Answer:
$122,600
Explanation:
Maintenance department cost = $27,000
Assembly department cost = $106,400
Square feet occupied by Milling department = 12,000
Square feet occupied by Assembly department = 18,000
Total square feet occupied by two production departments = Square feet occupied by Milling department + Square feet occupied by Assembly department
= 12,000 + 18,000
= 30,000
Maintenance department cost allocated to Assembly department = Maintenance department cost * (Square feet occupied by Assembly department / Total square feet occupied by two production departments)
= 27,000 * (18,000/30,000)
= 27,000 * 0.6
= 16,200
The total cost of operating the Assembly department for the current period = Assembly department cost + Maintenance department cost allocated to Assembly department
= $106,400 + $16,200
= $122,600
What is the current value of a $1,000 bond with a 8% annual coupon rate (paid semi-annually) that matures in 8 years if the appropriate stated annual discount rate is 5%. Please round your answer to the nearest hundredth.
Answer:
Bond Price= $1,193.9
Explanation:
Giving the following information:
Face value= $1,000
Coupon= 0.08*1,000= $80
Discount rate= 0.05
Years to maturity= 8 years
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 80*{[1 - (1.05^-8)] / 0.05} + [1,000/(1.05^8)]
Bond Price= 517.06 + 676.84
Bond Price= $1,193.9
Riley Company borrowed $36,000 on April 1, Year 1 from the Titan Bank. The note issued by Riley carried a one year term and a 7% annual interest rate. Riley earned cash revenue of $1,700 in Year 1 and $1,400 in Year 2. Assume no other transactions. The amount of total liabilities that would appear on Riley's December 31 balance sheets for Year 1 and Year 2, respectively, would be:_____.A) $36,000 and $0. B) $37,890 and $0. C) $37,890 and $38,520. D) $1,890 and $630.
Answer:
B) $37,890 and $0
Explanation:
Calculation to determine The amount of total liabilities that would appear on Riley's December 31 balance sheets for Year 1 and Year 2, respectively, would be
Total liabilities=$36,000+($36,000 * 7% * 9/12)
Total liabilities = $36,000+$1,890
Total liabilities = $37,890
Therefore The amount of total liabilities that would appear on Riley's December 31 balance sheets for Year 1 and Year 2, respectively, would be $37,890
Phillips Company bought 30 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. During the period of January 1, 20X1, through December 31, 20X3, the market value of Phillips' investment in Jones' stock increased by $1,500 each year. In 20X1, 20X2, and 20X3, Jones Bag reported the following:
Year Net Income Dividends
20X1 $8,000 $15,000
20X2 12,000 10,000
20X3 20,000 10,000
The balance in Phillips Companyâs investment account on December 31, 20X3, was $54,000.
Required
In each of the following independent cases, determine the amount that Phillips paid for its investment in Jones Bag stock assuming that Phillips accounted for its investment using the ( a ) cost method and ( b ) equity method.
Answer:
1. Fair value
Particulars Amount$
Investment on December 31,20X3 54,000
Less: Increase for 20X1 -1,500
Less: Increase for 20X2 -1,500
Less: Increase for 20X3 -1,500
Amount that phillips paid for Investment $49,500
2. Equity Method
Particulars Amount$
Investment on December 31, 20X3 54,000
Add: Dividend share for 20X1 4,500 (15000*30%)
Add: Dividend share for 20X2 3,000 (10000*30%)
Add: Dividend share for 20X3 3,000 (10000*30%)
Less: Net Income share for 20X1 -2,400 (8000*30%)
Less: Net Income share for 20X2 -3,600 (12000*30%)
Less: Net Income share for 20X3 -6,000 (20000*30%)
Amount that phillips paid for Investment $52,500
Titan Fishing Boats had product sales for the current year as follows: Q1 2,000 boats; Q2 2,400 boats; Q3 1,800 boats; Q4 1,200 boats. Current selling price is $5,000 per boat. A strong economy and specific market initiatives at Titan for next year indicate that sales volume is expected to increase by 2% per quarter cumulatively for each quarter and sales price will increase by 4% per boat. The sales revenue forecast for Q4 next year would be:
Answer:
Titan Fishing Boats
The sales revenue forecast for Q4 next year would be
= $6,364,800
Explanation:
a) Data and Calculations:
Current Year Next Year
Q1 2,000 boats 2,040 boats (2,000 * 1.02)
Q2 2,400 boats 2,448 boats (2,400 * 1.02)
Q3 1,800 boats 1,836 boats (1,800 * 1.02)
Q4 1,200 boats 1,224 boats (1,200 * 1.02)
Expected increase per quarter = 2% cumulatively
Selling price per boat = $5,000
Expected increase in selling price = 4% ($200)
New selling price per boat = $5,200
The sales revenue forecast for Q4 next year would be = $6,364,800 ($5,200 * 1,224)
Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units.
Required:
a. Calculate the operating income for July.
b. Calculate the break-even point in units sold and total revenues.
Answer and Explanation:
The computation is shown below:
(a)
Sales = 30 × 12,000 units = $360,000
(Less) variable costs = 21 × 12,000 units = $252,000
(Less) fixed costs = $90,000
Operating income = $18,000
(b)
Break even point in units be X
X × 30 = X × 21 + $90,000
9X = $90,000
X = 10,000 units
Now
Break even point in dollars is
= 10,000 × $30
= $300,000
James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?
A) The mortgagee has an insurable interest towards 25 percent of the loan amount.
B) The mortgagee has an insurable interest towards the entire loan amount.
C) The mortgagee does not have an insurable interest in the loan amount.
D) The mortgagee has an insurable interest towards half the loan amount.
Answer:B
Explanation:
Kuley owns two investments, A and B, that have a combined total value of $73.600. Investment A is expected to pay $53,000 in 5 years from today and has an expected return of 8.41 percent per year. Investment B is expected to pay $61,400 in 8 years from today and has an expected return of R per year. What is R, the expected annual return for investment B
Solution :
The present value is given by :
[tex]$PV = \frac{FV}{(1+r)^n}$[/tex]
Here r = interest rate per period
n = number of periods
Particulars Amount
Future value $ 53,000
Interest rate 8.41%
Periods 5
The present value is :
[tex]$PV = \frac{FV}{(1+r)^n}$[/tex]
[tex]$ = \frac{53,000}{(1+0.0841)^5}$[/tex]
[tex]$=\frac{53000}{1.4974}$[/tex]
= $ 35,393.96
Therefore, the value of investment A is $ 35,393.96
The value of investment of B = Combined value - value of A
= $ 73600 - $ 35393.96
= $ 38,206.04
The Future Value
[tex]$FV=PV \times (1+r)^n$[/tex]
Particulars Amount
Present value $ 38,206.04
Future value $ 61,400
Periods 8
Therefore, the future value is :
[tex]$FV=PV \times (1+r)^n$[/tex]
[tex]$61,400=38,206.04 \times (1+r)^8$[/tex]
[tex]$(1+r)^8 = \frac{61400}{38206.04}$[/tex]
[tex]$(1+r)^8 = 1.6071$[/tex]
(1 + r) = 1.061096
r = 1.061096 - 1
r = 0.061096
r = 6.1096 %
Therefore, the interest rate per annum is 6.1096%
As a manager of a medium sized manufacturing organization, you have noticed productivity has steadily gone down recently. You have made a study and discovered the team is lacking motivation. Invoking any two theories you have learnt explain how you would go about re-energizing the workers to regain and even surpass the previous levels of productivity.
Answer: give them bonuses for work complete.
Explanation:people like money
Determine the inventory cost using the (a) first-in, first-out (FIFO) method; (b) last-in, first-out (LIFO) method; and (c) weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar).
Answer:
(a) Cost of inventory sold using FIFO method = $179,280
(b) Cost of inventory sold using LIFO method = $188,700
(c) Cost of inventory sold using weighted average cost method = $186,000
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf file for the complete question.
The explanation of the answers is now provided as follows:
Units of inventory sold = Units available for sale - Ending physical inventory units = 45 – 14 = 31
(a) first-in, first-out (FIFO) method
Under FIFO, inventory purchased first is sold first. Therefore, we have:
Cost of inventory sold using FIFO = 12 units at $5,400 each from Jan. 1 + 18 units at $6,000 each from Aug. 7 Purchase + 1 unit at $6,480 from Dec. 11 Purchase = (12 * $5,400) + (18 * $6,000) + (1 * $6,480) = $64,800 + $108,000 + $6,480 = $179,280
(b) last-in, first-out (LIFO) method
Under LIFO, inventory purchased last is sold first. Therefore, we have:
Cost of inventory sold using LIFO = 15 unit at $6,480 each from Dec. 11 Purchase + 16 units at $6,000 each from Aug. 7 Purchase = (15 * $6,480) + (16 * $6,000) = $97,200 + $96,000 = $188,700
(c) weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar).
Under the weighted average cost method, the cost of goods available for sale is divided by the number of units available for sale to obtain average cost per unit. This is then used to multiply the total units sold to obtain the cost of inventory sold as follows:
Weighted average cost per unit = Cost of goods available for sale / Units available for sale = $270,000 / 45 = $6,000
Cost of inventory sold using weighted average cost method = Units of inventory sold * Weighted average cost per unit = 31 * $6,000 = $186,000
What was the result in the Lucy v. Zehmer case (referenced in the textbook) involving whether allegations of joking regarding the sale of land prevented the formation of a contract
Answer:
The Supreme Court ruled in favour of the Complainants, enforcing the contract.
Explanation:
The Lucy Vs Zehmer case was one of decision on if a contract was binding or not on the basis of the undisclosed intentions of the parties involved in the contract. Zehmer alleged that he had jokingly sold and transferred title to Lucy while drunk. However the court ruled that contract for the sale of land to Lucy was valid on the basis that the secret intentions of Zehmer was not known or disclosed in the sale of the land and only his actions count for the contract to be binding.
Trak Corporation incurred the following costs while manufacturing its bicycles.
Bicycle components $100,000 Advertising expense $45,000
Depreciation on plant 60,000 Property taxes on plant 14,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-line workers 110,000 Sales commissions 35,000
Factory supplies used 13,000 Salaries paid to sales clerks 50,000
(a) Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.
Bicycle components
Trak Corporation incurred the following costs whil Direct LaborPeriod CostsDirect MaterialsManufacturing Overhead
Depreciation on plant
Trak Corporation incurred the following costs whil Direct MaterialsPeriod CostsManufacturing OverheadDirect Labor
Property taxes on store
Trak Corporation incurred the following costs whil Direct MaterialsManufacturing OverheadPeriod CostsDirect Labor
Labor costs of assembly-line workers
Trak Corporation incurred the following costs whil Direct MaterialsManufacturing OverheadDirect LaborPeriod Costs
Factory supplies used
Trak Corporation incurred the following costs whil Period CostsManufacturing OverheadDirect MaterialsDirect Labor
Advertising expense
Trak Corporation incurred the following costs whil Manufacturing OverheadDirect LaborPeriod CostsDirect Materials
Property taxes on plant
Trak Corporation incurred the following costs whil Manufacturing OverheadDirect LaborPeriod CostsDirect Materials
Delivery expense
Trak Corporation incurred the following costs whil Direct MaterialsPeriod CostsManufacturing OverheadDirect Labor
Sales commissions
Trak Corporation incurred the following costs whil Manufacturing OverheadPeriod CostsDirect LaborDirect Materials
Answer:
Trak Corporation
Direct materials:
Bicycle components $100,000
Direct labor:
Labor costs of assembly-line workers $110,000
Manufacturing overhead:
Factory supplies used $13,000
Property taxes on plant 14,000
Depreciation on plant 60,000
Total manufacturing overhead $87,000
Period costs:
Advertising expense $45,000
Property taxes on store 7,500
Delivery expense 21,000
Sales commissions 35,000
Salaries paid to sales clerks 50,000
Total period costs $158,500
Explanation:
a) Data and Calculations:
Bicycle components $100,000
Advertising expense $45,000
Depreciation on plant 60,000
Property taxes on plant 14,000
Property taxes on store 7,500
Delivery expense 21,000
Labor costs of assembly-line workers 110,000
Sales commissions 35,000
Factory supplies used 13,000
Salaries paid to sales clerks 50,000
b) Direct materials refer to materials consumed during the manufacturing process, which are easily identified, measured, and charged to the product.
Direct labor refers to factory workers' time consumed during the production process.
Manufacturing overhead includes all indirect materials, labor, and other costs which cannot be directly traced to a unit of the manufactured product.
Period costs include administrative, selling, and distribution costs incurred during a financial period.
In a recent year, BMW sold 216,944 of its 1 Series cars. Assume the company expected to sell 225,944 of these cars during the year. Also assume the budgeted sales price for each car was $30,000, and the actual sales price for each car was $30,200. Compute the sales price variance and the sales volume variance.
Answer:
Sales price variance = $43,388,800 Favorable
Sales volume variance = -$270,000,000 Unfavorable
Explanation:
Actual sales price per unit = $30,200
Budgeted sales price per unit = $30,000
Actual quantity sold = 216,944
Budgeted quantity to sell = Expected quantity to sell 225,944
Therefore, we have:
Sales price variance = (Actual sales price per unit - Budgeted sales price per unit) * Actual quantity sold = ($30,200 - $30,000) * 216,944 = $43,388,800 Favorable
Sales price variance is favorable because actual sales price per unit is greater than budgeted sales price per unit.
Sales volume variance = (Actual quantity sold - Budgeted quantity to sell) * Budgeted sales price per unit = (216,944 - 225,944) * $30,000 = -$270,000,000 Unfavorable
Sales volume variance is unfavorable because actual quantity sold is less than budgeted quantity to sell.
FIllmore Company began operations on Sept. 1 by purchasing $4,400 of inventory and $750 of cleaning supplies. During the month, the company generated $6,000 of sales revenue. On Sept. 30, the company had $1,800 of inventory remaining, along with $550 of cleaning supplies. What was FIllmore Company's gross profit for the month of September?
Answer: $3,400
Explanation:
Gross Profit = Sales revenue - Cost of Goods sold
Cost of good sold = Opening stock + Purchases of inventory - Closing stock of inventory
= 0 + 4,400 - 1,800
= $2,600
Gross Profit = 6,000 - 2,600
= $3,400
Perggy's Bakes, a bakery in New Orleans that exclusively sells its confectionery products online, makes its products only when it receives an order. The bakery produces the products as per the order and delivers to the customer's homes. It does not produce any excess products. In the given scenario, the price associated with the demand and supply of the products at Perggy's Bakes reflects the _____. a. equilibrium price b. skimmed price c. grounded price d. parity price
Answer:
A)equilibrium price
Explanation:
From the question we are informed about Perggy's Bakes, a bakery in New Orleans that exclusively sells its confectionery products online, makes its products only when it receives an order. The bakery produces the products as per the order and delivers to the customer's homes. It does not produce any excess products. In the given scenario, the price associated with the demand and supply of the products at Perggy's Bakes reflects the equilibrium price. The equilibrium price can be reffered to as only price in which both desires of consumers and that of producers agree, this can be explained as a situation where by quantity demanded is been equal to quantity supplied. The theory stressed that movement of market tends toward this price, it can also be regarded as "market-clearing price"
The BRS Corporation makes collections on sales according to the following schedule:45% in month of sale50% in month following sale5% in second month following saleThe following sales have been budgeted:Sales April $ 160,000May $ 180,000June $ 170,000Budgeted cash collections in June would be:___________a) $170,800b) $166,500c) $170,000d) $174,500
Answer:
$170,500
Explanation:
Calculation to determine what the Budgeted cash collections in June would be
Cash collections for June:March credit sales collected in June ($160,000 × 45%)$72,000
February credit sales collected in June ($180,000 × 50%) $90,000
January credit sales collected in June ($170,000 × 5%) $8,500
Total cash collections in June $170,500
Therefore the Budgeted cash collections in June would be:$170,500
The lowest total process cost
Answer:
hope it is helpful to you.....
The Chiemsee Knee Replacement Clinic (CKRC) is a sports clinic located at the northern edge of the German Alps. It specializes in knee replacements for skiers who come to CKRC from Germany, Austria, Switzerland, and Italy. The clinic currently has one operating room (OR). However, since the clinic has dramatically more demand than capacity, the management team contemplates investing in a second OR. A lean consulting firm, however, suggests that before going ahead with installing new capacity, the clinic should first look at how it uses its existing capacity. The data collected by the consulting firm reveal that:
Answer:
Another operating room is needed.
Explanation:
The data collected by the consulting firm reveal that the existing facility does not fulfill the requirement due to more number of people so for this reason they have to build another operating room to quickly facilitate more number of people in less time. There are more number of people comes to the clinic as compared to previous years which compels the authority to build up new operating rooms for the convenience of people that comes for knee replacement.
Client 5 I am a 45-year-old agricultural scientist. I have been working for years to come up with a natural egg that is free of cholesterol and low in fat. I finally have completed all the tests and have received all the government approvals I need for my new eggs. Up until now, my work has been simple and I have been my own boss. But now I want to launch my new product—Eggs You Can Love—on a national scale.
What type of business organization do you recommend? Why?
(this is for my economics class plz answer as fast as you can)
Answer:
corporation
with a corporation, he would have larger assess to funds needed to grow his business
Explanation:
A publicly owned corporation is a company is a company owned by shareholders. This type of company's shares is freely traded on a stock exchange
Characteristics of A publicly owned corporation
• Limited liability. the liability of owners are limited to the amount invested
• Central management. The company is manged by board of directors and managers and not the shareholders
• the company is a legal entity.
On December 31, the Accounts Receivable ending balance is $80,000. Assume that the unadjusted balance of Allowance for Uncollectible Accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be:
Answer:
$6,100
Explanation:
Calculation to determine what The amount of bad debt expense recorded on December 31 will be:
Using this formula
Bad debt expense=(Estimated % of accounts receivable*Accounts Receivable ending +balance)+Unadjusted balance of Allowance for Uncollectible Accounts
Let plug in the formula
Bad debt expense=(7%*$80,000)+$500
Bad debt expense=$5,600+$500
Bad debt expense=$6,100
Therefore The amount of bad debt expense recorded on December 31 will be:$6,100
Bay City Company’s fixed budget performance report for July follows. The $440,000 budgeted total expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses. Fixed Budget Actual Results Variances Sales (in units) 6,000 4,900 Sales (in dollars) $480,000 $431,200 $48,800 U Total expenses 440,000 406,000 34,000 F Income from operations $40,000 $25,200 $14,800 U Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.
Answer:
Bay City Company
Flexible Budget Performance Report:
Flexible Budget Actual Results Variances
Sales (in units) 4,900 4,900
Sales (in dollars) $392,000 $431,200 $39,200 F
Total expenses:
Variable expenses 245,000 276,000 31,200 U
Fixed expenses 140,000 130,000 10,000 F
Total expenses 385,000 406,000 21,200 U
Income from operations $7,000 $25,200 $18,200 U
Explanation:
a) Data and Calculations:
Variable expenses = $300,000
Fixed expenses = $140,000
Budgeted total expenses = $440,000
Actual expenses:
Fixed expenses = $130,000
Fixed Budget Actual Results Variances
Sales (in units) 6,000 4,900
Sales (in dollars) $480,000 $431,200 $48,800 U
Total expenses 440,000 406,000 34,000 F
Income from operations $40,000 $25,200 $14,800 U
Flexing the budgets:
Sales revenue = $392,000 ($480,000/6,000 * 4,900)
Variable expenses = $245,000 ($300,000/6,000 * $4,900)
Actual variable expenses = $276,000 ($406,000 - $130,000)
Miguel consumes only art classes and anthropology classes. Miguel prefers a bundle of art classes and anthropology classes (with not necessarily equal to ) over a bundle of art classes and anthropology classes if (and only if) and . If and then Miguel prefers , over , . If neither case is true, he is indifferent between the two bundles.
a. Miguel's preferences satisfy the completeness assumption
b. Miguel's preferences satisfy the transitivity assumption
c. Miguel's preferences satisfy the non-satiation assumption
Answer: A. Miguel's preferences satisfy the completeness assumption
Explanation:
Based on the information given, Miguel's preferences satisfy the completeness assumption.
According to the completeness axiom, an individual or firm must be able to make a choice whether the economic agent is either indifferent to, or maybe prefers, a particular set of options over other options.
This implies that consumers can rank the possibilities as better, good, bad, worse etc and an indifference curve can be assigned.
Monte Motors sells two different products. Following are the monthly revenues and costs. Product A Sales Quantity: 10,000 units Sales Price per Unit: $6.00 Variable Costs per Unit: $1.25 Product B Sales Quantity: 30,000 Units Sales Price per Unit: $2.50 Variable Costs per Unit: $0.75 Total fixed costs are $200,000. What is the break-even point for this company in units
Answer:
80,000 units
Explanation:
First, calculate the contribution margin of both products using the following formula
Contribution margin = Selling Price - Variable cost
Product A
CM = $6 - $1.25 = $4.75
Product B
CM = $2.5 - $0.75 = $1.75
Now calculate the Weighted average contribution margin
Weighted average contribution margin = ( $4.75 x 10,000 / ( 10,000 + 30,000 ) ) + ( $1.75 x 30,000 / ( 10,000 + 30,000 ) ) = $1.1875 + $1.3125 = $2.50
Use the following formula to calculate the breakeven point in unit
Breakeven point in unit = Fixed Cost / Weighted average contribution margin = $200,000 / $2.50 = 80,000 units
The following persons own Schlecht Corporation, a non-U.S.entity.
Jim, U.S. individual 35%
Gina, U.S. individual 15%
Marina, U.S. individual 8%
Pedro, U.S. individual 12%
Chee, non-U.S. individual 30%
None of the shareholders are related. Subpart F income for the tax year is $300,000. No distributions are made. Which of the following statements is correct?
a. Schlecht is not a CFC.
b. Chee includes $90,000 in gross income.
c. Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC.
d. Marina includes $24,000 in gross income.
Answer: Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC.
Explanation:
From the options given, the correct statement is that "Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC".
A controlled foreign corporation (CFC) refers to a corporate entity which is duly registered and then conducts business in a different country than where it was registered and where the controlling owners lives.
A controlled foreign corporation (CFC) is a foreign corporation whereby more than 50% of the total voting power is owned by the person.
_________ used ingredient branding, which resulted in end consumers requiring that their product be included by the OEM’s.
Answer:
Intel
Explanation:
Marketing can be defined as the process of developing promotional techniques and sales strategies by a firm, so as to enhance the availability of goods and services to meet the needs of the end users or consumers through advertising and market research. Thus, it comprises of all the activities such as, identifying, anticipating set of medium and processes for creating, promoting, delivering, and exchanging goods and services that has value for customers. It typically, involves understanding customer needs, building and maintaining healthy relationships with them in order to scale up your business.
Ingredient branding can be defined as a strategic marketing plan or technique which typically involves branding a component of a business firm or organization as a separate entity so as to project its high performance and quality.
Intel is a multinational corporation (MNC) that uses ingredient branding such as "Intel inside", which stimulate end consumers to request that Intel's product such as processors be included by the original equipment manufacturers (OEM's).
g Because the monopolist is the only firm in the market, its demand curve Group of answer choices upward-sloping Vertical Flat. downward-sloping. Flag question: Question 2
Answer:
downward-sloping
Explanation:
East Coast Cleaners borrows $20,000 for 120 days and pays $400 interest. What is the effective rate of interest if the loan is discounted
According to the question, the effective rate of interest if the loan is discounted is more than 6% but less than 6.5%.
What do you mean by the effective rate of interest?The effective interest rate, often referred to as the yearly equivalent rate, is the amount of interest that a person actually pays or earns on a financial instrument.
It is determined by taking into account the impact of compounding over time.
When the benefits of compounding over time are taken into account, the real return on a savings account or any other interest-paying investment is known as the effective annual interest rate.
It also displays the actual percentage rate of interest owed on any outstanding debts, including credit card debt and loans.
Therefore, according to the question, the effective rate of interest if the loan is discounted is more than 6% but less than 6.5%.
To know more about the effective rate of interest, visit:
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A rookie quarterback is in the process of negotiating his first contract. The team's general manager has offered him three possible contracts. Each contract lasts for four years. All of the money is guaranteed and is paid at the end of each year. The payment terms of the contracts are as follows:
(dollars in millions)
Year Contract 1 Contract 2 Contract 3
1 $1.50 1.0 3.5
2 $1.50 1.5 0.5
3 $1.50 2 0.5
4 $1.50 2.5 0.5
The quarterback discounts all the cash flows at 12%. Which of the three contracts offers the most value? (Hint: Calculate the present value of future cash flows)
Answer:
Contract 2 offers the most value.
Explanation:
a) Data and Calculations:
Payment terms of the contracts:
(dollars in millions)
Year Contract 1 Contract 2 Contract 3
1 $1.50 1.0 3.5
2 $1.50 1.5 0.5
3 $1.50 2 0.5
4 $1.50 2.5 0.5
Discount rate = 12%
Present value of Contract 1:
PV annuity factor at 12% for 4 years = 3.037
PV annuity of $1.50 = $1.50 * 3.037 = $4.5555 or $4,555,500
Present value of Contract 2:
$1.0 * 0.893 = $0.893
$1.5 * 0.797 = 1.1955
$2 * 0.712 = 1.424
$2.5 * 0.636 = 1.59
Total = $5.1025 or $5,102,500
Present value of Contract 3:
$3.5 * 0.893 = $3.1255
$0.5 * 0.797 = 0.3985
$0.5 * 0.712 = 0.356
$0.5 * 0.636 = 0.318
Total = $4.198 million or $4,198,000
Heinz Company began operations on January 1, 2020, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:
Final Inventory
2017 2018
FIFO $640,000 $712,000
LIFO $560,000 $636,000
Net Income
(computed under the FIFO method) $980,000 $1,030,000
Based on the above information, a change to the LIFO method in 2020 would result in net income for 2018 of ________.
a. $1,070,000
b. $1,030,000
c. $954,000
d. $950,000
Answer: $954,000
Explanation:
Thw difference in the final inventory between the FIFO and the LIFO method in 2018 will be:
= $712,000 - $636,000
= $76,000
Then, based on the above information, a change to the LIFO method in 2018 would result in net income for 2018 of:
Net income as per FIFO = $1,030,000
Less: Decrease in income = $76,000
Net income as per LIFO = $954,000
Carly Company plans to depreciate a new building using the double declining-balance depreciation method. The building cost is $960,000. The estimated residual value of the building is $66,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year
Answer:
Straight line method rate = 1/ Number of years * 100 = 1/25*100 = 4%
Double declining balance depreciation = 2*Straight line method rate*Book value
First Year depreciation = 8%*$960,000
First Year depreciation = $76,800
Second year depreciation = 8% * (Book Value as on 1st year - First Year depreciation)
Second year depreciation = 8%*($960,000-$76,800)
Second year depreciation = 8%*$883,200
Second year depreciation = $70,656
A company reports the following income statement and balance sheet information for the current year:
Net income $424,000 Interest expense 80,000 Average total assets 4,200,000
Determine the return on total assets. (Round percentages to one decimal place.)
______%
Answer:
10.1%
Explanation:
Given the above information, return on total asset is computed as;
Return on total asset = Net income / Average total assets
Net income = $24,000
Average total assets = $4,200,000
Therefore,
Return on total assets = $424,000 / $4,200,000
Return on total assets = 10.1%
Answer:
10.1%
Explanation:
Determine the return on total assets. (Round percentages to one decimal place.) 10.1%