Answer:
(a) materials = 25,000 units and
(b) conversion costs = 20,000 units
Explanation:
Note : I will assume the Weighted Average Cost Method for this question since the information provided allows so.
The equivalent units of production for
(a) materials and
Units Completed and Transferred 15,000
Units in ending Work in Process 10,000
Total 25,000
(b) conversion costs.
Units Completed and Transferred 15,000
Units in ending Work in Process 5,000
Total 20,000
A company issued 5%, 20-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 4%. Interest is paid semiannually. At what price did the bonds sell
Answer:
The bond was sold at $1,136.78.
Explanation:
Annual coupon = Bond face value * Coupon rate = $1000 * 5% = $50
Annual coupon discount factor = ((1 - (1 / (1 + r))^n) / r) .......... (1)
Where;
r = semi-annul interest rate = 4% / 2 = 2%, or 0.02
n = number of period = 20 years * Number of semiannuals in a year = 20 * 2 = 40 semi-annuals
Substituting the values into equation (1), we have:
Annual coupon discount factor = ((1-(1/(1 + 0.02))^40)/0.02) = 27.3554792407382
Present value of coupon = (Annual coupon * Annual coupon discount factor) / 2 = ($50 * 27.3554792407382) / 2 = $683.886981018455
Present value of the face value of the bond = Face value / (1 + r)^n = $1,000 / (1 + 0.02)^40 = $452.890415185236
Therefore, we have:
Price of bond = Present value of coupon + Present value of the face value of the bond = $683.886981018455 + $452.890415185236 = $1,136.77739620369
Approximating to 2 decimal places, we have:
Price of bond = $1,136.78
Therefore, the bond was sold at $1,136.78.
The expected return on a portfolio: Group of answer choices can be greater than the expected return on the best performing security in the portfolio. can be less than the expected return on the worst performing security in the portfolio. is independent of the performance of the overall economy. is limited by the returns on the individual securities within the portfolio. is an arithmetic average of the returns of the individual securities when the weights of those securities are unequal.
Answer:
is limited by the returns on the individual securities within the portfolio
Explanation:
Portfolio is simply defined as a list of securities showing how much is (or will be) invested in each of them.
The expected return on a portfolio is calculated as the weighted average of the expected returns on the securities that the portfolio involves. The weight of each security is the a Portion or a fraction of wealth invested in that security. Expected return on a portfolio of N securities is: rp= sum (Xr).
Expected Return is usually based on anticipated income and anticipated capital appreciation.
PLEASE HELP!! This is economics/business work. Will give brainliest if correct!!
Rainey Company's true cash balance at October 31 is $4,700. The following information is available for the bank reconciliation: Outstanding checks, $740 Deposits in transit, $540 Bank service charges, $110 The bank had collected an account receivable for Rainey Company, $1,200 The bank statement included an NSF check written by one of Ramsey's customers for $720. What was the unadjusted book balance at October 31
Answer: $4330
Explanation:
The unadjusted book balance at October 31 is calculated below:
True cash balance = $4700
Add: Bank service charge = $110
Add: NSF Check = $720
Less: Account receivable = $1200
Unadjusted book balance = $4330
Crane Company uses a periodic inventory system. Details for the inventory account for the month of January, 2020 are as follows: Units Per unit price Total Balance, 1/1/20 150$4.00$600 Purchase, 1/15/20 705.10 357 Purchase, 1/28/20 705.30 371 An end of the month (1/31/20) inventory showed that 110 units were on hand. If the company uses LIFO, what is the value of the ending inventory
Answer:
Crane Company
If Crane Company uses LIFO, the value of the ending inventory is:
= $440.
Explanation:
a) Data and Calculations:
Units Unit Cost Total Cost
1/1/20 inventory 150 $4.00 $600
1/15/20 Purchase, 70 5.10 357
1/28/20 Purchase, 70 5.30 371
Total 240 $1,328
1/31/20 inventory 110 $4.00 $440 ($4.00 * 110)
b) The LIFO method assumes that goods that are sold first are the last that were purchased. Therefore, the cost of the ending inventory is usually based on the cost of the earlier inventory purchased. In our case, the cost per unit was based on the beginning inventory balance.
A trade secret is a formula, device, process, method, or compilation of information that, when used in___________ , gives the owner an advantage over _______who do not know the ________information. In addition to considering the competitive advantage, a court will consider whether the information was , ________and___________ (and/or expensive) to obtain, when determining whether something is a trade secret. Another important consideration is whether the company made to __________protect it.
Fill in the blanks with words that would best complete the passage.
a. difficult
b. extraordinary efforts
c. interesting
d. the public domain
e. employees
f. commercial
g. reasonable efforts
h. desirable
i. conceal
j. readily available
Answer:
Business; competitors; secret; readily available; difficult; reasonable efforts.
Explanation:
A trade secret is a formula, device, process, method, or compilation of information that, when used in business, gives the owner an advantage over competitors who do not know the secret information.
In addition to considering the competitive advantage, a court will consider whether the information was, readily available and difficult (and/or expensive) to obtain, when determining whether something is a trade secret. Another important consideration is whether the company made reasonable efforts to protect it.
For example, the recipe and ingredients used in the manufacturing of popular soft drinks and alcoholic beverages is a trade secret that isn't known to many people around the world.
you are required to write a report and in this report you are to consider the importance of understanding the business environment
Answer:
The understanding of its business environment helps an organization to make realistic plans and ensure their effective implementation. It also helps thebusiness enterprise in identification of opportunities and threats.
Explanation:
I am not sure if this is what you wanted
Jayhawk Company reports current E&P of $450,000 and accumulated E&P of negative $297,500. Jayhawk distributed $500,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine’s tax basis in her Jayhawk stock is $48,250
1. How much of the $500,000 distribution is treated as a dividend to Christine?
2. What is Christine’s tax basis in her Jayhawk stock after the distribution?
3. What is Jayhawk’s balance in accumulated E&P on the first day of next year?
Answer:
1. The amount of the distribution treated as a dividend to Christine is equal to $450,000.
2. The amount of Christine’s tax basis in her Jayhawk stock after the distribution is equal to $0.
3. Jayhawk's balance in accumulated E&P on the first day of next year is equal to the negative $297,500.
Explanation:
1. How much of the $500,000 distribution is treated as a dividend to Christine?
The amount of the distribution treated as a dividend to Christine is the equal to the current E&P of $450,000 reported by Jayhawk Company.
2. What is Christine’s tax basis in her Jayhawk stock after the distribution?
This can b determined as follows:
Tax basis in Jayhawk stock after distribution = Max of (0, Current E&P + Previous tax basis - Distribution by Jayhawk') = Max of (0, $450,000 + $48,250 - $500,000) = Max of (0, - $1,750) = $0
Therefore, the amount of Christine’s tax basis in her Jayhawk stock after the distribution is equal to $0.
3. What is Jayhawk’s balance in accumulated E&P on the first day of next year?
Jayhawk's balance in accumulated E&P on the first day of next year is equal to the negative $297,500. This is because all the E&P of last year is paid as dividend.
Myrna and Geoffrey filed a joint tax return in 2018. Their AGI was $85,000, and itemized deductions were $24,700, which included $7,000 in state income tax and no other state or local taxes. In 2019, they received a $1,800 refund of the state income taxes that they paid in 2018. The standard deduction for married filing jointly in 2018 was $24,000.
Under the tax benefit rule, what amount of the state income tax refund is included in gross income in 2019?
Answer:
$700
Explanation:
Calculation for what amount of the state income tax refund is included in gross income in 2019
Standard deduction for married filing jointly in 2018 $24,000
Less itemized deductions ($24,700)
State income tax refund included in gross income in 2019 $700
($24,000-$24,700)
Therefore the state income tax refund that is included in gross income in 2019 will be $700
Froggatt Enterprises,a premier educational products company, experiences ups and downs in demand each year corresponding to major school holidays. The company maintains a steady workforce and uses overtime, inventory, and subcontracting to absorb fluctuations in demand. Expected demand, available capacities, and costs for the next four quarters are given below. There is no beginning inventory. Design a production plan that will satisfy demand at minimum cost.
Period Demand Regular Capacity Overtime Capacity Subcontracting Capacity
1 600 1000 500 500
2 2100 1000 500 500
3 800 1000 500 500
4 1800 1000 500 500
Regular production cost per unit $8
Overtime production cost per unit $10
Subcontracting cost per unit $12
Inventory holding cost per unit per period $1
Answer:
Answer is explained in the explanation section below.
Explanation:
Note: As this question contains tables, here I cannot insert table properly, so I have done it on excel spreadsheet and it is attached in the attachment below. Please refer to the attachment below for the minimum cost production plan.
Please refer to Attachment.
Priority should be given in the order mentioned below.
1. Maintain maximum capacity output even though demand is lower for the period because demand for the next period is higher and inventory holding costs are only $1 per unit per period.
2. Over time output for remaining demand, including demand for the following year, since it is less costly than subcontract production and inventory keeping costs are just $1 per unit per period.
3. There is no obligation for output to be subcontracted.
In your own words, discuss GAP management and then suggest a way to reduce the impact of its limitation. Do not duplicate limitations and solutions; that is, you can discuss the same limitation as a fellow student if you are able to suggest a different way of reducing the impact.
Answer:
Gap management is a strategy which every business follows. A business can be successful only if it sets goals for its future.
Explanation:
Gap management is the difference between where an organization stands today and where it wants to be in future. A company's management will set its own targets and then sets position of the company. There are limitation of gap management as there can be targets which are sometimes unachievable or there are some external forces which hinders the business progress.
Portfolio Returns i. stock has mean of 8% and stdev of 20%; ii bond has mean of 6% and stdev of 15%; iii correlation b/w stock and bond of -0.3; iv. Risk free rate for cash lending and borrowing is at 1%. a. What is the mean and stdev of a portfolio of that is 60% in stock and 40% in bond (3 points)
Answer:
Portfolio Mean = 7.2%
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%
Explanation:
The mean return of a portfolio consisting of two securities can be calculated by multiplying the weight of each security in the portfolio by the mean return of that security and adding the products for each security. The formula for two asset or security portfolio return (mean) can be written as follows,
Portfolio Mean = wA * rA + wB * rB
Where,
w represents the weight of each securityr represents the mean return of each securityPortfolio Mean = 60% * 8% + 40% * 6%
Portfolio Mean = 7.2%
The standard deviation is a measure of the total risk. The standard deviation of a portfolio consisting of two securities can be calculated using the attached formula.
Portfolio Stdev = √(0.6)² (0.2)² + (0.4)² (0.15)² + 2(0.6) (0.4) (-0.3) (0.2) (0.15)
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%
The multiplier effect occurs when an initial increase (or decrease) in autonomous expenditure produces a greater increase (or decrease) in real GDP than the initial change. In which type of discretionary fiscal policy does the multiplier play a role? tax changes only neither government spending changes nor tax changes government spending changes only both government spending changes and tax changes Assume a marginal propensity to consume (MPC) of 0.5. Which discretionary fiscal policy would have a more pronounced impact on the economy? A 800 billion dollar increase in government spending, or a 800 billion dollar tax cut, would both have an equal impact on the economy. A 800 billion dollar increase in government spending would have a more pronounced impact on the economy. A 800 billion dollar tax cut would have a more pronounced impact on the economy.
Answer:
The answer is "Choice d and Choice b".
Explanation:
In question 1:
The multiplier effect is produced whenever an initial rise (or decrease) of self-employed market capitalization (or decreases) GDP Growth higher than the original change. Where both increases in public spending or adjustments in taxes are produced by a budgetary monetary strategy, a multiplier mostly on the economy plays a major role in public spending and new taxes.
In question 2:
This marginal demand risk of 0.5 would have a more noticeable influence on financial spending, via an 800 billion dollar increase in government expenditure. This will have more major economic effects on fiscal policy. More noticeable effects of increased spending will have on the aggregate throughout the economy.
The use of government budget funding policies to impact economic factors, particularly macroeconomic variables such as aggregate consumer spending, employment, inflation, and economic growth, is referred to as fiscal policy.
How is a fiscal policy that is discretionarily chosen?The multiplier impact occurs anytime an initial increase (or drop) in self-employed market capitalization (or reduces) GDP Growth that is greater than the original change.
When a fiscal monetary strategy produces both increases in public expenditure and tax adjustments, a multiplier based primarily on the economy plays a significant role in both public spending and new taxes.
This marginal demand risk of 0.5 would have a greater impact on financial expenditures, resulting in an 800 billion dollar rise in government spending.
This will have a greater impact on budgetary policy. The aggregate consequences of higher expenditure will be more visible throughout the economy.
Thus, Options B and D are correct.
For more information about discretionary fiscal policy refer to the link:
https://brainly.com/question/1114207
You are planning to save for retirement over the next 35 years. To do this, you will invest $710 per month in a stock account and $310 per month in a bond account. The return of the stock account is expected to be 9.1 percent, and the bond account will earn 5.1 percent. When you retire, you will combine your money into an account with an annual return of 6.1 percent. Assume the returns are expressed as APRs.
How much can you withdraw each month from your account assuming a 30-year withdrawal period?
Answer:
monthly payment = $16,162.87
Explanation:
future value of stock account = $710 x= [(1 + 0.00758333)⁴²⁰- 1 ] / 0.00758333 = $2,142,045
future value of bond account = $310 x= [(1 + 0.00425)⁴²⁰- 1 ] / 0.00425 = $360,116
future value = $2,502,161
PVIFA = [1 - 1/(1 + 0.0050833)³⁶⁰ ] / 0.0050833 = 165.019
monthly payment = $2,502,161 / 165.019 = $16,162.87
Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending. For each form of private spending, indicate whether it represents consumption or investment.
Private Spending Consumption Investment
People buying houses
People buying newspapers
People buying food
Firm buying trash cans
Firm buying computers
For each form of government spending, indicate whether it represents consumption or investment.
Government Spending Consumption Investment
Building tunnels
Buying medical equipment
Building public housing
Payment for public safety employees
Answer:
For each form of private spending, indicate whether it represents consumption or investment.
Private Spending
People buying houses Investment
People buying newspapers Consumption
People buying food Consumption
Firm buying trash cans Investment
Firm buying computers Consumption
For each form of government spending, indicate whether it represents consumption or investment.
Government Spending
Building tunnels Investment
Buying medical equipment Investment
Building public housing Investment
Payment for public safety employees Consumption
Explanation:
As a manager seeks to develop her leadership skills, she should be aware that:______.
A. There is one best leadership style to which all managers should aspire
B. Leadership is first and foremost about establishing a deep knowledge of their industry
C. Ideally, managers will have both management and leadership skills
D. Leadership is primarily about personal efficiency
Answer:
B. Leadership is first and foremost about establishing a deep knowledge of their industry.
Explanation:
Leadership is the capacity of a person to influence the actions of others to deliver on set goals and objectives. A leader is someone who gets things done through others.
A manager who seeks to develop her leadership skills should be aware that leadership is first and foremost about establishing a deep knowledge of their industry. As an aspiring leader, a manager must have full knowledge of the industry he or she is working. This is important because the manager would be able to effectively direct, control, motivate and influence people he is leading due to the vast experience gotten from the industry he is operating.
Answer:
Ideally, managers will have both management and leadership skills
Explanation:
just took the test
22. An employment contract is an agreement between the manager and top management designed to provide incentives for the manager to act: Group of answer choices Consistently with that of other managers. Independently to achieve the manager's objectives. Independently to achieve top management's objectives. Independently to achieve the customer's objectives.
Answer:
Independently to achieve top management's objectives.
Explanation:
A contract can be defined as an agreement between two or more parties (group of people) which gives rise to a mutual legal obligation or enforceable by law.
There are different types of contract in business and these includes: fixed-price contract, cost-plus contract, bilateral contract, implies contract, unilateral contract, adhesion contract, unconscionable contract, option contract, express contract, etc.
Hence, an employment contract is an agreement between the manager and top management designed to provide incentives for the manager to act independently to achieve top management's objectives because they are playing a fiduciary duty or role.
Both __________ and __________ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions
Answer:
b. market commonality; resource similarity
Explanation:
The two things that can impact the awareness and the motivation so that the firm could take the actions and responses is that the market commodity where the company deals with and the similarity of the resources. These two things would be required that can impact the awareness and the motivation level of the firm
hence, the option b is correct
Following is the stockholders’ equity section from the The Coca-Cola Company 2017 balance sheet. (All amounts in millions except par value.)
The Coca-Cola Company Shareowners' Equity December 31, 2017
Common stock-$0.25 par value; authorized-11,200 shares; issued-7,040 shares $1,760
Capital surplus 15,864
Reinvested earnings 60,430
Accumulated other comprehensive income (loss) (10,305)
Treasury stock, at cost-2,781 shares (50,677)
Equity attributable to shareowners of The Coca-Cola Company $17,072
Required:
a. Compute the number of shares outstanding.
b. At what average price were the Coca-Cola shares issued? Round answer to two decimal places.
Answer and Explanation:
a. The computation of the no of shares outstanding is shown below:
No. of shares outstanding is
= shares issued - shares held as treasury stock
= 7,040 shares - 2,781 shares
= 4,259 shares
b. The average price is
= (Common Stock value + Capital Surplus) ÷ No. of shares issued
=($1,760 + $15,864) ÷ 4259 shares
= $4.14
What is a planned economy regulated by?
Explanation:
The government regulates the interactions between producers and consumers.
Fischer Company has outstanding 8,000 shares of $100 par value, 5% preferred stock, and 50,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company declares and pays the regular $5 per share cash dividend on preferred stock and a $1.80 per share cash dividend on common stock. What is the total dividends paid by Fischer Company
Answer:
The appropriate solution is "$130,000".
Explanation:
The given values are:
No. of common shares outstanding
= 50,000
Dividend per share
= $1.80
No. of preferred shares outstanding
= 8,000
Dividend per share
= $5
Now,
The total dividend on common shares will be:
= [tex]No. \ of \ common \ shared \ outstanding\times Dividend \ per \ share[/tex]
On substituting the values, we get
= [tex]50,000\times 1.80[/tex]
= [tex]90,000[/tex] ($)
The total dividend on preferred stock will be:
= [tex]No. \ of \ preferred \ shares \ outstanding\times Divided \ per \ share[/tex]
On substituting the values, we get
= [tex]8,000\times 5[/tex]
= [tex]40,000[/tex] ($)
Hence,
The total dividend paid by company will be:
= [tex]Total \ dividend \ on \ common \ shares +Total \ dividend \ on \ preferred \ stock[/tex]
= [tex]90,000+40,000[/tex]
= [tex]130,000[/tex] ($)
Thus the above is the correct answer.
e) Wesley Publishing has an office in England that would like the American office to share their
data on profits. What steps should the American office take in order to determine the profits in
pounds for the England office? (2 points)
I
Answer:
He should make sure he has the right profits then he should see how much things are going to cost, and then finalize it.
Explanation:
Sorry y'all I am having troubles with this assignment sorry if I get it wrong
Carter Corporation's partial income statement after its first year of operations is as follows: Income before income taxes $3,750,000 Income tax expense Current $1,035,000 Deferred 90,000 1,125,000 Net income $2,625,000 Carter uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $2,400,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 20% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year
Answer: $2,850,000
Explanation:
The amount was deducted for depreciation on the corporation's tax return for the current year will be calculated as:
Defered income tax = $90,000
Tax rate = 20%
We will calculate the difference between the book income and the taxable income which will be:
= $90000 ÷ 20%
= $90000 × 100/20
= $90000 × 5
= $450000
Therefore, the amount that was deducted for depreciation on the corporation's tax return for the current year will be:
= $2,400,000 + $450,000
= $2,850,000
1A.) Assume a simple economy where only burgers are traded. In a year, 100 burgers are traded at the rate of $5 per burger. Assume two scenarios:
a. The economy has $100 in the form of 20 pieces of $5 bills.
b. The economy has $100 in the form of 100 pieces of $1 bills.
Calculate the velocity of money for both situations.
1B.) For a country A, the GDP growth rate is 8 percent and inflation is 4 percent. If the velocity of money remains constant, what is the change in real money balances?
Answer:
a. 5
b. 5
1B. 8%
Explanation:
a. MV = PY
Money Supply * Velocity of money = Price level * Real GDP
100 * V = 5 * 100
100V = 500
V = 5
b. Velocity = 5
It will not change because the money supply for both questions is the same = $100.
1.B. Change in real money balances = 8%
The change in real money balances will be the same as the GDP growth rate if velocity is constant.
The Mighty Music Company produces and sells a desktop speaker for $100. The company has the capacity to produce 50,000 speakers each period. At capacity, the costs assigned to each unit are as follows: Unit level costs $ 45 Product level costs $ 15 Facility level costs $ 5 The company has received a special order for 500 speakers. If this order is accepted, the company will have to spend $15,000 on additional costs. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order
Answer:
$75
Explanation:
Calculation to determine what selling price will the company be indifferent between accepting and rejecting the special order
Using this formula
Selling price between accepting and rejecting the special order= ( Additional cost ÷ Units sold number) + Unit level Cost
Let plug in the formula
Selling price between accepting and rejecting the special order= ( $15,000 ÷ 500 ) + $45
Selling price between accepting and rejecting the special order= $30 + $45
Selling price between accepting and rejecting the special order= $75
Therefore The selling price that the company will be indifferent between accepting and rejecting the special order is $75
Provide an example of two companies that have built in effective co-opetition. Briefly explain the benefit of the relationship describe one job that once existed but today is obsolete or slowly becoming obsolete because of technology provide an exampled of two companies that have built a strategic alliance. Briefly explain the benefits of the relationship.
Answer:
Microsoft and Apple, Samsung and sony.
Explanation:
Samsung electronics and sony formed an agreement in 2004 for use of shared knowledge and resources in designing flat television screens. A strategic alliance is a collaboration or a synergy where each partner gets the benefits of the alliance. Jobs such as travel agencies, cashiers, textile workers. A strategic alliance consists of healthy behavior, long terms goals, and better customer satisfaction.In an indirect message, valid reasons for the refusal are presented before the bad news. Which option is most effective? a.If we accepted your rather dated desktops and laptops, we would risk software incompatibility, high repair bills, and substantial replacement costs for missing input and output devices. b.We're very sorry but our policy does not allow us to accept donations of used computing equipment. c.We had to establish guidelines for the acceptance of used computing equipment because only new computers provide warranties, compatible software, and come with matching peripherals.
Answer:
c.We had to establish guidelines for the acceptance of used computing equipment because only new computers provide warranties, compatible software, and come with matching peripherals.
Explanation:
An indirect message aims to soften bad news, to achieve this goal the message is transmitted through a soothing speech, where there is an explanation of the reasons for the bad news before reaching the fact, in order to cushion the impact that the message may cause. Indirect discourse is more accepted in the case of the transmission of bad news, as individuals generally tend to better understand the facts when they are explained through evidence.
Therefore, the letter c corresponds more adequately to an indirect speech.
g Marlboro Construction enters into a contract with a customer to build a warehouse for $725,000 on April 15, 2021 with a completion date of September 15, 2021. The contract contains a performance clause such that Marlboro will receive a $12,000 bonus for each week the contract is completed early. Likewise, the agreed contract price will be reduced by $12,000 for each week the contract is completed after the due date. These clauses are commonly included in Marlboro contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability September 1 10% September 8 30% September 15 25% September 22 20% September 29 15% The transaction price for this transaction, using the most likely amount method is A. $471,250 B. $725,000 C. $737,000 D. $713,000
Answer:
B. $725,000
Explanation:
The expected value for the contract will be :
10% ($725,000 + 12,000 + 12,000 ) + 30% ($725,000 + 12,000 ) + 25% ($725,000 ) + 20% ($725,000 - 12,000 ) + 15% ($725,000 - 12,000 - 12,000 )
= $ 74,900 + $221,100 +$181,250 + $142,600 + $105,150 = $725,000
Marlboro constructions expected value of the contract is 725,000 based on the given probability estimates of contract completion.
Which of the following addresses the economic question of how to produce?
a. growing corn instead of potatoes
b. requiring individuals to complete specific types of work
c. producing more capital goods and fewer consumer products
d. selling natural resources to other countries
Answer:
b. requiring individuals to complete specific types of work
Explanation:
Among the following options, the statement that addresses the economic question of how to produce is "requiring individuals to complete specific types of work"
This is because as a producer one may choose to use either a certain individual to complete a specific type of work or employ the service of machinery, an ex-pat from another country, or just a technical expert in a government-funded organization.
Therefore, each of the options will yield a different cost to the producer.
The management of Mitchell Labs decided to go private in 2002 by buying all 3.30 million of its outstanding shares at $17.50 per share. By 2006, management had restructured the company by selling off the petroleum research division for $13.50 million, the fiber technology division for $9.25 million, and the synthetic products division for $23 million. Because these divisions had been only marginally profitable, Mitchell Labs is a stronger company after the restructuring. Mitchell is now able to concentrate exclusively on contract research and will generate earnings per share of $1.40 this year. Investment bankers have contacted the firm and indicated that if it reentered the public market, the 3.30 million shares it purchased to go private could now be reissued to the public at a P/E ratio of 12 times earnings per share.
Required:
a. What was the initial cost to Mitchell Labs to go private?
b. What is the total value to the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3.30 million shares (based on current earnings and an anticipated P/E of 12)?
c. What is the percentage return to the management of Mitchell Labs from the restructuring?
Answer: See explanation
Explanation:
a. What was the initial cost to Mitchell Labs to go private?
This will be calculated as:
= Price per share × Number of shares
= $17.50 × 3.3 million
= $57.75 million
b. What is the total value to the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3.30 million shares (based on current earnings and an anticipated P/E of 12)?
This will be calculated as:
= $13.5 Million + $9.25 Million + $23 Million + [(12 X $ 1.40) × 3.3 Million]
= $45.75 Million + $55.44 Million
= $101.19 Million
c. What is the percentage return to the management of Mitchell Labs from the restructuring?
This will be calculated as:
= {$101.19 Million - $57.75 Million} /$57.75 Million
= $43.44/$57.75 × 100
= 0.7522 × 100
= 75.22%
