Answer: I and II
I. American Opportunity Tax Credit
II. Lifetime Learning Credit
Explanation:
From the question, we are informed that Michael and Kathy have one dependent, Dustin, who is in his third year of college and that Michael is taking classes in the evening toward an MBA.
The credits that Michael and Kathy can claim related to tuition they pay for these programs are American Opportunity Tax Credit and the Lifetime Learning Credit.
Calculate the monthly implicit costs for a business owner who devotes 200 hours per month to his business that could be spent working at $50/hour for someone else.
Answer:
Implicit cost = $10,000
Explanation:
Implicit cost is the opportunity cost of using resources a business already owns.
This business owner passes this income by being in a business for himself
200 hours per month multiplied by $50/hour
200 x 50
= 10000
Implicit cost = $10,000
1. Chang Industries has 1,900 defective units of product that have already cost $13.90 each to produce. A salvage company will purchase the defective units as they are for $4.90 each. Chang's production manager reports that the defects can be corrected for $6.10 per unit, enabling them to be sold at their regular market price of $20.80. The incremental income or loss on reworking the units is:_______.
a. $18,620 income.
b. $30,210 income.
c. $27,930 income.
2. Poe Company is considering the purchase of new equipment costing $85,500. The projected net cash flows are $40,500 for the first two years and $35,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.
Periods Present Value of 1 at 10% Present Value of anAnnuity of 1 at 10%
1 0.9091 0.9091
2 0.8264 1.7355
3 0.7513 2.4869
4 0.6830 3.1699
a. $(27,665).
b. $(14,857).
c. $27,665.
d. $35,709.
Answer:
1. $18620
2. $35709
Explanation:
1.we are required to find incremental loss.
= Defect(market price - price per unit - correction per unit)
Defect product = 900
Market price = 20.8
Price for each defect unit = 4.9
Price for defect correction = 6.1
1900(20.8-4.9-6.1)
= $18600
2. Present value of cash flow =
40500*0.9091 = 36818.55
40500*0.8264 = 33469.2
35500*0.7513 = 26671.15
35500*0.683 = 24246.5
Total = 121209
We subtract cost of new equipment from this value
121209-85500
= $35709
Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:
Year Plant Expansion Retail Store Expansion
1 $ 450,000 $ 500,000
2 450,000 400,000
3 340,000 350,000
4 280,000 250,000
5 180,000 200,000
Total $1,700,000 $1,700,000
Each project requires an investment of $900,000. A rate of 15% has been selected for the net present value analysis.
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
Required:
1a. Compute the cash payback period for each project.
Cash Payback Period
Plant Expansion < >1 year2 years3 years4 years5 years
Retail Store Expansion < >1 year2 years3 years4 years5 years
1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.
Plant Expansion Retail Store Expansion
Present value of net cash flow total $ $
Less amount to be invested $ $
Net present value $ $
2. Because of the timing of the receipt of the net cash flows, the
plant expansion
retail store expansion
Answer:
the cash payback period for both projects is 2 years
NPV for plant expansion = $304,707.24
NPV for Retail Store Expansion = $309,744.41
retail store expansion has the greater NPV
Explanation:
Here is the full question for question 2
. Because of the timing of the receipt of the net cash flows, the
plant expansion
retail store expansion
has the higher net present value
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Please check the attached image for a calculation of how the payback period was calculated.
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
for Plant Expansion
Cash flow in year 0 = -900,000
Cash flow in year 1 = 450,000
Cash flow in year 2 = 450,000
Cash flow in year 3 = 340,000
Cash flow in year 4 = 280,000
Cash flow in year 5 = 180,000
I = 15%
NPV = $304,707.24
For retail store expansion
Cash flow in year 0 = -900,000
Cash flow in year 1 = 500,000
Cash flow in year 2 = 400,000
Cash flow in year 3 = 350,000
Cash flow in year 4 = 250,000
Cash flow in year 5 = 200,000
I = 15%
NPV = $309,744.41
retail store expansion has the greater NPV
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.
Answer:
None of the options are correct.
Explanation:
We start by calculating the net change of the treasury bond position.
= $95,125 - $95,000
= $125
The long treasury bond position gains $125 after a month.
We will also calculate the net change of the treasury bond futures contract.
= $94,125 - $95,187.50
= -$1,062.50
Therefore, Net profits is;
= $125 - $1,062.50
= -$937.50
Which of the following items would be a way to manipulate the cash flow from operating activities amount on the statement of cash flows?
a.
Adding depreciation back to net income to determine cash flow from operating activities.
b.
Including interest expense and tax expense in the calculation of cash flow from operating activities.
c.
Recording an item that should be recorded as an operating activity as an investing activity.
d.
The cash flow statement cannot be manipulated.
Answer:
C. Recording an item that should be recorded as an operating activity as an investing activity.
Explanation:
Hope it helped
ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 ABC buys back the bonds for $196,000 immediately after the interest payment on 12/31/2018 and retires them. What gain or loss, if any, would ABC record on this date (use a minus sign in front of the number if it is a loss)?
Answer:
Gain $370
Explanation:
Calculation for the gain or loss, if ABC record on this date 12/31/2018
Based on the information given on the amortization schedule, on this date 12/31/2018 the Carrying value was $196,370 while we were still told that ABC buys back the bonds for $196,000 on 12/31/2018
Now let calculate for the gain or loss using this formula
Gain/Loss = Carrying value- Stock bond
Let plug in the formula
Gain/Loss =$196,370-$196,000
Gain/Loss=$370
Therefore if ABC record on this date 12/31/2018, ABC will have a gain of $370
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a % weight in equity, % in preferred stock, and % in debt. The cost of equity capital is %, the cost of preferred stock is %, and the pretax cost of debt is %. What is the weighted average cost of capital for Ford if its marginal tax rate is %?
Complete Question:
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 25% in preferred stock, and 65% in debt. The cost of equity capital is 17%, the cost of preferred stock is 11%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?
Answer:
7.96%
Explanation:
We can calculate WACC using the formula:
WACC = Cost of equity * Equity %age / 100% +
After Tax Cost of Debt * Debt %age / 100% +
Cost of Preferred Stock * Preferred Stock %age / 100%
Here,
Cost of equity is 17%
Cost of preferred stock is 11%
Post tax cost of debt = Pre-Tax cost * (1 - Tax rate)
This implies,
Post tax cost of debt = 9% * (1 - 40%) = 5.4%
Equity weight is 10% weight in equity
Preferred stock weight is 25%
Debt Weight is 65%
By putting value in the formula given in the attachment, we have:
WACC = 17% * (10% / 100%) + 11% * (25% / 100%) + 5.4% * (65% / 100%)
WACC = 1.7% + 2.75% + 3.51%
WACC = 7.96%
balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe’s assets’ book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?
Answer: $2,420,000
Explanation:
Goodwill is the amount over the fair value of a company that it is purchased for.
Goodwill = Acquisition price - Net Assets
Net Assets = Assets - Liabilities
= (6,900,000 + 410,000) - 2,700,000
= $4,610,000
Goodwill = 7,030,000 - 4,610,000
= $2,420,000
A company has a net cash inflow from operating activities of $793,000, a net cash outflow of $58,000 from investing activities and a net cash inflow of $100,800 from financing activities. The company paid $128,000 in interest, $188,500 in income taxes, and $204,000 in cash dividends. Which of the following statements about the statement of cash flows is not correct?a. The statement of cash flows will show a net increase in cash and cash equivalents of $838, 500. b. If the direct method is used, the $125,000 of interest paid and the $187,000 of income taxes paid will be reported in the cash flows from operating activities. c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section. d. Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.
Answer:
Incorrect Statement about the Statement of Cash Flows:
c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section.
Explanation:
Cash dividends of $201,000 will be reported as a cash outflow in the financing activities section and not the investing activities section.
Statement of Cash Flows is broadly divided into three, the operating, investing, and financing activities sections. The operating activities section show the cash flows from the normal business of the enterprise. The investing activities section shows the acquisition and disposal of investments made by the company in cash. While, the financing section shows the inflow and outflow of cash resulting from the funding of the business by stockholders and noncurrent creditors.
The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with a. 9 units of output. b. 15 units of output. c. 21 units of output. d. 30 units of output.
Answer:
b. 15 units of output.
Explanation:
information regarding sales price and quantity demanded is missing, so I looked it up (see attached file):
units sales revenue total costs profits
9 $216 $36 $180
15 $270 $54 $216
21 $252 $72 $180
30 $90 $99 ($9)
A company issues 9% bonds with a par value of $110,000 at par on January 1. The market rate on the date of issuance was 8%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:
Answer: $4950
Explanation:
From the question, we are informed that a company issues 9% bonds with a par value of $110,000 at par on January 1 and that the market rate on the date of issuance was 8% and also that the bonds pay interest semiannually on January 1 and July 1.
There is no discount on the bonds payable because they are issues at par. Therefore, the cash paid on July 1 to the bond holders will be:
= $110,000 x 9% x 6/12
= $110,000 x 9/100 x 6/12
= $110,000 x 0.09 x 0.5
= $4,950
During the current year, Chudrick Corporation expects to produce 10,000 units and has budgeted the following: net income $300,000, variable costs $1,100,000, and fixed costs $100,000. It has invested assets of $1,500,000. The company’s budgeted ROI was 20%. What was its budgeted markup percentage using a full-cost approach?
Answer:
25%
Explanation:
For the computation of budgeted markup percentage using a full-cost approach first we need to find out the profit expected and total cost which is shown below:-
Profit Expected = $1,500,000 × 20%
= $300,000
Total cost = Variable cost + Fixed cost
= $1,100,000 + $100,000
= $12,00,000
Budgeted Markup Percentage = Profit ÷ Total Cost
= $300,000 ÷ $12,00,000
= 25%
To be responsible in financial planning you must set goals. To reach these goals you must create a plan. What is a specific financial goal that you have
Answer and Explanation:
As we know that planning is the most important part of everyone life. Without planning, no one could able to accomplish its goals and objectives.
There are various steps to study about yourself and based on this you can do the planning and reach your goals which are shown below:
1. The most important part of your life find that and always do practical thinking
2. How much time it takes to reach your goals
3. Now use the SMART strategy which gives you the way to accomplish it
4. Make a roadmap so that you get to know how the things could be happen
5. How much money is required to execute it
6. And at last check your progress
These above steps helps you to develop a financial plan
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.a. True
b. False
Answer:
a. True.
Explanation:
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
In Financial accounting, Horizontal analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
How can you assist the ProServices team in serving Pro customers in your
department? Select all that apply.
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team
Answer:
ProServices Team and Pro CustomersAssisting the ProServices Team in serving Pro customers in my department. Here I have assumed that my department manages and coordinates the relationship with Pro customers:
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team.
Explanation:
“Pro” customers are a group of independent contractors, repair remodelers, specialty tradesmen, property management, and facility maintenance professionals who are afflicted to an organization offering ProServices. They are not the end customers. Between my organization and the customers, they are middlemen and women who are organized by my ProServices organization to offer specialty services to the general public in a professional manner that guarantees customer satisfaction and payment to the professionals for services rendered. In doing this, the ProService organization charges the Pro customers a fixed fee, which is deducted from the payments made by the end-customers.
The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%, is closest to:
Answer:
PV= $5,189.21
Explanation:
Giving the following information:
The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%.
To calculate the present value, we need to use the following formula:
PV= FV/(1+i)^n
PV= 10,000/(1.0678^10)
PV= $5,189.21
Conversion costs are:_______.
A. The direct labor costs associated with processing a product.
B. The combined costs of converting raw materials to finished goods.
C. The overhead costs associated with processing a product.
D. All the costs that go into the manufacturing of a product (DM, DL and OH).
Answer:
B. The combined costs of converting raw materials to finished goods.
Explanation:
Conversion Costs are the combined costs of converting raw materials to finished goods.
These include the costs of direct labor and manufacturing overheads such as water and electricity.
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows:
Sales $188,000,000
Cost of goods sold (100,000,000)
Gross profit $88,000,000
Expenses:
Selling expenses $16,000,000
Administrative expenses 12,000,000
Total expenses (28,000,000)
Operating income $60,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,000,000 of operating income that was earned in the current year.
6. Determine the maximum operating income possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
A. In favor of the proposal because of the reduction in break-even point.
B. In favor of the proposal because of the possibility of increasing income from operations.
C. In favor of the proposal because of the increase in break-even point.
D. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
E. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.
Answer:
1. Variable Fixed
Cost of goods sold 70,000,000 30,000,000
Selling Expenses 12,000,000 4,000,000
Administrative Exp. 6,000,000 6,000,000
Total 88,000,000 40,000,000
Note:
Cost of goods sold 70% 30% on 10,000,000 for variable and Fixed respectively
Selling expenses 75% 25% on $16,000,000 for variable and Fixed respectively
Administrative expenses 50% 50% on $12,000,000 for variable and Fixed respectively
2. Unit Variable cost = Total variable cost / Units produced
Total Variable cost 88,000,000
Unit produced 1,000,000
Unit variable cost 88
Unit Contribution margin = Selling Price - Variable cost per unit
Selling Price $188
- Variable cost per unit $88
Unit Contribution margin $100
3. Break even Point (Units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Contribution margin per Unit 100
Break even Point (Units) 400,000
4. Break even point (units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Increased Fixed cost 5,000,000
Total New fixed cost 45,000,000
Contribution margin per unit 100
Break even point (units) 450,000
5. Determined sales units = (New fixed cost + Desired Income) / Contribution margin
New Fixed Cost 45,000,000
Desired Income 60,000,000
105,000,000
Contribution margin 100
per unit
Determined sales units 1,050,000
6. Maximum Income from operation = Total New sales - Total New variable cost - Total Fixed cost
Sales 188,000,000
Increased sales 11,280,000
Total New sales 199,289,000
Variable cost 88,000,000
New Variable cost 5,280,000
Total New Variable cost 93,280,000
Total New Fixed cost 45,000,000
Maximum Income from 61,000,000
operation
Number of units = Increase in sales / Price per unit
New variable cost = Number of units * Unit variable cost
Increased sales 11,280,000
Price per unit 188
Number of units 60,000
Unit variable cost x 88.00
New Variable cost 5,280,000
7. Net income = Sales - Variable cost - New fixed cost
Sales 188,000,000
Less: Variable cost 88,000,000
Less: New fixed cost 45,000,000
Net Income 55,000,000
8. Option b. In favour of the proposal because of the possibility of increasing income from operation.
1. The total variable costs are $88,000,000.
Total fixed costs for the current year are $40,000,000.
2.a. The unit variable cost is $88 ($88,000,000/1,000,000)
b. The unit contribution margin is $100 ($188 - $88).
3. The break-even sales (units) for the current year = 400,000 units ($40,000,000/$100).
4. The break-even sales (units) for the proposed program = 450,000 units ($45,000,000/$100).
5. Sales units to realize $60,000,000 of operating income = 1,050,000 units ($45,000,000 + $60,000,000)/$100
6. The maximum operating income with the expanded plant is $61,000,000 ($199,280,000 - $93,280,000 - $45,000,000).
7. Operating income at current sales level = $49,720,000 (188,000,000 - $93,280,000 - $45,000,000).
8. I would recommend the acceptance of the proposal, B. In favor of the proposal because of the possibility of increasing income from operations.
Data and Calculations:
Sales unit at full capacity = 1,000,000 units
Selling price per unit= $188
Sales = $188,000,000
Cost of goods sold = $100,000,000
Variable cost of goods sold = $70,000,000 ($100,000,000 x 70%)
Fixed cost of goods sold = $30,000,000 ($100,000,000 x 30%)
Gross profit = $88,000,000
Expenses:
Selling expenses = $16,000,000
Variable cost of goods sold = $12,000,000 ($16,000,000 x 75%)
Fixed cost of goods sold = $4,000,000 ($16,000,000 x 25%)
Administrative expenses = 12,000,000
Variable cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Fixed cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Cost of goods sold $70,000,000 $30,000,000
Selling expenses 12,000,000 4,000,000
Administrative expenses 6,000,000 6,000,000
Total costs $88,000,000 $40,000,000
Selling price per unit = $188
Variable cost per unit 88
Contribution margin $100
Contribution ratio = 53.2% ($100/$188 x 100)
Fixed costs = $45,000,000 ($40,000,000 + $5,000,000)
Sales Revenue = $199,280,000 ($188,000,000 + $11,280,000)
Additional sales units = 60,000 ($11,280,000/$188)
Total sales units = 1,060,000 (1,000,000 + 60,000)
Learn more: https://brainly.com/question/18155783
On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the issuance of the bond is: Multiple Choice Debit Bonds Payable $390,000; debit Bond Interest Expense $15,830; credit Cash $405,830. Debit Cash $405,830; credit Bonds Payable $405,830. Debit Cash $405,830; credit Premium on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $405,830; credit Discount on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $390,000; debit Premium on Bonds Payable $15,830; credit Bonds Payable $405,830.
Answer:
The journal entry to record issuance is:
January 1, 202x, bonds are issued at a premium
Dr Cash 405,830
Cr Bonds payable 390,000
Cr Premium on bonds payable 15,830
Explanation:
When a bond's coupon rate is higher than the market rate, the bonds will sell at a premium or a value higher than the bond's face value. On the other hand, if the bond's coupon rate is lower than the market rate, the bonds will sell at a discount or a value lower than the bond's face value.
Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?
Answer and Explanation:
1. At 0fficial exchange rate:
100 * 0.5 = $50
what I want to buy would be purchased at $50
at market exchange rate:
0.25 x 100 = $25
products bought from this place are not a good deal as I am paying more than the market exchange rate.
2. at equilibrium exchange rate:
100 x 0.25% = $25
the price is $25
3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.
4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.
5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.
Recently, the Google team announced its fleet of driverless cars had completed over 1 million miles of "autonomous driving." The Google driverless car is at which stage of the new-product development process?
Answer:
Product Development (stage five)
Explanation:
Sometimes companies make moves towards introducing new products in the market space. To do this there are different stages that must be passed in the new-product development process. The product development stage is the stage where a prototype version of the product is produced. This version of the product would have the required features of the end product and the effect the product is expected to produce. After this stage, the product undergoes market testing. For products that took in a lot of investment, more intense test marketing should be done in order to ascertain what would really translate to higher sales for the product.
When the Google team announced that its fleet of driverless cars had completed over 1 million miles of 'autonomous driving', it means that they had produced the prototype of the product and it has undergone testing. The next stage would entail testing the product in the market and then commercialization.
Cullumber Corporation had 312,000 shares of common stock outstanding on January 1, 2017. On May 1, Cullumber issued 29,700 shares.
(a) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued for cash.
Weighted-average number of shares outstanding $
(b) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend.
Weighted-average number of shares outstanding $
Answer:
a. Issued for Cash = ($312,000 * 12/12) + ($29,700 * 8/12)
= $312,000 + $19,800
= $331,800
b. Issued in a stock dividend: Shares issued in the stock dividend are assumed outstanding from the beginning of the year
= ($312,000 * 12/12) + ($29,700 * 12/12)
= $312,000 + $29,700
= $341,700
Danny owns two companies where he has recently made changes. The margin of safety ratio for Company X is 42% and the margin of safety ratio for Company Y is 25%. What does this imply about the two companies?
Answer: Company X could lose more business before it will begin experiencing financial difficulties when it is being compared to company Y
Explanation:
Margin of safety ratio simply helps to understand the extent to which there'll be drop in sales before a company will begins to make a loss.
Since the margin of safety ratio for Company X is 42% and the margin of safety ratio for Company Y is 25%, it means that Company X could lose more business before it begins experiencing financial difficulties when it is compared to company Y.
Nemesis, Inc., has 215,000 shares of stock outstanding. Each share is worth $81, so the company's market value of equity is $17,415,000. Suppose the firm issues 48,000 new shares at the following prices: $81, $75, and $69. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "O". Round your answers to 2 decimal places, e.g., 32.16.)
Price Ex-Rights Amount $ Effect per share
per share
per share
No change
Price drops by
Price drops by
Answer:
$81, $75, and $69
a. Market value of existing shares = 215000 * $81 = $17415000
Value of New shares issued = 48000 * $81 = $3888000
$21,303,000
Price after issue of new shares = 21,303,000 / (215000 + 48000)
= 21,303,000 / 263,000
= $81
Conclusion: No changes ($0 per share
b. Market value of existing shares = 215000 * $81 = $17415000
Value of New shares issued = 48000 * $75 = $3600000
$21015000
Price after issue of new shares = 21015000 / (215000 + 48000)
= 21,015,000 / 263,000
= $79.90
Conclusion: There is a decrease in amount (81 - 79.90) = $1.10 per share
c. Market value of existing shares = 215000 * $81 = $17415000
Value of New shares issued = 48000 * $69 = $3312000
$20,727,000
Price after issue of new shares = 20,727,000 / (215000 + 48000)
= 20,727,000 / 263,000
= $78.81
Conclusion: There is a decrease in amount (81 - 78.81) = $2.19 Per share
Charger Company's most recent balance sheet reports total assets of $28,413,000, total liabilities of $16,113,000 and total equity of $12,300,000. The debt to equity ratio for the period is (rounded to two decimals):
Answer:
Debt to equity ratio is 1.31
Explanation:
Given the above inflation, the formula for debt to equity ratio is
= Total debt / Total equity
= $16,113,000 / $12,300,000
= 1.31
Therefore, debt to equity ratio is 1.31
RLW-II Enterprises estimated that indirect manufacturing costs for the year would be $60 million and that 12,000 machine hours would be used
Answer: $3,150,000
Explanation:
Total cost of production will be the total sum of the material costs, labor costs and indirect costs.
Indirect Costs
It was estimated that 12,000 machine hours would be used at a cost of $60 million.
Indirect cost per machine hour is;
= 60,000,000/12,000
= $5,000 per hour
With 200 machine hours, indirect cost is;
= 200 * 5,000
= $1,000,000
Total cost of production = 1,250,000 + 900,000 + 1,000,000
= $3,150,000
Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company Heidee has the higher debt ratio. Which of the following statements is CORRECT?a. Company Heidee has a lower operating income (EBIT) than Company LDb. Company Heidee has a lower total assets turnover than Company Leaudy.c. Company Heidee has a lower equity multiplier than Company Leaudy.d. Company Heidee has a higher fixed assets turnover than Company Leaudy.e. Company Heidee has a higher ROE than Company Leaudy.
Answer:
Correct Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on Equity, (ROE) is a ratio that provides investors with insight into how efficiently a company and more specifically, its management team is handling the money that shareholders have contributed to it. That is, it measures the profitability of a corporation in relation to stockholders' equity.
Company Heidee has the higher debt ratio shows that the ROE is very high. This shows that the investors money in Company Heidee is well managed in the business.
Rogers, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars):
Sales Operating Income Total Assets
Residential $850,000 $68,000 $200,000
Professional $1,095,000 $153,300 $365,000
Assume that management has a 25% target rate of return for each division.
Requirements
a. Calculate each division’s ROI.
b. Calculate each division’s sales margin. Interpret your results.
c. Calculate each division’s capital turnover. Interpret your results.
d. Use the expanded ROI formula to confirm your results from Requirement a. What can you conclude?
e. Calculate each division’s residual income (RI). Interpret your results.
Answer:
A.Residential 34%
Professional 42%
B.Residential 8%
Professional 14%
C.Residential 4.25%
Professional 3%
D.Residential 34%
Professional 42%
E.Residential $18,000.00
Professional $62,050.00
Explanation:
A.Calculation for each division’s ROI
Using this formula
Return on Investment
=Net Income / Average Invested Assets
Let plug in the formula
Residential $68,000.00/$200,000.00 = 34.00%
Professional $153,300.00/$365,000.00 = 42.00%
B.Calculation for each division’s sales margin. Interpret your results
Using this formula
Sales Margin= Operating income/Sales
Let plug in the formula
Residential $68,000.00/$850,000.00 = 8.00%
Professional $153,300.00/$1,095,000.00 = 14.00%
C.Calculation for each division’s capital turnover
Using this formula
Capital Turnover=Sales/Average operating assets
Let plug in the formula
Residential $850,000.00 /$200,000.00 = 4.25
Professional $1,095,000.00/$365,000.00 = 3.00
D.Using the expanded ROI formula to confirm the results from Requirement a.
Using this formula
Return on Investment=Profit Margin * Investment Turnover
Let plug in the formula
Residential 8.00% * 4.25% 34.0%
Professional 14.00% * 3.00% 42.0%
E.Calculation for each division’s residual income (RI)
Residential Professional
Average investment
$200,000.00 $365,000.00
×Target return 25% 25%
=Target income
$50,000.00 $91,250.00
Hence,
Operating income $68,000.00 $153,300.00
Less:Target income$50,000.00 $91,250.00
Residual income $18,000.00 $62,050.00
A divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income. She collects another $2,500 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE
Answer: No contribution can be made
Explanation:
The options to the question are:
a. No contribution can be made
b. A contribution can be made based only on the income received from the trust fund.
c. A contribution can be made based only on the alimony payments received
d. A contribution can be made based on both the income received from the trust fund and the alimony payments received
From the question, we are informed that a divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income and that she collects another $2,500 per year in alimony payments.
Based on the above analysis, the woman cannot make a contribution to an Individual Retirement Account this year.
You buy a stock for $55 today, and sell the stock one year later for $54, during which time a $2 dividend is paid. What is your return on this stock
Answer:
1.82%
Explanation:
Calculation for the return on the stock
Using this formula
Return=(Sales of stock - Stock bought today+Dividend)/Sales of stock
Let plug in the formula
Return = (54 - 55 + 2)/55
Return =1/55
Return = 0.0182×100
Return=1.82%
Therefore the return on the stock will be 1.82%
