Answer: $112
Explanation:
The following information can be gotten from the question:
Growth Rate = 5%
Dividend at end of year,D1 = 5.60
Required return, ke = 10%
Then, the current market value will be:
P0 = De/(ke-g)
= 5.60/(10% - 5%)
= 5.60 / 5%
= 5.60/0.05
= $112
Therefore, the current market value of a share of IBM stock is $112.
Hector Company reports the following: July August September Sales $ 32,000 $ 40,000 $ 44,000 Purchases 19,520 24,400 32,000 Payments for purchases are made in the month after purchase. Selling expenses are 16% of sales, administrative expenses are 12% of sales, and both are paid in the month of sale. Rent expense of $3,300 is paid monthly. Depreciation expense is $1,600 per month. Prepare a schedule of budgeted cash payments for August and September.
Answer:
ask brainly
Explanation:
Other things equal, the deadweight loss of a tax Group of answer choices decreases as the size of the tax increases. increases as the size of the tax increases, but the increase in the deadweight loss is less rapid than the increase in the size of the tax. increases as the size of the tax increases, and the increase in the deadweight loss is more rapid than the increase in the size of the tax. increases as the price elasticities of demand and/or supply increase, but the deadweight loss does not change as the size of the tax increases.
Answer:
increase as the size of the tax increase, and the increase in the deadweight loss is more rapid than the increase in the size of the tax.
Explanation:
Taxation can be defined as the involuntary or compulsory fees levied on individuals or business entities by the government to generate revenues used for funding public institutions and activities.
The different types of tax include the following;
1. Income tax: a tax on the money made by workers in the state. This type of tax is paid by employees with respect to the amount of money they receive as their wages or salary.
2. Property tax: a tax based on the value of a person's home or business. It is mainly taxed on physical assets or properties such as land, building, cars, business, etc.
3. Sales tax: a tax that is a percent of the price of goods sold in retail stores. It is being paid by the consumers (buyers) of finished goods and services and then, transfered to the appropriate authorities by the seller.
Other things being equal (ceteris paribus), the deadweight loss (loss of economic efficiency due to a lack of balance in competing economical influences for goods or services) of a tax increase as the size of the tax increase, and the increase in the deadweight loss is more rapid than the increase in the size of the tax.
The following standards have been established for a raw material used to make product O84: Standard quantity of the material per unit of output 8.6 meters Standard price of the material $ 19.80 per meter The following data pertain to a recent month's operations: Actual material purchased 4,900 meters Actual cost of material purchased $ 101,430 Actual material used in production 4,600 meters Actual output 650 units of product O84 The direct materials purchases variance is computed when the materials are purchased. Required:
Answer:
Results are below.
Explanation:
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (19.8 - 20.7)*4,900
Direct material price variance= $4,410 unfavorable
Actual price= 101,430/4,900= $20.7
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (8.6*650 - 4,600)*19.8
Direct material quantity variance= $19,602 favorable
theo anh chị quan điểm về bán hàng hiện nay và trước kia khác nhau như thế nào
Explanation:
Trả lời ngắn gọn thôi nhe ^^
Bán hàng trước kia (mình đang chọn thời điểm trước khi có công nghệ, trước khi có mạng internet nha) thì sẽ bị hạn chế rất nhiều (thời gian, giao tiếp, v.v) so với bán hàng thời điểm hiện tại (Dẫn chứng: hiện tại có thể giao bán rất đơn giản qua việc livestream và ship trong khi trước kia thì việc giao bán hàng rất khó khăn..)
Thời điểm hiện tại có rất nhiều "cách" bán hàng khác nhau so với trước kia: đa cấp, online, ...
Bạn có thể tham khảo các trang khác nữa nhưng brainly ko cho mk đưa web lên mk rất xin lỗi ;-;
(Bạn có thể tra "kinh doanh hiện đại khác trước kia như thế nào" hoặc "bán hàng hiện nay và trước kia khác nhau như thế nào" thì sẽ nhận được khá nhiều trang hữu dụng nha)
<3 Chúc bạn có 1 ngày tốt lành nha!!
you are planning for your retirement and have decided the following: you will retire in 35 years and would like to have $8,000 per month as retirement income for 30 years of retirement. you have access to an account that earns a 7% rate of return. a. how much will you need to have when you retire to be able to withdraw the desired $8,000 per month during your years of retirement
Answer:
Amount needed to have in account = 99272
Explanation:
Below are the calculations:
Annual income after retirement, annuity = $8000
The time period or the retirement life = 30 years
The Interest rate earned by account = 7%
The amount in the account at the time of retirement = Annuity (P/A, r, n)
The amount in the account at the time of retirement = 8000 (P/A, 7%, 30)
The amount in the account at the time of retirement = 8000 x 12.409
The amount in the account at the time of retirement = 99272
Identify the financial instruments based on the following descriptions.
a. Issued by nonfederal government entities, these financial instruments are debt securities that fund their capital expenditures. They are exempt from most taxes imposed in the area where the securities are issued.
b. Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk.
c. These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated. These financial instruments are contractual agreements that give one party a long-term agreement to use an asset by providing regular payments.
Which of the following instruments are traded in the capital markets?
a. Eurodollar time deposits
b. Bankers' acceptances
c. Treasury bills
d. Commercial paper
e. Common stocks
Answer:
a). State and local government bonds (municipal bond)
b. Certificate of Deposit
c). Corporate bonds
Explanation:
The municipal bonds are a debt security are a from of debt security that is issued by the municipality or the state in order to finance the capital expenditures. They are exempted from most of the taxes that are imposed in that area.
Certificate of Deposit is defined as the savings account which holds a fixed amount of money. They are used to fund a short term financing requirements in a corporate.
The corporate bonds are financial instruments which are considered as an investment pools which buy a short term debt instruments. These instruments are in contractual agreements which provide a long term agreement to a party to use the asset.
The political environment in India has proven to be critical to company performance for both PepsiCo and Coca-Cola India. What specifi c aspects of the political environment have played key roles?
Answer:
Explanation:
The political environment in India have played key role in company performance of PepsiCo and Coca-Cola India as follow:
- The Indian government viewed as unfriendly to foreign investors especially those who want to invest in other sectors apart from high tech sectors.
- Outside investment had been allowed only in high-tech sectors and was almost entirely prohibited in consumer goods sectors. The The “Principle of Indigenous Availability” (Policy banning imports being sold in India)
- Distribution Arrangements - Production plants and bottling centers were strategically placed in large cities all around India. They were more added as demand grew, along with new product lines. In Coca-Cola’s case, the JV with Parle provided access to its bottling plants and its products. By forming partnerships, both Coca-Cola and Pepsi were able to get initial access into the market.
Identify whether the situations described below are example of uneven cash flows or annuity payments.
a. You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.
b. SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.
c. Franklinia Venture Capital (FVC) invested in a budding entrepreneur’s restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.
d. You have committed to deposit $600 in a fixed interest–bearing account every quarter for four years.
Solution :
The Uneven cash flow is defined as the series of unequal payments which is done over a period of time. Whereas if a regular amount is to be made in a fixed period of time, that such payments are known as equal cash flows.
An annuity payments refers to the payment that is made at equal interval of times. It pays a fixed amount of payments for an individual.
In the given situations,
a). Monthly rents payment is annuity payments.
b). Uneven cash flow
c). Uneven cash flow
d). Annuity
Suppose that Musashi, an economist from an AM talk radio program, and Rina, an economist from a university in Massachusetts, are arguing over health insurance. The following dialogue shows an excerpt from their debate:
Rina: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits.
Musashi: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese.
Rina: I disagree. I think government funding of health insurance is useful to ensure basic fairness.
The disagreement between these economists is most likely due to:
a. Differences in scientific judgments
b. Differences in Values
c. Differences between perception VS. reality
Despite their differences, with which proposition are two economists chosen at random most likely to agree?
a. Lawyers make up an excessive percentage of elected officials.
b. Minimum wage laws do more to harm low-skilled workers than help them.
c. Tariffs and import quotas generally reduce economic welfare.
Answer:
b. Differences in Valuesc. Tariffs and import quotas generally reduce economic welfare.Explanation:
Economists are known to disagree with each other a lot especially when they adhere to different economic theories such as the Neoclassic or Keynesian theories. In this case, these economists having opposing viewpoints in relation to what the government is doing in regards to health insurance is most probably due to different economic values they hold.
Regardless of the values they subscribe to however, most economists usually support certain propositions and one of them is free trade. They believe that the presence of tariffs and import quotas serve to reduce economic welfare as there are deadweight losses and things are more expensive for consumers.
Time series are particularly useful to track variables such as revenues, costs, and profits over time. Time series models help evaluate performance and make predictions. Consider the following and respond in a minimum of 175 words: Time series decomposition seeks to separate the time series (Y) into 4 components: trend (T), cycle (C), seasonal (S), and irregular (I). What is the difference between these components
Answer:
Trend (T): This is a secular trend, which refers to the movement across time.
Cycle (C): These are cyclical swings that correspond to seasonal but not periodical variations.
Seasonal (S): These are seasonal shifts represented by seasonal variations.
Irregular (I): These are irregular variations, which are a different type of nonrandom cause of series variations.
Explanation:
A time series is a collection of data points that have been indexed (or listed or graphed) in chronological sequence.
The difference between the components can explained as follows:
Trend (T): This is a secular trend, which refers to the movement across time. A trend in data is a pattern that demonstrates the movement of a series to progressively higher or lower values over time. To put it another way, a trend can be seen when the time series has a rising or decreasing slope. A trend usually lasts for a short period of time before dissipating; it does not occur again.
Cycle (C): These are cyclical swings that correspond to seasonal but not periodical variations. The term cycle refers to recurring fluctuations in time series that persist longer than a year, sometimes up to 15 or 20 years. In terms of amplitude and length, these variations aren't regular. The majority of business time series show some form of cyclical or oscillatory fluctuation.
Seasonal (S): These are seasonal shifts represented by seasonal variations. Seasonal fluctuation may be present in time series data. Seasonal variation, often known as seasonality, refers to cycles that occur on a regular basis over time. Seasonal variation refers to a recurring pattern within each year, though it can also refer to patterns that repeat across any specified period.
Irregular (I): These are irregular variations, which are a different type of nonrandom cause of series variations. The polar opposite of a regular time series is an irregular time series. The data in the time series is organized in a chronological order, however measurements may not occur at regular intervals. The operator may produce unexpected or suboptimal results if the time series is erratic.
Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary).Week Time Series ForecastValue 1 18 2 15 3 16 4 13 5 17 6 16MSE:
The forecast for week 7:
Use = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 7.Week Time Series Forecast
Value
1 18
2 15
3 16
4 13
5 17
6 16MSE:
The forecast for week 7:
Compare the three-week moving average forecast with the exponential smoothing forecast using = 0.2. Which appears to provide the better forecast based on MSE?
Answer:
a. We have:
MSE: 63.03
The forecast for week 7: 15.33
b. We have:
MSE: 47.49
The forecast for week 7: 16.35
c. The exponential smoothing forecast using = 0.2. appears to provide the better forecast based on MSE.
Explanation:
a. Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary).
Note: See Part a of the attached excel file for the Calculations of Forecast, Error, and Error^2.
From the attached excel file, we can have:
MSE = Mean squared error = Total of Error^2 / Number of observation under the Error^2 = 252.11 / 4 = 63.03
The forecast for week 7 = 15.33
b. Use = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 7.
Note: See Part b of the attached excel file for the Calculations of Forecast, Error, and Error^2.
From the attached excel file, we can have:
MSE = Mean squared error = Total of Error^2 / Number of observation under the Error^2 = 284.96 / 6 = 47.49
The forecast for week 7 = 16.35
Note that under exponential smoothing, forecast for week 2 has to be the Time Series Value for week 1.
b. Compare the three-week moving average forecast with the exponential smoothing forecast using = 0.2. Which appears to provide the better forecast based on MSE?
Since 47.49 MSE of the exponential smoothing forecast using = 0.2 is less than 63.03 MSE of the three-week moving average forecast, it implies that the exponential smoothing forecast using = 0.2. appears to provide the better forecast based on MSE.
Ayala Architects incorporated as licensed architects on April 1, 2017. During the first month of the operation of the business, these events and transactions occurred:
Apr. 1 Stockholders invested $18,270 cash in exchange for common stock of the corporation.
1 Hired a secretary-receptionist at a salary of $381 per week, payable monthly.
2 Paid office rent for the month $914.
3 Purchased architectural supplies on account from Burmingham Company $1,320.
10 Completed blueprints on a carport and billed client $1,929 for services.
11 Received $711 cash advance from M. Jason to design a new home.
20 Received $2,842 cash for services completed and delivered to S. Melvin.
30 Paid secretary-receptionist for the month $1,524.
30 Paid $305 to Burmingham Company for accounts payable due.
Required:
Journalize the transaction.
Answer:
Ayala Architects
General Journal
April 1
Debit : Cash $18,270
Credit : Common Stock $18,270
April 1
Debit : Salaries expense ($381 x 4) $1,524
Credit : Salaries Payable $1,524
April 2
Debit : Rent expense $914
Credit : Cash $914
April 3
Debit : Supplies $1,320
Credit : Accounts Payable - Burmingham Company $1,320
April 10
Debit : Accounts Receivable $1,929
Credit : Service Revenue $1,929
April 11
Debit : Cash $711
Credit : Deferred Revenue
April 20
Debit : Cash $2,842
Credit : Service Revenue $2,842
April 30
Debit : Salaries expense $1,524
Credit : Cash $1,524
April 30
Debit : Accounts Payable - Burmingham Company $305
Credit : Cash $305
Explanation:
Journal entry for the transactions have been prepared above.
You just inherited a trust that will pay you $100,000 per year in perpetuity. However, the first payment will not occur for exactly five more years. Assuming a 10% annual interest rate, what is the value of this trust?
Answer:
PV= $620,921.32
Explanation:
Giving the following information:
Cash flow (Cf)= $100,000
Interest rate (i)= 7.25%
First, we need to calculate the value of the investment at the moment of the first payment (five years from now). To calculate the present value we need to use the following formula:
PV= Cf / i
PV= 100,000 / 0.1
PV= $1,000,000
Now, the value today:
PV= FV / (1 + i)^n
PV= 1,000,000 / (1.1^5)
PV= $620,921.32
You just bought a rent house in Fayetteville, AR, for $100,000, with $20,000 down and the balance in the form of a 15-year amortization mortgage at a fixed rate of 5.0% and monthly payments. Your principal, interest, property tax, and insurance, plus all costs of maintaining the property, are covered by your rent. a) How much are your monthly mortgage payments? b) The University grows, and prices appreciate at the rate of 6% per year, what will the value of the house be in 6 years? What will the outstanding principal of the debt be (assume no extra payments)? What will the value of the equity be? c) Using CAGR, what is your rate of return on your equity? Why is it so high compared to housing market price appreciation? d) At this CAGR rate, how long will it take to double your money? e) What shape of yield curve is often (but not always) followed by an economic downturn and stock market correction/crash?
Answer:
Please find the attached file for the complete solution:
Explanation:
Salaries and Wages Expense appears on the _________, while Salaries and Wages Payable is a(n):a. Balance sheet; expense on the balance sheetb. Income statement; expense on the income statementc. Income statement; liability on the balance sheetd. Balance sheet; liability on the income statement
Answer: income statement ; liability on the balance sheet
Explanation:
It should be noted that wages and salaries expense don't appear on the balance sheet directly. They appear in the income statement.
On the other hand, salaries and wages payable is considered to be a liability on the balance sheet. Therefore, the correct option is "income statement ; liability on the balance sheet".
what is management ?
Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.
New Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to Group of answer choices Common Stock $20,000 and Paid-in Capital in Excess of Stated Value $8,000. Common Stock $28,000. Common Stock $20,000 and Paid-in Capital in Excess of Par $8,000. Common Stock $20,000 and Retained Earnings $8,000.
Answer:
Common Stock $20,000 and Paid-in Capital in Excess of Par $8,000.
Explanation:
The journal entry to record the issuance of the shares is given below:
Cash Dr (2000 shares × $14) $28,000
To Common stock (2000 × $10) $20,000
To Paid in capital in excess of par value (2000 × 4) $8,000
(being the issuance of the shares is recorded)
Here the cash is debited as it increased the assets and rest 2 account is credited as it also increased the equity
Which of the following choices correctly depicts whether McDonald's, the University Wisconsin, and Apple Inc. would have a need for managerial accounting?
a. The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost: Object.
b. Application method.
c. Estimation method Hierarchy
d. Classification scheme that is useful in traditional, volume-based systems.
Answer:
a. The division of activities into unit level, batch level, product sustaining level and facility level categories is commonly known as cost.
Explanation:
The managerial accounting is important for any service business. McDonalds have service business and they run on zero tolerance for disruption in consumer service. Management accounting enables to identify cost for product sustaining and batch producing.
This trait of a successful entrepreneur is important for multi-tasking. energy
dedication
well-rounded leader
risk-taking
Answer:
energy
Explanation:
An entrepreneur refers to an individual who sees a need or discovers a problem in a society and innovatively proffers a solution using brilliant ideas or entrepreneurial thinking.
The following are five (5) characteristics of an entrepreneur;
1. Innovative: it can be defined as a quality possessed by an individual or group of people such as an entrepreneur and typically involves the process of improving on an existing product or ideas.
2. Passionate: believing in a course and one's ability to achieve much more at a business.
3. Risk-Taker: he or she is confident enough to venture into risky businesses with the hope of an expected success.
4. Self-confident: he or she is bold and believes in his or her abilities to excel.
5. Well-rounded leader: it involves being compassionate, fun, organized and intelligent as a successful entrepreneur.
Energy can be defined as the ability (capacity) to do work.
Hence, energy is one of the traits of a successful entrepreneur and it is important for multi-tasking i.e performing multiple tasks at the same time.
In a society, the role of an entrepreneur is mainly focused on bringing the four (4) factors of production together and to take the risks of producing output, so as to generate revenue through sales and make economic profits in the long-run.
Russell Preston delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Russell has determined that if he drives 3,000 miles in a month, his average operating cost is $0.55 per mile. If he drives 4,000 miles in a month, his average operating cost is $0.50 per mile. Russell has used the high-low method to determine that his monthly cost equation is total cost = $600 + $0.35 per mile.
Required:
1. Determine how many miles Russell needs to drive to break even k-Even Miles Miles.
2. Assume Russell drove 1,800 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month.
3. Determine how many miles Russell must drive to earn $1,000 in profit.
Answer:
Russell Preston
1. The miles Russell needs to drive to break even is:
= 1,500 miles.
2. If Russel drove 1,800 miles last month, he earned a profit.
3. To earn a profit of $1,000, the miles Russell must drive are:
= 4,000 miles
Explanation:
a) Data and Calculations:
Selling price per mile driven = $0.75
Average operating cost for driving 3,000 miles = $0.55 per mile
Total operating cost for 3,000 miles = $1,650 ($3,000 * $0.55)
Average operating cost for driving 4,000 miles = $0.50 per mile
Total operating for 4,000 miles = $2,000 (4,000 * $0.50)
Total cost function = $600 + $0.35 per mile using the high-low method
Variable cost per mile = $0.35
Fixed cost per month = $600
Contribution margin per mile = $0.40 ($0.75 - $0.35)
Contribution margin ratio = 0.5333
To break-even, Russel must drive = $600/$0.40 = 1,500 miles
At this mileage, his total costs = $1,125 ($600 + $0.35 * 1,500)
At this mileage, his total revenue = $1,125 ($0.75 * 1,500)
To earn a profit of $1,000, Russell must drive = ($600 + $1,000)/$0.40
= 4,000 miles
Engler Company purchases a new delivery truck for $60,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck? Group of answer choices $66,050 $65,890 $64,000 $65,600
Answer: $65,890
Explanation:
When it comes to capitalizing fixed assets, every cost that was incurred to get the fixed asset ready for use will be included in the cost price.
The cost price here is therefore;
= Cost price + Sales taxes + Logo + safety testing
= 60,000 + 4,000 + 1,600 + 290
= $65,890
On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt.
Debt $30,000,000
Common equity 30,000,000
Total capital $60,000,000
New bonds will have an 10% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so $1.20/$30 = 4%). The marginal corporate tax rate is 30%. In order to maintain the present capital structure, how much of the new investment must be financed by common equity?
Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, what is its WACC?
Suppose now that there is not enough internal cash flow and the firm must issue new shares of stock. Qualitatively speaking, what will happen to the WACC?
I. rs and the WACC will increase due to the flotation costs of new equity.
II. rs and the WACC will decrease due to the flotation costs of new equity.
III. rs will increase and the WACC will decrease due to the flotation costs of new equity.
IV. rs will decrease and the WACC will increase due to the flotation costs of new equity.
V. rs and the WACC will not be affected by flotation costs of new equity.
Answer:
Tysseland Company
1. In order to maintain the present capital structure, the new investment must be financed by common equity to the tune of $15 million (50% of $30 million).
2. Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, its WACC = 9.5%
3. IV. rs will decrease and the WACC will increase due to the flotation costs of new equity.
Explanation:
a) Data and Calculations:
Total market capitalization = $60 million
Debt Common Equity Total
Market value $30,000,000 $30,000,000 $60,000,000
Weight 50% 50% 100%
New financing 15,000,000 15,000,000 30,000,000
New market cap. $45,000,000 $45,000,000 $90,000,000
Coupon rate of new bonds issued at par = 10%
Selling price of common stock = $30 per share
Stock's required rate of return = 12%
Estimated Dividend yield = 4%
Expected constant growth rate = 8%
Expected dividend per share = $1.20 ($30 * 4%)
Corporate tax rate = 30%
Cost of Equity = the stockholders' required rate of return = 12% or
= (Dividend/Price) + g (growth rate)
= ($1.20/$30) + 0.08
= 12%
After-Tax Cost of Debt = Before Tax Cost of Debt × (1-Tax Rate)
10 × (1 - 0.3)= 7%
WACC = (Weight of Equity × Cost of Equity) + (Weight of Debt × After Tax Cost of Debt)
(0.5 × 12%) + (0.5 × 7%) = 9.5%
North Pole Fishing Equipment Corporation and South Pole Fishing Equipment Corporation would have identical equity betas of 1.10 if both were all equity financed. The market value information for each company is shown here: North Pole South PoleDebt $ 2,900,000 $ 3,800,000 Equity $ 3,800,000 $ 2,900,000 The expected return on the market portfolio is 10.9 percent, and the risk-free rate is 3.2 percent. Both companies are subject to a corporate tax rate of 35 percent. Assume the beta of debt is zero.a. What is the equity beta of each of the two companies? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Equity betaNorth Pole South Pole b. What is the required rate of return on each of the two companies’ equity? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Rate of returnNorth Pole % South Pole %
Answer and Explanation:
The calculation is given below;
For North Pole:
Unlevered Beta = 1.10
Debt = $2,900,000
Equity = $3,800,000
So,
D/E Ratio = Debt ÷ Equity
= $2,900,000 ÷ $3,800,000
= 0.76316
Now
Levered Beta = Unlevered Beta × [1 + (1 - tax) × D ÷ E Ratio]
= 1.10 × [1 + (1 - 0.35) × 0.76316]
= 1.65
Required Return = Risk-free Rate + Levered Beta × (Market Return - Risk-free Rate)
= 3.20% + 1.65 × (10.90% - 3.20%)
= 15.91%
For South Pole:
Unlevered Beta = 1.10
Debt = $3,800,000
Equity = $2,900,000
So,
D/E Ratio = Debt ÷ Equity
= $3,800,000 ÷ $2,900,000
= 1.31034
Now
Levered Beta = Unlevered Beta × [1 + (1 - tax) × D ÷ E Ratio]
= 1.10 × [1 + (1 - 0.35) × 1.31034]
= 2.04
And
Required Return = Risk-free Rate + Levered Beta × (Market Return - Risk-free Rate)
= 3.20% + 2.04 × (10.90% - 3.20%)
= 18.91%
The United Nations Human Development Report gives the following data for real GDP per person in 2014: China, $12,547; Russia, $22,352; Canada, $42,155; United States, $52,947.
Other information suggests that household production is similar in Canada and the United States and smaller than in China and Russia. The underground economy is larger in Russia and China and a similar proportion of each of these economies. Canadians and Americans enjoy more leisure hours than do the Chinese and Russians. Canada and the United States spend significantly more on the environment than do China and Russia. In which pair (or pairs) of countries is it easiest to compare the standard of living?
And in which pair (or pairs) is it most difficult? Explain why?
Answer:
B. between China and Russia or between Canada and the United States, because household production, the underground economy, leisure hours, and the environment are similar in each pair
Explanation:
The standard of living can be easily compared ______. A. between China and Canada because they have a similar land size B. between China and Russia or between Canada and the United States, because household production, the underground economy, leisure hours, and the environment are similar in each pair C. among none of the four countries because they are too different D. between Russia and the United States because they are both super powers E. among all four countries because real GDP per person includes a reliable measure of income, household production, the underground economy, leisure hours, and the environment
Real Per capita GDP measures the standard of living of the people in a country. The higher the Real Per capita GDP, the higher the standard of living
Real Per capita GDP = Real GDP / population
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation.
some items are not perfectly measured by GDP. They include
1. services not rendered to oneself
2. Activities not reported to the government
3. illegal activities
4. sale or purchase of used products
5. sale or purchase of intermediate products
Because GDP does not measure underground economy (illegal activities) , leisure , it would be difficult to compare either pair of countries
Ken's home has a replacement value of $200,000. Ken insured the home for $150,000 under an unendorsed Homeowners 3 policy. The roof of Ken's home was damaged by a windstorm. The replacement cost of the damaged roof is $16,000. The actual cash value of the loss is $12,000. How much will Ken receive from his insurer to settle this claim
Answer: $15,000
Explanation:
Using a Homeowners 3 policy, Ken will get the higher amount out of two amounts which are:
The actual cash value of the damaged area. An amount calculated as follows:= (Amount of Insurance cover on home / 80% of Replacement Cost) * Cost of Repair to damaged area.
The actual cash value is $12,000
The second amount is:
= (Amount of Insurance cover on home / 80% of Replacement Cost) * Cost of Repair to damaged area.
= 150,000 / (80% * 200,000) * 16,000
= 0.9375 * 16,000
= $15,000
Ken will receive the higher amount of $15,000.
After a product recall triggered by salmonella contamination and repeated violation citations by the health department, Mc Burger Inc. is considering introduction of its first brand of soy-based gourmet burgers, Healthylicious-n-Safe. Each box of Healthylicious-n-Safe contains 8 burgers (similar to other meatless burger brands). An extensive marketing research undertaken by the firm indicated that there is a growing demand in the meatless burger market, with annual projected sales of 1,250,000 boxes (Note that this is the demand in the total meatless burger market and not the demand for the Healthylicious-n-Safe brand).
Mc Burger estimates that it will incur a fixed cost of $35,000/month. The variable cost of making one burger is estimated to be $0.875. Mc Burger plans to run a promotional campaign in the first 12 months of product introduction, which is estimated to cost a total of $275,000. Based on its marketing research Mc Burger expects an average customer to pay $9.00 for a box of Healthylicious-n-Safe.
Required:
Do you think Mc Burger should launch this new product? Is Mc Burger likely to break-even in 12 months? Is Mc Burger likely to break-even in 18 months?
Answer:
McBurger Inc.
Introduction of Healthylicious-n-Safe
I think that McBurger should launch this new product. If McBurger can capture more than 28% of the meatless burger market, it can break-even in 12 months and start earning huge profits in 18 months when there will be nil promotion costs.
Explanation:
Annual projected market sales of meatless burger = 1,250,000 boxes
Content of each box of Healthylicious-n-Safe = 8 burgers
Fixed cost per month = $35,000
Total annual fixed cost = $420,000 ($35,000 * 12)
Estimated variable cost of making one burger = $0.875
Estimated variable cost of a box of 8 burgers = $7 ($0.875 * 8)
Cost of promotional campaign in the first 12 months = $275,000
Total annual fixed cost including promotions = $695,000
Expected selling price per box of Healthylicious-n-Safe = $9
Estimated variable cost per box of Healthylicious-n-Safe 7
Contribution margin per box of Healthylicious-n-Safe = $2
Sales units required to break-even = Total fixed costs/Contribution margin per box
= $695,000/$2 = 347,500 boxes
This sales units break-even point represents 27.8% of the meatless burger market (347,500/1,250,000 * 100)
In its 2016 annual report, Lockheed Martin reported net earnings of $5,302 million and dividends paid of $2,048 million. Your forecast of net income for Lockheed Martin for 2017 is $5,504 million. What are projected dividends for the company for 2017
Answer:
The dividend for 2017 will be = $2124.98
Explanation:
The net earnings for the year 2016 = $5302
Dividend paid for the year 2016 = $2048
The forecast for the income of 2017 = $5504
The projected dividend for the year 2017 = 5504 x (2047 / 5302)
The projected dividend for the year 2017 = 2124.98
The dividend for 2017 will be = $2124.98
The prepaid insurance account had a balance of $9,400 at the beginning of the year. The account was debited for $10,400 for premiums on policies purchased during the year.
Journalize the adjusting entry required at the end of the year for each of the following situations:
a. The amount of unexpired insurance applicable to future periods is $3,730.
b. The amount of insurance expired during the year is $18,100.
Answer:
Following are the response to the given points:
Explanation:
[tex]\text{Insurance Expense} =\text{ Beginning Prepaid Insurance} + \text{Cash Premium Paid} -\text{Ending Prepaid Insurance}[/tex]
[tex]= \$9,400 + \$10,400 - \$3,730\\\\ = \$16,070[/tex]
[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 16,070 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]
[tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 16,070\\\\[/tex]
For point b:
[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 18,100 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]
[tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 18,100\\\\[/tex]
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,540 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0.
Cash $12,650 Cash dividends $1,570
Accounts receivable 13,520 Consulting revenue 13,520
Office supplies 2,850 Rent expense 3,110
Land 45,940 Salaries expense 6,490
Office equipment 17,530 Telephone expense 850
Accounts payable 8,110 Miscellaneous expenses 660
Common stock 83,540
Required:
Using the above information prepare an October 31 balance sheet for Emst Consulting ERNST.
Solution :
Particulars Amount
Consulting revenue $13,520
Less: Expenses
Rent Expense ($3,110)
Salaries Expense ($6,490)
Telephone Expense ($850)
Miscellaneous Expense ($660)
Net Profit $2,410
Statement of Retained Earnings
Particulars Amount
Retained Earnings $2,410
Less : Cash Dividend ($1,570)
Net Retained Earnings $840
Ernst Consulting Balance Sheet as of October 31
Assets Amount Liabilities Amount
Current Assets Current Liabilities
Cash $12,650 Accounts Payable $8,110
Office Supplies $2,850
Accounts Receivable $13,520
Non-Current Assets Equity
Office Equipment $17,350 Common Stock $83,540
Land $45,940 Retained Earnings $840
Total $92,490 Total $92,490
Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt–equity ratio of .73. The cost of equity is 11.5 percent and the pretax cost of debt is 6.6 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 39 percent?
Answer:
0.5780
Explanation:
Calculation to determine the capital structure weight of the firm's equity
Using this formula
Weight of equity = 1 / (1 + D-E)
Let plug in the formula
Weight of equity = 1 / (1 + .73)
Weight of equity = 1 / 1.73
Weight of equity = 0.5780
Therefore the capital structure weight of the firm's equity is 0.5780
