises, then Firm 1 should also advertise
Firm 1 dominant strategy is to advertise
Firm 2 dominant strategy is to advertise
1. A. Nash equilibrium is for both Firms to advertise.
Explanation:
Nash equilibrium is a state where interactions by different firms in a matrix is involved. No firm can gain by a unilateral change of strategy if other firm does not changes its strategy. It is a situation where there is optimal when there is no deviation from the initial strategy. Here firm 1 can by advertise and Firm 2 can also optimize by advertising.
n an economy, the working-age population is 400 million. Of this total, 320.0 million workers are employed. 12.0 million workers are unemployed. 56.0 million workers are not available for work (homemakers, full-time students, etc.). 8.0 million workers are available for work but are discouraged and thus are not seeking work. 4.0 million workers are available for work but are not currently seeking work due to transportation or childcare problems. The labor force participation rate in this economy is
Answer: 83%
Explanation:
The Labour Force Participation Rate is a measure that checks the activeness of a nation's workforce.
It is calculated by dividing the segment of the population that are either working or ACTIVELY seeking employment by the total number of working age people in the economy that are not in prison.
It is assumed that unemployed people are Actively seeking employment.
In the above scenario therefore, the active population are,
= (320 million employed + 12 million unemployed )/400 million
The rest of the population are either unavailable for work or not actively seeking employment.
= 332/400
= 0.83
= 83%
The labor force participation rate in this economy is 83%
The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?
Answer:
$22,000
Explanation:
The computation of amount of dividends common shareholders is shown below:-
Amount of annual preferred stock dividend = $ 400,000 par value × 6%
= $24,000
Total Cash Paid to Preferred Paid to Dividends in
Dividend paid Common Arrears at Year end
2011 $40,000 $24,000 $16,000
2012 $20,000 $20,000 $ - $4,000
2013 $50,000 $28,000 $22,000 $ -
Total $110,000 $72,000 $38,000
Therefore, out of $ 50,000 dividend declared and $28,000 is for Preferred stockholders $24,000 annual + 4,000 Arrears
Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $44,010 and $3,440, respectively. During the year, the company wrote off $2,620 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of days Receivables % Likely to be past due amount uncollectible Current $ 70,000 1% 0-30 26,700 5% 31-60 6,760 10% 61-90 3,420 25% Over 90 3,100 50% Total $ 109,980 What will Domino record as Uncollectible Accounts Expense for Year 2
Answer:
Domino will record $4,296 as Uncollectible Accounts Expense for Year 2.
Explanation:
The write-off of the accounts receivable is as follows:
Debit Allowance for doubtful accounts $2,620
Credit Accounts receivable $2,620
(Write-off of accounts receivable)
The effect of the write-off on the allowance account is $3,440 - $2,620 = $820 (credit). It was assumed that the opening balance of $3,440 is credit balance.
Estimate of the uncollectible amount
No of days Receivables % Past due Amount uncollectible
Current $ 70,000 1% $700
0-30 26,700 5% 1,335
31-60 6,760 10% 676
61-90 3,420 25% 855
Over 90 3,100 50% 1,550
Total $109,980 $5,116
The bad debt expense will be $5,116 - $820 = $4,296.
n 2018, Warehouse 13 had net credit sales of $750,000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2018, $29,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $150,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018
Answer:
$28,000
Explanation:
When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.
To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.
Given that Past experience indicates that the allowance should be 10% of the balance in receivables
Allowance = 10% * $150,000
= $15,000
Since during 2018, $29,000 of uncollectible accounts receivable were written off
Balance in allowance account before adjustment
= $29,000 - $16,000
= $13,000 (Debit)
Required adjustment for Doubtful Accounts at December 31, 2018
= $13,000 + $15,000
= $28,000
You just graduated and landed your first job in your new career. You remember that your favorite finance professor told you to begin the painless job of saving for retirement as soon as possible. You decide to put away $5,000 at the end of each year in a Roth IRA. Your expected annual rate of return on the IRA is 6%. The amount you will have accumulated at retirement after 40 years of investing is closest to:
Answer :
Money accumulated at retirement after 40 year = $773,809.83
Explanation :
As per the data given in the question,
Present value of future deposits = $5,000 ÷ (1+6%) + $5,000 ÷ (1+6%)^2+... +$5,000 ÷ (1+6%)^40
= $75,231.48
Future value of deposit is
= Present value × (1 + interest rate)^number of years
= $75,231.48 × (1+6%)^40
= $773,809.83
Hence, Money accumulated at retirement after 40 year = $773,809.83
Answer:
The answer is $7,73,810
Explanation
Solution
To solve this question, we use a table or tabular form shown below:
Rate (I) Rate per period 0.06
NPER Total no of payments 40
PMT Payment per second $5,000
PV Present Value $0.00
TYPE Ending (0), Beginning (1) 0
Future value $ 7,73,810
(-FV (rate, nper, pmt, pv, type))
Which of the following best describes an opportunity cost: Select one: a. it is a relevant cost in decision making, but is not part of the traditional accounting records. b. it is not a relevant cost in decision making, but is part of the traditional accounting records. c. it is a relevant cost in decision making, and is part of the traditional accounting records. d. it is not a relevant cost in decision making, and is not part of the traditional accounting records.
Answer:
a. it is a relevant cost in decision making, but is not part of the traditional accounting records.
Explanation:
An opportunity cost is a relevant cost in decision making, but is not part of the traditional accounting records.
The opportunity cost also known as the alternative forgone in accounting and can be defined as the potential benefit that is forgone when an alternative is selected over another.
For instance, the money and time you spend to go see a movie at the cinema, you can't spend the time reading a book at home and the money can't be spent on something else either.
The opportunity cost can be calculated by using the formula;
Opportunity cost (OC) = FO − CO
where:
FO = Return on alternative forgone.
CO = Return on the option chosen.
Kronos Inc., a car manufacturer, makes a car called Hover that runs on the force generated by super magnets. Kronos is the first company to use super-magnet technology in automobile manufacturing, aiming to reduce dependency on non-renewable fuels. If Kronos plans to release television advertisements about Hover, what kind of advertising objective should it pursue when introducing the new product into the market
Answer:
The objective is to build primary demand.
Explanation:
As Hover is introducing a car that has a new technology, it should use informative advertising because this type of advertising has a focus on the product information to influence potential customers and it is used when companies introduce a new product to inform people about the characteristics of it. According to this, the objective that Hover should pursue when introducing the new product into the market is to build primary demand as this is a new technology and Hover needs to create interest in this type of products by letting people know the features as it is the first company to use super-magnet technology in automobile manufacturing.
All industrialized countries have become "service economies." Which factor helps explain this shift? Group of answer choices Information age and labor saving innovation in manufacturing. Trade unionism and failure of the manufacturing sector to grow. Non availability of industrial labor with required skills. Absence of competition in the service sector.
Answer:
Information Age and labor saving innovation in manufacturing.
Explanation:
The Service economy can be defined as the economy which centers at giving the service than producing goods. A country that provides a service economy is able to earn more from the service sector than other sectors such as manufacturers.
The investment in the service economy is cheaper than other sectors and is comprised of freelancers and entrepreneurs such as doctors, lawyers, professors, etc.
The factor that has led to this shift in countries to a service economy is because of the increase in demand for services in education and Information Technology. And also because of the labor-saving innovations.
Thus the correct answer is the first option.
The common stock of Blasco Books has a standard deviation of 16.4 percent as compared to the market standard deviation of 12.7 percent. The covariance of this stock with the market is .0217. What is the beta of Blasco Books' stock?
Answer:
1.35
Explanation:
For determining the beta first we have to compute the correlation which is shown below:
= Market standard deviation ÷ common stock standard deviation × covariance
= 16.4% ÷ 12.7% × 0.217
= 1.04187
Now the beta of the stock is
= correlation × Market standard deviation ÷ common stock standard deviation
= 1.04187 × 16.4% ÷ 12.7%
= 1.35
We simply applied the above formulas
In 2019, BayKing Company sold used equipment for $ 21 comma 000. The equipment had an original cost of $80,000 and accumulated depreciation as of the date of sale was $60,000. BayKing also purchased heldminustominusmaturity securities for $ 10 comma 000. Net income for the year was $74,000. There were no other transactions conducted during the period. What are the net investing cash flows for BayKing?
Answer:
$11,000
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
net investing cash flows
= $21,000 - $10,000
= $11,000
A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at %5 per year thereafter. The expected rate of return on the stock is 12%.
a) What is the expected price of the stock in a year?
b) Show that the expected return, 12%, equals dividend yield plus capital appreciation.
Answer:
(a) = 57.14
(b) Shown below
Explanation:
According to the scenario, computation of the given data are as follow:-
Expected Rate of Return(R) = 12%
Growth Rate(g) = 5%
P2 = Div. Per Share × (1+g) ÷ (R-g)
P2 = 4 × 1.05 ÷ (0.12 - 0.05) = 60
One Year Stock’s Expected Price = Div. Per Share ÷ (1+R)t + P2 / (1+R)t
a). Expected price (P1) = 4 ÷ (1+0.12)1 + 60 ÷ (1+0.12)1
= 3.57 + 53.57
= 57.14
b).
One Year Dividend (P0) = 2 ÷ (0+0.12) + 4 ÷ (1+0.12)2 + 60÷(1+0.12)2
= 1.79 + 3.19 + 47.83
= 52.81
Dividend Yield Plus Capital Appreciation= Share Dividend in One Year ÷ Current Price Per Share
= 2 ÷ 52.81 = 0.0379 or 3.79%
Capital Gain = ( P1 - P0 ) ÷ P0
= ( 57.14 - 52.81) ÷ 52.81
= 0.0820 or 8.20%
Total = Dividend Yield Plus Capital Appreciation + Capital Gain
= 3.79% + 8.20%
= 11.99% or 12%
Derby Inc. manufactures a product which contains a small part. The company has always purchased this motor from a supplier for $125 each. Derby recently upgraded its own manufacturing capabilities and now has enough excess capacity (including trained workers) to begin manufacturing the motor instead of buying it. The company prepared the following per unit cost projections of making the motor, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 150% of direct labor cost.Direct material $ 38Direct labor 50Overhead (fixed and variable) 75Total $ 163The required volume of output to produce the motors will not require any incremental fixed overhead. Incremental variable overhead cost is $21 per motor. What is the effect on income if Derby decides to make the motors
Answer:
Income will be higher by $16 per unit
Explanation:
As per the data given in the question,
Direct material = $38
Direct labor = $50
Overhead = $21
Total variable cost = $38 + $50 + $21
= $109
Cost of supply = $125
Income increased per unit = cost of supply - total variable cost
=$125 - $109
= $16
Because the cost of inhouse is lower therefore net income will be more by $16 per unit
Rudyard Corporation had 240,000 shares of common stock and 24,000 shares of 6%, $100 par convertible preferred stock outstanding during the year. Net income for the year was $680,000 and dividends were paid to both common and preferred shareholders. Rudyard's effective tax rate is 25%. Each share of preferred stock is convertible into five shares of common stock. What is Rudyard's diluted EPS (rounded)?
Answer:
$1.90 per share
Explanation:
The computation of the diluted earning per share is shown below:
Diluted earning per share = Net income ÷ Weighted number of outstanding shares
where,
Net income is $680,000
And, the Weighted number of outstanding shares is
= 240,000 + 24,000 × 5
= 240,000 + 120,000
= 360,000 shares
So, the diluted EPS is
= $680,000 ÷ 360,000 shares
= $1.90 per share
We simply applied the above formula
Mary owns 100 percent of a gift shop with an equity value of $150,000. If she keeps the shop open 5 days a week, EBIT is $75,000. If the shop remains open 6 days a week, EBIT increases to $92,000 annually. Mary needs an additional $50,000 which she can raise today by either selling stock or issuing debt at an interest rate of 7 percent. The principal amount would be repaid at the end of the fifth year. Ignore taxes. What will be the cash flow for this year to Mary if she issues debt, remains open 6 days a week, and distributes all the residual cash flow to the shareholders?
Answer:
$88,500
Explanation:
The computation of the residual cash flow for the year is shown below:
= EBIT - interest
where,
EBIT is $92,000
And, the interest on debt is
= $50,000 × 7%
= $3,500
So the residual cash flow is
= $92,000 - $3,500
= $88,500
We simply deduct the interest on debt from the EBIT so that the residual cash flow could come
When deducting the interest on the debt from the EBIT the residual cash flow could come is = $88,500
Computation of Cashflow
Now, The computation of the residual cash flow for the year is shown below:
Then = EBIT - interest
where,
EBIT is $92,000
And also, the interest on debt is
Then = $50,000 × 7%
Now, = $3,500
So the residual cash flow is
Then = $92,000 - $3,500
Therefore, = $88,500
Then We deduct the interest on the debt from the EBIT so that the residual cash flow could come
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At the beginning of 2018, England Dresses has an inventory of $75,000. However, management wants to reduce the amount of inventory on hand to $35,000 at December 31. If net sales for 2018 are forecast at $220,000 and the gross profit rate is expected to be 22%, compute the cost of the merchandise which management should expect to purchase during 2018. (Hint: First compute the expected cost of goods sold.)
Answer:
$136600
Explanation:
Given:
inventory of $75,000amount of inventory on hand to $35,000net sales for 2018 at $220,000gross profit rate: 22%We need to find the gross profit via the given information of net sales and gross profit rate
<=> gross profit = net sales*gross profit rate
= $220,000* 22%
= $48,400
Moreover, Cost of goods sold is = sales - gross profit
<=> Cost of goods sold = $220,000 - $48,400 = $171,600
But Cost of goods sold = opening inventory + purchases - closing inventory
<=> purchases = Cost of goods sold - opening inventory + closing inventory
= $171,600 - $75,000 + ($75,000 - $35,000)
= $136600
Answer:
The cost of the merchandise which management should expect to purchase during 2018: $131,600
Explanation:
Net sales for 2018 are forecast at $220,000 and the gross profit rate is expected to be 22%.
The expected Gross profit = 22% x $220,000 = $48,400
The expected Cost of goods sold = Net sales - The expected Gross profit = $220,000 - $48,400 = $171,600
The cost of the merchandise expected to purchase during 2018 = Inventory on hand at December 31 + The expected Cost of goods sold in 2018 - Inventory at the beginning of 2018 = $35,000 + $171,600 - $75,000 = $131,600
was organized on January 1, 2021. The firm was authorized to issue 170,000 shares of $5 par value common stock. During 2021, Ginger Hardware had the following transactions relating to stockholders' equity: Issued 51,000 shares of common stock at $7 per share. Issued 34,000 shares of common stock at $8 per share. Reported a net income of $170,000. Paid dividends of $85,000. What is total paid-in capital at the end of 2021
Answer:
Balance sheet extract as at 31st December,2021
Common stock($255,000+$155,000) $410,000
Paid in capital in excess of par($102,000+$93000) $195,000
Total paid in capital $605,000
Retained earnings($170,000-$85,000) $85,000
Shareholders equity $690,000
Explanation:
The issue of 51,000 shares issue would result in cash proceeds of $357,000 with $255,000 recorded in Common stock account and the balance of $102,000 shown in paid-in capital in excess of par.
The issuance of 34,000 shares would increase cash account by $248,000 while the common stock account and paid-in capital in excess of par would witness increase of $155,000 and $93,000 respectively.
The net income would be reduced by the amount of dividends declared .
ay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 23,000 units at a price of $350 each. Product costs include: Direct materials $74.00 Direct labor $42.00 Variable overhead $11.00 Total fixed factory overhead $549,200 Variable selling expense is a commission of 6 percent of price; fixed selling and administrative expenses total $97,200. Required: 1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations.
Answer:
$21
Explanation:
The computation of the sales commission per unit sold is shown below:
= Selling price per unit × sales commission percentage
= $350 × 6%
= $21
By multiplying the selling price per unit with the sales commission percentage we can get the sales commission per unit and the same is shown above in the calculation part.
All other information is not relevant. Hence, ignored it
Monty Company expects to have a cash balance of $58,410 on January 1,
2017. Relevant monthly budget data for the first 2 months of 2017 are as follows:
Collections from customers: January $110,330, February $194,700.
Payments for direct materials: January $64,900, February $97,350.
Direct labor: January $38,940, February $58,410.
Wages are paid in the month they are incurred.
Manufacturing overhead: January $27,258, February $32,450. These costs include
depreciation of $1,947 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $19,470, February $25,960. These
costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize $15,576 in
cash. Monty Company has a line of credit at a local bank that enables it to
borrow up to $32,450. The company wants to maintain a minimum monthly
cash balance of $25,960. Prepare a cash budget for January and February.
Monty Company Cash Budget
January February
Beginning Cash Balance 58410 35695
Add Receipts
Collections from Customers 110330 194700
Sale of Marketable Securities 15576 0
Total Receipts
Answer:
The ending cash balance of Jan is $ 68145 which is more than $58,410 . We get this balance after the borrowings. The cash balance is $ 18172 for February .
Explanation:
Monty Company
Cash Budget
January February
Beginning Cash Balance 58410 35695
Add Receipts
Collections from Customers 110330 194700
Sale of Marketable Securities 15576 0
Total Receipts 125906 194700
Total available Cash 184316 230395
Less Disbursements
Direct Materials $64,900, $97,350
Direct labor: $38,940, $58,410
Manufacturing overhead: $27,258, $32,450
Depreciation ($1,947) ( $1,947)
Selling and
Administrative expenses: $19,470, $25,960.
Total Disbursements 148,621 212,223
Excess 35,695 18172
Financing
Add Borrowings $32,450 0
Less Repayments 0 0
Ending Cash Balance 68145 18172
Receipts are added to the cash balance to get the total available cash .
Total cash disbursements are subtracted from the total available cash to find the excess amount from which the repayments are subtracted and borrowings are added to get the ending cash balance.
Peter and Blair recently reviewed their future retirement income and expense projections. They hope to retire in 35 years and anticipate they will need funding for an additional 26 years. They determined that they would have a retirement income of $64 comma 000 in today's dollars, but they would actually need $88 comma 241 in retirement income to meet all of their objectives. Calculate the total amount that Peter and Blair must save if they wish to completely fund their income shortfall, assuming a 4 percent inflation rate and a return of 9 percent.
Answer:
Peter and Blair need to save 4,105.10 USD per year for 35 years until retirement.
Explanation:
Peter and Blair actually need 88,241 USD in retirement income to meet all of their objectives.
Current amount they have = 64,000 USD
Time period of Retirement = 35 years
Additional Years = 26 years
Inflation rate = 4%
Rate of return = 9%
So, we have all of that data to solve the problem. Then let's do it.
Our first step is to calculate the real rate of return by incorporating the inflation rate into it. Note: we have been given rate of return not the real rate of return.
Real Rate of Return = ( 1 + ROR given)/(1+ inflation rate) - 1
Real Rate of Return = ( 1+ 0.09)/(1 + 0.04) -1
Real Rate of Return = 0.048 x 100 = 4.80%
So, the real rate of retunr is = 4.80%
Now, let's find out the what is the additional fund required in total:
Additional funds required = Required - Available
Additional funds required = 88,241 - 64,000
Additional funds required = 24,241 USD
Now, we have to calculate the Present value of this additional funds required for the time period of 26 years.
Present value can be calculated by using the finance calculator online.
You have to put these data into the calculator to calculate the present value of the money.
PMT = 24241
Interest Rate (I/Y) = 4.80
Number of Periods (N) = 26 years
By plugging in these numbers, you will the present value of 24,241 USD:
Present Value = 355,770.28 USD
Now, we have to calculate the amount of money Peter and Blair need to save every year till their retirement after 35 years.
For that, I have used that finance calculator this time solving for PMT.
You need to put following data into the calculator:
Future Value = 355,770.28
Number of periods(N) = 35 years
Interest Rate (I/Y) = 4.80%
Annual Payment (PMT) = 4105.10 USD
It means Peter and Blair need to save 4,105.10 USD per year for 35 years until retirement.
Many academic institutions offer a sabbatical policy. Every seventh year a professor is given a year free of teaching and other administrative responsibilities at full pay. For a professor earning $70,000 per year who works for a total of 42 years, what is the present value of the amount she will earn while on sabbatical if the interest rate is 6% (EAR)? Note: Assume that the sabbatical annual salary is paid in one lump sum every 7 years.
Final answer:
The present value of the amount a professor will earn while on sabbatical is $266,996.60.
Explanation:
To calculate the present value of the amount a professor will earn while on sabbatical, we can use the formula for present value of a future sum of money. The formula is:
PV = FV / (1 + r)^n
Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.
In this case, the professor earns $70,000 per year and will work for 42 years. The sabbatical salary is paid in one lump sum every 7 years. So, the number of payments is 42 / 7 = 6.
Using the formula, the future value of the sabbatical salary is $70,000 * 6 = $420,000. The interest rate is 6% (EAR), so r = 0.06. And the number of years is 6.
Substituting the values into the formula, we have:
PV = $420,000 / (1 + 0.06)₆ = $266,996.60
Therefore, the present value of the amount the professor will earn while on sabbatical is $266,996.60.
The present value of the amount the professor will earn while on sabbatical is approximately $175,607.76
To solve this problem, we need to calculate the present value of the sabbatical earnings for a professor who works for a total of 42 years and receives a sabbatical every seventh year. The professor's annual salary is $70,000, and the interest rate is 6% (EAR).
First, we determine how many sabbaticals the professor will receive over the 42-year period. Since the professor receives a sabbatical every seventh year, we divide the total number of years worked by 7:[tex]\[ \text{Number of sabbaticals} = \frac{42}{7} = 6 \][/tex]
Next, we calculate the future value of the sabbatical salary received every seventh year. Since the salary is paid in one lump sum at the end of each sabbatical period, we can use the formula for the future value of a lump sum:
[tex]\[ FV = PV \times (1 + r)^n \][/tex]
where [tex]\( FV \)[/tex] is the future value, [tex]\( PV \)[/tex] is the present value (in this case, the sabbatical salary of $70,000), [tex]\( r \)[/tex] is the interest rate per period, and [tex]\( n \)[/tex] is the number of periods.
However, since the sabbatical salary is received at the end of each sabbatical period, we need to find the present value of each sabbatical salary. The formula for the present value of a lump sum received in the future is:
[tex]\[ PV = \frac{FV}{(1 + r)^n} \][/tex]
For each sabbatical, the number of periods \( n \) will be 7 years, and the interest rate \( r \) is 6% per year. We calculate the present value for each sabbatical and then sum them up to get the total present value of all sabbaticals:
[tex]\[ PV_{\text{total}} = \sum_{i=1}^{6} \frac{70000}{(1 + 0.06)^{7i}} \][/tex]
Now, we calculate the present value for each sabbatical and sum them up:
[tex]\[ PV_{\text{total}} = \frac{70000}{(1 + 0.06)^7} + \frac{70000}{(1 + 0.06)^{14}} + \frac{70000}{(1 + 0.06)^{21}} + \frac{70000}{(1 + 0.06)^{28}} + \frac{70000}{(1 + 0.06)^{35}} + \frac{70000}{(1 + 0.06)^{42}} \]\\[/tex]
After calculating the above expression, we get the total present value of the sabbatical earnings.
Using the given interest rate of 6%, the present value of the sabbatical earnings over the 42-year period is approximately $175,607.76. This is the amount that, if invested today at an annual interest rate of 6%, would grow to be enough to cover the sabbatical salaries paid out every seventh year over the professor's 42-year career.
Burger Emporium Inc. is currently losing $100,000 per year on its Zhou Burger product line. The revenue from the Zhou Burger is $500,000 per year. The related variable costs are $300,000 and the fixed costs specific to the Zhou Burger operation are $300,000 per year. Burger Emporium Inc. is deciding whether or not they should drop their Zhou Burger line. They suspect $160,000 of the fixed costs will be avoidable if they drop the line. Assuming there are no opportunity costs, what should they do from a financial perspective
Answer:
The correct answer to the following question will be "keeping the product line since they would lose an extra $40000 if they dropped".
Explanation:
Keep Drop
Loss $100000 (given) -
Fixed asset loss - (300000-160000)
Loss $100000 140000
If dropped, so the $40000 damage would be included. Such that the correct approach is "keeping the product line since they would lose an extra $40000 if they dropped."
A forward contract is described by:_______.
a. agreeing today to buy a product today at its current price.
b. agreeing today to buy a product at a later date at a price to be set
in the future.
c. agreeing today to buy a product if and only if its price rises above the
exercise price today at its current price.
d. agreeing today to buy a product at a later date at a price set today.
Answer:
Agreeing today to buy a product at a later date at a price set today.
Explanation:
Forward contract can be described as a type of contract that exists between two parties. Both parties agree on a specific and defined price to buy and sell their assets at a later date. The specific price agreed upon by the both the buyer and seller is known as forward price.
It is necessary for the buyer and seller to ensure the forward contract is completed before the fixed date to prevent problems that might arise. The advantages of this type of contract include: consistency in the price agreed upon by both parties, downside risks are prevented due to the ability to determine future rate.
BTC, a consulting company with offices across the United States, began an employee discussion forum on its website. A few employees began criticizing the company on the forum and undermining its morale. BTC does not want to limit employee interaction, but at the same time, it would like to limit what employees can write. Which of the following features of a discussion forum will help them achieve this?a) tele-presence.b) anonymity.c) moderators.d) version control.
Answer:
c) moderators.
Explanation:
Since BTC doesn't want to limit employee interaction, but at the same time, it would like to limit what employees can write. The use of moderating features of a discussion forum through the service of a moderator will help them achieve this effectively and efficiently.
A moderator is a neutral individual who has the sole responsibility and skill set to preside and regulate discussions, by ensuring participants do not stray off from the subject matter and the time allotted to them.
Data related to the inventories of Costco Medical Supply are presented below: Surgical Equipment Surgical Supplies Rehab Equipment Rehab Supplies Selling price $ 265 $ 132 $ 352 $ 159 Cost 163 100 252 159 Costs to sell 26 11 32 7 In applying the lower of cost or net realizable value rule, the inventory of surgical equipment would be valued at: Multiple Choice $163. $181.
Answer:
$163
Explanation:
The accounting standard for Inventory under IFRS IAS 2 requires that inventory be recognized at cost which includes all the cost incurred to bring the item of inventory to a state or place where the item of inventory becomes available for sale.
These costs includes cost of purchase, freight, Insurance cost during transit etc.
Subsequently, inventory is to be carried at the lower of cost or net realizable value. The net realizable value is the difference between the cost and cost to sell.
Given;
Surgical Equipment Surgical Supplies Rehab Equipment Rehab Supplies Selling price $ 265 $ 132 $ 352 $ 159
Cost $ 163 $ 100 $ 252 $ 159
Costs to sell $ 26 $ 11 $ 32 $ 7
Net realizable $ 239 $ 121 $ 322 $ 152
Applying the lower of cost or net realizable value rule, the inventory of surgical equipment would be valued at
= $163
On December 31, 2017, the Bennett Company had 105,000 shares of common stock issued and outstanding. On July 1, 2018, the company sold 21,000 additional shares for cash. Bennett's net income for the year ended December 31, 2018, was $590,000. During 2018, Bennett declared and paid $85,000 in cash dividends on its nonconvertible preferred stock. What is the 2018 basic earnings per share?
Answer:
$5.84
Explanation:
The calculation of basic earnings per share is shown below:-
Earnings available for equity share holders = Net income- Preference dividend
= $590,000 + $85,000
= $675,000
Equivalent shares outstanding = Common stock share + (Additional shares × From July to Dec 31 months)
= 105,000 + (21,000 × 6 ÷ 12)
= 105,000 + 10,500
= 115,500
So, Basic earning per share = Earnings available for equity share holders ÷ Equivalent shares outstanding
= $675,000 ÷ 115,500
= $5.84
Therefore for computing the basic earning per share we simply applied the above formula.
What actions do you think a multinational firm can take to limit the impact of future crises in the global financial system on the ability of the enterprise to raise capital to pay its short-term bills and fund longterm investments? Hill, Charles W. L.. International Business: Competing in the Global Marketplace (p. 623). McGraw-Hill Higher Education. Kindle Edition.
Answer:
A Multinational Company will bound the effect of upcoming disasters within the international economic system on the flexibility of the firm to lift investment to recompense its short-run expenses and fund long run funds in the subsequent methods:
Confirm that the corporate is cost-effective and collapse resistant by differentiating into artifact parts that are pledge diurnal to the most line of the corporation. Maybe, throughout the world money crisis, the upper education phase did well as variety of dismissed wished to upgrading their abilities or re-skill themselves. College conscription enlarged throughout the world money crisis. Expand geologically in terms of markets, provide foundations, plant positions and then on, so just in case sure economies are consuming inactive development, others will compose. Throughout the world money crisis, the expansion in China and Asian country failed to get exaggerated. Use obligation providentially so the corporate isn't over leveraged. Have a vigorous record and make sure that satisfactory money assets are there with the corporate to require care of adverse times. Be complex to tuned in to international economic circumstances and appearance for early cautionary marks of an at hand crisis.To shield itself from the impacts of global financial crises, a multinational firm can diversify capital sources, establish varied banking relationships, practice effective risk management, focus on sustainable investments, and advocate for regulatory changes to manage foreign capital flows.
Explanation:To mitigate the impact of future crises in the global financial system, a multinational firm can implement several strategies to ensure it can raise capital for short-term liquidity and long-term investments. Firstly, the firm can diversify its sources of capital, reducing reliance on any one economy or currency. This might involve maintaining liquidity reserves in multiple currencies or investing in a range of financial instruments. Secondly, establishing strong relationships with multiple banks and investors can provide more options when access to capital becomes constrained. Thirdly, the firm should engage in thorough risk management practices, such as stress testing scenarios to understand potential impacts on capital accessibility.
Another approach is to focus on sustainable investments and long-term projects that might be more attractive to investors who have a medium to long-term focus, thus potentially avoiding the pitfalls of speculative short-term inflows. Furthermore, the firm can take a proactive role in advocating for regulatory changes to manage and direct foreign capital flows, seeking to limit speculative investment and favor more stable and committed capital investments.
Mather Company purchased equipment on January 1, 2018 at a total invoice cost of $336,000; additional costs of $6,000 for freight and $30,000 for installation were incurred. The equipment has an estimated salvage value of $12,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2019 if the straight-line method of depreciation is used is
Answer:
$144,000
Explanation:
The computation of accumulated depreciation is shown below:-
Total cost = Invoice cost + Freight + Installation
= $336,000 + $6,000 + $30,000
= $372,000
Depreciation as per SLM = (Total Cost - Salvage Value) ÷ Estimated useful life
= (372,000 - 12,000) ÷ 5
= $72,000
The amount of accumulated depreciation (after 2 years) = Depreciation as per SLM × Years
= 72,000 × 2
= $144,000
So, for computing the accumulated depreciation we simply applied the above formula.
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 4%. Management calculated a weightedminusaverage cost of capital (WACC) of 3%. Allied's corporate tax rate is 40%.Sales$ 400 comma 000Operating income60 comma 000Total assets1 comma 100 comma 000Current liabilities900 comma 000What is the division's sales margin?
Answer:
The division's sales margin is 15%
Explanation:
In order to calculate the division's sales margin we would have to use the following formula:
sales margin=operating income/sales
operating income= $60,000
sales=$400,000
Therefore sales margin=$60,000/$400,000
sales margin=0.15
sales margin=15%
The division's sales margin is 15%