Answer:
$4,900
Explanation:
Calculation to determine What amount of interest revenue from the lease should Crane report in its 2021 income statement
Interest revenue=8%/2*($144000 - $21500)
interest revenue=4%*$122,500
interest revenue = $4,900.
Therefore the amount of interest revenue from the lease should Crane report in its 2021 income statement is $4,900
Brightstone Tire and Rubber Company has capacity to produce 179,000 tires. Brightstone presently produces and sells 137,000 tires for the North American market at a price of $93 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 21,000 tires for $76.85 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:
Direct materials $54
Direct labor 24
Factory overhead (62% variable) 24
Selling and administrative expenses (44% variable) 25
Total $127.00
Brightstone pays a selling commission equal to 4% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.65 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $165,424.
Required:
a. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors.
b. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors
c. What is the minimum price per unit that would be financially acceptable to Brightstone?
Answer:
A. Reject (Alternative 1) $0
Accept (Alternative 2) -$815,584
Differential effect Income (Alternative 2) -$815,584
B. Goodman should REJECT the special order from Euro Motors
C.$115.69
Explanation:
a. Preparation of a differential analysis dated January 21
DIFFERENTIAL ANALYSIS
Reject (Alternative 1) Accept (Alternative 2) Differential effect Income (Alternative 2)
Revenues $0 $1,613,850 $1,613,850
(21,000 tires × $76.85 per tire)
Costs:
Direct materials 0 –$1,134,000 $1,134,000
(21,000 tires × $54 per tire)
Direct labor 0 –$504,000 $504,000
(21,000 tires × 24 per tire)
Variable factory overhead 0 –$312,480 $312,480
[21,000 tires × ($24 per tire × 62%)]
Variable selling and admin.
expenses 0 –$152,880 $152,880
21,000 tires × [(25 per tire × 44%) – ($93 × 4%)]
Shipping costs 0 –$160,650 $160,650
(21,000 tires × $7.65 per tire)
Certification costs 0 –$165,424 –$165,424
Income (Loss) $0 -$815,584 -$815,584
B. Based on the above Differentials analysis Brightstone should REJECT the special order from Euro Motors.
C. Calculation to determine minimum price per unit that would be financially acceptable to Brightstone
Minimum price per unit =$76.85-(-$815,584/21,000)
Minimum price per unit =$76.85-(-$38.84)
Minimum price per unit=$115.69
Therefore minimum price per unit that would be financially acceptable to Brightstone is $115.69
The dividend irrelevance theory, proposed by Miller and Modigliani, says that provided a firm pays at least some dividends, how much it pays does not affect either its cost of capital or its stock price.
a) true
b) false
Answer:
b) false
Explanation:
In the case of theory that developed by MM in this the investor have no need for concering with respect to the dividend policy of the company as in this the sell option is there with regard to the equity portfolio when they need the cash
So according to the given situation, the given statement is false
hence the option b is correct
You purchased 100 shares of Crestwood Equity Partners (CEQP) stock on the last day of April 2020 for $10.94 per share. During the month of May you received a dividend of $0.625 per share. You sold all of your Crestwood stock on the last trading day of May for $14.21 per share. Compute your percentage return for the month that you owned the stock.
Answer:
the percentage return is 35.60%
Explanation:
The computation of the percentage return is shown below;
= (Last trading day on may - last day of april + dividend received) ÷ (last day of april) ×100
= ($14.21 - $10.94 + $0.625) ÷ ($10.94) × 100
= ($3.895) ÷ ($10.94) × 100
= 35.60%
Hence, the percentage return is 35.60%
The above formula should be applied
At the beginning of June, 6,000 diamonds were in process. During June, an additional 9,000 diamonds were started. 7,000 diamonds were completed and transferred to finished goods. As of the beginning of the month, work in process was 80% complete with respect to materials and 60% complete with respect to conversion costs. As of the end of the month, work in process was 50% complete with respect to materials and 30% complete with respect to conversion costs. Calculate the equivalent units of direct labor for June.
Answer:
9,400 units
Explanation:
Equivalent units are physical units expressed as a percentage of work done on then. In this case we express the physical outputs as percentage of direct labor.
Step 1: Ending Work in Process units calculation :
Ending Work in Process units = 6,000 + 9,000 - 7,000
= 8,000
Step 2 : Equivalent units of direct labor for June calculation:
Completed and transferred (7,000 x 100%) 7,000
Ending Work in Process (8,000 x 30%) 2,400
Equivalent units of production 9,400
Selected financial information for ELX Corporation is reproduced below: 1. Net operating assets (NOA) turnover (average NOA equals ending NOA) is 4. 2. Net operating profit after tax (NOPAT) margin is 6% 3. Leverage ratio (average net financial obligation to average common equity) is 2.5, and the spread is 7.3%. What is ELX's return on common equity
Answer:
the Return on common equity is 43.45%
Explanation:
The computation of the return on common equity is shown below;
As we know that
Return on common equity = Return on net operating assets + leverage × spread
= (4.2 × 6%) + 2.5 × 7.3%
= 25.2% + 18.25%
= 43.45%
Hence, the Return on common equity is 43.45%
The above formula should be applied for the same
Roxy Inc. issues a $1,500,000, 10%, 10-year mortgage note on December 31, 2018, to obtain financing for a new building. The terms provide for annual installment payments of $244,118. Prepare the entry to record the mortgage loan on December 31, 2018, and the first installment payment on December 31, 2019.
Answer:
See the journal entries below.
Explanation:
The journal entries will look as follows:
Date Particulars Debit ($) Credit ($)
31 Dec 2018 Cash 1,500,000
Mortgage payable 1,500,000
(To record $1,500,000, 10%, 10-year mortgage note issued.)
31 Dec 2018 Mortgage payable (w.2) 94,118
Interest exp. on Mortgage (w.1) 150,000
Cash 244,118
(To record first installment payment on mortgage note.)
Workings:
w.1. Interest expense on Mortgage = Mortgage payable * Interest rate = $1,500,000 * 10% = $150,000
w.2. Mortgage note principal repaid = Annual installment payment - w.1 = $244,118 - $150,000 = $94,118
Lily Company expects the following total sales: Month Sales March $30,000 April $20,000 May $30,000 June $25,000 The company expects 60% of its sales to be credit sales and 40% for cash. Credit sales are collected as follows: 30% in the month of sale, 70% in the month following the sale. The budgeted accounts receivable balance on May 31 is: A. $12,240 B. $12,600 C. $20,400 D. $21,000
Answer:
B. $12,600
Explanation:
"The company expects 60% of its sales to be credit sales and 40% for cash"
Credit sale for May = $30,000 * 60%
Credit sale for May = $18,000
"70% of the credit sale is collected in following month of sale"
Accounts receivables on 31 May = 70% of credit sale for May
Accounts receivables on 31 May = 70% * $18,000
Accounts receivables on 31 May = $12,600
the objective section of a resume should consist of no more than:
A. One to two sentences
B. One page
C. A half-page
D. One paragraph
Answer:A
Explanation:
A p e x
Answer:
A. One to two sentences
Explanation:
You dont want whomever is reading your resume to think that you are full of yourself.
Liam works at an IT firm. He finds that the activities carried out by his team are very complex and struggles to complete his tasks on time. He learns that some of his team members are also facing the same issue. Even though there is clarity of the target among the team members, the team struggles to efficiently carry out its task. Which of the following should the team do in order to ensure the completion of the tasks?
It should change the output and retain the workforce.
It should use informal communication to carry out its tasks.
It should standardize the work activities through flowcharts.
It should conduct an in-house training program to bring employees up to speed.
Team-based organizational structures are usually organic and highly decentralized.
True
False
Answer:
It should conduct an in-house training program to bring employees up to speed.
true
Explanation:
An inhouse training would be appropriate to help team members overcome their struggles with the complexity of the tasks. the training would provide more clarification on the tasks to be carried out. this would have the effect of making the task look less complex. Even though there is clarity on the target, there is no clarity on the steps to take to reach the target. Thus, a training is needed.
Team-based organizational structures is when the employees of an organisation are divided into teams. these teams work separately but they work towards a common goal . The structure is usually decentralised. Decisions are made within teams instead of decisions been made by one central body.
Advantages of Team-based organizational structures
communication between employees are faster and more effectiveit increases teamwork Problems are resolved fasterDisadvantages of Team-based organizational structures
it might be difficult to identify employees with low performance as they might be able to hide behind their teamsCharacteristics of an organic organisation includes :
few levels of management,decentralized decision-making, a short chain of command.these are characteristics of a team based organisational structure
A firm has common stock with a market price of $100 per share and an expected dividend of $5.61 per share at the end of the coming year. A new issue of stock is expected to be sold for $98, with $2 per share representing the underpricing necessary in the competitive capital market. Flotation costs are expected to total $1 per share. The dividends paid on the outstanding stock over the past five years are as follows: The cost of this new issue of common stock is ________.
Answer:
D) 12.8 percent
Explanation:
Calculation to determine what The cost of this new issue of common stock is
Using this formula
Cost of common stock new issue= D1 ÷ P0 + g
Where,
D1 =$5.61
P0=$98
g=[($5.61 - $5.24) ÷ $5.24]=7.06%
Let plug in the formula
Cost of common stock new issue = ($5.61 ÷ $98*100) + 7.06%
Cost of common stock new issue= 5.72% + 7.06%
Cost of common stock new issue= 12.78%
Cost of common stock new issue= 12.8 % (Approximately)
Therefore The cost of this new issue of common stock is 12.8%
The Murdock Corporation reported the following balance sheet data for 2021 and 2020:
2021 2020
Cash $98,465 $34,355
Available-for-sale debt
securities (not cash
equivalents) 25,000 104,000
Accounts receivable 99,000 85,350
Inventory 184,000 162,100
Prepaid insurance 3,210 3,900
Land, buildings, and
equipment 1,288,000 1,144,000
Accumulated depreciation (629,000 ) (591,000 )
Total assets $1,068,675 $942,705
Accounts payable $93,440 $167,670
Salaries payable 27,600 34,000
Notes payable (current) 42,100 94,000
Bonds payable 219,000 0
Common stock 300,000 300,000
Retained earnings 386,535 347,035
Total liabilities and
shareholders' equity $1,068,675 $942,705
Additional information for 2021:
(1) Sold available-for-sale debt securities costing $79,000 for $85,400.
(2) Equipment costing $20,000 with a book value of $6,900 was sold for $8,850.
(3) Issued 6% bonds payable at face value, $219,000.
(4) Purchased new equipment for $164,000 cash.
(5) Paid cash dividends of $29,500.
(6) Net income was $69,000.
Required:
Prepare a statement of cash flows for 2016 in good form using the indirect method for cash flows from operating activities.
Answer:
The Murdock Corporation
Statement of Cash Flows for the year ended December 31, 2021
Operating activities (only):
Net income $69,000
Depreciation expense 51,100
Gain on sale of securities (6,400)
Gain on sale of equipment (1,950)
Changes in working capital:
Accounts receivable (13,650)
Inventory (21,900)
Prepaid insurance 690
Accounts payable (74,230)
Salaries payable (6,400)
Notes payable (current) (51,900)
Cash flow from operations ($55,640)
Explanation:
a) Data and Calculations:
2021 2020 Change
Cash $98,465 $34,355 +$64,110
Available-for-sale debt securities
(not cash equivalents) 25,000 104,000 -79,000
Accounts receivable 99,000 85,350 +13,650
Inventory 184,000 162,100 +21,900
Prepaid insurance 3,210 3,900 -690
Land, buildings, and
equipment 1,288,000 1,144,000 +144,000
Accumulated depreciation (629,000 ) (591,000 ) +38,000
Total assets $1,068,675 $942,705
Accounts payable $93,440 $167,670 -74,230
Salaries payable 27,600 34,000 -6,400
Notes payable (current) 42,100 94,000 -51,900
Bonds payable 219,000 0 +219,000
Common stock 300,000 300,000 0
Retained earnings 386,535 347,035 +39,500
Total liabilities and
shareholders' equity $1,068,675 $942,705
Additional information for 2021:
1. Available=for-sale debt securities:
Cost = $79,000
Sales = 85,400 Cash
Profit = $6,400
2. Equipment:
Cost = $20,000
Acc. Dep. 13,100
Book value 6,900
Cash sales 8,850
Profit = 1,950
Accumulated Depreciation:
Beginning balance $591,000
Sale of equipment (13,100)
Depreciation expense 51,100
Ending balance 629,000
3. Bonds issue = $219,000
Interest on bonds = 13,140 ($219,000 * 6%)
4. Purchase of new equipment = $164,000
5. Cash dividends = $29,500
6. Net income = $69,000
Statement of Cash Flows for the year ended December 31, 2021
Operating activities:
Net income $69,000
Depreciation expense 51,100
Gain on sale of securities (6,400)
Gain on sale of equipment (1,950)
Changes in working capital:
Accounts receivable (13,650)
Inventory (21,900)
Prepaid insurance 690
Accounts payable (74,230)
Salaries payable (6,400)
Notes payable (current) (51,900)
Cash flow from operations ($55,640)
Investing activities:
Sale of equipment 8,850
Purchase of equipment (164,000)
Available-for-sale debt securities
(not cash equivalents) 85,400
Cash flow from investing ($69,750)
Financing activities:
Issue of bonds 219,000
Dividends (29,500)
Cash from financing $189,500
Net Cash flows $64,110
Reconciliation:
Beginning cash balance $34,355
Net Cash flows $64,110
Ending cash balance $98,465
Corporation was organized on January 1, 2021. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2021, QWN had the following transactions relating to shareholders' equity:
Issued 10,400 shares of common stock at $5.80 per share.
Issued 19,600 shares of common stock at $9.30 per share.
Reported a net income of $106,000.
Paid dividends of $53,000.
Purchased 2,600 shares of treasury stock at $11.30 (part of the 19,600 shares issued at $9.30).
Required:
What is total shareholders' equity at the end of 2021?
Answer:
Total stochkholders' equity = $266,220
Explanation:
Total stockholders' equity
10,400 x $5.80 = $60,320
19,600 x $9.30 = $182,280
Net income (retained earnigns) = $106,000
Paid cash dividends = -$53,000
Purhcase of treasury stocks = -2,600 x $11.30 = -$29,380
Total stochkholders' equity = $266,220
Metlock, Inc. reported net income of $205,840 for 2022. Metlock, Inc. also reported depreciation expense of $37,750 and a loss of $4,660 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,940 for the year, a $15,790 increase in accounts payable, and a $4,300 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2022. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
Please see below
Explanation:
Metlock Inc.
Preparation of Operating activities section of the statement of cash flows for 2022
Net income
$205,840
Adjustment to reconcile net income
to net cash provided by operating activities
Depreciation expense
$37,750
Loss on disposal of plant asset
$4,660
Account receivable increase
($15,940)
Prepaid expense increase
($4,300)
Accounts payable decrease
$15,790
Net cash provided by operating activities
$243,800
Budgeted sales commissions would appear on the: A. sales budget and pro forma balance sheet. B. sales budget and pro forma income statement. C. selling, general, and administrative budget and pro forma balance sheet. D. selling, general, and administrative budget and pro forma income statement.
Answer:
Option d: Selling, general and administrative budget and the pro forma income statement
Explanation:
Budgeting
This is simply defined as the showing forth the plans for a business in financial terms. It is said to be a plan to help you an individual to monitor and manage money wisely ans can it one to achieve short term, intermediate, and long term goals in a timely manner.
The notable arrangements of most master budgets are prepared in is sales, purchases, cash and income statement. Budgeted sales commissions is said to visibly shown on the selling, general and administrative budget and the pro forma income statement.
The average height of members of the high school basketball team is six feet, three inches. Jerry is on the high school basketball team, so Jerry must be taller than six feet. The argument above is flawed because it confuses:_________
Answer:
The argument is confusing an average for the individuals who make up that average.
Explanation:
The argument assumes that the height of all members of the team is above 6 ft. this is flawed because it assumes that the average height is equal to the height of the members of the team
for example, there are two members in the team
assume that the height of each member is 6 ft 3 inches. the average height is 6 ft 3 inches
Assume that the height of one member is 10.6 in and jerry's height is 2.0. the average height is 6 ft 3 inches. Here Jerry's height is less than 6ft
Bindy Crawford created a corporation providing legal services, Skysong, Inc., on July 1, 2022. On July 31 the balance sheet showed: Cash $4,600; Accounts Receivable $7,400; Supplies $730; Equipment $9,900; Accounts Payable $9,100; Common Stock $11,700; and Retained Earnings $1,830. During August the following transactions occurred.
Aug. 1 Collected $1,200 of accounts receivable due from customers.
4 Paid $2,770 cash for accounts payable due.
9 Performed services worth $6,050, of which $3,510 is collected in cash and the balance is due in September.
15 Purchased additional office equipment for $4,180, paying $510 in cash and the balance on account.
19 Paid salaries $1,390, rent for August $760, and advertising expenses $330. 23 Paid a cash dividend of $670.
26 Borrowed $5,700 from American Federal Bank; the money was borrowed on a 4-month note payable.
31 Incurred utility expenses for the month on account $370.
Prepare a tabular analysis of the August transactions beginning with July 31 balances.
Prepare an income statement for August, a retained earnings statement for August and a classified balance sheet at August 31.
Answer:
Bindy Crawford
1. Tabular Analysis of the August Transactions:
Cash Accounts Supplies Equipment Accounts Common Retained
Receivable Payable Earnings
7/31 $4,600 $7,400 $730 $9,900 $9,100 $11,700 $1,830
8/1 +1,200 -1,200
8/4 -2,770 -2,770
8/9 +3,510 +2,540 +6,050
8/15 -510 +4,180 +3,670
8/19 -2,480 -2,480
8/23 -670 -670
8/26 +5,700 +5,700
8/31 -370 -370
8/31 $8,210 $8,740 $730 $14,080 $15,700 $11,700 $4,360
2. Income Statement for the month of August
Service revenue $6,050
Salaries expense $1,390
Rent expense 760
Advertising expenses 330
Utility expenses 370 2,850
Net income $3,200
3. Retained Earnings Statement for the month of August
Retained earnings, July 31 $1,830
Net income 3,200
Dividends (670)
Retained earnings, Aug. 31 $4,360
4. Classified Balance Sheet as of August 31
Assets
Current Assets:
Cash $8,210
Accounts receivable 8,740
Supplies 730 $17,680
Long-term Assets:
Equipment $14,080
Total assets $31,760
Liabilities and Equity
Current liabilities:
Accounts Payable 10,000
Notes Payable 5,700 $15,700
Equity:
Common stock 11,700
Retained earnings 4,360 $16,060
Total liabilities and equity $31,760
Explanation:
a) Data and Analysis:
8/1 Cash $1,200 Accounts receivable $1,200
8/4 Accounts payable $2,770 Cash $2,770
8/9 Accounts receivable $2,540, Cash $3,510 Service revenue $6,050
8/15 Equipment $4,180 Cash $510 Accounts payable $3,670
8/19 Salaries expense $1,390, Rent expense $760, Advertising expenses $330 Cash $6,150
8/23 Cash dividend $670 Cash $670
8/26 Cash $5,700 Note payable (American Federal Bank) $5,700
8/31 Utility expenses $370 Cash $370
Tabular Analysis of the August Transactions:
Cash Accounts Supplies Equipment Accounts Common Retained
Receivable Payable Earnings
7/31 $4,600 $7,400 $730 $9,900 $9,100 $11,700 $1,830
8/1 +1,200 -1,200
8/4 -2,770 -2,770
8/9 +3,510 +2,540 +6,050
8/15 -510 +4,180 +3,670
8/19 -2,480 -2,480
8/23 -670 -670
8/26 +5,700 +5,700
8/31 -370 -370
8/31 $8,210 $8,740 $730 $14,080 $15,700 $11,700 $4,360
What cost of living?
Need help please
Why would a producer decide to produce in a competitive market in which she will earn zero profit in the long run? Choose one: A. Because at zero profit, with her revenue, she can cover all her costs—explicit and implicit (opportunity cost). B. Because the zero profit in the long run is, in fact, zero accounting profit, and it matters only in the books. C. Because in the short run, her profit is always positive. D. Because the producer has a high cost of exiting this market, and it is better for her to continue operating at zero profit.
Answer:
Option A : Because at zero profit, with her revenue, she can cover all her costs—explicit and implicit (opportunity cost).
Explanation:
Perfectly Competitive Market
This is simply a market the market participants are said to be price takers that is no consumption decisions by individual consumers and no production decisions by individual producers can be able to affect the market price of a good.
Perfectly Competitive Industry
This is simply an industry where producers are said to be price takers.
Explicit Costs
These are costs that are simply known as "out-of-pocket" costs or in accounting costs. They are an individual's fixed and variable costs of doing business.
Implicit Costs
These are costs that do not partains to monetary payment as they are the opportunity costs of doing business.
It is said that at zero profit, the revenue covers all the costs, including the implicit ones. The fact that her implicit costs are covered shows that no outside option or opportunity that is superior to the zero economic profit option is chosened.
Wall Street bond trader turned on the television one day and saw a news report accusing him of committing a large securities scam. This trader learned that his employer had accused him of creating $300 million of phony profits and, as a result, getting bogus bonuses of $8 million. He claimed he was innocent, and it took about three years for him to prove his innocence. In the months that followed the accusations, he was investigated by the SEC, the National Association of Securities Dealers, and the Justice Department. Three years later, the bond trader was cleared of all major charges brought against him
Required:
a. Assume that you are the employer. What type of legal action would you seek against this bond trader? Why?
b. To what type of court would your case most likely be assigned? Why?
Answer:
A. From a civil standpoint, I will report the body of proof against the bond broker. Once the dissension has been brought to the attention of the offending party, a standard legal procedure will be followed. The protest will go into detail about the offence as well as monetary provisions for the damage suffered.
B. The case will most likely be signed to the district courts in which the company is registered.
Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $3.9 million per year along with incremental costs of $1.3 million per year. Daily's marginal tax rate is 35%. You are forecasting incremental free cash flows for Daily Enterprises. Whatare the incremental free cash flows associated with the new machine?
Answer:
$2,421,220
Explanation:
Calculation to determine incremental free cash flows associated with the new machine
First step is to calculate The cost of depreciation
Cost of depreciation= $10,4000,00 + $46,000/ 5
Cost of depreciation= $2,089,200
Now let calculate the Incremental free cash flows
Incremental free cash flows = ( $3.9 million - $1,300,000) * (1 - 0.35) + $2,089,200* 0.35
Incremental free cash flows = $1,690,000 + $731,220
Incremental free cash flows=$2,421,220
Therefore the incremental free cash flows associated with the new machine is $2,421,220.
Your child is planning attend summer camp for 3 months, starting 12 months from now. The cost for camp is $2,676 per month, each month, for the 3 months she will attend. If your investments earn 2.3% APR (compounded monthly), how much must you invest each month, starting next month, for 3 months such that your investment will grow to just cover the cost of the camp
Answer:
Monthly deposit= $2,625.16
Explanation:
Giving the following information:
Total cost= 2,676*3= $8,028
Monthly interest rate0 0.023/12= 0.00192
First, we need to calculate the nominal value required at the end of the third month:
PV= FV / (1 + i)^n
FV= 8,028
i= 0.00192
n= 9 months
PV= 8,028 / (1.00192^9)
PV= $7,890.6
Now, the monthly investment to reach $7,890.6:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (7,890.6*0.00192) / [(1.00192^3) - 1]
A= $2,625.16
Schnusenberg Corporation just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 0.75, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price? Do not round intermediate calculations. a. $27.80 b. $33.23 c. $31.63 d. $28.76 e. $31.95
Answer:
Option E is correct
Price of share = $31.95
Explanation:
The price of the share is the future dividend discounted at the required rate of return .
The required rate of return is the cost of equity . The cost of equity is computed as follows:
Cost of equity = Rf + β(Rm-Rf)
Rf= 4.50, Rm= 10.50, β= 0,75
Ke= 4.50% + 0.75×(10.50-4.50)
Ke= 9%
Price of share = Do×(1+g)/(Ke-g)
Price of the share = 0.75 × (1.065)/(0.09-0.065)
= 31.95
Price of share = $31.95
On January 1, Boston Enterprises issues bonds that have a $2,100,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months
Answer:
$73,500
Explanation:
Calculation to determine How much interest will Boston pay (in cash) to the bondholders every six months
Semiannual cash interest
payment =$2,100,000 × 7% × 1/2
Semiannual cash interest
payment = $73,500
Therefore How much interest will Boston pay (in cash) to the bondholders every six months is $73,500
The "liability of foreignness" is the: a. political disadvantage that U.S. firms have when doing business abroad. b. inability of most U.S. managers to truly comprehend foreign cultures. c. preference for "buying local," which always puts foreign firms at a disadvantage when competing in the U.S. market. d. risk of participating outside a firm's domestic markets in the global economy.
Answer:
d. risk of participating outside a firm's domestic markets in the global economy.
Explanation:
Trade can be defined as a process which typically involves the buying and selling of goods and services between a producer and the customers (consumers) at a specific period of time.
Globalization can be defined as the strategic process which involves the integration of various markets across the world to form a large global marketplace. Basically, globalization makes it possible for various organizations to produce goods and services that is used by consumers across the world.
The "liability of foreignness" is the risk of participating outside a firm's domestic markets in the global economy. It comprises of the costs that a business firm operating outside its home country incurs as compared with local firms operating in the same country.
Intermediate targets are Group of answer choices financial variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals. interim goals set on the way to fully achieving policy goals. targets the Fed hopes to achieve by June of each year. targets for policy goals that are of secondary importance.
Answer:
financial variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals.
Explanation:
The Federal Reserve System ( popularly referred to as the 'Fed') was created by the Federal Reserve Act, passed by the U.S Congress on the 23rd of December, 1913. The Fed began operations in 1914 and just like all central banks, the Federal Reserve is a United States government agency.
Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.
Like all central banks, the Federal Reserve is a government agency that is saddled with the following responsibilities;
I. The Fed controls the issuance of currency in United States of America: it promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.
II. It provides banking services to all the commercial banks in the country because the Federal Reserve is the "lender of last resort."
III. It regulates banking activities in the United States of America: it has the power to supervise and regulate banks.
Intermediate targets can be defined as financial and economic variables which aren't directly under the control of the Federal Reserve (central bank) but they try to use them to influence policy actions or goals within a specific period of time.
Hence, intermediate targets are financial or economic variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals.
Explain the impact of taxation on the valuation of a country's currency
Answer:
The value of a currency depends on factors that affect the economy such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, macroeconomic policies, foreign investment inflows, banking capital, commodity prices
The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): Pretax accounting income: $ 310 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 12 Depreciation expense 77 Depreciation in the tax return using MACRS: 122 The applicable tax rate is 25%. There are no other temporary or permanent differences. Franklin's taxable income ($ in millions) is:
Answer:
$277
Explanation:
Particular Amount
Pre-Tax Accounting Income $310
Adjustments
Add: Overweight Fines $12
Add: Depreciation Expenses $77
Less: Depreciation as per tax return $122
Taxable Income $277
Therefore, Franklin's taxable income is $277.
Normally you will see US Labor Productivity Increasing at an annual rate of around 6%. In reading the book you should see that it must continue to increase for our country to continue to have the standard of living that we do. What seemed odd to me was that in the 3rd Quarter of 2009, while our country is in the midst of a very deep recession, this number went to 14.8%. In the 4th Quarter it dropped to 6.4% and in the 1st Quarter of this year it was at 2.5%. Why the Big Spike in the 3rd Quarter of 2009
Answer: c) Employees are fearful of losing their jobs, so they are working harder and complaining less.
Explanation:
Research has shown that during periods of recession, people tend to work harder than they do before the recession which has the effect of boosting productivity levels during that period.
The simply reason for this is, fear. In a recession, businesses come under a lot of pressure to reduce their workforce in order to save costs which leads to a rise in unemployment. Workers that are laid off are usually the unproductive ones so workers begin to put in more work during this time so that they do not get laid off.
Qu. 10-150 (Algo) Majer Corporation makes a product with ... Majer Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.4 ounces $ 2.00 per ounce $ 12.80 Direct labor 0.5 hours $ 15.00 per hour $ 7.50 Variable overhead 0.5 hours $ 2.00 per hour $ 1.00 The company reported the following results concerning this product in February. Originally budgeted output 5,100 units Actual output 6,000 units Raw materials used in production 33,400 ounces Actual direct labor-hours 1,860 hours Purchases of raw materials 35,800 ounces Actual price of raw materials $ 47.10 per ounce Actual direct labor rate $ 37.60 per hour Actual variable overhead rate $ 5.60 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for February is:
Answer:
Direct material quantity variance= $10,000 favorable
Explanation:
Giving the following information:
Standard Direct materials 6.4 ounces $ 2.00 per ounce.
Actual output 6,000 units
Raw materials used in production 33,400 ounces
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (6.4*6,000 - 33,400)*2
Direct material quantity variance= (38,400 - 33,400)*2
Direct material quantity variance= $10,000 favorable
Concord Corporation manufactures a product with a unit variable cost of $100 and a unit sales price of $181. Fixed manufacturing costs were $480000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 1000 units at $125 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
a. Income would increase by $23000.
b. Income would increase by $125000.
c. Income would decrease by $23000.
d. Income would increase by $25000.
Answer:
d. Income would increase by $25000.
Explanation:
Concord Corporation received a special order to sell 1,000 units at $125 each.
Incremental Sales Revenue = 1,000 * $125
Incremental Sales Revenue = $125,000
Variable Cost per unit = $100
Fixed manufacturing cost = $480,000
To produce required additional units, there will be no change in fixed manufacturing costs. So, cost to produce additional units will change on account of variable manufacturing cost only.
Incremental Cost = $100 * 1,000
Incremental Cost = $100,000
Incremental Net Income = Incremental Sales Revenue - Incremental Cost
Incremental Net Income = $125,000 - $100,000
Incremental Net Income = $25,000