Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Farah Snack Co. has earnings after taxes of $108,750. Interest expense for the year was $20,000; preferred dividends paid were $18,750; and common dividends paid were $30,000. Taxes were $15,000. The firm has 100,000 shares of common stock outstanding. Earnings per share on the common stock was?
Answer:
$0.9
Explanation:
Data provided in the question:
Earnings after taxes = $108,750
Interest expense for the year = $20,000
Preferred dividends paid = $18,750
Common dividends paid = $30,000
Common stock outstanding = 100,000 shares
Now,
Earning available on common stock
= Earnings after taxes - Preferred dividends paid
= $108,750 - $18,750
= $90,000
Therefore,
Earnings per share on the common stock
= Earning available on common stock ÷ Common stock outstanding
= $90,000 ÷ 100,000
= $0.9
If the economy is experiencing a recession due to a negative aggregate demand shock, the return to potential output
will be slower, the faster wages and prices adjust
will be quicker, the slower wages and prices adjust
will be quicker, the faster wages and prices adjust
will be quick regardless of the speed of wage and price adjustment
If the economy is experiencing a recession due to a negative aggregate demand shock, the return to potential output will be slower, the faster wages and prices adjust .
Explanation:
The economic shock of demand is an unexpected phenomenon that suddenly raises or reduces demand for goods or services. A shock of positive demand increases total demand and a shock of negative demand decreases aggregate demand. In both situations, products and services costs are impacted.
Stock shocks are somewhat different from shocks of demand. In this scenario, whether such shocks are temporary or permanent depends on the long term effect.
For example, assume that a rise in oil prices results in a negative supply shock (as a raise in input prices would result in a drop in SRAS). Having a negative supply shock, demand is declining, but inflation and unemployment are rising.
The Pinetop Corporation issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2014. All remaining shares are common stock. The company was not able to pay dividends in 2014, but plans to pay dividends of $18,000 in 2015. Assuming the preferred stock is cumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2015
Answer:
$12,000 and $6,000
Explanation:
For computing the dividend, first we have to find out the yearly dividend which is shown below:
= Number of shares × par value per share × dividend rate × number of years
= 1,000 shares × $100 × 6% × 2 years
= $12,000
Out of $18,000, the $12,000 will be paid to preferred stockholders and the remaining $6,000 will be paid to common stockholders
The main difference between a monopsonist and a competitive buyer of labor is that the competitor can hire as many workers as it wants at the going wage while the monopsonist must raise wages to hire additional workers. the monopsonist can hire as many workers as it wants at the going wage while the competitive firm must raise wages to hire additional workers. the competitive firm can hire as many workers as it wants at the going wage while the monopsonist can hire more workers at lower wages. the monopsonist can force wages down and still hire as many workers as it wants while the competitive firm must increase the wage rate to hire additional workers.
The main difference between a monopsonist and a competitive buyer of labor is that the competitor can hire as many workers as it wants at the going wage while the monopsonist must raise wages to hire additional workers.
Explanation:
There is a horizontal labour curve for a profitable consumer. Thus any number of jobs can be employed at a specified wage rate. The curve of labor supply for monopsonists is sloping upwards. Monopsonist must ,therefore pay higher wages to hire more employees.
Some examples of monopsonism relate to the buy in the labour market of workers ' time, in which a company is the only buyer of a particular kind of labor. The classical example of a natural monopoly is a mining company, where the mining company is the main employer and the primary employer in the city.
In the middle of this decade, the United States imported about $800 billion more in goods and services than it exported, thereby resulting in a _________ value of Xn and a decrease in GDP.
A positive
B negative
C neutral
D none of the above
Answer:
B negative
Explanation:
This problem is talking about the balance of trade of the United States during this time period.
If a country exports more than it imports, it has a positive trade surplus, or positive balance of trade.
Otherwise, if the country imports more than it exports, it has a negative trade surplus.
Since US imported more than it exported, the correct answer is:
B negative
Gundy Company expects to produce 1,252,800 units of Product XX in 2017. Monthly production is expected to range from 72,200 to 110,400 units. Budgeted variable manufacturing costs per unit are: direct materials $3, direct labor $6, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $5 and for supervision are $1.In March 2017, the company incurs the following costs in producing 91,300 units: direct materials $303,900, direct labor $541,800, and variable overhead $1,010,300. Actual fixed costs were equal to budgeted fixed costs.Prepare a flexible budget report for March. (List variable costs before fixed costs.)
Answer:
See below.
Explanation:
Flexible budget is when per unit budgeted costs are reconciled with actual production volume.
Flexed Budget Costs
Direct Materials (91,300 * 3) $273,900
Direct Labor (91,300 * 6) $547,800
Overheads (91,300 * 11) $1,004,300
Manufacturing (91,300 * 5) $456,500
Supervision (91,300 * 1) $91,300
Total flexed Costs Budgeted $2,373,800
Hope that helps.
Paradise Corp. has determined a standard labor cost per unit of $10.20 (1 hour × $10.20 per hour). Last month, Paradise incurred 1,650 direct labor hours for which it paid $16,005. The company also produced and sold 1,700 units during the month.
Calculate the direct labor rate, efficiency, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Direct Labor Rate Variance
Direct Labor Efficiency Variance
Total Direct Labor Spending Variance
Answer:
Direct Labor Rate Variance = $825 favorable
Direct Labor Efficiency Variance = $510 favorable
Total Direct Labor Spending Variance = $1,335 favorable
Explanation:
The computations are shown below:
Direct Labor Rate Variance
= (Standard rate - Actual rate) × Actual hours
= ($10.20 - $16,005 ÷ 1,650 labor hours) × 1,650 direct labor hours
= ($10.20 - $9.7) × 1,650 direct labor hours
= $825 favorable
Direct Labor Efficiency Variance
= (Standard Hours allowed - Actual hours) × Standard rate
= (1,700 units × 1 hour - 1,650 hours) × $10.20
= (1,700 hours - 1,650 hours) × $10.20
= $510 favorable
Total Direct Labor Spending Variance
= Standard cost - actual cost
= 1,700 hours × $10.20 - $16,005
= $17,340 - $16,005
= $1,335 favorable
Edelman Engines has $5 billion in total assets — of which cash and equivalents total $90 million. Its balance sheet shows $1 billion in current liabilities — of which the notes payable balance totals $1.04 billion. The firm also has $3.25 billion in long-term debt and $0.75 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $24 per share. The firm's EBITDA totals $1.08 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.
Answer:
Edelman's market/book = 2.29
Edelman's EV/EBITDA = 10.52
Explanation:
Firstly, we need to calculate enterprise value (EV) & fiem value (FV) of Edelman Engines as below:
EV = Market value of equity + Net market value of debt
= Stock price x Number of share outstanding + (Debt - Cash)
= 24 x 0.3 + (3.25 + 1 - 0.09) = 11.36
FV = Market value of equity + Market value of debt
= Stock price x Number of share outstanding + Market value of debt
= 24 x 0.3 + 3.25 + 1 = 11.45
Edelman's market/book = FV/Total asset = 11.45/5 = 2.29
Edelman's EV/EBITDA = 11.36/1.08 = 10.52
Study abroad programs at universities worldwide promote the fact that they offer a unique opportunity for college students who appreciate diversity, are adventurous in spirit and enjoy new experiences. These students have a different outlook on life, compared to most college students. Based on this information, which form of segmentation has proven to be most useful to them in better understanding their audience?
a) Geographic
b) Demographic
c) Psychographic
d) Behavioral
e) All of the above
Answer: C. Psychographic
Explanation:
Psychograhic is the grouping of a population based on attitude , Interest and motivation, the demarcation in this scenario is based on students spirits, diversity and what they enjoy doing.
It's not a geographic demarcation because it's not based on physical boundaries or countries, it's not demographic because it's not based on natural factors such as ages, sex, etc . It's not based on equal consumption pattern and this makes it not to be behavioral and all the alternatives cannot be right because they are all different.
During 2018​, Whisper Breeze Spa reported revenue of $20,000. Total expenses for the year were $15,000. Whisper Breeze Spa ended the year with total assets of $35,000​, and it owed debts totaling $15,000. At​ year-end 2017​, the business reported total assets of $30,000 and total liabilities of $ 15,000.
a. Compute Whisper Breeze Spa's net income for 2018.
Answer:
Whisper Breeze Spa's net income for 2018 is $5000.
Explanation:
Net income = Revenue - Total expenses
= $20000 - $15000
= $5000
Therefore, Whisper Breeze Spa's net income for 2018 is $5000.
To calculate the net income, subtract the total expenses from the total revenue. Using the figures provided for Whisper Breeze Spa, the net income for 2018 is $5,000 ($20,000 in revenue minus $15,000 in expenses).
Explanation:The net income for the year 2018 can be calculated by subtracting the total expenses from the total revenue. Whisper Breeze Spa reported a revenue of $20,000 and total expenses of $15,000 for the year 2018. By subtracting the total expenses from the total revenue, the net income for the year 2018 can be determined.
Net Income = Total revenue - Total expenses = $20,000 - $15,000 = $5,000.
So, Whisper Breeze Spa's net income for 2018 was $5,000.
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On April 2, Granger Sales decides to establish a $360 petty cash fund to relieve the burden on Accounting. Required:
(a) Journalize the establishment of the fund.
(b) On April 10, the petty cash fund has receipts for mail and postage of $34, contributions and donations of $19, meals and entertainment of $112, and $191 in the ending cash balance. Journalize the replenishment of the fund.
(c) On April 11, Granger Sales decides to increase petty cash to $470. Journalize this event.
Answer:
a) Debit= Petty Cash $360; Credit= Cash= $360
b)Debit Mail and Postages=$34,
Contributions and donations= $19,
Meals and Entertainment= $112,
Cash Over and Shorts=$4
Credit Cash= $169
C)Debit= Petty Cash $110; Credit= Cash $110
Explanation:
a) Journalise the establishment of the fund
April 2 Debit Petty Cash $360
Credit Cash A/C $360
Being the establishment of a petty cash fund
b) Petty Cash Expenditure and Replenishment
April 10 Debit Mail and Postage $34
Debit Contributions and donations $19
Debit Meals and Entertainment $112
Debit Cash Over and Shorts $4
Credit Cash A/c $169
Being the replenishment of Petty Cash fund
Note: The balance of $191 in the ending cash balance means the petty cash already expended $169. However, the addition of Mail, Contributions and Meals = $165, meaning the account is short by $4 and this must be debited as Cash shorts to make up the difference.
c) Increase in Petty Cash to $470
April 11 Debit Petty Cash $110
Credit Cash A/c $110
Being the Increase in Petty Cash account by $110 (from $360 to $470)
Granger Sales establishes a petty cash fund with a debit to Petty Cash and a credit to Cash for $360. Replenishing the fund involves debiting the respective expense accounts and crediting Cash for the total amount of the receipts. Increasing the fund requires a debit to Petty Cash and a credit to Cash for the amount of the increase.
Explanation:When Granger Sales decides to establish a petty cash fund, the journal entry on April 2 would be:
Debit Petty Cash $360Credit Cash $360This entry establishes the petty cash fund by increasing the Petty Cash account and decreasing the Cash account by $360.
When replenishing the petty cash fund on April 10, the journal entry would be:
Debit Mail and Postage Expenses $34Debit Contributions and Donations $19Debit Meals and Entertainment Expenses $112Credit Cash $165Since the receipts total $165 ($34 + $19 + $112), the Cash account is reduced, and respective expense accounts are debited. The remaining $191 is the cash on hand in the petty cash fund.
On April 11, when Granger Sales decides to increase the petty cash fund to $470, the journal entry would be:
Debit Petty Cash $110Credit Cash $110This entry increases the Petty Cash account and decreases the Cash account by $110, the amount by which the petty cash was increased.
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Your client wants to transfer $500 from their checking account into a savings account to cover tax liabilities for sales made last month.
Where should they start the process?
Answer:
start process is go to Quick Create ( + ) icon after that find Transfer link
Explanation:
given data
transfer = $500
solution
For start the process of transfer the $500 from checking account in to saving account
we first Navigate to the Quick Create icon
Quick Create icon shown as ( + )
click on ( + ) then there we will find transfer link
after click on transfer link we can get process for transfer
so start process is go to Quick Create ( + ) icon after that find Transfer link
The client should start the process by accessing their online banking account. They need to locate the 'Transfer Money' option, specify the amount to transfer, and indicate their checking account as the source and the savings account as the recipient of the $500.
Explanation:To transfer $500 from a checking account to a savings account to cover tax liabilities, the client should start the process by logging into their online banking account. If their checking and savings accounts are with the same financial institution, they should navigate to an option labelled something like, 'Transfer Money' or 'Make a transfer'. Here, they can then go ahead to specify the amount they want to transfer (in this case, $500), and choose their checking account as the 'From' and their savings account as the 'To'. If the accounts are with different banks, the process may involve setting up a link between the two accounts first.
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One of the reasons the reporting of national news is relatively uniform among news source is that
A. The government dictates much of what is reported
B. There are only a few important events each day that merit news coverage
C. The network newscasts are brief and the day's top stories tend to dominate
D. Reporters are not given much freedom by their editors
Answer:
The correct option is C
Explanation:
The major reason why there is relative uniformity in the national news source is because the number of news organization and news services are responsible for generating most of the news, hence the option that network newscast are brief and hence the days top stories tend to dominate is the best option.
Answer:
B. There are only a few important events each day that merit news coverage.
Explanation:
The news sources strive to report important news, thereby making the reporting of the stories relatively uniform. These important stories would be broadcast by the network newscasts but in various dimensions.
The major reason for uniformity among news source is that important daily events are few, and these are what the majority of people intend to be abreast of. No one is interested in irrelevant stories.
A good example is the case of the corona virus 2019 that has bedeviled the whole world at present, most networks broadcast this and a few other stories. This is because they intend to report what majority of their followers wish to know and there are few important stories for the day.
A ScrumMaster's role is to also be a Servant Leader. Which of the following characteristics is not a Servant Leader characteristic?
Select one:
A. Let's go and have a cup of coffee and let's discuss what I can do for you.
B. Needs of the Scrum team are met
C. How can I help you?
D. What are you going to do for me today?
Answer:
D. What are you going to do for me today?
Explanation:
The leader should be first a servant, having a desire to serve than to be served. This makes a leader has authority and not just power by having interactions with ones he leads. He is not just interested in building himself but contributing to growth and development of the people around him.
Therefore asking what one will do for you is not a Servant Leader characteristic because it puts the leader first before the people.
Which of the following will not increase the demand for hot dogs (i.e. which will not shift demand to the right)?
a. An expectation of a decline in the price of hotdogs in the future.
b. The price of hotdogs fall.
c. An increase in the price of substitute, such as hamburgers.
d. A decrease in the price of a complement, such as hotdog buns.
e. A celebrity effectively promotes the healthful attributes of hotdogs.
Answer:
b. The price of hotdogs fall.
Explanation:
The demand curve will shift to the right when the demand increases with an increase in demand due to change in factors other than the price.
A decline in the price of hotdogs can lead to an increase in quantity demanded but it does not shift the demand curve (increase demand). Instead, it moves along the curve. Conversely, changes in future price expectations, the price of substitute or complementary goods and effective marketing can shift the demand curve.
Explanation:In the context of economics, increasing the demand for a product means shifting the demand curve to the right. This refers to a scenario where, at any given price, the quantity demanded increases. The option that will not shift the demand for hot dogs to the right, out of the given choices, is - b. The price of hotdogs fall.
This is because a decrease in the price of hotdogs is a movement along the demand curve (quantity demanded change), not a shift of the demand curve. In contrast, options a, c, d, and e, which refer to future price expectations, price changes in substitute goods, price changes in complement goods, and effective marketing respectively, could all cause the demand curve to shift (demand change).
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Parker owned all of Odom Inc.Although the Investment in Odom Inc. account had a balance of $834,000, the subsidiary's 12,000 shares had an underlying book value of only $56 per share.On January 1, 2011, Odom issued 3,000 new shares to the public for $70 per share.How does this transaction affect the Investment in Odom Inc. account?a) It should be decreased by $141,120.b) It should be increased by $176,400.c) It should be increased by $48,000.d) It should be decreased by $128,400.e) It is not affected since the shares were sold to outside parties.
Answer:
The answer is d) It should be decreased by $128,400
Explanation:
We have the Total stock holder's equity of Odom is:
Book value of 12,000 outstanding shares + Value of 3,000 newly issued shares = 12,000 x 56 + 3,000 x 70 = $882,000
% of holding Parker has in Odom after the new issuance = 12,000 / (12,000+3,000) = 80%
=> Investment in Odom account balance should be recorded at: 80% x Total stock holder's equity of Odom = 0.8 x 882,000 = $705,600
=> Investment in Odom account should be written down by 705,600 - 834,000 = $(128,400).
So d is the correct choice.
Which of the following statements is CORRECT?
Group of answer choices
A. When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.
B. Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.
C. For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.
D. There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases.
E. The Economic Ordering Quantity model for establishing inventory levels demonstrates this relationship.
F. When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.
Answer:
The correct answer is letter "B": Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.
Explanation:
Lumpy assets are assets that must be acquired in large-discrete units, not in small units. This causes excess capacity which is the situation in which the production is less than reachable for a firm. In the market, the demand is lower than what the firm could supply. This problem should be considered in a financial forecasting process to predict what the consequences could be in the long-term.
Elected officials should be excluded from the planning process because of the potential for political influence.
A. TRUE
B. FALSE
Answer:
The answer is False
Explanation:
Democracy identifies that people have the power to decide for themselves. However, since the populations are vast, the representative democracy allows citizens to elect officials to represent themselves and their needs and interests.
If elected officials are banned, then the Citizen's ability to govern themselves and participate in the planning process is prevented.
Final answer:
The claim that elected officials should be excluded from the planning process due to potential political influence is false; their role is vital in representing constituents. Dillon's Rule restricts, not expands, local government powers, and direct democracy involves citizens voting directly rather than daily politician interactions. Machine politics often led to higher taxes due to corruption.
Explanation:
The statement that 'elected officials should be excluded from the planning process because of the potential for political influence' is FALSE. While it's a valid concern that elected officials might be influenced by politics, it's also part of their role to represent the interests of their constituents within the planning process. They are elected to serve the public interest, and excluding them could undermine the democratic process. Moreover, officials can bring valuable knowledge and oversight to policy discussions. On the other hand, Dillon's Rule does not give local governments freedom and flexibility; rather, it is a principle stating that local governments have only those powers granted by the state and no more. Direct democracy is not about daily interactions with politicians, but rather it implies citizens making decisions through referendums or other forms of vote without intermediary representatives.
Government planners rely on experts such as scientists to provide objective advice in policy-making; however, creating a policy where any failing prediction results in permanent exclusion could lead to overly conservative recommendations and stifle innovation. Thus, incorporating a mixture of elected officials, experts, and public opinion is typically considered a balanced approach in policy-making. In the U.S., the system is not a true democracy as it operates as a republic, where citizens elect representatives to make policy decisions on their behalf.
Concerning colonial governors, they did have the power to veto legislation from colonial assemblies, reflecting the centralized authority of the governing structures of the time. The definition of executive authority is unrelated to the idea of the prime minister or president being 'the leader of the free world'; this is a colloquialism that does not accurately describe executive powers.
Regarding term limits, whether they've led to a significant increase in the number of women in state legislatures is a matter that requires statistical evidence to support. Lastly, a disadvantage of machine politics included the fact that taxpayers often faced higher city taxes due to corrupt practices.
Madison Corporation sells three products (M, N, and O) in the following sales mix: 3:1:2. Unit price and cost data are: M N O Unit sales price $ 7 $ 4 $ 6 Unit variable costs 3 2 3 Total fixed costs are $340,000. The break-even point in composite units for the current sales mix (round to the nearest unit) is:
The break-even point in composite units for Madison Corporation based on the sales mix and provided cost data is 102102 units.
Explanation:The break-even point in composite units can be determined using the provided sales mix and the cost and price data for products M, N, and O from the Madison Corporation.
First, we calculate the contribution margin per unit for each product:
To find the weighted average contribution margin per composite unit based on the sales mix (3:1:2), we use the formula:
Weighted average contribution margin = (3*$4 + 1*$2 + 2*$3) / (3+1+2)
Weighted average contribution margin = ($12 + $2 + $6) / 6 = $20 / 6 = $3.33 (rounded to two decimal places)
Now, we calculate the break-even point in composite units by dividing the total fixed costs by the weighted average contribution margin per unit:
Break-even point in composite units = $340,000 / $3.33
Break-even point in composite units = 102102.10 units (rounded to nearest unit) = 102102 units
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The break-even point in: 1) Composite units = 17,000. 2) Individual units of products: - Product M = 85,000 units. - Product N = 170,000 units. - Product O = 113,333 units. 3) Total sales for the current sales ≈ $636,763.
To find the break-even point, we need to determine the total contribution margin and then divide the total fixed costs by the contribution margin per unit.
1) Composite Units:
Total contribution margin per composite unit = Total unit sales price - Total unit variable costs
= (3 × $7) + (1 × $4) + (2 × $6) - [(3 × $3) + (1 × $2) + (2 × $3)]
= $21 + $4 + $12 - ($9 + $2 + $6)
= $37 - $17
= $20.
Break-even point in composite units = Total fixed costs / Total contribution margin per composite unit
= $340,000 / $20
= 17,000 composite units.
2) Individual Units of Product:
To find the break-even point in individual units of each product, we first need to find the contribution margin per unit for each product:
- Product M: $7 - $3 = $4.
- Product N: $4 - $2 = $2.
- Product O: $6 - $3 = $3.
Now, we can find the break-even point for each product:
- Product M: $340,000 / $4 = 85,000 units.
- Product N: $340,000 / $2 = 170,000 units.
- Product O: $340,000 / $3 = 113,333 units.
3) Total Sales:
Total break-even sales = Total fixed costs / Contribution margin ratio
= $340,000 / ($20 / $37)
≈ $636,763.
So, the break-even point in:
1) Composite units = 17,000.
2) Individual units:
- Product M = 85,000 units.
- Product N = 170,000 units.
- Product O = 113,333 units.
3) Total sales ≈ $636,763.
The complete question is:
Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:
Unit sales price: $7(M), $4(N), $6(O)
Unit variable costs: 3(M), 2(N), 3(O)
Total fixed costs are $340,000.
Required:
Determine the break-even point in:
1) composite units
2) individual units of product
3) total sales, for the current sales mix (round to the nearest unit).
Meacham Corp. wants to raise financing to purchase a competitor. It can issue 12 year bonds with a 9% annual coupon for $1090 and will incur debt flotation costs of $15 per bond.The company can sell additional equity shares to the public for $30 per share and estimates its equity flotation costs will be $3 per share. Meacham paid a $4 per share dividend yesterday and expects is dividends to grow 7% annually. The company is targeting a capital structure of 40% debt and 60% common equity and has a 35% marginal tax rate.Calculate the company's WACC.
Answer:
COST OF BOND
Year Cashflow DF@10% PV DF@5% PV
$ $ $
0 (1,075) 1 (1,075) 1 (1,075)
1-12 58.50 6.8137 399 8.8633 519
12 1,000 0.3186 319 0.5568 557
NPV (357) NPV 1
Kd = LR + NPV1/NPV1+NPV2 x (HR – LR)
Kd = 5 + 1/1 + 357 x (10 – 5)
Kd = 5 + 1/358 x 5
Kd = 5.01%
Ke = Do(1 +g)/Po-Fc + g
Ke = $4(1 + 0.07)/$30-$3 + 0.07
Ke = $4(1.07)/$27 + 0.07
Ke = 0.1585 + 0.07
Ke = 0.2285 = 22.85%
WACC = Ke(E/V) + Kd(D/V)
WACC = 22.85(60/100) + 5.01(40/100)
WACC = 13.71 + 2.004
WACC = 15.71%
Explanation:
In this question, we need to calculate cost of debt using IRR formula. The cashflow for year 0 is the current market price less floatation cost. The cashflow for year 1 to 12 is the after-tax coupon, which is calculated as R(1 -T). R = 9% x $1,000 = $90 and R(1 -T) = $90(1-0.35) = $58.50. The cashflow for year 12 is the par value. we will discount the cashflows so as to obtain the net present value.
We will also calculate cost of equity. which is a function of dividend paid, current market price and growth rate.
Finally, we will calculate the weighted average cost of capital by considering the cost of each stock and the proportion of each stock in the capital structure.
An architect is considering bidding for the design of a new shopping mall. The cost of drawing plans and submitting a model is $10,000. The probability of being awarded the bid is 0.12, and anticipated profits are $100,000, resulting in a possible gain of this amount minus the $10,000 cost for plans and a model. What is the expected value in this situation?
Answer:
The expected value is $2,000
Explanation:
The expected value in the following situation is computed as:
Expected value = Probability of bid × (Anticipated Profits - Cost of drawing plans) - (1 - Probability of bid) × Cost of drawing plans
where
Probability of bid is 0.12
Anticipated Profits is $100,000
Cost of drawing plans is $10,000
Putting the values above:
= 0.12 × ($100,000 - $10,000) - (1 - 0.12) × $10,000
= 0.12 × $90,000 - 0.88 × $10,000
= $10,800 - $8,800
= $2,000
The expected value in this situation is $10,800.
Explanation:To calculate the expected value in this situation, we need to multiply the profit by the probability of being awarded the bid. The profit is $100,000 minus the cost of $10,000, which is $90,000. The probability of being awarded the bid is 0.12.
Expected Value = Profit x Probability
Expected Value = $90,000 x 0.12
Expected Value = $10,800
Therefore, the expected value in this situation is $10,800.
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What do you get when you calculate the present value of the free cash flow of the firm using this discount rate?
Answer:
Explanation:
To calculate the present value of a firm, first, determine the expected free cash flows over the specified time period. Next thing is to determine the present value factor for each year using the discount rate given. Next, multiply the respective discount factor by each year's cashflow. This will give you the Present value for each year. Lastly, sum up individual PVs to get the value of the firm.
Sales $ 929,000 $ 264,000 $ 406,000 $ 259,000 Variable manufacturing and selling expenses 478,000 114,000 206,000 158,000 Contribution margin 451,000 150,000 200,000 101,000 Fixed expenses: Advertising, traceable 69,300 8,300 40,600 20,400 Depreciation of special equipment 42,900 20,300 7,200 15,400 Salaries of product-line managers 115,700 40,100 38,900 36,700 Allocated common fixed expenses* 185,800 52,800 81,200 51,800 Total fixed expenses 413,700 121,500 167,900 124,300 Net operating income (loss) $ 37,300 $ 28,500 $ 32,100 $ (23,300) Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?
Answer:
Although the racing bikes is making a loss of $(23,300), by discontinuing the Racing Bikes, it will create financial disadvantage of $(101,000)
Explanation:
The financial advantages/(disadvantages) from discontinuing the Racing Bikes production is calculated as:
Plus: Cost saving = Variable contribution margin = $158,000
Less: Revenue deduction from not selling Racing Bikes = $259,000
Advantages/(Disadvantages) $(101,000)
In other words, by stopping Racing Bikes - a business line having positive Contribution Margin of $101,000, the company does not gain any further fixed cost saving or recovery of the sales of machines/ equipment used only for the Racing Bikes production, the discontinue will create a disadvantage equal to the contribution margin of the Racing Bike business line.
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $96 Dividends $32 Addition to retained earnings $64 For the coming year, the company is forecasting a 15% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 60% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. What is Austin's projected 2017 net income? What is the expected growth rate in Austin's dividends?
Answer:
Net income = $169.2
Growth in dividend = 76.25%
Explanation:
The projected figures are as below:
Sales = $700 x (1 + 15%) = $805 (15% increase in sales)
Operating costs including depreciation = $805 x 60% = $483 (60% of sales)
Interest expense = 40 (remain constant)
EBIT = Sales - Operating costs including depreciation = $805 - $483 = $322
EBT = EBIT - Interest expense = $322 - $40 = $282
Net income = EBT x (1 - Tax rate) = $282 x (1 - 40$) = $169.2
Dividend = Net income x Dividend payout ratio = $169.2 x (32/96) = $56.4
Growth in dividend = $56.4/$32 = 76.25%
SilverFinn makes high-end jewelry for women. This jewelry is manufactured and patented in Italy. Manufacturers in Argentina create counterfeit SilverFinn jewelry and sell it in local markets at nearly similar prices to the original SilverFinn jewelry sold in other countries. This lack of intellectual property protection is like to result ina. reduction in export opportunities from Argentina to other countries.b. reduction in the export opportunities for SilverFinn jewelry in Argentina.c. expansion of the world market for SilverFinn products.d. reduction in import of all Argentinian goods.e. increase in the prices of jewelry produced by SilverFinn.
Answer:
b. reduction in the export opportunities for SilverFinn jewelry in Argentina
Explanation:
As there is a secondary market which erodes the trademark value of SilverFinn with counterfeit products; SilverFinn will find harder to export into Argentina as local market would prefer the local option as it is cheaper and will import other jewelry which do not have an alternative counterfeit market.
On January 2, 2017, a calendar-year corporation sold 5% bonds with a face value of $2500000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2292000 to yield 7%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2017?
Answer:
Consider the following explanation
Explanation:
Under Effective interest method, Interest calculated at the effective interest rate (i.e., the yield of the bond) is charged as an expense annually, and the payment made basis the Coupon rate.
In the given case, interest to be paid semi annually i.e, on June 30 and on December 31, will be $62,500 (i.e., 2,500,000 * 5% * 6/12).
On the basis of above, the interest expense to be charged in the 2017 can be calculated as follows: take a look to the attached archive.
As calculated above, the amount to be charged as interest expense for the year 2017 is (80,220 + 80,840 i.e.,) $ 161,060.
Which of the following would be considered a situation of legal employment discrimination? A. Rene, who has a disability, is rejected from a job position because another candidate did not have a disability. B. Sheryl, who has a disability, is rejected from a job position because the employer would have to pay for an accommodation. C. Charlie, who does not have a disability, is rejected from a job position because the employer thinks he has a disability. D. Meryl, who has a disability, is rejected from a job position because she doesn’t have a certification for the job she would be doing.
Answer: The correct answer is "A. Rene, who has a disability, is rejected from a job position because another candidate did not have a disability.".
Explanation: Disability discrimination occurs when an employer treats a qualified person with a disability, who is an employee or job applicant, unfavorably because he has a disability.
While in the case of option B, the law requires an employer to provide reasonable accommodation to an employee or job applicant with a disability, this is not mandatory if doing so will generate significant difficulties or expenses for the employer.
Therefore the case of option A would be considered a situation of legal employment discrimination.
Legal employment discrimination occurs when a job applicant is treated unfairly based on their race, gender, religion, age, or disability status.
Explanation:Legal employment discrimination occurs when a job applicant is treated unfairly due to their race, gender, religion, age, or disability status. In the given options, Option A would be considered a situation of legal employment discrimination. Rene, who has a disability, is rejected from a job position because another candidate did not have a disability. This is illegal under the Americans with Disabilities Act (ADA), which prohibits discrimination against qualified individuals with disabilities in regard to job application procedures, hiring, advancement, and other terms and conditions of employment.
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Relationship-enhancing attributions involve which of the following factors?
A) Accurately identifying a partner's transgressions
B) Actor/observer effects
C) Giving credit for positive actions and excusing transgressions
D) Identifying one's own contributions to the relationship
Relationship-enhancing attributions involve Giving credit for positive actions and excusing transgressions.
Explanation:
Relationship-enhancing features happen when people place greater responsibility for the positive behavior on their relationships and less responsibility for the negative behavior of their partners.
If your partner brought you flowers, that's because he's sweet and sweet. But that's because he's caught in the traffic (something he wouldn't control when he's slow for a date).
In special relationship research, attributions are frequently divided into two classifications: attributions that "improve relationship" and attributions that "maintain distress" (Bradbury & Fincham, 1990), respectively.
Relationship-enhancing attributions involve giving credit for positive actions and excusing transgressions, which can help maintain a positive view of a partner.
Explanation:Relationship-enhancing attributions involve C) Giving credit for positive actions and excusing transgressions. This type of attribution reflects a tendency to view a partner's positive behaviors as intentional and as a reflection of their character, while negative behaviors are seen as circumstantial or situational. In contrast to relationship-enhancing attributions:
Actor/observer bias suggests that people attribute their own actions to situational factors while attributing others’ actions to their dispositions.Self-serving bias refers to the common habit of a person taking credit for positive events or outcomes, but blaming outside factors for negative events.The fundamental attribution error is the tendency to overemphasize personality traits and underestimate situational factors when explaining another's behavior.These biases and attribution errors can impact relationships, as they affect the way individuals perceive and react to each other's behaviors.
Which products are considered "covered products" by the Treasury Department and are subject to anti-money regulations?A. Term life insuranceB. Health insuranceC. Whole life insuranceD. AnnuitiesE. Group life insurance
Answer:
The correct answers are letters "C" and "D": Whole life insurance; Annuities.
Explanation:
The Department of the Treasury defines "covered products" as permanent life insurance policy not applicable to group life insurance policies; annuity contracts that do not include group annuity contracts; and, other insurance products with monetary value or considered investments.
Under anti-money laundering laws outlined by the Treasury Department, 'covered products' include insurance policies such as whole life insurance and annuities that have cash value or investment features. However, term life insurance, health insurance, and group life insurance are typically not considered 'covered products'.
Explanation:According to the Treasury Department and provisions outlined under anti-money laundering regulations, certain insurance products are considered 'covered products.' The primary products considered under these regulations include permanent life insurance policies, other than group life insurance, annuities, and any other insurance products with features of cash value or investment. Therefore, out of the options given, whole life insurance (C) and annuities (D) are considered 'covered products' under these regulations. Term life insurance (A), health insurance (B), and group life insurance (E) are typically not included.
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Use this information for Train Corporation to answer the question that follow. The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: Rails Division Locomotive Division Corporate Total Cost of goods sold $46,100 $29,500 Direct operating expenses 26,900 22,100 Sales 97,300 65,500 Interest expense $2,500 General overhead 19,200 Income tax 4,300
The gross profit for the Locomotive Division is:
Answer:
Gross profit= $36,000
Explanation:
Giving the following information:
Cost of goods sold:
Rails Division= 46,100
Locomotive Division= 29,500
Sales:
Rails Division= 97,300
Locomotive Division= 65,500
To calculate the gross profit, we need to use the following formula:
Gross profit= Sales - cost of goods sold
Gross profit (Locomotive)= 65,500 - 29,500= $36,000