Answer:
55.17 %
Explanation:
We use the Market Values of Sources of Capital to determine their Weight in Capital Structure.
Weight of the debt = Market Value of Debt / Total Market Value x 100
where,
Market Value of Debt = 950 x $1,000 x 106% = $1,007,000
Market Value of Common Stock = 6,600 x $89 = $587,400
Market Value of Preferred Stock = 5,500 x $42 = $231,000
therefore,
Weight of the debt = $1,007,000 / $1,825,400 x 100
= 55.17 %
thus,
The capital structure weight of the debt is 55.17 %
Your firm has a contract to build one custom-designed machine that costs $100,000,000. This machine will operate at a paper recycling plant. It will take 1,000,000 pieces of paper per day, shred them into tiny fragments, grind them into paper dust, and create pulp used to make recycled paper envelopes. You need a gear motor to run at 10 horsepower with an output speed of 10 RPM. Your other option is buy a 10 horsepower, 1750 RPM motor, and design your own transmission system to reduce the speed to 10 RPM. Your firm has 10 engineers, and 2 of them would work full-time for six months to get the transmission system designed and built. The purchased gear motor would cost $10,000 and the purchase motor would cost $3,000. The transmission parts would cost another $3,000, saving you $4,000. Time is of the essence. You have only 6 months to design and build your machine.
Which makes more sense to you, buy the gear motor, or buy an AC motor and design and build your own gear transmission system?
Answer:
Buy the gear motor
Explanation:
Given that form the question Time is very important factor to be considered hence it will make more sense to buy the gear motor rather than buying the an AC motor because you cannot rely on the two engineers working fulltime for 6 months because of the factor of uncertainty which might lead to delay in shipment . also the difference in cost is not much compared to the value of the contract ( $1 billion )
Cost of Gear motor = $10,000
cost of AC motor = $3000 + $3000 = $6000
If the financial markets are strong form efficient, then: Question 22 options: 1) only the most talented analysts can consistently outperform the market. 2) technical analysis provides the best tool to use to gain a marketplace advantage. 3) only individuals with private information have a marketplace advantage. 4) no one individual has an advantage in the marketplace.
Answer:
4) no one individual has an advantage in the marketplace.
Explanation:
Strong form efficiency in a market is defined as a situation where prices are already influenced by public and insider information.
No one person or group have an advantage as a result of insider information.
So they can't predict future price movements accurately.
Price is a function of market forces. Fundamental and technical analysis cannot be used as prediction tools.
In this situation no one individual has an advantage in the marketplace.
Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2015 and 2014 are provided below.
BALANCE SHEETS
12/31/2015 12/31/2014
Cash $ 306,000 $ 144,000
Short-term Investment $0 $ 264,000
Accounts receivable 270,000 162,000
Inventory 288,000 360,000
Property, plant and equipment $ 456,000 $ 408,000
Less accumulated depreciation (240,000) (180,000)
$1,080,000 $1,158,000
Accounts payable $ 132,000 $ 72,000
Accrued liabilities 264,000 294,000
Bonds payable 270,000 450,000
Common stock 162,000 162,000
Retained earnings 252,000 180,000
$1,080,000 $1,158,000
INCOME STATEMENT
For the Year Ended December 31, 2015
Sales revenue $ 6,300,000
Cost of sales 5,328,000
Gross profit 972,000
Selling and administrative expenses 648,000
Income from operations 324,000
Less: Loss on sale of investments 36,000
Income before taxes 288,000
Income tax expense 72,000
Net income $216,000
The following additional data were provided:
1. Cash dividends for the year 2015 were $144,000.
2. During the year, no plant assets are sold. All new plant assets are purchased by cash.
3. All depreciation expense is included in the selling expense category.
Prepare a complete statement of cash flows for the year ended Dec. 31, 2015 using indirect method.
Answer:
Harlan Mining Co.
Statement of Cash Flows for the year ended December 31, 2015
Operating activities:
Net income $216,000
Add non-cash expenses:
Loss on sale of investments 36,000
Depreciation on equipment 60,000
Changes in working capital:
Accounts receivable -108,000
Inventory 72,000
Accounts payable 60,000
Accrued liabilities -30,000
Net cash from operations $306,000
Investing activities:
Short-term Investment $228,000
Property, plant and equipment -48,000
Net cash from investments $180,000
Financing activities;
Bonds payable repaid -$180,000
Cash dividends paid -144,000
Net cash from financing -$324,000
Net cash inflows $162,000
Explanation:
a) Data and Calculations:
Financial statements of Harlan Mining Co. for 2015 and 2014 are provided below.
BALANCE SHEETS
12/31/2015 12/31/2014 Change
Cash $ 306,000 $ 144,000 +$162,000
Short-term Investment $0 $ 264,000 -$264,000
Accounts receivable 270,000 162,000 +108,000
Inventory 288,000 360,000 -72,000
Property, plant and equipment $ 456,000 $ 408,000 +48,000
Less accumulated depreciation (240,000) (180,000) (60,000)
$1,080,000 $1,158,000
Accounts payable $ 132,000 $ 72,000 +$60,000
Accrued liabilities 264,000 294,000 -30,000
Bonds payable 270,000 450,000 -180,000
Common stock 162,000 162,000 0
Retained earnings 252,000 180,000
$1,080,000 $1,158,000
INCOME STATEMENT
For the Year Ended December 31, 2015
Sales revenue $ 6,300,000
Cost of sales 5,328,000
Gross profit 972,000
Selling and administrative expenses 648,000
Income from operations 324,000
Less: Loss on sale of investments 36,000
Income before taxes 288,000
Income tax expense 72,000
Net income $216,000
Additional data:
1. Cash dividends for the year 2015 $144,000
2. During the year, no plant assets are sold. All new plant assets are purchased by cash.
3. All depreciation expense is included in the selling expense category.
In the essay entitled, "Nature's Entrepreneurs" Professor Terry Anderson points out that private businesses have every incentive to enhance environmental quality on their own property (under the right rules). He uses the example of International Paper Corporation. Explain their actions as outlined in Anderson's essay. (approximately 8 sentences).
On January 1, 2016, Hage Corporation granted incentive stock options to purchase 21,500 of its common shares at $10 each. The options are exercisable after one year. The market price of common averaged $11 per share during the quarter ending on March 31, 2016. There was no change in the 150,000 shares of outstanding common stock during the quarter ended March 31, 2016. Net income for the quarter was $8,618. The number of shares to be used in computing diluted earnings per share for the quarter is (Round your final answer to whole number.): -
a. 171,500.
b. 150,000.
c. 151,955.
d. 169,545.
Answer:
c. 151,955
Explanation:
Calculation to determine what The number of shares to be used in computing diluted earnings per share for the quarter is
First step is to calculate the amount assumed to be exercised
Exercised amount= 21,500*$10 / $11 avg
Exercised amount=$l215,000/11 avg
Exercised amount= 19,545
Second step is to calculate the Net
Net=21,500-19,545
Net= 1,955
Now let calculate The number of shares to be used in computing diluted earnings per share
Using this formula
Number of shares=Outstanding+Net
Let plug in the formula
Number of shares=150,000 +1,955
Number of shares= 151,955
*diluted eps=$8,618 /151,955
Therefore The number of shares to be used in computing diluted earnings per share for the quarter is: 151,955
Visited, Not Yet Judged 3.Not Answered 4.Not Answered 5.Not Answered 6.Not Answered 7.Not Answered 8.Not Answered 9.Not Answered 10.Not Answered Question Workspace Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 130.5 million yen, when the exchange rate was 140.0 yen per dollar. In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars
Answer:
DeGraw Corporation
The dollar amount that DeGraw would actually receive after it exchanged yen for U.S. dollars is:
= $845,207
Explanation:
a) Data and Calculations:
Japanese Yen U.S. Dollar
Price Price
Sale of a solar heating station 130.5 million $932,143.86 (130.5m/140 yen)
Payment in 6 months' time 130.5 million $845,207.25 (130.5m/154.4 yen)
b) When the yen fell against the dollar from 140 yen to 154.4 yen, the dollar amount that DeGraw would receive reduced from $932,143 to $845,207.25. This is a loss of $86,935.61 due to exchange rate fluctuations.
7. Which of the following is NOT a function of money * 3 points A Unit of account B Store of value C Protection against inflation D Medium of exchange
Answer:
C Protection against inflation
Explanation:
As we know that there are three functions of money i.e.
1. Unit of account
2. Store of value
3. Medium of exchange
There is only 3 functions of money that are shown above
So the protection against inflation would not be considered for the same
And, these 3 would represent the functions of money and can be treated as the unit of account, store of value and the medium of exchange
Hence, the option c is correct
Cash receipts and cash disbursement budgets for a government: Should be prepared monthly or as needed to enhance cash management, investment management, and short-term debt management. Should be prepared for all funds for the entire fiscal year. Should be prepared for only those funds for which appropriations budgets are not required by law. Should be prepared for only those funds for which appropriations budgets are required by law to be prepared on the accrual basis or the modified accrual basis.
Answer:
Should be prepared monthly or as needed to enhance cash management, investment management, and short-term debt management.
Explanation:
The government budget with respect to the cash receipts and cash disbursement should be prepared on the monthly basis or it should be prepared as per the requirement so that the managing of the cash could be enhanced also along with it the managing of the investing and managing of the short term debt could also be enhances
Therefore the first option is correct
Describe the purpose of the balance sheet and understand its usefulness and limitations
Answer:
The description of the given question is described in the segment below.
Explanation:
Purpose of the balance sheet:
The objective of something like the balance sheet as well as accounting records would be to disclose a company's financial situation across a certain date.Usefulness and limitation:
Everything just provides a picture somewhere after some kind of organization's financial statement of its investments, future or taxation liabilities as well as equities.Beacon Company is considering automating its production facility. The initial investment in automation would be $15 million, and the equipment has a useful life of 10 years with a residual value of $500,000. The company will use straight-line depreciation. Beacon could expect a production increase of 40,000 units per year and a reduction of 20 percent in the labor cost per unit.
Determine the project's accounting rate of return. (Round your answer to 2 decimal places.)
Accounting Rate of Return____________
Determine the project's payback period. (Round your answer to 2 decimal places.)
Payback Period _______________years
Using a discount rate of 15 percent, calculate the net present value (NPV) of the proposed investment. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign.)
Net Present Value ______________
Recalculate the NPV using a 10% discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign.)
Net Present Value_________
Question Completion:
Current Proposed
no automation with automation
Production and Sales Volume 80,000 units 120,000 units
Per unit Per unit
Sales revenue $90 $7,200,000 $90 $10,800,000
Variable costs
Direct materials 18 18
Direct labor 25 20
Variable overhead 10 10
Total variable costs 53 48
Contribution per unit $37 2,960,000 $42 5,040,000
Fixed costs 1,250,000 2,350,000
Net operating income $1,710,000 $2,690,000
Answer:
Beacon Company
a. The project's accounting rate of return = Net operating income/Initial investment * 100
= $2,690,000/$15,000,000 * 100
= 17.93%
b. The project's payback period =
Initial investment/Net Annual Cash inflow
= $15,000,000/$4,140,000
= 3.62 years
c. NPV (PV factor at 15% for 10 years)
Cash flows Amount PV factor PV
Cash outflows = $15,000,000 1 -$15,000,000
Cash inflows = 4,140,000 5.019 20,778,660
Salvage value 500,000 0.247 123,500
NPV = $5,902,160
c. NPV (PV factor at 10% for 10 years)
Cash flows Amount PV factor PV
Cash outflows = $15,000,000 1 -$15,000,000
Cash inflows = 4,140,000 6.145 25,440,300
Salvage value 500,000 0.386 193,000
NPV = $10,633,300
Explanation:
a) Data and Calculations:
Initial investment cost of production facility = $15 million
Estimated useful life of equipment = 10 years
Residual value = $500,000
Annual depreciation expense = $1,450,000 ($15m - $500,000)/10
Net Annual Cash inflows = Net operating income + Depreciation
= $2,690,000 + $1,450,000 = $4,140,000
Consider how you might use visual aids to explain each of the following:
a. How to stretch before and after exercise.
b. The proportion of the electorate that votes in major national elections in the United States, France, Germany, England, and Japan, respectively.
c. Where to obtain information about student loans.
d. The wing patterns of various species of butterflies.
e. The decrease in the amount of money spent by public schools on arts education since 2005.
f. How to play the ukulele.
g. The basic equipment and techniques of rock climbing.
Answer:
There are various kinds of visual aids. Namely:
PowerPoint PresentationWhiteboardsHandoutsVideo clipsPostersProduct, objects or artifactsExplanation:
a. How to stretch before and after excercise is best exemplified using video clips. The activity involves motion. Whiteboards or PowerPoint presentations or the others may attempt to describe how to bend over, however, a video tutorial showing what should be done needs little nor no explanation;
b. The proportion of the electorate that votes in major national elections in the United States, France, Germany, England, and Japan, respectively.
When it comes to comparing proportions, figures, numbers, statistics, PowerPoint presentations do more justice than any other visual aid listed above. It is equipped with a plethora of tools that help to express relationships between different kinds of data in a very clear and easy-to-understand manner.
c. Student Loans and where one can get them can be advertised using Handouts, and Posters as these are intended to reach more audiences by their very nature. Video clips work as well and even much more depending on where it is being published.
d. the wing patterns of various species of butterflies: Pictures arranged in sequence can be edited on to PowerPoint, WhiteBoard animation works excellently well too as it combines visuals with audio narrations in an animated format to explain what is being shown
e. Just in B, a decrease in the amount of money spent by public universities on arts since 2005 is an expression of the various relationships between factors and figures. The best visual aid for this is PowerPoint and Animated WhiteBoard
f. When it comes to demonstrating to a live audience how to do something complicated, video clips is the best visual aid that can be used
g. answer for f above applies to g as well.
Cheers
Assume that Solo Company commenced operations on January 1, 2006, and it was granted permission to use the same depreciation calculations for shareholder reporting and income tax purposes. The company planned to depreciate its fixed assets over 15 years, but in December 2006 management realized that the assets would last for only 10 years. Solo's accountants plan to report the 2006 financial statements based on this new information. How would the new depreciation assumption affect the company's financial statements
Answer: c. The firm's cash position in 2006 and 2007 would increase.
Explanation:
Depreciation expense is heavily dependent on the useful life of the asset. The longer the useful life, the smaller the depreciation expense because the equipment is being depreciated over a longer period.
If the useful life is reduced from 15 to 10 years therefore, the depreciation expense would increase.
The Cash position of a company is calculated by adding back the depreciation to the Net income after taxes are paid because depreciation is not a cash expense.
If the depreciation is now larger (which it is) and is added back to the Net income, the cash position will therefore increase.
On May 3, 2020, Cheyenne Company consigned 90 freezers, costing $480 each, to Remmers Company. The cost of shipping the freezers amounted to $850 and was paid by Cheyenne Company. On December 30, 2020, a report was received from the consignee, indicating that 45 freezers had been sold for $780 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $210, and total installation costs of $330 on the freezers sold.
(Round answers to 0 decimal places, e.g. 5,275.)
(a) Compute the inventory value of the units unsold in the hands of the consignee.
Inventory value
$enter the inventory value in dollars
(b) Compute the profit for the consignor for the units sold.
Profit on consignment sales
$enter the profit on consignment sales in dollars
(c) Compute the amount of cash that will be remitted by the consignee.
Remittance from consignee
Answer and Explanation:
The computation is shown below;
a.
Inventory Unsold in Hand (90-45) 45
Unit cost Unsold (45 × 480) $21,600.00
Shipping cost on Unit Unsold (850 ÷ 90 × 45) $425.00
Value of Inventory (21600 + 425) $22,025.00
b.
Sale value (45 × 780) $35,100.00
Less: Cost
Unit cost Sold (21600+425) -$22,025.00
Comission of Consignee (35,100 × 6%) -$2,106.00
Advertising cost -$210.00
Installation cost -$330.00
Net Profit $10,429.00
c.
Sale value (45 × 780) $35,100.00
Less: deduction made by consignee
Comission of Consignee (35100 × 6%) -$2,106.00
Advertising cost -$210.00
Installation cost -$330.00
Net Remittance made by consignee $32,454.00
Kent Manufacturing produces a product that sells for $120.00. Fixed costs are $179,400 and variable costs are $36.00 per unit. Kent can buy a new production machine that will increase fixed costs by $12,480 per year, but will decrease variable costs by $9.60 per unit. Compute the revised break-even point in dollars with the purchase of the new machine.
Answer:
$246,000
Explanation:
Break even point is computed as
= Fixed costs ÷ Contribution margin
With the purchase of a new production machine, total fixed costs would increase by $12,480.
New total fixed costs = $179,400 + $12,480 = $191,880
New Contribution margin = Sales price per unit - Variable cost per unit
= [$120 - ($36 - $9.6)]
= $120 - $26.4
= $93.6
New break even point in unit of output = $191,880 ÷ $93.6
= 2,050 units
Therefore,
New break even (dollars) = 2,050 × $120 = $246,000
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month. The cash flows from each of the businesses has approximately the same amount of risk. The business names, square footage requirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
Answer:
I would like to lease spaces to the following businesses:
Square Feet Expected Monthly
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
They have the highest monthly expected cash flows to be able to pay the monthly rent. Another reason is that the variable part of the rent depends on each business's monthly gross sales. The higher the gross sales, the higher the rent. They also require the highest square space on which the fixed element of the rent depends.
Explanation:
a) Data and Calculations:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 $70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
Space available for leasing = 15,000 square feet
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
At 60,000 machine hours, Boris Company static budget for variable overhead costs is $180,000. At 60,000 machine hours, the company's static budget for fixed overhead costs is $300,000. Machine hours are the cost driver of all overhead costs. The static budget is based on 60,000 machine hours. At 60,000 machine hours, the company produces 40,000 units. The following data is available:
Actual units produced and sold 42,000
Actual machine hours 64,000
Actual variable overhead costs $185,600
Actual fixed overhead costs $302,400
What is the fixed overhead spending variance?
A) $2,400 Favorable
B) $2,400 Unfavorable
C) $1,000 Unfavorable
D) $1,000 Favorable
Answer:
$2,400 unfavorable
Explanation:
The computation of the fixed overhead spending variance is shown below;
We know that
fixed overhead spending variance = actual fixed overhead - budgeted fixed overhead
= $302,400 - $300,000
= $2,400 unfavorable
As actual fixed overhead is more than the standard fixed overhead so it should be unfavorable else it is favorable
Carmel Corporation is considering the purchase of a machine costing $52,000 with a 4-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average inv
Answer:
$26,000
Explanation:
Average investment = (Initial investment + Salvage value) / 2
Average investment = ($52,000 + $0) / 2
Average investment = $52,000 / 2
Average investment = $26,000
So, Carmel's average investment is $26,000.
Aardvark Enterprises has agreed to be acquired by Lawson Products in exchange for $16,000 worth of Lawson Products stock. Lawson has 1,100 shares of stock outstanding at a price of $15 a share. Aardvark has 1,700 shares outstanding with a market value of $21 a share. The incremental value of the acquisition is $3,800. What is the value of Lawson Products after the merger? $51,520 $41,440 $56,000 $49,280 $44,800
Answer: $56000
Explanation:
The value of Lawson Products after the merger will be calculated thus:
Number of shares = 1100
Price of share = $15
Value of Lawson share = $16500
Number of shares = 1700
Price of share = $21
Value of Aardvark share = $35700
Market value of both firms will be:
= $16500 + $35700
= $52200
We then less incremental earnings from the market value and this will be:
= $52200 + $3800
= $56000
Therefore, the value of Lawson Products after the merger is $56000
The EPBO for a particular employee on January 1, 2018, was $30,000. The APBO at the beginning of the year was $6,000. The appropriate discount rate for this postretirement plan is 5%. The employee is expected to serve the company for a total of 25 years with 5 of those years already served as of January 1, 2018. What is the APBO at December 31, 2018? Group of answer choices $7,200. $6,300. $7,560. $7,500.
Answer:
$7,560
Explanation:
Calculation to determine APBO at December 31, 2018.
Using this formula
December 31 APBO=(Beginning EPBO*Discount rate)*6/25
Let plug in the formula
December 31 APBO=($30,000 * 1.05) * 6/25
December 31 APBO= $7,560
Therefore APBO at December 31, 2018 is $7,560
Buffalo BBQ Restaurant is trying to become more efficient in training its chefs. It is experimenting with two training programs aimed at this objective. Both programs have basic and advanced training modules. The restaurant has provided the following data regarding the two programs after two weeks of implementation:
Training Program A Training Program B
New chef # 1 2 3 4 5 6 7 8 9 10
Hours of basic training 22 24 28 21 23 25 24 29 31 28
Hours of advanced training 8 7 8 10 11 4 3 0 1 2
Number of chef mistakes 12 13 15 14 14 7 6 8 5 6
a. Compute the following performance metrics for each program:
(1) Average hours of employee training per chef, rounded to one decimal place.
(2) Average number of mistakes per chef, rounded to one decimal place.
b. Which program should the restaurant implement moving forward?
Answer: See explanation
Explanation:
(1) Average hours of employee training per chef.
Program A:
Hours of basic training = 22 + 24 + 28 + 21 + 23 = 118
Hours of advanced training = 8 + 7 + 8 + 10 + 11 = 44
Total hours of training = 118 + 44 = 162
Number of chefs in A = 5
Average hours of employee training per chef in A = 162/5 = 32.4
Average hours of employee training per chef for Program B
Hours of basic training = 25 + 24 + 29 + 31 + 28 = 137
Hours of advanced training = 4 + 3 + 0 + 1 + 2 = 10
Total hours of training = 137 + 10 = 147
Number of chefs in B = 5
Average hours of employee training per chef in B = 147/5 = 29.4
(2) Average number of mistakes per chef for Program A:
Number of chefs mistake = 12 + 13 + 15 + 14 + 14 = 68
Number of chefs = 5
Average number of mistakes per chef for Program A: = 68/5 = 13.6
Average number of mistakes per chef for Program B
Number of chefs mistake = 7 + 6 + 8 + 5 + 6 = 32
Number of chefs = 5
Average number of mistakes per chef for Program B: = 32/5 = 6.4
b. Which program should the restaurant implement moving forward?
The restaurant should Implement program B because less training is required and less mistakes are made.
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following results for the past year:
Sales $750,000
Net operating income $15,000
Average operating assets $100,000
Required:
Compute the Fitness Fanatics’s return on investment (ROI).
Answer:
The Fitness Fanatics’s return on investment (ROI) is 15%.
Explanation:
Return on investment (ROI) can be computed as the ratio of the net operating income to average operating assets as expressed in percentage as follows:
ROI = Net operating income / Average operating assets .............. (1)
Where, for Fitness Fanatics, we have:
Net operating income = $15,000
Average operating assets = $100,000
Substituting this into equation (1), we have:
ROI = $15,000 / $100,000 = 0.15, or 15%
Therefore, the Fitness Fanatics’s return on investment (ROI) is 15%.
Saginaw Steel Corporation has a precredit U.S. tax of $105,000 on $500,000 of taxable income in 2018. Saginaw has $200,000 of foreign source taxable income and paid $60,000 of income taxes to the German government on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. Saginaw's foreign tax credit on its 2018 tax return will be:
Answer: $42000
Explanation:
Saginaw's foreign tax credit on its 2018 tax return will be calculated thus:
= Foreign source taxable income × precredit U.S tax/Taxable income
= 200000 × 105000/500000
= 200000 × 0.21
= 42000
Therefore, the foreign tax credit will be the least between $60,000 paid to the German government or $42000. In this case, the answer is $42000
Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $28,500, and Harold expects to spend about $700 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $11,300. Alternatively, Harold could lease the same vehicle for five years at a cost of $3,705 per year, including maintenance. Assume a discount rate of 10 percent.
Requirement:
1. Calculate the net present value of Harold’s options. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your final answers to 2 decimal places.
2. Advise Harold about which option he should choose.
Lease Option
Purchase Option
Answer:
$-24,137.14
$-14,044.86
He should choose the lease option
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Purchase option
Cash flow in year 0 = $-28,500
Cash flow in year 1 - 4 = -700
Cash flow in year 2 = 11,300 - 700 = 10,600
I = 10%
NPV= -24,137.14
Lease option
Cash flow in year 1 - 5 = 3705
I = 10%
NPV= -14,044.86
the lease option is less expensive and should be chosen
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Holbrook, a calendar year S corporation, distributes $89,500 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $107,400, Holbrook's AAA balance is $40,275, and Holbrook has $13,425 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $89,500 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0".
Distribution from Account Affect on Stock Basis Balance after Distribution
From AAA Account $8000 $8000 $0
From AEP Account $2500 $0 $0
From Cody's stock basis $ $ $
Answer:
Explanation:
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The nine-cell attractiveness-strength matrix provides clear, strong logic for Group of answer choices using both industry attractiveness and business strength measurements in allocating resources and investment capital to a corporation's different businesses. measuring only business strength in allocating resources and investment capital to the different businesses. using both resource fit and product strength measurements in allocating resources and investment capital to its different businesses. concentrating resources in only those business units that are destined for squeezing out the maximum cash flows. concentrating resources to bolster unattractive and competitively weak performers in the corporate portfolio.
Answer:
using both industry attractiveness and business strength measurements in allocating resources and investment capital to a corporation's different businesses.
Explanation:
A nine-cell matrix can be defined as a strategic framework that provides a systematic approach used multi-business corporations to set priority on their investments among the different business units. Thus, it offers strategic implications of an investment by evaluating business portfolios, which are mainly based on business strength and market attractiveness.
Furthermore, the nine-cell industry attractiveness competitive strength matrix is a strategic framework adopted by individuals or managers in order to assist them in deciding which businesses should have low, average, and high priorities in deploying corporate resources.
Hence, the nine-cell attractiveness-strength matrix provides clear, strong logic for using both industry (market) attractiveness and business strength measurements in allocating corporate resources and investment capital to the different businesses owned by a corporation.
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $510,000 at face value.
Sep. 1 Acquired $1,230,000 of American Instruments' 10% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $590,000.
Nov. 1 Purchased $1,950,000 of M&D Corporation 6% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:
American Instruments bonds$1,181,000
M&D Corporation bonds$2,021,000
(Hint: Interest must be accrued.)
Required:
Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
Answer:
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Explanation:
Preparation of the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
(8%/2*$510,000)
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
($590,000-$510,000)
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
($1,230,000 x 10% x 4/12)
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
($1,950,000* 6% x 2/12)
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Available for sale securities Cost Fair market Value Profit/Loss
M & D Corporation shares
$1,950,000 $2,021,000 $ -71,000
American Instruments bonds $1,230,000 $1,181,000 $49,000
Totals $3,180,000 $3,202,000 $22,000
Chicken Can has net sales revenue of $1,420,000, cost of goods sold of $761,700, and all other expenses of $307,000. The beginning balance of stockholders' equity is $417,000 and the beginning balance of fixed assets is $378,000. The ending balance of stockholders' equity is $617,000 and the ending balance of fixed assets is $406,000. The fixed asset turnover ratio is closest to:
Answer:
The fixed asset turnover ratio is closest to 3.62.
Explanation:
The fixed asset turnover ratio can be calculated using the following formula:
Fixed asset turnover ratio = Net sales revenue / Average fixed assets …….. (1)
Where:
Net sales revenue = $1,420,000
Average fixed assets = (Beginning balance of fixed assets + Ending balance of fixed assets) / 2 = ($378,000 + $406,000) / 2 = $392,000
Substituting the values into equation (1), we have:
Fixed asset turnover ratio = $1,420,000 / $392,000 = 3.62
Therefore, the fixed asset turnover ratio is closest to 3.62.
Would you rather be able to scream as loud as you want in your house without getting in trouble or would you rather be able to break stuff in anger without getting punished?
I would pick scream as loud as I want in my house without getting punished because I never get to scream.
At the beginning of the current year, Max Corp. granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $12 per share on the grant date. Ignoring taxes, what is the effect on earnings(net income) in the current year after the shares are granted to executives
Answer:
$90 million
Explanation:
Calculation to determine the effect on earnings (net income) in the current year after the shares are granted to executives
First step is to calculate the fair value of shares represented by RSUs
Using this formula
Fair value of shares represented by RSUs=Fair value per share*Shares represented by RSUs shares granted
Let plug in the formula
Fair value of shares represented by RSUs=$12 *30 million
Fair value of shares represented by RSUs=$360 million
Now let calculate the Effect on earnings
Using this formula
Effect on earnings=Fair value of shares represented by RSUs/Vesting period
Let plug in the formula
Effect on earnings=$360 million/4 years
Effect on earnings=$90 million
Therefore the effect on earnings (net income) in the current year after the shares are granted to executives is $90 million
If the demand for labor falls from D to D' and wages are sticky on the downward side, there will be unemployment of ________ million. a. 75 b. 100 c. 25 d. None of the above
Answer:
There will be unemployment of 100 million. The correct option is b. 100.
Explanation:
Note: This question is not complete because the graph is not attached. The graph is therefore provided before answering the question. See the attached photo for the graph.
From the attached graph, we have:
Equilibrium units of labor at D = 300 million
Equilibrium units of labor at D’ = 200 million
Employment If the demand for labor falls from D to D' = Equilibrium units of labor at D’ - Equilibrium units of labor at D = 300 million - 200 million = 100 million
Therefore, there will be unemployment of 100 million. The correct option is b. 100.