Answer:
8.83%
Explanation:
The computation of the required return is shown below;
The market risk premium is
= 9.5% - 4.2% ÷ 1.05
= 5.048%
Now
beta of portifolio is
= 10 ÷ 15 × 1.05 + 5 ÷ 15 × 0.65
= 0.9167
And, finally
required return is
= 4.2% + 0.9167 × 5.048%
= 8.83%
Assuming that the term structure of interest rates is determined as posited by the pure expectations theory, which of the following statements is CORRECT? a. Inflation is expected to be zero. b. Consumer prices as measured by an index of inflation are expected to rise at a constant rate. c. The maturity risk premium is assumed to be zero. d. In equilibrium, long-term rates must be equal to short-term rates. e. An upward-sloping yield curve implies that future short-term rates are expected to decline.
Answer:
c. The maturity risk premium is assumed to be zero.
Explanation:
In the case when the term structure of the rate of interest would be measured via the pure expectations theory so here the maturity risk premium would be zero as under this theory it is assumed that the risk premium i.e. of the long term would be equivalent to the zero
Therefore the option c is correct
And, the rest of the options seems wrong
Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period?
Answer:
they will earn 5$ eps over the 10 year period
Explanation:
hope it helps
Brief Exercise 18-5 a1-a2 Crane Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost July 19,960 $46,020 August 35,488 53,232 September 39,924 60,995 October 24,398 48,965 November 44,360 82,620 December 42,142 68,758 (a1) Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) Variable cost per unit
Answer:
A.$1.50 per units
B. $16,080
Explanation:
Computation for the variable cost per unit using the high-low method.
Using this formula
Variable cost per unit= High activity cost -Low Activity cost /High activity cost -Low Activity cost
Let plug in the formula
Variable cost per unit=(82,620-$46,020)/(44,360-19,960)
Variable cost per unit=$36,600/$24,400
Variable cost per unit= $1.5 per units
Therefore the variable cost per unit using the high-low method is $1.50 per units
B. Computation for the fixed cost element unit using the high-low method.
Fixed cost element=82,620-(1.50*44,360)
Fixed cost element=82,620-66,540
Fixed cost element=$16,080
Therefore the fixed cost element unit using the high-low method is $16,080
Preventive maintenance of a system involves ________. Select one: a. making enhancements to improve processing performance or interface usability b. making changes to an information system to repair flaws in the design c. making changes to a system to reduce the chance of future system failure d. making changes to an information system to accommodate changing business needs e. adding desired, but not necessarily required, system features
Answer:
c
Explanation:
A brewery produced regular beer and a low carb "light beer". Steady Customers of the brewery buy 10 units of regular beer and 15 units of light beer monthly. While setting up the brewery to produce extra beer, beyond that needed to satisfy customers. The cost per unit of regular is $32,000 and the cost per unit if light beer is $50,000. Every unit of regular beer brings in $120,000 in revenue, while every unit of light beer brings in $300,000 in revenue. The brewery wants at least $9,000,000 in revenue. At least 20 additional units of beer can be sold (a) How much of each type of beer should be made so as ti minimize total production cost (b) Suppose the minimum revenue is increased to $9,500,000.Calcualte the total production cost
Answer:
Regular Low Carb Total
a) Units to be produced 20 22 42
(to minimize total production cost)
b) Total production costs $704,000 $1,150,000 $1,854,000
Explanation:
a) Data and Calculations:
Regular Low Carb
Monthly customers demand 10 15
Ratio of customers demand 40% 60%
Cost per unit $32,000 $50,000
Revenue per unit 120,000 300,000
Contribution per unit $88,000 $250,000
Total required revenue = $9,000,000
With 20 additional units of beer, total units produced = 45 (25 + 20)
To minimize production costs and generate a total revenue of $9,000,000, more of the units that cost less should be produced. Units should be produced according to the following ratio:
Regular Low Carb Total
New Production and Sales units 20 22 42
Total production cost = $640,000 $1,100,000 $1,740,000
($32,000 * 20) ($50,000 * 22)
Total revenue = $2,400,000 $6,600,000 $9,000,000
($120,000 * 20) ($300,000 * 22)
To achieve a minimum revenue of $9,500,000,
New production units 22 23 45
Total production cost = $704,000 $1,150,000 $1,854,000
Total revenue = 2,640,000 6,900,000 9,540,000
Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $ 31,000 Number of employees
Depreciation 20,500 Cost of goods sold
Advertising 41,500 Net sales
Item Drilling Grinding Total
Number of employees 1080 1620 2700
Net sales 326,625 477,375 804,000
Cost of goods sold 76,500 127,500 204,000
The amount of the total office expenses that should be allocated to Grinding for the current period is (Do not round your intermediate calculations.)
a) $56,054.
b) $46,204.
c) $93,000.
d) $36,954.
e) $600,000.
Answer:
a) $56,054.
Explanation:
The computation of the amount of the total office expenses that should be allocated to Grinding for the current period is shown below:
= Salaries + Depreciation + Advertising
= (31,000 ÷ 2700) × 1620 + (20,500 ÷ 204,000) × 127,500 + (41,500 ÷ 804,000) × 477,375
= $56,054
Hence, the first option is correct
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour. Assume that Sam has an upward-sloping labor supply curve. If the opportunity cost of Sam's leisure time increases, he will respond by working:__________
Answer:
more hours
Explanation:
Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives
time is a limited resource that has to be shared between work and leisure. If the opportunity cost of leisure increases, it means he is giving up more work to rest. As a result, he would increase his work hours
Payton Inc. reports in its Year 7 annual report, sales of $7,362 million and cost of goods sold of $2,945 million. For next year, you project that sales will grow by 3% and that cost of goods sold percentage will be 1 percentage point higher. Projected cost of goods sold for Year 8 will be:
THe answer is scjkgnsgjnDVDJ
65 employees have earned two weeks of vacation time to be taken the following year. If the average weekly salary for these employees is $900, what is the required journal entry to accrue compensated absences
Answer: Debit Salaries and Wages Expense $117000
Credit Salaries and Wages Payable $117000
Explanation:
Based on the information given in the question, the required journal entry to accrue compensated absences will be as follows:
First, we need to know the amount of the compensated absence which will be:
= 65 employees × $900 × 2 Weeks vacation
= $117000
Therefore, the journal entry is:
Debit Salaries and Wages Expense $117000
Credit Salaries and Wages Payable $117000
Consumers know that some fraction x of all new cars produced and sold in the market are defective. The defective ones cannot be identified except by those who own them. Cars do not depreciate with use. Consumers are risk-neutral and value nondefective cars at $10,000 each. New cars sell for $8,000 and used ones for $2,000. (Note that since buyers are risk-neutral, the price of a new car reflects the expected value of purchasing a car that may or may not be defective.)What is the fraction x?Instructions: Enter x as a number rounded to two decimal places. For example, if x = 1/3 enter 0.33.
Answer:
0.25
Explanation:
Given :
The [tex]$\text{consumers value}$[/tex] the non defective cars = [tex]$\$ 10,000$[/tex]
We will consider all the defective [tex]$\text{ cars are used cars}$[/tex] only. This is only because the value of the used car is $ 2000 and it is lower than the price of a good car that is $10,000. Thus only defective cars are being sold as the old cars.
For a risk neutral customer, the price that he is ready to give for the new car is the reservation price of a non defective car. It means that (the amount of $ 8000 is the value of the good car x chances of getting a good car) +( the value of the bad car x chances of getting a bad car).
Since we know that x is the fraction of all the cars sold in the market are defective, it means that the fraction of the good cars is 1 - x. Thus putting the values,
[tex]$x\times 2000+(1-x)\times 10000=8000$[/tex]
[tex]$10000-8000x=80000$[/tex]
[tex]$8000x=2000$[/tex]
[tex]$x=\frac{2}{8}$[/tex]
= 0.25
Thus the value of :
[tex]$x=\frac{2}{8} = 0.25$[/tex]
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $179,850. The equipment will have an initial cost of $545,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $34,000, what is the accounting rate of return
Answer:
So, accounting rate of return = 33 %
Explanation:
given data
net income after tax = $179,850
initial cost = $545,000
time = 7 year
salvage value = $34,000
we will get here the accounting rate of return
solution
as we know that accounting rate of return is express as
accounting rate of return = Net income ÷ initial investment .................1
put here value and we get
accounting rate of return = [tex]\frac{179850}{545000}[/tex]
So, accounting rate of return = 33 %
Terp Corp.'s transactions for the year ended December 31, 2021 included the following: Purchased real estate for $1,250,000 cash which was borrowed from a bank. Sold investment securities for $1,000,000. Paid dividends of $1,200,000. Issued 500 shares of common stock for $500,000. Purchased machinery and equipment for $250,000 cash. Paid $900,000 toward a bank loan. Reduced accounts receivable by $200,000. Increased accounts payable $400,000. The net cash used in financing activities for 2021 was
Answer:
$1,600,000
Explanation:
Cashflow from financing activities
Dividends ($1,200,000)
Issue of Stocks $500,000
Bank Loan Repayment ($900,000)
Net Cash flow ($1,600,000)
thus
The net cash used in financing activities for 2021 was $1,600,000
g Suppose a bond is priced at $1035, has 12 years remaining until maturity, and has a 12% coupon, paid monthly. What is the amount of the next interest payment (in $ dollars)
Answer:
$10
Explanation:
As the bond is priced at $1035, the par value is $1000.
Calculation of the amount of the next interest payment
= Par value * Coupon rate/12
= $1000 * 12%/12
= $1000 * 1%
= $10
So, the amount of the next interest payment is $10.
Hillary considers herself a shrewd commodities investor. She bought a May cotton contract (50,000 pounds) at a pound, and later sold it at a pound. What were her profit and her return on invested capital if her initial margin was and the size of a cotton futures contract is 50,000 pounds of cotton?
Answer: See explanation
Explanation:
Based on the information given in the question, the profit will be calculated as:
Profit = (Selling price - Buying Price) × Size
= ($0.6485 - $0.6264)*50,000
= $0.0221 × 5000
= $1,105
Then, the return on the invested capital will be:
= Profit/Initial Margin
= 1105/1060
= 1.0425
= 104.25%
A new accountant, Costa Goodsold, put together a preliminary version of Medina Co.'s financial statements. Medina's Net Income was $500, its Depreciation Expense was $100, and its Cash Flow from Operations was $70. The CEO found an error that Costa made in computing straight-line Depreciation Expense, which should have been $50. What is Medina's Cash Flow from Operations after fixing this mistake
Answer:
the cash flow from operation after fixing the mistake is $20
Explanation:
The computation of the cash flow from operation after fixing the mistake is as follows;
Cash flow from operations $70
Less; Depreciation expense -$100
Add: Depreciation expense $50
Net Cash flow from operations $20
Hence, the cash flow from operation after fixing the mistake is $20
The same is to be considered and relevant
Zonk Company needs to raise $47.5 million to fund a new project. The company will sell shares at a price of $27.90 in a general cash offer and the company's underwriters will charge a spread of 6 percent. The direct flotation costs associated with the issue are $650,000. How many shares need to be sold?
Answer:
Zonk Company
The number of shares that needs to be sold is:
= 1,842,569 shares.
Explanation:
a) Data and Calculations:
Amount needed to fund a new project = $47,500,000
Selling price per share = $27.90
Proceed per share after underwriter's spread = $26.132 ($27.80 * (1 - 0.06)
Underwriters spread per share = 6% * $27.80 = $1.668
Direct flotation costs = $650,000
Number of shares to float = ($47,500,000 + $650,000)/$26.132
= 1,842,569 shares
Expanded Proof:
Proceeds from share issue = $51,223,418 (1,842,569 * $27.80)
less underwriter's spread = 3,073,405 (1,842,569 * $1.668)
Net proceeds before flotation $48,150,013
less direct flotation costs = 650,000
Funds raised = $47,500,013
Bonita Industries received $108000 in cash and a used computer with a fair value of $384000 from Carla Vista Co. for Bonita Industries's existing computer having a fair value of $492000 and an undepreciated cost of $461700 recorded on its books. The transaction has no commercial substance. How much gain should Bonita recognize on this exchange, and at what amount should the acquired computer be recorded, respectively
Answer:
$30,300 and $384,000
Explanation:
The computation of the gain and the amount should acquired is shown below;
The gain is
= Fair value - undepreciable cost
= $492,000 - $461,700
= $30,300
And, the amount at which the computed should be recorded is equivalent to the fair value i..e $384,000
The same is considered and relevant
What is the basic purpose of the consumer price index (CPI)? A. to track monthly changes in prices paid by urban consumers B. to track consumer spending on thousands of goods and services C. to predict future price increases for representative goods and services D. to predict and avoid deflation, or a decline in the general level of prices
Answer:
A). to track monthly changes in prices paid by urban consumers.
Explanation:
CPI(Consumer Price Index) is characterized as 'a statistical estimate of the price level of goods and services bought by consumers for consumption purposes by the households.' It primarily aims to estimate the change or swap in the prices of the weighted average price of the common basket(consumption goods, as well as, services that the consumers pay for). It is calculated using the formula;
[tex]CPI_{t} = \frac{C_{t} }{C_{0} } * 100[/tex]
where,
[tex]CPI_{t}[/tex] = current Consumer Price Index
[tex]C_{t}[/tex] = Current price basket
[tex]C_{0}[/tex] = Cost of price basket in the base year
It assists in deducing whether the average prices have received a fall or rise and determines inflation or deflation. Thus, option A is the correct answer.
Identify the type of adjustment that would most likely be needed. Business B purchased a piece of equipment to be used in operations for $5,000 during the middle of October. Today is December 31st, the end of the 4th quarter and financial reports are being produced. g
Answer: c . Depreciation
Explanation:
When accounting for fixed assets, it is important that they are recorded at their book value to reflect the effects of being utilized. This means that depreciation needs to be charged on fixed assets.
Even though the equipment in question was only purchased 2.5 months prior to the financial reports being made, depreciation still needs to be accounted for such that the equipment is represented at its book value in the financial statement.
Which performance management evaluation criterion reflects the extent to which a performance measure assesses all the relevant - and only the relevant - aspects of performance
Answer:
E. Validity
Explanation:
This are options for the question
A. Reliability
B. Strategic congruence
C. Acceptability
D. Specificity
E. Validity
Performance evaluation can be regarded as process whereby manager or consultant carry out examination or evaluatation of an employee's work behavior through comparisons of it with preset standards, then the results of the comparison is documentd and uses to provide feedback to the employees and point where improvements are needed as well as reason why. Validity which is one of criterion for performance management evaluation gives reflection of the extent that a performance measure is been assessed with all the relevance aspects of performance
Assume that interest rate parity (IRP) exists. You expect that the one-year nominal interest rate in the U.S. is 7%, while the one-year nominal interest rate in Australia is 11%. The spot rate of the Australian dollar is $0.60. You will need 10 million Australian dollars in one year. Today, you purchase a one-year forward contract in Australian dollars. How many U.S. dollars will you need in one year to fulfill your forward contract
Answer:
US $5,784,000
Explanation:
As per interest rate parity, forward rate = Spot rate*(1+Interest rate U.S.)/(1+interest rate Australia)
= 0.60*(1.07)/(1.11)
= 0.5784 /A$
Australian Dollars required in one year = 10,000,000
U.S. Dollars required = 10,000,000 * 0.5784 /A$
U.S. Dollars required = $5,784,000
So, the number of U.S. dollars you will need in one year to fulfill the forward contract is 5,784,000.
Sun Co. was constructing fixed assets that qualified for interest capitalization. Sun had the following outstanding debt issuances during the entire year of construction: $6,000,000 face value, 8% interest $8,000,000 face value, 9% interest None of the borrowings were specified for the construction of the qualified fixed asset. Average expenditures for the year were $1,000,000. What interest rate should Sun use to calculate capitalized interest on the construction
Answer:
the interest rate that should be determined the capitalized interest is 8.57%
Explanation:
The computation of the interest rate that should be determined the capitalized interest is shown below;
= $6,000,000 ÷ ($6,000,000 + $8,000,000) × 0.08 + $8,000,000 ÷ ($6,000,000 + $8,000,000) × 0.09
= 0.0857
= 8.57%
Hence, the interest rate that should be determined the capitalized interest is 8.57%
The same would be considered
An overly optimistic sales budget may result in Group of answer choices increases in selling prices late in the year. insufficient inventories. increased sales during the year. excessive inventories.
Answer:
excessive inventories.
Explanation:
If there is an overall optimistic sales budget so there would be the excessive inventories as the sales budget predicts that in the future the number of units is to be sold for the given period of time. And, when this budget would be optimistic so it over predicted the sales due to this there would be the chances of the excessive inventories
hence, the last option is correct
A city government adds streetlights within its boundaries at a total cost of $300,000. These lights should burn for at least 10 years but can last significantly longer if maintained properly. The city develops a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. The city also spends another $78,000 to construct lights for several new streets. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government-wide financial statements.
Answer: See explanation
Explanation:
a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements.
1. Debit: Infrastructure assets—street lights $300,000
Credit: Cash $300,000
(To record cash purchase of street light
2. Debit: Depreciation expense $300,000/10 = $30,000
Credit: Accumulated depreciation—infrastructure assets $30,000
(To record depreciation expense)
3. Debit: Maintenance expense—infrastructure assets $48000
Credit: Cash $48000
(To record maintenance expense)
4. Debit: Infrastructure assets—street lights $78000
Credit: Cash $78000
(To record cash expense for new light)
b. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government-wide financial statements.
1. Debit: Infrastructure assets—street lights $300,000
Credit: Cash $300,000
(To record purchase of street light)
2. Debit: Maintenance expense—infrastructure assets $48000
Credit: Cash $48000
(To record maintenance expense)
3. Debit: Infrastructure assets—street lights $78000
Credit: Cash $78000
(To record cash expense for new light)
Dean Company has sales of $163,000, and the break-even point in sales dollars is $102,690. Determine the company's margin of safety percentage. Round answer to the nearest whole number. fill in the blank 1 %
Answer:
37%
Explanation:
The Dean company has sales of $163,000
The break even point in sales dollars is $102,690
Therefore, the company's margin of safety can be calculated as follow;
Margin of safety = (Sales - Break even sales ) / Sales
Margin of safety = ($163,000 - $102,690) / $163,000
Margin of safety = $60,310 / $163,000
Margin of safety = 0.37 × 100
Margin of safety = 37%
When suppliers collaborate with the firm overall performance has been known to improve up to _________
Hi, you've asked an incomplete question. Answered from a general business perspective.
Explanation:
Note, a firm may measure its overall performance using some of the metrics below:
amount of sales in dollarsthe total cost of production,production capacity, etc.Only when the firm's suppliers are reliable, affordable, and efficient, would the firm be able to meet their product demand.
Bethany’s regular hourly wage rate is $12, and she receives an hourly rate of $18 for work in excess of 40 hours. During a January pay period, Bethany works 50 hours. Bethany’s federal income tax withholding is $99, and she has no voluntary deductions. Compute Bethany’s gross earnings and net pay for the pay period. Assume that the FICA tax rate is 7.65%.
Answer and Explanation:
The computation of the gross earnings and the net pay is shown below;
Gross pay = Regular pay + Overtime pay
= (40 × $12) + (50 - 40) × $18
= $480 + $180
= $660
Net pay = Gross pay - FICA taxes - Federal income taxes withholding
= $660 - ($660 × 7.65%) - $99
= $510.51
Hence, the same is to be considered and relevant
View Point Industries has forecasted a rate of return of 20.00% if the economy booms (25.00% probability); a rate of return of 15.00% if the economy is in a growth phase (45.00% probability); a rate of return of 2.50% if the economy is in decline (20.00% probability); and a rate of return of -15.00% if the economy is in a depression (10.00% probability). What is View Point's standard deviation of returns
Answer: 10.46%
Explanation:
Based on the information given in the question, View Point's standard deviation of returns will be calculated thus:
Firstly, we have to calculate the expected rate of return which will be the respective returns multiplied by the respective probabilties and this will be:
= (0.2 × 0.25) + (0.15 × 0.45) + (0.025 × 0.2) + (-0.15 × 0.10)
=10.75%
Then, we'll calculate the total probability and this will be:
= [0.25 × (20 - 10.75)²] + [0.45 × (15 - 1.75)²] + [0.2 × (2.5 - 10.75)²] + [0.1 × (-15 - 10 75)²]
= 21.3906 + 8.1281 + 13.6125 + 66.3063
= 109.7375%
Therefore, View Point's standard deviation of returns will be:
= [Total of Probability × (Return-Mean)²/✓Total probability
=10.46%
It is important when regulating a market with a natural monopoly to maintain on going business incentives for the firm involved. A cost-plus approach to regulating a market does not provide this. What would a benefit to not utilizing a cost plus approach to regulation be
Answer:
The natural monopoly will have incentives for efficiency and innovation
Explanation:
Monopoly my be defined as taking or having an excessive control or charge over the trade of a particular commodity or product or the control over the supply of a particular product on the market by one particular group or person.
In the context, the cost-plus approach requires the monopoly in order to change the price which includes normal return to the average cost. So the monopolist does not have any incentive for innovating efficient technology so as to reduce its cost. Thus we can promote innovation and efficiency by not using the cost plus policy.
Roberto Corporation was organized on January 1, 2021. The firm was authorized to issue 84,000 shares of $5 par common stock. During 2021, Roberto had the following transactions relating to shareholders' equity: Issued 10,800 shares of common stock at $6.00 per share. Issued 20,400 shares of common stock at $8.20 per share. Reported a net income of $108,000. Paid dividends of $59,000. Purchased 3,100 shares of treasury stock at $10.20 (part of the 20,400 shares issued at $8.20). What is total shareholders' equity at the end of 2021
Answer:
$249,460
Explanation:
Calculation to determine the total shareholders' equity at the end of 2021
Issued of stock $64,800
(10,800 shares * $6.00 per share)
Issued of stock $167,280
(20,400 shares * $8.20 per share)
Net income $108,000
Less dividends ($59,000)
Less Treasury stock $31,620
( 3,100 shares* $10.20)
Total shareholders' equity $249,460
Therefore total shareholders' equity at the end of 2021 is $249,460