Answer:
$138,000
Explanation:
Particulars Amount
Finished goods inventory, January 1 $68,000
Add: Cost of goods manufactured $147,000
Total $215,000
Less: Finished goods inventory, December 31 $77,000
Cost of goods sold $138,000
During June, Cisco Company produced 12,000 chainsaw blades. The standard quantity of material allowed per unit was 1.5 pounds of steel per blade at a standard cost of $8 per pound. The actual cost was $7 per pound. The actual pounds of steel that Cisco purchased were 19,500 pounds. All materials purchased were used. Calculate Cisco's materials usage variance.
Answer:
Direct material quantity variance= $12,000 unfavorable
Explanation:
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (1.5*12,000 - 19,500)*8
Direct material quantity variance= (18,000 - 19,500)*8
Direct material quantity variance= $12,000 unfavorable
Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,000,000. The project is expected to generate the following net cash flows:
Year Cash Flow
Year 1 $350,000
Year 2 $450,000
Year 3 $450,000
Year 4 $450,000
Cold Goose Metal Works Inc.'s weighted average cost of capital is 8%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?
Answer:
Cold Goose Metal Works Inc.
Based on the cash flows, project Beta's NPV is negative:
= ($1,602,200).
Explanation:
a) Data and Calculations:
Initial investment in project Beta = $3,000,000
Weighted average cost of capital = 8%
Net cash flows:
Year Cash Flow Discount Factor Present Value
Year 1 $350,000 0.926 $324,100
Year 2 $450,000 0.857 385,650
Year 3 $450,000 0.794 357,300
Year 4 $450,000 0.735 330,750
Total cash inflows = $1,397,800
Investment cost = $3,000,000
NPV = -$1,602,200
b) Cold Goose should not pursue the investment. The cash outflows outweigh the cash inflows by more than 50%. The net present value of the project is negative.
Bonita Industries purchased machinery for $1030000 on January 1, 2017. Straight-line depreciation has been recorded based on a $82000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of $27500. How much cash did Bonita receive from the sale of the machinery?
a. $138,000
b. $162,000
c. $198,000
d. $258,000
Answer:
$235,900
Explanation:
Depreciation p.a. = ($1030000 - $82,000) / 5 years
Depreciation p.a. = $189,600
Depreciation charged till the Jan 1 ,2021 (4 years)
= $189,600 * 4 years
= $758,400
Depreciation charged till May 1, 2021 (4 month)
= $189,600 * 4 months/12 months
= $63,200
Value of the asset = $1030000 - $758,400 - $63,200
Value of the asset = $208,400
Cash received from sale of machinery = $208,400 + $27,500 (gain)
Cash received from sale of machinery = $235,900
MC Qu. 116 CWN Company uses a job order costing... CWN Company uses a job order costing system and last period incurred $70,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $85,000. It also expects to incur $100,000 of direct labor. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:
Answer:
85%
Explanation:
With regards to the information above, predetermined overhead will be computed as;
Predetermined overhead = (Estimated overhead / Expected labor cost) × 100
Estimated overhead = $85,000
Expected labor cost = $100,000
Then,
Predetermined overhead = ($85,000 / $100,000) × 100
Predetermined overhead = 85%
Therefore, its predetermined overhead rate for the next period should be 85%
Mo will receive a perpetuity of $27,000 per year forever, while Curly will receive the same annual payment for the next 40 years. If the interest rate is 7.1 percent, how much more are Mo's payments worth
Answer:
380281.69-360900.85=19380.84
Explanation:
Perpetuity present value, PV=A/rate
Ordinary Annuity present value, PV= A[(1-(1+7.1%)^40)/7.1%)]
The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna Douglas Corporation.
Ladonna Douglas Corporation
ADJUSTED TRIAL BALANCE
July 31, 20--
ACCOUNT TITLE DEBIT CREDIT
Cash 34,750.00
Accounts Receivable 9,750.00
Office Supplies 2,525.00
Store Supplies 4,785.00
Machinery 10,750.00
Accumulated Depreciation 2,150.00
Accounts Payable 14,300.00
Notes Payable 11,500.00
Common Stock 33,725.00
Retained Earnings 20,000.00
Dividends 13,250.00
Service Revenue 41,500.00
Wages Expense 37,425.00
Rent Expense 3,000.00
Advertising Expense 2,750.00
Office Supplies Expense 1,465.00
Store Supplies Expense 2,150.00
Depreciation Expense 575.00
Totals 123,175.00 123,175.00
Required:
Utilize these adjusted values to perform the closing entries for Ladonna Douglas Corporation.
Answer:
Jul-31
Dr Service revenue $41,500
Dr Retained earnings $5,865
Cr Wages expense $37,425
Cr Rent expense $3,000
Cr Advertising expense $2,750
Cr Office supplies expense $1,465
Cr Store supplies expense $2,150
Cr Depreciation expense $575
Jul-31
Dr Retained earnings $13,250
Cr Dividends $13,250
( To close dividends)
Explanation:
Preparation of the closing entries for Ladonna Douglas Corporation
First step is to prepare the income statement
INCOME STATEMENT
Revenues:
Service revenue $41,500
Less Expenses:
Wages expense $37,425
Rent expense $3,000
Advertising expense $2,750
Office supplies expense $1,465
Store supplies expense $2,150
Depreciation expense $575
Total expenses (-$47,365)
Net Loss ($5,865)
($41,500-$47,365)
Now let Prepare the closing entries
Jul-31
Dr Service revenue $41,500
Dr Retained earnings $5,865
Cr Wages expense $37,425
Cr Rent expense $3,000
Cr Advertising expense $2,750
Cr Office supplies expense $1,465
Cr Store supplies expense $2,150
Cr Depreciation expense $575
( To close income summary)
Jul-31
Dr Retained earnings $13,250
Cr Dividends $13,250
( To close dividends)
The cost components of a heater include $38 for the compressor, $14 for the sheet molded compound frame, and $70 per unit for assembly. The factory machines and tools cost is $53,000. The company expects to produce 1,400 heaters in the coming year. What cost function best represents these costs
Answer: y = 122x + 53,000
Explanation:
The cost function takes the form, y = mx + c
Y = total cost
m would be the variable cost because it is the increase in x
x = total number of units to be produced
c = fixed cost because this is the y intercept and represents an amount that will not change regardless of the change in x
Variable cost = compressor + compound frame + assembly
= 38 + 14 + 70
= $122
Fixed cost = $53,000
Cost function is:
y = 122x + 53,000
A firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit of labor but does not want its output quantity to change, the firm should A. add 1.25 units of capital. B. use 1.25 fewer units of capital. C. use 0.8 fewer units of capital. D. use 5 fewer units of capital.
Answer: C. use 0.8 fewer units of capital.
Explanation:
The Marginal Rate of Technical Substitution (MRTS) shows how much you can decrease capital or labor by in order to keep production constant if you increase either capital or labor.
It is calculated by the formula:
= Marginal product of labor / Marginal product of capital
= 4 / 5
= 0.8
The firm should use 0.8 fewer units of capital in order to maintain the same production level.
Matching Items Reported to Cash Flow Statement Categories (Indirect Method).
Adidas AG is a global company that designs and markets sports and fitness products, including footwear, apparel, and accessories. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are listed here. Indicate whether each item is disclosed in the Operating Activities, Investing Activities, or Financing Activities section of the statement or use Not Applicable if the item does not appear on the statement. (Note: This is the exact wording used on the actual statement).
1. Dividends paid.
2. Repayments of short-term borrowings.
3. Depreciation and amortization.
4. Proceeds from reissuance of treasury shares to employees.
5. [Change in] Accounts payable and other liabilities.
6. Cash collections from customers.
7. Purchase of investments.
8. Net income.
9. Purchase of property, plant, and equipment.
10. Increase in receivables and other assets.
Answer:
1. Dividends paid.
Classification: Financing Activity
2. Repayments of short-term borrowings.
Classification: Financing Activity
3. Depreciation and amortization.
Classification: Operating Activities
4. Proceeds from reissuance of treasury shares to employees.
Classification: Financing Activity
5. Change in Accounts payable and other liabilities.
Classification: Operating Activities
6. Cash collections from customers.
Classification: Not Applicable
7. Purchase of investments.
Classification: Financing Activity
8. Net income.
Classification: Operating Activities
9. Purchase of property, plant, and equipment.
Classification: Investing Activities
10. Increase in receivables and other assets.
Classification: Operating Activities
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers $ 370,000 Working capital required $ 115,000 Annual net cash receipts $ 130,000 * Cost to construct new roads in year three $ 43,000 Salvage value of equipment in four years $ 68,000 *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company’s required rate of return is 18%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted?
Answer:
Windhoek Mines, Ltd., of Namibia
a. The net present value (NPV) of the proposed mining project is:
= -$117,258
b. No. The project should be rejected. It has a negative NPV.
Explanation:
a) Data and Calculations:
Cost of new equipment and timbers = $370,000
Working capital required = $115,000
Cost to construct new roads in year three = $43,000
Annual net cash receipts = $130,000
Salvage value of equipment in four years = $68,000
Company's required rate of return = 18%
Mining duration = 4 years
Annuity factor for 4 years at 18% = 2.1690
Relevant discount factors at 18%:
Year 3 = 0.712
Year 4 = 0.636
Present values of Cash Flows:
Transaction Cash Flows PV Factor PV Amount
Cost of new equipment and timbers $370,000 1.000 -$370,000
Working capital required 115,000 1.000 -115,000
Cost to construct new roads in year three 43,000 0.712 -30,616
Annual net cash receipts 130,000 2.169 281,970
Salvage value of equipment in four years 68,000 0.636 43,248
Working capital released 115,000 0.636 73,140
Net present value -$117,258
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 200th gallon of gasoline entails the following:
• a private cost of $3.03;
• a social cost of $3.23;
• a value to consumers of $3.39.
Refer to Scenario 10-1. Suppose the equilibrium quantity of gasoline is 220 gallons; that is, Q MARKET = 220. Then the equilibrium price of a gallon could be:________
a. $3.08.
b.$2.77.
c. $2.45.
d. $3.69.
Answer:
a. $3.08
Explanation:
Calculation to determine what the equilibrium price of a gallon could be:
Based on the information given the Private cost is $3.03 while the Social cost is $3.23 which indicates that Social cost lies ABOVE the private cost and since The MARKET EQUILIBRIUM tend to occurs when Private value=Private cost which means that the EQUILIBRIUM PRICE lies between $3.03 and $3.23, Therefore the EQUILIBRIUM PRICE of a gallon would be $3.08 because it lies between $3.03 and $3.23.
Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $7 million. If demand for new products is low, the company expects to receive $9 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $14 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $8 million. Were demand to be low, the company would expect $9 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $13 million. In either case, the probability of demand being high is .30, and the probability of it being low is .70. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products.
1. Calculate the NPV for the following:
Plans NPV
Small facility $million
Do nothing million
Large facility million
2. The best decision to help Expando is:_________
Answer:
Expando, Inc.
1. NPV for the following:
Plans NPV
Small facility $3.5 million
Do nothing 0 million
Large facility 2.2 million
2. The best decision to help Expando is:_________
to build a small facility.
Explanation:
a) Data and Calculations:
Small Facility Large Facility
Initial investment costs $7 million $8 million
Discounted revenues:
Low demand 9 million 9 million
High demand 14 million 13 million
Probability of low demand = 0.70
Probability of high demand = 0.30
Expected revenue 10.5 million 10.2 million
($9m * 0.7 + $14m * 0.30) ($9m * 0.7 + $13m * 0.30)
NPV 3.5 million 2.2 million
1. NPV for the following:
Plans NPV
Small facility $3.5 million ($10.5 - $7) million
Do nothing 0 million ($0 - $0) million
Large facility 2.2 million ($10.2 - $8) million
An American worker is hired by a German consulting firm operating in New York. They pay him $50,000 in wages. The new worker's contribution is to bring a new client to the firm that buys consulting services for $70,000 . Assume no other new cost was involved in this other than the wage. The client is a Mexican firm located in Mexico City. Which of the following is correct
a. National income increases by $50,000 and factor payments to abroad increase by $20,000, so US GDP increases by $70,000
b. Consumption increases by $70,000 and imports increase by $70,000,50 US GDP remains unchanged
c. Consumption increases by $50,000 and exports increase by $20,000, so US GDP increases by $70,000
d. National income increases by $50,000 and factor payments from abroad increase by $50,000, so US GDP remains unchanged
Answer:
a. National income increases by $50,000 and factor payments to abroad increase by $20,000, so US GDP increases by $70,000
Explanation:
The German firm hired an American worker and paid him $50,000. That means that American national income will increase by $50,000.
Since the company is German, that would increase factor payments ot abroad by the difference = $70,000 - $50,000 = $20,000.
Total GDP increases by the amount of $50,000 + $20,000 = $70,000
MC Qu. 117 Cosi Company uses a job order costing... Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incur $830,000 of overhead during the next period, and expects to use 53,000 labor hours at a cost of $10.00 per hour. What is Cosi Company's overhead application rate
Answer:
157%
Explanation:
Calculation to determine Cosi Company's overhead application rate
First step is to calculate Total DL Cost
Total DL Cost = 53,000 hours * $10/hr
Total DL Cost= $530,000
Now let determine the overhead application rate
OH rate = $830,000/$530,000*100
OH rate= 157%
Therefore Cosi Company's overhead application rate is 157%
What is the impact on cash flow from operations in the current year based on the change in operating assets and liabilities listed below
2 Balance sheets
Prior Year Current Year
4
5 Accounts receivable 1,725 1,825
6 Inventories 1,535 1,785
7 Accounts payable 1,325 1,475
a. -200
b. 0
c. -150
d. 200
Answer:
The impact on cash flow from operations in the current year based on the changes in operating assets and liabilities is:
a. -200
Explanation:
a) Data and Calculations:
Prior Year Current Year Changes
Accounts receivable 1,725 1,825 $100
Inventories 1,535 1,785 $250
Accounts payable 1,325 1,475 $150
b) Accounts receivable increased by $100, thereby reducing cash inflows. Inventories increased by $250, thereby reducing cash inflows. Accounts payable increased by $150, thereby increasing cash inflows. The net effect or impact is a reduction of $200 in the cash from operations.
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:___.
A. $8, 167.50.
B. $9, 652.50.
C. $9, 750.00.
D. $8, 250.00.
E. $8, 152.50.
Answer:
A. $8, 167.50
Explanation:
The fact Juniper company returned $1,500 worth of merchandise, means that it is only obliged to pay the amount of $8,250($9,750-$1,500).
However, the payment was made on 16th August, which is the discount period of 10 days, hence, the cash paid on August 16 is computed thus:
cash paid=amount of merchandise owed*(1-discount rate)
discount rate=1%(1% discount if payment is made within 10 days of the purchase date)
cash paid=$8,250*(1-1%)
cash paid=$ 8,167.50
Axis Pvt. Ltd., an international financial services firm, assigns projects to employees in different nations. Since these multinational projects and careers provide employees with global exposure, they are more than willing to cooperate. With regard to organizing a multinational company, which of the following internal factors has been covered in this example?
A. Structure.
B. People.
C. Culture.
D. Management.
Answer: B. People
Explanation:
The people who work in a company are a very important internal factor because their work makes or breaks a company. When the company does something that can be expected to improve the efficiency of its workers, it is said to be investing in its people.
In the above, Axis is sending workers around the world which is giving these workers much needed exposure. In this day and age where globalization is everything, skills gained from being exposed to different nations are very important and can make workers more efficient.
Assume the following information: Selling price per unit $200 Contribution margin ratio 50% Total fixed costs $275,000 How many units must be sold to generate a profit of $50,000
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price per unit $200
Contribution margin ratio 50%
Total fixed costs $275,000
Desired profit= $50,000
First, we need to calculate the sales required to obtain the desired profit:
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (275,000 + 50,000) / 0.5
Break-even point (dollars)= $650,000
Now, the number of units:
Number of units= 650,000 / 200= 3,250
Or, you can use the following formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (275,000 + 50,000) / (0.5*200)
Break-even point in units= 3,250
The RRR Company has a target current ratio of 3.2. Presently, the current ratio is 4.1 based on current assets of $12,956,000. If RRR expands its fixed assets using short-term liabilities (maturities less than one year), how much additional funding can it obtain before its target current ratio is reached
Answer:
$888,750
Explanation:
The amount of additional funding required is the excess of revised current liabilities based on the current ratio is 3.2 compared with the current liabilities based on the current ratio of 4.1(the one we have currently).
Current ratio=current assets/current liabilities
Current situation:
current ratio=4.1
current assets=$12,956,000
current liabilities=unknown(let us assume it is X)
4.1=$12,956,000/X
4.1*X=$12,956,000
X=$12,956,000/4.1
X=$3,160,000
Revised situation:
target current ratio=3.2
current assets=$12,956,000
current liabilities=unknown(let us assume it is Y)
3.2=$12,956,000/Y
3.2*Y=$12,956,000
Y=$12,956,000/3.2
Y=$4,048,750
additional funding=$4,048,750-$3,160,000
additional funding increase=$888,750
Joshua has been working as a project manager in an information technology company for three years. Martha is a delivery team lead in the same company. When the company receives a project that has to be completed in a short span of time, Joshua decides to increase the daily work hours of the delivery team to accommodate the project. Martha, however, insists that Joshua request the client for a time extension. Not willing to reach an agreement, Joshua and Martha ignore each other's opinions and begin working on the project individually. Which of the following conflict-handling intentions does this scenario portray? Collaborating Accommodating Avoiding Compromising
The conflict-handling deals with collaborating
Identify the following is structural, frictional, cyclical and seasonal employment.
a. Andrew recently lost his job as an accountant for a large firm because he only knows how to perform the job using a general ledger (paper and pencil), and has been unwilling to learn how to use newly invented accounting software provided by the company.
b. Sam recently lost his job as an accountant for a large firm because he only knows how to perform the job a using a general ledger and has been unwilling to learn how to use newly invented accounting software provided by the company.
c. Teresa just graduated from college and is looking for a full time position with an investment banking firm.
d. A recent recession has reduced the number visitors to a local theme park. The park has had to lay off many of its employee, including Beth.
Answer:
Frictional unemployment occurs when people decided to leave their jobs and look for another or people join the labor force for the first time.
Structural unemployment arises from a situation where there is a mismatch between the skills needed in an economy and the skills possessed by people. Happens a lot when employees need to adapt to new technology.
Cyclical unemployment happens as a result of the economy either growing or shrinking.
a. Andrew recently lost his job as an accountant for a large firm because he only knows how to perform the job using a general ledger (paper and pencil), and has been unwilling to learn how to use newly invented accounting software provided by the company. ⇒ STRUCTURAL UNEMPLOYMENT.
b. Sam recently lost his job as an accountant for a large firm because he only knows how to perform the job a using a general ledger and has been unwilling to learn how to use newly invented accounting software provided by the company. ⇒ STRUCTURAL UNEMPLOYMENT.
c. Teresa just graduated from college and is looking for a full time position with an investment banking firm. ⇒ FRICTIONAL UNEMPLOYMENT.
d. A recent recession has reduced the number visitors to a local theme park. The park has had to lay off many of its employee, including Beth. ⇒ CYCLICAL UNEMPLOYMENT.
Given the following information, calculate the funds from operation (FFO).
Net income: $1,200,000
Gain/losses from infrequent and unusual events: $0
Amortization of tenant improvements: $120,000
Amortization of leasing expenses: $75,000
Depreciation (real property): $2,675,000.
a. $195,000
b. $1,395,000
c. $2,870,000
d. $4,070,000
Answer:
Funds from Operations = 4070000
Explanation:
Use the below formula to find the fund from operations:
Funds from Operations = Net Income + Depreciation + Amortization - Gains on Sales of Property
Funds from Operations = 1200000 + 2675000 + 75000 + 120000
Funds from Operations = 4070000
What is the fundamental accounting equation?
Answer:
Explanation:
Asset=Liabilities + Equities
Undang Undang terkait pencegahan dan
pemberantasan tindak pidana pencucian
uang diatur dalam ....
O UU Nomor 9 tahun 2013
O UU Nomor 9 tahun 2010
UU Nomor 8 tahun 2010
UU Nomor 8 tahun 2013
If Hilltop Turf Farm’s total cost of producing acres of sod is TC = 0.2 Q 2 + 120 Q + 5,000, the marginal cost of producing the 50th acre of sod is:
Answer: $140
Explanation:
Based on the information given in the question, the marginal cost of producing the 50th acre of sod will be:
TC = 0.2Q² + 120Q + 5000
The marginal cost will be:
= dTC / dQ
= 0.4Q + 120
Then we put the value of Q = 50 into the equation and this will be:
MC = 0.4Q + 120
MC = (0.4 x 50) + 120
MC = 20 + 120
MC = 140
what is gompertz function
Answer:
The Gompertz curve or Gompertz function is a type of mathematical model for a time series, named after Benjamin Gompertz (1779–1865). It is a sigmoid function which describes growth as being slowest at the start and end of a given time period. ... It is a special case of the generalised logistic function.
Why is keeping a journal about what is good and bad regarding your summer or part-time work a good idea to help you choose a career path
The correct answer to this open question is the following.
Keeping a journal about what is good and bad regarding my summer or part-time work is a good idea to help me choose a career path because writing down what I like and what I dislike, I can get a pretty close idea of the things I enjoy and have more skills to perform, compared to the things I do not like or I have no abilities at all.
If a clearly identify my skills and abilities in the workplace during the summer, it will be easier for me to identify what could be the profession I love or at least, what I am attracted to.
As it is difficult to remember all the work experience by memory, writing the journal will help me to remember exact dates, specific activities that I enjoyed or were interesting, and what was not.
A farmer sells a bushel of corn to the supermarket for $12. The supermarket then sells the corn to customers for $25. What is the total contribution to GDP?
Answer:
$ 25
Explanation:
As per the description, the exact amount that is being contributed from the corn bushel to the Gross Domestic Product would be $ 25. The price at which the farmer sold it to the supermarket would not be included in the GDP because it would be considered as an intermediary good because the good purchased for the resale purpose is not included in GDP as it leads to double-counting. Thus, only the price of the final good i.e. $ 25 would be included in GDP as it will now be used for final consumption by the customers.
An investment offers $6,700 per year for 15 years, with the first payment occurring one year from now. a. If the required return is 6 percent, what is the value of the investment today
Answer: $65070
Explanation:
Based on the information given in the question, the value of the investment today will be:
= amount × pvaf , 1/(1+ rate )^t
= 6700 × pvaf (1/1+6%) ^15
= 6700 × pvaf (1/1.06)^15
= 6700 × 9.712
= $65070
Therefore, the value of the investment today is $65070
Should the firms' overseas operations be judged by the standards (legal, economic, cultural, and moral) of the country in which it is operating or should they be judged by the standards of the U.S. market?
Answer: Standards of the country they operate in
Explanation:
Various countries have differing norms on what is legally, socially, morally and culturally acceptable. In order to be able to operate in those countries, companies would have to adapt to these requirements in order to maximize business operations.
It would therefore be illogical to judge these overseas operations in terms of the U.S. market which would be different from them. They should be judged on their own merit and then a standardizing factor can be used to relate them to the U.S. market to see whether they are performing well given their unique circumstances.
