Answer:
2.75, elastic.
Explanation:
Measure labor supply elasticity of Individual T's as follows :
[tex]\bf Elasticity=\frac{Percent \;change\;in\;labour\;hr}{\frac{Average\;labour\;hour}{\frac{Percent\;change\;in\;wage\;price}{Average\;wage\;price} } }[/tex]
[tex]\bf =\frac{16-6}{\frac{16+6}{\frac{2}{\frac{35-25}{\frac{35+25}{2} } } } }[/tex]
[tex]\bf=\frac{10}{\frac{11}{\frac{10}{30} } }[/tex]
[tex]\bf=\frac{0.91}{0.33}[/tex]
[tex]=2.75[/tex]
Therefore, the elasticity of the labour supply of Individual T's is approx. of earnings per hour. 2.75, meaning that the work supply of Person T's is elastic across this wage range
Save-the-Earth Co. reports the following income statement accounts for the year ended December 31. Sales discounts $ 890 Office salaries expense 3,400 Rent expense—Office space 2,900 Advertising expense 780 Sales returns and allowances 390 Office supplies expense 780 Cost of goods sold 11,800 Sales 48,000 Insurance expense 2,400 Sales staff salaries 3,900 Required: Prepare a multiple-step income statement for the year ended December 31.
Answer:
Multiple-step income statement for the year ended December 31.
Sales 48,000
Less Sales returns and allowances 390
Net Sales 47,610
Less Cost of goods sold (11,800)
Gross Profit 35,810
Less Operating Expenses :
Sales discounts 890
Office salaries expense 3,400
Rent expense—Office space 2,900
Advertising expense 780
Office supplies expense 780
Insurance expense 2,400
Sales staff salaries 3,900 (15,050)
Operating Income / (Loss) 20,760
Explanation:
The multiple-step income statement shows separately profit derived from Primary Activities of an Entity (Operating Profit) and the profit that includes Secondary Activities of an Entity (Net Profit)
In this case, Save-the-Earth Co derived its profit only from Primary Activities.
The inventory data for an item for November are: Nov. 01 Inventory 16 units at $22 04 Sale 9 units 10 Purchase 29 units at $23 17 Sale 17 units 30 Purchase 24 units at $24 Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO? a.$1,013 b.$743 c.$589 d.$582
Answer:
Cost of goods sold $ 589
Explanation:
Under the LIFO inventory system units of inventory are priced using the price of the most recent batch purchased and this continues in turn.
The total value of purchases = (16 × $22) + ( 29 × $2) + (24 × $24)= $1,595
The cost of goods sold can worked out as follows:
Nov 4th - 9 × $22 = 198
Nov 17th - 17× $23 = 391
Cost of goods sold = (198+ 391 )=$ 589
Cost of goods sold $ 589
g (Ignore income taxes in this problem.) The management of Mashiah Corporation is considering the purchase of a machine that would cost $305,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $105,000 per year. The company requires a minimum pretax return of 7% on all investment projects. Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables. The net present value of the proposed project is closest to:
Answer:
= $195,486.67
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-305,000
Cash flow each year from year 1 to 6 = $105,000
I = 7%
NPV = $195,486.67
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $100,000. However, the building carries a $36,000 mortgage that will be assumed by the partnership. Smart is investing $61,000 cash. The balance of Maxwell's Capital account will be:
Answer:
=$64,000
Explanation:
Max and Smart are forming partnership
Market Value of building = 100,000
The building carried mortgage by the partnership= 36,000
Smart is investing= 61,000
Balance of Maxwell capital Account will be Building value - Mortgage on building
=$100,000 - $36,000
=$64,000
Balance of Maxwell capital Account is equals to =$64,000
Capital account is the account that show the net worth of an enterprise or business in accounting.
The Accounts Receivable balance for Bach Consulting is $4,400,000 as of May 31, 2020. Before calculating and recording the month’s bad debt expense, there is a credit balance in the Allowance for Doubtful Accounts of $80,000. The May 2020 net sales were $30,000,000. In the past several years, 1% of net sales have proven uncollectible. An aging of accounts receivable results in a $360,000 estimate for the Allowance for Doubtful Accounts as of May 31, 2020.
PART A: PERCENT OF SALES METHOD
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
PART B: ANALYSIS OF RECEIVABLES METHOD
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
Problem 3
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020
February 3, 2019
Accounts Receivable (gross)
Allowance for Doubtful Accounts
Accounts Receivable, net
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Answer:
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 300,000 (= $30,000,000 x 1%)
Cr Allowance for doubtful accounts 300,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,100,000 (= $4,400,000 - $300,000)
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $300,000
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 280,000 (= $360,000 - $80,000)
Cr Allowance for doubtful accounts 280,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,120,000
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $280,000
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020 February 3, 2019
Accounts Receivable (gross) $762,000,000 $800,000,000
Allowance for Doubtful Accounts $21,000,000 $22,000,000
Accounts Receivable, net $741,000,000 $778,000,000
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
$741,000,000
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
$21,000,000
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
$762,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Dr Bad debt expense 22,000,000
Cr Allowance for doubtful accounts 22,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Dr Allowance for doubtful accounts 22,000,000
Cr Accounts receivable 22,000,000
Explanation:
Accounts receivable = $4,400,000
beginning balance Allowance for doubtful accounts = $80,000
May's net sales = $30,000,000
1% of net sales are uncollectible
aging of accounts receivable results in a $360,000 estimate for the Allowance for doubtful accounts as of May 31, 2020
1. Which of the following is an example of the resource-based view of the firm? a. Philip Morris diversified by purchasing Kraft foods, because they did not want to put money back in the high-risk cigarette business. b. Google hires employees by asking them to fill out a 200-item questionnaire; many of the questions have nothing to do with computers. c. Halliburton takes advantage of the US war budget to bill the government at over $5 per gallon of gasoline. d. Canon manufactures scanners, printers, copiers and cameras, all using its capability in imaging.
Answer:
An example of the resource-based view of the firm is:
d. Canon manufactures scanners, printers, copiers and cameras, all using its capability in imaging.
Explanation:
The resource-based view is a model or framework for examining the potentials an organization possesses to develop a competitive advantage over other competitors. By applying this model, management sees resources as key to superior firm performance. It therefore focuses its attention on internal resources in an effort to identify those assets, capabilities, and competencies with the potential to deliver superior competitive advantages.
The other approaches mentioned do not consider the firm's internal capabilities as a means of competitive advantage.
Suppose you are provided with the following data for your country for a particular month: 200 million people are working, 20 million are not working but are looking for work, and 40 million are not working and have given up looking for work. If we treated discouraged workers as unemployed, what would the unemployment rate for that month be
Answer:
60%
Explanation:
The following equity investment transactions were completed by Romero Company during a recent year:
Apr. 10 Purchased 3,600 shares of Dixon Company for a price of $51 per share plus a brokerage commission of $95.
July 8 Received a quarterly dividend of $0.95 per share on the Dixon Company investment.
Sept. 10 Sold 2,000 shares for a price of $41 per share less a brokerage commission of $75.
Journalize the entries for these transactions.
Answer:
The journal entries will look as follows:
Explanation:
Date Particulars Dr ($) Cr ($)
Apr 10 Investments - Dixon (w.1.) 183,695
Cash (w.1.) 183.695
(To record total value of investment in Dixon Company.)
July 8 Cash 3,420
Dividend revenue (w.2.) 3,420
(To record dividend revenue from Dixon Company shares.)
Sept. 10 Cash (w.3.) 81,925
Loss on investment sold (w.5.) 20,128
Investments - Dixon (w.4.) 102,053
(To record sales of investment in Dixon Company.)
Workings:
w.1. Total value of investment in Dixon Company = (3,600 * $51) + $95 = $183,695
w.2. Dividend revenue = 3,600 * $0.95 = $3,420
w.3. = Cash = (2,000 * 41) - $75 = $81,925
w.4. Value of investment in Dixon = ($183,695 / $3,600) * 2,000 = $102,053
w.5. Loss on sale of investment = w.3. - w.4. = $102,053 - $81,925 = $20,128
Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner’s insurance policy is $600 for the coverage they need. Their insurance company offers a discount of 8 percent if they install dead-bolt locks on all exterior doors. The couple can also receive a discount of 5 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $105 each. At the local hardware store, smoke detectors cost $28 each, and the new house has two floors. Dave and Ellen can install them themselves.
a. What discount will Dave and Ellen receive if they install the dead-bolt locks?b. What discount will Dave and Ellen receive if they install smoke detectors?
Answer:
1. 48 dollars
2. 30 dollars
Explanation:
The yearly premium on their homeowner's insurance policy is $600 for the coverage they need.
Their insurance company offers a discount of 8 percent if they install dead-bolt locks on all exterior doors.The couple can also receive a discount of 5 percent if they install smoke detectors on each floor.
1. What discount will Dave and Ellen receive if they install the dead-bolt locks?
discount for deadbolts =
Discount % x Premium
0.08 x 600 = 48 dollars
b. What discount will Dave and Ellen receive if they install smoke detectors?
discount for deadbolts =
Discount% x Premium
0.05 x 600 = 30 dollars
At March 31, Cummins Co. had an unadjusted balance in its cash account of $9,700. At the end of March, the company determined that it had outstanding checks of $950, deposits in transit of $620, a bank service charge of $25, and an NSF check from a customer for $210. What is the true cash balance at March 31
Answer:
$9,465
Explanation:
The computation of the true cash balance as on March 31 is shown below:
= Unadjusted cash balance as on March 31 - bank service charges - NSF check from a customer
= $9,700 - $25 - $210
= $9,465
These above two items are to be deducted
The other two items i.e outstanding checks and the deposit in transit are related to the bank balance and the same is not considered
Vertical Analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For Years Ended December 31 2019 2018 Fees earned $680,000 $576,000 Operating expenses 482,800 420,480 Operating income $197,200 $155,520 Prepare a vertical analysis of Cornea Company's income statements. Enter percents as whole numbers.
Answer:
Cornea Company
Income Statements For Years Ended December 31
2019 2018
Amount Percent Amount Percent
Fees earned $680,000 100% $576,000 100%
Operating expenses $482,800 71% $420,480 73%
Operating income $197,200 29% $155,520 27%
Operating expense working
2019= 482,800/680,000 * 100/1= 71% = 0.71
2018= 420,480/576,000 * 100/1= 73% = 0.73
Operating Income working
2019= 1 - 0.71 = 0.29 = 29%
2018= 1 - 0.73 = 0.27= 27%
Freya Co. has two patents that have allegedly been infringed by competitors. After investigation, legal counsel informed Freya that it had a weak case for Patent A34 and a strong case in regard to Patent B19. Freya incurred additional legal fees to stop infringement on Patent B19. Both patents have a remaining legal life of 8 years. How should Freya account for these legal costs incurred relating to the two patents?
Answer:
Freya needs to expense costs for Patent A34 and capitalize costs for Patent B19.
Explanation:
Based on the scenario being described it can be said that Freya needs to expense costs for Patent A34 and capitalize costs for Patent B19. That is because a successful defense of a patent needs to be capitalized and amortized since you can now monetize and recover the costs incurred as well as make a profit off of the patent. On the other hand, unsuccessful defense of a patent needs to be expensed as incurred since that patent cannot be used to make money and recover costs.
Billy-Bob owns a condo in Seattle, and a farm in Yakima. His older brother, Bobby-Lee, has some severe health problems and is unable to work anymore, and just has Social Security Disability income of about $800/month. Billy-Bob records a deed giving a "life estate" to Bobby-Lee as long as he lives, with the "remainder" to go to Billy-Bob’s sister, Judy. A. Bobby-Lee now owns the "fee simple" title to the property, as long as he lives. B. Once Bobby-Lee dies, Judy will own the "fee simple" title to the property. C. No one will own the "fee simple" title to the property.
Answer: B. Once Bobby-Lee dies, Judy will own the "fee simple" title to the property.
Explanation:
In the Life Estate arrangement, a person is granted use and ownership of a property for as long as they are alive. When they die however, if a Remainder also known as Remainder- man is named, then the property rights transfer to the Remainder- man.
The Remainder-man then gets access to the property and owns in to the highest extent of the law which in common law countries such as the United States, is the Fee Simple title ownership. This gives them the right to basically do what they want with the property.
Bobby-Lee therefore gets the rights to the property but once he dies, his sister Judy will own a fee simple title to the property.
One reason the federal government might "bail out" farmers in flood prone areas of the country? A. Such flooding is diversifiable, but the market for such insurance policies cannot clear without the assistance of the International Community. B. Such flooding is diversifiable, but insurance company CEOs are more concerned with their stockminusholder wealth than the wellminusbeing of farmers. C. Such flooding is not diversifiable and therefore only nonminusprofit entities, such as the federal government, can cover the risks. D. Such flooding is known to happen on a regular basis and therefore there is no "risk" to be insured against.
Answer: Such flooding is not diversifiable and therefore only non-profit entities, such as the federal government, can cover the risks
Explanation:
One reason that can make the federal ggovernment to bail out farmers in the flood prone areas of the country will be in a situation whereby the flooding is not flooding is not diversifiable and therefore only non-profit entities, such as the federal government, can cover the risks.
In this situation since the risk associated with the flooding can't be diversified, this can lead to profit making entities to run from bailing out the farmers because they'll believe there's nothing to gain for them so it might be left for the government to take charge and help out.
Caroline runs her own business selling horse related products (saddles, boots, bridles, etc.). She is considering investing $70,000 into an operating systems for security and data management for online ordering. After 8 years the equipment has a salvage value of $18,000. In the third year a major update is expected to cost $5,000. The operating costs per year are $2,000 for license and IT contracts.
a) Draw the cash flow diagram.
b) What is the present value the expected costs of the new security and data management system (including salvage value) using a 5% interest rate?
Answer:
The present value the expected costs of the new security and data management system is $-75,062.5
Explanation:
Kindly check attached picture for explanation
According to Keynesian business cycle theory, A. inflation is procyclical and leading. B. the procyclical movement of investment is well explained when shocks to durable goods are themselves a main source of the cycle (so-called "animal spirits"), but not when cycles are caused by fluctuations in the LM curve. C. beneficial aggregate demand shocks, regardless of whether they shift the IS curve or the LM curve, will increase both output and the real interest rate. D. the procyclical behavior of labor productivity occurs due to firms' labor hoarding practices.
Answer: D. the procyclical behavior of labor productivity occurs due to firms' labor hoarding practices.
Explanation:
Keynesian Economists argue that firms practice labor hoarding which is the practice of keeping workers when they should not such as when there is a Recession. They should not keep these workers because demand has slowed so keeping them means that they will not be producing to meet the demand.
The procyclical behavior of labor productivity means that labor productivity goes by the Business Cycle in that it is high when the Economy is booming and low when it is in a Recession.
Productivity is calculated by dividing goods produced by the number of labor producing them.
By refusing to fire workers during a Recession, there will be too many workers producing too few goods which will decrease labor productivity which is why according to Keynesian Economists, the productivity is low in Recessions.
A young couple is planning for the education of their two children. They plan to invest the same amount of money at the end of each of the next 16 years. The first contribution will be made at the end of the year and the final contribution will be made at the end of the year the older child enters college. The money will be invested in securities that are certain to earn a return of 8% each year. The older child will begin college in 16 years and the second child will begin college in 18 years. The parents anticipate college costs of $25,000 a year (per child). These costs must be paid at the end of each year. If each child takes four years to complete their college degrees, then how much money must the couple save each year
Answer:
The couple must save $ 6,598 each year
Explanation:
Calculating the payment amount:
Cost per year = $25,000 per each child
Cost for 4 years = $25,000 × 4 = $100,000
For the oldest child, the college will begin in 16 years and the second child the college will begin in 18 years.
Calculating the amount to be deposited each year for the oldest child.
Using Microsoft Excel PMT function
Rate = 8%
N = 16
PV = 0
FV = -100000
= $3,298
Therefore, they must deposit $3,298 each year for their oldest child.
Calculating the amount to be deposited each year for the second child:
Using Microsoft Excel PMT function
Rate = 8%
N = 18
PV = 0
FV = -100000
= $2,670
Therefore, they must deposit $2,670 each year for their second child.
Total sum to be saved per year = $3,298 + $2,670 = $6,598
Brief Exercise 3-5 On July 1, 2017, Major Co. pays $27,600 to Cruz Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Major Co., journalize and post the entry on July 1 and the annual adjusting entry on December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer: Please see below
Explanation:
Journal to record the Adjusting entry for Major Co payment to Cruz Insurance
Date Account Debit Credit
July 1 Prepaid insurance $27, 600
Cash $27,600
Date Account Debit Credit
Dec 31 Insurance expense $4,600
Prepaid insurance $4,600
Working : July - december= 6months, insurance contract= 3 years(3x12months =36months )
Insurance expense = $27,600 x
(6/36)= $4,600
13) Baxter & Baxter has total assets of $710,000. There are 45,000 shares of stock outstanding with a market value of $28 a share. The firm has a net profit margin of 7.1 percent and a total asset turnover of 1.29. What is the price-earnings ratio?
Answer:
19.38
Explanation:
Baxter & Baxter
Market value share/ Percentage of profit margin ×(Total assets ×Total asset turnover)/Outstanding shares
Where:
Market value shares=28
Percentage of profit margin =71%
Total assets =710,000
Total asset turnover=1.29
Outstanding shares =45,000
Hence:
Price-earnings ratio =
$28/[0.071 ×($710,000 ×1.29)]/45,000
=19.38
Suppose Sharon earns $575 per week working as a programmer for PC Pros. She uses $9 to get her car washed at Spotless Car Wash. Spotless Car Wash pays Paolo $300 per week to wash cars. Paolo uses $200 to purchase software from PC Pros.
and
1. Paolo spends $200 to purchase software from PC Pros.
- A. Resource Market? B. Product Market market?
2. Paolo earns $300 per week working for Spotless Car Wash
- A. Resource Market? B. Product Market market?
3. Sharon spends $9 to get her car washed.
- A. Resource Market? B. Product Market market?
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs.
1. The $300 per week Paolo earns working for Spotless Car Wash
2. The $200 Paolo spends to purchase software from PC Pros
3. Sharon's labor
Answer:
First Question
1. B
2. A
3. B
Second Question
The $200 Paolo spends to purchase software from PC Pros.
Explanation:
1. Paolo's transaction falls under the product market cash flow because he wittingly spends on a product–the software.
2. Paolo's earnings comes to the resource market, since he is been paid for his human resourcefulness in the organization.
3. Sharon's payment for washing her car is best placed on the Product market flow since she is spending on a personal product–the car.
The $200 Paolo spends to purchase software from PC Pros in this scenario represent a flow from a household to a firm because he (an individual belonging to a household) transfers his money to the firm.
Read the scenario. Yuri has $100 to spend at the store. He spots a pair of designer jeans with a $98 price tag on them but knows that he can buy three pairs of $30 jeans for about the same price. He still decides to buy the $98 pair. What is most likely Yuri’s motivation behind buying the pricier pair? emotional spending confused sense of needs and wants greedy spending conspicuous consumption
Answer:
D
Explanation:
Conspicuous consumption
Conspicuous consumption is the spending of money on and the acquiring of luxury goods and services to publicly display economic power of the income or of the accumulated wealth of the buyer.
Yuri’s motivation behind buying the pricier pair is conspicuous consumption.
What is conspicuous consumption?Conspicuous consumption can be defined as the way in which a person or individual decide to buy luxury items or costly items so as to display or showcase their wealth.
Based on the given scenario Yuri is buying the costly designers jeans instead of the cheaper pair as to showcase his wealth.
Inconclusion Yuri’s motivation behind buying the pricier pair is conspicuous consumption.
Learn more about conspicuous consumption here:https://brainly.com/question/4384035
Government Spending
Consumer Expectations
Degree of Excess Capacity
Personal Income Tax Rates
Productivity
National Income Abroad
Business Taxes
Domestic Resource Availability
Prices of Imported Products
Profit Expectations on Investments
Answer the question based on the accompanying list of items related to aggregate demand or aggregate supply. A change in which factor is most likely to change both aggregate demand and aggregate supply?
Answer:
Business Taxes.
Explanation:
A change in business taxes is most likely to change both aggregate demand and aggregate supply.
Aggregate demand can be defined as the total amount of goods and services by consumers at a specific period of time and price level in an economy.
Aggregate supply can be defined as the total amount of goods and services an organization is willing to sell or provide to it's consumers at a specific price level.
When business taxes are imposed on businesses, such as manufacturing companies, these in turn affect the demand and supply framework (final goods and services).
Basically, business taxes causes shifts in demand and supply, which in turn affect the price and quantity of goods and services in an economy.
Hence, companies would either be forced to cut-down on the amount of goods and services provided, result to borrowing or downsizing their manpower. As a result of this, they won't be able to meet the demands of their consumers.
Billy owns one share of Disney stock. He purchased the share 3 years ago for $15. Disney stock is currently trading for $30 per share. The stock has paid the following dividends over the past three years: year 1, $1.00; year 2, $2.00; year 3, $3.00. What is the compounded rate of return (IRR) that Billy has earned on his investment
Answer:
35.8%
Explanation:
purchase price 3 years ago $15, so CF₀ = -15
CF₁ = $1
CF₂ = $2
CF₃ = $3 + $30 = $33
using an excel spreadsheet (or you can also a financial calculator), you must determine the internal rate of return (IRR) = 35.8%
the IRR is the interest rate where NPV = 0, or the future cash flows equal the investment amount
Calculate the times interest earned ratio using the financial statement data shown below. Current liabilities $185 Income before interest and taxes $170 10% Bonds, long-term 360 Interest expense 36 Total liabilities 545 Income before tax 134 Stockholders' equity Income tax 29 Common stock 222 Net income $105 Retained earnings 289 Total stockholders' equity 511 Total liabilities and equity $1,056HHF's times interest earned ratio is:______.a. 10.00.b. 3.14.c. 1.54.d. 2.14.Current liabilities $180 Income before interest and taxes $11810% Bonds, long-term 360 Interest expense 36Total liabilities 540 Income before tax 82Shareholders' equity Income tax 20Capital stock 201 Net income $62Retained earnings 283Total shareholders'equity 484Total liabilities and equity $1,024HHF's debt to equity ratio is:________.a. 0.74.b. 0.56.c. 1.12.d. 1.90.
Answer:
1. Times interest earned ratio is 4.72
2. Debt to equity ratio is 1.12. Option C
Explanation:
Current liabilities = $185
Income before interest and taxes = $170
10% Bonds, long-term = $360
Interest expense = $36
Total liabilities = $545
Income before tax = $134
Stockholders' equity Income tax = $29
Common stock = $222
Net income = $105
Retained earnings = $289
Total stockholders' equity = $511
Total liabilities and equity = $1,056
1. Times interest earned ratio = Earnings before interest and taxes/Interest expenses
= $170 ÷ $36
= 4.72
Current liabilities = $180
Income before interest and taxes = $118
10% Bonds, long-term = $360
Interest expense = $36
Total liabilities = $540
Income before tax = $82
Shareholders' equity Income tax = $20
Capital stock 201 Net income = $62
Retained earnings = $283
Total shareholders'equity = $484
Total liabilities and equity = $1,024
2. Debt to equity ratio = Total debt ÷ Total equity
= 540 ÷ 484
= 1.12
g "At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $3,500. During the year a monthly provision of 3% of sales was made for uncollectible accounts. Sales for the year were $1,110,000, and $7,200 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:"
Answer: Allowance for the doubtful accounts with a credit balance of $29,600
Explanation:
From the information that is provided in the question, the following can be deduced and the year-end financial statements should show:
Allowance for the doubtful accounts with a credit balance will be calculated as: the beginning allowance for the doubtful accounts + (the sales × Provision % ) - accounts receivable that were written off.
= $3,500 + ($1,110,000 × 3%) - $7,200
= $3500 + $33300 - $7200
= $36800 - $7200
= $29,600
You own a portfolio that has a total value of $210,000 and it is invested in Stock D with a beta of .87 and Stock E with a beta of 1.38. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D
Answer:
The dollar amount of the investment in Stock D is (x=$156470.59)
Explanation:
Let assume investment in Stock D = $x
Hence investment in Stock E = (210,000-x)
Portfolio beta=Respective betas * Respective investment weights
1= (x/210,000*0.87) + (210,000-x) /210,000*1.38[Beta of market=1]
(1*210,000) = 0.87x + 289800 -1.38x
290,000=0.87x+289800-1.38x
Hence x=(289800-210,000)/(1.38-0.87)
x= 79,800 / 0.51
x=156470.5882
x=$156470.59
Changes in reserve requirements to conduct monetary policy is generally not a good idea for the United States because:
A)it requires approval of Congress and this can take too long.
B)it takes a long time to work whereas other tools are much quicker.
C)this tool is powerful and makes it difficult for bank managers to plan for the future and manage funds as they like.
D)the United States is too large of a country to use this tool.
Answer: this tool is powerful and makes it difficult for bank managers to plan for the future and manage funds as they like.
Explanation:
Reserve requirements are the amount of money that a bank holds in its reserve to ensure that it can meet liabilities in the case of sudden withdrawals. The reserve requirement is a tool that is used by the central bank of a country to either increase or decrease the money supply in the economy and also influence interest rates.
The changes in reserve requirements to conduct monetary policy is not a good idea for the United States because it is a powerful tool which makes it hard for bank managers to make future plans and manage funds as they want. In a situation whereby small variation in the reserve ratio brings about huge changes in an economy, the changes are positive and okay but in a situation whereby they bring about negative effect, it will be hard to face such scenarios.
The Nelson Company has $1,750,000 in current assets and $700,000 in current liabilities. Its initial inventory level is $490,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.9? Round your answer to the nearest cent. $ What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.
Answer:
(a) Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
(b) The firm's quick ratio after Nelson has raised the maximum amount of short-term funds is 1.34
Explanation:
Current assets = $1,750,000
Current liabilities = $700,000
Initial inventory level = $490,000
Current ratio = Current assets ÷ Current liabilities
= $1,750,000 ÷ $700,000 = 2.5
1.9 = (Current assets + [tex]\Delta{NP[/tex]) ÷ (Current liabilities + [tex]\Delta{NP[/tex])
1.9 = ($1,750,000 + [tex]\Delta{NP[/tex]) ÷ ($700,000 + [tex]\Delta{NP[/tex])
1.9 × ($700,000 + [tex]\Delta{NP[/tex]) = ($1,750,000 + [tex]\Delta{NP[/tex])
$1,330,000 + [tex]1.9\Delta{NP[/tex] = $1,750,000 + [tex]\Delta{NP[/tex]
[tex]0.9\Delta{NP[/tex] = $1,750,000 - $1,330,000
[tex]\Delta{NP[/tex] = $466,666.67
Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
Quick ratio = (Current assets - Inventories) ÷ Current liabilities
= $937,500 ÷ $700,000
= 1.34
Balance sheet The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company's financial condition and performance.
Cold Goose Metal Works Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet.
Cold Goose Metal Works Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars)
Year 2 Year 1 Year 2 Year 1
Assets Liabilities and equity
Current assets: Current liabilities
Cash and equivalents $4,612 Accounts payabl $0 $0
Accounts receivable 2,109 1.688 Accruals 293 293 0
Inventories 6,187 4,950 Notes par 1,660 1,562
Total current assets $14,062 $11,250 Total current abilities $1,562
Net fixed assets: Long-term debt 5,859 4,688
Net plant and equipment $13.750 Total debt $7,812 $6,250
Conon equity
Common stock 15.235 12,188
Retained earnings 6,562
Total common equity $23,438 $18,750
Total assets $31,250 $25,000 Total abilities and equity $31,250 $25,000
Given the information in the preceding balance sheet—and assuming that Cold Goose Metal Works Inc. has 50 million shares of common stock outstanding—read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.Statement #1: Cold Goose’s pool of relatively liquid assets, which are available to support the company’s current and future sales, decreased from Year 1 to Year 2.This statement is , because:Cold Goose’s total current asset balance increased from $11,250 million to $14,062 million between Year 1 and Year 2Cold Goose’s total current liabilities balance increased from $1,688 million to $2,109 million between Year 1 and Year 2Cold Goose’s total current liabilities balance decreased by $2,812 million between Year 1 and Year 2Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-term debt financing.This statement is , because:Cold Goose’s total current liabilities increased by $391 million, while its use of long-term debt increased by $1,171 millionCold Goose’s total current liabilities decreased by $391 million, while its long-term debt account decreased by $1,171 millionCold Goose’s total notes payable increased by $98 million, while its common stock account increased by $3,047 millionStatement #3: One way to interpret the change in Cold Goose’s accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts.This statement is , because:The $421 increase in accounts receivable means either that Year 1’s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1’s credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1’s credit salesThe decrease from $2,109 million to $1,688 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on creditThe change from $4,950 million to $6,187 million reflects a net accumulation of new credit salesBased on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to if the firm buys a new plant and equipment at a cost of $1 million with liquid capital.
Answer:
Cold Goose Metal Works Inc.
Balance Sheet
For Year Ending December 31 (Millions of Dollars)
Year 2 Year 1
Assets
Current assets:
Cash and equivalents $5,766 $4,612
Accounts receivable 2,109 1.688
Inventories 6,187 4,950
Total current assets $14,062 $11,250
Net fixed assets:
Net plant and equipment $17,188 $13.750
Total assets $31,250 $25,000
Liabilities and Equity
Current liabilities:
Accounts payable $0 $0
Accruals 293 0
Notes payable 1,660 1,562
Total current abilities $1,953 $1,562
Long-term debt 5,859 4,688
Total debt $7,812 $6,250
Common equity
Common stock 15.235 12,188
Retained earnings $8,203 6,562
Total abilities and equity $31,250 $25,000
Statement #1: Cold Goose’s pool of relatively liquid assets, which are available to support the company’s current and future sales, decreased from Year 1 to Year 2.
This statement is FALSE, because: Cold Goose’s total current asset balance increased from $11,250 million to $14,062 million between Year 1 and Year 2
Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-term debt financing.
This statement is FALSE, because: Cold Goose’s total current liabilities increased by $391 million, while its use of long-term debt increased by $1,171 million
Statement #3: One way to interpret the change in Cold Goose’s accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts.
This statement is TRUE, because:The $421 increase in accounts receivable means either that Year 1’s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1’s credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1’s credit sales
Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to DECREASE if the firm buys a new plant and equipment at a cost of $1 million with liquid capital.
Cash dividend payments were $25,000. Long-term investments were sold for $79,000 cash. A building costing $198,000 was purchased using $19,800 cash, and the balance was financed with a mortgage note payable. Stock was issued to stockholders in exchange for $110,000 cash. A $44,000 loan was made to a local inventory supplier; the loan will be repaid in twelve months. Equipment used in operations was sold for $37,000. Repaid a long-term note payable for $92,000 cash. Cash received from short-term bank loans totaled $71,000. Determine Smith’s cash flows from investing activities.
Answer:
$4,200
Explanation:
Data provided in the question:
Cash dividend payments = $25,000.
Cash from selling of Long-term investments = $79,000.
Cash used for purchasing a building costing $198,000 = $19,800
Sale of equipment = $37,000
Long term note payable = $92,000 cash
Now,
The net cash from investing activities will be
= sale of long term investments - purchase of building + sale of equipment - purchase of investments
= $79,000 - $19,800 + $37,000 - $92000
= $4,200.
