The smartest thing a firm involved in an oligopoly market could do is to cut their prices and capture more of the market share from their competitors.

a) We learned in class that the best move would be to raise prices.

b) We also learned that cutting prices on an elastic demand curve will be a smart way of getting more revenues.

c) Cutting prices is no gaurantee of success. Indeed if the firm does capture more market share and customers, then their costs will go up and it will be harder for them because they will have lower profit margins - if they can earn any profit at all.

d) Both A and C are correct.

Answers

Answer 1

Answer:

Correct Answer:

c) Cutting prices is no gaurantee of success. Indeed if the firm does capture more market share and customers, then their costs will go up and it will be harder for them because they will have lower profit margins - if they can earn any profit at all.

Explanation:

An oligopoly market is a market form wherein a market or industry is dominated by a small group of large sellers. A pure monopoly maximizes profits by producing that quantity where marginal revenue = marginal cost. however, it is much more difficult for an oligopoly to determine at what output it can maximize its profit.


Related Questions

All of the following statements regarding convertible bonds are true except:_________.
A. Holders of convertible bonds can generally decide whether to convert to stock.
B. Holders of convertible bonds have the potential to profit from increases in stock price.
C. Holders of convertible bonds can choose when to convert to stock.
D. Holders of convertible bonds have the option to not convert and continue receiving bond interest payments and par value at maturity.
E. Holders of convertible bonds can choose how many shares of stock to receive at conversion.

Answers

Answer: Holders of convertible bonds can choose how many shares of stock to receive at conversion

Explanation:

A convertible bond is a debt security that yields the payment of interest, but can also be converted into equity shares or common stock that are predetermined.

The option that holders of convertible bonds can choose how many shares of stock to receive at conversion is wrong. This is because the number I shares that will be eventually converted will already have been fixed.

Three phenomena that tend to bias the expected completion time of projects are inflated time estimates, activity time variability with path interdependencies, and resource dependence.


a. True

b. False

Answers

Answer: True

Explanation:

The expected completion time of a project is determined when the duration of every activity that takes place on the critical path is established.

Three phenomena that tend to bias the expected completion time of projects are inflated time estimates, activity time variability with path interdependencies, and resource dependence.

Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.​ ​What would the profits be for Mattie’s Dairy if Irene does not enter the market?

Answers

Answer:

"Threaten to always accommodate" is the correct choice.

Explanation:

As we acknowledge accommodation seems to be the phase wherein we change current understanding in anything other than a sense that new information of interest is integrated. And then we can tell whether Mattie won't try to compromise Irene and will therefore surely consider to "intimidate to accommodate" Irene throughout all times. Accommodate means, for example, introducing a piece of different information about what another person asks mother in some kind of a railway station what it's really. Mother says this is train and starts running on what seems like a device like buses running on roadways.

2. A constraint which represents a target value for a problem is called a a. fuzzy constraint. b. vague constraint. c. preference constraint d. soft constraint

Answers

Answer: soft constraint

Explanation:

The soft constraint is defined as

a constraint on a random variable (X)that permits overruling the constraint.a function from the domains in its scope(set of variables ) into a real number.

Hence, a  constraint which represents a target value for a problem is called a  soft constraint.

Thus the correct option is d. soft constraint.

Research an organization that makes people their primary focus and another organization that makes productivity and efficiency their primary focus. Compare, contrast, and discuss the control techniques and measurements for each organization.

Answers

Answer:

Ritz Carlton hotel focuses on people.

Sony  Focuses on their products.

Explanation:

Ritz Carlton has created its leading brand by providing great ambiance to the visitors and its guest. One can dream of staying at such luxury hotel. They are famous for their hospitality of their guests. The hotel management believes on total quality management. It has set highest standard for themselves and strive to meet them by providing better and better service to its guests. The success of Ritz Carlton is mainly because they keep the comfort of their guests as their highest priority.

Sony has always been striving to serve its customer better. Millennial are the top brands that are considered in market. They are the organizations which capture major market share and are massive market segment. Sony has offered wide range of products to its customers. Their main focus is on their product features and its qualities.

Carlos and Deborah are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and corn on the rest.


Rye Corn
(Bushels per acre) (Bushels per acre)
Carlos 18 6
Deborah 28 7

___________ has an absolute advantage in the production of rye, and _________ has an absolute advantage in the production of corn. Carlos's opportunity cost of producing 1 bushel of corn is___________ bushels of rye, whereas Deborah's opportunity cost of producing 1 bushel of corn is ___________ bushels of rye. Because Carlos has a ___________ opportunity cost of producing corn than Deborah,____________ has a comparative advantage in the production of corn, and____________ has a comparative advantage in the production of rye.

Answers

Answer:

Deborah

Deborah

3

4

lower

Carlos

Deborah

Explanation:

a person has comparative advantage in production if he / she produces at a lower opportunity cost when compared to other people

for carlos

the opportunity cost of producing rye = 6 / 18 = 0.33

the opportunity cost of producing corn = 18 / 6 = 3

for Deborah,

the opportunity cost of producing rye = 7 / 28 = 0.25

the opportunity cost of producing corn = 28 /7 =4

Carlos has a comparative advantage in the production of corn because he produces at a lower opportunity cost when compared with Deborah

Deborah has a comparative advantage in the production of rye because he produces at a lower opportunity cost when compared with Carlos

A person has absolute advantage in production if he produces more quantity of the product when compared to other people.

Deborah has absolute advantage in the production of both rye and corn

The correct statements will be that

1. Carlos has an absolute advantage in the production of Rye

2. Deborah has an absolute advantage over the production of Corn.

3. Carlos' opportunity cost of producing 1 bushel of rye is 3 bushels of rye

4. Deborah's opportunity cost of producing 1 bushel of corn is 4 bushels of rye.

5. Carlos has a lower opportunity cost of producing corn than Deborah.

6. Deborah has a competitive advantage in the production of Corn.

7. Carlos has a competitive advantage in the production of Rye.

The production outputs of Carlos and Deborah suggests that Deborah is a more efficient farmer.

Production output

The production output refers to the total outcome derived from the use of resources available at a given period of time, such that the two different outputs are comparable.

Here, as the production output of Deborah is more in both the cases of production of rye and corn, it can be said that the production output of Deborah is more than Carlos.

Hence, the correct statements regrading the production outputs of Carlos and Deborah are as aforementioned.

Learn more about production output here:

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rdier attached to a life insurance policy that provides coverage on the insureds family members is called the

Answers

Answer: Other insured rider

Explanation:

The rider that is attached to a life insurance policy that provides coverage on the insureds family members is referred to as the other insured rider.

When more than one member of a particular family is to be provided insurance for, this type of rider is typically used.

On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the issuance of the bond is: Multiple Choice Debit Bonds Payable $390,000; debit Bond Interest Expense $15,830; credit Cash $405,830. Debit Cash $405,830; credit Bonds Payable $405,830. Debit Cash $405,830; credit Premium on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $405,830; credit Discount on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $390,000; debit Premium on Bonds Payable $15,830; credit Bonds Payable $405,830.

Answers

Answer:

The journal entry to record issuance is:

January 1, 202x, bonds are issued at a premium

Dr Cash 405,830

    Cr Bonds payable 390,000

    Cr Premium on bonds payable 15,830

Explanation:

When a bond's coupon rate is higher than the market rate, the bonds will sell at a premium or a value higher than the bond's face value. On the other hand, if the bond's coupon rate is lower than the market rate, the bonds will sell at a discount or a value lower than the bond's face value.

You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into China. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO (15 Points)

Answers

Answer:

1. Pro-Maintain tight oversight of technologies and manufacturing methods, build American employment that improve domestic reputation, and theoretically gain tax cuts.

2.  Pro-Less start-up charges wanting to work to current manufacturers, possibly avoiding import-related taxes / punishments, and potentially taking advantage of brand recognition as well as financial acumen.

1. Con-Possibly increasing labour charges, logistics and delivery costs, customs duties or punishments on entry into the western europe territory , market stimulation expenses.

2. Con-Less power over production cycle and efficiency, knowledge sharing, less efficient workers.

All of the following statements concerning the characteristics of aggregate planning for services is true except

A. Group of answer choices
B. Demand is difficult to predict
C. Most services can be inventoried
D. Capacity is easy to predict
E. Labor is the most constraining resource

Answers

Answer:  D. Capacity is easy to predict

Explanation:

Aggregate planning for services involves organising the business areas of companies engaging in service provision or operation companies that also provide a service.

It is generally held that demand is difficult to predict and most services can be inventoried. It is also held that labor is the most constraining resource.

However, capacity in aggregate planning for services is not easy to predict. This is because services are not standadized and are instead varied and mostly unique. Therefore knowing the capacity to give to a service becomes hard to predict.

Cobe Company has already manufactured 17,000 units of Product A at a cost of $20 per unit. The 17,000 units can be sold at this stage for $410,000. Alternatively, the units can be further processed at a $240,000 total additional cost and be converted into 5, 800 units of Product B and 11, 400 units of Product C. Per unit selling price for Product B is $107 and for Product C is $52.
Prepare an analysis that shows whether the 17,000 units of Product A should be processed further or not.
Sell as is ProcessFurther
Sales
Relevant costs:
Total relevant costs
Income (loss)
Incremental net income (or loss) if processed further
The company should

Answers

Answer:

differential analysis:

                         No further process      Process further         Differential

                                                                                                 amount

Sales revenue            $410,000                $1,213,400             $803,400

Production costs     ($340,000)               ($580,000)           ($240,000)

Operating income       $70,000                  $633,400            $563,400

The company should process further and sell products B and C because its operating income will increase by $563,400.

Which of the following countries would likely have the greatest success is exporting television and other media to Mexico?

a. Brazil
b. Canada
c. Japan
d. Spain

Answers

Answer:

d. Spain

Explanation:

The country that would have the greatest success in doing this would be Spain. This is mainly due to the fact that Mexico's main language is Spanish just like in Spain (even though the dialect is different). The other countries listed all speak different languages which will not fair well with Mexican audiences since they will not understand the media. In Brazil, they speak Portuguese. In Canada, they speak English. In Japan, they speak Japanese.

Childress Company produces three products, K1, S5, and G9. Each product uses the same type of direct material. K1 uses 4 pounds of the material, S5 uses 2.2 pounds of the material, and G9 uses 6.5 pounds of the material. Demand for all products is strong, but only 55,400 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows. K1 S5 G9 Selling price $155.8 $108.92 $205.55 Variable costs 91.00 90.00 136.00
Required:
Calculate the contribution margin per pound for each of the three products.

Answers

Answer:

The contribution margin per pound for each of the three products is :

K1 = $16.20

S5 = $8.60

G9 = $10.70

Explanation:

First Calculate the Contribution per margin for for the 3 products.

                                                  K1                        S5                      G9

Selling Price                         $155.80               $108.92             $205.55

Less Variable Costs             ($91.00)               ($90.00)            ($136.00)

Contribution                          $64.80                 $18.92               $69.55

Then determine the contribution per pound as follows :

                                                  K1                        S5                      G9

Contribution                          $64.80                 $18.92               $69.55

Material Usage per unit      4 pounds            2.2 pounds       6.5 pounds

Contribution per pound       $16.20                  $8.60                $10.70

Below are the account balances for Cowboy Law Firm at the end of December.
Accounts Balances
Cash $5,000
Salaries expense 2,000
Accounts payable 3,000
Retained earnings 4,000
Utilities expense 1,100
Supplies 13,400
Service revenue 8,900
Common stock 5,600
Required:
Use only the appropriate accounts to prepare an income statement.

Answers

Answer:

Cowboy Law Firm

Income statement for the year ended December.

                                            $

Service revenue              8,900

Less Expenses :

Salaries expense           (2,000)

Utilities expense              (1,100)

Net Income / (Loss)         5,800

Explanation:

Income statements shows Revenues earned and Expenses incurred at the end of the trading period.

Mauro Products distributes a single product, a woven basket whose selling price is $20 per unit and whose variable expense is $17 per unit. The company’s monthly fixed expense is $8,100. Required: If the company's fixed expenses increase by $600, what would become the new break-even point in dollar sales?

Answers

Answer:

the new break-even point in dollar sales is  $29,000.

Explanation:

Break even point is the level of activity where a firm makes neither a profit nor a loss.

Break even point (dollar sales) = Fixed Cost ÷ Contribution Margin Ratio

Where, Contribution Margin Ratio = Contribution ÷ Sales

                                                        = ($20 - $17) ÷ $20

                                                        = 0.30

New Break even point (dollar sales) = ($8,100 + $600) ÷ 0.30

                                                            = $29,000

Activity-Based Costing: Selling and Administrative Expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of $20 per sales order, and the customer return activity has an activity rate of $100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns.

Required:
a. Determine the total sales order processing and customer return activity cost for swing sets.
b. Determine the per-unit sales order processing and customer return activity cost for swing sets. Round your answer to the nearest cent.

Answers

Answer: 1}ToTAL Activity cost =$23,000

2a)  Sales order Processing Activity per unit sale=$6.00

2b)customer return activity per unit sale=$3.20

Explanation:

a. total sales order processing and customer return activity cost for swing sets

Sales order Processing Activity =Number of orders x rate per sales order

                                       =750 x 20 =  $15,000

customer return activity  = Number of returns x rate per return

                                         = 80 x 100= $8,000

ToTAL Activity cost = Sales order Processing Activity +customer return activity= $15,000 + $8000 = $23,000

b)per-unit sales order processing and customer return activity cost for swing sets

Cost of Sale order processing = $15,000

Number of swing set sold = 2,500

Therefore Sales order Processing Activity per unit sale =  Cost of Sale order processing/ Number of swing set sold = $15,000/ 2,500= $6.00

customer return activity cost  = $8,000

Number of swing set sold = 2,500

Therefore customer return activity per unit sale=  customer return activity cost / Number of swing set sold = $8,000/ 2,500= $3.20

ToTAL Activity cost  per unit sale = Sales order Processing Activity  cost per unit +customer return activity cost per unit = $6.00 +  $3.20 = $9.20

A creamery shop sells its special ice cream for $4.50 a quart. It costs them $3.00 a quart to make it. The daily demand for this flavor is normally distributed with a mean of 35 quarts and a standard deviation of 4 quarts. Unsold ice cream is sold each day to a local restaurant at $1.50 per quart. What is the service level and corresponding optimal stocking level?

Answers

Answer and Explanation:

The computation of the service level and the corresponding optimal stocking level is shown below:

Given that

Selling price = SP = $4.50

Cost price = CP  = $3.00

So,

Salvage value =  V  = $1.50

Average daily demand (d) = 35 quarts

The  standard deviation of daily demand  = 4 quarts

based on the above information

Overage cost = (Co) is

= CP - V

= $3.00 - $1.50

= $1.50

Now

Underage cost= (Cu)

= SP - CP

= $4.50 - $3.00

= $1.50

So,  

Service level is

= Cu ÷ (Co + Cu)

= 1.50 ÷ (1.50 + 1.50)

= 1.50 ÷ 3.00

= 0.50

= 50%

Now

At 50 % service level, the value of Z is 0

So,

Optimal stocking level is

= d + Z × standard deviation

= 35 + (0  × 4)

= 35 + 0  

= 35 quarts

A company has 500 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $60 per share. It also has 20,000 shares of common stock outstanding, and the total value of its stockholders' equity is $680,000. The company's book value per common share equals:

Answers

Answer:

$32.50

Explanation:

Calculation for the company's book value per common share

Using this formula

Book value per common share =[Stockholders' equity -Preferred shares*Preferred stock Stock price per share/ Shares of common stock outstanding,

Let plug in the formula

Book value per common share= [$680,000 - (500 x $60)]/20,000

Book value per common share=$680,000-$30,000/20,0000

Book value per common share= $650,000/20,000

Book value per common share=$32.50

Therefore the company's book value per common share will be $32.50

Suppose the benefit of owning a painting, in terms of your personal enjoyment, is worth 5% of the value of the painting. If the expected rate of return on stocks is 7%, then the painting should grow in value by _________ per year.

Answers

Answer:

7%

Explanation:

It would grow by 7% each year which is the rate of return on stocks

Since the expected rate of return is 7%, then, the painting should grow in value by 2% per year.

Given Information

Expected rate of return = 7%

Present rate of return = 5%

Growth rate = Expected rate of return - Present rate of return

Growth rate = 7% - 5%

Growth rate = 2%

In conclusion, the painting should grow in value by 2% per year.

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A decrease in the basis will __________ a long hedger and __________ a short hedger. Group of answer choices hurt; hurt hurt; benefit benefit; have no effect upon benefit; benefit benefit; hurt

Answers

Answer:

hurt, benefit

Explanation:

The basis in a future contract is defined as the difference between the spot price of the asset in the cash market and the price of the same assets future contract.

A short hedge is an investment strategy that is used to protect hedge, against the risk of future decline in asset price or basically to hedge against potential losses by selling at a determined rate. This means that when one is in possession of a commodity and in order to protect against a decline, in the market, you sell (go short) the future contract , while long hedge is when you anticipate a need for the underlying commodity in the future. It means that to protect against an increase in the market price, you buy (go long) the future contract. Then when you are ready to buy the commodity, any increase in the market price is offset by your gain on the future contract.

The above means that where an asset and a contract are liquidated before due dates , there would be basis risk hence both the future and spot price need not move in lockstep before delivery date. This means that a decrease in the basis will benefit the short hedger and hurt the long hedger.

Sloan Transmissions inc.,has the following estimates for its new gear assembly project: price=$2,200 per unit., variable cost= $440 per unit., fixed costs = $1.6 million., quantity = 90,000 units. suppose the company believes all of its estimates are accurate only to

Answers

Answer:

Best case

Price 2,640

Variable cost per unit 352

Fixed cost 1.28 million

Quantity 108,000 units

Worst case

Price 1,760

Variable cost per unit 528

Fixed cost 1.92 million

Quantity 72,000 units

Explanation:

Based on the information given in the best case expenses would be 20% lower while the incomes will be 20% higher.

Calculation for the price

Price = 2,200 ×(1+0.20)

Price=2,200×1.2

Price = 2,640

Calculation for Variable cost per unit

Variable cost per unit = 440× (1-0.20)

Variable cost per unit=440×0.80

Variable cost per unit= 352

Calculation for fixed cost

Fixed cost = 1.60 million ×(1-0.20)

Fixed cost=1.60 million× 0.80

Fixed cost= 1.28 million

Calculation for the Quantity

Quantity = 90,000 × (1+0.20)

Quantity =90,000×1.2

Quantity=108,000units

Therefore, Best case will be:

Price 2,640

Variable cost per unit 352

Fixed cost 1.28 million

Quantity 108,000units

Based on the information given in the worst case expenses would be 20% higher while incomes would be 20% lower.

Calculation for the price

Price = 2,200 × (1-0.20) = 1080

Price=2,200 ×0.8

Price=1,760

Calculation for the Variable cost per unit

Variable cost per unit = 440 × (1+0.20)

Variable cost per unit=440× 1.2

Variable cost per unit= 528

Calculation for Fixed cost

Fixed cost = 1.60 million × (1+0.20)

Fixed cost=1.60 million×1.2

Fixed cost= 1.92 million

Calculation for the Quatity

Quantity = 90,000 ×(1-0.20)

Quantity=90,000×0.8

Quantity= 72,000 units

Therefore Worst case will be:

Price 1,760

Variable cost per unit 528

Fixed cost 1.92 million

Quantity 72,000 units

EHealth Corporation has $1,000 par value bonds with 4 years to maturity. The bonds pay an 8% coupon rate with semi-annual coupon interest payments. The bond's closing price is quoted at 103.75. Suppose you purchase the bond for the closing price. What is the bond's yield to maturity?

Answers

Answer:

Yield to Maturity(YTM) = 3.47%

Explanation:

The yield to maturity is the required rate of return (discount rate) that would equate the price of the bond and cash outflow  expected from the bond.  The yield on the bond can be determined as follows using the formula below:  

YTM = C + F-P/n) ÷ 1/2 (F+P)  

YTM-Yield to maturity-  

C- coupon  

F- Face Value  

P- Current Price  

DATA  

Coupon = coupon rate × Nominal value = 1,000 × 8%× 1/2=40(note we divide by 2 because interest is paid semi-annually)

n= 4×2 = 8 (note there 2 half months in a year)

Face Value = 1000

YM-?, C-40, Face Value - 1,000, P-103.75/100×   1000 = 1037.5

YM = (40 + (1000-1037)/8) ÷ ( 1/2× (1000 + 1037.5  ) )  =0.0347

YM = 0.0347 × 100 = 3.47%  

Yield to Maturity = 3.47%

Kelley Company reports $1,250,000 of net income for 2017 and declares $175,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 380,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders for 2017

Answers

Answer:

Net Income available to common stockholders = $1075000

Explanation:

The preferred stock holders have a preference over the common stockholders in the distribution of dividends as they are paid before the common stock holders and receive a fixed amount of dividend. However, the net income that is available to common stock holders is all the net income that is left after deducting the preferred stock dividend from it.

Thus, the net income available to common stockholders can be calculated as,

Net Income available to common stockholders = Net Income - Preferred stock dividend

Net Income available to common stockholders = 1250000 - 175000

Net Income available to common stockholders = $1075000

On January 1, 2018, Lizzy's Lemonade issues 5%, 20-year bonds with a face amount of $81,000 for $71,638, priced to yield 6%. Interest is paid semiannually. What amount of interest expense will be recorded on June 30, 2018, the first interest payment date

Answers

Answer:

The amount of $2,149.14 will be recorded on June 30, 2018 , the first interest payment date.

Explanation:

The data below were extracted from the above information

Face amount $81,000

rate 5%

Issue price $71,638

Yield 6%

Since we already know that interest is paid semi annually, then ;

Amount of interest expense will be = issue price × yield

= $71,638 × 6% × 1/2

= $2,149.14

Amount of interest expense is therefore $2,149.14, to be recorded on June 30, 2018, the first interest payment date.

You purchased a stock at a price of $46.55. The stock paid a dividend of $1.79 per share and the stock price at the end of the year is $52.45. What was the dividend yield

Answers

Answer:

3.84%

Explanation:

Calculation for dividend yield

Using this formula

Dividend Yield(%) = D / P0

Where,

D=$1.79

P0=$46.55

Let plug in the formula

Dividend Yield(%) =$1.79/$46.55

Dividend Yield(%) =0.0384*100

Dividend Yield(%) =3.84%

Therefore the dividend yield will be 3.84%

You are considering purchasing one of two assets. Asset 1 has payments of 5,000 at the end of year 1, 10,000 at the end of year 3, and 15,000 at the end of year 5. The price for Asset 1 today is 26,000. Asset 2 has payments of 12,000 at the end of year 4 and 20,000 at the end of year 5. The price of the asset 3 years from now is 29,500. If the current spot curve is below, what is the one year forward rate, deferred three years? Term 1 2 3 4 5 Spot Rate 3.00% 3.40% s3 s4 4.25%

Answers

Answer:

hello attached below are the missing option related to your question

5.45% ( D )

Explanation:

Given data:

for asset 1

cost of asset = $26000

Year 1  payments = $5000, year 3 = $10000, year 5 = $15000

For asset 2

cost of asset 2 three years from now  = $29500

year 4 payments = $12000, year 5 payments = $20000

Calculate the one year forward rate deferred three years

find the value of  [tex](1+s3)^3[/tex] using asset 1

2600 (cost of asset now )  = 5000/ (1.03 +10000) / ((1 +s3)^3 +15000))/ 1.0425^5

from the above equation

(1 +s3)^3 = 1.11559

Now to get the one year forward rate deferred three years we determine that value using asset 2

29500 = 12000 / (1+1 year rate deferred for 3 years) + 220000/(1.0425^5/(1+s3)^3)

hence ( 1 + 1 year rate deferred for three years )

= 12000/(29500-20000)/(1.0425^5)*1.11559)

= 12000/(9500)/(1.0425^5)*1.11559

1 year rate deferred for three years = 5.447% ≈ 5.45%

Gross Corporation adopted the dollar-value LIFO method of inventory valuation on Dec 31, 2016. Its inventory at that date was $1,100,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
Date Inventory at Current Prices Current Price Index
December 31, 2017 $1,284,000 107
December 31, 2018 $1,450,000 125
Deceber 31, 2019 $1,625,500 130
1. What is the cost of ending inventory December 31, 2017 under Dollar-value LIFO method?
2. What is the cost of ending inventory December 31, 2018 under Dollar-value LIFO method?
3. What is the cost of ending inventory December 31, 2019 under Dollar-value LIFO method?

Answers

Answer:

1. $1,207,000

2. $1,164,200

3. $1,281,701

Explanation:

To calculate ending inventory under the dollar value LIFO method, the steps below shall be followed.

Step 1

Y = Current price at year end / Price index at that time

Step 2

Ending inventory = Opening inventory value + ( Y - Opening inventory value ) × Index value.

Gross corporation

Ending inventory

2016 1,100,000

1. Cost of ending inventory at 31, December 2017, under dollar value LIFO

= 1,284,000 / 1.07

= $1,200,000

Ending inventory

= $1,100,000 + ( $1,100,000 - $100,000 ) × 1.07

= $1,207,000

2. Cost of ending inventory at 31, December 2018, under dollar value LIFO

= $1,450,000/1.25

= $1,160,000

Ending inventory

= $1,100,000 + ( $1,160,000 - $1,100,000) × 1.07

= $1,164,200

3. Cost of ending inventory at 31, December 2019, under dollar value LIFO

= $1,625,500/1.30

= $1,250,385

Ending inventory

= $1,164,200 + $90,385 × 1.30

= $1,281,701

The Janjua Company had the following account balances at 1/1/18: Common Stock $65,000 Treasury Stock (at cost) 13,400 Paid-in-Capital in Excess of Par 82,000 Investments in AFS Debt Securities 40,000 FVA (AFS) 1,500 credit Retained Earnings 22,000 On that date, the Accumulated OCI account was at its proper balance. There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the investments, 2018 Net Income was $10,300. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2018 was $40,000.Required:a. Prepare the 12/31/18 journal entry to adjust the investment to fair value.b. Prepare the complete 12/31/18 Equity section of the balance sheet.

Answers

Answer:

The Janjua Company

a) Journal Entry:

Debit FVA (AFS) $1,500

Credit Unrealized Gain on Investments $1,500

To record the unrealized gain on AFS investment.

b) Equity Section of the Balance Sheet as of December 31, 2018:

Common Stock                                $65,000

Treasury Stock (at cost)                     (13,400)

Paid-in-Capital in Excess of Par         82,000

Retained Earnings                              32,300

Total Stockholders' Equity             $165,600

Explanation:

Retained Earnings:

1/1/18 = $22,000

Net income = $10,300

12/31/18 = $32,300

FVA = The Janjua Company's Funding Valuation Adjustment is the contra account of Investments where The Janjua Company adjusts the value of investments at the end of the account period.  When the value of the investment reaches $40,000, the unrealized gain is debited to the FVA account.  This effectively reverses the credit balance and restores the investments to the adjusted balance of $40,000.

Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, what is the EAA for Project A? Year Project A Project B 0 -300,000 -300,000 1 150,000 70,000 2 150,000 70,000 3 80,000 120,000 4 80,000 120,000 5 120,000 6 60,000

Answers

Answer:

Explanation:

Required rate of return r = 12 % .

Cash flow of project A = 300000 , 150000 , 150000 , 80000 , 80000 , 120000.

NPV of project A

300000 + 150000 / 1.12  + 150000 / 1.12²  + 80000 / 1.12³ + 80000 / 1.12⁴ +

120000 / 1.12⁵

= 300000 + 133928 +119579 + 56942 +50841 + 68091

= 729381 .

Equivalent annual annuity of Project A at the rate of 12 % .

729381  = NPVA of 1 at 12 %

729381 = A x 3.60478

A = 202337

EAA of project A is 202337 .

 

Due Diligence refers to diligently monitoring the interview for lies or half-truths the interviewee might include. Select one: True False

Answers

Answer: False

Explanation:

Due diligence is a review, audit or an investigation that is performed in order to confirm certain facts. Due diligence also involves looking at the financial records of w company before having a transaction with the company in order to ascertain some facts.

Due Diligence is not diligently monitoring the interview for lies or half-truths the interviewee might include. This is false.

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