Answer:
a) The avoidable interest on this project is $803,328.
b) The depreciation expense for the year ended December 31, 2021 is $466,777.60.
Explanation:
Note: This question is not complete but the complete one is presented before answering the question as follows:
Sandhill Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $12,000,000 on January 1, 2020. Sandhill expected to complete the building by December 31, 2020. Sandhill has the following debt obligations outstanding during the construction period:
Construction loan - 10% interest, payable semiannually, issued December 31, 2019; $4,800,000.
Short-term loan - 8% interest, payable monthly, and principle payable at maturity on May 30, 2021; $3,360,000.
Long-term loan - 9% interest, payable on January 1 of each year; principal payable on January 1, 2024; $2,400,000
a) Assume that Sandhill completed the office and warehouse building on December 31, 2020, as planned at a total cost of $12,480,000, and the weighted-average amount of accumulated expenditures was $8,640,000. Compute the avoidable interest on this project.
b) Compute depreciation expense for the year ended December 31, 2021. Harrisburg elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of 720,000.
The explanation to the answer is therefore presented as follows:
a) Assume that Sandhill completed the office and warehouse building on December 31, 2020, as planned at a total cost of $12,480,000, and the weighted-average amount of accumulated expenditures was $8,640,000. Compute the avoidable interest on this project.
This can be computed by following the following two steps.
Step 1: Computation of interest rate of other loan
Interest expense on short-term loan = $3,360,000 * 8% = $268,800
Interest expense on long-term loan = $2,400,000 * 9% = $216,000
Total interest expenses on other loans = Interest expense on short-term loan + Interest expense on long-term loan = $268,800 + $216,000 = $484,800
Total other loans = Short term loan + Long-term loan = $3,360,000 + $2,400,000 = $5,760,000
Interest rate of other loan = Total interest expenses on other loans / Total other loans = $484,800 / $5,760,000 = 0.0842, or 8.42%
Step 2: Computation of avoidable interest on this project
Since;
Weighted-average accumulated expenditures (WAAE) = $8,640,000.
Therefore we have;
Other loan based on WAAE = WAAE - Construction loan = $8,640,000 - $4,800,000 = $3,840,000
Interest on Construction loan = $4,800,000 * 10% = $480,000
Interest on other loan based on WAAE = Other loans based on WAAE * Interest rate of other loan = $3,840,000 * 8.42% = $323,328
Note that interest rate of other loan of 8.42% is calculated and taken from part a.
Avoidable loan = Interest on Construction loan + Interest on other loan based on WAAE = $480,000 + $323,328 = $803,328
Therefore, the avoidable interest on this project is $803,328
b) Compute depreciation expense for the year ended December 31, 2021. Harrisburg elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of 720,000.
Total cost of the building = Planned total cost + Avoidable interest expense = $12,480,000 + $803,328 = $13,283,328
Annual depreciation expenses = (Total cost of the building - Salvage value) / Useful life = ($13,283,328 - $720,000) / 30 = $466,777.60
Therefoe, the depreciation expense for the year ended December 31, 2021 is $466,777.60.
Park Co. is considering an investment that requires immediate payment of $21,705 and provides expected cash inflows of $6,700 annually for four years. Assume Park Co. requires a 7% return on its investments.
Required:
What is the net present value of this investment?
Answer:
The net present value of this investment is $989.32
Explanation:
The Net Present Value is calculated by taking the Present Day (discounted) value of all future net cash flows based on the business cost of capital and subtracting the initial cost of investment.
Input Value Cash flow
CF0 ($21,705)
CF1 $6,700
CF2 $6,700
CF3 $6,700
CF4 $6,700
Cost of Capital = 7%
Input the values in a financial calculator we get the result;
Net present value = $989.3154
= $989.32
Conclusion :
The net present value of this investment is $989.32
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is:
Answer: Please see below
Explanation:
Depletion expense = Initial price Purchase - Residual value / Total number of units.
$1,500,000 - $250,000/ 2,000,000 = 0.0625 per ton
if 150,000 tons of ore are mined,
Depletion expense = depletion per ton x units mined
0.625 x 150,000=$93,750
journal entry to record the depletion is:
Account Debit Credit
Depletion expense $93,750
Accumulated Depreciation $93,750
Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 45%. Stock B has an expected return of 18% and a standard deviation of 65%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invested 40% in Stock A and 60% in Stock B
Answer:
Portfolio return = 0.156 or 15.6%
Explanation:
The expected return of a portfolio is the weighted average of the individual stocks returns' that form up the portfolio. For a two stock portfolio, the expected return is calculated as follows,
Portfolio return = wA * rA + wB * rB
Where,
w is the weight of each stockr is the expected return of each stockPortfolio return = 0.4 * 0.12 + 0.6 * 0.18
Portfolio return = 0.156 or 15.6%
The journal entry to record the purchase of equipment for a $220 cash down payment and a balance of $640 due in 30 days would include Multiple Choice a debit to Equipment for $220 and a credit to Cash for $220. a debit to Equipment for $860, a credit to Cash for $220, and a credit to Accounts Payable for $640. debit to Equipment for $860 and a credit to Cash for $860. a debit to Equipment for $220 and a credit to Accounts Payable for $640.
Answer:
a debit to Equipment for $860, a credit to Cash for $220, and a credit to Accounts Payable for $640.
Explanation:
The complete journal entry to record the purchase of the equipment would be:
Dr Equipment 840
Cr Cash 200
Cr Accounts payable 640
Since the balance is due in 30 days, it will be recorded as accounts payable.
The cost of the equipment = $200 cash down payment + $640 debt = $840
Consider an assembly line with 20 stations. Each station has a 0.5% probability of making a defect. At the end of the line, an inspection step singles out the defective units. The inspection step catches 80% of all defects. From inspection, units that are deemed to be non-defective
are moved to the shipping department.
If a defect is found at inspection, it is sent to the rework department.
Rework fixes about 95% of the defective units. Units are directly shipped from the rework department with no further inspection taking place.
1- What is the probability that a unit ends up in rework (in decimal form)?
2- What is the probability that a defective unit is shipped (in decimal form)?
Answer:
Assembly Line1. Probability that a unit ends up in rework = Probability of defect in 20 stations multiplied by the probability of catching defects = 0.8%(1% x 80%) = 0.008
2. Probability that a defective unit is shipped = Probability of defective units during inspection plus Probability of defective units during rework = 25% (20% + (100-95%)) = 0.25
Explanation:
a) Probability of defect in 20 stations = 0.5% x 20 = 1%. Each station has a 0.05%
b) Probability of defective units during inspection = 20% (100% - 80)
c) Probability of defective units during rework = 5% (100% -95)
c) Probability is the likelihood or chance of an event occurring. Divide the number of events by the number of possible outcomes. This will give us the probability of a single event occurring.
suppose community bank offers to lend you 10000 for one year at a nominal annual rate of 17.75% but you must make interest payments at the end of each quarter and then pay off the $10,000 principal amount at the end of the year. What is the effective annual rate on the loan
Answer:
18.97%
Explanation:
Effective annual rate = (1 + periodic interest rate / m)^m - 1
M = 4
Periodic interest rate = 17.75%
17.75% / 4 = 4. 4375%
(1+0.044375) ^4 - 1 = 18.97%
I hope my answer helps you
Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell for $60 each. During Year 1, Dynamo sells 600 toasters, for cash. Past experience shows that the average warranty costs are $4 each or $2,400 for these toasters. In Year 1, Dynamo pays $500 cash for warranty costs on the toasters sold that year. Required: Prepare Dynamo’s journal entries related to the sales and warranty in Year 1.
Answer:
Journal entry to record sale of toasters and warranty
Dr Cash 36,000
Cr Sales revenue 36,000
Dr Warranty expense 2,400
Cr Warranty liability 2,400
Adjusting entry for actual warranty expense
Dr Warranty liability 500
Cr Cash 500
Since the warranty covers a 5 year period, the remaining warranty expense cannot be recognized as warranty revenue yet. Only after the warranty period is over, will any money left over will be recognized as revenue.
Outstanding stock of the Blue Corporation included 50000 shares of $5 par common stock and 18000 shares of 5%, $10 par non-cumulative preferred stock. In 2019, Blue declared and paid dividends of $7500. In 2020, Blue declared and paid dividends of $25000. How much of the 2020 dividend was distributed to preferred shareholders
Answer:
The dividends to be distributed among preferred stockholders in 2020 is $9000
Explanation:
The preferred stock holders are always paid dividends before the common stock holders. The amount left after paying preferred stockholders is paid to common stockholders as dividends.
Non cumulative preferred stock does not accrue or accumulates dividends. Thus, if dividends are not paid in a particular year, the company has no obligation to pay these dividends ever in the future.
Preferred stock dividend per year = 18000 * 10 * 0.05
Preferred stock dividend per year = $9000
As the preferred stock is non cumulative, then the remaining dividends for 2019 (which are 9000 - 7500 = $1500) will not be paid in 2020.
So, the preferred stock dividends to be paid in 2020 will be $9000 as the declared dividends are more than that required to pay the preferred stockholders.
On November 7, 2017, Mura Company borrows $360,000 cash by signing a 90-day, 9% note payable with a face value of $360,000. (Use 360 days a year. Do not round your intermediate calculations.) 1. Compute the accrued interest payable on December 31, 2017.
Answer:
The accrued interetst is $4860 and $3240
Explanation:
Solution
Recall that:
Mura Company borrows= $360,000
Time =90/360
rate = 9%
Face value =$360,000
The next step is to compute the accrued interest payable on December 31, 2017.
Now,
Interest = 360000*9%*90/360=8100$
year end interest accrual:
Principal =$360000
time 54/360
Interest =360000*9%*54/360 = $4860
Interest recognized on February 5
Principal =$360000
Rate= 9%
Time= 36/360
Interest 360000*9%*36/360 = $3240
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a new building at a cost of $142,000. What is Oscar's basis on his new building?
Answer: $132,000
Explanation:
Oscar's new basis on the building will be the basis of the old building plus any additional investment he added.
This is the because there is no gain on the $140,000 he received because it was an Involuntary Conversion amount and he reinvested it into another building within a period of 2 years.
As there is no gain, the building will retain it's original basis but will add any amount outside the involuntary replacement cost of the building.
The Additional basis will be,
= Cost of building - Insurance
= 142,000 - 140,000
= $2,000
The Basis for the new building is,
= 130,000 + 2,000
= $132,000
Due to population shifts, Select one: a. businesses that cater to older consumers will see slower growth. b. health care will emerge as the only business sector that will grow. c. businesses that sell electronic devices will see a significant decline. d. businesses that cater to older consumers will see higher growth.
Answer: d. businesses that cater to older consumers will see higher growth
Explanation:
The trend in the Developed World is that of lower birth rates and higher life expectancies. This has and will keep leading to more of the population being from the Older generation. This is a population shift towards the older generation.
Should this happen, Businesses and products that were made for the older generation will see their business grow as they will have more customers which equates to more demand which equates to higher profitability.
The greater the number of compounding periods within a year, then (1) the greater the future value of a lump sum investment at Time 0 and (2) the smaller the present value of a given lump sum to be received at some future date. Truie or False
Answer:
True
Explanation:
If there is a more number of compounding periods within a year so it would result into the higher price of future value for lump sum investment in year 0 but the case would be adverse with the present value i.e there is less amount in the present value with regard to lumpsum amount i.e to be recieved in the future date
Hence, the given statement is true
Madsen Motors's bonds have 21 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 12%, and the yield to maturity is 15%. What is the bond's current market price
Answer:
$810.63
Explanation:
For computing the current market price we need to use the present value formula i.e to be shown in the attachment below
Provided that,
Future value = $1,000
Rate of interest = 15%
NPER = 21 years
PMT = $1,000 × 12% = $120
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the bond current market price is $810.63
Invested assets, beginning $ 2,692 $ 4,485 Invested assets, ending 2,608 4,415 Sales 2,696 3,940 Operating income 364 649 Assume that each of the company’s divisions has a required rate of return of 5%. Compute residual income for each division
Answer and Explanation:
The computation of the residual income for each division is shown below:
As we know that
Residual income = Operating income - target income
where,
Operating income is given in the question
And, the target income could be calculated by
= Average invested assets × required rate of return
Now
Particulars Beverage Cheese
Division Division
Average assets
{(Open + closing) ÷ 2} $2,650 $4,450
Required rate of return 5% 5%
Target income $132.50 $222.50
So, the residual income is
Particulars Beverage Cheese
Division Division
Operating income $364 $649
Less:
Target income -$132.50 -$222.50
Residual income $231.50 $426.50
During 2012, Robby's Camera Shop had sales revenue of $170,000, of which $75,000 was on credit. At the start of 2012, Accounts Receivable showed a $16,000 debitbalance, and the allowance for Doubtful Accounts showed a $900 credit balance. Collections of accounts receivable during 2012 amounted to $60,000.
Data during 2012 follows:
a. On December 31, 2012, an Account Receivable (J. Doe) of $1,700 from a prior year was determined to be uncollectable; therefore, it was written off immediately as abad debt.
b. On December 31, 2012, on the basis of experience, a decision was made to continue the accounting policy of basing estimated bad debt losses on 1.5 percent of creditsales for the year.
REQUIRED:
1. Give the required journal entries for the two items on December 31, 2012 (end of the accounting period).
2. Show how the amounts related to Accounts Recievable and Bad Debt Expense would be reported on the income statement and balance sheet for 2012. Disregard income taxconsiderations.
3. On the basis of the data available, does the 1.5 percent rate appear to be reasonable? Explain
Answer:
1) December 31, 2012, bad debt write off
Dr Bad debt expense 1,700
Cr Accounts receivable 1,700
December 31, 2012
Dr Bad debt expense 1,125
Cr Allowance for doubtful accounts 1,125
2) Bad debt expense must be recorded in the income statement and it reduces net income. Both transactions reduce net accounts receivable on the balance sheet.
3) It doesn't seem to be appropriate because just one bad account (J. Doe) was higher than 1.5%. A large % of accounts receivable is still outstanding (= $27,275 / $75,000 = 36.4%) and they should include approximately four months of credit sales. This means that unless the company issues a very long credit, a much larger percent is past due.
Explanation:
net accounts receivable January 1, 2012 = $15,100
credit sales 2012 = $75,000
collections on accounts receivable $60,000
net accounts receivable December 31 = $15,100 + $75,000 - $60,000 - $1,700 - $1,125 = $27,275
You are valuing an investment that will pay you $12,000 the first year, $14,000 the second year, $17,000 the third year, $19,000 the fourth year, $23,000 the fifth year, and $29,000 the sixth year (all payments are at the end of each year). What it the value of the investment to you now is the appropriate annual discount rate is 11.00%?
Answer:
Total present value= $76,309.62
Explanation:
Giving the following information:
Cf1= $12,000
Cf2= $14,000
Cf3= $17,000
Cf4= 19,000
Cf5= $23,000
Cf6= $29,000
Discount rate= 0.11
We need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 12,000/1.11= 10,810.81
Cf2= 14,000/1.11^2= 11,362.71
Cf3= 17,000/1.11^3= 12,430.25
Cf4= 19,000/1.11^4= 12,515.89
Cf5= 23,000/1.11^5= 13,649.38
Cf6= 29,000/1.11^6= 15,540.58
Total present value= $76,309.62
The value of the investment to you now is $76,309.62
Calculation of the present value of an investment:Here the following formulas should be used:
PV= [tex]FV\div (1+i)^n[/tex]
Cf1=[tex]12,000\div 1.11[/tex]= 10,810.81
Cf2= [tex]14,000\div 1.11^2[/tex]= 11,362.71
Cf3= [tex]17,000\div 1.11^3[/tex]= 12,430.25
Cf4= [tex]19,000\div 1.11^4[/tex]= 12,515.89
Cf5= [tex]23,000\div 1.11^5[/tex]= 13,649.38
Cf6= [tex]29,000\div 1.11^6[/tex]= 15,540.58
So,
Total present value= $76,309.62
Learn more about investment here: https://brainly.com/question/24583782
Davis and Thompson have earnings of $814 each. The social security tax rate is 6.0%, and the Medicare tax rate is 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period
Answer:
$122.10
Explanation:
814 × 6% = 48.84
814 × 1.5% = 12.21
48.84 + 48.84 = 97.68
12.21 + 12.21 = 24.42
97.68 + 4.42 = 122.10
A 10-year (zero-coupon) Treasury bill with face value of $100 per share is selling at $70.89 per share. There is a 10-year corporate bond with a 5% coupon rate and face value of $100 per share. The coupon payment is every 12 months. The price of the bond is $96.23 per share. The 10-year, zero coupon Treasury bills are selling at $70.89. What is the bond's yield to maturity?
Answer:
3.5%
Explanation:
the yield to maturity of a zero coupon bond is calculated using the following formula:
YTM = (face value / current market value)¹/ⁿ - 1
YTM = ($100 / $70.89) ¹/¹⁰ - 1 = 3.5%
the way you can check if your calculations were correct is to find the future value of the bond using the YTM = $70.89 x (1 + 3.5)¹⁰ = $99.997 ≈ $100
Mrs. Kwan withdrew the entire $8,000 balance from her Roth IRA this year. Her total contributions to the account were $6,070, and her marginal tax rate is 12 percent. Determine the tax cost of the withdrawal if: Mrs. Kwan is age 63 and opened the Roth IRA three years ago. Mrs. Kwan is age 63 and opened the Roth IRA seven years ago. Mrs. Kwan is age 48 and opened the Roth IRA seven years ago.
Answer:
$425
Explanation:
The computation of the tax cost of the withdrawal is shown below:-
The withdrawal will not be considered a qualifying withdrawal as Ms. Kwan is not 59 1/2 years old. Therefore, the taxable withdrawal would be subject to an additional 10 percent penalty.
Tax cost of the withdrawal = (Tax rate × (Balance amount - Total contribution) + (Penalty × (Balance amount - Total contribution)
= (12% × ($8,000 - $6,070)) + (10% × ($8,000 - $6,070))
= $231.6 + $193
= $424.6
or
= $425
Current assets and current liabilities for Brayden Company are as follows: 20Y9 20Y8 Current assets $498,600 $532,400 Current liabilities 269,300 301,500 What is the working capital for 20Y9 and 20Y8
Answer:
Working Capital -2019 =$229300
Working Capital -2018 = $230900
Explanation:
Working capital is the operating capital of the business that is used in the day to day running or the business and is a metric for the liquidity of the business. It is necessary for the operations of the business and is calculated as the difference between the current assets and the current liabilities.
Working Capital = Current Assets - Current Liabilities
Working Capital -2019 = 498600 - 269300 =$229300
Working Capital -2018 = 532400 - 301500 = $230900
The folowing information apples to the questions displayed bełow The financial statements for Highland Corporation included the folowing selected information: Common stock Retained earnings Net income Shares issued Shares outstanding Dividends declared and paid $1,600,000 $ 900,000 1,000,000 90,000 80,000 $ 800,000 The common stock was sold at a price of $30 per share.
Required: 1. What is the amount of additional paid-in capital?
Answer:
The amount of additional paid-in capital is $800,000
Explanation:
1. In order to calculate the amount of additional paid-in capital we would have to make the following calculation:
additional paid-in capital=Total stock price-Common stock
Total stock price=Shares outstanding*sold price common stock
Total stock price=80,000*$30
Total stock price=$2,400,000
Therefore, additional paid-in capital=$2,400,000-$1,600,000
additional paid-in capital=$800,000
The amount of additional paid-in capital is $800,000
Heights of adult women are distributed normally with a mean of 162 centimeters and a standard deviation of 7 centimeters.
The percentage of heights less than 145 centimeters
The percentage of heights between 16t centimeters and 180 centimeters
Answer:
a) 0.75%
b) 60.9%
Explanation:
The heights of adult women are distributed normally with a mean(μ) = 162 centimetres and a standard deviation (σ) = 7 centimetres.
z score is a measure of the distance a raw score is from the mean in terms of standard deviation units. The z score is given by the equation:
[tex]z=\frac{x-\mu}{\sigma} \\[/tex].
a) The percentage of heights less than 145 centimetres. For x = 145 centimetres, the z score is:
[tex]z=\frac{x-\mu}{\sigma} =\frac{145-162}{7}=-2.43[/tex]
P(x < 145) = P(z < -2.43) = 0.0075
The percentage of heights less than 145 centimetres is 0.75%
b) The percentage of heights between 165 centimetres and 180 centimetres
For x = 165 centimetres, the z score is:
[tex]z=\frac{x-\mu}{\sigma} =\frac{160-162}{7}=-0.29[/tex]
For x = 180 centimetres, the z score is:
[tex]z=\frac{x-\mu}{\sigma} =\frac{180-162}{7}=2.57[/tex]
P(160 < x < 180) = P(-0.29 < z < 2.57) = P(z < 2.57) - P(z < -0.29) = 0.9949 - 0.3859 = 0.609
The percentage of heights between 160 centimetres and 180 centimetres is 60.9%
Marin Inc. has an investment in trading securities of $143000. This investment experienced an unrealized loss of $7300 during the current year. Assuming a 33% tax rate, the amount of this loss that would reported as part of other comprehensive income would be:
Answer:
This would be the loss on paper only.
Explanation:
Given investment trading securities = $143000
During the current year, the loss experienced on investment = $7300
The tax rate = 33%
However, this loss that is reported as the part of other comprehensive income would be the loss on paper only because the actual loss can be seen when the stock is sold but this unrealized loss is on paper only so there will no effect of this loss in comprehensive income.
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in A. the regulation of nonmonopolistic industries. B. health and safety regulation. C. social regulation. D. the regulation of natural monopolies.
Answer:
A. the regulation of nonmonopolistic industries.
Explanation:
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in the regulation of nonmonopolistic industries.
A nonmonopolistic industry is one that is characterized by competition among various service providers in a country and generally there's a government agency that regulates their actions and activities in the public.
The Securities and Exchange Commission (SEC) is a governmental agency saddled with the sole responsibility of regulating the securities or capital markets, as well as protecting investors in a country.
In the U.S, the Securities and Exchange Commission (SEC) as an independent government agency was established under the Securities Act of 1933 and the Securities and Exchange Act of 1934 of the United States of America.
Hence, SEC has the power to propose securities rules and regulations, and enforce federal securities law in the securities market.
The Federal Aviation Administration (FAA) was founded on the 23rd of August, 1958 under the Federal Aviation Act of 1958 of the United States of America. It is an independent government agency with the responsibility of regulating civil aviation, commercial space transportation, construction and maintenance of airports, air traffic management and operations of navigation systems for both civil and military aircrafts, and issuance of licenses to airline operators with their personnel.
Harvey Industries, a Wisconsin company, specializes in the assembly of high-pressure washer systems and in the sale of repair parts for these systems. The products range from small portable high-pressure washers to large industrial installations for snow removal from vehicles stored outdoors during the winter months. Typical uses for high-pressure water cleaning include:_______
Answer:
1. Airplanes.
2. Ice-cream plants.
3. Building maintenance.
4. Engines.
5. Automobiles.
6. Barns.
7. Lift trucks.
8. Swimming pools.
9. Machinery.
Explanation:
In this scenario, Harvey Industries, a Wisconsin company, specializes in the assembly of high-pressure washer systems and in the sale of repair parts for these systems. The products range from small portable high-pressure washers to large industrial installations for snow removal from vehicles stored outdoors during the winter months.
Basically, the high-pressure water cleaning is a process that involves using water running at a very high pressure and sometimes high temperature to remove mold, dirt, dusts, loose paint, snow removal, grime etc from physical objects such as vehicles, equipments, buildings, billboards through the use of a plunger pump.
The typical uses for high-pressure water cleaning include: Airplanes, Ice-cream plants, Building maintenance, Engines, Automobiles, Barns, Lift trucks, Swimming pools, Machinery etc.
The proper application of high-pressure water cleaning helps to reduce environmental degradation, ensure equipments or environment are clean and neat. Also, high and tight places that cannot be easily reached by humans can still be cleaned with the help of a high-pressure water cleaner.
Secular inflation in the United States since 1960 has been most likely be the result of persistent leftward shifts of the aggregate demand curve. persistent rightward shifts of the long-run aggregate supply curve. persistent leftward shifts of the long-run aggregate supply curve. persistent rightward shifts of the aggregate demand curve.
Answer:
Persistent leftward shifts of the aggregate demand curve.
Explanation:
The inflation results in decreasing the aggregate demand. The real spending decreases the value of money. Secular inflation is prolonged period of slight price increase. This type of inflation continues to persist over a long time. The secular inflation in the United States has been due to leftward shift of aggregate demand curve.
You would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of 150 at year-end. XYZ currently sells for 150. Over the next year, the stock price will either increase by 10% or decrease by 10%. The T-bill rate is 5%. Unfortunately, no put options are traded on XYZ Co.
a. How much would it cost to purchase if the desired put option were traded? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Cost to purchase $
b. What would be the cost of the protective put portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Cost of the protective put portfolio $
Answer:
a. $3.38
b=$153.38
a. Calculation for how much would it cost to purchase if the desired put option were traded
Calculation for Pd=10/100×150=15
Calculation for uS0=10/100×150=15+150=165
Calculation for dS0=150-15=135
Hence
X=150; uS0= 165; Pu= 0; dS0= 135; Pd= 15
Using this formula to find the Hedge ratio
Hedge ratio :Pu- Pd / uSo-dSo
Let plug in the formula
Hedge ratio=0.15/165-135
=-15/30
=-0.5or -1/2
The portfolio comprised of one share and as well as a two puts which provides a guaranteed payoff of $165
Let find the present value:
-0.5S-P= -0.5*165=-82.5
-0.5*150-P=-82.5/1.05= -78.57
P=78.38-75
P=3.38
Therefore how much that it would cost to purchase if the desired put option were traded will be$3.38
b. Calculation for what would be the cost of the protective put portfolio
The Cost of protective put portfolio with a $150 guaranteed payoff will be
$150 + $3.38 = $153.38
Therefore what would be the cost of the protective put portfolio will be $153.38
Question 2 (10 Marks)
In Andalusia Ltd, wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly rate
of RM2.80. It is estimated that the time required to manufacture a particular product was 12 minutes.
However, the time allowed of 25% is to be added (for normal idle time, setting up time, etc.). During
the first week of June 2020, Roslan produced 250 units of the product.
Required:
Compute Roslan's wages for the particular week using the following methods of wage payment:
a. time rate.
[2 marks]
b. piece rate with a guaranteed weekly wage.
[3 marks]
c. Halsey's premium bonus scheme.
[5 marks]
Answer:
Andalusia LtdWages based on:a. Time rate = RM 2.80 x 40 hours = RM 112
b. Piece Rate = RM 0.70 x 250 units = RM 175
c. Halsey premium bonus scheme:
Pay per hour = RM 2.80,
Therefore Wages = Normal Wages + Bonus
= (RM 2.80 x 40) + 50% (RM 2.80 x 22.5)
= RM 112 + 31.5 = RM 143.50
Explanation:
a) Time for each product unit = 12
Piece rate = RM 2.80/60 x 15 = RM 0.70 per unit
b) Under Halsey Premium Bonus Scheme:
Hours used in production = 40 hours
Hours for producing 250 units = 62.5 hours
Gain in hours = 22.5 hours (62.5 - 40)
c) Time rates are wages based on the amount of time spent at work. The usual form of time rate is the weekly wage or monthly salary. Usually the time rate is fixed in relation to a standard working week (e.g. 40 hours per week).
d) Wages based on piece rate (also known as piecework) is a pay based on number of units or pieces created rather than the number of hours worked. In other words, the more “pieces” an employee produces, the more the employee is paid.
e) Under Halsey Plan, the standard time for the completion of a job is fixed and the rate per hour is then determined. The usual bonus share paid to the worker is 50% of the time saved multiplied by the rate per hour (time-rate).
An investor with an investment objective of tax-exempt income will need access to the funds in four months. An RR should not recommend which of the following municipal securities?
A. A variable-rate demand obligation (VRDO)B. An auction-rate security (ARS)C. A tax-anticipation note (TAN)D. A bond anticipation note (BAN)
Answer:
B. An auction-rate security (ARS)
Explanation:
An auction-rate security (ARS) is a debt security (either municipal or corporate securities) with long-term maturities usually between 20 to 30 years and has its interest rates reset periodically through dutch auctions, such as every 7, 14, 28, 35, 49, or 91 days.
Also, an auction-rate security (ARS) is typically structured as preferred equity securities, which are issued by closed-end funds.
An auction-rate security (ARS) and a variable rate demand obligation (VRDO) are both long-term securities having short-term trading features.
Generally, an auction rate security (ARS) doesn't have a put feature that would permit the holder to sell the securities to a third party or back to the issuer of the securities. Thus, if the dutch auction fails, the investor in question wouldn't have an immediate access to his funds.
Hence, RR should NOT recommend an auction-rate security (ARS) since investor will need access to the funds in four months.
Lastly, tax-anticipation note (TAN) and bond anticipation note (BAN) are both short-term municipal notes and can easily be sold in the secondary market if their maturities is above four (4) months in duration.
Complete the following table by indicating whether or not each scenario is an example of price discrimination.
Hint: In order to determine if a scenario is an example of price discrimination, think about if the market can be segmented into two groups that pay different prices for the same good.
Scenario
Price Discrimination
Yes
No
Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance. A local boutique is having a sale on sweaters, but customers are not aware of the sale until they are already in the store. In other words, there is no advertising of the sale other than signs in the back of the store that cannot be seen from the outside. All sweaters are marked as 55% off.
Answer:
a. Yes
b. No
Explanation:
Price discrimination refers that selling the products the same product to different customers at different prices so that they can increase their sales and profits.
A. According to the given situation, the correct answer is yes as the discounted tickets are awarded on the basis of lottery or first come on the basis of first served.
b. Now, according to the second situation, the correct answer is no as it is not an advertising item as is it within the store and has no information outside the store.