Answer: $1,365.91
Explanation:
Shortfall = Expected GDP - Actual GDP
Expected GDP in 2009 is based on the premise that the economy has grown by 3% since 2007.
Expected GDP in 2009 will therefore be;
= 15,762 * ( 1 + 3%)²
= $16,721.91
Shortfall = 16,721.91 - 15,356
= $1,365.91
A local distributor for a national tire company expects to sell approximately 10,160 tires of a certain size and tread design next year. Annual carrying cost is $14 per tire and ordering cost is $76. The distributor operates 287 days a year.
a. What is the EOQ
b. How many times per year does the store reorder?
c. What is the length of an order cycle?
d. What is the total annual cost if the EOQ quantity is ordered?
Answer:
Following are the solution to the given points:
Explanation:
Given:
[tex](D) = 10,160\ tires / year\\\\(H) = \$14 / tire\\\\(S) = \$76\\\\work\ days\ number = 287 \ \frac{days}{year}[/tex]
For point a:
[tex]EOQ = \sqrt{(\frac{2DS}{H})}[/tex]
[tex]=\sqrt{(\frac{2\times 10,160\times 14 }{14})}\\\\=\sqrt{({2\times 10,160})}\\\\=\sqrt{20320}\\\\=142.548[/tex]
For point b:
Calculating the order of number of per year [tex]= \frac{D}{EOQ}[/tex]
[tex]=\frac{10,160}{142.548}\\\\=71.27\approx 71[/tex]
therefore, the reorded store 71 times per year
For point c:
Calculating the order cycle length [tex]= (\frac{EOQ}{D}) \times \text{work days number in a year}[/tex]
[tex]= (\frac{142.548}{10,160}) \times287\\\\= 0.0140\times287\\\\=4.018[/tex]
For point d:
[tex]\text{Total annual cost = carrying cost + ordering cost}[/tex]
Carrying cost:
[tex]= (\frac{EOQ}{2}) \times H \\\\= (\frac{142.548}{2}) \times 14 \\\\= 71.274 \times 14 \\\\= \$997.836 \approx 998\\\\\[/tex]
Ordering cost:
[tex]= (\frac{D}{EOQ}) \times S \\\\ = (\frac{10160}{142.548}) \times 76 \\\\ = 71.274\times 76\\\\ = \$5416.824\\\\[/tex]
[tex]\therefore\\\\\text{Total annual cost = Carrying cost + Holding cost}[/tex]
[tex]=998+5416.824\\\\=6414.824[/tex]
For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (1), government purchases (G), exports (X), or imports (M). Transaction
i. Andrew's employer upgrades all of its computer systems using U.S.-made parts.
ii. Beth gets a new refrigerator made in the United States Andrewbuys a bottle of Italian wine.
iii. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.
iv. Beth's father in Sweden orders a bottle of Vermont maple syrup from the producer's website,
Answer and Explanation:
The classification is as follows:
i. It is an investment as the employer of andrew spent money for upgrading the system so that the productivity could be increased due to this it will give benefits till the long term
ii. It is a consumption as the product is made in US and the same should be consumed in US only
It is a consumption and imports as the andrews purchased the bottle
iii. It is a government spending as the government used the money for creating the infrastructure that should beneficial for the general public
iv. It is an export as father lived in sweden and the maple syrup should be delivered to the foreign party
You buy a lottery ticket to a lottery that costs $10 per ticket. There are only 100 tickets available to be sold in this lottery. In this lottery there are one $455 prize, two $75 prizes, and four $20 prizes. Find your expected gain or loss. (Round your answer to two decimal places.)
Answer: Expected loss of $2.45
Explanation:
The expected gain is a weighted probability of the expected outcomes and their individual probabilities.
There is one $455 prize out of 100 tickets so the probability is: 1/100 = 0.01
There are two $75 prizes so the probability is: 2/100 = 0.02
There are four $20 prizes so the probability is: 4/100 = 0.04
There is a chance that you will lose the $10 and that probability is the :
= 1 - 0.01 - 0.02 - 0.04
= 0.93
Expected gain (loss) = (0.01 * 455) + (0.02 * 75) + (0.04 * 20) + (0.93 * -10)
= ($2.45)
Suppose we have the following information concerning the printed magazine and digital magazine subscription markets:
Printed Magazine Subscription Price0=$20 Digital Magazine Subscription Quantity0=216 Printed Magazine Subscription
Price1=$13.40 Digital Magazine Subscription Quantity1=208 Question:
What is the cross-price elasticity of demand between printed and digital magazine subscriptions?
Answer:
Cross-price elasticity of demand between printed and digital magazine subscriptions is 8.91.
Explanation:
Percentage change in price of Printed Magazine Subscription = ((Printed Magazine Subscription Price1 - Printed Magazine Subscription Price0) / Printed Magazine Subscription Price0) * 100 = (($13.40 - $20) / $20) * 100 = -33%
Percentage change in quantity of Digital Magazine Subscription Quantity = ((Digital Magazine Subscription Quantity1 - Digital Magazine Subscription Quantity0) / Digital Magazine Subscription Quantity0) * 100 = ((208 - 216) / 216) * 100 = -3.7037037037037%
Cross-price elasticity of demand between printed and digital magazine subscriptions = Percentage change in price of Printed Magazine Subscription / Percentage change in quantity of Digital Magazine Subscription Quantity = -33% / -3.7037037037037% = 8.91
Note: The relationship between printed and digital magazine subscriptions is that they are substitutes because the cross-price elasticity between them is positive. That is, an increase in the price of printed digital magazine makes consumer to switch to and buy more of digital magazine which is a substitute.
MC Qu. 152 Adams Manufacturing allocates... Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $364,800; materials of $418,000 and direct labor of $228,000. During the year Adams incurred $426,000 in materials costs, $415,400 in overhead costs and $232,000 in direct labor costs. Compute the overhead application rate.
Answer:
$1.60 per direct labor hour
Explanation:
Overhead application rate = Budgeted Overheads ÷ Budgeted Activity
hence,
Overhead application rate = $364,800 ÷ $228,000
= $1.60 per direct labor hour
In a Chapter 11 bankruptcy, a class of creditors is considered to have accepted the bankruptcy plan when: Group of answer choices two-thirds of the class in dollar amount agree. at least 51 percent of the class in number agree. at least 90 percent of the members of the class agree. at least 51 percent of the class in dollar amount and two-thirds of the class in number agree. one-half of the class in number and two-thirds of the class in dollar amount agree.
Answer:
In a Chapter 11 bankruptcy, a class of creditors is considered to have accepted the bankruptcy plan when:
one-half of the class in number and two-thirds of the class in dollar amount agree.
Explanation:
In a Chapter 7 bankruptcy, the business assets are liquidated to pay the creditors. In a Chapter 11 bankruptcy, the business assets are not liquidated. Instead, the business is refinanced as the assets and debts are reorganized, making it possible for the continued existence of the business. This is the reason the agreement of the creditors are usually paramount in the decision to undergo a Chapter 11 bankruptcy, unlike a Chapter 7 bankruptcy.
g The fundamental limitation of a matrix structure is that it ________. A. introduces more errors in the decision-making process due to the speed of the process B. institutes a dual hierarchy that violates the unity-of-command principle C. isolates upper management from operational levels D. creates a poor organizational culture
Answer:
The correct answer is the option B: Institutes a dual hierarchy that violates the unity-of-command principle.
Explanation:
To begin with, in the business management field the concept known as "Matrix structure" or matrix management as well is refered to the dynamic way of organizating the company that has the characteristic of having the employees of the business answering directly to two or more superiors of leaders instead of just one. Therefore that in this type of organizational structure sometimes the matters of certain departments tend to interfere or collide with the objectives of others. That is the main reason why it does violates the principle of unity-of-command described in the organizational theory.
The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $570,210 and a credit total of $506,590. This is before the amount for net income or net loss has been included. In preparing the income statement from the end-of-period spreadsheet, what is the amount of net income or net loss?
Answer:
$63,620
Explanation:
Calculation to determine the amount of net income or net loss
Using this formula
Net income = Total debit - Total credit
Let plug in the formula
Net income=$570,210 -$506,590
Net income=$63,620
Therefore the amount of net income is $63,620
Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his a. profit. b. producer surplus. c. cost of building fences.
Answer:
c. Cost of building fences.
Explanation:
The cost of production encompasses the money spend as well as the time to produce a commodity. For example, if a person spends $15 to make a juice cup and invest 1 hour to make so the total cost of production is $15 and the time invested by the producer. Thus, option "c" is correct.
In 2020, Susan retired from her active participation in a 50% owned restaurant business, which she owned for 20 years. Susan is also a material participant in a clothing store which she has a 50% ownership. Susan continues to actively participate in the clothing store in 2020. The restaurant generated an $80,000 loss, and the clothing store produced $150,000 in income in 2020. These amounts are Susan's share of each activity. Susan does not participate nor own any other business.
Question Completion with Options:
a. Susan cannot deduct the $80,000 loss from the restaurant because she is not a material participant.
b. Susan can offset the $80,000 loss against the $150,000 of income from the retail store.
c. Susan will not be able to deduct any losses from the restaurant until she has been retired for at least three years.
d. Assuming Susan continues to hold the interest in the restaurant, she will always treat the losses as active.
Answer:
Susan
b. Susan can offset the $80,000 loss against the $150,000 of income from the retail store.
Explanation:
Susan can offset the $80,000 loss from the restaurant business against the income from the retail store because she has been an active and material participant in both businesses. For the past 20 years, she had participated materially in the restaurant, only just retiring this year. At least, she has passed the material participant test, number 5.
Food manufacturers prefer to use ________ as a sweetener because it is easy to transport, has good shelf-stability, is low cost, and improves food properties .
Food manufacturer prefer to use high Fructose corn syrup as a sweetener because it is easy to transport, has good shelf-stability, is low cost and improves food properties.
What is high fructose corn syrup?Fructose corn syrup is generally made from corn starch .It is used to sweetened processed food.
What is shelf stability?Shelf stable food is food that can be stored at room temperature in a sealed container.
To know more about high Fructose corn syrup here;
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Supriya invested $14,320 in a highly rated ETF. At the end of four years, she had $18,434. What was her annual effective yield on this investment
Answer:
6.517%
Explanation:
Present Value PV = $14,320
Future Value FV = $18,434
Number of period Nper = 4
Annual effective yield = Rate(Nper, Pmt, Pv, -Fv)
Annual effective yield = Rate(4, 0, 14320, -18434)
Annual effective yield = 0.06517
Annual effective yield = 6.517%
The increase or decrease in owner's equity is reported on the
O A income statement.
B statement of owner's equity.
C balance sheet.
D All of the above
Accounting
Answer:
B
Explanation:
Owners equity also known as the Statement of Changes in Owner's Equity is an example of a financial statement. It records the owners equity and changes to the owners equity during a financial year.
A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a point in time.
The income statement records a company's income and expenses in a financial year. It is used for determining if a company is earning a profit or a loss
The following information applies to the questions displayed below] A local Chevrolet dealership carries the following types of vehicles
Inventory Items Quantity Cost per unit NRV per Unit
Vans 4 27000 25000
Trucks 7 18000 17000
2-door sedans 3 13000 15000
4-door sedans 5 17000 20000
Sports cars 1 37000 40000
SUVs 6 30000 28000
Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks
A) Compute the total cost of the entire inventory.
B) Determine whether each inventory item would be reported at cost or net realizable value (NRV).
C) Prepare necessary journal entry to write down inventory from from close to net realize value.
D) The write-down of inventory from cost to net realizable value reduces total assets and increases total expenses, leading to lower net income and lower retained earnings. True OR False
Answer:
Chevrolet Dealership
A) The total cost of the entire inventory is:
= $575,000
B) Each inventory would be reported at the LCNRV:
Inventory Items Quantity Reporting Cost/Value
Vans 4 NRV
Trucks 7 NRV
2-door sedans 3 Cost
4-door sedans 5 Cost
Sports cars 1 Cost
SUVs 6 NRV
C) Journal Entry:
Debit Cost of goods sold $27,000
Credit Inventory $27,000
To write-down costs to net realizable values.
D) TRUE.
Explanation:
a) Data and Calculations:
Inventory Items Quantity Cost per unit NRV per Unit LCNRV
Vans 4 27000 $108,000 25000 $100,000
Trucks 7 18000 126,000 17000 119,000
2-door sedans 3 13000 39,000 15000 39,000
4-door sedans 5 17000 85,000 20000 85,000
Sports cars 1 37000 37,000 40000 37,000
SUVs 6 30000 180,000 28000 168,000
Total Cost $575,000 $548,000
The Rosa model of Mohave Corp. is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave’s two options follows:
Rosa Umbrella Decorated Umbrella
Estimated demand 10,000 units 10,000 units
Estimated sales price $ 8.00 $ 19.00
Estimated manufacturing cost per unit
Direct materials $ 2.50 $ 5.50
Direct labor 1.50 4.00
Variable manufacturing overhead 0.50 2.50
Fixed manufacturing overhead 2.00 2.00
Unit manufacturing cost $ 6.50 $ 14.00
Additional development cost $ 10,000
Required:
1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
Rosa umbrella Decorated Umbrella Incremenral
sales revenue
variable cost
contribution margin
additional development cost
differential profit
2. Should Mohave add decorations to the Rosa umbrella?
Yes
No
3-a. Suppose that the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 8,000 units. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
Rosa Umbrella Decorated Umbrella Incremental
sales revenue
variable cost
contribution marginal
additional development cost
differential profit
3-b. Should Mohave add decorations to the Rosa umbrella?
Yes
No
Solution :
1. Incremental analysis when the demand for the decorated umbrella is 10,000 units.
[tex]\text{Particulars}[/tex] [tex]\text{Rosa umbrella}[/tex] [tex]\text{Decorated umbrella}[/tex] [tex]\text{Incremental}[/tex]
[tex]\text{Sales revenue}[/tex] $80000 $190000 $110000
[tex]\text{Less: Variable cost}[/tex] $ 45000 $120000 $75000
Contribution $35000 $70000 $35000
[tex]\text{Less: Additional}[/tex] --- $10000 $10000
development cost.
[tex]\text{Differential profit}[/tex] $35000 $60000 $25000
The company earns an additional profit of [tex]\$25,000[/tex] if it decorates and sells the Rosa umbrella.
2. The company, Mohave should add the decorations to the Rosa umbrella as this would increase the net revenues of the company by an amount of $25,000.
3.a. The demand for he decorated umbrella will fall to 8,000 units due to the higher price. If the company does not make any changes to the Rosa umbrella, it could sell 10,000 units.
The incremental profit or loss is :
Incremental analysis when the demand for the Rosa umbrella is 10,000 units and for the decorated umbrella is 8,000 units is given below:
[tex]\text{Particulars}[/tex] [tex]\text{Rosa umbrella}[/tex] [tex]\text{Decorated umbrella}[/tex] [tex]\text{Incremental}[/tex]
[tex]\text{Sales revenue}[/tex] $80,000 $152,000 $72,000
[tex]\text{Less: Variable cost}[/tex] $45,000 $96,000 $51,000
Contribution $35,000 $56,000 $21,000
[tex]\text{Less: Additional}[/tex] ---- $10,000 $10,000
development cost.
[tex]\text{Differential profit}[/tex] $35,000 $46,000 $11,000
The incremental profits are : $11,000.
3.b. The company should decorate and sell 8000 units of the decorated umbrellas as the increase in the net profit is $11,000.
On January 2 Kelly company performed $800 worth of services for a client. The client paid $100 immediately, but promised to pay the balance next month. The journal entry to record this transaction in Calley company's books would include a _____ to the cash account; a _____ to the accounts receivable account and a _____ to the service revenue account.
Answer:
$100, $700, $800
Explanation:
Calley Journal entries would include:
Debiting $100 to the cash account
Debit the $700 to the receivables account
Credit $800 to the revenue account
This follows the double entry rule that a credit in one account must correspond to at least one debit in another account.
We debit all asset accounts(receivables,cash) when increased and credit all liabilities account when increased. We credit all income account(revenue) when increased and debit all expenses account when increased.
Answer:
Date Account Title Debit Credit
Jan, 2 Cash $100
Accounts Receivable $700
Service revenue $800
$100 will be debited to Cash to show that $100 was received. The rest of the bill will go to the Accounts Receivables to shows that it is still owed. Then finally the entire $800 will go to Service revenue to show that services were performed for a client up to $800 worth.
mprudential, Incorporated, has an unfunded pension liability of $750 million that must be paid in 25 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 10.0 percent, what is the present value of this liability
Answer:
PV= $69,221,998.63
Explanation:
Giving the following information:
Future Value= $750,000,000
Number of periods (n)= 25 years
Discount rate (i)= 10%
To calculate the present value, we need to use the following formula:
PV= FV / (1 + i)^n
PV= 750,000,000 / (1.1^25)
PV= $69,221,998.63
15. Ilang lalawigan ang bumubuo sa Gitnang Mindanao?
Answer:
6 region any meron SA mindanao
Wagon Department Store had net credit sales of $16,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is Group of answer choices 8 times. 15 times. 7.5 times. 5 times.
Answer:
The answer is "7.5 times"
Explanation:
Inventory turnover represents the rate where an enterprise sells or substitutes its inventory for a certain period. The stock revenue ratio is the cost of products sold, that are divided by the total equity for the same period.
The efficacy of an entrepreneur's turning stock into sales is evaluated. This ratio also demonstrates whether well the costs of the stock are handled, if the stock is too large or not.
[tex]\text{Inventory turnover ratio} = \frac{\text{Cost of goods sold}}{\text{Average Inventory}}[/tex]
[tex]= \frac{15000000}{2000000}\\\\= \frac{15}{2}\\\\ = 7.5\ times[/tex]
Lập danh mục chi phí hoạt động của 1 toà nhà cho thuê hạng C
Chi phí hoạt động là chi phí liên tục để duy trì và duy trì hoạt động đầu tư bất động sản cho thuê. Nói cách khác, chúng là những chi phí ảnh hưởng đến hoạt động hàng ngày của khoản đầu tư và được coi là cần thiết để duy trì dòng doanh thu.
why do you think that the npv method choosen by you is the most suitable method in ecaluating the proposed investment?
Answer:
Hind Petrochemicals Company
The reason that the NPV method is the most suitable method in evaluating the proposed investment is that
the NPV reduces all the cash outflows and inflows to their present value to assess their relative values vis-a-vis the time value of money.
Explanation:
NPV, therefore, creates a common denominator for project evaluation. If the cash outflows in their present values are more than the cash inflows in their present values, then Hind may need to reconsider its decision to buy the refineries from the government. Using NPV enables Hind Petrochemicals to compute the revenues and costs in their present values and cash flow forms.
If you wanted to build a structure on a river bank, you should build the structure __________ to maximize its lifetime.
Answer:
Above the point bar
Explanation:
channelization
Straightened sections of the river channel are lined with concrete to increase the rate of flow and reduce bank collapse
Advantages of channelization
Improves rate of flow
Benefits transportation
Reduces bank collapse
The expenditures and receipts below are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a) Money borrowed to pay building contractor (signed a note) $(289,100 )
(b) Payment for construction from note proceeds 289,100
(c) Cost of land fill and clearing 11,860
(d) Delinquent real estate taxes on property assumed by purchaser 7,990
(e) Premium on 6-month insurance policy during construction 9,480
(f) Refund of 1-month insurance premium because construction completed early (1,580 )
(g) Architect’s fee on building 26,400
(h) Cost of real estate purchased as a plant site (land $202,900 and building $56,600) 259,500
(i) Commission fee paid to real estate agency 9,690
(j) Installation of fences around property 4,140
(k) Cost of razing and removing building 10,530
(l) Proceeds from salvage of demolished building (4,690 )
(m) Interest paid during construction on money borrowed for construction 12,230
(n) Cost of parking lots and driveways 17,750
(o) Cost of trees and shrubbery planted (permanent in nature) 13,350
(p) Excavation costs for new building 3,290
Identify each item by letter and list the items in columnar form, using the headings shown below. All receipt amounts should be reported in parentheses. For any amounts entered in the Other Accounts column, also indicate the account title. (Enter receipt amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). If no entry is required in other accounts, select "No Entry" for the account titles.)
Item Land Land
Improvements Building Other Accounts
(a) $
$
$
$
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
Answer:
a)Other Accounts – $(289,100 )Notes Payable
b)Buildings – $289,100
c)Land – $11,860
d)Land – $7,990
e)Buildings – $9,480
f)Buildings – ($1,580)
g)Building – $26,400
h)Land – 259,500
i)Land – $9,690
j)Land Improvement – $4,140
k)Land – $10,530
l)Land – ($4,690 )
m)Buildings –$ 12,230
n)Land Improvement – $17,750
o)Land – $13,350
p)Buildings – $3,290
Explanation:
To Identify each item by letter and list the items in columnar form,
a)Other Accounts – $(289,100 )Notes Payable
b)Buildings – $289,100
c)Land – $11,860
d)Land – $7,990
e)Buildings – $9,480
f)Buildings – ($1,580 )
g)Building – $26,400
h)Land – 259,500
i)Land – $9,690
j)Land Improvement – $4,140
k)Land – $10,530
l)Land – ($4,690 )
m)Buildings –$ 12,230
n)Land Improvement – $17,750
o)Land – $13,350
p)Buildings – $3,290
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:
Direct materials $86,000
Direct labor $43,500
Variable manufacturing overhead $21,800
Fixed manufacturing overhead 33,100
Total manufacturing overhead $54,900
Variable selling expense $15,400
Fixed selling expense 24,800
Total selling expense $40,200
Variable administrative expense $5,700
Fixed administrative expense 28,400
Total administrative expense $34,100
Required:
a. What is the total product cost?
b. What is the total period cost?
Answer:
Results are below.
Explanation:
The product costs are all the expenses incurred in production being direct and indirect:
Direct materials= 86,000
Direct labor= 43,500
Variable manufacturing overhead= 21,800
Fixed manufacturing overhead= 33,100
Total product cost= $184,400
The period costs are all the expenses not involved in production (selling and administrative):
Variable selling expense= 15,400
Fixed selling expense= 24,800
Variable administrative expense= 5,700
Fixed administrative expense= 28,400
Total period cost= $74,300
The CVP income statement Group of answer choices discloses contribution margin in the body of the statement. is distributed internally and externally. classifies costs by functions. will reflect a different net income than the traditional income statement.
Answer: discloses contribution margin in the body of the statement.
Explanation:
The Cost Volume Profit (CVP) income statement is made to better show the influence of variable costs and fixed costs on income. It as well shows the effects that changing costs and production volume can have on the income.
Although it shows the same income as a traditional income statement, the format is different in that the contribution margin is included in the statement and the costs and revenue per unit are shown as well.
A second-year MBA student, takes three hours off one evening and uses his car to go to a movie with a friend. A ticket to the movie costs Josh $5, gasoline for the trip costs $1, and Josh passed up tutoring a student that night at $10 an hour. He could also have used the three hours to work as a grader for a professor at $15 an hour. What is Joshâs economic cost of going to the movie?
Answer:
$-39
Explanation:
Economic cost is implicit cost less accounting cost
Implicit cost or opportunity cost : implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives. It is used in calculating economic profit
There are two opportunities the student forgoes when he decides to go to the movies. They are, the amount he would have earned if he tutored the student which has a value of $10 / hour and the amount he would have earned working as a grader which is $15 / hour.
The next best option is $15 / hour because it has a higher value
total economic cost = 15 x 3 = 45
the cost of the ticket and the cost of gasoline are explicit costs
Explicit cost includes the amount expended in going to the cinema
6 - 45 = -39
Fowler, Inc., just paid a dividend of $2.60 per share on its stock. The dividends are expected to grow at a constant rate of 5.75 percent per year, indefinitely. Assume investors require a return of 12 percent on this stock.
a. What is the current price?
b. What will the price be in four years and in sixteen years?
Answer:
a. Current price = $43.99
b. We have:
Price in four years = $52.03
Price in sixteen years = $101.76
Explanation:
a. What is the current price?
Using the Gordon Growth Model formula, we have:
Current price = (Dividend just paid * (100% + Dividend growth rate)) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)) / (12% - 5.75%) = $43.99
b. What will the price be in four years and in sixteen years?
Using the Gordon Growth Model formula with an adjustment for number of years, we have:
Price in four years = (Dividend just paid * (100% + Dividend growth rate)^Number of years) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)^4) / (12% - 5.75%) = $52.03
Price in sixteen years = (Dividend just paid * (100% + Dividend growth rate)^Number of years) / (Rate of return – Dividend growth rate) = ($2.60 * (100% + 5.75%)^16) / (12% - 5.75%) = $101.76
A company is considering investing in a new machine that requires a cash payment of $38,198 today. The machine will generate annual cash flows of $15,904 for the next three years. What is the internal rate of return if the company buys this machine?
Answer:
Internal rate of return = 12%
Explanation:
Below is the calculation of internal rate of return:
The new machine requires cash payment = $38198
Annual cash flows = $15904
Time period = 3 years
First divide the cash payment with the annual cash flow and then look at the factor table to find the interest rate at 3rd year.
Factor = 38198 / 15904 = 2.40
Now look the value 2.40 in the table:
Thus Internal rate of return = 12%
Claire purchases a $125 suit on her credit card from a local clothing store in her hometown. When she takes it home, she realizes it is damaged. She tries to take the product back for a full refund or store credit, but the store refuses. In this situation, ____________________.
Answer: the store violate TILA
Explanation:
The Truth in Lending Act of 1968 refers to the federal law that's designed in order to promote how the consumer credit will be used as there should be disclosures regarding terms and cost.
The Act is vital in protecting the consumers from misleading practices and provides them with necessary information about the costs of credit. Based on the information given, the store violates TILA.
Transactions for Jayne Company for the month of June are presented below.
June:
1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work.
Required:
Journalize the transaction.
Answer:
June 1
Debit : Cash $5,000
Credit : Common Stock $5,000
June 2
Debit : equipment $1,100
Credit : account payable $1,100
Explanation:
Journalize the transaction.
