Answer:
Free cash flow is $21
Explanation:
Given that:
Net cash provided by operating activities = $110
Capital expenditures = $65
Cash dividends = $24
Then,
Free cash flow = Net cash provided by operating activities - Capital expenditure - Cash dividends
Free cash flow = $110 - $65 - $24
Free cash flow = $21
You are an investment manager and one of your clients is a famous soccer player. She is promised to be paid $5million three years from now. What is the present value of this cash flow today
Answer:
$4,153,268.86
Explanation:
The below is missing from the question:
Your discount rate for real cash flows is 5% APR, compounded monthly and you are expecting inflation of 1.2% per year (APR, annual compounding).
We need to convert the real interest rate to an effective annual rate as shown thus:
EAR=(1+APR/n)^n-1
APR=5%
number of times interest is compounded annually=12
EAR=(1+5%/12)^12-1
EAR=5.12%
Nominal Discount rate = [(1+ Real Discount rate)*(1+Inflation Rate)] - 1
Nominal Discount rate =(1+5.12%)*(1+1.2%)-1
Nominal discount rate=6.38%
Present value=future value/(1+nominal discount rate)^3
future value=$5,000,0000
nominal discount rate=6.38%
n=3 years
PV=$5,000,000/(1+6.38%)^3
PV= $4,153,268.86
Hsu Company reported the following on its income statement: Income before income taxes $420,000 Income tax expense 120,000 Net income $300,000 Interest expense was $80,000. Hsu Company's times interest earned is a.6.25 times b.5 times c.5.25 times d.8 times
Answer:
a. 6.25 times
Explanation:
Times interest earned ratio = Earnings before income taxes / Total interest expense
Earnings before income taxes = Income before taxes + interest expense
Earnings before income taxes = $420,000 + $80,000
= $500,000
Total interest expense = $80,000
Therefore,
Times interest earned ratio = $500,000 / $80,000
= 6.25 times
In general, accelerating cash inflows and decelerating cash outflows would maximize the time value of money.
a. True
b. False
Answer:
a. True
Explanation:
In the case of the accelarating the cash flows, it permits the business to pay off the bills, and the other liabilities on time so that the company is eligible for taking some trade discount when the payment is made within the specified period as mentioned by suppliers
On the other hand, if the cash flows are decelerating that means the payment is not made within time so ultimately it give rise to the time value of money
Therefore the given statement is true
Sunland Company is about to issue $262,700 of 6-year bonds paying an 9% interest rate, with interest payable semiannually. The discount rate for such securities is 8%.
Required:
In this case, how much can Sunland expect to receive from the sale of these bonds?
Answer:
Amount from sale of bonds $275,028
Explanation:
The computation is shown below;
Particulars Amount PV factor Present value of cash flows
Interest $11,821.50 9.38507 $1,10,946
($262,700 × 0.09 × 6 ÷ 12)
Principal $262,700 0.6246 $164,082
Amount from sale of bonds $275,028
Statement Of Owner's Equity Jay Pembroke started a business in April. Prepare a Statement of Owner's Equity using the following balances for April transactions. Cash $12,834 Accounts Receivable 1,809 Office Supplies 4,667 Prepaid Insurance 1,327 Accounts Payable 327 Jay Pembroke, Capital 18,155 Jay Pembroke, Drawing 145 Service Fees 3,113 Rent Expense 813 You will need to calculate the net income for April.
Answer and Explanation:
the computation of the net income for the april month is as follows;
= Service fees - rent expense
= $3,113 - $813
= $2,300
Now the preparation of the owner equity is as follows;
Jay Pembroke, Capital $18,155
Net income $2,300
Less; Jay Pembroke, Drawing $145
Jay Pembroke, Capital ending capital $20,310
We assume that the capital is given for the beginning of the month
An investment earns 35% the first year, earns 40% the second year, and loses 38% the third year. The total compound return over the 3 years was
Answer:
17.18%
Explanation:
compound return = ( 1 + 0.35)x (1 + 0.40) x (1-0.38) - 1
1.35 x 1.40 x 0.62 - 1 = 17.18%
Financial statement data for years ending December 31 for Tango Company follow: 20Y7 20Y6 Cost of goods sold $3,894,185 $4,002,225 Inventories: Beginning of year 795,700 773,800 End of year 861,400 795,700 Required a. Determine the inventory turnover for 20Y7 and 20Y6. Round to one decimal place.
Answer:
A. 20Y7 Inventory Turnover 4.7
20Y6 Inventory Turnover=5.1
B. 20Y7 77.66 days
20Y6 71.57 days
Explanation:
A. Calculation to determine the inventory turnover for 20Y7 and 20Y6
Using this formula
Inventory Turnover = Cost of Goods Sold/Average inventory
Let plug in the formula
20Y7 Inventory Turnover=$3,894,185/[(795,700+861,400)/2]
20Y7 Inventory Turnover=$3,894,185/($1,657,100/2)
20Y7 Inventory Turnover=$3,894,185/828,550
20Y7 Inventory Turnover=4.7
20Y6 Inventory Turnover= $4,002,225/(773,800+795,700)/2]
20Y6 Inventory Turnover=$4,002,225/(1,569,500/2)
20Y6 Inventory Turnover=$4,002,225/784,750
20Y6 Inventory Turnover=5.1
B. Calculation to determine the number of days' sales in inventory for 20Y7 and 20Y6
Days in inventory = 365/Inventory Turnover
20Y7 Days in inventory=365/4.7=77.66 days
20Y6 Days in inventory=365/5.1=71.57 days
Special tools in a 3-year property class have been bought at a cost of $15,000 for the manufacture of some critical parts in a plastic company. It is estimated that the salvage value at the end of a three-year useful life is $1000. (15 points)
a) The second -year MACRS depreciation is equal to:________
b) The second-year SOYD depreciation is equal to:________
Answer:
Special Tools MACRS and SOYD
a) The second -year MACRS depreciation is equal to:________
= $6,668
b) The second-year SOYD depreciation is equal to:________
= $4,667
Explanation:
a) Data and Calculations:
Cost of special tools= $15,000
Estimated salvage value = $1,000
Special tools depreciable amount = $14,000 ($15,000 - $1,000)
Property Class = 3-year
Second-year Modified Accelerated Cost Recovery System (MACRS) for 3-year property class = 44.45%
Depreciation expense for the second year = $6,668 ($15,000 * 44.45%)
Second-year Sum-of-the-years-digit (SOYD) = $4,667 ( 2/6 * $14,000)
The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:
1. Cash balance according to the company’s records at August 31, $24,270.2. Cash balance according to the bank statement at August 31, $32,278.3. Checks outstanding, $14,668.4. Deposit in transit, not recorded by bank, $7,170.5. A check for $58 in payment of an account was erroneously recorded in the check register as $580.6. Bank debit memo for service charges, $12.A. Prepare a bank reconciliation, using the format shown in
B. If the balance sheet were prepared for Creative Design Co. on August 31 what amount should be reported for cash?
C. Must a bank reconciliation always balance (reconcile)
A) NoB) Yes.
Amount DescriptionsAdjusted balanceBank service chargeBank error in charging check as $58 instead of $580Bank error in charging check as $580 instead of $58Deposit in transit, not recorded by bankError in recording check as $58 instead of $580Error in recording check as $580 instead of $58Outstanding checksTotal adjustments
Answer:
Creative Design Co.
A. Bank Reconciliation Statement as of August 31:
Balance as per bank statement $32,278
Deposit in transit, $7,170
Checks outstanding, ($14,668)
Balance as per adjusted cash bal. $24,780
B. The amount that should be reported for cash is $32,278.
C. B) Yes. A bank reconciliation must always balance (reconcile), otherwise, the purpose of the reconciliation is defeated.
Explanation:
a) Data and Calculations:
1. Cash balance according to the company’s records at August 31, $24,270.
2. Cash balance according to the bank statement at August 31, $32,278
3. Checks outstanding, $14,668
4. Deposit in transit, not recorded by bank, $7,170
5. A check for $58 in payment of an account was erroneously recorded in the check register as $580.
6. Bank debit memo for service charges, $12
Cash Book Adjustment:
August 31 balance $24,270
add overstatement of check 522
less bank charges 12
Adjusted balance $24,780
Your firm has net income of $259 on total sales of $1,100. Costs are $620 and depreciation is $110. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow
Answer:
The correct approach is "369".
Explanation:
The given values are:
Net income (NI),
= $259
Total sales,
= $1,100
Depreciation (Dep),
= $110
Tax rate,
= 30%
Now,
The operation cash flow will be:
= [tex]Net \ income +Depreciation[/tex]
By putting the values, we get
= [tex]259+110[/tex]
= [tex]369[/tex]
Cox Footwear pays a constant annual dividend. Last year, the dividend yield was 3.2 percent when the stock was selling for $35 a share. What is the current price of the stock if the current dividend yield is 2.9 percent
Answer:
$38.62
Explanation:
Dividend yield = dividend / price
3.2% = dividend / $35
0.032 x 35 = dividend
dividend = $1.12
current price of the stock
2.9% = $1.12 / price
price = $1.12 / 0.029
= $38.62
Quickbrush Paint Company is developing a linear program to determine the optimal quantities of ingredient A and ingredient B to blend together to make oil-base and water-base paint. The oil-base paint contains 90 percent A and 10 percent B, whereas the water-base paint contains 30 percent A and 70 percent B. Quickbrush currently has 10,000 gallons of ingredient A and 5,000 gallons of ingredient B in inventory and cannot obtain more at this time. Assuming that x represents the number of gallons of oil-base paint, and y represents the gallons of water-base paint, which constraint is correctly represents the constraint on ingredient A?
A. .9x + .3y ≤ 10,000
B. .9A + .1B ≤ 10,000
C. .9x + .1y ≤ 10,000
D. .3x + .7y ≤ 10,000
Answer:
A. 0.9x + 0.3y ≤ 10,000
Explanation:
Given
[tex]x \to[/tex] oil based plant
[tex]y \to[/tex] water based plant
The data can be represented in tabular form as:
[tex]\begin{array}{ccc}{} & {A} & {B} & {x} & {90\%} & {10\%} & {y} & {30\%} & {70\%} & {} & {10000} & {5000}\ \end{array}[/tex]
Considering only A, we have the following constraints:
[tex]A \to 90\% * x + 30\% * y[/tex]
[tex]A \to 0.9x + 0.3y[/tex]
Since the company currently has 10000 of A.
The above constraint implies that, the mixture cannot exceed 10000.
So, we have:
[tex]A \to 0.9x + 0.3y \le 10000[/tex]
Hence, (A) is correct
Moral hazard is a situation when a. contract terms attract parties that have a higher preference for risk b. contract terms incentivize applications of worse customers and repels better ones because of generous variable benefits, but high fixed-costs c. contract terms incentivize one party to take on more risk because they don't carry the full cost of the risk d. contract terms repel parties that have a lower preference for risk
Answer:
contract terms incentivize one party to take on more risk because they don't carry the full cost of the risk
Explanation:
A moral hazard can be understood as the concept that a participant that is sheltered from danger in some manner will behave significantly than if they were not.
Every day, we see moral hazard in the form of established academics who remain apathetic presenters, individuals who have burglary insurance who are less attentive about where they parked, compensated workers who take long vacations, and etc.
Thus, from the above we can conclude that the correct option is C.
gThe following data are available for Martin Solutions, Inc. Year 2 Year 1 Sales $1,139,600 $1,192,320 Beginning inventory 80,000 64,000 Cost of goods sold 500,800 606,000 Ending inventory 72,000 80,000 Required: Assume a 365-day year. Determine for each year:
Answer and Explanation:
The computation is shown below;
For Year 1
Average inventory = (Beginning inventory + Ending inventory)÷ 2
= ($64,000 + $80,000) ÷ 2
= $72,000
Inventory turnover = Cost of goods sold ÷ Average inventory
= $606,000 ÷ 72,000
= 8.4 times
Days in inventory = 365 ÷ Inventory turnover ratio
= 365 ÷ 8.4
= 43.5 days
For Year 2
Average inventory = (Beginning inventory + Ending inventory) ÷ 2
= ($80,000 + $72,000) ÷ 2
= $76,000
Inventory turnover = Cost of goods sold ÷ Average inventory
= $500,800 ÷ 76,000
= 6.6 times
Days in inventory = 365 ÷ Inventory turnover ratio
= 365 ÷ 6.6
= 55.3 days
An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.
Answer:
increase; decrease; decrease; decrease.
Explanation:
Trade can be defined as a process which typically involves the buying and selling of goods and services between a producer and the customers (consumers) at a specific period of time.
Basically, trade can be categorized into two (2) main groups and these are;
I. Import: this involves bringing in goods from a foreign country to sell in a different (domestic) country.
II. Export: it involves the sales of goods produced in a domestic country to a foreign country.
An export subsidy can be defined as any government policy that encourages the export of goods to other countries while discouraging the sales of goods in the domestic market through the use of tax reliefs, low cost loans, government foreign adverts, etc.
A surplus is the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
Producer surplus is the amount a buyer is willing to pay for a good minus the cost of producing the good.
Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
Hence, an export subsidy will increase producer surplus, decrease consumer surplus, decrease government revenue, and decrease overall domestic national welfare.
If a contingent liability is reasonably estimable and it is reasonably possible that the contingency will occur, the contingent liability Group of answer choices should be recorded in the accounts. should be disclosed in the notes accompanying the financial statements. should not be recorded or disclosed in the notes until the contingency actually happens. must be paid for the amount estimated.
Answer:
Should be disclosed in the notes accompanying the financial statements
Explanation:
You have to report contingent liabilities that are reasonably possible to occur, but since they haven’t occurred, you don’t record or pay them until they actually occur. You report them in the notes only.
A cost-cutting project will decrease costs by $66,100 a year. The annual depreciation will be $15,750 and the tax rate is 35 percent. What is the operating cash flow for this project?
Answer:
$48,478
Explanation:
Calculation to determine What is the operating cash flow for this project
Operating cash flow = [$66,100 ×(1 -.35)] + [$15,750 ×.35]
Operating cash flow = [$66,100 ×.65)+5,513.
Operating cash flow = 42,965+5,513
Operating cash flow = $48,478
Therefore the operating cash flow for this project will be $48,478
Suppose that there is no third-party payer in the medical care market in Uganda in 1955. Suppose that in 1960, health insurance companies begin operations in Uganda. All else being equal, what does supply and demand analysis predict will happen in the medical care market in 1960
Answer: b. Total expenditures will increase
Explanation:
Medical insurance reduces the amount that people have to pay to get health related services. Ugandans from the year 1960 can be expected to pay less for medical services as a result.
If people are able to pay less for a good or service, the normal thing that they would do would be to demand more of that good and service because it is more affordable. Total expenditure in the medical field will increase as a result.
During 2020, Lincoln Company hires 22 individuals who are certified to be members of a qualifying targeted group. Each employee works in excess of 600 hours and is paid wages of $13,600 during the year. Determine the amount of Lincoln's work opportunity credit. $fill in the blank 1 .
Answer:
$52,800
Explanation:
The computation of the amount of Lincoln's work opportunity credit is shown below:
Since the employees work in excess of 600 hours so it should be more than 400
So, the work opportunities credit for each would be $6,000 × 40% i.e. $2,400
Now the amount of Lincoln's work opportunity credit is
= $2,400 × 22
= $52,800
The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to a.Paid-In Capital from Preferred Stock for $750,000 b.Preferred Stock for $500,000 and Retained Earnings for $250,000 c.Preferred Stock for $500,000 and Paid-In Capital in Excess of Par—Preferred Stock for $250,000 d.Preferred Stock for $750,000
Answer:
b) Preferred Stock for $500,000.00 and Paid-In Capital in Excess of Par-Preferred Stock for $250,000.00
Explanation:
Based on the information given The Appropriate journal entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to PREFERRED STOCK FOR $500,000.00 and PAID-IN CAPITAL IN EXCESS OF PAR-PREFERRED STOCK FOR $250,000.00
Dr Cash $750,000
(10,000 shares *$75)
Cr Preferred Stock for $500,000.00
(10,000 shares *$50)
Cr Paid-In Capital in Excess of Par-Preferred Stock for $250,000.00
($750,000-$500,000]
Anthony Walker plans to invest $28,400 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 9.8 percent. How much money will Anthony have at the end of seven years
Answer:
267,785.95
Explanation:
28400 X (1.098)^7 = 267,785.95
A simple optimal portfolio problem is the cash matching problem.
Suppose you are given a sequence of future monetary obligations, in dollars, required to be paid at the end of each year over the next 10 years as follows:
YEAR 1 2 3 4 5 6 7 8 9 10
OBLIGATION 100 200 300 400 500 600 700 800 900 1000
We wish to invest now so that these obligations can be met as they occur, accordingly, we must purchase bonds of various maturities and use the associated future cash flows to meet the obligations.
Suppose there are 10 zero coupon bonds available to be purchased, each with a face value of $100. The maturities of the zero coupon bonds span 1 to 10 years, and the price of each zero coupon bond is consistent with a flat term structure: all spot rates are equal to 5% annually. To be clear, we have available a 1-year zero coupon bond with 5% yield, a 2-year zero coupon bond with 5% yield, a 3-year zero coupon bond with a 5% yield, all the way up to a 10-year zero coupon bond with a 5% yield, for a total of 10 zero coupon bonds. The objective function to be minimized is the total cost of the portfolio, which is equal to the sum of the prices of the bonds times the number of units purchased.
How many units of the 5-year zero coupon bond should be purchased in the optimal portfolio? Please round your numerical answer to the nearest integer number of units.
Answer:
The units of the 5-year zero coupon bond that should be purchased in the optimal portfolio is:
= 6 units
Explanation:
a) Data and Calculations:
Spot rates = 5% annually
Yield of a 1-year zero coupon bond = 5%
Yield of a 2-year zero coupon bond = 5%
Yield of a 3-year zero coupon bond = 5%
Yield of a 4-year zero coupon bond = 5%
Yield of a 5-year zero coupon bond = 5%
Yield of a 6-year up to a 10-year zero coupon bond = 5%
Future Monetary Obligations:
YEAR 1 2 3 4 5 6 7 8 9 10
OBLIGATION 100 200 300 400 500 600 700 800 900 1000
PV factor 1.05 1.1025 1.1576 1.2155 1.2763 etc.
Present value of a 5-year zero coupon bond = $78.35 ($100/1.2763)
Number of units of the 5-year zero coupon bond that should be purchased in the optimal portfolio = 6.382 ($500/$78.35)
= 6 units
Kumi, your coworker, has been working on his taxes for the last two months. If Kumi gets audited this year, he is likely to believe that it happened because of an
Answer: external cause
Explanation:
Based on the information that's provided in the question, if Kumi gets audited this year, then he is likely to believe that the reason for the audit is due to an external cause, like the tax program that was used in the preparation of his taxes.
In such case, we can infer that the perception of Kumi is being influenced due to self-serving bias.
Which one of the following was not a contributing cause of the decline in investment and thus the recessionary expenditure gap occurring during the US recession of 2001?
A. Pessimism relating to the stock market crash
B. The collapse of numerous Internet-related start-up firms
C. Low-interest rates
D. Overcapacity in major industries
Answer:
Hence the correct option is Option C. Low interest rates.
Explanation:
Low interest rates:-
Because the real GDP is lower than the potential GDP at the full employment level (Overcapacity). Internet based start ups and stock market are collapsing (The dot com bubble).
Wang Systems operates in a state that has a corporate tax rate of 8% and is deductible from the income taxed by the federal government. If the incremental federal tax is 34%, then the combined effective tax rate is 36.9%
a) true
b) false
Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct labor requirement per unit is 0.50 hours. Labor is paid at the rate of $21 per hour. The total cost of direct labor budgeted for the month of August is:
Answer:
See below
Explanation:
The budgeted direct labor cost for August can be computed by multiplying the labor rate per hour by the labor hours worked in August.
Assume one unit consumes 0.50 labor hours, the labor hours worked in August are;
Labor hours - August = 0.50 × 8,100 = 4,050 labor hours
Therefore, the labor cost for August are budgeted to be;
Direct labor cost - August = 4,050 × $21 = $85,050
Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:
Sales revenue $470,000
Cost of goods sold $410,000
Operating expenses $70,000
Long-term capital gains $2,400
§1231 gains $900
Charitable contributions $300
Municipal bond interest $300
Salary paid as a guaranteed payment to Deanne (not included in expenses) $3,000
a. Compute the adjusted basis of each partner’s interest in the partnership immediately after the formation of the partnership.
b. List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership’s first year of operations.
c. (Optional) Using the information generated in answering parts a. and b., prepare Blue Bells’ page 1 and Schedule K to be included with its Form 1065 for its first year of operations along with Schedule K-1 for Deanne.
d. What are the partners’ adjusted bases in their partnership interests at the end of the first year of operations?
Answer:
As attached.
Explanation:
35. The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and ___________________
Answer:
Organizational resources.
Explanation:
A resource-based view can be defined as a managerial framework or model that is typically used by an organization to examine and determine the fundamental resources that it can use or exploit in order to achieve competitive advantage that is sustainable over a period of time.
The three (3) all-encompassing internal resource categories used by many businesses in the resource-based view are physical resources, human resources, and organizational resources.
Competitive advantage can be defined as conditions, factors or circumstances that allow a business firm (organization) to manufacture finished goods or services better and perhaps cheaper than other (rival) firms in the same industry. Thus, it's responsible for putting a business firm in a superior or more favorable position than rival firms.
This ultimately implies that, a competitive advantage has a significant impact on a business because it increases its level of sales, revenue generation and profit margin when compared to rival firms in the same industry.
Steven White is planning to save up for a trip to Europe in three years. He will need $8,100 when he is ready to make the trip. He plans to invest the same amount at the end of each of the next three years in an account paying 5 percent. What is the amount that he will have to save every year to reach his goal of $8,100 in three years
Answer:
Annual deposit= $2,560.39
Explanation:
Giving the following information:
Future value= $8,100
Number of periods= 3 years
Interest rate= 5%
To calculate the annual deposit (annual saving), we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (8,100*0.05) / [(1.05^3) - 1]
A= $2,560.39
Olsen Company uses a standard cost system for its production process. Olsen Company applies overhead based on direct labor hours. The following information is available for July: Standard: Direct labor hours per unit 2.20 Variable overhead per hour $2.50 Fixed overhead per hour (based on 11,990 DLHs) $3.00 Actual: Units produced 4,400 Direct labor hours 8,800 Variable overhead $29,950 Fixed overhead $42,300 Refer to Olsen Company Using the three-variance approach, what is the efficiency variance
Answer:
1800
Explanation:
