Answer:
B. higher than the marginal
Explanation:
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity.
Because in many industries the cost of generating new ideas is so high, firms must charge a price higher than marginal cost in order to maximize profits or increase the amount of profits generated.
Suppose that real gdp per capita in italy is $33,500. if real gdp per capita is growing at a rate of 1.6% per year, how many years will it take for real gdp per capita to reach $67,000?
Answer:
45 years
Explanation:
The computation of the number of years to reach the $67,000 real GDP per capita is shown below:
Here we use the rule of 72 that doubles the real gdp per capita
= 72 ÷ growth rate
= 72 ÷ 1.6%
= 45 years
In 45 years the real GDP per capita would be doubled that means from $33,500 to $67,000 it would be reached in 45 years
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 6.2% coupon rate and pays the $62 coupon once per year. The third has a 7.2% coupon rate and pays the $72 coupon once per year.
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
Answer:
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
zero coupon bond = $1,000 / (1 + 7%)¹⁰ = $508.35
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $62 x 7.0236 (PV annuity factor, 7%, 10 periods) = $435.46
market price = $943.81
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $72 x 7.0236 (PV annuity factor, 7%, 10 periods) = $505.70
market price = $1,014.05
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 7%)⁹ = $543.93
before tax holding period return = ($543.93 - $508.35) / $508.35 = 7%
after tax HPR = 7% x 0.8 = 5.6%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $62 x 6.5152 (PV annuity factor, 7%, 10 periods) = $403.94
market price = $947.87
before tax holding period return = ($947.87 - $943.81 + $62) / $943.81 = 7%
after tax HPR:
($4.06 x 0.8) / $943.81 = 0.34%
($62 x 0.7) / $943.81 = 4.60%
total = 4.94%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $72 x 6.5152 (PV annuity factor, 7%, 10 periods) = $469.09
market price = $1,013.02
before tax holding period return = ($1,013.02 - $1,014.05 + $72) / $1,014.05 = 7%
after tax HPR:
(-$1.03 x 0.8) / $1,014.05 = -0.08%
($72 x 0.7) / $1,014.05 = 4.97%
total = 4.89%
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 6%)⁹ = $591.90
before tax holding period return = ($591.90 - $508.35) / $508.35 = 16.44%
after tax HPR = 16.44% x 0.8 = 13.15%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $62 x 6.8017 (PV annuity factor, 6%, 10 periods) = $421.71
market price = $1,013.61
before tax holding period return = ($1,013.61 - $943.81 + $62) / $943.81 = 13.96%
after tax HPR:
($69.80 x 0.8) / $943.81 = 5.92%
($62 x 0.7) / $943.81 = 4.60%
total = 10.52%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $72 x 6.8017 (PV annuity factor, 6%, 10 periods) = $489.72
market price = $1,081.62
before tax holding period return = ($1,081.62 - $1,014.05 + $72) / $1,014.05 = 13.76%
after tax HPR:
($67.57 x 0.8) / $1,014.05 = 5.33%
($72 x 0.7) / $1,014.05 = 4.97%
total = 10.30%
The Dell Corporation borrowed â$ at â% interest perâ year, which must be repaid in equal EOY amountsâ (including both interest andâ principal) over the next years. How much must Dell repay at the end of eachâ year? How much of the total amount repaid isâ interest?
Answer:
A. $2,098,000 per year
B. $2,588,000
Explanation:
A. Calculation for How much must Dell repay at the end of each year
First step is to calculate (A/P, 7%, 6 )which will give us (0.2098)
Now let Calculate the amount to repay
Amount to repay= $10,000,000 (A/P, 7%, 6)
Amount to repay= $10,000,000 (0.2098)
Amount to repay = $2,098,000 per year
Therefore the amount that Dell will repay at the end of each year will be $2,098,000 per year
2. Calculation for How much of the total amount repaid is interest
Total interest repaid = ($2,098,000*6 years)− $10,000,000
Total interest repaid=$12,588,000-$10,000,000
Total interest repaid= $2,588,000
Therefore the total amount repaid interest will be $2,588,000
Runnerz Inc.,a leading manufacturing and retail company that designs and develops footwear and apparel,has signed a contract with a particular courier service for managing the delivery process.The courier service is required to deliver goods from the factory to the warehouse,to customers,and also to collect customer payments for the goods.This is a typical example of a(n)________.
A) non-equity strategic alliance
B) turnkey operation
C) greenfield investment
D) international licensing agreement
Answer:
A) non-equity strategic alliance
Explanation:
From the question, we are informed about, Runnerz Inc., which is a leading manufacturing and retail company that designs and develops footwear and apparel,has signed a contract with a particular courier service for managing the delivery process.The courier service is required to deliver goods from the factory to the warehouse,to customers,and also to collect customer payments for the goods. In this case we can regard this as a typical example of a non-equity strategic alliance.
Non-equity strategic alliance can be explained as when there is contractual relationship is signed by two independent companies to gather their resources as well as their capabilities even though there is no separate entity or sharing equity. Most of the business alliances are fond of this type of agreement.
Calculate current assets Sales Revenue $25,000 Accounts Payable $1,200 Accounts Receivable $2,600 Inventory $3,200 Supplies $300 Cost of Goods Sold $16,000 Notes Payable (due in 2 years) $24,000 Equipment $40,000 Accumulated Depreciation $12,000 Land $30,000 Unearned Revenue $1,100 Taxes Payable $1,400 Prepaid Rent (3 months) $2,100 Cash $5,200
Answer: $13,400
Explanation:
Current Assets are those that will be used up in a year and in this question are;
= Accounts Receivable + Inventory + Supplies + Prepaid rent + Cash
= 2,600 + 3,200 + 300 + 2,100 + 5,200
= $13,400
Why is it important now for HR management to transform from being primarily administrative and operational to becoming more of an overall strategic contributor to the organization?
How have you seen this implemented in your workplace/former workplace?
Explanation:
Human resource management is increasingly relevant for a company to be successful, competitive and well positioned in the market. It is correct to affirm that it is important that HR ceases to be basically administrative and operational to become a general strategic contributor in a company due to the fact that management is going through a phase in which organizations have well-defined social and environmental responsibilities most demanded in a competitive and globalized world.
Therefore, the valorization of human capital in an organization is increasingly essential and strategic, because through professionals satisfied with their working conditions, well trained and motivated, the objectives are achieved more effectively, there is a greater attraction of quality professionals, greater innovation, greater productivity, continuous improvement of processes and the creation and maintenance of an organizational culture focused on ethical and collaborative practices in order to achieve organizational objectives.
Equipment costing $17,500 with an estimated salvage value of $1,180 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
Answer:
the depreciation expense recorded is $680
Explanation:
The computation of the depreciation expense under the straight-line method is shown below:
= (Purchase cost - residual value) ÷ (estimated life)
= ($17,500 - $1,180) ÷ ( 4 years)
= $4,080
Now the 2 months depreciation is i.e. from November to December
= $4,080 × 2 months ÷ 12 months
= $680
Hence, the depreciation expense recorded is $680
Sue now has $490. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?
Answer
a.
$1,148.14
b.
$837.58
c.
$941.10
d.
$1,157.55
e.
$724.64
Answer:
c.$941.10
Explanation:
Calculation for How much would she have after 8 years
Using this formula
FV = PV(1+i)^n
FV represent future value
PV represent present value
i represent interest rate
n represent number of periods
Let plug in the formula
FV = 490(1 + .085)^8
FV= $941.10
Therefore How much would she have after 8 years will be $941.10
Which company is most easily able to outsource its operations and have its good or service produced in another country
Answer:
d. Queen’s Quilts
Explanation:
Options are "Hannah’s Hair Salons, Busker Baseball Team , Darling Dentistry , Penelope’s Fresh Pretzels , Queen’s Quilts"
a. Salons, Dentistry : these are services which cannot be outsourced partly or fully.
b. Baseball team: It is a sports team which cannot operate partly in another country.
c. Pretzels: These are freshly baked pastries or food items which needs to be made fresh , so cannot be outsourced.
d. Quilts: These are textile which can be produced in countries having cheap labor .
Which option, within the Word Options dialog box, allows users to add the Auto Text function to the Ribbon?
The customize ribbons option in Word Options dialog box, allows users to add the Auto Text function to the Ribbon.
What is Auto Text function ?To save portions of a Word document for later use, utilize AutoText. For example, you could retain a convenient collection of headers and footers or build a library of sentences for business letters. Everything a Word document can contain, including formatted text, images, and fields, can be stored in an AutoText entry.
You can quickly speed up document creation using AutoText by adding predetermined text to your project.
In your Office applications, you can create and organize tabs and commands in the ribbon however you choose. Show or conceal the ribbon. Select the at the ribbon's right edge to make it invisible. Choose a tab to reveal the ribbon.
To learn more about customize ribbons
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When the bond sells at par, the implicit €/$ exchange rate at maturity of a Euro/U.S. dollar dual currency bond that pays $651.25 at maturity per €1,000, is:________ A) €1.54/$1.00. B) €1.22/$1.00. C) €1.79/$1.00. D) €1/$1.00.
Answer:
€1.54/$1.00
Explanation:
When the bond sells at par, the implicit €/$ exchange rate pays €651.25 at maturity per €1000
651.25/1000= 1/x
Cross multiply
651.25x = 1000
x= 1000/651.25
x= 1.54
Hence the implicit exchange rate is €1.54/$1.00
Preparing an income and expense statement helps in answering the question, "Where does all my money go?" This statement takes __________and ___________subtracts to determine an individual's or a family's cash surplus or deficit situation.
Correct question read;
"This statement takes __________and subtracts_________ to determine an individual's or a family's cash surplus or deficit situation.
Answer:
note of income; the expenses
Explanation:
Remember, the income and expense statement as the name implies is a financial statement that takes note of all incomes into a financial account and then subtracting identified expenses from the income to determine if there was a loss or profit.
By following this method, one ultimately would be able to answer the question, "Where does all my money go?".
identify three of the many shared ethical standards among businesses that are incorporated in codes of ethics
Answer:
c. Social responsibility, fair pricing and truth in advertising.
Explanation:
The ethical standards shared by organizations that are incorporated into codes of ethics are: Social responsibility, fair price, truth in advertising.
A company needs to be ethical and transparent, this includes all its internal and external processes and systems. A company's social ethics can be demonstrated through responsibility to its stakeholders, which means that the company must promote the development of its employees, society and the environment.
The fair price refers to fair competition and the practice of prices consistent with its products and services, acting as a promoter to improve the quality of life of the population and enabling economic strengthening.
The truth in advertising corresponds to organizational transparency in promoting products and services consistent with what they offer in terms of price, quality, benefits, etc.
A company that complies with such ethical standards is much better positioned in the market and has a higher level of reliability by investors and consumers.
Answer: C. Social responsibility, fair pricing and truth in advertising.
Explanation:
Jefferson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:________.A. $60,000B. $180,000C. $30,000D. $90,000E. $120,000
Answer:
A. $60,000
Explanation
Calculation for what the estimated cost of the ending inventory under the gross profit method would be
First step is to calculate the Gross profit
Gross profit= $300,000 *30%
Gross profit= $90,000
Second Step is to calculate the cost of goods sold
Cost of goods sold=$300,000-$90,000
Cost of goods sold= $210,000
Last step is to calculate the estimated cost of the ending inventory under the gross profit method
Using this formula
Estimated cost of the ending inventory=
Cost of goods available for sale- Cost of goods sold
Let plug in the formula
Estimated cost of the ending inventory=$270,000-$210,000
Estimated cost of the ending inventory=$60,000
Therefore the estimated cost of the ending inventory under the gross profit method would be $60,000
The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for: A. a monopolist lies below its marginal revenue curve. B. a monopolist is the market demand curve. C. a competitive firm is inelastic. D. a competitive firm lies above its marginal revenue curve.
Answer:
B. a monopolist is the market demand curve
Explanation:
As we know that the under monopoly market the firm and the industry are similar to each other also the monopolist determined the price due to this he is a price taker and price maker and the curve of the demand would be downward that shifted from left to right
Therefore in the given situation, the option B is correct
And the rest of the options are wrong
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production CostsQuantity of Ear Buds MC ATC ($) ($)5 - 80 2 515 2.45 4.1520 3.55 425 4 430 5.5 4.2535 6 4.540 8.5 5A. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?B. At the profit-maximizing quantity, what is the total cost of producing ear buds?C. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?D. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?E. Buddies earns a normal profit whena. marginal cost equals average cost at the minimum of average cost.b. marginal cost equals average cost.c. marginal cost equals marginal revenue at the minimum of marginal cost.d. average cost equals average revenue at the minimum of average cost.
Answer and Explanation:
The computation is shown below:
a. The number of pairs of ear buds that should be produced for maximizing the profits is
As we know that
MR = MC
Q = 35
And also the price is equal to the MC
Hence, the quantity that should be produced would be 35
b). The total cost of producing ear buds for maximizing the profit is
As we know that
TC = ATC × Q
= 4.5 × 35
= $157.5
c. The weekly profit is
As we know that
Profit = TR - TC
= (P - ATC) × Q
= (6 - 4.5) × 35
= $52.5
d) The weekly profit is
Profit= (5.5 - 4.25) × 30
= $37.5
e. The normal profit could be earned at the time when the marginal cost is equivalent to the average cost that contains the minimum
Hence, the option a is correct
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. (Do not round intermediate calculations. Round your answers to two decimal places.) YTM Maturity (Years) Price of Bond 920.90 $ 912.97 $ 826.62 $ 785.62 b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. (Do not round intermediate calculations. Round your answers to two decimal places.) Maturity (years) Price of Bond $ 920.90 912.97 826.62 785.62 Forward Rate Maturity (Years) Price of Bond $ 912.97 $ 826.62 $ 785.62
Answer:
a. Calculation of the yield to maturity for a bond with a maturity years
Yield to Maturity = [(Face value/Bond price)^(1/Time period)] - 1
i. One year = (1000/920.90) - 1 = 0.0858942339 = 8.59%
ii. Two year = (1000/912.97)^(1/2) - 1 = 0.04657835011 = 4.66%
iii. Three year = (1000/826.62)^(1/3) - 1 = 0.06552758403 = 6.55%
iv. Four year = (1000/785.62)^(1/4) - 1 = 0.06217693669 = 6.22%
b. Calculation of the forward rate
Forward rate = [(1 + Next year YTM)^Period / (1+Previous year YTM)^Period} - 1
i. Second year = (1+4.66%)^2/(1+8.59%) - 1 = 0.00872231328 = 0.87%
ii. Third year = (1+6.55%)^2/(1+4.66%) - 1 = 0.08474130517 = 8.47%
iii. Fourth year = (1+6.22%)^2/(1+6.55%) - 1 = 0.05891022055 = 5.89%
Why is it relevant that finance tends to attract large amounts of money?
Explanation:
An organization to be successful in the long term and competitive in the market, needs financial capital to carry out its activities, for this they open the company's capital to investors, who are the capital holders willing to inject capital into the company and receive dividends business, thus becoming a partner of that company.
It is essential that companies attract investors willing to inject a large amount into the business, as this benefits both, since a company with larger amounts of assets will produce more, have its obligations up to date and remain better positioned in the market.
To attract investors to a company, it is necessary that the company has a good reputation in the market and there is a favorable negotiation process, where there is a demonstration of results and the opportunity that the investor will have to invest his money in an organization that will generate profits.
Which situation best illustrates an effect of the law of demand?
A. A car company increases sales when incomes rise in a city.
B. More children go to a theme park after a competing park shuts
down.
C. Customers stop going to a restaurant after it raises its prices.
D. A shop orders more computers when their selling price increases.
The correct answer is C
Answer: C. Customers stop going to a restaurant after it raises its prices
Explanation: (apx)
Last month the balance on your credit account was $785. Your new balance is $540. What percent of your total balance did you pay?
Answer:
31.21%
Explanation:
The balance last month was $785
The new balance is $540
It means a payment of $785- $540 was made
=$785 - $540
=$245
As a percentage
=$245/$785 x 100
=0.3121 x 100
=31.21%
Answer: 31%
Explanation: I just got it right
Ivanhoe, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 20%. The following account balances are available: Inventory, March 1 $540000 Purchases 420000 Purchase returns 10000 Sales during March 720000 The estimate of the cost of inventory at March 31 would be
Answer:
$350,000
Explanation:
Cost of goods sold = $720,000 / 1.20
Cost of goods sold = $600,000
Estimated cost of inventory = Inventory, March 1 + (Purchases - Purchases Return) - Cost of goods sold
Estimated cost of inventory = $540,000 + ($420,000 - $10,000) - $600,000
Estimated cost of inventory = $540,000 + $410,000 - $600,000
Estimated cost of inventory = $350,000
Issued common stock to owners in exchange for $26,000 cash. Purchased $6,500 of equipment, paying $1,950 cash and signing a promissory note for $4,550. Received $11,700 in cash for consulting services performed in January. Purchased $1,950 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $20,800. Paid $975 on account. Paid $3,900 to employees for work performed during January. Received a bill for utilities for January of $4,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January
Answer:
Explanation:
2333
Stock Y has a beta of 1.10 and an expected return of 13.15 percent. Stock Z has a beta of .80 and an expected return of 6 percent. If the risk-free rate is 5.0 percent and the market risk premium is 7.6 percent, what are the reward-to-risk ratios of Y and Z?
Answer:
For Y = 7.31%
For Z = 1.25%
Explanation:
The computation of reward-to-risk ratios of Y and Z is shown below:-
Reward to Risk Ratio = (Expected Return of Security - Risk free Return) ÷ Beta of Security
Reward to Risk Ratio Y = (13.05% - 5%) ÷ 1.10
= 7.31%
Reward to Risk Ratio Z = (6% - 5%) ÷ 0.80
= 1.25%
hence, the same is to be considered
JebCo has a $600,000 mortgage payable. The mortgage has a 4% interest rate. JebCo's monthly payments are $4,546. (Round all answers to the nearest dollar). a. Prepare the journal entry to record the first monthly payment on June 30, 2020? 6/30/2020 b. What is the Principal Balance of the Mortgage after the second monthly payment?
Answer:
a.
6/30/2020
Dr. Interest Expense ______ $2,000
Dr. Mortgage Loan Payable _ $2,546
Cr. Cash ________________ $4,546
b.
The Principal Balance of the mortgage is $594,899.51
Explanation:
As the monthly payment of $4,546 includes the principal and interest payment as well. First we need to determine the interest payment and then the residual value of the payment will be assigned to the principal payment.
a.
First Monthly payment
Interest payment = $600,000 x 4% x 1/12 = $2,000
Pricipal Payment = Monthly payment - Interest payment = $4,546 - $2,000 = $2,546
Balance of mortgage after payment = $600,000 - $2,546 = $597,454
Second Monthly payment
Interest payment = $597,454 x 4% x 1/12 = $1,991.51
Pricipal Payment = Monthly payment - Interest payment = $4,546 - $1,991.51 = $2,554.49
Balance of mortgage after payment = $597,454 - $2,554.49 = $594,899.51
The EU regulates taxes on Internet sales and the amount of pollution differently than the U.S. government. U.S. companies doing business in the EU:A. Are required to comply with EU regulations only if their main headquarters are located within the European Union B. Must pay taxes to the EU when conducting all business globally if they wish to do any business in the EU. C. Must comply with EU regulations when doing business in the European Union only D. Are never required to comply with EU regulations as long as they are headquartered in the United States E. Have the option to conduct business under either EU or U.S. regulations
Answer: C. Must comply with EU regulations when doing business in the European Union only.
Explanation:
European Union tax and pollution laws are meant to bind only the area in the EU and not other areas. For instance, a Nebraska state law that is not law in other parts of the country only covers Nebraska and so can only be enforced there.
The same logic goes for the EU. Their laws are only applicable if you are in their area of control. This means that U.S. companies doing business in the EU must comply with EU regulations when doing business in the EU only.
Consider a capacity constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?
A) No impact on revenue or profits
B) Higher revenue and profits
C) Lower revenue and profits
D) Higher profits with no change in revenue
Answer:
The answer is "Option B"
Explanation:
In this question, Higher incomes and profits are correct because it minimizes the congestion operating frequency by 10%. It takes a long time and decreasing the processing, which would have had an impact on revenue and profit directly. Performance would grow, generating additional sales, that's why choice b is correct.
Why do you think setting goals can influence an employee's safety-related actions in the workplace?
Answer in 200 words
Answer:
Setting goals helps with knowing what to focus on and what to do at work
This helps the employee do better at work because they know exactly what they are going for
Explanation:
Just write a bunch of things about the things I said above like try to go into more detail about them I tried helping but I don’t think I can write 200 words worth of explanation on here
Answer:
well there realy inportant
Explanation:
The optimal method of production is the one that:
A.
maximizes output regardless of cost.
B.
minimizes the normal rate of return
C.
maximizes inputs.
D.
minimizes cost.
Answer:
D minimizes the cost
Explanation:
the production method that minimizes cost for a given level of output.
A share of common just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 13.9%, what is the stock price?
a) $11.04
b) $12.40
c) $13.76
d) $15.00
e) $9.42
Answer:
The correct option is b) $12.40.
Explanation:
The stock price can be calculated using the Gordon growth model (GGM) formula that assumes that dividend growth rate will be stable in the long run. The formula is given as follows:
P = d / (r - g) ……………………………………… (1)
Where;
P = Stock price = ?
d = next year dividend = Dividend just paid * (1 + Dividend growth rate) = $1.00 * (1 + 0.054) = $1.00 * 1.054 = $1.054
r = required rate of return = 13.9% = 0.139
g = dividend constant growth forever = 5.4%, or 0.054
Substituting the values into equation (1), we have:
P = $1.054 / (0.139 - 0.054)
P = $1.054 / 0.085
P = $12.40
Therefore, the stock price $12.40. That is, the correct option is b) $12.40.
Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July’s activities: On July 1:
Beginning inventories 850 units, 60% complete
Direct materials cost $5,000
Conversion costs $4,000
During July:
Number of units started 15,000
Direct materials added $155,000
Conversion costs added $83,520
On July 31:
Ending inventories 1,600 units, 40% complete
Using the FIFO method and rounding cost per unit to four decimal places, the cost of goods completed and transferred out during July was:_________
Answer:
$227,270
Explanation:
The computation of the cost of goods completed and transferred out is shown below
Particulars Direct materials Conversion costs
Beginning inventories 0 340
(850 × 40%)
Units started
and completed 13400 13400
(15,000 - 1,600)
Ending inventories 1600 640
(1,600 × 40%)
Equivalent units 15000 14380
Current costs $155000 $83520
Cost per Equivalent unit $10.3333 $5.8081
Cost of goods completed and transferred out is
= ($5000 + $4000) + (340 × 5.8081) + 13400 × (10.3333 + 5.8081)
= $227,270