Answer:
Breakeven in units is 3231
Explanation:
Breakeven units=fixed costs/contribution margin per unit.
new selling price=$100*(1+20%)=$120
variable cost per unit=$120*40%=$48
contribution margin=selling price per unit-variable cost per unit
contribution margin per unit=$120-$48=$72
fixed costs next year=$211,500*(1+10%)=$232,650.00
breakeven units=$232,650.00/$72=3231
Kela Corporation reports net income of $470,000 that includes depreciation expense of $83,000. Also, cash of $44,000 was borrowed on a 6-year note payable. Based on this data, total cash inflows from operating activities are: Multiple Choice $514,000. $553,000. $597,000. $387,000.
Answer:
The Total cash inflows from operating activities are $553,000
Explanation:
According to the given data, the Statement of Cash Flow from Operating Activities would be as follows:
Statement of Cash Flow from Operating Activities
Particulars Amount Total Amount
Income $470,000
Depreciation $83,000
Cash flow from operating activities $553,000
The cash of $44,000 was borrowed on a 6-year note payable. It is Financing Activity since note is long term
Therefore, total cash inflows from operating activities are $553,000
Piper is a manager in a corporation that was organized in Canada by one of his former coworkers. The company provides consulting services and training for architects employed by construction companies. The company recently went public, with shares being sold to hundreds of investors. Piper’s company would be a __________ corporation.
Answer:
A Public company.
Explanation:
A public company can be described as a commercial organization that has its share capital formed by shares, that is, the company sells its shares to the public, who become partners in the company.
The shares of a public company are traded on the stock exchange freely, without the need for any type of public bookkeeping.
The company's shareholders can be composed of any type of person who is interested in buying shares in the company.
Private companies generally become public because of the possibility of obtaining capital, which generates greater revenue for the company and greater possibility for growth and investment in business.
11. Which ones of the four examples below is an example of value-migration? a. No one buys typewriters anymore, but they buy PCs even to type. b. HP now produces laser printers that can accept emailed inputs as well. c. Honda used its expertise in small engines to enter the lawn-mower market d. Sony lost share in the video recorder market, but gained the camcorder market.
Answer:
a. No one buys typewriters anymore, but they buy PCs even to type.
Explanation:
Value migration can be described as the change in the value-creating forces due to the migration of value from products or business models that are outmoded to business designs that able to give better satisfaction to the priorities of customers.
Therefore, the correct option is "no one buys typewriters anymore, but they buy PCs even to type" because typewriters are outmoded while PCs are the new designs.
Four of the ships sought a passage along a southern...……
1 coast
2 inland
3 border
4 body of land with water on three sides
5 non of the above
what is the answer
MGM Resorts Incorporated is expected to grow at an exceptionally high rate over the next 2 years due to the success of Macau casino. Growth in dividends is expected to be 20% for the next 2 years before reverted back to a constant rate of 4% that is expected to continue indefinitely. If MGM Resorts’ paid a $1.20 dividend yesterday (D0=$1.20) and the stock is valued according to a required rate of return of 14%, what is the value of a share of MGM Resorts stock today?
Answer:
The value of a share of MGM Resorts stock today will be $16.42
Explanation:
In order to calculate the value of a share of MGM Resorts stock today we would have to calculate the following steps:
Step-1, Dividend for the next 2 years
Dividend per share in Year 0 (D0) = $1.20 per share
Dividend per share in Year 1 (D1) = $1.4400 per share [$1.20 x 120%]
Dividend per share in Year 2 (D2) = $1.7280 per share [$1.4400 x 120%]
Step-2, Share Price in Year 2
Dividend Growth Rate after Year 2 (g) = 4.00% per year
Required Rate of Return (Ke) = 14.00%
Share Price in Year 2 (P2) = D2(1 + g) / (Ke – g)
= $1.7280(1 + 0.04) / (0.14 – 0.04)
= $1.7971 / 0.10
= $17.97 per share
Step-3, The Current Stock Price
As per Dividend Discount Model, Current Stock Price the aggregate of the Present Value of the future dividend payments and the present value the share price in year 2
Year Cash flow ($) PVF at 14.00% Present Value of cash flows ($)
[Cash flows x PVF]
1 1.4400 0.877193 1.26
2 1.7280 0.769468 1.33
2 17.97 0.769468 13.83
TOTAL 16.42
Hence, the value of a share of MGM Resorts stock today will be $16.42
Ebbers Corporation overstated its ending inventory balance by $7,000 in the current year. What impact will this error have on cost of goods sold and gross profit in the current year and following year?
Answer:
ZOOM
Explanation:
Frank Barlowe is retiring soon, so he is concerned about his investments providing him with a steady income every year. He is aware that if interest rates , the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in interest rates might lead to annual income from his investments. What kind of risk is Frank most concerned about protecting against? Reinvestment rate risk Interest rate risk
Answer:
Increase
less
A) Reinvestment rate risk.
Explanation:
Reinvestment rate risk is demonstrated as the type of financial risk in which the investor is concerned about his investment getting canceled or stopped in the future and the other party/place might not be able to provide a similar rate of return.
In the given situation, Frank Barlowe is concerned about reinvestment risk. He is aware that he will earn a steady income from his investments as he knows that when the interest rates increase, his potential returns would increase and vice versa. But since he is retiring, he has a potential concern that if the investment gets abandoned somehow, he might not be able to reinvest his amount at the same rate and will not be able to continue with steady returns. Thus, option A is the correct answer.
If your risk-aversion coefficient is A = 4.4 and you believe that the entire 1926–2015 period is representative of future expected performance, what fraction of your portfolio should be allocated to T-bills and what fraction to equity? Assume your utility function is U = E(r) – 0.5 × Aσ2
Answer:
=> fraction of the portfolio that should be allocated to T-bills = 0.4482 = 44.82%.
=> fraction to equity = 0.5518 = 55.18%.
Explanation:
So, in this question or problem we are given the following parameters or data or information which are; that the utility function is U = E(r) – 0.5 × Aσ2 and the risk-aversion coefficient is A = 4.4.
The fraction of the portfolio that should be allocated to T-bills and its equivalent fraction to equity can be calculated by using the formula below;
The first step is to determine or Calculate the value of fraction to equity.
Hence, the fraction to equity = risk premium/(market standard deviation)^2 - risk aversion.
= 8.10% ÷ [(20.48%)^2 × 3.5 = 0.5518.
Therefore, the value for fraction of the portfolio that should be allocated to T-bills = 1 - fraction to equity = 1 - 0.5518 =0.4482 .
Mary runs an ad in the paper offering a $5 reward for the return of her lost dog, Sparky. Mary has made a promise to pay the person who performs the act of returning Sparky. This is a(n) _____ contract. Select one: a. quasi b. implied c. bilateral d. unilateral
Answer:
This is a Unilateral contract
Explanation:
Mary has made a promise to pay the person who performs the act of returning Sparky therefore this is an example of a unilateral contract.
A unilateral contract is a type of contract agreement where an offeror such as Mary makes a promise to pay after the performance of a specified act, which is to return her dog Sparky
Suppose your company reports $160 of net income and $40 of cash dividends paid, and its comparative balance sheet indicates the following. Beginning Ending Cash $ 35 $ 205 Accounts Receivable 75 175 Inventory 245 135 Total $ 355 $ 515 Salaries and Wages Payable $ 10 $ 50 Common Stock 100 100 Retained Earnings 245 365 Total $ 355 $ 515 Required: Prepare the operating activities section of the statement of cash flows, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Answer and Explanation:
The preparation of the operating activities section of the cash flow statement using the indirect method is shown below:
Cash flow from operating activities
Net income $160
Add or less adjustments made
Less Increase in account receivable $100 ($175 - $75)
Add: Decrease in inventory $110 ($245 - $135)
Add: Increase in salaries and wages payable $40 ($50 - $10)
Net cash provided by operating activities $210
The cash inflow represents in a positive sign and cash outflow represents in negative sign
The operating activities section of the statement of cash flows, using the indirect method is $210.
Cash flow from operating activities
Net income $160
Increase in account receivable ($100)
($175 - $75)
Decrease in inventory $110
($245 - $135)
Increase in salaries and wages payable $40
($50 - $10)
Net cash flow from operating activities $210
Inconclusion the operating activities section of the statement of cash flows, using the indirect method is $210.
Learn more about operating activities here: https://brainly.com/question/22434851
A man turns 40 today and wishes to provide supplemental lifetime retirement income of 3,000 at the beginning of each month starting on his 65th birthday. Starting today, he makes monthly contribution of X to a fund for 25 years. The fund earns a nominal rate of 8% compounded monthly. Every 9.65 of lifetime income paid at the beginning of each month starting at age 65 will cost 1,000 to purchase. Calculate x.
Answer:
324.72
Explanation:
To get an income of $1, the man needs [tex]\frac{1000}{9.65}[/tex], therefore to get an income of $3000, the man needs [tex]\frac{1000*3000}{9.65}=310880.83[/tex].
Interest (i)= 8%/12 = 0.08/12 = 0.00667
Number of periods (N) = 12 months/year × 25 years = 300
Using actuarial notation:
[tex]Xs_{300/0.006667}=310880.83\\Where:\\s_{300/0.006667}=(1+0.006667)\frac{(1+0.006667)^{300}-1}{0.00667} =957.366[/tex]
Therefore:
[tex]957.366X=310880.83\\X=\frac{310880.83}{957.366} =324.72[/tex]
Dusan is a member of the Tonda LLC, and all members have equal interests in capital and profits. The LLC has made an optional adjustment-to-basis election. Dusan's interest is sold to Adele for $35,000. The balance sheet of the LLC immediately before the sale shows the following:
Basis FMV
Cash $40,000 $40,000
Depreciable assets 80,000 100,000
$120,000 $140,000
Dusan, capital $30,000 $35,000
Randal, capital 30,000 35,000
Thom, capital 30,000 35,000
Erin, capital 30,000 35,000
$120,000 $140,000
a. How much is the 754 adjustment?
b. What is the amount of Adele's basis in the acquired interest?
c. Which partner receives deductions related to the step-up?
Answer: a. $5000 b. $35000 c. Adele
Explanation:
The balance sheet is a report which summarizes all of an entity's assets, the liabilities, and the equity at a given point in time.
Based on the balance sheet in the question, the following can be calculated:
a. The 754 adjustment will be the difference in the sale of interest and Susan's capital balance. This will be:
= Sale of interest - Dusan's capital balance
= $35,000 - $30,000
= $5000
b. Adele's basis in the acquired interest will be the value at which she acquired the interest. This will be = $35,000
c. Adele is the partner who receives deductions related to the step-up
You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The Chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $500 billion. The best estimate she has for the MPC is 0.5. Which of the following policies should you recommend? Why?
A) increase government purchases by $200 billion B) increase government purchases by $250 billion C) cut taxes by $200 billion D) cut taxes by $200 billion and to increase government purchases by $200 billion
Answer:
Council of Economic Advisors (CEA)
I would recommend this policy to increase aggregate output:
B) increase government purchases by $250 billion
Explanation:
To increase aggregate output (GDP) by $500 billion, in order to reduce the unemployment rate, government, given the best estimate for the MPC as 0.5, it would be to increase government purchases by $250 billion. The MPC is the marginal propensity to consume.
By increasing government purchases by $250 billion, the ripple effect would ginger industries to generate more output, thereby increasing the factors that affect aggregate output. These actions would then increase aggregate output by more than $500 billion. This choice is made because government spending is funded from taxes, making government unable to cut taxes.
Economists define aggregate output as "the sum of all the goods and services produced in an economy over a certain period of time." Aggregate output is an economy's total productivity or GDP (Gross Domestic Product). The factors that determine aggregate output include household wealth, consumer and business expectations, capacity utilization, monetary policy, fiscal policy, exchange rates, and foreign GDP.
The equation for calculating aggregate output, which expands the GDP by showing price level, is given as "Y = Y ad = C + I + G + NX tells us that aggregate output (or aggregate income) is equal to aggregate demand, which in turn is equal to consumer expenditure plus investment (planned, physical stuff) plus government spending plus net exports (exports – imports)."
A notice is published stating that RMO 5% convertible preferred stock will be called at $60 per share. The preferred is convertible into 1/2 share of common and is selling in the market at $56 per share. RMO common stock is selling in the market at $110 per share. After the notice appears, the price of the preferred stock will most likely trade in the market at: _________.
Answer: d. A price near $60
Explanation:
The Preferred Stock was selling at $56 then a notice was circulated that RMO would be calling the stock at a price of $60.
This $60 is more than the current $56 and so this will need to reflect in the price of the stock. The adjustment will cause the Preferred stock to start trading near $60 as traders will seek to take advantage of the impending call by buying at a lower price and thus making a bit of profit when the stock is called at $60. The market will adjust to this because the Preferred stock will be perceived as undervalued. A price closer to the Call price will therefore become the new price to properly value the stock.
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Claimjumper Makeover Total Sales $ 116,000 $ 58,000 $ 174,000 Variable expenses 35,800 7,700 43,500 Contribution margin $ 80,200 $ 50,300 130,500 Fixed expenses 83,250 Net operating income $ 47,250 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Claimjumper Makeover
Total Sales:
Claimjumper= $116,000
Makeover= $58,000
Total= $174,000
Variable expenses:
Claimjumper= $35,800
Makeover= $7,700
Total= $43,500
Contribution margin:
Claimjumper= $80,200
Makeover= $50,300
Total= $130,500
Fixed expenses 83,250
Sales proportion:
Claimjumper= 116,000/174,000= 0.67
Makeover= 58,000/174,000= 0.33
Variable cost proportion:
Claimjumper= 35,800/43,500= 0.82
Makeover= 7,700/43,500= 0.18
First, we need to calculate the contribution margin ratio for the company:
Weighted average contribution margin ratio= (weighted average selling price - weighted average unitary variable cost)/ weighted average selling price
Weighted average contribution margin ratio= 130,500/174,000
Weighted average contribution margin ratio= 0.75
Now, we can calculate the break-even point in dollars:
Break-even point (dollars)= fixed costs/ Weighted average contribution margin ratio
Break-even point (dollars)= 83,250/0.75
Break-even point (dollars)= $111,000
Finally, we structure the income statement:
Sales= 111,000
Total variable costs= (111,000*0.25)= (27,750)
Income statement:
Sales:
Claimjumper= 111,000*0.67= 74,370
Makeover= 111,000*0.33= 36,630
Variable costs:
Claimjumper= 27,750*0.82= (22,755)
Makeover= 27,750*0.18= (4,995)
Contribution margin= 83,250
Fixed costs= 83,250
Net operating income= 0
Before year-end adjusting entries, Marigold Corp.'s account balances at December 31, 2020, for accounts receivable and the related allowance for uncollectible accounts were $1540000 and $91500, respectively. An aging of accounts receivable indicated that $123000 of the December 31 receivables are expected to be uncollectible. The accounts receivable amount expected to be collected after adjustment is
Answer:
1,417,000
Explanation:
$123000 of the December 31 receivables is to be subtracted from $1540000 of the related allowance for uncollectible accounts
= $1540000 - $123000
= $1,417,000.
The accounts receivable amount expected to be collected after adjustment is $1,417,000
Kansas Enterprises purchased equipment for $76,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $7,200 at the end of ten years. Using the straight-line method, depreciation expense for 2021 would be:
Answer:
The depreciation expense for 2021 would be: $6,880
Explanation:
Straight line method charges a fixed depreciation charge over the life of asset.
Depreciation Charge = (Cost - Residual Value) / Number of Estimated Useful life
= ($76,000 - $7,200) / 10
= $6,880
The amount of depreciation is charged at fixed amount of $6,880 for each of the years that this asset is in use in the business.
Conclusion :
The depreciation expense for 2021 would be: $6,880
Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Pasadena Candle Inc. Direct Labor Cost Budget For the Month Ending January 31 Hours required for assembly: Candles min. Convert minutes to hours ÷ min. Molding hours hrs. Hourly rate × $ Total direct labor cost
Answer:
Direct labour cost budget= $1,413,000.
Explanation:
The direct labor cost budget is a function of the production product budget. The quantity of the product budgeted to be produced would determine the labor cost budget.
Direct labour budget = Production budget × standard hours × standard labour rate per hour
Standard hour = 6/60 =0.1 (note there are 60 minutes in an hour)
Direct labour budget = 785,000 × 0.1× 18 = $1,413,000.
Direct labour cost budget= $1,413,000.
Required Information
The following information applies to the questions displayed below) Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2018, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows:________.
Cash $1,600,000
Accounts Receivable 174,000
Supplies 15,100
Equipment 930,000
Buildings 510,000
Land 2,050,000
Accounts Payable 113,000
Deferred Revenue 74,800
Notes Payable (due 2025) 94,800
Common Stock 2,500,000
Retained Earnings 2,498,100
In addition to the above accounts, VGC's chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month:________.
A. Received $57,750 cash from customers on 1/1 for subscriptions that had already been earned in 2017.
B. Purchased 10 new computer servers for $41,500 on 1/2; paid $11,500 cash and signed a three-year note for the remainder owed.
C. Paid $14,300 for an Internet advertisement run on 1/3.
D. On January 4, purchased and received $5,300 of supplies on account.
E. Received $150,000 cash on 1/5 from customers for service revenue earned in January.
F. Paid $5,300 cash to a supplier on January 6.
G. On January 7, sold 19,900 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.
H. Paid $380,000 in wages to employees on 1/30 for work done in January.
I. On January 31, received an electric and gas utility bill for $6,260 for January utility services. The bill will be paid in February.
Answer:
Cash 57,750 debit
Account receivables 57,750 credit
--------------------------------------------
Equipment 41,500 debit
cash 11,500 credit
note payable 30,000 credit
--------------------------------------------
Advertising Expense 14,300 debit
cash 14,300 credit
--------------------------------------------
supplies 5,300 debit
account payables 5,300 credit
------------------------------------------
cash 150,000 debit
service revenue 150,000 credit
-------------------------------------------
account payables 5,300 debit
cash 5,300 credit
---------------------------------------------
cash 129,350 debit
account receivables 129,350 debit
services revenue 258,700 credit
---------------------------------------------
wages expense 380,000 debit
cash 380,000 credit
--------------------------------------------
utilities expense 6,260 debit
account payable 6,260 credit
Explanation:
To make thge jounral entries we must follow the basic principles:
debit = credit
and one value per account
Is important to comment that A state the income has been earned so we deduct from account recievables
then. we again receive cash for service earned
In none ofthe case we are doing the recognition of hte deferred revenue so this, stays untouched.
G) 19,900 x $13 each = $258,700
half cash-half credit : 258,700 / 2 = 129,350
nventory records for Water Incorporated revealed the following: Date Transaction Number of Units Unit Cost July 1 Beginning inventory 520 $ 2.48 July 25 Purchase 330 2.67 Water Inc. sold 630 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.)
Answer:
$562
Explanation:
Date Transaction Units Unit Cost Total
July 1 Beginning inventory 520 $2.48 $1,289.60
July 25 Purchase 330 $2.67 $881.10
subtotal 850 $2.554 $2,171
Sales 630 $2.554 $1,609.09
July 31 Ending inventory 220 $2.554 $561.91
July 31's ending inventory = 220 units at $2.554 per unit, total cost $561.91
You just agreed to a deal that will make you the proud new owner of a beautiful new convertible. The car comes with a three-year warranty. Please consider the purchase of the extended warranty which has a purchase price of $1,800, today (the day you purchased your NEW car). The extended warranty covers the 4 years immediately after the three-year warranty expires. You estimate that the yearly expenses that would have been covered by the extended warranty are $400 at the end of the first year of the extension, $500 as the end of the second year of the extension, $600 at the end of the third year of the extension, and $800 at the end of the fourth year of the extension. Assume that money during this time can earn interest at a rate of 7% compounded monthly. Will you decide to buy the warranty? Your formal solutions should include:______.1. The overall goal and/or purpose
2. The given information
3. A time-line for the expected repair costs covered by the warranty
4. The present value for each of the repair costs
5. The present value of the warranty and the expected profit for the warranty company
6. Your conclusion
Answer:
1. The overall goal and/or purpose
The overall goal of this analysis is to determine if you would actually save money by purchasing the extended warranty.
2. The given information
You can calculate this by determining the present value of the expected repair costs that will be covered by the warranty and determine which is higher; the warranty or the repairs
3. A time-line for the expected repair costs covered by the warranty
initial investment -$1,800cash flow year 4 = $400cash flow year 5 = $500cash flow year 6 = $600cash flow year 7 = $8004. The present value for each of the repair costs
the discount rate is 7%, so the present value of each repair cost is:
PV cash flow year 4 = $400 / 1.07⁴ = $305PV cash flow year 5 = $500 / 1.07⁵ = $356PV cash flow year 6 = $600 / 1.07⁶ = $400PV cash flow year 7 = $800 / 1.07⁷ = $498total $1,5595. The present value of the warranty and the expected profit for the warranty company
the present value of the warranty is $1,800, so the car company is making $1,800 - $1,559 = $241 in profits by selling you the warranty
6. Your conclusion
You shouldn't buy the extended warranty (negative NPV)
atton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Patton Company should debit its Debt Investments account for the Scott Company bonds by__________ and credit its Interest Revenue account by __________.
Answer:
Patton Company should debit its Debt Investments account for the Scott Company bonds by $2,571 and credit its Interest Revenue account by $155,283
Explanation:
On July 1 2021, Patton Company should increase its Debt Investments account for the Scott Company bonds by =
Amount of discount amortized = Interest revenue - Interest received
= ($1,410,375 × 11% × 6/12) - ($1,500,000 × 10% × 6/12)
= $77,571 - $75,000
= $2,571
Interest revenue on 31 December 2021 = ($1,410,375 + $2,571) × 11% × 6/12
= $77,712
For the year ended December 31, 2021, Patton Company should report interest revenue from the Scott Company bonds of = $77,571 + $77,712 = $155,283
Fine Stationery makes personalized stationery of the highest quality. The company maintains a stock of blank note cards, calling cards, stationery, and envelopes. Customers order online, indicating the product type, personalization (monogram, name), font style, and color. The following schedule is typical of an order of 100 calling cards:
Activity Minutes
Process order ............... 3
Wait for production to begin......... 55
Pull calling cards from inventory........ 15
Set up machine for font style and color.... 2
Process calling cards............ 40
Inspect cards.............. 5
Wait for packaging ............ 16
Package cards for shipping......... 2
Wait for pickup by FedEx......... 120
Required:
Calculate the manufacturing cycle efficiency.
Answer:
The manufacturing cycle efficiency is 0.219
Explanation:
In order to calculate the manufacturing cycle efficiency we would have to calculate the following formula:
manufacturing cycle efficiency=value added time/throughput time
value added time= 40 min
throughput time=Process time+Inspection time+movie time+Queue time
throughput time=40+5+15+2+120
throughput time=182 min
Therefore, manufacturing cycle efficiency=40/182
manufacturing cycle efficiency=0.219
The manufacturing cycle efficiency is 0.219
Thorley Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 4 5 Cash flows -$1,100 $325 $325 $325 $325 $325 a. 15.18% b. 14.59% c. 11.24% d. 13.43% e. 16.20%
Answer:
b. 14.59%
Explanation:
The computation of Project IRR is Shown below:-
Year Cash Flow
0 -$1,100
1 $325
2 $325
3 $325
4 $325
5 $325
Project IRR 14.59%
For more clarification we attached the spreadsheet which shown the computation of Project IRR.
A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 7 years at $1,073.00, and currently sell at a price of $1,135.93. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.
Answer:
YTM = 6.51%
YTC = 6.40%
Explanation:
We need to solve using excel goal seek or bond formulas to generate the yield (interest rate) which matches the future couponb and maturity payment with the current selling price of the bond:
Present value of the coupon
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 40.000 (1,000 x 8% / 2 payment per year)
time 28 (14 years x 2 payment per year)
rate 0.032529972 (generate using goal seek tool)
[tex]40 \times \frac{1-(1+0.0325299719911398)^{-28} }{0.0325299719911398} = PV\\[/tex]
PV $727.8688
Pv of the maturity (lump sum)
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 28.00
rate 0.032529972
[tex]\frac{1000}{(1 + 0.0325299719911398)^{28} } = PV[/tex]
PV 408.06
PV c $727.8688
PV m $408.0612
Total $1,135.9300
As this is a semiannual rate we multiply it by 2
0.032529972 x 2 = 0.065059944 = 6.51%
We repeat the procedure with changing the time and end-value to adjust for the callabe conditions:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 40.000
time 14 (7 years x 2 payment per year)
rate 0.032015131
[tex]40 \times \frac{1-(1+0.0320151313225188)^{-14} }{0.0320151313225188} = PV\\[/tex]
PV $445.6984
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,073.00 (call price)
time 14.00
rate 0.032015131
[tex]\frac{1073}{(1 + 0.0320151313225188)^{14} } = PV[/tex]
PV 690.23
PV c $445.6984
PV m $690.2316
Total $1,135.9300
Againg his will be a semiannual rate so we multiply by two:
0.032015131 x 2 = 0.064030263 = 6.40%
Erosion can best be explained as the:
A. loss of current sales due to a new project being implemented.
B. loss of revenue due to employee theft.
C. additional income generated from the sales of a newly added product.
D. loss of revenue due to customer theft.
Answer:
A. loss of current sales due to a new project being implemented.
Explanation:
In business, erosion takes place when a new product or project competes with another product or project from the came company. This "internal" competition reduces the revenues and benefits from existing products or projects. It is basically a form of business cannibalization, where the left arm takes away from the right arm. E.g. newer smartphone models decrease the sales revenue from existing (older) models.
A company's beginning Work in Process inventory consisted of 21,500 units that were 20% complete with respect to direct labor. These beginning units were completed and another 92,400 units were started during the current period. Of those started, 61,500 were finished and the remaining 30,900 were 40% complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:
Answer:95,360 units.
Explanation:The equivalent unit of production shows the quantity of work done by a manufacturing company on units of output partially completed at the end of a period.
Equivalent units of production =Units completed(work n progress at beginning + finished goods)+Ending work in progess
=(21,500+61, 500)+(30,900×40%)
=83,000 + 12,360
=95,360 units.
The equivalent units of production for conversion is 95,000 units.
On September 1, 2021, Daylight Donuts signed a $188,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2022. Daylight Donuts should report interest payable at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)
Answer:$3,760--- Interest payable at December 31, 2021.
Explanation:
Interest payable is current liability recorded on a firm's balance sheet that shows the amount of interest which a firm owes currently but has not yet paid as of the date recorded on the of the balance sheet.
For daylight donuts
September --- December = 4 months
interest payable within the four months= $188,000 X 6% X 4/12= $3,760
Daylight Donuts should report interest payable at December 31, 2021, in the amount of $3,760
Joy Elle’s Vegetable Market had the following transactions during 2010: Issued $50,000 of par value common stock for cash. Repaid a 6 year note payable in the amount of $22,000. Acquired land by issuing common stock of par value $100,000. Declared and paid a cash dividend of $2,000. Sold a long-term investment (cost $63,000) for cash of $6,000. Acquired an investment in IBM stock for cash of $12,000. What is the net cash provided by financing activities?
Answer:
$26,000
Explanation:
Joy Elle’s Vegetable Market
Cash flow from Financing Activities
Issuance of Stock $50,000
Less: Repaid Note payable $22,000
Less: Paid Dividend $2,000
Net Cash provided by financial activities $26,000
-Acquired land by issuing common stock is a Non cash investing and financing activities under cash flow
-Sold a long-term investment for cash is an investing activities under cash flow
-Acquired an investment in IBM stock for cash is an Investing activities under Cash flow
The Federal Reserve sets the reserve requirement, which banks must meet through deposits at the Fed and cash held at the bank. What do these requirements achieve? Check all that apply. They help to control the money supply. They help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash. They mean that banks must have one dollar of deposits for every dollar it loans. They help to facilitate transfers of funds between banks when a customer from one bank writes a check to a customer of another.
Answer:
The correct answer to the following question will be Option B.
Explanation:
These conditions hopefully reduce banking crises as well as quantify the community against banks never running cash. The criteria for the reservation were established to be doing the ends of the next day.Amount of inter-bank payments, these funds also convince the public which banks aren't going to make many such mortgages.Other available options have no connection with the particular circumstance. So the answer to the above seems to be the right one.