Answer:
B. No, because for any bonus offered, the worker will claim to have exerted high effort.
Explanation:
This question required some basic reasoning about how human beings function. We all like to receive things from others, and if they are free (or without cost or effort) the more we like them. And we all believe that good things should happen to us and that we are entitled to receive good things. That is the basic reason why jealousy and envy exist.
Now, back to our case. If the company simply hands out bonuses to everyone regardless of their personal effort, every single worker will be convinced that they really deserve the bonus. Even if the worker didn't even try to do his best or didn't do anything right at all, he/she will be convinced that they deserve the bonus. Each and every single worker will claim that the reason they are receiving the bonus is due to their work. Everyone will say that they worked hard and their work was good.
Imagine this happened at school. One day, the teacher decides to give As to half the class in alphabetical order (or any other random way). The half that got the As will believe that they deserved the As while the other half will be very unhappy. If everyone got As, then everyone will be convinced that thy got As because they deserved them.
Cinnamon Buns Co. (CBC) started 2018 with $52,600 of merchandise on hand. During 2018, $297,000 in merchandise was purchased on account with credit terms of 3/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,400. Merchandise with an invoice amount of $2,100 was returned for credit. Cost of goods sold for the year was $309,000. CBC uses a perpetual inventory system. Assuming CBC uses the gross method to record purchases, ending inventory would be:
Answer:
$39,053
Explanation:
The computation of the ending inventory is shown below:
Beginning inventory $52,600
Add: Inventory purchased $297,000
Add: Freight in $9,400
Less: Merchandise returned -$2,100
Less: Discounts -$8,847 ($297,000 - $2,100) × 3%
Less: Cost of goods sold -$309,000
Ending inventory $39,053
Hence, the ending inventory using the gross method is $39,053
atton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Patton Company should debit its Debt Investments account for the Scott Company bonds by__________ and credit its Interest Revenue account by __________.
Answer:
Patton Company should debit its Debt Investments account for the Scott Company bonds by $2,571 and credit its Interest Revenue account by $155,283
Explanation:
On July 1 2021, Patton Company should increase its Debt Investments account for the Scott Company bonds by =
Amount of discount amortized = Interest revenue - Interest received
= ($1,410,375 × 11% × 6/12) - ($1,500,000 × 10% × 6/12)
= $77,571 - $75,000
= $2,571
Interest revenue on 31 December 2021 = ($1,410,375 + $2,571) × 11% × 6/12
= $77,712
For the year ended December 31, 2021, Patton Company should report interest revenue from the Scott Company bonds of = $77,571 + $77,712 = $155,283
Assume that the full-employment level of output is $5000 billion and the natural unemployment rate is 5%. Suppose the current unemployment rate is 8%. What would be the current level of output according to Okun's law (when the Okun's law coefficient is 2)?
Answer:
$4700 Billion
Explanation:
Solution
Given that:
Assume that full-employment level of output is =$5000 billion
Natural employment rate is =5%
Current unemployment rate = 8%
Now,
We find the current level of output according to Okun's law when the Okun's law coefficient is 2 which is given below:
2 (unemployment rate -natural unemployment) = potential GDP - actual GDP/potential GDP *100% this is known as the Okun's law
Thus
2( 8 - 5 ) = 5000 - actual GDP / 5000 * 100
or (6 * 5000 ) / 100 = 5000 - actual GDP = $4700 Billion
or
300 = 5000 - actual GDP
Hence, the actual GDP or current output = 5000 - 300 = 4700 $ billion
Erosion can best be explained as the:
A. loss of current sales due to a new project being implemented.
B. loss of revenue due to employee theft.
C. additional income generated from the sales of a newly added product.
D. loss of revenue due to customer theft.
Answer:
A. loss of current sales due to a new project being implemented.
Explanation:
In business, erosion takes place when a new product or project competes with another product or project from the came company. This "internal" competition reduces the revenues and benefits from existing products or projects. It is basically a form of business cannibalization, where the left arm takes away from the right arm. E.g. newer smartphone models decrease the sales revenue from existing (older) models.
Waterway Enterprises reported cost of goods sold for 2020 of $1,385,600 and retained earnings of $5,415,900 at December 31, 2020. Waterway later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $103,320 and $38,040, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.
Answer:
b. Corrected 2020 cost of goods sold = $ 1,320,320.
b. Corrected retained earnings = $5,377,860.
Explanation:
a. Determine the corrected amounts for 2020 cost of goods sold
An overstatement of the beginning inventory has to be deducted from the reported cost of good sold since the amount of the overstatement was added to the cost of goods sold initially.
On the other hand, an overstatement of the ending inventory has to be added to the reported cost of good sold since the amount of the overstatement was deducted to the cost of goods sold initially.
Therefor, we have:
Corrected 2020 cost of goods sold = $1,385,600 - $103,320 + $38,040 = $ 1,320,320.
b. Determine the corrected amounts for December 31, 2020, retained earnings
In this case, the amount of overstatement of the ending inventory has to be deducted from the reported retained earning since the retained earning was initially overstated by that amount.
Therefore, we have:
Corrected retained earnings = $5,415,900 - $38,040 = $5,377,860
An investor enters into a 2-year swap agreement to purchase crude oil at $51.25 per barrel. Soon after the swap is created, forward prices rise and the new 2-year swap price is $61.50. If interest rates are 1% and 2% on 1- and 2-year zero coupon government bonds, respectively, what is the gain or loss to be made from unwrapping the original swap agreement?
Answer:
The present Value of Annual Gain for two years made from unwrapping the original swap agreement is $20.00
Explanation:
From the given information;
The annual gain from swap agreements = $61.50 - $51.25
The annual gain from swap agreements = $10.25
Annual rate for the first year = 1% = 0.01
Annual rate for the second year = 2% = 0.02
However the present gain for the first year will be;
[tex]= \dfrac{Annual \ Gain}{(1+r_1)^1}[/tex]
[tex]= \dfrac{10.25}{(1+0.01)^1}[/tex]
= 10.14851485
The present gain for the second year will be;
[tex]= \dfrac{Annual \ Gain}{(1+r_2)^2}[/tex]
[tex]= \dfrac{10.25}{(1+0.02)^2}[/tex]
= 9.851980008
The present Value of Annual Gain for two years is:
[tex]= \dfrac{Annual \ Gain}{(1+r_1)^1} + \dfrac{Annual \ Gain}{(1+r_2)^2}[/tex]
= 10.14851485 + 9.851980008
= 20.00049486
≅ $ 20.00
The present Value of Annual Gain for two years is $20.00
Gloria Rose works at College of Austin and is paid $ 30 per hour for a 40-hour workweek and time-and-a-half for hours above 40. LOADING...(Click the icon to view payroll tax rate information.) Requirements 1. Compute Rose's gross pay for working 60 hours during the first week of February. 2. Rose is single, and her income tax withholding is 20 % of total pay. Rose's only payroll deductions are payroll taxes. Compute Rose's net (take-home) pay for the week. Assume Rose's earnings to date are less than the OASDI limit. 3. Journalize the accrual of salaries and wages expense and the payments related to the employment of Gloria Rose. Requirement 1. Compute Rose's gross pay for working 60 hours during the first week of February. Gross Pay
Answer and Explanation:
1. The gross pay is
Straight time pay
= 40 hours × $30 per hour
= $1,200
overtime pay
= 40 hours × $30 per hour × 1.5
= $1,800
So, the total gross pay is
= $1,200 + $1,800
= $3,000
2. Now the net take home pay is
Gross pay $3,000
Less: deductions
Income tax withholding (20%) -$600
Employee OASDI tax (6.2%) -$186
Employee medicare tax (1.45%) -$43.50
Net take home pay $2,170.50
3. Now the journal entries are
Wages expense $3,000
To Income tax payable $600
To Employee OASDI tax payable $186
To Employee medicare tax payable $43.50
To wages payable $2,170.50
(Being the wages expense is recorded)
We debited the expenses as it increased the expenses and credited all liabilities it increased the liabilities
Wages payable Dr $2,170.50
To cash $2,170.50
(being cash paid is recorded)
For recording this we debited the wages payable as it reduced the liabilities and credited the cash as it also reduced the current assets
Fine Stationery makes personalized stationery of the highest quality. The company maintains a stock of blank note cards, calling cards, stationery, and envelopes. Customers order online, indicating the product type, personalization (monogram, name), font style, and color. The following schedule is typical of an order of 100 calling cards:
Activity Minutes
Process order ............... 3
Wait for production to begin......... 55
Pull calling cards from inventory........ 15
Set up machine for font style and color.... 2
Process calling cards............ 40
Inspect cards.............. 5
Wait for packaging ............ 16
Package cards for shipping......... 2
Wait for pickup by FedEx......... 120
Required:
Calculate the manufacturing cycle efficiency.
Answer:
The manufacturing cycle efficiency is 0.219
Explanation:
In order to calculate the manufacturing cycle efficiency we would have to calculate the following formula:
manufacturing cycle efficiency=value added time/throughput time
value added time= 40 min
throughput time=Process time+Inspection time+movie time+Queue time
throughput time=40+5+15+2+120
throughput time=182 min
Therefore, manufacturing cycle efficiency=40/182
manufacturing cycle efficiency=0.219
The manufacturing cycle efficiency is 0.219
German brothels recently began offering a monthly subscription service for multiple purchasers. If you thought that the brothels' encouragement of prostitution was immoral to begin with, would you consider this pricing plan to be even more immoral? Suppose a particular patron at a German brothel has the following willingness-to-pay schedule for services at the brothel, per session. Session Willingness to Pay 1st $105 2nd $90 3rd $75 4th $60 5th $45 6th $30 Suppose this consumer would not demand any more sessions, even for free. Also assume that the marginal cost to the brothel, per session, is constant at $15. At a price of $82.50 per session, the number of sessions demanded by this consumer would be . At this price and quantity, consumer surplus is
Answer:
The pricing plan of the is even more immoral to buttress that the fact that brothel was encouraged, the fact that subscription packages was introduced will enhance the practice of prostitution which also has a pricing system which is aimed at I creasing the producer surplus.
Explanation:
Given the following :
Session - - - - - Willingness to Pay
1st - - - - - $105
2nd - - - - $90
3rd - - - - -$75
4th - - - - - $60
5th - - - - - $45
6th - - - - - $30
At price of $82.50 per session, the number of sessions demanded by this consumer will be 2.
Consumer surplus = ($105 - $82.50) = $22.50
Producer surplus = ($82.50 - $22.50) = $60
Mojo Mining has a bond outstanding that sells for $1,061 and matures in 25 years. The bond pays semiannual coupons and has a coupon rate of 6.1 percent. The par value is $1,000. If the company's tax rate is 39 percent, what is the aftertax cost of debt
Answer:
3.44%
Explanation:
For computing the after tax cost of debt we need to apply the RATE formula i.e shown in the attachment below:
Provided that,
Present value = $1,061
Future value or Face value = $1,000
PMT = 1,000 × 6.1% ÷ 2 = $30.5
NPER = 25 years × 2 = 50 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula,
1. The pretax cost of debt is 2.82% × 2 = 5.64%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 5.64% × ( 1 - 0.39)
= 3.44%
Consider the following data on U.S. GDP: Year Nominal GDP GDP Deflator (Billions of dollars) (Base year 2009) 2016 18,707 105.93 1996 8,073 73.18 The growth rate of nominal GDP between 1996 and 2016 was______, and the growth rate of the GDP deflator between 1996 and 2016 was:_______.
Answer:
Data on U.S. GDP
a) The growth rate of nominal GDP between 1996 and 2016 was 131.72%, calculated as follows:
= (2016 nominal GDP - 2009 nominal GDP) / 2009 nominal GDP x 100
= (18,707 - 8,073)/ 8,073 x 100
= 131.72%
b) The growth rate of the GDP deflator between 1996 and 2016 was 44.75%, calculated as follows:
= (2016 GDP deflator - 1996 GDP deflator)/ 1996 GDP deflator x 100
= (105.93 - 73.18)/73.18 x 100
= 44.75%
Explanation:
1. Data on U.S. GDP
Year Nominal GDP GDP Deflator (Billions of dollars) (Base year 2009)
2016 18,707 105.93
1996 8,073 73.18
2. According to wikipedia.com, "the GDP deflator (implicit price deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year."
3. Nominal GDP is a way of assessing an economy's economic production. It includes the current prices of goods and services. The GDP measures the monetary value of goods and services produced in an economy within a given period.
4. Growth rate refers to the percentage change of a specific variable within a specific time period. It is calculated as the difference between the current year's variable and the base year's variable, divided by the base year's variable, and then multiplied by 100.
Kela Corporation reports net income of $470,000 that includes depreciation expense of $83,000. Also, cash of $44,000 was borrowed on a 6-year note payable. Based on this data, total cash inflows from operating activities are: Multiple Choice $514,000. $553,000. $597,000. $387,000.
Answer:
The Total cash inflows from operating activities are $553,000
Explanation:
According to the given data, the Statement of Cash Flow from Operating Activities would be as follows:
Statement of Cash Flow from Operating Activities
Particulars Amount Total Amount
Income $470,000
Depreciation $83,000
Cash flow from operating activities $553,000
The cash of $44,000 was borrowed on a 6-year note payable. It is Financing Activity since note is long term
Therefore, total cash inflows from operating activities are $553,000
Kansas Enterprises purchased equipment for $76,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $7,200 at the end of ten years. Using the straight-line method, depreciation expense for 2021 would be:
Answer:
The depreciation expense for 2021 would be: $6,880
Explanation:
Straight line method charges a fixed depreciation charge over the life of asset.
Depreciation Charge = (Cost - Residual Value) / Number of Estimated Useful life
= ($76,000 - $7,200) / 10
= $6,880
The amount of depreciation is charged at fixed amount of $6,880 for each of the years that this asset is in use in the business.
Conclusion :
The depreciation expense for 2021 would be: $6,880
Find the nominal annual rate of interest compounded monthly if $1200 accumulates to $1618.62 in five years.
Answer:
The nominal annual interest rate is 6%
Explanation:
The future value of a sum of money an be calculated as follows,
FV = PV (1+i)^n
Where,
PV is present value i is the interest raten is the number of compounding periodsAs we already know the FV, the PV and the number of compounding periods, we can calculate the value of i. The value of i here represents the nominal annual interest rate denominated in monthly terms.
Annual interest rate denominated in monthly terms = Annual i / 12
As the total period in years is 5 years, the total period in monthly terms will be 5 * 12 = 60. So n is 60.
Plugging in the available values, we get the following expression which should be solved to get the monthly i.
1618.62 = 1200 * (1+i)^60
1618.62 / 1200 = (1+i)^60
1.34885 = (1+i)^60
Taking the 60th root of both sides.
(1.34885)^1/60 = (1+i)^60/60
1.004999998 = 1 + i
1.00499998 - 1 = i
i = 0.00499998 rounded off to 0.005 or 0.5%
If the annual interest rate denominated in monthly terms is is 0.005 or 0.5%, then the annual interest rate is,
Annual interest rate = 0.005 * 12 = 0.06 or 6%
1. If you and your BSG team decided to explore the possibility of diversification beyond the athletic shoe market, what factors would you consider to be positive factors in selecting a diversification target and why; i.e. what positive elements would you be looking for in making your decision? 2. What factors would discourage you from pursuing a diversification strategy with another firm and why?
Answer: provided in the explanation section
Explanation:
The process of diversification has to do with connecting to new business opportunity with the existing business. This business startegy helps the company to enter a new area of the market in which it is not currently working. The risk associated with it can or may not provide extraordinary benefits.
In these cases, there are positive factors that encourage diversification-
Other companies will handle the losses in the current company.
Unpleasant surprises can be offset by market diversification.
The resources used under these can be used in sports shoe styling in game simulation companies such as background designers, creative team and so on.
The customer base would be more like that, thereby reducing the attempt of the company to shape a whole new customer base.
If the gaming business starts to decline at any time, all its resources can be used in this new business.
There are always, however, factors which prevent such diversifications.
This can restrict business growth opportunities in the gaming sector as new companies can get investment that is needed to be more competitive.
More new skilled employees, equipment and resources will be needed as the production requires a whole new set of know-how and equipment.
A poorly managed diversification will cause existing businesses to suffer.
As this is a broad horizontal diversification, they can not respond with the same speed to market changes.
Cheers I hope this helps !!!
A man turns 40 today and wishes to provide supplemental lifetime retirement income of 3,000 at the beginning of each month starting on his 65th birthday. Starting today, he makes monthly contribution of X to a fund for 25 years. The fund earns a nominal rate of 8% compounded monthly. Every 9.65 of lifetime income paid at the beginning of each month starting at age 65 will cost 1,000 to purchase. Calculate x.
Answer:
324.72
Explanation:
To get an income of $1, the man needs [tex]\frac{1000}{9.65}[/tex], therefore to get an income of $3000, the man needs [tex]\frac{1000*3000}{9.65}=310880.83[/tex].
Interest (i)= 8%/12 = 0.08/12 = 0.00667
Number of periods (N) = 12 months/year × 25 years = 300
Using actuarial notation:
[tex]Xs_{300/0.006667}=310880.83\\Where:\\s_{300/0.006667}=(1+0.006667)\frac{(1+0.006667)^{300}-1}{0.00667} =957.366[/tex]
Therefore:
[tex]957.366X=310880.83\\X=\frac{310880.83}{957.366} =324.72[/tex]
Suppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, it is projected that only 45,000 cars per week will use the highway stretch. Assuming that the marginal cost of highway use is constant (i.e., the supply schedule is horizontal) and equal to $.40 per car, what is the change in social surplus attributable to the increase in the toll
Answer:
$250 is the change in social surplus attributable to the increase in the toll
Explanation:
Suppose the government increase in toll on a certain stretch of highways by this caused a dead-weight loss occur and then resulting full in the number of cars using the highway.
Dead-weight loss = (0.5) (0.50-0.40) (50,000-45,000)
Dead-weight loss = 0.5 * 0.10 * 5000
Dead-weight loss = $250
The increase paid by other remaining drivers (0.50-0.40)(40,000) can be viewed as transfer from drivers to the government.
Magpie Corporation uses the total cost method of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% return on invested assets of $700,000. Fixed factory overhead cost $38,700 Fixed selling and administrative costs 7,500 Variable direct materials cost per unit 4.60 Variable direct labor cost per unit 1.88 Variable factory overhead cost per unit 1.13 Variable selling and administrative cost per unit 4.50 The markup percentage on total cost for Magpie's product is
Answer:
Mark-up =22.64%
Explanation:
Profit = Return on Investment (%) × assets\
Profit = 25% × 700,000 = 175,000
Total variable cost = (4.60+ 1.88+ 1.13+ 4.50 )× 60,000= 726600
Total cost = Total variable cost + total fixed cost
= 726600 + 38,700+ 7,500= 772800
Mark-up = profit/cost × 100
= 175,000/726,600 × 100 = 22.64%
Mark-up =22.64%
Real-Balances Effect Household Expectations Interest-Rate Effect Personal Income Tax Rates Profit Expectations National Incomes Abroad Government Spending Answer the question based on the accompanying list of factors that are related to the aggregate demand curve. Changes in which two of the factors would most likely cause a shift in aggregate demand due to a change in consumer spending.
Answer: Household Expectations
Personal Income Tax Rates
Explanation:
The Aggregate Demand curve can shift as a result of Consumer Spending, Government Spending, Investment Spending or Net Export spending.
When the AD shifts due to a change in Consumer Spending, the reasons are usually related to individuals in the economy including Households.
One of the reasons there may be a shift is due to changes in Household Expectations.
If a Household expects an Economic variable such as Inflation to change in the future, it might inspire them to act now to take advantage of it. For example, if a Household expects that car prices will rise in future, they may decide to buy a car now instead so as not to pay a higher amount in future thus increasing demand and shifting the AD curve Right.
Another reason could be the Personal Income Tax rate. Taxes reduce the amount that people have after they are paid. A change in personal income tax rates therefore is a change in people's income. If Personal Tax rates were to reduce for instance, that would mean that people would have more money to spend and they might consume this extra money. This would increase Consumption and therefore shift the AD curve Right.
You just agreed to a deal that will make you the proud new owner of a beautiful new convertible. The car comes with a three-year warranty. Please consider the purchase of the extended warranty which has a purchase price of $1,800, today (the day you purchased your NEW car). The extended warranty covers the 4 years immediately after the three-year warranty expires. You estimate that the yearly expenses that would have been covered by the extended warranty are $400 at the end of the first year of the extension, $500 as the end of the second year of the extension, $600 at the end of the third year of the extension, and $800 at the end of the fourth year of the extension. Assume that money during this time can earn interest at a rate of 7% compounded monthly. Will you decide to buy the warranty? Your formal solutions should include:______.1. The overall goal and/or purpose
2. The given information
3. A time-line for the expected repair costs covered by the warranty
4. The present value for each of the repair costs
5. The present value of the warranty and the expected profit for the warranty company
6. Your conclusion
Answer:
1. The overall goal and/or purpose
The overall goal of this analysis is to determine if you would actually save money by purchasing the extended warranty.
2. The given information
You can calculate this by determining the present value of the expected repair costs that will be covered by the warranty and determine which is higher; the warranty or the repairs
3. A time-line for the expected repair costs covered by the warranty
initial investment -$1,800cash flow year 4 = $400cash flow year 5 = $500cash flow year 6 = $600cash flow year 7 = $8004. The present value for each of the repair costs
the discount rate is 7%, so the present value of each repair cost is:
PV cash flow year 4 = $400 / 1.07⁴ = $305PV cash flow year 5 = $500 / 1.07⁵ = $356PV cash flow year 6 = $600 / 1.07⁶ = $400PV cash flow year 7 = $800 / 1.07⁷ = $498total $1,5595. The present value of the warranty and the expected profit for the warranty company
the present value of the warranty is $1,800, so the car company is making $1,800 - $1,559 = $241 in profits by selling you the warranty
6. Your conclusion
You shouldn't buy the extended warranty (negative NPV)
Discount-Mart issues $19 million in bonds on January 1, 2021. The bonds have a seven-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 17,233,953 06/30/2021 $ 950,000 $ 1,034,037 $ 84,037 17,317,990 12/31/2021 950,000 1,039,079 89,079 17,407,069 06/30/2022 950,000 1,044,424 94,424 17,501,493 12/31/2022 950,000 1,050,090 100,090 17,601,583 What is the market annual rate of interest on the bonds
Answer: 12%
Explanation:
The semi annual market rate of interest on the bonds will be the interest expense divided by the carrying value i.e issue price of bond which is then multiplied by 100%. This will be mathematically expressed as:
= 1,034,037/17,233,953 × 100
= 0.06 × 100
= 6%
This implies that the semi annual market interest rate is 6%.
Since we are told to calculate the market annual rate of interest on the bonds, we multiply the value of 6% by 2 since 12 months make a year and we used 6 months for the calculation above which is semi annual. This will be:
= 6% × 2
= 12%
Therefore, the market annual rate of interest on the bonds is 12%
MGM Resorts Incorporated is expected to grow at an exceptionally high rate over the next 2 years due to the success of Macau casino. Growth in dividends is expected to be 20% for the next 2 years before reverted back to a constant rate of 4% that is expected to continue indefinitely. If MGM Resorts’ paid a $1.20 dividend yesterday (D0=$1.20) and the stock is valued according to a required rate of return of 14%, what is the value of a share of MGM Resorts stock today?
Answer:
The value of a share of MGM Resorts stock today will be $16.42
Explanation:
In order to calculate the value of a share of MGM Resorts stock today we would have to calculate the following steps:
Step-1, Dividend for the next 2 years
Dividend per share in Year 0 (D0) = $1.20 per share
Dividend per share in Year 1 (D1) = $1.4400 per share [$1.20 x 120%]
Dividend per share in Year 2 (D2) = $1.7280 per share [$1.4400 x 120%]
Step-2, Share Price in Year 2
Dividend Growth Rate after Year 2 (g) = 4.00% per year
Required Rate of Return (Ke) = 14.00%
Share Price in Year 2 (P2) = D2(1 + g) / (Ke – g)
= $1.7280(1 + 0.04) / (0.14 – 0.04)
= $1.7971 / 0.10
= $17.97 per share
Step-3, The Current Stock Price
As per Dividend Discount Model, Current Stock Price the aggregate of the Present Value of the future dividend payments and the present value the share price in year 2
Year Cash flow ($) PVF at 14.00% Present Value of cash flows ($)
[Cash flows x PVF]
1 1.4400 0.877193 1.26
2 1.7280 0.769468 1.33
2 17.97 0.769468 13.83
TOTAL 16.42
Hence, the value of a share of MGM Resorts stock today will be $16.42
Joy Elle’s Vegetable Market had the following transactions during 2010: Issued $50,000 of par value common stock for cash. Repaid a 6 year note payable in the amount of $22,000. Acquired land by issuing common stock of par value $100,000. Declared and paid a cash dividend of $2,000. Sold a long-term investment (cost $63,000) for cash of $6,000. Acquired an investment in IBM stock for cash of $12,000. What is the net cash provided by financing activities?
Answer:
$26,000
Explanation:
Joy Elle’s Vegetable Market
Cash flow from Financing Activities
Issuance of Stock $50,000
Less: Repaid Note payable $22,000
Less: Paid Dividend $2,000
Net Cash provided by financial activities $26,000
-Acquired land by issuing common stock is a Non cash investing and financing activities under cash flow
-Sold a long-term investment for cash is an investing activities under cash flow
-Acquired an investment in IBM stock for cash is an Investing activities under Cash flow
Wrong Meds, Again! “It was horrible,” said the distraught client. “No matter how many times I provided the information, no one listened to me. And they obviously didn’t listen to each other either, because they used the wrong meds . . . again.” “Okay, calm down. Now tell me what happened from the beginning,” urged Melanie Torrent, the Quality Assurance Manager for Hope Memorial Hospital. “I got a call at work saying my father was being taken to the hospital from the nursing home. The nursing home always sends a list of medications with the ambulance, but when I got to the emergency room, they were asking my dad what medications he was taking. Of course my dad told them he wasn’t taking any medications and they believed him! He’s sent to the emergency room from a nursing home and they decide it’s reasonable for him not to be on any medications . . . so of course I corrected him and told them to find the medication list. I don’t know whether the ambulance driver forgot to bring in the list, or gave it to the wrong person, or what, but they couldn’t find it. My dad must be on 12 different medications so I wasn’t sure I could remember them correctly. I called the nursing home and we went over the list with them, and then I gave the handwritten list to the nursing station. In the meantime, my dad was admitted to the hospital and moved to a hospital room. Again, a nurse came in with a computer and asked me to tell them what meds he was talking. I tried to tell them that the emergency room had the list, but she said it would be the next morning before the list got updated online. Nevertheless, the nurse called down to the emergency room and was faxed up the list of medications. Only the fax was unreadable, so they came back to me. It was a few hours before his next meds were due, so I drove over to the nursing home, had them make several legible copies of the meds list and drove back to the hospital. I gave the nurse the list, kept one for myself and posted the other on the bulletin board in my dad’s room. The nurse thanked me and said she’d take care of it at the end of her shift. After a long night at the hospital, I woke up the next morning to see my dad hallucinating. I knew immediately what had happened—there’s a certain drug that he has this reaction to. I ran down to the nurse’s station and had her look up the medications he had been given. Sure enough, it was there, along with several other medications he should no longer be taking. Turns out, the list was from two years ago when he had last been admitted to the hospital! How could they have made that kind of mistake—using data from two years ago?” “That is something we’ll look into. More importantly, has your father been taken off the drug?” “Yes.” “And has the medication list been corrected?” “Yes.” “And how is he doing today?” “Fine today, but it could have been more serious and I think you should look into changing your procedures so this doesn’t happen again . . .” “I appreciate you bringing this to my attention. I will speak to the persons involved and I assure you this will not happen again. Hope Memorial prides itself on being a caring and responsible health care provider. Now if you’ll excuse me, I have another client to see . . .” 1. Trace the path of the medication list and denote possible failure points. Construct a process flowchart of the existing process and create a new chart of an improved process. 2. Was the medication error a failure of individuals or a failure of the process? Explain. 3. Think about the different settings, the ambulance, the emergency room, the hospital room, and the nurse’s station. How is data handled in each scenario? Can the process of recording information be changed so that every one is using the same data? How can the accuracy of the data be assured? 4. Given Melanie’s reaction, do you think this error will happen again? Why or why not?
Answer:
Explanation:
no it will not happen agian because she learned from her mistake!
New Keynesian theorists argue that a. price and wage adjustments in response to policy changes often overcompensate and cause further price disruptions. b. unions and big business have considerable power and often choose not to change wages and prices so as to deliberately offset policy changes enacted by the government. c. the Fed and the Congress rarely do what they say they will do, so one should never listen to what they say. d. new classical rational expectations theories about how expectations are formed are completely wrong. e. prices and wages may not be free to adjust in response to policy changes.\
Answer:
The correct answer is (D)
Explanation:
New classical "rational expectations" theories about how expectations are formed, are completely wrong. That is, prices and wages may not be free to adjust in response to policy changes.
This is the basis of New Keynesian economics, which emerged from the Classical Keynesian economics.
New Keynesian theorists argue that wages and prices are sticky (hardly adjust) in the face of short term fluctuations in the economy. This means or explains that short term federal monetary policies do not have such a great influence on wage level and price level in the macroeconomy.
A store sells 20 ice cream bars per hour for $4 each, but on discount days, it sells 35 ice cream bars per hour for $3. Based on these two data points, what would be the slope for the relationship between the price and the quantity of ice cream sold?
Answer:
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
Explanation:
In order to calculate the slope for the relationship between the price and the quantity of ice cream sold we would have to calculate the following formula:
Slope= change in yaxis( vertical)/change in xaxis(horizontal)
Slope= change in price/change in quantity demand
Slope=P2-P1/Q2-Q1
Slope=3-4/35-20
Slope=-1/15
The slope for the relationship between the price and the quantity of ice cream sold would be of -1/15
On September 1, 2021, Daylight Donuts signed a $188,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2022. Daylight Donuts should report interest payable at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)
Answer:$3,760--- Interest payable at December 31, 2021.
Explanation:
Interest payable is current liability recorded on a firm's balance sheet that shows the amount of interest which a firm owes currently but has not yet paid as of the date recorded on the of the balance sheet.
For daylight donuts
September --- December = 4 months
interest payable within the four months= $188,000 X 6% X 4/12= $3,760
Daylight Donuts should report interest payable at December 31, 2021, in the amount of $3,760
A notice is published stating that RMO 5% convertible preferred stock will be called at $60 per share. The preferred is convertible into 1/2 share of common and is selling in the market at $56 per share. RMO common stock is selling in the market at $110 per share. After the notice appears, the price of the preferred stock will most likely trade in the market at: _________.
Answer: d. A price near $60
Explanation:
The Preferred Stock was selling at $56 then a notice was circulated that RMO would be calling the stock at a price of $60.
This $60 is more than the current $56 and so this will need to reflect in the price of the stock. The adjustment will cause the Preferred stock to start trading near $60 as traders will seek to take advantage of the impending call by buying at a lower price and thus making a bit of profit when the stock is called at $60. The market will adjust to this because the Preferred stock will be perceived as undervalued. A price closer to the Call price will therefore become the new price to properly value the stock.
Obtain the linear trend equation for the following data on new checking accounts at Fair Savings Bank and use it to predict expected new checking accounts for periods 16 through 19. (Round your intermediate calculations and final answers to 2 decimal places.)
Period New Accounts Period New Accounts Period New Accounts
1 200 6 239 11 281
2 215 7 241 12 275
3 211 8 250 13 282
4 224 9 254 14 288
5 235 10 267 15 308
Y = + t
Y16 =
Y17 =
Y18 =
Y19 =
Use trend-adjusted smoothing with %u03B1 = .2 and %u03B2 = .1 to smooth the new account data in part a. What is the forecast for period 16? (Use the "Trend" values to 3 decimal places and other values to 2 decimal places for intermediate calculations. Round your final answer to 2 decimal places.)
Answer:
Y16 = 7(16) + 195.33 = 307.33
Y17 = 7(17) + 195.33 = 314.33
Y18 = 7(18) + 195.33 = 321.33
Y19 = 7(19) + 195.33 = 328.33
Explanation:
Period (x)
New accounts (Y)
The regression equation:
Y = mx + t
Y is the dependent variable
X is the independent variable
t point where trend line cuts through the x-axis
M is the gradient or slope
Using the regression calculator, the trend line for the data is :
Y = 7X + 195.33
Using the regression equation obtained :
Y16 = 7(16) + 195.33 = 307.33
Y17 = 7(17) + 195.33 = 314.33
Y18 = 7(18) + 195.33 = 321.33
Y19 = 7(19) + 195.33 = 328.33
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its unit costs for each product at this level of activity are given below:
Alpha Beta
Direct materials $ 30 $ 10
Direct labor 22 29
Variable manufacturing overhead 20 13
Traceable fixed manufacturing overhead 24 26
Variable selling expenses 20 16
Common fixed expenses 23 18
Total cost per unit $ 139 $ 112
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.
Required:
7.
Assume that Cane normally produces and sells 48,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?
8.
Assume that Cane normally produces and sells 68,000 Betas and 88,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?
9.
Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufacture and deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those units, how much will profits increase or decrease?
10.
Assume that Cane expects to produce and sell 58,000 Alphas during the current year. A supplier has offered to manufacture and deliver 58,000 Alphas to Cane for a price of $112 per unit. If Cane buys 58,000 units from the supplier instead of making those units, how much will profits increase or decrease?
13.
Assume that Cane’s customers would buy a maximum of 88,000 units of Alpha and 68,000 units of Beta. Also assume that the company’s raw material available for production is limited to 172,000 pounds. How many units of each product should Cane produce to maximize its profits?
14.
Assume that Cane’s customers would buy a maximum of 88,000 units of Alpha and 68,000 units of Beta. Also assume that the company’s raw material available for production is limited to 172,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
15.
Assume that Cane’s customers would buy a maximum of 88,000 units of Alpha and 68,000 units of Beta. Also assume that the company’s raw material available for production is limited to 172,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)
Answer:
7. profits will decrease by:
lost profits = total revenue - total costs = $5,760,000 - $5,376,000 = $384,000unavoidable fixed costs = $18 x 48,000 units = $864,000total decrease in profits ($1,248,000)8. profits will decrease by:
lost profits from Beta product line = $8,160,000 - $7,616,000 = ($544,000)increased profits from Alpha sales = $2,220,000 - $1,668,000 = $552,000unavoidable fixed costs = (68,000 x $18) - (12,000 x $23) = (948,000)total decrease in profits ($940,000)9. profits will increase by:
avoidable costs of producing 88,000 Alphas = 88,000 x $116 = $10,208,000cost of purchasing 88,000 x $112 = ($9,856,000)total increase in profits = $10,208,000 - $9,856,000 = $352,00010. profits will increase by:
avoidable costs of producing 58,000 Alphas = 58,000 x $116 = $6,728,000cost of purchasing 58,000 x $112 = ($6,496,000)total increase in profits = $6,728,000 - $6,496,000 = $232,00013. Since the profit margin per pound of direct materials used for Alphas = $7.67 and Betas = $4, the company should produce Alphas. It should produce 28,666 Alphas and 2 Betas. Total profits = $1,318,636 + $16 = $1,318,652
14. Maximum contribution margin:
Contribution margin Alphas = 28,666 units x $92 = $2,637,272Contribution margin Betas = 2 units x $52 = $104total contribution margin = $2,637,37615. Since the profit margin per pound of materials used Betas is only $4, there is not much room for increasing the materials costs. If you want to produce Betas, you would be willing to pay less than $9 per pound of direct materials.
But since the profit margin per pound of direct materials used on Alphas is much higher ($7.67), as long as you pay less than $12.97 per pound of direct materials you can still make a profit producing Alphas. So you could pay a much higher price if you wanted to produce Alphas and still make a profit.
Explanation:
Alpha Beta
Sales price $185 $120
Direct materials ($5 per pound) $30 $10
pounds of materials used 6 2
profit margin per pound $7.67 $4
Direct labor $22 $29
Variable manufacturing overhead $20 $13
Traceable fixed man. overhead $24 $26
Variable selling expenses $20 $16
Common fixed expenses (unavoidable) $23 $18
Total cost per unit $139 $112
total production capacity 112,000 units per year
contribution margin = sales revenue - variable costs:
contribution margin Alpha = $185 - $93 = $92
contribution margin Beta = $120 - $68 = $52