Answer:4 Functions of Management Process: Planning, Organizing, Leading, Controlling
Planning and Decision Making – Determining Courses of Action.
Organizing – Coordinating Activities and Resources.
Leading – Managing, Motivating and Directing People.
Controlling – Monitoring and Evaluating activities.
Explanation:
The explanation regarding the function of management is described below:
The following information should be considered;
Planning and Decision Making – Determining Courses of Action.Organizing – Coordinating Activities and Resources.Leading – Managing, Motivating and Directing People.Controlling – Monitoring and Evaluating activities.Learn more: https://brainly.com/question/17961582?referrer=searchResults
XYZ Company received $18,000 on April 1, 2020 for one year's rent in advance and recorded the transaction with a credit to a nominal account. The December 31, 2020 adjusting entry is
Answer:
Dr Rent revenue
Cr Unearned rent revenue, $4,500
Explanation:
Preparation of XYZ Company Journal entry
Since we were told that the Company received the amount of $18,000 on April 1, 2020 for a one year's rent paid in advance in which the transaction has a credit to a nominal account, this means we have to record the transaction by Debiting Rent revenue with 4,500 and Crediting Unearned rent revenue, with the same amount of $4,500 calculated as
(3/12 x $18,000 ).
Dr Rent revenue
Cr Unearned rent revenue, $4,500
(3/12 x $18,000 )
You know that the assets of a firm BIG are today worth 100mil. You reasonably feel that in a year they will be either worth 110mil or 90mil. You also know that a riskless zero coupon bond maturing in one year is offering today a yield of 5%. The firm has issued a zero-coupon bond that matures in one year and has a face value of 100mil. 1. What should be the value of this corporate bond today? 2. What should be its yield to maturity? 3. What should be the value of the equity of the firm? 4. Can you do a further analysis of this problem?
Answer:
(1) 95.23 (2)5.008% or 5% (3) The value of equity is zero (4)The future value of the firm will be 110 mil. than Firm equity will be 110-100 =10 mil not zero
Explanation:
Solution
Given that:
The worth in good in this example= 110 mil
Worth in bad in this example =90 mil
The future value =( 110+90)/2
=100
Future value = 100
Now
(1) The Present value = F/(1+r)^n
=100/1.05
=95.23
(2) the yield to maturity is given below:
YTM = (FV/PV)^n -1
Here
FV = future value
PV = present value
n=years
Thus
(100/95.23)^1 -1
=5.008% or 5%
Since the bond are zero coupon bond so interest rate is equal to YTM
(3) The total worth =100 mil
Thus
The Debt +equity =100
100+equity =100
Equity =100-100
=0
Hence the value of equity is zero.
The firm BIG is only debt firm. Firm do not have equity.
(4) The future value of the firm will be 110 mil. than Firm equity will be 110-100
=10 mil not zero
When deleting a check all of the following is true except: Multiple Choice It is better to delete the check than void the check in order to erase all records of the transaction The deleted check no longer appears in the check register QuickBooks changes the amount deducted in the check register to zero All of the choices are correct
Answer: It is better to delete the check than void the check in order to erase all records of the transaction
Explanation:
When a check is deleted, it should be noted that such check is being removed entirely from the system and also the transaction of the check will no longer be visible anywhere in the system.
Voiding a check mean that the amount of the transaction on the check will be changed to zero but it should be ited that a record of such transaction will still be kept in QuickBooks but deleting it will help remove the transaction in QuickBooks.
When a check is voided, the check details like the check number, account, payee, memo and date will be unchanged, even though the amount will change to zero.
Therefore, the option that says that it is better to delete the check than void the check in order to erase all records of the transaction isn't true.
After screening the best ideas for new products, D'Andre prepares a clear product description and builds a product model. He is involved in
Answer:
This question is incomplete, it misses the options. The options are the following:
a) Commercialization
b) Concept testing
c) Prototype development
And the correct answer is the option C: Prototype development.
Explanation:
On the one hand, the stage of "product screening" is when the company and its employees can pare down the list of viable ideas to the ones that will only match the organization's strategic goals that they are looking for.
On the other hand, the "prototype devolopment" stage involves the fact of getting those viable ideas into touchable models that the managers can try in real life experience more than just in the papers. Therefore that in this stage is when the employees build a product model based on clear product descriptions.
Vargas, Inc. sold goods with a selling price of $ 54,000 in 2019 and estimated 4%warranty expense for the year. Customers complained of defects, and goods with a cost of $ 3,500 had to be replaced. Which of the following is the correct journal entry for honoring the warranties with goods?
A. Estimated Warranty Payable 1,500 Cash 1,500B. Estimated Warranty Payable 1,500 Warranty Expense 1,500C. Warranty Expense 1,500 Merchandise Inventory 1,500D. Estimated Warranty Payable 1,500 Merchandise Inventory 1,500
Answer:
Estimated Warranty Payable 1,500 Debit
Merchandise Inventory 1,500 Credit
Explanation:
Vargas, Inc.
Sales $ 54,000
Warranty 4%
Defected Items $ 3500
The Estimated Warranty Payable is a deferred liability and is posted in the journal unless paid . It is debited when an equal amount of merchandise inventory is credited . An equal amount of inventory is credited to honor the warranty charges which are a liability of the seller if the deal is not accordingly set. So the correct entry is
Estimated Warranty Payable 3,500 Debit
Merchandise Inventory 3,500 Credit
The amount is equal to the defected items claimed. But from the given choices it is
Estimated Warranty Payable 1,500 Debit
Merchandise Inventory 1,500 Credit
Kallard Manufacturing Company produces t-shirts screen-printed with the logos of various sports teams. Each shirt is priced at $13.50 and has a unit variable cost of $9.85. Total fixed cost is $197,600. Required: 1. Compute the break-even point in units. Round your answer to the nearest whole unit. units
Answer:
You would need to sell 54,137 units in order to cover your fixed costs
Explanation:
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 11 Sydney accepts delivery of $39,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $26,465. Sydney pays $470 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,100 of the $39,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $737. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. (Both Sydney and Troy use a perpetual inventory system and the gross method.) 1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. 2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions g g
Answer:
1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
May 11 Sydney accepts delivery of $39,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $26,465. Sydney pays $470 cash to Express Shipping for delivery charges on the merchandise.
May 11, merchandise purchased on account, terms 3/10, n/90
Dr Merchandise inventory 39,500
Cr Accounts payable 39,500
May 11, freight costs
Dr Merchandise inventory 470
Cr Cash 470
12 Sydney returns $1,100 of the $39,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $737.
May 12, merchandise is returned
Dr Accounts payable 1,100
Cr Merchandise inventory 1,100
20 Sydney pays Troy for the amount owed. Troy receives the cash immediately.
May 20, invoice is paid
Dr Accounts payable 38,400
Cr Cash 37,248
Cr Purchase discounts 1,152
2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
May 11 Sydney accepts delivery of $39,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $26,465. Sydney pays $470 cash to Express Shipping for delivery charges on the merchandise.
May 11, merchandise sold on account, terms 3/10, n/90
Dr Accounts receivable 39,500
Cr Sales revenue 39,500
Dr Cost of goods sold 26,465
Cr Merchandise inventory 26,465
12 Sydney returns $1,100 of the $39,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $737.
May 12, merchandise is returned
Dr Sales revenue 1,100
Cr Accounts receivable 1,100
Dr Merchandise inventory 737
Cr Accounts receivable 737
20 Sydney pays Troy for the amount owed. Troy receives the cash immediately.
May 20, invoice is paid
Dr Cash 37,248
Dr Sales discounts 1,152
Cr Accounts receivable 38,400
Universal Publishing completed the following transactions during 2018:
Oct. 1 Sold a six-month subscription (starting on November 1), collecting cash of
$270, plus sales tax of 8%.
Nov. 15 Remitted (paid) the sales tax to the state of Tennessee.
Dec. 31 Made the necessary adjustment at year-end to record the amount of
subscription revenue earned during the year.
Journalize the transactions (explanations are not required).
Answer:
Oct. 1
Dr Cash 291.6
Cr Unearned Revenue 270.00
Cr Sales Tax Payable 21.6
Nov. 15
Dr Sales Tax Payable 21.6
Cr Cash 21.6
Dec.31
Dr Unearned Revenue 90.00
Cr Subscription Revenue90.00
Explanation:
Journal entry for Universal Publishing
Since on Oct. 1 the company Sold a six-month subscription which start on November 1 in which the company collect cash of $270, in addition with sales tax of 8%. This means the transaction will be recorded as:
Oct. 1
Dr Cash 291.6
(270+21.6)
Cr Unearned Revenue 270.00
Cr Sales Tax Payable 21.6
(8%×270)
Since on Nov. 15 the company paid the sales tax to the state of Tennessee which is $270, in addition with a sales tax of 8% this means the transaction will be recorded as:
Nov. 15
Dr Sales Tax Payable 21.6
Cr Cash 21.6
Since we were told that the company made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year which 270 this means the transaction will be recorded as:
Dec.31
Dr Unearned Revenue 90.00
(270÷ 3months)
Cr Subscription Revenue90.00
Assume the market for manufactured houses is in equilibrium. Imagine that trade restrictions increased the cost of cement, which is an input in making manufactured houses. How does this impact the manufactured house market
Answer: f. Supply of manufactured houses shifts leftward and manufactured houses increase in price
Explanation:
All else being equal, when the price of an input into the production process increases, it makes producing the goods in question more expensive and so producers will respond by reducing production levels to maintain Profitability.
As the price of cement rises, making manufactured houses becomes more expensive and so the makers of manufactured houses will reduce the number of manufactured houses they make. This will reduce Supply thereby shifting the Supply Curve to the left. The new Equilibrium level will indicate a higher Equilibrium price as shown in the attached graph.
Given the following selected information on McMillen's Chocolate, Inc., calculate Cash Flow from Operating Activities for 2012. Show your work.
2011 2012
EAT $ 600,000 800,000
Depreciation Exp. 100,000 120,000
Dividends 400,000 550,000
Accounts Receivable 1,500,000 1,000,000
Inventory 3,500,000 4,100,000
Accts. Payable 350,000 350,000
Accruals 250,000 200,000
Long-Term Debt 2,300,000 2,000,000
Common Stock 2,200,000 3,000,000
Interest expenses 50,000 60,000
Retained Earnings 6,150,000 6,400,000
Answer:
Cash flow from operating activities for the Year 2012 = $770000.
Explanation:
Particulars Amount ($)
Earnings after tax (EAT) 800,000
+ Depreciation (Non-cash expenditure) 120,000
Operating profit before working 920,000
capital changes
+ Decrease in accounts receivable 500,000
(1,500,000 - 1,000,000)
- increase in inventory 600,000
(4,100,000 - 3,500,000)
- Decrease in accrual 50,000
(250,000 - 200,000)
Cash flow from operating activities 770,000
Conclusion:- Cash flow from operating activities for the Year 2012 = $770000.
For strategic success from its merger with Amoco, the corporate _____________ must merge together.Multiple Choiceculturesrulespolicies
Answer:
Cultures
Explanation:
For strategic success from its merger with Amoco, the corporate CULTURES must tend to merge together because at the firm level, a strategy is a form of a comprehensive plan which help to states how an organization or a company will achieve their mission, aim and objectives.
Lastly, STRATEGY SUCCESS can be seen as a road map which enables or help an organisation or a company to get to where they intend to reach in order for their proposed mission to be accomplished, Although this can only be based on good information that is been gathered in advance.
J's Foods is trying to estimate the cash flows in their first year of operation. They project that the firm will have sales of 100,000; operating costs of 50,000; and depreciation of 10,000. If their tax rate is 29% what would the firm's operating cash flow equal?
Answer:
$38,400
Explanation:
The computation of operating cash flow is shown below:-
Operating cash flow = (Sales - operating costs - depreciation) × (1 - tax) + depreciation
= (100,000 - 50,000 - 10,000) × (1 - 0.29) + 10,000
= (40,000) × (0.71) + 10,000
= $38,400
Therefore for computing the operating cash flow we simply applied the above formula.
Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Hart Company made 3,400 bookshelves using 22,400 board feet of wood costing $315,840. The company's direct materials standards for one bookshelf are 8 board feet of wood at $14.00 per board foot. Exercise 23-14A Recording and closing materials variances LO P6 Hart Company uses a standard costing system.
(1) Prepare the journal entry to charge direct materials costs to Work in Process Inventory and record the materials variances.
(2) Assume that Hart's materials variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.
Answer and Explanation:
The Journal entries is shown below:-
1. Goods in Process Inventory Dr, (3,400 × 8 × $14) $380,800
Direct Materials Price Variance $2,240
$22,400 × ($14.00 - $315,840 ÷ $22,400))
To Direct Materials Quantity Variance $67,200
$14.00 × ((3,400 × 8) - 22,400)
To Raw Materials Inventory $315,840
(Being direct material charged is recorded)
2. Direct Materials Quantity Variance $67,200
To Direct Materials Price Variance $2,240
To Cost of Goods Sold $64,960
(being the closing is recorded)
Hardmon Enterprises is currently anâ all-equity firm with an expected return of 15.2%. It is considering a leveraged recapitalization in which it would borrow and repurchase existing shares. Assume perfect capital markets.
a. Suppose Hardmon borrows to the point that itsâ debt-equity ratio is 0.50. With this amount ofâ debt, the debt cost of capital is 5%. What will be the expected return of equity after thisâtransaction?
b. Suppose instead Hardmon borrows to the point that itsâdebt-equity ratio is 1.50. With this amount ofâ debt, Hardmon's debt will be much riskier. As aâ result, the debt cost of capital will be 7%. What will be the expected return of equity in thisâcase?
c. A senior manager argues that it is in the best interest of the shareholders to choose the capital structure that leads to the highest expected return for the stock. How would you respond to thisâ argument?
Answer and Explanation:
The computation is shown below:
a. The expected return of equity is
= Expected return + debt to equity ratio × (expected return - debt cost to capital)
= 15.2% + 0.5 × (0.152 - 0.05)
= 20.3%
b. Now the debt cost of capital is 7%
So, the expected return of equity is
= Expected return + debt to equity ratio × (expected return - debt cost to capital)
= 15.2% + 0.5 × (0.152 - 0.07)
= 27.5%
c. As we know that if the investment has a higher return than of course it has high risk also or we can say it is compensated by high risk
So it would be best shareholder interest
Ruiz co. provides the following sales forecast for the next four mounths. The company wants to end each month with ending finished goods inventory equal to 40% of next months forecasted sales. Finished goods inventory on april 1 is 224 units. Prepare a production budget for the months of april may june
Answer:
Some information is missing, estimated sales:
April = 660May = 740June = 690July = 780Ruiz Co.
Production Budget
For the Months of April, May and June
April May June
Forecasted sales 660 740 690
Planned ending inventory 296 276 312
Total production required 956 1,016 1,002
- Beginning inventory -224 -296 -276
Units to be produced 732 720 726
Among the responsibility centres listed, which type of responsibility centre is most likely to use "Growth in Sales" as a performance measure
Answer:
C. Revenue
Explanation:
Growth in sales is an important metric in determining revenue for an organization. It is the ability of an organization or a team within the organization to increase its revenue over a period of time. Most business managers measure the revenue generated through the growth in sales. To achieve growth in sales, sales teams would need to set monthly, quarterly, and yearly targets for themselves.
An increase in sales growth, which is directly proportional to an increase in revenue, assures the stakeholders in a business that there is progress and that the organization is thriving.
A company purchased land for $89600 cash. Real estate brokers' commission was $4700 and $7600 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at
Answer:
$101,900
Explanation:
The computation of the cost of land would be recorded by using the historical cost principle is shown below:
As we know that
According to the historical cost principle the assets should be recorded at the purchase price or historical cost by considering the commission and demolishing value
Here, the cost of land is
= Purchase value of land + real estate broker commission + demolishing value
= $89,600 + $4,700 + $7,600
= $101,900
What will a bond be worth on the day it matures? Group of answer choices $0 $100 its face value (plus remaining coupon, if applicable) its remaining coupon, if applicable
Answer: Its face value (plus remaining coupon
Explanation:
On the day a bond matures it is to be paid back to the investors therefore it will be at it's face value to reflect the amount owed to investors. The last coupon may still have to be paid so it also be added to the bond on this date.
For example, if a bond is issued at $100 face value and will.mature in 5 years but is currently trading at $95, at the end of the 5th year it will be trading at $100 because that it what the Issuer of the bond will pay back.
The ABC Corporation has the following information. How much is the Cash Flow to Creditors? АВС Coгporation 1,588 Earnings before Interest & taxes Depreciation Beginning net fixed assets Interest paid Net new equity raised Net new borrowing 130 1,650 150 450 110 424 Тахes O$110 O $40 $340 $1,200 $1,650
Answer: $40
Explanation:
Cash-flow to creditors is that amount of cash that the business paid to creditors during a period. It is calculated by removing the net new borrowings from the interest payments for the period to the creditors.
Cash-flow to Creditors = Interest Paid - Net Borrowing
Cash-flow to Creditors = 150 - 110
Cash-flow to Creditors = $40
On December 28, 20X3, Stern Corporation and Ram Company established S&R Partnership, with cash contributions of $14,000 and $42,000, respectively. The partnership’s purpose is to purchase from Stern accounts receivable that have an average collection period of 90 days and hold them to collection. The partnership borrows cash from Midtown Bank and purchases the receivables without recourse but at an amount equal to the expected percent to be collected, less a financing fee of 5 percent of the gross receivables. Stern and Ram hold 20 percent and 80 percent of the ownership of the partnership, respectively, and Stern guarantees both the bank loan made to the partnership and a 15 percent annual return on the investment made by Ram. Stern receives any income in excess of the 15 percent return guaranteed to Ram. The partnership agreement provides Stern total control over the partnership’s activities. On December 31, 20X3, Stern sold $8,080,000 of accounts receivable to the partnership. The partnership immediately borrowed $7,580,000 from the bank and paid Stern $7,440,000. Prior to the sale, Stern had established a $414,000 allowance for uncollectibles on the receivables sold to the partnership. The balance sheets of Stern and S&R immediately after the sale of receivables to the partnership contained the following:
Stern Corporation S&R Partnership
Cash $8,036,000 $373,000
Accounts Receivable 4,380,000 8,080,000
Allowance for Uncollectible Accounts (212,000) (414,000)
Other Assets 5,420,000
Prepaid Finance Charges 404,000
Investment in S&R Partnership 11,000
Accounts Payable 942,000
Deferred Revenue 404,000
Bank Notes Payable 7,580,000
Bonds Payable 9,770,000
Common Stock 697,000
Retained Earnings 6,630,000
Capital, Stern Corporation 11,000
Capital, Ram Company 44,000
Required:
Assuming that Stern is S&R's primary beneficiary, prepare a consolidated balance sheet for Stern at January 1, 20X4.
Answer:
Total Assets $25,663,000
Total Liabilities and Stockholders’ Equity $25,663,000
Explanation:
Preparation of the prepare a consolidated balance sheet for Stern at January 1, 20X4
Stern CorporationConsolidated Balance StatementJanuary 1, 20X4
ASSET:
Cash $8,409,000
($8,036,000 +$373,000)
Accounts Receivable $12,460,000
( 4,380,000 +8,080,000)
Allowance for Uncollectible Accounts ($626,000)
[(212,000) (414,000)]
Other Assets 5,420,000
Total Assets $25,663,000
LIABILITIES:
Accounts Payable 942,000
Bank Notes Payable 7,580,000
Bonds Payable 9,770,000
Shareholders’ Equity
Controlling Interest:
Common Stock 697,000
Retained Earnings 6,630,000
Total Controlling interest $7,327,000
(6,630,000+697,000)
Non controlling interest $44,000
Total Liabilities and Stockholders’ Equity $25,663,000
Therefore consolidated balance sheet for Stern at January 1, 20X4 will have a Total Assets of $25,663,000 and a Total Liabilities and Stockholders’ Equity of $25,663,000
Welfare analysis: Basic conceptsIdentify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Statement Consumer Producer Neither Surplus Surplus I sold a used laptop for $149, even though I was willing to go as low as $140 in order to sell it. I sold a watch for $59 on eBay last week. This week, someone offered me $145 for it. Even though I was willing to pay up to $46 for a jersey sweater, I bought a jersey sweater for only $39.
Answer:
Producer surplus
Neither
Consumer surplus
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Producer surplus is the difference between the price of the good and the least price the seller is willing to sell his product.
1. Price = $149
least price seller was willing to sell his laptop = $140.
Hence it's producer surplus.
2. Price = $59
there's no information on the least price the seller was willing to sell or the highest amount the buyer was willing to buy.
hence it's neither producer or consumer surplus
3. Price = $39
highest amount buyer was willing to buy = $46
Hence, it's consumer surplus
I hope my answer helps you
Rice Corp. recognizes revenue over time to account for long-term contracts and has the following information for the first year of the contract:
Contract price $500,000
Total expected costs on contract 400,000
Costs incurred in current year 60,000
Costs incurred in previous years 0
What is the amount of revenue recognized in year 1?
A.) $100,000
B.) $500,000
C.) $60,000
D.) $75,000
Answer:
D.) $75,000
Explanation:
Amount of revenue recognized = Cost incurred to date / Estimated total cost * Contract price
Cost incurred to date=60,000
Estimated total cost=400,000
Contract price=500,000
Amount of revenue recognized= 60,000/400,000 * 500,000
=0-15 * 500,000
=$75,000
Amount of revenue recognized in year 1 is $75,000
Fetzer Company declared a $0.35 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the dividend declaration is:
Answer:
The journal entry to record the dividend declaration would be as follows:
Debit Credit
retained earnings $63,700
common dividend payable $63,700
Explanation:
According to the given data we have the following:
shares issued=190,000
treasury stock=8,000
cash dividend=$0.35
Therefore, to prepare the journal entry to record the dividend declaration we would have to calculate the retained earnings as follows:
retained earnings=(shares issued-treasury stock)*cash dividend per share
retained earnings=(190,000-8,000)*$0.35
retained earnings=$63,700
Hence, The journal entry to record the dividend declaration would be as follows:
Debit Credit
retained earnings $63,700
common dividend payable $63,700
Setrakian Industries needs to raise $96.2 million to fund a new project. The company will sell bonds that have a coupon rate of 6.04 percent paid semiannually and that mature in 30 years. The bonds will be sold at an initial YTM of 6.85 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds? (Round your intermediate calculations to two decimal places and final answer to the nearest whole number.)
a) 66,997 bonds
b) 185,900 bonds
c) 53,598 bonds
d) 96,200 bonds
e) 48,100 bonds
Answer:
OPTION C is correct
number of bonds that must be sold to raise the necessary funds is 53,597 Bonds
Explanation:
First we need to determine how much they sold each bond of $2,000 face value, this can be done using Excel function -pv(rate,nper,pmt,fv)
But we were told that coupon rate of 6.04 percent was paid semiannually and that mature in 30 years, Then the rate used in that function is the coupon rate/2 = 6.85%/2=3.425 which is tied to maturity.
pmt function used = [$2,000×(6.04/100)×(6/12)]=60.5 which is the coupon amount
nper function is (30years× 2) since it is been paid paid semiannually
Note that we were given a face value of $2,000 per bond, then the function can be analyse as
=-pv(6.85%/2,60,60.40,2000)
= 1,794.9
Therefore, single bond =$ 1,794.9 then
Then number of bonds that must be sold to raise the necessary funds
=(96,200,000)/1,794.9
= 53,597
Hawar International is a shipping firm with a current share price of $5.50 and 10 million shares outstanding. Suppose Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares.
a) With perfect capital markets, what will the share price be after this announcement?
Suppose that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent.
b) If the only imperfection is corporate tax rate of 30%, what will the share price be after this announcement?
c) Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $5.75 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt?
Answer: a. $5.50
b. $6.1
c. $3,500,000
Explanation:
a. From the question, we are informed that Hawar International is a shipping firm with a current share price of $5.50 and 10 million shares outstanding and that Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares.
We are informed that Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares. This is a transaction and therefore, the value if the share won't be changed. So, the value for the share will still be $5.50.
b. If the only imperfection is corporate tax rate of 30%, the share price after this announcement will be:
= [30% × (20million/10million)] + $5.50
= [0.3 × 2] + $5.50
= $0.6 + $5.50
= $6.1
Therefore, the share price be after this announcement will be $6.1.
c. If the share price rises to $5.75 after this announcement, the PV of financial distress costs Hawar will incur as the result of this new debt will be:
= ($6.1 - $5.75) × 10,000,000
= $0.35 × 10,000,000
= $3,500,000
a) With perfect capital markets, the share price of Hawar International, after this announcement will remain at $5.50 per share.
b. If the only imperfection in the capital market is caused by the corporate tax rate of 30%, the share price after this announcement will be $6.10.
c. If the share price increases to $5.75 after this announcement, the PV of financial distress costs that Hawar will incur from the new debt is $3,500,000.
What are the financial distress costs?The financial distress costs are the additional expenses that a firm in financial distress faces as a result of higher cost of capital with debts instead of equity funds.
Data and Calculations:Current share price = $5.50
Outstanding shares = 10 million
Proposed loan for share repurchase = $20 million
Corporate tax rate = 30%
b. This new share price is computed as current share price + (Debt/Equity x 30%).
= $6.10 {$5.50 + ($20/$10 x 30%)}
c. The financial distress costs = $3,500,000 {10,000,000 x ($6.1 - $5.75)}
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Gates Appliances has a return-on-assets (investment) ratio of 19 percent. a. If the debt-to-total-assets ratio is 20 percent, what is the return on equity
Answer:
23.8%
Explanation:
Gates appliances has a return-on-assets(investment) of 19%
The debt-to-total-assets ratio is 20%
Therefore, the return on equity can be calculated as follows
Return on equity= Return on assets(investment)/(1-debt/asset)
= 19/(1-20/100)
= 19/(1-0.2)
= 19/0.8
= 23.8%
Hence the return on equity is 23.8%
Cainas Cookies purchased a commercial oven on 1/1/14 for a total cost of 35,000. Estimated useful life is 6 years, with a salvage value of 5,000 at the end of that time. Cainas estimates that the equipment will be used for 12,000 baking hours. For the first year of operations, Cainas had 2,500 backing hours. For the second year Cainas had 1,700 hours. Compute the depreciation for YEAR 2. Group of answer choices
Answer:
Units of production = $4250
Straight line depreciation expense = $5,000
Double declining method = $7.777
Explanation:
The depreciation method to he used wasn't stated, so I calculated the depreciation expense using 3 depreciation methods
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
(35,000 - 5,000) / 6 = $5,000
The depreciation expense each year would be $5000
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life)
2 / 6 = 0.3333
Deprecation expense in year 1 = 0.3333 x $35,000 = $11,666.67
Book value = $35,000 - $11,666.67 = $23,333.33
Depreciation expense in year 2 = $23,333.33 × 0.3333 = $7.777
Depreciation expense using units of production = ( hours used in year / total estimated hours of the machine) x (Cost of asset - Salvage value)
(1,700 / 12,000) x (35,000 - 5,000) = $4250
I hope my answer helps you
The Cainas Cookies' depreciation expense for year 2 is C. $4,250.
The correct choice of answer is not A. $7,292 , B. $6,250 , or D. $4,598.
Data and Calculations:
Cost of commercial oven = $35,000
Salvage value = $5,000
Depreciable amount = $30,000 ($35,000 - $5,000)
Estimated useful life = 12,000 baking hours
Depreciation rate per baking hour = $2.50 ($30,000/12,000)
Depreciation expense for Year 2 = $4,250 ($2.50 x 1,700)
Thus, the depreciation expense for year 2 is $4,250.
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Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore, Group of answer choices for the same risk, Elias requires a lower rate of return than David. for the same return, David tolerates higher risk than Elias. Cannot be determined. for the same risk, David requires a higher rate of return than Elias. for the same return, Elias tolerates higher risk than David.
Answer:
for the same return, David tolerates higher risk than Elias
Explanation:
The risk averse investor means that investors who know about the risk due to which they prefer less returns as compared with the risk i.e unknown
Therefore in the given case it is given that David is less risk averse investor as compared with Elias therefore for the same return David would be in high risk position as compared with the Elias due to risk averse condition
Hence, the second option is correct
E24-3 (Segmented Reporting) Carlton Company is involved in four separate industries. The following information is available for each of the four industries.
Operating Segment Total Revenue Operating Profit (Loss) Identifiable Assets
W $60,000 $15,000 $167,000
X 10,000 3,000 83,000
Y 23,000 (2,000) 21,000
Z 9,000 1,000 19,000
$102,000 $17,000 $290,000
Instructions:
Determine which of the operating segments are reportable based on the:
(a) Revenue test.
(b) Operating profit (loss) test.
(c) Identifiable assets test.
Answer:
(a) Revenue test.
Only report segments that generate at least 10% of total revenues:
WXY(b) Operating profit (loss) test.
Only report segments that generate at least 10% of profits or losses:
WXY(c) Identifiable assets test.
Only report segments that account for at least 10% of combined assets:
WXExplanation:
Operating Total Operating Identifiable
segment revenue profit (loss) assets
W $60,000 $15,000 $167,000
X $10,000 $3,000 $83,000
Y $23,000 ($2,000) $21,000
Z $9,000 $1,000 $19,000
$102,000 $17,000 $290,000
10% $10,200 $1,700 $29,000
An underpinning of all commerce is effective communications, knowledge of where goods and services exit and where they are needed and the ability to communicate instantaneously across vast distances. Facilitation this movement into the future one can observe which shifts in examining world population and telecommunications?
Explanation:
Analyzing the historical context, it is possible to see how the new communication technologies were essential for the development of commerce. We currently live in the digital age, where almost every individual has access to a cell phone with internet and can communicate within seconds with any part of the world.
This technological revolution also had a great economic impact, generating new business models.
Companies have to adapt to this reality and insert themselves in the new market based on the internet, in creating relationships with consumers, in the practice of positive social and environmental attitudes, etc. Some companies needed to reinvent themselves to adapt to the new economic context, or they would lose strength in the market and would cease to exist.
The fact is that the technological revolution has impacted commercial relations around the world, today the consumer seeks the solution to his problems and desires, not being restricted to local consumption, which causes a new redesign of commerce and manages impacts on the economy of the world.