Answer: B. 1 DEF Jan 50 Call
Explanation:
The Options Clearing Corporation (OCC) acting under its mandate of being an issuer and guarantor for options and futures contracts can alter options prices but does not do so for prices based on normal dividends as they are more regular and their effects are already accounted for in the price of the call.
When a company calls a one-time special cash dividend, this is new to the market which would not have incorporated it into the price of the call. The OCC will then adjust the price to account for this.
In this case it will do so by subtracting the dividend from the call;
= 55 - 5
= $50
The customer will then have 1 DEF Jan 50 Call .
A firm has sales of $1,220, net income of $226, net fixed assets of $544, and current assets of $300. The firm has $101 in inventory. What is the common-size statement value of inventory
Answer:
11.97%
Explanation:
Common size statement value of inventory is where all accounts are expressed as a percentage of total assets.
Total assets = Net fixed assets + Current assets
= $544 + $300
= $844
Common size statement value of inventory = Inventory ÷ Total assets
= $101 ÷ $844
= 0.1197
= 11.97%
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $620,000 cost with an expected four-year life and a $34,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) Expected annual sales of new product $ 2,190,000 Expected annual costs of new product Direct materials 494,000 Direct labor 686,000 Overhead (excluding straight-line depreciation on new machine) 476,000 Selling and administrative expenses 174,000 Income taxes 30 % Required: 1. Compute straight-line depreciation for each year of this new machine’s life. 2. Determine expected net income and net cash flow for each year of this machine’s life. 3. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year. 4. Compute this machine’s accounting rate of return, assuming that income is earned evenly throughout each year. 5. Compute the net present value for this machine using a discount rate of 4% and assuming that cash flows occur at each year-end. (Hint: Salvage value is a cash inflow at the end of the asset’s life.)
Answer:
1) depreciation expense per year = $146,500
2) net income:
years 1 - 4 = $149,450
net cash flows:
year 0 = -$620,000
year 1 = $295,950
year 2 = $295,950
year 3 = $295,950
year 4 = $329,950
3) payback period = 2.09 years
4) accounting rate of return = 24.1%
5) net present value (NPV) = $483,330.83
Explanation:
purchase cost of the machine $620,000
depreciation expense per year = ($620,000 - $34,000) / 4 = $146,500
expected annual sales $2,190,000
direct materials $494,000
direct labor $686,000
overhead (excluding depreciation) $476,000
S&A expenses $174,000
total costs (excluding depreciation) = $1,830,000
income taxes 30%
net income per year = ($2,190,000 - $1,830,000 - $146,500) x 70% = $149,450
net cash flow (years 1 - 3) = $149,450 + $146,500 = $295,950
net cash flow (year 4) = $149,450 + $146,500 + $34,000 = $329,950
payback period = $620,000 / $295,950 = 2.09 years
accounting rate of return = $149,450 / $620,000 = 24.1%
NPV, using a financial calculator = $483,330.83
The Extra Surplus Company's Balance Sheet for December 31, 2017 and the Income Statement for 2018 are shown below.
Extra Surplus Company
Balance Sheet
December 31, 2017
Assets
Cash $14,000
Accounts Receivable 7,000
Inventory 16,800
Property and Equipment, Net 28,000
$65,800
Liabilities and Stockholders' Equity
Accounts Payable $14,000
Notes Payable, Long-Term 7,000
Common Stock 28,000
Retained Earnings 16,800
$65,800
Extra Surplus Company
Income Statement
For the Year Ended December 31, 2018
Sales $23,400
Cost of Goods Sold 5,400
Salaries and Wage Expense 5,400
Interest Expense 1,800
Other Expenses 900
Net Income $9,900
Additional data:
A- Sales were $23,400; $14,400 in cash was received from customers.
B- Bought new land for cash, $18,000.
C- Sold other land for its book value of $9,000.
D- Paid $1,800 principal on the long-term note payable and $1,800 in interest.
E- Issued new shares of stock for $18,000 cash.
F- Cash dividends of $3,800 were declared and paid to stockholders.
G- Paid $10,300 on accounts payable.
H- No inventory purchases were made: other expenses were incurred on account.
I- All wages were paid in cash.
J- Other expenses were on account.
Required:
a. Prepare a balance sheet as of December 31, 2020.
b. Prepare the statement of cash flows using the direct method.
Answer:
The Extra Surplus Company
Balance Sheet
December 31, 2020
Assets
Cash $14,300
Accounts Receivable 16,000
Inventory 11,400
Property and Equipment, Net 37,000
$78,700
Liabilities and Stockholders' Equity
Accounts Payable $3,700
Other Expenses Payable 900
Notes Payable, Long-Term 5,200
Common Stock 46,000
Retained Earnings 22,900
$78,700
b. The Extra Surplus Company
Statement of Cash Flows, using the direct method:
December 31, 2020
Operating activities:
Cash from customers $14,400
Payment to suppliers (10,300)
Payment to labor (5,400)
Net cash from operating (1,300)
Investing activities:
Land sales 9,000
Land (18,000)
Net cash from investing (9,000)
Financing activities:
Issue of shares 18,000
Note Payable Repayment (1,800)
Interest paid (1,800)
Dividends (3,800)
Net cash from financing 10,600 10,600
Net Cash Inflow $300
Explanation:
a) Data and Calculations:
Extra Surplus Company
Balance Sheet
December 31, 2017
Assets Adjustment Balance
Cash $14,000 300 $14,300
Accounts Receivable 7,000 + 23,400 - 14,400 16,000
Inventory 16,800 - 5,400 11,000
Property and Equipment, Net 28,000 - 9,000 + 18,000 37,000
$65,800
Liabilities and Stockholders' Equity
Accounts Payable $14,000 -10,300 3,700
Notes Payable, Long-Term 7,000 -1,800 5,200
Common Stock 28,000 + 18,000 46,000
Retained Earnings 16,800 22,900
$65,800
ii) Extra Surplus Company
Income Statement
For the Year Ended December 31, 2018
Sales $23,400
Cost of Goods Sold 5,400
Salaries and Wage Expense 5,400
Interest Expense 1,800
Other Expenses 900
Net Income $9,900
Cash balance (beginning) $14,000
iii) Cash Receipts:
Cash from customers $14,400
Land sales 9,000
Issue of shares 18,000
Total receipts $41,400
iv) Cash Payments:
Land $18,000
Note Payable Repayment 1,800
Interest paid 1,800
Dividends 3,800
Accounts Payable 10,300
Salaries & Wages 5,400
Total payments $41,100
Cash Balance (Ending) $14,300
v) Retained Earnings:
Net Income $9,900
Beginning Retained Earnings 16,800
Dividends 3,800
Ending Retained Earnings $22,900
v) The Extra Surplus Company's Statement of Cash Flows can also be prepared using the indirect method. This method starts with the net income and adjusts working capital changes after adding back non-cash flow expenses in order to arrive at the net cash from operating activities. Other steps are similar to the direct method, which considers only the actual cash inflows and outflows.
The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.:Net sales $ 10,711Total assets 4,363End of year balance in cash 1,022Total stockholders' equity 431Gross profit (Sales-Cost of Sales) 2,456Net increase in cash for the year 9Operating expenses 2,067Net operating cash flow 702Other income (expense), net (12)a. Compute Amazon's balance in cash at the beginning of the year.b. Compute Amazon's total liabilities at the end of the year.c. Compute cost of goods sold for the year.
d. Compute the income before income tax for Amazon.
Answer and Explanation:
The computation is shown below:
1. Beginning cash balance is
= Ending cash balance - Increase in cash
= $1,022 - $9
= $1,013
2. As we know that
Assets = Total liabilities + Total Equity
$4,363 = Total liabilities + $431
= $4,363 - $431
= $3,932
3. Gross profit = Net sales - Cost of goods sold
so,
Cost of goods sold = Net sales - Gross profit
= $10,711 - $2,456
= $8,255
4. Income before taxes is
= Revenue - expenses
= $10,711 - $2,456 - $2,067 -$12
= $6,176
Because of higher gasoline prices, firms using gasoline intensively in the production or distribution of their goods have experienced:_______.
Answer:
An upward shift in their MC, AVC, and ATC curves.
Explanation:
Titan Mining Corporation has 7.6 million shares of common stock outstanding, 280,000 shares of 4.5% preferred stock outstanding, and 165,000 bonds with a semi-annual coupon rate of 5.9% outstanding, par value $2,000 each. The common stock currently sells for $61 per share and has a beta of 1.15, the preferred stock has a par value of $100 and currently sells for $95 per share, and the bonds have 19 years to maturity and sell for 109% of par. The market risk premium is 7.1%, T-bills are yielding 3.5%, and the company’s tax rate is 25%.
A. What is the firm’s market value capital structure?
B. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?
Answer:
A. The Capital structure is : 4.23 % - Equity, 6.59 % - Preferred Shares and 89.17 % - Debt
B. The firm should discount the project’s cash flows at 4.45 %.
Explanation:
Total Market Value = Market Value of Equity + Market Value of Debt + Market Value of Preferred Shares
Market Value of Equity = 280,000 shares × $61
= $17,080,000
Market Value of Preferred Shares = 280,000 shares × $95
= $26,600,000
Market Value of Debt = 165,000 bonds × $2,000 × 109%
= $359,700,000
Total Market Value = $403,380,000
Capital Structure :
Weight of Equity = $17,080,000 / $403,380,000 × 100
= 4.23 %
Weight of Preferred Shares = $26,600,000 / $403,380,000 × 100
= 6.59 %
Weight of Debt = $359,700,000 / $403,380,000 × 100
= 89.17 %
Thus, the market value capital structure is : 4.23 % - Equity, 6.59 % - Preferred Shares and 89.17 % - Debt
Firms use the Weighted Average Cost of Capital (WACC) to discount the project’s cash flows.
Cost of Debt, r
PV = $2000 × 109 % = - $2,100
PMT = ($2,000 × 5.9%) ÷ 2 = $59
n = 19 × 2 = 38
P/YR = 2
FV = $2,000
r = ?
Using a Financial Calculator, Pretax cost of debt, r is 5,47 %
After tax cost of debt = Interest × ( 1 - tax rate)
= 5,47 % × ( 1 - 0.25)
= 4.10 %
Cost of Equity
Cost of Equity = Return on Risk Free Security + Beta × Return on Risk Premium Portfolio
= 3.5 % + 1.15 × 7.1%
= 11.67 %
Cost of Preference Stock
Cost of Preference Stocks = 4.5%
WACC = ke(W/V) + kd(D/V) + kp(P/V)
= 11.67 % × 4.23 % + 4.10 % × 89.17 % + 4.5% × 6.59 %
= 4.45 %
4. Suppose you hold a PUT option on Israeli shekels with a strike price of 3.4207s/$. If the spot rate on the final day of the option is 3.4329s/$, how much profit would you make trading $1,000,000? Should you do it?
Answer:
Profit $3,567
I would exercise my option by buying the shares before the expiration .
Explanation:
Calculation of how much profit would you make trading $1,000,000
First step is to multiply the spot rate on the final day by the trading amount
3.4329s*$1,000,000
=$3,432,900
Second step is to divide the spot rate option by the strike price
3,432,900/3.4207
=$1,003,567
Last Step is to find the profit
Profit =$1,003,567-$1,000,000
Profit=$3,567
Therefore the amount of PROFIT you would make trading $1,000,000 will be $3,567
Based on the above calculation I would exercise my option by buying the shares before the expiration .
At first glance, the research reported in the Washington Post article Why We've Been Hugely Underestimating the Overfishing of the Oceans may appear to be only bad news for the world's stock of fish. However, researchers believe that their discovery of how much overfishing has been underestimated could also be good news. Determine whether each statement should be considered good news or bad news based on the information in the article.
Good news Bad news
a. Fisheries may be able to feed more people than previously thought.
b. Policy made using FAO data could be poorly made because FAO data does not match reality.
c. Severe declines in catches since the 1990s may be due to unsustainable fishing.
d. Sustainable food production may be more at risk than scientists thought due to the fishing industry catching far more fish than previously believed
e. Declines in catches have been even greater than FAO data suggests.
f. When catches peaked, fisheries were actually much more productive than previously thought
Answer:
According to the article, the following statements is classified under the following headings:
Good News:
a. Fisheries may be able to feed more people than previously thought.
b. Policy made using FAO data could be poorly made because FAO data does not match reality.
f. When catches peaked, fisheries were actually much more productive than previously thought
Bad News:
c. Severe declines in catches since the 1990's may be due to unsustainable fishing.
d. Sustainable food production may be more at risk than scientists thought due to the fishing industry catching far more fish than previously believed
e. Declines in catches have been even greater than FAO data suggests.
Explanation:
In 2019, Dan transferred 5-year property to Fleck Corp. in a tax-deferred Section 351 transaction. Fleck took Dan's adjusted basis in the property. Dan originally placed the depreciable property in service in 2017. What year of the depreciation schedule will Fleck use to depreciate the property
Answer:
The property will be depreciated using the remaining 3 years of its life after the tax-free incorporation transfer year. This is because Dan had already depreciated the property for 2 years before the transfer.
Explanation:
Sec. 351 allows a tax-free incorporation transfer if certain requirements are met, including that the property must be transferred to Fleck Corporation by Dan in exchange for stock in Fleck Corporation, and, immediately after the exchange, the Fleck Corporation is in control.
If the budget deficit increases then a. saving and the interest rate rise. b. saving rises and the interest rate falls. c. saving falls and the interest rate rises. d. saving and the interest rate fall.
Answer:
c. saving falls and the interest rate rises.
Explanation:
If Country A runs a budget deficit, it forces the government to issue bonds at reduced prices in order to raise funds to shore up the decreased government revenue. When bonds are issued, the government is mopping up the savings, thus reducing the available savings. With this increased budget deficit, interest rates will rise as the cost of funding increases to match the inflationary effect of the deficit. And the vicious circle starts.
For the following transaction, answer the questions that follow in accordance with the rules of journalizing and the double-entry accounting system:
Transaction:
Drawing by owner amounted to $1,500.
Required:
a. Which two accounts are affected ?
b. What kind of accounts are they?
c. Do the account balances increase or decrease?
d. Do we debit or credit the accounts?
Answer and Explanation:
Given that
Drawings by owner for $1,500
The journal entry is
Drawing Dr $1,500
To cash $1,500
(being the amount withdrawn is recorded)
a. Here the two accounts are affected one is drawings account and the second one is the cash account
b. The drawing is the equity account while the cash is the asset account
c. The drawing account is increased and the cash account is decreased
d. The drawing account is debited and cash account is credited
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance.
A. True
B. False
Answer:
A. True
Explanation:
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance. Also, a negative direct labor efficiency variance is considered favorable one. And for a direct labor, if the efficiency and rate variances are both negative, then the flexible budget variance will be unfavorable. Therefore, the statement of the question is true.
A customer has purchased 10,000 shares of Fromage stock, a Swiss cheese company. The stock is not traded in the United States. Fromage declares and pays a dividend of 15,000 Swiss Francs, which, when converted to dollars, equals $10,000. Switzerland imposes a 20% withholding tax on dividends repatriated outside its borders. How is the dividend reported on this investor's U.S. tax return
Answer:
$10,000 of dividends are reported, along with a $2,000 tax credit for monies withheld in Switzerland
Explanation:
As we know that if there is a direct investment in a foreign security, so the foreign country having a tax on dividend send an individual his home country against his will now if this condition arise so the same i.e tax credit should be levy on the same person while filing the U.S tax return
Since $10,000 dividend is received along with it $2,000 would be the tax credit
If the distribution of water is a natural monopoly, then:__________.
a. a single firm cannot serve the market at the lowest possible average total cost.
b. allowing for competition among different firms in the water-distribution industry is efficient.
c. average cost increases as the quantity of water produced increases.
d. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
Answer:
d. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
Explanation:
Option a is wrong because:
The initial investment is very high, therefore, the more firms competing will only increase the required investments and fixed costs associated with them, e.g. depreciation, maintenance. That is why the lowest average costs is generally achieved when only one firm serves this type of market.
Option b is wrong because:
A natural monopoly exists because it is extremely difficult for two or more competing firms to exist. Generally the required investment is very high, and the revenues are not large enough to allow two or more firms to compete.
Option c is wrong because:
Utilities require large initial investments, but once they are set up, the production costs are very small. I.e. the fixed costs are more relevant than the variable costs. Average production costs as decrease as the quantity produced increases.
The open interest on silver futures at a particular time is the Group of answer choices number of all long or short silver futures contracts outstanding. number of silver futures contracts traded during the day. number of silver futures contracts traded the previous day. number of outstanding silver futures contracts for delivery within the next month.
Answer:
number of all long or short silver futures contracts outstanding.
Explanation:
The open interest on silver futures at a particular time is the number of all long or short silver futures contracts outstanding. Open interest can be defined as the total or overall number of contracts (open long and short positions) outstanding in a futures market.
In stocks exchange, when a contract begins trading it has an open interest that is equal to zero and in future dates, more contracts are entered into as time passes by.
Additionally, majority of the contracts are liquidated before their maturity date.
A catering company prepared and served 375 meals at an anniversary celebration last week using 3 workers. The week before, 2 workers prepared and served 225 meals at a wedding reception
a1. Calculate the labor productivity for each event. (Round your answers to 1 decimal place.) Anniversary Wedding meals/worker meals/worker
a2. For which event was the labor productivity higher?
Anniversary
Wedding
Answer:
for anniversary = 125
for wedding = 112.5
anniversary
Explanation:
Labour productivity = number of meals / total number of workers
for anniversary = 375 / 3 = 125
for wedding = 225 / 2 = 112.5
labour productivity is higher for the anniversary because one unit of labour produces more meals when compared to the wedding.
A company purchased money market funds with cash during the current year. Which of the following statements is correct?
A. This transaction will result in a decrease in cash from investing activities.B. This transaction will result in a decrease in cash from operating activities.C. This transaction will result in a decrease in cash from financing activities.D. This transaction will not cause a change in cash from operating, investing, or financing activities.
Answer: This transaction will not cause a change in cash from operating, investing, or financing activities.
Explanation:
When a company purchased money market funds with cash during the current year, it should be noted that this will transaction will not cause a change in cash from operating, investing, or financing activities. This is because the purchase was made with cash during the current year.
g An arbitrage opportunity arises when... Group of answer choices An investment has a high risk-return ratio. disparity between 2 or more prices allow investors to yield a sure profit the risk-free rate generates a positive alpha. a net investment is taken place within a portfolio
Answer:
disparity between 2 or more prices allow investors to yield a sure profit
Explanation:
Arbitrage is defined as the practice where there is simultaneous buying and selling of an asset so as to benefit from a price difference.
Usually the price differences occur in different markets, so the arbitrator acts as a supplier of the goods to market where goods are to be sold.
For example if a company buys fertiliser from a whole seller and immediately sells the goods to a farmer's cooperative at higher price this is arbitrage.
So abitrage opportunity is when disparity between 2 or more prices allow investors to yield a sure profit
"One of the ten IG principles is a Continuous improvement. What is the importance of this principle to the organization program"
Answer:
the importance is to provide periodic program review and necessary adjustments against gaps and it short comings
Explanation:
Information governance is a full way of managing information in a corporation by the implementation of a series of processes, controls and roles. It can be simply said to be a process of managing information assets as this will cause a balance between security and usage.
continuous improvement is one of its 10 principles. And it simply means that programs in information governance have to go through continuous reviews and updates as doing such will help to reduce shortcomings.
Trevor Company discloses supplementary operating segment information for its three reportable segments. Data for 20X8 are available as follows:
Segment A Segment B Segment C
Sales $500,000 $300,000 $200,000
Traceable operating
expenses 250,000 120,000 90,000
Allocable costs for the year was $180,000. Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs. The 20X8 operating profit for Segment B was:_______.
A) $180,000.
B) $120,000.
C) $126,000.
D) $110,000.
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Segment A Segment B Segment C
Sales $500,000 $300,000 $200,000
Traceable operating expenses 250,000 120,000 90,000
Profit= 250,000 180,000 110,000 = 540,000
Allocable costs for the year was $180,000.
First, we need to allocate costs to Segment B:
Segment B= 180,000/540,000= 0.33
Allocate= 0.33*180,000= 60,000
Now, we can calculate the profit:
Segment B profit= 180,000 - 60,000= 120,000
the frequency of deposits of federal income taxes withheld and social security and medicare taxes is
Answer: A) amount of the tax liability.
Explanation:
Federal taxes like income taxes withheld and social security and Medicare taxes are mandated to be paid by the IRS depending on the amount of tax liability that is owed.
For 2020 for instance, if in a company's tax lookback period it owed $50,000 or less than $50,000 in tax liability, the company should be a monthly depositor. If however, the company owed more than $50,000 then it is to be a semi-weekly depositor.
Answer:
✓ amount of the tax liability.
Explanation:
The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is most dependent on the:
The Doha Round of negotiations focuses on industrial and nontariff barriers, agriculture, services, and easing trade rules.
a. True
b. False
Answer:
True.
Explanation:
The Doha Round of negotiations focuses on industrial and non-tariff barriers, agriculture, services, and easing trade rules. It is a trade negotiation which is common among the world trade organizations (WTO) member countries. The main purpose of the Doha Round of negotiations is to enhance the international trading process through the application of revised trade rules and lower trade barriers.
This trade-negotiation round of the World Trade Organization was officially launched in November, 2001 in Doha, Qatar.
A creamery shop sells its special ice cream for $4.50 a quart. It costs them $3.00 a quart to make it. The daily demand for this flavor is normally distributed with a mean of 35 quarts and a standard deviation of 4 quarts. Unsold ice cream is sold each day to a local restaurant at $1.50 per quart. What is the service level and corresponding optimal stocking level?
Answer and Explanation:
The computation of the service level and the corresponding optimal stocking level is shown below:
Given that
Selling price = SP = $4.50
Cost price = CP = $3.00
So,
Salvage value = V = $1.50
Average daily demand (d) = 35 quarts
The standard deviation of daily demand = 4 quarts
based on the above information
Overage cost = (Co) is
= CP - V
= $3.00 - $1.50
= $1.50
Now
Underage cost= (Cu)
= SP - CP
= $4.50 - $3.00
= $1.50
So,
Service level is
= Cu ÷ (Co + Cu)
= 1.50 ÷ (1.50 + 1.50)
= 1.50 ÷ 3.00
= 0.50
= 50%
Now
At 50 % service level, the value of Z is 0
So,
Optimal stocking level is
= d + Z × standard deviation
= 35 + (0 × 4)
= 35 + 0
= 35 quarts
__________ refers to difficulties in the communication process
that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.
a.
Feedback
b.
Decoding
c.
Noise
d.
Encoding
e.
Channel
Answer:
c. Noise
Explanation:
-Feedback is the answer given by the receiver.
-Decoding is the process in which the receiver interprets the message.
-Noise is any interference that affects the communication process.
-Encoding is when the sender translates his/her thoughts into a message.
-Channel is the method used to send the message.
According to these definitions, the answer is that noise refers to difficulties in the communication process that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.
Noise refers to difficulties in the communication process that might arise due to some type of interference or distortion that occurs during transmission of a message, resulting in disruption of the communication process.
Communication noise are simply those things that influences effective communication and that affects the interpretation of conversations.There are different types of noise. They include physical, semantic, psychological, and physiological.
Each of the above types interferes with the process of communication in different ways.
Noise is also regarded as obstruction to the process of coding and decoding information.
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On May 1, 2010, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Ziek had 100,000 shares of $1 par value common stock issued and outstanding. The fair value of Ziek 's common stock was $20 per share on May 1, 2010. As a result of this stock dividend, Ziek's total stockholders' equity:_________
Answer: did not change
Explanation:
From the question, we are informed that On May 1, 2010, Ziek Corp. declared and issued a 10% common stock dividend and that prior to this dividend, Ziek had 100,000 shares of $1 par value common stock issued and outstanding. We are further informed that the fair value of Ziek 's common stock was $20 per share on May 1, 2010.
As a result of this stock dividend, Ziek's total stockholders' equity did not change. The accounts involved belong to the stockholders' equity, therefore, there will be no change on the total stockholders equity.
Identify whether each example in the following table belongs in M1, M2, or both.
Example M1 M2
Juanita has $8,000 in a six-month certificate of deposit (CD).
Charles has a $10 bill in his wallet.
Gilberto has $3,000 in a savings account.
Answer:
Juanita has $8,000 in a six-month certificate of deposit (CD)
Conclusion: M2
Charles has a $10 bill in his wallet.
Conclusion: M1
Gilberto has $3,000 in a savings
Conclusion: M2
Definition of Terms
M1 money supply are those monies that are liquid such as cash and demand deposits.
M2 money supply are less liquid in nature and includes M1 + savings and time deposits, certificates of deposits, and money market funds.
A bond with a par value of $1,000 and an annual coupon has a yield to maturity of 5.60% and a current price of $975. If the bond has 18 years to maturity, what is its current yield?
Answer:
Current Yield is 5.74%
Explanation:
Current yield is the ratio of coupon payment of a bond to its current market price. It is calculated by using coupon payment and the current market value of the bond.
Coupon Payment = $1,000 x 5.6% = $56
Current market price = $975
Formula for Current yield is as follow
Current Yield = Annual Coupon Payment / Current Market Price
Current Yield = $56 / $975
Current Yield = 0.0574% = 5.74%
"The technique which identifies the time period required to recover the cost of the investment is called the" ________________ method.
Answer:
Cash payback method
Explanation:
Cash payback technique is a method used by financial experts to analyse capital projects to see which ones they can invest in and which one to avoid.
This method is used to estimate the time it will take for a project to recoup the original cost of investment. It estimated when a business will payoff initial cost and start giving the investor profit.
Cash payback is easy to calculate
Cash payback = (Initial investment) ÷ (Estimated cash inflows each year)
Shorter cash payback is favourable as the investor gets back initial cost in a shorter period.
At the beginning of the current year, both Doug and Amelia each own 50% of Amaryllis Corporation (a calendar year taxpayer). In July, Doug sold his stock to Kevin for $140,000. At the beginning of the year, Amaryllis Corporation had accumulated E& P of $240,000 and its current E & P is $280,000 (prior to any distributions). Amaryllis distributed $300,000 on February 15 ($150,000 to Doug and $150,000 to Alfred) and distributed another $300,000 on November 1 ($150,000 to Kevin and $150,000 to Alfred). Kevin has dividend income of:_______
a. $150,000.b. $140,000.c. $110,000.d. $70,000.e. None of the above.
Answer:
Kevin has dividend income of:_______
a. $150,000.
Explanation:
Kevin became a 50% shareholder of Amaryllis in July. So, Kevin is entitled to receive 50% of any distributions made by Amaryllis from the July date. Since Amaryllis distributed $300,000 on November 1, Kevin will receive a dividend income equivalent to $150,000 from Amaryllis. The remaining 50% goes to his partner in business. Kevin could not be entitled to the distribution made on February 15, by which date he was not yet a shareholder of Amaryllis.
The_________for a soft drink manufacturer would include other manufacturers of soft drinks, fruit juices, bottled water, sports drinks, caffeine-free colas, and dairy beverages.
a. competitive environment
b. technological environment
c. cooperative environment
d. economic environment
Answer:
The answer is A
Explanation:
Competitive environment is an environment where competitors compete with one another for customers.
For example, Westpac, NAB, Commonwealth Bank and ANZ are in the same competitive environment. These are banks in Australia.
Types of competition are perfect competition, monopoly, monopolistic competition, oligopoly etc.
