Assume that the risk-free rate of interest is 3% and the expected rate of return on the market is 14%. I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is 0.9, when in fact the beta is really 1.8, how much more will I offer for the firm than it is truly worth

Answer: $‭3,365.98‬

Explanation:

Value of firm with beta of 0.9.

First use CAPM to find the required return:

= Risk free rate + beta * (Market return - risk free rate)

= 3% + 0.9 * (14% - 3%)

= 12.9%

Firm Value = Perpertual cashflow / Required return

= 1,000 / 12.9%

= $7,751.94

Value of firm with beta of 1.8.

Required return = 3% + 1.8 * (14% - 3%)

= 22.8%

Value of firm = 1,000 / 22.8%

= $4,385.96

Difference = 7,751.94 - 4,385.96

= $‭3,365.98‬

You would be paying $‭3,365.98‬ than the firm is worth.

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Account Titles Debit Credit
Cash $2
Accounts Receivable 6
Supplies 13
Land 0
Equipment 54
Accumulated Depreciation $5
Software 21
Accumulated Amortization 6
Accounts Payable 4
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 72
Retained Earnings 9
Service Revenue 0
Salaries and Wages Expense 0
Depreication Expense 0
Amortization Expense 0
Income Tax Expense 0
Interest Expense 0
Supplies Expense 0
Totals 85 85

Required

a. In the journal, record the entry to close revenue and expense accounts to retained earnings.
b. Post the closing statement.

On January 1 , 1980 , Jack deposited $ 1 , 000 into bank X to earn interest at a nominal annual rate of j compounded semiannually. On January 1 , 1985 , he transferred his account to bank Y to earn interest at a nominal annual rate of k compounded quarterly. On January 1 , 1988 , the balance at bank Y is $ 1 , 990.76 . If Jack could have earned interest at nominal annual rate of k compounded quarterly from January 1 , 1980 through January 1 , 1988 , his balance would have been $ 2 , 203.76 . Calculate the ratio of k to j .

A student has received a $30,000 loan from a wealthy aunt in order to finance his four-year college program. The terms are that the student repay his aunt in full at the end of eight years with simple interest computed at the rate of 4 percent per year. Determine the interest that must be paid on the eight-year loan. Don't forget to include units

A staff accountant at Ysidro Fabricators in San Ysidro, CA has provided data concerning its operations for July. The beginning balance in the raw materials account was $20,500 and the ending balance was $37,000. Raw materials purchases during the month totaled $64,000. Manufacturing overhead cost incurred during the month was $111,500, of which $2,100 consisted of raw materials classified as indirect materials. The direct materials cost for July was:

The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
Jul. 3 Charged 175 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour.
10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500.
14 Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hour.
18 Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the Obsidian trial.
27 Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case.
31 Paid administrative and support salaries of $28,500 for the month.
31 Used office supplies for the month, $4,000.
31 Paid professional salaries of $74,350 for the month.
31 Billed Obsidian $172,500 for successful defense of the case.
Required:
A. Provide the journal entries for each of these transactions.
B. How much office overhead is over- or underapplied?
C. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.

Tiger Trade has the following cash transactions for the period.
Accounts Amounts
Cash received from sale of products to customers $ 35,000
Cash received from the bank for long-term loan 40,000
Cash paid to purchase factory equipment (45,000)
Cash paid to merchandise suppliers (11,000)
Cash received from the sale of an unused warehouse 12,000
Cash paid to workers (23,000)
Cash paid for advertisement (3,000)
Cash received for sale of services to customers 25,000
Cash paid for dividends to stockholders (5,000)
1. Calculate the ending balance of cash, assuming the balance of cash at the beginning of the period is $4,000.
2. Prepare a statement of cash flows. (Cash outflows should be indicated by a minus sign.)

The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.2. The standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.4. The correlation between the futures price changes and the spot price changes is 0.7. It is now October 15. A beef producer is committed to purchasing 200,000 pounds of live cattle on November 15. The producer wants to use the December live cattle futures contracts to hedge its risk. Each contract is for the delivery of 40,000 pounds of cattle. What strategy should the beef producer follow?

Caradonna Company has 100,000 shares of $5 par common stock issued and outstanding as of January 1, year 8. The shares were originally issued for $22 per share. On February 3, year 8, Caradonna repurchased 5,000 shares at $19 per share for the purposes of retiring them. On April 10, year 8, Caradonna repurchased an additional 2,000 shares at $25 per share. No other transactions involving common stock occurred during the year. What will be the balance in additional paid in capital from retired stock as a result of those transactions?

Before any month-end adjustments are made, the net income of Russell Company is $37,000. However, the following adjustments are necessary: office supplies used, $3,060; services performed for clients but not yet recorded or collected, $2,940; interest accrued on a note payable to bank, $3,540. After adjusting entries are made for the items listed above, Russell Company's net income would be: Group of answer choices

Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $11.10 each, and the variable cost to manufacture them was $6.10 per unit. The company needed to sell 22,400 shirts to break-even. The after tax net income last year was $5,760. Donnelly's expectations for the coming year include the following: (CMA adapted) The sales price of the T-shirts will be $14. Variable cost to manufacture will increase by one-third. Fixed costs will increase by 10%. The income tax rate of 40% will be unchanged. Sales for the coming year are expected to exceed last year's by 1,120 units. If this occurs, Dorcan's sales volume in the coming year will be:_____.

Hubbard, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2015. 1/1/15 12/31/15 Projected benefit obligation $11,400,000 $11,760,000 Pension assets (at fair value) 6,000,000 6,900,000 Accumulated benefit obligation 2,400,000 2,760,000 Net (gains) and losses -0- 240,000 The service cost component of pension expense for 2015 is $890,000 and the amortization of prior service cost due to an increase in benefits is $180,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2015?
a. $1,766,000
b. $1,730,000
c. $1,658,000
d. $1,490,000

Trek Company has the following production data for April: units transferred out 41,400, and ending work in process 5,620 units that are 100% complete for materials and 40% complete for conversion costs. If unit materials cost is $6 and unit conversion cost is $10. Determine the costs to be assigned to the units transferred out and the units in ending work in process.

Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2018, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should: Group of answer choices Expense $9,000 for 2018 and capitalize $14,000. Capitalize $23,000. Capitalize $14,000 and not deduct $9,000. None of the above. Expense $23,000 for 2018.

Limited Liability Companies (LLCs) are gaining in popularity over sub-chapter S corporations because:_____.
A. LLCs offer better liability protection to their members.
B. Sub-chapter S corporations are being phased out by the government which is promoting.
C. LLCs as they requires less paperwork on the part of the IRS.
D. Sub-chapter S corporations are being taxed at a higher rate by the IRS.
E. They are simpler when it comes to paperwork, offer some of the same tax advantages and also protect members from unlimited financial exposure.

Oslund Company manufactures only one product and uses a standard cost system. During the past month, the following variances were observed: Direct labor rate variance $30,000 favorable Direct labor efficiency variance 50,000 unfavorable Variable overhead efficiency variance 20,000 unfavorable Standard direct labor hours (DLH) per unit 5 Oslund applies variable overhead using a standard rate of $20 per standard DLH allowed. During the month, Oslund used 20% more DLHs than the total standard hours for the units manufactured. What were the total actual direct labor hours worked by Oslund Company during the past month

On November 1, Arvelo Corporation had $34,500 of raw materials on hand. During the month, the company purchased an additional $75,500 of raw materials. During November, $90,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $3,500. Prepare journal entries to record these events. Use those journal entries to answer the following questions:

Which phrase best completes the list?
Characteristics of the U.S. Economy
Free market with some government regulation
Competition between businesses encouraged
A. No centralized banking system
B. Banks owned mostly by the government
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Ο Ο
C. Tax rates set by private companies
D. Individuals and businesses given economic freedom

Hi, please help me
A garage band wants to hold a concert. The expected crowd has a Normal distribution with the mean of 3000 and standard deviation of 200. The average expenditure on concessions is Uniformly distributed with a minimum of $10 and maximum of 25 dollars. Tickets sell for $10 each, and the band’s profit is 80% of the gate (ticket sale) and concession sales, minus a fixed cost of $12,000. Use the provided spreadsheet model and conduct a Monte Carlo simulation with 500 trials to analyze the band profit.
In your analysis,
a. find the minimum, maximum, average, and standard deviation for band profit.
b. create the frequency distribution (using FREQUENCY function) and the histogram for
band profit.
c. Find the probability that band profit will be greater than $62000.

HELP A company can have a competitive advantage if it

produces a comparable product at the same cost as others in the market.
builds the best reputation for quality of all companies in the market.
has about the same manufacturing costs as other companies in the market.
All of the above.

Sandier company had no treasury stock transactions. Then, on June 1, the company paid $5,000 to purchase 100 shares common stock on the open market. On July 1, the company sold 50 of these shares at $52 per share. Then, on August 1, the company sold remaining 50 shares at $46 per share. Complete the journal entry for the sale of the treasury stock on July 1.

A product priced at $5 has annual sales of 1,000 units. When price is reduced to $4, quantity increases to 1,250 units. Other things unchanged, the price elasticity of demand for the product is:

Damon Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows:

Direct materials $100,000
Direct labor 160,000
Variable manufacturing overhead 60,000
Fixed manufacturing overhead 80,000

An outside supplier has offered to sell the component for $17. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,000. If Damon purchases the component from the supplier instead of manufacturing it, the effect on income would be:

a. a $30,000 increase.
b. a $50,000 decrease.
c. a $70,000 increase.
d. a $10,000 decrease.

During December, Krause Chemical Company had the following selected data concerning the manufacture of Xyzine, an industrial cleaner:

Production Flow Physical Units
Completed and transferred to the next department 100
Add: Ending work in process inventory 10(40% complete as to conversion)
Total units to account for 110
Less: Beginning work in process Inventory 20(60% complete as to conversion)
Units started during 90

All materials are added at the beginning of processing in this department, and conversion costs are added uniformly during the process. The beginning work in process inventory had $120 of raw materials and $180 of conversion costs incurred. Materials added during December were $540, and conversion costs of $1,484 were incurred. Krause uses the first-in, first-out (FIFO) process cost method. The equivalent units of production used to compute conversion costs for December were:

a. 110 units.
b. 104 units.
c. 100 units.
d. 92 units.

On January 1, 2017, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $400,000 zero-interest-bearing note payable, promising 5 equal annual installments of $80,000, with the first payment due December 31, 2017. The prevailing rate of interest for a note of this type is 8%.

Required:
What is the carrying value of the notes payable at 12/31/14, after the first payment is made (assuming that the effective-interest method is used)?

Last year Kruse Corp had $410,000 of assets (which is equal to its total invested capital), $403,000 of sales, $28,250 of net income, and a debt-to-total-capital ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets and total invested capital to $252,500. The firm finances using only debt and common equity. Sales, costs, and net income would not be affected, and the firm would maintain the same capital structure (but with less total debt). By how much would the reduction in assets improve the ROE? Do not round your intermediate calculations. Question 2 options: 7.05% 6.69% 6.41% 7.26% 7.82%

Ambiguity can arise as to whether receivables have been sold or instead are being used as collateral for a loan whenever certain obligations, duties, or rights regarding the transferred receivables are retained by the transferor. In distinguishing between sales and collateralized borrowings using receivables, the critical issue:________

a. is whether the transferor surrenders control over the receivables.
b. comes down to how clearly the rights, etc. being retained are specified in the transfer agreement.
c. is whether any gain or loss related to the transfer is recognized in earnings.
d. is whether the terms regarding the transfer were initiated by the transferor or transferee.

Jaguar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following: Cash Investments (short-term) Accounts receivable Inventory Notes receivable (long-term) Equipment Factory building Intangibles $ 26,000 Accounts payable 2,400 Accrued liabilities payable 4,100 Notes payable (current) 26,000 Notes payable (noncurrent) 1,800 Common stock 53,000 Additional paid-in capital 94,000 Retained earnings 3,700 $ 16,000 2,700 6,200 44,000 9,900 89,100 43, 100
During the current year, the company had the following summarized activities:
a. Purchased short-term investments for $8,300 cash.
b. Lent $5,300 to a supplier who signed a two-year note.
c. Purchased equipment that cost $28,000; paid $5,000 cash and signed a one-year note for the balance.
d. Hired a new president at the end of the year. The contract was for $81,000 per year plus options to purchase company stock at a set price based on company performance. The new president begins her position on January 1 of next year.
e. Issued an additional 2,100 shares of $0.50 par value common stock for $14,000 cash.
f. Borrowed $17,000 cash from a local bank, payable in three months.
g. Purchased a patent (an intangible asset) for $2,800 cash.
h. Built an addition to the factory for $25,000; paid $7,300 in cash and signed a three-year note for the balance.
i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,200.
1. & 2. Post the current year transactions to T-accounts for each of the accounts on the balance sheet. (Two items have been given in the cash T-account as examples).
Cash 26,000 Investments (short-term) 2,400 Beg. Bal. Beg. Bal. 8,300 (a) 5,300 (6) 5,000 (c) (d) End. Bal. 2,400 End. Bal. 7,400 Accounts Receivable 4,100 Inventory 26,000 Beg. Bal. Beg. Bal. End. Bal. 4,100 End. Bal. 26,000 Notes Receivable (long-term) 1,800 Equipment 53,000 Beg. Bal. Beg. Bal. End. Bal. L 1,800 End. Bal. 53,000

On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept:

Weatherford Company Absorption Costing Income Statement For the Month Ended November 30

Sales (3,300 units) $125,400
Cost of goods sold:
Cost of goods manufactured (3,900 units) $105,300
Inventory, November 30 (500 units) (13,500)
Total cost of goods sold 102,500
Gross profit $44,500
Selling and administrative expenses 25,730
Income from operations $18,770

Assume the fixed manufacturing costs were $28,800 and the fixed selling and administrative expenses were $12,600.

Required:
Prepare an income statement according to the variable costing concept.

Suppose there are 500 identical vendors selling T-shirts at an Ozzie Osborneconcert in State College. All vendors pay $5 dollars per T-shirt to their supplierand $20 for the right to sell at the concert. Vendors have no other costs. Atthe end of the day, you (the concert organizer) observe that each vendor sold20 T-shirts and that the price of a T-shirt was $6.00. Is this a perfectly competitive market? Explain

On January 2, 2021, Miller Properties paid $28 million for 1 million shares of Marlon Company's 6 million outstanding common shares. Miller's CEO became a member of Marlon's board of directors during the first quarter of 2021.
The carrying amount of Marlon's net assets was $117 million. Miller estimated the fair value of those net assets to be the same except for a patent valued at $36 million above cost. The remaining amortization period for the patent is 10 years.
Marlon reported earnings of $54 million and paid dividends of $6 million during 2021. On December 31, 2021, Marlon's common stock was trading on the NYSE at $27.50 per share.
Required: 2. Assume Miller accounts for its investment in Marlon using the equity method. Ignoring income taxes, determine the amounts related to the investment to be reported in its 2021. (Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal places, (i.e., 5,500,000 should be entered as 5.5).):
a. Income statement million
b. Balance sheet million
c. Statement of cash flows
Operating cash flow million
Investing cash flow million