Answer:
It will take 6 years and 183 days to cover for the investment.
Explanation:
Giving the following information:
Cash flow:
Cf1 trough 3= 100
Cf4 trough 8= 75
Initial investment= 475
The payback period is the time required to recover the initial investment.
Year 1= 100 - 475= -375
Year 2= 100 - 375= -275
Year 3= 100 - 275= -175
Year 4= 75 - 175= -100
Year 5= 75 - 100= -25
Year 6= 75 - 25= 50
To be more accurate:
(25/50)*365= 183
It will take 6 years and 183 days to cover for the investment.
a. Compute the future value of $2,500 continuously compounded for 5 years at an APR of 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Compute the future value of $2,500 continuously compounded for 9 years at an APR of 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. Compute the future value of $2,500 continuously compounded for 6 years at an APR of 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a) $3920.78
b) $3804.90
c) $3583.32
d) $4555.30
Explanation:
To find future value, use the formula below:
[tex] A=P(e)^r^n [/tex]
where
A=future value
P=present value
r=rate of interest
n=time period.
e=2.71828
a)
[tex] A=2500*(2.71828)^(^0^.^0^9^*^5^)[/tex]
=$2500*1.568312185
Future value =$3920.78
b)
[tex] A=2500*(2.71828)^(^0^.^0^7^*^6^)[/tex]
=$2500 * 1.521961556
Future value =$3804.90
c)
[tex] A=2500*(2.71828)^(^0^.^0^4^*^9^)[/tex]
=$2500 * 1.433329415
Future value =$3583.32
d)
[tex] A=2500*(2.71828)^(^0^.^1^0^*^6^)[/tex]
=$2500 * 1.8221188
Future value =$4555.30
Answer:
u9g
Explanation:
Suppose the transfers of pillars to the Lantern Division cut into sales to outside customers by 14,000 units. Further suppose that an outside supplier is willing to provide the Lantern Division with basic pillars at $1.27 each. If the Lantern Division had chosen to buy all of its pillars from the outside supplier instead of the Pillar Division, the change in net operating income for the company as a whole would have been:
Complete question:
The Pillar Division of the Gothic Building Company produces basic pillars which can be sold to outside customers or sold to the Lantern Division of the Gothic Company. Last year, the Lantern Division bought all of its 25,000 pillars from Pillar at $2.00 each. The following data are available for last year's activities of the Pillar Division:
Capacity in units 320,000 pillars
Selling price per pillar to outside customers $2.05
Variable costs per pillar $1.20
Fixed costs, total $155,000
The total fixed costs would be the same for all the alternatives considered below.
Suppose the transfers of pillars to the Lantern Division cut into sales to outside customers by 20,000 units. Further suppose that an outside supplier is willing to provide the Lantern Division with basic pillars at $1.92 each. If the Lantern Division had chosen to buy all of its pillars from the outside supplier instead of the Pillar Division, the change in net operating income for the company as a whole would have been:
$2,000 decrease.
$14,000 increase.
$1,000 decrease.
$18,000 decrease.
I tried my best to find the question but was unable to find the exact question, instead I found a symmetry question and its solution is as under:
Answer:
Option D. $18,000 decrease
Explanation:
The decrease in the net operating income that would occur due to purchase of all of the pillars from the outside supplier would cost the additional cost to the company which is opportunity cost per pillar and is calculated by using the following formula:
Opportunity Cost = Variable Cost - Purchasing Cost
Here, the variable cost to manufacture the pillar within the factory is $1.2 per pillar whereas the purchasing cost of pillars from outside supplier is $1.92 per pillar.
By putting values, we have:
Opportunity Cost = $1.2 - $1.92 = $0.72
Now for purchasing 25,000 units from the supplier, the total opportunity cost would be:
Total Opportunity Cost = $0.72 * 25,000 Units Purchased from Outside Supplier = - $18,000
The minus sign shows the decrease in the net operating income.
Barnes Company purchased $58,000 of 10.0% bonds at par. The bonds mature in six years and are a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
a) debit Unrealized Gain-Equity, $2,900; credit Cash, $2,900.
b) debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900.
c) debit Cash, $2,900; credit Interest Revenue, $2,900.
d) debit Cash, $5,800; credit Unrealized Gain-Equity, $5,800.
e) debit Cash, $5,800; credit Long-Term Investments-HTM, $5,800.
Answer:
Option B,debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900,is correct
Explanation:
Semiannual interest on the bond can be computed using the below semiannual interest formula:
semiannual interest=face value*coupon rate*6/12
face value is $58000
The coupon rate is 10%
semiannual interest=$58000*10%*6/12=$2900
The receipt of $2900 semiannual interest would be debited to cash while also being credited to Long-Term investments-HTM
Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits.
Cooking Canning
Beginning work in process $0 $4,240
Materials 24,700 9,800
Labor 9,550 7,440
Overhead 32,800 27,100
Costs transferred in 55,000
Journalize the April transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date Account Titles and Explanation Debit CreditApril 30(To record materials used.)30 (To assign factory labor to production.)30 (To assign overhead to production.)30 (To record costs transferred in.)
Answer: Please explanation column for answers
Explanation: Cooking Canning
Beginning work in process $0 $4,240
Materials 24,700 9,800
Labor 9,550 7,440
Overhead 32,800 27,100
Costs transferred in 55,000
a) journal to record materials used
Date Account Debit Credit
April 30 Work in progress- cooking $24,700
Work in progress -Canning $9,800
Raw materials inventory $34,500
B) journal to record assignment of factory labor to production
Date Account Debit Credit
April 30 Work in progress- cooking $9,500
Work in progress -Canning $7,440
Factory Labour $16,940
c) journal to record assignment of overhead to production.
Date Account Debit Credit
April 30 Work in progress- cooking $32,800
Work in progress -Canning $27,100
Manufacturing Overhead $59,900
c) journal to record costs transferred in from cooking to Canning
Date Account Debit Credit
April 30 Work in progress- Canning $55,000
Work in progress -Cooking $55,000
The following summarized data (amounts in millions) are taken from the September 27, 2014, and September 28, 2013, comparative financial statements of Apple Inc., a manufacturer of mobile communication and media devices, personal computers, portable digital music players, and seller of a variety of related software, services, accessories, networking solutions, and third-party digital content and applications:(Amounts Expressed in Millions) For the Fiscal Years Ended September 27 and September 28, respectively: 2014 2013Net sales $108,400 $65,370 Costs of sales 64,580 39,690 Operating income 33,950 18,530 Net income $26,050 $14,160 At Year End: Assets Current assets: Cash and cash equivalents $9,580 $10,630 Short-term marketable securities 16,280 14,510 Accounts receivable, less allowancesof $84 and $99, respectively 5,520 5,670 Inventories 930 1,200 Deferred tax assets 2,170 1,780 Vendor nontrade receivables 6,500 4,560 Other current assets 4,680 3,590 Total current assets 45,660 41,940 Long-term marketable securities 85,770 25,540 Property, plant, and equipment, net 7,930 22,670 Goodwill 1,060 890 Acquired intangible assets, net 3,690 490 Other assets 3,710 2,410 Total assets $147,820 $93,940 Liabilities and Shareholdersâ Equity Current liabilities: Accounts payable $14,780 $12,160 Accrued expenses 9,400 5,870 Deferred revenue 4,250 3,130 Commercial paper 6,548 0 Total current liabilities 34,978 21,160 Deferred revenueânoncurrent 1,840 1,290 Long-term debt 23,452 17,760 Other noncurrent liabilities 10,260 5,680 Total liabilities 70,530 45,890 Shareholdersâ Equity: Common stock and additional paid-in capital, $0.00001 par value, 1,900,000 shares authorized; 929,430 and 916,130 shares issued and outstanding, respectively 13,490 10,810 Retained earnings 63,200 37,320 Accumulated other comprehensive income (loss) 600 (-80 )Total shareholdersâ equity 77,290 48,050 Total liabilities and shareholdersâ equity $147,820 $ 93,940 At September 29, 2012, total assets were $47,820 and total shareholdersâ equity was $31,800.a. Calculate Apple Inc.âs working capital, current ratio, and acid-test ratio at September 27, 2014, and September 28, 2013. (Round your ratio answers to 1 decimal place. Enter "Working capital" in million of dollars.)b. Calculate Appleâs ROE for the years ended September 27, 2014, and September 28, 2013. (Round your answers to 1 decimal place.)2014 2015roi=c. Calculate Appleâs ROI, showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. (Round "Turnover" answers to 2 decimal places. Round your percentage answers to 1 decimal place.)2014 2015roi=margin=turnover=
Answer:
Apple Inc.
a. Calculate Apple Inc.'s working capital, current ratio, and acid-test ratio at September 27, 2014, and September 28, 2013. (Round your ratio answers to 1 decimal place. Enter "Working capital" in million of dollars.)
September 2014:
a) Working Capital = Current Assets - Current Liabilities
= $45,660,000 - $34,978,000 = $10,682,000
b) Current Ratio = Current Assets / Current Liabilities
= $45,660 / $34,978 = 1.3 : 1
c) Acid-Test Ratio = Current Assets - Inventory / Current Liabilities
= $45,660 - 930 / $34,978 = 1.3 : 1
September 2013:
a) Working Capital = Current Assets - Current Liabilities
= $41,940,000 - $21,160,000 = $20,780,000
b) Current Ratio = Current Assets / Current Liabilities
= $41,940 / $21,160 = 2 : 1
c) Acid-Test Ratio Current Assets - Inventory / Current Liabilities
= $41,940 -1,200 / $21,160 = 1.9 : 1
b. Calculate Apple's ROE for the years ended September 27, 2014, and September 28, 2013. (Round your answers to 1 decimal place.)
September 2014
ROE = Net Income/Equity x 100 = $26,050/$77,290 x 100 = 33.7%
September 2013
ROE = Net Income/Equity x 100 = $14,160/$48,050 x 100 = 29.5%
c. Calculate Apple's ROI, showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. (Round "Turnover" answers to 2 decimal places. Round your percentage answers to 1 decimal place.)
September 2014
ROI = Margin x Turnover = Net Operating Income/Sales x Sales/Average Assets
= ($33,950/$108,400) x ($108,400/$120,880)
= 0.31 x 0.90
= 0.279 = 27.9%
Average Assets = $120,880 ($147,820 + 93,940) /2
September 2013
ROI = margin = turnover = Net Operating Income/Sales x Sales/Average Assets
= ($18,530/$65,370) x ($65,370/$70,880)
= 0.28 x 0.92
= 0.258 = 25.8%
Average Assets = $70,880 ($93,940 + 47,820) /2
Explanation:
Apple Inc. Income StatementFor the Fiscal Years Ended September 27 and September 28, respectively:
2014 2013
Net sales $108,400 $65,370
Costs of sales 64,580 39,690
Operating income 33,950 18,530
Net income $26,050 $14,160
Balance Sheet:
Assets
Current assets:
Cash and cash equivalents $9,580 $10,630
Short-term marketable securities 16,280 14,510
Accounts receivable, less allowances of $84 & $99 5,520 5,670
Inventories 930 1,200
Deferred tax assets 2,170 1,780
Vendor non-trade receivables 6,500 4,560
Other current assets 4,680 3,590
Total current assets 45,660 41,940
Long-term marketable securities 85,770 25,540
Property, plant, and equipment, net 7,930 22,670
Goodwill 1,060 890
Acquired intangible assets, net 3,690 490
Other assets 3,710 2,410
Total assets $147,820 $93,940
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable $14,780 $12,160
Accrued expenses 9,400 5,870
Deferred revenue 4,250 3,130
Commercial paper 6,548 0
Total current liabilities 34,978 21,160
Deferred revenue: noncurrent 1,840 1,290
Long-term debt 23,452 17,760
Other noncurrent liabilities 10,260 5,680
Total liabilities 70,530 45,890
Shareholders' Equity:
Common stock and additional paid-in capital,$0.00001
par value, 1,900,000 shares authorized; 929,430 & 916,130
shares issued & outstanding, respectively 13,490 10,810
Retained earnings 63,200 37,320
Accumulated other comprehensive income (loss) 600 (-80)
Total shareholders' equity 77,290 48,050
Total liabilities & shareholders' equity $147,820 $ 93,940
At September 29, 2012, total assets were $47,820 and total shareholders' equity was $31,800.
b) Working Capital is the excess of current assets over current liabilities. It shows the amount of finance needed for meeting day-to-day operations of an entity. Working capital measures a company's liquidity, operational efficiency, and its short-term financial health. A healthy entity has some excess of current assets over current liabilities in order to continue to run the business operations in the short-run. Working capital can also be measured in relative terms with the use of ratios, especially the current ratio and the acid-test ratio.
c) ROE means Return on equity. It is a financial performance measure calculated by dividing net income by shareholders' equity. Since shareholders' equity is equal to a company's assets minus its debt, ROE is considered as the return on net assets. As with return on capital, a ROE measures management's ability to generate income from the equity available to it.
d) Return on Investment (ROI) is a financial performance measure which evaluates the efficiency of an investment or compares the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. As a financial metric, it measures the probability of gaining a return from an investment.
What is liquidity risk? Select one: a. risk due to changes in interest rates b. risk due to exchange rates c. risk to technological investments d. risk due to a sudden surge in liability withdrawals
Answer:
The correct answer is D)
Risk due to a sudden surge in liability withdrawals.
Explanation:
In banking terms, this simply refers to the inability of the bank to meet with its financial responsibilities in the near term.
When a bank has excess capital tied down in the form of loans which have been collateralised, the physical assets upon the default of the loans become assets to the bank. Its liabilities to the depositors which are still in existence have to be met. If at any point in time the bank is unable to meet its liability to depositors and is also unable to quickly convert the assets, then it is said to be exposed to the risk of liquidity.
Cheers!
Suppose that JB Cos. has a capital structure of 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 14 percent while its cost of equity is 18 percent. Assume the appropriate weighted-average tax rate is 25 percent.
What will be JBâs WACC? (Round your answer to 2 decimal places.)
WACC ______ %
Answer:
16.13%
Explanation:
The computation of the weighted cost of capital (WACC) is shown below:
As we know that
WACC is
= weight of equity × cost of equity + weight of debt × before cost of debt × (1 - tax rate)
= 0.75 × 18% + 0.25 × 14% × (1 - 0.25)
= 13.5% + 2.625%
= 16.13%
We simply applied the above formula so that the WACC could be arrive
Prepare journal entries to record each of the following four separate issuances of stock.
a. A corporation issued 4,000 shares of $10 par value common stock for $48,000 cash.
b. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
c. The stock has a $3 per share stated value.A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
d. The stock has no stated value.A corporation issued 1,000 shares of $50 par value preferred stock for $107,000 cash.
Answer:
a.
DR Cash $48,000
CR Common Stock (4,000*10) $40,000
CR Paid in Excess of Par- Common Stock $8,000
(To record common stock issued for cash)
Working
Paid in Excess of Par- Common Stock = 48,000- 40,000
= $8,000
b.No stated value
DR Organization expenses $57,000
CR Common Stock $57,000
(To record common stock issued to promoters)
c.
DR Organization expenses $57,000
CR Common Stock (2,000 * $3) $6,000
CR Paid in Excess of Par- Common Stock $51,000
(To record common stock issued to promoters)
Working
Paid in Excess of Par- Common Stock = 57,000 - 6,000
= $51,000
d.
DR Cash $107,000
CR Preferred Stock (1,000*50) $50,000
CR Paid in Excess of Par- Preferred Stock $57,000
(To record preferred stock issued for cash)
Working
Paid in Excess of Par- Preferred Stock
= 107,000 - 50,000
= $57,000
The specifications for a plastic liner for a concrete highway project calls for thickness of 5.0 mmplus or minus±0.10 mm. The standard deviation of the process is estimated to be 0.02 mm.
A) The upper specification limit for this product = ? mm (round your response to three decimalplaces).
B) The lower specification limit for this product = ? mm (round to three decimal palces)
C) The process capability index (CPk) = ? (round to three decimal places)
D) The upper specification lies about ? standard deviations from the centerline (mean thickness)
Answer:
a) 5.10 mm
b) 4.90 mm
c) 1.67
d) upper specification lies at 5 standard deviations from mean.
Explanation:
Given:
Mean = 5.0mm
Standard deviation = 0.02 mm
a) The upper specification limit:
5.0 + 0.10
= 5.10 mm
b) The lower specification limit:
5.0 - 0.10
= 4.90 mm
c) The process capability index (CPk):
Use the formula below to find the process capability index
[tex] C_p_k = min (\frac{USL - mean}{3\sigma}, \frac{mean - LSL}{3\sigma}) [/tex]
Substitute figures:
[tex] C_p_k = min (\frac{5.1 - 5.0}{3*0.02}, \frac{5.0 - 4.9}{3*0.02}) [/tex]
[tex] C_p_k = min (\frac{0.1}{0.06}, \frac{0.1}{0.06}) [/tex]
[tex] C_p_k = min( 1.67, 1.67) [/tex]
[tex] C_p_k = 1.67 [/tex]
d) The upper specification lies at a distance of (5.1-5) = 0.1 mm
Standard deviation = 0.02 mm
upper specification lies at:
[tex] \frac{0.1}{0.02} = 5 [/tex]
Therefore, upper specification lies at 5 standard deviations from mean.
If the depreciable investment is $1,000,000 and the MACRS 5-Year class schedule is: Year-1: 20%; Year-2: 32%; Year-3: 19.2%; Year-4: 11.5%; Year-5: 11.5% and Year-6: 5.8% Calculate the depreciation tax shield for Year-2 using a tax rate of 30%:
Answer: C.$96,000
Explanation:
The Depreciation Tax Shield refers to how much in taxes are being saved by the company for depreciating an asset because Depreciation is tax deductible.
Depreciation Tax Shield = Tax Rate * Depreciation Amount for year
= 30% * ( 1,000,000 * 32%)
= 30% * 320,000
= $96,000
By claiming a Depreciation of $320,000 in Year 2, the depreciable asset saved the company $96,000 in taxes.
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares
Answer: B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
The company is already Publicly traded. If it were to issue more stock it would increased the amount of stock it has in the market which will lead to the prices reducing from a high amount of supply.
Companies generally do not want their stock prices to decrease as it sends negative signals to investors as well as the fact that management's role is to try to increase Shareholder wealth.
They will therefore rather issue bonds than risk their stock prices reducing in price.
Using the following information please prepare a schedule of cost of goods sold and calculate the value of ending inventory and cost of goods of sold included in the Schedule of Cost of Goods Sold for the year ended December 31, 2019, Using FIFO, First In First Out The total Inventory valuation using FIFO on December 31, 2018 was 2,000 units at a cost of $10 per unit. On June 30, 2019 the company purchased 5,000 units at cost of $20 per unit. On September 30, 2019 the company purchased 3,000 units at a cost of $30 per unit. On December 1, 2019 the company sold 6,000 units.
Answer:
Ending inventory= $110,000
COGS= $100,000
Explanation:
Giving the following information:
Beginning inventory=2,000 units for $10 per unit.
Purchases:
June 30, 2019= 5,000 units at cost of $20 per unit.
September 30, 2019= 3,000 units for $30 per unit.
On December 1, 2019 the company sold 6,000 units.
Using the FIFO (first-in; first-out) inventory method, the value of ending inventory is calculated using the cost of the last units incorporated into inventory.
Ending inventory in units= 10,000 - 6,000= 4,000
Ending inventory= 3,000*30 + 1,000*20= $110,000
COGS= 2,000*10 + 4,000*20= $100,000
Prepare journal entries to record the following production activities. 1. Incurred $59,000 of direct labor in production (credit Factory Payroll Payable). 2. Incurred $22,000 of indirect labor in production (credit Factory Payroll Payable). 3. Paid factory payroll.
Answer: The answer has been solved and attached
Explanation:
The work in progress and inventory is the inventory that has almost finished by a company and waiting so was to be changed to finished goods. We are told that direct labour is used, therefore we will have to debit work in progress inventory by $59,000 and credit payable factory payroll by $59,000.
Factory overhead are expenses that a company makes. We have to debit it by $22,000 and credit payable factory payroll by $22,000.
The solution has been attached.
Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000units Direct materials$6.40per unit Direct labor$3.93per unit Variable overhead$5.80per unit Fixed overhead$150,000in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under variable costing
Answer:
The company's income would decrease by $422,600.
Explanation:
The Variable Costing includes only variable manufacturing costs in product costs.Fixed and non-manufacturing costs are treated as period costs.
Prepare a Differential Analysis for an additional 20,000 units
Differential Analysis for an additional 20,000 units
Additional Costs :
Direct materials ($6.40 × 20,000) $128,000
Direct labor ($3.93× 20,000) $78,600
Variable overhead ($5.80× 20,000) $116,000
Fixed Overheads ($5 × 20,000) $100,000
Incremental Cost $422,600
Conclusion:
The company's income would decrease by $422,600.
Suppose you decide to deposit $24,000 in a savings account that pays a nominal rate of 12%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after four months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)
Answer:
The total amount after four-month is 24982.08 dollars.
Explanation:
The amount to deposit in savings account = $24000
Nominal interest rate = 12%
Daily rate = 12 /365= .03288%
The interest is compounded daily and a number of months = 4 months.
We have to calculate the total amount after the four months. The calculation is given below:
Number of days in 4 months = 4 × 365/12 = 121.66 (rounded to 122)
Amount in account = Amount deposited × (1+i)^n
= 24000 × (1+.0003288)^122
= 24000 × (1.0003288)^122
= 24000 × 1.04092
= 24982.08 dollars
You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 25 % Stock B 32 % Stock C 43 % What are the investment proportions of your client’s overall portfolio, including the position in T-bills?
Answer:
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
Explanation:
Calculation for the investment proportions of your client's overall portfolio, including the position in T-bills
Based on the information given the T-bill rate is 8% which means we are going to multiply each stock Investments by 8%
Stock A 25%
Stock B 32%
Stock C 43%
Hence
Stock A: .25*.8= 20%
Stock B: .32*.8= 25.6%
Stock C: .43*.8= 34.4%
Therefore the investment proportions of your client's overall portfolio, including the position in T-bills will be :
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested
Answer: expand
Explanation:
Here's the complete question:
Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested a smaller investment of $20 million to see if the market is as strong as they hope it is. If demand is strong and the opportunity is still available, Clemens will increase its investment at a later date. This example describes a real option to:
a. abandon
b. expand
An expansion option is an option that gives the company that bought a real option, the right to take part in certain actions, and to also expand its operations in the future even with little or no cost. In real estate, this option gives opportunities to the tenants to increase the space of the premises where they live.
This is the idea portrayed in the question when few senior managers suggested a smaller investment of $20 million should be made at first and when the demand is strong and the opportunity is still available, Clemens will increase its investment at a later date.
A corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share. If the corporation issues a 5-for-1 stock split, determine the number of shares outstanding. Select the correct answer. 583,752 8,981 224,520 44,904
Answer: 224,520
Explanation:
From the question, we are told that a corporation has 44,904 shares of $26 par value stock outstanding that has a current market value of $238 per share and that the corporation issues a 5-for-1 stock split. The number of shares outstanding goes thus:
Shares outstanding = 44,904 shares
We are also told that the corporation issues a 5-for-1 stock split. Therefore, the new shares will be:
= 44,904 × 5
= 224,520 shares
If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be 224,520.
"______, a key feature of a customer relationship management system, is the ability to aid customer service representatives so that they can quickly, thoroughly, and appropriately address customer requests and resolve customer issues while collecting and storing data about those interactions."
Answer:
Customer support
Explanation:
Customer support offers various customer services to help customers in making cost effective and correct use of a product. Through customer support, customers requests and issues can be resolved through answering questions and providing help on onboarding, while collecting and storing data about those interactions
You have just sold your house for $ 1 comma 000 comma 000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $ 800 comma 000. The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25 % (APR), how much cash will you have from the sale once you pay off the mortgage? g
Answer:
cash received = $510194.55
Explanation:
given data
sold your house = $1000000
time t = 30 year = 360 month
initial balance P = $800,000
mortgage currently exactly = 18½ years = 138 months
interest rate r = 5.25 % = 0.525% per month
solution
first, we will get monthly loan payment is express as
C = P ÷ [tex]\frac{1}{r} \times (1-\frac{1}{(1+r)^n})[/tex] ...............1
Put here values
C = 800,000 ÷ [tex]\frac{1}{.00525} \times (1-\frac{1}{(1+0.00525)^{360}})[/tex]
C = $ 4951.78
so that monthly payment is $ 4951.78
and
Balance after the 18.5 years will be
Balance = $ 4951.78 × [tex]\frac{1}{0.00525}[/tex] × [tex](1-\frac{1}{1.00525^{138}})[/tex]
Balance after 18.5 year = $ 485287.64
Balance after 18.5 year = $489805.45
but here we received here $1000,000 excess cash received is
so
cash received = 1000,000 - 489805.45
cash received = $510194.55
A hospital carried a 2-year malpractice insurance policy that allows for retroactive premium adjustments based on experience (claims actually incurred). The basic premium is $150,000 for the 2-year policy payable in advance. At the end of the first year the hospital estimates that it will have to pay an additional $80,000 in premiums as a result of claims filed in the current year and it estimates that it will incur additional premiums in the second year of $100,000 as a result of claims filed in the second year. The amount of insurance expense that should appear on the financial statements at the end of the first year should be:_______
Answer:
The answer is $155,000
Explanation:
Solution
Given that:
The Malpractice claims should accumulate an estimated loss by a charge to operations as soon as both the following conditions are :
1. There is a possibility that an asset has been weakened or a liability has been incurred.
2. The loss can be reasonably estimated
Thus
The Basic premium is = $150,000
The Additional premium is = $80,000 for first year as result of claims
So,
The insurance expense in first year is given as follows:
150,000/2 + 80,000
= 75,000+80,000
= $155,000
Therefore the amount of insurance expense that should appear on the financial statements at the end of the first year is $155,000
For each of the following separate transactions:
Sold a building costing $38,500, with $23,400 of accumulated depreciation, for $11,400 cash, resulting in a $3,700 loss. Acquired machinery worth $13,400 by issuing $13,400 in notes payable. Issued 1,340 shares of common stock at par for $2 per share. Note payables with a carrying value of $41,700 were retired for $50,400 cash, resulting in a $8,700 loss.
Required:
a. Prepare the reconstructed journal entry.
1. Record Sale of Building
2. Record Acquisition of machinery
3. Record the issuance of common stock for cash
4. Record payment of cash to retire debit
b. Identify the effect it has, if any, on the investing section or financing section of the statement of cash flows.
Answer:
Separate Transactions
a. Reconstructed Journal Entries:
1. Record Sale of Building
Debit Sale of Building $38,500
Credit Building $38,500
To transfer building to sale of building account.
Debit Accumulated Depreciation- Building $23,400
Credit Sale of Sale $23,400
To transfer the accumulated depreciation to sale of building account.
Debit Cash Account $11,400
Credit Sale of Building $11,400
To record the cash received on sale of building.
2. Record Acquisition of machinery :
Debit Equipment (Machinery) $13,400
Credit Notes Payable $13,400
To record the purchase of machinery with notes payable.
3. Record the issuance of common stock for cash :
Debit Cash Account $2,680
Credit Common Stock $2,680
To record the issue of 1,340 shares at par, $2 per share.
4. Record payment of cash to retire debit:
Debit Notes Payable $41,700
Debit Loss on Notes Payable $8,700
Credit Cash Account $50,400
To record the retirement of notes payable.
b. Identification of the effect on the investing section or financing section of the statement of cash flows:
1. Investing Section of the statement of cash flows:
Building $11,400
This increases the cash inflow from investing activities by $11,400.
2. Machinery acquired by issuing notes payable does not affect the statement of cash flows. No cash is involved in the transaction, at least for now.
Financing Section of the statement of cash flows:
3. Issue of common stock $2,680
This increases the cash inflow from financing activities by $2,680.
4. Notes Payable ($50,400)
This increases the cash outflow from financing activities by $50,400 if the notes payable are non-current liabilities. If they are current, it will have the same effect but on the operating activities section of the statement of cash flows.
Explanation:
The financing activities section of the statement of cash flows deals with the sources of funding the business, both inflow and outflow of cash.
The investing activities section deals with the investments made by the entity based on cash flows.
Using the year-end information for each of the following six separate companies ($ thousands):
Case Assets Liabilities Average Assets Net Income
Company 1 $ 90,500 $ 11,765 $ 100,000 $ 20,000
Company 2 64,000 46,720 40,000 3,800
Company 3 32,500 26,650 50,000 650
Company 4 147,000 55,860 200,000 21,000
Company 5 92,000 31,280 40,000 7,520
Company 6 104,500 52,250 80,000 12,000
a.
Calculate the debt ratio and the return on assets. (Round your debt ratios to 2 decimal places and return on assets to 3 decimal places.)
Case Debt Ratio ROA
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
b.
. Of the six companies, which business relies most heavily on creditor financing?
c.
Of the six companies, which business relies most heavily on equity financing?
d.
Which two companies indicate the greatest risk?
e.
Which two companies indicate the greatest risk?
f.
Which one company would investors likely prefer based on the risk
Answer:
Year-end Information
a. Calculation of the debt ratio and the return on assets. (Round your debt ratios to 2 decimal places and return on assets to 3 decimal places.)
Case Debt Ratio ROA
Company 1 = 13.00% ($11,765/$90,500) 22.099% ($20,000/$90,500)
Company 2 = 73.00% ($46,720/$64,000) 5.938% ($3,800/$64,000)
Company 3 = 82.00% ($26,650/$32,500) 2.000% ($650/$32,500)
Company 4 = 38.00% ($55,860/$147,000) 14.286%($21,000/$147,000)
Company 5 = 34,00% ($31,280/$92,000) 8.174% ($7,520/$92,000)
Company 6 = 50.00% ($52,250/$104,500) 11.483%($12,000/$104,500)
b. Of the six companies, which business relies most heavily on creditor financing?
Company 3 relies most heavily on creditor financing, with a ratio of 82%.
c. Of the six companies, which business relies most heavily on equity financing?
Company 1 relies most heavily on equity financing, of about 87%.
d. Which two companies indicate the greatest risk?
Companies 2 and 3 indicate the greatest risk, with heavy reliance on debt financing and less than optimal performance.
e. Which two companies indicate the lowest risk?
Companies 1 and 4 indicate the lowest risk.
f. Which one company would investors likely prefer based on the risk
Company 1 has the lowest risk profile.
Explanation:
a) Schedule of Companies' Assets, Liabilities, Average Assets, & Net Income:
Case Assets Liabilities Average Assets Net Income
Company 1 $ 90,500 $ 11,765 $ 100,000 $ 20,000
Company 2 64,000 46,720 40,000 3,800
Company 3 32,500 26,650 50,000 650
Company 4 147,000 55,860 200,000 21,000
Company 5 92,000 31,280 40,000 7,520
Company 6 104,500 52,250 80,000 12,000
b) The debt ratio or the debt to asset ratio or the total debt to total assets ratio indicates the percentage of the total asset amounts (as reported on the balance sheet) that is owed to creditors and has the formula as total liabilities divided by total assets.
c) Total assets are liabilities plus equity on the balance sheet. To calculate ROA, use the following return on assets formula: ROA = Net Income / Total Assets. Return on assets (ROA) helps investors measure how management is using its assets or resources to generate more income.
Which of the following is true regarding whether a customer's sexual harassment of an employee may result in employer liability under Title VII of the Civil Rights Act of 1964?
a) An employer cannot be held liable in such cases because the employer has no control over the customer.
b) An employer is liable as a matter of law in such cases because the employer has an absolute duty to provide a work environment that is free of harassment.
c) An employer may be held liable in such cases if the employer knew that the customer repeatedly harassed the employee, yet the employer did nothing to remedy the situation.
d) An employer may be held liable in such cases, but only if quid pro quoharassment is involved.
e) An employer may be held liable in such cases, but only if disparate impact harassment is involved.
Answer: c) An employer may be held liable in such cases if the employer knew that the customer repeatedly harassed the employee, yet the employer did nothing to remedy the situation.
Explanation:
According to Title VII of the Civil Rights Act of 1964, the U.S. Equal Employment Opportunity Commission (EEOC) can hold an Employer liable for the harassment of an employee by a Customer (non-employee) if it was shown that the Employer knew or at the very least should have known about the incident and did not take appropriate and/or corrective action.
The rationale behind this is that the Customer falls under the control of the Employer when they are within the premises of the business.
A small independent television station will need to replace one of its cameras. They deposit $9,400 in an account that earns 3.7% per year compounded semiannually. How much will they have toward the purchase of the camera in 3 years?
Answer:
$10,492.86
Explanation:
we are to determine the future value of the lump sum in 3 years
The formula for calculating future value:
FV = P (1 + r/m)^nm
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding per year
$9,400 (1 + 0.037 / 2)^6 = $10,492.86
Myers Corporation's stock currently trades at $40 a share. Investors estimate that the year-end dividend will be $2.00 a share and that its dividend will grow at 5% a year (i.e., D1= $2.00 and g = 5%). The company needs to issue new stock in order to fund its upcoming projects, and investment bankers estimate that the floatation cost will be 4%. What is Myers' cost of new external equity?
a) 10.2%
b) 12.0%
c) 9.6%
d) 11.3%
e) 8.5%
Answer: 10.2%
Explanation:
The formula to solve this question will be: Re =D1/P0(1 - float) + g
where,
D1 = $2.00
P0 = $40
Float = 4% = 4/100 = 0.04
g = 5% = 5/100 = 0.05
We will then solve Myers' cost of new external equity by slotting the values into the formula written. This will now be:
Re =D1/P0(1 - float) + g
= 2/40(1 - 0.04) + 0.05
= 2/(40 × 0.96) + 0.05
= 2/38.4 + 0.05
= 0.052 + 0.05
= 0.1020
= 10.2%
Myers' cost of new external equity will be 10.2%
Beatrice invests $1,360 in an account that pays 3 percent simple interest. How much more could she have earned over a 4-year period if the interest had been compounded annually
Answer:
If the interest was compounded annually, the amount that would have been earned more over the simple interest method is $7.49
Explanation:
A simple interest account pays interest on only the sum deposited at an annual rate for a specified period of time while a compounding interest account adds the interest earned in each period to the principal amount and calculate the interest for the next period on this new amount (Principal + Accumulated Interest).
The formula to calculate interest under simple interest method is,
Interest = Principal * Annual Rate * Time in years
Total Interest earned = 1360 * 3% * 4
Total interest earned = 163.2
The formula to calculate interest under compound interest method is,
Interest = [Principal * (1+i)^t] - Principal
Where,
i is the interest ratet is the number of periodsInterest = 1360 * (1+0.03)^4 - 1360
Interest = 170.6919 rounded off to $170.69
If the interest was compounded annually, the amount that would have been earned more over the simple interest method is,
Extra amount = 170.69 - 163.2
Extra amount = $7.49
What is the price of a perpetual bond that pays a $45 per year into perpetuity, and has a 3.5% yield to maturity (YTM)
Answer:
Price =$1,285.71
Explanation:
A perpetual bond is that which pays a fixed amount of interest income for the foreseeable future. It issuer does not always have an obligation for redemption under the terms of loan contract.
The price of perpetual bond can be determined as the present value of a perpetuity. An perpetuity is an annuity that pays a fixed amount of cash flow for a certain number of years
PV = A/r
PV- price of bond- ?
A- annual interest - 45
r- Yield to maturity- 3.5%
Price = 45/0.035=1,285.714
Price =$1,285.71
A 10-year bond that pays coupon semi-annually at a coupon rate of 9% is priced at $ 900 at its issuance. What is the Yield to Maturity of the Bond? If it is called back 3-years after the issuance will a call premium of 5%. What is its Yield to Call? (12 points)
Answer:
YTM = 10.53%
YTC = 14.36%
Explanation:
the yield to maturity (YTC) formula is:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
YTM = {$45 + [($1,000 - $900)/20]} / [($1,000 + $900)/2] = $50 / $950 = 5.26 x 2 coupons per year = 10.53%
the yield to call (YTC) formula is:
YTC = {$45 + [($1,050 - $900)/6]} / [($1,050 + $900)/2] = $70 / $975 = 7.179 x 2 = 14.36%
Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. Diane Manufacturing desired rate of return on this project is 10%. Net cash flows for years 1 through 10 (99,000 X present value of $1 annuity factor) round to nearest dollar A. 120000 Recovery of investment in working capital (500,000 x (present value of $1 factor) B. Present Value of net cash flows C. Initial cash outlay500,000 Net Present Value
Answer:
net income per year = $49,000
annual cash flows = $99,000
NPV = $108,315.40
payback period = 5.05 years
accounting rate of return = 19.6%
Explanation:
annual cash flow = [($320,000 - $200,000 - $50,000) x 0.7] + $50,000 = $99,000
NPV = -$500,000 + [$99,000 x 6.1446 (PV annuity, 10%, 10 periods)] = -$500,000 + $608,315.40 = $108,315.40
payback period = $500,000 / $99,000 = 5.05 years
accounting rate of return = net income per year / average investment = $49,000 / [($500,000 + $0)/2] = $49,000 / $250,000 = 19.6%