Answer:
Reward-to-risk ratio Y =7.54%
Reward-to-risk ratio Z = 5.43%
Since the SML reward-to-risk is 6.8%
Stock Y is Undervalued
Stock Z Overvalued
Explanation:
Calculation for the reward-to-risk ratios for stocks Y is 7.54% and Z is 5.43% respectively.
Reward-to-risk ratio Y = (15.3%-5.5%)/1.3
Reward-to-risk ratio Y =7.54%
Reward-to-risk ratio Z = (9.3%-5.5%)/0.7 =
Reward-to-risk ratio Z = 5.43%
Therefore the reward-to-risk ratios for stocks Y and Z are and percent, respectively
Since the SML reward-to-risk is 6.8%
Stock Y is undervalued while Stock Stock Z on the other hand is overvalued reason been that
Reward-to-risk ratio Y is high while the Reward-to-risk ratio is low .
Which of the following statements accurately describe the phases of a business cycle?
A. A contraction phase is when an economy exhibits decreasing levels of production and consumption.
B. A period of expansion is when an economy exhibits decreasing levels of production and spending.
C. A trough occurs at the end of the contraction phase and the beginning of the expansion phase
D. A peak level of business activity occurs at the end of the expansion phase and the beginning of the contraction phase.
Answer:
Option A
Explanation:
In simple words, contraction relates to a period of the market cycle throughout which the market is in recession as a group When the economic cycle rises, a recession usually occurs, just before it reaches a trough. A contraction is triggered by three kinds of occurrences. We are talking of a sharp spike in borrowing rates a banking crash, or uncontrolled inflation . Paranoia and anxiety replace assurance.
Stevenson Corporation acquires a one-year old building at a cost of $500,000 at the beginning of Year 2. The building has an estimated useful life of 50 years. However, based on reliable historical data, the company believes the carpeting will need to be replaced in 5 years, the roof will need to be replaced in 15 years, and the HVAC system will need to be replaced in 10 years. On the date of acquisition, the cost to replace these items would have been carpeting, $10,000; roof, $15,000; HVAC system, $30,000. Assume no residual value.
Required:
Determine the amount to be recognized as depreciation expense in Year 2 related to this building.
Answer:
$14,900
Explanation:
The computation of the amount recognized as a depreciation expense for the year 2 is shown below;
= Carpenting + roof + hvac system + building
= ($10,000 ÷ 5 years) + ($15,000 ÷ 15 years) + ($30,000 ÷ 10 years) + ($500,000 - $10,000 - $15,000 - $30,000) ÷ (50 years)
= $2,000 + $1,000 + $3,000 + $8,900
= $14,900
A firm has provided you with the following information:
Output 30
Variable Cost $1,900
Fixed Cost $120
Marginal Cost $50
Price $50
a. What is the firm's short-run profit if they produce using the MC=MR rule?
b. What is the firm's short-run profit if they produce nothing?
c. What will be the firm's production decision in the short-run?
1. Shutdown
2. Exit
3. Operate
Answer:
(a) Output produced = 30 , Price = $50
Total revenue = Output produced * Price = 30 units * $50 = $1,500
Total Cost= Variable cost + Fixed cost = $1900 + 120 = $2020
At profit maximization or loss minimization point, MR = MC.
Corresponding to an output level of 30, MR=MC =$50
Note: Price is constant at $50. So, the marginal revenue will be $50 at each level of output
Profit = Total revenue - Total Cost.
Profit = $1500 - $2020
Profit = -$520.
The firm's short-run profit is -$520 if they produce using MR=MC.
(b) If a firm produces nothing, then a firm has to bear a fixed cost of $120. It means there is a loss of $120 or a profit of -$120. So, short-run profit is -$120 if they produce nothing.
(c) In the short run, if the firm produces then bear a loss of $520. if a firm produces nothing then bear a loss of $120. So, it is better to shut down the production in the short run in order to minimize the loss of the firm.
Ford Motor Company is considering launching a new line of hybrid diesel-electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating losses of million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from operations next year. Ford pays a 35% tax rate on its pre-tax income. The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is closest to ________. Group of answer choices $15.8 million $40.3 million 12.3 million $28.0 million
Answer:
$28 million
Explanation:
The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is = $80 million * 35% = $28 million. Because the SUV have not been launched, the operating loss associated with heavy advertising will not be considered.
In 2018, Borland Semi-conductors entered into the transactions described below. In 2015, Borland had issued 195 million shares of its $1 par common stock at $39 per share.
Required:
1. On January 2, 2018, Borland re-acquired 12 million shares at $37.50 per share.
2. On March 3, 2018, Borland re-acquired 12 million shares at $41 per share.
3. On August 13, 2018, Borland sold 1 million shares at $47 per share.
4. On December 15, 2018, Borland sold 2 million shares at $41 per share.
Solution :
Serial No. Date given Journal Debit Credit
1). 02 Jan, 2018 Common stock $ 12
Paid-in-capital
excess of the par $ 456
Paid-in-capital
share repurchased $ 18
Cash $ 450
2). 03 March, 2018 Common-stock $ 12
Paid-in-capital
excess of the par $ 456
Paid-in-capital
share repurchased $18
Retained earnings $ 6
Cash $ 492
3). 15 Dec, 2018 Cash $ 82
Common-stock $ 2
Paid-in-capital
excess of the par $ 80
Universal Foods issued 12% bonds, dated January 1, with a face amount of $175 million on January 1, 2018. The bonds mature on December 31, 2032 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method.
Required:
a. Determine the price of the bonds at January 1, 2018.
b. Prepare the journal entry to record their issuance by Universal Foods on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2025.
Answer:
Price of bond issued = $20,305,000 + $115,403,700 = $135,708,700
Explanation:
January 1 2018 ,
Investment in Bond issued by Universal Food (Dr.) $155,000,000
Discount on investment in Bonds issued by Universal Foods (Cr.) $19,291,300
Cash (Cr.) $135,708,700
June 30, 2018,
Cash (Dr.) $9,300,000
Discount in Investment in Bonds by Universal Foods (Dr.) $643,043
Interest Revenue (Cr.) $9,943,043
Dec 31, 2025,
Cash (Dr.) $9,300,000
Discount in Investment in Bonds by Universal Foods (Dr.) $643,043
Interest Revenue (Cr.) $9,943,043
Identify the importance of accounting by selecting the statement that is correct below. Multiple choice question. Accounting information helps users make business and financial decisions. Accounting is a system that identifies, records and communicates an organization's business activities. Accounting information is primarily used only at the end of a year when tax returns and financial statements are prepared.
Answer:
Accounting information helps users make business and financial decisions.
Explanation:
Users of accounting information are divided into :
Internal users External usersInternal users include : owners, managers, employees
External users include : shareholders, tax authority, regulatory bodies
Based on the information contained in the financial information a shareholder can decide if to invest in a company or not to.
Also, mangers can decide to invest in new ventures based on the information on profitability contained in the financial statements.
The importance of accounting from the statements is A. Accounting information helps users make business and financial decisions.
Why is accounting important ?Accounting plays a crucial role in providing relevant and reliable information to users for making informed business and financial decisions. It involves the identification, recording, and communication of an organization's business activities, which helps users understand the financial health and performance of the entity.
Accounting information is used not only at the end of the year for tax returns and financial statements but also on an ongoing basis to support decision-making, budgeting, forecasting, strategic planning, and evaluating the financial position and performance of the organization.
In conclusion, option A is correct.
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13.) An investor is in a 30% combined federal plus state tax bracket. If corporate bonds offer 6% yields, what yield must municipals offer for the investor to prefer them to corporate bonds
Answer:
the yield that must offer for the investor in order to prefer them is 4.2%
Explanation:
The computation is shown below:
The after tax yield is
= Corporate bond yield × (1 - tax rate)
= 6% × (1 - 0.30)
= 6% × 0.70
= 4.2%
hence, the yield that must offer for the investor in order to prefer them is 4.2%
The same is relevant
$400 invested with compound interest at a rate of 3% per year for 2 years. Formula: M = P(1+ i)n
Answer:
$424.36
Explanation:
The applicable formula =M= P ( 1+ r)^2
Where M is the amount after two years
P = principal amount: $400
r = interest rate: 3% or 0.03
n =number of period :2
M= $400 x ( 1+ 0.03) ^ 2
M=$400 x 1.0609
M= $424.36
In the case of an expansionary_____policy, the interest rate rises, while in the case of an expansionary _____ policy, the interest rate falls.
Select one:
a. fiscal; monetary
b. monetary, monetary
c. monetary, fiscal
d. fiscal; fiscal
= fiscal; monetary
With an expansionary fiscal policy, the interest rate rises, while with an expansionary monetary policy, the interest rate falls.
What is an Expansionary fiscal & monetary policy?This is when an increases in money supply is stimulated by raising spending or cut taxes while the latter is when the cost of borrowing i reduced to stimulate an economy.
Therefore, the Option A is correct.
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Which of the following is/are inconsistent with the semi-strong form of the efficient market hypothesis? [I] Significant non-random price movements [II] Price overreaction to the public release of new information [III] Superior performance of professional traders [IV] Abnormal profits from illegal insider trading
A. I and III
B. II and IV
C. I and II
D. All are inconsistent with the semi-strong form of the EMH
Answer:
C. I and II
Explanation:
Semi strong form of efficient market hypothesis is a situation where stock prices adjust quickly to any new public information that circulates in the market. It assumes that stock prices incorporates the effect of all information which is publicly available in the market.
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
Division
Osaka Yokohama
Sales $3,000,000 $9,000,000
Net operating expenses $210,000 $720,000
Average operating assets $1,000,000 $4,000,000
Required:
a. For each divisions, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations.)
b. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.
Answer:
1. Rate of Interest = Net operating expenses/Average operating assets
Osaka = $210000/$1000000 = 0.21 = 21%
Yokohama = $720000 / $4000000 = 0.18 = 18%
2. Osaka Yokohama
Average operating assets $1,000,000 $4,000,000
M. required return at 15% $150,000 $600,000
Net operating income $210,000 $720,000
Minimum required return $150,000 $600,000
Residual income $60,000 $120,000
A car dealer acquires a used car for $12,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include $100 for transportation-in. $170 for shipping insurance. $800 for car import duties. $140 for advertising. $1,400 for sales staff salaries. $150 for trimming shrubs.
Answer:
$13,070Explanation:
The Cost of inventory = all cost of purchase; including costs of conversion and transfer.
Calculation of Inventory Cost FOB ship.
Cost of Purchase $12,000
Transportation-in $100
Shipping insurance $170
Car import duties $800
Total Cost $13,070
if quantity demamded is completely unresponsive to changes in price ,demand is what?
Answer:
If quantity demanded is completely unresponsive to changes in price, demand is Perfectly inelastic.
Explanation:
Perfectly inelastic demand means that quantity demanded remains the same when price increases or decreases. Consumers are completely unresponsive to changes in price.
I hope it's helpful
National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $900,000 on January 1, 2018. The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31.
(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the standard factor tables.)
Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by National on January 1, 2018.
3. Prepare the journal entry to record interest on June 30, 2018.
4. Prepare the appropriate journal entries at maturity on December 31, 2021.
Table Values Based On:
n=
i=
Cash Flow Amount Present Value
Interest
Principal
Price of Bonds
Answer:
1. Determine the price of the bonds at January 1, 2018.
PV of face value = $900,000 / (1 + 5%)⁸ = $612,525
PV of coupon payments = $40,500 x 6.4632 (PV annuity factor, 5%, 8 periods) = $261,760
market price of bonds = $874,285
2. Prepare the journal entry to record their issuance by National on January 1, 2018.
January 1, 2018, bonds issued at a discount
Dr Cash 874,285
Dr Discount on bonds payable 25,715
Cr Bonds payable 900,000
3. Prepare the journal entry to record interest on June 30, 2018.
Dr Interest expense 43,714
Cr Cash 40,500
Cr Discount on bonds payable 3,214
4. Prepare the appropriate journal entries at maturity on December 31, 2021.
Dr Bonds payable 900,000
Dr Interest expense 43,714
Cr Cash 940,500
Cr Discount on bonds payable 3,214
Which type of team rarely has the
authority to unilaterally implement
any of their suggestions?
= Problem-Solving Teams
Explanation:
Problem-Solving Teams is the right one hahahahahahahabaha
Which professional has helped Jennifer in this example?
Jennifer bought a new smart phone from a local store that sells electronic products. After a week, she started experiencing problems with the
phone's display screen. She went back to the store and spoke to its ___
representative, who replaced the product and
apologized for the inconvenience.
Answer:
would it be sales representative since they were only able to replace the device and apologize
Answer:
customer service
Explanation:
I'm smart and got it right on my test
