Answers
Answer:
The answer is "face value".
Explanation:
FACE VALUE was its common characteristic of stocks and bonds.
For an inventory, that original cost of stock indicated on the certification was its face value. That facial value for securities refers to the amount paid to the owner just at the expiry date.
Its book value, as well as the factor, is the distinctive function of shares, while the factor of bonds is a discount rate, duration, or factor value.
Answer:
Stock- closing price
Bond- maturity date, coupon rate, and face value
Explanation:
Got it right on the test :)
Related Questions
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,250,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below:
2018 2019
Costs incurred during the year $300,000 $1575,000
Estimated costs to complete as of 12/31 1,200,000 0
Billings during the year 380,000 1,620,000
Cash collections during the year 250,000 1,750,000
Required:
a. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion.
b. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.
c. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion.
d. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.
Answers
Answer:
Nortel Networks
Revenue Recognized over time according to percentage of completion:
2018:
Percentage of completion = 20%
Revenue = $450,000 ($2,250,000 * 20%)
Costs incurred 300,000
Gross profit = $150,000
2019:
Percentage of completion = 80% (100% - 20%)
Revenue = $1,800,000
Costs incurred 1,575,000
Gross profit = $225,000
b.
2018:
Revenue = $0
Costs incurred = $300,000
Gross loss = $300,000
2019:
Revenue = $2,250,000
Costs incurred 1,575,000
Gross profit = $675,000
c. Partial balance sheet (Revenue over time according to percentage of completion):
Assets:
2018
Accounts receivable $130,000
Equity:
Retained earnings $150,000
d. Partial balance sheet, assuming this project does not qualify for revenue recognition over time:
Assets:
2018
Accounts receivable $130,000
Equity:
Retained earnings ($300,000)
Explanation:
a) Data and Calculations:
Contract price = $2,250,000
2018 2019
Costs incurred during the year $300,000 $1575,000
Estimated costs to complete as of 12/31 1,200,000 0
Billings during the year 380,000 1,620,000
Cash collections during the year 250,000 1,750,000
Accounts Receivable:
2018 2019
Beginning balance $0 $130,000
Billings 380,000 1,620,000
Cash collection (250,000) 1,750,000
Ending balance $130,000 $0
c. Partial balance sheet (Revenue over time according to percentage of completion):
Assets:
2018 2019
Accounts receivable $130,000 $0
Equity:
Retained earnings $150,000 $225,000
d. Partial balance sheet, assuming this project does not qualify for revenue recognition over time:
Assets:
2018 2019
Accounts receivable $130,000 $0
Equity:
Retained earnings ($300,000) $675,000
If an announcement by a firm causes the price of that firm's stock to suddenly change, that price change will most likely be driven by:________.
a. the unexpected part of the announcement.
b. the expected part of the announcement
c. market inefficiency
d. systematic risk
Answers
Answer:
The correct answer is the option A: The unexpected part of the announcement.
Explanation:
To begin with, the stock market is characterized for being completely umpredictable due to the fact that the information available for the common people is not enough to predict the possible behaviors of the prices, so that means that when an unexpected announcement happens and nobody new about it then the market will react depending on how it takes the new so that explains that if something not good happens all the sudden the priece of the stocks of that company will probably go down due to the bad reception of the news.
A leader has a problem of low Product X sales. She meets individually (i.e., one at a time) with a number of her subordinates and shares the problem of low Product X sales. She asks for their ideas and suggestions about how to increase Product X sales and then makes the decision alone based on their input. According to Vroom and Yetton's normative theory of leadership, what decision-making style is the leader using in this situation
Answers
Answer: CI consultative.
Explanation:
According to Vroom and Yetton's normative theory of leadership, the decision-making style that the leader is using in this situation is the consultative leadership style.
This is a form of leadership style whereby the leader seeks the opinion of his team members and then uses the input gotten from them to make a final decision. Since the leader meets them individually and seeks their opinion, the leader is using a consultative leadership style.
A central characteristic of management by objectives (MBO) is that: Group of answer choices employees are given complete freedom to set their own goals as long as they are consistent with guidelines approved by the CEO. it assumes that management must motivate employees, since employees are incapable of motivating themselves. goals are set by top management and followed without question by others within the organization. goals are set through a process involving members of the organization.
Answers
Answer:
goals are set through a process involving members of the organization.
Explanation:
Management by objectives (MBO) refers to the management where there is a strategic management model that focuse to improve the organization performance by defining the goals & objectives and the same would be by both management and employees.
so here according to the given options, the last option is correct as it represents the characteristic of the MBO
So the same would be selected
Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 non qualifying dividends, and $1,100 long-term capital gains. The Fortes' expenses for the year consist of $3,000 in investment interest expense and $900 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year
Answers
Answer: $2500
Explanation:
The amount of investment interest expense deduction for the year will be calculated thus:
The value of interest expense will be:
= Interest income + Non qualifying dividend
= $1000 + $1500
= $2500
It should be noted that the investment interest expenses will be $2500 due to the fact that thus is lesser than Fortes' expenses for the year which is $3,000 in investment interest expense.
1. Assume that your company is considering the lease of one of these HP copiers, and you expect that the average price for a color copy for your company would be $0.110 because you would carefully prioritize color copy jobs and reduce the number of copies requiring a large amount of color. You expect that training your copy center staff to properly use the new copier would cost about $6,150 for materials and lost work time. What is the breakeven number of color copies per year that would make you indifferent between the new HP copier and your current copier
Answers
Answer: 246,000 color copies
Explanation:
Cost of printing color pages using the old machine is not included so we will infer that.
We shall assume the cost of that to be $0.135.
In using this new copier made by HP, the cost saved per copy is:
= 0.135 - 0.110
= $0.025
The breakeven number of color copies that would make you indifferent would be the number of copies that would lead to a savings of $6,150 incurred on account of training the staff:
= 6,150 / 0.025
= 246,000 copies
equity method to account for inOn January 1 of the current year, Beta Company paid $200,000 for shares of Gamma Company common stock. Beta owns 10% of Gamma Company. Gamma reported net income of for December 31 of the current year. The fair value of the Gamma stock on that date was . What amount will be reported in Beta's balance sheet for the investment in Gamma at December 31?vestments
Answers
Answer:
$270,000
Explanation:
Calculation to determine What amount will be reported in Beta's balance sheet for the investment in Gamma at December 31
Using this formula
December 31 Investment in Gamma= Shares of Gamma*Fair value of the Gamma stock
Let plug in the formula
December 31 Investment in Gamma = 10,000 shares*$27
December 31 Investment in Gamma = $270,000
Therefore The amount that will be reported in Beta's balance sheet for the investment in Gamma at December 31 is $270,000
It is an accounting question
Answers
Answer:
Latana Company
Classified Balance Sheet
As of the first month of operation
Assets
Current assets:
Cash $49,500
Short-term investments 10,000
Notes receivable 5,000
Supplies 900 $65,400
Long-term assets:
Land 15,000
Equipment 10,000 $25,000
Total assets $90,400
Liabilities and Equity
Current liabilities:
Accounts payable $400
Long-term liabilities:
Notes payable $15,000
Total liabilities $15,400
Stockholders' equity:
Common stock $750
Additional Paid-in Capital 74,250 $75,000
Total liabilities and equity $90,400
Explanation:
a) Data and Calculations:
Latana Company
Trial Balance
As of the first month of operation
Account Titles Debit Credit
Cash $49,500
Short-term investments 10,000
Notes receivable 5,000
Supplies 900
Land 15,000
Equipment 10,000
Accounts payable $400
Notes payable 15,000
Common stock 750
Additional Paid-in Capital 74,250
Total $90,400 $90,400
Capable Golf Cart, Inc. (CGC) manufactures two models of golf cart: LX and EX. The budget data for next month is available. LX EX Total Units produced 50 30 80 Direct labor hours 2,000 3,000 5,000 Machine hours 1,500 1,200 2,700 Direct materials $125,000 $90,000 $215,000 Direct labor 90,000 60,000 150,000 Manufacturing overhead 202,500 Total $567,500 Required: 1. Compute the reported unit cost for each product if direct labor hours are used as the allocation base. 2. Compute the reported unit cost for each product if direct labor costs are used as the allocation base. 3. Compute the reported unit cost for each product if machine hours are used as the allocation base.
Answers
Solution :
1. Allocation on the basis of [tex]$\text{Direct labor hours}$[/tex]
LX EX
Direct Material 125000 90000
Direct [tex]$\text{labor}$[/tex] cost 90000 60000
Manufacturing overhead [tex]$81000$[/tex] [tex]$121500$[/tex]
(202500/5000 x 2000) (202500/5000 x 3000)
Total cost 296000 271500
Units produced 50 30
Cost per unit 5920 9050
2. Allocation on the basis of [tex]$\text{Direct labor costs}$[/tex]:
LX EX
Direct Material 125000 90000
Direct labor cost 90000 60000
Manufacturing overhead 121500 81000
(202500/150000 x 90000) (202500/150000 x 60000)
Total cost 336500 231000
Units produced 50 30
Cost per unit 6730 7700
3. Allocation on the basis of [tex]$\text{machine hours}$[/tex]
LX EX
Direct Material 125000 90000
Direct labor cost 90000 60000
Manufacturing overhead 112500 90000
(202500/2700 x 1500) (202500/2700 x 1200)
Total cost 327500 240000
Units produced 50 30
Cost per unit 6550 8000
What kinds of barriers get in the way of "following your dreams"?
Answer: A. Individuals may not have the talents or resources to simply do whatever they dream of doing.
Answers
The kind of obstacles that prevent people from "following their ambitions" It's possible that some people lack the skills or resources necessary to pursue their dreams.
What kinds of skills are examples?making excellent choices despite having little knowledge. recognizing other people's viewpoints and interacting with various types of people successfully. Setting objectives, keeping track of progress, and making an effort to enhance your job. generating original answers and imaginative concepts to address issues.
What does human resources talent mean?Talent management, which includes a variety of HR procedures throughout the employee life cycle, is the attraction, selection, and retention of personnel. It includes hiring, onboarding, succession planning, learning and development, performance management, workforce planning, and employee engagement.
To Know more about resources
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Answer:
Individuals may not have the talents or resources to simply do whatever they dream of doing.
Explanation: Just took the test
The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 4,000 units at $20
Apr. 19 Sale 2,500 units
June 30 Purchase 6,000 units at $24
Sept. 2 Sale 4,500 units
Nov. 15 Purchase 1,000 units at $25
The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method.
Answers
Answer:
Cost of goods sold $152,000
Closing inventory $97,000
Explanation:
Under the FIFO system , inventories are priced using the price of the oldest batch in the stock, after which the price of the next oldest batch and this is done in turn. It is based on the principle that the first batch that arrives the store should be issued first.
Total units sold = 2,500+4,500= 7,000
Using the FIFO method of the perpetual inventory, the 7,000 units sold by will be priced as follows:
2500 units at a price of $20 = $50,000
Next 1500units at a price of $20 = $30,000
Next 3,000 units at a price of $24= $72,000
Cost of goods sold 152,000
Closing inventory = Total cost of goods available for sale- cost of goods sold
Total cost of goods available for sale =
(4,000× 20) + (6,000× 24) + (1,000× $25) = 249,000
Closing inventory = 249,000 - 152,000=$97,000
Cost of goods sold $152,000
Closing inventory $97,000
Loren is in charge of implementing a wellness program for his organization. In formulating the plans for the wellness program, Loren visits and studies a number of other businesses that have successfully implemented such programs. When it is time to actually start the program in his organization, which of the following services or benefits is Loren LEAST likely to include?
a. Smoking cessation programs
b. Nutrition and weight-loss seminars
c. Cancer treatments including chemotherapy and radiation therapies
d. Stress management workshop sessions
Answers
Answer:
c. Cancer treatments including chemotherapy and radiation therapies
Explanation:
A wellness.program is defined as a set of activities.aomed at improving the quality of life of individuals through exercise, proper diet, and stress management.
The main idea behind a wellness program is prevention of illness with a healthy routine.
In the given scenario the other options are wellness initiatives except Cancer treatments including chemotherapy and radiation therapies.
This is excluded because it is study of a full blown illness and not preventive strategies to stay healthy.
RM Company, a manufacturer, has provided the following information pertaining to its recent year of operation:
Net income $390,000
Accounts payable increased $33,000
Prepaid rent decreased $14,500
Depreciation expense was $44,000
Accounts receivable increased $43,000
Gain on sale of a building was $15,500
Wages payable decreased $30,000
Unearned revenue increased $53,000
Using the indirect method, how much was RM's net cash provided by operating activities?
a. $259,000.
b. $327,000.
c. $347,000.
d. $358,000.
Answers
Answer:
RM Company
Using the indirect method, RM's net cash provided by operating activities is:
= $446,000.
Explanation:
a) Data and Calculations:
Net income $390,000
Accounts payable increased $33,000
Prepaid rent decreased $14,500
Depreciation expense was $44,000
Accounts receivable increased $43,000
Gain on sale of a building was $15,500
Wages payable decreased $30,000
Unearned revenue increased $53,000
Operating Activities:
Net income $390,000
Adjustment with non-cash items:
Depreciation expense was 44,000
Gain on sale of a building was (15,500)
Working capital changes:
Accounts payable increased 33,000
Prepaid rent decreased 14,500
Unearned revenue increased 53,000
Accounts receivable increased (43,000)
Wages payable decreased (30,000)
Net cash provided by operating
activities $446,000
Why would you choose a job over a career?
Answers
Answer:
A job can be just going to work to earn a paycheck. A career means that each of your jobs, experiences, and training programs is helping you advance in pay or responsibility. The real difference between a job and a career is your attitude. People who want a career are always thinking about their long-term goals.
Explanation:
Sorry if this isn't right love, I tried:(
To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation
Answers
Answer:
8.09%
Explanation:
Semi annual coupon = 1000*(9.25/2)% = 46.25
N = (20*2) = 40
Using Ms Excel to get I/Y
N = 40, PV=-875, PMT = 46.25, FV = 1000
CPT I/Y = I/Y(n, -pv, pmt, fv) * 2
CPT I/Y = I/Y(40, -875, 46.25, 1000) * 2
CPT I/Y = 5.39% * 2
CPT I/Y = 10.78%
After tax cost of debt = 10.78%*(1 - 0.25)
After tax cost of debt = 10.78%*0.75
After tax cost of debt = 0.08085
After tax cost of debt = 8.09%
Marriage between individuals who have similar social characteristics
Answers
Homogamy is the marriage between individuals who have similar social characteristics.
What is homogamy?Homogamy is the practice that involves individuals marrying each other because they have similar characteristics. It involves marriage between individuals who are, in some culturally important way, similar to each other.
The similar characteristics in homogamy include:
Race/ethnicityReligious backgroundAgeEucation backgroundSocial backgroundTherefore, marriage between individuals who have similar social characteristics is know as homogamy.
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Zachary Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $23,680,000; it will enable the company to increase its annual cash inflow by $6,400,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $27,880,000; it will enable the company to increase annual cash flow by $8,200,000 per year. This plane has an eight-year useful life and a zero salvage value. Required Determine the payback period for each investment alternative and identify the alternative Zachary should accept if the decision is based on the payback approach. (Round your answers to 1 decimal place.)
Answers
Answer: See explanation
Explanation:
For the first airplane:
Payback period will be:
= Cost of first airplane ÷ Annual cash inflow
= 23,680,000 / 6,400,000
= 3.7 years
For the second airplane:
Payback period will be:
= Cost of first airplane ÷ Annual cash inflow
= 27,880,000 / 8,200,000
= 3.4 years
Since the decision is based on the payback approach, Zachary Airline should select the second option since it has a lesser payback period.
A public good is A. any good provided by government. B. a good that can be most cheaply provided by government, though it may in fact be provided by private enterprise. C. a good whose benefits cannot readily be restricted to a small group of people. D. a good whose benefits cannot be enjoyed by an individual alone.
Answers
Answer:
C. a good whose benefits cannot readily be restricted to a small group of people.
Explanation:
Factors of production can be defined as the fundamental building blocks used by individuals or business firms for the manufacturing of finished goods and services in order to meet the unending needs and requirements of their customers.
The four factors of production are;
I. Land: this refers to the natural resources and raw materials extracted from the ground or grown in the soil e.g oil, gold, rubber, cocoa, etc.
II. Labor (working): this is the human capital or workers who are saddled with the responsibility of overseeing and managing all the aspects of production.
III. Capital resources: it includes the physical assets used for production of goods and services such as equipment, money, plant, etc.
IV. Entrepreneurship: it is intellectual capacity required to drive a business and the skills to develop an idea into a money making venture (business).
These four (4) factors of production when combined effectively and efficiently are used for the manufacturing or production of goods and services that meets the unending requirements or needs of the consumers.
A public good is a good whose benefits cannot readily be restricted to a small group of people.
This ultimately implies that, a public good such as power utility (electricity) or water supply is capable of being provided simultaneously to the general public.
Furthermore, a public good is non-excludable and cannot be exhausted due to its use by the general public i.e it's never depleted.
Shareholders, customers, suppliers, and employee groups are considered
A. indirect stakeholders
B. convertible stakeholders
C. direct stakeholders
D. formal stakeholders
Answers
Answer: its “direcr stakeholders”
Explanation: bcs it is
Alpha Industries is considering a project with an initial cost of $9.7 million. The project will produce cash inflows of $1.67 million per year for 9 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 6.12 percent and a cost of equity of 11.61 percent. The debt–equity ratio is .77 and the tax rate is 40 percent. What is the net present value of the project?
Answers
Answer:
$660,000
Explanation:
WACC = [wD * kD * (1 - t)] + [wE * kE]
WACC = [(0.77 / 1.77)*6.12%* (1 - 0.40)] + [(1 / 1.77)*11.61%]
WACC = 1.60% + 6.56%
WACC = 8.16%
Present value of annuity = Annuity*[1-(1+interest rate)^-time period]/rate
Present value of annuity = $1.67*[1-(1.08156745763)^-9]/0.0816
Present value of annuity = $1.67*6.206374532
Present value of annuity = $10.36 million
NPV = Present value of inflows - Present value of outflows
NPV = $10.36 million - $9.7 million
NPV = $660,000
Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $2.5 million, and they are financed by a bank loan at an 11% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is $15,000, what pre-tax net annual savings would be realized
Answers
Answer:
$40,000
Explanation:
Average accounts receivables = $2,500,000. Loan amount is also $2,500,000.
Interest rate is 11%. So, interest paid = $2,500,000*0.11 = $275,000
If the system reduces receivables by 20%,then current receivables = $2,500,000*0.8 = $2,000,000. So, loan amount = $2,000,000
Interest payable = $2,000,000*0.11 = $220,000
Cost of system = $15,000
Net annual savings = Interest payable without system - Interest payable after system installed - Cost of system
Net annual savings = $275,000 - $220,000 - $15,000
Net annual savings = $40,000
In a year in which common stocks offered an average return of 18%, Treasury bonds offered 10% and Treasury bills offered 7%, the risk premium for common stocks was:_______
A. 1%.
B. 3%.
C. 8%.
D. 11%.
Explain.
Answers
Tariq and Noelle work in the sales department at CTI Telecommunications. Tariq is the star salesman of the department and makes it his mission to motivate the rest of the team when sales numbers are down or when there are problems interacting with other departments. Meanwhile, Noelle consistently ranks in the middle or near the bottom in terms of sales, and she often gets distracted by calls from her teenage son. She also spends more time than she should socializing with friends in other departments. However, everyone, including the bosses, loves Noelle because of her true-blue loyalty to the company and her team. What else is most likely true of Noelle
Answers
Answer:
D. She volunteers to do the mundane tasks others avoid, and she does things like buying birthday cards for co-workers and organizing parties.
Explanation:
Noelle is an average perfomer so she is open for doing mundane task also she is not worried for star performance. in addition to this, she spends more time with some one as compared by having socializing. moreover, she is having a good skills and does not give priority to perform better as compared with others
So here the second last option is correct
Identify whether the actions or scenarios would likely increase or decrease the natural rate of unemployment. You are currently in a sorting module. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop. Increases natural rate of unemployment reducing workers' collective bargaining rights extra financial benefits for the unemployed a large number of young people entering the labor force an increase in union membership Decreases natural rate of unemployment
Answers
Answer:
increases natural rate of unemployment
extra financial benefits for the unemployed
a large number of young people entering the labor force
an increase in union membership
Decreases natural rate of unemployment
reducing workers' collective bargaining rights
Explanation:
natural rate of unemployment is unemployment that exists when there is only structural and frictional unemployment in an economy
structural unemployment is an unemployment that occurs as a result of changes in the economy. These changes can be as a result of changes in technology, polices or competition . Structural unemployment tends to be permanent.
Frictional unemployment . the period of time a person is unemployed from the period he leaves his current job and the time he gets another job. Eg. when a real estate agent who leaves a job in Texas and searches for a similar, higher-paying job in California.
If the unemployed are given extra benefits, there would be less incentive to find a job, thus unemployment would increase
An increase in union membership increases bargaining power of employees. this can lead to increase in wages. increase in wages reduces demand for labour and this increases unemployment. reducing collective bargaining right has the opposite effect on unemployment
a large number of people entering the labour force increases frictional unemployment
Expected cash flows: FireRock Wheel Corp is evaluating a project in which there is a 40 percent probability of revenues totaling $4 million and a 60 percent probability of revenues totaling $2 million per year. Its cash expenses will be $1.0 million while depreciation expense will be $300,000. What is the expected free cash flow from taking the project if the marginal tax rate for the firm is 25 percent
Answers
Answer:
$1,425,000
Explanation:
Calculation to determine the expected free cash flow
Expected revenue$2,800,000
[(40%*$4 million)+(60%*$2 million)]
Less Cash Expenses $1,000,000
Less Depreciation Expense $300,000
EBIT$1,500,000
($2,800,000-$1,000,000-$300,000)
Tax $375,000
(25%*$1,500,000)
Net Income $1,125,000
($1,500,000-$375,000)
Add Depreciation Expense $300,000
Free Cash Flow $1,425,000
($1,125,000+$300,000)
Therefore the expected free cash flow is $1,425,000
In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. Holding all else constant, the effect of this tax would be to _____ in the District of Columbia.
Answers
Answer:
b. decrease Amazon sales
Explanation:
Note: "Options the question is attached as picture below"
In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. If we hold all else equal, the effect of this tax would be to decrease Amazon Sales In the District of Columbia.
This action will consequentially increase the sales in local Market and then discourage online shopping along with it In Columbia district; it will decrease sales overall.
The accounts in the ledger of Monroe Entertainment Co. are listed below. All accounts have normal balances.
Accounts payable $598 Fees Earned $3,129
Accounts receivable 717 Insurance Expense 543
Supplies 500 Rent expense 1,500
Prepaid insurance 2,195 Land 2,773
Cash 2,002 Wages expense 651
Office equipment 1,800 Retained earnings 5,500
Dividends 701 Common stock 5,855
Unearned rent 1,600
Prepare a trial balance. The total of the debits is:
a. $11,200
b. $13,900
c. $12,700
d. $9,700
Answers
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 1.70. It plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $3.6 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 15%, and T-bills currently offer a 5% return.
Required:
a. Find the price at which Analog stock should sell.
b. Calculate the P/E ratio.
c. Calculate the present value of growth opportunities.
d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock.
Answers
Answer:
a $7.95
b. $2.21
c $16.36
d, $13.01
Explanation:
according to the constant dividend growth model
price = [d0 (1+g)] / (r - g)
d0 = recently paid dividend
Dividend = payout ratio x earnings
payout ratio = 1 - plowback rate
1 - 2/3 = 1/3
1/3 x 3.6 = $1.2
r = cost of equity
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
5% + 1.7(15 - 5) = 22%
g = growth rate
g = plowback rate x ROE
2/3 X 9 = 6%
1. [1.2 x 1.06] / (0.22 - 0.06) = 1.272/ 0.16 = $7.95
2.
The price to earning ratio is a financial metric used to value a company. it compares the price of a stock to the earnings of the stock. the lower the metric is, the higher the valuation of the firm
price to earning ratio = market value per share / earnings
$7.95 / $3.6 = $2.21
c. present value of growth opportunities = earnings / cost of equity
3.6 / 0.22 = $16.36
d.
price = [d0 (1+g)] / (r - g)
d0 = recently paid dividend
Dividend = payout ratio x earnings
payout ratio = 1 - plowback rate
1 - 1/3 = 2/3
2/3 x 3.6 = $2.40
r = cost of equity = 22%
g = plowback rate x ROE
1/3 X 9 = 3%
[2.4 x 1.03] / (0.22 - 0.03) = 2.472/ 0.19 = $13.01
Pecan acquires Southern in an acquisition reported as a merger. The acquisition results in $50 million in goodwill. The acquisition cost includes an earnings contingency, valued at $1 million at the date of acquisition. Within the measurement period, additional information on Southern's expected future performance at the date of acquisition reveals that the earnout actually had a fair value of $200,000 at the date of acquisition. The entry to record the new information includes a credit of $800,000 to:
Answers
Answer:
Dr Earnings contingency liability $800,000
Cr Goodwill $800,000
Explanation:
Based on the information given the appropiate journal entry to record the new information includes a credit of $800,000 to:Dr Earnings contingency liability $800,000 and Cr Goodwill $800,000 reason been that the acquisition cost is lesser.
Dr Earnings contingency liability $800,000
Cr Goodwill $800,000
Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $62,000 per ton, one-fourth of which is allocated to product X15. Eight thousand three hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $16 each, or processed further at a total cost of $9,800 and then sold for $19 each.
Required:
1. What is the financial advantage (disadvantage) of further processing product X15?
2. Should product X15 be processed further or sold at the split-off point?
Answers
Answer:
1) Financial advantage = $15,100
2) X15 should be processed further because it would generate 15,100
Explanation:
A company should process a product further if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Sales revenue after further processing
(19×8,300) 157,700
Sales revenue at the split-off point
(16×8,300) 132,800
Additional sales revenue from further processing 24,900
Less further processing cost (9,800)
Financial advantage 15,100
Financial advantage = $15,100
X15 should be processed further because it would generate 15,100