Answer:
The correct answer is the option D: product differentiation strategy.
Explanation:
To begin with, the fact that the company knows and understand that in other countries the people may have other needs and preferences is helpful because in that way they are able to investigate and start the creation and production of a good that adjusts to the preferences of that other country and by doing that the company leaves behind the concept of standarization and focus on the differentiation of its product by making it unique in every country they are in.
Q1 The following is a description of the conversion cycle of Central Production Limited: The conversion cycle of the company is triggered by a report from the warehouse. When the quantity of an inventory item falls below a pre-set minimum level, the warehouse manager sends an online inventory status report to production department advising them to schedule a production batch run for the item. Upon receipt of the report, the production clerk assesses the digital bill of materials and the route sheet files for the item to be produced and adds the production details to the online production schedule. The system automatically adds a record to the open work order file and sends an online work order to the work centre supervisor’s computer and to the accounting clerk’s computer. The work centre supervisor receives the work order from his computer and print hard-copy move tickets and materials requisitions for each production process. Production employees take the materials requisitions to store clerk and receives the materials and subassemblies needed to perform the production tasks. If additional materials beyond the standard amount is needed, the work centre supervisor prepares additional materials requisitions. Production employees complete job time tickets after completing a production process to record the time spent on the job. The job time tickets are then sent together with the move tickets to the accounting department. After releasing the materials into production, the store clerk updates the material inventory records and send the materials requisitions to accounting department. The clerk prepares a journal voucher and posts to the general ledger material control account at the end of each day. The accounting clerk assesses the work orders and set up a work-in-process account for a production batch. Throughout the production period, the clerk also receives move tickets, job tickets, and materials requisitions, which he uses to post to the work-in-process account. At the end of each day, the accounting clerk prepares a digital journal voucher and post it to the general ledger work-inprocess and finished goods control accounts. Q) Identify the risks exist in the conversion cycle of Central Production Limited. (10 marks 300 words) Q3 Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash. Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model. (10 marks, maximum 300 words) Q4 You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the management of your client is concerned that the audit tests that you perform will disrupt operations. Your client has recently implemented a data warehouse and the management suggests that you draw the data for analytical reviews and substantive testing from the data warehouse instead of the operational database. The management points out that operational data are copied weekly into the data warehouse and all data you need are contained there. Outline your response to the management’s proposal and mention any concerns you might have. (10 marks, maximum 300 words) Q5 The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead we get a modified version of the old system. CIO: I can assure you that will not happen this time. My team just want a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time in determining what exactly we want the system to do upfront. Then your team can come in and determine what portions to salvage if you wish. Just don’t constrain us to the old system! Required: a) The CIO and MD have different views on how the system analysis should be performed. Comment on whose position you sympathise with the most. (6 marks, maximum 200 words) b) What method would you recommend to Illustrious Limited for system analysis? Explain. (4 marks, maximum 150 words)
Answer:
a)
To my view, the MD viewpoint is better. In companies the existing process is usually analyzed and the pain points identified whenever there is a need for change. The new system is simply a change to the existing system. The stakeholders' specific needs are not completely addressed. The MD calls for a collection of and analysis of demands from scratch to share its needs , requirements and inhibitions between the principal stakeholders. The CIO and their staff would be able to assess in the requirements review process what worked and what did not work well for the organization.
In assessing the current process, the CIO and his team will align their thinking process with the pain points and correct the existing system. They are not going to build the system in a fresh light. A new system that meets the needs of stakeholders can be developed. For everybody, this is a win-win situation. The point of view of MD is therefore more logical and related.
b)
In the particular case, the most logical and comprehensive system analysis method is:
Primary stakeholder requirements collection: Primary stakeholders using the system must be consulted on their specific requirements and needs. It is also necessary to consider the limitations identified by stakeholders.
Comprehension of existing system and pain points: the current system can be analysed based on requirements collection and pain points can be emphasized in the current system.
A new system that will win for everyone: the new system must primarily comply with the needs of the stakeholders.
Presentation and approval of the system blueprint to stakeholders
Development and implementation of the system: system development can be carried out by the agile method of sprinting.
Monitoring and control of the system: to check for performance deviations, the system implemented should be observed. In order to monitor deviations, specific intervention can be implemented.
Swiss Group reports net income of $26,000 for 2017. At the beginning of 2017, Swiss Group had $184,000 in assets. By the end of 2017, assets had grown to $234,000. What is Swiss Group's 2017 return on assets?
Answer:
12.44%
Explanation:
The computation of the return on assets is shown below:
As we know that
Return on asset = Net income ÷ Average of total asset
= ($26,000) ÷ ($184,000 + $234,000) ÷ 2
= ($26,000) ÷ ($209,000)
= 12.44%
We simply applied the above formula so that the return on assets could be determined
Therefore we considered all the information given in the question
Answer:
12.44
Explanation:
Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs are $ 60 comma 000 for proposal A and $ 75 comma 000 for proposal B. The variable cost is $ 12.00 for A and $ 10.00 for B. The revenue generated by each unit is $ 22.00.
Required:
a. What is the break-even point in units for proposal A?
b. What is the break-even point in units for proposal B?
Answer:
Break-event point
Product A 6,000 units
Product B 6,250 units
Explanation:
The break-even point is the level of activity that a business must operate to equate total revenue to total cost . At the break even point, the business makes no profit or loss., and the total contribution is equal to total fixed cost
The break-even point is calculated as follows:
Total general fixed cost/(selling price - variable cost)
Break-even point = 60,000/(22-12)=6000 units
Product B
Beak-even point = 75,000/(22-10)=6250 units
Break-event point
Product A 6,000 units
Product B 6,250 units
Calisto Launch Services is an independent space corporation and has been contracted to develop and launch one of two different satellites. Initial equipment will cost $750,000 for the first satellite and $850,000 for the second. Development will take 5 years at an expected cost of $150,000 per year for the first satellite; $120,000 per year for the second. The same launch vehicle can be used for either satellite and will cost $275,000 at the time of the launch 5 years from now. At the conclusion of the launch, the contracting company will pay Calisto $2,500,000 for either satellite. Calisto is also considering whether they should consider launching both satellites. Because Calisto would have to upgrade its facilities to handle two concurrent projects, the initial costs would rise by $150,000 in addition to the first costs of each satellite. Calisto would need to hire additional engineers and workers, raising the yearly costs to a total of $400,000. An additional compartment would be added to the launch vehicle at an additional cost of $75,000. As an incentive to do both, the contracting company will pay for both launches plus a bonus of $1,000,000. Using a present worth analysis with a MARR of 10 percent/year, what should Calisto Launch Services do?
Answer:
The three different alternatives have positive NPVs. The alternative with the highest NPV is alternative 3, to develop and launch both satellites (NPV = $241,891). This alternative also has the highest IRR (12.1%). So Calisto should work on both satellites.
Explanation:
satellite 1 satellite 2
initial cost $750,000 $850,000
if 2 satellites developed $150,000
development cost year 1 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 2 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 3 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 4 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 5 $150,000 $120,000
if 2 satellites developed $130,000
launch vehicle cost year 5 $275,000
if 2 satellites developed $75,000
revenue from launching $2,500,000 $2,500,000
bonus for launching both $1,000,000
MARR = 10%
since there is not enough room here, I used an excel spreadsheet to calculate NPVs of launching satellite 1, satellite 2 or both.
Suppose you have a linear integer optimization problem. You solve the problem as a linear optimization problem by ignoring the integer constraints and obtain an integer optimal solution (i.e., your model did not require the variables to be integer, but it turned out when you solved the problem Solver found an optimal answer where the variables are integer).
Which of the statements below are correct (choose only one):
A. You can categorically state that you have the optimal solution to the integer optimization problem.
B. You can categorically state that you do not have the optimal solution to the integer optimization problem.
C. None of the above.
Answer:
Option(A) is the correct answer to the given question .
Explanation:
The integer programming problem is also known as the computational optimization or the functionality method that main objective to limits the some or many of the parameters may be integer. The objective of linear optimization problem to make the objective function as well as integer constraints linear .
The integer programming problem conclusively specify of the optimised solution to the issue of the integral optimisation.All the other option are not correct for the linear integer optimization problem because they are not give objective function as well as integer constraints as linear .Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $1,400,000 of 5-year, 6% bonds at a market (effective) interest rate of 3%, receiving cash of $1,593,666. Interest is payable semiannually on April 1 and October 1.
Required:
a. Journalize the entries to record the following.
1. Issuance of bonds on April 1, Year 1.
2. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)
b. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000.
Answer:
a. Journalize the entries to record the following.
1. Issuance of bonds on April 1, Year 1.
Dr Cash 1,593,666
Cr Bonds payable 1,400,000
Cr Premium on bonds payable 193,666
2. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)
premium per coupon = $193,666 / 10 coupons = $19,366.60
Dr Interest expense 22,633.40
Dr Premium on bonds payable 19,366.60
Cr Cash 42,000
b. Explain why the company was able to issue the bonds for $1,593,666 (not $22,282,220) rather than for the face amount of $1,400,000 (not $21,300,000).
Since the bond's coupon rate was higher than the market rate, investors were willing to pay more for the bond (premium) than its face value. At $1,593,666, the actual returns will equal the returns of a $1,400,000 bond issued at market rate.
your investment has a 20% chance of earning 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 7%. what is your expected return on investment
Answer:
8.9%
Explanation:
From the question above
- The investment has 20% chance of earning 30% rate of return
= 20/100
Number or chances= 0.2
- The investment has a 50% chance of earning 10% rate of return
= 50/100
Number of chances = 0.5
- The investment has 30% chance of losing 7%
= 30/100
Number of chances= 0.3
Therefore, the expected return on investment can be calculated as follows
=0.2(30) + 0.5(10) + 0.3(-7)
=6 + 5 - 2.1
= 11-2.1
= 8.9%
Hence the expected return on investment is 8.9%
Journalize the following transactions using the allowance method of accounting for uncollectible receivables.
April 1 Sold merchandise on account to Jim Dobbs, $6,800. The cost of the merchandise is $6,700.
June 10 Received $1,400 from Jim Dobbs and wrote off the remainder owed of $5,400.
Oct. 11 Reinstated the account of Jim Dobbs and received $5,400 cash in full payment.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.
Answer:
See the journal entries with narration below.
Explanation:
a. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 6,800
Sales 6,800
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 6,700
Inventory 6,700
To record cost of goods sold to Jim Dobbs.
June 10 Cash 1,400
Allow. for doubtful acct. (B. debt) 5,400
Account Receivable - J. Dobss 6.800
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 5,400
Allowance for doubtful accounts 5,400
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 5,400
Account Receivable 5,400
To record cash received from Jim Dobbs' in full.
b. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 7,200
Sales 7,200
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 5,400
Inventory 5,400
To record cost of goods sold to Jim Dobbs.
June 10 Cash (1/3 * 7,200) 2,400
Allow. for doubtful acct. (B. debt) 4,800
Account Receivable - J. Dobss 7,200
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 4,800
Allowance for doubtful accounts 4,800
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 4,800
Account Receivable 4,800
To record cash received from Jim Dobbs' in full.
The evaluation of a firm's strengths, weaknesses, opportunities, and threats is called a SWOT analysis. A SWOT analysis can be a valuable tool in the development of a marketing plan, but too often the SWOT analysis is not well thought out and proves to be an ineffective waste of time. Perhaps the most common mistake when conducting a SWOT analysis is the failure to separate internal issues from external issues. The strengths and weaknesses aspects of the SWOT analysis focus on internal capabilities. The opportunities and threats aspects focus on the external environment. Select the most appropriate category for the descriptors below.1. Post office closings2. JPM has the superior information technology infrastructure3. Increasing demand for international packages4. JPM has an excellent workforce and human resource department5. Potential global economic recession6. JPM has increasing labor costs7. JPM has less fuel-efficient planes8. Increasing fuel costs due to turmoil in the Middle East
Answer: Please refer to Explanation
Explanation:
SWOT ANALYSIS is indeed a very useful matrix for evaluating a firm's strong points.
The Strengths and Weaknesses portion focus on the internal Environment with the Strengths looking at what the company does better than other companies and has a competitive advantage in while weaknesses look at where the company is lacking.
The Threats and Opportunities focus on the External Environment. The Threats refer to any and every potential source of negative effects on the company while Opportunities are the potential chances that a company can capitalise on to make themselves more profitable.
Classifying the above,
1. Post office closings. OPPORTUNITIES
This is because JPM as a Delivery Service can then take over the customers that can no longer use the closed Post Offices.
2. JPM has the superior information technology infrastructure. STRENGTHS.
This is an area that JPM excels in making it a strength.
3. Increasing demand for international packages. OPPORTUNITIES.
This is a chance for JPM to grow as they can capitalise on this increased demand to increase profitability.
4. JPM has an excellent workforce and human resource department. STRENGTH.
JPM has a strength in this area because this is something that they are good at.
5. Potential global economic recession. THREATS.
This is a Threat to JPM as it could potentially affect their business negatively.
6. JPM has increasing labor costs. WEAKNESSES.
This is an internal problem that is a weakness for JPM. Rising labour costs means lower profits so they should be careful.
7. JPM has less fuel-efficient planes. WEAKNESSES.
Less fuel efficient planes means that they burn more fuel to deliver goods around the world so they have more expenses. This is a weakness that needs to be curtailed.
8. Increasing fuel costs due to turmoil in the Middle East. THREATS.
This is a threat because it is from the External Environment but threatens to increase the costs of deliveries for JPM.
Mountain High Ice Cream Company transferred $63,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,300). Mountain High anticipates a $3,300 recourse obligation. The bank charges a 3% fee (3% of $63,000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Journal entries for Mountain high Ice cream is given below
Explanation:
Journal entries:
Debit Credit
Cash 54810(w1)
Loss on receivables 6190
Factoring amount 5300(fair value)
Recourse liability 3300
Receivables 63000
Workings 1
63000 x 90%-3% = 54810
Chen Company's account balances at December 31, 2017 for Accounts Receivable and the Allowance for Doubtful Accounts are $800,000 debit and $1,500 credit. Sales during 2017 were $2,750,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for:___________.
A) $29,000.
B) $27,500.
C) $26,000.
D) $8,000.
Answer:
B) $27,500.
Explanation:
The computation of the amount credited to the allowance account is shown below:
= Sales during the 2017 year × estimated uncollectible percentage
= $2,750,000 × 1%
= $27,500
By multiplying the sales with the estimated uncollectible percentage we can get the amount credited to the allowance account and the same is to be considered
Hence, the correct option is B
Here are comparative statement data for Ivanhoe Company and Pharoah Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016.
2017 2016 2017 2016
(Ivanhoe (Ivanhoe (Pharoah (Pharoah
Company) Company) Company) Company)
Net sales $1,865,000 $595,000
Cost of goods sold 1,064,000 279,000
Operating expenses 252,000 84,000
Interest expense 8,000 1,800
Income tax expense 70,900 35,000
Current assets 583,495 $559,214 149,171 $142,246
Plant assets (net) 942,972 895,000 250,113 225,203
Current liabilities 118,722 135,709 63,273 54,203
Long-term liabilities 204,042 161,100 53,020 44,750
Common stock, $10 par 895,000 895,000 214,800 214,800
Retained earnings 308,703 262,405 68,192 53,696
Required:
Prepare a vertical analysis of the 2017 income statement data for Ivanhoe Company and Pharoah Company.
Answer:
Condensed Income Statement
For the Year Ended December 31, 2017
Ivanhoe Company Pharaoh Company
Net sales $1,865,000 100% $595,000 100%
Cost of goods sold ($1,064,000) 57% ($279,000) 47%
Gross profit $801,000 43% $316,000 53%
Operating expenses ($252,000) 14% ($84,000 ) 14%
EBIT $549,000 29% $232,000 39%
Interest expense ($8,000) 0.4% ($1,800 ) 0.3%
Income tax expense ($70,900) 3.8% ($35,000) 5.9%
Net income after taxes $470,100 25.2% $195,200 32.8%
A vertical analysis of an income statement uses net sales as the reference for all the other accounts. The other accounts are shown as a % of total net sales.
At the beginning of a semester, a group of five students (Marcus, Gerard, Penelope, Zendaya, and Duane) are asked to order a snack that the teacher will deliver to the students free of charge before the first class of the tenth week of the semester. The three choices are an apple, a banana, or a Snickers candy bar. The teacher collects the orders and finds that two students have ordered an apple, two students have ordered a banana, and one student has ordered a Snickers candy bar. The four students who ordered either an apple or a banana cite health consciousness as the reason for their choice. Immediately before the orders are scheduled to be delivered, the teacher informs the students that they can switch their choice and order something else from the original menu if they wish, or they can receive what they originally ordered. Which of the following scenarios is the best example of inconsistent intertemporal decision-making?A. Gerard ordered a banana and switched to an apple when prompted.
B. Duane ordered a Snickers candy bar and did not change his choice when prompted.
C. Penelope ordered an apple and switched to a banana when prompted.
D. Zendaya ordered a banana and switched to a Snickers candy bar when prompted.
E. Marcus originally ordered an apple and did not change his choice when prompted.
Answer:
THIS IS LONG
Explanation:
it is a long question
Answer:
E
Explanation:
A company incurred the following transactions:
a. Wages of $2,750 accrued at the end of the prior fiscal period were paid this fiscal period.
b. Real estate taxes of $7,350 applicable to the current period have not been accrued.
c. Interest on bonds payable has not been accrued for the current month. The company has outstanding $870,000 of 7.5% bonds.
d. The premium related to the bonds in part c has not been amortized for the current month. The current-month amortization is $145.
e. Based on past experience with its warranty program, the estimated warranty expense for the current period should be 0.2% of sales of $1,261,500.
f. Analysis of the company's income taxes indicates that taxes currently payable are $191,400 and that the deferred tax liability should be increased by $70,470.
Show the effect, if any, of each of the transactions/adjustments on the appropriate balance sheet category or on the income statement by selecting the amount and indicating whether it is an addition (+) or a subtraction (−).
Transaction/Adjustment (a-f). Current Assets, Current Liabilties, Long-term debt, Net Income
Answer:
since there is not enough room here, I prepared a balance sheet category on an excel spreadsheet
Explanation:
Dr Wages payable 2,750
Cr Cash 2,750
Dr Real estate taxes expense 7,350
Cr Real estate tax payable 7,350
Dr Interest expense 5,437.50
Cr Interest payable 5,437.50
Dr Bond premium 145
Cr Interest expense 145
Dr Warranty expense
Cr Warranty liability
Dr Income tax expense 191,400
Dr Income tax expense (deferred) 70,470
Cr Income tax payable 191,400
Cr Deferred tax liability 70,470
Suppose that the Federal Reserve decides to increase the money supply with a $300 purchases of Treasury bills. Complete the tables that represent the financial position of the Federal Reserve and commercial banks after this open-market operation. Be sure to use a negative sign for reduced values.For the Federal Reserve, what are assets? What are liabilities?
Answer:
The correct answer to the following question will be "Treasury bills, Monetary Base ". The further explanation is given below.
Explanation:
(A)...
Assets: $300 (tax bills)
If it's bought by Federal Reserve, it's going to be the asset portion.
(B)...
Reserves: $300 (Commercial Banking liabilities)
Based mostly on reserve requirements, banks would then deposit funds to Federal Reserve. All of the lenders will carry through.
(C)...
Treasury Deposits or bills = -$300
Certain bills would go down by $300 as either a result of Federal Reserve purchases.
(D)...
Bookings or Reserves: + $300
This would be growing by $300 because of the sale of treasury bills. It won't bring any changes to the aspect of liability.
If researchers add financial treasury obligations with reserves as well as circulating documents, so it becomes a financial basis. Such that the answer given is indeed the appropriate one.
Data related to the inventories of Kimzey Medical Supply are presented below: Surgical Equipment $ 260 170 Surgical Supplies $ 120 Selling price Cost Replacement cost Costs to sell Normal gross profit ratio 90 Rehab Equipment $ 340 250 235 25 30 % Rehab Supplies $ 165 162 158 240 80 30 30% 10 30 % 20 % In applying the lower of cost or market rule, the inventory of surgical equipment would be valued at:_________
A) $170.
B) $152.
C) $230.
D) $240.
Answer: A) $170
Explanation:
In applying the Lower of Cost or Market Value, inventory is valued at the amount that is lower between the current market value or the cost of the inventory and recorded in the balance sheet.
Market Value can be calculated as the current value minus the cost to sell.
From the above question, the value of the Surgical Equipment is $260 and the cost to sell is $30.
That means that the Market Value is,
= 260 - 30
= $230
This figure is larger than the cost of the Surgical Equipment which is $170 so to record the inventory according to the Lower of cost or market rule, the $170 is picked as it is lower.
You just made the last monthly payment on a 30 year mortgage -- the house is yours! In your joyous moment, you calculate how much you made in payments over those 30 years, and it is $647,514! If your interest rate was an APR of 6%, and you made equal monthly payments, how much did you originally borrow for this house
Answer:
$112,807
Explanation:
To calculate the amount of money you borrowed, you have to use the formula to calculate the present value:
PV=FV/(1+r)^n
PV= pressent value
FV= future value= 647,514
r= rate= 6%
n= number of periods of time= 30
PV=647,514/(1+0.06)^30
PV=647,514/(1.06)^30
PV=647,514/5.74
PV=112,807
According to this, you originally borrowed $112,807 for this house.
A company currently pays a dividend of $3.4 per share (D0 = $3.4). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.3, the risk-free rate is 6.5%, and the market risk premium is 1.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Answer:
Current price of stock =$128.06
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
The model is given as
P = D× g/(r-g)
P- price, D- dividend payable in year 1, r -cost of equity, g - growth rate in dividend
Cost of equity
The cost of equity can be calculated using the Capital Asset Model (CAPM).
Ke= Rf +β(Rm-Rf)
Ke =? , Rf- 6.5%, (Rm-Rf)- 1.5, β- 1.3
Ke=6.5% + 1.3× (1.5)= 8.45%
Stock price
PV of dividend in year 1 = 3.4× 1.17× 1.0845^(-1)=3.668
PV of dividend in year 2 = 3.4× 1.17^2× 1.0845^(-2) = 3.9572
PV of dividend in year 3
This will be done in two(2) steps:
Step 1- PV in year 2 terms
3.4× 1.17^2× 1.05/(0.0845- 0.05)= 141.651
Step 2- PV in year 0
141.6513913× 1.0845^(-2)= 120.4375
Current piece of stock = 3.668 + 3.957 + 120.4375 = 128.062
Current price of stock =$128.062
Hi-Tech, Inc., reports net income of $65.0 million. Included in that number are depreciation expense of $5.5 million and a loss on the sale of equipment of $1.5 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.5 million, $3.5 million, and $4.5 million, respectively. What are Hi-Tech's net cash flows from operating activities?
Answer:
Net Cash Flows from operating activities is $68.5 million.
Explanation:
The indirect Method would be used here because all we will find the cash expenses and revenues that were converted into within the year and are reported in the income statement by calculating the increase and decrease in the current assets and current liabilities. Here we will also eliminate the non cash expense effects by adding them back.
The net cash flows from operating activities can be calculated using the following method:
Millions
1. Net Income 65
Add Non Cash Deductions
2. Depreciation 5.5
3. Loss on sale of Equipment 1.5
Add / (Less) the increase or
decrease in current Assets or
liabilities
4. Increase in Trade Receivables (2.5)
5. Increase in Trade Payables 3.5
6. Increase in inventory (4.5)
Net Cash Flows from operating activities $68.5
During step 3 of activity-based costing, activity overhead cost pool rates are used to assign overhead costs to final cost objects. Proper determination of activity rates depends on all of the following: proper calculation of total overhead costs proper assignment of costs to cost objects proper determination of factors which drive costs proper measurement of activities Rate your confidence to submit your answer.
Answer:
HEY
Explanation:
How is each of the following likely to be affected by a recession:
a. the natural unemployment rate.
b. the cyclical unemployment rate.
c. the inflation rate.
d. the poll ratings of the president
Each of the following likely to be affected by a recession is the cyclical unemployment rate. The correct option is b.
What is a recession?The term "recession" is used in economics to describe the economic downturn brought on by a reduction in supply or demand. The production, employment, and income of domestic economies generally diminish, which in turn results in additional drops in demand and investment, lengthening the recessive process.
Because of this, when demand or production falls, the recession tends to last longer, deepen, and speed up, signaling that the affected nation's domestic economy will be in decline.
A recession is a time in the economy when growth is generally slow, yet inflation is also high. It is crucial that market forces operate independently, without interference from the government, in order to prevent a recession.
Therefore, the correct option is b. the cyclical unemployment rate.
To learn more about the recession, refer to the link:
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Peterson Corporation wanted to run an ad campaign that featured popular songs sung by the original singer. The aim was to make an emotional connection with people who remembered the songs. When Bette was approached to sing for the commercial, she refused saying she did not "do" commercials. Peterson Corporation still wanted to use the song, so they hired a backup singer for Bette and she was told to "sound as much as possible like the Bette record." The backup singer did the commercial, and people, even close acquaintances of Bette, thought it was her. Bette sued Peterson Corporation for wrongfully appropriating her likeness.
Required:
Is this a valid example of misappropriation. Why or why not.
Answer:
Misappropriation refers to the use of another person's intellectual property including their name or likeness without prior permission from the person which can then cause harm to that person.
This is indeed an example of misappropriation because the company tried to use Bette's likeness in the commercial. After being rebuffed by Bette saying that she does not do commercials for whatever business or personal reasons known to her, they still sought to use her popularity and image to make their products more popular.
To do so they hired a backup singer and told her to sing as much like Bette as she could so much so that even Bette's close acquaintances thought that it was Bette. If her close acquaintances could think it was her, imagine the general public.
They therefore made it seem as though Bette did their commercial which then would mean that Bette does in fact do commercials which would do damage her assertion that she does not do same. This would bring harm to her business relationships if for instance she had rebuffed other companies in the past when they sought her to do their commercials.
This is a case of Misappropriation and Bette should sue.
American Express trades on the New York Stock Exchange under the ticker symbol AXP. In 2016, AXP was paying a dividend of $.80 and analysts forecasted five-year growth rates of 10.54% for AXP and 13.21% for the financial services industry. Assume the growth rate for the financial services industry will remain constant. Then, assuming AXP's growth rate will revert to the industry average after five years, what value would we place on AXP, if we use a discount rate of 15%
Answer:
The current value placed on AXP is $ 45.08
Explanation:
Dividend currently paying = $ 0.80
Growth rate up to 5 years = 10.54%
Expected dividend for 1st year = $0.80 × 1.1054 = $0.88
Year Dividend amount Present Value at 15%
0 0.8
1 0.88 0.77
2 0.98 0.74
3 1.08 0.71
4 1.19 0.68
5 1.32 0.66
Growth rate = 13.21% from 6th year and onward
Expected dividend for 6th year = $1.32 × 1.1321 = $1.49
Value of the AXP at 5th year with constant growth at 13.21%
= $1.49 ÷ (0.15 - 0.1321)
= $83.51
Value of the AXP currently = P.V. of dividend payable in first 5 years + Present Value at 5th year at 15%
= $0.77 + $ 0.74 + $ 0.71 + $ 0.68 + $0.66 + ($83.51 × 0.4971 )
= $ 45.08
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?a) Bev's total explicit costs are $25,300.
b) Bev's total implicit costs are $300.
c) Bev's accounting profits exceed her economic profits by $300.
d) Bev's economic profit is $4,700.
Answer:
Bev's total explicit costs are $1000
Bev's total implicit costs are $25,300
Bev's accounting profits exceed her economic profits by $25,300
Bev's economic profit is $3,700.
Explanation:
Accounting profit is total revenue less total explicit cost.
Explicit cost is actual cost incurred.
Accounting profit = Total revenue - Total explicit cost
Total explicit cost = $1,000
Total revenue = $30,000
Accounting profit = $30,000 - 1,000 = $29,000
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
Implicit cost = $300 + $25,000 = $25,300
Economic profit = $29,000 - $25,300 = $3,700
I hope my answer helps you
As part of an economics class project, students were asked to randomly select 500 New York Stock Exchange (NYSE) stocks from the Wall Street Journal. As part of the project, students were asked to summarize the current prices (also referred to as the closing price of the stock for a particular trading date) of the collected stocks using graphical and numerical techniques. Would this be an application of descriptive or inferential statistics
Answer:
Descriptive Statistics
Explanation:
Descriptive Statistics is a technique in which data is collected and then analysis is made on the selected data through numerical techniques or graphs. In the given question the students have selected stocks and are analyzing its performance through graphical and numerical technique. This is descriptive statistics.
Presented below are two independent situations: A) Sandhill Inc. acquired 10% of the 420,000 shares of common stock of Schuberger Corporation at a total cost of $15 per share on June 17, 2020. On September 3, Schuberger declared and paid a $120,000 dividend. On December 31, Schuberger reported net income of $520,000 for the year. B) Blue Corporation obtained significant influence over Hunsaker Company by buying 30% of Hunsaker’s 120,000 outstanding shares of common stock at a cost of $18 per share on January 1, 2020. On May 15, Hunsaker declared and paid a cash dividend of $120,000. On December 31, Hunsaker reported net income of $220,000 for the year. Prepare all necessary journal entries for 2017 for (a) Edelman and (b) Wen.
Answer:
The journal entries for both corporations is prepared below
A)
Date: June 17
Accounts title and Explanations: Stock investment, dr. (420,000*$15*10%) 630,000
Accounts title and Explanations: Cash, Cr. 630,000
____________________________
Date: Sept 3.
Accounts title and Explanations: Cash, dr. (120,000*10%) 12,000
Accounts title and Explanations: Dividend revenue, Cr. 12,000
______________________________
Date: Dec 31.
Accounts title and Explanations: Stock investments, dr. (520,000*10%) 52,000
Accounts title and Explanations: Investment revenue, Cr. 52,000
____________________________
B)
Date: Jan 1
Accounts title and Explanations: Stock investment, dr. (120,000*$18*30%) 648,000
Accounts title and Explanations: Cash, Cr. 648,000
____________________________
Date: May 15
Accounts title and Explanations: Cash, dr. (120,000*30%) 36,000
Accounts title and Explanations: Dividend revenue, Cr. 36,000
______________________________
Date: Dec 31.
Accounts title and Explanations: Stock investments, dr. (220,000*30%) 66,000
Accounts title and Explanations: Investment revenue, Cr. 66,000
____________________________
Gena Manufacturing Company has a fixed cost of $259,000 for the production of tubes. Estimated sales are 153,400 units. A before tax profit of $126,034 is desired by the controller. If the tubes sell for $22 each, what unit contribution margin is required to attain the profit target?
Answer:
$2.51
Explanation:
Gena Manufacturing Company calculation for contribution margin unit
Using this formula
Fixed cost + Tax profit/Estimated sales units
Let plug in the formula
Where:
Fixed cost =$259,000
Tax profit=$126,034
Estimated sales units=153,400
Hence:
(259,000 + 126,034) / 153,400
=$385,034/153,400
= $2.51
Therefore the contribution margin that is required to attain the profit target will be $2.51
Required: Using the adjusted trial balance on the next page for Buttross Manufacturing, Inc., prepare statements for the fiscal year ended September 30, 2020, in good form:
Part 1: Prepare a Statement of Cost of Goods Manufactured
Part 2: Prepare a Multiple-Step Income Statement
Aside: The general ledger would usually include a factory overhead control account and the detail of factory overhead would be in a subsidiary ledger. However, the detail of factory overhead has been put into the adjusted trial balance mixed with the other accounts to make sure you can distinguish accounts going into cost of goods manufactured from those going into the income statement.
Find the given attachments for answer.
Note: The adjusted trial balance is added.
Cost of Goods Sold = Beginning finished goods inventory + COGM - Ending Finished Goods Inventory = 69,000 + 311,000 -100,000 = 280,000.
Cost of goods available for sale = Beginning finished goods inventory + COGM
COGS = Cost of goods available for sale - Ending finished goods inventory.
Strait Co. manufactures office furniture. During the most productive month of the year, 3,300 desks were manufactured at a total cost of $82,000. In the month of lowest production, the company made 1,130 desks at a cost of $59,000. Using the high-low method of cost estimation, total fixed costs are
Answer:
Using the high-low method of cost estimation, total fixed costs are $47,020
Explanation:
Cost at highest level of activity = $82,000.00
Cost at Lowest level of activity = $59,000.00
Highest level of activity = 3,300
Lowest Level of activity = 1,130
Variable cost per unit = $(82,000 - 59,000) ÷ (3,300 -1,130)
Variable cost per unit = $23,000 ÷ 2,170
Variable cost per unit = $10.60
Fixed Costs = $82,000 - (3,300 × 10.60)
Fixed Costs = $47,020
Gearty and Olinto organized The Worthington Corp., which issued voting common stock with a fair market value of $240,000. They each transferred property in exchange for stock as follows
Property Adjusted Basis Fair Market Value Percentage of The Worthington Corp. Stock Acquired
Gearty Building $80,000 $164,000 60%
Olinto Land 10,000 96,000 40%
The building was subject to a $20,000 mortgage that was assumed by The Worthington Corp. What was The Worthington Corp.'s basis in the building?
Answer:
$80,000
Explanation:
Since Worthington Corp. assumed the the $20,000 mortgage which the building was subject to, the Worthington Corp.'s basis in the building is the adjusted basis of the building.
Therefore, Worthington Corp.'s basis in the building is $80,000 which is the adjusted basis of the building.