Bonita Industries financed the purchase of a machine by making payments of $29000 at the end of each of five years. The appropriate rate of interest was 8%. The future value of one for five periods at 8% is 1.46933. The future value of an ordinary annuity for five periods at 8% is 5.86660. The present value of an ordinary annuity for five periods at 8% is 3.99271. What was the cost of the machine to Bonita?

Answers

Answer 1

Answer:

Cost of Machine today = $115788.59

Explanation:

To calculate the cost of machine to Bonita in today's term, we need to calculate the present value of annuity. We know that the payments made are in form of an ordinary annuity because the amount of payment is fixed (29000) , the payments are made after equal interval of time (at the end of each year) and are made in finite number (5 years).

We will multiply the annuity payment per period by the PV of ordinary annuity factor as provided in the question to calculate the value or price of machine today.

Cost of Machine today = 29000 * 3.99271

Cost of Machine today = $115788.59


Related Questions

Rabbit Foot Motors has been approached by a new customer with an offer to purchase 5,000 units of its hands-free, Wi-Fi-enabled automotive model—the SMAK—at a price of $18,000 per automobile. Rabbit Foot’s other sales would not be affected by this new customer offer. Rabbit Foot normally produces 100,000 units of its SMAK model per year but only plans to produce and sell 90,000 in the coming year. The normal sales price is $35,000 per SMAK. Unit cost information for the normal level of activity is as follows:

Fixed overhead will not be affected by whether or not the special order is accepted.

1. What are the relevant costs and benefits of the two alternatives (accept or reject the special order)?

a. Special order price, direct materials, direct labor, and variable overhead.
b. Special order price, direct materials, direct labor, variable overhead, and fixed overhead
c. Normal price, direct materials, direct labor, and variable overhead.
d. Normal price, direct materials, direct labor, variable overhead, and fixed overhead.

2. By how much will operating income increase or decrease if the order is accepted?
a. increase by $_______
b. decrease by $_________

Answers

Answer: 1. Special order price, direct materials, direct labor, and variable overhead.

2. Increases by $10,000,000

Explanation:

1. What are the relevant costs and benefits of the two alternatives (accept or reject the special order)

These include special order price, direct materials, direct labor, and variable overhead.

2. By how much will operating income increase or decrease if the order is accepted?

This will be:

= Units × (special order price-variable costs)

= 5000 × ($18000 - $10000 - $2000 - $4000)

= 5000 × $2000

=$10,000,000

Therefore, it increases by $10,000,000

Burcham Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Compute the company's book equivalent of taxable income. - Use this number to compute the company's total income tax provision or benefit, assuming a tax rate of 34%.

Answers

Answer: See explanation

Explanation:

Pre-tax book income = $600,000

Less: Tax exempt interest = $300,000

Book equivalent of taxable income = $600,000 - $300,000 = $300,000

The company's total income tax provision or benefit, assuming a tax rate of 34% will be:

= 34% × $300,000

= 0.34 × $300,000

= $102,000

Are female expatriates different?.​

Answers

Answer:

Explanation: Selmer and Leung (2003c) found that female expatriates have the same general adjustment as male expatriates, but with higher levels of work adjustment and better interaction adjustment. A replication study by Haslberger (2010) confirms that the adjustment patterns of male and female expatriates are different.

Answer:

yes the patterns of male and female expatriates are different

Bismith Company reported: Actual fixed overhead Fixed manufacturing overhead spending variance Fixed manufacturing production-volume variance $700,000 $40,000 unfavorable $30,000 unfavorable
To record the write-off of these variances at the end of the accounting period, Bismith would
A. credit Fixed Manufacturing Production-Volume Variance for $30,000
B. debit Fixed Manufacturing Control for $700,000
C. credit Fixed Manufacturing Overhead Allocated for $700,000
D. debit Fixed Manufacturing Overhead Spending Variance for $40,000

Answers

Answer:

D. Debit fixed manufacturing overhead spending variance for $40,000

Explanation:

Since fixed manufacturing overhead shows the difference between the actual fixed overhead costs and budgeted fixed overhead cost during a period, Bismith would debit fixed manufacturing overhead spending variance of $40,000 inorder to write off the recording of the variances at the end of the accounting period because the value for fixed manufacturing overhead spending variance has already being gotten hence would be applied at the end of the period.

Sunland Company uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2020 was $277000. The balance in the same account at the end of 2021 is $419000. Sunland’s Cost of Goods Sold account has a balance of $2110000 from sales transactions recorded during the year. What amount should Sunland report as Cost of Goods Sold in the 2021 income statement?

Answers

Answer:

$2,252,000

Explanation:

Calculation to determine what amount should Sunland report as Cost of Goods Sold in the 2021 income statement

Using this formula

2021 income statement Cost of Goods Sold =Cost of Goods Sold account+(2021 LIFO Reserve account ending balance-2020 LIFO Reserve account ending balance)

Let Plug in the formula

2021 income statement Cost of Goods Sold =$2110000+($419000-$277000)

2021 income statement Cost of Goods Sold =$2110000+$142,000

2021 income statement Cost of Goods Sold =$2,252,000

Therefore The amount that Sunland should report as Cost of Goods Sold in the 2021 income statement is $2,252,000

Last year, Pastis Productions reported $100,000 in sales and $40,000 in cost of goods sold. The company estimates it would have doubled its sales and cost of goods sold had it allowed customers to buy on credit, but it also would have incurred $50,000 in additional expenses relating to wages, bad debts, and interest. Using these estimates, calculate the amount by which Income from Operations would increase (decrease).

Answers

Answer:

$10,000

Explanation:

The computation of the increase or decrease of income from operations is shown below

Without Credit

Income from Operations is

= $100,000 - $40,000

= $60,000

And,

With Credit

Income from Operations is

= 2 × ($100,000 - $40,000) -$50,000

= $70,000

So, there is Increase in Income from Operations i.e.

= $70,000 - $60,000

= $10,000

A company's income statement reported net income of $80,000 during 2016. The income tax return excluded a revenue item of $6,000 (reported on the income statement) because under the tax laws the $6,000 would not be reported for tax purposes until 2017. Which of the following statements is incorrect assuming a 21% tax rate?

a. Income tax expense on the income statement exceeds the tax liability to the IRS.
b. The $6,000 of revenue creates a deferred tax liability.
c. A $2,100 deferred tax liability is reported as of December 31, 2014.
d. Income tax expense on the income statement is $25,900.

Answers

Answer:

d. Income tax expense on the income statement is $25,900.

Explanation:

Calculation to determine the statements that is incorrect assuming a 21% tax rate

INCOME TAX EXPENSE

Using this formula

Income tax expense=Net income*Tax rate

Let plug in the formula

Income tax expense=$80,000*.21

Income tax expense=$16,800

Based on the above calculationThe income tax expense ($80,000 × .21) on the income statement is $16,800

Therefore the statements that is incorrect assuming a 21% tax rate is

INCOME TAX EXPENSE ON THE INCOME STATEMENT is $25,900

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:

Current Year Prior Year
Balance sheet at December 31
Cash $66,550 $65,500
Accounts receivable 18,150 24,750
Merchandise inventory 24,750 19,200
Property and equipment 212,250 152,600
Less Accumulated depreciation (61,500) (47,050)
$260,200 $215,000
Accounts payable $11,800 $21,900
Wages payable 4,500 5,100
Note payable, long-term 62,300 74,400
Contributed capital 102,000 67,000
Retained earnings 79,600 46,600
$260,200 $215,000
Income statement for current year
Sales $206,000
Cost of goods sold 103,000
Depredation expense 14,450
Other expenses 44,100
Net income $44,450

Additional Data:

a. Bought equipment for cash $59 650.
b. Paid $12,100 on the long-term note payable.
c. Issued new shares of stock for $35,000 cash.
d. Dividends of $11,450 were declared and paid.
e. Other expenses all relate to wages.
f. Accounts payable includes only inventory purchases made on credit.

Required:
Prepare the statement of cash flows using the indirect method for the year ended December 31, current year.

Answers

Answer and Explanation:

The preparation of the cash flow statement using the indirect method is as follows:

Cash flow from operating activities

Net income $44,450

Add: depreciation expense $14,450

Add: decrease in account receivable ($18,150 - $24,750) $6,600

Less: Increase in merchandise inventory ($24,750 - $19,200) $5,550

LesS: decrease in accounts payable ($11,800 - $21,900) $10,100

Less Decrease in wages payable ($4,500 - $5,100) -$600

Net cash provided from operating activities $49,250

Cash flow from investing activities

Equipment purchased -$59,650

Cash flow used by investing activities -$59,650

Cash flow from financing activities

Cash payment made for long term note payable -$12,100

Issuance of the new shares $35,000

Dividend paid -$11,450

Cash flow from financing activities $11,450

Net increase in cash $1,050

Add: opening cash balance $65,500

Closing cash balance $66,550

When the Federal Reserve decreases bank's reserves through an open-market operation: ____________

a. deposits increase, currency in circulation increases, and the monetary base remains the same.
b. the monetary base decreases, the money multiplier decreases, and the money supply increases.
c. loans increase, the federal funds rate rises, and the discount rate rises.
d. the monetary base decreases, loans decrease, and the money supply decreases.

Answers

Answer:

d. the monetary base decreases, loans decrease, and the money supply decreases.

Explanation:

In the case when the federal reserve reduce the reserve of the bank via open market operation so it would be resulted in decrease in the monetary base, reduction in the loan and the reduction in the money supply. Overall, all three things would be decrease

Therefore as per the given situation, the option d is correct

And the same would be  relevant

The Federal Reserve Board in the United States of America's banking system. After a series of financial panics, the desire for central control of the monetary system to ameliorate debt meltdown led to the passing of the Federal Reserve Act on December 23, 1913.

The correct option is d. the monetary base decreases, loans decrease, and the money supply decreases.

When the Federal Reserve decreases a bank's reserve through an open market operation, the monetary base, loan volume, and money supply are all reduced. All three things would be reduced in total.

As a result, option d is right in the current situation.

To know more about the federal reserve system, refer to the link below:

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Bonita, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats.

Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity
Designing $452,795 11,900 designer hours
Sizing and cutting 4,231,150 157,000 machine hours
Stitching and trimming 1,501,000 79,000 labor hours
Wrapping and packing 327,050 31,000 finished units

Required:
Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools.

Answers

Answer:

Results are below.

Explanation:

To calculate the activities rates, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Designing= 452,795 / 11,900= $38.05 per designer hour

Sizing and cutting= 4,231,150 / 157,000= $36.95 per machine hour

Stitching and trimming= 1,501,000 / 79,000= $19 per labor hour

Wrapping and packing= 327,050 / 31,000= $10.55 per finished unit

Brushy Mountain Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 6% per year. What is the value of Brushy Mountain's stock (in dollars) if the company is expected to pay $4.40/share in dividend at t

Answers

The question is incomplete. The complete Question is,

Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 4% per year. If D0 = $2 and rs = 17%, what is the estimated value of Brushy Mountain's stock?

Answer:

P0 = $9.1428 rounded off to 9.14

This answer is for the question above. Change the values and use the same formula if the values differ

Explanation:

The constant growth model of dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under constant growth DDM is,

P0 = D0 * (1+g) / (r - g)

Where,

D0 * (1+g) is the dividend expected in Year 1 or next year

g is the constant growth rate in dividends

r is the discount rate or required rate of return

P0 = 2 * (1-0.04)  /  (0.17 + 0.04)

P0 = $9.1428 rounded off to 9.14

Game Theory and Strategic Choices -- End of Chapter Problem You have developed a new computer operating system and are considering whether you should enter the market and compete with Microsoft. Microsoft has the option of offering their operating system for a high price or a low price. Once Microsoft selects a price, you will decide whether you want to enter the market or not enter the market. If Microsoft charges a high price and you enter, Microsoft will earn $30 million and you will earn $10 million. If Microsoft charges a high price and you do not enter, Microsoft will earn $60 million and you will earn $0. If Microsoft charges a low price and you enter, Microsoft will earn $20 million and you will lose $5 million. If Microsoft charges a low price and you do not enter, Microsoft will earn $50 million and you will earn $0. Construct a payoff table and find the Nash equilibrium if you and Microsoft both make your decisions simultaneously.
In a simultaneous move game, Microsoft will and you will:___________

Answers

Answer:

Microsoft will choses High price and you will choose to enter the market .

Explanation:

The Nash equilibrium

                                                           You

                                                enter                     Don't enter

Microsoft  high price          ( $30 , $10 )              ( $60 , $0 )

Microsoft  low price            ( $20, -$5 )               ( $50, $0 )

From the Nash equilibrium the best time for you to enter the market is when Microsoft Charges a high price

While the best time for Microsoft is when it charges a high price and you do not enter the market

But considering Simultaneous Move game : Microsoft will choses High price and you will choose to enter the market .

Here is the payoff table:

                Enter          Don't enter  

High          30, 10         60,0

Low           20, -5        50, 0

In a simultaneous move game, Microsoft will charge a high price and you will enter the market.

Game theory studies how participants in a competitive market make the best choice for themselves.  

Nash equilibrium is the best outcome for participants in a competitive market where no player has an incentive to change their decisions.

If I enter the market, I can either earn $10 million or lose $5 million. If I don't enter the market, I would earn nothing. The best strategy for me is to enter the market because $5 million is greater than 0.

If Microsoft charges a high price, it can either earn $30 million or $60 million. If the firm charges a low price, it would earn either $20 or $50 million. The best strategy is to charge a high price.

A similar question was answered here: https://brainly.com/question/14987529

Well-managed companies set aside money to pay for emergencies that inevitably arise in the course of doing business. A commercial solid-waste recycling and disposal company in Mexico City puts 0.5% of its after-tax income into such an account. (a) How much will the company have after 7 years if after-tax income averages $15.2 million and inflation and market interest rates are 5% per year and 9% per year, respectively

Answers

Answer:

$699,200

Explanation:

According to the scenario, computation of the given data are as follows,

After tax income = $15,200,000

Amount in account = 0.5% × $15,200,000 = $76,000

Time period = 7 years

inflation = 5%

Interest rate = 9%

So, Total amount after 7 years = $76,000 × (F/A, 9%, 7)

= $76,000 ×[ [tex]((1+.09)^{7}-1 )[/tex] ÷ .09]

= $76,000 × [.82803912082 ÷ .09]

= $76,000 × 9.2

= $699,200

Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants. The firm selling suits faces no competition and has a marginal cost of zero. The optimal commodity bundling strategy is:

Answers

Answer:

Charge $150 for a suit

Explanation:

Bundling strategy is the pricing of goods by a business despite different customers having different preferential prices they are willing to pay for the good.

In this scenario Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants.

The two customers are willing to pay $150 for both the jacket and the pants.

So the best decision for the company is to sell a suit made up of the jacket and pants for $150.

This way bother customers will get their preferred price.

Charging $150 for the suit is the optimal commodity bundling strategy in this scenario. Thus, Option (C) is correct.

Consumers of type A are willing to pay $100 for a coat and $50 for pants, totaling $150. By offering a bundled price of $150, the firm ensures that consumers of type A are willing to purchase the suit at their maximum willingness to pay.

Consumers of type B, who are willing to pay $75 for both the coat and pants individually, also find the bundled price of $150 attractive because it allows them to acquire both items at their maximum willingness to pay.

Thus, Option (C) i.e. charging $150 for a suit would maximize the firm's revenue by catering to both types of consumers and capturing their respective willingness to pay.

Learn more about the optimal bundle here:

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Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants. The firm selling suits face no competition and has a marginal cost of zero. The optimal commodity bundling strategy is: Multiple Choice

a)Charge $100 for a suit.

b)Charge $75 for a suit.

c)Charge $150 for a suit.

d)Charge $125 for a suit.

The excess return is computed by ________ the average return for the investment. Group of answer choices subtracting the inflation rate from adding the inflation rate to subtracting the average return on the U.S. Treasury bill from adding the average return on the U.S. Treasury bill to subtracting the average return on long-term government bonds from

Answers

Answer:

The answer is "subtracting the average return on the U.S. Treasury bill from".

Explanation:

By subtracting the average annual return on the US Treasury bill form of the investment's average return, that excess return is calculated, when the risk premium is another term for excess return. After subtracting the risk-free return from its investment's annualized value, the risk premium is calculated its avg treasury bond investment is a risk-free portfolio.

Wesley, who is single, listed his personal residence with a real estate agent on March 3 of the current year at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7. The closing statement showed the following disbursements:

Real estate agent's commission $21,780
Appraisal fee 600
Exterminator's certificate 300
Recording fees 800
Mortgage to First Bank 305,000
Cash to seller 34,520

Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2017, Wesley purchases another residence for $325,000.
a. Wesley's recognized gain on the sale is __________
b. Wesley's adjusted basis for the new residence is ___________
c. Assume instead that the selling price is $800,000.
Wesley's recognized gain is _____________, and his adjusted basis for the new residence is __________

Answers

Answer:

a. Wesley's recognized gain on the sale is $0.

b. Wesley's adjusted basis for the new residence is $325,000

c. Assume instead that the selling price is $800,000.

Wesley's recognized gain is $326,520, and his adjusted basis for the new residence is $325,000.

Explanation:

Wesley's actual gain = $363,000 - $21,780 - $600 - $300 - $800 - $200,000 = $139,520, but it can all be excluded using section 121.

If the selling price is $800,000;

Wesley's actual gain = $800,000 - $21,780 - $600 - $300 - $800 - $200,000 = $576,520, but he can exclude $250,000, so his recognized gain = $326,520

The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookbook Travel Book Classics Total Sales $63,000 $179,000 $60,000 $302,000 Cost of goods sold 37,000 70,000 23,000 130,000 Contribution margin 26,000 109,000 37,000 172,000 Order and delivery processing 19,000 26,000 9,000 54,000 Rent (per sq. foot used) 3,000 3,000 3,000 9,000 Allocated corporate costs 10,000 10,000 10,000 30,000 Corporate profit $ (6,000) $70,000 $15,000 $79,000 If the cookbook product line had been discontinued prior to this year, the company would have reported ________. the same amount of corporate profits less corporate profits greater corporate profits resulting profits cannot be determined

Answers

Answer:

the company would have reported loss

Beyer Company is considering the purchase of an asset for $245,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 9% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 76,000 $ 55,000 $ 82,000 $ 158,000 $ 37,000 $ 408,000 a. Compute the net present value of this investment. b. Should Beyer accept the investment

Answers

Answer:

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The shadow banking system refers to:______.
a. Non-bank financial firms that acted as banks by borrowing and lending of U.S. Treasury bills in an effort to make a profit.
b. Non-bank financial firms that acted as banks by borrowing and lending in an effort to make a profit.
c. Non-bank financial firms that acted as stock brokers by buying and selling stocks in an effort to make a profit.
d. Non-bank financial firms that provide profit advice to hedge fund managers.

Answers

Answer:

b. Non-bank financial firms that acted as banks by borrowing and lending in an effort to make a profit.

Explanation:

A shadow banking system can be described as a group of non-bank financial intermediaries that render services that are similar to the services that normal commercial banks render but the members of the group are not subject to normal banking regulations.

In addition, a shadow baking system can also be described as unregulated services rendered by regulated institutions.

Structured investment vehicles (SIVs), limited-purpose finance companies (LPFCs), asset-backed commercial paper (ABCP) conduits, and among others are examples of shadow banks.

Based on this explanation, the correct option is b. Non-bank financial firms that acted as banks by borrowing and lending in an effort to make a profit.

MedTech Corp. stock was $55.25 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return

Answers

Answer:

Percentage Return = 0.13936651584  or  13.936651584%  rounded off to 13.94%

Explanation:

To calculate the return percentage, we need to take the total return provided by the share in form of both dividends and capital gains. The total yield or return for the holding period can be calculated as follows,

Percentage Return = [Dividend + P1 - P0] / P0

Where,

P1 is price todayP0 is the purchase price

Percentage Return = [0.45 + 62.50 - 55.25] / 55.25

Percentage Return = 0.13936651584  or  13.936651584%  rounded off to 13.94%

Computing and Recording Interest Capitalization Bullock Company is constructing a building for its own use and has been capitalizing interest based on average expenditures on a quarterly basis since the project began last year. The following expenditures are made during the first quarter: January 1, $2,520,000; February 1, $2,295,000; and March 31, $3,285,000. Bullock had the following debts outstanding during this quarter. Debt Amount Note payable, 10%, incurred specifically to finance construction $1,440,000 Short-term note payable, 15% 2,250,000 Mortgage note payable, 8% 1,080,000 Answer the following questions, round your answers to the nearest whole number.
a. Compute interest to be capitalized and interest to be expensed for this first quarter.
Amount of interest to be capitalized Answer 0
Amount of interest to expense Answer 0
b. Prepare the entry to record the construction expenditures and interest.
Note: Record the debit accounts in alphabetical order using the first letter of the account name
. Account Name Dr.
Cr.

Answers

Answer:

Bullock Company

a. The amount of interest to be capitalized = $405,000.

The amount of interest to expense = $105,975

b. Journal Entry:

January 1,

Debit Construction expenditure $2,520,000

Credit Cash $2,520,000

To record the expenditure incurred on this date.

February 1,

Debit Construction expenditure $2,295,000

Credit Cash $2,295,000

To record the expenditure incurred on this date.

March 31,

Debit Construction expenditure $3,285,000

Credit Cash $3,285,000

To record the expenditure incurred on this date.

March 31

Debit Construction expenditure $405,000

Credit Capitalized interest $405,000

To capitalize the interest for the quarter.

March 31

Debit Interest Expense $105,975

Credit Interest Payable $105,975

To record the interest expense for the quarter.

Explanation:

a) Data and Calculations:

First Quarter Expenditures:

Date                  Amount        Weight      Weighted-Average

January 1,    $2,520,000        3/3              $2,520,000

February 1,  $2,295,000        2/3                 1,530,000

March 31,    $3,285,000         0/3                 0

Accumulated Weighted-Average expenditure = $4,050,000

Capitalized Interest = $4,050,000 * 10% * 1/4 = $405,000

Debts outstanding during the quarter:

Debt                                                               Amount   Interest Expense

Note payable, 10%, incurred specifically

to finance construction                            $1,440,000  $0

Short-term note payable, 15%                   2,250,000  $84,375

Mortgage note payable, 8%                       1,080,000  $21,600

Total interest expense for the quarter                      $105,975

Acort Industries owns assets that will have a 75% probability of having a market value of $52 million in one year. There is a 25% chance that the assets will be worth only $22 million. The current risk-free rate is 5%, and Acort's assets have a cost of capital of 10%. a) If Acort is unlevered, what is the current market value of its equity? b) Suppose instead that Acort has debt with a face value of $18 million due in one year. According to MM (i.e. perfect market), what is the value of Acort's equity in this case? c) What is the expected return of Acort's equity without leverage? What is the expected return of Acort's equity with leverage? d) What is the lowest possible realized return of Acort's equity with and without leverage?

Answers

Solution :

a). The current market value of the unlevered equity

   [tex]$=\frac{75\% \times \$52 \text{ million} + 25\% \times \$22 \text{ million}}{1+10 \%}$[/tex]

   = $ 40.45 million

b). The market value of the equity one year from now is

  [tex]$=(75\% \times \$52 \text{ million} + 25\% \times \$22 \text{ million})- \$18 \ \text{million}$[/tex]

  = $ 44.5 million - $ 18 million

  = $ 26.5 million

c). The expected return on the equity without the leverage = 10%

     The expected return on the equity with the leverage =   [tex]$=10\% +\frac{ \$22 \text{ million}}{\$ 26.5 \text{ million}}$[/tex]

= 0.93 %

d). The lowest possible value of equity without the leverage = $20 million - $ 18 million

= $ 2 million

The lowest return on the equity without the leverage = 10%

The lowest return on the equity with the leverage = 2 % as the equity is eroded.

Which of these investments may be long term? Choose four answers.
savings accounts
mutual funds
bonds
retirement funds
commodities

Answers

These long-term investments are the asset size of company balance sheets i.e shown by a company's investments it including stocks, bonds, and real estate these are long-term as they are kept for one than one year.

The long-term investment includes mutual funds, bonds, retirement funds, commodities. These are investments that are made for the long term periods and may be for long-term goals of the individual or the organization.

Thus the options B, C, D, and E are correct.

Learn more about the investments may be of long-term.

brainly.com/question/18641093.

The investments may be long term is bonds and retirement funds.

What is long term investment?

A long-term investment is an investment owned by an individual or company for more than three year.

This could be a company or an individual asset such as real estate and bonds that takes a long time to mature because they do not generate income immediately.

Therefore, The investments may be long term is bonds and retirement funds

Learn more on investment here,

https://brainly.com/question/417234

Given the following information for Albright Company, what was the total manufacturing cost variance? Manufacturing Costs Actual Costs Standard Cost at Actual Volume Budgeted Cost Direct materials $ 80,300 $ 76,000 $ 71,250 Direct labor 77,000 72,500 68,400 Factory overhead 44,800 48,000 45,600 Total $202,100 $196,500 $185,250 a.$5,600 unfavorable b.$(5,600) favorable c.$16,850 unfavorable d.$3,200 unfavorable

Answers

Answer:

Total manufacturing cost variance = $5,600 unfavorable

Explanation:

The total manufacturing cost variance is the difference between the actual total manufacturing cost incurred and the standard manufacturing cost for the actual output achieved.

The manufacturing cost is the sum of the direct material cost and direct labour cost and factory production overhead.

Actual total Manufacturing cost = 202,100

Standard manufacturing cost=$196,500

Variance = $202,100- $196,500=$5,600 unfavorable

Total manufacturing cost variance = $5,600 unfavorable

Due to better internet job searching websites, the job finding rate increases in the recent years. In a survey studying the job finding rate in Jan 2019, 420 out of 10,000 unemployed workers report that they found jobs. In the same period of time, a similar survey studying employment status reports that 29 out of 10,000 employed workers left their jobs. What is the steady unemployment rate

Answers

Answer:

6.46%

Explanation:

Job finding rate (F) = Rate at which the unemployed people get job

Job Separation rate (S) = Rate at which the employed people loose their job

Steady state level of unemployment = Ratio of Unemployed people to the Total labor (i.e U/L)

Formulae used to calculate the steady state level of unemployment is: U/L = S / S + F

Where F =  (420/10,000)*100 = 4.2%

Where S = (29/10,000)*100 = 0.29%

Steady unemployment rate (U/L) = 0.29 / (0.29 + 4.2)

Steady unemployment rate (U/L) = 0.29 / 4.49

Steady unemployment rate (U/L) = 0.0646

Steady unemployment rate (U/L) = 6.46%

Sheffield Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.

Car Truck
Estimated wheels produced 36,000 11,000
Direct labor hours per wheel 1 3

Total estimated overhead costs for the two product lines are $731,400.

Required:
Calculate overhead rate.

Answers

Answer:

Predetermined manufacturing overhead rate= $10.6 per direct labor hour

Explanation:

Giving the following information:

Car Truck

Estimated wheels produced 36,000 11,000

Direct labor hours per wheel 1 3

Total estimated overhead costs for the two product lines are $731,400.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 731,400 / (1*36,000 + 3*11,000)

Predetermined manufacturing overhead rate= $10.6 per direct labor hour

Recently, some college alumni started a moving service for students living on campus. They have 3 employees and are debating hiring one more. The hourly wage for an employee is $30 per hour. An average moving job takes 4 hours. The company currently does 3 moving jobs per week, but with one more employee, the company could manage 5 jobs per week. The company charges $100 for a moving job.
Instructions:
Round your answers to the nearest whole number.
a. The new employee's marginal product of labor is ______.
b. The value of that merginal product is ______.
c. The moving service should moving jobs ______- hire another worker.

Answers

Answer: a. 2

b. $200

c. Should not

Explanation:

a. The new employee's marginal product of labor is ______.

This will be:

= 5 - 3

= 2 moving jobs

b. The value of that marginal product is ______..

Since the company charges $100 for a moving job, the value of the marginal product will be:

= 2 × $100

= $200

c. The moving service should moving jobs ______- hire another worker

Marginal cost of moving 2 jobs will be:

= $30 × 4 × 2

= $240

Since the marginal cost is more than the marginal product, the company should not hire another worker.

When a company uses a
allocation rate there is only one base for allocating all overhead costs to products or other cost objects.

Answers

Answer:

company-wide

Explanation:

Using a single company-wide allocation rate implies that only one cost driver (or cost base) is used to allocate all the overhead costs to the product units, batches, departments, or divisions, and other cost objects.  This single rate is the plant-wide or company-wide allocation rate.  It is opposed to the use of multiple allocation rates, where different rates are calculated and used to allocate overhead costs from different cool pools to the units or activities consuming the services.  The company-wide allocation rate is typical with traditional costing method, while the multiple allocation rates are used with ABC costing method.

Do you think you would want a credit card in college? Why or why not ?

Answers

Answer:

Yes I would to help build my credit but only if I  was in a spot where I knew that I whould be able to keep up and pay it back on time.

Explanation:

yes, it would make things way more convenient !

Robert Parish Corporation purchased a new machine for its assembly process on January 1, 2014. The cost of this machine was $315,900. The company estimated that the machine would have a salvage value of $15,900 at the end of its service life. Its life is estimated at 4 years, and its working hours are estimated at 40,000 hours. Year-end is December 31.
Instructions
Compute the depreciation expense under the following methods and complete the depreciation schedules below.
(a) Straight-line depreciation.
(b) Activity method for 2014 and 2015, assuming that machine usage was 15,000 hours for 2014; 11,710 hours for 2015; 12,150 hours for 2016 and 1,140 hours for 2017.
(c) Sum-of-the-years'-digits.
(d) Double-declining-balance.

Answers

Answer:

(a) Straight-line depreciation.

depreciation expense per year = ($315,900 - $15,900) / 4 = $75,000

(b) Activity method for 2014 and 2015, assuming that machine usage was 15,000 hours for 2014; 11,710 hours for 2015; 12,150 hours for 2016 and 1,140 hours for 2017.

depreciation expense per unit = $300,000 / 40,000 = $7.50 per unit

depreciation expense 2014 = $7.50 x 15,000 = $112,500

depreciation expense 2015 = $7.50 x 11,710 = $87,825

(c) Sum-of-the-years'-digits.

depreciation expense 2014 = $300,000 x 4/10 = $120,000

depreciation expense 2015 = $300,000 x 3/10 = $90,000

(d) Double-declining-balance.

depreciation expense 2014 = $315,900 x 2 x 1/4 = $157,950

depreciation expense 2015 = $157,950 x 2 x 1/4 = $78,975

depreciation expense 2016 = $78,975 x 2 x 1/4 = $39,487.50

depreciation expense 2017 = $39,487.50 - $15,900 = $23,587.50

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