Answer:
1. $1,930,000
2. Margin = 15%
Turnover = $2.8
Return on investment = 42%
3. $521,100
Explanation:
1. The computation of average operating assets for last year is shown below:-
Average operating assets = (Beginning operating assets + Ending operating assets) ÷ 2
= ($2,562,000 - $399,000 - $253,000) + ($2,634,000 - $434,000 - $250,000) ÷ 2
= ($1,910,000 + $1,950,000) ÷ 2
= $3,860,000 ÷ 2
= $1,930,000
2. The computation of company's margin, turnover, and return on investment is shown below:-
Margin = Net operating income ÷ Sales
= $810,600 ÷ $5,404,000
= 15%
Turnover = Sales ÷ Average operating assets
= $5,404,000 ÷ $1,930,000
= $2.8
Return on investment = Margin × Turnover
= 15% × $2.8
= 42%
3. The computation of residual income last year is shown below:-
Residual income last year = Net operating income - Minimum required return
= $810,600 - ($1,930,000 × 15%)
= $810,600 - $289,500
= $521,100
So, we have applied the above formula.
Match the following terms with the best definition given.
a. Currently attainable standard
b. Favorable cost variance
c. Ideal standard
d. Nonfinancial performance measure
e. Unfavorable cost variance
- An example is number of customer complaints.
- Actual cost > standard cost at actual volumes
- Actual cost < standard cost at actual volumes
- Normal standard
- Theoretical standard
Answer: Please refer to Explanation
Explanation:
a. Currently attainable standard - Normal standard.
When a company says that a certain level of production is it's Currently Attainable Standard, they mean that this is the normal standard that they are able to operate in. That it is the standard that they have the actual capacity to produce at and so is normal for them.
b. Favorable cost variance - Actual cost < standard cost at actual volumes.
Variance cost in production is a measure that compares the cost that a company budgets to be able to produce a good vs the actual amount it takes to produce the said good. When the Budget is higher than the actual cost of production, it is said to be a FAVOURABLE balance because the budget was not exceeded.
c. Ideal standard - Theoretical standard.
This is the Standard that the company would like to be producing at to make a certain level of profit. It is usually different from the Normal Standard and the goal of most of not all companies is to work towards attaining their Ideal standard. They usually make Theoretical forecasts about their Ideal Standard.
d. Nonfinancial performance measure - An example is number of customer complaints.
There are many ways to measure performance but those ways are usually group into 2 categories being Financial and Non-financial measures of performance. The number of customer complaints that a business gets is a type of Non-financial Performance. As the intended market for a product, Customers are the most important appraisers of a Company's goods and services and if there are relatively low customer complaints, this shows that the company is performing well as they are able to please their customers.
e. Unfavorable cost variance - Actual cost > standard cost at actual volumes
As mentioned before, Variance helps determine the cost of production vs the budgeted cost of production. When a cost Variance is labeled as Unfavourable, it means that the Actual Cost exceeded the Budget of the production activity. This is unfavourable because it means that the business had to spend more than it thought it would on production thereby harming it's profit margins.
Laurie saved for six months to have enough money to buy a new designer outfit to wear to a special party. She had to travel to a larger city to purchase this outfit, but it was worth it to her because it made her feel beautiful and confident. The difference between the benefits Laurie perceived from this purchase and the cost to her to acquire these benefits describes her _____.
Answer: B) customer value
Explanation:
Customer Value refers to the perception of what the good in question is worth to the customer buying it as opposed to other alternatives. Essentially, how much is it worth to the buyer vs the opportunity costs of buying it. The customer values a good when they feel like they gained more benefits than they paid for or that it was an equal trade-off and so do not mind the cost.
Laurie gained confidence and felt beautiful as a result of the attire and so decided that the cost was worth it.
Worth refers to whether the consumer feels he or she received more benefits and services than he or she paid for.
What is the customer Value?Customer value is the financial compensation that a customer receives in exchange for the amount paid for a market item.
In general, a client evaluates the net benefits of one item to those of its prospective alternatives. It aids in determining whether the client believes they received adequate value for the cost of the offering.
Thus, Option B is correct about Laurie.
For more information about Customer Value refer to the link:
https://brainly.com/question/15236362
During January 2018, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $20,000 cash. Purchased $5,000 of equipment, paying $1,000 cash and signing a promissory note for $4,000. Received $9,000 in cash for consulting services performed in January. Purchased $1,500 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $16,000. Paid $750 on account. Paid $3,000 to employees for work performed during January. Received a bill for utilities for January of $3,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January?
Answer:
The total or gross revenue for this company on the income statement would be the sum of:
$9,000 received in cash for consulting services performed in January$16,000 worth of consulting services that will be paid on account.So the total revenue will be $25,000.
This is because revenue is different from cash: as long as the sales are made, they are counted as revenue even if they are on account, and no cash payment has been made.
Two mutually exclusive investment opportunities require an initial investment of $10 million. Investment A pays $1.5 million per year in perpetuity, while investment B pays $1.2 million in the first year, with cash flows increasing by 3% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent?
Answer: 15%
Solving this would require finding the rate/cost of capital that gives both investments the same present value.
Investment 1
Investment 1 is a perpetuity which means that it's present value can be calculated as,
= Amount/rate
= 1,500,000/r
Investment 2
Investment 2 pays $1,200,000 in the first year and then grows at a rate of 3% every year afterwards.
The Present Value of such can be calculated with the following equation,
= Amount / ( rate/cost of capital - growth rate)
= 1,200,000 / ( r - 3%)
To find the Rate that gives both figures the same Present Value, simply equate them.
1,500,000/r = 1,200,000 / (r - 3%)
1,500,000(r - 3% ) = 1,200,000r
1,500,000r - 45,000 = 1,200,000r
300,000r = 45,000
r = 45,000/300,000
r= 0.15
r = 15%
At 15% an investor regard both opportunities as being equivalent.
You have a portfolio that is invested 17 percent in Stock A, 38 percent in Stock B, and 45 percent in Stock C. The betas of the stocks are .62, 1.17, and 1.46, respectively. What is the beta of the portfolio
Answer:
The portfolio beta is 1.207
Explanation:
The portfolio beta is the weighted average of the individual stock betas that form up the portfolio. The weightage of each stock in the portfolio is calculated on the basis of investment in that stock as a proportion of total investment in the portfolio. The portfolio beta is calculated as follows,
Portfolio beta = Weight of Stock A * Beta of Stock A + Weight of Stock B * Beta of Stock B + ... + Weight of Stock N * Beta of Stock N
Portfolio beta = 0.17 * 0.62 + 0.38 * 1.17 + 0.45 * 1.46
Portfolio beta = 1.207
Process Costing using First-in-First Out (FIFO) Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company's Assembly Department for the month of October.
Cost in beginning work in process inventory $1,920
Units started and completed this month 3,130
Materials Conversion:
Cost per equivalent unit $9.50 $20.40
Equivalent units required to complete the units in
beginning work in process inventory 360 140
Equivalent units in ending work in process inventory 330 264
Required:
a. Determine the cost of ending work in process inventory
b. Determine the cost of units transferred out of the department during October.
Answer:
Cost of ending inventory= $8,520.6
Total cost of units transferred out=$99,863
Explanation:
Cost of ending inventory
Cost of items of inventory = cost per equivalent unit × No of units
Cost of items of inventory = ($9.50×330) + ($20.40 × 264)= $8,520.6
Total cost of units transferred out
The FIFO method of valuation of working in progress separates the units transferred out into opening inventory and fully worked.
The fully worked represents the units of inventory started and completed in the sames period.
The cost of units transferred out is the sum of h opening inventory and he fully worked. This done below:
Opening inventory = ($9.50 × 360) + ($20.40×140)= 6276
Transferred of fully worked = $(9.50 +$20.40) × 3,130= 93,587
Total cost of units transferred out = (6276 +93587)= $99,863
In 2021, the Marion Company purchased land containing a mineral mine for $1,150,000. Additional costs of $448,000 were incurred to develop the mine. Geologists estimated that 310,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $110,000.
To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $102,300. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $51,500 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $5,000 after the mining project is completed.
In 2021, 41,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 310,000 to 397,500. During 2019, 71,000 tons were extracted, of which 51,000 tons were sold.
Required:
a. Compute depletion and depreciation of the mine and the mining facilities and equipment for 2018 and 2019. Marion uses the units-of-production method to determine depreciation on mining facilities and equipment.
b. Compute the book value of the mineral mine, structures, and equipment as of December 31, 2019.
Answer:
Marion Company
a1) Depletion of the Mine for two years:
2018: 41,000/310,000 * $1,488,000 = $196,800
2019: 51,000/397,500 * $1,488,000 = $190,913
a2) Depreciation of Mining Facilities:
2018: 41,000/310,000 *$102,300 = $13,530
2019: 51,000/397,500 * $102,300 = $13,125
a3) Depreciation of Mining Equipment
2018: 41,000/310,000 *$46,500 = $6,150
2018: 51,000/397,500 * $46,500 = $5,966
b) Book Values December 31, 2019:
1) Mineral Mine:
Cost = $1,598,000
Accumulated Depletion $387,713 (2018 & 2019)
Book Value = $1,210,287
b2) Structures:
Cost = $102,300
Accumulated Depreciation $26,655 (2018 & 2019)
Book Value = $75,645
b3) Equipment:
Cost = $51,500
Accumulated Depreciation $12,116
Book Value = $39,384
Explanation:
a) Cost of Mine:
Land $1,150,000
Development $448,000
Less Resale ($110,000)
Total cost = $1,488,000
b) Cost of Facilities or Structure:
Building cost = $102,300
c) Cost of Equipment = $51,500 - $5,000 = $46,500
d) Depletion is an accrual accounting technique used to allocate the cost of extracting natural resources. It is like depreciation and amortization, which lower the cost value of an asset incrementally through periodic charges to income.
e) Depreciation is an accounting method for allocating the cost (the value used up) of a tangible or physical asset over its useful life.
2. Which of the following is an example of the globalization of production? a. Pepsico sells the same brand of pringles in multiple markets but with flavors talilored to local tastes. b. The World Trade Organization forces Venezuela to change its gasoline grade to conform to the US Clean Air Act. c. Ford manufactures a car in Michigan, but uses parts sourced from 27 countries. d. All of the above.
Answer: Ford manufactures a car in Michigan, but uses parts sourced from 27 countries
Explanation:
Globalization is the process by which businesses or organizations develop international influence or a situation whereby they start operating on international scale.
Globalization of production has to do with the producers of final finished goods relocating and moving to other parts of the world in order to source for the necessary raw materials or equipments needed to complete a product and assemble all of them at their facility.
Based on this definition, Ford manufactures a car in Michigan, but uses parts sourced from 27 countries is the right answer.
Answer: c. Ford manufactures a car in Michigan, but uses parts sourced from 27 countries
Explanation:
Globalization of production entails when companies source or gather best materials or services from other countries in order to incorporate it to the manufacturing or establishment of the final product in another country so as to get the best reduced cost in production with best materials or services.
Ford manufactures a car in Michigan, but uses parts sourced from 27 countries follows the Globalization of production.
According to WSJ article, companies like Apple, Deere, and Walt Disney recently issued new bonds on the market, totaling $27 billion offering on a single day on Sep. 3. What explains such an increased activity in a corporate bond market
Answer: Fall in Benchmark Interest Rates.
Explanation:
This activity was caused by a Refinancing Drive. Refinancing is when entities get a new loan with a lower interest rate and pay off the older loan with a higher interest rate so that they can pay at the lower rate.
Bond interest rates are usually fixed so when interest rates in a country fall, bond holders don't benefit from that. One option they have to take advantage of that is to go on a Refinancing Drive and issue new bonds at those lower rates and then pay off the older ones.
That is what Apple, Deere, and Walt Disney have done.
Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 minusone half q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. If the firm will charge a monthly access fee plus a per hour rate, the monthly access fee will equal A. $5. B. $16. C. $1. D. $8.
Answer: B) $16
Explanation:
First lets take down the data given to us;
access from a certain leading provider can be represented as p = 5 minusone half q i.e 5 - 0.5q
Using the concept of two-part terrific which is a monopolistic market system, it is type of price discrimination where the price of goods and services are of two section namely; a lump-sum fee (expensive) as well as a per-unit charge .
Entry fees are set to be equal to the consumer surplus in the competitive equilibrium.
So we calculate our price and quantity in the competitive equilibrium first, marginal cost is equal to price
5 - 0.5q = 1
4 / 0.5 = q
q = 8
Now the intercept of the demand curve at the vertical axis is 5,
so the consumer surplus in the competitive equilibrium is:
M = (5 - 1) * 8 / 2
M = 4 * 4
M = 16
the monthly access fee will be equal to $16.
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2013, net credit sales totaled $4,500,000, and the estimated bad debt percentage is 1.5%. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2013 and $40,000, after adjusting entries, at the end of 2013.
Required:
1. What is bad debt expense for 2013?
2. Determine the amount of accounts receivable written off during 2013.
3. If the company uses the direct write-off method, what would bad debt expense be for 2013?
Answer:
1. The Bad debt expense for 2013 is $67,500
2. The amount of accounts receivable written off during 2013 is $69,500
3. If the company uses the direct write-off method, the bad debt expense for 2013 would be $69,500
Explanation:
1. In order toCalculate the bad debt expense for 2013 we would have to make the following calculation:
Bad debt expense=1.5% of Net Credit Sales
=1.5%×$4,500,000
=$67,500
The Bad debt expense for 2013 is $67,500
2. In order to Determine the amount of accounts receivable written off during 2013 we would have to make the following calculation:
amount of accounts receivable written off=$42,000+$67,500-$40,000
amount of accounts receivable written off=$69,500
The amount of accounts receivable written off during 2013 is $69,500
3. Using direct write off method, the bad debt expense is recognized only when the actual bad debt is incurred. The actual bad expense would be the amount of accounts receivable written off during the year. Accounts receivable written off during the year would be same in both the methods.
Thus, the bad debt expense for the year 2013 would be $69,500.
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 49 range instruments and 297 pressure gauges were produced, and overhead costs of $88,560 were estimated. An analysis of estimated overhead costs reveals the following activities.
Activities Cost Drivers Total Cost
1. Materials handling Number of requisitions $38,850
2. Machine setups Number of setups 26,190
3. Quality inspections Number of inspections 23,520
$88,560
The cost driver volume for each product was as follows.
Cost Drivers Instruments Gauges Total
Number of requisitions 420 630 1,050
Number of setups 225 260 485
Number of inspections 265 225 490
Determine the overhead rate for each activity.
Overhead Rate
Materials handling $
Machine setups $
Quality inspections $
Assign the manufacturing overhead costs for April to the two products using activity-based costing.
Instruments Gauges
Total cost assigned $ $
Overhead cost per Unit $ $
Answer and Explanation:
1. The computation of overhead rate for each activity is shown below:-
Overhead rate for each activity Overhead Rate
Materials handling 37
($38,850 ÷ 1,050)
Machine setups 54
($26,190 ÷ 485)
Quality inspections 48
(23,520 ÷ 490)
2. The computation of assignment of manufacturing overhead costs for April to the two products using activity-based costing is shown below:-
Assignment of Instruments Gauges
manufacturing
overhead costs
Materials handling $37 × 420 $15,540 $37 × 63 $23,310
Machine setups $54 × 225 $12,150 $54 × 260 $14,040
Quality inspections $48 × 265 $12,720 $48 × 225 $10,800
Total cost assigned $40,410 $48,150
Overhead cost
per Unit $40,410 ÷ 49 $824.69 $48,150 ÷ 297 $162.12
Therefore we have applied the above formula.
A water utility is planning to construct a grease treatment facility so that local haulers will not have to transport grease to a city 550 km away. The facility will cost $400,000 to build and $160,000 per year to operate. Benefits to the haulers and restaurant owners (through reduced costs) are expected to be $250,000 per year. If the facility will have a 10-year life, the B/C ratio at 6% per year is closest to:
Answer:
The B/C ratio at 6% per year is closest to 1.17
Explanation:
In order to calculate the B/C ratio at 6% per year we would have to make first the following calculations:
Present Worth(PW) of annual operating cost (excel formula) =PV(0.06,10,160000,0) = $1,177,613.93
PW of annual benefit (excel formula) =PV(0.06,10,250000,0) = $1,840,021.76
Present cost (at beginning of project) = $400,000
Therefore, to calculate the B/C ratio at 6% we would use the following formula:
B/C ratio at 6%=PW of benefits-PW of disbenefits/Initial cost+PW of operating and maintenance-PW of salvage value
B/C ratio = ($1,840,021.76 - 0)/($400,000 - $1,177,613.93) = 1.17
Todd can afford to pay $375 per month for the next 7 years in order to purchase a new car. The interest rate is 6.5 percent compounded monthly. What is the most he can afford to pay for a new car today
Answer:
The most he can afford to pay = $25,260.07
Explanation:
The most he can afford to pay is the present value of the $375 per month discounted at the interest rate of return of 6.5% p.a
PV = A× (1- (1+r)^(-n))/r
PV = ?, A- 375, r- 6.5/12= 0.541% n= 12×7 = 84
PV = 375× (1- (1.00541)^(-84) )/0.00541= 25260.071
The most he can afford to pay = $25,260.07
Note: the monthly interest rate needed to be computed by dividing 6.5% by 12 and the number of months in 7 years is 7 × 12 = 84
Metro Services, Inc. reported the following information for the year 2019. Based on the following information, calculate the rate of return on total assets for Metro Services, Inc. (Round the percentage to two decimal places.)Total Assets, December 31, 2019$599,000Total Assets, December 31, 2018$505,000For Year Ended December 31, 2019: Interest Expense$27,900 Net Income$67,100A. 7.78%B. 7.10%C. 11.20%D. 17.21%
Answer:
Option D,17.21% is correct
Explanation:
The total assets deployed in generating profit for the year is the average of the beginning assets of $599,000 and the closing assets of $505,000 which translated into $552,000 i.e ($599,000+$502,000)/2
The total return on assets is the profit before interest, hence the interest of $27,900 is added to net income of $67,100 to give total return on assets in dollar terms i.e $95,000($27,900+$67,100)
The return on total assets=total return/average assets=$95,000/$552,000=17.21%
Blythe Company has provided the following information: Sales price per unit $40 Variable cost per unit 18 Fixed costs per month 12,800 What is the amount of sales in dollars required for Blythe to break even? (Round any percentages to two decimal places and your final answer to the nearest dollar.)
Answer:
Break-even sales in dollars = $23,273
Explanation:
The break-even point is the selling price at which the selling price, equals the cost of production. no profit is made, but no loss is incurred too.
we will use the formula for calculating required selling price, to calculate the break-even price as follows:
Required selling price = (Fixed costs + Target profit) ÷ (Contribution margin ratio)
Contribution margin ratio = Contribution margin ÷ net sales revenue
Contribution margin = sales price - variable cost
contribution margin = 40 - 18 = $22
Net sales revenue = $40
∴ contribution margin ratio = (Contribution margin ÷ net sales revenue) × 100
= 22 ÷ 40 = 55.00% = 0.55
∴ Required selling price = (Fixed costs + Target profit) ÷ (Contribution margin ratio)
Required selling price = (12,800 + 0) ÷ 55.00%
= 12,800 ÷ 0.55 = 23,272.7 = 23,273 (to the nearest dollars)
Break-even sales in dollars = $23,273
The W.C. Pruett Corp. has $200,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 11%. In addition, it has $700,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $1 million, its average tax rate is 35%, and its profit margin is 8%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
Answer:
a. Times Interest Earned (TIE) Ratio = 6.59 times
b. Return on invested capital (ROIC) = 10.48%
Explanation:
To estimate these, we have to first calculate the following:
Interest expenses = $200,000 * 11% = $22,000
Net income = Profit margin * Annual sales = 8% * $1,000,000 = $80,000
Income before tax = Net income / (1 - Average tax rate) = $80,000 / (1 - 35%) = 123,076.92
Tax = Income before tax * Tax rate = $123,076.92 * 35% = $43,076.92
Earning before interest and tax (EBIT) = Net income + Interest expenses + Tax = $80,000 + $22,000 + $43,076.92 = $145,076.92
Net operating profit after tax (NOPAT) = EBIT * (1 - Average tax rate) = $145,076.92 * (1 - 35%) = $94,300
Invested capital = Common stock + Interest-bearing debt outstanding = $200,000 + $700,000 = $900,000
a. What are its TIE ratio?
Times Interest Earned (TIE) Ratio = EBIT / Interest expenses = $145,076.92 / $22,000 = 6.59 times
This indicates that the income of the W.C. Pruett Corp. is 6.59 times greater than its annual interest expense.
b. What are its return on invested capital (ROIC)?
ROIC = NOPAT / Invested capital = $94,300 / $900,000 = 0.1048, or 10.48%
Public television periodically runs pledge drives to raise money. Only a small percentage of the people who benefit from public television are willing to pay. This low percentage of people willing to contribute illustrates a difficulty with:____________.
Answer
voluntary programs
Explanation:
voluntary programs or activities that are usually individual or people voluntarily participate in and they are not paid for it. sometimes, voluntary programs are made for profit and sometimes not for profit.
pledge drive is a vivid example of a voluntary program. sometimes, only some few public television are able to get donations to run their day to day program/activities. most times, the subscription will be an addition to others and also large source of revenue. most times the incentives to join and dangers of shirking is a problem affecting voluntary program
Why are z-scores useful?
A. They help us calculate average sales.
B. They assume a non-normal distribution
C. They let us compare variables with different scales
D. They allow us to calculate the percentage of profits
Answer:
[tex]\pi \: option \: a \: and \: c \: [/tex]
Explanation:
Hope it works out !!!
Jessica Ulta works as an employee for City Service Credit Union and is responsible for consulting on loans, talking clients through the loan process, and providing loans to members. What type of processes does Jessica primarily work with?
A. Business-facing processes
B. Industry-specific customer-facing processes
C. Customer-facing processes
D. Industry-specific business-facing processes
Cash Payback Period, Net Present Value Method, and Analysis
Elite Apparel Inc. is considering two investment projects.
The estimated net cash flows from each project are as follows:
Year Plant Expansion Retail Store Expansion
1 $450,000 $500,000
2 450,000 400,000
3 340,000 350,000
4 280,000 250,000
5 180,000 200,000
Total $1,700,000 $1,700,000
Each project requires an investment of $900,000.
A rate of 15% has been selected for the net present value analysis.
Required:
1. Compute the cash payback period for each project.
2. Compute the net present value for each project.
(Round to nearest dollar)
Answer:
Plant Expansion
Cash payback period = 2 years
NPV = $304,707.24
Retail Store Expansion
Cash payback period = 2 years
NPV = $309,744.42
Explanation:
Cash payback period measures how long it takes for the amount invested in a project to be recovered from the cumulative cash flows.
Cash payback for the Plant Expansion
Amount invested = $-900,000
Amount recovered in the first year = $-900,000 + $450,000 = $-450,000
Amount recovered in the second year = $-450,000 + $450,000 = 0
The amount invested in the project is recovered In the second year. So, the cash payback period is 2 years.
Cash payback for the Retail Store Expansion
Amount invested = $-900,000
Amount recovered in the first year = $-900,000 + $500,000 = $-400,000
Amount recovered in the second year = $-400,000 + $400,000 = 0
The amount invested in the project is recovered In the second year. So, the cash payback period is 2 years.
The 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:
Plant Expansion
Cash flow in year 0 = $-900,000
Cash flow in year 1 = $450,000
Cash flow in year 2 = $450,000
Cash flow in year 3 = $340,000
Cash flow in year 4 = $280,000
Cash flow in year 5 = $180,000
I = 15%
NPV = $304,707.24
Retail Store Expansion
Cash flow in year 0 = $-900,000
Cash flow in year 1 = $500,000
Cash flow in year 2 = $400,000
Cash flow in year 3 = $350,000
Cash flow in year 4 = $250,000
Cash flow in year 5 = $200,000
I = 15%
NPV = $309,744.42
To find the NPV using a financial calacutor:
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
I hope my answer helps you
The State of Idaho issued $2,000,000 of 7% coupon, 20-year semiannual payment, tax-exempt bonds 5 years ago. The bonds had 5 years of call protection, but now the state can call the bonds if it chooses to do so. The call premium would be 5% of the face amount. Today 15-year, 5%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2%. What is the net present value of the refunding? Because these are tax-exempt bonds, taxes are not relevant.
Answer:
$278,606
Explanation:
Calaculation of the net present value of the refunding:
The first step is to calculate call premium :
Call premium= 2,000,000 x 5%
= 100,000
Second step is to calculate the Flotation cost
Flotation cost = 2,000,000 x 2%
= 40,000
Calculation for Old interest = 2,000,000 x (7% / 2) = 70,000
Caluclatio fo New interest = 2,000,000 x (5% / 2) = 50,000
Therefore the Six months savings will be:
20,000 70,000 + 50,000 + 20,000 = 140,000
The PV of savings 30 periods 5% / 2 will be:
20,000 x 20.9303 = 418,606
Therefore the Net Present Value of the refunding will be:
418,606- 140,000
= $278,606
Alfred is saving up money for a down payment on a townhouse. He currently has $5016$ 5016, but knows he can get a loan at a lower interest rate if he can put down $5994$ 5994. If he invests the $5016$ 5016 in an account that earns 4.4%4.4% annually, compounded monthly, how long will it take Alfred to accumulate the $5994$ 5994? Round your answer to two decimal places, if necessary.
Answer:
It will take Alfred to accumulate the $5994 annually 4.1367 and monthly 4.0557
Explanation:
In order to calculate how long will it take Alfred to accumulate the $5994 we would have to use the following formula:
A=P(1+r/n)∧n*t
P=$5,016
A=$5994
r=4.4%
n=1 annually
n=12 monthly
Therefore, t annually would be as follows:
5,994=$5,016(1+(4.4%/100)/1)∧1*t
t=4.1367
Therefore, t monthly would be as follows:
5,994=$5,016(1+(4.4%/100)/12)∧12*t
t=4.0557
It will take Alfred to accumulate the $5994 annually 4.1367 and monthly 4.0557
Congress wishes to impose regulations on the insurance industry. What test would the United State Supreme Court use to determine whether such regulations would violate the substantive due process rights of insurance companies that would be subject to the regulations? What is the likely outcome of the case?
Answer:
Three part test.
The outcome: if the three requirements are not met, then there is not point the Government should interfere.
At the end, the law will be held.
Explanation:
In some cases, the courts are allowed to protect individual, company or business organization from Government interrupting with these individuals or business organization "fundamental right" and this is the "substantive due process rights " of insurance companies as mentioned in the question above.
The test that the United State Supreme Court can use to determine whether the regulations they want to enact would violate the substantive due process rights of insurance companies is what is known as the THREE PARR TEST.
THE THREE PART TEST has its root from cases such as that of Pasgraf V Long Island Railroad co. The three part test involves three main subjects and they are;
=> foreseeability: are the policies in which insurance companies work going to affect the consumers in the future?
=> proximity: what kind of relationship do the insurance companies have with there consumers?
=> fairness: are these policies just and fair?
CONCLUSION: if the three requirements are not met, then there is not point the Government should interfere.
Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $16,600,000 of five-year, 11% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Chin Company receiving cash of $15,989,036. a. Journalize the entries to record the following: Issuance of the bonds. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.
Answer:
The answer to the question is as attached
Explanation:
a. The total credit matches the debit in a total of $16,600,000
b. Cash $$15989036
Discount on bonds payable (16600000 -15989036) $610964
Bonds payable $16600000
(To record issuance of bonds)
b) Interest expense 825000+610964= $1435964
Discount on bonds payable 610964/11= $55542
Cash 16600000*11%*6/12= $913000
(To record discount amortized and interest paid)
c) Interest expense 825000+55542= $880542
Discount on bonds payable 610964/11= $55542
Cash 16600000*11%*6/12= $913000
Why Do Organizations not change in response to environmental pressures?
Answer:
It often proves difficult to actually realize the change that you have come up with. Especially when it comes to cultural or behavioral change. We want to show that change is not so much something that you have to get others to join. You have to make your change part of it
Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 25 million bottles of wine were sold every month at a price of $6 per bottle. After the tax, 20 million bottles of wine are sold every month; consumers pay $8 per bottle (including the tax), and producers receive $5 per bottle. The amount of the tax on a bottle of wine is_____________ $ per bottle. Of this amount, the burden that falls on consumers is_________ $ per bottle, and the burden that falls on producers is $___________ per bottle.?
Answer:
Explanation:
From the question, we are informed that before the tax, 25 million wine bottles were sold at price of $6 per bottle and that after the tax, 20 million bottles of wine are sold every month and the consumers pay $8 per bottle which include the tax and producers receive $5 per bottle.
The amount of tax on wine will be the difference between the price consumers pay after the tax and the price producers receive. This will be:
= $8 - $5
= $3 per bottle
The tax burden that falls on the consumers will be difference between price paid after tax and the price which is paid before the tax.
= $8 - $6
= $2 per bottle
The tax burden on the producers will be difference between price received before the tax and price received after the tax.
= $6 - $5
= $1 per bottle
Ronald, Inc. had the following balances and transactions during 2017: What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2017 balance sheet, using the periodic weighted-average inventory costing method
Answer: $707
Explanation:
Using the Periodic System means that inventory is updated per period. This means that using the Weighted Average method, Ending Inventory prices will be calculated on the basis of all inventory in the period.
Weighted Average Method aims to ascribe a single price to all the inventory units sold by a company and so divides the entire cost by the number of units.
Number of Units bought in 2017,
Opening Balance = 12 units
June 10 = 24 units.
= 12 + 24
= 36 units.
Cost of the the 36 units
= (12 * 91) + (24 * 87)
= $3,180
Weighted Average Cost,
= 3,180/36
= $88.33
During the year they sold 28 units (10 + 18) meaning that 8 units (36 - 28) were left.
The closing Inventory on the 12/31/2020 therefore is,
= 8 * 88.33
= $706.66
= $707
Oriole Company has the following items: common stock, $1610000; treasury stock, $217000; deferred income taxes, $254000 and retained earnings, $782000. What total amount should Oriole Company report as stockholders’ equity?
Answer:
Stockholders' equity = $ 2,175,000.
Explanation:
Stockholders' equity is also the corporation's total book value. In other word, it is the amount of difference between the Corporation Asset and its liability
Stockholders' equity for Oriole company can be derived using : Common stock + Retained earnings - Treasury stock
Stockholders' equity = 1,610,000 + 782,000 - 217,000
Stockholders' equity = $ 2,175,000.
We also need to know that deferred income taxes is not a component of stockholders' equity thus it will not be considered in stockholders' equity calculation.
Correct answer is $ 21,75,000.
g The law of supply states that, other things equal, an increase in a. price causes quantity supplied to increase. b. price causes quantity supplied to decrease. c. quantity supplied causes price to increase. d. quantity supplied causes price to decrease.
Answer:
a. price causes quantity supplied to increase.
Explanation:
The law of supply states that, other things equal, an increase in price causes quantity supplied to increase. An increase in price causes the supply curve to slope upward, thus, giving producers of goods and service providers, an incentive to supply more quantity of their products and vice-versa.
Also, the demand for goods and services has an effect on the quantity of goods and services provided by the producers or suppliers. Hence, an increase in the demand for a product would result in an increase in price, thereby causing the producers to supply more quantity in order to maximize profits.
For instance, an electronic gadget company will manufacture more television sets if the price of those television increases.