Answer:
FV= $94,108.42
Explanation:
First, we need to calculate the future value of the 12 annual deposits:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {3,500*[(1.06^12) - 1]} / 0.06
FV= $59,044.79
Now, the future value at the end of the 20 years (8 years more):
FV= PV*(1 + i)^n
FV= 59,044.79*(1.06^8)
FV= $94,108.42
The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2.Stargel Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y120Y2 20Y1Retained earnings, January 1 $5,375,000 $4,545,000Net income 900,000 925,000Total $6,275,000 $5,470,000Dividends: Preferred stock dividends $45,000 $45,000Common stock dividends 50,000 50,000Total dividends $95,000 $95,000Retained earnings, December 31$6,180,000$5,375,000 Stargel Inc. Comparative Income Statement For the Years Ended December 31, $6,180,000 $5,375,000Stargel Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y2 20Y1Sales $10,000,000 $9,400,000Cost of goods sold 5,350,000 4,950,000Gross profit $4,650,000 $4,450,000Selling expenses $2,000,000 $1,880,000Administrative expenses 1,500,000 1,410,000Total operating expenses $3,500,000 $3,290,000Income from operations $1,150,000 $1,160,000Other revenue 150,000 140,000$1,300,000 $1,300,000Other expense (interest) 170,000 150,000Income before income tax $1,130,000 $1,150,000Income tax expense 230,000 225,000Net income $900,000 $925,000Stargel Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1Dec. 31, 20Y2
Dec. 31, 20Y1Assets Current assets: Cash $500,000 $400,000Marketable securities 1,010,000 1,000,000Accounts receivable (net) 740,000 510,000Inventories 1,190,000 950,000Prepaid expenses 250,000 229,000Total current assets $3,690,000 $3,089,000Long-term investments 2,350,000 2,300,000Property, plant, and equipment (net) 3,740,000 3,366,000Total assets $9,780,000 $8,755,000Liabilities Current liabilities $900,000 $880,000Long-term liabilities: Mortgage note payable, 10% $200,000 $0Bonds payable, 10% 1,500,000 1,500,000Total long-term liabilities $1,700,000 $1,500,000Total liabilities $2,600,000 $2,380,000Stockholders' Equity Preferred $0.90 stock, $10 par $500,000 $500,000Common stock, $5 par 500,000 500,000Retained earnings 6,180,000 5,375,000Total stockholders' equity $7,180,000 $6,375,000Total liabilities and stockholders' equity $9,780,000 $8,755,000Required:Determine the following measures for 20Y2.Return on total assets %Return on stockholder's equity %Return on common stockholder's equity %
According to information provided in the chapter, McDonald’s has been involved in a variety of corporate social initiatives. Give an example of how McDonald’s might initiate cause-related marketing, and define what cause-related marketing is
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Ronald mc Donald house as well as charity days
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McDonald's actively promote this day for several weeks before, both through advertising and in-store displays. In addition, they attempt to have celebrities work on the counter in order to increase customer traffic on the day. ... Customers gain “emotional goodwill” as part of their purchase goes to a good cause.
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I would like brainliest if I deserve it plz
A company budgeted unit sales of 204,000 units for January, 2020 and 240,000 units for February 2020. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2019, how many units should be produced in January, 2020 in order for the company to meet its goals
Answer:
the number of units to be produced is 214,800 units
Explanation:
The computation of the number of units to be produced is given below;
= Budgeted units sales + required ending inventory - opening inventory
= 204,000 units + (240,000 units × 30%) - 61,200 units
= 204,000 units + 72,000 units - 61,200 units
= 214,800 units
Hence, the number of units to be produced is 214,800 units
We simply applied the above formula so that the correct units could come
Over the past 4 years an investment returned 0.1 -0.12 -0.08 and 0.13, what is the standard deviation of returns?
a. 8.96 percent.
b. 16.05 percent.
c. 17.92 percent.
d. 18.09 percent.
e. 20.03 percent.
Answer:
The answer is below
Explanation:
Standard Deviation is a measure used to represent the volatility or risk in an instrument. The higher the SD, the higher will be the fluctuations in the returns and vice versa Given that:
the past 4 years an investment returned 0.1 -0.12 -0.08 and 0.13
[tex]Arithmetic\ mean=\frac{\Sigma x_i}{n}= \frac{0.1+(-0.12)+(-0.08)+0.13}{4} =0.0075[/tex]
The standard deviation (σ) is:
[tex]\sigma=\sqrt{ \frac{\Sigma(x_i-mean)2}{n-1} }=\sqrt{\frac{(0.1-0.0075)^2+(-0.12-0.0075)^2+(-0.08-0.0075)^2+(0.13-0.0075)^2}{3} } \\\\\sigma=12.58\%[/tex]
et sales $ 1,825,000 Expenses: Cost of goods sold $ 1,060,000 Operating expenses 570,000 Depreciation expense 51,000 Income tax expense 41,000 Total expenses 1,722,000 Net income $ 103,000 PEACH COMPUTER Selected Balance Sheet Data December 31 2021 2020 Increase (I) or Decrease (D) Cash $ 103,000 $ 85,500 $ 17,500 (I) Accounts receivable 45,100 49,500 4,400 (D) Inventory 76,000 55,500 20,500 (I) Prepaid rent 3,100 5,200 2,100 (D) Accounts payable 46,000 37,500 8,500 (I) Income tax payable 5,100 10,500 5,400 (D) Required: Prepare the operating activities section of the
Answer:
PEACH COMPUTER
PEACH COMPUTER
Statement of Cash Flows for the year ended December 31, 2021
(Operating Activities only)
Net income $ 103,000
Depreciation expense 51,000
Changes in working capital:
Accounts receivable 4,400
Inventory -20,500
Prepaid rent 2,100
Accounts payable 8,500
Income tax payable -5,400
Net cash flows from
operating activities $143,100
Explanation:
a) Data and Calculations:
Sales revenue $1,825,000
Expenses: Cost of goods sold $ 1,060,000
Operating expenses 570,000
Depreciation expense 51,000
Income tax expense 41,000
Total expenses 1,722,000
Net income $ 103,000
PEACH COMPUTER
Selected Balance Sheet Data
December 31 2021 2020
2021 2020 Increase (I) or Decrease (D)
Cash $ 103,000 $ 85,500 $ 17,500 (I)
Accounts receivable 45,100 49,500 4,400 (D)
Inventory 76,000 55,500 20,500 (I)
Prepaid rent 3,100 5,200 2,100 (D)
Accounts payable 46,000 37,500 8,500 (I)
Income tax payable 5,100 10,500 5,400 (D)
Peter Pundit has been hired by a (rather biased) news outlet to provide a cost benefit analysis of proposed nuclear power plant that refutes an earlier one done by environmentalists. The environmentalists’ analysis shows that the long term cleanup costs outweigh the short term benefits. In trying to counter the environmentalist’s report, Pundit would most likely…
Answer:
Use a higher discount rate and assume that cleanup would occur later.
Explanation:
When you are evaluating cash flows, the higher the discount rate, the lower the present value. Also, if the discount rate occurs farther away into the future, its present value will be lower. For example, a cash flow that occurs in 10 years will have a lower present value than a cash flow that occurs in 5 years.
Trew Company plans to issue bonds with a face value of $907,500 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to nearest whole dollar.)
Answer:
$756,692
Explanation:
Calculation to determine the issuance price of the bonds
Principal $907,500×0.43499=$394,753
Add Interest $27,225×13.29437 =$361,939
ISSUED PRICE $756,692
($907,500 × 0.06 × ½ year=$27,225)
Therefore the issuance price of the bonds is $756,692
At the beginning of year 1, Kare Company initiated a quality improvement program. Considerable effort was expended over two years to reduce the number of defective units produced. By the end of the second year, reports from the production manager revealed that scrap and rework had both decreased. The president of the company was pleased to hear of the success but wanted some assessment of the financial impact of the improvements. To make this assessment, the following financial data were collected for the two years. Year 1 Year 2 Sales $ 10,000,000 $ 10,000,000 Scrap 400,000 300,000 Rework 600,000 400,000 Product inspection 100,000 125,000 Product warranty 800,000 600,000 Quality training 40,000 80,000 Materials inspection 60,000 40,000 Required: a. Classify the costs as prevention, appraisal, internal failure, and external failure. b-1. Compute total quality cost as a percentage of sales for each of the two years. b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2
Answer:
a. The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. We have:
Total quality cost as a percentage of sales for Year 1 = 1.60%
Total quality cost as a percentage of sales for Year 2 = 1.65%
b-2. Profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
Explanation:
a. Classify the costs as prevention, appraisal, internal failure, and external failure.
The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. Compute total quality cost as a percentage of sales for each of the two years.
Total quality cost as a percentage of sales = ((Product inspection + Material inspection) / Sales) * 100 ………………. (1)
Using equation (1), we have:
Total quality cost as a percentage of sales for Year 1 = (($100,000 + $60,000) / 10,000,000) * 100 = 1.60%
Total quality cost as a percentage of sales for Year 2 = (($125,000 + $40,000) / 10,000,000) * 100 = 1.65%
b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2?
To calculate the profit associated to quality, only costs associated to quality are deducted from Sales as follows:
Profit associated to quality = Sales - Scrap - Rework - Product inspection - Materials inspection ……… (1)
Using equation (1), we have:
Profit associated to quality for Year 1 = $10,000,000 - $400,000 - $600,000 - $100,000 - $60,000 = $8,840,000
Profit associated to quality for Year 2 = $10,000,000 - $300,000 - $400,000 - $125,000 - $40,000 = $9,135,000
Therefore, we have:
Increase in profit because of quality improvements = Profit associated to quality for Year 2 - Profit associated to quality for Year 1 = $9,135,000 - $8,840,000 = $295,000
Therefore, profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
Prior to June 1, Sandler Company had no treasury stock transactions. Then, on June 1, the company paid $5,000 to purchase 100 shares of its common stock on the open market.
Required:
Complete the necessary journal entry.
Answer: Treasury stock debit 5000
cash credit 5000
Explanation: the amount they paid for treasury stock
According to the Sandler Company, the journal entry of the given data is:
Treasury Stock (Dr.) $ 5,000
Cash (Cr.) $ 5,000.
What do you mean by the Journal Entry?All company transactions are documented in journal entries. Any financial activity that has an effect on the firm is a transaction, in the broadest sense.
They encompass every transaction involving the exchange of money, including interest payments, depreciation, costs, and payroll. They are not just restricted to the purchasing and selling of goods and services.
Budgets and other financial documentation for accounts, departments, and the entire company are created using journal entries.
The capacity of the accounting team to categories transactions into the relevant accounts, as well as to track and properly analyze financial activities for the business, will be impacted by the quality and consistency of journal entries.
Therefore, according to the Sandler Company, the journal entry of the given data is:
Treasury Stock (Dr.) $ 5,000
Cash (Cr.) $ 5,000.
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The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,700 direct labor-hours will be required in January. The variable overhead rate is $9 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,110 per month, which includes depreciation of $3,650. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
Total cash disbursement= $63,760
Explanation:
The cash outflows of manufacturing overhead are the sum of total variable overhead and cash fixed overhead.
First, we need to deduct the depreciation expense from the fixed overhead:
Cash only fixed overhead= 43,110 - 3,650= $39,460
Now, the cash disbursement:
Total variable overhead= 2,700*9= 24,300
Total fixed overhead= 39,460
Total cash disbursement= $63,760
Rains Company purchased equipment on January 1 at a list price of $125,000, with credit terms2/10, n/30. Payment was made within the discount period. Rains paid $6,250 sales tax on theequipment and paid installation charges of $2,200. Prior to installation, Rains paid $5,000 to pour aconcrete slab on which to place the equipment. What is the total cost of the new equipment
Answer:
$135,950
Explanation:
Calculation to determine the total cost of the new equipment
Using this formula
New equipment Total cost =(List price × (100% - 2%) + Sales tax + Installation + Concrete slab)
Let plug in the formula
New equipment Total cost=[$125,000 *(100%-2%)]+ $6,250 + $2,200 + $5,000
New equipment Total cost=($125,000 *.98) + $6,250 + $2,200 + $5,000
New equipment Total cost=$135,950
Therefore the total cost of the new equipment is $135,950
Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cozy. Labor costs will go from $1.76 to $2.26 per unit. Assume all period and variable costs as reported on Chester's Income Statement remain the same. If Chester were to pass on half the new labor costs to their customers, how many units of product Cozy would need to be sold next round to break even on the product
Answer:
See below
Explanation:
The above is an incomplete question. The concluding parts are assuming the following;
Selling price per unit = $54
Current total variable cost = $24.50
Total fixed cost = $69,000
New variable cost will increase by ($2.26 - $1.76)/2 = $0.25
New variable cost will be = ($24.50 + $0.25) = $24.75
Contribution margin = ($54 - $24.75) = $29.25
New fixed cost = ($0.25 × 2,339) + $69,000 = $69,585
Note:
Old break even units = $69,000/$29.5 = 2,335 units
Therefore,
New break even units
= Fixed cost/Contribution margin per unit
= $69,585/$29.5
= 2,397 units
Cozy would have to sell 2,397 units as opposed to 2,335 units in order to break even.
trade industry short note
Answer:
Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties
which skill is most important for a successful entrepreneur?
Answer: Tenacity
Answer:
Tenacity
Explanation:
Tenacity is a skill that is most important for a successful entrepreneur.
Tenacity skill is most important for a successful entrepreneur. The entrepreneur's main motive is to set up a business to generate employment.
The term “entrepreneur” refers to the person who launches a new business at their own risk and profit basis. The starting up of a new business with a new idea and logic is called entrepreneurship.
A vital quality of any successful person, and essentially the entire philosophy of great businesses, is tenacity. The tenacious mindset emphasizes persistence and work ethic above all else.
A successful entrepreneur needs to be able to sell, communicate, concentrate, learn, and strategize well. A fundamental entrepreneurial talent as well as a highly important life skill is the capacity for lifelong learning.
As a result, the significance of the most important for a successful entrepreneur are the aforementioned.
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A period of economic growth that follows the lowest point in a business cycle
is called a(n)
A. trough
B. peak
C. contraction
D. expansion
Answer:
D. expansion
Explanation:
A business cycle is made up of six stages including: expansion, peak, recession, depression, trough, and recovery.
The trough is the lowest stage of the business cycle.
It is followed by recovery where the economy starts to turn around.
However the stage of economic growth after a trough is the expansion stage, where real gross domestic product (GDP) grows for more than 2 quarters.
This stage is characterised by rise in consumer confidence, employment, and the equity market.
In order for someone to avoid a contract on the grounds of intoxication, the level of intoxication must have been:______.
Answer: so great that he didn't comprehend the nature of the agreement he was entering into.
Explanation:
An intoxicated person simply refers to someone who is under contractual incapacity due to the fact that there's ingestion of drugs or alcohol which brought about incompetence.
In order for someone to avoid a contract on the grounds of intoxication, the level of intoxication has to be so great that the person can't comprehend the nature of the agreement he or she was entering into.
What is most likely to push the price of a company's stock higher?
A. An increase in demand for the company's products
B. An increase in demand for the company's stock
C. An increase in tariffs paid by the company's competitors
O
D. An increase in the exchange rate for the U.S. dollar
Answer:
b.
Explanation:
The correct answer is option B. An increase in demand for the company's stock.
What is most likely to push the price of a company's stock higher?
Confidence in the stock market can also push up demand and prices for individual stocks. If investors believe that stocks are a good investment, either because valuations are attractive or because the stock market has been trending upwards, an increase in demand for stocks can push up prices across the board.
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You're a web developer for an online furniture retailer, and you've been having a debate with your boss, the marketing director. She's rejecting your proposal to invite customers' product ratings and reviews on the website because she's concerned that negative comments might discourage sales. You argue that customer feedback would enhance the ________ aspect of your customers' shopping experience.
Answer:
it will enhance the business aspect
Chris Co. produces sports equipment and is currently producing 1,000 mini long boards annually. A supplier has offered to produce the boards for Chris Co. for $300 per board. Chris Co. incurs unit-level costs of $280 per unit. Chris also spends $25,000 on product design each year and incurs $50,000 of facility-level costs. The avoidable production cost for Chris to produce one mini long board is
Answer: $305
Explanation:
The avoidable production cost for Chris to produce one mini long board goes thus:
Unit Level Cost = $280
Add: Product Level Cost = $25,000 / 1000 units = $25
Then, the avoidable cost to produce one unit will be:
= $280 + $25
= $305
Which of the following helps make the management process efficient?
Answer:
Explanation:
Efficient processes require constant monitoring and optimization to observe an increase. As the famous management consultant Peter Drucker said, “If you can't measure it, you can't manage it”. Any process you have should be measurable to take action and improve process efficiency.
RKJ Company has provided the following information: 100,000 shares of $5 par value common stock are authorized 64,000 shares have been issued 59,000 shares are outstanding The 64,000 shares of issued common stock were issued for $10 per share. Which of the following statements is correct?
a. Common stock is reported at $630,000 on the balance sheet.
b. Additional paid-in capital is reported at $260,000 on the balance sheet.
c. Common stock is reported at $350,000 on the balance sheet.
d. Treasury stock is reported at $45,000 on the balance sheet.
Answer:
$320,000
Explanation:
The computation is shown below:
= Issued shares of the common stock × par value per share
= 64,000 shares × $5
= $320,000
This $320,000 should be reported in the equity section of the balance sheet
Hence, this is the answer but the same is not provided in the given options
hence, the same is to be considered and relevant
Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During the month of March, the company produced 1,650 cars.
Related production data for the month follows:
Actual materials purchased and used (tons) 6,650
Actual direct materials total cost $ 115,000
What is the direct materials quantity variance for the month?
A) $ 850 favorable
B) $ 850 unfavorable
C) $ 1,950 favorable
D) $ 1,950 unfavorable
Answer:
Direct material quantity variance= $850 unfavorable
Explanation:
Giving the following information:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During March, the company produced 1,650 cars.
Actual materials purchased and used (tons) 6,650
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (4*1,650 - 6,650)*17
Direct material quantity variance= $850 unfavorable
Which person would suffer the most from inflation?
Group of answer choices
Brittany is a high school senior who has been saving money for all of her senior activities.
Braxton is approaching retirement but continues to work full-time.
Coach Hirsh invests in gold and sees the value of it go up by about 7% year to year.
Gertrude is a retired 80-year old woman living on a fixed income.
The person that would suffer from inflation is coach Hirsh who invests in gold and later sees the value goes up by 7% year to year. Thus option C is correct.
What is inflation?Inflation is the general rise of prices and directly affects the economy of goods and services. As the general process of the currency rises there is a production in the purchasing capacity.
Inflation can be measured by the inflation rate which is the general price index. Thus Coach Hirsh will suffer most form the inflation due to his loss in investment as value goes up.
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Donkey Inc. has a fleet of 10 large trucks that cost a total of $1,410,000. The fleet is expected to be driven a total of 1,000,000 miles during its estimated 10-year life and be sold for $141,000 at the end of its useful life. If the fleet was driven 125,000 miles during the current year, what is the amount of depreciation that would be calculated using the straight-line and units-of-production methods, respectively
Answer:
$126,900
$125,000
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
( $1,410,000 - $141,000) / 10 = $126900
Activity method based on activity = (miles that year / total miles expected to be driven) x (Cost of asset - Salvage value)
( $1,410,000 - $141,000) x ( 125,000 / 1,000,000) = 125,000
Noah Yobs, who has $62,000 of AGI before considering rental activities, has $70,000 of losses from a real estate rental activity in which he actively participates. He also actively participates in another real estate rental activity from which he has $33,000 of income. He has other passive activity income of $20,000. What is Noah's adjusted gross income for the current year
Answer: $45,000
Explanation:
Noah is allowed to offset his real estate rental losses from real estate income and passive income.
This means that the loss reduces to:
= -70,000 + 33,000 + 20,000
= -$17,000
Noah's adjusted gross income for the year is:
= AGI + Income from rental activities
= 62,000 - 17,000
= $45,000
Noah's adjusted gross income for the current year is $45,000.
The passive activity income = $20000
The loss from the real estate = $70000
The income from the real rental estate = $33000
The Net loss = $70000-$33000
= $37000
The Net loss from passive activity = $20000 - $37000
= -$17000
Then Noah's adjusted basis
= $62000-$17000
= $45000
Therefore the adjusted gross income for the current year that Noah has is $45000
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Knowledge capital is nonrival in the sense that Select one: a. firms do not compete to be the first to develop new technologies. b. no single company can be excluded from the benefits of new technologies. c. two people can use the same knowledge to develop and produce a product. d. firms can benefit from the research and development of rival firms without paying for that benefit.
Answer:
C. Two people can use the same knowledge to develop and produce a product
Explanation:
Knowledge capital can be regarded as
the value of an organization which is comprised of its knowledge, learned techniques as well as relationships and innovations. Knowledge capital
can as well be regarded as intellectual capital, which is intangible and brings great value to the company which in turn gives competitive edge over rivals.
It should be noted that Knowledge capital is nonrival in the sense Two people can use the same knowledge to develop and produce a product
Calculate the future value of the following annuity streams: a. $8,000 received each year for 6 years on the last day of each year if your investments pay 7 percent compounded annually. b. $8,000 received each quarter for 6 years on the last day of each quarter if your investments pay 7 percent compounded quarterly. c. $8,000 received each year for 6 years on the first day of each year if your investments pay 7 percent compounded annually. d. $8,000 received each quarter for 6 years on the first day of each quarter if your investments pay 7 percent compounded quarterly.
Answer:
We will derive the amount of Future values with the aid of financial calculator:
a. Future value = FV (Pv, -Pmt, N, I)
Future value = FV (0, -8000, 6, 7%)
Future value = $57,226.33
b. Future value = FV (Pv, -Pmt, N, I)
Future value = FV (0, -8000, 6*4, 7%/4)
Future value = FV (0, -8000, 24, 1.75%)
Future value = $236,088.13
c. For this case, we need to put the financial calculator at BEGIN mode
Future value = FV (Pv, -Pmt, N, I)
Future value = FV (0, -8000, 6, 7%)
Future value = $61,232.17
d. For this case, we need to put the financial calculator at BEGIN mode
Future value = FV (0, -8000, 6*4, 7%/4)
Future value = FV (0, -8000, 24, 1.75%)
Future value = $240,219.67
Matrice has been working as a creative head at Ace Designs for 10 years. Her growth at Ace has made her one of the industry's finest. Of late, Matrice has had multiple recruiters offering interviews for possible positions at different companies. Matrice feels she should stay at Ace due to the medical insurance benefits that Ace offers . This is an example of _______ commitment.
Answer: continuance commitment
Explanation:
The above scenario explains a continuance commitment. This occurs when a worker remains with a particular organization after he or she looks at both the benefits and costs of leaving and sees that the cost of leaving the organization outweighs the benefits.
In this case, even though Matrice has had several recruiters offering interviews for possible positions at different companies, he believes that he should stay as a result of the medical insurance benefits that he gets. This is thus referred to as continuance commitment.
Kingbird Company sells 290 units of its products for $18 each to Logan Inc. for cash. Kingbird allows Logan to return any unused product within 30 days and receive a full refund. The cost of each product is $11. To determine the transaction price, Kingbird decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability-weighted amount. Using the probability-weighted amount, Kingbird estimates that (1) 10 products will be returned and (2) the returned products are expected to be resold at a profit.
Required:
a. Indicate the amount of Net sales.
b. Indicate the amount of estimated liability for refunds.
Answer:
Kingbird Company
a. The amount of Net Sales = $5,040.
b. The amount of the estimated liability for refunds = $180
Explanation:
a) Data and Calculations:
Units of products sold to Logan Inc. = 290
Selling price = $18
Sales revenue = $5,220 ($18 * 290)
Cost of each unit = $11
Expected returns = 10/290 = 0.03448
Net sales = $5,220 * (1 - 0.03448)
= $5,040
Estimated liability for refunds = $180 ($5,220 - $5,040)
Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 7.2%. Also, bonds can be issued at a pretax cost of 6.4%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $68. Flotation costs will be $3 per share. The recent common stock dividend was $3.54. Dividends are expected to grow at 7% in the future.
Required:
What is the cost of capital if the firm uses bank loans and retained earnings?
Answer: 9.44%
Explanation:
Find the cost of equity using the Gordon Growth model:
Price of stock = Next dividend/ (Cost of equity - growth rate)
68 = (3.54 * 1.07) / (Cost of equity - 7%)
(Cost of equity - 7%) * 68 = 3.79
Cost of equity - 7% = 3.79 / 68
Cost of equity = 3.79 / 68 + 7%
= 12.57%
Cost of debt is the cost using bank loans of 7.2%
Cost of Capital:
= (Weight of debt * Cost of debt * (1 - tax)) + (Weight of equity * cost of equity)
= (40% * 7.2% * ( 1 - 34%)) + (60% * 12.57%)
= 9.44%