Answer:Dept. Y and Dept. Z, respectively, are: $8,300 and $6,700
Explanation:
Given that
total delivery expense of Y and Z=$15,000
and Y and Z both have 50% of regular delivery requests
Departments Direct expenses Indirect expenses
y $1,600 $13,400 x 50% = $6,700
z $0 $13,400 x 50 % = $6,700
For department y = The total expenses = direct expenses+indirect expenses $1,600 + $6,700 = $8,300
For department Z= The total expenses = direct expenses+indirect expenses $0 + $6,700 = $6,700
Hannish Orchards, a juice manufacturer, uses a process that adds all the raw materials at the beginning of the process. Conversion costs are evenly distributed. Assume there are no beginning inventories. During the period the company started making 10,000 gallons. There were 2,000 gallons left in ending WIP that were 40% of the way through the process. Costs incurred during the period were: $ 16,000 Raw materials $ 5,500 Conversion costs The cost assigned to ending work in process would be closest to: A) $3,700 B) $4,300 C) $1,720 D) $1,780
Answer:
a. $3,700
Explanation:
Unit completed = 10000 - 2000 = 8000
Equivalent unit of material = 10000
Equivalent unit of conversion = 8000 + (2000*40%)
Equivalent unit of conversion = 8800
Cost per equivalent unit of material = $16000/10000
Cost per equivalent unit of material = $1.6
Cost per equivalent unit of conversion = $5500/8800
Cost per equivalent unit of conversion = $0.625
Cost of ending WIP = Equivalent unit of material*Unit cost+Equivalent unit of conversion*Unit cost
Cost of ending WIP = 2000*$1.6 + (2000*40%)*$0.625
Cost of ending WIP = $3200 + $500
Cost of ending WIP = $3,700
You are a financial adviser working with a client who wants to retire in eight years. The client has a savings account with a local bank that pays 7% annual interest. The client wants to deposit an amount that will provide her with $1,005,500 when she retires. Currently, she has $302,200 in the account. How much additional money should she deposit now to provide her with $1,005,500 when she retires?
Answer:
$283,005
Explanation:
The computation of the additional money that she deposited now is shown below:
As we know that
Future value = P × FV (7%, 8 Years)
Here
Future value = $1,005,500,
P represent the deposited amount
and FV (7%, 8 Years) is the future value (FV) of $1 at 7% for 8 years. Its value is to be determined from future value table.
From the table, the value of FV (7%, 8 years) is 1.7182.
Now
$1,005,500 = P × 1.7182
P = $1005500 × 1.7182
P = $585205
Now
The Additional deposit amount is
= $585,205 - $302,200
= $283,005
Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4, 2020. His father paid $44 per share for the stock on February 2, 2019. The FMV of the stock on March 4, 2020, was $48 per share. Monte sold the stock for $54 per share on October 10, 2020. What is the amount and character of the gain or loss that Monte recognizes
Answer:
$6,000 LTCG
Explanation:
Calculation to determine the amount and character of the gain or loss that Monte recognizes
Using this formula
Recognized gain or loss =Amount realized -Basis
Let plug in the formula
Recognized gain or loss=(1,000 Shares*$54 per share)-(1,000shares*$48 per share)
Recognized gain or loss=$54,000-$48,000
Recognized gain or loss=$6,000 LTCG
Therefore the amount and character of the gain or loss that Monte recognizes is $6,000 LTCG reason been the any gain Amount on the sales of property that was inherited are often tend to be LTCG
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
Direct Materials Variances Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 550 tablets during December. However, due to LCD defects, the company actually used 500 LCD displays during December. Each display has a standard cost of $6.40. LCD displays were purchased for December production at a cost of $2,950.
Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to nearest cent, if required.
Price variance $ Unfavorable/favorable
Favorable Quantity variance $ Unfavorable/favorable
Total direct materials cost variance $ Unfavorable/Favorable
Answer:
Standard price = $6.40
Actual price = $5.90 ($2,950/500)
Standard quantity = 550
Actual quantity = 500
Direct materials price variance = (Actual price - Standard price) * Actual quantity
= ($5.90 - $6.40) * 500
= $0.5 * 500
= $250 Favorable
Direct materials quantity variance = (Actual quantity - Standard quantity) * Standard price
= (500 - 550) * $6.40
= 50 * $6.40
= $320 Favorable
Total direct materials cost variance = Direct materials price variance + Direct materials quantity variance
= $250 Favorable + $320 Favorable
= $570 Favorable
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
Which of the following is a true statement? Multiple Choice A fiduciary entity is a legal entity that takes possession of property for the benefit of a person. An estate is a fiduciary that comes into existence upon a person's death to transfer the decedent's real and personal property. A trust is also a fiduciary whose purpose is to hold and administer the corpus for other persons (beneficiaries). An estate exists only temporarily, but a trust may have a prolonged or even indefinite existence. All of the choices are true.
Answer:
All of the choices are true.
Explanation:
The following statements are considered to be true
a. The fiduciary entity acts as a legal entity in which the possession of the property could be taken so that it would be benefit to the person
b. The estate acts as a fiduciary would come into existence at the time when the death of the person would be convert into the decedent real & personal property
c. The trust acts as a fiduciary in the case when the motive is to be hold
d. The estate would be existed on temporary basis but the trust would be for non-definite existence
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 %
A customer has signed a Letter of Intent (LOI) to buy $25,000 of XYZ mutual fund to qualify for a breakpoint that reduces the sales charge from 7% to 6%. The customer deposits $15,000 into the fund over the next 13 months. At the end of 13 months, the NAV is $20,000. How much does the customer have to deposit to complete the LOI?
A. 0
B. $5,000
C. $10,000
D. $15,000
2. PC Calculators sell calculators that it purchases for $15 each. It costs PC $60 each time calculators are ordered, and carrying costs are 20% of the calculator's purchase price. Annual demand is 100,000 calculators. (a) Compute the EOQ. (b) Compute the inventory costs if PC orders are at (i) the EOQ amount, (ii) 1000 calculators, (iii) 2500 calculators.
Answer: See explanation
Explanation:
The following can be deduced from the question:
Purchase price = $15,
Ordering cost = $60
Carrying cost = 20 % × $15 = $3
(a) The EOQ (economic order quantity) goes thus:
= ✓(2 × Annual demand × ordering cost / carrying cost )
= ✓(2 × 100000 × 60 / 3)
= ✓(12000000 / 3)
= ✓(4000000)
EOQ = 2000 calculators
b. The inventory cost when PC orders are at the EOQ amount goes thus:
Note that:
Inventory cost = Cost of purchase + Ordering cost + Carrying cost
Cost of purchase = $2000 × $15 = $30000
Ordering cost = 100000 / 2000 × 60 = $3000
Carrying cost = 20% × purchase price = 20% × $30000 = $6000
Then, the total cost will be:
= $30000 + $3000 + $6000
= $39000
b. Inventory cost at 1000 calculators will be:
Purchase cost = $1000 × $15 = $15000
Ordering Cost = Annual demand / Ordering quantity × cost of placing the order
= 100000 / 1000 × 60
= $6000
Carrying cost = 20% × $15000 = $3000
Then, the total inventory cost will be:
= $15000 + $6000 + $3000
= $24000
(iii) Inventory cost at 2500 calculators will be:
Purchase cost = 2500 × purchase price = $2500 × $15
= $37500
Ordering Cost of order = 100000 / 2500 × 60
= $2400
Carrying cost = 20% × $37500 = $7500
Total inventory cost:
= $37500 + $2400 + $7500
= $47400
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
∵∴∵answer∵∴∵
Ronald mc Donald house as well as charity days
∵∴∵description∵∴∵
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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On January 1, 2020, Indian river groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2021. Expenditures for the construction were as follows:
Jan 1, 2020. $600,000
Sept 1, 2020. $1800,000
Dec 31, 2020 $1800,000
March 31,2021. $1800,000
Aug 31, 2021. $1200,000
Indian river groves borrowed $800,000 at 10% interest rate from a bank on Jan 1, 2020 specifically to finance this construction. In addition, it as has two other debt outstanding throughout the entire construction. A) $1500,000, 8%, 10 years bonds payable and B) $3,200,000, 10%, 5 years note payable. Fiscal year-end is Dec 31.
Instruction:
A. What are the weighted-average accumulated expenditures for 2020 and 2021, respectively?
B. How much interest should be capitalized in 2020? Show your calculation.
Bonita Industries purchased a machine on July 1, 2018, for $1470000. The machine was estimated to have a useful life of 10 years with an estimated salvage value of $86000. During 2021, it became apparent that the machine would become uneconomical after December 31, 2025, and that the machine would have no scrap value. Accumulated depreciation on this machine as of December 31, 2020, was $354000. What should be the charge for depreciation in 2021 under generally accepted accounting principles
Answer:
$223,200
Explanation:
to determine the depreciation charge, calculate the book value of the asset. use this revised book value to calculate the depreciation using the revised estimates
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
Book value = cost of the asset - accumulated depreciation
$1,470,000 - $354,000 = $1,116,000
salvage value - 0
useful life = 5
Straight line depreciation expense = $1,116,000 / 5 = $223,200
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
Journalize the entries to correct the following errors:
a. A purchase of supplies for $108 on account was recorded and posted as a debit to Supplies for $569 and as a credit to Accounts Receivable for $569. (
b. A receipt of $4,410 from Fees Earned was recorded and posted as a debit to Fees Earned for $4,410 and a credit to Cash for $4,410.
Answer:
A. Dr Accounts Receivable for $569
Cr Supplies $569
Dr Supplies $108
Cr Accounts payable $108
B. Dr Cash $8820
Cr Fees earned $8820
Explanation:
Preparation of the entry to correct the following errors:
A. Dr Accounts Receivable for $569
Cr Supplies $569
Dr Supplies $108
Cr Accounts payable $108
B. Dr Cash $8820
Cr Fees earned $8820
($4410+$4410)
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.
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
Suppose that Fizzo and Pop Hop are the only two firms that sell orange soda. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Pop Hop Advertise Doesn't Advertise Fizzo Advertise 8, 8 15, 2 Doesn't Advertise 2, 15 11, 11 For example, the upper right cell shows that if Fizzo advertises and Pop Hop doesn't advertise, Fizzo will make a profit of $15 million, and Pop Hop will make a profit of $2 million. Assume this is a simultaneous game and that Fizzo and Pop Hop are both profit-maximizing firms. If Fizzo decides to advertise, it will earn a profit of $ million if Pop Hop advertises and a profit of $ million if Pop Hop does not advertise. If Fizzo decides not to advertise, it will earn a profit of $ million if Pop Hop advertises and a profit of $ million if Pop Hop does not advertise. If Pop Hop advertises, Fizzo makes a higher profit if it chooses . If Pop Hop doesn't advertise, Fizzo makes a higher profit if it chooses . Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing
Answer: See explanation
Explanation:
A pay off matrix has been attached.
If Fizzo decides to advertise, it will earn a profit of ($8 million) if Pop Hop advertises and a profit of ($15 million) if Pop Hop does not advertise.
If Fizzo decides not to advertise, then, it will earn a profit of ($2 million) if Pop Hop advertises and on the other hand, a profit of ($11 million) if Pop Hop does not advertise.
If Pop Hop advertises, then Fizzo makes a higher profit if it chooses (to advertise). On the other hand, if Pop Hop doesn't advertise, then Fizzo will make higher profit if it chooses (to advertise).
In a scenario whereby the firms act independently, the strategies that they will choose is that that both of the firms will prefer and choose to advertise.
A1 Co. has a process costing system. All materials are added when the process is first begun. At the beginning of May, there were no units of product in process. During May, 67,000 units were started; 6,700 of these were still in process at the end of May and were 60% finished in terms of conversion. The equivalent units for material in May were:
Answer:
Total equivalent units of materials =67,000 units
Explanation:
Equivalent unit is computed as follows:
Equivalent units =Degree of completion × units of inventory
Fully worked = 67,000-6,700= 60,300
Closing inventory = 6,700
Item Equivalent unit
Fully worked 100%× 60,300= 60,300 units
Closing inventory = 100%× 6,700= 6,700 units
Total equivalent units 67,000 units
Note that we used 100% as the degree of completion for materials because materials required are always added at the beginning of the process
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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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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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.
A reduction in inflation would lead to a. more frequent price changes and increased variability of relative prices. b. more frequent price changes and decreased variability of relative prices. c. less frequent price changes and increased variability of relative prices. d. less frequent price changes and decreased variability of relative prices.
Answer:
d. less frequent price changes and decreased variability of relative prices.
Explanation:
We know that the Inflation is an increase in prices for a period of time that represent the loss in the purchasing power of the consumer. With attached to it, there would be rise in the level of the price that have the high amount of fluctuations in the price
So in the case when there is a decrease in inflation so it would have less frequent change in price and reduction in variability in relative prices as the prices would become stable
Hence, the option d is correct
If the cost method is used to account for a long-term investment in common stock:____.
a. it is presumed that the investor has significant influence on the investee.
b. the earning of net income by the investee is considered a proper basis for recognition of income by the investor.
c. net income of the investee is not considered earned by the investor until dividends are declared by the investee.
d. the Investment account may be, at times, greater than the acquisition cost.
Answer:
net income of the investee is not considered earned by the investor until dividends are declared by the investee
Explanation:
Cost method can be regarded as
a method that is utilized when the influence of the investor over the investment that which he owns is just little or no influence , this could be typically described as owning less than 20% of the company. The investment will be recorded in the asset section of the balance sheet at historical cost. When an investment is made by an investing entity and the investment is having following two criteria, then the investment can be accounted for by the investor using the cost method.
Those criteria are;
1) There is no substantial influence by the investor over the investee.
2)There is no easily determinable fair value for the investment.
This cost method is best method when making a passive as well as long-term investment which doesn't result to influence over the company.
It should be noted that If the cost method is used to account for a long-term investment in common stock, then net income of the investee is not considered earned by the investor until dividends are declared by the investee
Which of the following is an example of an employee benefit for which money is deducted from your paycheck?
Answer: B. Heath insurance
As an example of an employee benefit, health insurance is one that is paid for out of your income. As a result, choice (B) is accurate.
One sort of insurance that covers all or a portion of the risk of a person needing medical care is health insurance, sometimes referred to as medical insurance or medical aid in South Africa.
Risk is divided among several people, much as other forms of insurance. An insurer can create a standard financial framework, such a monthly premium or payroll tax, to raise the funds necessary to pay for the medical benefits outlined in the insurance agreement by evaluating the income entire risk of health risks and health system expenditures across the risk pool.
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The general ledger of ABC Corporation as of December 31, 2021, includes the following accounts: Copyrights $50,000 Deposits with advertising agency (will be used to promote goodwill) 30,000 Discount on bonds payable 70,000 Excess of cost over fair value of identifiable net assets of acquired 80,000 Trademarks 90,000 Equity Investments 100,000 Patents 20,000 In the preparation of ABC balance sheet as of December 31, 2021, what should be reported as total intangible assets
Answer:
$240,000
Explanation:
Calculation to determine what should be reported as total intangible assets
Using this formula
Total intangible assets=Copyrights+Excess of cost over fair value of identifiable net assets of acquired+Trademarks+Patents
Let Plug in the formula
Total intangible assets=$50,000 + $80,000 + $90,000 +$20,000
Total intangible assets=$240,000
Therefore The Amount that should be reported as total intangible assets is $240,000
What is meant when a company is going through the "refreeze"
Answer:
Refreezing is the process of fixing these new ideas into the minds of the employees and managers so that they form the new set of beliefs, values, and norms of the organization.
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List 3 negative consequences of Chapter 7 and 13 Bankruptcy.
Answer:
As with any legal process, bankruptcy is a complex issue with both positive and negative consequences. Anyone considering filing for bankruptcy should consider all the possible outcomes before taking this step. Whether one is considering a Chapter 7 straight bankruptcy or a Chapter 13 repayment plan case, consulting with a qualified consumer bankruptcy attorney is paramount to ensuring that the process runs smoothly and advantageously.
The Paint Supply Store franchise sells an average of 52 gallons of Yellow Paint every week (for 52 weeks per year, Standard Deviation of the Demand = 6 gallons). They purchase Yellow Paint from their supplier at a price of $3.00 per gallon. It takes 1.75 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $25 per order. Holding Costs = 30% of the purchase price per gallon per year. How much Safety Stock should the company hold to have a Service Level of 99.0%?
Answer: 18.49
Explanation:
The amount of safety stock that the company should hold to have a Service Level of 99.0% will be calculated thus:
The following information can be depicted from the question:
Service level = 99%, corresponding z value = 2.33
Lead time = 1.75
Standard deviation = 6
Safety stock will now be:
= Z × ✓L × SD
where
Z = z value = 2.33
L = lead time = 1.75
SD = standard deviation = 6
Therefore, safety stock will be:
= Z × ✓L × SD
= 2.33 × ✓1.75 × 6
= 2.33 × 1.3229 × 6
= 18.49
A firm has just paid its annual dividend of $5.64 a share. Thereafter the dividend is expected to increase at a rate of 2% a year. If the firm's stock currently sells for $60 a share, what is the cost of equity
Answer:
11.588 %
Explanation:
The information available allows us to use the Dividend Growth Model to calculate the cost of equity as :
Cost of equity = Expected dividend ÷ Price per share + growth rate
therefore,
Cost of equity = ($5.64 x 1.02) / $60 + 2 %
= 11.588 %