Answer and Explanation:
a. The marginal utility per dollar spent in a monopolistic industry is
= Marginal utility ÷ Price
= 10 ÷ 5
= 2 utils per dollar
b. The consumer marginal utility per dollar for the monopoly is
= Marginal utility ÷ Marginal cost
= 10 ÷ 2
= 5 utils per dollar
hence by using the above formulas, the above answers should be considered
Economists argue that the pace of economic growth: Determines the size of the population of a nation over the long term. Determines the standard of life of a nation over the long term. Determines the military capability of a nation over the long term. Determines the unemployment rate of a nation over the long term. Determines the environmental health of a nation over the long term.
Answer: Determines the standard of life of a nation over the long term.
Explanation:
Economists believe that the economic growth of a country determines the standard of living of its people over the long term which is why measures such as GDP per capita exist.
They argue that if the economy is growing, more wealth will be created for citizens to access and the higher production of goods and services will give citizens more choice on what to buy to be able to improve their standard of living.
In 2021, due to a change in marketing forecasts, Barney Corporation reduced the projected life of its patent for producing round dice. The cumulative patent amortization prior to 2021 would have been $18 million higher had the new life been used. Barney's tax rate is 25%. Barney's retained earnings as of December 31, 2021, would be:
Answer: unaffected
Explanation:
We should note that a retrospective adjustment isn't necessarily needed when there's an alternation to a accounting estimate.
With regards to this Barney's retained earnings as of December 31, 2021, would neither be understated or overstated but would be unaffected.
l Englehard purchases a slurry-based separator for the mining of clay that costs $700,000 and has an estimated useful life of 10 years, a MACRS-GDS property class of 7 years, and an estimated salvage value after 10 years of $75,000. It was fi nanced using a $200,000 down payment and a loan of $500,000 over a period of 5 years with interest at 10%. Loan payments are made in equal annual amounts (principal plus interest) over the 5 years. a. What is the amount of the MACRS-GDS depreciation taken in the 3rd year
Answer:
The amount of the MACRS-GDS depreciation taken in the 3rd year is $122,430.
Explanation:
The amount of the MACRS-GDS depreciation taken in the 3rd year can be calculated as follows:
Cost of the slurry-based separator = $700,000
Third year depreciation rate for a MACRS-GDS property class of 7 years from the MACRS-GDS table = 17.49%
MACRS-GDS depreciation in the 3rd year = $700,000 * 17.49% = $122,430
Therefore, The amount of the MACRS-GDS depreciation taken in the 3rd year is $122,430.
Pension data for Barry Financial Services Inc. include the following: ($ in thousands) Discount rate, 7% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, 2021 $ 340 January 1, 2021: Projected benefit obligation 2,450 Accumulated benefit obligation 2,150 Plan assets (fair value) 2,550 Prior service cost—AOCI (2021 amortization, $40) 340 Net gain—AOCI (2021 amortization, $6) 360 There were no changes in actuarial assumptions. December 31, 2021: Cash contributions to pension fund, December 31, 2021 275 Benefit payments to retirees, December 31, 2021 300 Required: 1. Determine pension expense for 2021. 2. Prepare the journal entries to record (a) pension expense, (b) gains and losses (if any), (c) funding, and (d) retiree benefits for 2021.
Answer:
1. Pension expense $291
2.A. Pension expense
Dr Pension expense $291
Dr Plan assets (expected plan assets) $255
Dr Net gain -aoci6
Cr Prior service cost- oci 40
Cr PBO $512
B. Gains and losses
Dr Loss-oci 25
Dr Plan assets 25
(c) funding
Dr Plan assets $275
Cr cash 275
D. retiree benefits for 2021.
Dr PBO 300
Cr Plan assets 300
Explanation:
1. Calculation to determine the Pension Expense
PENSION EXPENSE
Service cost (given) $340
Add Interest cost $172
Less Expected return on plan assets ($255)
Add Prior service cost $40
Less Net gain or (loss) (6))
PENSION EXPENSE $291
2. Preparation of the journal entries to record
(a) pension expense
Dr Pension expense $291
Dr Plan assets (expected plan assets) $255
Dr Net gain -aoci6
Cr Prior service cost- oci 40
Cr PBO (service cost + interest cost)$512
($340+$172)
b. gains and losses
Dr Loss-oci 25
Dr Plan assets 25
(c) funding
Dr Plan assets $275
Cr cash 275
D. retiree benefits for 2021.
Dr PBO 300
Cr Plan assets 300
Working :
Projected benefit obligation ($2,450) x Discount rate (.07) = $172 Interest cost
Plan assets (fair value) ($2,550) x Expected return on plan assets (.10) = $255
Plan assets (fair value) ($2,550) x Actual return on plan assets (.09) =$230
Gain or (loss on plan assets) $255-$230 = ($25) loss
Service cost (given) =$340
Prior service cost (given)= 40
Benefit payments to retirees, December 31, 2013= $300
Cash contributions to pension fund, December 31, 2021 (given)= 275
Net gain or (loss) (given) = (6)Net gain–AOCI (2021 amortization
Exercise 10-2 Recording bond issuance at par, interest payments, and bond maturity LO P1 Brussels Enterprises issues bonds at par dated January 1, 2019, that have a $2,700,000 par value, mature in four years, and pay 6% interest semiannually on June 30 and December 31. 1. Record the entry for the issuance of bonds for cash on January 1. 2. Record the entry for the first semiannual interest payment and the second semiannual interest payment. 3. Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).
Answer:
June 30 Bond Interest Expense Dr $81000
Cash Cr $81000
(6%/2*$2,700,000)
December 31 Bond Interest Expense Dr $81000
Cash Cr $81000
Bonds Payable Dr $2,700,000
Cash Cr $2,700,000
Explanation:
Record the entry for the first semiannual interest payment and the second semiannual interest payment.
June 30 Bond Interest Expense Dr $81000
Cash Cr $81000
(6%/2*$2,700,000)
December 31 Bond Interest Expense Dr $81000
Cash Cr $81000
Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).
Bonds Payable Dr $2,700,000
Cash Cr $2,700,000
Which statement best conveys the bad news of the refusal?
a.We were able to save valuable resources that otherwise might have been spent on keeping out-of-warranty gear in working order and on missing peripherals such as monitors, keyboards, and mice.
b.To ensure compatibility, proper software licensing, and the same useful life of the equipment, we decided to accept only new and complete systems.
c.We regret to inform you that we cannot accept your used computing equipment as much as we appreciate your offer.
Answer: B
Explanation:proof
The grouping of living things according to similar characteristics is
Answer:
see the explanation
Explanation:
A species can be defined as a group of organisms with similar features, and these organisms are capable of breeding and produce fertile offspring. You are probably aware of the fact that horses and donkeys belong to the same kingdom, phylum, class, order, family as well as genus but they are from different species.
Use the following information to answer question. Madelyn owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for $100 each. It costs Madelyn $20,000 for the raw materials to produce the 1,000 pieces of pottery. She has invested $100,000 in her factory and equipment: $50,000 from her savings and $50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Madelyn can work at a competing pottery factory for $40,000 per year.
Required:
The economic profit at madelyn's pottery factory is:_________
Answer:
$30,000
Explanation:
According to the scenario, computation of the given data are as follows,
Total number of pieces per year = 1,000
Selling price per piece = $100 per piece
So, Total revenue = $100 × 1,000 = $100,000
Raw material = $20,000
Investment = $100,000
So, interest on investment = 10% × $100,000 = $10,000
Opportunity cost = $40,000
So, we can calculate the economic profit by using following formula,
Economic profit = Total revenue - Raw material - interest on investment - Opportunity cost
By putting the value, we get
Economic profit = $100,000 - $20,000 - $10,000 - $40,000
= $30,000
An organization whose capacity is on that portion of the average unit cost curve that falls as output rises: has a facility that is below optimum operating level and should build a larger facility. has a facility that is above optimum operating level and should reduce facility size. is suffering from diseconomies of scale. has utilization higher than efficiency. has expected output higher than rated capacity
Answer:
has a facility that is below optimum operating level and should build a larger facility.
Explanation:
In the case when the organization whose capacity should be on the average unit cost curve where it would be decline when the output rises so this means that it has a facility i.e. lower than the optimal level of operation and should established the larger facility
Hence, the first option is correct
And, the other options would be incorrect
The following information pertains to Carla Vista Company.
1. Cash balance per bank, July 31, $7,738.
2. July bank service charge not recorded by the depositor $48.
3. Cash balance per books, July 31, $7,774.
4. Deposits in transit, July 31, $3,110.
5. $2,426 collected for Carla Vista Company in July by the bank through electronic funds transfer. The collection has not been recorded by Carla Vista Company.
6. Outstanding checks, July 31, $696.
Required:
Prepare a bank reconciliation.
A bicameral legislature is made up of how many bodies?
O one
O two
O three
O four
Answer:
two
Explanation:
A bicameral legislature is made up of two bodies. Thus, option B is the correct option.
What is a bicameral legislature?A bicameral legislature, which is distinguished by having two distinct assemblies, chambers, or houses, is one that practices bicameralism. Unicameralism, in which all members discuss and vote as a single body, is distinct from bicameralism. Bicameralism will be used by about 40% of national legislatures throughout the world as of 2022, compared to 60% at the national level and significantly more at the subnational level for unicameralism.
The techniques used to elect or choose the members of the two chambers sometimes varied from jurisdiction to jurisdiction. This frequently results in the membership of the two chambers being significantly different. Primary legislation frequently has to be approved by majorities in both houses of the legislature in order to be passed. If this is the case, the legislature may be seen as the epitome of bicameralism.
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All of the following are potential exchanges between the fan and the event EXCEPT
Ticket purchases
Purchase of ancillary products
Purchase of sponsor products
Referrals
Answer:
Purchase of sponsor products
Explanation:
Copper and nickel electroless plating processes are under consideration for printed circuit boards. The copper process has fixed costs of $110,000 per year with a variable cost of $50 per batch. The nickel process has a fixed cost of $85,000 per year and a variable cost of $90 per batch. Determine the number of batches that must be produced each year in order for the processes to break even.
Answer:
see explanation
Explanation:
The question has missing sales price information, however explanations are provided below
Break even point is the level at which a company makes neither a profit nor a loss.
Break even point (units) = Fixed Costs ÷ Contribution per unit
Step 1 :
Find Contribution per unit of each process and add the unit contributions to find the total unit contribution
Contribution = Sales - Variable Costs
Step 2
Find the Total Fixed Costs for both the copper process and nickel process.
Step 3
Determine the sales mix for copper process and nickel process
Step 4
Calculate the Break even units for the 2 processes combined. After that multiply the respective mixes to the break even point
A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. For the students of the college, the visual appearance of the campus is _____________ and ___________. Thus, the visual appearance would be classified as a public good.
Suppose the college administrators estimate that the beautification initiative will cost $2,040. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 420 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $12.
The benefit of the beatification initiative, as suggested by the survey, is $ __________ Because the estimated benefit is ____________ than the
cost, the college administrators ______________ undertake the beautification in initiative.
The calculation of the benefit of the beatification initiative relied on the ability of the administrators to accurately capture the true willingness-to-pay of each student.
Which of the following scenarios would cause the survey used by the college administrators to yield misleading willingness-to-pay data? Check all that apply.
a. Students believe that if the initiative does not happen, the funds for the initiative Will not be spent elsewhere.
b. An equal number of male and female students were surveyed.
Answer:
non rival, non excludable
$5040
greater
will
a. Students believe that if the initiative does not happen, the funds for the initiative Will not be spent elsewhere.
Explanation:
A public good is a good that is non excludable and non rivalrous.
Because a student is enjoying the visual appearance of the campus, another student is not prevented from enjoying the visual appearance of the campus. This means that the beautification initiative is non rivalrous
There is no way to prevent any student from viewing the initiative. This means it is non excludable
Benefit can be calculated using the willingness to pay of student
the price a student is willing to pay would be dependent on the amount of benefit she expects to derive from the project
benefit = 420 x $12 = $5040
The beautification initiative generates a positive externality
A good or initiative has positive externality if the benefits to third parties not involved in production is greater than the cost
Because the good generates positive externality, the initiative should be carried out
If . Students believe that if the initiative does not happen, the funds for the initiative Will not be spent elsewhere, they would quote a lower willingess to pay
Oriole Company has issued three different bonds during 2022. Interest is payable annually on each of these bonds. 1. On January 1, 2022, 1,000, 8%, 5-year, $1,000 bonds dated January 1, 2022, were issued at face value. 2. On July 1, $854,000, 9%, 5-year bonds dated July 1, 2022, were issued at 101. 3. On September 1, $281,000, 7%, 5-year bonds dated September 1, 2022, were issued at 99. Prepare the journal entry to record each bond transaction at the date of issuance.
Answer:
Transaction 1
Debit : Cash ($1,000 x 1,000) $1,000,000
Credit : Bond Payable $1,000,000
Transaction 2
Debit : Cash ($854,000 x 101.30%) $865,102
Credit : Bond Payable $865,102
Transaction 3
Debit : Cash ($281,000 x 99%) $278,190
Credit : Bond Payable $278,190
Explanation:
On each issuance date recognize a cash inflow and a liability - Bond Payable to the extent of the amount paid on issue.
During the year, Walt who is self-employed travels from Seattle to Tokyo, Japan, on business. His time was spent as follows: two days travel (one day each way), two days business, and two days personal. His expenses for the trip were as follows (meals and lodging reflect only the business portion): Airfare $3,000 Lodging 2,000 Meals 1,000 Presuming no reimbursement, Walt's deductible expenses are: a.$3,500. b.$6,000. c.$4,500. d.$5,500.
Answer:
d.$5,500.
Explanation:
The computation of the deductible expense is shown below:
= Airfare + lodging + 50% of meals
= $3,000 + $2,000 + 50% of $1,000
= $3,000 + $2,000 + $500
= $5,500
hence, the deductible expense is $5,500
Here we take 100% of airfare & lodging but we took 50% for the meals
hence, the option d is correct
Use the following information to answer Questions 12 - 15. Below is selected data for Gertup Corporation as of 12/31/05: Gertup has maintained the same inventory levels throughout 2005. If end of year inventory turnover was increased to 12 through more efficient relationships with suppliers, how much cash would be freed up (pick closest number)
Answer:
the cash that should be freed up is $267
Explanation:
The computation of the cash that would be freed up is shown below:
As we know that
The inventory turnover is
= Cost of goods sold ÷ average inventory
12 = $14,800 ÷ average inventory
So, the average inventory is 1,233
Now the cash that should be freed up is
= 1,500 - 1,233
= $267
hence, the cash that should be freed up is $267
Brodrick Company expects to produce 20,000 units for the year ending December 31. A flexible budget for 20,000 units of production reflects sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. Assume that actual sales for the year are $480,000 (26,000 units), actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)
Answer: Check attachment
Explanation:
The flexible budget performance report for the year has been solved and attached.
Note that the selling price per unit was calculated as:
= 400,000 /20,000
= $20 per unit
Therefore, total sales was gotten as:
= 26000 × $20
= $520,000
Variable cost per unit was calculated as:
= 80,000/20,000
= $4 per unit
Then, total cost was:
= $4 × 26,000
= $104,000
Check attachment for further details.
How do the McDonald brothers propose to control the involvement Ray Kroc would have in their business?
Superior Inc. is starting a new project. It plans to develop an online platform that allows for 3D printing of online purchases. This would effectively reduce the online purchases' delivery times to minutes. It expects this new product to be a great success and bring rapidly growing profits in the first few years. After that, it expects the competition to kick in which will reduce the growth of annual profits. The dividends on Superior Inc.'s shares will be growing accordingly. Here is the exact schedule of expected future dividends:
Most recently paid dividend is $4.
Expected annual growth rate of dividends for the first 3 years is 50%.
Expected annual growth rate of dividends after that is 10%.
Discount rate for this company is 15%.
Required:
Calculate the price per share of stock of Superior Inc.
Answer:
P0 = $216.18147448015 rounded off to $216.18
Explanation:
The dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under DDM is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + [(Dn * (1+g) / (r - g)) / (1+r)^n]
Where,
D1, D2, ... , Dn is the dividend expected in Year 1,2 and so on g is the constant growth rate in dividends r is the discount rate or required rate of return
P0 = 4 * (1+0.5) / (1+0.15) + 4 * (1+0.5)^2 / (1+0.15)^2 +
4 * (1+0.5)^3 / (1+0.15)^3 + [(4 * (1+0.5)^3 * (1+0.1) / (0.15 - 0.1)) / (1+0.15)^3]
P0 = $216.18147448015 rounded off to $216.18
A year-end review of accounts receivable and estimated uncollectible percentages revealed the following: Category Accounts Receivable Uncollectible percentages 1-30 days $40,000 1.5% 31-60 days $10,000 8.0% 61-90 days $6,000 15.0% The beginning balance of Allowance for Doubtful Accounts is $400 (credit). Based on this information, the bad debt expense for the year is:
Answer:
$1,900
Explanation:
Calculation to determine what the bad debt expense for the year is:
Accounts Receivable Uncollectible percentages 1-30 days $40,000* 1.5% =$600
31-60 days $10,000 *8.0% =$800
61-90 days $6,000 *15.0% =$900
Total $2,300
Bad debt expense =$2,300-400
Bad debt expense =$1,900
Therefore Based on this information, the bad debt expense for the year is:$1,900
The purpose of cascading the balanced scorecard throughout the organization is: _____________
a. To help all employees think about, discuss, and implement the corporate strategy.
b. To ensure strict hierarchical control of the organization.
c. To customize the organizational mission and goals for every employee.
d. To create detailed performance measures for each employee
Answer:
b. To ensure strict hierarchical control of the organization.
The purpose of cascading the balanced scorecard is b. To ensure strict hierarchical control of the organization.
What is cascading?Cascading is a term that describes the positions in an organization and how an organization is been set up from higher heirachy to lower heirachy.
Therefore, with cascading, hierarchical control of the organization can be checked and be monitored.
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Chevron Phillips (CP) has put into place new laboratory equipment for the production of chemicals; the cost is $1,770,000 installed. CP borrows 48% of all capital needed, and the borrowing rate is 13.4%. In the 1st year, 25% of the principal borrowed will be paid back. The throughput rate for in-process test samples has increased the capacity of the lab, saving a net of $X per year. In this 1st year, depreciation is $362,000 and taxable income is $329,000.
Required:
a. What is the gross income or annual savings?
b. Determine the income tax for the 1st year assuming a marginal tax rate of 40%.
c. What is the after-tax cash flow for the 1st year?
Answer:
Chevron Phillips (CP)
a. The gross income or annual savings is:
= $804,846.
b. The income tax for the 1st year assuming a marginal tax rate of 40% is:
= $131,600.
c. The after-tax cash flow for the 1st year is:
= $559,400.
Explanation:
a) Data and Calculations;
Cost of new laboratory equipment = $1,770,000
Borrowed capital = $849,600 ($1,770,000 * 48%)
Borrowing rate = 13.4%
Borrowing interest expense for the first year = $113,846
Depreciation = $362,000
Taxable income = $329,000
Gross savings = $X
$X = $804,846 ($113,846 + $362,000 + $329,000)
Income tax for the 1st year:
Marginal tax rate = 40%
Taxable income = $329,000
= $131,600 ($329,000 * 40%)
After-tax Cash Flows for the 1st year:
Gross savings = $804,846
Interest expense 113,846
Depreciation 362,000
Taxable income $329,000
Income tax 131,600
Net income $197,400
Cash Flows:
Net income $197,400
Depreciation 362,000
After-tax cash flow $559,400
16. The selling of goods and/or services to a customer is called
O A. purchasing
B. food service.
O C. service industry.
D. retail
Answer: retail
Explanation:
Retail refers to the sale of products and/or services to a customer. Thus option (D) is correct.
What are customer?A client is a person who purchases goods, services, or ideas from a seller, vendor, or supplier in exchange for money or another useful consideration. This definition applies to sales, commerce, and economics. A customer is an individual or business that purchases another company's goods or services
An individual or business that purchases goods or services from another company is known as a customer. Customers are crucial to businesses because they generate income; without them, they would cease to exist.
Therefore, option(D) is correct.
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Alexa Inc. purchased equipment in 2018 for $50,000 with no residual value. On December 31, 2020, accumulated depreciation using the straight-line method for financial reporting was $15,000. For tax purposes, Alexa uses MACRS depreciation resulting in $35,600 in accumulated depreciation for tax purposes on December 31, 2020. Taxable income was $100,000 for 2020 and the company's tax rate is 25%.
Required:
a. Determine the GAAP basis of equipment (net) on December 30, 2020.
b. Determine the tax basis of equipment on December 30, 2020.
Answer:
a. $35,000
b. $14,400
Explanation:
The computation is shown below;
a. GAAP basis of equipment (net) is
Purchase equipment $50,000
Less: accumulated depreciation for finnacial reporting -$15,000
Equipment (net) $35,000
b. Tax bais of equipment is
Purchase equipment $50,000
Less: accumulated deprecation for tax purposes - $35,600
Equipment net $14,400
The above should be considered and relevant too
Bob lives in Miami and runs a business that sells guitars. In an average year, he receives $793,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Bob does not operate this guitar business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this guitar business.
Identify each of Bob’s costs as either an implicit cost or an explicit cost of selling guitars.
a. The wholesale cost for the guitars that Bob pays the manufacturer
b. The wages and utility bills that Bob pays
c. The salary Bob could earn if he worked as a financial advisor
d. The rental income Bob could receive if he chose to rent out his showroom
Answer and Explanation:
The identification of each transaction as an explicit cost or implicit cost is as follows
a. It is an explicit cost as the cost would be paid to the factors of production
b. It is also an explicit cost as the cost would be paid to the factors of production
c. It is an implicit cost as it is considered to be the hidden cost
d. It is also an implicit cost as it is considered to be the hidden cost
Florida Seaside Oil Exploration Company is deciding whether to drill for oil off the northeast coast of Florida. The company estimates that the project would cost $4.24 million today. The firm estimates that once drilled, the oil will generate positive cash flows of $2.12 million a year at the end of each of the next four years. While the company is fairly confident about its cash flow forecast, it recognizes that if it waits two years, it would have more information about the local geology as well as the price of oil. Florida Seaside estimates that if it waits two years, the project would cost $4.59 million. Moreover, if it waits two years, there is a 85% chance that the cash flows would be $2.306 million a year for four years, and there is a 15% chance that the cash flows will be $0.705 million a year for four years. Assume that all cash flows are discounted at a 8% WACC. Will the company delay the project and wait until they have more information
Answer:
The company will invest now and not delay
Explanation:
In order to determine the better option, we have to determine the Net present value of each of the option.
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
The option with the higher NPV would be chosen
First option
Cash flow in year 0 = $-4.24 million
Cash flow in year 1 = $2.12 million
Cash flow in year 2 = $2.12 million
Cash flow in year 3 = $2.12 million
Cash flow in year 4 = $2.12 million
I = 8%
NPV = 2.78 million
Second option
NPV of the cash flow with $2.306 million a year for four years
Cash flow in year 0 = 0
Cash flow in year 1 = 0
Cash flow in year 2 = $-4.59 million.
Cash flow in year 3 = $2.306
Cash flow in year 4 = $2.306 million
Cash flow in year 5 = $2.306 million
Cash flow in year 6 = $2.306 million
I = 8
NPV = $2.61 million
NPV when cash flows would be $0.705 million
Cash flow in year 0 = 0
Cash flow in year 1 = 0
Cash flow in year 2 = $-4.59 million.
Cash flow in year 3 = $0.705 million
Cash flow in year 4 = $0.705 million
Cash flow in year 5 = $0.705 million
Cash flow in year 6 = $0.705 million
I = 8 %
NPV = -1.93 million
NPV of the second option = (0.85 x $2.61 million) + (0.15 x 0) = $2.22 million
The NPV when cash flows would be $0.705 million is zero because the NPV is negative and thus would not be undertaken.
The company will invest now and not delay because the NPV of not waiting is greater than the NPV of delaying
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Income statement data for Huffman Pharmaceuticals are provided below. Income Statements 12/31/201712/31/2016 Sales Revenue$598,000$724,000 Cost of Goods Sold337,000427,000 Gross Profit261,000297,000 Operating Expenses137,000146,000 Operating Income124,000151,000 Other Income (Expense)60,00023,000 Income before Tax184,000174,000 Income Tax Expense71,00076,000 Net Income$113,000$98,000 Using trend analysis, what percentage should be assigned to Gross Profit
Answer:
Huffman Pharmaceuticals
The percentage that should be assigned to Gross Profit, using trend analysis, is:
= 42%.
Explanation:
a) Data and Calculations:
Income Statements 12/31/2017 12/31/2016
Sales Revenue $598,000 $724,000
Cost of Goods Sold 337,000 427,000
Gross Profit 261,000 297,000
Operating Expenses 137,000 146,000
Operating Income 124,000 151,000
Other Income (Expense) 60,000 23,000
Income before Tax 184,000 174,000
Income Tax Expense 71,000 76,000
Net Income $113,000 $98,000
Income Statements 12/31/2017 12/31/2016
Sales Revenue $598,000 $724,000
Cost of Goods Sold 337,000 427,000
Gross Profit 261,000 297,000
Ratio of Gross profit to
Sales Revenue
2017 = $261,000/$598,000 * 100 = 43.65% = 44%
2016 = $297,000/$724,000 * 100 = 41%
Average Gross profit ratio for the two years = 42.5% (44 + 41)/2.
b) Huffman's trend analysis is the use of its past financial performance indices to predict its future financial performances. Past performances are expressed in percentages, forming the basis for predicting and comparing future performances of an entity.
Write a short paragraph describing how segmentation could make your marketing efforts more effective. In your response to your manager, provide at least one specific example of how using segmentation could more effectively reach customers. In addition, describe at least two specific action steps you would suggest taking in order to effectively segment your customers.
Explanation:
Market segmentation consists of directing the business strategy to satisfy the desires and needs of a specific audience.
The use of segmentation can make marketing efforts more effective because the company finds out the profile of its customer, its needs, its income, its location, and in this way develops or improves its products and services in order to satisfy its customers. potential. An example of market segmentation is demographic segmentation that, through data, identifies consumer information such as age, income, gender to improve the product's strategy.
For demographic segmentation to be effective, it is necessary for companies to conduct market research in order to delimit their audience and then determine communication from the data and information found, in order to attract and retain consumers to increase their positioning and profitability. in the market.
Yuri owns just one ship, he calls it Previt. The ship is worth $25 million dollars. If the ship sinks, Yuri loses $25 million. The probability that it will sink is .02. Yuri's total wealth, including the value of the ship is $50 million. He is an expected utility maximizer with utility U(W) equal to W2. What is the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
Answer:
$745,000
Explanation:
Calculation to determine the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
First step is to calculate the Expected Utility (√W)
Expected Utility = (98% x √$25,000,000) + (2% x √$0)
Expected Utility = $4,900
Second step is to calculate the Fair premium of insurance policy using this formula
Fair premium of insurance policy = Probability of loss x Size of loss
Let plug in the formula
Fair premium of insurance policy = 2% x $25,000,000
Fair premium of insurance policy = $500,000
Third step is to calculate the Maximum premium using this formula
Maximum premium = Maximum utility - Expected Utility²
Let Plug in the formula
Maximum premium = $25,000,000 - $4,900²
Maximum premium = $25,000,000 - $24,010,000
Maximum premium= $990,000
Now let calculate the Maximum amount willing to pay using this formula
Maximum amount willing to pay = (Fair premium + Maximum premium) / 2
Let plug in the formula
Maximum amount willing to pay= ($ 500,000 + $990,000) / 2
Maximum amount willing to pay=$1,490,000/2
Maximum amount willing to pay= $745,000
Therefore the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship is $745,000