Answer:
2.7 times
Explanation:
Chutes and co. has an interest expense of 1.25 million
Operating margin of 10.8%
Total sales of 30.7 million
The first step is to calculate the operating income
Operating income= Sales×operating margin
= $30,700,000×10.8/100
= $30,700,000×0.108
= $3,315,600
Therefore, the interest coverage ratio can be calculated as follows
Interest coverage ratio= Operating income/Interest expense
= $3,315,600/$1,250,000
= 2.65
= 2.7 times
Hence Chutes' interest coverage ratio is 2.7 times
Tru-U stock is selling for $41 a share. A 6-month call on Tru-U stock with a strike price of $45 is priced at $1.60. Risk-free assets are currently returning .29 percent per month. What is the price of a 6-month put on Tru-U stock with a strike price of $45?
Answer:
$4.82
Explanation:
Calculation for the price of the 6-month put on Tru-U stock
To find the price of a 6-month put on Tru-U stock with a strike price of $45 we are going to use Put-call parity formula to calculate it
Using this formula
Put-call parity: S + P = C + PV(E) P
Let plug in the formula
Put-call parity= $1.60 + ($45 / 1.0029^⁶) - $41 = Put-call parity=$1.60+($45/1.01752)-$41
Put-call parity=$1.60+(44.22517)-$41
Put-call parity=$45.82517-$41
Put-call parity=$4.82
Therefore the price of a 6-month put on Tru-U stock with a strike price of $45 will be $4.82
A bank has excess reserves of $1 million and makes a new loan for $500,000. If the bank faces a 10% required reserve ratio, by how much could the money supply increase when the loan is made
Answer:
With a 10% required reserve ratio, the money supply could increase by $500,000/r when the loan is made.
This equals $5,000,000 ($500,000/0.1) where r = 10%
Explanation:
a) The money multiplier is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend.
b) The formula for the money multiplier is simply 1/r, where r = the reserve ratio.
c) The reserve ratio, also known as Cash Reserve Ratio, is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank. It is used by the central bank to control the supply of money in the economy. When the central bank wants to increase the money supply, it lowers the reserve ratio and vice versa.
d) According to wikipedia.com, "the money supply is the total value of money available in an economy at a point of time." It is usually defined as currency in circulation plus demand deposits. It is the demand deposits that give commercial banks the ability to create money using the reserve ratio.
What are the kinds of purchases for which you’ll "spare no expense"? What kinds of purchases do you want to buy spending as little as possible? What are the major differences between these two categories that drive your attitude regarding price?
Answer:
"Spare no Expense" Purchases
When purchasing long-term items (assets) which cannot be consumed within a short-term period, one tends to "spare no expense." These purchases are dictated by their quality and not price. For example, in constructing a building an individual or an entity does not consider the price as a deciding factor. Instead, the entity goes for the best quality at whatever price. In such a situation, it can be described as "sparing no expense" because it can spend as possible as is needed to ensure that the quality of the construction was of the highest standard. A wealthy man does not spare any expense to receive medical treatment. Vacationists spare no expense to go on vacation
These purchases or items come with high prices and they last longer than a year.
On the other hand, one does not want to spend much resources on goods that are not durable. So, the person involved tend to spend as little as possible. No one wants to buy expensive food items. But, the same person can pay for an exorbitant car. No one wants to expend much resources on inner wears, but the same person can spend thousand for the outer wears, to put up appearances.
Ostentatious goods that convey image attract higher prices much more than private goods that others co not care whether you use them or not. This accords with our human natural way of believing in appearances.
The major factors that differentiate between these two categories that drive our attitude regarding price include:
a) Scarcity, b) Longevity, c) Quality, d) Price, e) Durability, f) Ostentation
Explanation:
The expression "spare no expense" means to spend as much financial resources as needed in order to make something happen or bring about an outcome.
If the real money demand is greater than the real money supply, interest rates must rise to reach equilibrium in the money market as institutions sell bonds to obtain more money.1. True2. False
Answer:
2. False
Explanation:
The market for money is like the market for any other good: if demand is higher than supply, then, the price of money (the interest rate), will have to be lowered, so that money becomes cheaper and more abundant, and supply and demand become equal and reach equilibrium.
In this case, the centrla bank needs to lower the interest rates by buying bonds. When the central bank buys bonds, it prints more money that is put in the market, effectively increasing the supply of money, and lowering the interest rate in the meantime.
Currently, a U.S. trader notes that in the 6-month forward market, the Japanese yen is selling at a premium (that is, you receive more dollars per yen in the forward market than you do in the spot market), while the British pound is selling at a discount. Which of the following statements is correct?
a) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Britain should have the lowest rates.
b) If interest rate parity holds among the three countries, the United States should have the highest 6-month interest rates and Japan should have the lowest rates.
c) If interest rate parity holds among the three countries, Japan should have the highest 6-month interest rates and Britain should have the lowest rates.
d) If interest rate parity holds, 6-month interest rates should be the same in the U.S., Britain, and Japan.
e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Answer:
Hence correct answer is option e) If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Explanation:
Suppose the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent. The deposit-creation potential of the banking system is:
Answer: $500 million
Explanation:
The required reserve ratio is the fraction of the total deposit that a bank recieves which is mandated by the central bank to be kept and should not be given out.
If the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent. The deposit-creation potential of the banking system will be:
= $50million/10%
= $50million/0.1
= $500 million
Two partners, Small and Big, form a partnership in which Small invested $40,000 and Big invested $60,000 for a total capital of $100,000. But Small devotes more time to the business and earns more from the firm. They have agreed to share the profits as follows:
1. The first $20,000 is allocated on the partner's capital balances.
2. The next $30,000 is allocated based on service: Small gets $20,000, and Big gets $10,000.
3. Any remaining profits are allocated equally.
4. The partnership's net income is $100,000.
Requried:
a. What is Small's portion of the net income?
b. What is Big's portion of the net income? Make the entry for this allocation.
c. What would be the right parts to the journal entry for this question?
Answer:
a. What is Small's portion of the net income?
$53,000b. What is Big's portion of the net income? Make the entry for this allocation.
Big's portion = $47,000Dr Income Summary 47,000 Cr Big, capital 47,000c. What would be the right parts to the journal entry for this question?
Debit Income summary and credit capital accountsExplanation:
partnership's net income $100,000
first $20,000
Small $8,000Big $12,000next $30,000
Small $20,000Big $10,000Remaining $50,000
Small $25,000Big $25,000total Small = $53,000
total Big = $47,000
A company has net income of $7.10 million. Stockholders' equity at the beginning of the year is $35.05 million and, at the end of the year, it is $43.15 million. The only change to stockholders' equity came from net income. The return on equity ratio is approximately:
Answer:
Return on equity ratio 18.16%
Explanation:
Calculation for the return on equity ratio
This first step is to find the Average stock holder equity.
Using this formula
Average stock holder equity =Beginning stock holder equity + ending stock holder /2
Let plug in the formula
Average stock holder equity=$35.02+$43.15/2
Average stock holder equity =$78.17/2
Average stock holder equity =$39.085
Second step is to calculate for the return on equity ratio
Using this formula
Return on equity ratio=NET INCOME/STOCKHOLDERS EQUITY
let plug in the formula
Return on equity ratio=$7.10/$39.085
Return on equity ratio=0.18165 ×100
Return on equity ratio=18.16%
Therefore The return on equity ratio is approximately 18.16%
Characteristics of competitive markets The model of competitive markets relies on these three core assumptions:
1. There must be many buyers and sellersâa few players can't dominate the market.
2. Firms must produce an identical productâbuyers must regard all sellers' products as equivalent
. 3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry. The first two conditions imply that all consumers and firms are price takers.
While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario Competitive?
The government has granted the U.S. Postal Service the exclusive right to deliver mail.
There are hundreds of high school students in need of algebra private teachers services in Dallas. Dozens of companies offer private teaching services, and the parents who seek out private teachers view the quality of the at the different companies to be largely the same.
There are hundreds of colleges that serve millions of students each year. The colleges vary by location, size, and educational quality, which enables students with diverse preferences to find schools that match their needs.
A few major airlines account for the vast majority of air travel. Consumers view all airlines as providing basically the same service and will shop around for the lowest price.
Answer:
The correct answers are:
First Scenario: It is not a perfect competitive market
Second Scenario: It is a perfect competitive market
Third Scenario: It is not a perfect competitive market
Foruth Scenario: It is not a perfect competitive market
Explanation:
First Scenario: The fact that the government has interfere with the market and make it impossible for other companies to operate in there then that market refers to a monopoly where the only seller is the U.S. Postal Service and therefore there can not be another companies selling in the market and that is why it is not a perfect competitive market.
Second Scenario: The fact that there are a lot of buyers and sellers and that the product is perceived as the same and therefore that this one is homogeneous to every consumer makes this market a perfect competitive one.
Third Scenario: The fact that the colleges vary on many variables such as location, size and educational quality makes it impossible to be a competitive market because there is not a homogenoues product but instead the buyers can choose among those colleges due to their differences and needs.
Fourth Scenario: The fact that there are only a few airlines and not many makes it impossible for the market to a be a perfect competitive one and therefore that this market is actually an oligopoly preferently because the buyers will choose mostly by price.
The gift from Rebecca Smith (see previous question) earned $50,000 this year. The city council decides that these resources should be used to construct new sand volleyball courts for public use. Which fund should be used to account for the construction of the courts
Answer: a. Capital Projects Fund
Explanation:
This is a fund that is used by the Government in it's accounting records to record the various transactions related to embarking on a capital project.
It includes how the funds were sourced and how they will be disbursed.
Once the project is finished this fund is usually terminated.
When longer-term employees' salaries are lower than those of workers entering the firm today, ______ has occurred.
Answer: Salary compression
Explanation:
Salary compression is a situation that occurs when there is a negligible differences in pay between the workers in an organization despite the experience and skills level.
It usually occurs when the pay of the current employees that are working with a company does not keep up with the rise in market pay rate thereby giving rise to a situation whereby new employees are employed at a identical pay or better pay to those that have been at the organization.
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares
Answer: B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
The company is already Publicly traded. If it were to issue more stock it would increased the amount of stock it has in the market which will lead to the prices reducing from a high amount of supply.
Companies generally do not want their stock prices to decrease as it sends negative signals to investors as well as the fact that management's role is to try to increase Shareholder wealth.
They will therefore rather issue bonds than risk their stock prices reducing in price.
At the level of output at which a single-price monopolist maximizes profit, price is Group of answer choices
Answer:
Greater than marginal cost.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. It is also known as oligopoly, wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
Also, a single-price monopolist is an individual or seller that sells each unit of its products to all its customer at the same price. Hence, a single-price monopolist doesn't engage in price discrimination among its customers (buyers).
At the level of output at which a single-price monopolist maximizes profit, price is greater than marginal cost because the marginal revenue would be below the demand curve.
However, if the marginal cost is greater than the price, the monopolist will not make any profit.
In a nutshell, profit maximization for the single-price monopolist occurs at the point where marginal cost is equal to marginal revenue (MC = MR) on the graph of price (P) against quantity (Q) of goods.
Bonner Corp.'s sales last year were $345,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. Bonner's new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant? Use the year-end balance in your calculations. Select the correct answer. a. $211,325 b. $211,175 c. $211,101 d. $211,250 e. $211,026
Answer:
d. $211,250
Explanation:
The TATO is the ratio of sales to assets:
TATO = sales/assets
Filling in the desired numbers, we can find the desired level of assets:
2.4 = 345,000/assets
assets = 345,000/2.4 = 143,750
Starting with assets of 355,000 the reduction necessary to bring assets down to 143,750 is ...
$355,000 -143,750 = $211,250 . . . . matches choice D
Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% compounded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term
Answer:
$12,615.21
Explanation:
we need to determine the future value of the loan:
future value = present value x (1 + interest rate)ⁿ
present value = $12,000n = 365 days (compounded daily)interest rate = 5% / 365 days = 0.05/365 = 0.000136986future value = $12,000 x (1 + 0.000136986)³⁶⁵ = $12,000 x 1.051267496 = $12,615.21
DeKay Dental Supplies issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually. This is a partial bond amortization schedule for the bonds Effective Decrease in Outstanding Payment Cash interest balance 400 400 400 400 409 409 409 410 balance 9,080 9,089 9,098 9,107 9,117 10 What is the stated annual rate of interest on the bonds?
a) 4.5%.
b) 9.0%.
c) 40%.
d) 80%.
Answer: d. 8.0%
Explanation:
The Stated Annual Rate of Interest on a bond refers to the coupon rate which is the amount that the company promises to pay on the bond pay period.
Looking at the question, the company is paying $400 every 6 months on the $10,000 bonds . The interest therefore is;
= 400/10,000
= 4%
Company pays 4% on the bonds every 6 months.
This 4% should be stated in annual terms so;
= 4% * 2
= 8%.
First National Bank charges 13.5 percent compounded monthly on its business loans. First United Bank charges 13.8 percent compounded semiannually. Calculate the EAR for First National Bank and First United Bank. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer: 14.28%
Explanation:
Effective Annual Rate is the rate that takes the periodic rates and converts it to an annual rate if compounding the periodic rate was taken into account.
The formula is;
EAR = (1 + r/m)^m - 1
Where;
r is the Annual nominal rate of interest and,
m is Number of compounding periods in a year
EAR = ( 1 + 13.8/2)² - 1
= 1.142761 - 1
= 0.142761
= 14.28%
Barnes Company purchased $58,000 of 10.0% bonds at par. The bonds mature in six years and are a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
a) debit Unrealized Gain-Equity, $2,900; credit Cash, $2,900.
b) debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900.
c) debit Cash, $2,900; credit Interest Revenue, $2,900.
d) debit Cash, $5,800; credit Unrealized Gain-Equity, $5,800.
e) debit Cash, $5,800; credit Long-Term Investments-HTM, $5,800.
Answer:
Option B,debt Cash, $2,900; credit Long-Term Investments-HTM, $2,900,is correct
Explanation:
Semiannual interest on the bond can be computed using the below semiannual interest formula:
semiannual interest=face value*coupon rate*6/12
face value is $58000
The coupon rate is 10%
semiannual interest=$58000*10%*6/12=$2900
The receipt of $2900 semiannual interest would be debited to cash while also being credited to Long-Term investments-HTM
Patricia Nall was approved for a $3,000, two-year, 11 percent loan with the finance charges figured using the discount method. How much cash will Patricia receive from this loan?
Answer:
$2,340
Explanation:
The computation of cash received from this loan is shown below:-
cash received from this loan = Approved amount - (Approved amount × Two year × Percentage of loan )
= Approved amount - ($3,000 × 2 × 11% )
= $3,000 - ($3,000 × 2 × 0.11 )
= $3,000 - $660
= $2,340
Therefore, for computing the cash will Patricia receive from this loan we simply applied the above formula.
In your opinion which causes of work stress, or organizational stressors, are likely to be among the most common experienced by air traffic controllers? Explain your reasoning.
Answer:
There are four types of organizational stressors: task demands, physical demands, role demands, and interpersonal demands.
For air traffic controllers, task demands are probably the most common organizational stressor that they experience.
Among the task demands, we have the need of quick decisions, critical decisions, and the fact that some information may be incomplete.
The job of an air traffic controller is complex, difficult, requires taking quick, and specially, critical decisions all the time. A bad decision by a traffic controller can be very problematic, and even prove fatal, because of the delicate nature of the job. For all these reasons, air traffic controllers are likely to be subjected to this specific organizational stressor.
On May 10, Monty Corp. issues 1,900 shares of $4 par value common stock for cash at $13 per share. Journalize the issuance of the stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
May 10, 2020, 1,900 shares issued at $13
Dr Cash 24,700
Cr Common stock 7,600
Cr Additional paid in capital 17,100
The common stock account increases using the pay value as reference. For example, if the common stock account = $200,000 and the par value of the stocks = $4, then we know that the company has 50,000 common stocks outstanding.
If investors pay any amount over the stocks' par value, that amount must be reported as additional paid in capital, in this case for common stock.
Gelb Company currently manufactures 41,000 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $83,000 per year, and allocated fixed costs are $78,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 41,000 units and buying 41,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer and Explanation:
1. The computation of total incremental is shown below:-
Incremental Costs to Make
Relevant Amount Relevant Fixed Total Relevant
Per Unit Costs Costs
Variable Cost
Per Unit $4.05 $166,050
(41,000 × $4.05)
Fixed manufacturing
cost $83,000 $83,000
Total incremental
cost to make $249,050
Incremental Costs to Buy
Purchase Price Relevant Fixed Total Relevant
Per Unit Costs Costs
Purchase Price
Per Unit $143,500
($3.50 × 41,000)
Total Incremental Cost to Buy $143,500
2. The company should buy from the outside supplier as its a lower and the total incremental cost is $143,500
J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $50 per square yard. The actual price for the wool was $38 and the usage was only 1.6 yards of wool per coat. What would be the standard cost per output for the wool?
Answer:
$100 per coat
Explanation:
Standard ;
Wool required = 2 yard square per coat
Budgeted price = $50 per square yard
Therefore,
We will need to multiply the total direct material quantity per unit for its unitary cost in order to arrive at the standard cost per unit.
Total standard cost per coat = Wool per coat × Cost per square yard,
= 2 × $50
= $100 per coat
1) In the previous problem, suppose Ferguson has announced it is going to repurchase $15,600 worth of stock. What effect will this transaction have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? Ignoring tax effects, show how the share repurchase is effectively the same as a cash dividend.
Answer:
1. Equity reduces to $372,300
2. 11,517 shares
3. $32.33
Explanation:
1. Effect on Equity
The company will use $15,600 cash to buy the equivalent amount of shares.
Cash Balance will reduce by;
= 52,900 - 15,600
= $37,300
Equity will reduce by the amount of stock repurchased;
= 387,900 - 15,600
= $372,300
2. Shares Outstanding
Current Stock Price = [tex]\frac{Equity Value}{Number of shares outstanding}[/tex]
= 387,900/12,000
= $32.33
Number of shares repurchased = 15,600/32.33
= 483 shares
New Shares Outstanding = 12,000 shares - 483 shares
= 11,517 shares
3. Price per share after repurchase
= [tex]\frac{New Equity Value}{New Number of shares outstanding}[/tex]
= 372,300 / 11,517
= $32.33
4. Dividends declared reduces the equity value.
= 32.33 - 1.30
= $31.03
The share repurchase is the same as the cash dividend because the stock price after the repurchase is the same as the stock price if dividends are declared less the cash dividends.
21. Find the present values of these ordinary annuities. Discounting occurs once a year. a. $400 per year for 10 years at 10%. b. $200 per year for 5 years at 5% c. $400 per year for 5 years at 0% d. Rework parts a-c assuming they are annuities due.
Answer:
a.
PV = $2457.826842 rounded off to $2457.83
b.
PV = $865.8953341 rounded off to $865.90
c.
PV = $400
d.
PV = $2703.609527 rounded off to $2703.61
PV = $909.1901008 rounded off to $909.19
PV = $400
Explanation:
An annuity is a series of cash flows that are constant, that occur after equal interval of time and that are for a defined period of time.
An ordinary annuity is the one whose cash flows occur at the end of the period. While an annuity due is the one whose cash flows occur at the start of the period. The formula for the present value of both the ordinary and the due annuity are attached.
a.
PV = 400 * [(1 - (1+0.1)^-10) / 0.1]
PV = $2457.826842 rounded off to $2457.83
b.
PV = 200 * [(1 - (1+0.05)^-5) / 0.05]
PV = $865.8953341 rounded off to $865.90
c.
PV = 400 * [(1 - (1+0.0)^-5) / 0.0]
PV = $400
d.
PV = 400 * [(1 - (1+0.1)^-10) / 0.1] * (1+0.1)
PV = $2703.609527 rounded off to $2703.61
PV = 200 * [(1 - (1+0.05)^-5) / 0.05] * (1+0.05)
PV = $909.1901008 rounded off to $909.19
PV = 400 * [(1 - (1+0.1)^-10) / 0.1]
PV = $400
You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 25 % Stock B 32 % Stock C 43 % What are the investment proportions of your client’s overall portfolio, including the position in T-bills?
Answer:
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
Explanation:
Calculation for the investment proportions of your client's overall portfolio, including the position in T-bills
Based on the information given the T-bill rate is 8% which means we are going to multiply each stock Investments by 8%
Stock A 25%
Stock B 32%
Stock C 43%
Hence
Stock A: .25*.8= 20%
Stock B: .32*.8= 25.6%
Stock C: .43*.8= 34.4%
Therefore the investment proportions of your client's overall portfolio, including the position in T-bills will be :
Stock A: 20%
Stock B: 25.6%
Stock C: 34.4%
In the development of a SFAS matrix, the first step is to:____________.
A) enter the ratings of how the company's management is responding to each of the strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term goals for the duration.
E) enter the weights for all of the internal factors.
Answer:
its A
Explanation:
I promise trust me
You are considering two mutually exclusive projects. Both projects have an initial cost of $52,000. Project A produces cash inflows of $25,300, $37100, and $22,000 for years 1 through 3, respectively. Project B produces cash inflows of $43,600, $19,800 and $10,400 for years 1 through 3, respectively. The required rate of return is 14.2 percent for Project A and 13.9 percent for Project B. Which project should you accept and why? a) Project A because it has the higher required rate of return b) Project A because it has the larger NPV c) Project 8, because it has the largest cash inflow in year 1. d) Project B; because it has the lower required rate of return
Answer:
b) Project A because it has the larger NPV
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Project A
Cash flow in year 0 = $-52,000
Cash flow in year 1= $25,300,
Cash flow in year 2 = $37100
Cash flow in year 3= $22,000
I = 14.2
NPV = $13,372.95
Project B
Cash flow in year 0 = $-52,000
Cash flow in year 1= $43,600
Cash flow in year 2 =, $19,800
Cash flow in year 3= $10,400
I = 13.9
NPV = $8,579.62
The NPV of project A is larger than that of project B, so, project A is more suitable
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $345,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $345,000 investment for new machinery with a five-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Project Y Project Z
Sales $ 360,000 $ 288,000
Expenses
Direct materials 50,400 36,000
Direct labor 72,000 43,200
Overhead including depreciation 129,600 129,600
Selling and administrative expenses 26,000 26,000
Total expenses 278,000 234,800
Pretax income 82,000 53,200
Income taxes (38%) 31,160 20,216
Net income $ 50,840 $ 32,984
Compute each projectâs annual expected net cash flows.
Project Y Project Z
Determine each projectâs payback period.
Payback Period
Choose Numerator: / Choose Denominator: = Payback Period
/ = Payback period
Project Y =
Project Z =
Compute each projectâs accounting rate of return.
Accounting Rate of Return
Choose Numerator: / Choose Denominator: = Accounting Rate of Return
/ = Accounting rate of return
Project Y
Project Z
Determine each projectâs net present value using 6% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)
Project Y
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Net present value
Project Z
Chart values are based on:
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Select Chart Amount x PV Factor = Present Value
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Net present value
Answer:
Project Y Project Z
(6 years) (5 years)
investment: -$345,000 -$345,000
cash flows:
net income after taxes $50,840 $32,984
+ depreciation expense $57,500 $69,000
net cash flow per year = $108,340 $101,984
payback period:
investment / NCF = 3.18 years 3.38 years
accounting rate or return:
net income / investment = 14.74% 9.56%
net present value:
NCFs discounted at 6% = $187,743 $84,594
Project Y lasts for 6 years, while project Z lasts for only 5 years, that is the reason why there NPVs are so different.
Which senior managers may assume a greater deal of transferability between domestic and international HRM practices?
Answer: d. All of the Above
Explanation:
All the above senior managers are more likely to apply more Domestic HRM practices to make them International HRM practices when they are put into a situation where International practices will be needed.
This is because they have been with the Domestic companies for much of their time and so know more about Domestic practices than international.
The first options refers to senior managers in firms with large domestic markets. To be a senior manager demands experience in the market they are in so it is not far fetched to say that they are more knowledgeable in domestic practices than international.
The second option speaks of managers with little International experience meaning they are more likely to engage in transferability between domestic and International practices.
The third option speaks of managers who built their careers on domestic experience. They will find it hard letting go of what has brought them such success so will more likely apply domestic practices on an international scale.