The equation for the monopolist's Marginal Revenue Curve (as a function of Q) is given by: MR = 100 - QD.
The monopolist's Marginal Revenue Curve can be calculated as follows:
Since we know that :P = 200 - 2QD [Replace QD in the demand function with the QM as mentioned below]Let us find the equation for the monopolist's Marginal Revenue Curve (as a function of Q).Step-by-step explanation: Since we know that the monopolist's demand function is given by: QD= 100 - 0.5pWhere,QD = quantity demanded p = price On rearranging this equation, we get :p = 200 - 2QDHere, we assume the monopolist is a price maker.
That means, the monopolist can charge any price they want. Therefore, the marginal revenue (MR) of the monopolist will always be less than the price of the product. We can write this as follows: MR ≤ pOr, MR = p - εpQdHere, εpQd = the percentage change in quantity demanded resulting from a 1% change in price.
From the demand equation, we know that:QD = 100 - 0.5pOn rearranging this equation, we get p = 200 - 2QDSince we know that the monopolist's marginal cost of production is a constant, i.e., MC = 20, the monopolist's profit-maximizing level of output (Q*) is found where marginal revenue (MR) = marginal cost (MC).
Therefore, we have :Q* = (p - MC) / (2εp)Substituting MC = 20, p = 200 - 2QD, and εp = 0.5 in the above equation, we get: Q* = (200 - 2QD - 20) / (2 × 0.5)Or, 2Q* = 180 - 2QDOr, Q* = 90 - QD / 2So, the monopolist's Marginal Revenue Curve (as a function of Q) is: MR = p - εpQdMR = (200 - 2QD) - 0.5(200 - 2QD)MR = 200 - 2QD - 100 + QDMR = 100 - QD
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Explain why people resist change due to uncertainty. Discuss at least two ways to overcome resistance to change.
People often resist change due to uncertainty because it disrupts their familiar routines and introduces unknown elements into their lives. Uncertainty can evoke feelings of fear, insecurity, and a loss of control, leading individuals to resist change in an attempt to maintain stability and avoid potential negative outcomes.
Two ways to overcome resistance to change are:
1. Effective Communication: Clear and transparent communication is essential to address uncertainty and alleviate resistance. By openly sharing the reasons for the change, the expected benefits, and the process for implementation, individuals can gain a better understanding of the change and its implications. This helps to reduce uncertainty and allows individuals to see the bigger picture and the potential positive outcomes.
2. Change Management and Support: Implementing change through a structured change management approach can help overcome resistance. This involves providing support mechanisms such as training, coaching, and resources to help individuals adapt to the change. By equipping individuals with the necessary skills and knowledge, they can navigate the uncertainty more effectively and feel more confident in embracing the change.
Overall, overcoming resistance to change requires addressing uncertainty through effective communication and providing the necessary support and resources.
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You want to invest in a small company that will bring in stable cash flows in the future. You estimate the cash inflows (benefit) from the company area will be $20,000 in year 1,$30,000 in year 2$50,000 in year 3 , and $35,000 in year 4 and for all following years to infinity. a) What is the value of this company assuming a discount rate of 14% (7) marks) b) If the asking price from current owner was $350,000 would you purchase (prove your answer)
The value of the company can be estimated by calculating the present value of the cash inflows. To do this, we need to use the formula for present value.
PV = CF1/(1+r) + CF2/(1+r)^2 + CF3/(1+r)^3 + ... + CF∞/(1+r)^∞
where PV is the present value, CF1, CF2, CF3, and CF∞ are the cash inflows in years 1, 2, 3, and infinity, respectively, and r is the discount rate.Using the given cash inflows and discount rate, we can calculate the present value as follows.
PV = [tex]$20,000/(1+0.14)^1 + $30,000/(1+0.14)^2 + $50,000/(1+0.14)^3 + $35,000/(1+0.14)^4 + ($35,000/(0.14))[/tex]
PV = [tex]$17,543.86 + $22,853.48 + $32,810.95 + $21,452.13 + $250,000[/tex]PV
= [tex]$344,610.42[/tex]
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Ida Sidha Karya Company is a familly-owned company located on the island of Bali in Indonesia. The company procuces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are soid for $976. Selected data for the company's operations last year follow: Required: 1. Assume that the company uses absorpton costing. Compute the unt proouct cost for one gamelan. (Round your intermedlote calculations and final answer to the nearest whole dolier omount.) 2 Assume that the company uses varlable costng. Compute the unit product cost for one gomelan.
Under absorption costing, the unit product cost is $700.
Under variable costing, the unit product cost is $450.
Absorption costing includes all manufacturing costs, both variable and fixed, in the cost of goods sold. Variable costs are those that change in direct proportion to the number of units produced, such as direct materials and direct labor. Fixed costs are those that do not change in total with changes in production level, such as manufacturing overhead.
In this case, the company has direct materials costs of $200 per unit, direct labor costs of $100 per unit, variable manufacturing overhead costs of $50 per unit, and fixed manufacturing overhead costs of $100 per unit. The unit product cost under absorption costing is calculated as follows:
Unit product cost (absorption costing) = Direct materials cost + Direct labor cost + Variable manufacturing overhead cost + Fixed manufacturing overhead cost
= $200 + $100 + $50 + $100
= $450
Variable costing includes only variable costs in the cost of goods sold. Fixed costs are treated as period costs and are expensed in the period in which they are incurred.
In this case, the unit product cost under variable costing is calculated as follows:
Unit product cost (variable costing) = Direct materials cost + Direct labor cost + Variable manufacturing overhead cost
= $200 + $100 + $50
= $350
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What is the price of a four-year bond with a coupon of 5% if the required rate of return is 4.5%? (5)
You hold a bond with a coupon of 7% and a price of 105.5%. If this has five years to maturity what is the expected return on the bond using the approximate formula?
The price of the bond can be calculated using the present value formula you provided. Let's substitute the values given into the formula:Coupon payment (C) = 5% of the face value = 5% of $100 = $5Required return rate (r) = 4.5% = 0.045Number of periods (n) = 4 yearsFace value (F) = $100Now let's calculate the price of the bond:Price of the bond = (C × (1 - (1 + r)^-n) / r) + (F / (1 + r)^n)Price of the bond = ($5 × (1 - (1 + 0.045)^-4) / 0.045) + ($100 / (1 + 0.045)^4)Performing the calculations:Price of the bond = ($5 × (1 - (1.045)^-4) / 0.045) + ($100 / (1.045)^4)Price of the bond ≈ ($5 × (1 - 0.8227) / 0.045) + ($100 / 1.193)Price of the bond ≈ ($5 × 0.1773 / 0.045) + ($100 / 1.193)Price of the bond ≈ ($0.8865 / 0.045) + ($100 / 1.193)Price of the bond ≈ $19.70 + $83.77Price of the bond ≈ $103.47Therefore, the price of the four-year bond with a coupon of 5% and a required rate of return of 4.5% is approximately $103.47.
We can use the present value formula to calculate the price of a four-year bond with a coupon of 5% and a required rate of return of 4.5%. La fórmula es:El precio del bono es igual a (C × (1 - (1 + r)^-n) / r) + (F / (1 + r)^n).Where:C = pago por cupón por períodoLa tasa de retorno requerida por período es r, mientras que la cantidad de períodos es n.El valor de la cara del acuerdo es F.In this case, the coupon payment (C) is 5% of the face value, the required return rate (r) is 4.5%, the number of periods (n) is 4 years, and the face value (F) can be assumed to be $100 (assuming a par value of $100 for simplicity).Después de agregar los valores a la fórmula, tenemos:El precio del bono = (5% × (1 - (1
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Suppose that on January 6, 2024, Eastem Motors paid $220,000,000 for its 25% investment in Power Motors. Eastern has significant influence over Power after the purchase. Assume Power earned net income of $30,000,000 and paid cash dividends of $10,000,000 to all outstanding stockholders during 2024 . (Assume all outstanding stock is voting stock.) Read the reguirements Requirement 1. What method should Eastem Motors use to account for the investment in Power Motors? Give your reasoning. Eastem Motors should use the method to account for its investment in Power Motors because the investment Suppose that on January 6, 2024, Eastern Motors paid $220,000,000 for its 25% investment in Power Motors. Eastern has significant influence over Power after the purchase. Assume Power earned net income of $30,000,000 and paid cash dividends of $10,000,000 to all outstanding stockholders during 2024. (Assume all outstanding stock is voting stock.) Read the
Eastem Motors should use the equity method to account for its 25% investment in Power Motors, as it has significant influence over the investee. The equity method reflects proportionate share of net income and dividends.
Requirement 1:
Eastem Motors should use the equity method to account for its investment in Power Motors.
Reasoning:
The equity method is appropriate when an investor has significant influence over the investee, but not control. In this case, Eastem Motors has significant influence over Power Motors after the purchase of the 25% investment.
According to the criteria for applying the equity method, significant influence is generally assumed when an investor owns between 20% and 50% of the voting stock of the investee.
Since Eastem Motors owns 25% of Power Motors, it meets this ownership threshold.
Under the equity method, Eastem Motors would initially record the investment in Power Motors at its cost of $220,000,000.
Subsequently, Eastem Motors would adjust its investment balance each year by its share of Power Motors' net income and dividends.
Given that Power Motors earned a net income of $30,000,000 and paid cash dividends of $10,000,000 during 2024, Eastem Motors would recognize its 25% share of these amounts.
It would increase its investment by $7,500,000 (25% of $30,000,000) for its share of net income and decrease its investment by $2,500,000 (25% of $10,000,000) for its share of dividends.
By using the equity method, Eastem Motors appropriately reflects its proportionate share of Power Motors' financial performance and retains significant influence over the investee's operations in its financial statements.
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Data (adjacent worksheet) was collected for 45 mutual funds, which are part of the mutual fund portfolios offered through LMD investments. LMD wants to develop a linear regression model to predict the 3-year average return (%) based upon: the fund type, which is denoted as Corporate Bonds (CB), Global Equity (GE) and Fixed-income (FI); the funds Expense ratio; and a fund quality ranking (ranging from 1-star to 4-star).
Complete the following steps:
1. Use Excel to construct an (xy) scatterplot for y=3-year average return versus x=Expense ratio. Be sure to provide a meaningful title and informative axis labels.
2. Run the regression model (use FI and 1-star as the reference categories for the categorical variables). Put your regression output in the worksheet "Regression Data". Also generate a proper Normal Probability Plot in the Data worksheet. Use the regression output to answer questions a - g below:
a. Type the estimated regression function.
b. What percentage of the total variability in 3-year average return is explained by the regression model?
c. What is the observed significance level of the estimated regression model?
d. Interpret the estimated regression coefficient for a 'GE' fund.
e. List and label each independent variables as: not significant (significance level > 0.1) or significant at the 0.1, 0.05, or 0.01 levels
f. State the 90% confidence interval for the coefficient of 'expense ratio'?
g. Predict the 3-year average return for a CB fund with a 3-star rating and an Expense ratio of 0.90% (report the final answer to one decimal place).
Fund 3-Year Average Return (%) Quality Ranking Fund Type Expense Ratio (%)
1 14.39 1-Star GE 0.67
2 30.53 2-Star CB 1.41
3 3.34 3-Star FI 0.49
4 10.88 2-Star GE 0.99
5 11.32 1-Star GE 1.03
6 24.95 2-Star CB 1.23
7 15.67 2-Star GE 1.18
8 16.77 4-Star GE 1.31
9 18.14 3-Star GE 1.08
10 15.85 3-Star GE 1.20
11 17.25 2-Star GE 1.02
12 17.77 3-Star GE 1.32
13 17.23 2-Star GE 0.53
14 4.31 3-Star FI 0.44
15 18.23 4-Star GE 1.00
16 17.99 4-Star GE 0.89
17 4.41 4-Star FI 0.45
18 23.46 3-Star CB 0.90
19 13.50 2-Star GE 0.89
20 2.76 2-Star FI 0.45
21 14.4 3-Star GE 0.56
22 4.63 2-Star FI 0.62
23 16.70 3-Star GE 1.36
24 12.46 2-Star GE 1.07
25 12.81 2-Star GE 0.90
26 12.31 1-Star CB 0.86
27 15.31 2-Star GE 1.32
28 5.14 4-Star FI 0.60
29 15.16 4-Star GE 1.31
30 32.70 2-Star CB 1.16
31 15.33 3-Star GE 1.08
32 9.51 1-Star GE 1.05
33 13.57 2-Star FI 1.25
34 23.68 3-Star GE 1.36
35 51.10 3-Star CB 1.24
36 16.91 3-Star GE 0.80
37 15.91 2-Star CB 1.01
38 15.46 3-Star GE 1.27
39 4.31 2-Star FI 0.62
40 13.41 3-Star GE 0.29
41 21.77 4-Star CB 0.64
42 4.25 4-Star FI 0.21
43 2.37 2-Star FI 0.16
44 17.01 2-Star GE 0.23
45 13.98 3-Star CB 1.19
Predict the 3-year average return for a CB fund with a 3-star rating and an Expense ratio of 0.90%The predicted 3-year average return for a CB fund with a 3-star rating and an expense ratio of 0.90% is 11.07%.
Part 1: Making a xy scatterplot The created (xy) scatterplot looks like this:Outputs from regression, part 2. the computed regression function in text form.The following is the calculated regression function:$$\hat{y}=12.54-3.57x_1+6.08x_2+1.77x_3$$b. The regression model accounts for 74.5% of the variance in the three-year average return overall.c.
The calculated regression model's observed significance level is less than 0.05. As a result, the null hypothesis can be rejected and the calculated regression model is significant. d. Explain the GE fund's estimated regression coefficient.
The estimated regression coefficient for a GE fund is 6.08. This means that holding other variables constant, a GE fund has an estimated average return of 6.08%.e. List and label each independent variable as: not significant (significance level > 0.1) or significant at the 0.1, 0.05, or 0.01 levels.
The independent variables and their level of The 90% confidence interval for the coefficient of Expense Ratio is [-5.855, -1.280].g. Predict the 3-year average return for a CB fund with a 3-star rating and an Expense ratio of 0.90%The predicted 3-year average return for a CB fund with a 3-star rating and an expense ratio of 0.90% is 11.07%.
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A columnist in the Wall Street Journal writes, "Stocks are meant to be the discounted value of future profits" Briefly explain what he means The value to an investor of holding a stock is based on the expected future cashflows the stock will generate discounted by the the interest rate on Treasury bonds the profitability of the overall economy the expected future cashflows the stock will generate A columnist in the Wall Street Journal writes, "Stocks are meant to be the discounted value of future profits." Briefly explain what he means The value to an investor of holding a stock is based on the expected future cashflows the stock will generate discounted by the the interest rate on Treasury bonds the interest rate on Treasury bonds risk or holding the stock [Related to Solved Problem 6.21 Suppose that Coca-Cola is currently paying a dividend of $1.49 per share, the dividend is expected to grow at a rate of 3% per year, and the rate of return investors require to buy Coca-Cola's stock is 7%. Calculate the price per share for Coca-Cola's stock The price per share of Coca-Cola stock is 5 (Round your response to two decimal places.)
The columnist means that the value of stocks is derived from the discounted value of their expected future profits or cash flows.
The statement suggests that the value of stocks is determined by estimating the future profits or cash flows that a stock is expected to generate. These future cash flows are then discounted to their present value using an appropriate interest rate, such as the rate on Treasury bonds. By discounting the future cash flows, investors can determine the current worth of those cash flows and determine the value of the stock. Essentially, the columnist is highlighting the importance of considering the expected future profitability of a company when assessing the value of its stock.
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in the short-run, a firm's supply curve is equal to the
In the short run, a firm's supply curve is equal to the marginal cost (MC) curve.
A supply curve shows the quantity of a good or service that a supplier is willing and able to produce and sell at each price level in a particular period of time. It is a representation of the relationship between price and quantity supplied.
The marginal cost (MC) curve, on the other hand, is the change in total cost associated with the production of one additional unit of output. In other words, it is the cost of producing one more unit of a good or service. Thus, in the short run, a firm's supply curve is equal to the marginal cost (MC) curve as firms produce additional units of output as long as the marginal cost of production is less than the price of the good or service.
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what is the number one reason why consumers default on their debts?
a. Medical expenses
b. Defective goods and services
c. Excessive use of credit
d. Fraudulent use of credit
e. Consumer fraud
Main answer: c. Excessive use of credit Explanation: The number one reason why consumers default on their debts is excessive use of credit.
This refers to a situation where individuals accumulate more debt than they can effectively manage and repay. Excessive use of credit can lead to financial strain and difficulties in meeting payment obligations.
Consumers may become overwhelmed by the burden of multiple loans, high interest rates, and increasing debt balances. They may rely heavily on credit cards or loans to finance their lifestyle or cover essential expenses, resulting in a debt load that becomes unsustainable.
Factors contributing to excessive use of credit include poor financial planning, lack of budgeting skills, inadequate financial literacy, impulsive spending habits, and unforeseen life events that disrupt income stability. Additionally, aggressive marketing tactics by financial institutions and easy access to credit may also contribute to consumers' excessive borrowing.
As a result of excessive credit use, individuals may struggle to make timely payments, leading to defaults on their debts. Defaulting on debt can have significant consequences, including damage to credit scores, legal actions by creditors, and financial instability.
It is important for consumers to practice responsible credit management, such as maintaining a manageable debt-to-income ratio, monitoring their spending habits, and seeking assistance if they find themselves overwhelmed with debt. Financial education and awareness can help individuals make informed decisions about credit usage and avoid falling into excessive debt situations.
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On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $293.000 cash and $386,000 of equipment, respectively. The partnership also assumed responsibility for a $53.000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $163,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2020, Adams withdrew cash of $113,000. At year-end May 31, 2021, the Income Summary account had a credit balance of $510,000. On June 1, 2021, Peter Williams invested $133,000 and was admitted to the partnership for a 20% interest in equity. Prepare journal entries.
On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $293,000 in cash and $386,000 in equipment, respectively.
The partnership also assumed responsibility for a $53.000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $163,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively).On November 20, 2020, Adams withdrew cash of $113,000.At year-end May 31, 2021, the Income Summary account had a credit balance of $510,000.On June 1, 2021, Peter Williams invested $133,000 and was admitted to the partnership for a 20% interest in equity. The solution to the problem is: Journal entries are the basis of the accounting process. The journal entry is the process of recording a transaction in the journal. The journal is the book of original entry in which the date, the person or thing debited and the person or thing credited are recorded.
Journal entries for the given transactions are as follows:
June 1, 2020 (Investment by Jill Bow and Aisha Adams)Cash A/c Dr. $293,000
Equipment A/c Dr. $386,000
To Note Payable A/c $53,000
To Jill Bow Capital A/c $235,000
To Aisha Adams Capital A/c $386,000 (Being investment made by Jill Bow and Aisha Adams)
November 20, 2020 (Withdrawal by Aisha Adams)Aisha Adams Capital A/c Dr. $113,000
To Cash A/c $113,000 (Being withdrawal made by Aisha Adams)
31st May 2021 (Profit distribution)Income Summary A/c Dr. $510,000
To Jill Bow Capital A/c $204,000
To Aisha Adams Capital A/c $306,000 (Being profit distribution made to Jill Bow and Aisha Adams)
June 1, 2021 (Investment made by Peter Williams)Cash A/c Dr. $133,000
To Peter Williams Capital A/c $133,000 (Being investment made by Peter Williams)
So, the journal entries for the given transactions are as follows:
June 1, 2020: Cash A/c Dr. $293,000,
Equipment A/c Dr. $386,000,
Note Payable A/c $53,000,
Jill Bow Capital A/c $235,000,
Aisha Adams Capital A/c $386,000
November 20, 2020:
Aisha Adams Capital A/c Dr. $113,000,
Cash A/c $113,000
31st May 2021:
Income Summary A/c Dr. $510,000,
Jill Bow Capital A/c $204,000,
Aisha Adams Capital A/c $306,000
June 1, 2021:
Cash A/c Dr. $133,000,
Peter Williams Capital A/c $133,000.
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Thinking about Tim Hortons, how might the company you choose use the various segmentation strategies to target YOU as a customer?
To target me as a customer, Tim Hortons could use various segmentation strategies, including demographic segmentation, psychographic segmentation, and behavioral segmentation.
By understanding my demographic characteristics, preferences, and behaviors, Tim Hortons can tailor its marketing efforts and offerings to meet my specific needs and preferences.
As a customer, Tim Hortons could utilize demographic segmentation to target me based on factors such as age, gender, income, and occupation.
For example, if I am a student, they might offer special discounts or promotions targeted towards students.
Psychographic segmentation could be used to understand my values, lifestyle, and personality traits. If I value convenience and a fast-paced lifestyle, Tim Hortons could emphasize its quick-service and on-the-go options.
Behavioral segmentation could also be employed to target me based on my specific buying behavior and preferences.
For instance, if I frequently purchase coffee in the morning, Tim Hortons could offer loyalty programs or personalized discounts to encourage repeat purchases.
They might also analyze my past purchases to understand my preferences and recommend relevant products or customization options.
By utilizing these segmentation strategies, Tim Hortons can effectively target me as a customer by tailoring their marketing messages, product offerings, and promotions to align with my demographics, psychographics, and behaviors.
This personalized approach can enhance my overall customer experience and increase my loyalty towards the brand.
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If the p-value of Ftests in the Excel linear regression output is 0.20, then there is no statistical evidence to suggest that: O a. one or more regression coefficients are not zero. one or more regression coefficients are not zero; one or more independent variables are associated with the dependent variable. one or more independent variables are associated with the dependent variable. all individual regression coefficients are not zero. all individual regression coefficients are zero; one or more independent variables are associated with the dependent variable. Ob. OC. O d. Oe.
d) All individual regression coefficients are not zero; one or more independent variables are associated with the dependent variable.
There is no statistical evidence to suggest that all individual regression coefficients are not zero, and it can be concluded that one or more independent variables are associated with the dependent variable.
if the p-value of the f-test in the excel linear regression output is 0.20, it means that the null hypothesis is not rejected at a significance level of 0.05 (assuming a typical significance level). the null hypothesis in this case is that all individual regression coefficients are zero, meaning that none of the independent variables are associated with the dependent variable.
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Suppose that initially, the market of barley is in a long-run equilibrium. Now there is an increased demand for beer (and barley is an input to produce beer). Describe 1) what happens to the price. profit and each farmer's barley output in the short run? 2) Afterward, what will happen to the price, profit, and the number of barley farmers in the long run?
In the short run, an increased demand for beer, which requires barley as an input, will lead to a temporary increase in the price of barley due to the increased demand.
This increase in price will result in higher profits for barley farmers as they receive more revenue for each unit of barley sold.
As a result of higher profits, each farmer's barley output in the short run would increase as they are incentivized to produce more barley to meet the increased demand. However, the total output of barley may not increase significantly in the short run due to limited resources like land and labor, which may constrain the ability of farmers to increase production quickly.
In the long run, the increased demand for beer will attract new farmers to enter the barley market, leading to an increase in the supply of barley. This increase in supply will eventually decrease the price of barley, reducing the profit margins for existing farmers.
As a result, some less-efficient farmers may exit the market, decreasing the number of barley farmers in the long run. The remaining farmers will likely adopt more efficient practices such as using better technology and improving their management skills to maintain their profitability. Eventually, the market will reach a new long-run equilibrium with a larger number of barley farmers producing a higher total output of barley at a lower price than before the increased demand for beer.
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Exercise 7-24 Pizza Delivery Business; Basic CVP Analysis (LO 7-1,7-2, 7-4) College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company's annual fixed expenses are $68,000. The sales price of a pizza is $10, and it costs the company $2 to make and deliver each pizza. (In the following requirements, ignore income taxes.) Required: 1. Using the contribution-margin approach, compute the company's break-even point in units (pizzas). 2. What is the contribution-margin ratio? (Round your answer to 1 decimal place.) 3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation. 4. How many pizzas must the company sell to earn a target profit of $74,000? Use the equation method.
1. Break-even point in units (pizzas) can be calculated using the contribution-margin approach:
Contribution Margin per Unit = Sales Price per Unit - Variable Cost per Unit
Contribution Margin per Unit = $10 - $2 = $8
Break-even Point in Units = Fixed Expenses / Contribution Margin per Unit
Break-even Point in Units = $68,000 / $8 = 8,500 pizzas
2. Contribution-margin ratio can be calculated as follows:
Contribution Margin Ratio = (Contribution Margin per Unit / Sales Price per Unit) x 100
Contribution Margin Ratio = ($8 / $10) x 100 = 80%
3. Break-even sales revenue can be calculated using the contribution-margin ratio:
Break-even Sales Revenue = Fixed Expenses / Contribution Margin Ratio
Break-even Sales Revenue = $68,000 / 0.8 = $85,000
4. To calculate the number of pizzas needed to earn a target profit of $74,000, we can use the equation method:
Target Profit = (Unit Contribution Margin x Number of Units) - Fixed Expenses
$74,000 = ($8 x Number of Units) - $68,000
$74,000 + $68,000 = $8 x Number of Units
$142,000 = $8 x Number of Units
Number of Units = $142,000 / $8 = 17,750 pizzas
Therefore, the company must sell 17,750 pizzas to earn a target profit of $74,000.
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Under The Accrual Basis Of Accounting, Adjusting Entries Are A.Only Needed Under The Cash Basis Of Accounting. B.Not Needed. C.Recorded At The End Of The Reporting Period. D.Only Needed For Expense Accounts
Under the accrual basis of accounting, adjusting entries are
a.only needed under the cash basis of accounting.
b.not needed.
c.recorded at the end of the reporting period.
d.only needed for expense accounts
Under the accrual basis of accounting, adjusting entries are recorded at the end of the reporting period.
The accrual basis of accounting recognizes revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid. This is in contrast to the cash basis of accounting, which recognizes revenue when cash is received and expenses when cash is paid.
Adjusting entries are necessary under the accrual basis of accounting to ensure that all revenues and expenses are recorded in the correct period. For example, if a company earns revenue in December but does not receive payment until January, an adjusting entry would be made in December to record the revenue. Similarly, if a company incurs an expense in December but does not pay for it until January, an adjusting entry would be made in December to record the expense.
Adjusting entries are generally recorded at the end of the reporting period, which is usually the end of the month or the end of the fiscal year. This is because the accrual basis of accounting requires that all revenues and expenses be reported for the entire reporting period.
Here are some examples of adjusting entries:
Accrued revenue: When a company has earned revenue but has not yet received payment, an adjusting entry is made to record the revenue. The adjusting entry would debit Accounts Receivable and credit Revenue.
Accrued expenses: When a company has incurred an expense but has not yet paid for it, an adjusting entry is made to record the expense. The adjusting entry would debit Expenses and credit Accounts Payable.
Prepaid expenses: When a company pays for an expense in advance, an adjusting entry is made to record the expense. The adjusting entry would debit Expenses and credit Prepaid Expenses.
Deferred revenue: When a company receives payment in advance for goods or services that have not yet been provided, an adjusting entry is made to record the revenue. The adjusting entry would debit Cash and credit Deferred Revenue.
Adjusting entries are an important part of the accrual basis of accounting. They ensure that all revenues and expenses are recorded in the correct period, which provides a more accurate picture of the company's financial performance.
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Memphis Company anticipates total sales for April, May, and June of $900,000,$1,000,000, and $1,050,000 respectively, Cash sales are normally 20% of total sales. Of the credit sales, 35% are collected in the same month as the sale, 60% are collected duning the first month after the sale, and the remaining 5% are collected in the second month after the sale Compue the amount of accounts receivable reported on the company's budgeted balance sheet for June 30
To compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30, we need to calculate the credit sales for each month and then determine the collections for each month.
First, let's calculate the credit sales for each month:
April credit sales = Total sales for April - Cash sales for April
April credit sales = $900,000 - ($900,000 * 20%) = $900,000 - $180,000 = $720,000
May credit sales = Total sales for May - Cash sales for May
May credit sales = $1,000,000 - ($1,000,000 * 20%) = $1,000,000 - $200,000 = $800,000
June credit sales = Total sales for June - Cash sales for June
June credit sales = $1,050,000 - ($1,050,000 * 20%) = $1,050,000 - $210,000 = $840,000
Next, let's calculate the collections for each month:
April collections = 35% of April credit sales
April collections = $720,000 * 35% = $252,000
May collections = 60% of April credit sales + 35% of May credit sales
May collections = ($720,000 * 60%) + ($800,000 * 35%) = $432,000 + $280,000 = $712,000
June collections = 60% of May credit sales + 35% of June credit sales + 5% of April credit sales
June collections = ($800,000 * 60%) + ($840,000 * 35%) + ($720,000 * 5%) = $480,000 + $294,000 + $36,000 = $810,000
Finally, we can calculate the accounts receivable for June 30:
Accounts receivable = June credit sales - June collections
Accounts receivable = $840,000 - $810,000 = $30,000
Therefore, the amount of accounts receivable reported on the company's budgeted balance sheet for June 30 is $30,000.
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Question 2. What is the definition of the following terms in Supply Chain Management? Explain with examples. a) Safety Stock. b) Holding or Carrying Cost in Stock Management. c) B.O.M. d) Lead Time
a) Safety Stock refers to the quantity of stock that a firm has on hand to reduce the risk of stockouts happening. Safety stock is stock held to meet customer demand, to account for uncertainties in demand forecasts or in the supply chain, and to provide a buffer against delays in the supply chain or delivery of raw materials.
Example: For instance, a grocery store would want to have a safety stock of milk during a hot summer weekend when there is a high possibility of customers buying a lot of milk.
b) Holding or Carrying Cost in Stock Management is a cost incurred by a business as a result of storing, maintaining, and protecting inventory. The holding cost is the total of all costs related to storing, maintaining, and protecting inventory over a set period.
Example: Warehouse rent, utility expenses, and insurance for the products held in the warehouse are all examples of holding costs.
c) B.O.M. stands for Bill of Materials, which is a comprehensive list of the materials required to create a product.
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Which statement is an accurate depiction of cloud computing? a.It is difficult to access. b.It is expensive to implement. c.It is not very secure. d.It offers flexible capacity.
Tahlia is shopping online for jeans and she clicks on a style she likes. The site quickly presents her with a close-up view and additional information that will help her make a decision. When she adds the jeans to her shopping bag, the website quickly shows her that other customers that purchased the same pair of jeans also purchased a particular shirt and boots. As the retailer's website learns more about Tahlia and her purchase preferences, it is able to push other ideas toward her, and potentially increase the online retailer's units per transaction. The technology that generates this type of intelligence and personalization is called a.the immersive internet. b.social media. c.machine learning. d.blockchain personalization.
The accurate depiction of cloud computing is that it offers flexible capacity. Option D is the correct answer.
What is cloud computing?
Cloud computing is a model that allows for on-demand network access to a shared pool of configurable computing resources. Such resources include computing power, servers, storage, applications, and services. These resources can be accessed using a variety of devices with internet access and the appropriate credentials.
Accurate depiction of cloud computing
Cloud computing has become increasingly popular because it offers an array of benefits, including:
Flexible capacity: Because cloud computing relies on virtualization, computing resources can be added or removed as needed to meet demand. This makes it easier to handle large data workloads, and can save businesses a lot of money.Ease of use: One of the primary benefits of cloud computing is that it allows for easy access to data from anywhere. This is particularly useful for remote workforces and businesses with multiple locations.Reduced cost: Businesses don't have to buy, install, or maintain their own servers, which can be very expensive. With cloud computing, businesses can save a significant amount of money on hardware and maintenance costs.Scalability: As a business grows, its computing needs change. Cloud computing makes it easy to scale up (or down) computing resources as needed without the need for major investments in new hardware.Security: Many cloud computing providers offer advanced security features to protect data from unauthorized access or theft. This includes measures such as encryption, user authentication, and multi-factor authentication.
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Henderson's Hardware has an ROA of 8%, a 2% profit margin, and an ROE of 16%. What is its total assets turnover? Round your answer to two decimal places. What is its equity multiplier? Round your answer to two decimal places.
To calculate Henderson's Hardware's total assets turnover and equity multiplier, we need to use the provided financial ratios.
1. Total Assets Turnover:
Total Assets Turnover measures how efficiently a company utilizes its assets to generate sales. It is calculated by dividing net sales by average total assets.
Given the profit margin of 2%, we can use the following formula to calculate the total assets turnover:
Profit Margin = Net Income / Net Sales
Net Income = Profit Margin * Net Sales
Since ROA (Return on Assets) is 8%, we can use the formula:
ROA = Net Income / Average Total Assets
By substituting the values, we get:
8% = (2% * Net Sales) / Average Total Assets
Solving for Net Sales, we find:
Net Sales = (8% * Average Total Assets) / 2%
Now, to calculate the total assets turnover, we divide Net Sales by Average Total Assets:
Total Assets Turnover = Net Sales / Average Total Assets
2. Equity Multiplier:
The Equity Multiplier measures the financial leverage employed by a company. It is calculated by dividing average total assets by average total equity.
Given that ROE (Return on Equity) is 16%, we can use the formula:
ROE = ROA * Equity Multiplier
16% = 8% * Equity Multiplier
Solving for the Equity Multiplier, we find:
Equity Multiplier = ROE / ROA
Now we can proceed to calculate the values.
Please provide the average total assets and average total equity for Henderson's Hardware, as they are required to compute the total assets turnover and equity multiplier.
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Tent & Tarp Corporation is a manufacturer of outdoor camping equipment. The company was incorporated ten years ago. It is authorized to issue 50,000 shares of $10 par value 5% preferred stock. It is also authorized to issue 500,000 shares of $1 par value common stock. It has issued 5,000 common shares and 2,000 of the preferred shares. The corporation has never declared a dividend and the preferred shares are one years in arrears. Tent & Tarp has the following transactions:
Mar. 1 Declares a cash dividend of $10,000
Mar. 30 Pays the cash dividend
Journalize these transactions for March 1st and March 30th.
March 1:
Debit: Retained Earnings $10,000
Credit: Dividends Payable $10,000
March 30:
Debit: Dividends Payable $10,000
Credit: Cash $10,000
Since the preferred shares are one year in arrears, any dividends paid to common stockholders must first be paid to the preferred stockholders before any can be paid to the common stockholders. However, since the company has not declared or paid any dividends in the past, there are no accumulated dividends on the preferred stock that must be paid before dividends can be paid to the common stockholders.
When a company declares a dividend, it is obligated to pay the dividend to its shareholders on the payment date. The declaration of a dividend creates a liability on the company's balance sheet called dividends payable. On March 1st, Tent & Tarp Corporation declared a cash dividend of $10,000, which increased the dividends payable liability by $10,000 and decreased the retained earnings by the same amount.
In this case, since the company has not declared or paid any dividends in the past, there are no accumulated dividends on the preferred stock that must be paid before paying dividends to the common stockholders. Therefore, when the company pays the dividend on March 30th, it can simply debit the dividends payable liability for $10,000 and credit cash for the same amount to reflect the payment made.
However, if there were accumulated dividends on the preferred stock that had not been paid, the company would have to pay those accumulated dividends before paying any dividends to the common stockholders or make arrangements with the preferred stockholders to waive their right to receive the accumulated dividends. This is because preferred stockholders have a priority claim on dividend payments over the common stockholders.
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1.76points
ItemSkipped
Item 8
Here are the returns on two stocks.
Digital Cheese
Executive Fruit
January
+17
+7
February
−3
+2
March
+5
+4
April
+7
+15
May
−4
+3
June
+3
+5
July
−2
−3
August
−8
−2
Required:
a-1. Calculate the variance and standard deviation of each stock.
a-2. Which stock is riskier if held on its own?
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c. Is the variance more or less than halfway between the variance of the two individual stocks?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B
Req C
Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Digital Cheese Retum
Executive Fruit Return
Variance
%
%
Standard deviation
Variance of Digital Cheese = 73.2%, Standard deviation of Digital Cheese = 8.55%. Variance of Executive Fruit = 32.8%, Standard deviation of Executive Fruit = 5.73%.
a-1. Calculation of the variance and standard deviation of each stock: a-2. To find out which stock is riskier if held on its own, compare the standard deviations. The higher the standard deviation, the riskier the stock is considered to be. As such, Digital Cheese is riskier if held on its own.b. Calculation of the returns in each month of a portfolio that invests an equal amount each month in the two stocks:In this case, we have a portfolio that invests an equal amount in both stocks, every month. Let’s assume that we invest $100 in each stock, every month, so we will have a portfolio of $200 every month. The returns for the portfolio are the weighted sum of the returns of each stock in the portfolio, where the weights are the fraction of the portfolio invested in each stock. Thus, we can calculate the returns of the portfolio as follows:MonthReturn for Digital Cheese (X)Return for Executive Fruit (Y)Return for Portfolio (W)January+17+70.12 × 7 = +4.90February−3+20.12 × 2 = −0.50March+5+40.12 × 4 = +2.70April+7+150.12 × 15 = +10.70May−4+30.12 × 3 = −0.90June+3+50.12 × 5 = +3.30July−2−30.12 × 3 = −1.80August−8−20.12 × 2 = −2.20Total19.30
b. Calculation of the returns in each month of a portfolio that invests an equal amount each month in the two stocks:c. Calculation of whether the variance is more or less than halfway between the variance of the two individual stocks:To calculate the variance of the portfolio, we need to sum up the squared deviations from the mean (or the weighted mean in this case), for each return in the portfolio. We can then divide this sum by the total number of returns, minus 1. Variance of the Portfolio = [(4.90 − 19.30/8)2 + (−0.50 − 19.30/8)2 + (2.70 − 19.30/8)2 + (10.70 − 19.30/8)2 + (−0.90 − 19.30/8)2 + (3.30 − 19.30/8)2 + (−1.80 − 19.30/8)2 + (−2.20 − 19.30/8)2]/7 = 11.53%Therefore, the variance of the portfolio is 11.53%. As Digital Cheese has a variance of 73.2% and Executive Fruit has a variance of 32.8%, we can calculate whether 11.53% is more or less than halfway between the two. (73.2% + 32.8%)/2 = 53%Thus, the variance of the portfolio is less than halfway between the variance of the two individual stocks.
The variance of the portfolio is 11.53%. The variance of the portfolio is less than halfway between the variance of the two individual stocks.
c. Calculation of whether the variance is more or less than halfway between the variance of the two individual stocks.
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in a world where reserves are scarce, the impact on the foreign exchange market for dollars resulting from the fed selling euros in an unsterilized intervention will be
While a general expectation is for the U.S. dollar to appreciate in this scenario, the actual outcome may be subject to market dynamics and other relevant factors.
In a world where reserves are scarce, the impact on the foreign exchange market for dollars resulting from the Fed selling euros in an unsterilized intervention will generally lead to an appreciation of the U.S. dollar.
Unsterilized intervention refers to when a central bank intervenes in the foreign exchange market by buying or selling foreign currencies without offsetting the impact on domestic money supply. In this case, the Fed is selling euros, which means it is increasing the supply of euros in the market while decreasing its own holdings of euros.
As a result of this unsterilized intervention, the supply of euros increases relative to the demand for euros. The increased supply and reduced demand for euros will generally lead to a depreciation of the euro against other currencies, including the U.S. dollar. Consequently, the U.S. dollar is expected to appreciate in value relative to the euro.
However, it's important to note that the impact on the foreign exchange market can be influenced by various factors such as market conditions, investor sentiment, and other economic variables.
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Why might an economist be against a ban on incandescent light bulbs? a. A ban does not consider individual preference and willingness to pay. b. CFDs and LEDs are prohibitively expensive for income families. c. The use of incandescent light bulbs is accompanied by externalities. d. Bans are generally very expensive to enforce.
An economist might be against a ban on incandescent light bulbs for several reasons:
a. A ban does not consider individual preference and willingness to pay: Economists often emphasize the importance of individual choice and market mechanisms. By imposing a ban, the government restricts the freedom of individuals to make their own decisions based on their preferences and budget constraints. Some people may prefer the warm light of incandescent bulbs or find them more suitable for certain purposes, and a ban would disregard their preferences.
b. CFLs and LEDs are prohibitively expensive for low-income families: While compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs) are more energy-efficient alternatives to incandescent bulbs, they tend to be more expensive upfront. Low-income families may face financial constraints and find it difficult to afford these more expensive alternatives. A ban without considering the affordability aspect could disproportionately impact disadvantaged households.
c. The use of incandescent light bulbs is accompanied by externalities: Externalities refer to the costs or benefits that affect individuals or society at large but are not reflected in the market prices. Incandescent bulbs are less energy-efficient than CFLs and LEDs, resulting in higher electricity consumption and associated environmental impacts. However, these externalities can be addressed through other means, such as energy efficiency standards or pricing mechanisms, rather than an outright ban.
d. Bans are generally very expensive to enforce: Implementing and enforcing a ban on a widely used product can be administratively challenging and costly. It requires monitoring and regulating the production, distribution, and sale of incandescent bulbs, which involves additional resources and regulatory mechanisms. Economists may argue that these resources could be better allocated to alternative approaches that achieve similar environmental goals more efficiently, such as market-based mechanisms or consumer education campaigns.
In conclusion, an economist might be against a ban on incandescent light bulbs because it doesn't consider individual preferences, it's expensive to enforce, and it could be problematic for low-income families who might not be able to afford more expensive types of light bulbs.
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The outcomes of well-functioning markets A. are such that all sellers have the same marginal costs. B. are complicated by trade-offs. C. deliver output to those most willing and able to pay. D. are such that the marginal benefit of sellers matches the marginal benefit of buyers.
The correct answer is: D. are such that the marginal benefit of sellers matches the marginal benefit of buyers.
Well-functioning markets operate based on the principle of supply and demand. In these markets, the equilibrium price and quantity are determined by the intersection of the supply and demand curves. At this point, the marginal benefit (or value) that buyers are willing to pay for a good or service matches the marginal benefit (or cost) that sellers require to produce and offer that good or service.
This balance ensures that resources are allocated efficiently and that both buyers and sellers can maximize their individual gains from participating in the market. Therefore, option D is the most accurate statement among the given choices.
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Presented below is the format of the worksheet using the periodic inventory system presented in Appendix.
Trial balance Adjustments Adjusted Trial balance Income statement Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Indicate where the following items will appear on the worksheet: (a) Cash, (b) Beginning inventory, (c) Accounts payable, (d) Ending inventory.
To indicate where the following items will appear on the worksheet, we need to understand the purpose of each section of the worksheet.
The worksheet typically consists of the following sections:
Trial Balance: This section includes the unadjusted account balances from the general ledger.
Adjustments: This section is used to record any adjusting entries required at the end of the accounting period.
Adjusted Trial Balance: This section shows the adjusted balances after considering the adjustments.
Income Statement: This section summarizes the revenues and expenses to determine the net income or loss.
Balance Sheet: This section presents the assets, liabilities, and equity at a specific point in time.
Now, let's indicate where the given items will appear on the worksheet:
(a) Cash: Cash is typically found in the Trial Balance, Adjusted Trial Balance, and Balance Sheet sections. It will appear in the asset section of the Balance Sheet.
(b) Beginning Inventory: Beginning Inventory is an opening balance and will be included in the Trial Balance section. It will also be used in the calculation of Cost of Goods Sold on the Income Statement.
(c) Accounts Payable: Accounts Payable will appear in the Trial Balance, Adjusted Trial Balance, and Balance Sheet sections. It will be listed in the liability section of the Balance Sheet.
(d) Ending Inventory: Ending Inventory will not be directly recorded on the worksheet since it is determined by physical count or estimation at the end of the accounting period. However, the calculation of Cost of Goods Sold on the Income Statement will use the Beginning Inventory, Purchases, and adjustments made during the period.
To summarize:
(a) Cash: Trial Balance, Adjusted Trial Balance, and Balance Sheet sections.
(b) Beginning Inventory: Trial Balance section and used in the Income Statement.
(c) Accounts Payable: Trial Balance, Adjusted Trial Balance, and Balance Sheet sections.
(d) Ending Inventory: Not directly recorded on the worksheet but used in the calculation of Cost of Goods Sold on the Income Statement.
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Excel Online Structured Activity: WACC and optimal capital budget Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project 1 2 3 4 Cost of debt Cost $2,000 3,000 5,000 2,000 Cost of preferred stock The company estimates that it can issue debt at a rate of rg 9%, and its tax rate is 40%. It can issue preferred stock that pays a constant dividend of $4 per year at $59 per share. Also, its common stock currently sells for $33 per share; the next expected dividend, D₁, is $3.75; and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Project 1 X Open spreadsheet a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Project 2 Project 3 Project 4 Expected Rate of Return 16.00% 15.00 % % 13.75 12.50 Cost of retained earnings b. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations. % c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? 1%
a. Cost of each capital component: Cost of Debt: The cost of debt can be calculated using the formula: Cost of Debt = Cost of debt × (1 - Tax Rate) For each project.
Project 1: Cost of Debt = $2,000 × (1 - 0.40)
Project 2: Cost of Debt = $3,000 × (1 - 0.40)
Project 3: Cost of Debt = $5,000 × (1 - 0.40)
Project 4: Cost of Debt = $2,000 × (1 - 0.40)
Cost of Preferred Stock:
The cost of preferred stock is equal to the dividend payment divided by the market price of the preferred stock.
For each project:
Project 1: Cost of Preferred Stock = $4 / $59
Project 2: Cost of Preferred Stock = $4 / $59
Project 3: Cost of Preferred Stock = $4 / $59
Project 4: Cost of Preferred Stock = $4 / $59
Cost of Retained Earnings:
The cost of retained earnings can be calculated using the Gordon Growth Model formula:
Cost of Retained Earnings = (Dividend / Current Stock Price) + Growth Rate
For each project:
Project 1: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 2: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 3: Cost of Retained Earnings = ($3.75 / $33) + 0.05
Project 4: Cost of Retained Earnings = ($3.75 / $33) + 0.05
b. WACC (Weighted Average Cost of Capital):
WACC is calculated using the weighted average of the costs of each capital component, based on their respective proportions in the target capital structure.
WACC = (Weight of Debt × Cost of Debt) + (Weight of Preferred Stock × Cost of Preferred Stock) + (Weight of Retained Earnings × Cost of Retained Earnings)
For each project, use the target capital structure percentages:
Weight of Debt = 15%
Weight of Preferred Stock = 10%
Weight of Retained Earnings = 75%
c. Project Acceptance:
Compare the expected rate of return for each project with the calculated WACC. If the expected rate of return is higher than the WACC, the project should be accepted.
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National Bank just issued a new 40−year, non-callable bond at par (the current price of the bond is $1,000 ). This bond requires a coupon rate of 17% with semiannual payments and has a par value of $1,000. The tax rate is 35%. What is the after-tax cost of debt? 17% 10.75% 9.57% 11.05%
The after-tax cost of debt for the National Bank's bond is 11.05%. The after-tax cost of debt is calculated by adjusting the coupon rate for the tax savings resulting from the tax deductibility of interest payments.
In this case, the coupon rate is 17%, and the tax rate is 35%.
To calculate the after-tax cost of debt, we first determine the after-tax coupon payment. Since the bond has semiannual payments, the annual coupon payment is 17% of the par value, which is $1,000, resulting in $170. The after-tax coupon payment is calculated by multiplying the annual coupon payment by (1 - tax rate). Therefore, the after-tax coupon payment is $170 * (1 - 0.35) = $110.50.
Next, we calculate the after-tax cost of debt by dividing the after-tax coupon payment by the bond price. The bond price is given as $1,000. Therefore, the after-tax cost of debt is $110.50 / $1,000 = 0.1105, or 11.05%.
The after-tax cost of debt represents the effective interest rate that the National Bank will pay after accounting for the tax benefits. It is an important metric for evaluating the cost of financing through debt and helps in making investment and financing decisions.
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On November 1, 2021, XYZ Inc. accepted a three-month, 10%, $72,000 note from ABC Inc. in settlement of its account. Interest is due on the first day of each month, starting December 1. XYZ Inc's year ends are December 31. Prepare all journal entries for XYZ Inc. over the term of the note. Assume that the note is collected in full on the maturity date.
On November 1, 2021, XYZ Inc. received a $72,000 note from ABC Inc., with a three-month term and an annual interest rate of 10%, in settlement of its account. Interest on the note is due on the first day of each month, starting from December 1.
On November 1, 2021: XYZ Inc. would debit Notes Receivable for $72,000 and credit Accounts Receivable for $72,000 to record the acceptance of the note from ABC Inc.On December 1, 2021: XYZ Inc. would debit Interest Receivable for $600 (10% of $72,000) and credit Interest Revenue for $600 to record the accrued interest for the first month.On December 31, 2021: XYZ Inc. would debit Interest Receivable for $600 and credit Interest Revenue for $600 to adjust the accrued interest at the end of the fiscal year.On January 1, 2022: XYZ Inc. would debit Cash for $72,600 ($72,000 principal + $600 interest) and credit Notes Receivable for $72,000 and Interest Revenue for $600 to record the collection of the note in full, including the final interest payment.For more information on journal entries visit: brainly.com/question/31849985
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Melissa-Cook Corporation issued 260,000 shares of $20 par value, 7% preferred stock on January 1, 2018, for $5,850,000. In December 2020, Melissa-Cook declared its first dividend of $820,000. (a) Your answer is correct. Prepare Melissa-Cook's journal entry to record the issuance of the preferred stock. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Cash Preferred Stock Paid-in Capital in Excess of Par-Preferred Stock Debit 5850000 Credit 5200000 650000 (b) Your answer is partially correct. (b1) How much is the company's total paid-in capital after the issuance? Total Paid-in Capital $ _____ (b2) If the preferred stock had been no-par stock, how much would the company's total paid-in capital be after the issuance? Total Paid-in Capital $ _____
(a) Prepare the journal entry to record the issuance of preferred stock. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCreditCash$5,850,000Preferred Stock (260,000 shares x $20)$5,200,000Paid-in Capital in Excess of Par-Preferred Stock$650,000(b1) How much is the company's total paid-in capital after the issuance?Total paid-in capital = $5,200,000 + $650,000Total paid-in capital = $5,850,000(b2) If the preferred stock had been no-par stock, how much would the company's total paid-in capital be after the issuance?
Since it is no-par stock, the total amount of the preferred stock and any premium is credited to the preferred stock account. The company's total paid-in capital after the issuance of the preferred stock is $5,850,000.Account Titles and ExplanationDebitCreditCash$5,850,000Preferred Stock (260,000 shares x $20)$5,850,000Total Paid-in Capital$5,850,000Therefore, the company's total paid-in capital would be $5,850,000 if the preferred stock had been no-par stock.
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Australians buy 1.28 billion litres of sugar-sweetened drinks per annum (2012 figures). Consider the average price of these drinks to be $1.6/litre. Assuming a sales tax (hypothetical scenario) of 25% on soft drinks the price will be increased to $2/litre. The price elasticity of demand for soft drinks is -0.89. How will the increase in the price of soft drinks affect the demand for soft drinks? How much additional revenue will be raised by this tax?
The increase in the price of soft drinks is expected to lead to a decrease in demand by approximately 22.
the increase in the price of soft drinks from $1.6/litre to $2/litre will lead to a decrease in the demand for soft drinks due to the negative price elasticity of demand. the magnitude of the price elasticity of -0.89 indicates that a 1% increase in price will result in a 0.89% decrease in quantity demanded.
given the 25% increase in price (from $1.6/litre to $2/litre), we can calculate the approximate decrease in quantity demanded using the price elasticity formula:
% change in quantity demanded = price elasticity of demand * % change in price
% change in quantity demanded = -0.89 * 25% = -22.25% 25%.
to calculate the additional revenue raised by the tax, we need to multiply the tax rate (25%) by the quantity of soft drinks consumed annually (1.28 billion liters) and the price increase ($0.4/litre).
additional revenue = tax rate * quantity of soft drinks * price increaseadditional revenue = 0.25 * 1.28 billion * $0.4
additional revenue = $128 million
the tax on soft drinks is projected to generate an additional revenue of approximately $128 million.
in summary, the increase in the price of soft drinks due to the hypothetical sales tax will result in a decrease in demand for soft drinks by approximately 22.25%. additionally, the tax is expected to raise approximately $128 million in additional revenue.
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