Answer: B. prices of actively traded stocks do not differ from their true values in an efficient market
Explanation: The efficient market theory postulates that the market is generally efficient with prices of actively traded stocks do not differ from their true values in an efficient market. As a result, prices of securities such as stocks reflect all available information, thus making it needles to engage in stock picking with hopes to "beat the market" on a risk-adjusted basis. This is because the market only reacts to new information.
Your most senior employee is not willing to change how she does her job because she is satisfied with the current approach she uses. To get her to change, you need to focus on Lewin’s stage of planned change. Use your knowledge of organizational change to select the word or phrase that best describes the situation. The introduction of the new computer system isn’t going as planned, but you are doing all that you can to coordinate activities with the change agent to ensure that business is minimally affected. Coaching Transition management Change analysis
The word or phrase that best describes the situation in which your most senior employee is not willing to change how she does her job because she is satisfied with the current approach she uses is transition management. Transition management focuses on guiding individuals or organizations through the process of transitioning from the old ways of doing things to the new ways.
Explanation:The word or phrase that best describes the situation in which your most senior employee is not willing to change how she does her job because she is satisfied with the current approach she uses is transition management.
Transition management is a stage in Lewin’s planned change model that involves guiding individuals or organizations through the process of transitioning from the old ways of doing things to the new ways. It focuses on managing the emotional and psychological aspects of change to ensure a smooth and successful transition.
In this situation, the introduction of a new computer system is not going as planned, and your senior employee's resistance to change presents a challenge. To get her to change, you would need to apply transition management principles, such as communicating the benefits of the new system, addressing her concerns, providing training and support, and involving her in the change process.
Juarez Corporation produces cleaning compounds and solutions for industrial and household use. While most of its products are processed independently, a few are related. Grit 337, a coarse cleaning powder with many industrial uses, costs $2.00 a pound to make and sells for $3.20 a pound. A small portion of the annual production of this product is retained for further processing in the Mixing Department, where it is combined with several other ingredients to form a paste, which is marketed as a silver polish selling for $5.30 per jar. This further processing requires 1/4 pound of Grit 337 per jar. Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $2.10 per jar. Variable selling costs are $0.50 per jar. If the decision were made to cease production of the silver polish, $8,900 of Mixing Department fixed costs could be avoided. Juarez has limited production capacity for Grit 337, but unlimited demand for the cleaning powder.
Required:
Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)
Minimum number of jars = ?
Answer:
4,684 jars
Explanation:
The computation of the minimum number of jars is shown below:
Minimum number of jars = Fixed cost ÷ Contribution margin per unit
where,
Fixed cost is $8,900
And,
Contribution margin per unit is
Sales revenue per jar $5.30
Less: Sales revenue lost per jar ($3.20 × 1 ÷ 4) $0.8
Net sales revenue per jar $4.50
Les: Variable processing cost per jar $2.10
Less: Variable selling cost per jar $0.50
Contribution margin per jar $1.90
Based on this, the minimum number of jars is
= $8,900 ÷ $1.90
= 4,684 jars
The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has an estimated annual demand of 8,000 units. Talbot estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year. What is the time between two consecutive orders (in days), in the situation when inventory costs are minimized for the XO-01
Answer:
6.25 days
Explanation:
In order to compute the time first we have to find out the economic order quantity and the total number of orders in a year which is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
[tex]= \sqrt{\frac{2\times \text{8,000}\times \text{\$50}}{\text{\$20}}}[/tex]
= 200 units
Now the total number of years in a year is
= Annual demand ÷ economic order quantity
= 8,000 ÷ 200 units
= 40 orders
And, the time between two consecutive orders is
= 1 ÷ 40 orders × 250 days
= 6.25 days
Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $13,500 for medical insurance and contribute an additional $9,200 to a retirement program. Record the entry for these accrued (but unpaid) benefits on December 31.
Answer:
Dr. Employee Benefits expense $22,700
Cr. Medical Insurance payable $13,500
Cr. Employee retirement program payable $9,200
Explanation:
The cost of fringe benefit provided to the employee of the company and any tax component attached to it is known as the employee benefit expense.
Total employee benefit expense is the sum of medical insurance and employee retirement program. As medical insurance and retirement program is payable until now so, it is recorded as a liability.
Employee benefit expense = $13,500 + $9,200 = $22,700
Freitas Corporation was organized early in 2021. The following expenditures were made during the first few months of the year: Attorneys’ fees in connection with the organization of the corporation $ 12,000 State filing fees and other incorporation costs 3,000 Purchase of a patent 20,000 Legal and other fees for transfer of the patent 2,000 Purchase of equipment 30,000 Preopening salaries and employee training 40,000 Total 107,000 Required: Prepare a summary journal entry to record the $107,000 in cash expenditures.
Answer:
Dr Organization costs ($12,000 + $3,000) 15,000
Dr Patent ($20,000 + $2,000) 22,000
Dr Equipment 30,000
Dr Preopening expenses 40,000
Cr Cash 107,000
Explanation:
Organization costs are the initial costs incurred to start a business. They include attorney fees, and any other legal and registration fees required by both municipal state and federal government.
Any fees related to the purchase of the patent, e.g. commissions paid or attorney fees must be included in the purchase cost of the patent.
ABC Software operates stores within five regions. Regional managers are held accountable for marketing, advertising, and sales decisions, and all costs incurred within their region. In addition, regional managers decide whether new stores will open, where the stores will be located, and whether the stores will lease or purchase the facilities. Store managers, in contrast, are accountable for marketing, advertising, and sales decisions, and costs incurred within their stores. Ideally, on the basis of this information, what type of responsibility center should the software company use to evaluate its regions and stores
Answer:
The type of responsibility center ABC software company can use to evaluate its regions and stores is called Investment Center.
Explanation:
An investment center is a responsibility center that handles, revenues, expenses as well as investment base.
This kind of responsibility center is appropriate for large companies like ABC software.
It is designed to cater for the different regions and stores as well as the product specifications and managerial responsibilities.
It is applicable for companies with regional mangers and store managers that take decisions on which stores to open, marketing plan, advertising, sales, accounting and financial decisions.
Ultra Day Spa provided $94,850 of services during Year 1. All customers paid for the services with credit cards. Ultra submitted the credit card receipts to the credit card company immediately. The credit card company paid Ultra cash in the amount of face value less a 1 percent service charge. Required a. Show the credit card sales (Event 1) and the subsequent collection of accounts receivable (Event 2) in a horizontal statements model like the one shown next. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). (Enter any decreases to account balances with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)
Answer and Explanation :
The presentation is shown below:
As per the data given in the question,
Assets = Liabilities + Equity Revenue - Expenditure = Net income Cash flow
Cash + Acc. Rev.
NA $94,850 NA $94,850 $94,850 NA $94,850 NA
$93,901.5 -$94,850 NA -$948.5 NA -$948.5 -$948.5 $93,901.5
We simply present the transactions on the financial statements
Two thugs in an alley in Manhattan held up an unidentified man. When the thieves departed with his possessions, the man quickly gave chase. He had almost caught one when the thief managed to force his way into an empty taxi cab stopped at a traffic light. The Peerless Transport Company owned the cab. The thief pointed the gun at the driver's head and ordered him to drive on. The driver started to follow the directions while closely pursued by a posse of good citizens, but then suddenly jammed on the brakes and jumped out of the car to safety. The thief also jumped out, but the car traveled on, injuring Mrs. Cordas and her two children.
The Cordases then brought an action for damages , claiming the cab driver was negligent in jumping to safety and leaving the moving vehicle uncontrolled.
a) Was the cab driver negligent? Explain.
Answer:
Yes, he was negligent
Explanation:
Base on the scenario been described in the question, Yes, he was negligent. It could reasonably be assumed that leaving the car without setting the brake could cause someone to be injured. Despite being negligent in this regard, the thief holds a large percentage of the blame for this incident and the cab driver's share (actually, his insurance company's share) of liability should reflect that.
Final answer:
Whether the cab driver was negligent is complex and involves the legal definition of negligence and the principle of 'necessity'. Given the duress under which the driver acted, facing a direct threat to his life, it could be argued that his actions were aimed at preventing greater harm to himself, which complicates a straightforward negligence claim.
Explanation:
The question of whether the cab driver was negligent for jumping to safety, leaving the moving vehicle uncontrolled, on understanding the legal definition of negligence. Generally, negligence occurs when a person's action or inaction falls below the standard of care expected of a reasonable person under similar circumstances, resulting in harm to another party. In this scenario, the cab driver's decision to jump from a moving vehicle, while seemingly reckless, was made under duress and in response to an immediate threat to his life posed by the armed thief.
Legal precedents often recognize the principle of 'necessity' as a defense to actions that would otherwise be considered negligent. This principle acknowledges that in emergency situations requiring immediate action, individuals may take steps that, while potentially dangerous, are aimed at preventing greater harm. The cab driver facing a direct threat to his life had to make a split-second decision. Considering these unique and extreme circumstances, it could be argued that his actions, though resulting in unintended harm, were motivated by a need to ensure his own safety, rather than a disregard for the safety of others.
For the Cordases to successfully argue negligence, they would need to demonstrate that a reasonable person, in the cab driver's position, would have acted differently, and that the driver's actions directly caused their injuries. Due to the unpredictable and forceful introduction of a life-threatening factor (the armed thief), this might be challenging. It's also relevant to consider any potential liability on the part of the thief, whose actions set the events leading to the injury into motion.
g Kleczynski Co. provided the following information on selected transactions during 2021: Purchase of land by issuing bonds 900,000 Proceeds from issuing bonds 2,900,000 Purchases of inventory from Johnson Inc. 3,700,000 Purchases of treasury stock 590,000 Increase in the equity method investment of Gonzales Corp. 130,000 Proceeds from issuing preferred stock 1,500,000 Proceeds from sale of equipment to McCutcheon Inc. 290,000 The net cash provided by or (used by) financing activities during 2021 is
Answer:
$3,940,000
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.
The net cash provided by or (used by) financing activities during 2021
= $2,900,000 - $590,000 + $130,000 + $1,500,000
= $3,940,000
Other transactions are operating and investing activities.
Linda is trying to figure out her conversion cost. She knows her cost per click her
number of unique visitors, and the number of purchases they made. What does she
need to calculate in order to get the information she wants?
To determine her conversion cost, Linda must calculate her total ad campaign cost by multiplying her cost per click with the number of unique visitors, and then divide this total by the number of purchases made.
Linda needs to calculate her conversion cost, which is a metric used in online advertising and marketing to measure the cost of acquiring a customer through a digital campaign. To do this, she needs to know two things: the total cost of her advertising campaign and the number of conversions (purchases) it generated. The formula for conversion cost is the total ad campaign cost divided by the number of conversions. Given that Linda knows her cost per click (CPC), the number of unique visitors, and the number of purchases, she can calculate the total ad campaign cost by multiplying the cost per click by the number of unique visitors. Then, using the number of purchases (conversions), she can calculate the conversion cost by dividing the total ad campaign cost by the number of purchases.
XYZ, a calendar-year corporation, had accumulated earnings and profits of $5,000 as of January 1, 2019. XYZ’s earnings and profits for 2019 were $8,000. During 2019, XYZ distributed one stock right for each of the 10,000 outstanding shares of its only class of stock. The fair market value of each stock right was $15. The corporation gave shareholders the option of receiving the stock rights or cash. No other dividends were paid in 2019. Ms. Y is a 10% shareholder and elects to receive the stock rights. What is the amount of the distribution that is includible in Ms. Y’s 2019 gross income as a dividend?
Answer:
$1,300
Explanation:
Since Ms. Y was given the option to either receive the stock option or cash, the entire dividend distribution will be included in her gross income.
XYZ's distribution = 10,000 stocks x $15 = $150,000 which exceeds its retained earnings which were only $13,000. So only $13,000 can be considered as dividends, while the rest, $137,000 will be considered as return of capital (which reduces the stock's basis, but is not taxed as gross income).
So Ms. Y's share of the dividends = $13,000 x 10% = $1,300
That is the amount that she will include in her gross income.
Farm Co. leased equipment to Union Co. on January 1, 2021, and properly recorded the sales-type lease at $135,000, the present value of the lease payments discounted at 10%. The first of eight annual lease payments of $20,000 due at the beginning of each year of the lease term was received and recorded on January 3, 2021. Farm had purchased the equipment for $110,000. What amount of interest revenue from the lease should Farm report in its 2021 income statement
Answer:
$5,750
Explanation:
For computing the interest revue first we have to determine the remaining amount which is shown below:
= Sale type lease of property - first eight annual lease payments
= $135,000 - $20,000
= $115,000
Now the interest revenue is
= Remaining amount × discounted rate × number of months ÷ total number of months in a year
= $115,000 × 10% × 6 months ÷ 12 months
= $5,750
The six months is calculated from June to December
We simply applied the above formula
Most Solutions, Inc., issued 13% bonds, dated January 1, with a face amount of $540 million on January 1, 2021. The bonds mature in 2031 (10 years). For bonds of similar risk and maturity, the market yield is 15%. Interest expense is recorded at the effective interest rate. Interest is paid semiannually on June 30 and December 31.
Most recorded the sale as follows:
January 1, 2021
Cash (price) 484,947,999
Discount on bonds (difference) 55,052,001
Bonds payable (face amount) 540,000,000
Required:
1. What would be the net amount of the liability Most would report in its balance sheet at December 31, 2021?
2. What would be the amount related to the bonds that Most would report in its income statement for the year ended December 31, 2021?
3. What would be the amount(s) related to the bonds that Most would report in its statement of cash flows for the year ended December 31, 2021?
Answer:
Net amount of liability is $487,585,531.34
Income statement expense is $72,837,532.35
Cash flow amount is $70,200,000
Explanation:
The amount the company,Most Solutions Inc, would record in its balance sheet as at 31st December,2021 is the initial cash proceeds of $484,947,999 plus the 2 interest expenses for the year minus the 2 coupon payments in the year as shown in the schedule below:
Bal B/f Interest expense coupon payment Bal c/f
30-6 $484,947,999 $36,371,099.93 $ 35,100,000.00 $486,219,098.93
31-12 486,219,098.93 $36,466,432.42 $35,100,000 $487,585,531.34
The first interest expense=15%/2*$484,947,999=$36,371,099.93
coupon payment=$540,000,000*13%/2= $35,100,000
second interest expense= $486,219,098.93 *15%/2=$36,466,432.42
The bal c/f =opening balance+interest expense-coupon payment
total interest expense for the year=$36,371,099.93+$36,466,432.42=$ 72,837,532.35
total cash outflow=$35,100,000=$70,200,000
Chip Conley, the founder of Joie de Vivre Hospitality, discusses that pay is not the most important factor for many of his employees. Many employees want to work hard and remain employed by the company due to the pleasure they get from doing their job, an idea called ________.
Answer:
Intrinsic Motivation
Explanation:
The right answer according to the given condition is Intrinsic motivation.
What is Intrinsic Motivation:
It is the type of an organizational idea that in an ideal organization employees are way more satisfied with the culture, environment and the work they do than the pay they get. Such type of idea is known as intrinsic motivation.
Hence, in this question, Chip Conley discusses about an idea called intrinsic motivation. Where intrinsic means internal rewards or encouragements that employees are getting due to which they are satisfied to work har irrespective of the pay they are getting.
"Bank Three currently has $500 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. a. If the Federal Reserve decreases the reserve requirement to 4 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits. b. Redo part (a) using a 8 percent reserve requirement."
Answer:
FED - Balance Sheet
Assets- Securities: $30
Liabilities- Reserve Accounts: $30
Bank Three - Balance Sheet
Assets- Loans: $470
Reserve Deposits at Fed: $30
Liabilities- Transaction deposits: $500
If reserve requirement is 4%
FED - Balance Sheet
Assets- Securities: $20
Liabilities- Reserve Accounts: $20
Bank - Balance Sheet
Assets- Loans: $480
Reserve Deposits at Fed: $20
Liabilities- Transaction deposits: $500
If reserve requirement is 8%
FED - Balance Sheet
Assets- Securities: $40
Liabilities- Reserve Accounts: $40
Bank - Balance Sheet
Assets- Loans: $460
Reserve Deposits at Fed: $40
Liabilities- Transaction deposits: $500
Explanation:
Before:
500 million x 6% = 30 million
available for loan 500 - 30 = 470 million
after, with 4%:
500 millon x 0.04 = 20 million
500 - 20 = 480 available
after, with 8%:
500 millon x 0.08 = 60 million
500 - 40 = 460 available
Bank Three's balance sheet and the Federal Reserve System's balance sheet are affected by changes in the reserve requirement. The balance sheets need to be adjusted based on the new reserve requirement percentage. Decreasing or increasing the reserve requirement will impact the amount of excess reserves, loans, and transaction deposits.
Explanation:In this question, we are asked to show the balance sheet of Bank Three and the Federal Reserve System just before and after a change in the reserve requirement set by the Federal Reserve. We need to assume that Bank Three withdraws all excess reserves and gives out loans, and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits. The reserve requirement is given as a percentage of transaction deposits. We need to calculate the new reserve required, and adjust the balance sheets accordingly, for two different scenarios: a decrease to 4 percent and an increase to 8 percent.
a. Decrease to 4 percent:Before the change:Bank Three: Transaction deposits = $500 million; Reserve requirement = 6% of $500 millionFederal Reserve System: Total reserves = Reserve requirement for Bank ThreeAfter the change:Bank Three: Excess reserves = Total reserves - New reserve requirement; Loans = Excess reserves; Transaction deposits = LoansFederal Reserve System: Reserve requirement for Bank Three = 4% of new transaction deposits; Total reserves = Reserve requirement for Bank Threeb. Increase to 8 percent:Before the change:Bank Three: Transaction deposits = $500 million; Reserve requirement = 6% of $500 millionFederal Reserve System: Total reserves = Reserve requirement for Bank ThreeAfter the change:Bank Three: Excess reserves = Total reserves - New reserve requirement; Loans = Excess reserves; Transaction deposits = LoansFederal Reserve System: Reserve requirement for Bank Three = 8% of new transaction deposits; Total reserves = Reserve requirement for Bank ThreeLearn more about balance sheets here:https://brainly.com/question/34287613
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The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet:
Cash 16,000
Noncash asset 434,000
Total- 450,000
Liability-150000
Abrams-80,000
Bartle- 90,000
Creighton-130,000
total- 450,000
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account, prior to considering the liquidation expenses incurred?
Answer and Explanation:
The contribution of assets to the partnership to cover a deficit is presented below:
Particulars Abram Bartle Creighton
Capital Balance $80,000 $90,000 $130,000
Less:
Allocation of non cash assets sold ($434,000 - $134,000) = $300,000 in 3 : 2 :5 ratio
-$90,000 -$60,000 -$150,000
Liquidation expense -$3,600 -$2,400 -$6,000
Liabilities ($150,000 - $16,000) = $134,000 in 3 : 2 :5 ratio
-$40,200 -.$26,800 -$67,000
Adjusted capital balance -$53,800 $800 -$93,000
So based on the above calculation the Abram and Creighton have to contribute the assets
Final answer:
Abrams and Creighton would both need to contribute assets to the partnership to cover deficits of $10,000 and $20,000 respectively in their capital accounts after the sale of noncash assets and before accounting for liquidation expenses.
Explanation:
Liquidation Deficit Calculation
Before considering liquidation expenses, we need to determine how the sale of noncash assets impacts the partners' capital accounts. The noncash assets were sold for $134,000, which is $300,000 less than the book value of $434,000. This loss needs to be allocated to the partners according to their profit and loss sharing ratio, which is 3:2:5 for Abrams, Bartle, and Creighton respectively.
The total loss is $300,000, which is shared as follows:
Abrams' share: $300,000 x 3/10 = $90,000
Bartle's share: $300,000 x 2/10 = $60,000
Creighton's share: $300,000 x 5/10 = $150,000
Adjusting their capital accounts for these losses results in:
Abrams: $80,000 - $90,000 = -$10,000 (deficit)
Bartle: $90,000 - $60,000 = $30,000
Creighton: $130,000 - $150,000 = -$20,000 (deficit)
Abrams and Creighton would both have to contribute assets to the partnership to cover their deficits in their capital accounts, prior to considering the $12,000 liquidation expenses.
good theory should have the virtue of , or refutability. In other words, not only must a theory predict thing that we should observe if it is right, but it should predict things that we should observe if it is wrong. Theory X predicts that individuals will buy more of a particular good if their incomes rise. This is a theory that can be falsified. True or false
Answer:
True. Yes, the theory can be falsified.
Explanation:
Theory X would more specifically refer to the theory of supply and demand, which states that individuals will buy more of a particular good if their income rises. From this theory, comes the concept of "normal good", which are precisely the goods that people buy more as their income rises.
This theory could be falsified by empirical observation: a study could be made, including a good number of subjects, to see whether their purchasing habits are directly related to their income.
Bennett Co. has a potential new project that is expected to generate annual revenues of $253,100, with variable costs of $140,000, and fixed costs of $58,300. To finance the new project, the company will need to issue new debt that will have an annual interest expense of $19,500. The annual depreciation is $23,200 and the tax rate is 40 percent. What is the annual operating cash flow?
Answer:
Hence, the annual operating cash flow is: $44860
Explanation:
Year 0 Year 1
Initital investment
Inflows $253,100
variable costs ($140,000)
fixed cost (53800)
Depreciton ($23,200)
Interest expense ($19,500)
Net cash inflows $16600
Tax at 40% ($6640)
Net Cashinflows after tax $9960
Add Depreciation $23,200
Interest net of tax $11.700
Operating cashflows $44860
Hence, the annual operating cash flow is: $44860
Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $33,500, and Harold expects to spend about $1,200 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $13,300. Alternatively, Harold could lease the same vehicle for five years at a cost of $4,355 per year, including maintenance. Assume a discount rate of 12 percent. Required: 1. Calculate the net present value of Harold’s options. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your final answers to 2 decimal places. Do not round intermediate calculations.) 2. Advise Harold about which option he should choose. Lease Option Purchase Option
Final answer:
To compare Harold's options for leasing vs. purchasing a vehicle, we calculate the Net Present Value (NPV) of both options using a 12% discount rate. Harold should choose the option with the higher NPV, indicating the lower cost over time, calculated by considering the initial cost, maintenance, and salvage or lease payments.
Explanation:
To compare leasing vs. purchasing a vehicle, we need to calculate the Net Present Value (NPV) of each option for Harold, considering the discount rate of 12%. The NPV is the sum of the present values of all cash flows associated with the investment, including the initial investment, any periodic payments, and any final salvage value or cost.
For the purchase option, we have:
Initial cost = -$33,500 (negative because it's an outflow)
Maintenance cost per year = -$1,200 for five years
Salvage value after five years = +$13,300
For the lease option, we have:
Annual lease cost (including maintenance) = -$4,355 for five years
To calculate the NPV of the purchase option, we need to find the present value of the annual maintenance costs and add it to the present value of the initial investment and the future salvage value, discounted at the 12% rate.
For the lease option, we need to calculate the present value of the annual lease payments at the 12% discount rate.
After calculating these values, Harold should choose the option with the higher NPV, which represents the lower cost over the time period when discounted back to present value terms.
Kelly Industries issued 9% bonds, dated January 1, with a face value of $150,000 on January 1, 2021. The bonds mature in 2031 (10 years). Interest is paid semiannually on June 30 and December 31. For bonds of similar risk and maturity the market yield is 11%. What was the issue price of the bonds? FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Answer:
Price of Bonds= $132,074.43
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
Semi -annual Interest Payment = 9%× 150,000 × 1/2 = 6750
Semi-annual market yield = 11%/2 = 5.5%
Present Value = PV of interest payment = A× (1+r)^(-n)/ r
A- interest payment= r- semi annual yield - 5.5%, n- number of periods - 2× 10 = 20
PV of interest payment = 6750 × (1 - 1.055^(-20))/0.055= 80,665.08
PV of Redemption Value = Face Value × (1+r)^(-n)
= 150,000 × (1.055)^(-20)= 51,409.34
Price of Bonds = 51,409.34 + 80,665.08 = $132,074.43
Price of Bonds= $132,074.43
It is illegal for a company to ask a prospective employee about his religion, although it is not illegal for a prospective employee to volunteer such information. Suppose it is well known that a particular organization gives some preference to job seekers who are Catholic. If you are interviewing for a job with the organization and are not Catholic, what should you do?
Explanation:
i think it is best to state my credentials very clear.
I'll have to bring out all profiles and information about me .
I'll show them what I have knowledge about . I don't have to take about the Catholic aspect, except if I'm asked to , and I'll honestly state that I'm not a Catholic member .
Giving preference doesn't mean they can't still check my abilities and experience , I might be a pro in that aspect of what they need in the company.
Suppose you own a bookstore where you currently sell 22 John Grisham mystery novels per day at a price of $35 per book. However, if you were to reduce the price to $30, then you would sell 26 John Grisham mystery novels per day. Using the midpoint formula, what is the price elasticity of demand for John Grisham mystery novels? nothing. (Enter a numeric response using a real number rounded to two decimal places. Don't forget the minus sign.) In this price range, the demand for John Grisham mystery books is ▼ inelastic elastic .
Answer:
Price elasticity of demand = -1.08
Explanation:
According to the scenario, computation of the given data are as follows:
Quantity 1(Q1) = 22
Quantity 2(Q2) = 26
Price 1(P1) = $35
Price 2(P2) =$30
Price elasticity of demand = [(Q2-Q1) ÷ {(Q1 + Q2)} ÷ 2] ÷ [(P2-P1) ÷ {(P1 + P2)÷2}]
= [(26-22) ÷ {(22 + 26)} ÷ 2] ÷ [(30-35) ÷ {(35+ 30)÷2}]
=-(139 ÷ 128)
= -1.08
Final answer:
Using the midpoint formula, the price elasticity of demand for John Grisham mystery novels is calculated to be -1.08, indicating that demand is elastic. This means that sales of these novels are sensitive to price changes.
Explanation:
To calculate the price elasticity of demand for John Grisham mystery novels, we use the midpoint formula. The formula is (Q2 - Q1) / ((Q2 + Q1) / 2) divided by (P2 - P1) / ((P2 + P1) / 2), where Q1 and Q2 are the initial and final quantities sold, and P1 and P2 are the initial and final prices.
Initial scenario: 22 novels at $35 each. New scenario: 26 novels at $30 each. Using these values, the calculation is as follows:
Q2 - Q1 = 26 - 22 = 4P2 - P1 = $30 - $35 = -$5(Q2 + Q1) / 2 = (26 + 22) / 2 = 24(P2 + P1) / 2 = ($30 + $35) / 2 = $32.50The elasticity calculation then is (4 / 24) / (-5 / 32.5), which simplifies to -1.08.
The negative sign indicates that the demand decreases as the price increases, which is typical for most goods.
The absolute value of 1.08 indicates that the demand for John Grisham novels is elastic because it is greater than 1, meaning sales are sensitive to price changes.
What is an expense statement?
A. a record of how much we owe and to whom.
B. a record of our income.
C. a record of our income and expenses.
D. a record of how we have spent our money.
Answer:
A record of how we have spent our money
Explanation:
i just did it
ZZZ Corporation is issuing Common Stocks that are expected to pay $14 dividend per year and this company is expected to grow at 1% per year. Concurrently, the expected rate of return on stocks with similar risk is 9 % per year. Based on this data, find the pure price per share of common stock issued by ZZZ Corporation. Note: round your answer to two decimal places, and do not include spaces, currency signs, plus or minus signs, nor commas.
Answer:
The pure price per share of common stock issued by ZZZ is $175
Explanation:
According to the given data we have the following:
Expected dividend next year=D1=$14
Growth rate=g=1%
Expected rate of return=r=9%
To calculate the pure price per share of common stock issued by ZZZ Corporation Pure price of share will be equal to PV of all future dividends.
Therefore, Pure price per share=D1/(r-g)
Pure price per share= $14/(9%-1%)=$175
As a country begins to liberalize its capital account (become more financially open), what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets? Group of answer choices get smaller stay the same exponential divergence it depends on the existing exchange rate. get larger
Answer:
Get smaller.
Explanation:
This process is easily explained by relaxing of the economy towards the the private sector. In some countries emerging markets, it provides new opportunities for investors to increase their diversification and profit. Economic liberalization refers to a country "opening up" to the rest of the world with regards to trade, regulations, taxation and other areas that generally affect business in the country.
As a general rule, you can determine to what degree a country is liberalized economically by how easy it is to invest and do business in the country.
Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant rate of 7% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 13%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Round your answer to two decimal places.Each share of common stock is worth $ , according to the corporate valuation model.
Answer:
$9.26 per stock
Explanation:
using the discounted cash flow model, the value of Scampini Technologies is:
company's value = free cash flow / (required rate of return - growth rate) = $25,000,000 / (13% - 7%) = $25,000,000 / 6% = $416,666,667
since the company does not have any debt, the price of each stock is:
stock price = total value of the company / total outstanding stocks = $416,666,667 / 45 million shares = $9.26 per stock
he Wood Valley Dairy makes cheese to supply to stores in its area. The dairy can make 485 pounds of cheese per day (358 days per year), and the demand at area stores is 67 pounds per day. Each time the dairy makes cheese, it costs $290 to set up the production process. The annual cost of carrying a pound of cheese in a refrigerated storage area is $0.92. Determine the minimum total annual cost.
Answer :
Minimum total annual cost = $3,321.26
Explanation :
The computation of the minimum total annual cost is shown below:
As per the data given in the question,
Annual demand (D) = 67 × 358 days = 23,986
Setup cost (C) = $290
Production rate (R) = 358 days × 485 = 173,630
Holding cost(H) = $0.92
Economic production quantity(Q) = sqrt((2 × D × C) ÷ H × (1-(D ÷ R)))
= sqrt(((2 × 23,986 × $290) ÷ $0.92 × (1 -(23,986 ÷ 173,630)))
= 4,188.7
= 4,189
Minimum total annual cost is
= (Q ÷ 2) × (1 - D ÷ R) × H + (D ÷ Q) × C
=4,189 ÷ 2 × (1 - (23,986 ÷ 173,630) × $0.92+ (23,986 ÷ 4,189) × 290
= $3,321.26
Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $37,500. In addition, Jose incurred the following expenses before using the van: shipping costs of $850; paint to match the other fleet vehicles at a cost of $1,480; registration costs of $2,913, which included $2,700 of sales tax and a registration fee of $213; wash and detailing for $101; and an engine tune-up for $269.
What is Jose�s cost basis for the delivery van?
Answer:
$42,530
Explanation:
The computation of cost basis for the delivery van is shown below:-
Cost basis for the delivery van = Purchase price + Shipping cost + Paint + Sales tax
= $37,500 + $850 + $1,480 + $2,700
= $42,530
Here the shipping cost, paint, sales tax is business preparation cost. So, for computing the cost basis of delivery van we simply added the purchase price, shipping cost, paint and sales tax.
Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $4,800, $9,800, and $16,000 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 11 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
Answer:
$23,977.29
Explanation:
In order to determine how much Marko would be willing to pay, we have to calculate the present value of the ABC Co.
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator:
Cash flow in year 1 =$4,800
Cash flow in year 2 = $9,800
Cash flow in year 3 = $16,000
I = 11%
Present value = $23,977.29
To find the PV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
Final answer:
Marko, Inc. should be willing to pay a maximum of $23,768.81 today for ABC Co. to achieve an 11% rate of return, which is the sum of the discounted cash flows expected over the next three years.
Explanation:
The student is asking how to calculate the present value of the cash flows generated by ABC Co. that Marko, Inc. expects to receive over the next three years using a discount rate of 11%. To find out how much Marko is willing to pay for ABC Co. today, we need to discount the future cash flows back to their present value.
To calculate the present value (PV) of each cash flow, we use the formula PV = CF / (1 + r)ⁿ, where CF is the cash flow in a given year, r is the discount rate, and n is the number of years in the future the cash flow occurs.
Applying this formula, we find:
Year 1: PV = $4,800 / (1 + 0.11)¹ = $4,324.32
Year 2: PV = $9,800 / (1 + 0.11)² = $7,936.97
Year 3: PV = $16,000 / (1 + 0.11)³ = $11,507.52
The total present value of the cash flows is the sum of the individual present values: $4,324.32 + $7,936.97 + $11,507.52 = $23,768.81.
Therefore, the most that Marko, Inc. should be willing to pay to purchase ABC Co. today is $23,768.81 to achieve an 11% rate of return on the investment.
Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,700 units for materials and 10,650 units for conversion costs. Beginning inventory consisted of $8,000 in materials and $8,800 in conversion costs. April costs were $30,000 for materials and $43,612 for conversion costs. Ending inventory still in process was 4,100 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be:
Answer:
$4,92
Explanation:
Step 1 Calculate the Total Cost of conversion costs incurred during the process.
Total Cost of conversion costs
Cost of conversion in Beginning inventory $8,800
Add Cost of conversion for April $43,612
Total $52,412
Step 2 Calculate cost per equivalent unit for conversion costs
cost per equivalent unit = Total Cost of conversion / Total equivalent unit for conversion
= $52,412 / 10,650
= $4,92
Therefore, the cost per equivalent unit for conversion costs using the weighted average method would be $4,92.