Answer:
Cross-price elasticity = 2
Explanation:
The cross-price elasticity of demand measures the degree of responsive of quantity demand of a product with respect to change in the price of a related product. The related product could be a substitute or a complement.
The elasticity is determined as follows:
= % change in the quantity of syrup/% change in the price of milk
= 9%/4.5%= 2
Cross-price elasticity = 2
One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a negatively oriented relevant brand need?a) normal depletionb) sensory gratificationc) social approvald) value enhacement
Answer:
) normal depletion
Explanation:
Marketing communications are the different tools employed to increases the awareness of a brand.
A brand needs to be pleasing to the eyes, socially approved and useful to customers.
Depletion is one of the negatively oriented relevant brand need.
I hope my answer helps you
Answer:
normal depletion
Explanation:
Marketing communications are the different tools employed to increases the awareness of a brand.
A brand needs to be pleasing to the eyes, socially approved and useful to customers.
Depletion is one of the negatively oriented relevant brand need.
I hope my answer helps you
Explanation:
The Company uses a periodic inventory system. For specific identification, ending inventory consists of 215 units, where 190 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.
Answer:
Ending inventory:
(a) specific identification = $2,720(b) weighted average = $2,810.05(c) FIFO = $2,687.50(d) LIFO = $3,010Cost of goods sold:
(a) specific identification = $6,495(b) weighted average = $6,404.95(c) FIFO = $6,527.50(d) LIFO = $6,205Explanation:
Date Activity Units Cost Total
Jan. 1 Beg. inventory 215 $14 $3,010
Jan. 10 Sales 165
Jan. 20 Purchase 160 $13 $2,080
Jan. 25 Sales 190
Jan. 30 Purchase 330 $12.50 $4,125
total Purchases 705 $13.07 $9,215
Ending inventory:
(a) specific identification = (190 x $12.50) + (5 x $13) + (20 x $14) = $2,720
(b) weighted average = 215 x $13.07 = $2,810.05
(c) FIFO = 215 x $12.50 = $2,687.50
(d) LIFO = 215 x $14 = $3,010
Cost of goods sold:
(a) specific identification = $9,215 - $2,720 = $6,495
(b) weighted average = $9,215 - $2,810.05 = $6,404.95
(c) FIFO = $9,215 - $2,687.50 = $6,527.50
(d) LIFO = $9,215 - $3,010 = $6,205
Nathan's Athletic Apparel has 1,200 shares of 7%, $100 par value preferred stock the company issued at the beginning of 2020. All remaining shares are common stock. The company was not able to pay dividends in 2020, but plans to pay dividends of $18,000 in 2021. Required: 1. & 2. How much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2021, assuming the preferred stock is cumulative? What if the preferred stock were noncumulative?
Answer:
Nathan's Athletic Apparel
1. Preferred Stock Dividend = $120,000 x 7% = $8,400 for one year
For two years = $16,800 ($8,400 x 2)
Common Stock Dividend = $1,200 ($18,000 - $16,800)
2.If the preferred stock were noncumulative, the dividends would be:
Preferred Stock Dividend = $120,000 x 7% = $8,400
Common Stock Dividend = $9,600 ($18,000 - $8,400)
Explanation:
Preferred Stockholders' Equity = $120,000 (1,200 x $100)
Cumulative preferred stock is the type of preferred stock that accumulates unpaid dividends. If in any year the preferred dividend was not paid, the amount that was supposed to be paid would be carried forward to the next year when dividend is paid unlike an ordinary preferred stock that does not attract the arrears of dividend that was not paid in any given year.
A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,050,000 and can be sold for $670,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 34 percent. What is the aftertax salvage value of the equipment?
Answer:
$718,606.4
Explanation:
The first step is to calculate the accumulated depreciation
=$3,050,000×(0.2+0.32+0.192+0.1152)
= $3,050,000×0.8272
= $2,522,960
The accumulated depreciation is then subtracted from the book value in purchase to get the book value on sale
= $3,050,000-$2,522,960
= $527,040
The next step is to subtract the book value on sale from the salvage value
= $527,040-$670,000
= -$142,960
Loss of - $142,960
The tax gain on disposal can be calculated as follows
= -$142,960×34/100
= -$142,960×0.34
= -$48,606.4
Therefore, the after-tax salvage value can be calculated as follows
= salvage value-tax disposal
= $670,000-(-48,606.4)
= $670,000+$48,606.4
= $718,606.4
Hence the aftertax salvage value of the equipment is $718,606.4
MC Qu. 137 Clayborn Company deposits... Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $24,525. Clayborn's May bank statement shows $21,800 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit $ 7,450 Outstanding checks $ 6,100 Bank service fees, not yet recorded by company $ 100 A NSF check from a customer, not yet recorded by the company $ 1,275 The adjusted cash balance should be:
Answer:
The adjusted cash balance is $23,150.
Explanation:
The correct cash balance can only be verified through preparation of a bank reconciliation statement.
The first step is to update the Cash Book Bank balance as follows ;
Debits :
Balance as at May 31 $24,525
Totals $24,525
Credits:
Bank service fees $100
Dishonored Check $1,275
Balance as per updated cash book $23,150
Totals $24,525
The next step is to prepare a Bank Reconciliation Statement.
Bank Reconciliation Statement as at May 31.
Balance at bank as per the cash book (updated) $23,150
Add Unpresented cheques $ 6,100
Less Lodgements not yet credited ($ 7,450)
Balance as per bank statement $21,800
Conclusion :
The adjusted cash balance is $23,150.
You plan to borrow $35,000 at a 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2
Answer:
$2,250
Explanation:
Since terms require you to amortize the loan with 7 equal end-of-year payments, it implies that interest will be paid on the amount outstanding balance for a whole year.
The would be paid in Year 2 can therefore be calculated as follows:
Equal amount of the loan principal = Loan amount / Number of equal end-of-year payments = $35,000 / 7 = $5,000
Loan balance outstanding throughout Year 2 = Loan amount - Year 1 end-of-year payment = $35,000 - $5,000 = $30,000
Year 2 interest payable = Loan balance outstanding throughout Year 2 * Annual interest rate = $30,000 = 7.5% = $2,250.
Therefore, you would be paying $2,250 interest in Year 2.
You have decided to save $500 a year for the next five years and then increase that amount to $700 a year for the following five years. Which one of these correctly reflects a multiple annuity time line for the future value of your savings?A. The time line will have a $500 cash flow for Years 1-5 and a $700 cash flow for Years 6 - 10. B. The time line will have a -$700 cash flow for Years 1 - 5 and a $500 cash flow for Years 6-10. C. The time line will have a $500 cash flow for Years 1 - 10 and an additional $200, cash flow for Years 6 - 10. D. The time line will have a -$500 cash flow for Years 1 - 10 and an additional -$200 cash flow for Years 6 - 10.
Answer:
A. The time line will have a $500 cash flow for Years 1-5 and a $700 cash flow for Years 6 - 10.
Explanation:
A timeline orders events chronologically. Here, the timeline would list cash flows in the order in which they occur.
Please check the attached image for an image of the timeline.
I hope my answer helps you
Which of the following statements is CORRECT?a. Ethical behavior is not influenced by training and auditing procedures. People are either ethical or they are not, and this is what determines ethical behavior in business.b. If someone deliberately understates costs and thereby causes reported profits to increase, this can cause the stock price to rise above its intrinsic value. The stock will probably fall in the future. Both those who participated in the fraud and the firm itself can be prosecuted.c. Ethics is not an important consideration in business and in business schools.d. There are many types of unethical business behavior. One example is where executives provide information that they know is incorrect to outsiders. It is illegal to provide such information to federally regulated banks, but it is not illegal to provide it to stockholders because they are the owners of the firm.e. If a lower level person in a firm does something illegal, like "cooking the books," to understate costs and thereby artificially increase profits because he or she was ordered to do so by a superior, the lower level person cannot be prosecuted but the superior can be prosecuted.
Answer: b. . If someone deliberately understates costs and thereby causes reported profits to increase, this can cause the stock price to rise above its intrinsic value. The stock will probably fall in the future. Both those who participated in the fraud and the firm itself can be prosecuted.
Explanation:
Ethics in business ad organization is very vital towards the accomplishment of goals in every organization. Ethical behavior can be influenced by training and auditing procedures.
It should be noted that when someone understates the cost intentionally maybe with the person trying to steal from the company. This can lead to the reported profits of the company to increase, and thereby cause the stock price to rise above its intrinsic value.
If eventually the stock will fall in the future, everyone who took part in this fraudulent activity and even the company itself can be prosecuted. Performing in fraudulent activities by a company or its workers will make the individuals or the company lose the trust of its clients.
Option B is the correct answer.
Selected transactions for the Hamilton Company are listed below.1. Collected accounts receivable.2. Declared and paid dividends on common stock.3. Sold long-term investments for cash.4. Issued stock for equipment.5. Repaid five year note payable.6. Paid employee wages.7. Converted bonds payable to common stock.8. Acquired long-term investment with cash.9. Sold buildings and equipment for cash.10. Sold merchandise to customers.Instructions
Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity.
Answer:
1. Collected accounts receivable = (a) an operating activity
2. Declared and paid dividends on common stock = (c) a financing activity
3. Sold long-term investments for cash = (b) an investing activity
4. Issued stock for equipment = (d) a noncash investing and financing activity
5. Repaid five year note payable = (c) a financing activity
6. Paid employee wages = (a) an operating activity
7. Converted bonds payable to common stock = (d) a noncash investing and financing activity.
8. Acquired long-term investment with cash = (b) an investing activity
9. Sold buildings and equipment for cash = (b) an investing activity
10. Sold merchandise to customers = (a) an operating activity
Explanation:
The Operating Activities include those activities that occurs within the course of business.
The Investing Activities include any cash movement in capital expenditure items.
The Financing Activities included activities that involve sourcing of funds and changes in ownership activities.
1. Characteristics of oligopoly An oligopolistic market structure is distinguished by several characteristics, one of which is market control by a few large firms. Which of the following are other characteristics of this market structure? Check all that apply. Either similar or identical products Difficult entry Neither mutual interdependence nor mutual dependence No entry Mutual interdependence
Answer:
----Either similar or identical products --------Difficult entry
----Mutual interdependence
Explanation: An Oligopolistic market is a market characterized by few sellers of large firms who sell either similar or differentiated products. Here, Each firm is mutually interdependent as any action from any firms influences the actions of the rest of the competing firms , therefore decisions are made using strategic planning and consideration as competing firms are ready to counter react to any change in any new market action.
Market entry is difficult Because of the already established customer base of the successful operating firms dominating the market.Also venturing into the market requires high capital, technology or additional government licences. Examples of Oligopolistic firms are oil and gas firms, airlines, mass media etc
Market entry is difficult Because of the already established customer base of the successful operating firms dominating the market.
Also venturing into the market requires high capital, technology, or additional government licenses.
The correct options are:
Either similar or identical productsDifficult entry Mutual interdependence
An Oligopolistic market is a market characterized by few sellers of large firms who sell either similar or differentiated products. Each firm is mutually interdependent as any action from any firm influences the actions of the rest of the competing firms.
Therefore decisions are made using strategic planning and consideration as competing firms are ready to counter-react to any change in any new market action.
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Knowledge Check 01 On February 13, a jewelry store sells an engagement ring with a sales price of $10,000 to a nervous young man, who pays in cash. The sale is subject to a 9.75 percent sales tax. Prepare the revenue portion of the February 13 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Cash Dr 10975
To Sales $10,000
To Sales Tax Payable $975 ($10,000 × 9.75%)
(Being the cash is recorded)
Explanation:
The journal entry is shown below;
Cash Dr 10975
To Sales $10,000
To Sales Tax Payable $975 ($10,000 × 9.75%)
(Being the cash is recorded)
For recording this we debited the cash as it increased the assets and credited the sales and sales tax payable as it also increased the revenue and liabilities
Identify each person below as structurally, frictionally, or cyclically unemployed.
a. Jake recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
b. Rosa is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
c. Latasha just graduated from college and is looking for a full-time position with an investment banking firm.
Answer and Explanation:
Structurally unemployed: It refers to mismatch between both the available jobs and the unemployed skills
Frictionally unemployed: This condition occurs when the workers or labors are not employed and looking for the work
Cyclically unemployed: It arise when where the aggregate demand for goods and services can not encourage full employment in an economy. This takes place during times of sluggish economic growth or times of economic contraction
Based on the explanation, the classification is as follows
a. Structurally unemployed
b. Cyclic unemployed
c. Frictionally unemployed
Give three examples of business processes or operations that would benefit significantly from having detailed real-time or near real-time data and identify the benefits.
Answer:
Business Processes/Operations that would benefit from having detailed real-time or near real-time data are:
Air Tower/Radar Monitoring OperationsHualage/Logistics OperationsForex/Stock Trading TransactionsExplanation:
Lower Risk: Real-time data in operations lowers risk, minimizes room for errors are decisions for course correction are made instantly as the data occur.Improved Efficiency: to make decisions on the spot based on real data mean to cut down on time spent before decisions are made. Hence, increased efficiency.Lower costs: Real-time collection and use of data imply automated systems. An Automated system allows for instant decisions without requiring the accumulation of paper trails. In most cases, real-time data also provide uncommon insights into the deep operations of the company.
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If the Wet Dog Surf Company borrows $11,000 at 3.00% and there are 4 compounding periods per year, calculate Wet Dog's Effective Annual Rate (APY) of interest.
Answer:
3.039%
Explanation:
Effective annual interest = ( 1 + periodic interest/ m)^m - 1
M = number of compounding per year
(1 + 0.03 / 4)^4 -1 = 0.03039 = 3.039%
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Kuhn company is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 58% debt, 6% preferred stock and 36% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1,555.38. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $8 at a price of $92.25 per share. You can assume that Jordan does not incur any flotation costs when issuing debt and preferred stock. Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 40%. What is Kuhn's WACC for this project? Please show work.
a. 7.65%
b. 9.00%
c. 10.35%
d. 9.45%
Answer:
b. 9.00%
Explanation:
For the computation of WACC first we need to follow some steps which is shown below:-
Step 1
Cost of debt = 5.48% which is explained with the help of attachment.
Given that,
Present value = $1,555.38
Future value or Face value = $1,000
PMT = 1,000 × 11% = $110
NPER = 15 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the cost of debt is
Step 2
Cost of preferred stock = Annual preferred dividend ÷ Price
= $8 × $92.25
= 0.086721
Step 3
Cost of equity = Dividend ÷ (Stock price × (1 - flotation cost)) + Growth rate
= 2.78 ÷ (33.35 × (1 - 0.08)) + 0.092
= 18.26%
WACC = Weight of debt × Cost debt) + (Weight of preference stock × Cost of preference stock) + (Weight of equity × cost of equity)
= (0.58 × (0.0548 × (1 - 0.4)) + (0.06 × 0.086721) + (0.36 × 0.1826068)
= 9.00%
Kuhn's WACC for this project will be 9.00%.
Based on the information given, the cost of preferred stock will be:
= Annual preferred dividend / Price
= $8 / $92.25
= 0.086721
Then, the cost of equity will be calculated as:
= Dividend ÷ (Stock price × (1 - flotation cost)) + Growth rate
= 2.78 ÷ (33.35 × (1 - 0.08)) + 0.092
= 18.26%
Therefore, the weighted average cost of capital (WACC) will be:
= (0.58 × (0.0548 × (1 - 0.4)) + (0.06 × 0.086721) + (0.36 × 0.1826068)
= 9.00%
Therefore, Kuhn's WACC for this project will be 9.00%.
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A fixed asset with a cost of $52,025 and accumulated depreciation of $44,221 is traded for a similar asset priced at $55,501. Assuming a trade-in allowance of $5,664, the recognized loss on the trade is
Answer:
$2,140
Explanation:
When a commercial substance exists in the course of the exchange of an old asset for a new one , the gain or loss on this assets is recognized,
Commercial substance can be said to exist when the exchange assets impact the future cash flow. The extended useful life of the involved assets in the question the the newly acquired asset through exchange support this.
Workings
Cost of the fixed assets = 52,025
Accumulated depreciation = 44,221
Book value = 7,804
Trade in allowance = 5,664
loss = 7,804 - 5664 = 2,140
.Many of the same environmental factors, such as cultural factors, that operate in the domestic market also exist internationally. Discuss the key cultural factors Starbucks had to consider as it expanded into China.
Answer:
There are three main cultural factors that influece the consumer's behavior when it comes to the decision making process and those are: the culture, the subculture and the social class. Below is explained briefly the importance of them.
Explanation:
To begin with, the most important cultural factor that tend to influence in the particular society and more specifically in the consumers is the culture itself. The culture of the country will show very positive or negative influences regarding the purchase of the product when it comes to the buyers' decision's process and therefore that in this case presented Starbucks will have to consider the culture of the whole country as well as the social class and the subculture of every region in particular where they planned to establish. The culture will favour or not the purchase of the product if the people are great consumers of coffe or other related products and the social class will influence regarding how much will it cost to buy a coffe or two and where the locations will be, in the neighboorhoods or in the major cities, etc.
An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy more goods and services than she could buy last year.
a. Her real and nominal salary have risen.
b. Her real and nominal salary have fallen.
c. Her real salary has risen and her nominal salary has fallen.
d. Her real salary has fallen and her nominal salary has risen.
Answer:
a. Her real and nominal salary have risen
Explanation:
Her nominal salary is the amount she earns. the $200 increase is an increase in her nominal salary.
Her real salary is calculated in the amount of goods and service she can purchase given her income. Since with the $200, she can buy more goods and services, her real salary has also increased.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the October 9 sale consisted of 55 units from beginning inventory and 185 units from the October 5 purchase; the October 29 sale consisted of 35 units from the October 18 purchase and 75 units from the October 25 purchase. (Round your average cost per unit to 2 decimal places.)
Answer:
Ending inventory:
(a) specific identification = $5,885
(b) weighted average = $5,960
(c) FIFO = $5,750
(d) LIFO = $5,845
Explanation:
Date Activity Units Cost Total
Oct. 1 Beg. inventory 155 $14 $2,170
Oct. 5 Purchase 180 $13.50 $2,430
Oct. 9 Sales 240
Oct. 18 Purchase 140 $13 $1,820
Oct. 29 Sales 110
Oct. 25 Purchase 330 $12.50 $4,125
total Purchases 805 $13.10 $10,545
Cost of goods sold:
(a) specific identification = [(55 x $14) + (185 x $13,50)] + [(35 x $13) + (75 x $12.50)] = $4,660
(b) weighted average = $13.10 x 350 units = $4,585
(c) FIFO = (155 x $14) + (85 x $13.50) + (95 x $13.50) + (15 x $13) = $4,795
(d) LIFO = (180 x $13.50) + (60 x $14) + (110 x $13) = $4,700
Ending inventory:
(a) specific identification = $10,545 - $4,660 = $5,885
(b) weighted average = $10,545 - $4,585 = $5,960
(c) FIFO = $10,545 - $4,795 = $5,750
(d) LIFO = $10,545 - $4,700 = $5,845
Credit Card Debt - Application The function D(t) can be used to approximate the total average credit card debt in a U.S. household (in thousands of dollars) t years after 1995. Interpret the meaning of the statement: D(23) = 21.5. In the year , the total average credit card debt for a U.S. household will be $___________.
Answer: 2018; $21,500
Explanation:
The 't' in D(t) represents how many years after 1995 the function is referring to. This question has the 't' at 23 so this is 23 years after 1995.
= 1995 + 23
= 2018
The average household debt is given in thousands of dollars therefore;
= 21.5 * 1,000
= $21,500
In the year 2018, the total average credit card debt for a U.S. household will be $21,500.
The following totals for the month of April were taken from the payroll register of Magnum Company. Use this information to answer the question that follow. Salaries $12,000 FICA taxes withheld 900 Income taxes withheld 2,500 Medical insurance deductions 450 Federal unemployment taxes 32 State unemployment taxes 216 The journal entry to record the monthly payroll on April 30 would include a:_______. a. debit to Salaries Payable for $7,902 b. debit to Salaries Expense for $7,902 c. debit to Salaries Payable for $8,150 d. credit to Salaries Payable for $8,150
Answer:
The journal entry to record the monthly payroll on April 30 would include a credit to Salaries Payable for $8,150. The right answer is d.
Explanation:
In order to prepare The journal entry to record the monthly payroll on April 30 we would have to calculate the Salaries Payable as follows:
Salaries Payable=Salaries-FICA taxes withheld+Income taxes withheld+Medical insurance deductions
Salaries Payable=$12,000-$900+$2,500+$450
Salaries Payable=$8,150
Therefore, journal entry to record the monthly payroll on April 30 would be as follows:
Debit Credit
Salaries $12,000
FICA withheld $900
Income taxes withheld $2,500
Medical insurance deductions $450
salaries payable $8,150
So, The journal entry to record the monthly payroll on April 30 would include a credit to Salaries Payable for $8,150
True or False: A small number of institutional investors are often able and motivated to bring direct shareholder pressure on a firm’s management in an effort to reduce potential agency conflicts. True False
Answer: True
Explanation:
The agency problem is when there is a conflict of interest between the management of a company and the stockholders that exists in the company.
In order to help reduce the potential agency conflicts that at occur during the course of a business, a few of the institutional investors often bring in the pressure of the direct shareholder on the management of a firm. They believe by involving the shareholders, the management will try not to have any differences with the shareholders and thereby reducing agency problem.
Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 10 percent, and the current profits of the firm are $120 million. What is the value of the firm
Answer:
$4,400,000,000
Explanation:
The formula is shown below together with the computation.
Value of the firm = [(Firm's current profit ) × (1 + firm's opportunity cost of funds/Interest rate)] ÷ (Firm's opportunity cost of funds/Interest rate - Constant growth annual rate)
= [($120,000,000) × (1 + 10%)] ÷ (10% - 7%)
= [($120,000,000) × (1.1)] ÷ (0.1 - 0.07)
= $120,000,000 × 1.1 ÷ 0.03
= $132,000,000 ÷ 0.03
= $4,400,000,000
The Purple Martin has annual sales of $687,400, total debt of $210,000, total equity of $365,000, and a profit margin of 5.9 percent. What is the return on assets
Answer:
7.1%
Explanation:
Purple martin has an annual sales of $687,400
The total debt is $210,000
Total equity is $365,000
Profit margin is 5.9%
= 5.9/100
= 0.059
The first step is to calculate the net income
Net income= sales×profit margin
= $687,400×0.059
= $40,556.6
The next step is to calculate the total assets
Total assets= Total debt+Total equity
= $210,000+$365,000
= $575,000
Therefore, the return on assets can be calculated as follows
ROA= Net income/Total assets
= 40,556.6/575,000
= 0.0705×100
= 7.1%
Hence the return on assets is 7.1%
A publisher is deciding whether or not to invest in a new printer. The printer would cost $900, and would increase the cash flows in year 1 by $500 and in year 3 by $800. Cash flows do not change in year 2. If the interest rate is 12%, what is the present value of the cash flows from the investment
Answer:
The present value of the cash flows from the investment is $1015.85.
Explanation:
The present value of the cash flows can be calculated using the discounted cash flows approach also known as the DCF approach. Under this approach, the cash flows are discounted to the present day value using a certain discount rate.
The formula to calculate the present value of the cash flows is,
Present value = CF1 / (1+i) + CF2 / (1+i)^2 + ... + CFn / (1+i)^n
Where,
CF are the cash flowsi is the interest rate which is also the discount ratePresent value = 500 / (1+0.12) + 800 / (1+0.12)^3
Present value = $1015.85277 rounded off to $1015.85
Ralph, a cash basis taxpayer, owns an office building that he leases to various tenants. During 20X8, he signed a three-year lease with a tenant and received a check for $16,000 for the following:
Rent for November 1, 2008 to October 1, 2009 $5,000
Advance rent for last three months of lease 600
Security deposit (refundable) 400
For the current year, 2008, Ralph must report income of:__________
a. $6,000
b. $5,600
c. $5,000
d. $832
e. some other amount.
Answer:
b. $5,600
Explanation:
A cash basis taxpayer will report revenues and expenses when they are actually collected or paid for. The business transaction is not directly related to the moment that the payment occurs (unlike accrual accounting).
in this case, Ralph should report all the income related to monthly rental payments = $5,000 (Nov. 2008 - Oct. 2008) + $600 (the three last months of rent) = $5,600. Security deposits are not considered rental revenue, so they should not be reported as such.
You purchased an airplane for $500,000 and will depreciate it using a 7-year an MACRS. Salvage value in year 4 is expected to be $250,000. The airplane is expected to increase revenues by $200,000 per year, however, O&M costs are expected to be $30,000 per year. Your company is in a 40% tax bracket and your MARR is 15%. Show the end of year cash flows for this project for years 0 through 4. What is the Net Present Worth of this investment?
Year 0_____
Year 1____
Year 2______
Year 3_____
Year 4______
NPW_____
Answer:
Year 0 = -$500,000
Year 1 = $130,580
Year 2 = $150,980
Year 3 = $136,980
Year 4 = $433,260
NPV = $65,495
Explanation:
depreciation expense per year under 7 year MACRS table:
year 1 = $500,000 x 14.29% = $71,450
year 2 = $500,000 x 24.49% = $122,450
year 3 = $500,000 x 17.49% = $87,450
year 4 = $500,000 x 12.49% = $62,450
cash flow year 1 = [($200,000 - $30,000 - $71,450) x (1 - 40%)] + $71,450 = $130,580
cash flow year 2 = [($200,000 - $30,000 - $122,450) x (1 - 40%)] + $122,450 = $150,980
cash flow year 3 = [($200,000 - $30,000 - $87,450) x (1 - 40%)] + $87,450 = $136,980
cash flow year 4 = [($200,000 - $30,000 - $62,450 + $93,800 gain on sale) x (1 - 40%)] + $62,450 + $250,000 = $433,260
MARR = 15%
using a financial calculator, NPV = $65,495
Prepare a 2020 income statement for Shanta Corporation based on the following information:_________.
Cost of goods sold $490,000
Operating expenses 100,000
Other expenses and losses 30,000
Sales revenue 700,000
Tax rate 30%
Prepare a income statement
SHANTA CORPORATION
Income Statement
For the Year Ended December 31, 2020
Students arrive at the Administrative Services Office at an average of one every 15 minutes, and their requests take on average 10 minutes to be processed. The service counter is staffed by only one clerk, Judy Gumshoes, who works eight hours per day. Assume Poisson arrivals and exponential service times.
a. What percentage of time is Judy idle?
b. How much time, on average, does a student spend waiting in line?
c. How long is the (waiting) line on average?
d. What is the probability that an arriving student (just before entering the Administrative Services Office) will find at least one other student waiting in line?
Answer:
a) %idle time = 0.33
b)40.2minutes
c)40.02customers
d)0.5219
Step-by-step explanation:
It was said in the question Students arrive at the Administrative Services Office at an average of one every 15 minutes which means that
λ = 60/15= 4customers/hr
It was stated that their requests take on average 10 minutes to be processed which means that
μ = average of 10minutes = 60/10 = 6customers/hr
Then let us use these information to solve the given questions
a) percentage when judy was idle = (1- λ/μ)= 1- 0.67= 0.33
%service time = 0.67
%idle time = 0.33
b)To calculate How much time, on average that a student spend waiting in line then we make use of the formula below
= λ/ μ( μ- λ)
= 0.67hrs = 0.67 x60 = 40.2minutes
c) To calculate How long the waiting line on average;
= average waiting time x arrival rate = 0.67hrs x 6customers/hr
= 40.02customers
d) the probability that an arriving student will find at least one other student waiting in line is calculated below;
P( idle time i.e no customer to attend to) = 0.33
P1( Probability of having a customer to attend to) = 0.33 x 0.67= 0.2211
P( Probability of having 2 customer to attend to) = 0.33 x 0.67x0.67 = 0.1481
Therefore, the probability of finding at least one customer = 1 -[ po + p1]
= 1 - 0.33- 0.1481 = 0.5219
Consider a 11-period binomial model with R=1.02R=1.02, S_0 = 100S 0 =100, u=1/d= 1.05u=1/d=1.05. Compute the value of a European call option on the stock with strike K=102K=102. The stock does not pay dividends. Please submit your answer rounded to two decimal places. So for example, if your answer is 3.45673.4567 then you should submit an answer of 3.463.46. 1 point
Answer: 1.76
Explanation:
Given the following :
R=1.02,
S0 = 100
u=1/d= 1.05
Strike(k) = 102
Total Payoff = (probability of upside × upside Payoff) + (probability of downside × downside Payoff)
Upside Price = u × S0 = 1.05 × 100 = 105
downside Price = S0/u = 100/1.05 = 95.24
Upside Payoff = upside price - strike rate =(105 - 102) = 3
Upside probability :
[e^(r - q) - d] / u - d
E = exponential, q = Dividend (Dividend is 0, since the stock does not pay dividend)
d = 1/d = 1/1.05 = 0.9523809
e = 2.7182818
[2.7182818^(1.02% - 0) - 0.9523809] / (1.05 - 0.9523809)
[1.0102521 - 0.9523809] / 0.0976191
0.0578712 / 0.0976191
= 0.5928266
Probability of downside = 1 - p(upside)
P(downside) = 1 - 0.5928266
P(downside) = 0.4071733
Therefore, total Payoff =
(0.5928266 × 3) + (0.4071733 × 0)
= 1.7784798
European. Call option:
Total Payoff / (1 + r%)
1.7784798 / (1 + 1.02%)
=1.7784798/ (1 + 0.0102)
= 1.7784798 / 1.0102
= 1.7605224
= 1.76