Answer:
2.41%
Explanation:
The difference between the two firms' ROEs is shown below:-
Particulars Firm HD Firm LD
Assets $200 Debt ratio 50% Debt ratio 30%
EBIT $40 Interest rate 12% Interest rate 10%
Tax rate 35%
Debt $100 $60
Interest $12 $6
($100 × 12%) ($60 × 10%)
Taxable income $28 $36
($40- $12) ($40 - $6)
Net income $18.2 $22.1
$28 × (1 - 0.35) $36 × (1 - 0.35)
Equity $100 $140
($200 - $100) ($200 - $60)
ROE 18.2% 15.79%
($18.2 ÷ $100) ($22.1 ÷ $140)
Taxable income = EBIT - Interest
Net income = Income - Taxable income
Equity = Assets - Debt
ROE = Net income ÷ Equity
Difference in ROE = ROE Firm HD - ROE Firm LD
= 18.2% - 15.79%
= 2.41%
So, for computing the difference between the two firms' ROEs we simply deduct the ROE firm LD from ROE firm HD.
Kat Outfitting currently has $22,500 in cash. The company owes $49,500 to suppliers for merchandise and $52,500 to the bank for a long-term loan. Customers owe the company $41,000 for their purchases. The inventory has a book value of $76,800 and an estimated market value of $72,000. If the store compiled a balance sheet as of today, what would be the book value of the current assets?
Answer:
The book value of the current assets is $140,300
Explanation:
Cash = $22,500
Amount owed by company = $49,500
Amount Owed by Customers = $41,000
Book Value of Inventory = $76,800
Estimated market value = $72,000
Book Value of Current Assets = Cash + Amount Owed by Customers + Book Value of Inventory
Book Value of Current Assets = $22,500 + $41,000 + $76,800
Book Value of Current Assets = $140,300
Section 103 of the Federal Public Works Employment Act establishes the Minority Business Enterprise program and requires that, absent a waiver by the secretary of commerce, 10 percent of all federal grants given by the Economic Development Administration be used to purchase services or supplies from businesses owned and controlled by U.S. citizens belonging to one of six minority groups: African Americans, Spanish speaking, Asian, Native American, Eskimo, and Aleut. White owners of business contend the Act constitutes illegal reverse discrimination. Discuss.
Explanation:
Looking from a fair point of view, the White owners of businesses have legitimate reasons to feel that the Act constitutes illegal reverse discrimination.
Remember, reverse discrimination implies an unfair treatment of the majority group (White owners) in an effort to please the minority group. This is evident from the fact that the 10 percent of all federal grants to be released by the Economic Development Administration was only to be used to purchase services or supplies from businesses owned and controlled by U.S. citizens belonging to one of six minority groups excluding the White business owners; making the White owners feel discriminated against.
Thus, unintentionally the Act became a reverse discrimination on White business owners.
Belltone Company made the following expenditures related to its 10-year-old manufacturing facility:
1. The heating system was replaced at a cost of $185,000. The cost of the old system was not known. The company accounts for improvements as reductions of accumulated depreciation.
2. A new wing was added at a cost of $740,000. The new wing substantially increases the productive capacity of the plant.
3. Annual building maintenance was performed at a cost of $22,000.
4. All of the equipment on the assembly line in the plant was rearranged at a cost of $34,000. The rearrangement clearly increases the productive capacity of the plant.
Required:
Prepare journal entries to record each of the above expenditures.
Answer: The answer is given below
Explanation:
A journal is a detailed account that is used in a business or an organization in order to record every financial transactions thatbtskes place in the business or organization who ch will be used for reconciliation of account in the future and also transfer to every other accounting records, like the general ledger.
The journal entries to record the expenses made by Belltone Company relating to its 10-year-old manufacturing facility has been prepared and attached.
CommercialServices Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: Sales $ 3,000,000 Net operating income $ 150,000 Average operating assets $ 750,000 The following questions are to be considered independently. Garrison 16e Rechecks 2019-01-10 Required: 1. Compute the company's return on investment (ROI).
Answer:
The answer is 0.20 or 20%
Explanation:
Solution
Given that:
The sales = $ 3,000,000
The Net operating income= $150,000
The Average operating assets =$ 750,000
The next step is to calculate the company return rate of investment
Thus,
The return of investment is stated as follows:
the return of investment = Net operating income divided by the average operating assets * 100
= $150,000/$750,000
= 0.2 * 100
= 20 %
Therefore, the company's ROI is 20%
Valley Technology Balance Sheet As of March 11, 2020 (amounts in thousands) Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100 Use T-accounts to record the transactions below, which occur on March 12, 2020, close the T-accounts, and construct a balance sheet to answer the question. 1. Buy $15,000 worth of manufacturing supplies on credit 2. Issue $85,000 in stock 3. Borrow $63,000 from a bank 4. Pay $5,000 owed to a supplier 5. Receive payment of $12,000 owed by a customer What is the final amount in Total Liabilities?
Answer:
total liabilities = accounts payable $11,500 + unearned revenue $7,500 + debt $65,900 + other liabilities $800 = $85,700
Explanation:
Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100
1. Buy $15,000 worth of manufacturing supplies on credit
Supplies Accounts payable
debit credit debit credit
15,000 1,500
15,000
16,500
2. Issue $85,000 in stock
Cash Paid-In Capital
debit credit debit credit
9,700 7,300
85,000 85,000
94,700 92,300
3. Borrow $63,000 from a bank
Cash Debt
debit credit debit credit
94,700 2,900
63,000 63,000
157,700 65,900
4. Pay $5,000 owed to a supplier
Cash Accounts payable
debit credit debit credit
157,700 16,500
5,000 5,000
152,700 11,500
5. Receive payment of $12,000 owed by a customer
Cash Accounts receivable
debit credit debit credit
152,700 4,500
12,000 12,000
164,700 7,500
Due to some strange reason, accounts receivable has a debit balance (= $4,500 - $12,000). Since that is not possible, the remaining part $7,500 must be included under unearned revenue:
Accounts receivable Unearned revenue
debit credit debit credit
7,500 0
7,500 7,500
0 0 7,500
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the units-of-production method.
Answer:
$25,800
Explanation:
The units-of-production deprecation method depreciates an asset based on the total units produced each year.
Unit of production depreciation expense = (units produced / total expected units of production) × (cost of asset - salvage value)
(64,500 / 300,000) x ($135,000 - $15,000)
0.215 x $120,000 = $25,800
I hope my answer helps you
Freya Co. has two patents that have allegedly been infringed by competitors. After investigation, legal counsel informed Freya that it had a weak case for Patent A34 and a strong case in regard to Patent B19. Freya incurred additional legal fees to stop infringement on Patent B19. Both patents have a remaining legal life of 8 years. How should Freya account for these legal costs incurred relating to the two patents?
Answer:
Freya needs to expense costs for Patent A34 and capitalize costs for Patent B19.
Explanation:
Based on the scenario being described it can be said that Freya needs to expense costs for Patent A34 and capitalize costs for Patent B19. That is because a successful defense of a patent needs to be capitalized and amortized since you can now monetize and recover the costs incurred as well as make a profit off of the patent. On the other hand, unsuccessful defense of a patent needs to be expensed as incurred since that patent cannot be used to make money and recover costs.
You own a portfolio that has a total value of $210,000 and it is invested in Stock D with a beta of .87 and Stock E with a beta of 1.38. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D
Answer:
The dollar amount of the investment in Stock D is (x=$156470.59)
Explanation:
Let assume investment in Stock D = $x
Hence investment in Stock E = (210,000-x)
Portfolio beta=Respective betas * Respective investment weights
1= (x/210,000*0.87) + (210,000-x) /210,000*1.38[Beta of market=1]
(1*210,000) = 0.87x + 289800 -1.38x
290,000=0.87x+289800-1.38x
Hence x=(289800-210,000)/(1.38-0.87)
x= 79,800 / 0.51
x=156470.5882
x=$156470.59
Maria Am Corporation uses a process costing system. The Baking Department is one of the processing departments in its strudel manufacturing facility. In June in the Baking Department, the cost of beginning work in process inventory was $3,570, the cost of ending work in process inventory was $2,860, and the cost added to production was $43,120. Required: Prepare a cost reconciliation report for the Baking Department for JuneBanking DeparmentBost ReconciliationCosts to be accounted forBlank blank blank amountBlank blank blank amountTotal costs to be accounted forCosts accounted for as followsBlank blank blank amountBlank blank blank amountTotal cost accounted for
Answer:
Explanation:
The following information can be derived from the question above:
The cost of the beginning work in the process inventory = $3,570
The cost of the ending work in the process inventory = $2,860
The cost that is added to the production = $43,120.
In the attached document, it should be noted that the cost of goods that were transferred out was calculated as:
The total cost to be accounted for minus the cost of the ending work in the process inventory. This is:
= 46690 - 2860
= 43830
The cost reconciliation report for the Baking Department for June has been solved and attached.
Portions of the financial statements for Peach Computer are provided below.PEACH COMPUTERIncome StatementFor the year ended December 31, 2021Net sales $ 1,875,000 Expenses: Cost of goods sold $ 1,080,000 Operating expenses 590,000 Depreciation expense 53,000 Income tax expense 43,000 Total expens 1,766,000 Net income $ 109,000 PEACH COMPUTERSelected Balance Sheet DataDecember 312021 2020 Increase (I)orDecrease (D)Cash $ 105,000 $ 86,500 $ 18,500 (I)Accounts receivable 45,300 50,500 5,200 (D)Inventory 78,000 56,500 21,500 (I)Prepaid rent 3,300 5,600 2,300 (D)Accounts payable 48,000 38,500 9,500 (I)Income tax payable 5,300 11,500 6,200 (D)Required:Prepare the operating activities section of the statement of cash flows for Peach Computer using the direct method. (List cash outflows and any decrease in cash as negative amounts.)
Answer:
Cash flow from Operating Activities
Cash Receipts from Customers $1,880,200
Cash Paid to Suppliers and Employees ($1,679,700)
Cash Generated from Operations $ 200,500
Income taxes paid ($49,200)
Cash flow from Operating Activities $ 151,300
Explanation:
Cash Receipts from Customers Calculation
Net sales $ 1,875,000
Add Decrease in Accounts receivable $ 5,200
Cash Receipts from Customers $1,880,200
Cash Paid to Suppliers and Employees
Cost of goods sold $ 1,080,000
Add Operating Expenses
Operating expenses $ 590,000
$1,670,000
Increase in Inventory $ 21,500
Decrease in Prepaid rent ($ 2,300)
Increase in Accounts payable ($ 9,500)
Cash Paid to Suppliers and Employees $1,679,700
Income taxes paid Calculation
Open an Income taxes Payable T - Account as follows :
Debits :
Closing Balance $ 5,300
Cash (Balancing figure) $49,200
Totals $54,500
Credit :
Opening Balance $ 11,500
Income Statement $43,000
Totals $54,500
Maquoketa Services was formed on May 1, 2017. The following transactions took place during the first month.
Transactions on May 1:
1. Jay BradFord invested $40,000 cash in the company, as its sole owner.
2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.
3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.
4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.
5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.
Transactions during the remainder of the month:
6. Purchased basic office supplies for $420 cash.
7. Purchased more office supplies for $1,500 on account.
8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.
9. Paid $400 to suppliers for accounts payable due.
10. Received $3,000 from customers in payment of accounts receivable.
11. Received utility bills in the amount of $380, to be paid next month.
12. Paid the monthly salaries of the two employees, totaling $6,100.
Prepare journal entries to record each of the events listed. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
1. Jay BradFord invested $40,000 cash in the company, as its sole owner.
Account Debit Credit
Cash $40,000
Capital $40,000
2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.
Account Debit Credit
Wage Expense $3,050
Wages Payable $3,050
3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.
Account Debit Credit
Prepaid Rent $24,000
Cash $24,000
4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.
Account Debit Credit
Furniture and Equipment $30,000
Cash $10,000
Accounts Payable $10,000
5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.
Account Debit Credit
Prepaid Insurance $1,800
Cash $1,800
6. Purchased basic office supplies for $420 cash.
Account Debit Credit
Office supplies $420
Cash $420
7. Purchased more office supplies for $1,500 on account.
Account Debit Credit
Supplies $1,500
Accounts Payable $1,500
8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.
Account Debit Credit
Revenue $20,000
Cash $8,000
Accounts Receivable $12,000
9. Paid $400 to suppliers for accounts payable due.
Account Debit Credit
Accounts Payable $400
Cash $400
10. Received $3,000 from customers in payment of accounts receivable.
Account Debit Credit
Accounts Receivable $3,000
Cash $3,000
11. Received utility bills in the amount of $380, to be paid next month.
Account Debit Credit
Utility Expense $380
Accounts Payable $380
12. Paid the monthly salaries of the two employees, totaling $6,100.
Account Debit Credit
Wage Expense $3,050
Wages Payable $3,050
The first year after you retire you want to be able to withdraw $100,000 from your savings account. Every year after that you want to increase your withdrawals by 2%. You expect that the account will earn 6% annual interest. How much money must you have in your savings account when you retire to make sure that your money lasts for 25 years
Answer:
Total amount of money to be had in savings is $1,544,352.63
Explanation:
First withdrawal is $100,000 and is increases by 2% every year till 25 years.
The amount required in savings account can be calculated by knowing the present value of growing annuity.
Annuity = [tex](p /(r-g) *[ 1 -(1+g / 1+r)^n][/tex]
given, p = $100,000
r = 6% = 0.06
g=2% = 0.02.
n = number of periods = 25.
= (100,000 ÷ (0.06 - 0.02)) × [ 1 - (1.02 ÷ [tex]1.06)^{25[/tex] ]
= $2,500,000 × [1 - 0.382258949]
= $2,500,000 × 0.61774105
= $1,544,352.63
Kenzie is a research scientist in Tallahassee, Florida. Her spouse Gary stays home to take care of their house and two dogs. Kenzie's total wages for 2019 were $60,500 from which $5,900 of federal income tax was withheld. Calculate the income tax due or income tax refund on Kenzie and Gary's 2019 individual income tax return. Use the tax formula for individuals and show your work.
Answer:
tax due 1,848 (presenting head of household)
Explanation:
They will use Head of household
As Gary do not work and this will report the better tax-burden for them
Tax bracket table for the year ended December 31th 2019
10% $ 0 to $13,850
12% $13,851 to $52,850
22% $52,851 to $84,200
13.850 x 10% = 1,385
(52,850 - 13,850) x 12% = 4,680
(60,500 - 52,850) x 22% = 1,683
Total tax: 7.748
tax due 7,748 - 5,900 = 1,848
Suppose your employer offers you a choice between a $ 4 comma 600 bonus and 200 shares of the company stock. Whichever one you choose will be awarded today. The stock is currently trading for $ 64 per share. Ignore transaction costs. a. Suppose that if you receive the stock bonus, you are free to trade it. Which form of the bonus should you choose? What is its value? b. Suppose that if you receive the stock bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus now? What will your decision depend on?
Answer:
a. Suppose that if you receive the stock bonus, you are free to trade it. Which form of the bonus should you choose? What is its value?
I would choose the stock bonus because the current market price = 200 x $64 = $12,800 which is much higher than $4,600 (cash bonus)
b. Suppose that if you receive the stock bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus now? What will your decision depend on?
Even if you are required to hold the stock for one year, the price difference with the cash bonus is too great = ($12,800 - $4,600) / $4,600 = 178% higher. Since you are employed by the company, you should know if the company is doing well or not, and the probable future stock price.
Only if something catastrophic happened to the company would make the cash bonus more attractive.
Consider each of the following independent scenarios:a.Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his hair back and sighed. December had been a bad month. Two machines had broken down, and some factory production workers (all on salary) were idled for part of the month. Materials prices increased, and insurance premiums on the factory increased. No way out of it; costs were going up. He hoped that the marketing vice president would be able to push through some price increases, but that really wasn’t his department.b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year. She was sure that her campaign to lower costs and use machinery more efficiently (enabling her factories to sell several older machines) was the reason why. Joanna planned to take full credit for the improvements at her semiannual performance review.c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing the recent cost increases for the laser printer line. Headquarters suggested raising prices. "Great," thought Gil, "an increase in price will kill sales and revenue will go down. Why can’t the plant shape up and cut costs like every other company in America is doing? Why turn this into my problem?"d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenue was down, and cost was up—what a combination! Then she had an idea. If she cut back on maintenance of equipment and let a product engineer go, expenses would decrease—perhaps enough to reverse the trend in income.e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation. A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of state-of-the-art, computer-assisted machinery. The new machinery would take time for the workers to learn to use, but once that was done, waste would be virtually eliminated.Required:For each of the above independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).
Answer: a. Cost center b. Investment center. c. Revenue center d. Profit center. d. Investment center.
Explanation:
a. Cost center
We are informed that Terrin Belson, a plant manager for the laser printer factory of Compugear Inc., complained that two machines had broken down, and some factory production workers were idled for part of the month. He also complained that materials prices has and insurance premiums on the factory has increased and costs were going up.
The responsibility center involved here is the cost center. Everything he was complaining about was with regards to the rise on costs of running the company. Therefore, the cost center should be in charge.
b. Investment center
We are told that Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year as she was sure that her campaign to lower costs and efficiently use of machinery was the reason for this.
This is the responsibility of the investment center. We can see that Joanna is talking about the increase in the return on investment. Therefore, the investment center should be responsible to handle this.
c. Revenue center
From the information, we are told that Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing recent cost increases for the laser printer line. The headquarters suggested that increase in prices will kill sales and that the revenue will go down.
The responsibility center involved in this situation is the revenue center. We can see that the headquarters was concerned that the increase will in price will affect revenue as the revenue will reduce. This is the revenue center in charge.
d. Profit center
We are told that Susan Whitehorse looked at the quarterly profit and loss statement with disgust as the revenue was down, and the cost was up. The responsibility center in charge here is the profit center as the main issue of discussion is about the profit and loss of the company.
e. Investment center
We are told that Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. and that after meeting with top staff, she gave out a 3-year plan to improve the situation as obsolete equipment will be retired and the state-of-the-art, computer-assisted machinery will be bought.
This is an investment because she told the firm to buy state-of-the-art, computer-assisted machinery will be bought in order to improve their fortunes. The responsibility center involved is the investment center.
Wattan Company reports beginning inventory of 10 units at $60 each. Every week for four weeks it purchases an additional 10 units at respective costs of $61, $62, $65, and $70 per unit for weeks 1 through 4. Compute the cost of goods available for sale and the units available for sale for this four-week period. Assume that no sales occur during those four weeks.
Answer:
Activity Units Units cost Cost of Goods Available
Beginning Inventory 10 $60.00 $600
1st week purchase 10 $61.00 610
2nd week purchase 10 $62.00 620
3rd week purchase 10 $65.00 650
4th week purchase 10 $70.00 700
Units available for sale 50
Cost of goods available for sale $3,180
Explanation:
We can compute the cost of goods available for sale and the units available for sale for this four-week period by assuming that no sales occur during those four weeks
Activity Units Unit Cost Cost of Goods Available
Beginning Inventory 10 60 600
1st Week purchase 10 61 610
2nd Week purchase 10 62 620
3rd Week purchase 10 65 650
4th Week purchase 10 70 700
Units available for sale 50
Cost of goods available for sale 3180
Thus, in the above it is shown the computing of the cost of goods available for sale and the units available for sale for this four-week period by assuming that no sales occur during those four weeks.
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As a toy company produces more toys the average total cost of each toy produced decreases. This is because: total fixed costs are decreasing as more toys are produced. average variable cost is decreasing as more toys are produced. total variable cost is decreasing as more toys are produced. None of the above.
Answer:
total fixed costs are decreasing as more toys are produced.
Explanation:
Costs are classified as variable or fixed based on their relationship with the level of activity.
At any given level of activity, variable unit costs are constant. However, the unit fixed costs decrease as more units are produced.
Completed Per Day
Flower Beds Weeded
Bags of Leaves Raked
Samantha
4
8
Adam
5
25
Samantha and Adam own a gardening business together. They each pull weeds from flower beds and rake up leaves for their neighbors. If each decides to specialize in what they are best at, Samantha will
a.weed and Adam will rake because these are the goods each has a comparative advantage in.
b.rake and Adam will weed because these are the goods each has a comparative advantage in.
c.weed and Adam will rake because these are the goods each has an absolute advantage in.
d.rake and Adam will weed because these are the goods each has an absolute advantage in.
Answer:
The correct option is A, Samantha weed and Adam will rake because these are the goods each has a comparative advantage in.
Explanation:
The opportunity formula comes handy in this case, which is given below:
opportunity cost formula=what one sacrifices/what one gains
If Samantha were to weed flower beds, opportunity cost is computed thus:
Opportunity cost of Samantha weeding flower beds=8/4= 2 bags of leaves raked
The opportunity of Adam weeding flower beds=25/5 =5 bags of leaves raked.
In a nutshell ,if Samantha weeds flowers they would lose 2 bags of leaves raked while if Adam were to do so same, they would lose 5 bags of leaves raked, conclusively Samantha should weed flower beds since she has lower opportunity, higher comparative advantage
Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner’s insurance policy is $600 for the coverage they need. Their insurance company offers a discount of 8 percent if they install dead-bolt locks on all exterior doors. The couple can also receive a discount of 5 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $105 each. At the local hardware store, smoke detectors cost $28 each, and the new house has two floors. Dave and Ellen can install them themselves.
a. What discount will Dave and Ellen receive if they install the dead-bolt locks?b. What discount will Dave and Ellen receive if they install smoke detectors?
Answer:
1. 48 dollars
2. 30 dollars
Explanation:
The yearly premium on their homeowner's insurance policy is $600 for the coverage they need.
Their insurance company offers a discount of 8 percent if they install dead-bolt locks on all exterior doors.The couple can also receive a discount of 5 percent if they install smoke detectors on each floor.
1. What discount will Dave and Ellen receive if they install the dead-bolt locks?
discount for deadbolts =
Discount % x Premium
0.08 x 600 = 48 dollars
b. What discount will Dave and Ellen receive if they install smoke detectors?
discount for deadbolts =
Discount% x Premium
0.05 x 600 = 30 dollars
Cooperton Mining just announced it will cut its dividend from $4.17 to $2.56 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.3 % rate, and its share price was $50.47. With the planned expansion, Cooperton's dividends are expected to grow at a 46% rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk). Is the expansion a good investment?
Answer: New share price= Price = $35.38. No, it's not a good investment
Explanation:
First, we have to calculate the cost of equity.
Price = Dividend/r - g
Dividend = $4.17 × (1 + 3.3%)
= $4.17 × (1 + 0.033)
= $4.17 × 1.033
= $4.30761
Price = Dividend/r - g
50.47 = 4.30761/r - 0.033
r - 0.033 = 4.30761/50.47
r - 0.033 = 0.08535
r = 0.08535 + 0.033
r = 0.11835
Now, we have to calculate the new price with dividend of $2.56 and g= 4.6%.
Price = Dividend/r - g
Price = 2.56/0.11835 - 0.046
Price = 2.56/0.07235
Price = $35.38
The expansion isn't a good investment because the stock price is s reduced from $50.47 to $35.38
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 5 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately:________.
A) 1.5.
B) 1.7.
C) 1.9.
D) 2.0.
Answer:
B) 1.7
Explanation:
GDP deflator simply shows the occurring event of the level of prices in the economy which is why It is often the ratio of nominal GDP to real GDP.
GDP deflator in 2009 will be:
Norminal GDP
Cost of apple= $1 in 2009
Apple produced =5 in 2009
Cost of oranges= $1.50 in 2009.
Orange produce= 5 in 2009
$1.00*(5)+$1.50*(5)
=5+7.5
=$12.50
Real GDP
Cost of apple= $0.50 in 2002
Apple produced =5 in 2002
Cost of oranges= $1 in 2002
Orange produce= 5 in 2002
0.50*(5)+$1.00*(5)
=2.5+5
=$7.50
GDP deflator = Nominal GDP/Real GDP)
=$12.50/$7.50
=1.666
approximately 1.7
Insurance companies facilitate the transfer of risk from Multiple Choice those who have a low-risk tolerance to those with high risk-tolerance. insurance policyholders to the government. those who have a high-risk tolerance to those with low risk-tolerance. the insurance companies' owners to the insurance policyholders.
Answer:
Those who have a low-risk tolerance to those with high risk-tolerance.
Explanation:
In Insurance, risk tolerance refers to the willingness of an individual or organization to take a risk in business transactions in order to get a potentially positive reward.
Simply stated, risk tolerance in insurance is the willingness of an insured individual to increase his or her Self-Insured Retentions (SIRs) or deductibles by the insurer. For instance, the high risk associated with investments such as stocks, high-yield bonds, is often perceived by investors to be worth the higher reward such investment brings.
Insurance companies facilitate the transfer of risk from those who have a low-risk tolerance to those with high risk-tolerance. The transfer of risk in insurance refers to the process whereby an individual or entity pay premiums to an insurer for the purpose of mitigating potential losses or liabilities.
Generally, insurance companies across the globe charge millions of their customers (insured) premiums every year. This gives them the privilege of having a pool of cash which can be used to cover the cost of losses and destruction to the asset of a small fraction or percentage of its customers.
This simply means that, since insurance companies collect premium from all of their customers for losses which may or may not occur, so they can easily use this cash to compensate or indemnify for losses incurred by those having high risk.
During the current year, the following manufacturing activity took place for a company's products. The beginning work in process, 70% complete, was comprised of 10,000 units. Units started into production during the year totaled 150,000 units. A total of 140,000 units were completed during the year. The ending work in process, 25% complete, was comprised of 20,000 units. What was the number of equivalent units using the FIFO method
Answer:
Equivalent units= 145,000 units
Explanation:
Giving the following information:
The beginning work in process, 70% complete, was comprised of 10,000 units. Units started into production during the year totaled 150,000 units. A total of 140,000 units were completed during the year. The ending work in process, 25% complete, was comprised of 20,000 units.
We need to use the following structure:
Beginning work in process = beginning inventory* %incompleted
Units started and completed = units completed - beginning WIP
Ending work in process completed= Ending WIP* %completed
=Number of equivalent units
Beginning work in process = 10,000*0.3= 3,000
Units started and completed = 140,000 - 3,000= 137,000
Ending work in process completed= 20,000*0.25= 5,000
=145,000 units
Home Corporation will open a new store on January 1. Based on experience from its other retail outlets, Home Corporation is making the following sales projections: Cash Sales Credit Sales January $60,000 $40,000 February $30,000 $50,000 March $40,000 $60,000 April $40,000 $80,000 Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale, with the balance collected in the second month following the month of sale. In a cash budget for April, the total cash receipts will be:
Answer:
$97,000
Explanation:
The computation of the total cash receipts for the month of April is shown below:
= Cash sales in April + (Credit sales in February × following second month percentage) + (Credit sales in March x following month percentage)
= $40,000 + ($50,000 x 30%) + ($60,000 x 70%)
= $40,000 + $15,000 + $42,000
= $97,000
We simply added the cash sales for one month and the credit sales for two months so that the total cash receipts could come
1. Investment in the business= $17,010
2. Borrow cash= $7620
3. Purchase equipment= the list price was $8700 but the final price was $8300
4. Revenues earned = $298,600, the cash has been collected from the customers for all revenue earned
5. Expenses incurred= total $210,900 during the same year, all expenses paid in cash
6. Dividens= end of each quarter, the company distributed cash to stockholders, the sum of those quarterly distributions was $15,000
Consider the following transactions for Thomas Company and their effect ont he accounting equation. Determine the new balance for each component of the accounting equation from the transactioon. If an amount box does not require an entry, leave it blank.
Transaction Assets =Liabilities Stockholders' Equity
Beginning $0 $0 $0
1. Investment in the business $17,160 17160
2. Borrow cash $7940 7940 7940
3. Purchase equipment 8600 7940 660
4. Revenues earned 29860 0 29860
5. Expenses incurred 210800 103660
6. Dividends 14200 88460
Answer & Explanation:
Assets = Capital + Liabilities
1) Investment Cash (+17...) (+17160)
2) Borrowings Cash (+7...) Loan (+7...)
3) Purchase Cash (-price paid) + Gain
Equip (+final price) (final - price paid)
4) Revenue Cash (+298...) Income (+298...)
5) Expense Cash (-210...) Expense (-210...)
3)* Price paid = 8700 or 8600 , Final price = 8300 or 7940 , Gain (Discount received) = 8700 - 8300 ie 400 (or) 8600 - 7940 = 660
At the Millbrook High School cafeteria, students proceed along a series of stations in a single line: (1) get tray and utensils, (2) choose food, (3) select beverage, (4) pay. The school is concerned that students are taking too long to get their meal. The school has analyzed the capacities of each of the four steps in isolation and found there exists sufficient capacity at each resource in isolation. Which of the following is most likely to be causing the congestion?a. The bottleneck is probably at the last station because capacity is reduced the most when the bottleneck is at the end of the process. b. The implied utilization of the bottleneck is too low. c. Due to variability in processing times, both blocking and starving could be occurring. d. The process must be demand-constrained. e. The stations have similar utilizations.
Answer:
c. Due to variability in processing times, both blocking and starving could be occurring.
Explanation:
The problem here is that students take a long time to get their meal. It is understood that at each of the four stations there is ample space and so the most likely cause of delays is different processing times at four stations.
The problem of either blocking or starving arises when the processing times are very small or very large at one or two of the stations, which will significantly increase the cycle time of the operation.
hence, the correct option is c.
The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget:
Data Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
Budgeted unit sales 45,000 70,000 105,000 70,000 90,000 100,000
Selling price per unit $7 per unit
a. What are the total expected cash collections for the year under this revised budget?
b. What is the total required the production for the year under this revised budget?
c. What is the total cost of raw materials to be purchased for the year under this revised budget?
d. What are the total expected cash disbursements for raw materials for the year under this revised budget?
e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?
Answer:
a. What are the total expected cash collections for the year under this revised budget?
65 + 236.25 + 78.75 + 367.5 + 122.5 + 551.25 + 183.75 + 367.5 = 1,972.5 x $1,000 = $1,972,500
b. What is the total required production for the year under this revised budget?
52.5 + 80.5 + 94.5 + 76 = 303.5 x 1,000 = 303,500 units
c. What is the total cost of raw materials to be purchased for the year under this revised budget?
237 + 367.5 + 507.5 + 360 = 1,472 x 1,000 = 1,472,000 pounds x $0.80 = $1,177,600
d. What are the total expected cash disbursements for raw materials for the year under this revised budget?
195.26 + 252.24 + 361.2 + 330.4 = 1,139.1 x $1,000 = $1,139,100
e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?
No, since total budgeted sales for the year are 303,500 units, which divided by 4 quarters = 75,875 units per quarter. All you need to do is increase quarter 1 production by 15,000 units, and that would satisfy quarters 2 and 3 needs.
Explanation:
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
unit sales 45 70 105 70 90 100
(in thousands)
total sales 315 490 735 490 630 700
(in thousands)
cash collected 65 78.75 122.5 183.75 122.5 157.5
(in thousands) 236.25 367.5 551.25 367.5 472.5 525
75% of sales are collected during this quarter and 25% are collected the next quarter
beginning $65,000
ending finished inventory 30% of budgeted sales for next quarter
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
beginning 13.5 21 31.5 21 27 30
ending 21 31.5 21 27 30 ?
quarter sales 45 70 105 70 90 100
production 52.5 80.5 94.5 76 93 ?
cost of raw materials = $0.80, 5 pounds per unit produced
beginning inventory of raw materials = 23,000 pounds
desired ending inventory of raw materials = 10% of next quarter's needs
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
beginning 23 35 52.5 35 45 50
ending 35 52.5 35 45 50 ?
quarter needs 225 350 525 350 450 500
raw materials 237 367.5 507.5 360 455 ?
60% of raw materials cost paid during the quarter, 405 paid the next quarter
beginning accounts payable 81.5
Year 2 Quarter Year 3 Quarter
1 2 3 4 1 2
past q $ 81.5 75.84 117.6 162.4 112 114
next q $ 75.84 117.6 162.4 112 114 ?
quarter needs 189.6 294 406 280 360 ?
payments 195.26 252.24 361.2 330.4 358 ?
Omaha Beef Co. purchased a delivery truck for $50,000. The residual value at the end of an estimated eight-year service life is expected to be $10,000. The company uses straight-line depreciation for the first six years. In the seventh year, the company now believes the truck will be useful for a total of 10 years (four more years), and the residual value will remain at $10,000. Calculate depreciation expense for the seventh year.
Answer:
2500
Explanation:
First depreciate for 6 years using regular method: (Cost - Salvage Value)/Initial Useful life
(50,000-10,000)/8 = 5000 <- this is annual depreciation
For 6 years, $30,000 accumulated depreciation
Now to calculate change in useful life, you do (Cost - Accumulated Depreciation - Salvage Value)/Remaining Useful life
Remaining Useful life = 10-6 = 4
(50,000-30,000-10,000)/4 = 2500
Karim Corp. requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.
July August September
Cash receipts $20,000 $26,000 $40,000
Cash payments 28,000 30,000 22,000
Required:
Prepare a cash budget for July, August, and September.
Answer:
Karim Corp
Cash Budget
July August September
Cash inflows: $20,000 $26,000 $40,000
Cash outflows: ($28,000) ($30,000) ($22,000)
Monthly cash flow: ($8,000) ($4,000) $18,000
Monthly interests: $0 ($76) ($116.76)
Initial cash balance: $8,400 $8,000 $8,000
Ending cash balance: $400 $3,924 $25,883.24
Required bank loan: $7,600 $4,076 $0
Payment of bank loan: $0 $0 ($11,676)
Total $8,000 $8,000 $14,207.24
Explanation:
A cash budget is the estimation of the business's future cash flows including estimated revenues and expenses.
A firm has sales of $1,140, net income of $218, net fixed assets of $528, and current assets of $284. The firm has $93 in inventory. What is the common-size balance sheet value of inventory
Answer:
The answer is 11.45%
Explanation:
Solution
Given that:
Firm sales = $1,140
The net income = $218
Net fixed assets = $528
The firm's inventory = $93
The next step is to find the common-size balance sheet value of inventory
Now,
The common size value of inventory would be value of inventory divided by total value of assets.
So,
Total assets=current assets+net fixed assets
=$528+$284 = $812
Therefore,
The common size value of inventory = inventory/Total assets
$93/$812
=11.45%