In January 2012, one US dollar was worth 50.0 Indian rupees. Suppose that over the next year the value of the Indian rupee decreases to 57.0 Indian rupees to one US dollar. Suppose also that the price level of all goods and services in India, as measured in rupees, falls 21.0%, so that the Indian price index falls from a value of 100 to 79.0. At the same time, suppose that the US price level increases by 6%, to 106.1. By what percentage did the value of the real exchange rate change over this period? Please give your answer to the nearest whole percentage point. 2. What will happen to the following as a result of the changes?a) America's consumption of Indian goods and services will likely _______.b) India's consumption of American goods and services will likely _______.

Answers

Answer 1
Final answer:

The value of the real exchange rate has increased by 35% over this period.

Explanation:

The real exchange rate is the nominal exchange rate adjusted for changes in the price level of goods and services in each country. To calculate the percentage change in the real exchange rate, we need to compare the change in the price levels of both countries.

The percentage change in the price level in India is calculated as (100 - 79)/100 = -21%. The percentage change in the price level in the US is 106.1 - 100 = 6.1%.

To calculate the percentage change in the real exchange rate, we can use the formula: Percentage change in real exchange rate = Percentage change in nominal exchange rate - Percentage change in price levels

The percentage change in the nominal exchange rate is (57 - 50)/50 * 100 = 14%. Therefore, the percentage change in the real exchange rate is 14% - (-21%) = 35%.

The value of the real exchange rate has increased by 35% over this period.


Related Questions

The board of directors of Testa Incorporated has decided that they would like to declare a $400,000 cash dividend at some point in the near future. The company currently has Retained Earnings of $2,419,000 and a Cash balance of $827,000. They also have current liabilities totaling $436,000. What is missing in order for Testa to be able to pay a cash dividend

Answers

Tesla is unable to pay a cash dividend because they have the serious problem of not having B : a healthy cash reserve

In order to pay dividends, a company needs to have a healthy cash reserve from which the dividends can be paid.

Tesla cash reserve:

= Cash balance - Current liabilities

= 827,000 - 436,000

= $391,000

This amount is less than the dividend amount of $400,000 which means that Tesla does not have a healthy cash reserve to pay dividends.

Options for this question include:

A : approval of the executives

B : a healthy cash reserve

C : approval of the investors

D : adequate Retained Earnings

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The most recent financial statements for Kerch, Inc., are shown here (assuming no income taxes): Income Statement Balance Sheet Sales $ 8,400 Assets $ 14,000 Debt $ 6,000 Costs 6,390 Equity 8,000 Net income $ 2,010 Total $ 14,000 Total $ 14,000 Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,996. What is the external financing needed? (Do not round intermed

Answers

Answer: $268.10

Explanation:

Assets and Costs are proportional to sales meaning they grow at the same rate.

Sales rate of growth is,

= (9,996-8,400)/8400

=19%

Assuming that costs grew by 19% then Costs next year will be ,

= 6,390 * (1 + 0.19)

= $7,604.1

Meaning that Net Income is,

= Sales - Costs.

= 9,996 - 7,604.1

= $2,391.9

Retained earnings or net income is added to Equity

Total Equity= 8,000 + 2391.9

Total Equity =$10,391.90

Total Assets also grew by 19% as per the question so,

= 14,000* (1 + 0.19)

=$16,660

Going by the Accounting Equation,

Total assets = Total equity + Total debt

Hence external financing needed

16,660 = 10391.9 + 6000 + Additional funding

Additional funding = 16,660 - 10391.9 - 6,000

Additional funding = $268.10

Final answer:

The external financing needed for Kerch, Inc. to meet the projected increase in sales for the next year, considering no changes in the debt level and all net income is retained, is $268.10.

Explanation:

Calculating External Financing Needed for Kerch, Inc.

To calculate the external financing needed for Kerch, Inc., we need to evaluate the changes in the company's balance sheet that will occur due to the projected increase in sales. Since assets and costs are proportional to sales, we can forecast these figures for the next year based on the new sales projection of $9,996.

First, we determine the percentage increase in sales:
$9,996 (Projected Sales) / $8,400 (Current Sales) = 1.19, which is a 19% increase in sales.

Next, we apply this percentage to the current assets to estimate the next year's assets:
$14,000 (Current Assets) * 1.19 (Percentage Increase) = $16,660 (Projected Assets).

Similarly, we calculate the projected costs:
$6,390 (Current Costs) * 1.19 (Percentage Increase) = $7,604.10 (Projected Costs).

Now we calculate the projected net income. Note that since there are no taxes or dividends, net income will equal sales minus costs:
$9,996 (Projected Sales) - $7,604.10 (Projected Costs) = $2,391.90 (Projected Net Income).

Given that there are no dividends and net income is added to equity, the new equity value will be:
$8,000 (Current Equity) + $2,391.90 (Projected Net Income) = $10,391.90 (Projected Equity).

Since debt is not proportional to sales, it remains at $6,000.

Total projected financing required (Projected Assets) = Projected Debt + Projected Equity,
$16,660 (Total Projected Financing) - $6,000 (Debt) - $10,391.90 (Equity) = $268.10 (External Financing Needed).

The external financing needed for Kerch, Inc. to support the projected increase in sales is $268.10.

Larkspur, Inc. issues $4.2 million, 5-year, 7% bonds at 103, with interest payable on January 1. The straight-line method is used to amortize bond premium. Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answers

Answer:

Dr. Cash                                 $4,326,000

Cr. Premium on Bond           $126,000

Cr. Bond Payable Account   $4,200,000

Explanation:

The difference between the face value of the bond and the sale value of the bond is known as premium or the discount on the bond. If the face value is higher from the sale value the bond is issued on the discount and if the sale value of the bond is higher than the face value the bond is issued on the premium.

In this question the bond is issued on premium and the amount of premium is calculated as follow

Premium on the Bond =  Sale value - Face value = ($4,200,000 x 103%) - $4,200,000 = $126,000

The Premium will be amortized during the life of the bond  to maturity and deducted from the interest expense.

For purposes of allocating joint costs to joint products, the estimated net realizable value at split-off is equal to A. final sales price reduced by cost to complete after split-off. B. sales price less a normal profit margin at the point of sale C. separable product cost plus a normal profit margin. D. total sales value less joint costs at point of split-off.

Answers

Answer:

A. Final sales price reduced by cost to complete after split-off.

Explanation:

Net realizable value (NRV) is explained here to be the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs associated with the eventual sale or disposal of the asset. It is a common method used to evaluate an asset's value for inventory accounting. NRV is a valuation method used in both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Many business transactions allow for judgment or discretion when choosing an accounting method.

A conservative approach means that the accountant should use the accounting method that generates less profit and does not overstate the value of assets.

On January 1, the Elias Corporation issued 10% bonds with a face value of $56,000. The bonds are sold for $60,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Elias records straight-line amortization of the bond discount. The actual interest expense reported in the income statement for the year ended December 31 of the first year is

Answers

Answer:

$6,000

Explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the Interest Expenses of Total Bond by using following formula:-

Interest Expenses = Face Value × Rate of Bonds

= $56,000 × 10%

= $5,600

Amortization Expenses = (Bond Issue Price - Bond Face Value) ÷ Bond Term

= ($60,000 - $56,000) ÷ 10

= $400

Interest Expenses of Total Bond = Interest Expenses + Amortization Expenses

= $5,600 + $400

= $6,000

104. During 2017, Logan Corporation acquired a mineral mine for $4,000,000 of which $400,000 was ascribed to land value after the mineral has been removed. Geological surveys have indicated that 10 million units of the mineral could be extracted. During 2017, 1, 500,000 units were extracted and 1,000,000 units were sold. What is the amount of depletion expense for 2017

Answers

Answer:

$540,000

Explanation:

Depletion expense = (unit extracted in a year/ total units ) x (Cost- salvage value)

(1, 500,000 / 10,000,000) x (

$4,000,000  - $400,000) = 0.15 × $3,600,000 = $540,000

I hope my answer helps you

A telephone customer service center wants to ensure that the majority of its customers’ calls are answered within a reasonable amount of wait time. Based on customer surveys, the company determined that the acceptable wait time that customers considered acceptable is between 10 and 45 seconds. A large sample of current customer calls was monitored. The average wait time was found to be 31 seconds with a standard deviation of 4.5 seconds.

What is the Capability Index for this process?

A. 1.30
B. 1.04
C. 1.56
D. 0.43

Answers

Answer:

The Capability Index for this process is 1.04. The right answer is B

Explanation:

According to the given data we have the following:

μ = 31 Seconds

USL = 45

LSL = 10

Standard deviation σ= 4.5

Therefore, in order to calculate the Capability Index for this process we would have to use the following formula:

Cpk=Min( USL-μ  ,  μ- LSL)

               3×σ            3×σ

Cpk=Min( 45-31  ,  31- 10)

               3×4.5      3×4.5

Cpk = Min ( 1.04,1.56) = 1.04

The Capability Index for this process is 1.04

Coronado Company borrowed $1,018,620 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,005,300 note payable and an 11%, 4-year, $3,444,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.)

Answers

Answer:

weighted-average interest rate =10.8%

Explanation:

The weighted average interest rate is the average interest rate of all of the Notes weighted using the nominal value of the notes.

Total nominal value = 1,018,620 + 2,005,300 +  $3,444,000 =  6,467,920.

Weighted average interest rate

= (1,018,620× 12%) + (10%×2,005,300)+(11%×3,444,000 )/6,467,920.

= 10.8%

weighted-average interest rate =10.8%

Benny asked his marketing team to research and collect data regarding the demographics of people residing in the state of California. He wanted to use this business data to come up with a product design for his company to consider in the future. What should Benny use to analyze this business data?

A.
human resources distribution system
B.
information dispersal unit
C.
management information system
D.
management delegation system
E.
distribution and management system

Answers

Answer:

C, Management Information System

Explanation:

Final answer:

Benny should use a Management Information System (MIS), a computerized system for data analysis and decision-making, to analyze the demographic data collected by his marketing team.

Explanation:

To analyze the demographic data obtained by his marketing team, Benny should use a  Management Information System (MIS). Option C is the correct answer. An MIS is a computer system used for processing and organizing data in a manner that supports decision-making in an organization. Using MIS, Benny can organize, sort and study the collected demographic data effectively. It will facilitate better decision-making regarding product design geared towards the population of California. MIS not only helps with data collection and analysis but also in the planning, controlling and decision-making processes within a business.

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___________________ are for-profit organizations that contract out or lease a wide range of light manufacturing, warehousing, and distribution services to other companies. Group of answer choices Public warehouses Private warehouses Breakbulk warehouses Consolidation warehouses

Answers

Answer:

Consolidation warehouses

Explanation:

Consolidation warehouses are warehouses that, as the name implies, consolidate a number of smaller shipments from other companies into a larger shipment, in a specific area.

Consolidation warehouses can also offer light manufacturing services, but their main function is to consolidate shipment into a single place, and distribute those shipments in a more cost-efficient manner.

On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $538,160. Strike receives a trade-in allowance of $31,185. The old equipment had an initial cost of $231,000 and has accumulated depreciation of $196,350. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

Answers

Answer:

Loss of $3,465

Explanation:

the journal entry to record the exchange should be:

Dr Batting cage - new 538,160

Dr Accumulated depreciation - batting cage old 196,350

Dr Loss on exchange 3,465

    Cr Cash 506,975    

    Cr Batting cage old - 231,000

the carrying value of the old batting cage was = $231,000 - $196,350 = $34,650, but it was exchanged at $31,185, which results in a $3,465 loss (= $34,650 - $31,185).

Use the following scenario to answer the following questions: Babak owns a sports practice facility called Boston Batting Cages in Boston, Massachusetts. During the first year of operation, Boston Batting Cages incurred many costs. In that year, Babak spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Babak took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000. If Boston Batting Cages received $80,000 in revenues, what were the economics profits

Answers

Answer:

$20,500

Explanation:

Economic profit is the difference between the total revenue generated and the total explicit (direct) and implicit  (Indirect cost ) incurred

Total revenue  - (explicit cost + implicit cost )

Revenue                        80,000

Explicit cost

Labor                                                             5000

maintenance                                                2000

Electricity                                                      1000

Total                               (8000)

Implicit cost                                                

loan revenue forgone                                  1500

Previous earning                                           50000

Total                               (51,500)

Economic profit            20,500

Final answer:

The economic profits for Boston Batting Cages are calculated by subtracting both explicit and implicit costs from the revenues. The business earned an economic profit of $20,500 after accounting for all costs.

Explanation:

To calculate the economic profits for Babak's business, Boston Batting Cages, we need to consider both explicit and implicit costs against the revenues. Explicit costs are the direct, out-of-pocket expenses for the business operation, whereas implicit costs represent the opportunity costs of using resources that could be employed elsewhere.

Explicit Costs: Labor ($5,000) + Maintenance ($2,000) + Electricity ($1,000) = $8,000Implicit Costs: Foregone salary ($50,000) + Foregone interest on loan ($1,500) = $51,500Total Costs: $8,000 (explicit) + $51,500 (implicit) = $59,500Revenues: $80,000Economic Profit: Revenues - Total Costs = $80,000 - $59,500 = $20,500

Economic profits consider both the tangible costs of running the business and the opportunity costs, providing a comprehensive picture of the business's true profitability.

Hammerstein Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock award plan, the company, on January 1, 2018, granted 2 million of its $1 par common shares to various division managers. The shares are subject to forfeiture if employment is terminated within four years. The common shares have a market price of $20.4 per share on the award date. Required: 1. Determine the total compensation cost from these restricted shares. 2. & 3. Prepare the appropriate journal entries. 4. Suppose a 10% forfeiture rate was expected prior to vesting. Determine the total compensation cost, assuming the company follows the fair value approach and chooses to anticipate forfeitures at the grant date.

Answers

Answer and Explanation:

As per the data given in the question,

1)

Fair value per share = $20.4

Number of Share = 2 million

Fair value of award = Fair value per share ×Number of Share

= $20.4 × 2 million

= $40.8 million

2) No Entry

3)

Compensation expense($40.8 million÷4 years) $10.2 million

          To Paid in capital - restricted stock($20.4-$10.2) $10.2  million

(Being the compensation expense is recorded)

4)

Fair value per share = $20.4

Share granted = 2 million

(100%-10%) forfeiture rate = 90%

fair value of award = $20.4×2×90%

= $36.72 million

Burns offers Realtor a commission of 10 percent of the sales price if Realtor can find a buyer for the Burns Building for $500,000. Realtor spends funds to research and obtain potential-buyer contact information and locates Walters, who is willing to accept the $500,000 offer to sell from Burns. Before any transaction takes place, Burns revokes his offer to Realtor and refuses to sell the property to Walters. Burns's revocation is:

Answers

Answer:

Burns’s revocation is not effective

Explanation:

Revocation can be defined as the

the cancellation of either a decree, decision, or even a promise and the making void of some deed which was previously existing.

Therefore according to the information given Burns’s revocation is not effective because Burns’s promise to pay for a particular performance which isa unilateral contract which was said to be rendered irrevocable once Realtor performed by finding a buyer for the building.

Answer:

Burns’s revocation is not effective

Explanation:


Terapin Company engages in the following external transactions for November.

1. Purchase equipment in exchange for cash of $21,300.
2. Provide services to customers and receive cash of $6,100.
3. Pay the current month's rent of $900.
4. Purchase office supplies on account for $1,500.
5. Pay employees' salaries of $1,300 for the current month.


Required:
Record the transactions. Terapin uses the following accounts: Cash, Supplies, Equipment, Accounts Payable, Service Revenue, Rent Expense, and Salaries Expense. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Answers

Answer and Explanation:

The journal entries are shown below:

1. Equipment Dr $21,300

          To cash $21,300

(Being the equipment is purchased for cash)

For recording this we debited the equipment as it increased the assets and credited the cash as it reduced the assets

2. Cash Dr $6,100

       To Service revenue $6,100

(Being the cash received is recorded)

For recording this we debited the cash as it increased the assets and credited the service revenue as it increased the revenue

3. Rent expense $900

       To Cash $900

(Being the rent is paid)

For recording this we debited the rent expense as it increased the expenses and credited the cash as it reduced the assets

4. Office supplies Dr

        To Account payable

(Being the office supplies purchased on account)

For recording this we debited the office supplies as it increased the assets and credited the account payable as it increased the liabilities

5. Salaries expense

           To cash

(Being the salaries paid is recorded)

For recording this we debited the salaries expense as it increased the expenses and credited the cash as it reduced the assets

Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015–2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under absorption costing for 2017 is


A) $4,800.

B) $8,400.

C) $9,600.

D) $13,200.

Answers

Answer:

B) $8,400

Explanation:

Absorption costing consider all the cost incurred in production either variable or fixed as production cost.

As we know variable cost vary with the change in the sale but the fixed costs remains constant whatever the level of sale is.

As per given data

Selling price = $6,600

Variable manufacturing cost = $3,600

Manufacturing Fixed Cost = $18,000

Total cost per unit = $3,600 + $18,000/20 = $4,500

Sales = Selling price x Numbers of units sold = $6,600 x 16 = $105,600

Cost of goods sold = Units sold x Cost per unit = 16 units x $4,500 = $72,000

Gross income = Sales - Cost of Goods sold = $105,600 - $72,000 = $33,600

Selling and Admin Cost = Variable cost + Fixed = (16 x $75) + $24,000 = $25,200

Net Income = Gross Income - Selling and Admin cost = $33,600 - $25,200 = $8,400

The Income from operation under absorption costing for 2017 is $8,400.

Cost per unit = Variable Manufacturing per unit + Fixed Manufacturing per unit

Cost per unit = $3,600 + $18,000 / 20

Cost per unit = $3,600 + $900

Cost per unit = $4,500

Sales price = Selling Price per unit * Units Sold

Sales price = $6,600 * 16

Sales price = $105,600

Cost of Goods Sold = Cost per unit * Units Sold

Cost of Goods Sold = $4,500 * 16

Cost of Goods Sold = $72,000

Selling & Administrative Expense = Variable Selling and Administrative Expense * Units Sold + Fixed Selling and Administrative Expense

Selling & Administrative Expense = $75 * 16 + $24,000

Selling & Administrative Expense = $25,200

Income from Operation = Sales - Cost of Goods Sold - Selling and Administrative Expense

Income from Operation = $105,600 - $72,000 - $25,200

Income from Operation = $8,400

Hence, the Income from operation under absorption costing for 2017 is $8,400.

Therefore, the Option B is correct.

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Gorberchev Food Processing expects to have 28,000 units of finished goods inventory on hand on March 31 and reports the following expected sales (in units) for the months of April through July: April 128,000 May 138,000 June 155,000 July 128,000 At the end of each month the company desires its ending finished goods inventory to be 25% of the next month's projected sales (in units). The budgeted production (in units) for Gorberchev Food Processing for May should be:

Answers

Answer:

Total production= 142,250

Explanation:

Giving the following information:

Sales (in units):

May=138,000

June= 155,000

At the end of each month the company desires its ending finished goods inventory to be 25% of the next month's projected sales (in units).

To calculate the units to be produced in May, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Budgeted production:

Sales= 138,000

Desired ending inventory= (155,000*0.25)= 38,750

Beginning inventory= (138,000*0.25)= (34,500)

Total production= 142,250

Production records show that there were 440 units in the beginning inventory, 30% complete, 1,440 units started, and 1,600 units transferred out. The beginning work in process had materials cost of $2,220 and conversion costs of $1,720. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.a) How many units are in process at May 31?(b) What is the unit materials cost for May?(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)


Work in Process�Painting

5/1 Balance 3,940 5/31 Transferred out ?

5/31 Materials 6,610

5/31 Labor 4,800

5/31 Overhead 1,300

5/31 Balance ?

Answers

Answer and Explanation:

The computation is shown below:

a. The number of units processed is

= Beginning work in process units + completed and started units - transferred out units

= 440 units + 1,440 units - 1,600 units

= 280 units

b. The material cost per unit is

= Total cost ÷ equivalent units

where,

Total cost is

= Opening work in process + material cost

= $2,220 + $6,610

= $8,830

And, the equivalent units is

= Units transferred out + ending work in process

= 1,600 + 280

= 1,880

So, the material cost per unit is

= $8,830 ÷ 1,880 units

= $4.70

c. The conversion cost per unit is

= Total cost ÷ equivalent units

where,

Total cost is

= Opening work in process + labor cost + overhead cost

= $1,720 + $4,800 + $1,300

= $7,820

And, the equivalent units is

= Units transferred out + ending work in process × completion percentage

= 1,600 + 280 × 40%

= 1,712

So, the material cost per unit is

= $7,820 ÷ 1,712 units

= $4.57

Dell is a product of the Digby company. Digby's sales forecast for Dell is 1856 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Dell's Production After Adjustment have to be in order to have a 10% reserve of units available for sale

Answers

Answer:

Dell's Production After Adjustment will be 2,041 units

Explanation:

According to the given data we have that Dell forecast for sales is 1856 and there considering the 10% reserve first we would need to calculate the number of units after the reserve of 10% as follows:

10% reserve units=0.10×1856=185 units

Therefore, total required units=1,856+185

total required units=2,041 units

Dell's Production After Adjustment will be 2,041 units

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:


$148,800.


$129,600.


$144,000.


$132,000.

Answers

Answer:

The accumulated depreciation at 31 December 2019 is $144000

Explanation:

When recording the purchase of a fixed asset, the asset should be recognized at cost at which the asset is purchased plus all the necessary costs that are incurred to bring the asset to the location and in the condition necessary to use as required and intended by the management.

The equipment purchased by Mather should be recorded as,

Cost of equipment = 336000  +  6000  +  30000  =  $372000

The freight and installation are non recurring and necessary expenses to bring the asset to the location and in the condition for use as intended by management. So, these expenses are capitalized.

The straight line depreciation charges a constant depreciation expense every year through out the useful life of the asset.

Straight line depreciation =  (Cost - Salvage Value) / estimated useful life

Straight line depreciation per year = (372000 - 12000) / 5

Straight line depreciation per year = $72000

So, the accumulated depreciation at 31 December 2019 is,

Accumulated depreciation = 72000 + 72000 = $144000

First Niles Financial, Inc., is a company whose sole business is to own and operate a bank, Home Federal Savings and Loan Association of Niles, Ohio. First Niles's directors included bank officers William Stephens, Daniel Csontos, and Lawrence Safarek; James Kramer, president of an air-conditioning company that serviced the bank; and Ralph Zuzolo, whose law firm served the bank and whose title company participated in most of its real estate deals. First Niles's board put the bank up for sale and received three bids. Farmers National Bank Corp. stated that it would not retain the board. Cortland Bancorp indicated that it would terminate the directors but consider them for future service. First Financial Corp. said nothing about the directors. The board did not pursue Farmers' offer, failed to timely respond to Cortland's request, and rejected First Financial's bid. Leonard Gantler and other First Niles shareholders filed a suit in a Delaware state court against Stephens and the others. What duties do directors and officers owe to a corporation and its shareholders

Answers

Answer: Please refer to Explanation

Explanation:

The Directors and Officers of a Corporation owe to a Corporation and it's shareholders various duties such as Loyalty, Prudence, Care and Fair Dealing.

They are to act in the interest of the shareholders at all times which means their own personal interest should be put behind that of the shareholders as they work to maximise shareholder wealth.

If it is proven that the Directors and Officers of First Niles analysed the bids on the bank based on their personal interests namely, the keeping of their position as board members, and therefore rejected these bids based on the unwillingness of the bidding companies to keep them as Board members, then that constitutes a Breach of the duties expected of them.

Final answer:

Directors and officers owe fiduciary duties to a corporation and its shareholders, including the duty of care and the duty of loyalty. These duties require them to act in the best interests of the company and its shareholders and to avoid conflicts of interest. Failure to fulfill these duties may result in legal consequences.

Explanation:

Directors and officers owe fiduciary duties to a corporation and its shareholders. These duties include the duty of care and the duty of loyalty. The duty of care requires directors and officers to act with the level of care that a reasonably prudent person would use in similar circumstances. The duty of loyalty requires directors and officers to act in the best interests of the corporation and its shareholders, and to avoid conflicts of interest.

For example, in the case of First Niles Financial, Inc., the directors had a duty to consider the best interests of the company and its shareholders when deciding whether to pursue the bids for the bank. Failing to properly respond to the bids and rejecting offers without considering the potential benefits to the shareholders could be seen as a breach of their duties.

Shareholders who believe that directors and officers have breached their fiduciary duties can file a lawsuit against them. In the case of First Niles, Leonard Gantler and other shareholders filed a suit against the directors. If a court determines that the directors breached their duties, they may be held personally liable for any damages caused to the company and its shareholders.

Suppose you know that a company’s stock currently sells for $66.50 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

Answers

Answer:

$2.86

Explanation:

The computation of current dividend per share is shown below:-

Dividend yield = 9% × 2

= 4.5%

Current price = Company stock × Dividend yield

= $66.50 × 4.5%

= 2.9925

Current dividend per share = Current price ÷ (1 + Dividend yield percentage)

= 2.9925 ÷ (1 + 0.045)

= 2.9925 ÷ 1.045

= $2.86

So, for computing the current dividend per share we simply applied the above formula.

Final answer:

To calculate the current dividend per share, the company's constant growth rate in dividends implies that the dividend yield is equal to the growth rate (4.5% in this scenario). Multiplying the current stock price of $66.50 by the dividend yield gives us the current dividend per share, which is $2.9925.

Explanation:

The student is asking about calculating the current dividend per share based on the information given about a company's stock price, the total return, and the required return. Given that the total return is equally split between capital gains yield and dividend yield, and the required return on the stock is 9%, each yield would thus be 4.5% (half of the total required return).

Since the company maintains a constant growth rate in its dividends, we can use the Gordon Growth Model (also known as the Dividend Discount Model) which states that the current stock price (P0) equals the dividend next year (D1) divided by the required return (r) minus the dividend growth rate (g). In this case, we know that the current stock price (P0) is $66.50, the required return (r) is 9%, and we've identified the dividend yield (which is the same as the capital gains yield in this example) to be 4.5% which is also the growth rate (g). To find the current dividend (D0), we can rearrange the formula to D0 = P0 × dividend yield. So, the current dividend per share would be $66.50 × 4.5%, which equals $2.9925 per share.

At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 6.53% 7.51% 5.22% 7.84%

Answers

Answer:

6.53%      

Explanation:

For computing the after cost of debt we need to use the RATE formula i.e to be shown in attached spreadsheet. Kindly find it below:

Given that,  

Present value = $1,050.76

Future value or Face value = $1,000  

PMT = 1,000 × 10% = $100

NPER = 5 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after applying this above formula

1. The pretax cost of debt is 8.70

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 8.70% × ( 1 - 0.25)

= 6.53%      

The Nearside Co. just paid a dividend of $1.20 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year, indefinitely. Investors require a return of 10 percent on the stock. a. What is the current price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the price be in three years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the price be in 10 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

Answer and Explanation:

The computation is shown below:

a. Current price is

= D1 ÷ (Required return - Growth rate)

= ($1.20 × 1.04 ÷ (0.1 - 0.04)

= $20.8

b. Now the price in three year is

P3 = Current price × (1 + Growth Rate)^3

= $20.8 × (1.04)^3

= $23.40

c. For price in 10 year it is

P10 = Current price × (1 + Growth Rate)^10

= $20.80 × (1.04)^10

= $30.79

We simply applied the above formula

Final answer:

Explanation of current stock price using dividend discount model, calculations for price in three and ten years.

Explanation:

The current price of the stock can be calculated using the dividend discount model. The formula to find the current price of a stock using DDM is P = D / (R - G), where P is the current price, D is the dividend paid per share, R is the required return rate, and G is the dividend growth rate.

a. Current price = $1.20 / (0.10 - 0.04) = $20.00

b. To find the price in three years, you can use the formula P3 = D3 / (R - G), where D3 is the dividend in three years. Calculate D3 first: D3 = $1.20 * (1 + 0.04) ³ = $1.20 * 1.04 ^ 3 = $1.2990 (approx).

Now calculate the price in three years: P3 = $1.2990 / (0.10 - 0.04) = $21.65

c.The price in ten years can be found using the formula P10 = D10 / (R - G), where D10 is the dividend in ten years. Calculate D10 first using the growth rate: D10 = $1.20 * (1 + 0.04) ¹⁰ = $1.20 * 1.04¹⁰ = $2.0498 (approx).

Now find the price in ten years: P10 = $2.0498 / (0.10 - 0.04) = $34.16

Varto Company has 12,600 units of its sole product in inventory that it produced last year at a cost of $31 each. This year’s model is superior to last year’s, and the 12,600 units cannot be sold at last year’s regular selling price of $49 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $13 each or (2) they can be processed further at a cost of $272,300 and then sold for $34 each. Should Varto sell the products as is or process further and then sell them?

Answers

Answer:

It is more profitable to sell the units as-is.

Explanation:

Giving the following information:

Number of units= 12,600

Varto has two alternatives for these items:

(1) they can be sold to a wholesaler for $13 each

(2) they can be processed further for $272,300 and then sold for $34 each.

The first cost of $31 is a sunk cost, it will remain no matter which option is chosen. We will not take it into account for the decision making process.

Option 1:

Effect on income= 12,600*13= $163,800

Option 2:

Effect on income= 12,600*34 - 272,300= $156,100

It is more profitable to sell the units as-is.

What are the benefits of "inventory pooling"? Establishing pools of inventory at each supplier and customer locationsCentralizes inventory into fewer locations thus reducing safety stocks and the amount of inventory needed in the supply chain.Pulling back inventory when firms have too much at retail level.Providing a one-stop means for the customer to return goods

Answers

Answer:

The benefits of Inventory Pooling includes:

centralizing inventory into fewer locations thus reducing safety stocks and the amount of inventory needed in the supply chain.Pulling back inventory when firms have too much at retail level.

Explanation:

inventory pooling is an operational strategy used to increase efficiency in stock management and analysis.

It is a supply chain tool that consolidates multiple inventory locations into a single one.

It is a centralized system that helps with stock keeping. It makes projections easier and helps manage shortfalls that may arise due to demand uncertainty.

It is cost effective by reducing cost of employing more staff and reduces the percentage error due to the centralized portal.

By reducing operational costs, profit is maximized.

In October, Pine Company reports 22,000 actual direct labor hours, and it incurs $198,900 of manufacturing overhead costs. Standard hours allowed for the work done is 22,100 hours. The predetermined overhead rate is $9.25 per direct labor hour. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $7.19 variable per direct labor hour and $51,500 fixed. Compute the overhead volume variance. Normal capacity was 25,000 direct labor hours. Overhead Volume Variance

Answers

Answer:

$5,974  U

Explanation:

a). Variable Cost = Standard Hours × Variable Per Direct Labor

= 22,100 hours × $7.19 = $158,899

Predetermined Overhead Charged to Production = Standard Hours × Overhead Rate Per Direct Labor

= 22,100 hours × $9.25 = $204,425

Budgeted Overhead Volume Variance = Variable Cost + Fixed Cost - Predetermined Overhead Charged to Production

=$158,889 + $51,500 - $204,425 = $5,974  U

b). Alternative Method:-

Normal Capacity = 25,000

Standard Hours = 22,100

Fixed Overhead Rate at Normal Capacity = Fixed Cost ÷ Normal Capacity Hours

= $51,500 ÷ 25,000 = $2.06

Overhead Volume Variance = (Normal Capacity - Standard Hours) × Fixed Overhead Rate at Normal Capacity

= (25,000 - 22,100) × 2.06 = 2,900 × $2.06 = $5,974  U

The overhead volume variance is calculated as the difference between actual hours and standard hours, multiplied by the predetermined overhead rate.

Overhead Volume Variance:

To calculate the overhead volume variance, we use the formula:

Overhead Volume Variance = (Actual Hours - Standard Hours) x Predetermined Overhead Rate

Plugging in the values, the calculation would be: (22,000 - 22,100) x $9.25 = -$925 Overhead Volume Variance.

Dapper Corporation had only one job in process on May 1. The job had been charged with $1,710 of direct materials, $3,500 of direct labor, and $6,280 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $23.50 per direct labor-hour.During May, the following activity was recorded:Raw materials (all direct materials): Beginning balance $ 7,800Purchased during the month $26,800Used in production $30,300Labor: Direct labor-hours worked during the month 1,700Direct labor cost incurred $21,250Actual manufacturing overhead costs incurred $38,100Inventories: Raw materials, May 30 ? Work in process, May 30 $20,000Work in process inventory on May 30 contains $3,125 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The balance in the raw materials inventory account on May 30 was:____________a) $4,180b) $4,300c) $4,420d) $4,820

Answers

Answer:

b. $4,300

Explanation:

Data provided

Beginning balance = $7,800

Purchases = $26,800

Used in Production = $30,300

The computation of balance in the raw materials inventory is shown below:-

Balance in the raw materials inventory = Beginning balance + Purchases - Used in production

= $7,800 + $26,800 - $30,300

= $34,600 - $30,300

= $4,300

Therefore for computing the ending inventory we simply applied the above formula.

The Blending Department for ArkYork Paints started October with 500 gallons in process and started in production 9 comma 000 gallons. During the​ month, 6 comma 500 gallons were completed and transferred to the next department. Ending​ work-in-process was 3 comma 000 gallons​ (100% complete with respect to direct materials and 10​% complete for conversion​ costs). The department uses the​ weighted-average method. The Blending Department incurred the following​ costs: LOADING...​(Click the icon to view the​ costs.) 7. Prepare a production cost report for the Blending Department for the month of October. ​(Enter cost per equivalent units to the nearest cent.​ Abbreviations: EUP​ = Equivalent Units of​ Production.)

Answers

Answer:

Production cost report for the Blending Department for the month of October

Inputs

                                                                                     Units                      

Opening Work In Process                                           500

Started                                                                       9,000

Total                                                                           9,500

Outputs

                                                                                    Units                      

Completed and Transferred                                      6,500

Closing Work In Process                                            3,000

Total                                                                            9,500

Explanation:

The concept of equivalent units measures the number of units completed in terms of completion stage of the the inputs.

Final answer:

A production cost report using the weighted-average method includes calculating equivalent units for direct materials and conversion costs and computing the cost per equivalent unit. Costs are summed and divided by the equivalent units; the report shows production efficiency and cost management.

Explanation:

The question you've presented revolves around the preparation of a production cost report for the Blending Department at ArkYork Paints using the weighted-average method. Since no specific cost data was provided, a general approach to creating such a report includes calculating the equivalent units of production (EUP) for both direct materials and conversion costs, computing the cost per equivalent unit, and then preparing a summary of costs for units transferred out and ending work in process.

In the scenario described, 500 gallons were in process at the start of the month, and an additional 9,000 gallons were started during the month. By the month's end, 6,500 gallons were completed and the remaining 3,000 gallons were 100% complete with respect to direct materials and 10% complete for conversion costs. To determine the EUP, one would add the completed gallons to the equivalent completed portion of the ending work in process.

Costs for direct materials and conversion must be added to those carried over from the prior period (beginning inventory) plus those added during the current period. The total costs are then divided by equivalent units to obtain the cost per equivalent unit. The report would summarize these figures and provide insights into the department's production efficiency and cost management.

The Really Reliable Company produces roller bearings used in a high-wear application in diesel locomotives. The exponentially distributed mean time to failure for these roller bearings has been determined to be 10,000 hours of operation. Really Reliable wants to determine an appropriate warranty period (in hours) such that it will have to provide warranty service for no more than 0.04% of the roller bearings it produces.

Answers

Answer:

Appropriate warranty period = 4 hours

Explanation:

According to the scenario, computation of the given data are as follows:

Here, mean = 10,000 = 1/λ

Let appropriate warranty period = t

Hence, 0.0004 = 1-e^-λt

0.0004 = 1-e^(t/10,000)

e^(t/10,000) = 0.9996

Taking ln on both the sides and then solving,

t/10,000 = 0.0004

t = 4 hours

Hence, Appropriate warranty period = 4 hours

The student's question involves applying statistical principles to practical problems, such as deciding on warranty periods based on exponential distribution, testing claims with hypothesis testing, and calculating service times with normal distributions.

The student's question pertains to the determination of an appropriate warranty period for roller bearings produced by The Really Reliable Company, given that the mean time to failure is 10,000 hours and they wish to limit warranty services to 0.04% of produced units. This problem involves the use of exponential distribution and probability to find the time at which the cumulative distribution function (CDF) is equal to 99.96%, corresponding to the 0.04% failure rate allowed under warranty.

To address the tire claim study, a hypothesis testing will be employed using the standard deviation and mean from both the past studies and recent survey to decide if the data significantly contradict the claim.

Regarding the preventive maintenance for air conditioners, with an average service time of one hour and a standard deviation of one hour, the probability that the service time will be less than 1.1 hours needs to be calculated using a normal distribution. The result will help determine if 1.1 hours per technician is a sufficient average budgeted time to service each unit.

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