Answer:
does not need a required rate to calculate
is the rate at which npv is zero
Explanation:
Internal rate of return is an example of capital budgeting method
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested.
Projects with the IRR greater than the discount rate should be accepted. It means that it is profitable.
Projects with more than one negative cash flow are unsuitable for calculating with IRR. This is because it can lead to multiple IRR, Thus, it not suitable for analysing all investment scenarios.
The net present value is the most preferred capital budgeting method
Other capital budgeting methods includes
1. profitability index = 1 + (NPV / Initial investment)
2. Accounting rate of return = Average net income / Average book value
3. Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
4. Net present value is the present value of after-tax cash flows from an investment less the amount invested.
The Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators. Both of these products require wiring and testing during the assembly process. Each generator requires 2 hours of wiring and 1 hour of testing and can be sold for a $250 profit. Each alternator requires 3 hours of wiring and 2 hours of testing and can be sold for a $150 profit. There are 260 hours of wiring time and 140 hours of testing time available in the next production period and Electrotech wants to maximize profit. Formulate an LP model for this problem. Sketch the feasible region for this problem. Determine the optimal solution to this problem using level curves.
Answer:
Given that generators generate greater profit with less consumption of hours, the maximum profit would be building 130 generators, obtaining $ 32,500 of profit, and there would be 10 hours of testing left over.
Explanation:
Since the Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators, and both of these products require wiring and testing during the assembly process, and each generator requires 2 hours of wiring and 1 hour of testing and can be sold for a $ 250 profit, while each alternator requires 3 hours of wiring and 2 hours of testing and can be sold for a $ 150 profit, and there are 260 hours of wiring time and 140 hours of testing time available in the next production period and Electrotech wants to maximize profit, to determine this situation the following mathematical logical reasoning must be carried out:
260/2 = 130
140 - 130 = 10
130 generators = 32,500
Thus, given that generators generate greater profit with less consumption of hours, the maximum profit would be building 130 generators, obtaining $ 32,500 of profit, and there would be 10 hours of testing left over.
Walmart's channel members negotiate with one another, buy and sell products, and facilitate the change of ownership between Walmart and its suppliers in the course of moving finished goods from the manufacturer into the hands of Walmart's customers. As products move toward the final consumer, which of the following is true of the channel members within Walmart's marketing channel?
a. They help provide contact efficiency as goods move into the hands of the final consumer.
b. They play roles that are different from those of intermediaries and resellers.
c. They provide division of labor but without any particular specialization in moving goods.
d. They facilitate the change of ownership but not the sale to the final consumer.
Explanation:
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Explain the significance of capital structure.
On June 1, 2020, Forde Auto Manufacturer sells a 4-door sedan to a dealer for $6,000, which includes three years of maintenance. The standalone selling price of the vehicle is $6,000 and the standalone selling price of the maintenance contract is $400. In addition, Forde offered a $100 cash incentive (per vehicle purchased) to the dealer if the vehicle was purchased in the first week of June 2020. a. How should the transaction price be allocated among the performance obligation(s) for sales made in the first week of June? b. Prepare Forde’s journal entry to record the sale of vehicles for cash, assuming that dealers purchased 20 vehicles during the first week of June 2020. Ignore the cost of sales entries
Answer:
Part a
Allocation based on Stand Alone Selling Prices :
4 - door Sedan and the 3 years maintenance contract = $6,400Cash incentive = $100Part b
Journal entry :
Debit : Cash $130,000
Credit : Revenue - 4 - door Sedan $128,000
Credit : Revenue - Cash incentive $2,000
Explanation:
It is important to identify the step in IFRS 15 - Revenue from Contracts with Customers, which is affected by the question.
Here, Step 2 - Identify the performance obligation in the contract, Step 3 - Determine the Transaction Price, Step 4 - Allocate the Transaction Price to the Performance obligation and Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied. These are explained and applied as follows :
Step 2 - Identify the performance obligation in the contract.
Here, identify the individual promises (Performance Obligations) that the entity has committed to transfer to the customer.
Also the entity identifies each performance obligation that is distinct, or a series of distinct Goods or Services that are substantially the same and have the same pattern of transfer to the customer.
So, the performance obligations are as follows :
4 - door Sedan and the 3 years maintenance contract(these can not be consumed independently from one another)Cash incentive (can be consumed independently from the rest of the performance obligations)Step 3 - Determine the Transaction Price
Transaction price is the consideration the entity expects to be entitled to in exchange of goods or services transferred to the customer.
Transaction Price is $6,500 ($6,000 + $400 + $100)
Step 4 - Allocate the Transaction Price to the Performance obligation
Allocation of Transaction Price is done based on Stand Alone Selling Prices.
Stand alone selling prices have already been identified :
4 - door Sedan and the 3 years maintenance contract = $6,400Cash incentive = $100Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied
Stand alone for 20 vehicles :
4 - door Sedan and the 3 years maintenance contract = $6,400 x 20 = $128,000Cash incentive = $100 x 20 = $2,000Journal entry :
Debit : Cash $130,000
Credit : Revenue - 4 - door Sedan $128,000
Credit : Revenue - Cash incentive $2,000
5
Select the correct answer.
Which type of investment offers both capital gains and interest income?
ОА.
property
OB.
CDs
Ос.
stocks
OD
bonds
Plato
Answer:
stocks
Explanation:
stocks have both a postitiveand negitive pole its the only one that makes sence.
Answer:
Stocks
Explanation:
Stocks is the type of investment offers both capital gains and interest income.
Bushard Company (buyer) and Schmidt, Inc. (seller) engaged in the following transactions during February 2019:
Bushard Company
DATE TRANSACTIONS
2019
Feb. 10 Purchased merchandise for $5,000 from Schmidt, Inc., Invoice 1980, terms 1/10, n/30.
13 Received Credit Memorandum 230 from Schmidt, Inc., for damaged merchandise totaling $200 that was returned; the goods were purchased on Invoice 1980, dated February 10.
19 Paid amount due to Schmidt, Inc., for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010. Schmidt, Inc.
DATE TRANSACTIONS
2019
Feb. 10 Sold merchandise for $5,000 on account to Bushard Company, Invoice 1980, terms 1/10, n/30.
13 Issued Credit Memorandum 230 to Bushard Company for damaged merchandise totaling $200 that was returned; the goods were purchased on Invoice 1980, dated February 10.
19 Received payment from Bushard Company for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010.
Required:
Journalize the transactions above in a general journal for both Bushard Company and Schmidt, Inc.
Answer:
Bushard Company (buyer) and Schmidt, Inc. (seller)
Journal Entries:
Bushard Company
Feb. 10 Debit Inventory $5,000
Credit Accounts payable (Schmidt, Inc.) $5,000
To record the purchase of goods on account, via Invoice 1980, terms 1/10, n/30.
13 Debit Accounts payable (Schmidt, Inc.) $200
Credit Inventory $200
To record the return of damaged goods and received Credit Memorandum 230.
19 Debit Accounts payable (Schmidt, Inc.) $4,800
Credit Cash $4,752
Credit Cash Discounts $48
To record the payment on account and discounts.
Schmidt, Inc.
Feb. 10 Debit Accounts receivable (Bushard Company) $5,000
Credit Sales revenue $5,000
To record the sale of goods on account, Invoice 1980, terms 1/10, n/30.
13 Debit Sales returns $200
Credit Accounts receivable (Bushard Company) $200
To record the return of damaged, issuing Credit Memorandum 230.
19 Debit Cash $4,752
Debit Cash Discounts $48
Credit Accounts receivable (Bushard Company) $4,800
To record the receipt of cash from customer, including discounts.
Explanation:
a) Data and Analysis:
Bushard Company
Feb. 10 Inventory $5,000 Accounts payable (Schmidt, Inc.) $5,000, Invoice 1980, terms 1/10, n/30.
13 Accounts payable (Schmidt, Inc.) $200 Inventory $200 Credit Memorandum 230, damaged merchandise.
19 Accounts payable (Schmidt, Inc.) $4,800 Cash $4,752 Cash Discounts $48
Schmidt, Inc.
Feb. 10 Accounts receivable (Bushard Company) $5,000 Sales revenue $5,000, Invoice 1980, terms 1/10, n/30.
13 Sales returns $200 Accounts receivable (Bushard Company) $200 Credit Memorandum 230, damaged merchandise.
19 Cash $4,752 Cash Discounts $48 Accounts receivable (Bushard Company) $4,800
odarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours. In the most recent month, the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,480 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month
Answer:
$144 unfavorable
Explanation:
The computation of the overall fixed manufacturing overhead volume variance for the month is shown below:
But before that following calculations need to be done
Budgeted manufacturing overhead is
= 6600 × $1.20
= $7,920
And,
Manufacturing overhead applied is
= Standard hours × Predetermined overhead rate
= 6480 × $1.20 = $7,776
So, fixed manufacturing overhead volume variance is
= Fixed overhead applied - budgeted fixed overhead
= $7,776 - $7,920
= $144 unfavorable
Scenario 2:
The price of gas rises by $1 per gallon the last month. As you travel through southern california you notice an increase in oil drilling operations. In previous trips you noticed a handful of operations, this trip you're seeing hundreds and hundreds of oil manufacturing centers.
Does this scenario relate to the law of supply, demand, or neither? Justify why you believe this to be true.
Answer:
both
Explanation:
there is not enough supply to fit the demand meaning said oil is more valuable so it is a good time to drill for more because it is more expensive and you know you can charge more because people will have no choice but to purchase it at your price until supply exceeds demand which will make it less valuable until the demand once again is higher than supply which will make it more valuable again.
Which of the following is true of the informal structure in an organization?
O A. It is formed through shared interests.
OB. It is easy to monitor and control.
O c. It is good at handling many routine tasks.
O D. It is slow to adapt to changing conditions.
Answer: i think A
Explanation:
g The comparative balance sheets for Pharoah Company show these changes in noncash current accounts: Accounts Receivable increased $29,800, Prepaid Expenses decreased $10,800, and Inventory decreased $18,900. Accounts payable increased $13,400. Calculate net cash provided by operating activities using the indirect method assuming that profit is $252,000 for the year ended June 30, 2021. Depreciation expense for the year was $26,900 and the company incurred a gain on sale of equipment of $21,000.
Cisco Systems Inc. reported the following in its income statement for the year ended July 30, 2016: Basic earnings per share of $2.13 and diluted earnings per share of $2.11. There were 5,053 million weighted average basic shares were outstanding during the year. What approximate net income, did the company report for 2016
Answer:
$10,762,890
Explanation:
Earnings per Share = Net Income attributable to Common Stock holders ÷ Weighted Average Number of Common Stocks
Now, since we have basic earnings per share we an use that to find net income. Net Income is Profit after tax and interest and only available in basic earnings per share calculation.
Net Income attributable to Common Stock holders = Earnings per Share x weighted average basic shares = ($2.13 x 5,053,000) = $10,762,890
1. Evaluate the situation that Mason and Shepherd find themselves in with respect to their existing employers. What are the legal and ethical issues raised
Answer:
The answer is provided in two separate headings for Mason and Shepherd with regard to the issues faced by them and how to handle them.
Explanation:
Mason
Mason's goal is start a venture by utilising the information received from the company she has worked for. This could lead to the violation of the agreement with her employer with regard to Non-competition, Non-disclosure and Development provisions.
So to tackle this situation she needs to first of all prove that the business is not a competitor of ATS. Moreover, she must refrain from coming into contact of the current customers of ATS. Finally, data kept in her office computer on the details of the new venture is currently under the ownership of ATS. Therefore, she should removed that data. Other than that she could negotiate with ATS with the help of a legal consultant.
Shepherd
Shepherd has signed an agreement with NOVA, where he is being bound to disclose all the inventions he has worked on so far. This problem is more likely on the intellectual property law.
To resolve this issue he could own his inventions by way of patent the translate engines as early as possible. While the process may take some years, it will be protected from NOVA as it would in pending status.
Muscat Sayarati Co. uses a job-order costing system with a single plantwide predetermined overhead rate based on labor-hours . The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $525,000, variable manufacturing overhead of $6.00 per labor -hour, and 35,000 abor-hours. The job sheet of Job G828 shows that the number of units in this job order is 45 units which incurred total of 90 labor-hours. This job consumed \$14/unit of direct materials cost and \$64/unit of direct labor costs. What would be the ?total cost for Job G828 approximately
Answer:
$810
Explanation:
Calculation to determine cost for Job G828
Estimated total manufacturing overhead cost = $525,000 + ($6.00× 35,000) = 315,000
Predetermined overhead rate = $315,000 ÷ 35,000 = $9
Overhead applied to a particular job = $9×90 = $810.
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $341,900 and direct labor hours would be 48,900. Actual manufacturing overhead costs incurred were $307,800, and actual direct labor hours were 52,800. What is the predetermined overhead rate per direct labor hour
Answer:
See below
Explanation:
With regards to the above, the predetermined overhead rate is computed below.
Predetermined overhead rate = Estimated factory overhead cost / Estimated direct labor hours
Given that;
Estimated factory overhead cost = $341,900
Estimated direct labor hours = 48,900
Therefore,
Predetermined overhead rate per direct labor hour
= $341,000 / 48,900
= $6.97 per direct labor hour
what are tresholds in auditing?
Answer:
:)
Explanation:
The materiality threshold in audits refers to the benchmark used to obtain reasonable assurance that an audit does not detect any material misstatement that can significantly impact the usability of financial statements.
Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending.
Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point.
1. However, the reduction in expenditure on export subsidies ___________ the fiscal deficit, thereby ___________ public saving.
2. Indicate the effect this has on the U.S. market for loanable funds. (Supply and demand shift?)
3. Given the change in the real interest rate, show the effect this has on net capital outflow.
4. This causes the supply of dollars in the foreign exchange market to ______________, the real exchange rate to ______________, and the equilibrium level of net exports to _____________.
Answer:
1. Decrease, increase
2. Supply curve shifts to the right
3. NCO will rise
4. Real exchange rate falls and net exports rises
Explanation:
Fiscal deficit occurs when government spending's exceed government revenue. When the government lowers its export subsidies while keeping other spending's and taxes unchanged, it leads to a fall in the fiscal deficit.
1. However, the reduction in expenditure on export subsidies decreases the fiscal deficit, thereby increases public savings.
2. As public savings increase it leads to an increase in funds available to be loaned out. So the supply curve for loanable funds will shift to the right from S1 to S2. This will lead to a fall in the interest rate.
3. As we know that net capital outflow is inversely related to the interest rate. A fall in the interest rate above will lead to a rise in net capital outflow.
4. When net capital outflow increases, people move funds out of the country. Thus, supply of dollars will increase. While demand for dollars has remained unchanged, it leads to a fall in the real exchange rate. As exchange rate falls, the equilibrium level of net exports will rise.
1. Decrease, increase; 2. Supply curve shifts to the right; 3. NCO will rise;
and last 4. The real exchange rate falls and net exports rises
What is the Supply Curve?
A fiscal deficit happens when government spending surpasses government revenue.
When the government diminishes its export subsidies while maintaining different spending and taxes unchanged, it leads to a decline in the fiscal deficit.
1. However, the reduction in expense on export sponsorships decreases the fiscal deficit, thereby increasing general savings.
2. As public savings increase it rules to an increase in funds known to be loaned out. So the supply curve for loanable funds will shift to the right from S1 to S2. This will direct to a fall in the interest rate.
3. As we comprehend that net capital outflow is inversely correlated to the interest rate. A fall in the interest rate overhead will lead to a rise in the net capital outflow.
4. When net capital outflow increases, individuals transfer funds out of the country. Therefore, the supply of dollars will increase. While demand for dollars has stayed unchanged, it directs to a fall in the real exchange rate. As the conversation rate falls, the equilibrium grade of net exports will rise.
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How would you change bankruptcy law?
The provisions of Section 706(a) of the Bankruptcy Code permit debtors to convert a Chapter 7 case into a Chapter 13 case. However, the debtor cannot convert if the Chapter 7 case previously was converted from a case filed under a different chapter on request of a creditor, the trustee, or the bankruptcy court.
Choose, define, and restrict a topic based on a problem or issue you might deal with in one of the following divisions of a company: a. IT b. human resources/diversity c. security d. marketing e. accounting f. health care/health risks g. energy/utilities h. animal rights i. transportation j. environment Discuss the steps you took to narrow the topic, the audience you would be writing for, and the types of questions that audience may have.
Answer:
Human resource department is the one of the most important department in any organization. It has to deal with the concerns and problems of all the employees and satisfy them positively.
Explanation:
Human resource department is the first go to department for any employee when he faces some problem related to discrimination, demotivation, stressed or low pay. It is responsibility of human resource department to solve the problems that employees are facing. They have to resolve any issues that an employee is facing and assure him that his concerns will be dealt with pure justice.
1. How does payroll withholding help a company's employees? (1-2 sentences. 2.0 points)
Answer:
Payroll withholding spreads out the cost of taxes throughout the year, so employees don't have to pay the entire amount they owe all at once on April 15. This helps make sure that people pay their taxes.
In which career is an employee least likely to work for a private company?
Insurance Sales
Personal Financial Advising
Investment Fund Management
Tax Preparation
Answer:
personal financial advising
Answer: B
Explanation:
Suppose a firm has 35 million shares of common stock outstanding at a price of $15 per share. The firm also has 200,000 bonds outstanding with a current price of $905.4. The outstanding bonds have yield to maturity 9.4%. The firm's common stock beta is 1.5 and the corporate tax rate is 39%. The expected market return is 14% and the T-bill rate is 3%. What is the WACC for this firm
Answer:
16%
Explanation:
The computation of the WACC is given below:
But before that following calculation should be done
Cost of equity
= Risk free rate of return + beta × (market return - risk free rate)
= 3% + 1.5 × (14% - 3%)
= 19.5%
Market value of equity = 35 million shares ×$15 = $525 million
And, the market value of debt = 200,000 × $905.4 = $181.08 million
Now the WACC is
= cost of equity × weight of equity + cost of debt × (1 - tax rate) × weight of debt
= 19.5% × ($525 ÷ 525 + 181.08) + 9.4% × (1 - 0.39) × ($181.08 ÷ 525 + 181.08)
= 19.5% ×0.744 + 5.734% × 0.256
= 15.975%
= 16%
Are monopolistically competitive firms efficient in long-run equilibrium? Monopolistically competitive firms A. are productively efficient because they produce at minimum average total cost and they are not allocatively efficient because they produce where price is equal to marginal revenue. B. are not productively efficient because they do not produce at minimum marginal cost and they are allocatively efficient because they produce where price is equal to marginal revenue. C. are not productively efficient because they do not produce at minimum marginal cost and they are allocatively efficient because they produce where marginal cost equals marginal revenue. D. are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost. E. are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is less than marginal cost.
Answer:
E)are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost.
Explanation:
Monopolistic competition can be regarded as imperfect competition whereby many producers that are competing against each other exist in the market, though they are selling products which can be differentiated from one another. Monopolistically competitive firms do
maximize their profit if their production is at a level where marginal costs as well as its marginal revenues equals. Hence, monopolistically competitive firms are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost.
what is marketing strategies
Answer:
A marketing strategy refers to a business's overall game plan for reaching prospective consumers and turning them into customers of their products or services :)
Explanation:
In other words!
It refers to a business's overall game plan for getting more costumers and more money with the work of their products and services.
The PPP theory fails in reality for all of the following reasons EXCEPT Group of answer choices monopolistic or oligopolistic practices in goods markets. restrictions on trade. inflation rates are unrelated to money supply growth. transport costs. the inflation data reported in different countries are based on different commodity baskets.
Answer:
inflation rates are unrelated to money supply growth.
Explanation:
purchasing power parity which is regarded as (PPP) is a macroeconomic analysis metric which gives comparison between economic productivity aas well as standards of living existing between countries. It can be regarded as economic theory which gives comparison of currencies of different countries using an approach of "basket of goods". The PPP theory can hold in reality for instance, when inflation rates are unrelated to money supply growth.
EXCEPT Group of answer choices monopolistic or oligopolistic practices in goods markets. restrictions on trade. the inflation data reported in different countries are based on different commodity baskets.
What is strategic relationship management?
O A. Avoiding conflicts between direct stakeholders and indirect
stakeholders
O B. Building and maintaining ongoing contact between parties that is
beneficial to both
O C. Managing change processes to achieve strategic growth for a
profit-seeking organization
O D. Ending relationships between parties that have conflicting needs
and interests
Answer:
its B
Explanation:
All of the following are true about the basic EOQ model except One half the order size equals the average inventory level. The average dollar value of inventory equals unit price multiplied by order quantity. Annual demand divided by EOQ will give the optimal number of orders per year. The reorder point equals daily demand multiplied by the lead time in days, excluding safety stock.
Answer:
Hence, the second statement describing the average inventory is false
Explanation:
The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost. It is the order size that optimizes the investment in stock ordering.
The following statements
The number of orders = Annual demand/order size
Re-order level(point) Average daily usage × average lead time
Average inventory = safety stock × (1/2× order size)
The average Dollar value = Unit price × average inventory
Hence, the second statement describing the average inventory is false
2) INFLATION-INDEXED TREASURY BOND Assume that the U.S. economy experienced deflation during the year and that the consumer price index decreased by 1 percent in the first six months of the year and by 2 percent during the second six months of the year. If an investor had purchased inflation-indexed Treasury bonds with a par value of $10,000 and a coupon rate of 5 percent, how much would she have received in interest during the year
Answer:
She received $490.05 during the year.
Explanation:
The principal of the bond will decrease in cash of decrease in the consumer price index.
The principal can be calculated as follow
Principal Value = ( Face value x Percentage reduction in consumer price index )
For the First Six Months
Principal Value = ( $10,000 x ( 100% - 1% ) = $9,900
For the Last Six Months
Principal Value = ( $9,900 x ( 100% - 2% ) = $9,702
Now calculate the coupon payments using the following formula
Coupon payments = Principal value x Coupon rate x Time fraction
For the First Six Months
Coupon payments = $9,900 x 5% x 6/12 = $247.50
For the Last Six Months
Coupon payments = $9,702 x 5% x 6/12 = $242.55
Total Interest received = Interest received in First Six Months + Interest received in Last Six Months = $247.50 + $242.55 = $490.05
Kando Company incurs a $10.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $5.00 per unit and sell it for $11.90 per unit. If it does so, unit sales would remain unchanged and $5.00 of the $10.00 per unit costs of Product A would be eliminated. 1. Prepare Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale
Answer:
Results are below.
Explanation:
Giving the following information:
Make in-house:
Selling price= $13.5
Unitary variable cost= $10
Purchase:
Selling price= $11.9
Purchase price= $5
Unitary variable cost= $5
To determine which option is best, we need to determine the unitary contribution margin. The option that provides the higher unitary contribution margin, is the better choice.
Unitary contribution margin= selling price - unitary variable cost
Make in-house:
Unitary contribution margin= 13.5 - 10
Unitary contribution margin= $3.5
Buy:
Unitary contribution margin= 11.9 - 5 - 5
Unitary contribution margin= $1.9
It is more profitable to make in-house.
An investment project provides cash inflows of $1,350 per year for eight years. a. What is the project payback period if the initial cost is $4,250
Answer:
It will take 3 years and 55 days to cover the initial investment.
Explanation:
Giving the following information:
Cash flows= $1,350
Initial investment= $4,250
The payback period is the time required to cover the initial investment:
Year 1= 1,350 - 4,250= -2,900
Year 2= 1,350 - 2,900= -1,550
Year 3= 1,350 - 1,550= -200
Year 4= 1,350 - 200= 1,150
To be more accurate:
(200 / 1,350)= 0.15*365= 55 days
It will take 3 years and 55 days to cover the initial investment.
This year Randy paid $28,900 of interest on his residence. (Randy borrowed $462,000 to buy his residence, and it is currently worth $512,000.) Randy also paid $2,800 of interest on his car loan and $4,650 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances
Answer:
a. Interest Deductible = $31,100
b. Interest Deductible = $28,900
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
This year Randy paid $28,900 of interest on his residence. (Randy borrowed $462,000 to buy his residence, and it is currently worth $512,000.) Randy also paid $2,800 of interest on his car loan and $4,650 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances?
a. Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000.
Interest Deductible $.......
b. Randy had no investment income this year, and his AGI is $75,000.
Interest Deducttible $.......
The explanation of the anwer is now given as follows:
a. Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000.
Randy may choose to deduct the interest of $28,900 on his residence as an itemized deduction.
The $2,800 of interest on his car loan is a nondeductible personal interest.
The $2,200 interest income received can be regarded as an investment income.
The $4,500 margin interest to his stockbroke is likely investment interest. But since Randy has only $2,200 interest income, his deduction is limited to the $2,200.
Therefore, we have:
Interest Deductible = Interest on his residence + $2,200 = $28,900 + $2,200 = $31,100
b. Randy had no investment income this year, and his AGI is $75,000.
Since there is no investment income, Randy can only dedcut the interest of $28,900 on his residence based on the explanation in part a above.
Therefore, we have:
Interest Deductible = $28,900