Answer:
10,000 units
Explanation:
Calculation to determine the break-even point
Using this formula
Break-even point = Fixed cost / [Selling Price - Cost Price]
Let plug in the formula
Break-even point = $75,000 / [$25 - $17.5]
Break-even point = $75,000 / [$7.5]
Break-even point = 10,000 units
Therefore the break-even point is 10,000 units
On January 1, Pharoah Company had 87000 shares of $10 par value common stock outstanding. On May 7, the company declared a 5% stock dividend to stockholders of record on May 21. Market value of the stock was $16 on May 7. The stock was distributed on May 24. The entry to record the transaction of May 24 would include a
Answer: credit to Common Stock Dividends Distributable for $43500
Explanation:
Based on the information given in the question, the entry to record the transaction of May 24 goes thus:
Debit Stock Dividend = 87000 × 5% × $16 = $69600
Credit To Common Stock Dividend Distributable = 87000 × 5% × $10 = $43500
Credit To Paid in capital in excess of Par - Common Stock = $69600 - $43500 = $26100
A small business sold an equipment for $30,000 after depreciating the equipment using the MACRS depreciation method. The applicable federal tax rate for the company is 39%. The federal tax liability on this depreciation recapture is $10,200 if the company also had other taxable income of $200,000 in that year.
a. True
b. False
what is the future value of ordinary annuity makes 2000 every month 10 years interest rate is 7% g
Answer:
The future value of the ordinary annuity is:
= $346,169.61.
Explanation:
a) Data and Calculations:
Ordinary annuity receipt/payment = $2,000
Payment is made monthly for 10 years (120 months)
Interest rate = 7%
From an online financial calculator, the future value is:
N (# of periods) 120
I/Y (Interest per year) 7
PV (Present Value) 0
PMT (Periodic Payment) 2000
Results
FV = $346,169.61
Sum of all periodic payments $240,000.00
Total Interest $106,169.61
Consider two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.2. Stock B has an expected return of 14% and a beta of 1.8. The expected market rate of return is 9% and the risk-free rate is 5%. Security __________ would be considered the better buy because
Answer:
B; it offers an expected excess return of 1.8%
Explanation:
Here are the options :
A; it offers an expected excess return of .2%A; it offers an expected excess return of 2.2%B; it offers an expected excess return of 1.8%B; it offers an expected return of 2.4%
to determine which stock is the better buy, we have to calculate the expected return of the stocks using CAPM
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
Stock A = 5% + 1.2(9% - 5%) = 9.8%
Stock B = 5% + 1.8(9% - 5%) = 12.20%
The next step is to determine the excess return
stated expected return - calculated expected return = excess return
Stock A's excess return = 10% - 9.8% - 0.2%
Stock B's excess return = 14 - 12.20 = 1.8%
Security B would be considered because it has a higher excess return
Ford Motor Company agreed to pay its workers $37 an hour in 1999 and $37 an hour in 2001. The CPI in 1999 was 166 and in 2001 was 180. Calculate the real wage rate in each year (to the nearest cent). Did these workers really get a pay raise between 1999 and 2001?
Answer:
No, the wage rate did not raise.
Explanation:
Given the nominal wage rate for the year 1999 = $37
CPI for 1999 = 166
The real wage for the year 1999 = [ Nominal wage / CPI ] x 100
The real wage for the year 1999 = [ 37/ 166] x 100 = $22.28
Given the nominal wage rate for the year 2001 = $37
CPI for 2001 = 180
The real wage for the year 2001 = [ Nominal wage / CPI ] x 100
The real wage for the year 2001 = [ 37/ 180] x 100 = $20.55
No the wage rate did not raise.
If the best operating level of a process X is 1026 bottles per day and the actual output during a day is 786 bottles, then what is the capacity utilization rate for process X
Answer:
greater than 70% but less than or equal to 90%
Explanation:
The computation of the capacity utilization rate for process X is shown below:
As we know that
Capacity Utilization = (Actual Output ÷ Design Capacity) × 100
= (786 ÷ 1026) × 100
= 76.61%
So, it is greater than 70% but less than or equal to 90%
Josiah's team missed a crucial deadline and lost a major client due to poor communication. As a result, his team is experiencing trust issues. Josiah is looking for ways to improve trust across the team as a whole and has generated a few ideas. All of the following are likely to increase trust except:________.
a. Josiah creates a poster board with team goals, indicating the roles of each team member.
b. Josiah plans to provide his team with more project training sessions to help improve their efficiency both as dividuals and as a group.
c. Josiah conducts individual performance reviews in front of the whole group so no one feels singled out
d. Josiah has individual check-ins with his team members to provide feedback
IF COUNTRIES FIND WAYS OF IMPROVING THEIR FACTOR OF PRODUCTIVITY
Answer:
THEIR FACTOR OF PRODUCTIVITY will increase.
You sell 25,000 loaf of bread per year. The carrying cost associated the main ingredient wheat flour is estimated to be $8 per unit (amount used for 1 loaf of bread) per year, and the ordering cost is $10 per order. And assume 1 year is 300 days and lead time is 3 days.
Required:
a. What is the EOQ?
b. How much money you will lose if you order 300 units of wheat flour? Calculate the total cost of inventory with EOQ model and with order size is 300. The difference will give you the answer.
c. Calculate the re-order point (assuming no uncertainty)?
Answer:
Annual Demand (D) = 25000
Carrying Cost (H) = 8
Ordering Costs (S) = 10
Number of working days = 300
Lead Time (Lt) = 3 days
a. EOQ = Sqrt (2*D*S/H)
EOQ = Sqrt (2*25000*10/8)
EOQ = Sqrt (62500)
EOQ = 250
b. Total Cost = (D * S) / EOQ + (EOQ * H) / 2
Total Cost = (25000 * 10) / 250 + (250 * 8) / 2
Total Cost = 1000 + 1000
Total Cost = 2000
Now, we calculate total Cost with order size: of 300
Total Cost = (25000 * 10) / 300 + (300 * 8) / 2
Total Costs = 833.3333 + 1200
Total Cost = 2,033.3333
The amount to lost if we order 300 units of wheat flour is as follows
= 2033.33 - 2000
= $33.33
3. ROP = (D / Number of working days) x Lt
ROP = (25000 / 300) * 3
ROP = 83.3333 * 3
ROP = 249.9999
ROP = 250
Cyberphone, a manufacturer of cell phone accessories, ended the current year with annual sales (at cost) of $ million. During the year, the inventory of accessories turned over times. For the next year, Cyberphone plans to increase annual sales (at cost) by percent. a. What is the increase in the average aggregate inventory value required if Cyberphone maintains the same inventory turnover during the next year? $ nothing. (Enter your response as an integer.)
Answer:
sorry po
Explanation:
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Wieters Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows:
Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups 800
Inspection 120,000 # of quality tests 400
Materials receiving 252,000 # of purchase orders 1,800
The budgeted data for smartphone case production are as follows.
Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units
Required
a. Calculate the activity rate for each cost pool.
b. Calculate the activity-based unit cost of the smartphone case.
Answer:
Wieters Industries
a. Activity Rates:
Machine setup = $250
Inspection = 300
Materials receiving 140
b. The activity-based unit cost of the smartphone case is:
= $13.04
Explanation:
a) Data and Calculations:
Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups 800
Inspection 120,000 # of quality tests 400
Materials receiving 252,000 # of purchase orders 1,800
Total overhead costs $572,000
Activity Rates:
Machine setup = $250 ($200,000/800)
Inspection = 300 ($120,000/400)
Materials receiving 140 ($252,000/1,800)
Budgeted data for smartphone case production:
Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units
Overhead Applied to Smartphone Case:
Number of setups 92 * $250 = $ 23,000
Number of quality tests 400 * $300 = 120,000
Number of purchase orders 50 * $140 = 7,000
Total overhead applied = $150,000
Overhead per unit = $10 ($150,000/15,000)
Unit Cost of Smartphone Case:
Direct materials per unit $2.50
Direct labor per unit $0.54
Overhead per unit $10.00
Total unit cost = $13.04
The following items are reported on a company's balance sheet: Cash $160,000 Marketable securities 75,000 Accounts receivable (net) 65,000 Inventory 140,000 Accounts payable 200,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2
Answer and Explanation:
a. The current ratio is
We know that
Current ratio = Current Assets ÷ Current Liabilities
= $440,000 ÷ $200,000
= 2.2
Cash $160,000
Marketable Securities $75,000
Account receivable $65,000
Inventory $140,000
Current Assets $440,000
Account Payable $200,000
current liabilities $200,000
b
Quick ratio =( Current assets - inventory ) ÷ Current Liabilities
= ($440,000 - $140,000 ) ÷ $200,000
= 1.5
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. a. If the company has 470,000 shares outstanding and the stock currently sells for $41, how much will it cost you to buy a seat if the company uses straight voting
Answer: $9,635,041
Explanation:
With 470,000 shares, you will need to hold a majority to vote yourself into the board.
To gain a majority, you need more than 50% of the shares:
= 470,000 / 2 + 1 share to give you majority
= 235,001 shares
The cost of 235,001 shares is:
= 235,001 * 41
= $9,635,041
Legacy issues $630,000 of 9.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $571,310 when the market rate is 12%.
Required:
a. Prepare the January 1, 2018, journal entry to record the bonds' issuance.
b. Prepare the journal entries to record the first two interest payments.
Solution :
a). Prepare the journal entry to record the bonds' issuance as shown below:
Interest paid = [tex]$\$630,000 \times 9\%\times \frac{1}{2}$[/tex]
= $ 28,350
Date Accounts titles and explanation Debit ($) Credit($)
1 Jan 2018 Cash 571,310
Discount on bonds payable 58,690
($ 630,000 - $ 571,130)
Bonds payable 630,000
b). Preparing the journal entries to record the first two interest payments :
Date Accounts Titles and explanation Debit($) Credit($)
30/6/2018 Interest expense 35,686.25
Discount on bonds payable 7,336.25
Cash 28,350
31/12/2018 Interest expense 35,686.25
Discount on bonds payable 7,336.25
Cash 28,350
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $56.00, (b) $76.00, (c) $116.00, and (d) $133.00? Round your answers to two decimal places. %
[tex] \text{Preferred share par value = $30} [/tex]
[tex] \text{Dividend per share (Dp) = $10 ($100×10%)} [/tex]
Required :[tex] \text{Normal rate of return (rp)} [/tex]
Formula :[tex] \text{rp =} \frac{Dp}{Vp} [/tex]
Where,
[tex] \text{Vp = price of preferred share} [/tex]
[tex] \text{Dp = dividend per share} [/tex]
[tex] \text{Rp = normal rate of return of preferred share} [/tex]
Solve for nomial rate of return (rp) :Refer The AttachmentMideast Airlines purchased a 777 aircraft on January 1, 2020 at a cost of
$40,000,000. The estimated useful life of the aircraft is 20 years, with an
estimated salvage value of $6,000,000. What is the accumulated
depreciation and book value at December 31, 2022, using the straight-line
method
Answer:
3,400,000 accumulated depreciation, 36,600,000 book value
Explanation:
Cost - salvage = amount to be depreciated
40,000,000-6,000,000=34,000,000 amount to be deprecated
34,000,000/20 years =1,700,000 depreciation per year
1,700,000x2-3,400,000 accumulated depreciation after 2 years
40,000,000-3,400,000=36,600,000 book value
Suppose eggs are only sold by the dozen and priced in whole dollar amounts. No eggs are demanded at a price above $7 per dozen. At a price equal to $7 per dozen, 10 dozen eggs are demanded. If the price falls to $6 per dozen, then 11 dozen are demanded. At a price of $5 per dozen, 12 dozen are demanded. When the price falls to $4 then 13 dozen are demanded. Suppose also that this market is operating in the short run and the quantity of eggs supplied is fixed at 12 dozen eggs. What are the equilibrium price and quantity in this market?
Answer:
$5
12
Explanation:
Equilibrium price is the price at which quantity demand equal quantity supplied. Above equilibrium price there is a surplus - quantity supplied exceeds quantity demanded.
Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied
from the question, the following table can be determined
P Qd Qs
$7 10
$6 11
$5 12 12
$4 13
At equilibrium price, quantity demanded equal quantity supplied. this price is $5 and quantity is 12
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $14,000; (2) up to 120 days past due, $4,500; and (3) more than 120 days past due, $2,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance is $800 (credit) before the end-of-period adjusting entry is made. Data during the current year follow:
a. During December, an Account Receivable (Patty's Bake Shop) of $750 from a prior sale was determined to be uncollectible; therefore, it was written off immediately as a bad debt.
b. On December 31, the appropriate adjusting entry for the year was recorded.
Required:
1. Give the required journal entries for the two items listed above.
2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.
Answer:
Brown Cow Dairy
1. Journal Entries:
a. Debit Allowance for Uncollectibles $750
Credit Accounts Receivable $750
To write-off an uncollectible account.
b. Debit Bad Debts Expense $1,520
Credit Allowance for Doubtful Accounts $1,520
To record bad debts expense for the year.
2. Amounts that would be reported:
Income Statement:
Bad debts expense $1,520
Balance Sheet:
Accounts Receivable $21,000
less Allowance for Doubtful accounts $1,570
Explanation:
a) Data and Calculations:
(1) not yet due, $14,000 * 2% = $280
(2) up to 120 days past due, $4,500 * 12% = 540
(3) more than 120 days past due, $2,500 * 30% = 750
Total $21,000 $1,570
Balance of Allowance for Doubtful Accounts = $800
a. Debit Allowance for Uncollectibles $750
Credit Accounts Receivable $750
To write-off an uncollectible account.
b. Debit Bad Debts Expense $1,520
Credit Allowance for Doubtful Accounts $1,520
To record bad debts expense for the year.
Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in is A = 4: a. What would be a reasonable guess for the expected market risk premium? b. What value of A is consistent with a risk premium of 9%? (Round your answer to 2 decimal places.) c. What will happen to the risk premium if investors become more risk tolerant?
Answer:
a) 16%
b) 2.25
c) Increase in expected market risk premium
Explanation:
Expected standard deviation of market return = 20%
measure of risk aversion ( A ) = 4
a) Determine a reasonable expected market risk premium
= A * ( std ) ^2
= 4 * ( 20%)^2
= 16%
b) determine Value of A
market risk premium = A * ( std )^2
∴ A = 9% / ( 20% ) ^2
= 0.09 / 0.04
= 2.25
c) If investors become more risk tolerant the expected market risk premium will increase
Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .98. What profit margin must the firm achieve
Answer: 5.99%
Explanation:
Based on the question,
Dividend payout ratio = 30%
Therefore, the retention ratio will be:
= 1 - 30%
= 70%
Growth rate = 13.6%
We'll the use the sustainable growth rate formula which will be:
0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))
0.136(1 - (0.7ROE)) = 0.7ROE
ROE = 0.136/0.7952
ROE = 0.171026
Then, the Profit margin will be:
ROE = Profit Margin x Asset Turnover x Equity multiplier
0.171026 = PM x (1/0.98) x (1 + 1.8)
0.171026 = PM x (1/0.98) x 2.8
PM = 0.171026 x 0.98/2.8
PM = 0.0598591
Profit margin = 5.99%
Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:_________.
a.) $841,635.85
b.) $715,390.47
c.) $530,230.59
d.) $1,009,963.02
Answer:
a.) $841,635.85
Explanation:
The value of the Treasury note is the present value of its future cash flows, its semiannual coupon payments and the face value receivable by the investors in the T-note at maturity.
Semiannual coupon=face value*coupon rate*6/12
face value=$1,000,000
coupon rate=6%
semiannual coupon=$1,000,000*6%*6/12
semiannual coupon=$30,000( there would 8 semiannual coupons in 4 years)
The present value of the cash flows can be determined using a financial calculator bearing in mind that the calculator would be set to its default end mode before making the following inputs:
N=8(semiannual coupons)
PMT=30000(amount of each semiannual coupon)
I/Y=5.50%(semiannual yield to maturity=11.00%*6/12)
FV=1000000(the face value of T-note)
CPT
PV=$841,635.85
Cape Corp. will pay a dividend of $3.60 next year. The company has stated that it will maintain a constant growth rate of 5 percent a year forever. a. If you want a return of 17 percent, how much will you pay for the stock
Answer:
$30
Explanation:
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
$3.6 / (0.17 - 0.05)
$3.60 / 0.12 = $30
Favre and Carter Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?
a. $27,000
b. $32,000
c. $34,800
d. $37,400
Answer:
Billed costs= $32,000
Explanation:
Giving the following information:
Total estimated cost attorney= 12*100,000= $1,200,000
Total estimated cost paraprofessional= 5*30,000= $150,000
Estimated Indirect costs= $250,000
Estimated number of hours= 50,000
First, we need to calculate the allocation rate:
Allocation rate= total estimated costs for the period/ total amount of allocation base
Allocation rate= (1,200,000 + 150,000 + 250,000) / 50,000
Allocation rate= 1,600,000/50,000
Allocation rate= $32
Now, for 1,000 hours:
Billed costs= 1,000*32= $32,000
Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?a. $27,000b. $32,000c. $34,800d. $37,400
Answer:
See below
Explanation:
Given the above information,
= ($110,000 × 12 + $30,000 × 5) / 60,000 × 1,000
= ($1,320,000 + $150,000) / 60,000,000
= $1,470,000 / 60,000,000 + $300,000/60,000) × 1,000
= $0.0245 + $5,000
= $5,000
Photo Framing's cost formula for its supplies cost is $1,000 per month plus $10 per frame. For the month of November, the company planned for activity of 610 frames, but the actual level of activity was 600 frames. The actual supplies cost for the month was $7,600. The spending variance for supplies cost in November would be closest to:
Answer:
$600 U
Explanation:
Calculation to determine what The spending variance for supplies cost in November would be closest to:
Actual results$ 7600
Less Flexible budget $7,000
($1,000 + $10 × 600)
Spending variance $600 U
($7,600-$7,000)
Therefore The spending variance for supplies cost in November would be closest to: $600 U
More than 99% of all U.S. firms are classified as small businesses, and they employ about half of private workers. A small business is defined as any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people. Understanding the advantages and disadvantages of small business ownership is crucial for any potential entrepreneur.
Match each statement or scenario with the appropriate advantage or disadvantage of small business
i. ownership.ii. Focusiii. Reputationiv. High stress levelv. Inexperience/Incompetencevi. Flexibilityvii.Inability to cope with growthviii.Costsix. Independencex. High failure rateMatch each of the options above to the items below.1. One of the leading reasons for becoming your own boss. 2. A 20-employee factory does not have a designated accounting or advertising department.3. The pizzas offered on the Patrick’s Pizza menu are often based on the types of produce in season.4. Mike’s trucking business provides specific information and products to commercial truck drivers.5. Brandy’s nursery offers delivery and expert installation of their trees at no extra cost to the customer and will replace any defective one up to 3 years after purchase.6. Sue works more than 60 hours a week at her construction business and cannot find reliable suppliers for lumber inventory.
7. Half of all new employer firms fail within the first five years.8. As a fitness expert, Tyler is having difficulties understanding the accounting requirements for his bank business loan for his workout facility.9. Circumstances such as products not arriving on time due to limited capacity affect the reputation of a company more than any other factor.
Answer:
A
Explanation:
The primary purpose for using the the mean absolute error (MAE) in forecasting is to: A. remove forecast error B. estimate the trend line C. estimate forecast error D. seasonally adjust the forecast
Answer:
measure forecast accuracy
Explanation:
The main purpose for using the mean absolute error is to do the forecast in an accurate manner. Also, it provides the measure for total forecast error for the given model
Therefore as per the given situation, the above represent the answer as neither it remove the error, nor estimated the trend line, etc
So, the same should be considered
What would be the annual cost saved by shifting from the -bag lot size to the EOQ? The annual holding cost with the EOQ is $ nothing. (Enter your response rounded to two decimal places.)
Answer:
Without Calculating The... Problem 13 Current on-hand inventory is 310 bags, with no open orders or. Problem 13 ... What would be the annual cost saved by shifting from the 505-bag lot size to the EOQ? The annual holding cost with the EOQ is $ 690.15.
Explanation:
does it help??
1. Prepare the December 31 adjusting entries for the following transactions. Omit explanations. 1. Fees accrued but not billed, $6,300. 2. The supplies account balance on December 31, $4,750; supplies on hand, $960. 3. Wages accrued but not paid, $2,700. 4. Depreciation of office equipment, $1,650. 5. Rent expired during year, $10,800.
Answer:
1. Debit Accounts Receivable $6300
Credit Fees Revenue $6300
2. Debit Supplies Expense $3790
Credit Supplies $3790
3. Debit Wages Expense $2700
Credit Wages Payable $2700
4. Debit Depreciation Expense $1650
Credit Accumulated Depreciation-office equip. $1650
5. Debit Rent Expense $10800
Credit Prepaid Rent $10800
Explanation:
Preparation of the December 31 adjusting entries
1. Debit Accounts Receivable $6300
Credit Fees Revenue $6300
2. Debit Supplies Expense $3790
Credit Supplies $3790
(4750-960)
3. Debit Wages Expense $2700
Credit Wages Payable $2700
4. Debit Depreciation Expense $1650
Credit Accumulated Depreciation-office equip. $1650
5. Debit Rent Expense $10800
Credit Prepaid Rent $10800
You are considering an investment that promises to pay $1,000 per year for the next 10 years. The interest rate associated with investments having similar risk is 6.0%. How much would you be willing to pay for this investment
Answer:
$7360.09
Explanation:
the amount i would be willing to pay can be determined by calculating the present value of the cash flows
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 10 = 1000
I = 6%
PV = $7360.09
To determine PV using a financial calculator:
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.
