Answer:
a. Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
Explanation:
Dollar-value LIFO refers a technique of accounting that employed for inventory based on the last-in-first-out model.
To obtain the dollar-value LIFO, the conversion price index that will be used to calculate the LIFO cost layer for each period must be calculated first.
Therefore, Dollar-value LIFO starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: The reporting statement of revenue and expense data is shown. A table with three columns is shown. There is no heading in the first column; the second column heading in the current year; the third column heading is the previous year. The headings, Current Year and Previous Year, are set in bold. The first line (below the heading) shows Sales is $ 4,000,000 and $ 3,600,000; the second line shows Cost of goods sold is 2,280,000 and 1,872,000; the third line shows Selling expenses is 600,000 and 648,000; the fourth line shows Administrative expenses is 520,000 and 360,000;the fifth line shows Income tax expense is 240,000 and 216,000. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to the nearest whole percentage. Answer Check Figure: Current year net income: $360,000; 9% of sales Pencil Comment on the significant changes disclosed by the comparative income statement.
Answer:
Innovation Quarter Inc.
Income Statement
For the Years Ended
Current Year ($) Previous Year ($)
Sales 4,000,000 100% 3,600,000 100%
Cost of goods sold 2,280,000 57% 1,872,000 52%
Gross profit 1,720,000 43% 1,728,000 48%
Expenses:
Selling expenses 600,000 15% 648,000 18%
Administrative expenses 520,000 13% 360,000 10%
Total expenses 1,120,000 28% 1,008,000 28%
Income from operations 600,000 15% 720,000 20%
Income tax expense 240,000 6% 216,000 6%
Net income 360,000 9% 504,000 14%
Explanation:
Current Year Previous Year
Sales $ 4,000,000 $ 3,600,000
Cost of goods sold $ 2,280,000 $ 1,872,000
Selling expenses $ 600,000 $ 648,000
Administrative expenses $ 520,000 $ 360,000
Income tax expense $ 240,000 $ 216,000
1. Cost Management Systems: Analyze the process of assigning and allocating costs. Discuss the development of an activity-based costing system and how activity based management is used in decision making. Compare and contrast Just-In-Time and Quality Management Systems.
Explanation:
The assigning and allocation of costs in an organization can be defined as essential processes to assist in the management of organizational budgets, being characterized as essential activities for the company's accounting department.
An activity-based costing system can be initiated according to the identification of the scope of organizational projects, and then carry out an appropriate planning so that the costs of the company in relation to all organizational systems are identified and then eliminate subjectivity and carry out a more precise cost management and greater control, which guarantees a decision making more directed to the organizational needs, focused on reducing unnecessary costs.
The relationship between the cost management system and the Just-In-Time and quality management systems is that these two systems are focused on reducing waste and maintaining quality in all organizational processes, and controlling of the organizational costs realized by a cost management system will reduce the waste of undue costs of the company, increase its efficiency and quality, as this system assists in the control and coordination of the systems, which results in an improvement of all organizational processes.
For every dollar that you deposit into a bank, the bank will tend to:_________.
a) keep a portion of it and lend out the rest.
b) keep every penny as vault cash since it is such a small amount.
c) lend out every penny since almost all transactions are digital.
Answer:
The answer is A.
Explanation:
This system is known as Fractional Reserve Banking.
Fractional Reserve Banking is a banking system which allow banks to hold a fraction their customers' deposit as reserves. The rest not kept as reserves are used to make loans, thereby creating new money.
Central banks announce reserve requirements which banks within the jurisdiction must comply with.
If the Fed carries out an open market operation and sells U.S. government securities, as long as the federal funds interest rate remains within the corridor the federal funds rate ________ and the quantity of reserves ________. Group of answer choices rises; decreases falls; increases falls; decreases rises; increases
Answer:
rises; decreases
Explanation:
When the Fed sells US securities, it is engaging in a contractionary monetary policy. This means that they are trying to cool down the economy and lower inflation rate by reducing the money supply. This will lead to an increase in the federal funds rate and the whole economy's interest rates.
Since the Fed absorbs money from the banks and other investors, the quantity of banks' reserves decreases, which leads to less loans and higher interest rates charged.
The following items are taken from the financial statements of the Freight Service for the year ending December 31, 2016:
Accounts payable $ 19,000
Accounts receivable 13,000
Accumulated depreciation – equipment 26,000
Advertising expense 21,200
Cash 15,000
Owner’s capital (1/1/16) 104,000
Owner’s drawings 11,000
Depreciation expense 12,000
Insurance expense 3,800
Note payable, due 6/30/17 72,000
Prepaid insurance (12-month policy) 7,200
Rent expense 16,000
Salaries and wages expense 32,000
Service revenue 135,000
Supplies 5,000
Supplies expense 6,000
Equipment 210,000
What is the company’s net income for the year ending December 31, 2016?
Answer:
Freight Service
Income Statement for the year ending December 31, 2016:
Service Service $135,000
Costs:
Advertising expense 21,200
Depreciation expense 12,000
Insurance expense 3,800
Rent expense 16,000
Salaries & Wages exp 32,000
Supplies expense 6,000
Total Expenses $91,000
Net Income $44,000
Explanation:
In calculating the net income for the year, only revenue and expenses (income statement) items are taken into account. They are also called temporary or period accounts which are closed to the income statement for the period, because they are not permanent accounts. Permanent accounts are taken to the balance sheet and carried over to the next accounting period.
Managers involved in negotiation should:__________.
1. Search for the absolute best answer.
2. Exercise premature judgment.
3. Realize that solving the other party's problem is actually the other party's problem.
4. Verify whether there is only a fixed set of alternatives.
Which of the following phenomena would be most likely to occur if the project team did not have clear and commonly understood project goals?
1. The level of trust among team members would increase.
2. The motivation level of team members would increase.
3. The interdependency among team members would increase.
4. Conflict among team members would increase.
Answer:
For question (1): 4. Verify whether there is only a fixed set of alternatives.
For question (2): 4. Conflict among team members would increase.
Explanation:
Managers involved in negotiation should always verify whether there is only a fixed set of alternatives.
It is ideal that when managers are making a negotiation and by extension decision-making, they should ensure there are one or more alternative options. A fixed set of alternatives would only mean they're absolutely liable to the other party, without any reasonable benefits to their organization in the event of a crisis with the deal.
Conflict among team members would increase if the project team did not have clear and commonly understood project goals.
As a rule and standard, it is necessary to ensure that team members share common understanding, aims, ideas and vision in order to achieve their project goals and objectives.
When team members are in sync, they're bound to collaborate and use collective intelligence to attain success.
Hence, to increase the level of trust, motivation level, and interdependency among team members, project managers should ensure they've clear and commonly understood project goals.
Hot and Cold has annual sales of $847,000, annual depreciation of $47,000, and net working capital of $43,000. The tax rate is 21 percent and the profit margin is 7.3 percent. The firm has no interest expense. What is the amount of the operating cash flow
Answer:
The amount of the operating cash flow is $108,831
Explanation:
In this question, we are tasked with calculating the amount of the operating cash flow.
Firstly, we calculate the net income.
Mathematically, net income = Sales × % profit margin
From the question, sales = $847,000
% profit margin = 7.3% = 7.3/100 = 0.073
Net income = $847,000 × 0.073 = $61,831
Finally, Operating cash flow = Net income + Depreciation
From the question, depreciation = $47,000
Plugging this alongside the net income,
Operating cash flow = $61,831 + $47,000 = $108,831
Demographic studies show that the proportion of teenagers and minorities in the U.S. population is likely to increase in the near future. In your opinion, what implications, if any, will this trend have on the unemployment rate?
Answer:
Demographic Studies and Increased Proportion of Teenagers and Minorities
Implications of the Trend on the Unemployment Rate:
a) Labor Force Participation Rate: If the population of teenagers and minorities increase proportionately in the near future, there will be an increase in the labour force participation rate. This means that more people are vying for the available jobs. This puts pressure on the economy to create more sustainable jobs. However, this holds true if all other things are held constant. Obviously, the increased population of these demographic groups will push industries to create jobs in pursuit of the huge demand placed by the groups for more goods and services.
b) Increased Industrial growth reduces the unemployment rate. The resulting increased demand for goods and services required by these groups will increase industrial growth. This will in its turn reduce the unemployment rate.
c) Another implication of the trend on the unemployment rate is that the increased population of these groups will lead to social mobility. Social mobility happens when people move out of their social class to lower or better social classes. Social mobility affects the unemployment rate in any demography. When educated people accept menial jobs, while it may appear that they are working, they are obviously still within the unemployment bracket because they will be searching for jobs.
Explanation:
a) Unemployment rate is the number of unemployed people as a percentage of the labor force. The labor force comprises those who are unemployed plus those who are in paid or self employment.
b) Demographic studies are the studies conducted about a population based on factors such as age, race, and sex.
Tangarine Company is considering a project with an internal rate of return of 12%. Tangarine requires a minimum rate of return of 10%. The net present value of the project is: a.equal to zero. b.infinite. c.negative. d.positive. e.None of these choices are correct.
Answer:
The correct option is D
Positive NPV
Explanation:
The internal rate of return is the discount rate that equates the present value of cash inflow to the present value of cash inflows.
It is the maximum cost of capital that can be used to discount a project without causing harm to the investors. In other words, it is the cost of capital that produces an NPV of Zero.
It therefore means that any cost of capital that is less than the IRR would produce a positive NPV and vice and versa.
and vice versa
Finally, if the IRR is 12% a cost of capital of 10% would produce a positive NPV
Listed below are a few events and transactions of Kodax Company.
Jan. 2 Purchased 92,000 shares of Grecco Co. common stock for $526,000 cash. Grecco has 276,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax.
Sept. 1 Grecco declared and paid a cash dividend of $1.50 per share.
Dec. 31 Grecco announced that net income for the year is $507,900. Year 2
June 1 Grecco declared and paid a cash dividend of $3.80 per share.
Dec. 31 Grecco announced that net income for the year is $735,400.
Dec. 31 Kodax sold 13,000 shares of Grecco for $96,500 cash.
Required:
Prepare journal to record the above transactions and events of kodax Company.
Answer:
Jan. 2
Investment in Associate $526,000 (debit)
Cash $526,000 (credit)
Sept. 1
Cash $138,000 (debit)
Dividend Received $138,000 (credit)
June 1
Cash $349,600 (debit)
Dividend Received $349,600 (credit)
Dec. 31
Cash $96,500 (debit)
Investment in Associate $96,500 (credit)
Explanation:
When Kodax Company purchased 92,000 shares of Grecco Co she had significant influence (more than 20% of shareholding in Grecco Co). We call this an Investment in an Associate.
The Investment in Associate is a Financial Asset to the Holder (Kodax Company) and an Equity Element to the Investee (Grecco Co) and should be recorded appropriately as above.
Listed below are a few events and transactions of Kim Company. Year 1 Jan. 2 Purchased 95,000 shares of Grey Co. common stock for $501,000 cash. Grey has 285,000 shares of common stock outstanding, and its activities will be significantly influenced by Kim. Sept. 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $500,400. Year 2 June 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $722,900. Dec. 31 Kim sold 10,000 shares of Grey for $126,500 cash. Prepare journal entries to record the above transactions and events of Kim Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)
Answer:
Year 1
Jan. 2
Investment in Grey $501,000 (debit)
Cash $501,000 (credit)
Sept. 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Year 2
June 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Dec. 31
Cash $126,500 (debit)
Investment In Grey $126,500 (credit)
Explanation:
During the first year, Kim Company purchased 33% of stocks in Grey Co. This led to Kim Company having significant influence over Grey Co. Grey Co. is known as Associate Company.
The dividend paid by an Associate is Part of Share of profit from an associate and must be presented as such in the entity books.
During the second year, when Kim Company sells 10,000 shares of Grey Co, they lost part of Investment but still have significant influence (29%) in Grey Co.The Grey Co remains an Associate of Kim Company.
Some major technology companies have faced scrutiny in the past when it comes to labor and human rights on the overseas suppliers' side. What are the challenges of monitoring overseas suppliers (especially tier 3, tier 4, etc.) that are guilty of not following labor and human rights guidelines
Answer: The answer is provided below
Explanation:
With overseas factories that continue to move to new locations with a lower labour costs, the monitoring and controlling working conditions becomes a challenge. Research has shown that companies do little to monitor human rights violations in the low-cost supply chain locations.
A scandal involving Apple was reported in 2014 at a manufacturing building in China. The building which was owned by Catcher Technology Co., manufactures metal iPad covers for iPhones. Some findings included hiring discrimination, locked safety exits, excessive work hours, and also unpaid overtime each month totalling about $290,000 in owed wages. The factory was reported to have been dumping its industrial fluids and waste into nearby rivers, and also not providing proper toxic equipment for the employees.
Human rights of these people saw n those area are being abused by having them exposed to pollution, which can lead to lung diseases.
Companies like Apple have said that they are continuing to monitor situations like this, and are fixing them, but we still hear cases of more wrongdoings, therefore you have to wonder how vital these issues truly are to the firms involved.
Computing materials variances:
D-List Calendar Company specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct materials costs and the quantities of paper used showed the following:
Actual purchase price
$0175 per page
Standard quantity allowed for production
170,000 pages
Actual quantity purchased during month
200,000 pages
Actual quantity used during month
185,000 pages
Standard price per page
$0.17 per page
1. Total cost of purchases for the month
2. Materials price variance
3. Materials quantity variance
4. Net materials variance
Answer:
1. Total cost of purchases for the month
= actual purchases x actual price = 200,000 pages x $0.175 per page = $35,0002. Materials price variance
= (actual unit cost - standard unit cost) x actual quantity used = ($0.175 - $0.17) x 185,000 = $925 unfavorable3. Materials quantity variance
= (actual quantity used - standard quantity allowed) x standard price = (185,000 - 170,000) x $0.17 = $2,550 unfavorable
4. Net materials variance
= materials price variance + materials quantity variance = $925 + $2,550 = $3,475 unfavorableExplanation:
Actual purchase price $0.175 per page
Standard quantity allowed for production 170,000 pages
Actual quantity purchased during month 200,000 pages
Actual quantity used during month 185,000 pages
Standard price per page $0.17 per page
You order a $40 Andy Warhol print online for a Christmas gift. There’s a standard shipping charge of $10, but you see that orders of $45 or more ship for free. You could also order a $5 pair of socks, but you’re not sure the gift recipient would like them. Nonetheless, you decide to order the socks. Your decision is an example of:________.
a. marginal thinking.
b. trade-offs.
c. opportunity costs.
d. incentives.
Answer: C
Explanation:
You're seeing an opportunity in savings the cost is $40 + $10 for shipping = $50 versus $45 with free shipping. You get an extra item for less and it includes free shipping. So its a deal to actually buy the extra item.
Answer:
c. opportunity costs.
Explanation:
Opportunity cost is the cost that a person face for choosing an alternative and loosing benefit from other options. The benefit foregone for choosing an alternative is opportunity cost.
in this question there is an opportunity cost of $5 if it order the stock because it involves the options of $45 or $50 ($40+$10).
Analyzing Adjusting Journal Entries, Prepaid Asset and Deferred Revenue Voss Inc., an accounting firm, adjusts and closes its accounts each December 31. Below are two situations requiring adjusting entries.
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225. At the current year-end, inventory remaining was $360. Prepare the adjusting entry required for each of the following separate cases.
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case A Supplies 225 0
Supplies Expense 0 225
Case A: Balance of Supplies at year-end: $ 225
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case B Supplies 900 0
Expense Supplies 0 900
Case B: Balance of Supplies at year-end: $ 225
Answer:
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies expense 1,125
Cr Supplies 1,125
Then the ending balance of Supplies would be = -$900
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies 1,125
Cr Supplies expense 1,125
Then the ending balance of Supplies would be = $1,350
Explanation:
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225.
Adjusting entry to record supplies expense = $1,125 + $225 - $360
Dr Supplies expense 990
Cr Supplies 990
Ending balance of supplies inventory = $360
g A firm buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 85 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year? The firm's APR of not taking the trade credit is ____. (If you use percent, then do not use the percent sign. Go two places to the right of the decimal point (XX.XX). If you use decimal places, then go four places to the right of the decimal place. 0.XXXX).
Answer: 0.1613
Explanation:
From the question, a firm buys on terms of 3/15, net 45. This implies that a discount rate of 3% will be provided I payment is made within 15 days. If it's not made within 15 days, then full payment will be due on 85 days.
The nominal annual percentage cost is 0.1613. The calculation has been attached
You have $6,600 to deposit. Regency Bank offers 12 percent per year compounded monthly (1.0 percent per month), while King Bank offers 12 percent but will only compound annually. How much will your investment be worth in 17 years at each bank
Answer:
Instructions are below.
Explanation:
Giving the following information:
Deposit= $6,600
Regency Bank:
12 percent per year compounded monthly (1.0 percent per month)
King Bank:
12 percent but will only compound annually.
Number of years= 17
To calculate the final value, we need to use the following formula for each bank:
FV= PV*(1+i)^n
Regency Bank:
n=17*12= 204
FV= 6,600*(1.01^204)
FV= $50,246.3
King Bank:
FV= 6,600*(1.12^17)
FV= $45,315.87
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to:
Answer:
Net operating income is $ 15,400.00
Explanation:
The company's operating income if it sells 5,300 units is calculated thus:
sales (5,300*$319,200/5,700) $296,800.00
variable expenses($188,100/5700*5300) ($174,900.00)
Contribution $ 121,900.00
Fixed expenses ($106,500.00)
Net operating expenses $ 15,400.00
The net operating expenses dropped when 5,300 units were sold because the higher the volume, the more the contribution towards covering fixed expenses
Answer:
Net operating income= $15,400
Explanation:
Giving the following information:
Sales (5,700 units) $319,200
Variable expenses 188,100
Contribution margin 131,100
Fixed expenses 106,500
Net operating income $ 24,600
Sales now= 5,300 units
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= 131,100/5,700= $23
Contribution margin for 5,300:
Total contribution margin= 23*5,300= $121,900
Fixed costs= 106,500
Net operating income= $15,400
A day trader buys an option on a stock that will return $150 profit if the stock goes up today and lose $650 if it goes down. Complete parts a and b below given that the trader thinks there is a 70 % chance that the stock will go up.
a) What is her expected value of the option's profit?
b) What do you think of this option?
Answer:
A.-90
B.What I think of the option is that it will be extremely risky reason been that her expected value was a loss in (a).
Explanation:
Option on stock $150
Loss$650
Percentage 70 %
A.
150*.70= $105
100%-70%
=30%
-650*.30
= -195
$105 + (-195)
= -90
Therefore the expected value of the option's is losing 90
b.
What I think of the option is that it will be extremely risky reason been that her expected value was a loss in (a).
Hillsdale is considering two options for comparable computer software. Option A will cost $31,000 plus annual license renewals of $1,800 for three years, which includes technical support. Option B will cost $12,000 with technical support being an add-on charge. The estimated cost of technical support is $4,700 the first year, $3,700 the second year, and $2,700 the third year. Assume the software is purchased and paid for at the beginning of year one, but that technical support is paid for at the end of each year. The discount rate is 10%. Ignore income taxes.Required: Determine which option should be chosen based on present value considerations
Answer:
Option B
Explanation:
The computation of the present value is shown below:
For Option A
Year Cash flows Discount factor at 10% Present value
0 -$31,000 1.0000 -$31,000.00
1 -$1,800 0.9091 -$1,636.36
2 -$1,800 0.8264 -$1,487.60
3 -$1,800 0.7513 -$1,352.37
Total -$35,476.33
For Option B
Year Cash flows Discount factor at 10% Present value
0 -$12,000 1.0000 -$12,000.00
1 -$4,700 0.9091 -$4,272.73
2 -$3,700 0.8264 -$3,057.85
3 -$2,700 0.7513 -$2,028.55
Total -$21,359.13
As we can see that the present value for option B is less than the option A so the option B should be selected
Which of the following factors has not contributed to the trend towards outsourcing in recent decades: Group of answer choices
a. Increasing turbulence of the business environment.
b. Increasing emphasis on cost efficiency.
c. Increasing emphases on the need for competitive advantage based upon superior capabilities Increasing transaction costs
Shares in Brothers Grimm, Inc., manufacturers of gingerbread houses, are expected to pay a dividend of $5.00 in one year and to sell for $100 per share at that time. How much should you be willing to pay today per share of Grimm under the following circumstances?
A) If the safe rate of interest is 5 percent and you believe that investing in Grimm carries no risk?
B) If the safe rate of interest is 10 percent and you believe that investing in Grimm carries no risk?C) If the safe rate of interest is 5 percent, but your risk premium is 3 percent?
D) Repeat parts a to c, assuming that Grimm is not expected to pay a dividend, but the expected price is unchanged..
Answer:
(a) $100.00
(b) $95.45
(c) $97.22
(di) $95.24
(dii) $90.91
(diii) $92.59
Explanation:
Brothers Grimm corporation is responsible for the manufacturing of gingerbread houses. During a one year period, they are expected to pay a dividend of $5 and to sell each shares for $100. The share value for different safe interests is calculated as follows
a) If the safe interest is 5%, then the share value for today is
= ( 5+100)/( 1+5/100)
= 105/ ( 1+0.05)
= 105/1.05
= $100.00
b) If the safe interest is 10%, the share value for today would be
= (5+100)/(1+10/100)
= 105/( 1+0.1)
= 105/1.1
= 95.454
= $95.45( to 2 decimal places)
c) If the safe interest is 5% and the risk premium is 3%, then the share value for today is
= (5+100)/(1+(5+3)/100)
= 105/( 1+8/100)
= 105/(1+0.08)
= 105/1.08
= $97.222
= $97.22 (to 2 decimal places)
d) Since Grimm is not expected to pay dividend, the share values for each safe interest can be calculated as follows:
i) If the safe interest is 5% and there is no payment of dividend, then the share value for today is
= 100/( 1+5/100)
= 100/( 1+0.05)
= 100/1.05
= $95.238
= $95.24 ( to 2 decimal places)
ii) If the safe interest is 10% and there is no payment of dividend, then the share value for today is
= 100/( 1+10/100)
= 100/( 1+ 0.1)
= 100/1.1
= $90.909
= $90.91 ( to 2 decimal places)
iii) If the safe interest is 5% and the risk premium is 3% with no payment of dividend, the share value for today is calculated as
= 100/(1+8/100)
= 100/(1+0.08)
= 100/1.08
= $92.592
= $92.59 ( to 2 decimal places)
Share valuation is done based on quantitative techniques and the value of a share will vary depending on market demand and supply.
What do you mean by share value?Valuation of shares is a process of knowing the value of a company's shares. The stock price of listed companies trading publicly can be easily identified.
The share value for different safe interests is calculated as follows
a) If the safe interest is 5%, then the share value for today is
[tex]=\frac{ ( 5+100)}{1+\frac{5}{100}}\\\\= \dfrac{105}{( 1+0.05)} \\\\=\dfrac{105}{1.05}\\\\= \$100.00[/tex]
b) If the safe interest is 10%, the share value for today would be:
[tex]=\frac{ ( 5+100)}{1+\frac{10}{100}}\\\\= \dfrac{105}{( 1+0.1)} \\\\=\dfrac{105}{1.1}\\\\= \$95.454[/tex]
c) If the safe interest is 5% and the risk premium is 3%, then the share value for today is
[tex]=\frac{ ( 5+100)}{1+\frac{(5+8)}{100}}\\\\= \dfrac{105}{( 1+0.08)} \\\\=\dfrac{105}{1.08}\\\\= \$97.222\\[/tex]
d) Since Grimm is not expected to pay a dividend, the share values for each safe interest can be calculated as follows:
i) If the safe interest is 5% and there is no payment of dividend, then the share value for today is $95.238.
ii) If the safe interest is 10% and there is no payment of dividend, then the share value for today is $90.91 ( to 2 decimal places)
iii) If the safe interest is 5% and the risk premium is 3% with no payment of dividend, the share value for today is calculated to be $92.59 ( to 2 decimal places).
Thus, the value of each share under the specified rate of dividend and risk premium is calculated.
To learn more about share value, refer to:
https://brainly.com/question/25818989
Harry owns a Cadillac and a Porsche. Ryan has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Ryan and Harry tells Ryan, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Ryan calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Ryan is talking about the Cadillac, says, "You've got a deal." On what grounds is the above agreement open for rescission
Answer:
mutual mistake
Explanation:
A mutual mistake happens when all the parties involved in a contract (two or more) are mistaken or do not know the correct information about some specific material fact that is relevant to the contract. In this case, the contract can be rescinded because Harry believes that Ryan wants to buy his Cadillac, while Ryan believes Harry is selling his Porsche.
Since both of them are mistaken and do not know relevant material facts regarding the contract, the contract can be terminated.
Victor Rumsfeld Inc.'s dividend policy is under review by its board. Its projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $300,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out? Select the correct answer.
Answer:
The multiple choices are
a. $240,000
b. $228,000
c. $216,600
d.$205,770
e. $0
The correct option is E,$0
Explanation:
The funding required from equity is 40% of the projected capital budget of $2000,000 which is expected to be from the profit attributable to stockholders since new issue of shares is not contemplated.
In other words, dividends payable to shareholders is the net income less their counter funding of the project which is computed below:
residual dividends=net income-(equity%*capital outlay)
residual dividends=$300,000-(40%*$2000,000)
=$300,000-$800,000=$0
In essence the $300,000 is not even enough as funds expected from equity less alone paying excess as dividend
Logan Company can sell all of the standard and premier products they can produce, but it has limited production capacity. It can produce 8 standard units per hour or 4 premier units per hour, and it has 36,600 production hours available. Contribution margin per unit is $20.00 for the standard product and $23.00 for the premier product. What is the total contribution margin if Logan chooses the most profitable sales mix
Answer:
The most profitable sales mix is 288,000 standard units and 0 premier units.
Explanation:
8 standard units per hour
4 premier units per hour
36,600 production hours available
For standard units, contribution margin per hour = 8 x $20 = $160
For premier units, contribution margin per hour = 4 x $23 = $92
Therefore, most profitable sales mix = 36,000 hours x 8 units per hour of standard product
= 288,000 standard units and 0 premier units.
An all-equity business has 100 million shares outstanding selling for $20 a share. Management believes that interest rates are unreasonably low and decides to execute a leveraged recapitalization (a recap). It will raise $1 billion in debt and repurchase 50 million shares. a. What is the market value of the firm prior to the recap? What is the market value of equity? b. Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity? c. Do equity shareholders appear to have gained or lost as a result of the recap? Please explain. d. Assume now that the recap increases total firm cash flows, which adds $100 million to the value of the firm. Now what is the market value of the firm? What is the market value of equity? e. Do equity shareholders appear to have gained or lost as a result of the recap in this revised scenario?
Answer:
a) Market Value = $100 million × $20 = $2,000 million = $2 billion
Market value of equity would remain same = $2 billion
b) Market value would remain same after recap. Only market capitalization would reduce to half.
Market value of equity = 1 billion
c) Buying back shares increases the stock price which demonstrates the faith of the company in its work. But creditors have capital gains.
d) After recap and cash flow firm total value has increased to $2 billion + $100 Million = $2.1 billion and market value of equity has increased from $20 to $22 . ($1000 + $100)/50 = $22.
e) Equity shareholders have gained due to increase in there share value
Explanation:
A well diversified portfolio needs about 3 to 5 stocks from different categories.
True
False
Answer:
This is false.
Explanation:
Diversification is An investment strategy that includes a mixture of a wide variety of investments from different categories within a portfolio.
A well diversified portfolio does not need 3 to 5 stocks from different categories instead A well-diversified portfolio needs about 20-25 stocks from various categories.
Describe a "rite of initiation" that you experienced at a place of work. This could be described via a situation in which you began with the company as a new employee, or during a period of time in which your status within the company changed. In your opinion, are rites of initiation in the workplace a good thing?
Answer: Rites of initiation is a good thing at the workplace. The answer is explained further below.
Explanation:
Initiation is the rite of passage marking the entrance or acceptance into an organization, a group or a society. The rite of initiation I experienced at a place of work was when I worked as an intern for a firm and I was told that the rite of initiation was for me to sing my favourite song. I actually sang my favorite song and it was fun and I was welcomed into the organization and introduced myself.
I believe rites of initiation are important at the workplace. It helps to increase engagement, boost employee moral, and also foster a supportive culture. It also enable the organization reach its goals as the workers are united and work as a team.
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Income Statement The revenues and expenses of Paradise Travel Service for the year ended May 31, 2018, follow: Fees earned $900,000 Office expense 300,000 Miscellaneous expense 15,000 Wages expense 450,000 Prepare an income statement for the year ended May 31, 2018. Paradise Travel Service Income Statement For the Year Ended May 31, 2018
Answer:
Net income is $135,00 from the income statement.
Explanation:
In the Income Statement for a particular year, all expenses all expenses for the year are deducted from the income to arrive at net income for that year. Based this, we have:
Paradise Travel Service Income Statement For the Year Ended May 31, 2018
Details ($)
Fees earned 900,000
Office expense (300,000)
Miscellaneous expense (15,000)
Wages expense (450,000)
Net income 135,000
Therefore, net income is $135,00 from the income statement.
Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. Equivalent Units of Production Direct Materials Conversion Units Completed and transferred out 44,000 44,000 Units in Ending Work in Process: Direct Materials (9,000 * 100%) 9,000 Conversion (9,000 * 70%) 6,300 Equivalent Units of Production 53,000 50,300 Cost per Equivalent Unit Costs of beginning work in process $43,400 $63,700 Costs incurred this period 145,100 195,100 Total costs $188,500 $258,800 Cost per equivalent unit $3.56 per EUP $5.15 per EUP The total conversion costs transferred out of the Canning Department equals:_______.a. $156,640. b. $179,068. c. $188,500.
Answer:
Material Costs Transferred Out $ 156,640
Conversion Costs Transferred Out $ 226355
Explanation:
Mitchell Manufacturing
Canning Department.
Equivalent Units of Production
Direct Materials Conversion
Units Completed and transferred out 44,000 44,000
Units in Ending Work in Process:
Direct Materials (9,000 * 100%) 9,000
Conversion (9,000 * 70%) 6,300
Equivalent Units of Production 53,000 50,300
Cost per Equivalent Unit
Costs of beginning work in process $43,400 $63,700
Costs incurred this period 145,100 195,100
Total costs $188,500 $258,800
Cost per equivalent unit $3.56 per EUP $5.15 per EUP
The total conversion costs = $ 258,800
Less Conversion Costs of Ending Inventory= ( 6300 * 5.15)= 32445
Conversion Costs Transferred Out $ 226355
The Total Material Costs $188,500
Less Material Costs of Ending Inventory= ( 9000 * 3.56)= 32040
Material Costs Transferred Out $ 156,640
It can also be solved by multiplying EUP with the Units Completed and transferred out and we will get the same results.
Material Costs Transferred Out ( 44000*3.56) $ 156,640
Conversion Costs Transferred Out ( 44000*5.15) $ 226355
