Answer:Private good, Public good, Common Resource.
Explanation:
a. A new drum set for you to play in your friend's band---Private good
----A private good is defined as a good that is rival in consumption which means that no two people can utilize at the same time and excludable which means the owner of the property can decide , who and how it should be used.
b. A large, beautiful clock in a park----Public good
When a good is non rival in consumption meaning that utilizing the good does not prevent or decrease the chances of other people using it and Non- excludable meaning that due to its location, one person cannot deprive another person from seeing it as it is open for all to see and use, then the good is a Public good.
c. A dock on a lake that is open to the public----Common Resource
This refers to when a good is rival in consumption and non excludable meaning that By rival in consumption, it means that using the good by an individual reduces the value of it (eg here is the dock )
By nonexcludable because the good is free for everyone and anybody has the privilege to enjoy its use in common, here, the Lake.
An investment had a nominal return of 11.1 percent last year. If the real return on the investment was only 7.3 percent, what was the inflation rate for the year
Answer:
inflation rate= 3.8%
Explanation:
Giving the following information:
Nominal return= 11.1 percent
Real return= 7.3 percent
The real return on investments is the difference between the nominal return and the inflation rate.
Real return= nominal return - inflation rate
inflation rate= nominal return - real return
inflation rate= 11.1 - 7.3
inflation rate= 3.8%
Refer to Exhibit 26- 1. If average-cost pricing is imposed on the natural monopoly firm, what price is charged?
a. P1
b. P2
c. P3
d. any of the three prices
Answer: b. P2
Explanation:
Average Cost Pricing regulations being imposed on natural monopolies means that the regulators want them to charge customers a price that is close to or is the same as the Average cost it costs to produce goods and services.
The price that the Monopoly will charge is therefore the intersection between the Average Total Cost Curve and the Demand curve.
From the graph that price is P2 so that is the price that will be charged.
The specific identification method (select all that apply): matches each unit of inventory with its actual cost is not an acceptable method of accounting would be beneficial to a company that makes inexpensive products with high sales volume would be beneficial to a company that makes fine jewelry
Answer:
The specific identification methoda) matches each unit of inventory with its actual cost
d) would be beneficial to a company that makes fine jewelry
Explanation:
The specific identification inventory valuation method is one of the inventory valuation method allowed by U.S. GAAP. The other allowed methods are weighted average; and first in, first out (FIFO). The specific identification method identifies every item kept in inventory and its price and tracks it from purchase to resale. Some types of businesses that use the specific identification method are jewelry companies and stores, car dealerships, art galleries, and furniture stores, who can easily identify each item and track the cost and price respectively.
The specific identification method of costing inventories is used when finding out the cost of the ending inventory.
Correct option is A and D.
The specific identification method is "matches each unit of inventory with its actual cost and would be beneficial to a company that makes fine jewelry."
One of the inventory methods permitted by US GAAP is the particular identification inventory valuation method. Weighted average and first in, first out are two alternative strategies that can be used. Every item in inventory, as well as its price, is identified and tracked using this system, from purchase through resale.
Jewelry companies and stores, auto dealerships, art galleries, and furniture stores are just a few examples of enterprises that use the particular identification method to quickly identify each item and track the cost and pricing.
To know more about specific identification method, refer to the link:
https://brainly.com/question/25056275
Under which model of oligopoly are firms more likely to engage in a price war, driving down prices to marginal cost and resulting in no profit?
Answer:
The price leardership model of oligopoly
According to Nikki, the design and development manager at Holden Outerwear, it is difficult for the company to push its vendors toward new developments because the vendors:
Answer: b. do not want to develop products that may not get used.
Explanation:
According to the case study, Manager Nikki Brush tells of how they introduce new ways of doing things by being able to encourage and push their vendors in a way that they are not used to. She does admit though that it is getting harder to do so because the vendors are seeing their costs rise and don't want to make goods that people might not want to use because they are new and untested.
The Case in question is attached.
A company borrowed cash from the bank by signing a 5-year, 8% installment note. The present value for an annuity (series of payments) at 8% for 5 years is 3.9927. The present value of 1 (single sum) at 8% for 5 years is .6806. Each annual payment equals $75,000. The present value of the note is:
Answer: $299,452.50
Explanation:
The company will pay back $75,000 every year for 5 years. This is an Annuity as the payments are constant.
The Present Value = Annuity * ( Present Value Interest Factor of an Annuity for the year and interest)
Present Value = 75,000 * 3.9927 ( Present value Interest Factor of an Annuity at 8% for 5 years)
= $299,452.50
Often in business the greater the risk, the __________.
Answer:
greater the potential reward
Explanation:
addresses unknown parameters in the real world that parallel descriptive measures of very large population? A. The sample mean / B. Statistic Inference C. The central Limit Theorem
Answer:
The answer is "Option B".
Explanation:
Inferential statistics was its process through which data collection is used to conclude the property or even an implicit wave function. Its analysis infers these same features of inhabitants. Its purpose is to use statistical strategies to determine important assumptions regarding sample size, and other choices were wrong which can be defined as follows:
In option A, it defines the average of the given values, that's why it is wrong.In option C, It is used to0 describes a number of samples that's why it is wrong.Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $4 per share. It is going to employ a one-for-six reverse stock split to increase the stock value. Assume Dean Smith owns 156 shares.
a. How many shares will he own after the reverse stock split? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of shares b. What is the anticipated price of the stock after the reverse stock split? (Do not round intermediate calculations and round your answer to 2 decimal places.) Anticipated stock price $c. Because investors often have a negative reaction to a revere stock split, assume the stock only goes up to 80 percent of the value computed in part b. What will the stock’s price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) Stock price $d. How has the total value of Dean Smith’s holdings changed from before the reverse stock split to after the reverse stock split (based on the stock value computed in part c)? To get the total value before and after the split, multiply the shares held times the stock price.(Input the amount as a positive value. Do not round intermediate calculations and round your answer to 2 decimal places.) Dean Smith’s holdings $
Answer:
A. Post-split shares 26 shares
B.Post-split stock price$24
C.Adjusted stock price$19.2
D.Pre split value $624.00
Post-split value $499.2
Change in value=-$124.8
Explanation:
Worst Buy Company
a. Calculation for Post-split shares
Post split share= Pre-split shares × Split ratio=156 × 1/6=26 shares
b. Calculation for Post-split stock price
Post split stock price= Pre-split price × (1 / Split ratio)
=$4 × 6/1=$24.00
c. Calculation for Adjusted stock price
Adjusted stock price = Adjustment ratio × Post-split price=.80 × $24.00=$19.2
d. Calculation for Pre-split value
Pre split value = Pre-split shares × Pre-split price=
156 × $4=$624.00
Post-split value = Post-split shares × Post-split price=26 × $19.2=$499.2
Change in value = Post-split value – Pre-split value=$624.00 – $499.2
Change in value=-$124.8
The value of Dean Smith's holdings decreased by $124.8
Suppose you are evaluating two mutually exclusive projects, A and B. Project A costs $350 and has cash flows of $250 and $250 in the next 2 years, respectively. B costs $300 and generates cash flows of $300 and $100. What is the crossover rate for these projects
Answer:
The answer is 30%
Explanation:
Solution
Given that:
Project A
Project A costs = $350
Cash flows =$250 and $250 (next 2 years)
Project B
Project B costs =$300
Cash flow = $300 and $100
Now what is the crossover rate for these projects.
Thus
Year Project A Project B A-B B-A
0 -350 -300 -50 50
1 250 300 -50 50
2 250 100 150 -150
IRR 27% 26% 30% 30%
So,
CF = CF1/(1+r)^1 + CF2/(1+r)^2
$-50 = $-50/(1+r)^1 + $150/(1+r)^2
r = 30%
CF = CF1/(1+r)^1 + CF2/(1+r)^2
$50 = $50/(1+r)^1 + $-150/(1+r)^2
r = 30%
Hence, the cross over rate for these project is 30%
Note:
IRR =Internal rate of return
CF =Cash flow
r = rate
Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 25,000 to 100,000 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Memory Chips Produced 40,000 60,000 90,000 Total Variable Costs $1,400,000 D J Total Fixed Costs 800,000 E K Total Costs $2,200,000 F L Variable Costs per Unit A G M Fixed Cost Per Unit B H N Total Cost per Unit C I O Find the missing amounts for A-O A. ______________ B. ______________ C. ______________ D. ______________ E. ______________ F. ______________ G. ______________ H. ______________ I. _______________ J. ________________ K. _______________ L. _________________ M. _________________ N. _____________________ O. __________________
Answer and Explanation:
The computation of the missing amount is as follows
Components produced 40,000 60,000 90,000
Total cost
Total variable cost $1,400,000 $2,100,000 $3,150,000
(60,000 × $35) (90,000 × $35)
Total fixed cost $800,000 $800,000 $800,000
Total cost $2,200,000 $2,900,000 $3,950,000
Cost per unit
Variable cost per unit $35 $35 $35
($1,400,000 ÷ 40,000)
Fixed cost per unit $20 $13.33 $8.89
($800,000 ÷ 40,000) ($800,000 ÷ 60,000) ($800,000 ÷ 90,000)
Total cost per unit $55 $46.33 $43.89
The total cost per unit come from
= Variable cost per unit + fixed cost per unit
If economies of scale are so pronounced in an industry that only one firm can survive in the industry, this firm is called a(n) __________ monopoly.
Answer:
The answer is a natural monopoly
Explanation:
A natural monopoly is one of the forms monopoly that exists due to the high capital needed or powerful economies of scale of conducting a business in a specific industry. A natural monopoly will naturally have very high fixed costs, meaning that it is almost impossible to have more than one firm producing the good.
A firm that is blessed with a natural monopoly might be the only provider of a product or service in an industry or geographic location. Example of natural monopoly is the electricity grid.
You will pay $7,000 now to purchase a perpetuity which will pay you and your heirs $340 at the end of each year, forever. What is the rate of return on this perpetuity?
Answer:
4.86%
Explanation:
Interest rate of a perpetuity = amount / present value
$340 / $7,000 = 0.048571 = 4.86%
I hope my answer helps you
Answer:
4.86%
Explanation:
Interest rate of a perpetuity = amount / present value
$340 / $7,000 = 0.048571 = 4.86%
"A firm's peak borrowing needs will probably be overstated if it bases its monthly cash budget on the assumption that both cash receipts and cash payments occur uniformly over the month but in reality receipts are concentrated at the beginning of each month." True or False
Answer: True
Explanation:
If the firm borrows on the assumption that it will be receiving cash throughout the month this means that they are borrowing because they would like to offset costs as they come in then pay as they receive money.
If they however receive all the money that they were to receive for the month in the beginning of the month, there would be no need to borrow as much to offset costs because the money received will act as a reserve which will offset the payments that will be uniform throughout the month.
Barredo Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.60 Direct labor $ 3.65 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.80 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.45 If 4,000 units are sold, the variable cost per unit sold is closest to:
Answer:
The variable cost per unit sold is closest to $11.90.
Explanation:
Only variable manufacturing costs are included in product costing under the variable costing method.
Both the fixed manufacturing costs and non-manufacturing costs are treated as period costs, expensed in the profit and loss.
Calculation of Variable Unit Cost
Direct materials $ 6.60
Direct labor $ 3.65
Variable manufacturing overhead $ 1.65
Total Variable Unit Cost $11.90
Conclusion :
The variable cost per unit sold is closest to $11.90.
The potential sources of noise and bias in accounting data are: Group of answer choices Rigidity in accounting rules Random forecast errors Systematic reporting choices made by corporate manager to achieve specific objectives All of the above None of the above
Answer: All of the above
Explanation:
Accounting data can have bias or data that should not necessarily be included due to a couple of factors.
Accounting rules are too rigid because when they are applied, the Accountants will ibe unable to remove the noise and entries made by Management without removing a substantial part of Accounting records. There is need for more flexible rules so that Accountants can restrict how easily Management can introduce bias.
Accounting works a lot of forecasted information and it is impossible to make completely accurate forecasts as events can simply happen out of nowhere and disrupt operations. Also there is Human error in the forecasts so this can lead to noise and bias.
Finally, Accounting bias and noise can be linked to pressure from Corporate management to report data in a certain way for a myriad of reasons such as to improve management benefits if they are performance related, to avoid taxes, and to avoid Government regulations amongst others.
Your father has $500,000 invested at 8%, and he now wants to retire. He wants to withdraw $50,000 at the end of each year, beginning at the end of this year. How many years will it take to exhaust his funds, i.e., run the account down to zero
Answer:
The number of years is about 21 years
Explanation:
A scheme that allows the withdraw fixed amount of money for a number of years is referred to as annuity
The number of years required to exhaust the fund can be determined using the present of annuity formula
PV = A × (1 - ((1+r)^(-n))/n)
where- PV- Present value, A- annual cash flow, n- number of years , r- interest rate
500,000= 50000 × (1- (1.08)^(-n)/0.08
500,000/50,000= (1- (1.08)^(-n)/0.08
10 =(1- (1.08)^(-n)/0.08
n = 21
The number of years is about 21 years
On November 1, 2018, Master's Co. borrows $500,000 from its bank for five years at an annual interest rate of 10%. According to the terms of the loan, the principal amount will not be due for five years. Interest accrues monthly on the first day of each month, beginning November 1, 2018. With respect to this borrowing, Master's December 31, 2018, balance sheet included only a long-term note payable of $500,000. As a result:_______
a. Liabilities are understated by $12,500 accrued interest payable
b. Liabilities are understated by $4,167 accrued interest payable
c. The December 31, 2018, financial statements are accurately presented
d. Liabilities are understated by $8,333 accrued interest payable
Answer:
b. Liabilities are understated by $4,167 accrued interest payable
Explanation:
Danaher Woodworking Corporation produces fine furniture. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated lathe. Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
1. Estimated total fixed manufacturing overhead $26,190
2. Capacity of the lathe 270 hours
Actual results:
1. Actual total fixed manufacturing overhead $26,190
2. Actual hours of lathe use 240 hours
Required:
a. Calculate the predetermined overhead rate based on capacity.
b. Calculate the manufacturing overhead applied.
c. Calculate the cost of unused capacity.
Answer:
a. Calculate the predetermined overhead rate based on capacity.
predetermined overhead rate = $26,190 / 279 hours = $93.87 per hourb. Calculate the manufacturing overhead applied.
applied manufacturing overhead = $93.87 per hour x 240 hours = $22,528.80 ≈ $22,529c. Calculate the cost of unused capacity.
cost of unused capacity = (279 hours - 240 hours) x $93.87 per hour = 39 x $93.87 per hour = $3,660.93 ≈ $3,661or
$26,190 - $22,529 = $3,661Rick, who is single, has been offered a position as a city landscape consultant. The position pays $141,800 in cash wages. Assume Rick has no dependents. Rick deduct the standard deduction instead of itemized deductions and he is not eligible for the qualified business income deduction. (Use the tax rate schedules.)
Required:
a. What is the amount of Rick’s after-tax compensation (ignore payroll taxes) and his income tax liability?
b. Suppose Rick receives a competing job offer of $102,500 in cash compensation and nontaxable (excluded) benefits worth $4,900.
Answer:
I used the 2020 standard deduction and income tax brackets to calculate the answer.
a. What is the amount of Rick’s after-tax compensation (ignore payroll taxes) and his income tax liability?
Rick's gross income $141,800
- standard deduction $12,400
taxable income $129,400
income taxes = (10% x $9,875) + (12% x $30,250) + (22% x $45,400) + (24% x $43,875) = $25,135.50
after tax income = $141,800 - $25,135.50 = $116,664.50
b. Suppose Rick receives a competing job offer of $102,500 in cash compensation and nontaxable (excluded) benefits worth $4,900.
Rick's gross income $102,500
- standard deduction $12,400
taxable income $90,100
income taxes = (10% x $9,875) + (12% x $30,250) + (22% x $45,400) + (24% x $4,575) = $15,703.50
after tax income = $102,500 - $15,703.50 + $4,900 = $91,696.50
Suppose GDP in this country is $900 million. Enter the amount for consumption. National Income Account Value (Millions of dollars) Government Purchases ( G ) 250 Taxes minus Transfer Payments ( T ) 325 Consumption ( C ) Investment ( I )
Answer:
Consumption ( C ) = $325 million
Explanation:
Given:
GDP = $900 million:
Government Purchases ( G ) = $250 million
Taxes minus Transfer Payments ( T ) = $325 million
Investment ( I ) = $275 million
Find:
Consumption ( C )
Computation:
GDP = C + I + G
$900 million = Consumption ( C ) + $250 million + $325 million
Consumption ( C ) = $900 million - [$250 million + $325 million]
Consumption ( C ) = $325 million
Exercise 9-17 Flexible Budget Performance Report [LO9-1, LO9-2, LO9-3, LO9-4]
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
Fixed Component
per Month Variable
Component per Job Actual Total
for February
Revenue $ 275 $ 38,500
Technician wages $ 8,100 $ 7,950
Mobile lab operating expenses $4,800 $ 33 $ 9,590
Office expenses $ 2,400 $ 2 $ 2,550
Advertising expenses $1,590 $ 1,660
Insurance $ 2,850 $ 2,850
Miscellaneous expenses $ 960 $ 2 $ 565
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $33 per job, and the actual mobile lab operating expenses for February were $9,590. The company expected to work 150 jobs in February, but actually worked 160 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Answer:
AirQual Test Corporation
Flexible Budget Performance Report for February:
Fixed Variable Flexible Actual
Component Budget Total
Revenue $ 275 $38,500 $ 38,500 0 None
Technician wages $ 8,100 $8,100 $ 7,950 150 F
Mobile lab operating
expenses $4,800 $ 33 $10,080 $ 9,590 490 F
Office expenses $ 2,400 $ 2 $2,720 $ 2,550 170 F
Advertising expenses $1,590 $1,590 $ 1,660 70 U
Insurance $ 2,850 $2,850 $ 2,850 0 None
Miscellaneous expenses $ 960 $ 2 $1,280 $ 565 715 F
Explanation:
Fixed Component Variable Budget Actual
Revenue $ 275 $41,250 $ 38,500
Technician wages $ 8,100 $8,100 $ 7,950
Mobile lab operating
expenses $4,800 $ 33 $9,750 $ 9,590
Office expenses $ 2,400 $ 2 $2,700 $ 2,550
Advertising expenses $1,590 $1,590 $ 1,660
Insurance $ 2,850 $2,850 $ 2,850
Miscellaneous expenses $ 960 $ 2 $1,260 $ 565
b) Variable elements for the flexible budget:
1) Mobile lab operating expenses = $4,800 + ($33 x 160) = $10,080
2) Office Expenses = $2,400 + ($2 x 160) = $2,720
3) Miscellaneous expenses = $960 + ($2 x 160) = $1,280
c) A flexible budget is a budget that is flexed with regard to the volume of activity, with respect to the variable elements. This budget type changes in value as a result of the changes in the volume of activity. It is different from a static budget, which does not change in value following the level of activity and does not account for changing incomes and expenses.
Certain car companies offer performance cars at affordable prices, but in doing so they contribute to climate and environmental issues. These car companies overlook the .................. philosophy.
Can you complete the gap?
Answer:
Kaizen Philosophy
Explanation:
Kaizen philosophy refers to good change. It is a Japanese term in which the companies are required to improve their processes continuously. The companies which offer low cost car vehicles are overlooking Kaizen principle because they are contributing to environment pollution. Kaizen principle focuses on new improvements and abolishes old concepts.
Paid-ln Capital:
Common Stock—$10 Par Value; 350,000 shares authorized, 30,000 shares issued and outstanding : $300,000
Paid-ln Capital in Excess of Par—Common 310,000
Total Paid-ln Capital 610,000
Retained Earnings 161,000
Total Stockholders' Equity 771,000
Feb 6. Declared a 5% stock dividend on common stock. The market value of Patrick's stock was $27 per share.
15 Distributed the stock dividend.
Jul 29 Purchased 1 , 700 shares of treasury stock at $27 per share.
Nov. 27 Declared a $0. 10 per share cash dividend on the common stock outstanding.
Requirements
a. Record the transactions in the general journal.
b. Prepare a retained earnings statement for the year ended December31, 2016. Assume Fleck's net income for the year was $85,000.
c. Prepare the stockholders' equity section of the balance sheet at December 31,2016.
Answer:
a. General Journal:
Date Description Debit Credit
Feb. 6
Stock Dividend (Retained earnings) $15,000
Stock Dividend Payable $15,000
To record the declaration of 5% stock dividend or new 1,500 shares
Feb. 15
Stock Dividends Payable $15,000
Common Stock $15,000
To record the distribution of the stock dividend
July 29:
Treasury Stock $17,000
Paid-in Capital in Excess of Par $28,900
Cash Account $45,900
To record the repurchase of 1,700 shares of treasury stock at $27 each.
Nov. 27:
Cash Dividend $2,980
Dividend Payable $2,980
To record the declaration of a $0.10 per share cash dividend on 29,800 common stock shares outstanding
b. Retained Earnings Statement for the year ended December 31, 2016:
Retained Earnings b/f $161,000
Dividends (stock) (15,000)
Dividends (cash) (2,980)
Ending balance
c. Stockholders' Equity Section of the Balance Sheet at December 31, 2016:
Paid-in Capital:
Common Stock—$10 Par Value; 350,000 shares
authorized, 31,500 shares issued and outstanding : $315,000
Treasury Stock, 1,700 shares (17,000)
Paid-ln Capital in Excess of Par—Common 281,100
Total Paid-in Capital 579,100
Retained Earnings 143,020
Total Stockholders' Equity $722,120
Explanation:
a) Stock Dividend: 5% of stock outstanding was 1,500 (30,000 x 5%). The effect of the stock dividend is to increase the Common Stock shares from 30,000 to 31,500 shares. This is also reflected in the Common Stock account at the par value of $10, totalling $15,000 (1,500 x $10). This is because the market value of $27 per share does not involve any cash flows for the entity, but an inflow for the stockholders who decide to sell their shares at that point. The Retained Earnings is also reduced by $15,000, just as it is in the case of cash dividend.
b) Paid-in Capital in Excess of Par:
beginning balance $310,000
Treasury stock (28,900)
ending balance $281,100
This account reflects the changes in Treasury stock above and below the par values. It is also used to record the above and below the par values when shares are issued.
c) Treasury Stock: This is a contra account to the Common Stock. It records the repurchase of entity's own stock. Two methods are allowed for accounting for treasury stock. One is the par value method, where the differences in par value are recorded in the Paid-in Capital in Excess of Par. The other method is the costing method, where the differences in par value are recorded in the Treasury stock account.
The production budget for manner company shows units to be produced as follows: july, 630: august 690, and september 550. Each unit produced requires three hours of direct labor. The direct labor rate is currently $16 per hour but is predicted to be $16.75 per hour in september.
Prepare a direct labor budget for the months July, August, and September.
Answer:
Results are below.
Explanation:
Giving the following information:
Production:
July, 630
August 690
September 550
Each unit produced requires three hours of direct labor.
The direct labor rate is currently $16 per hour but is predicted to be $16.75 per hour in September.
Direct labor budget July:
Direct labor hours required= 630*3= 1,890
Direct labor cost= 1,890*16= $30,240
Direct labor budget August:
Direct labor hours required= 690*3= 2,070
Direct labor cost= 2,070*16= $33,120
Direct labor budget September:
Direct labor hours required= 550*3= 1,650
Direct labor cost= 1,650*16.75= $27,637.5
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 11.54%. What is the company's cost of equity capital? Round your answer to two decimal places.
Answer:
Cost of equity = 14.43%
Explanation:
Weigheted Average cost of capital is computed using the formula below:
WACC = (Wd×Kd) + (We×Ke)
Kd= aftre tax cost of debt= 12%× (1-0.4)= 7.2%
Wd =Proportion of debt= 40%
We = proportion of equity = 60%
Ke= cost of equity.
let the cost of equity be "y"
WACC = 11.54
11.54 = (40%× 7.2%) + (60% × y)
0.1154 = 0.0288 + 0.6y
0.1154 - 0.0288 = 0.6y
y =(0.1154 - 0.0288)/0.6
y = 0.1443 × 100
y =14.43%
Cost of equity = 14.43%
An investor buys a 10-year, 7% coupon bond for $1,050, holds it for 1 year, and then sells it for $1,040. What was the investor's rate of return?
Answer:
The answer is 5.71%
Explanation:
Solution
Given that
Coupon rate = 7%
Bond = $1050
Sale of the bond = $1040
n = 10 years, n = 1 year
Now we find the investor's rate of return
Thus
Coupon payment = 7%* 1000
=70
1050 = 70/(1+r) + $1,040/(1+r)
r= 5.71%
Therefore the rate of return of the investor is 5.71%
or
Rate of return = (P1-P0+ Interest ) /P0
= (1040 -1050 + 70 )/1050
= .0571 or 5.71%
Your customer, age 68, that has an IRA account at your firm valued at $500,000, passes away. The customer leaves the account to his son, age 38. He has no need for current income as he is still working, and wishes to know his best option to minimize taxes. He expects to retire in 22 years, at which time, he will need the funds to pay for annual living expenses. You should advise the son to:
Answer:
He should roll the funds over into a new IRA in the spouse's name
Explanation:
Since the son is expects to retire in 22 years, in which at that time he will be in need of the funds to pay for his or his Family annual living expenses the best advice I would give the son is for him to roll all the funds over into a new IRA in the name of spouse's because the IRA Account which is fully known as INDIVIDUAL RETIREMENT ACCOUNT is an individual retirement plan that can help to provides all tax the advantages that an individual needs for their retirement savings.
Milltown Company specializes in selling used cars. During the month, the dealership sold 31 cars at an average price of $15,900 each. The budget for the month was to sell 29 cars at an average price of $16,900. Compute the dealership's sales price variance for the month.
Answer:
The dealership's sales price variance for the month is $31,000 U
Explanation:
In order to calculate the dealership's sales price variance for the month we would have to calculate the following formula:
Sales price variance = Actual quantity sold x (Actual price - Budgeted price)
According to the given data que have the following:
Actual quantity sold=31 cars
Actual price=$15,900
Budgeted price=$16,900
Therefore, Sales price variance = 31 * ($15,900 - $16,900)
Sales price variance = $31,000 U
The dealership's sales price variance for the month is $31,000 U
On January 1, 2013, an investor purchases 25,000 common shares of an investee at $9 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $600,000 and $150,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values. During the year ended December 31, 2013, the investee company reported net income equal to $22,500 and dividends equal to $12,000.
Noncontrolling investment accounting (price equals book value)
Assume the investor does not exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013.
Explanation:
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